SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 13, 2002
THE PITTSTON COMPANY
(Exact Name of registrant as specified in its charter)
Virginia 1-9148 54-1317776
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
1801 Bayberry Court
P. O. Box 18100
Richmond, VA 23226-8100
(Address of principal (Zip Code)
executive offices)
(804)289-9600
(Registrant's telephone number, including area code)
Item 2 Acquisition or Disposition of Assets
On December 13, 2002, subsidiaries of The Pittston Company consummated the sale
of substantially all of their remaining coal assets in Virginia to subsidiaries
of Alpha Natural Resources, LLC, an affiliate of First Reserve Corporation, for
an aggregate purchase price of approximately $76 million, including $36 million
in cash, $24 million in notes and the present value of minimum royalty payments
on coal production and an estimated $16 million of assumed liabilities. The
purchase price was determined through arm's-length negotiations.
The $24 million fair value of future payments includes an $8 million note for
the sale of coal inventory and $16 million for the present value of minimum
future royalties to be received within five years. Liabilities assumed by
subsidiaries of Alpha Natural Resources, LLC were primarily for the reclamation
of Virginia coal mining properties.
Assets sold in the transaction included primarily real property, productive coal
mining assets (machinery and equipment) and coal inventory and supplies.
Item 7 Financial Statements, Pro Forma Financial Information and Exhibits
a) Financial Statements of Businesses Acquired
Not applicable
b) Pro Forma Financial Information
Pro forma effects of the sale of the remaining coal assets in Virginia
The objective of pro forma financial information is to present information
about the continuing impact of a transaction by showing how it might have
affected historical financial statements if the transaction had been
consummated at an earlier period. The pro forma adjustments below should be
read in conjunction with The Pittston Company's historical financial
statements included in its Annual Report on Form 10-K for the year ended
December 31, 2001, and quarterly report on Form 10-Q for the three and nine
months ended September 30, 2002.
As described in Item 2, subsidiaries of The Pittston Company consummated
the sale of substantially all of their remaining coal assets in Virginia to
subsidiaries of Alpha Natural Resources, LLC, an affiliate of First Reserve
Corporation, for an aggregate purchase price of approximately $76 million.
A pro forma statement of operations is based on a company's historical
results from continuing operations adjusted to reflect the sale transaction
as if it had occurred at the beginning of the reporting period. As the
disposed business has been classified within discontinued operations in The
Pittston Company's previously filed consolidated financial statements, a
pro forma statement of operations will not be filed.
For purposes of reporting a pro forma balance sheet, it is assumed that the
sales transaction occurred on the balance sheet date. As the remaining
assets and liabilities in Virginia were segregated on the face of the
balance sheet within net assets and liabilities of discontinued operations,
a limited number of pro forma adjustments are required to The Pittston
Company's historical balance sheet on September 30, 2002. Pro forma amounts
reported are based on preliminary estimates.
Pro forma
Consolidated Consolidated
September 30 Pro forma September 30
Unaudited 2002 Adjustments 2002
- -------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents 122.9 36.0 1
(4.6) 3
(31.4) 4 122.9
Note receivable - inventory - 8.3 1 8.3
Accounts receivable, net 528.3 - 528.3
Prepaid expenses and other 65.7 4.0 1 69.7
Deferred income taxes 90.9 - 90.9
Discontinued operations 35.1 (27.9) 2 7.2
- -------------------------------------------------------------------------------------------------------------------
Total current assets 842.9 (15.6) 827.3
Property and equipment, net 828.9 - 828.9
Goodwill, net 224.3 - 224.3
Prepaid pension assets 140.6 - 140.6
Deferred income taxes 234.9 - 234.9
Other assets 159.8 11.7 1 171.5
Discontinued operations 101.2 (51.4) 2 49.8
- -------------------------------------------------------------------------------------------------------------------
Total assets 2,532.6 (55.3) 2,477.3
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings 37.4 - 37.4
Current maturities of long-term debt 13.8 - 13.8
Accounts payable 264.5 - 264.5
Accrued liabilities 537.1 - 537.1
Discontinued operations 13.3 (3.0) 1,2
(4.6) 3 5.7
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 866.1 (7.6) 858.5
- -------------------------------------------------------------------------------------------------------------------
Long-term debt 313.9 (31.4) 4 282.5
Postretirement benefits
other than pensions 402.4 - 402.4
Workers' compensation
and other claims 91.1 - 91.1
Deferred revenue 128.6 - 128.6
Deferred income taxes 21.3 - 21.3
Other liabilities 152.1 - 152.1
Discontinued operations 31.3 (16.3) 1,2 15.0
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 2,006.8 (55.3) 1,951.5
Shareholders' equity 525.8 - 525.8
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity 2,532.6 (55.3) 2,477.3
- -------------------------------------------------------------------------------------------------------------------
On December 23, 2002, The Pittston Company announced that its previously
announced agreement to dispose of certain of its subsidiaries' coal mining
assets in West Virginia had been terminated. As a result, the remaining
Company-operated active mining operations will cease by the end of 2002. The pro
forma adjustments presented do not reflect the cessation of operations in West
Virginia.
Pro forma adjustments:
1. To record proceeds of sale, including cash, note receivable, the
present value of future minimum royalties to be received and
liabilities assumed by purchaser.
2. To remove the net assets of the sold Virginia coal mining
business
3. To reflect repayment of capital lease.
4. To reflect repayment of debt with remaining cash proceeds.
c) Exhibits
See Exhibit Index
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PITTSTON COMPANY
(Registrant)
By /s/ Robert T. Ritter
------------------------------------------
Robert T. Ritter
Vice President and Chief Financial Officer
Dated: December 30, 2002
EXHIBIT INDEX
We omitted the schedules and exhibits referenced in the attached Agreements in
accordance with Item 601(b)(2) of regulation S-K. In accordance with Item
601(b)(2) of regulation S-K, we will furnish a copy of any omitted schedule
and/or exhibit supplementally to the Securities and Exchange Commission upon
request.
2.1 Asset Purchase Agreement, dated as of October 29, 2002, by and between
Pittston Coal Company and Dickenson-Russell Coal Company, LLC ("APA
No. 1")
2.2 Amendment to APA No. 1, dated as of December 13, 2002, by and between
Pittston Coal Company and Dickenson-Russell Coal Company, LLC
2.3 Indemnification and Guaranty Agreement, dated as of December 13, 2002,
by and among Pittston Coal Company, The Pittston Company, Alpha
Natural Resources, LLC and Dickenson-Russell Coal Company, LLC
2.4 Cooperation Agreement, dated as of December 13, 2002, by and between
Pittston Coal Company and Dickenson-Russell Coal Company, LLC
2.5 Asset Purchase Agreement, dated as of October 29, 2002, by and between
Pittston Coal Company and Paramont Coal Company Virginia, LLC ("APA
No. 2")
2.6 Amendment to APA No. 2, dated as of December 13, 2002, by and between
Pittston Coal Company and Paramont Coal Company Virginia, LLC
2.7 Indemnification and Guaranty Agreement, dated as of December 13, 2002,
by and among Pittston Coal Company, The Pittston Company, Alpha
Natural Resources, LLC and Paramont Coal Company Virginia, LLC
2.8 Cooperation Agreement, dated December 13, 2002, by and between
Pittston Coal Company and Paramont Coal Company Virginia, LLC
2.9 Asset Purchase Agreement, dated as of October 29, 2002, by and between
Pittston Coal Company and Alpha Land and Reserves, LLC ("APA No. 3")
2.10 Amendment to APA No. 3, dated as of December 13, 2002, by and between
Pittston Coal Company and Alpha Land and Reserves, LLC
2.11 Indemnification and Guaranty Agreement, dated as of December 13, 2002,
by and among Pittston Coal Company, The Pittston Company, Alpha
Natural Resources, LLC and Alpha Land and Reserves, LLC
2.12 Asset Purchase Agreement, dated as of October 29, 2002, by and between
Pittston Coal Company and Alpha Coal Sales Co., LLC ("APA No. 4")
2.13 Amendment to APA No. 4, dated as of December 13, 2002, by and between
Pittston Coal Company and Alpha Coal Sales Co., LLC
2.14 Indemnification and Guaranty Agreement, dated as of December 13, 2002,
by and among Pittston Coal Company, The Pittston Company, Alpha
Natural Resources, LLC and Alpha Coal Sales Co., LLC
2.15 Asset Purchase Agreement, dated as of October 29, 2002, by and between
Pittston Coal Company and Alpha Terminal Company, LLC ("APA No. 5")
2.16 Amendment to APA No. 5, dated as of December 13, 2002, by and between
Pittston Coal Company and Alpha Terminal Company, LLC
2.17 Indemnification and Guaranty Agreement, dated as of December 13, 2002,
by and among Pittston Coal Company, The Pittston Company, Alpha
Natural Resources, LLC and Alpha Terminal Company, LLC
2.18 Asset Purchase Agreement, dated as of October 29, 2002, by and between
Pittston Coal Company and Maxxim Rebuild Co., LLC ("APA No. 6")
2.19 Amendment to APA No. 6, dated as of December 13, 2002, by and between
Pittston Coal Company and Maxxim Rebuild Co., LLC
2.20 Indemnification and Guaranty Agreement, dated as of December 13, 2002,
by and among Pittston Coal Company, The Pittston Company, Alpha
Natural Resources, LLC and Maxxim Rebuild Co., LLC
2.21 Cooperation Agreement, dated as of December 13, 2002, by and between
Pittston Coal Company and Maxxim Rebuild Co., LLC
Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
DICKENSON-RUSSELL COAL COMPANY, LLC
October 29, 2002
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS
1.1. 273 Threshold.........................................................................................1
1.2. Administrative Services Agreement.....................................................................2
1.3. Affiliate.............................................................................................2
1.4. Agreement.............................................................................................2
1.5. Asset Sale Companies..................................................................................2
1.6. Asset Sale Non-Signatory Company......................................................................2
1.7. Asset Sale Signatory Company..........................................................................3
1.8. Assignment and Assumption Agreements..................................................................3
1.9. Assumed Liabilities...................................................................................3
1.10. Bills of Sale........................................................................................3
1.11. Books and Records....................................................................................3
1.12. Business.............................................................................................4
1.13. Buyer................................................................................................4
1.14. Buyer's Affiliates, Successors, Assigns, Lessees or Contractors......................................4
1.15. Buyer Closing Certificate............................................................................4
1.16. Buyer's Ultimate Parent..............................................................................4
1.17. CERCLA...............................................................................................4
1.18. CERCLIS..............................................................................................4
1.19. Classified Employee..................................................................................5
1.20. Classified Employee Retiree Medical Plans............................................................5
1.21. Classified Employment................................................................................5
1.22. Closing..............................................................................................5
1.23. Closing Date.........................................................................................5
1.24. Coal Act.............................................................................................6
1.25. Coal Inventory.......................................................................................6
1.26. COBRA................................................................................................6
1.27. Code.................................................................................................6
1.28. Collective Bargaining Agreements.....................................................................6
1.29. Contaminated.........................................................................................8
1.30. Contracts............................................................................................8
1.31. Controlled Group.....................................................................................8
1.32. Conveyance Deeds.....................................................................................8
1.33. Cooperation Agreement................................................................................8
1.34. CPA Arbitrator......................................................................................8
1.35. D-R Service Agreement................................................................................9
1.36. Dispute..............................................................................................9
1.37. Employee.............................................................................................9
1.38. Employee Benefit Plans...............................................................................9
1.39. Environment..........................................................................................9
1.40. Environmental Laws...................................................................................9
1.41. Environmental Matter................................................................................10
1.42. Environmental or Response Action....................................................................10
1.43. EPA.................................................................................................11
1.44. Equipment...........................................................................................11
1.45. ERISA...............................................................................................11
1.46. ERISA Affiliates....................................................................................11
1.47. Fiduciary...........................................................................................12
1.48. Governmental Authority..............................................................................12
1.49. Hazardous Substances................................................................................12
1.50. Health and Safety Requirements......................................................................12
1.51. HIPAA...............................................................................................13
1.52. Income Tax or Income Taxes..........................................................................13
1.53. Indemnification and Guaranty Agreement..............................................................13
1.54. Independent Surveyor................................................................................13
1.55. Intellectual Property...............................................................................13
1.56. IRS.................................................................................................14
1.57. Knowledge of PCC....................................................................................14
1.58. Law.................................................................................................14
1.59. Lien................................................................................................14
1.60. Liability...........................................................................................14
1.61. Material Adverse Effect.............................................................................14
1.62. Medical Plans.......................................................................................15
1.63. Mining Activities...................................................................................15
1.64. Mining Data.........................................................................................15
1.65. Mining Environmental Liabilities....................................................................15
1.66. MSHA................................................................................................15
1.67. Multiemployer Plan..................................................................................16
1.68. Non-Classified Employee.............................................................................16
1.69. Non-Classified Employee Retiree Medical Plan........................................................16
1.70. Operator............................................................................................16
1.71. Ordinary Course of Business.........................................................................16
1.72. OSM.................................................................................................16
1.73. Parts, Fuel and Supplies Inventory..................................................................16
1.74. PBGC................................................................................................16
1.75. PCC.................................................................................................17
1.76. PCC Bonds...........................................................................................17
1.77. PCC Closing Certificate.............................................................................17
1.78. PCC Group...........................................................................................17
1.79. PCC Parent..........................................................................................17
1.80. Pension Plans.......................................................................................17
1.81. Permits.............................................................................................17
1.82. Permitted Liens.....................................................................................17
1.83. Person..............................................................................................18
1.84. Post-Closing Period.................................................................................18
1.85. Pre-Closing Period..................................................................................18
1.86. Promissory Note.....................................................................................18
1.87. Purchase Price......................................................................................18
1.88. Purchased Assets....................................................................................18
1.89. Qualified Plans.....................................................................................19
1.90. RCRA................................................................................................19
1.91. Real Property.......................................................................................19
1.92. Reclamation Laws....................................................................................19
1.93. Related Persons.....................................................................................19
1.94. Release.............................................................................................20
1.95. Retained Liabilities................................................................................20
1.96. Security Agreement..................................................................................28
1.97. SMCRA...............................................................................................28
1.98. Straddle Period.....................................................................................28
1.99. Tax or Taxes........................................................................................28
1.100. Tax Return.........................................................................................29
1.101. UMWA...............................................................................................29
1.102. UMWA Pension Plans.................................................................................29
1.103. VDEQ...............................................................................................29
1.104. VDMME..............................................................................................29
1.105. WARN Act...........................................................................................29
1.106. Welfare Plans......................................................................................29
1.107. Workers' Compensation Acts.........................................................................30
ARTICLE II PURCHASE AND SALE OF ASSETS...................................................................30
2.1. Transfer of Assets...................................................................................30
2.2. Bills of Sale, Assignment and Assumption Agreements, Conveyance Deeds and Other Documents............30
2.3. Assumption of Liabilities............................................................................31
2.4. Proration of Liabilities.............................................................................31
2.5. Indemnification and Guaranty Agreement...............................................................31
2.6. Cooperation Agreement................................................................................31
2.7. Administrative Services Agreement....................................................................31
2.8. D-R Service Agreement................................................................................32
2.9. Security Agreement...................................................................................32
2.10. Additional Documents................................................................................32
2.11. Coal Inventory Adjustment...........................................................................32
2.12. Allocation of Purchase Price and Assumed Liabilities................................................33
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PCC........................................................35
3.1. Incorporation........................................................................................35
3.2. Execution, Delivery and Performance..................................................................35
3.3. Authorization........................................................................................36
3.4. Absence of Changes...................................................................................37
3.5. Real Property........................................................................................40
3.6. Purchased Assets.....................................................................................42
3.7. Intellectual Property................................................................................43
3.8. Permits and Environmental Compliance.................................................................43
3.9. Reclamation Bonds....................................................................................47
3.10. Contracts...........................................................................................48
3.11. Litigation; Claims..................................................................................48
3.12. Employee Benefits...................................................................................49
3.13. Employment Matters..................................................................................54
3.14. No Broker...........................................................................................55
3.15. Health and Safety Requirements......................................................................55
3.16. Restrictions on Business Activities.................................................................55
3.17. Powers of Attorney..................................................................................55
3.18. Transactions With Affiliates........................................................................56
3.19. Absence of Certain Payments.........................................................................56
3.20. Disclosure..........................................................................................56
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................57
4.1. Organization.......................................................................................57
4.2. Execution, Delivery and Performance................................................................57
4.3. Authorization......................................................................................57
4.4. No Broker..........................................................................................58
4.5. Reclamation and Environmental Compliance...........................................................58
4.6. Financing..........................................................................................58
4.7. Disclosure.........................................................................................59
ARTICLE V CERTAIN COVENANTS..............................................................................59
5.1. Operation in Ordinary Course.........................................................................59
5.2. Compliance with Law..................................................................................60
5.3. Cooperation..........................................................................................60
5.4. Notices and Consents.................................................................................60
5.5. Publicity............................................................................................61
5.6. Permits; Replacement Bonds; Insurance and Guarantees; Other Filings..................................62
5.7. Exclusivity..........................................................................................64
5.8. Access...............................................................................................64
5.9. Notice of Developments...............................................................................65
5.10. Benefits Provided by PCC............................................................................65
5.11. Coal Inventory......................................................................................65
5.12. Further Assurances..................................................................................66
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING...............................................................66
6.1. Conditions Precedent to Each Party's Obligations...................................................66
6.2. Conditions Precedent to Obligations of Buyer.......................................................67
6.3. Conditions Precedent to Obligations of PCC.........................................................69
ARTICLE VII CERTAIN TAX MATTERS..........................................................................71
7.1. Property Taxes.....................................................................................71
7.2. Sales and Use Taxes................................................................................72
7.3. Transfer Taxes.....................................................................................72
7.4. Access for Tax Returns.............................................................................73
ARTICLE VIII COVENANTS REGARDING EMPLOYEES...............................................................73
8.1. Employees............................................................................................73
8.2. Collective Bargaining Obligations....................................................................73
ARTICLE IX TERMINATION....................................................................................74
9.1. Termination..........................................................................................74
9.2. Effect of Termination................................................................................75
ARTICLE X MISCELLANEOUS..................................................................................76
10.1. Entire Agreement....................................................................................76
10.2. Amendment...........................................................................................76
10.3. Extension; Waiver...................................................................................76
10.4. Expenses............................................................................................77
10.5. Bulk Sales Waiver...................................................................................77
10.6. Governing Law.......................................................................................77
10.7. Assignment..........................................................................................77
10.8. Notices.............................................................................................77
10.9. Counterparts; Headings..............................................................................79
10.10. Interpretation; Construction.......................................................................79
10.11. Severability.......................................................................................79
10.12. No Reliance........................................................................................79
10.13. Retention of and Access to Records................................................................80
10.14. Arbitration........................................................................................80
EXHIBITS
Exhibit A Outline of Administrative Services Agreement
Exhibit B Assignment and Assumption Agreements
Exhibit C Bills of Sale
Exhibit D Buyer Closing Certificate
Exhibit E Conveyance Deeds
Exhibit F Cooperation Agreement
Exhibit G D-R Service Agreement
Exhibit H Indemnification and Guaranty Agreement
Exhibit I PCC Closing Certificate
Exhibit J Opinion of Counsel to PCC
Exhibit K Opinion of Counsel to Buyer
SCHEDULES
Schedule 1.5 Asset Sale Companies
Schedule 1.9 Assumed Liabilities
Schedule 1.25 Coal Inventory Locations
Schedule 1.30 Contracts of Asset Sale Companies
Schedule 1.44(a) Equipment Owned by Asset Sale Companies
Schedule 1.44(b) Equipment Leased by Asset Sale Companies
Schedule 1.55(a) Intellectual Property Owned by the Asset Sale Companies
Schedule 1.55(b) Intellectual Property Leased by the Asset Sale Companies
Schedule 1.57 Knowledge of PCC
Schedule 1.65 Mining Environmental Liabilities
Schedule 1.73 Parts, Fuel and Supplies Inventory
Schedule 1.81 Permits
Schedule 1.82 Permitted Liens
Schedule 1.91 Real Property of the Asset Sale Companies
Schedule 1.95(a) Retained Liabilities
Schedule 1.95(k)(1) Classified Employees with 20 Years of Credited Service or 10 Years of Credited Service at Age 55
Schedule 1.95(k)(2) Purchased Assets for Certain Classified Employees
Schedule 1.95(k)(3) Classified Employees who may be Recalled or Hired between Closing Date and December 31, 2003
Schedule 1.95(y) Excluded Contracts
Schedule 2.11(b) Independent Survey of the Coal Inventory-Principles and Format
Schedule 3.1 Foreign States
Schedule 3.2 Conflicts
Schedule 3.4 Absence of Changes
Schedule 3.5(a) Real Property Matters
Schedule 3.5(b) Real Property - Lease Compliance
Schedule 3.5(d) Real Property - Third Party Mining Rights
Schedule 3.6(c) Purchased Assets Exceptions
Schedule 3.7 Intellectual Property Exceptions
Schedule 3.8 Permits and Environmental Compliance
Schedule 3.9 PCC Bonds
Schedule 3.10(b) Contract Exceptions
Schedule 3.10(c) Consents
Schedule 3.11 Litigation; Claims
Schedule 3.12(a) Employee Benefit Plans
Schedule 3.12(d) Plan Administration
Schedule 3.12(f) Severance Entitlements
Schedule 3.13(a) Labor Unions
Schedule 3.13(b) Panel of Employees
Schedule 3.17 Powers of Attorney
Schedule 3.18 Transactions with Affiliates
Schedule 5.4(a) PCC Consents
Schedule 5.4(b) Buyer Consents
Schedule 5.6 PCC Guaranties
Schedule 6.1(e)(i) PCC Material Consents
Schedule 6.1(e)(ii) Buyer Material Consents
Schedule 8.1 Asset Sale Companies with pre-Closing termination Employees
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 29th day of October, 2002,
by and between PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), and
DICKENSON-RUSSELL COAL COMPANY, LLC, a Delaware limited liability company
("Buyer").
RECITALS
WHEREAS, PCC owns, directly or indirectly, all of the outstanding capital
stock of the corporations listed on Schedule 1.5 (the "Asset Sale Companies");
WHEREAS, PCC desires to cause to be sold and assigned, and Buyer desires to
purchase and assume, certain of the assets and certain of the Liabilities (as
hereinafter defined) of the Asset Sale Companies;
WHEREAS, PCC desires to cause the Asset Sale Companies to retain certain
assets and certain Liabilities;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PCC and Buyer agree
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1. 273 Threshold.
"273 Threshold" shall have the meaning given to it in Section 1.95(k)
hereof.
1
1.2. Administrative Services Agreement.
"Administrative Services Agreement" shall mean the agreement by and between
PCC and Buyer, an outline of which is attached hereto as Exhibit A.
1.3. Affiliate.
"Affiliate" shall mean, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, none of Dominion Terminal Associates or any of its partners,
other than Pittston Coal Terminal Corporation, shall be deemed an Affiliate of
PCC or any of its Affiliates.
1.4. Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, which are incorporated into this Asset
Purchase Agreement by this reference, as the same may be amended from time to
time in accordance with the terms hereof.
1.5. Asset Sale Companies.
"Asset Sale Companies" shall have the meaning given to it in the Recitals
to this Agreement. The term "Asset Sale Company" shall mean one of the Asset
Sale Companies.
1.6. Asset Sale Non-Signatory Company.
"Asset Sale Non-Signatory Company" shall mean the Asset Sale Company
designated as "Asset Sale Non-Signatory Company" on Schedule 1.5.
2
1.7. Asset Sale Signatory Company.
"Asset Sale Signatory Company" shall mean the Asset Sale Company designated
as "Asset Sale Signatory Company" on Schedule 1.5.
1.8. Assignment and Assumption Agreements.
"Assignment and Assumption Agreements" shall mean the assignment and
assumption agreements substantially in the form of Exhibit B attached hereto.
1.9. Assumed Liabilities.
"Assumed Liabilities" shall mean all Liabilities of the Asset Sale
Companies listed on Schedule 1.9.
1.10. Bills of Sale.
"Bills of Sale" shall mean the bills of sale substantially in the form of
Exhibit C attached hereto.
1.11. Books and Records.
"Books and Records" shall mean the original or true and complete copies of
all of the books and records of the Asset Sale Companies pertaining to the
Purchased Assets, including but not limited to, customer lists, employee records
for those Employees employed by Buyer on or immediately following the Closing
Date, purchase orders and invoices, sales orders and sales order log books,
credit and collection records, plats, drawings and specifications, environmental
and mining reports and studies, correspondence and miscellaneous records with
respect to customers and supply sources, lessors and lessees, maps, core logs,
engineering data, equipment maintenance records and all other general
correspondence, records, books and files owned by any Asset Sale Company, but
excluding any and all Tax Returns, books and records relating to the Retained
Liabilities and corporate records of the Asset Sale Companies.
3
1.12. Business.
"Business" shall mean the coal mining and sale business conducted by the
Asset Sale Companies using the Purchased Assets.
1.13. Buyer.
"Buyer" shall have the meaning given to it in the preamble of this
Agreement.
1.14. Buyer's Affiliates, Successors, Assigns, Lessees or Contractors.
"Buyer's Affiliates, Successors, Assigns, Lessees or Contractors" shall
mean Buyer's Affiliates, Buyer's contractual successors and assigns, and lessees
and contractors who, as part of a contractual arrangement with Buyer or one of
its Affiliates, offer employment to the current or former Employees of an Asset
Sale Company.
1.15. Buyer Closing Certificate.
"Buyer Closing Certificate" shall mean the certificate of Buyer
substantially in the form of Exhibit D attached hereto.
1.16. Buyer's Ultimate Parent.
"Buyer's Ultimate Parent" shall mean Alpha Natural Resources, LLC, a
Delaware limited liability company.
1.17. CERCLA.
"CERCLA" shall have the meaning set forth in Section 1.40 hereof.
1.18. CERCLIS.
"CERCLIS" shall have the meaning set forth in Section 3.8 hereof.
4
1.19. Classified Employee.
"Classified Employee" shall mean any Employee whose employment is governed
by any of the Collective Bargaining Agreements. The term "current and former
Classified Employees" shall mean any Persons who fall within the term Classified
Employee at any time prior to the Closing Date.
1.20. Classified Employee Retiree Medical Plans.
"Classified Employee Retiree Medical Plans" shall mean the Pittston Coal
Group Companies Managed Care Employee Benefit Plan for UMWA Represented
Employees dated April 1, 1999 and the Pittston Coal Group Companies Employee
Benefit Plan for UMWA Represented Employees dated June 21, 1994.
1.21. Classified Employment.
"Classified Employment" shall mean employment, the terms of which are
governed by a collective bargaining agreement between an employer and the UMWA,
including any of the Collective Bargaining Agreements.
1.22. Closing.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement beginning at 10:00 a.m., local time, on the Closing Date, at the
offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia 23219.
1.23. Closing Date.
"Closing Date" shall mean November 30, 2002 or such other date as the
parties may mutually agree in writing.
5
1.24. Coal Act.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of 1992
as amended through the Closing Date (codified at Subtitle J of the Code).
1.25. Coal Inventory.
"Coal Inventory" shall mean the coal stockpile inventory and loaded
shipments in transit to a pier or at a pier owned by the Asset Sale Companies at
the locations listed on Schedule 1.25.
1.26. COBRA.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1986, as amended.
1.27. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate, any predecessor or successor provisions of Law, and all regulations
thereunder.
1.28. Collective Bargaining Agreements.
"Collective Bargaining Agreements" shall mean, collectively, the Agreement
Between the United Mine Workers of America and the Pittston Coal Group Companies
dated January 1, 1999 and the Memorandum of Understanding Regarding New Virginia
Operations dated March 23, 2002, each of which includes (a) any and all employee
benefit plans or programs maintained thereby or incorporated therein; (b) that
certain Settlement Agreement, dated March 20, 1996, in the case UMWA 1974
Pension Trust, et al. v. The Pittston Company, et al., Civil Action No. 88-0969
(TFH)(U.S. District Court for the District of Columbia; (c) any precedential
grievance settlements, arbitration decisions and binding past practices or
customs; and (d) any and all memoranda of understanding, local or district
6
agreements, correspondence and other documents incorporated by reference therein
or attached thereto, including, without limitation, the following:
Memorandum of Understanding Concerning Participation in the United Mine
Workers of America 1974 Pension Plan dated January 1, 1999;
Memorandum of Understanding Regarding McClure River Preparation Plan dated
October 2, 1996;
Agreement Regarding Clinchfield Electrical Crew dated April 5, 1999;
Undated Agreement between Clinchfield Coal Company and Members of Local
7950 (Construction Crew)(regarding pay in lieu of portal);
Clinchfield Agreement Regarding Forestry Department dated March 23, 2000;
Agreement Between Local Union 7950 and Clinchfield Coal Company dated March
23, 2000 (regarding waiver of cumulative 60 day limit as temporary supervisor);
Agreement Regarding Clinchfield Construction Crew dated March 29, 2000;
Agreement dated April 3, 1996 (regarding work performed by the Clinchfield
Central Shop on behalf of non signatory operations of the company);
Agreement Regarding Clinchfield Central Shop dated January 26-27, 1999;
Agreement dated September 10, 1996 (regarding work performed by the
Clinchfield Electrical Line Crew and the Clinchfield Truck Shop on behalf of non
signatory operations of the company);
Agreement dated February 5, 1993 (regarding the staffing of the seniority
units which encompass the operation of Highwall Continuous Mining Machines);
Three letters dated March 23, 2002 between James Spurlock and Daryl
Dewberry; and
7
Seven letters dated January 1, 1999 between James Spurlock and Bruce
Bratten.
"Collective Bargaining Agreements" shall not include the PCO/UMWA
Agreements dated January 1, 1999.
1.29. Contaminated.
"Contaminated" shall mean the presence of one or more Hazardous Substances
in such quantity or concentration as to: (i) violate any Environmental Law; (ii)
require disclosure to any Governmental Authority; (iii) require remediation or
removal; (iv) interfere with or prevent the use of the Real Property or any of
the Purchased Assets as customarily intended; or (v) create any contribution
Liability to fund the clean up of the Real Property.
1.30. Contracts.
"Contracts" shall mean the written contracts, agreements, personal and real
property leases, relationships and commitments, of the Asset Sale Companies
listed on Schedule 1.30.
1.31. Controlled Group.
"Controlled Group" shall have the meaning set forth in Codess.1563.
1.32. Conveyance Deeds.
"Conveyance Deeds" shall mean the deeds substantially in the form of
Exhibit E attached hereto.
1.33. Cooperation Agreement.
"Cooperation Agreement" shall mean the agreement by and among the PCC
Parent, PCC and Buyer substantially in the form of Exhibit F attached hereto.
1.34. CPA Arbitrator.
"CPA Arbitrator" shall have the meaning set forth in Section 2.12 hereof.
8
1.35. D-R Service Agreement.
"D-R Service Agreement" shall mean the agreement by and between Buyer and
PCC, substantially in the form of Exhibit G attached hereto.
1.36. Dispute.
"Dispute" shall have the meaning set forth in Section 10.14 hereof.
1.37. Employee.
"Employee" shall mean any Person (i) employed by and rendering personal
services for an Asset Sale Company, (ii) receiving short-term or long-term
disability benefits from an Asset Sale Company under an Employee Benefit Plan or
(iii) laid-off or on inactive status from an Asset Sale Company. The term
"current and former Employees" shall mean any Persons who fall within the term
Employee at any time prior to the Closing Date.
1.38. Employee Benefit Plans.
"Employee Benefit Plans" shall have the meaning set forth in Section 3.12
hereof.
1.39. Environment.
"Environment" shall mean surface or ground water, water supply, soil or the
ambient air.
1.40. Environmental Laws.
"Environmental Laws" shall mean collectively, all federal, foreign, state,
and local Laws in effect as of the Closing Date that relate to (a) the
prevention, abatement or elimination of pollution, or the protection of the
environment, or of natural resources, including, without limitation, Laws
applicable to coal mining operations or related activities, (b) the generation,
handling, treatment, storage, disposal or transportation of waste materials, (c)
the regulation of or exposure to Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
9
Act, 42 U.S.C.ss.ss.9601 et. seq. ("CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act, as amended, 42
U.S.C.ss.ss.6901 et. seq. ("RCRA"), the Clean Air Act, 42 U.S.C.ss.ss.7401 et.
seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et. seq., the Toxic Substances
Control Act, 15 U.S.C.ss.ss.2601 et. seq., the Emergency Planning and Community
Right to Know Act, 42 U.S.C.ss.ss.11001 et. seq., and any foreign, state,
county, municipal, or local statutes, Laws or ordinances similar or analogous to
the federal statutes listed in this sentence.
1.41. Environmental Matter.
"Environmental Matter" shall mean any assertion of a violation, claim or
directive by any Governmental Authority or any other Person for personal injury,
damage to property or the Environment, nuisance, contamination or other adverse
effects on the Environment, or for damages or restrictions resulting from or
related to (i) the operation of PCC's or its Affiliates' business or any
predecessor or the ownership, use or operation at or on any real property or
other assets owned, operated or leased by PCC or its Affiliates or any
predecessor; or (ii) the existence or the continuation of a Release of, or
exposure to, or the transportation, storage or treatment of any Hazardous
Substance into the Environment from or related to any real property or assets
currently or formerly owned, operated or leased by PCC or its Affiliates or any
activities on or operations thereof.
1.42. Environmental or Response Action.
"Environmental or Response Action" shall mean all actions required (i) to
clean up, remove, treat or in any other way address any Hazardous Substance or
other substance; (ii) to prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Substance or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
10
indoor or outdoor Environment; (iii) to perform pre-remedial studies and
investigations or post-remedial monitoring and care; (iv) to bring facilities on
any real property currently or formerly owned, operated or leased by PCC or its
Affiliates and the facilities located and operations conducted thereon into
compliance with all Environmental Laws and Reclamation Laws and all permits and
other authorizations, and the filing of all notifications and reports required
under any Environmental Laws and Reclamation Laws; or (v) for the purpose of
environmental protection of any real property currently or formerly owned,
operated or leased by PCC or its Affiliates.
1.43. EPA.
"EPA" shall have the meaning set forth in Section 3.8 hereof.
1.44. Equipment.
"Equipment" shall mean the tangible machinery, vehicles, equipment,
furniture, fixtures, furnishings, trailers, tools, parts and other personal
property owned or leased by the Asset Sale Companies listed on Schedules 1.44(a)
and 1.44(b), respectively.
1.45. ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.46. ERISA Affiliates.
"ERISA Affiliates" shall mean any trade or business (whether or not
incorporated) that is part of the same Controlled Group as, or under common
control with, or part of an affiliated service group that includes, PCC and each
of the Asset Sale Companies within the meaning of Section 414(b), (c), (m) or
(o) of the Code.
11
1.47. Fiduciary.
"Fiduciary" shall have the meaning set forth in ERISA ss.3(21)
1.48. Governmental Authority.
"Governmental Authority" shall mean any governmental, judicial,
legislative, executive, administrative or regulatory authority of the United
States, or of any foreign, state or local government or any subdivision, agency,
commission, office, authority or bureau thereof or any quasi-governmental entity
or authority of any nature.
1.49. Hazardous Substances.
"Hazardous Substances" shall mean any substance, chemical, waste, solid,
material, pollutant or contaminant that is defined or listed as hazardous or
toxic under any applicable Environmental Laws. Without limiting the generality
of the foregoing it shall also include any radioactive material, including any
naturally-occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. 2011, et seq., any amendments or authorizations
thereof, any asbestos-containing materials in any form or condition, any
polychlorinated biphenyls in any form or condition, radioactive waste, or
natural gas, natural gas liquids, liquified natural gas, condensate, or
derivatives or byproducts thereof or oil and petroleum products or by products
and constituents thereof.
1.50. Health and Safety Requirements.
"Health and Safety Requirements" shall mean all applicable federal, state,
local and foreign Laws concerning public health and safety and worker health and
safety each as in effect as of the Closing Date, other than Environmental Laws.
12
1.51. HIPAA.
"HIPAA" shall mean the Health Insurance Portability and Accountability Act
of 1996, as amended, and all rules and regulations thereunder.
1.52. Income Tax or Income Taxes.
"Income Tax or "Income Taxes" shall mean any Tax based on or measured by
net income.
1.53. Indemnification and Guaranty Agreement.
"Indemnification and Guaranty Agreement" shall mean the agreement by and
among PCC Parent, PCC, Buyer and Buyer's Ultimate Parent substantially in the
form of Exhibit H attached hereto.
1.54. Independent Surveyor.
"Independent Surveyor" shall have the meaning set forth in Section 2.11(b)
hereof.
1.55. Intellectual Property.
"Intellectual Property" shall mean the trademarks, service marks, patents,
copyrights (including any registrations, applications, licenses or rights
relating to any of the foregoing), technology, logos, trade secrets,
confidential information related to the Purchased Assets, inventions, know-how,
designs, technical data, drawings, customer and supplier lists, pricing and cost
information, or computer programs and processes and all goodwill associated
therewith and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions
owned or licensed or leased by the Asset Sale Companies listed on Schedules
1.55(a) and 1.55(b), respectively.
13
1.56. IRS.
"IRS" shall mean the United States Internal Revenue Service.
1.57. Knowledge of PCC.
"Knowledge of PCC" shall mean, for the individuals listed on Schedule 1.57,
any such individual's actual knowledge and what any such individual should have
known after reasonable inquiry within the scope of that individual's job
responsibilities.
1.58. Law.
"Law" and "Laws" shall mean any applicable United States or foreign,
federal, state, local or other law or governmental requirement of any kind, and
the rules, regulations and orders promulgated thereunder.
1.59. Lien.
"Lien" shall mean any lien, encumbrance, mortgage, charge, claim,
restriction, pledge, security interest or imposition of any kind.
1.60. Liability.
"Liability" shall mean any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), including any
liability for Taxes. Liabilities shall mean one or more items of Liability.
1.61. Material Adverse Effect.
"Material Adverse Effect" shall mean any event, change or occurrence that
individually, or together with any other event, change or occurrence, has a
material adverse impact on the Business, taken as a whole, without regard to the
duration of such material adverse impact.
14
1.62. Medical Plans.
"Medical Plans" shall mean any and all benefit plans that provide medical,
dental and other benefits to current or former Employees sponsored or maintained
by or on behalf of, or for the benefit of, PCC or any Asset Sale Company,
including the Comprehensive Medical Expense Benefits Plan of The Pittston
Company and Its Subsidiaries, the Pittston Coal Group Companies Managed Care
Employee Benefit Plan for UMWA Represented Employees dated April 1, 1999, the
Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented
Employees dated June 21, 1994, and the Pittston Coal Group Companies Employee
Benefit Plan for UMWA Represented Employees dated February 21, 1990.
1.63. Mining Activities.
"Mining Activities" shall mean those activities of the Asset Sale Companies
that have taken place on or through the use of the Purchased Assets that involve
surface, underground and auger mining, processing or transporting of coal and
the handling of coal by-products.
1.64. Mining Data.
"Mining Data" shall have the meaning set forth in Section 3.5(d) hereof.
1.65. Mining Environmental Liabilities.
"Mining Environmental Liabilities" shall mean Liabilities that relate to or
arise from both of the following: (i) any of the Hazardous Substances set forth
on Schedule 1.65 and (ii) an Environmental Matter or Environmental and Response
Action associated with Mining Activities to the extent that such Mining
Activities conformed to industry standard practices at the time such Mining
Activities were conducted.
1.66. MSHA.
"MSHA" shall have the meaning set forth in Section 3.8 hereof.
15
1.67. Multiemployer Plan.
"Multiemployer Plan" shall have the meaning set forth in Section 3.12
hereof.
1.68. Non-Classified Employee.
"Non-Classified Employee" shall mean an Employee, the terms of whose
employment are not or were not, at the time of the determination of the
Employee's status, governed by a collective bargaining agreement, including any
of the Collective Bargaining Agreements.
1.69. Non-Classified Employee Retiree Medical Plan.
"Non-Classified Employee Retiree Medical Plan" shall mean the Comprehensive
Medical Expense Benefits Plan of The Pittston Company and its Subsidiaries.
1.70. Operator.
"Operator" shall have the meaning set forth in Section 3.8 hereof.
1.71. Ordinary Course of Business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.72. OSM.
"OSM" shall have the meaning set forth in Section 3.8 hereof.
1.73. Parts, Fuel and Supplies Inventory.
"Parts, Fuel and Supplies Inventory" shall include the categories of items
listed on Schedule 1.73.
1.74. PBGC.
"PBGC" shall mean the Pension Benefits Guaranty Corporation.
16
1.75. PCC.
"PCC" shall have the meaning given to it in the preamble to this Agreement.
1.76. PCC Bonds.
"PCC Bonds" shall have the meaning set forth in Section 3.9 hereof.
1.77. PCC Closing Certificate.
"PCC Closing Certificate" shall mean the certificate of PCC substantially
in the form of Exhibit I attached hereto.
1.78. PCC Group.
"PCC Group" shall have the meaning set forth in Section 1.95(j) hereof.
1.79. PCC Parent.
"PCC Parent" shall mean The Pittston Company, a Virginia corporation.
1.80. Pension Plans.
"Pension Plans" shall have the meaning set forth in Section 3.12 hereof.
1.81. Permits.
"Permits" shall mean the written permits, licenses, orders, certificates,
registrations, approvals and similar rights held by the Asset Sale Companies
listed on Schedule 1.81.
1.82. Permitted Liens.
"Permitted Liens" shall mean: (i) Liens for property Taxes not due and
payable; (ii) encumbrances that would be apparent in a physical inspection of
the surface of the Real Property; (iii) all instruments of record in the offices
of the Clerk of the Circuit Court for each county where the Real Property is
located; and (iv) those Liens affecting the Purchased Assets that are listed on
Schedule 1.82.
17
1.83. Person.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Authority.
1.84. Post-Closing Period.
"Post-Closing Period" shall mean any taxable period beginning after the
Closing Date.
1.85. Pre-Closing Period.
"Pre-Closing Period" shall mean any taxable period ending on or before the
Closing Date.
1.86. Promissory Note.
"Promissory Note" shall mean the secured promissory note made by Buyer in
favor of PCC determined in accordance with Section 2.11, to be dated as of the
Closing Date, in a form to be agreed upon by the parties hereto.
1.87. Purchase Price.
"Purchase Price" shall mean the cash amount of $8,170,000 (which amount
shall include $880,000 for the Parts, Fuel and Supplies Inventory, $3,180,000
for the Coal Inventory and $110,000 for two continuous miners), plus the
Promissory Note.
1.88. Purchased Assets.
"Purchased Assets" shall mean all right, title and interest in and to the
Coal Inventory, Parts, Fuel and Supplies Inventory, Equipment, Books and
Records, Real Property, Mining Data and Intellectual Property of the Asset Sale
Companies and the rights of the Asset Sale Companies with respect to the
Contracts and the Permits.
18
1.89. Qualified Plans.
"Qualified Plans" shall have the meaning set forth in Section 3.12 hereof.
1.90. RCRA.
"RCRA" shall have the meaning set forth in Section 1.40 hereof.
1.91. Real Property.
"Real Property" shall mean the real property rights and interests owned,
leased or subleased by the Asset Sale Companies and any improvements, fixtures,
easements, rights of way, and other appurtenants thereto (such as appurtenant
rights in and to public streets) that are listed on Schedule 1.91.
1.92. Reclamation Laws.
"Reclamation Laws" shall mean all federal, state and local Laws, as now or
hereafter in effect, relating to coal mining reclamation activities or
Liabilities. For purposes of this definition, "coal mining" shall include, but
not be limited to, any activities defined under the Surface Mining Control and
Reclamation Act of 1977, as amended, as "surface coal mining operations."
1.93. Related Persons.
"Related Persons" shall mean related persons as that term is defined in
Section 9701(c)(2) of the Coal Act, except that it shall not include successors
in interest.
19
1.94. Release.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping or disposing into the
Environment of Hazardous Substances.
1.95. Retained Liabilities.
"Retained Liabilities" shall mean all of the Liabilities of each Asset Sale
Company, other than the Assumed Liabilities, including, without limitation, the
following:
(a) the Liabilities listed on Schedule 1.95(a);
(b) all Liabilities arising under applicable Workers' Compensation
Acts for or based upon the employment of (i) the current and
former Employees of the Asset Sale Companies who are not hired by
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees
or Contractors, and (ii) the current and former Employees of the
Asset Sale Companies who are hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors, but only
with respect to claims where the date of injury or the date of
last injurious exposure occurred prior to the date such Employees
began working for Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors;
(c) all Liabilities arising under the federal black lung Laws for or
based upon the employment of (i) the current and former Employees
of the Asset Sale Companies who are not hired by Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors
and (ii) the current and former Employees of the Asset Sale
Companies who are hired by Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors, to the extent and in
the amounts provided in the federal black lung Laws, but only
until such time as Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors becomes the
responsible operator under the federal black lung Laws for such
Employees;
20
(d) unless such Liabilities are otherwise retained pursuant to
Sections 1.95(j) or 1.95(k) hereof, all Liabilities for medical,
dental, vision, sickness and accident, life, death, accidental
death and dismemberment, and other benefits and expenses covered
under the Medical Plans including related insurance costs or
premiums for or based upon the employment of (i) the current and
former Employees of the Asset Sale Companies who are not hired by
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees
or Contractors, (ii) the current or former Employees of the Asset
Sale Companies who are hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors, but only
with respect to the period prior to the date such Employees began
working for Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors and (iii) in either case, all
such Liabilities under COBRA, HIPAA and other Laws, including all
Liabilities of a Fiduciary for breach of fiduciary duty or any
other failure to act or comply in connection with the
administration of such Medical Plans;
(e) unless such Liabilities are otherwise retained pursuant to
Sections 1.95(j) or 1.95(k) hereof, all Liabilities arising under
or based upon the Employee Benefit Plans sponsored or maintained
by, on behalf of or for the benefit of such Asset Sale Company or
its Employees or in which such Asset Sale Company participated
(other than the UMWA Pension Plans and the Medical Plans),
including all Liabilities arising from or related to the
termination thereof or Liabilities of a Fiduciary for breach of
fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of
any such Employee Benefit Plan;
21
(f) all Liabilities for salaries, wages, bonuses, vacation days,
personal days, contributions, if any, to the UMWA Pension Plans
required under the Collective Bargaining Agreements and similar
forms of leave or compensation for or based upon the employment
of (i) the current and former Employees of the Asset Sale
Companies who are not hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors, and (ii)
the current and former Employees of the Asset Sale Companies who
are hired by Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors, that are accrued, due or earned
up to the date such Employees began working for Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors
and for which such Employees are eligible;
(g) all Liabilities for terminated contract miner performance escrow
amounts (including interest) accrued up to the Closing Date;
(h) all Liabilities for accounts payable for which goods have been
shipped and delivered (whether or not invoiced) or services have
been performed (whether or not invoiced) and related notes, trade
payables and earned royalties, to the extent that an Asset Sale
Company received a benefit before the Closing Date;
(i) all Liabilities for claims of any current or former Employees
pursuant to the WARN Act arising out of acts or omissions of the
Asset Sale Companies prior to and including the Closing Date;
(j) (1) all Liabilities, if any, of any Asset Sale Company and its
Related Persons (collectively, the "PCC Group") under the Coal
Act, and (2) all Liabilities, if any, of the PCC Group under any
post-Closing amendments to the Coal Act for (i) beneficiaries
eligible under the Coal Act who are assigned to a member of the
PCC Group or for whom a member of the PCC Group is required to
22
provide or pay for medical benefits pursuant to Sections 9711 or
9712 of the Coal Act or (ii) death benefit premiums or unassigned
beneficiary premiums (as those terms are used in Sections 9704(c)
and 9704(d) of the Coal Act) for beneficiaries eligible under the
Coal Act, that are assessed against any member of the PCC Group;
provided, for the avoidance of doubt, that the Liabilities
retained pursuant to (1) and (2) above shall not be affected by
Buyer or any of its Affiliates being identified under the Coal
Act or any post-Closing amendments thereto as a successor,
successor in interest or "Related person" under the Coal Act or
any post-Closing amendments thereto to any member of the PCC
Group solely as a result of Buyer's purchase of the Purchased
Assets;
(k) notwithstanding anything in Article VIII to the contrary, all
Liabilities for retiree medical benefits provided through any
Classified Employee Retiree Medical Plan maintained pursuant to
any of the Collective Bargaining Agreements in which such Asset
Sale Signatory Company participates as of the Closing Date for
(i) the current and former Classified Employees (and their
eligible dependents and beneficiaries) of the Asset Sale
Signatory Company who, as of the Closing Date, have retired and
are receiving benefits from any such Classified Employee Retiree
Medical Plan, (ii) the current and former Classified Employees
(and their eligible dependents and beneficiaries) of the Asset
Sale Signatory Company who, based on age, service, and/or
disability, satisfy the eligibility criteria in any such
Classified Employee Retiree Medical Plan to receive retiree
health benefits and whose last signatory Classified Employment is
with the Asset Sale Signatory Company, (iii) the current and
former Classified Employees listed on Schedule 1.95(k)(1) (and
their eligible dependents and beneficiaries) who (1) are recalled
or hired after the Closing Date by Buyer or one of Buyer's
23
Affiliates, Successors, Assigns, Lessees or Contractors pursuant
to or as a result of any of the Collective Bargaining Agreements
to work at the Purchased Assets listed on Schedule 1.95(k)(2),
(2) based on age, service, and/or disability, satisfy the
eligibility criteria in any such Classified Employee Retiree
Medical Plan to receive retiree health benefits and (3) whose
last signatory Classified Employment is with Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors;
and (iv) the current and former Classified Employees listed on
Schedule 1.95(k)(3) (and their eligible dependents and
beneficiaries) who (1) are recalled or hired between the Closing
Date and December 31, 2003 by Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors pursuant to or as a
result of any of the Collective Bargaining Agreements to work at
the Purchased Assets listed on Schedule 1.95(k)(2), (2) based on
age, service and/or disability effective as of December 31, 2003
(but excluding any individuals who meet the disability criteria
as a result of having incurred the disability after being
employed by Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors) satisfy the eligibility criteria
in any Classified Employee Retiree Medical Plan to receive
retiree health benefits and (3) whose last signatory Classified
Employment is with Buyer, or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors, provided, however,
that PCC shall not retain Liabilities pursuant to (iii) and (iv)
above with respect to (A) any Employee listed on Schedule
1.95(k)(1) or Schedule 1.95(k)(3) who works for an employer other
than Buyer or one of Buyer's Affiliates, Successors, Assigns,
Lessees or Contractors, that is signatory to a collective
bargaining agreement with the UMWA, between the time the Employee
last worked for the Asset Sale Signatory Company and is recalled
24
or hired by Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors or (B) any Employee who is listed
on Schedule 1.95(k)(1) or Schedule 1.95(k)(3) (and their eligible
dependents and beneficiaries) where, at Lessees or Contractors,
the total number of Classified Employees working at the Purchased
Assets listed on Schedule 1.95(k)(2) exceeds 273 (the "273
Threshold"); and provided further that the Liabilities described
in (iii) and (iv) above shall exist regardless of when such
Classified Employees actually retire or seek to receive retiree
health benefits, and shall continue for so long as Buyer or one
of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors would be obligated to provide those benefits but for
the terms of this Agreement;
(l) all Liabilities, if any, of such Asset Sale Companies for retiree
medical benefits with respect to Non-Classified Employees of such
Asset Sale Company (and their eligible dependents and
beneficiaries) who, on or prior to the Closing Date, satisfy the
requirements for retiree medical benefits under any
Non-Classified Employee Retiree Medical Plan in which such Asset
Sale Company participates;
(m) all Liabilities relating to assets held in trust under any
Qualified Plan sponsored or maintained by, on behalf of or for
the benefit of such Asset Sale Company or its current or former
Employees or in which such Asset Sale Company participates (other
than the UMWA Pension Plans) arising or relating to the period
prior to the Closing Date;
(n) all Liabilities with respect to withdrawal by the Asset Sale
Companies or their Affiliates, if any, from the UMWA Pension
Plans or any other Multiemployer Plan;
25
(o) all inter-company indebtedness owed by any Asset Sale Company to
the PCC Parent or any of the PCC Parent's Affiliates;
(p) all Liabilities arising out of or in connection with compliance
prior to the Closing Date with Health and Safety Requirements
pertaining to the Purchased Assets, and all Liabilities arising
out of or in connection with compliance with all Laws relating to
equal employment opportunity, employment, or labor relations
concerning the employment of any Employee by the Asset Sale
Companies, or relating to any other action taken or not taken by
the Asset Sale Companies concerning (i) the current and former
Employees of the Asset Sale Companies who are not hired by Buyer
or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors, and (ii) the current and former Employees of the
Asset Sale Companies who are hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors, but only
with respect to matters arising out of the employment of such
Employees by the Asset Sale Companies;
(q) except as set forth on Schedule 1.9, all Liabilities for the
claims, legal actions, suits, litigation, arbitrations,
grievances, disputes or investigations listed on Schedules
3.5(c), 3.8 and 3.11;
(r) all Liabilities of any of the Asset Sale Companies for unpaid
Taxes with respect to any Tax year or portion thereof ending on
or before the Closing Date or for any Tax year beginning before
and ending after the Closing Date to the extent allocable to the
portion of such period beginning before and ending on the Closing
Date (to the extent of any inconsistencies with Article VII
hereof, Article VII shall be controlling);
26
(s) all amounts payable as the result of the consummation of the
transactions contemplated by this Agreement that arise due to any
change of control provision of any Contract other than those
Contracts listed on Schedule 5.4(b);
(t) all Liabilities of any of the Asset Sale Companies for the unpaid
Taxes of any Person (including PCC and its subsidiaries) under
Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise;
(u) all Liabilities for any Environmental Matter or Environmental or
Response Action related to real property or any other asset
owned, operated or leased by PCC or any of its Affiliates that is
not a Purchased Asset (except to the extent otherwise provided in
the D-R Service Agreement or any other agreement entered into
contemporaneously with this Agreement pursuant to which
reclamation and other services are to be performed on PCC's or
its Affiliates' idle properties);
(v) all Liabilities for any Environmental Matter or Environmental or
Response Action (other than Mining Environmental Liabilities) to
the extent the underlying claim relates to or arises from any
activity on or through the use of the Purchased Assets and is
attributable to acts or omissions occurring at or prior to the
Closing;
(w) all Liabilities of PCC that become a Liability of Buyer under any
bulk transfer Law of any jurisdiction;
(x) all Liabilities under the Collective Bargaining Agreements that
do not pertain to or arise out of any Asset Sale Signatory
Company's ownership of the Purchased Assets;
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(y) all Liabilities under the contracts, agreements, personal and
real property leases, relationships and commitments of the Asset
Sale Companies listed on Schedule 1.95(y); and
(z) all Liabilities related to Equipment retained by PCC and the
Asset Sale Companies after the Closing Date but included within
the Equipment leases listed in Schedule 5.4(b).
1.96. Security Agreement.
"Security Agreement" shall mean the Security Agreement between Buyer and
PCC, to be dated as of the Closing Date, in a form to be agreed upon by the
parties hereto.
1.97. SMCRA.
"SMCRA" shall have the meaning set forth in Section 3.8 hereof.
1.98. Straddle Period.
"Straddle Period" shall mean any taxable period covering days before and
after the Closing Date.
1.99. Tax or Taxes.
"Tax" or "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
custom duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, reclamation fees or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, but shall not
include, for purposes of this Agreement only, Liabilities under the Coal Act, of
whatever nature and regardless of how denominated.
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1.100. Tax Return.
"Tax Return" shall mean any original or amended report, return,
declaration, claim for refund, statement, document, schedule, attachment or
other information supplied or required to be supplied to a Governmental
Authority with respect to Taxes, including any return of an affiliated, combined
or unitary group.
1.101. UMWA.
"UMWA" shall mean the International Union, United Mine Workers of America,
including its district and local unions.
1.102. UMWA Pension Plans.
"UMWA Pension Plans" shall mean the United Mine Workers of America 1950 and
1974 Pension Plans and Trusts.
1.103. VDEQ.
"VDEQ" shall have the meaning set forth in Section 3.8 hereof.
1.104. VDMME.
"VDMME" shall have the meaning set forth in Section 3.8 hereof.
1.105. WARN Act.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended.
1.106. Welfare Plans.
"Welfare Plans" shall have the meaning set forth in Section 3.12 hereof.
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1.107. Workers' Compensation Acts.
"Workers' Compensation Acts" shall mean Laws that provide for awards to
employees and their dependents for employment-related accidents and diseases.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets.
On the Closing Date, PCC (on behalf of the Asset Sale Companies) shall
cause to be sold, conveyed, transferred, assigned, and delivered to Buyer, and
Buyer shall acquire, the Purchased Assets. At the Closing, subject to the terms
and conditions of this Agreement, PCC agrees to: (i) cause title to the
Purchased Assets to be transferred and delivered to Buyer; and (ii) perform its
obligations under this Agreement to be performed at or before Closing. In full
payment for the Purchased Assets, Buyer shall: (i) assume the Assumed
Liabilities; (ii) pay to PCC (which shall receive such amounts on behalf of the
Asset Sale Companies) the Purchase Price by wire transfer of cash or other
immediately available funds and execute and deliver to PCC the Promissory Note;
and (iii) perform its obligations under this Agreement to be performed at or
before Closing. Buyer shall not assume or have any responsibility with respect
to any Liability of PCC Parent, PCC, the PCC Group or the Asset Sale Companies
that is not an Assumed Liability.
2.2. Bills of Sale, Assignment and Assumption Agreements, Conveyance Deeds
and Other Documents.
At the Closing, PCC shall cause each of the Asset Sale Companies to: (i)
execute and deliver to Buyer the Bills of Sale, the Assignment and Assumption
Agreements, the Conveyance Deeds and such other documents as may be necessary to
convey to Buyer the Purchased Assets; and (ii) perform its obligations under the
Agreement to be performed at or before the Closing.
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2.3. Assumption of Liabilities.
At the Closing, Buyer shall execute and deliver to PCC the Assignment and
Assumption Agreements and such other documents and instruments as may be
necessary for Buyer to assume all of the Assumed Liabilities. Buyer shall not
assume or have any responsibility, however, with respect to any Liability of PCC
Parent, PCC, the PCC Group or the Asset Sale Companies that is not an Assumed
Liability.
2.4. Proration of Liabilities.
PCC and Buyer shall cooperate with each other to provide for payments due
with respect to the Assumed Liabilities and the Retained Liabilities during the
payment period in which the Closing occurs with all such Liabilities prorated as
of the Closing Date, if applicable.
2.5. Indemnification and Guaranty Agreement.
At the Closing, PCC, PCC Parent, Buyer's Ultimate Parent and Buyer shall
execute and deliver the Indemnification and Guaranty Agreement.
2.6. Cooperation Agreement.
At the Closing, PCC and Buyer shall, and PCC shall cause PCC Parent to,
execute and deliver the Cooperation Agreement pursuant to which Buyer, PCC
Parent and PCC shall provide each other certain information and other assistance
in connection with the collection, administration and/or satisfaction of certain
of the Retained Liabilities.
2.7. Administrative Services Agreement.
At the Closing, PCC and Buyer shall execute and deliver the Administrative
Services Agreement pursuant to which PCC or one of its Affiliates will provide
certain services to Buyer and the Asset Sale Companies for a transition period.
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2.8. D-R Service Agreement.
At the Closing, PCC and Buyer shall execute and deliver the D-R Service
Agreement pursuant to which Buyer will cause one of its Affiliates to perform
reclamation and other services on idle properties.
2.9. Security Agreement.
At the Closing, in order to secure Buyer's obligations under the Promissory
Note, PCC and Buyer shall execute and deliver the Security Agreement.
2.10. Additional Documents.
At the Closing, PCC and Buyer shall, and PCC shall cause the Asset Sale
Companies to, execute and deliver all such other documents or instruments
necessary or appropriate to effect the transactions contemplated by this
Agreement, including the documents provided in Section 5.6 hereof and in this
Article II.
2.11. Coal Inventory Adjustment.
(a) In accordance with the provisions of this Section 2.11, Buyer
shall pay PCC the amount, if any, by which the value of the Coal
Inventory (as calculated in accordance with Sections 2.11(b)) is
finally determined to be greater than $3,180,000. Such payment
shall constitute an adjustment to the Purchase Price and shall be
paid by fixing the face amount of the Promissory Note within one
business day after the completion of the procedures contemplated
in Sections 2.11(b).
(b) No later than three days before the Closing Date, the parties
will agree upon the density of the various stockpiles that
constitute the Coal Inventory. No later than two business days
prior to the Closing Date, PCC and Buyer shall cause PennTree
Engineering (the "Independent Surveyor") to prepare and deliver
to each of them a survey of all Coal Inventory of the Asset Sale
32
Companies as of the Closing, which survey shall be conducted in
accordance with the principles set forth on and shall be in
substantially the format attached hereto as part of Schedule
2.11(b). PCC and Buyer shall, and shall cause their respective
Affiliates to, cooperate with and make available any information
reasonably requested by the Independent Surveyor in its
preparation of its survey of the Coal Inventory. All
determinations made by the Independent Surveyor in its survey of
the Coal Inventory shall be final, binding and conclusive on the
parties. PCC and Buyer shall each bear fifty percent of the fees
and costs of the Independent Surveyor and any other third party
incurred in connection with the calculation of the Coal Inventory
pursuant to this Section 2.11(b).
2.12. Allocation of Purchase Price and Assumed Liabilities.
The Purchase Price and the Assumed Liabilities (to the extent they
constitute part of the amount realized for federal Income Tax purposes) shall be
allocated among the Purchased Assets in accordance with a schedule to be agreed
upon by Buyer and PCC after the Closing Date. Buyer shall prepare such
allocation schedule and deliver it to PCC upon a date to be agreed upon between
the parties, which date shall be no later than 60 days after the Closing Date.
PCC shall be deemed to agree with such allocation schedule unless, within ten
(10) days after the date PCC receives the allocation schedule from Buyer, PCC
notifies Buyer in writing of (i) each allocation with which it disagrees and
(ii) for each such allocation, the amount that PCC proposes to allocate. If PCC
provides such notice to Buyer, the parties shall proceed in good faith to
resolve mutually the disputed allocation amounts within fifteen (15) days after
the date on which PCC notifies Buyer of a disagreement with Buyer's proposed
allocation. If PCC and Buyer cannot resolve any such differences, the parties
agree to submit such differences to arbitration in Abingdon, Virginia, by the
33
accounting firm of Deloitte & Touche, LLP or another accounting firm mutually
acceptable to both parties (the "CPA Arbitrator") to resolve such differences.
The CPA Arbitrator shall make such review and examination of the relevant facts
and documents as the CPA Arbitrator deems appropriate and shall permit each of
Buyer and PCC to make a written presentation of their respective positions.
Within forty-five (45) days after submission of such dispute by both parties,
the CPA Arbitrator shall resolve such dispute in writing and shall prepare and
deliver its decision, which shall (i) be based upon a determination of the fair
market value of the Purchased Assets, (ii) defer to valuations that have been
prepared in accordance with generally accepted valuation techniques absent
manifest error, (iii) be final and binding upon the parties without further
recourse or collateral attack and (iv) accept either Buyer's or PCC's position
in its entirety. The party whose position is not accepted by the CPA Arbitrator
shall pay all fees and costs of such CPA Arbitrator to arbitrate such dispute.
The allocation schedule shall include, at a minimum, information necessary to
complete Part II of IRS Form 8594. The allocation to the Purchased Assets is
intended to comply with the requirements of Section 1060 of the Code. The
parties shall cooperate to comply with all substantive and procedural
requirements of Section 1060, and except for any adjustment to the Purchase
Price hereunder, after the completion and agreement by the parties to the
allocation schedule, such allocation schedule shall be adjusted only if and to
the extent necessary to comply with such requirements of Section 1060. Buyer and
PCC agree that they will not take nor will they permit any Affiliate to take,
for Income Tax purposes, any position inconsistent with such allocation schedule
to the Purchased Assets; provided, however, that (i) Buyer's cost for the
Purchased Assets may differ from the total amount allocated hereunder to reflect
the inclusion in the total cost of items (for example, capitalized acquisition
34
costs) not included in the total amount so allocated and (ii) the amount
realized by the Asset Sale Companies may differ from the total amount allocated
hereunder to reflect transaction costs that reduce the amount realized for
federal Income Tax purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PCC
PCC hereby represents and warrants to Buyer that the statements
contained in this Article III are correct and complete, except as set forth in
the Schedules delivered by PCC to Buyer in connection with this Agreement. The
Schedules are arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article III.
3.1. Incorporation.
PCC and each of the Asset Sale Companies are corporations duly organized,
validly existing and in good standing under the Laws of the respective state or
commonwealth of each such company's incorporation. PCC and each of the Asset
Sale Companies that is not a corporation incorporated under the Laws of Virginia
are duly qualified or licensed to transact business as a foreign corporation in
Virginia and are in good standing under the laws of Virginia. Set forth on
Schedule 3.1 is the name of each state or other jurisdiction in which each such
company has either paid taxes or had an office in the three years prior to the
date of this Agreement.
3.2. Execution, Delivery and Performance.
The execution, delivery and performance by PCC of this Agreement and by PCC
and the applicable Asset Sale Company of each other agreement or instrument to
which it is a party executed in connection herewith or delivered pursuant hereto
and the consummation of the transactions contemplated herein and therein will
not, with or without the giving of notice or the passage of time, or both: (i)
conflict with, or result in a violation or breach of, or a default, right to
35
accelerate, right to exercise any remedy or loss of rights under, or result in
the creation of any Lien (other than Permitted Liens) under or pursuant to, any
provision of PCC's or any Asset Sale Company's Articles of Incorporation or
Bylaws or of any material franchise, mortgage, deed of trust, Lien, lease,
license, instrument, agreement, consent, approval, waiver or understanding to
which PCC or any Asset Sale Company is a party or by which any Asset Sale
Company is bound, or any Law or any order, judgment, writ, injunction or decree
to which PCC or any Asset Sale Company is a party or by which PCC, any Asset
Sale Company or the Purchased Assets may be bound or affected; (ii) require the
approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or, except as set forth on Schedule
1.81, contravene, conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel or terminate any authorization or Permit issued by a
Governmental Authority that is held by PCC or the Asset Sale Companies or that
otherwise relates to the Purchased Assets; or (iii) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under any Law
to which PCC or any Asset Sale Company is subject.
3.3. Authorization.
PCC has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder and each of PCC and the Asset Sale
Companies has full power and authority to enter into and deliver each other
agreement or instrument to which it is a party executed in connection herewith
and delivered pursuant hereto and to perform its obligations thereunder. PCC's
execution, delivery and performance of this Agreement and the execution,
delivery and performance of all other agreements and instruments by PCC and each
of the Asset Sale Companies in connection herewith and delivered pursuant hereto
and the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of PCC and each of the Asset Sale
Companies. This Agreement and all other agreements or instruments executed by
PCC or any of the Asset Sale Companies in connection herewith and delivered by
PCC or any of the Asset Sale Companies pursuant hereto have been duly executed
and delivered by PCC or such Asset Sale Companies and this Agreement and all
other agreements and instruments executed by PCC or any of the Asset Sale
36
Companies in connection herewith and delivered by PCC or any of the Asset Sale
Companies pursuant hereto constitute the legal, valid and binding obligation of
PCC or such Asset Sale Company, as the case may be, enforceable in accordance
with their respective terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally the
enforcement of creditors' rights).
3.4. Absence of Changes.
Except as contemplated by this Agreement, since December 31, 2001, none of
the Asset Sale Companies has, with respect to the Purchased Assets:
(a) borrowed or agreed to borrow any funds or incurred, or become
subject to, any Liability, or issued any note, bond or other debt
security, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation, except Liabilities incurred in the
Ordinary Course of Business, none of which would reasonably be
expected to result in an impact greater than $100,000;
(b) paid any Liability other than current Liabilities in the Ordinary
Course of Business;
37
(c) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of any of the Equipment or Real
Property, or, other than in the Ordinary Course of Business, any
other Purchased Assets, or canceled or otherwise terminated, or
agreed to cancel or otherwise terminate, other than in the
Ordinary Course of Business, any Permits;
(d) except in the Ordinary Course of Business, entered into any
agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) or made or permitted
any material amendment to or termination, acceleration,
modification or cancellation of any Contract or breached any
provision of any Contract;
(e) merged or consolidated with any other Person;
(f) mortgaged, pledged or subjected to any Lien any of its assets or
properties, other than Permitted Liens;
(g) made any capital expenditure (or series of related capital
expenditures) either (x) involving more than $100,000 or (y)
outside the Ordinary Course of Business;
(h) made any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other Person (or series of
related capital investments, loans and acquisitions) either (x)
involving $100,000 or (y) outside the Ordinary Course of
Business;
(i) delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
38
(j) cancelled, compromised, waived or released any right or claim (or
series of related rights and claims) either (x) involving more
than $100,000 or (y) outside the Ordinary Course of Business;
(k) made any loan to, or entered into any other transaction with, any
of the directors, officers and employees of such Asset Sale
Company outside the Ordinary Course of Business;
(l) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing
such contract;
(m) except in the Ordinary Course of Business adopted, amended,
modified or terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the benefit
of any of the directors, officers and Employees of the Asset Sale
Companies, or taken any such action with respect to any other
Employee Benefit Plan;
(n) made any other change in employment terms for any of the
directors, officers and Employees of the Asset Sale Companies
outside the Ordinary Course of Business;
(o) suffered any damage, destruction or loss, whether or not covered
by insurance, that has had or would reasonably be expected to
have a Material Adverse Effect;
(p) implemented or adopted any change in its accounting methods or
principles or the application thereof; or
(q) entered into any agreement, arrangement or understanding with
respect to any of the foregoing.
39
3.5. Real Property.
(a) PCC has made available to Buyer all deeds, leases, bills of sale,
documents of title, abstracts, surveys, plats and maps in the
possession of the Asset Sale Companies or their Affiliates that
relate to the Real Property. With respect to the Real Property:
(i) the Asset Sale Companies have marketable title to the owned
Real Property, taken as a whole, and the Real Property is
free and clear of any Lien (other than Permitted Liens);
(ii) there are no pending or, to the Knowledge of PCC, threatened
condemnation proceedings, lawsuits, or administrative
actions relating to the Real Property;
(iii) the legal description for the parcels contained in the deed
thereof describes such parcel fully and adequately, and the
buildings and improvements are located within the boundary
lines of the described parcels of land;
(iv) none of the Asset Sale Companies have been notified that any
buildings or improvements located on the Real Property are
in violation of applicable zoning laws and ordinances; and
(v) there are no outstanding options or rights of first refusal
to purchase the parcel of Real Property, or any portion
thereof or interest therein.
(b) Schedule 1.91 identifies the coal leases, coal subleases and
surface leases that comprise a portion of the Real Property. PCC
has made available to Buyer all coal leases, coal subleases and
surface leases listed on Schedule 1.91. With respect to each such
lease and sublease:
40
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(ii) except for the consents set forth on Schedule 3.10(c) that
are required to be obtained and the notices given, the lease
or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred
to above);
(iii) no Asset Sale Company nor, to the Knowledge of PCC, any
other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration
thereunder;
(iv) no Asset Sale Company nor, to the Knowledge of PCC, any
other party to the lease or sublease has repudiated any
provision thereof; and
(v) none of the Asset Sale Companies has assigned, transferred,
conveyed or subjected to a Lien any interest in the
leasehold or subleasehold, other than those created pursuant
to the terms of that lease or sublease.
(c) There is not any third party adverse claim to any of the Real
Property, other than Permitted Liens, and, to the Knowledge of
PCC, no party is in wrongful possession of any parcel of the Real
Property.
(d) PCC has made available to Buyer geological data, reserve data,
mine maps, core hole logs and associated data, coal measurements,
coal samples, lithologic data, coal reserve calculations or
reports, washability analyses or reports, mine plans, mining
41
permit applications and supporting data, engineering studies and
all other information, maps, reports and data in the possession
of the Asset Sale Companies and relating to or affecting the Real
Property, including the coal reserves, coal ownership, coal
leases to the Asset Sale Companies, coal leases from the Asset
Sale Companies to third parties, mining conditions, mines, and
mining plans of the Asset Sale Companies as prepared and utilized
by the Asset Sale Companies in their day to day Mining Activities
(collectively, the "Mining Data"). NOTWITHSTANDING ANYTHING IN
THIS AGREEMENT TO THE CONTRARY, BUYER ACCEPTS THE ASSET SALE
COMPANIES' COAL RESERVES IN OR UNDER THE REAL PROPERTY, AS IS,
WHERE IS, TOGETHER WITH THE MINING DATA, FREE OF ANY WARRANTY
(EXPRESS OR IMPLIED) WITH REGARD TO THE MINEABILITY, WASHABILITY,
RECOVERABILITY, VOLUME, OR QUANTITY OR QUALITY OF ANY COAL
RESERVE. The coal reserves mined by the Asset Sale Companies
(whether such reserves are owned or leased by the Asset Sale
Companies) are not subject to any mining rights of any other
Person.
3.6. Purchased Assets.
(a) The Asset Sale Companies (i) own good and transferable title to
all of the Purchased Assets, other than Real Property, free and
clear of all Liens and restrictions on transfer, other than
Permitted Liens or (ii) lease such Purchased Assets under a valid
and enforceable lease (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights). No
rights of the Asset Sale Companies under such leases have been
assigned or otherwise transferred as security for any obligation
of the Asset Sale Companies. The consummation of the transactions
42
contemplated by this Agreement will not create or constitute,
either with or without notice or the passage of time a default or
event of default under any such lease or require the consent of
any other party to such lease in order to avoid a default or
event of default.
(b) Except for the items set forth on Schedule 1.95(y), the Purchased
Assets include all tangible and intangible assets owned by the
Asset Sale Companies and used in the Business.
(c) The Equipment that is currently in use has been maintained in
accordance with normal industry practice and is suitable for the
purposes for which the Asset Sale Companies are presently using
such Equipment.
(d) The value of the Parts, Fuel and Supplies Inventory as of the
Closing Date shall be at least $880,000.
3.7. Intellectual Property.
No third party has asserted any interest in the Intellectual Property, nor
has any third party alleged that any Asset Sale Company has infringed on any
Intellectual Property of any third party. To the Knowledge of PCC, none of the
Asset Sale Companies interferes with, infringes upon, misappropriates, or
otherwise comes into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of the Business as presently
conducted.
3.8. Permits and Environmental Compliance.
(a) Each Asset Sale Company is in material compliance with all
Environmental Laws related to the Purchased Assets. Neither PCC
nor any Asset Sale Company (such Persons being hereafter referred
to in this Section 3.8 as "Operators") has been notified by any
43
Governmental Authority of any current, alleged or unresolved
violation of any Environmental Laws applicable to Mining
Activities, including any investigatory, remedial or corrective
obligations, that would result in (i) closure, suspension or
restriction of any mine or mining-related activity on the Real
Property, (ii) revocation or suspension of any license or
Permits, or (iii) exposure of Buyer to the imposition of any
fines or other civil or criminal monetary penalty in excess of
$5,000. The Permits include all material permits, licenses,
franchises and other authorizations necessary to conduct the
Mining Activities as currently conducted and the Asset Sale
Companies are in material compliance with all such Permits. No
such Permit is the subject of any proceeding by or in front of
any Governmental Authority that might affect its validity and no
such proceeding is pending or, to the Knowledge of PCC,
threatened.
(b) PCC has made available to Buyer true and complete copies of (i)
the Permits, (ii) all of the mining permits and other permits
held by each Operator pertaining to the Purchased Assets,
together with a description of the permitted property or
facility, the amount of the bond for each such Permit and the
surety for each such bond or manner in which each such bond has
otherwise been posted, (iii) all other licenses, franchises,
certificates, concessions and other governmental approvals and
authorizations held by each Operator pertaining to the Purchased
Assets, as amended, supplemented and modified through the date
hereof, and (iv) any and all pending applications for additional
mining permits and other licenses and authorizations that have
been submitted to any governmental agency by an Operator
pertaining to the Purchased Assets or are in the process of
development either in-house or through consultants.
44
(c) Schedule 3.8 includes a true and complete list of all of the
citations, notices of non-compliance and notices of violation
received by each Operator with respect to the Purchased Assets
from the Virginia Department of Mines, Minerals and Energy
("VDMME"), the Virginia Department of Environmental Quality
("VDEQ"), the federal Environmental Protection Agency ("EPA"),
the federal Office of Surface Mining ("OSM"), the federal Mine
Safety and Health Administration ("MSHA"), or any other
Governmental Authority that remain outstanding. No Operator is
subject to any cessation orders, cease and desist orders, closure
orders or show cause orders issued by VDMME, VDEQ, EPA, OSM,
MSHA, or any such other Governmental Authority with respect to
the Purchased Assets.
(d) With respect to the Purchased Assets, each Operator is in
material compliance with all of the requirements of the Surface
Mining Control and Reclamation Act of 1977 ("SMCRA"), the Federal
Mine Safety and Health Act of 1977, as amended, all similar
statutes of the Commonwealth of Virginia, and all rules and
regulations promulgated under those Acts and statutes by OSM,
MSHA, VDMME, VDEQ and any other Governmental Authority. With
respect to the Purchased Assets, no Operator has been subjected
to any bond forfeiture, permit suspension or revocation, or
similar effort and proceedings instituted by OSM, VDMME or any
other Governmental Authority.
(e) To the Knowledge of PCC, after the Closing, Buyer will not be
liable for any fines, penalties, fees, Taxes or other
governmental charges assessed with respect to notices of
violation, cessation orders, closure orders, show cause orders or
other governmental enforcement actions issued prior to Closing
with respect to the Purchased Assets. Neither this Agreement nor
the consummation of the transactions that are the subject of this
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Agreement will result in any Buyer Liabilities for site
investigation or cleanup, or notification to or consent of any
Governmental Agency or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property
transfer" Environmental Laws. The representation in the previous
sentence does not relate to any matters for which Buyer has the
responsibility, pursuant to this Agreement, to notify any
Governmental Authority or to otherwise process with any
Governmental Authority in connection with the transfer of any
Permit.
(f) None of the Purchased Assets is identified on (i) the current or
proposed National Priorities List under 40 C.F.R. ss. 300, (ii)
the Comprehensive Environmental Response, Compensation and
Liability Inventory System ("CERCLIS") list, or (iii) any list
arising from a federal, state or local statute similar to CERCLA.
To the Knowledge of PCC, the Real Property is not Contaminated
with any Hazardous Substance.
(g) (A) None of the Purchased Assets has been or is being used in any
manner associated with the production, manufacture, processing,
generation, storage, treatment, disposal, management, shipment or
transportation of Hazardous Substances and no such Purchased
Assets are Contaminated by any Hazardous Substance; (B) there are
no underground storage tanks regulated pursuant to RCRAss. 9001
(42 U.S.C. ss. 6991) or equivalent authorized state program, and
no above ground storage tanks, located at, on, in or under the
Purchased Assets; (C) there is no asbestos-containing material in
any form or condition located at, on, in or under the Purchased
Assets; (D) there are no materials or equipment containing
polychlorinated biphenyls located at, on, in or under the
Purchased Assets, (E) there are no landfills or other areas
located at, on, in or under the Purchased Assets where Hazardous
Substances have been disposed, and (F) neither PCC nor any Asset
46
Sale Company has disposed of any Hazardous Substance at any
offsite disposal area located on the property of any other
Person, other than a facility permitted by any Governmental
Authority with jurisdiction to receive such Hazardous Substance.
(h) No Asset Sale Company has, with respect to the Purchased Assets,
either expressly or by operation of Law, assumed or undertaken
any Liability, including without limitation, any Liability for
corrective or remedial action, of any other Person relating to
any Environmental Laws.
(i) To the Knowledge of PCC, no conditions existing as of the Closing
Date and relating to the Purchased Assets or the activities of
the Asset Sale Companies or any of their respective predecessors
or Affiliates will prevent or materially hinder Buyer's
compliance with Environmental Laws, require Buyer to undertake
any investigatory, remedial or corrective actions pursuant to
Environmental Laws or impose upon Buyer any other Liabilities
pursuant to Environmental Laws, including without limitation, any
Environmental Laws relating to onsite or offsite releases or
threatened releases of Hazardous Substances or imposing Liability
for personal injury, property damage or natural resource damage.
3.9. Reclamation Bonds.
Schedule 3.9 contains a list of all bonds, including guaranties,
indemnities, letters of credit and other forms of surety, posted by and/or for
the benefit of the Asset Sale Companies to secure the performance of their
respective reclamation or other Liabilities pursuant to, in connection with or
as a condition of, the Permits (collectively, the "PCC Bonds"). The PCC Bonds
are sufficient to permit the Asset Sale Companies and their Affiliates to
conduct the Mining Activities in compliance with Laws and are in full force and
effect.
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3.10. Contracts.
(a) PCC has made available to Buyer copies of all of the written
Contracts, or a written summary setting forth the terms and
conditions where no copies exist, including all amendments,
modifications, waivers and elections applicable thereto.
(b) As to the Asset Sale Companies party thereto: (i) the Contracts
are valid and binding, enforceable in accordance with their
respective terms (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights), and
are in full force and effect; (ii) the consummation of the
transactions contemplated herein will not, with or without the
giving of notice or the passage of time, or both, conflict with,
or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under
the Contracts; (iii) no Asset Sale Company, nor to the Knowledge
of PCC, any other party is in material breach or default, and no
event has occurred that, with notice or lapse of time, would
constitute a breach or default, or permit termination,
modification or acceleration, under the Contracts; and (iv) no
Asset Sale Company, nor to the Knowledge of PCC, any other party
has repudiated any provision of the Contracts.
(c) Schedule 3.10(c) sets forth the consents and approvals of third
parties and Governmental Authorities required to be obtained as a
result of the transactions contemplated by this Agreement.
3.11. Litigation; Claims.
(a) Schedules 3.5(c), 3.8 and 3.11 list all claims, legal actions,
suits, litigation, arbitrations, disputes, investigations,
proceedings by or before any Governmental Authority involving
more than $100,000 and all orders, decrees or judgments, now
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pending or in effect, or, to the Knowledge of PCC, threatened or
contemplated, against or affecting the Asset Sale Companies, the
Purchased Assets, or the consummation of the transactions
contemplated by this Agreement, except to the extent involving
Taxes for Pre-Closing Periods. Schedule 3.11 also lists all
grievances and arbitrations that are pending against the Asset
Sale Signatory Company as of the Closing Date.
(b) There are no existing claims by or disputes involving more than
$100,000 with Persons owning or occupying lands or realty
adjoining or near any of the Real Property regarding Mining
Activities by the Asset Sale Companies or regarding the location
of boundary lines, encroachments, mineral rights, subsidence,
water quantity or quality, blasting damage, transportation of
coal or other materials, nuisances or any other similar matter.
3.12. Employee Benefits.
(a) Schedule 3.12(a) contains a list of all "employee benefit plans"
(as defined in Section 3(3) of ERISA) and all other employee
benefit plans, programs or arrangements, including each severance
pay, bonus, deferred compensation, incentive compensation, stock
purchase, stock option or other equity-based compensation, death
benefit, group insurance, hospitalization or other medical,
dental, health, life (including all individual life insurance
policies as to which any of the Asset Sale Companies is the
owner, beneficiary or both), disability or other insurance, Code
Section 125 "cafeteria" or "flexible" benefit plan, pension,
savings, profit-sharing or retirement plan, program or
arrangement: (i) under which Employees or former Employees are
entitled to participate by reason of their employment with any of
the Asset Sale Companies or their respective ERISA Affiliates,
49
whether or not any of the foregoing is funded, whether insured or
self-funded, and with respect to which any of the Asset Sale
Companies are a party or a sponsor or a fiduciary thereof or by
which any of the Asset Sale Companies are bound; or (ii) with
respect to which any of the Asset Sale Companies otherwise may
have, as of the Closing Date, any direct or indirect Liability
(the "Employee Benefit Plans"). Schedule 3.12(a) identifies: (i)
each Employee Benefit Plan that is a "pension plan" (as defined
in Section 3(2) of ERISA) (other than the UMWA Pension Plans)
(the "Pension Plans"), and denotes those Pension Plans intended
to be qualified under Section 401(a) of the Code (the "Qualified
Plans"); (ii) each Employee Benefit Plan that is a "multiemployer
plan" (as defined in Section 3(37) or Section 4001(a)(3) of
ERISA) (a "Multiemployer Plan"); and (iii) each Employee Benefit
Plan that is a "welfare plan" (as defined in Section 3(1) of
ERISA) (the "Welfare Plans"). PCC has delivered to Buyer correct
and complete copies of the Medical Plans maintained by the Asset
Sale Signatory Company pursuant to any of the Collective
Bargaining Agreements and the most recent Form 5500 Annual Report
for such Medical Plans.
(b) Each Qualified Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and has received, pursuant to a request
that accurately described such Qualified Plan, a favorable
determination letter from the IRS to the effect that the form of
such Qualified Plan satisfies the requirements of Section 401(a)
of the Code and that its related trust is exempt from taxation
under Section 501(a) of the Code. To the Knowledge of PCC, there
are no facts or circumstances that would jeopardize or adversely
affect in any material respect the qualification under Code
Section 401(a) of any Qualified Plan.
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(c) As of the Closing Date, full payment to each Employee Benefit
Plan of all contributions (including all employer contributions
and employee salary reduction contributions) that are required to
be made by the Asset Sale Companies under the terms thereof and
under the Collective Bargaining Agreements, ERISA or the Code in
respect of the current and prior plan years, if any, have been
made for all Employee Benefit Plans (except for The Savings and
Investment Plan of The Pittston Company and Its Subsidiaries,
which payment shall be made as soon as possible after the Closing
Date). All contributions that are required to be made by the
Asset Sale Companies for any period ending on or before the
Closing Date that are not yet due have been paid to each such
Employee Benefit Plan or accrued in accordance with the past
custom and practice of the Asset Sale Companies. All premiums
that are due on or before the Closing Date have been paid with
respect to each such Welfare Plan. As of the latest actuarial
determination, no "accumulated funding deficiency" (as defined in
Section 302 of ERISA or Section 412 of the Code), whether or not
waived, exists with respect to any Pension Plan. The present
value of all accumulated benefit obligations under each Qualified
Plan (based on the assumptions used for purposes of Statement of
Financial Accounting Standard No. 87) did not as of the last
annual valuation date applicable thereto exceed the fair market
value of the assets of such Qualified Plan. No "reportable event"
within the meaning of Section 4043 of ERISA has occurred in
connection with any of the Pension Plans.
(d) Employee Benefit Plan Compliance.
(i) Each Employee Benefit Plan (other than the Multiemployer
Plans) has been administered substantially in accordance
with its terms;
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(ii) each Employee Benefit Plan (other than the Multiemployer
Plans) and each related trust, insurance contract or fund
complies in form and in operation and has been administered
substantially in accordance with any applicable provisions
of ERISA, the Code and all other Laws, all reports, returns
and other documentation (including Form 5500 Annual Reports
and PBGC-1s) that are required to have been filed with the
IRS, the United States Department of Labor, the PBGC or any
other Governmental Authority have been filed on a timely
basis in each instance in which the failure to file such
reports, returns and other documents would result in any
material Liability to PCC or the Asset Sale Companies;
(iii) other than routine claims for benefits, no Liens, lawsuits
or complaints to or by any Person or Governmental Authority
have been filed or, to the Knowledge of PCC, are
contemplated or threatened, with respect to any Employee
Benefit Plan (other than the Multiemployer Plans) except for
those that would not reasonably be expected to result in any
material Liability to PCC or the Asset Sale Companies.
(e) Neither PCC nor any of the Asset Sale Companies has received a
written notice of, or incurred, any withdrawal liability with
respect to a Multiemployer Plan.
(f) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any Person to severance pay for
which Buyer will be liable after the Closing; (ii) accelerate the
time of payment or vesting of, increase the amount of, or satisfy
a condition to the compensation due to any Person under any
Employee Benefit Plan for which Buyer will be liable after the
Closing; or (iii) result in the payment of an amount that could,
52
individually or in combination with any other such payment,
constitute an "excess parachute payment" under Code Section
280G(b)(1).
(g) No "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) has occurred with
respect to any Employee Benefit Plan subject to ERISA, other than
such a transaction subject to an administrative or statutory
exemption, with respect to which a Tax, penalty or other amount
may reasonably be expected to be imposed on any of the Asset Sale
Companies or their respective ERISA Affiliates.
(h) Neither the PCC Parent, PCC, the Asset Sale Companies nor any of
their respective ERISA Affiliates, nor any organization with
respect to which any such entity is a successor or parent
corporation, within the meaning of Section 4069(b) of ERISA, has
engaged in any transaction described in Sections 4069 or 4212(c)
of ERISA.
(i) Each Pension Plan that is not qualified under Code Section 401(a)
or 403(a) is exempt from Parts 2, 3 and 4 of Title I of ERISA as
an unfunded plan that is maintained primarily for the purpose of
providing deferred compensation for a select group of management
or highly compensated employees, pursuant to ERISA Sections
201(2), 301(a)(3) and 401(a)(1).
(j) No assets of any of the Asset Sale Companies are allocated to or
held in a "rabbi trust" or similar funding vehicle.
(k) Neither the PCC Parent, PCC, the Asset Sale Companies nor any of
their respective ERISA Affiliates has received any notification
that any Multiemployer Plan is in reorganization (within the
meaning of Section 4121 of ERISA), is insolvent (within the
53
meaning of Section 4245 of ERISA) or has been terminated (within
the meaning of Title IV of ERISA), and to the Knowledge of PCC,
no Multiemployer Plan is reasonably expected to be in
reorganization, insolvent or terminated.
(l) No Welfare Plan is a "multiple employer welfare arrangement" as
defined in Section 3(40) of ERISA.
3.13. Employment Matters.
(a) The Asset Sale Non-Signatory Company is not a party to, bound by,
or negotiating with respect to any agreement with any labor
union, association or other employee group, nor is any unit of
Employees of the Asset Sale Non-Signatory Company represented by
any labor union or similar association. No labor union or
employee organization has been certified or recognized as the
collective bargaining representative of any Employees of the
Asset Sale Companies. To the Knowledge of PCC, there are no union
organizational campaigns or representation proceedings underway
or threatened with respect to any Employees of the Asset Sale
Non-Signatory Company, nor are there any existing or threatened
labor strikes, work stoppages, slowdowns, grievances, unfair
labor practice charges, discrimination charges or labor
arbitration proceedings affecting Mining Activities at or
deliveries to any mine or other facility of any of the Asset Sale
Companies. Each of the Asset Sale Companies has been and is in
compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance
would not reasonably be expected to impose any material Liability
on the Asset Sale Companies.
54
(b) To the Knowledge of PCC, Schedule 3.13(b) sets forth the panels
of Employees Buyer must assume as part of its assumption of the
Asset Sale Signatory Company's obligations under the Collective
Bargaining Agreements.
3.14. No Broker.
None of the Asset Sale Companies, PCC or the PCC Parent has had any
dealings, negotiations or communications with or retained any broker or other
intermediary in connection with the transactions contemplated by this Agreement
and none of the foregoing is committed to any Liability for any brokers' or
finders' fees or any similar fees in connection with the transactions
contemplated hereby, other than Rothschild Inc., who shall be compensated solely
by PCC or an Affiliate of PCC.
3.15. Health and Safety Requirements.
As it relates to the Purchased Assets, each of the Asset Sale Companies has
complied with all applicable Health and Safety Requirements and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
is currently outstanding against any of them alleging any failure to so comply,
except for those that would not reasonably be expected to have a Material
Adverse Effect.
3.16. Restrictions on Business Activities.
Except for this Agreement, there is no agreement, judgment, injunction,
order or decree binding upon PCC or any of the Asset Sale Companies that has or
would reasonably be expected to have the effect of prohibiting the conduct of
the Business.
3.17. Powers of Attorney.
There are no outstanding powers of attorney executed on behalf of any of
the Asset Sale Companies affecting the Purchased Assets.
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3.18. Transactions With Affiliates.
The Contracts do not include any Liability between any Asset Sale Company
and any Affiliate of such Asset Sale Company. At the Closing, the Purchased
Assets will not include any receivable or other Liability from an Affiliate of
any Asset Sale Company.
3.19. Absence of Certain Payments.
During the five (5) year period prior to the date of this Agreement, to the
Knowledge of PCC, none of the Asset Sale Companies have (nor has any director,
officer, agent, or employee of any Asset Sale Company nor any other person,
acting on behalf of any Asset Sale Company) directly or indirectly: used any of
such company's funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from such company's funds; violated any provision
of the Foreign Corrupt Practices Act of 1977 applicable to such company;
established or maintained any unlawful or unrecorded fund of such company's
monies or other assets; made any false or fictitious entry on the books or
records of such company; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment, to any person or entity, private or public,
regardless of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions for such
company, or to pay for favorable treatment for business secured or for special
concessions already obtained for such company.
3.20. Disclosure.
The representations and warranties contained in this Article III do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article III not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to PCC that:
4.1. Organization.
Buyer is a duly formed limited liability company, validly existing and in
good standing under the Laws of the State of Delaware.
4.2. Execution, Delivery and Performance.
The execution, delivery and performance of this Agreement and each other
agreement or instrument executed in connection herewith or delivered pursuant
hereto and the consummation of the transactions contemplated herein and therein
will not, with or without the giving of notice or the passage of time, or both,
(i) conflict with, or result in a violation or breach of, or a default, right to
accelerate or loss of rights under, or result in the creation of any Lien, under
or pursuant to, any provision of Buyer's organizational documents or of any
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding, any Law, or any finding, order,
judgment, writ, injunction or decree to which Buyer is a party or by which Buyer
or its respective assets may be bound or affected; or (ii) require the approval,
consent or authorization of, or prior notice to, filing with or registration
with, any Governmental Authority, or any other Person or entity; provided that
this Section 4.2 shall not apply to any requirement of Buyer to obtain any
consent of the applicable Governmental Authority to transfer or modify the
Permits.
4.3. Authorization.
Buyer has full power and authority to enter into and deliver this
Agreement, and each other agreement or instrument (to which it is a party)
executed in connection herewith or delivered pursuant hereto and to perform its
obligations hereunder and thereunder. Buyer's execution, delivery and
57
performance of this Agreement and all other agreements and instruments executed
in connection herewith or delivered pursuant hereto and the transactions
contemplated hereby have been duly authorized by all requisite action. This
Agreement and all other agreements or instruments executed by Buyer in
connection herewith or delivered by Buyer pursuant hereto have been duly
executed and delivered by Buyer and this Agreement and all other agreements and
instruments executed by Buyer in connection herewith or delivered by Buyer
pursuant hereto constitute Buyer's legal, valid and binding obligation,
enforceable in accordance with their respective terms (subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights).
4.4. No Broker.
Buyer has had no dealings, negotiations or communications with any broker
or other intermediary in connection with the transactions contemplated by this
Agreement nor is it committed to any Liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated hereby.
4.5. Reclamation and Environmental Compliance.
Buyer and all operators it owns or controls are in compliance with all
Environmental Laws and Reclamation Laws in all material respects, and are not
"permit blocked" under the Applicant Violator System administered by the
Department of the Interior.
4.6. Financing.
Buyer will have available to it, at the Closing, financial resources
sufficient to consummate the transactions contemplated by this Agreement.
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4.7. Disclosure.
The representations and warranties contained in this Article IV do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article IV not misleading.
ARTICLE V
CERTAIN COVENANTS
5.1. Operation in Ordinary Course.
Except as provided in this Agreement, between the date of this Agreement
and the Closing, PCC shall cause each of the Asset Sale Companies, in relation
to the Purchased Assets, to: (i) carry on its business in the Ordinary Course of
Business; (ii) use commercially reasonable efforts to preserve intact its
current business organization, Mining Activities and properties until the
Closing Date, and maintain the relations and good will with its suppliers,
customers, landlords, creditors, agents, and others having business
relationships with such Asset Sale Company; (iii) not enter into any contract or
other obligation binding upon such Asset Sale Company involving its Employees,
the UMWA, or an expenditure, purchase, sale, cost or commitment (unless such
contract is cancelable in thirty or fewer days, involves less than $100,000, or
is for consumable purchases) without the prior written consent of Buyer; (iv)
not settle or otherwise resolve any labor grievance or arbitration, without
prior consent of Buyer, that (x) is listed on Schedule 1.9 or (y) could
reasonably be expected to affect the operation of the Business after the
Closing; and (v) report regularly to Buyer concerning the status of the
business, Mining Activities and finances of such Asset Sale Company.
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5.2. Compliance with Law.
Between the date of this Agreement and the Closing, each of the Asset Sale
Companies shall comply in all material respects with all Laws and with all
orders of any Governmental Authority.
5.3. Cooperation.
Subject to the terms and conditions herein provided, each of PCC and Buyer
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper and
advisable under Law, to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, PCC and Buyer will, and PCC will cause the Asset Sale Companies to,
execute any additional instruments reasonably necessary to consummate the
transactions contemplated hereby. Prior to and following the Closing Date, PCC
shall make available to Buyer, at reasonable times, and in a manner so as not to
interfere with the normal business operations of the Asset Sale Companies, all
documents, maps and other information necessary to transfer all Permits to Buyer
in accordance with Law.
5.4. Notices and Consents.
PCC and Buyer each will use their commercially reasonable efforts to obtain
consents of all Governmental Authorities and other third parties necessary to
the consummation of the transactions contemplated by this Agreement. PCC shall
have responsibility for providing any notices to third parties that may be
required by the transactions contemplated by this Agreement and for obtaining,
or causing to be obtained, at its sole cost and expense, the consents listed on
Schedule 5.4(a) and Buyer shall have responsibility for obtaining, at its sole
60
cost and expense, all consents listed on Schedule 5.4(b), which Schedule shall
include all Equipment leases, and all consents necessary to transfer the
Permits, with the other party in each case using its commercially reasonable
efforts to assist the responsible party in obtaining such consents or Permits.
5.5. Publicity.
All general notices, releases, statements and communications to any
Employees, suppliers, distributors and customers of the Asset Sale Companies, to
the general public and to the press relating to the transactions contemplated by
this Agreement shall be made only at such times and in such manner as may be
mutually agreed upon by PCC and Buyer; provided, however, that either party
hereto (or, in the case of PCC, the PCC Parent) shall be entitled to make a
public announcement of the foregoing if: (a) in the opinion of its legal
counsel, such announcement is required to comply with Law or any listing
agreement with any national securities exchange or inter-dealer quotation
system; and (b) such disclosing party gives a reasonable period of notice and
opportunity to comment to the other party hereto of its intention to make such
public announcement; provided, that, failure to comment within 24 hours of
receipt of such notice shall be deemed a waiver of the opportunity to comment;
and provided, further, that nothing in this Section 5.5 shall operate to
prohibit any Asset Sale Company or Buyer from communicating, after the Closing
Date, with their respective suppliers, distributors, customers and Governmental
Authorities the fact that the transaction has occurred or to employees or their
collective bargaining representative regarding their employment or the terms and
conditions thereof, the operation of the Purchased Assets or matters necessarily
related thereto.
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5.6. Permits; Replacement Bonds; Insurance and Guarantees; Other Filings.
(a) At or prior to the Closing Date, Buyer shall: (i) secure, in
accordance with Law, irrevocable commitments to issue replacement
bonds and replacement sureties and guarantees or other financial
security, if applicable, for all Permits sufficient to cause the
applicable Governmental Authority to transfer the Permits to
Buyer in accordance with Law; and (ii) deliver copies of such
documents to PCC.
(b) At or prior to the Closing Date, Buyer shall deliver copies to
PCC of all filings, each in a form that satisfies all
requirements of the applicable Governmental Authority and that
are necessary to cause the applicable Governmental Authority to
transfer the Permits to Buyer in accordance with Law.
(c) Promptly following the Closing Date through the application of
best efforts, Buyer shall make all filings with the appropriate
Governmental Authorities and shall, upon submitting such
applications to transfer such Permits, post replacement bonds
necessary under Laws to transfer the Permits to Buyer in
accordance with Law.
(d) Following the Closing Date, PCC will cause each of the Permits
that is in its name or in the name of an Asset Sale Company to be
retained in its name or in the name of such Asset Sale Company,
as appropriate, until the applicable Governmental Authority
transfers the Permits to Buyer. Buyer may rely on any related
bonds held or guaranteed by PCC or an Affiliate of PCC; provided
that Buyer reimburses PCC for bond premiums, security, Office of
Surface Mining fees, amounts required to be paid to correct (and
to pay fines or assessments with respect to) any violation
occurring after the Closing Date and any direct out-of-pocket
costs incurred by PCC or its Affiliates in connection with the
maintenance of such Permits or the related bonds following the
Closing Date. Buyer agrees to use the same efforts to accomplish
62
the transfer of the Permits as soon as possible after the Closing
that it would use to obtain its own permits to commence immediate
mining operations at any site.
(e) To the extent allowed by and in accordance with applicable Law,
PCC shall cause each of the Asset Sale Companies to grant Buyer
the right to conduct Mining Activities on the properties included
in the Purchased Assets under each of the Permits; provided that
if the appropriate Governmental Authority has not transferred any
Permit by the first anniversary of the Closing Date, Buyer will
deposit in escrow cash or a letter of credit from a bank
reasonably acceptable to PCC in an amount equal to the face
amount of any related outstanding surety bonds until such Permit
has been transferred.
(f) If PCC or one of the Asset Sale Companies receives a notice of
violation under any of the Permits following the Closing Date but
before the transfer of the Permit, PCC will give Buyer prompt
notice thereof. If PCC reasonably determines that Buyer will not
cause such violation to be cured in a timely fashion, PCC shall
have the right to cure, or cause to be cured, such violation
itself and be reimbursed by Buyer for curing such violation.
(g) At or prior to the Closing Date, Buyer shall have: (i) for
purposes other than the Permits, secured replacement bonds,
replacement sureties, guarantees or other financial security, if
applicable, sufficient to allow PCC and the Persons who will be
its Affiliates after the Closing Date to be relieved or released
as of the Closing Date from all financial commitments,
guarantees, collateral agreements or similar undertakings listed
on Schedule 5.6; (ii) obtained property and liability insurance
customary for a company that is engaged in the Business or a
business similar to the Business to insure the Purchased Assets;
and (iii) delivered copies of such documents to PCC.
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(h) On or prior to the Closing, Buyer shall deliver to PCC: (i) a
Certificate of Good Standing for self-insured status or evidence
of insurance coverage with respect to Buyer's Liabilities for
workers' compensation and federal black lung benefits that arise
out of employment by Buyer or any of its Affiliates of Employees
on and after the Closing Date, to the extent and in the amounts
provided in applicable Laws; and (ii) certification from the
Department of Labor of approval of self-insured status in the
event Buyer is to be self-insured for federal black lung claim
liability.
5.7. Exclusivity.
PCC will not (nor will it cause or permit any of the Asset Sale Companies
to) (i) solicit, initiate or encourage the submission of any proposal or offer
from any Person relating directly or indirectly to the acquisition of the
Purchased Assets, or any portion thereof, or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. PCC will notify Buyer immediately if
any Person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
5.8. Access.
At or prior to the Closing Date, PCC will permit (and will cause each of
the Asset Sale Companies to permit) representatives of Buyer to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Asset Sale Companies, to all premises, properties,
personnel, books, records (including Tax records), contracts and documents of or
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pertaining to each of the Asset Sale Companies as related to the Purchased
Assets. Copies of and access to accounting records, ledgers and other pertinent
documents or work papers related to the Purchased Assets will be made available
to Buyer at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Asset Sale Companies, upon request.
5.9. Notice of Developments.
Each party will give prompt written notice to the other party of any
material adverse development causing a breach of any of its own representations
and warranties in Article III and Article IV above. No disclosure by any party
pursuant to this Section 5.9, however, shall be deemed to amend or supplement
the Schedules to such representations and warranties or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
5.10. Benefits Provided by PCC.
To the extent permitted and subject to the provisions of the Cooperation
Agreement, PCC shall provide all benefits necessary to satisfy the Liabilities
retained by PCC pursuant to Section 1.95(k) through its Classified Employee
Retiree Medical Plans, or any successor thereto that may be negotiated by the
Asset Sale Signatory Company or any of its Affiliates.
5.11. Coal Inventory.
PCC shall use its commercially reasonable efforts to have 390,000 tons of
Coal Inventory as of the Closing Date.
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5.12. Further Assurances.
The parties shall cooperate in a commercially reasonable manner with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the transactions
contemplated.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions precedent:
(a) no action, suit, proceeding, order, decree or injunction shall
have been commenced, threatened or entered by or before any
Governmental Authority that remains in force and that (i)
prohibits, seeks to prohibit, or imposes or seeks substantial
damages in connection with, the consummation of the transactions
contemplated by this Agreement, (ii) seeks or imposes relief that
causes or would cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, (iii)
affects adversely the right of Buyer to own the Purchased Assets
or to operate the Business on or after the Closing Date;
(b) PCC Parent, PCC, Buyer and Buyer's Ultimate Parent shall have
executed and delivered to each other party thereto the
Administrative Services Agreement, the Cooperation Agreement, the
Indemnification and Guaranty Agreement, and the D-R Service
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Agreement and any other documentation required in all
transactions contemplated or covered by all such agreements, all
in form and substance as set forth in Exhibits A, F, G and H
attached hereto and the same shall be in full force and effect;
(c) all other transactions pursuant to which Buyer or any of its
Affiliates acquire assets related to the Business shall have been
consummated prior to or simultaneously with the transactions
contemplated by this Agreement;
(d) PCC and Buyer shall have executed and delivered to each other all
such other documents or instruments necessary or appropriate to
effect the transactions contemplated by this Agreement, including
the documents provided in Section 5.6 hereof; and
(e) PCC shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(i) and PCC shall have provided
such payments as may be reasonably required to obtain all such
consents. Buyer shall have obtained, or caused to have been
obtained, the consents listed in Schedule 6.1(e)(ii) and Buyer
shall have provided such payments, guarantees and/or assurances
as may be reasonably required to obtain all such consents.
6.2. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions precedent:
(a) all of the representations and warranties of PCC set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or
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limitation with respect to materiality (whether by reference to
"Material Adverse Effect" or otherwise), shall be true and
correct in all respects as of the date hereof and at and as of
the Closing Date with the same effect as though such
representations and warranties were made at and as of the Closing
unless the aggregate failure of such representations or
warranties to be true and correct does not have a Material
Adverse Effect; provided that if a representation or warranty is
expressly made only as of a specific date, it need only be true
and correct in all respects as of such date; provided, further,
that revisions to Schedules 1.9V. (so long as such revision
relates to a settlement, mediation, arbitration or litigation of
employee grievances), 1.95(k)(1), 1.95(k)(3), 3.11(20 and 21) and
3.13(b) prior to the Closing shall not constitute a breach of any
representation or warranty, and Buyer shall have received the PCC
Closing Certificate required by Section 6.2(g) below dated as of
the Closing Date executed by PCC to such effect;
(b) all of the covenants and obligations that PCC is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects;
(c) all proceedings and actions, corporate or other, to be taken by
PCC or the Asset Sale Companies in connection with the
transactions contemplated by this Agreement and all documents
incident thereto, including all actions necessary to authorize
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, shall have been taken and shall
be reasonably satisfactory in form and substance to Buyer and
Buyer's counsel;
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(d) PCC shall have, and shall have caused the Asset Sale Companies to
have, executed and delivered the Bills of Sale, the Assignment
and Assumption Agreements, the Conveyance Deeds and such other
documents as may be necessary to convey to Buyer the Purchased
Assets;
(e) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that,
individually, or together with any other change, event or
occurrence, has had or could reasonably be expected to have a
Material Adverse Effect;
(f) Buyer shall have received an opinion of counsel to PCC addressed
to Buyer substantially in the form of Exhibit J; and
(g) Buyer shall have received an executed copy of the PCC Closing
Certificate.
6.3. Conditions Precedent to Obligations of PCC.
The obligation of PCC to consummate and cause the consummation of the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions precedent:
(a) all of the representations and warranties of Buyer set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or
limitation with respect to materiality, shall be true and correct
in all respects as of the date hereof and at and as of the
Closing Date with the same effect as though such representations
and warranties were made at and as of the Closing unless the
aggregate failure of such representations or warranties to be
true and correct does not have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by
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this Agreement or fulfill its post-Closing obligations hereunder;
provided that if a representation or warranty is expressly made
only as of a specific date, it need only be true and correct in
all respects as of such date, and PCC shall have received Buyer's
Closing Certificate required by Section 6.3(j) below dated as of
the Closing Date executed by Buyer to such effect;
(b) all of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects;
(c) all proceedings and actions, corporate or other, to be taken by
Buyer in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, including all
actions necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby, shall have been taken and shall be reasonably
satisfactory in form and substance to PCC and its counsel;
(d) PCC shall have received, on behalf of the Asset Sale Companies,
the Purchase Price by wire transfer of cash or other immediately
available funds and the execution and delivery by Buyer of the
Promissory Note;
(e) Buyer shall have executed and delivered the Security Agreement;
(f) Buyer shall have executed and delivered the Assignment and
Assumption Agreements and such other documents as may be
necessary for Buyer to assume all of the Assumed Liabilities;
(g) Buyer shall have delivered to PCC satisfactory evidence of
compliance with Sections 5.6(a), 5.6(g) and 5.6(h);
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(h) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that,
individually, or together with any other change, event or
occurrence, has had or could reasonably be expected to have a
Material Adverse Effect;
(i) PCC shall have received an opinion of counsel to Buyer addressed
to PCC substantially in the form of Exhibit K; and
(j) PCC shall have received an executed copy of Buyer's Closing
Certificate.
ARTICLE VII
CERTAIN TAX MATTERS
7.1. Property Taxes.
Property Taxes of the Asset Sale Companies with respect to the Purchased
Assets (including, without limitation, property Taxes payable as a tenant or
lessee under any lease) will be pro-rated as of the Closing Date and,
notwithstanding any other provision of this Agreement, the economic burden of
any such property Tax will be borne by (i) the Asset Sale Companies for all
Pre-Closing Periods and the portion of any Straddle Period through the Closing
Date and (ii) by Buyer for all Post-Closing Periods and the portion of any
Straddle Period after the Closing Date. Accordingly, notwithstanding any other
provision of this Agreement, (i) if any Asset Sale Company pays such a property
Tax with respect to a Post-Closing Period or the portion of Straddle Period
after the Closing Date, Buyer will reimburse PCC on behalf of such Asset Sale
Company within 15 days after receiving from PCC written demand for the amount of
such property Tax, and (ii) if Buyer pays such a property Tax with respect to a
Pre-Closing Period or the portion of a Straddle Period through the Closing Date,
PCC on behalf of the Asset Sale Companies will reimburse Buyer within 15 days
after receiving from Buyer written demand for the amount of such property Tax.
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For purposes of pro-rating property Taxes, the amount of any property Tax
attributable to the portion of a Straddle Period through the Closing Date shall
be deemed to be the amount of such property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days in the
Straddle Period through the Closing Date and the denominator of which is the
number of days in the entire Straddle Period. In determining the Straddle Period
for property Taxes, the Tax period as reflected on the statement of Taxes due,
property Tax bill, property "tax ticket," or any other request for payment from
a Governmental Authority will determine the taxable period (e.g., a Virginia
property Tax bill that indicates the tax year as 2002 is for a Tax for the
taxable period January 1, 2002 through December 31, 2002).
7.2. Sales and Use Taxes.
Buyer and PCC or the Asset Sale Companies hereby intend that the
transaction be an occasional sale within the meaning of Virginia Code Section
58.1-602 and regulations thereunder, and therefore exempt from Virginia sales
and use Tax pursuant to Virginia Code Section 58.1-609. PCC will be responsible
for sales and use Taxes payable as a result of the failure of this transaction
to qualify as an occasional sale or as an exempt transaction under any other
Virginia law; provided, however, that any use Tax payable as a result of this
transaction that would be payable regardless of whether the transaction
qualifies as an occasional sale or not shall be paid by Buyer.
7.3. Transfer Taxes.
All transfer, recording and similar Taxes arising in connection with the
transactions contemplated hereunder shall be borne equally by PCC and Buyer. PCC
and Buyer shall (and they shall cause their respective Affiliates to) cooperate
to comply with all Tax Return requirements for such Taxes and provide such
documentation and take such other actions as may be necessary to minimize the
amount of any such Taxes.
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7.4. Access for Tax Returns.
Following the Closing Date, Buyer shall, at reasonable times, and in a
manner so as not to interfere with normal business operations, allow PCC (and if
requested by PCC, representatives of federal, state or local agencies) access to
the Purchased Assets for purposes of reviewing information pertinent to any Tax
Return filed by PCC Parent or any of its Affiliates, including the Asset Sale
Companies.
ARTICLE VIII
COVENANTS REGARDING EMPLOYEES
8.1. Employees.
(a) Subject to the requirements of applicable Laws, but no later than
immediately prior to the Closing, PCC will cause those Asset Sale
Companies set forth on Schedule 8.1 to terminate the employment
of their Employees with respect to the Purchased Assets.
(b) From time to time after the Closing Date, PCC and Buyer may
require information with respect to current or former Employees.
Without intending to limit the obligations of the parties in the
exchange of information with respect to any other matter or in
accordance with the Cooperation Agreement, PCC and Buyer agree to
furnish such information to the other, if available, promptly
after receipt of a written request therefor.
8.2. Collective Bargaining Obligations.
Buyer acknowledges and agrees that the Asset Sale Signatory Company is
signatory to and bound by the Collective Bargaining Agreements, which Collective
Bargaining Agreements also pertain to assets other than the Purchased Assets.
Immediately after the Closing Date, Buyer further agrees to assume all of the
obligations arising after the Closing Date under the Collective Bargaining
Agreements, which pertain to, or arise out of the Asset Sale Signatory Company's
ownership of, the Purchased Assets.
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ARTICLE IX
TERMINATION
9.1. Termination.
This Agreement may be terminated prior to the Closing Date only as follows:
(a) by mutual written consent of PCC and Buyer;
(b) by either PCC or Buyer, if the Closing Date shall not have
occurred prior to the close of business on December 31, 2002 or
such later date as the parties may agree in writing (provided,
that the right to terminate this Agreement under this Section
9.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause,
in whole or in part, of, or has resulted in, the failure of the
conditions in Article VI to be satisfied and the Closing Date to
occur on or before such date);
(c) by PCC or Buyer if an action, suit, or proceeding, shall have
been commenced or threatened by or before any Governmental
Authority, or any order, decree or injunction shall have been
entered therein, that (i) prohibits, seeks to prohibit, or
imposes or seeks substantial damages in connection with, the
consummation of the transactions contemplated by this Agreement,
(ii) seeks or imposes relief that causes or would cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, or (iii) affects adversely the right of
Buyer to own the Purchased Assets or to operate the Business;
74
(d) by Buyer if (i) the representations of PCC contained in this
Agreement are not true and correct in all material respects as if
made at and as of that time, except for failures to be true and
correct that are capable of being and are cured within fifteen
(15) days after written notice from Buyer to PCC of such failure;
or (ii) PCC has failed to comply materially with its respective
obligations under this Agreement, except for failures to comply
that are capable of being and are cured within fifteen (15) days
after written notice from Buyer to PCC of such failure; or
(e) by PCC if (i) the representations of Buyer contained in this
Agreement are not true and correct in all material respects as if
made at and as of that time, except for failures to be true and
correct that are capable of being and are cured within fifteen
(15) days after written notice from PCC to Buyer of such failure;
or (ii) Buyer has failed to comply materially with its
obligations under this Agreement, except for failures to comply
that are capable of being and are cured within fifteen (15) days
after written notice from the PCC to Buyer of such failure.
9.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 9.1 hereof, all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further Liability of either party to the other except: (a) as set forth
in Section 10.4; and (b) for breaches of representations, warranties, or
covenants or for fraud. PCC and Buyer hereby agree that the provisions of this
Section 9.2 and of Section 10.4 shall survive any termination of this Agreement
pursuant to the provisions of this Article IX.
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ARTICLE X
MISCELLANEOUS
10.1. Entire Agreement.
This Agreement, the documents referred to herein and to be delivered
pursuant hereto and any other agreement entered into contemporaneously with this
Agreement among PCC, PCC Parent, Buyer and Buyer's Ultimate Parent or the
Affiliates of any of them constitute the entire agreement between the parties
pertaining to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions of the parties, whether oral or
written, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein or therein.
10.2. Amendment.
This Agreement may be amended by an instrument in writing and signed on
behalf of all of the parties hereto at any time.
10.3. Extension; Waiver.
At any time prior to the Closing Date, the parties may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein, other than the conditions contained in Section 6.1(a) hereof
as it relates to the entry of an order in any proceeding by or before a
Governmental Authority. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
and signed on behalf of such party.
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10.4. Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of their
respective counsel, investment bankers, financial advisors, accountants and
other experts and the other expenses incident to the negotiation and preparation
of this Agreement and consummation of the transactions contemplated hereby.
10.5. Bulk Sales Waiver.
Buyer hereby waives compliance with all applicable bulk sales Laws.
10.6. Governing Law.
This Agreement shall be construed and interpreted according to the Laws of
the Commonwealth of Virginia, without regard to the conflicts of Law rules
thereof.
10.7. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, provided that PCC may assign its rights
hereunder to any Affiliate of PCC after the Closing Date without the consent of
Buyer and Buyer may assign its rights hereunder to any Affiliate of Buyer prior
to, at or after the Closing Date without the consent of PCC and, further
provided, that nothing in this Agreement shall prevent a successor in interest
to either party from enforcing the provisions of this Agreement.
10.8. Notices.
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
77
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other party in the
manner provided by this Section 10.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
If to Buyer: Dickenson-Russell Coal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
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10.9. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and Section headings
in this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
10.10. Interpretation; Construction.
(a) Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and
include the singular and all words in any gender shall extend to
and include all genders.
(b) This Agreement has been fully negotiated by the parties hereto
and shall not be construed by any Governmental Authority against
either party as the drafting party.
10.11. Severability.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.12. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement and PCC and Buyer assume
no Liability to any third party because of any reliance on the representations,
warranties and agreements of PCC and Buyer contained in this Agreement, other
than Section 5.5 and Article VIII hereof, which are intended to be for the
benefit of the Persons expressly covered thereby and may be enforced by such
Persons.
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10.13. Retention of and Access to Records.
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record retention policies and practices those books and records relating
to the Asset Sale Companies delivered to Buyer. Buyer also shall provide to PCC
and its Affiliates reasonable access thereto, during normal business hours and
on at least three days' prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or litigation. Buyer
shall deliver to PCC at least thirty days written notice prior to the
destruction or other disposal of any such books and records. PCC and its
Affiliates may elect to take delivery of any such books and records that Buyer
intends to destroy or otherwise dispose of and to copy any such books and
records that Buyer intends to keep, all at their own expense.
10.14. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute"), excluding any dispute or disagreement among the parties
concerning the determination of the Coal Inventory, which shall be resolved
pursuant to Section 2.11 and the allocation of Purchase Price and Assumed
Liabilities, which shall be resolved pursuant to Section 2.12, shall be decided
by binding arbitration in accordance with the commercial arbitration rules of
the American Arbitration Association. PCC and Buyer shall jointly select one
arbitrator. If the two parties shall fail to select an arbitrator within
fourteen calendar days after arbitration is requested, then such arbitrator
shall be selected by the American Arbitration Association or any successor
thereto upon application of either party. No Dispute shall be consolidated in
any arbitration with any dispute, claim or controversy of any other party. The
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arbitration shall be conducted in Roanoke, Virginia, and any court having
jurisdiction thereof may immediately issue judgment on the arbitration award.
The parties agree that the arbitration provided for in this Section 10.14 shall
be the exclusive means to resolve all Disputes.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
---------------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
DICKENSON-RUSSELL COAL COMPANY, LLC
By: /s/ Anthony McGartland
--------------------------------------------
Name: Anthony McGartland
Title: President
82
SCHEDULE 1.5
ASSET SALE COMPANIES
Asset Sale Signatory Company
- ----------------------------
Clinchfield Coal Company, a Virginia corporation
Asset Sale Non-Signatory Company
- --------------------------------
Pittston Coal Management Company, a Virginia corporation
A-1
Exhibit 2.2
PITTSTON COAL COMPANY
448 N. E. Main Street
Lebanon, Virginia 24266
December 13, 2002
Dickenson-Russell Coal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Agreement"), dated
as of October 29, 2002, as amended to but not including the date hereof, by and
between Pittston Coal Company ("PCC") and Dickenson-Russell Coal Company, LLC
("Buyer"). Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
PCC and Buyer desire to amend certain provisions of the Agreement and, in
consideration of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Section 1.87 of the Agreement is deleted in its entirety and replaced
with the following:
"1.87 Purchase Price.
"Purchase Price" shall mean the cash amount of $12,510,674 (which amount
shall include $880,000 for the Parts, Fuel and Supplies Inventory, $3,180,000
for the Coal Inventory and $110,000 for two continuous miners), plus the
Promissory Note."
2. A new Section 1.108 of the Agreement is inserted into the Agreement as
follows:
"1.108 Subleases.
"Subleases" shall have the meaning set forth in Section 2.13(a) hereof."
3. Notwithstanding anything in the Agreement to the contrary, each of PCC
and Buyer agree that for purposes of Sections 2.1 and 2.2 of the
Agreement only, none of the Equipment listed on Schedule 1.44(b)
attached to the Agreement shall constitute Purchased Assets.
4. Notwithstanding anything in the Agreement to the contrary, each of PCC
and Buyer agree that PCC shall have caused the applicable Asset Sale
Companies to purchase the Equipment specifically identified under the
heading "Transamerica Equipment" on Schedule 1.44(b) (the
"Transamerica Equipment"). Simultaneously with the
1
Closing, PCC shall cause the applicable Asset Sale Companies to
transfer to Buyer, and Buyer shall acquire, the Transamerica Equipment
from such Asset Sale Companies pursuant to a bill of sale. Each of PCC
and Buyer agrees that the Purchase Price set forth in Section 1.87
includes all amounts that Buyer owes PCC or the Asset Sale Companies
for the Transamerica Equipment upon its purchase by the applicable
Asset Sale Companies from Transamerica, including one-half of the
lease breakage fee. PCC acknowledges its responsibility to pay
$64,939.74 to Transamerica, which is one-half of such lease breakage
fee.
5. Each of PCC and Buyer agree that in satisfaction of Section 2.11 of
the Agreement, the face amount of the Promissory Note shall be fixed
at $5,784,442.
6. A new Section 2.13 of the Agreement is inserted into the Agreement as
follows:
2.13 Subleases.
(a) Each of PCC and Buyer agree that at the Closing, Buyer shall
sublease the Equipment set forth on Schedule 1.44(b) attached to
the Agreement (other than the Transamerica Equipment) from the
applicable Asset Sale Company pursuant to the subleases
substantially in the forms attached hereto as Exhibits A-1, A-2
and A-3 (the "Subleases").
(b) At the Closing, PCC shall cause the applicable Asset Sale Company
to, and Buyer shall execute and deliver the Subleases.
7. Sections 5.6(b) and (c) of the Agreement are deleted in their entirety
and replaced with the following:
"(b) Prior to the Closing Date: (i) Buyer shall deliver a
copy to PCC of the filing that is necessary to cause the
applicable Governmental Authority to transfer any one of the
Permits (the "Initial Filing") to Buyer in accordance with Law,
in a form that satisfies all requirements of the applicable
Governmental Authority; and (ii) following approval by PCC, Buyer
shall file the Initial Filing with the appropriate Governmental
Authority.
(c) Promptly following the Closing Date through the
application of best efforts, and in any event no later than 30
days after the Closing, Buyer shall make all filings other than
the Initial Filing with the appropriate Governmental Authorities
necessary to transfer the Permits to Buyer in accordance with Law
and thereafter, as required by Law, shall post replacement
bonds."
8. PCC and Buyer agree that the completion of the actions set forth in
Sections 4 and 6 of this letter agreement that are required to be
completed by Buyer shall be deemed to satisfy all of Buyer's
obligations: (i) to obtain the consent of the applicable third party
lessor in accordance with Section 5.4 and Section 6.1(e) of the
Agreement; and (ii) with respect to such Equipment leases pursuant to
Section 5.6(g) of the Agreement (with the exception of the Equipment
being leased from Deere Credit, Inc. pursuant to leases expiring in
2004).
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9. The Schedules to the Agreement are hereby amended and restated in
their entirety as attached hereto as Exhibit A.
10. Except as amended by this letter agreement, the Agreement shall
continue in full force and effect.
11. This letter agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any executed counterpart
of this letter agreement or other signature hereto delivered by a
party by facsimile shall be deemed for all purposes as being good and
valid execution and delivery of this letter agreement by such party.
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Sincerely,
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
- -------------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ACKNOWLEDGED AND AGREED:
DICKENSON-RUSSELL COAL COMPANY, LLC
By: /s/ Anthony McGartland
- -------------------------------------
Name: Anthony McGartland
Title: President
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Exhibit 2.3
INDEMNIFICATION AND GUARANTY AGREEMENT
INDEMNIFICATION AND GUARANTY AGREEMENT, dated as of December 13, 2002, by
and among PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), THE PITTSTON
COMPANY, a Virginia corporation ("Pittston"), ALPHA NATURAL RESOURCES, LLC, a
Delaware limited liability company ("Buyer's Ultimate Parent") and
DICKENSON-RUSSELL COAL COMPANY, LLC, a Delaware limited liability company
("Buyer").
RECITALS
WHEREAS, Buyer and PCC have entered into an asset purchase agreement dated
October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto, as the same may be amended from time to time in accordance
with the terms thereof, being hereinafter referred to as the "Acquisition
Agreement"), pursuant to which Buyer will purchase or acquire from PCC and
certain of its Affiliates certain assets, and assume certain liabilities, all
upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, PCC and Buyer desire to provide for the terms upon which they will
indemnify each other with respect to certain matters relating to the
transactions contemplated by the Acquisition Agreement;
WHEREAS, Pittston owns, indirectly, all of the outstanding capital stock of
PCC and, as an inducement to Buyer to enter into the Acquisition Agreement, has
agreed to guarantee the obligations of PCC and certain of PCC's Affiliates under
this Agreement and the Acquisition Agreement; and
WHEREAS, Buyer's Ultimate Parent owns, indirectly, all of the outstanding
membership interests of Buyer and, as an inducement to PCC to enter into the
Acquisition Agreement, has agreed to guarantee the obligations of Buyer under
this Agreement and the Acquisition Agreement;
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NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
definitions
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Adverse Consequences.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
1.3. Basket.
"Basket" shall have the meaning set forth in Section 2.1(b)(i) hereof.
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1.4. Buyer.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
1.5. Buyer Indemnified Persons.
"Buyer Indemnified Persons" shall mean Buyer, its Affiliates (including,
after Closing, one or more Buyer Affiliates formed to hold the Virginia coal
operations of PCC acquired pursuant to the Acquisition Agreement), and their
respective members, directors, officers, employees, consultants, agents,
attorneys and representatives.
1.6. Buyer's Ultimate Parent.
"Buyer's Ultimate Parent" shall have the meaning set forth in the preamble
to this Agreement.
1.7. Buyer's Ultimate Parent Guaranty.
"Buyer's Ultimate Parent Guaranty" shall have the meaning set forth in
Section 3.2 hereof.
1.8. Claim Notice.
"Claim Notice" shall have the meaning set forth in Section 2.3(b) hereof.
1.9. Dispute.
"Dispute" shall have the meaning set forth in Article VII hereof.
1.10. Indemnified Party.
"Indemnified Party" shall have the meaning set forth in Section 2.3(b)
hereof.
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1.11. Indemnifying Party.
"Indemnifying Party" shall have the meaning set forth in Section 2.3(b)
hereof.
1.12. Other Acquisition Agreements.
"Other Acquisition Agreements" shall mean the agreements set forth on
Schedule A attached hereto.
1.13. Other Indemnification Agreements.
"Other Indemnification Agreements" shall mean the agreements set forth on
Schedule B attached hereto.
1.14. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.15. Pittston.
"Pittston" shall have the meaning set forth in the preamble to this
Agreement.
1.16. Pittston Guaranty.
"Pittston Guaranty" shall have the meaning set forth in Section 3.1 hereof.
1.17. Pittston Indemnified Persons.
"Pittston Indemnified Persons" shall mean Pittston, PCC, the Asset Sale
Companies and their respective directors, officers, employees, agents,
stockholders and their respective Affiliates, and their respective directors,
officers, employees, consultants, agents, attorneys and representatives.
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ARTICLE II
indemnification
2.1. Indemnification by PCC.
(a) PCC agrees to indemnify and hold harmless Buyer Indemnified Persons
from and against, and reimburse them for, any and all Adverse
Consequences that any Buyer Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty made
by PCC to Buyer in the Acquisition Agreement either: (A) as of
the date on which such representation or warranty was made or (B)
as of the Closing Date (provided that the consummation of the
transactions contemplated by the Acquisition Agreement in
accordance with the terms shall not be deemed without more to
have cause a breach of any representation or warranty);
(ii) any failure by PCC to carry out, perform, satisfy or discharge
any of its covenants, agreements, undertakings, liabilities or
obligations in or under the Acquisition Agreement (other than
Article VII and Article VIII thereof);
(iii) any failure by PCC to carry out, perform, satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or
obligations in or under Article VII and/or Article VIII of the
Acquisition Agreement; and
(iv) any failure by PCC or the Asset Sale Companies to satisfy the
Retained Liabilities.
(b) Notwithstanding the provisions of Section 2.1(a), PCC shall not be
required to indemnify any of Buyer Indemnified Persons with respect to
the matters described in Sections 2.1(a)(i) and 2.1(a)(ii):
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(i) unless and until the sum of (A) the Adverse Consequences for
which indemnification pursuant to (1) Sections 2.1(a)(i) and
2.1(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of the
Other Indemnification Agreements is sought plus (B) any amounts
paid by Buyer to obtain any of the consents listed on Schedule
6.1(e)(i) of the Acquisition Agreement or in Schedule 6.1(e)(i)
of the Other Acquisition Agreements shall exceed $100,000 (the
"Basket"), in which case the entire amount of such Adverse
Consequences is recoverable;
(ii) unless the right to indemnity is asserted pursuant to Section
2.3, (i) on or before thirty (30) days after the Closing Date for
any breach of PCC's representations specified in Section 3.6(c)
or Section 3.6(d) of the Acquisition Agreement, (ii) on or before
the fifth anniversary of the Closing Date for any breach of PCC's
representations specified in Section 3.8 of the Acquisition
Agreement and (iii) on or before the second anniversary of the
Closing Date for any other matter described in Sections 2.1(a)(i)
or 2.1(a)(ii); and
(iii) for any matter, to the extent that the aggregate amount of the
Adverse Consequences for which Buyer Indemnified Persons have
been indemnified pursuant to Sections 2.1(a)(i) and 2.1(a)(ii) or
in Sections 2.1(a)(i) and 2.1(a)(ii) of the Other Indemnification
Agreements exceeds $15,000,000 (the "Cap").
(c) Notwithstanding the foregoing, PCC agrees that any claim by a Buyer
Indemnified Person for indemnification (i) arising out of, relating
to, in the nature of or caused by any breach of PCC's representations
specified in Sections 3.1, 3.2, 3.3, 3.6(a) and 3.14 of the
Acquisition Agreement or (ii) pursuant to Sections 2.1(a)(iii) and
2.1(a)(iv), shall not be subject to the provisions of paragraph (b) of
this Section 2.1.
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(d) PCC agrees that its indemnification obligation under this Agreement
includes the obligation to indemnify Buyer Indemnified Persons for
Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Buyer
Indemnified Persons may suffer after the end of any applicable
survival period, as long as a claim for indemnification is made before
the end of the applicable survival period and the Adverse Consequences
suffered relate to such claim).
2.2. Indemnification by Buyer.
(a) Buyer agrees to indemnify and hold harmless Pittston Indemnified
Persons from and against and reimburse them for, any and all Adverse
Consequences that any Pittston Indemnified Persons may suffer or incur
or become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty made
by Buyer in the Acquisition Agreement either: (A) as of the date
on which such representation or warranty was made or (B) as of
the Closing Date (provided that the consummation of the
transactions contemplated by the Acquisition Agreement in
accordance with its terms shall not be deemed without more to
have caused a breach of any representation or warranty);
(ii) any failure by Buyer to carry out, perform, satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or
obligations in or under the Acquisition Agreement (other than
Article VII and Article VIII thereof and with respect to the
Permits);
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(iii) any liability that any Pittston Indemnified Persons may suffer
or incur or become subject to because of: (A) any failure by
Buyer to carry out, perform, satisfy and discharge any of its
covenants, agreements, undertakings, liabilities or obligations
in the Acquisition Agreement relating to the Permits, or (B) the
use by Buyer or its post-Closing Affiliates of any Permit held by
PCC or any of its pre-Closing Affiliates;
(iv) the ownership of the Purchased Assets on or after the Closing
Date;
(v) any failure by Buyer to carry out, perform, satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or
obligations in or under Article VII and/or Article VIII of the
Acquisition Agreement, excluding the Retained Liabilities;
(vi) any liability that any Pittston Indemnified Person may suffer or
incur or become subject to because of any actions it takes
pursuant to the Administrative Services Agreement; provided,
however, that this Section 2.2(a)(vi) shall not apply to any
liability resulting from or arising out of any Pittston
Indemnified Person's conduct in bad faith or willful misconduct;
(vii) any liability that any Pittston Indemnified Person may suffer or
incur or become subject to because of any actions it takes
pursuant to the Subleases; provided, however, that this Section
2.2(a)(vii) shall not apply to any liability resulting from or
arising out of any Pittston Indemnified Person's default under
the terms of the Subleases, conduct in bad faith or willful
misconduct; and
8
(viii) any failure by Buyer to satisfy the Assumed Liabilities.
(b) The foregoing notwithstanding, Buyer shall not be required to
indemnify any Pittston Indemnified Persons with respect to the matters
described in Sections 2.2(a)(i) and 2.2(a)(ii):
(i) unless and until the sum of (A) Adverse Consequences for which
indemnification pursuant to (1) Sections 2.2(a)(i) and 2.2(a)(ii)
or (2) Sections 2.2(a)(i) and 2.2(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by
PCC to obtain any of the consents listed on Schedule 6.1(e)(ii)
of the Acquisition Agreement or in Schedule 6.1(e)(ii) of the
Other Acquisition Agreements shall exceed the Basket, in which
case the entire amount of such Adverse Consequences is
recoverable;
(ii) unless the right to indemnity is asserted on or before the second
anniversary of the Closing Date pursuant to Section 2.3; and
(iii) for any matter, to the extent that the aggregate amount of
Adverse Consequences for which the Pittston Indemnified Persons
have been indemnified pursuant to Sections 2.2(a)(i) and
2.2(a)(ii) or in Sections 2.2(a)(i) and 2.2(a)(ii) of the Other
Indemnification Agreements exceeds the Cap.
(c) Notwithstanding the foregoing, Buyer agrees that any claim by a
Pittston Indemnified Person for indemnification (i) arising out of,
relating to, in the nature of or caused by any breach of Buyer's
representations specified in Sections 4.1, 4.2, 4.3 and 4.4 of the
Acquisition Agreement or (ii) pursuant to Sections 2.2(a)(iii) through
(viii), shall not be subject to the provisions of paragraph (b) of
this Section 2.2.
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(d) Notwithstanding the foregoing, nothing in Section 2.2(a)(iv) shall
diminish the right of any Buyer Indemnified Person to seek
indemnification from PCC after the Closing Date pursuant to the terms
of this Agreement.
(e) Buyer agrees that its indemnification obligation under this Agreement
includes the obligation to indemnify Pittston Indemnified Persons for
Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Pittston
Indemnified Persons may suffer after the end of any applicable
survival period, as long as a claim for indemnification is made before
the end of the applicable survival period and the Adverse Consequences
suffered relate to such claim).
2.3. Indemnification Procedures.
(a) All claims for indemnification under this Agreement shall be asserted
and resolved pursuant to this Section 2.3.
(b) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice (a "Claim Notice") to the party
required to provide such indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has notice of any Adverse
Consequence which may give rise to a claim for indemnification against
the other party under this Agreement, provided, however, that no delay
on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced. The Indemnified Party shall not be
required to commence litigation or take any action against any third
party prior to delivery of the Claim Notice.
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(c) The Indemnifying Party will have the right (at its expense) to assume
the investigation and/or defense of any Adverse Consequence or any
litigation resulting therefrom so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing (within 20 days after the
Indemnified Party has given the Claim Notice) that the Indemnifying
Party will indemnify the Indemnified Party from and against the
entirety of the Adverse Consequence, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to
the Indemnified Party that the Indemnifying Party will have the
financial resources to defend, and otherwise indemnify for, the
Adverse Consequence and fulfill its indemnification obligations
hereunder and (iii) the Adverse Consequence involves only money
damages and does not seek an injunction or other equitable relief.
(d) So long as the Indemnifying Party is conducting the defense of the
Adverse Consequence in accordance with Section 2.3(c), (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Adverse Consequence, (B)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Adverse Consequence
without the prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Adverse Consequence without the prior written consent
of the Indemnified Party; provided, that the Indemnifying Party may
consent to such judgment or enter into such settlement without the
prior written consent of the Indemnified Party so long as an
unconditional term of any such judgment or settlement includes the
giving by the claimant or plaintiff to the Indemnified Party of a
release from all liability with respect to such Adverse Consequence.
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(e) In the event any of the conditions in Section 2.3(c) is or becomes
unsatisfied, however, (A) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement
with respect to, the Adverse Consequence in any manner it may
reasonably deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Adverse Consequence (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Parties will remain
responsible for any Adverse Consequence the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of
or caused by the Adverse Consequence to the fullest extent provided in
this Agreement.
(f) Any indemnification with respect to the matters set forth in Section
2.1(a)(iv) and addressed expressly in the Cooperation Agreement shall
be conducted exclusively in accordance with the Cooperation Agreement.
Notwithstanding any provision of this Agreement, PCC shall have no
obligation to indemnify any Buyer Indemnified Person with respect to
any claim or matter to the extent that any Buyer Indemnified Person
has failed to comply with its obligations under the Cooperation
Agreement with respect to such claim or matter or has taken any action
that prevents, hinders or delays PCC from managing or disposing of
such claim or matter in the manner elected by PCC in its sole
discretion.
2.4. Insurance Proceeds.
The amount of any indemnification payable in connection with any
transaction contemplated by this Agreement or the Acquisition Agreement shall be
net of any insurance proceeds available, under any insurance policies in effect
at the time that are maintained in the Ordinary Course of Business, to a Buyer
Indemnified Person or a Pittston Indemnified Person, respectively, in connection
12
with the events or circumstances giving rise to the indemnification. For
purposes of this Section 2.4, any pollution and legal liability insurance
policies or an insurance policy covering loss in connection with the
representations and warranties contained in the Acquisition Agreement will be
deemed not to be maintained in the Ordinary Course of Business.
2.5. Exclusivity of Rights and Procedures.
The parties agree that, except as set forth in Section 2.3(f) of this
Agreement, the D-R Service Agreement, Article VII of the Acquisition Agreement
or in any Articles titled "Certain Tax Matters" of the Other Acquisition
Agreements, this Agreement shall constitute the sole and exclusive remedy of the
parties hereto with respect to the subject matters addressed in this Agreement,
the Acquisition Agreement and the transactions contemplated by the Acquisition
Agreement. Each party to this Agreement hereby waives and releases the other
parties from any and all claims and other causes of action, including claims for
contribution, related to those subject matters, other than claims (i) pursuant
to the terms of this Agreement, (ii) related to the Retained Liabilities (in the
case of Buyer Indemnified Persons) or the Assumed Liabilities (in the case of
the Pittston Indemnified Persons), (iii) for fraud, and (iv) for injunctive
relief.
ARTICLE III
Guaranties
3.1. Pittston Guaranty.
(a) Pittston hereby irrevocably and unconditionally guarantees to Buyer
(the "Pittston Guaranty") the full and punctual performance and
compliance by PCC with each and every covenant, term and condition to
be performed or complied with by PCC under this Agreement and the
Acquisition Agreement. The Pittston Guaranty expressed in this Section
3.1 is an absolute, present, primary and continuing guaranty of
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performance and compliance and not of collectibility and is in no way
conditioned or contingent upon any attempt to enforce such performance
or compliance by PCC or upon any other condition or contingency.
(b) Pittston hereby expressly waives (i) notice of acceptance of the
Pittston Guaranty and (ii) any other notice given to PCC in accordance
with the provisions of the Agreement on any default under the
Agreement or otherwise. Pittston hereby authorizes Buyer to forbear
with respect to, amend, modify, enlarge, extend, compromise and
discharge any or all of the obligations of PCC under the Agreement
without notice to or consent by Pittston. Pittston acknowledges and
agrees that its liability under the Pittston Guaranty is joint and
several with PCC and, upon any default by PCC, Buyer shall not be
obligated to first attempt enforcement against PCC. Pittston hereby
waives any and all defenses to enforcement of the Pittston Guaranty,
now existing or hereafter arising, which may be available to
guarantors, sureties and other secondary parties at law or in equity.
(c) Pittston represents and warrants to Buyer that (i) Pittston is a
corporation validly existing and in good standing under the laws of
the Commonwealth of Virginia; (ii) all necessary corporate action has
been duly taken by it to authorize the execution, delivery and
performance by it of the Pittston Guaranty, (iii) the Pittston
Guaranty is being executed on Pittston's behalf by a duly authorized
representative, (iv) the Pittston Guaranty is the legally valid and
binding obligation of Pittston enforceable in accordance with its
terms, and (v) the execution and the delivery of the Pittston Guaranty
will not (A) conflict with, or result in a violation or breach of, or
a default, right to accelerate, right to exercise any remedy or loss
of rights under, or result in the creation of any Lien (other than
Permitted Liens) under or pursuant to, any provision of Pittston's
Articles of Incorporation or Bylaws or of any material franchise,
14
mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding to which Pittston is a
party or by which Pittston is bound, or any Law or any order,
judgment, writ, injunction or decree to which Pittston is a party or
by which Pittston may be bound or affected; (B) require the approval,
consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or contravene, conflict
with or result in a violation of any of the terms or requirements of,
or give any Governmental Authority the right to revoke, withdraw,
suspend, cancel or terminate any authorization or permit issued by a
Governmental Authority that is held by Pittston or that otherwise
relates to the Pittston's business; or (C) give any Governmental
Authority or other Person the right to challenge any of the
transactions contemplated hereunder or exercise any remedy or obtain
any relief under any Law to which Pittston is subject.
(d) Pittston agrees to pay all reasonable costs and expenses, including
reasonable attorney fees and related costs, incurred by Buyer
Indemnified Persons in enforcing Pittston's liability to Buyer
Indemnified Persons under the Pittston Guaranty whether or not a civil
action or similar proceeding (including claims and proceedings in and
before the bankruptcy court or arbitrators) is filed, prosecuted or
appealed. If an action or proceeding is filed, prosecuted or appealed,
the reasonableness of such attorney fees shall be determined by the
trial judge and if, appealed, by the appellate court.
(e) The Pittston Guaranty shall be binding upon Pittston and its
successors and assigns, and shall inure to the benefit of and be
enforceable by Buyer and its successors and assigns. For purposes of
the Pittston Guaranty, Pittston shall be deemed to include the
surviving entity in any merger or consolidation involving Pittston,
which survivor shall be bound by the provisions of the Pittston
Guaranty and this Agreement.
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3.2. Buyer's Ultimate Parent Guaranty.
(a) Buyer's Ultimate Parent hereby irrevocably and unconditionally
guarantees to PCC (the "Buyer's Ultimate Parent Guaranty") the full
and punctual performance and compliance by Buyer with each and every
covenant, term and condition to be performed or complied with by Buyer
under this Agreement, the Acquisition Agreement and the Promissory
Note. Buyer's Ultimate Parent Guaranty expressed in this Section 3.2
is an absolute, present, primary and continuing guaranty of
performance and compliance and not of collectibility and is in no way
conditioned or contingent upon any attempt to enforce such performance
or compliance by Buyer or upon any other condition or contingency.
(b) Buyer's Ultimate Parent hereby expressly waives (i) notice of
acceptance of Buyer's Ultimate Parent Guaranty and (ii) any other
notice given to Buyer in accordance with the provisions of the
Agreement on any default under the Agreement or otherwise. Buyer's
Ultimate Parent hereby authorizes PCC to forbear with respect to,
amend, modify, enlarge, extend, compromise and discharge any or all of
the obligations of Buyer under the Agreement without notice to or
consent by Buyer's Ultimate Parent. Buyer's Ultimate Parent
acknowledges and agrees that its liability under Buyer's Ultimate
Parent Guaranty is joint and several with Buyer and, upon any default
by Buyer, PCC shall not be obligated to first attempt enforcement
against Buyer. Buyer's Ultimate Parent hereby waives any and all
defenses to enforcement of Buyer's Ultimate Parent Guaranty, now
existing or hereafter arising, which may be available to guarantors,
sureties and other secondary parties at law or in equity.
(c) Buyer's Ultimate Parent represents and warrants to PCC that (i)
Buyer's Ultimate Parent is a limited liability company validly
existing and in good standing under the laws of the State of Delaware;
(ii) all necessary corporate action has been duly taken by it to
16
authorize the execution, delivery and performance by it of Buyer's
Ultimate Parent Guaranty, (iii) Buyer's Ultimate Parent Guaranty is
being executed on Buyer's Ultimate Parent's behalf by a duly
authorized representative, (iv) Buyer's Ultimate Parent Guaranty is
the legally valid and binding obligation of Buyer's Ultimate Parent
enforceable in accordance with its terms, and (v) the execution and
the delivery of Buyer's Ultimate Parent Guaranty will not (A) conflict
with, or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under, or
result in the creation of any Lien (other than Permitted Liens) under
or pursuant to, any provision of Buyer's Ultimate Parent's Certificate
of Formation, Operating Agreement or other organizational documents or
of any material franchise, mortgage, deed of trust, lease, license,
instrument, agreement, consent, approval, waiver or understanding to
which Buyer's Ultimate Parent is a party or by which Buyer's Ultimate
Parent is bound, or any Law or any order, judgment, writ, injunction
or decree to which Buyer's Ultimate Parent is a party or by which
Buyer's Ultimate Parent may be bound or affected; (B) require the
approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or contravene, conflict
with or result in a violation of any of the terms or requirements of,
or give any Governmental Authority the right to revoke, withdraw,
suspend, cancel or terminate any authorization or permit issued by a
Governmental Authority that is held by Buyer's Ultimate Parent or that
otherwise relates to Buyer's Ultimate Parent's business; or (C) give
any Governmental Authority or other Person the right to challenge any
of the transactions contemplated hereunder or exercise any remedy or
obtain any relief under any Law to which Buyer's Ultimate Parent is
subject.
(d) Buyer's Ultimate Parent agrees to pay all reasonable costs and
expenses, including reasonable attorney fees and related costs,
17
incurred by the Pittston Indemnified Persons in enforcing Buyer's
Ultimate Parent's liability to the Pittston Indemnified Persons under
Buyer's Ultimate Parent Guaranty whether or not a civil action or
similar proceeding (including claims and proceedings in and before the
bankruptcy court or arbitrators) is filed, prosecuted or appealed. If
an action or proceeding is filed, prosecuted or appealed, the
reasonableness of such attorney fees shall be determined by the trial
judge and if, appealed, by the appellate court.
(e) Buyer's Ultimate Parent Guaranty shall be binding upon Buyer's
Ultimate Parent and its successors and assigns, and shall inure to the
benefit of and be enforceable by PCC and its successors and assigns.
For purposes of Buyer's Ultimate Parent Guaranty, Buyer's Ultimate
Parent shall be deemed to include the surviving entity in any merger
or consolidation involving Buyer's Ultimate Parent, each of whom shall
be bound by the provisions of the Buyer's Ultimate Parent Guaranty and
this Agreement.
ARTICLE IV
SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
ARTICLE V
notices
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other parties in the
manner provided by this Article V:
18
if to PCC or Pittston, to them at:
Pittston Coal Company
448 N.E. Main Street
P. O. Box 5100
Lebanon, Virginia 24266
Attention: President
with a copy to:
Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P. O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
and a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
if to Buyer:
Dickenson-Russell Coal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
19
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
if to Buyer's Ultimate Parent, to it at:
Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Michael J. Quillen
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
ARTICLE VI
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but this
Agreement and the rights, interests or obligations hereunder shall not be
assignable by Buyer's Ultimate Parent, Buyer, Pittston or PCC without the prior
written consent of the other parties and any attempt to make such an assignment
without such consent shall be void and of no effect.
20
ARTICLE VII
arbitration
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to designate an arbitrator within fourteen (14) calendar days after arbitration
is requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Article VII shall be the exclusive means to resolve all
Disputes.
ARTICLE VIII
MISCELLANEOUS
8.1. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
8.2. Integration.
This Agreement and any other agreement entered into contemporaneously with
this Agreement among PCC, Pittston, Buyer and Buyer's Ultimate Parent or the
Affiliates of any of them constitute the entire agreement and supercede all
prior agreements and understandings not reflected in the Acquisition Agreement,
both written and oral, among the parties with respect to the subject matter
hereof.
21
8.3. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument.
8.4. Governing Law.
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Commonwealth of Virginia, without
regard to the conflicts of laws principles thereof.
22
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
DICKENSON-RUSSELL COAL COMPANY, LLC,
a Delaware limited liability company
By:/s/ Anthony McGartland
-----------------------------------------
Name: Anthony McGartland
Title: President
ALPHA NATURAL RESOURCES, LLC, a Delaware limited
liability company
By:/s/ Mike Quillen
-----------------------------------------
Name: Mike Quillen
Title: President
PITTSTON COAL COMPANY,
a Delaware corporation
By:/s/ Michael D. Brown
-----------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and Technical
Resources
THE PITTSTON COMPANY,
a Virginia corporation
By:/s/ James B. Hartough
-----------------------------------------
Name: James B. Hartough
Title: Vice President - Corporate Finance and
Treasurer
23
Schedule A
Asset Purchase Agreement by and between Pittston Coal Company and Paramont
Coal Company Virginia, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Land and Reserves, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Coal Sales Co., LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Terminal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Maxxim
Rebuild Co., LLC, dated as of October 29, 2002, as amended.
24
Schedule B
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Paramont Coal Company Virginia, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Land and Reserves, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Coal Sales Co., LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Terminal Company, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Maxxim Rebuild Co., LLC and Alpha Natural Resources, LLC,
dated as of December 13, 2002.
25
Exhibit 2.4
COOPERATION AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
DICKENSON-RUSSELL COAL COMPANY, LLC
December 13, 2002
Table of Contents
Page
-----
ARTICLE I DEFINITIONS............................................................................................2
1.1. Acquisition Agreement.................................................................................2
1.2. Actuarial Firm........................................................................................2
1.3. Affiliates, Successors, Assigns, Lessees or Contractors...............................................2
1.4. Agreement.............................................................................................3
1.5. Amended Medical Plan..................................................................................3
1.6. Amended Plan Projected Cost...........................................................................3
1.7. Classified Plan Expected Cost.........................................................................3
1.8. Closing Layoff........................................................................................3
1.9. Coal Act Liabilities..................................................................................3
1.10. Collective Bargaining Agreement Liabilities...........................................................3
1.11. Communications........................................................................................4
1.12. Employee Related Liabilities..........................................................................4
1.13. D-R...................................................................................................4
1.14. Participants..........................................................................................4
1.15. PCC...................................................................................................4
1.16. Post-94 Retirees......................................................................................4
1.17. Post-94 Retiree Medical Liabilities...................................................................4
1.18. Recurrence Claim......................................................................................4
1.19. Relative Cost Factor..................................................................................4
1.20. Third Parties.........................................................................................5
1.21. UMWA..................................................................................................5
1.22. Workers' Compensation and Federal Black Lung Liabilities..............................................5
ARTICLE II COAL ACT LIABILITIES..................................................................................5
2.1. General...............................................................................................5
ARTICLE III POST-94 RETIREE MEDICAL LIABILITIES..................................................................7
3.1. General...............................................................................................7
3.2. Amendment to Collective Bargaining Agreements.........................................................9
3.3. PCC Amendments to the Medical Plans..................................................................11
3.4. D-R Provision of Benefits............................................................................12
ARTICLE IV WORKERS' COMPENSATION AND FEDERAL BLACK LUNG LIABILITIES.............................................13
4.1. General..............................................................................................13
4.2. Litigation and Disputes..............................................................................14
4.3. No Adverse Changes...................................................................................14
4.4. Recurrence of Prior Claims...........................................................................15
ARTICLE V EMPLOYEE RELATED LIABILITIES..........................................................................16
5.1. Employee Related Liabilities.........................................................................16
ARTICLE VI Collective bargaining agreement......................................................................17
6.1. Collective Bargaining Agreement Liabilities..........................................................17
ARTICLE VII DISPUTE RESOLUTION..................................................................................18
ARTICLE VIII TERM...............................................................................................19
ARTICLE IX MISCELLANEOUS........................................................................................19
9.1. Cooperation..........................................................................................19
9.2. Continuing Obligations...............................................................................20
9.3. D-R Communication with Third Parties.................................................................21
9.4. Litigation Support...................................................................................22
9.5. Confidentiality......................................................................................22
9.6. Governing Law........................................................................................23
9.7. Successors and Assigns...............................................................................23
9.8. Notices and Payments.................................................................................24
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT, made as of December 13, 2002, by and between
PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), on its own behalf and on
behalf of its Affiliates, and DICKENSON-RUSSELL COAL COMPANY, LLC, a Delaware
limited liability company ("D-R"), on its own behalf and on behalf of its
Affiliates.
RECITALS
WHEREAS, D-R, PCC and certain Affiliates of PCC have entered into a certain
asset purchase agreement as set forth on Schedule A, dated as of October 29,
2002 (such agreement, together with the Exhibits and Schedules attached thereto
being hereinafter referred to as the "Acquisition Agreement"), pursuant to which
D-R has agreed to purchase or acquire from PCC and certain of its Affiliates
certain assets, and assume certain liabilities, all upon the terms and subject
to the conditions set forth in the Acquisition Agreement;
WHEREAS, pursuant to the Acquisition Agreement, PCC has agreed to retain
certain liabilities and certain assets; and
WHEREAS, PCC, PCC Parent, D-R and Alpha Natural Resources, LLC, a Delaware
limited liability company, have entered into the Indemnification and Guaranty
Agreement; and
WHEREAS, PCC and D-R desire to establish certain administrative procedures
with respect to their respective obligations under the Acquisition Agreement;
provided, however, that nothing in this Agreement is intended in any way to
reallocate risk or modify the allocation of liabilities in the Acquisition
Agreement or the Indemnification and Guaranty Agreement; and provided, further,
that nothing in this Agreement, the Acquisition Agreement or the Indemnity
Agreement is intended to, nor should be construed to, establish a single
employer, joint employer, common employer and/or alter ego relationship between
PCC and its Affiliates on the one hand and D-R and its Affiliates on the other
hand.
1
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and in the Acquisition Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, PCC and D-R agree that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Actuarial Firm.
"Actuarial Firm" shall have the meaning set forth in Section 3.2(b) hereof.
1.3. Affiliates, Successors, Assigns, Lessees or Contractors.
"Affiliates, Successors, Assigns, Lessees or Contractors" shall mean D-R's
Affiliates, contractual successors and assigns, and lessees and contractors who,
as part of a contractual arrangement with D-R or one of its Affiliates, offer
employment to the current or former Employees of an Asset Sale Company.
2
1.4. Agreement.
"Agreement" shall mean this Cooperation Agreement, together with the
Schedule[s] attached hereto, as the same may be amended from time to time in
accordance with the terms hereof.
1.5. Amended Medical Plan.
"Amended Medical Plan" shall have the meaning set forth in Section 3.2(a)
hereof.
1.6. Amended Plan Projected Cost.
"Amended Plan Projected Cost" shall have the meaning set forth in Section
3.2(b) hereof.
1.7. Classified Plan Expected Cost.
"Classified Plan Expected Cost" shall have the meaning set forth in Section
3.2(b) hereof.
1.8. Closing Layoff.
"Closing Layoff" shall have the meaning set forth in Section 6.1 hereof.
1.9. Coal Act Liabilities.
"Coal Act Liabilities" shall mean those Retained Liabilities specified in
Section 1.95(j) of the Acquisition Agreement.
1.10. Collective Bargaining Agreement Liabilities.
"Collective Bargaining Agreement Liabilities" shall mean those liabilities
assumed by the Buyer pursuant to Section 8.2 of the Acquisition Agreement and
Section IV of Schedule 1.9 thereto.
3
1.11. Communications.
"Communications" shall have the meaning set forth in Section 2.1(a) hereof.
1.12. Employee Related Liabilities.
"Employee Related Liabilities" shall mean those Retained Liabilities
specified in Sections 1.95(d), 1.95(e), 1.95(f), 1.95(i), 1.95(l), 1.95(m),
1.95(n), and 1.95(p) of the Acquisition Agreement.
1.13. D-R.
"D-R" shall have the meaning set forth in the preamble to this Agreement.
1.14. Participants.
"Participants" shall have the meaning set forth in Section 3.4 hereof.
1.15. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.16. Post-94 Retirees.
"Post-94 Retirees" shall mean the current and former Classified Employees
for whom PCC has retained liabilities pursuant to Section 1.95(k) of the
Acquisition Agreement.
1.17. Post-94 Retiree Medical Liabilities
"Post-94 Retiree Medical Liabilities" shall mean those Retained Liabilities
specified in Section 1.95(k) of the Acquisition Agreement.
1.18. Recurrence Claim.
"Recurrence Claim" shall have the meaning set forth in Section 4.4 hereof.
1.19. Relative Cost Factor.
"Relative Cost Factor" shall have the meaning set forth in Section 3.2(b)
hereof.
4
1.20. Third Parties.
"Third Parties" shall have the meaning set forth in Section 9.3 hereof.
1.21. UMWA.
"UMWA" shall mean the International Union, United Mine Workers of America,
including its district and local unions.
1.22. Workers' Compensation and Federal Black Lung Liabilities.
"Workers' Compensation and Federal Black Lung Liabilities" shall mean those
Retained Liabilities specified in Sections 1.95(b) and 1.95(c) of the
Acquisition Agreement.
ARTICLE II
COAL ACT LIABILITIES
2.1. General.
In order to assist PCC with regard to the satisfaction of the Coal Act
Liabilities, PCC and D-R agree as follows:
(a) Notices and Communication.
In the event D-R or any of its Affiliates, Successors, Assigns, Lessees or
Contractors receive from any administrative, judicial or other source any
claims, communications, correspondence, notices, invoices and/or other documents
(collectively, "Communications") that are related to the Coal Act Liabilities,
D-R agrees that it shall, and shall cause its Affiliates, Successors, Assigns,
Lessees or Contractors to:
(i) promptly send to PCC or its designated Affiliate a copy of any
such Communications; and
5
(ii) cooperate with PCC in notifying the sender of the Communications
that such Communications should be sent to PCC or its designated
Affiliate.
(b) Litigation.
PCC shall have the exclusive right to pursue and/or defend currently
pending litigation or to commence and/or defend future litigation, with respect
to any issue relating to the Coal Act Liabilities, including, but not limited
to, claims pertaining to specific beneficiaries, statutory construction or the
constitutionality of the Coal Act, as PCC deems necessary or appropriate.
(c) Administration. PCC or one or more of its Affiliates shall be solely
responsible for administering the Coal Act Liabilities and shall take
such actions as it deems necessary or appropriate to administer the
Coal Act Liabilities, including, but not limited to:
(i) pursuing administrative or judicial challenges to the assignment
of beneficiaries to PCC or any of its Affiliates in accordance
with the terms of the Coal Act;
(ii) administering claims under the individual employer plan required
to be maintained under Section 9711 of the Coal Act, including
entering into agreements with third party administrators and
resolving or litigating claim disputes;
(iii) implementing managed care and/or other methods of delivery; and
6
(iv) discussing managed care and cost containment options with the
UMWA.
ARTICLE III
POST-94 RETIREE MEDICAL LIABILITIES
3.1. General.
In order to assist PCC with regard to the satisfaction of the Post-94
Retiree Medical Liabilities, PCC and D-R agree as follows:
(a) Administration.
PCC or one or more of its Affiliates shall be solely responsible for
administering the Post-94 Retiree Medical Liabilities, making such
determinations, awarding and denying such benefits, seeking such administrative
and judicial rulings and remedies and taking all such other actions as PCC shall
deem necessary or appropriate.
(b) Notices and Communication.
(i) PCC shall have the exclusive right to provide such notices, if
any, as PCC deems necessary or appropriate to the Post-94
Retirees, the UMWA and any insurers and third party
administrators providing services or benefits related to the
Post-94 Retiree Medical Liabilities, with respect to PCC's
retention, administration and satisfaction of the Post-94 Retiree
Medical Liabilities.
(ii) In the event D-R or any of its Affiliates, Successors, Assigns,
Lessees or Contractors receives any Communications that are
related to the Post-94 Retiree Medical Liabilities, D-R agrees
that it shall, and shall cause its Affiliates, Successors,
Assigns, Lessees or Contractors to, promptly send to PCC or its
designated Affiliate a copy of any such Communications and to
cooperate with PCC in notifying the sender of the Communications
that such Communications should be sent to PCC or its designated
Affiliate.
7
(iii) D-R shall provide to PCC, on a monthly basis, written notice of
(and by electronic means if available) (a) the names and social
security numbers, (b) dates of hire, (c) location of employment
and whether such employment is covered by a collective bargaining
agreement and (d) whether D-R believes that in the event any such
individual becomes entitled to retiree medical benefits,
liability therefor would be a Post-94 Retiree Medical Liability,
for all Classified Employees listed on Schedules 1.95(k)(1) and
1.95(k)(3) of the Acquisition Agreement who are recalled or hired
by D-R or any of its Affiliates, Successors, Assigns, Lessees or
Contractors. Each monthly notice shall include only new or
changed information from the last update.
(iv) The foregoing monthly notices also shall identify whenever the
total number of Classified Employees working at the Purchased
Assets listed on Schedule 1.95(k)(2) of the Acquisition Agreement
(A) reaches the 273 Threshold, (B) exceeds the 273 Threshold or
(C) decreases to less than the 273 Threshold, including the dates
on which the events described in (A), (B) and (C) of this
paragraph occurred.
(v) D-R shall provide written notice to PCC in the event D-R or any
of its Affiliates, Successors, Assigns, Lessees or Contractors
negotiates any successor agreement to any of the Collective
Bargaining Agreements that does not require such entity to
provide retiree medical benefits to UMWA pensioners, or which
contains any modifications or amendments to or replacements of
any Classified Employee Retiree Medical Plan.
(vi) D-R shall provide all information reasonably requested by PCC in
connection with any Classified Employee listed on Schedules
1.95(k)(1) and 1.95(k)(3) of the Acquisition Agreement who seeks
8
to receive retiree health benefits from D-R or PCC and whom D-R
or PCC believes is the responsibility of PCC under the Post-94
Retiree Medical Liabilities, including, without limitation, a
copy of such Classified Employee's UMWA Pension Plan award letter
and calculation worksheet, dates of employment with D-R or its
Affiliates, Successors, Assigns, Lessees or Contractors, and
verification that such Employee was hired or recalled to work at
the Purchased Assets listed on Schedule 1.95(k)(2) of the
Acquisition Agreement.
(vii) D-R shall provide all other information reasonably requested by
PCC in order to satisfy and/or administer the Post-94 Retiree
Medical Liabilities.
(c) Litigation and Disputes.
(i) PCC shall have the exclusive right to resolve any dispute
regarding Post-94 Retiree Medical Liabilities as PCC in its
discretion deems appropriate, including the exclusive right to
institute and/or defend against any litigation related to Post-94
Retiree Medical Liabilities.
(ii) PCC shall have the right to challenge any assertion that the
retiree medical benefits for any Classified Employee listed on
Schedules 1.95(k)(1) and 1.95(k)(3) of the Acquisition Agreement
is a Post-94 Retiree Medical Liability. In the event such a
challenge cannot be mutually resolved between PCC and D-R, it
shall become a Dispute under this Agreement and resolved in
accordance with Article VI hereof.
3.2. Amendment to Collective Bargaining Agreements.
(a) D-R and PCC acknowledge that from time to time it may be necessary for
D-R or its Affiliates, Successors, Assigns, Lessees or Contractors to
re-negotiate the terms of the Collective Bargaining Agreements. In the
9
event that D-R or its Affiliates, Successors, Assigns, Lessees or
Contractors agrees to any modifications or amendments to the benefits
provided under, or to the plan design of, any Classified Employee
Retiree Medical Plan ("Amended Medical Plan"), to the extent allowed
by law PCC shall have the right to determine whether to satisfy the
Post-94 Retiree Medical Liabilities through the Classified Employee
Retiree Medical Plan(s) or through any Amended Medical Plan, provided,
however, in the event a claim against D-R or PCC is filed with a court
or administrative agency with jurisdiction over the claim, asserting
that the Post-94 Retiree Medical Liabilities must be provided through
an Amended Medical Plan, then, (i) in the event the claim is asserted
against PCC, PCC may elect to satisfy the Post-94 Medical Liabilities
though an Amended Medical Plan, and (ii) in the event the claim is
asserted against D-R, PCC shall agree, upon the written request of
D-R, to satisfy such Liabilities through the Amended Medical Plan.
(b) In the event an Amended Medical Plan is negotiated by D-R or its
Affiliates, Successors, Assigns, Lessees or Contractors, PCC shall
have the right, at its sole cost and expense, to submit to the
actuarial firm of Mercer Human Resource Consulting, or another
actuarial firm mutually acceptable to PCC and D-R (the "Actuarial
Firm"): (i) the Classified Employee Retiree Medical Plan(s) pursuant
to which PCC is satisfying the Post-94 Retiree Medical Liabilities;
and (ii) the Amended Medical Plan. The Actuarial Firm will perform a
relative value analysis of each plan, including its administration,
using actuarial methods designed to estimate the cost difference
between two or more plans. This analysis will compare the coverage
provisions of the Amended Medical Plan to those of the Classified
Employee Retiree Medical Plan(s) to determine the relative cost of
10
each plan based on the respective benefit design and services covered.
This relative cost will be calculated as a factor representing the
percentage cost difference of the Amended Medical Plan relative to the
Classified Employee Retiree Medical Plan(s) ("Relative Cost Factor").
If the relative value analysis demonstrates that the cost of the
Amended Medical Plan, including its administration, exceeds the cost
of the Classified Employee Retiree Medical Plan(s), including its
administration, and PCC chooses or is required to satisfy the Post-94
Retiree Medical Liabilities through the Amended Medical Plan, D-R will
reimburse PCC that amount by which the projected cost to be incurred
by PCC for that plan year to satisfy the Post-94 Retiree Medical
Liabilities under the Amended Medical Plan ("Amended Plan Projected
Cost") exceeds the amount PCC would have expected to incur under the
terms of the Classified Employee Retiree Medical Plan(s) ("Classified
Plan Expected Cost"). This amount shall be divided and reimbursed in
four equal installments at the end of each calendar quarter. The
Amended Plan Projected Cost and the Classified Plan Expected Cost will
be estimated based on actuarial methods and factors, including the
historical experience of the plans, expected medical cost and
utilization trend, demographic differences and the Relative Cost
Factor.
(c) Either PCC or D-R shall have the right to request that the Actuarial
Firm perform a new relative value analysis of the Classified Employee
Retiree Medical Plan(s) and the Amended Medical Plan, or any successor
thereto: (i) at the termination of any collective bargaining agreement
to which D-R or any of its Affiliates, Successors, Assigns, Lessees or
Contractors are signatory or every five years, whichever occurs first;
and (ii) in the event legislation is enacted which affects the terms
or costs of any such plan. The party requesting such new relative
value analysis shall pay all costs and expenses associated therewith.
3.3. PCC Amendments to the Medical Plans.
If PCC has or secures from the UMWA a right to change the medical plan(s)
by which it satisfies the Post-94 Retiree Medical Liabilities, PCC may make any
11
such changes so long as they do not impose any liability or additional costs or
obligations on D-R or its Affiliates, Successors, Assigns, Lessees or
Contractors.
3.4. D-R Provision of Benefits.
D-R and PCC acknowledge that there is a possibility that participants for
which PCC is required to satisfy the Post-94 Retiree Medical Liabilities may
demand under the Collective Bargaining Agreements that D-R or its Affiliates,
Successors, Assigns, Lessees or Contractors, rather than PCC, provide their
retiree medical benefits ("Participants"). In the event D-R or its Affiliates,
Successors, Assigns, Lessees or Contractors is required to provide such retiree
medical benefits for any such Participant:
(a) PCC shall reimburse D-R or its Affiliates, Successors, Assigns,
Lessees or Contractors the Classified Plan Expected Cost, prorated for
each such Participant, which will be estimated based on actuarial
methods and factors, including the historical experience of the plans,
expected medical cost and utilization trend, demographic differences
and the Relative Cost Factor. This amount shall be divided and
reimbursed in four equal installments at the end of each calendar
quarter.
(b) Either PCC or D-R shall have the right to request that the Actuarial
Firm perform a new relative value analysis of the Classified Employee
Retiree Medical Plan(s) and the Amended Medical Plan, or any successor
thereto: (i) at the termination of any collective bargaining agreement
to which D-R or any of its Affiliates, Successors, Assigns, Lessees or
Contractors are signatory or every five years, whichever occurs first;
and (ii) in the event legislation is enacted which affects the terms
or costs of any such plan. The party requesting such new relative
value analysis shall pay all costs and expenses associated therewith.
12
ARTICLE IV
WORKERS' COMPENSATION AND FEDERAL BLACK LUNG LIABILITIES
4.1. General.
In order to assist PCC with regard to the satisfaction of the Workers'
Compensation and Federal Black Lung Liabilities, PCC and D-R agree as follows:
(a) Administration.
PCC or one or more of its Affiliates shall be solely responsible for
administering the Workers' Compensation and Black Lung Liabilities, including
making such determinations, awarding and denying such benefits, seeking such
administrative and judicial rulings and remedies and taking all such other
actions as PCC shall deem necessary or appropriate.
(b) Notices and Communication.
(i) D-R and PCC agree to cooperate with each other in providing any
notices that may be necessary to the appropriate Governmental
Authority regarding the allocation between PCC, on the one hand,
and D-R, on the other hand, of the Workers' Compensation and
Federal Black Lung Liabilities.
(ii) In the event D-R or any of its Affiliates, Successors, Assigns,
Lessees or Contractors receive any Communications that are
related to the Workers' Compensation and Federal Black Lung
Liabilities, D-R agrees that it shall, and shall cause its
Affiliates, Successors, Assigns, Lessees or Contractors to, send
promptly to PCC or its designated Affiliate a copy of any such
Communications.
(iii) D-R and PCC agree to cooperate with each other in providing such
notices of the allocation of liabilities under the Acquisition
13
Agreement as D-R and PCC deems appropriate to any insurer or
third party administrator providing services or benefits related
to the Workers' Compensation and Federal Black Lung Liabilities.
4.2. Litigation and Disputes.
PCC shall have the right to resolve or defend against any claim that is
related to the Workers' Compensation and Federal Black Lung Liabilities in such
manner as PCC in its discretion deems appropriate, in accordance with such
procedures as PCC deems appropriate and with the controlling Workers'
Compensation Act and federal black lung Laws, including raising the defense that
D-R is the responsible operator under the federal black lung Laws because D-R or
its Affiliates, Successors, Assigns, Lessees or Contractors is a
successor-in-interest to PCC or its Affiliates; provided, however, that D-R
shall have the right to respond that PCC is the responsible operator under the
federal black lung Laws notwithstanding D-R's acquisition of the Purchased
Assets. PCC also shall have the right to institute or defend against any
litigation related to the Workers' Compensation and Federal Black Lung
Liabilities, except that PCC shall promptly notify D-R of any workers'
compensation or federal black lung claim in which it intends to assert that D-R
is responsible for payment of the same under the Acquisition Agreement, in which
case D-R shall have the right to intervene in any such action to oppose PCC's
position. Any dispute as to which entity is the responsible entity for such
workers' compensation claims shall be determined in accordance with the Workers'
Compensation Acts, and any dispute as to which entity is the responsible
operator for such black lung claims shall be determined in accordance with the
federal black lung Laws.
4.3. No Adverse Changes.
D-R agrees that it will, and will cause its Affiliates, Successors,
Assigns, Lessees or Contractors to, use its or their commercially reasonable
14
efforts to retain in effect any lawful program or practice of PCC or its
Affiliates in effect at Closing that is intended to reduce employer liability or
the length of time an employee is entitled to receive benefits under the
Workers' Compensation Act.
4.4. Recurrence of Prior Claims.
In the event D-R or any of its Affiliates, Successors, Assigns, Lessees or
Contractors receives a claim under the applicable Workers' Compensation Acts or
federal black lung Laws and D-R or its Affiliates, Successors, Assigns, Lessees
or Contractors believes in good faith that such claim relates to, or is a
recurrence of, a prior claim that constituted a Workers' Compensation or Federal
Black Lung Liability (a "Recurrence Claim"), the provisions of this Section 4.4
shall govern. D-R shall promptly notify PCC of any Recurrence Claim and the
basis for its determination that such claim is a Recurrence Claim prior to
communicating its determination to any other person or entity. If PCC agrees
with D-R that such claim is a Recurrence Claim, such claim shall be deemed a
Workers' Compensation and Federal Black Lung Liability, and the rights and
obligations of the parties shall be as provided in this Article IV. If PCC
disagrees with D-R's position, the matter will be submitted to the appropriate
Governmental Authority for a determination, with each side being responsible for
its respective costs in such procedure. D-R recognizes that in the event the
employee who has filed the claim disagrees with the position of the parties with
respect to a Recurrence Claim, the employee may file a claim with the
appropriate Governmental Authority for a determination. In any such case, PCC
and D-R shall each have the right to defend its position, with each side bearing
the cost of its own defense.
15
ARTICLE V
EMPLOYEE RELATED LIABILITIES
5.1. Employee Related Liabilities.
In order to assist PCC with regard to the satisfaction of the Employee
Related Liabilities, PCC and D-R agree as follows:
(a) Administration. PCC or one or more of its Affiliates shall be solely
responsible for administering the Employee Related Liabilities, making
such determinations, awarding and denying such benefits, seeking such
administrative and judicial rulings and remedies and taking all such
other actions as PCC shall deem necessary or appropriate.
(b) Notices and Communication.
(i) PCC has the exclusive right to provide such notices as PCC deems
necessary or appropriate to Employees or other beneficiaries
regarding any matters related to the Employee Related Liabilities
and to any third parties providing services or benefits related
to the Employee Related Liabilities.
(ii) In the event D-R or any of its Affiliates, Successors, Assigns,
Lessees or Contractors receives any Communications that are
related to the Employee Related Liabilities, D-R shall promptly
send, and shall cause its Affiliates, Successors, Assigns,
Lessees or Contractors promptly to send, such Communications to
PCC or its designated Affiliate.
16
(iii) D-R agrees to provide on a monthly basis for a period of 12
months following the Closing Date, the names and social security
numbers of any non-Classified Employees hired by D-R or its
Affiliates, Successors, Assigns, Lessees or Contractors and
further agrees to provide, and shall cause its Affiliates,
Successors, Assigns, Lessees or Contractors to provide, all
information in its or their possession or under its or their
control reasonably requested by PCC in order to administer and
satisfy any Employee Related Liabilities.
(c) Litigation. PCC shall have the exclusive right to pursue and/or defend
currently pending litigation, or to commence and/or defend future
litigation, with respect to any issue related to any Employee Related
Liabilities, as PCC shall deem necessary or appropriate.
ARTICLE VI
Collective bargaining agreement
6.1. Collective Bargaining Agreement Liabilities.
In order to assist D-R with regard to the satisfaction of the Collective
Bargaining Agreement Liabilities, PCC and D-R agree as follows: (a) Panel Forms.
(i) Promptly after the Closing, PCC shall provide to D-R the existing
panel forms and Contractor Interest Forms, if any, for the Classified
Employees on Schedule 3.13(b) of the Acquisition Agreement who were
laid off prior to the layoff mandated by Section 8.1(a) of the
Acquisition Agreement ("Closing Layoff").
17
(ii) At the time of the Closing Layoff, PCC shall provide to such
Classified Employees the forms that are necessary for such Classified
Employees to provide their panel information in accordance with the
Collective Bargaining Agreements and shall advise such Classified
Employees to return those forms to PCC within the time allowed under
the Collective Bargaining Agreements.
(iii) Within a reasonable period of time after the panel forms must be
returned under the Collective Bargaining Agreements, PCC shall provide
all forms that have been returned to D-R.
(iv) PCC shall notify D-R of any Classified Employee on Schedule 3.13(b) of
the Acquisition Agreement who failed to submit a panel form as
required under the Collective Bargaining Agreements, and PCC and D-R
shall cooperate with each other to determine the final status of all
Classified Employees on Schedule 3.13(b) of the Acquisition Agreement.
ARTICLE VII
DISPUTE RESOLUTION
Disputes under or alleged violations of this Agreement shall be handled in
accordance with the Dispute resolution procedure set forth in Article VII of the
Indemnification and Guaranty Agreement.
18
ARTICLE VIII
TERM
The term of this Agreement shall commence as of the Closing Date and shall
continue through the completed satisfaction of all of the Coal Act Liabilities,
Post-94 Retiree Medical Liabilities, Workers' Compensation and Federal Black
Lung Liabilities and the Employee Related Liabilities.
ARTICLE IX
MISCELLANEOUS
9.1. Cooperation.
(a) To the extent permitted by Law and on a timely basis, D-R agrees to
take any reasonable action, provide information and execute any
appropriate documents, and shall cause its Affiliates, Successors,
Assigns, Lessees or Contractors to take any reasonable action, provide
information and execute any appropriate documents, that PCC reasonably
requests in order to assist PCC with regard to the administration and
satisfaction of the Coal Act Liabilities, Post-94 Retiree Medical
Liabilities, Workers' Compensation and Federal Black Lung Liabilities
and the Employee Related Liabilities. Upon written request by D-R, PCC
shall reimburse D-R for costs above $10,000 per year that are
reasonably incurred by D-R or its Affiliates as a result of actions
taken by it or them under this Agreement. Prior to payment of such
costs, PCC shall be entitled to receive a detailed invoice of such
costs from D-R if so requested by PCC.
(b) PCC and D-R shall cooperate with each other to determine the timing
and manner of transferring the Books and Records to D-R after the
Closing, provided, however, that D-R or its Affiliates shall have
immediate access to all such Books and Records while still in the
possession of PCC (including, without limitation, access to the forms
described in Section 6.1 hereof) and provided, further, that PCC or
its Affiliates shall have reasonable access to, and shall be allowed
19
to copy at its sole expense, any Books and Records to which PCC
reasonably believes it needs access or for which PCC reasonably
believes it needs copies after the Closing.
(c) PCC, its Affiliates, successors and assigns shall have reasonable
access to, and shall be allowed to copy at their sole expense, any
title abstracts, title files, records, deeds or other title documents
related to their real property interests. D-R, its Affiliates,
successors and assigns shall have reasonable access to, and shall be
allowed to copy at their sole expense, any title abstracts, title
files, records, deeds or other title documents related to the Real
Property.
(d) PCC or its Affiliates and D-R or its Affiliates will jointly work with
the respective Commissioners of Revenue to prepare new tax assessments
for the Real Property and PCC's retained real property. The parties
have used commercially reasonable efforts to include the correct tax
ticket numbers in an exhibit to be attached to and referenced in the
Conveyance Deeds in order to identify the Real Property being
transferred to D-R. To the extent it is later determined that
different tax ticket numbers should have been included on or removed
from the Conveyance Deeds, each party agrees to take any reasonable
action, provide information and execute any appropriate documents, and
shall cause its Affiliates, Successors, Assigns, Lessees or
Contractors to take any reasonable action, provide information and
execute any appropriate documents, that the other party reasonably
requests in order to ensure that the Conveyance Deeds reference the
tax ticket numbers associated with the actual Real Property
transferred to D-R.
9.2. Continuing Obligations.
Any failure by PCC or by D-R or its Affiliates, Successors, Assigns,
Lessees, or Contractors to comply with any of their obligations in this
Agreement shall not relieve PCC or D-R of any of their Liabilities or
obligations under the Acquisition Agreement.
20
9.3. D-R Communication with Third Parties.
Unless otherwise agreed to in writing by PCC or except as permitted
specifically by this Agreement and the Acquisition Agreement, neither D-R nor
any of its Affiliates, Successors, Assigns, Lessees or Contractors will make any
public statements or communicate with the UMWA, the United Mine Workers of
America Combined Benefit Fund, the 1992 UMWA Benefit Plan, the UMWA Pension
Plans, any beneficiary of any Employee Benefit Plan, or any other Person or
entity (collectively, "Third Parties") with respect to or concerning the Coal
Act Liabilities, Post-94 Retiree Medical Liabilities, Workers' Compensation and
Federal Black Lung Liabilities and the Employee Related Liabilities.
Notwithstanding the foregoing, in the event PCC fails to take such actions as
are necessary to comply with its obligations under the Acquisition Agreement and
this Agreement with respect to any of the Coal Act Liabilities, Post-94 Retiree
Medical Liabilities, Workers' Compensation and Federal Black Lung Liabilities or
the Employee Related Liabilities within a reasonable time after receiving notice
from D-R that attempts have been or are being made to obtain information
concerning or to impose any of the Coal Act Liabilities, Post-94 Retiree Medical
Liabilities, Workers' Compensation and Federal Black Lung Liabilities or the
Employee Related Liabilities on D-R or any of its Affiliates, Successors,
Assigns, Lessees or Contractors, D-R shall be permitted to communicate with the
appropriate Third Party regarding PCC's obligations with respect to such Coal
Act Liabilities, Post-94 Retiree Medical Liabilities, Workers' Compensation and
Federal Black Lung Liabilities or the Employee Related Liabilities. In addition,
notwithstanding anything in the foregoing to the contrary, in the event any
Third Party contacts D-R to inquire about PCC's or any of its Affiliates
obligations with respect to such Coal Act Liabilities, Post-94 Retiree Medical
Liabilities, Workers' Compensation and Federal Black Lung Liabilities or the
Employee Related Liabilities under this Agreement, D-R is permitted to direct
such Third Party to contact PCC for additional information.
21
9.4. Litigation Support.
In the event and for as long as PCC is actively contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand related to the Coal Act Liabilities, Post-94 Retiree Medical
Liabilities, Workers' Compensation and Federal Black Lung Liabilities and the
Employee Related Liabilities, D-R will, to the extent reasonable, cooperate, and
shall cause its Affiliates, Successors, Assigns, Lessees or Contractors to
cooperate, with PCC and its counsel in the contest or defense, make available
their personnel and provide such testimony and access to their books, documents
and records as shall be reasonably necessary in connection with the contest or
defense.
9.5. Confidentiality.
Except as otherwise provided in this Agreement, each party hereto covenants
and agrees to keep confidential the existence of this Agreement and the contents
of this Agreement at all times while any provision of this Agreement is in
force, unless and to the extent that a party shall be required to disclose the
same by generally accepted accounting principles, Law or judicial order or
decree or administrative regulation or order or in order to comply with its
obligations hereunder; provided, however, that any party that believes it may be
required to disclose this Agreement or any provisions hereof shall promptly
notify the other hereto in writing and afford such other party the opportunity
to determine whether disclosure is in fact required or if the scope of the
required disclosure can be reduced and provided further, however, that
notwithstanding anything in this Section 9.5 or in Section 9.3 hereof to the
contrary, without notifying the other party, any party may disclose the
existence and contents of this Agreement:
22
(a) to any employees within the party's organization who need to know of
this Agreement in order for the party to comply with its obligations
hereunder, so long as such employees at the time of disclosure are
required to comply with this Section 9.5;
(b) to D-R's Affiliates, Successors, Assigns, Lessees, Contractors and
their employees, attorneys, accountants, consultants and lenders who
need to know of the Agreement, so long as such entities and persons
agree to comply with this Section 9.5;
(c) to any third-party contractor whose services the party requires in
order for the party to comply with its obligations hereunder so long
as such contractor is contractually obligated to comply with this
Section 9.5;
(d) in the financial statements of the party as required by generally
accepted accounting principles; or
(e) to any attorneys, accountants, consultants or lenders of a party for
whom the party agrees to be responsible for the compliance herewith.
9.6. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, but without reference to the choice of law
provision thereof.
9.7. Successors and Assigns.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, except that PCC may assign its rights hereunder to any Affiliate of
PCC after the Closing Date without the consent of D-R and D-R may assign its
rights hereunder to any Affiliate of D-R after the Closing Date without the
consent of PCC.
23
9.8. Notices and Payments.
All Communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five (5) days of being mailed by registered or certified United States mail,
postage prepaid, return receipt requested, in all cases addressed to the person
for whom it is intended at his address set forth below or to such other address
as a party shall have designated by notice in writing to the other party in the
manner provided by this Section 9.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
24
If to D-R: Dickenson-Russell Coal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
25
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
DICKENSON-RUSSELL COAL COMPANY, LLC
By: /s/ Anthony McGartland
---------------------------------------------
Name: Anthony McGartland
Title: President
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
26
Exhibit 2.5
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
PARAMONT COAL COMPANY VIRGINIA, LLC
October 29, 2002
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.............................................................................................1
1.1. Administrative Services Agreement.......................................................................1
1.2. Affiliate...............................................................................................2
1.3. Agreement...............................................................................................2
1.4. Asset Sale Companies....................................................................................2
1.5. Assignment and Assumption Agreements....................................................................2
1.6. Assumed Liabilities.....................................................................................2
1.7. Audited Closing Date Financial Statements...............................................................3
1.8. Bills of Sale...........................................................................................3
1.9. Books and Records.......................................................................................3
1.10. Business...............................................................................................3
1.11. Buyer.................................................................................................3
1.12. Buyer's Affiliates, Successors, Assigns, Lessees or Contractors........................................4
1.13. Buyer Closing Certificate..............................................................................4
1.14. Buyer's Ultimate Parent................................................................................4
1.15. CERCLA.................................................................................................4
1.16. CERCLIS................................................................................................4
1.17. Closing................................................................................................4
1.18. Closing Date...........................................................................................4
1.19. Coal Act...............................................................................................5
1.20. Coal Inventory.........................................................................................5
1.21. COBRA..................................................................................................5
1.22. Code...................................................................................................5
1.23. Contaminated...........................................................................................5
1.24. Contracts..............................................................................................5
1.25. Controlled Group.......................................................................................6
1.26. Cooperation Agreement..................................................................................6
1.27. CPA Arbitrator.........................................................................................6
1.28. Dispute................................................................................................6
1.29. Employee...............................................................................................6
1.30. Employee Benefit Plans.................................................................................6
1.31. Engagement Letter......................................................................................6
1.32. Environment............................................................................................7
1.33. Environmental Laws.....................................................................................7
1.34. Environmental Matter...................................................................................7
1.35. Environmental or Response Action.......................................................................8
1.36. EPA....................................................................................................8
1.37. Equipment..............................................................................................9
1.38. ERISA..................................................................................................9
1.39. ERISA Affiliates.......................................................................................9
1.40. Fiduciary..............................................................................................9
1.41. Final VC 5 Cost........................................................................................9
1.42. Fiscal Year Financial Statements.......................................................................9
1.43. GAAP...................................................................................................9
1.44. Governmental Authority................................................................................10
1.45. Hazardous Substances..................................................................................10
1.46. Health and Safety Requirements........................................................................10
1.47. HIPAA.................................................................................................10
1.48. Income Tax or Income Taxes............................................................................11
1.49. Indemnification and Guaranty Agreement................................................................11
1.50. Independent Surveyor..................................................................................11
1.51. Intellectual Property.................................................................................11
1.52. IRS...................................................................................................11
1.53. Knowledge of PCC......................................................................................12
1.54. Law...................................................................................................12
1.55. Lien..................................................................................................12
1.56. Liability.............................................................................................12
1.57. Material Adverse Effect...............................................................................12
1.58. MD&A Disclosure.......................................................................................13
1.59. Medical Plans.........................................................................................13
1.60. Mining Activities.....................................................................................13
1.61. Mining Environmental Liabilities......................................................................13
1.62. MSHA..................................................................................................13
1.63. Multiemployer Plan....................................................................................14
1.64. Operator..............................................................................................14
1.65. Ordinary Course of Business...........................................................................14
1.66. OSM...................................................................................................14
1.67. Paramont Service Agreement............................................................................14
1.68. Parts, Fuel and Supplies Inventory....................................................................14
1.69. PBGC..................................................................................................14
1.70. PCC...................................................................................................14
1.71. PCC Bonds.............................................................................................14
1.72. PCC Closing Certificate...............................................................................15
1.73. PCC Group.............................................................................................15
1.74. PCC Parent............................................................................................15
1.75. Pension Plans.........................................................................................15
1.76. Permits...............................................................................................15
1.77. Permitted Liens.......................................................................................15
1.78. Person................................................................................................15
1.79. Post-Closing Period...................................................................................16
1.80. Pre-Closing Period....................................................................................16
1.81. Promissory Note.......................................................................................16
1.82. Purchase Price........................................................................................16
1.83. Purchased Assets......................................................................................16
1.84. Qualified Plans.......................................................................................16
1.85. RCRA..................................................................................................17
1.86. Reclamation Laws......................................................................................17
1.87. Related Persons.......................................................................................17
1.88. Release...............................................................................................17
1.89. Retained Liabilities..................................................................................17
1.90. Security Agreement....................................................................................23
1.91. SEC...................................................................................................23
1.92. SMCRA.................................................................................................23
1.93. Straddle Period.......................................................................................23
1.94. Tax or Taxes..........................................................................................23
1.95. Tax Return............................................................................................24
1.96. VC 5..................................................................................................24
1.97. VC 5 Calculation......................................................................................24
1.98. VC 5 Costs............................................................................................24
1.99. VC 5 Estimate.........................................................................................24
1.100. VC 5 Revenue.........................................................................................25
1.101. VDEQ.................................................................................................25
1.102. VDMME................................................................................................25
1.103. Virginia Entities....................................................................................25
1.104. WARN Act.............................................................................................25
1.105. Welfare Plans........................................................................................25
1.106. Workers' Compensation Acts...........................................................................25
ARTICLE II PURCHASE AND SALE OF ASSETS...........................................................................26
2.1. Transfer of Assets.....................................................................................26
2.2. Calculation of VC 5 Adjustment Amount..................................................................26
2.3. Bills of Sale, Assignment and Assumption Agreements and Other Documents................................28
2.4. Assumption of Liabilities..............................................................................28
2.5. Proration of Liabilities...............................................................................28
2.6. Indemnification and Guaranty Agreement.................................................................28
2.7. Cooperation Agreement..................................................................................28
2.8. Administrative Services Agreement......................................................................29
2.9. Paramont Service Agreement.............................................................................29
2.10. Security Agreement....................................................................................29
2.11. Additional Documents..................................................................................29
2.12. Coal Inventory Adjustment.............................................................................29
2.13. Allocation of Purchase Price and Assumed Liabilities..................................................30
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PCC................................................................32
3.1. Incorporation..........................................................................................32
3.2. Execution, Delivery and Performance....................................................................33
3.3. Authorization..........................................................................................34
3.4. Absence of Changes.....................................................................................34
3.5. Purchased Assets.......................................................................................37
3.6. Intellectual Property..................................................................................38
3.7. Permits and Environmental Compliance...................................................................38
3.8. Reclamation Bonds......................................................................................41
3.9. Contracts..............................................................................................42
3.10. Litigation; Claims....................................................................................42
3.11. Employee Benefits.....................................................................................43
3.12. Employment Matters....................................................................................48
3.13. No Broker.............................................................................................48
3.14. Health and Safety Requirements........................................................................49
3.15. Restrictions on Business Activities...................................................................49
3.16. Powers of Attorney....................................................................................49
3.17. Transactions With Affiliates..........................................................................49
3.18. Absence of Certain Payments...........................................................................49
3.19. Disclosure............................................................................................50
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................50
4.1. Organization.........................................................................................50
4.2. Execution, Delivery and Performance..................................................................50
4.3. Authorization........................................................................................51
4.4. No Broker............................................................................................52
4.5. Reclamation and Environmental Compliance.............................................................52
4.6. Financing............................................................................................52
4.7. Disclosure...........................................................................................52
ARTICLE V CERTAIN COVENANTS......................................................................................52
5.1. Operation in Ordinary Course..........................................................................52
5.2. Compliance with Law...................................................................................53
5.3. Cooperation...........................................................................................53
5.4. Notices and Consents..................................................................................54
5.5. Publicity.............................................................................................54
5.6. Permits; Replacement Bonds; Insurance and Guarantees; Other Filings...................................55
5.7. Exclusivity...........................................................................................57
5.8. Access................................................................................................58
5.9. Notice of Developments................................................................................58
5.10. Financial Statement Cooperation and Audits...........................................................58
5.11. Coal Inventory.......................................................................................61
5.12. Further Assurances...................................................................................61
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING......................................................................62
6.1. Conditions Precedent to Each Party's Obligations....................................................62
6.2. Conditions Precedent to Obligations of Buyer........................................................63
6.3. Conditions Precedent to Obligations of PCC..........................................................65
ARTICLE VII CERTAIN TAX MATTERS.................................................................................67
7.1. Property Taxes......................................................................................67
7.2. Sales and Use Taxes.................................................................................68
7.3. Transfer Taxes......................................................................................68
7.4. Access for Tax Returns..............................................................................68
ARTICLE VIII COVENANTS REGARDING EMPLOYEES......................................................................69
8.1. Employees.............................................................................................69
ARTICLE IX TERMINATION..........................................................................................69
9.1. Termination...........................................................................................69
9.2. Effect of Termination.................................................................................71
ARTICLE X MISCELLANEOUS.........................................................................................71
10.1. Entire Agreement.....................................................................................71
10.2. Amendment............................................................................................71
10.3. Extension; Waiver...................................................................................72
10.4. Expenses.............................................................................................72
10.5. Bulk Sales Waiver....................................................................................72
10.6. Governing Law.......................................................................................73
10.7. Assignment...........................................................................................73
10.8. Notices..............................................................................................73
10.9. Counterparts; Headings...............................................................................74
10.10. Interpretation; Construction........................................................................75
10.11. Severability........................................................................................75
10.12. No Reliance.........................................................................................75
10.13. Retention of and Access to Records..................................................................75
10.14. Arbitration.........................................................................................76
EXHIBITS
--------
Exhibit A Outline of Administrative Services Agreement
Exhibit B Assignment and Assumption Agreements
Exhibit C Bills of Sale
Exhibit D Buyer Closing Certificate
Exhibit E Cooperation Agreement
Exhibit F Paramont Service Agreement
Exhibit G Engagement Letter
Exhibit H Indemnification and Guaranty Agreement
Exhibit I PCC Closing Certificate
Exhibit J Opinion of Counsel to PCC
Exhibit K Opinion of Counsel to Buyer
SCHEDULES
---------
Schedule 1.4 Asset Sale Companies
Schedule 1.6 Assumed Liabilities
Schedule 1.20 Coal Inventory Locations
Schedule 1.24 Contracts of Asset Sale Companies
Schedule 1.37(a) Equipment Owned by Asset Sale Companies
Schedule 1.37(b) Equipment Leased by Asset Sale Companies
Schedule 1.51(a) Intellectual Property Owned by the Asset Sale Companies
Schedule 1.51(b) Intellectual Property Leased by the Asset Sale Companies
Schedule 1.53 Knowledge of PCC
Schedule 1.61 Mining Environmental Liabilities
Schedule 1.68 Parts, Fuel and Supplies Inventory
Schedule 1.76 Permits
Schedule 1.77 Permitted Liens
Schedule 1.89(a) Retained Liabilities
Schedule 1.89(v) Excluded Contracts
Schedule 1.96 VC 5
Schedule 2.12(b) Independent Survey of the Coal Inventory-Principles and Format
Schedule 3.1 Foreign States
Schedule 3.2 Conflicts
Schedule 3.4 Absence of Changes
Schedule 3.5 Purchased Assets Exceptions
Schedule 3.6 Intellectual Property Exceptions
Schedule 3.7 Permits and Environmental Compliance
Schedule 3.8 PCC Bonds
Schedule 3.9(b) Contract Exceptions
Schedule 3.9(c) Consents
Schedule 3.10 Litigation; Claims
Schedule 3.11(a) Employee Benefit Plans
Schedule 3.11(d) Plan Administration
Schedule 3.11(f) Severance Entitlements
Schedule 3.16 Powers of Attorney
Schedule 3.17 Transactions with Affiliates
Schedule 5.4(a) PCC Consents
Schedule 5.4(b) Buyer Consents
Schedule 5.6 PCC Guaranties
Schedule 5.10(a) Excluded Business
Schedule 6.1(e)(i) PCC Material Consents
Schedule 6.1(e)(ii) Buyer Material Consents
Schedule 8.1 Asset Sale Companies with pre-Closing termination
Employees
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 29th day of October, 2002,
by and between PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), and
Paramont Coal Company virginia, LLC, a Delaware limited liability company
("Buyer").
RECITALS
WHEREAS, PCC owns, directly or indirectly, all of the outstanding capital
stock of the corporations listed on Schedule 1.4 (the "Asset Sale Companies");
WHEREAS, PCC desires to cause to be sold and assigned, and Buyer desires to
purchase and assume, certain of the assets and certain of the Liabilities (as
hereinafter defined) of the Asset Sale Companies;
WHEREAS, PCC desires to cause the Asset Sale Companies to retain certain
assets and certain Liabilities;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PCC and Buyer agree
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1. Administrative Services Agreement.
"Administrative Services Agreement" shall mean the agreement by and between
PCC and Buyer, an outline of which is attached hereto Exhibit A.
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1.2. Affiliate.
"Affiliate" shall mean, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, none of Dominion Terminal Associates or any of its partners,
other than Pittston Coal Terminal Corporation, shall be deemed an Affiliate of
PCC or any of its Affiliates.
1.3. Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, which are incorporated into this Asset
Purchase Agreement by this reference, as the same may be amended from time to
time in accordance with the terms hereof.
1.4. Asset Sale Companies.
"Asset Sale Companies" shall have the meaning given to it in the Recitals
to this Agreement. The term "Asset Sale Company" shall mean one of the Asset
Sale Companies.
1.5. Assignment and Assumption Agreements.
"Assignment and Assumption Agreements" shall mean the assignment and
assumption agreements substantially in the form of Exhibit B attached hereto.
1.6. Assumed Liabilities.
"Assumed Liabilities" shall mean all Liabilities of the Asset Sale
Companies listed on Schedule 1.6.
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1.7. Audited Closing Date Financial Statements.
"Audited Closing Date Financial Statements" shall have the meaning set
forth in Section 5.10 hereof.
1.8. Bills of Sale.
"Bills of Sale" shall mean the bills of sale substantially in the form of
Exhibit C attached hereto.
1.9. Books and Records.
"Books and Records" shall mean the original or true and complete copies of
all of the books and records of the Asset Sale Companies pertaining to the
Purchased Assets, including but not limited to, customer lists, employee records
for those Employees employed by Buyer on or immediately following the Closing
Date, purchase orders and invoices, sales orders and sales order log books,
credit and collection records, plats, drawings and specifications, environmental
and mining reports and studies, correspondence and miscellaneous records with
respect to customers and supply sources, lessors and lessees, maps, core logs,
engineering data, equipment maintenance records and all other general
correspondence, records, books and files owned by any Asset Sale Company, but
excluding any and all Tax Returns, books and records relating to the Retained
Liabilities and corporate records of the Asset Sale Companies.
1.10. Business.
"Business" shall mean the coal mining and sale business conducted by the
Asset Sale Companies using the Purchased Assets.
1.11. Buyer.
"Buyer" shall have the meaning given to it in the preamble of this
Agreement.
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1.12. Buyer's Affiliates, Successors, Assigns, Lessees or Contractors.
"Buyer's Affiliates, Successors, Assigns, Lessees or Contractors" shall
mean Buyer's Affiliates, Buyer's contractual successors and assigns, and lessees
and contractors who, as part of a contractual arrangement with Buyer or one of
its Affiliates, offer employment to the current or former Employees of an Asset
Sale Company.
1.13. Buyer Closing Certificate.
"Buyer Closing Certificate" shall mean the certificate of Buyer
substantially in the form of Exhibit D attached hereto.
1.14. Buyer's Ultimate Parent.
"Buyer's Ultimate Parent" shall mean Alpha Natural Resources, LLC, a
Delaware limited liability company.
1.15. CERCLA.
"CERCLA" shall have the meaning set forth in Section 1.33 hereof.
1.16. CERCLIS.
"CERCLIS" shall have the meaning set forth in Section 3.7 hereof.
1.17. Closing.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement beginning at 10:00 a.m., local time, on the Closing Date, at the
offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia 23219.
1.18. Closing Date.
"Closing Date" shall mean November 30, 2002 or such other date as the
parties may mutually agree in writing, subject to the provisions of Section
5.10(a) hereof.
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1.19. Coal Act.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of 1992
as amended through the Closing Date (codified at Subtitle J of the Code).
1.20. Coal Inventory.
"Coal Inventory" shall mean the coal stockpile inventory and loaded
shipments in transit to a pier or at a pier owned by the Asset Sale Companies at
the locations listed on Schedule 1.20.
1.21. COBRA.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1986, as amended.
1.22. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate, any predecessor or successor provisions of Law, and all regulations
thereunder.
1.23. Contaminated.
"Contaminated" shall mean the presence of one or more Hazardous Substances
in such quantity or concentration as to: (i) violate any Environmental Law; (ii)
require disclosure to any Governmental Authority; (iii) require remediation or
removal; or (iv) interfere with or prevent the use of any of the Purchased
Assets as customarily intended.
1.24. Contracts.
"Contracts" shall mean the written contracts, agreements, personal and real
property leases, relationships and commitments, of the Asset Sale Companies
listed on Schedule 1.24.
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1.25. Controlled Group.
"Controlled Group" shall have the meaning set forth in Codess.1563.
1.26. Cooperation Agreement.
"Cooperation Agreement" shall mean the agreement by and among the PCC
Parent, PCC and Buyer substantially in the form of Exhibit E attached hereto.
1.27. CPA Arbitrator.
"CPA Arbitrator" shall have the meaning set forth in Section 2.2(b) hereof.
1.28. Dispute.
"Dispute" shall have the meaning set forth in Section 10.14 hereof.
1.29. Employee.
"Employee" shall mean any Person (i) employed by and rendering personal
services for an Asset Sale Company or (ii) receiving short-term or long-term
disability benefits from an Asset Sale Company under an Employee Benefit Plan.
The term "current and former Employees" shall mean any Persons who fall within
the term Employee at any time prior to the Closing Date.
1.30. Employee Benefit Plans.
"Employee Benefit Plans" shall have the meaning set forth in Section 3.11
hereof.
1.31. Engagement Letter.
"Engagement Letter" shall mean the engagement letter by and among PCC,
Buyer and KPMG LLP substantially in the form of Exhibit G attached hereto.
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1.32. Environment.
"Environment" shall mean surface or ground water, water supply, soil or the
ambient air.
1.33. Environmental Laws.
"Environmental Laws" shall mean collectively, all federal, foreign, state,
and local Laws in effect as of the Closing Date that relate to (a) the
prevention, abatement or elimination of pollution, or the protection of the
environment, or of natural resources, including, without limitation, Laws
applicable to coal mining operations or related activities, (b) the generation,
handling, treatment, storage, disposal or transportation of waste materials, (c)
the regulation of or exposure to Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C.ss.ss.9601 et. seq. ("CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act, as amended, 42
U.S.C.ss.ss.6901 et. seq. ("RCRA"), the Clean Air Act, 42 U.S.C.ss.ss.7401 et.
seq., the Clean Water Act, 33 U.S.C.ss.ss.1251 et. seq., the Toxic Substances
Control Act, 15 U.S.C.ss.ss.2601 et. seq., the Emergency Planning and Community
Right to Know Act, 42 U.S.C. ss.ss.11001 et. seq., and any foreign, state,
county, municipal, or local statutes, Laws or ordinances similar or analogous to
the federal statutes listed in this sentence.
1.34. Environmental Matter.
"Environmental Matter" shall mean any assertion of a violation, claim or
directive by any Governmental Authority or any other Person for personal injury,
damage to property or the Environment, nuisance, contamination or other adverse
effects on the Environment, or for damages or restrictions resulting from or
related to (i) the operation of PCC's or its Affiliates' business or any
predecessor or the ownership, use or operation at or on any real property or
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other assets owned, operated or leased by PCC or its Affiliates or any
predecessor; or (ii) the existence or the continuation of a Release of, or
exposure to, or the transportation, storage or treatment of any Hazardous
Substance into the Environment from or related to any real property or assets
currently or formerly owned, operated or leased by PCC or its Affiliates or any
activities on or operations thereof.
1.35. Environmental or Response Action.
"Environmental or Response Action" shall mean all actions required (i) to
clean up, remove, treat or in any other way address any Hazardous Substance or
other substance; (ii) to prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Substance or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor Environment; (iii) to perform pre-remedial studies and
investigations or post-remedial monitoring and care; (iv) to bring facilities on
any real property currently or formerly owned, operated or leased by PCC or its
Affiliates and the facilities located and operations conducted thereon into
compliance with all Environmental Laws and Reclamation Laws and all permits and
other authorizations, and the filing of all notifications and reports required
under any Environmental Laws and Reclamation Laws; or (v) for the purpose of
environmental protection of any real property currently or formerly owned,
operated or leased by PCC or its Affiliates.
1.36. EPA.
"EPA" shall have the meaning set forth in Section 3.7 hereof.
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1.37. Equipment.
"Equipment" shall mean the tangible machinery, vehicles, equipment,
furniture, fixtures, furnishings, trailers, tools, parts and other personal
property owned or leased by the Asset Sale Companies listed on Schedules 1.37(a)
and 1.37(b), respectively.
1.38. ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.39. ERISA Affiliates.
"ERISA Affiliates" shall mean any trade or business (whether or not
incorporated) that is part of the same Controlled Group as, or under common
control with, or part of an affiliated service group that includes, PCC and each
of the Asset Sale Companies within the meaning of Section 414(b), (c), (m) or
(o) of the Code.
1.40. Fiduciary.
"Fiduciary" shall have the meaning set forth in ERISA ss.3(21).
1.41. Final VC 5 Cost.
"Final VC 5 Cost" shall have the meaning set forth is Section 2.2(b)
hereof.
1.42. Fiscal Year Financial Statements.
"Fiscal Year Financial Statements" shall have the meaning set forth in
Section 5.10(a).
1.43. GAAP.
"GAAP" shall mean United States generally accepted accounting principles as
in effect from time to time.
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1.44. Governmental Authority.
"Governmental Authority" shall mean any governmental, judicial,
legislative, executive, administrative or regulatory authority of the United
States, or of any foreign, state or local government or any subdivision, agency,
commission, office, authority or bureau thereof or any quasi-governmental entity
or authority of any nature.
1.45. Hazardous Substances.
"Hazardous Substances" shall mean any substance, chemical, waste, solid,
material, pollutant or contaminant that is defined or listed as hazardous or
toxic under any applicable Environmental Laws. Without limiting the generality
of the foregoing it shall also include any radioactive material, including any
naturally-occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. 2011, et seq., any amendments or authorizations
thereof, any asbestos-containing materials in any form or condition, any
polychlorinated biphenyls in any form or condition, radioactive waste, or
natural gas, natural gas liquids, liquified natural gas, condensate, or
derivatives or byproducts thereof or oil and petroleum products or by products
and constituents thereof.
1.46. Health and Safety Requirements.
"Health and Safety Requirements" shall mean all applicable federal, state,
local and foreign Laws concerning public health and safety and worker health and
safety each as in effect as of the Closing Date, other than Environmental Laws.
1.47. HIPAA.
"HIPAA" shall mean the Health Insurance Portability and Accountability Act
of 1996, as amended, and all rules and regulations thereunder.
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1.48. Income Tax or Income Taxes.
"Income Tax or "Income Taxes" shall mean any Tax based on or measured by
net income.
1.49. Indemnification and Guaranty Agreement.
"Indemnification and Guaranty Agreement" shall mean the agreement by and
among PCC Parent, PCC, Buyer and Buyer's Ultimate Parent substantially in the
form of Exhibit H attached hereto.
1.50. Independent Surveyor.
"Independent Surveyor" shall have the meaning set forth in Section 2.12(b)
hereof.
1.51. Intellectual Property.
"Intellectual Property" shall mean the trademarks, service marks, patents,
copyrights (including any registrations, applications, licenses or rights
relating to any of the foregoing), technology, logos, trade secrets,
confidential information related to the Purchased Assets, inventions, know-how,
designs, technical data, drawings, customer and supplier lists, pricing and cost
information, or computer programs and processes and all goodwill associated
therewith and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions
owned or licensed or leased by the Asset Sale Companies listed on Schedules
1.51(a) and 1.51(b), respectively, including, without limitation, the
trademarks, service marks, logos or other rights related to the name "Paramont."
1.52. IRS.
"IRS" shall mean the United States Internal Revenue Service.
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1.53. Knowledge of PCC.
"Knowledge of PCC" shall mean, for the individuals listed on Schedule 1.53,
any such individual's actual knowledge and what any such individual should have
known after reasonable inquiry within the scope of that individual's job
responsibilities.
1.54. Law.
"Law" and "Laws" shall mean any applicable United States or foreign,
federal, state, local or other law or governmental requirement of any kind, and
the rules, regulations and orders promulgated thereunder.
1.55. Lien.
"Lien" shall mean any lien, encumbrance, mortgage, charge, claim,
restriction, pledge, security interest or imposition of any kind.
1.56. Liability.
"Liability" shall mean any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), including any
liability for Taxes. Liabilities shall mean one or more items of Liability.
1.57. Material Adverse Effect.
"Material Adverse Effect" shall mean any event, change or occurrence that
individually, or together with any other event, change or occurrence, has a
material adverse impact on the Business, taken as a whole, without regard to the
duration of such material adverse impact.
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1.58. MD&A Disclosure.
"MD&A Disclosure" shall mean any "Management's Discussion and Analysis of
Financial Condition and Results of Operations" disclosure (required by Item 303
of Regulation S-K promulgated by the SEC (or any successor rule or regulation of
the SEC)) to be prepared for the fiscal years covered by the Fiscal Year
Financial Statements and the period covered by the Audited Closing Date
Financial Statements.
1.59. Medical Plans.
"Medical Plans" shall mean any and all benefit plans that provide medical,
vision and dental benefits to current or former Employees sponsored or
maintained by or on behalf of, or for the benefit of, PCC or any Asset Sale
Company, including the Comprehensive Medical Expense Benefits Plan of The
Pittston Company and Its Subsidiaries.
1.60. Mining Activities.
"Mining Activities" shall mean those activities of the Asset Sale Companies
that have taken place on or through the use of the Purchased Assets that involve
surface, underground and auger mining, processing or transporting of coal and
the handling of coal by-products.
1.61. Mining Environmental Liabilities.
"Mining Environmental Liabilities" shall mean Liabilities that relate to or
arise from both of the following: (i) any of the Hazardous Substances set forth
on Schedule 1.61 and (ii) an Environmental Matter or Environmental and Response
Action associated with Mining Activities to the extent that such Mining
Activities conformed to industry standard practices at the time such Mining
Activities were conducted.
1.62. MSHA.
"MSHA" shall have the meaning set forth in Section 3.7 hereof.
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1.63. Multiemployer Plan.
"Multiemployer Plan" shall have the meaning set forth in Section 3.11
hereof.
1.64. Operator.
"Operator" shall have the meaning set forth in Section 3.7 hereof.
1.65. Ordinary Course of Business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.66. OSM.
"OSM" shall have the meaning set forth in Section 3.7 hereof.
1.67. Paramont Service Agreement.
"Paramont Service Agreement" shall mean the agreement by and between Buyer
and PCC, substantially in the form of Exhibit F attached hereto.
1.68. Parts, Fuel and Supplies Inventory.
"Parts, Fuel and Supplies Inventory" shall include the categories of items
listed on Schedule 1.68.
1.69. PBGC.
"PBGC" shall mean the Pension Benefits Guaranty Corporation.
1.70. PCC.
"PCC" shall have the meaning given to it in the preamble to this Agreement.
1.71. PCC Bonds.
"PCC Bonds" shall have the meaning set forth in Section 3.7(g) hereof.
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1.72. PCC Closing Certificate.
"PCC Closing Certificate" shall mean the certificate of PCC substantially
in the form of Exhibit I attached hereto.
1.73. PCC Group.
"PCC Group" shall have the meaning set forth in Section 1.89(j) hereof.
1.74. PCC Parent.
"PCC Parent" shall mean The Pittston Company, a Virginia corporation.
1.75. Pension Plans.
"Pension Plans" shall have the meaning set forth in Section 3.11 hereof.
1.76. Permits.
"Permits" shall mean the written permits, licenses, orders, certificates,
registrations, approvals and similar rights held by the Asset Sale Companies
listed on Schedule 1.76.
1.77. Permitted Liens.
"Permitted Liens" shall mean those Liens affecting the Purchased Assets
that are listed on Schedule 1.77.
1.78. Person.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Authority.
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1.79. Post-Closing Period.
"Post-Closing Period" shall mean any taxable period beginning after the
Closing Date.
1.80. Pre-Closing Period.
"Pre-Closing Period" shall mean any taxable period ending on or before the
Closing Date.
1.81. Promissory Note.
"Promissory Note" shall mean the secured promissory note made by Buyer in
favor of PCC in the amount determined in accordance with Section 2.12, to be
dated as of the Closing Date, in a form to be agreed upon by the parties hereto.
1.82. Purchase Price.
"Purchase Price" shall mean the cash amount of $10,565,000 (which amount
shall include $620,000 for the Parts, Fuel and Supplies Inventory, $1,640,000
for the Coal Inventory, $55,000 for one continuous miner and $250,000 for one
helicopter), plus the Promissory Note, plus the VC 5 Estimate, subject to the
adjustment provided for in Section 2.2(b).
1.83. Purchased Assets.
"Purchased Assets" shall mean all right, title and interest in and to the
Coal Inventory, Parts, Fuel and Supplies Inventory, Equipment, Books and Records
and Intellectual Property of the Asset Sale Companies and the rights of the
Asset Sale Companies with respect to the Contracts and the Permits.
1.84. Qualified Plans.
"Qualified Plans" shall have the meaning set forth in Section 3.11 hereof.
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1.85. RCRA.
"RCRA" shall have the meaning set forth in Section 1.33 hereof.
1.86. Reclamation Laws.
"Reclamation Laws" shall mean all federal, state and local Laws, as now or
hereafter in effect, relating to coal mining reclamation activities or
Liabilities. For purposes of this definition, "coal mining" shall include, but
not be limited to, any activities defined under the Surface Mining Control and
Reclamation Act of 1977, as amended, as "surface coal mining operations."
1.87. Related Persons.
"Related Persons" shall mean related persons as that term is defined in
Section 9701(c)(2) of the Coal Act, except that it shall not include successors
in interest.
1.88. Release.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping or disposing into the
Environment of Hazardous Substances.
1.89. Retained Liabilities.
"Retained Liabilities" shall mean all of the Liabilities of each Asset Sale
Company, other than the Assumed Liabilities, including, without limitation, the
following:
(a) the Liabilities listed on Schedule 1.89(a);
(b) all Liabilities arising under applicable Workers' Compensation
Acts for or based upon the employment of (i) the current and
former Employees of the Asset Sale Companies who are not hired by
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees
or Contractors, and (ii) the current and former Employees of the
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Asset Sale Companies who are hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors, but only
with respect to claims where the date of injury or the date of
last injurious exposure occurred prior to the date such Employees
began working for Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors;
(c) all Liabilities arising under the federal black lung Laws for or
based upon the employment of (i) the current and former Employees
of the Asset Sale Companies who are not hired by Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors
and (ii) the current and former Employees of the Asset Sale
Companies who are hired by Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors, to the extent and in
the amounts provided in the federal black lung Laws, but only
until such time as Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors becomes the
responsible operator under the federal black lung Laws for such
Employees;
(d) all Liabilities for medical, dental, vision and other benefits
and expenses covered under the Medical Plans including related
insurance costs or premiums for or based upon the employment of
(i) the current and former Employees of the Asset Sale Companies
who are not hired by Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors, (ii) the current or
former Employees of the Asset Sale Companies who are hired by
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees
or Contractors, but only with respect to the period prior to the
date such Employees began working for Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors and (iii)
in either case, all such Liabilities under COBRA, HIPAA and other
Laws, including all Liabilities of a Fiduciary for breach of
fiduciary duty or any other failure to act or comply in
connection with the administration of such Medical Plans;
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(e) unless such Liabilities are otherwise retained pursuant to
Section 1.89(j) hereof, all Liabilities arising under or based
upon the Employee Benefit Plans sponsored or maintained by, on
behalf of or for the benefit of such Asset Sale Company or its
Employees or in which such Asset Sale Company participated (other
than the Medical Plans), including all Liabilities arising from
or related to the termination thereof or Liabilities of a
Fiduciary for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment
of the assets of any such Employee Benefit Plan;
(f) all Liabilities for salaries, wages, bonuses, vacation days,
personal days and similar forms of leave or compensation for or
based upon the employment of (i) the current and former Employees
of the Asset Sale Companies who are not hired by Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors,
and (ii) the current and former Employees of the Asset Sale
Companies who are hired by Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors, that are accrued,
due or earned up to the date such Employees began working for
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees
or Contractors and for which such Employees are eligible;
(g) all Liabilities for terminated contract miner performance escrow
amounts (including interest) accrued up to the Closing Date;
(h) all Liabilities for accounts payable for which goods have been
shipped and delivered (whether or not invoiced) or services have
been performed (whether or not invoiced) and related notes, trade
payables and earned royalties, to the extent that an Asset Sale
Company received a benefit before the Closing Date;
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(i) all Liabilities for claims of any current or former Employees
pursuant to the WARN Act arising out of acts or omissions of the
Asset Sale Companies prior to and including the Closing Date;
(j) (1) all Liabilities, if any, of any Asset Sale Company and its
Related Persons (collectively, the "PCC Group") under the Coal
Act, and (2) all Liabilities, if any, of the PCC Group under any
post-Closing amendments to the Coal Act for (i) beneficiaries
eligible under the Coal Act who are assigned to a member of the
PCC Group or for whom a member of the PCC Group is required to
provide or pay for medical benefits pursuant to Sections 9711 or
9712 of the Coal Act or (ii) death benefit premiums or unassigned
beneficiary premiums (as those terms are used in Sections 9704(c)
and 9704(d) of the Coal Act) for beneficiaries eligible under the
Coal Act, that are assessed against any member of the PCC Group;
provided, for the -------- avoidance of doubt, that the
Liabilities retained pursuant to (1) and (2) above shall not be
affected by Buyer or any of its Affiliates being identified under
the Coal Act or any post-Closing amendments thereto as a
successor, successor in interest or "Related person" under the
Coal Act or any post-Closing amendments thereto to any member of
the PCC Group solely as a result of Buyer's purchase of the
Purchased Assets;
(k) unless such Liabilities are otherwise retained pursuant to
Section 1.89(j) hereof, all Liabilities, if any, of such Asset
Sale Companies for retiree medical benefits with respect to
current or former Employees of such Asset Sale Company (and their
eligible dependents and beneficiaries) who, on or prior to the
Closing Date, satisfy the requirements for retiree medical
benefits under any Employee Benefit Plan in which such Asset Sale
Company participates;
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(l) all Liabilities relating to assets held in trust under any
Qualified Plan sponsored or maintained by, on behalf of or for
the benefit of such Asset Sale Company or its current or former
Employees or in which such Asset Sale Company participates
arising or relating to the period prior to the Closing Date;
(m) all inter-company indebtedness owed by any Asset Sale Company to
the PCC Parent or any of the PCC Parent's Affiliates;
(n) all Liabilities arising out of or in connection with compliance
prior to the Closing Date with Health and Safety Requirements
pertaining to the Purchased Assets, and all Liabilities arising
out of or in connection with compliance with all Laws relating to
equal employment opportunity, employment, or labor relations
concerning the employment of any Employee by the Asset Sale
Companies, or relating to any other action taken or not taken by
the Asset Sale Companies concerning (i) the current and former
Employees of the Asset Sale Companies who are not hired by Buyer
or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors, and (ii) the current and former Employees of the
Asset Sale Companies who are hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors, but only
with respect to matters arising out of the employment of such
Employees by the Asset Sale Companies;
(o) except as set forth on Schedule 1.6, all Liabilities for the
claims, legal actions, suits, litigation, arbitrations, disputes
or investigations listed on Schedules 3.7 and 3.10;
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(p) all Liabilities of any of the Asset Sale Companies for unpaid
Taxes with respect to any Tax year or portion thereof ending on
or before the Closing Date or for any Tax year beginning before
and ending after the Closing Date to the extent allocable to the
portion of such period beginning before and ending on the Closing
Date (to the extent of any inconsistencies with Article VII
hereof, Article VII shall be controlling);
(q) all amounts payable as the result of the consummation of the
transactions contemplated by this Agreement that arise due to any
change of control provision of any Contract other than those
Contracts listed on Schedule 5.4(b);
(r) all Liabilities of any of the Asset Sale Companies for the unpaid
Taxes of any Person (including PCC and its subsidiaries) under
Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise;
(s) all Liabilities for any Environmental Matter or Environmental or
Response Action related to real property or any other asset
owned, operated or leased by PCC or any of its Affiliates that is
not a Purchased Asset (except to the extent otherwise provided in
the Paramont Service Agreement or any other agreement entered
into contemporaneously with this Agreement pursuant to which
reclamation and other services are to be performed on PCC's or
its Affiliates' idle properties);
(t) all Liabilities for any Environmental Matter or Environmental or
Response Action (other than Mining Environmental Liabilities) to
the extent the underlying claim relates to or arises from any
activity on or through the use of the Purchased Assets and is
attributable to acts or omissions occurring at or prior to the
Closing;
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(u) all Liabilities of PCC that become a Liability of Buyer under any
bulk transfer Law of any jurisdiction;
(v) all Liabilities under the contracts, agreements, personal and
real property leases, relationships and commitments of the Asset
Sale Companies listed on Schedule 1.89(v); and
(w) all Liabilities related to Equipment retained by PCC and the
Asset Sale Companies after the Closing Date but included within
the Equipment leases listed Schedule 5.4(b).
1.90. Security Agreement.
"Security Agreement" shall mean the Security Agreement between Buyer and
PCC, to be dated as of the Closing Date, in a form to be agreed upon by the
parties hereto.
1.91. SEC.
"SEC" shall mean the Securities and Exchange Commission.
1.92. SMCRA.
"SMCRA" shall have the meaning set forth in Section 3.7 hereof.
1.93. Straddle Period.
"Straddle Period" shall mean any taxable period covering days before and
after the Closing Date.
1.94. Tax or Taxes.
"Tax" or "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
custom duties, capital stock, franchise, profits, withholding, social security
23
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, reclamation fees or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, but shall not
include, for purposes of this Agreement only, Liabilities under the Coal Act, of
whatever nature and regardless of how denominated.
1.95. Tax Return.
"Tax Return" shall mean any original or amended report, return,
declaration, claim for refund, statement, document, schedule, attachment or
other information supplied or required to be supplied to a Governmental
Authority with respect to Taxes, including any return of an affiliated, combined
or unitary group.
1.96. VC 5.
"VC 5" shall mean that certain property owned indirectly by PCC depicted on
Schedule 1.96.
1.97. VC 5 Calculation.
"VC 5 Calculation" shall have the meaning set forth in Section 1.99 hereof.
1.98. VC 5 Costs.
"VC 5 Costs" shall mean the amount that equals the sum of all costs and
expenses in connection with VC 5 incurred by PCC and its Affiliates through the
Closing Date.
1.99. VC 5 Estimate.
"VC 5 Estimate" shall mean:
(a) if the expected VC 5 Costs minus the expected VC 5 Revenue (the
"VC 5 Calculation") exceeds $13,800,000, then the VC 5 Estimate
shall be the amount by which the VC 5 Calculation exceeds
$13,800,000; or
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(b) if the VC 5 Calculation is less than $13,800,000, then the VC 5
Estimate shall equal the VC 5 Calculation minus $13,800,000.
1.100. VC 5 Revenue.
"VC 5 Revenue" shall mean the amount that equals the sum of all revenues in
connection with VC 5 received by PCC and its Affiliates through the Closing
Date.
1.101. VDEQ.
"VDEQ" shall have the meaning set forth in Section 3.7 hereof.
1.102. VDMME.
"VDMME" shall have the meaning set forth in Section 3.7 hereof.
1.103. Virginia Entities.
"Virginia Entities" shall have the meaning set forth in Section 5.10(a)
hereof.
1.104. WARN Act.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended.
1.105. Welfare Plans.
"Welfare Plans" shall have the meaning set forth in Section 3.11 hereof.
1.106. Workers' Compensation Acts.
"Workers' Compensation Acts" shall mean Laws that provide for awards to
employees and their dependents for employment-related accidents and diseases.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets.
On the Closing Date, PCC (on behalf of the Asset Sale Companies) shall
cause to be sold, conveyed, transferred, assigned, and delivered to Buyer, and
Buyer shall acquire, the Purchased Assets. At the Closing, subject to the terms
and conditions of this Agreement, PCC agrees to: (i) cause title to the
Purchased Assets to be transferred and delivered to Buyer; and (ii) perform its
obligations under this Agreement to be performed at or before Closing. In full
payment for the Purchased Assets, Buyer shall: (i) assume the Assumed
Liabilities; (ii) pay to PCC (which shall receive such amounts on behalf of the
Asset Sale Companies) the Purchase Price by wire transfer of cash or other
immediately available funds and execute and deliver to PCC the Promissory Note;
and (iii) perform its obligations under this Agreement to be performed at or
before Closing. Buyer shall not assume or have any responsibility with respect
to any Liability of PCC Parent, PCC, the PCC Group or the Asset Sale Companies
that is not an Assumed Liability.
2.2. Calculation of VC 5 Adjustment Amount.
(a) No later than ten days before the Closing Date, PCC will deliver
to Buyer documentation reasonably acceptable to Buyer detailing
and supporting the VC 5 Estimate.
(b) No later than 20 days after the Closing Date, PCC will deliver to
Buyer documentation reasonably acceptable to Buyer detailing the
VC 5 Costs and the VC 5 Revenue (the "Final VC 5 Cost"). The
Final VC 5 Cost shall be equal to the VC 5 Costs minus the VC 5
Revenue as shown on such documentation. PCC and Buyer will use
commercially reasonable efforts to resolve any differences within
seven business days after the delivery by PCC of the
26
documentation detailing the Final VC 5 Costs. If PCC and Buyer
cannot resolve any such differences within such seven business
days period, the parties agree to submit any such differences to
arbitration in Abingdon, Virginia, by the accounting firm of
Deloitte & Touche, LLP or another accounting firm mutually
acceptable to both parties (the "CPA Arbitrator") to resolve such
differences. The CPA Arbitrator shall make such review and
examination of the relevant facts and documents as the CPA
Arbitrator deems appropriate, and shall permit each of Buyer and
PCC to make a written presentation of their respective positions.
Within forty-five (45) days after submission of such dispute by
both parties, the CPA Arbitrator shall resolve all disputed items
in writing and shall prepare and deliver its decision (which
shall include a determination of the VC 5 Costs, the VC 5 Revenue
and the Final VC 5 Cost), and which shall be final and binding
upon the parties without further recourse or collateral attack
and, as to each disputed matter, shall accept either Buyer's or
PCC's position in its entirety and the party whose position is
not accepted by the CPA Arbitrator on a particular disputed
matter shall pay all fees and costs of such CPA Arbitrator to
arbitrate such disputed matter. In accordance with the provisions
of this Section 2.2(b): (i) Buyer shall pay PCC the amount, if
any, by which the value of the Final VC 5 Cost exceeds the value
of the VC 5 Estimate; or (ii) PCC shall pay Buyer the amount, if
any, by which the value of the VC 5 Estimate exceeds the value of
the Final VC 5 Cost. Such payment shall constitute an adjustment
to the Purchase Price and shall be paid by wire transfer of cash
or other immediately available funds within three business days
after the completion of the procedures contemplated in this
Section 2.2(b).
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2.3. Bills of Sale, Assignment and Assumption Agreements and Other
Documents.
At the Closing, PCC shall cause each of the Asset Sale Companies to: (i)
execute and deliver to Buyer the Bills of Sale, the Assignment and Assumption
Agreements and such other documents as may be necessary to convey to Buyer the
Purchased Assets; and (ii) perform its obligations under the Agreement to be
performed at or before the Closing.
2.4. Assumption of Liabilities.
At the Closing, Buyer shall execute and deliver to PCC the Assignment and
Assumption Agreements and such other documents and instruments as may be
necessary for Buyer to assume all of the Assumed Liabilities. Buyer shall not
assume or have any responsibility, however, with respect to any Liability of PCC
Parent, PCC, the PCC Group or the Asset Sale Companies that is not an Assumed
Liability.
2.5. Proration of Liabilities.
PCC and Buyer shall cooperate with each other to provide for payments due
with respect to the Assumed Liabilities and the Retained Liabilities during the
payment period in which the Closing occurs with all such Liabilities prorated as
of the Closing Date, if applicable.
2.6. Indemnification and Guaranty Agreement.
At the Closing, PCC, PCC Parent, Buyer's Ultimate Parent and Buyer shall
execute and deliver the Indemnification and Guaranty Agreement.
2.7. Cooperation Agreement.
At the Closing, PCC and Buyer shall, and PCC shall cause PCC Parent to,
execute and deliver the Cooperation Agreement pursuant to which Buyer, PCC
Parent and PCC shall provide each other certain information and other assistance
in connection with the collection, administration and/or satisfaction of certain
of the Retained Liabilities.
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2.8. Administrative Services Agreement.
At the Closing, PCC and Buyer shall execute and deliver the Administrative
Services Agreement pursuant to which PCC or one of its Affiliates will provide
certain services to Buyer and the Asset Sale Companies for a transition period.
2.9. Paramont Service Agreement.
At the Closing, PCC and Buyer shall execute and deliver the Paramont
Service Agreement pursuant to which Buyer will cause one of its Affiliates to
perform reclamation and other services on idle properties.
2.10. Security Agreement.
At the Closing, in order to secure Buyer's obligations under the Promissory
Note, PCC and Buyer shall execute and deliver the Security Agreement.
2.11. Additional Documents.
At the Closing, PCC and Buyer shall, and PCC shall cause the Asset Sale
Companies to, execute and deliver all such other documents or instruments
necessary or appropriate to effect the transactions contemplated by this
Agreement, including the documents provided in Section 5.6 hereof and in this
Article II.
2.12. Coal Inventory Adjustment.
(a) In accordance with the provisions of this Section 2.12: Buyer
shall pay PCC the amount, if any, by which the value of the Coal
Inventory (as calculated in accordance with Sections 2.12(b)) is
finally determined to be greater than $1,640,000. Such payment
shall constitute an adjustment to the Purchase Price and shall be
paid by fixing the face amount of the Promissory Note within one
business day after the completion of the procedures contemplated
in Sections 2.12(b).
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(b) No later than three days before the Closing Date, the parties
will agree upon the density of the various stockpiles that
constitute the Coal Inventory. No later than two business days
prior to the Closing, PCC and Buyer shall cause Tuck Engineering,
Inc. (the "Independent Surveyor") to prepare and deliver to each
of them a survey of all Coal Inventory of the Asset Sale
Companies as of the Closing, which survey shall be conducted in
accordance with the principles set forth on and shall be in
substantially the format attached hereto as part of Schedule
2.12(b). PCC and Buyer shall, and shall cause their respective
Affiliates to, cooperate with and make available any information
reasonably requested by the Independent Surveyor in its
preparation of its survey of the Coal Inventory. All
determinations made by the Independent Surveyor in its survey of
the Coal Inventory shall be final, binding and conclusive on the
parties. PCC and Buyer shall each bear fifty percent of the fees
and costs of the Independent Surveyor and any other third party
incurred in connection with the calculation of the Coal Inventory
pursuant to this Section 2.12(b).
2.13. Allocation of Purchase Price and Assumed Liabilities.
The Purchase Price and the Assumed Liabilities (to the extent they
constitute part of the amount realized for federal Income Tax purposes) shall be
allocated among the Purchased Assets in accordance with a schedule to be agreed
upon by Buyer and PCC after the Closing Date. Buyer shall prepare such
allocation schedule and deliver it to PCC within the later to occur of (i) ten
(10) business days after the completion of the Audited Closing Date Financial
Statements or (ii) ten (10) business days after the CPA Arbitrator's final
resolution under Sections 2.2 and 2.12, if applicable. PCC shall be deemed to
agree with such allocation schedule unless, within ten (10) days after the date
PCC receives the allocation schedule from Buyer, PCC notifies Buyer in writing
30
of (i) each allocation with which it disagrees and (ii) for each such
allocation, the amount that PCC proposes to allocate. If PCC provides such
notice to Buyer, the parties shall proceed in good faith to resolve mutually the
disputed allocation amounts within fifteen (15) days after the date on which PCC
notifies Buyer of a disagreement with Buyer's proposed allocation. If PCC and
Buyer cannot resolve any such differences, the parties agree to submit such
differences to arbitration in Abingdon, Virginia, by the CPA Arbitrator to
resolve such differences. The CPA Arbitrator shall make such review and
examination of the relevant facts and documents as the CPA Arbitrator deems
appropriate and shall permit each of Buyer and PCC to make a written
presentation of their respective positions. Within forty-five (45) days after
submission of such dispute by both parties, the CPA Arbitrator shall resolve
such dispute in writing and shall prepare and deliver its decision, which shall
(i) be based upon a determination of the fair market value of the Purchased
Assets, (ii) defer to valuations that have been prepared in accordance with
generally accepted valuation techniques absent manifest error, (iii) be final
and binding upon the parties without further recourse or collateral attack and
(iv) accept either Buyer's or PCC's position in its entirety. The party whose
position is not accepted by the CPA Arbitrator shall pay all fees and costs of
such CPA Arbitrator to arbitrate such dispute. The allocation schedule shall
include, at a minimum, information necessary to complete Part II of IRS Form
8594. The allocation to the Purchased Assets is intended to comply with the
requirements of Section 1060 of the Code. The parties shall cooperate to comply
31
with all substantive and procedural requirements of Section 1060, and except for
any adjustment to the Purchase Price hereunder, after the completion and
agreement by the parties to the allocation schedule, such allocation schedule
shall be adjusted only if and to the extent necessary to comply with such
requirements of Section 1060. Buyer and PCC agree that they will not take nor
will they permit any Affiliate to take, for Income Tax purposes, any position
inconsistent with such allocation schedule to the Purchased Assets; provided,
however, that (i) Buyer's cost for the Purchased Assets may differ from the
total amount allocated hereunder to reflect the inclusion in the total cost of
items (for example, capitalized acquisition costs) not included in the total
amount so allocated and (ii) the amount realized by the Asset Sale Companies may
differ from the total amount allocated hereunder to reflect transaction costs
that reduce the amount realized for federal Income Tax purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PCC
PCC hereby represents and warrants to Buyer that the statements contained
in this Article III are correct and complete, except as set forth in the
Schedules delivered by PCC to Buyer in connection with this Agreement. The
Schedules are arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article III.
3.1. Incorporation.
PCC and each of the Asset Sale Companies are corporations duly organized,
validly existing and in good standing under the Laws of the respective state or
commonwealth of each such company's incorporation. PCC and each of the Asset
Sale Companies that is not a corporation incorporated under the Laws of Virginia
are duly qualified or licensed to transact business as a foreign corporation in
Virginia and are in good standing under the laws of Virginia. Set forth on
Schedule 3.1 is the name of each state or other jurisdiction in which each such
company has either paid taxes or had an office in the three years prior to the
date of this Agreement.
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3.2. Execution, Delivery and Performance.
The execution, delivery and performance by PCC of this Agreement and by PCC
and the applicable Asset Sale Company of each other agreement or instrument to
which it is a party executed in connection herewith or delivered pursuant hereto
and the consummation of the transactions contemplated herein and therein will
not, with or without the giving of notice or the passage of time, or both: (i)
conflict with, or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under, or result in
the creation of any Lien (other than Permitted Liens) under or pursuant to, any
provision of PCC's or any Asset Sale Company's Articles of Incorporation or
Bylaws or of any material franchise, mortgage, deed of trust, Lien, lease,
license, instrument, agreement, consent, approval, waiver or understanding to
which PCC or any Asset Sale Company is a party or by which any Asset Sale
Company is bound, or any Law or any order, judgment, writ, injunction or decree
to which PCC or any Asset Sale Company is a party or by which PCC, any Asset
Sale Company or the Purchased Assets may be bound or affected; (ii) require the
approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or, except as set forth on Schedule
1.76, contravene, conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel or terminate any authorization or Permit issued by a
Governmental Authority that is held by PCC or the Asset Sale Companies or that
otherwise relates to the Purchased Assets; or (iii) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under any Law
to which PCC or any Asset Sale Company is subject.
33
3.3. Authorization.
PCC has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder and each of PCC and the Asset Sale
Companies has full power and authority to enter into and deliver each other
agreement or instrument to which it is a party executed in connection herewith
and delivered pursuant hereto and to perform its obligations thereunder. PCC's
execution, delivery and performance of this Agreement and the execution,
delivery and performance of all other agreements and instruments by PCC and each
of the Asset Sale Companies in connection herewith and delivered pursuant hereto
and the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of PCC and each of the Asset Sale
Companies. This Agreement and all other agreements or instruments executed by
PCC or any of the Asset Sale Companies in connection herewith and delivered by
PCC or any of the Asset Sale Companies pursuant hereto have been duly executed
and delivered by PCC or such Asset Sale Companies and this Agreement and all
other agreements and instruments executed by PCC or any of the Asset Sale
Companies in connection herewith and delivered by PCC or any of the Asset Sale
Companies pursuant hereto constitute the legal, valid and binding obligation of
PCC or such Asset Sale Company, as the case may be, enforceable in accordance
with their respective terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally the
enforcement of creditors' rights).
3.4. Absence of Changes.
Except as contemplated by this Agreement, since December 31, 2001, none of
the Asset Sale Companies has, with respect to the Purchased Assets:
34
(a) borrowed or agreed to borrow any funds or incurred, or become
subject to, any Liability, or issued any note, bond or other debt
security, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation, except Liabilities incurred in the
Ordinary Course of Business, none of which would reasonably be
expected to result in an impact greater than $100,000;
(b) paid any Liability other than current Liabilities in the Ordinary
Course of Business;
(c) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of any of the Equipment, or, other
than in the Ordinary Course of Business, any other Purchased
Assets, or canceled or otherwise terminated, or agreed to cancel
or otherwise terminate, other than in the Ordinary Course of
Business, any Permits;
(d) except in the Ordinary Course of Business, entered into any
agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) or made or permitted
any material amendment to or termination, acceleration,
modification or cancellation of any Contract or breached any
provision of any Contract;
(e) merged or consolidated with any other Person;
(f) mortgaged, pledged or subjected to any Lien any of its assets or
properties, other than Permitted Liens;
(g) made any capital expenditure (or series of related capital
expenditures) either (x) involving more than $100,000 or (y)
outside the Ordinary Course of Business;
35
(h) made any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other Person (or series of
related capital investments, loans and acquisitions) either (x)
involving $100,000 or (y) outside the Ordinary Course of
Business;
(i) delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
(j) cancelled, compromised, waived or released any right or claim (or
series of related rights and claims) either (x) involving more
than $100,000 or (y) outside the Ordinary Course of Business;
(k) made any loan to, or entered into any other transaction with, any
of the directors, officers and employees of such Asset Sale
Company outside the Ordinary Course of Business;
(l) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing
such contract;
(m) except in the Ordinary Course of Business adopted, amended,
modified or terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the benefit
of any of the directors, officers and Employees of the Asset Sale
Companies, or taken any such action with respect to any other
Employee Benefit Plan;
(n) made any other change in employment terms for any of the
directors, officers and Employees of the Asset Sale Companies
outside the Ordinary Course of Business;
36
(o) suffered any damage, destruction or loss, whether or not covered
by insurance, that has had or would reasonably be expected to
have a Material Adverse Effect;
(p) implemented or adopted any change in its accounting methods or
principles or the application thereof; or
(q) entered into any agreement, arrangement or understanding with
respect to any of the foregoing.
3.5. Purchased Assets.
(a) The Asset Sale Companies (i) own good and transferable title to
all of the Purchased Assets free and clear of all Liens and
restrictions on transfer, other than Permitted Liens or (ii)
lease such Purchased Assets under a valid and enforceable lease
(subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting
generally the enforcement of creditors' rights). No rights of the
Asset Sale Companies under such leases have been assigned or
otherwise transferred as security for any obligation of the Asset
Sale Companies. The consummation of the transactions contemplated
by this Agreement will not create or constitute, either with or
without notice or the passage of time a default or event of
default under any such lease or require the consent of any other
party to such lease in order to avoid a default or event of
default.
(b) Except for the items set forth on Schedule 1.89(v), the Purchased
Assets include all tangible and intangible assets owned by the
Asset Sale Companies and used in the Business.
37
(c) The Equipment that is currently in use has been maintained in
accordance with normal industry practice and is suitable for the
purposes for which the Asset Sale Companies are presently using
such Equipment.
(d) The value of the Parts, Fuel and Supplies Inventory as of the
Closing Date shall be at least $620,000.
3.6. Intellectual Property.
No third party has asserted any interest in the Intellectual Property, nor
has any third party alleged that any Asset Sale Company has infringed on any
Intellectual Property of any third party. To the Knowledge of PCC, none of the
Asset Sale Companies interferes with, infringes upon, misappropriates, or
otherwise comes into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of the Business as presently
conducted.
3.7. Permits and Environmental Compliance.
(a) Each Asset Sale Company is in material compliance with all
Environmental Laws related to the Purchased Assets. Neither PCC
nor any Asset Sale Company (such Persons being hereafter referred
to in this Section 3.7 as "Operators") has been notified by any
Governmental Authority of any current, alleged or unresolved
violation of any Environmental Laws applicable to Mining
Activities, including any investigatory, remedial or corrective
obligations, that would result in (i) closure, suspension or
restriction of any mine or mining-related activity related to the
Permits, (ii) revocation or suspension of any license or Permits,
or (iii) exposure of Buyer to the imposition of any fines or
other civil or criminal monetary penalty in excess of $5,000. The
Permits include all material permits, licenses, franchises and
38
other authorizations necessary to conduct the Mining Activities
as currently conducted and the Asset Sale Companies are in
material compliance with all such Permits. No such Permit is the
subject of any proceeding by or in front of any Governmental
Authority that might affect its validity and no such proceeding
is pending or, to the Knowledge of PCC, threatened.
(b) PCC has made available to Buyer true and complete copies of (i)
the Permits, (ii) all of the mining permits and other permits
held by each Operator pertaining to the Purchased Assets,
together with a description of the permitted property or
facility, the amount of the bond for each such Permit and the
surety for each such bond or manner in which each such bond has
otherwise been posted, (iii) all other licenses, franchises,
certificates, concessions and other governmental approvals and
authorizations held by each Operator pertaining to the Purchased
Assets, as amended, supplemented and modified through the date
hereof, and (iv) any and all pending applications for additional
mining permits and other licenses and authorizations that have
been submitted to any governmental agency by an Operator
pertaining to the Purchased Assets or are in the process of
development either in-house or through consultants.
(c) Schedule 3.7 includes a true and complete list of all of the
citations, notices of non-compliance and notices of violation
received by each Operator with respect to the Purchased Assets
from the Virginia Department of Mines, Minerals and Energy
("VDMME"), the Virginia Department of Environmental Quality
("VDEQ"), the federal Environmental Protection Agency ("EPA"),
the federal Office of Surface Mining ("OSM"), the federal Mine
Safety and Health Administration ("MSHA"), or any other
Governmental Authority that remain outstanding. No Operator is
subject to any cessation orders, cease and desist orders, closure
orders or show cause orders issued by VDMME, VDEQ, EPA, OSM,
MSHA, or any such other Governmental Authority with respect to
the Purchased Assets.
39
(d) With respect to the Purchased Assets, each Operator is in
material compliance with all of the requirements of the Surface
Mining Control and Reclamation Act of 1977 ("SMCRA"), the Federal
Mine Safety and Health Act of 1977, as amended, all similar
statutes of the Commonwealth of Virginia, and all rules and
regulations promulgated under those Acts and statutes by OSM,
MSHA, VDMME, VDEQ and any other Governmental Authority. With
respect to the Purchased Assets, no Operator has been subjected
to any bond forfeiture, permit suspension or revocation, or
similar effort and proceedings instituted by OSM, VDMME or any
other Governmental Authority.
(e) To the Knowledge of PCC, after the Closing, Buyer will not be
liable for any fines, penalties, fees, Taxes or other
governmental charges assessed with respect to notices of
violation, cessation orders, closure orders, show cause orders or
other governmental enforcement actions issued prior to Closing
with respect to the Purchased Assets. Neither this Agreement nor
the consummation of the transactions that are the subject of this
Agreement will result in any Buyer Liabilities for site
investigation or cleanup, or notification to or consent of any
Governmental Agency or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property
transfer" Environmental Laws. The representation in the previous
sentence does not relate to any matters for which Buyer has the
responsibility, pursuant to this Agreement, to notify any
Governmental Authority or to otherwise process with any
Governmental Authority in connection with the transfer of any
Permit.
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(f) No Asset Sale Company has, with respect to the Purchased Assets,
either expressly or by operation of Law, assumed or undertaken
any Liability, including without limitation, any Liability for
corrective or remedial action, of any other Person relating to
any Environmental Laws.
(g) To the Knowledge of PCC, no conditions existing as of the Closing
Date and relating to the Purchased Assets or the activities of
the Asset Sale Companies or any of their respective predecessors
or Affiliates will prevent or materially hinder Buyer's
compliance with Environmental Laws, require Buyer to undertake
any investigatory, remedial or corrective actions pursuant to
Environmental Laws or impose upon Buyer any other Liabilities
pursuant to Environmental Laws, including without limitation, any
Environmental Laws relating to onsite or offsite releases or
threatened releases of Hazardous Substances or imposing Liability
for personal injury, property damage or natural resource damage.
3.8. Reclamation Bonds.
Schedule 3.8 contains a list of all bonds, including guaranties,
indemnities, letters of credit and other forms of surety, posted by and/or for
the benefit of the Asset Sale Companies to secure the performance of their
respective reclamation or other Liabilities pursuant to, in connection with or
as a condition of, the Permits (collectively, the "PCC Bonds"). The PCC Bonds
are sufficient to permit the Asset Sale Companies and their Affiliates to
conduct the Mining Activities in compliance with Laws and are in full force and
effect.
41
3.9. Contracts.
(a) PCC has made available to Buyer copies of all of the written
Contracts, or a written summary setting forth the terms and
conditions where no copies exist, including all amendments,
modifications, waivers and elections applicable thereto.
(b) As to the Asset Sale Companies party thereto: (i) the Contracts
are valid and binding, enforceable in accordance with their
respective terms (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights), and
are in full force and effect; (ii) the consummation of the
transactions contemplated herein will not, with or without the
giving of notice or the passage of time, or both, conflict with,
or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under
the Contracts; (iii) no Asset Sale Company, nor to the Knowledge
of PCC, any other party is in material breach or default, and no
event has occurred that, with notice or lapse of time, would
constitute a breach or default, or permit termination,
modification or acceleration, under the Contracts; and (iv) no
Asset Sale Company, nor to the Knowledge of PCC, any other party
has repudiated any provision of the Contracts.
(c) Schedule 3.9(c) sets forth the consents and approvals of third
parties and Governmental Authorities required to be obtained as a
result of the transactions contemplated by this Agreement.
3.10. Litigation; Claims.
(a) Schedules 3.7 and 3.10 list all claims, legal actions, suits,
litigation, arbitrations, disputes, investigations, proceedings
by or before any Governmental Authority involving more than
$100,000 and all orders, decrees or judgments, now pending or in
42
effect, or, to the Knowledge of PCC, threatened or contemplated,
against or affecting the Asset Sale Companies, the Purchased
Assets, or the consummation of the transactions contemplated by
this Agreement, except to the extent involving Taxes for
Pre-Closing Periods.
(b) There are no existing claims by or disputes involving more than
$100,000 with Persons owning or occupying lands or realty
adjoining or near any of the Purchased Assets regarding Mining
Activities by the Asset Sale Companies or regarding the location
of boundary lines, encroachments, mineral rights, subsidence,
water quantity or quality, blasting damage, transportation of
coal or other materials, nuisances or any other similar matter.
3.11. Employee Benefits.
(a) Schedule 3.11(a) contains a list of all "employee benefit plans"
(as defined in Section 3(3) of ERISA) and all other employee
benefit plans, programs or arrangements, including each severance
pay, bonus, deferred compensation, incentive compensation, stock
purchase, stock option or other equity-based compensation, death
benefit, group insurance, hospitalization or other medical,
dental, health, life (including all individual life insurance
policies as to which any of the Asset Sale Companies is the
owner, beneficiary or both), disability or other insurance, Code
Section 125 "cafeteria" or "flexible" benefit plan, pension,
savings, profit-sharing or retirement plan, program or
arrangement: (i) under which Employees or former Employees are
entitled to participate by reason of their employment with any of
the Asset Sale Companies or their respective ERISA Affiliates,
whether or not any of the foregoing is funded, whether insured or
self-funded, and with respect to which any of the Asset Sale
Companies are a party or a sponsor or a fiduciary thereof or by
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which any of the Asset Sale Companies are bound; or (ii) with
respect to which any of the Asset Sale Companies otherwise may
have, as of the Closing Date, any direct or indirect Liability
(the "Employee Benefit Plans"). Schedule 3.11(a) identifies: (i)
each Employee Benefit Plan that is a "pension plan" (as defined
in Section 3(2) of ERISA) (the "Pension Plans"), and denotes
those Pension Plans intended to be qualified under Section 401(a)
of the Code (the "Qualified Plans"); (ii) each Employee Benefit
Plan that is a "multiemployer plan" (as defined in Section 3(37)
or Section 4001(a)(3) of ERISA) (a "Multiemployer Plan"); and
(iii) each Employee Benefit Plan that is a "welfare plan" (as
defined in Section 3(1) of ERISA) (the "Welfare Plans").
(b) Each Qualified Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and has received, pursuant to a request
that accurately described such Qualified Plan, a favorable
determination letter from the IRS to the effect that the form of
such Qualified Plan satisfies the requirements of Section 401(a)
of the Code and that its related trust is exempt from taxation
under Section 501(a) of the Code. To the Knowledge of PCC, there
are no facts or circumstances that would jeopardize or adversely
affect in any material respect the qualification under Code
Section 401(a) of any Qualified Plan.
(c) As of the Closing Date, full payment to each Employee Benefit
Plan of all contributions (including all employer contributions
and employee salary reduction contributions) that are required to
be made by the Asset Sale Companies under the terms thereof and
under ERISA or the Code in respect of the current and prior plan
years, if any, have been made for all Employee Benefit Plans
(except for The Savings and Investment Plan of The Pittston
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Company and Its Subsidiaries, which payment shall be made as soon
as possible after the Closing Date). All contributions that are
required to be made by the Asset Sale Companies for any period
ending on or before the Closing Date that are not yet due have
been paid to each such Employee Benefit Plan or accrued in
accordance with the past custom and practice of the Asset Sale
Companies. All premiums that are due on or before the Closing
Date have been paid with respect to each such Welfare Plan. As of
the latest actuarial determination, no "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived, exists with respect to any
Pension Plan. The present value of all accumulated benefit
obligations under each Qualified Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standard
No. 87) did not as of the last annual valuation date applicable
thereto exceed the fair market value of the assets of such
Qualified Plan. No "reportable event" within the meaning of
Section 4043 of ERISA has occurred in connection with any of the
Pension Plans.
(d) Employee Benefit Plan Compliance.
(i) Each Employee Benefit Plan (other than the Multiemployer
Plans) has been administered substantially in accordance
with its terms;
(ii) each Employee Benefit Plan (other than the Multiemployer
Plans) and each related trust, insurance contract or fund
complies in form and in operation and has been administered
substantially in accordance with any applicable provisions
of ERISA, the Code and all other Laws, all reports, returns
and other documentation (including Form 5500 Annual Reports
and PBGC-1s) that are required to have been filed with the
IRS, the United States Department of Labor, the PBGC or any
45
other Governmental Authority have been filed on a timely
basis in each instance in which the failure to file such
reports, returns and other documents would result in any
material Liability to PCC or the Asset Sale Companies;
(iii)other than routine claims for benefits, no Liens, lawsuits
or complaints to or by any Person or Governmental Authority
have been filed or, to the Knowledge of PCC, are
contemplated or threatened, with respect to any Employee
Benefit Plan (other than the Multiemployer Plans) except for
those that would not reasonably be expected to result in any
material Liability to PCC or the Asset Sale Companies.
(e) Neither PCC nor any of the Asset Sale Companies has received a
written notice of, or incurred, any withdrawal liability with
respect to a Multiemployer Plan.
(f) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any Person to severance pay for
which Buyer will be liable after the Closing; (ii) accelerate the
time of payment or vesting of, increase the amount of, or satisfy
a condition to the compensation due to any Person under any
Employee Benefit Plan for which Buyer will be liable after the
Closing; or (iii) result in the payment of an amount that could,
individually or in combination with any other such payment,
constitute an "excess parachute payment" under Code Section
280G(b)(1).
(g) No "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) has occurred with
respect to any Employee Benefit Plan subject to ERISA, other than
such a transaction subject to an administrative or statutory
exemption, with respect to which a Tax, penalty or other amount
may reasonably be expected to be imposed on any of the Asset Sale
Companies or their respective ERISA Affiliates.
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(h) Neither the PCC Parent, PCC, the Asset Sale Companies nor any of
their respective ERISA Affiliates, nor any organization with
respect to which any such entity is a successor or parent
corporation, within the meaning of Section 4069(b) of ERISA, has
engaged in any transaction described in Sections 4069 or 4212(c)
of ERISA.
(i) Each Pension Plan that is not qualified under Code Section 401(a)
or 403(a) is exempt from Parts 2, 3 and 4 of Title I of ERISA as
an unfunded plan that is maintained primarily for the purpose of
providing deferred compensation for a select group of management
or highly compensated employees, pursuant to ERISA Sections
201(2), 301(a)(3) and 401(a)(1).
(j) No assets of any of the Asset Sale Companies are allocated to or
held in a "rabbi trust" or similar funding vehicle.
(k) Neither the PCC Parent, PCC, the Asset Sale Companies nor any of
their respective ERISA Affiliates has received any notification
that any Multiemployer Plan is in reorganization (within the
meaning of Section 4121 of ERISA), is insolvent (within the
meaning of Section 4245 of ERISA) or has been terminated (within
the meaning of Title IV of ERISA), and to the Knowledge of PCC,
no Multiemployer Plan is reasonably expected to be in
reorganization, insolvent or terminated.
(l) No Welfare Plan is a "multiple employer welfare arrangement" as
defined in Section 3(40) of ERISA.
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3.12. Employment Matters.
None of the Asset Sale Companies is a party to, bound by, or negotiating
with respect to any agreement with any labor union, association or other
employee group, nor is any unit of Employees of the Asset Sale Companies
represented by any labor union or similar association. No labor union or
employee organization has been certified or recognized as the collective
bargaining representative of any Employees of the Asset Sale Companies. To the
Knowledge of PCC, there are no active union organizational campaigns or
representation proceedings underway or threatened with respect to any Employees
of the Asset Sale Companies, nor are there any existing or threatened labor
strikes, work stoppages, slowdowns, grievances, unfair labor practice charges,
discrimination charges or labor arbitration proceedings affecting Mining
Activities at or deliveries to any mine or other facility of any of the Asset
Sale Companies. Each of the Asset Sale Companies has been and is in compliance
with all applicable Laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, except where the failure to be
in compliance would not reasonably be expected to impose any material Liability
on the Asset Sale Companies.
3.13. No Broker.
None of the Asset Sale Companies, PCC or the PCC Parent has had any
dealings, negotiations or communications with or retained any broker or other
intermediary in connection with the transactions contemplated by this Agreement
and none of the foregoing is committed to any Liability for any brokers' or
finders' fees or any similar fees in connection with the transactions
contemplated hereby, other than Rothschild Inc., who shall be compensated solely
by PCC or an Affiliate of PCC.
48
3.14. Health and Safety Requirements.
As it relates to the Purchased Assets, each of the Asset Sale Companies has
complied with all applicable Health and Safety Requirements and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
is currently outstanding against any of them alleging any failure to so comply,
except for those that would not reasonably be expected to have a Material
Adverse Effect.
3.15. Restrictions on Business Activities.
Except for this Agreement, there is no agreement, judgment, injunction,
order or decree binding upon PCC or any of the Asset Sale Companies that has or
would reasonably be expected to have the effect of prohibiting the conduct of
the Business.
3.16. Powers of Attorney.
There are no outstanding powers of attorney executed on behalf of any of
the Asset Sale Companies affecting the Purchased Assets.
3.17. Transactions With Affiliates.
The Contracts do not include any Liability between any Asset Sale Company
and any Affiliate of such Asset Sale Company. At the Closing, the Purchased
Assets will not include any receivable or other Liability from an Affiliate of
any Asset Sale Company.
3.18. Absence of Certain Payments.
During the five (5) year period prior to the date of this Agreement, to the
Knowledge of PCC, none of the Asset Sale Companies have (nor has any director,
officer, agent, or employee of any Asset Sale Company nor any other person,
acting on behalf of any Asset Sale Company) directly or indirectly: used any of
such company's funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; made any unlawful payment to
49
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from such company's funds; violated any provision
of the Foreign Corrupt Practices Act of 1977 applicable to such company;
established or maintained any unlawful or unrecorded fund of such company's
monies or other assets; made any false or fictitious entry on the books or
records of such company; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment, to any person or entity, private or public,
regardless of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions for such
company, or to pay for favorable treatment for business secured or for special
concessions already obtained for such company.
3.19. Disclosure.
The representations and warranties contained in this Article III do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article III not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to PCC that:
4.1. Organization.
Buyer is a duly formed limited liability company, validly existing and in
good standing under the Laws of the State of Delaware.
4.2. Execution, Delivery and Performance.
The execution, delivery and performance of this Agreement and each other
agreement or instrument executed in connection herewith or delivered pursuant
hereto and the consummation of the transactions contemplated herein and therein
will not, with or without the giving of notice or the passage of time, or both,
(i) conflict with, or result in a violation or breach of, or a default, right to
50
accelerate or loss of rights under, or result in the creation of any Lien, under
or pursuant to, any provision of Buyer's organizational documents or of any
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding, any Law, or any finding, order,
judgment, writ, injunction or decree to which Buyer is a party or by which Buyer
or its respective assets may be bound or affected; or (ii) require the approval,
consent or authorization of, or prior notice to, filing with or registration
with, any Governmental Authority, or any other Person or entity; provided that
this Section 4.2 shall not apply to any requirement of Buyer to obtain any
consent of the applicable Governmental Authority to transfer or modify the
Permits.
4.3. Authorization.
Buyer has full power and authority to enter into and deliver this
Agreement, and each other agreement or instrument (to which it is a party)
executed in connection herewith or delivered pursuant hereto and to perform its
obligations hereunder and thereunder. Buyer's execution, delivery and
performance of this Agreement and all other agreements and instruments executed
in connection herewith or delivered pursuant hereto and the transactions
contemplated hereby have been duly authorized by all requisite action. This
Agreement and all other agreements or instruments executed by Buyer in
connection herewith or delivered by Buyer pursuant hereto have been duly
executed and delivered by Buyer and this Agreement and all other agreements and
instruments executed by Buyer in connection herewith or delivered by Buyer
pursuant hereto constitute Buyer's legal, valid and binding obligation,
enforceable in accordance with their respective terms (subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights).
51
4.4. No Broker.
Buyer has had no dealings, negotiations or communications with any broker
or other intermediary in connection with the transactions contemplated by this
Agreement nor is it committed to any Liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated hereby.
4.5. Reclamation and Environmental Compliance.
Buyer and all operators it owns or controls are in compliance with all
Environmental Laws and Reclamation Laws in all material respects, and are not
"permit blocked" under the Applicant Violator System administered by the
Department of the Interior.
4.6. Financing.
Buyer will have available to it, at the Closing, financial resources
sufficient to consummate the transactions contemplated by this Agreement.
4.7. Disclosure.
The representations and warranties contained in this Article IV do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article IV not misleading.
ARTICLE V
CERTAIN COVENANTS
5.1. Operation in Ordinary Course.
Except as provided in this Agreement, between the date of this Agreement
and the Closing, PCC shall cause each of the Asset Sale Companies, in relation
to the Purchased Assets, to: (i) carry on its business in the Ordinary Course of
Business; (ii) use commercially reasonable efforts to preserve intact its
current business organization, Mining Activities and properties until the
Closing Date, and maintain the relations and good will with its suppliers,
52
customers, landlords, creditors, agents, and others having business
relationships with such Asset Sale Company; (iii) not enter into any contract or
other obligation binding upon such Asset Sale Company involving its Employees,
any union, or an expenditure, purchase, sale, cost or commitment (unless such
contract is cancelable in thirty or fewer days, involves less than $100,000, or
is for consumable purchases) without the prior written consent of Buyer; and
(iv) report regularly to Buyer concerning the status of the business, Mining
Activities and finances of such Asset Sale Company.
5.2. Compliance with Law.
Between the date of this Agreement and the Closing, each of the Asset Sale
Companies shall comply in all material respects with all Laws and with all
orders of any Governmental Authority.
5.3. Cooperation.
Subject to the terms and conditions herein provided, each of PCC and Buyer
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper and
advisable under Law, to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, PCC and Buyer will, and PCC will cause the Asset Sale Companies to,
execute any additional instruments reasonably necessary to consummate the
transactions contemplated hereby. Prior to and following the Closing Date, PCC
shall make available to Buyer, at reasonable times, and in a manner so as not to
interfere with the normal business operations of the Asset Sale Companies, all
documents, maps and other information necessary to transfer all Permits to Buyer
in accordance with Law.
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5.4. Notices and Consents.
PCC and Buyer each will use their commercially reasonable efforts to obtain
consents of all Governmental Authorities and other third parties necessary to
the consummation of the transactions contemplated by this Agreement. PCC shall
have responsibility for providing any notices to third parties that may be
required by the transactions contemplated by this Agreement and for obtaining,
or causing to be obtained, at its sole cost and expense, the consents listed on
Schedule 5.4(a) and Buyer shall have responsibility for obtaining, at its sole
cost and expense, all consents listed on Schedule 5.4(b), which Schedule shall
include all Equipment leases, and all consents necessary to transfer the
Permits, with the other party in each case using its commercially reasonable
efforts to assist the responsible party in obtaining such consents or Permits.
5.5. Publicity.
All general notices, releases, statements and communications to any
Employees, suppliers, distributors and customers of the Asset Sale Companies, to
the general public and to the press relating to the transactions contemplated by
this Agreement shall be made only at such times and in such manner as may be
mutually agreed upon by PCC and Buyer; provided, however, that either party
hereto (or, in the case of PCC, the PCC Parent) shall be entitled to make a
public announcement of the foregoing if: (a) in the opinion of its legal
counsel, such announcement is required to comply with Law or any listing
agreement with any national securities exchange or inter-dealer quotation
system; and (b) such disclosing party gives a reasonable period of notice and
opportunity to comment to the other party hereto of its intention to make such
public announcement; provided, that, failure to comment within 24 hours of
receipt of such notice shall be deemed a waiver of the opportunity to comment;
54
and provided, further, that nothing in this Section 5.5 shall operate to
prohibit any Asset Sale Company or Buyer from communicating, after the Closing
Date, with their respective suppliers, distributors, customers and Governmental
Authorities the fact that the transaction has occurred or to employees regarding
their employment or the terms and conditions thereof, the operation of the
Purchased Assets or matters necessarily related thereto.
5.6. Permits; Replacement Bonds; Insurance and Guarantees; Other Filings.
(a) At or prior to the Closing Date, Buyer shall: (i) secure, in
accordance with Law, irrevocable commitments to issue replacement
bonds and replacement sureties and guarantees or other financial
security, if applicable, for all Permits sufficient to cause the
applicable Governmental Authority to transfer the Permits to
Buyer in accordance with Law; and (ii) deliver copies of such
documents to PCC.
(b) At or prior to the Closing Date, Buyer shall deliver copies to
PCC of all filings, each in a form that satisfies all
requirements of the applicable Governmental Authority and that
are necessary to cause the applicable Governmental Authority to
transfer the Permits to Buyer in accordance with Law.
(c) Promptly following the Closing Date through the application of
best efforts, Buyer shall make all filings with the appropriate
Governmental Authorities and shall, upon submitting such
applications to transfer such Permits, post replacement bonds
necessary under Laws to transfer the Permits to Buyer in
accordance with Law.
(d) Following the Closing Date, PCC will cause each of the Permits
that is in its name or in the name of an Asset Sale Company to be
retained in its name or in the name of such Asset Sale Company,
as appropriate, until the applicable Governmental Authority
transfers the Permits to Buyer. Buyer may rely on any related
bonds held or guaranteed by PCC or an Affiliate of PCC; provided
55
that Buyer reimburses PCC for bond premiums, security, Office of
Surface Mining fees, amounts required to be paid to correct (and
to pay fines or assessments with respect to) any violation
occurring after the Closing Date and any direct out-of-pocket
costs incurred by PCC or its Affiliates in connection with the
maintenance of such Permits or the related bonds following the
Closing Date. Buyer agrees to use the same efforts to accomplish
the transfer of the Permits as soon as possible after the Closing
that it would use to obtain its own permits to commence immediate
mining operations at any site.
(e) To the extent allowed by and in accordance with applicable Law,
PCC shall cause each of the Asset Sale Companies to grant Buyer
the right to conduct Mining Activities on the properties included
in the Purchased Assets under each of the Permits; provided that
if the appropriate Governmental Authority has not transferred any
Permit by the first anniversary of the Closing Date, Buyer will
deposit in escrow cash or a letter of credit from a bank
reasonably acceptable to PCC in an amount equal to the face
amount of any related outstanding surety bonds until such Permit
has been transferred.
(f) If PCC or one of the Asset Sale Companies receives a notice of
violation under any of the Permits following the Closing Date but
before the transfer of the Permit, PCC will give Buyer prompt
notice thereof. If PCC reasonably determines that Buyer will not
cause such violation to be cured in a timely fashion, PCC shall
have the right to cure, or cause to be cured, such violation
itself and be reimbursed by Buyer for curing such violation.
(g) At or prior to the Closing Date, Buyer shall have: (i) for
purposes other than the Permits, secured replacement bonds,
replacement sureties, guarantees or other financial security, if
56
applicable, sufficient to allow PCC and the Persons who will be
its Affiliates after the Closing Date to be relieved or released
as of the Closing Date from all financial commitments,
guarantees, collateral agreements or similar undertakings listed
on Schedule 5.6; (ii) obtained property and liability insurance
customary for a company that is engaged in the Business or a
business similar to the Business to insure the Purchased Assets;
and (iii) delivered copies of such documents to PCC.
(h) On or prior to the Closing, Buyer shall deliver to PCC: (i) a
Certificate of Good Standing for self-insured status or evidence
of insurance coverage with respect to Buyer's Liabilities for
workers' compensation and federal black lung benefits that arise
out of employment by Buyer or any of its Affiliates of Employees
on and after the Closing Date, to the extent and in the amounts
provided in applicable Laws; and (ii) certification from the
Department of Labor of approval of self-insured status in the
event Buyer is to be self-insured for federal black lung claim
liability.
5.7. Exclusivity.
PCC will not (nor will it cause or permit any of the Asset Sale Companies
to) (i) solicit, initiate or encourage the submission of any proposal or offer
from any Person relating directly or indirectly to the acquisition of the
Purchased Assets, or any portion thereof, or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. PCC will notify Buyer immediately if
any Person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
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5.8. Access.
At or prior to the Closing Date, PCC will permit (and will cause each of
the Asset Sale Companies to permit) representatives of Buyer to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Asset Sale Companies, to all premises, properties,
personnel, books, records (including Tax records), contracts and documents of or
pertaining to each of the Asset Sale Companies as related to the Purchased
Assets. Copies of and access to accounting records, ledgers and other pertinent
documents or work papers related to the Purchased Assets will be made available
to Buyer at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Asset Sale Companies, upon request.
5.9. Notice of Developments.
Each party will give prompt written notice to the other party of any
material adverse development causing a breach of any of its own representations
and warranties in Article III and Article IV above. No disclosure by any party
pursuant to this Section 5.9, however, shall be deemed to amend or supplement
the Schedules to such representations and warranties or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
5.10. Financial Statement Cooperation and Audits.
(a) PCC and Buyer shall engage KPMG LLP pursuant to the Engagement
Letter to audit the combined balance sheets, statements of
income, cash flow and stockholders' equity (the "Fiscal Year
Financial Statements") as of and for the fiscal years ended
December 31, 2000 and 2001 for the Asset Sale Companies and
certain of their Affiliates who conduct the coal mining and sale
and export terminal and equipment rebuilding, repairing or
58
servicing business of PCC in Virginia, except as listed on
Schedule 5.10(a) (the "Virginia Entities"), including notes and
disclosures required by GAAP. The parties shall cause KPMG LLP to
deliver a draft of the Fiscal Year Financial Statements to both
parties for review. Each of the parties shall have ten (10)
business days to review such draft Fiscal Year Financial
Statements and provide any comments to KPMG LLP. Notwithstanding
any provisions of this Agreement to the contrary and unless
agreed to by both parties, the Closing Date shall be no earlier
than forty-five (45) days from the date on which the final Fiscal
Year Financial Statements shall be delivered by KPMG LLP to both
parties.
(b) PCC agrees that the Fiscal Year Financial Statements (including
the notes thereto) will (i) use accounting policies that are
consistent with PCC Parent's audited financial statements, (ii)
be prepared in conformity with GAAP, applied on a consistent
basis throughout the periods covered thereby and (iii) present
fairly the financial position, condition and results of
operations of the Virginia Entities as of such dates.
(c) At any time between the date of this Agreement and the Closing
Date, Buyer shall have the right, in its reasonable discretion
and upon reasonable advance notice to PCC, to require PCC to
provide Buyer with unaudited internally prepared balance sheets,
statements of income and cash flow for the Virginia Entities
individually or on a combined basis as Buyer may request as of a
more recent month end than December 31, 2001, which will be
prepared in a manner that is consistent with past practices and
with the books and records of the Virginia Entities.
(d) After the Closing Date, PCC will furnish, or cause to be
furnished to Affiliates of Buyer, its accountants and auditors,
upon request of Buyer and as promptly as practicable, such
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information and assistance as is reasonably necessary for
Affiliates of Buyer to cause to be prepared audited combined
balance sheets, statements of income, cash flow and stockholders
equity for the Virginia Entities as of the Closing Date and for
the period beginning on January 1, 2002 and ended on the Closing
Date (the "Audited Closing Date Financial Statements") that are
consistent with the significant accounting policies disclosed in
the footnotes to the Fiscal Year Financial Statements (except as
such consistency may be affected by accounting principles that
have an effective date subsequent to the date of the Fiscal Year
Financial Statements), in conformity with GAAP and with
Regulations S-K and S-X promulgated by the SEC and applied on a
consistent basis throughout the period covered thereby.
(e) With respect to any registration statement or other filings with
the SEC that Buyer shall determine to make in the future, PCC
shall use commercially reasonable best efforts to timely furnish,
or cause to be timely furnished to Affiliates of Buyer, its
accountants and auditors, upon request of Buyer, the following:
(i) consents of PCC's independent public accountants with respect
to the audited Fiscal Year Financial Statements as required by
SEC Regulation S-X, (ii) such information, assistance and
cooperation (including information, assistance and cooperation
from PCC's independent auditors) as is reasonably necessary for
Buyer and Affiliates of Buyer to: (a) address and resolve any SEC
comments related to the Fiscal Year Financial Statements or the
Audited Closing Date Financial Statements (including any required
modification of such financial statements or footnotes thereto)
and (b) prepare any MD&A Disclosure required in connection with a
filing with the SEC and address and resolve any SEC comments
related to such MD&A Disclosure (including any required
modification to such MD&A Disclosure), (iii) such information,
60
assistance and cooperation reasonably necessary for Buyer to
prepare any unaudited pro forma balance sheets or income
statements required to be included in any such registration
statement or other SEC filing and (iv) such information,
assistance and cooperation reasonably necessary for Buyer to
accumulate five years of historical unaudited financial
information of the Virginia Entities for inclusion in any such
registration statement or other filing with the SEC.
(f) PCC and its Affiliates shall reasonably cooperate with Buyer, its
accountants and auditors in the conduct of the actions described
in the preceding sentence and shall allow Buyer, its accountants
and auditors to have access at all reasonable times and upon
reasonable advance notice, and in a manner so as not to interfere
with the normal business operations of PCC, to all premises,
properties, books, records, contracts, and documents of or
pertaining to Buyer's audit of the Audited Closing Date Financial
Statements. In addition, PCC will provide access to PCC's and its
Affiliates' employees, including, without limitation, making
employees available to provide additional information and
explanation of any materials reviewed by Buyer, its accountants
and auditors; provided, however, Buyer's use of such employees
shall not unreasonably interfere with such employee's duties to
his or her employer.
5.11. Coal Inventory.
PCC shall use its commercially reasonable efforts to have 110,000 tons of
Coal Inventory as of the Closing Date.
5.12. Further Assurances.
The parties shall cooperate in a commercially reasonable manner with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
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Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the transactions
contemplated.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions precedent:
(a) no action, suit, proceeding, order, decree or injunction shall
have been commenced, threatened or entered by or before any
Governmental Authority that remains in force and that (i)
prohibits, seeks to prohibit, or imposes or seeks substantial
damages in connection with, the consummation of the transactions
contemplated by this Agreement, (ii) seeks or imposes relief that
causes or would cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (iii)
affects adversely the right of Buyer to own the Purchased Assets
or to operate the Business on or after the Closing Date;
(b) PCC Parent, PCC, Buyer and Buyer's Ultimate Parent shall have
executed and delivered to each other party thereto the
Administrative Services Agreement, the Cooperation Agreement, the
Indemnification and Guaranty Agreement, and Paramont Service
Agreement and any other documentation required in all
transactions contemplated or covered by all such agreements, all
in form and substance as set forth in Exhibits A, E, H and F
attached hereto and the same shall be in full force and effect;
62
(c) all other transactions pursuant to which Buyer or any of its
Affiliates acquire assets related to the Business shall have been
consummated prior to or simultaneously with the transactions
contemplated by this Agreement;
(d) PCC and Buyer shall have executed and delivered to each other all
such other documents or instruments necessary or appropriate to
effect the transactions contemplated by this Agreement, including
the documents provided in Section 5.6 hereof; and
(e) PCC shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(i) and PCC shall have provided
such payments as may be reasonably required to obtain all such
consents. Buyer shall have obtained, or caused to have been
obtained, the consents listed in Schedule 6.1(e)(ii) and Buyer
shall have provided such payments, guarantees and/or assurances
as may be reasonably required to obtain all such consents.
6.2. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions precedent:
(a) all of the representations and warranties of PCC set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or
limitation with respect to materiality (whether by reference to
"Material Adverse Effect" or otherwise), shall be true and
correct in all respects as of the date hereof and at and as of
the Closing Date with the same effect as though such
representations and warranties were made at and as of the Closing
unless the aggregate failure of such representations or
63
warranties to be true and correct does not have a Material
Adverse Effect; provided that if a representation or warranty is
expressly made only as of a specific date, it need only be true
and correct in all respects as of such date, and Buyer shall have
received the PCC Closing Certificate required by Section 6.2(g)
below dated as of the Closing Date executed by PCC to such
effect;
(b) all of the covenants and obligations that PCC is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects;
(c) all proceedings and actions, corporate or other, to be taken by
PCC or the Asset Sale Companies in connection with the
transactions contemplated by this Agreement and all documents
incident thereto, including all actions necessary to authorize
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, shall have been taken and shall
be reasonably satisfactory in form and substance to Buyer and
Buyer's counsel;
(d) PCC shall have, and shall have caused the Asset Sale Companies to
have, executed and delivered the Bills of Sale, the Assignment
and Assumption Agreements and such other documents as may be
necessary to convey to Buyer the Purchased Assets;
(e) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that,
individually, or together with any other change, event or
occurrence, has had or could reasonably be expected to have a
Material Adverse Effect;
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(f) Buyer shall have received an opinion of counsel to PCC addressed
to Buyer substantially in the form of Exhibit J;
(g) Buyer shall have received an executed copy of the PCC Closing
Certificate; and
(h) KPMG LLP shall have issued an unqualified audit opinion with
respect to the Fiscal Year Financial Statements pursuant to the
Engagement Letter.
6.3. Conditions Precedent to Obligations of PCC.
The obligation of PCC to consummate and cause the consummation of the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions precedent:
(a) all of the representations and warranties of Buyer set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or
limitation with respect to materiality, shall be true and correct
in all respects as of the date hereof and at and as of the
Closing Date with the same effect as though such representations
and warranties were made at and as of the Closing unless the
aggregate failure of such representations or warranties to be
true and correct does not have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by
this Agreement or fulfill its post-Closing obligations hereunder;
provided that if a representation or warranty is expressly made
only as of a specific date, it need only be true and correct in
all respects as of such date, and PCC shall have received Buyer's
Closing Certificate required by Section 6.3(j) below dated as of
the Closing Date executed by Buyer to such effect;
65
(b) all of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects;
(c) all proceedings and actions, corporate or other, to be taken by
Buyer in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, including all
actions necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby, shall have been taken and shall be reasonably
satisfactory in form and substance to PCC and its counsel;
(d) PCC shall have received, on behalf of the Asset Sale Companies,
the Purchase Price by wire transfer of cash or other immediately
available funds and the execution and delivery by Buyer of the
Promissory Note;
(e) Buyer shall have executed and delivered the Security Agreement;
(f) Buyer shall have executed and delivered the Assignment and
Assumption Agreements and such other documents as may be
necessary for Buyer to assume all of the Assumed Liabilities;
(g) Buyer shall have delivered to PCC satisfactory evidence of
compliance with Sections 5.6(a), 5.6(g) and 5.6(h);
(h) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that,
individually, or together with any other change, event or
occurrence, has had or could reasonably be expected to have a
Material Adverse Effect;
66
(i) PCC shall have received an opinion of counsel to Buyer addressed
to PCC substantially in the form of Exhibit K; and
(j) PCC shall have received an executed copy of Buyer's Closing
Certificate.
ARTICLE VII
CERTAIN TAX MATTERS
7.1. Property Taxes.
Property Taxes of the Asset Sale Companies with respect to the Purchased
Assets (including, without limitation, property Taxes payable as a tenant or
lessee under any lease) will be pro-rated as of the Closing Date and,
notwithstanding any other provision of this Agreement, the economic burden of
any such property Tax will be borne by (i) the Asset Sale Companies for all
Pre-Closing Periods and the portion of any Straddle Period through the Closing
Date and (ii) by Buyer for all Post-Closing Periods and the portion of any
Straddle Period after the Closing Date. Accordingly, notwithstanding any other
provision of this Agreement, (i) if any Asset Sale Company pays such a property
Tax with respect to a Post-Closing Period or the portion of Straddle Period
after the Closing Date, Buyer will reimburse PCC on behalf of such Asset Sale
Company within 15 days after receiving from PCC written demand for the amount of
such property Tax, and (ii) if Buyer pays such a property Tax with respect to a
Pre-Closing Period or the portion of a Straddle Period through the Closing Date,
PCC on behalf of the Asset Sale Companies will reimburse Buyer within 15 days
after receiving from Buyer written demand for the amount of such property Tax.
For purposes of pro-rating property Taxes, the amount of any property Tax
attributable to the portion of a Straddle Period through the Closing Date shall
be deemed to be the amount of such property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days in the
Straddle Period through the Closing Date and the denominator of which is the
number of days in the entire Straddle Period. In determining the Straddle Period
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for property Taxes, the Tax period as reflected on the statement of Taxes due,
property Tax bill, property "tax ticket," or any other request for payment from
a Governmental Authority will determine the taxable period (e.g., a Virginia
property Tax bill that indicates the tax year as 2002 is for a Tax for the
taxable period January 1, 2002 through December 31, 2002).
7.2. Sales and Use Taxes.
Buyer and PCC or the Asset Sale Companies hereby intend that the
transaction be an occasional sale within the meaning of Virginia Code Section
58.1-602 and regulations thereunder, and therefore exempt from Virginia sales
and use Tax pursuant to Virginia Code Section 58.1-609. PCC will be responsible
for sales and use Taxes payable as a result of the failure of this transaction
to qualify as an occasional sale or as an exempt transaction under any other
Virginia law; provided, however, that any use Tax payable as a result of this
transaction that would be payable regardless of whether the transaction
qualifies as an occasional sale or not shall be paid by Buyer.
7.3. Transfer Taxes.
All transfer, recording and similar Taxes arising in connection with the
transactions contemplated hereunder shall be borne equally by PCC and Buyer. PCC
and Buyer shall (and they shall cause their respective Affiliates to) cooperate
to comply with all Tax Return requirements for such Taxes and provide such
documentation and take such other actions as may be necessary to minimize the
amount of any such Taxes.
7.4. Access for Tax Returns.
Following the Closing Date, Buyer shall, at reasonable times, and in a
manner so as not to interfere with normal business operations, allow PCC (and if
requested by PCC, representatives of federal, state or local agencies) access to
the Purchased Assets for purposes of reviewing information pertinent to any Tax
Return filed by PCC Parent or any of its Affiliates, including the Asset Sale
Companies.
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ARTICLE VIII
COVENANTS REGARDING EMPLOYEES
8.1. Employees.
(a) Subject to the requirements of applicable Laws, but no later than
immediately prior to the Closing, PCC will cause those Asset Sale
Companies set forth on Schedule 8.1 to terminate the employment
of their Employees with respect to the Purchased Assets.
(b) From time to time after the Closing Date, PCC and Buyer may
require information with respect to current or former Employees.
Without intending to limit the obligations of the parties in the
exchange of information with respect to any other matter or in
accordance with the Cooperation Agreement, PCC and Buyer agree to
furnish such information to the other, if available, promptly
after receipt of a written request therefor.
ARTICLE IX
TERMINATION
9.1. Termination.
This Agreement may be terminated prior to the Closing Date only as follows:
(a) by mutual written consent of PCC and Buyer;
(b) by either PCC or Buyer, if the Closing Date shall not have
occurred prior to the close of business on December 31, 2002 or
such later date as the parties may agree in writing (provided,
that the right to terminate this Agreement under this Section
9.1(b) shall not be
69
available to any party whose failure to fulfill any obligation
under this Agreement has been the cause, in whole or in part, of,
or has resulted in, the failure of the conditions in Article VI
to be satisfied and the Closing Date to occur on or before such
date);
(c) by PCC or Buyer if an action, suit, or proceeding, shall have
been commenced or threatened by or before any Governmental
Authority, or any order, decree or injunction shall have been
entered therein, that (i) prohibits, seeks to prohibit, or
imposes or seeks substantial damages in connection with, the
consummation of the transactions contemplated by this Agreement,
(ii) seeks or imposes relief that causes or would cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, or (iii) affects adversely the right of
Buyer to own the Purchased Assets or to operate the Business;
(d) by Buyer if (i) the representations of PCC contained in this
Agreement are not true and correct in all material respects as if
made at and as of that time, except for failures to be true and
correct that are capable of being and are cured within fifteen
(15) days after written notice from Buyer to PCC of such failure;
or (ii) PCC has failed to comply materially with its respective
obligations under this Agreement, except for failures to comply
that are capable of being and are cured within fifteen (15) days
after written notice from Buyer to PCC of such failure; or
(e) by PCC if (i) the representations of Buyer contained in this
Agreement are not true and correct in all material respects as if
made at and as of that time, except for failures to be true and
correct that are capable of being and are cured within fifteen
(15) days after written notice from PCC to Buyer of such failure;
or (ii) Buyer has failed to comply materially with its
70
obligations under this Agreement, except for failures to comply
that are capable of being and are cured within fifteen (15) days
after written notice from the PCC to Buyer of such failure.
9.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 9.1 hereof, all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further Liability of either party to the other except: (a) as set forth
in Section 10.4; and (b) for breaches of representations, warranties, or
covenants or for fraud. PCC and Buyer hereby agree that the provisions of this
Section 9.2 and of Section 10.4 shall survive any termination of this Agreement
pursuant to the provisions of this Article IX.
ARTICLE X
MISCELLANEOUS
10.1. Entire Agreement.
This Agreement, the documents referred to herein and to be delivered
pursuant hereto and any other agreement entered into contemporaneously with this
Agreement among PCC, PCC Parent, Buyer and Buyer's Ultimate Parent or the
Affiliates of any of them constitute the entire agreement between the parties
pertaining to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions of the parties, whether oral or
written, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein or therein.
10.2. Amendment.
This Agreement may be amended by an instrument in writing and signed on
behalf of all of the parties hereto at any time.
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10.3. Extension; Waiver.
At any time prior to the Closing Date, the parties may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein, other than the conditions contained in Section 6.1(a) hereof
as it relates to the entry of an order in any proceeding by or before a
Governmental Authority. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
and signed on behalf of such party.
10.4. Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of their
respective counsel, investment bankers, financial advisors, accountants and
other experts and the other expenses incident to the negotiation and preparation
of this Agreement and consummation of the transactions contemplated hereby;
provided that Buyer and PCC shall each pay 50% of the cost of auditing the
Fiscal Year Financial Statements and the Audited Closing Date Financial
Statements and provided further that Buyer shall reimburse PCC or its Affiliates
for all out-of-pocket expenses incurred by PCC or its Affiliates in complying
with their respective obligations under Sections 5.10(e) and 5.10(f) hereof.
10.5. Bulk Sales Waiver.
Buyer hereby waives compliance with all applicable bulk sales Laws.
72
10.6. Governing Law.
This Agreement shall be construed and interpreted according to the Laws of
the Commonwealth of Virginia, without regard to the conflicts of Law rules
thereof.
10.7. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, provided that PCC may assign its rights
hereunder to any Affiliate of PCC after the Closing Date without the consent of
Buyer and Buyer may assign its rights hereunder to any Affiliate of Buyer prior
to, at or after the Closing Date without the consent of PCC and, further
provided, that nothing in this Agreement shall prevent a successor in interest
to either party from enforcing the provisions of this Agreement.
10.8. Notices.
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other party in the
manner provided by this Section 10.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
73
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
If to Buyer: Paramont Coal Company Virginia, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
10.9. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and Section headings
in this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
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10.10. Interpretation; Construction.
(a) Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and
include the singular and all words in any gender shall extend to
and include all genders.
(b) This Agreement has been fully negotiated by the parties hereto
and shall not be construed by any Governmental Authority against
either party as the drafting party.
10.11. Severability.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.12. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement and PCC and Buyer assume
no Liability to any third party because of any reliance on the representations,
warranties and agreements of PCC and Buyer contained in this Agreement, other
than Section 5.5 and Article VIII hereof, which are intended to be for the
benefit of the Persons expressly covered thereby and may be enforced by such
Persons.
10.13. Retention of and Access to Records.
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record retention policies and practices those books and records relating
to the Asset Sale Companies delivered to Buyer. Buyer also shall provide to PCC
and its Affiliates reasonable access thereto, during normal business hours and
75
on at least three days' prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or litigation. Buyer
shall deliver to PCC at least thirty days written notice prior to the
destruction or other disposal of any such books and records. PCC and its
Affiliates may elect to take delivery of any such books and records that Buyer
intends to destroy or otherwise dispose of and to copy any such books and
records that Buyer intends to keep, all at their own expense.
10.14. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute"), excluding any dispute or disagreement among the parties
concerning the determination of the Coal Inventory, which shall be resolved
pursuant to Section 2.12 and the allocation of Purchase Price and Assumed
Liabilities, which shall be resolved pursuant to Section 2.13, shall be decided
by binding arbitration in accordance with the commercial arbitration rules of
the American Arbitration Association. PCC and Buyer shall jointly select one
arbitrator. If the two parties shall fail to select an arbitrator within
fourteen calendar days after arbitration is requested, then such arbitrator
shall be selected by the American Arbitration Association or any successor
thereto upon application of either party. No Dispute shall be consolidated in
any arbitration with any dispute, claim or controversy of any other party. The
arbitration shall be conducted in Roanoke, Virginia, and any court having
jurisdiction thereof may immediately issue judgment on the arbitration award.
The parties agree that the arbitration provided for in this Section 10.14 shall
be the exclusive means to resolve all Disputes.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
---------------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and Technical
Resources
PARAMONT COAL COMPANY VIRGINIA, LLC
By: /s/ Eddie Bateman
---------------------------------------------
Name: Eddie Bateman
Title: Vice President
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SCHEDULE 1.4
------------
ASSET SALE COMPANIES
Paramont Coal Corporation, a Delaware corporation
Motivation Coal Company, a Virginia corporation
Pittston Coal Management Company, a Virginia corporation
A-1
Exhibit 2.6
PITTSTON COAL COMPANY
448 N. E. Main Street
Lebanon, Virginia 24266
December 13, 2002
Paramont Coal Company Virginia, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Agreement"), dated
as of October 29, 2002, as amended to but not including the date hereof, by and
between Pittston Coal Company ("PCC") and Paramont Coal Company Virginia, LLC
("Buyer"). Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
PCC and Buyer desire to amend certain provisions of the Agreement and, in
consideration of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Section 1.82 of the Agreement is deleted in its entirety and replaced
with the following:
"1.82 Purchase Price.
"Purchase Price" shall mean the cash amount of $12,296,687
(which amount shall include $620,000 for the Parts, Fuel and Supplies
Inventory, $1,640,000 for the Coal Inventory, $55,000 for one continuous
miner, $250,000 for one helicopter and $1,483,206 for the VC 5 Estimate),
plus the Promissory Note, subject to the adjustment provided for in Section
2.2(b).
2. A new Section 1.107 of the Agreement is inserted into the Agreement as
follows:
"1.107 Subleases.
"Subleases" shall have the meaning set forth in Section
2.13(a) hereof."
3. Notwithstanding anything in the Agreement to the contrary, each of PCC
and Buyer agree that for purposes of Sections 2.1 and 2.3 of the
Agreement only, none of the Equipment listed on Schedule 1.37(b)
attached to the Agreement shall constitute Purchased Assets.
4. Notwithstanding anything in the Agreement to the contrary, each of PCC
and Buyer agree that Buyer shall have caused the applicable Asset Sale
Companies to
1
purchase the Equipment specifically identified under the heading
"Transamerica Equipment" on Schedule 1.37(b) (the
"Transamerica Equipment"). Simultaneously with the Closing, PCC shall
cause the applicable Asset Sale Companies to transfer to Buyer, and
Buyer shall acquire, the Transamerica Equipment from such Asset Sale
Companies pursuant to a bill of sale. Each of PCC and Buyer agrees
that the Purchase Price Set forth in Section 1.82 includes all amounts
that Buyer owes PCC or the Asset Sale Companies for the Transamerica
Equipment upon its purchase by the applicable Asset Sale Companies
from Transamerica, including one-half of the lease breakage fee. PCC
acknowledges its responsibility to pay $3,672.13 to Transamerica,
which is one-half of such lease breakage fee.
5. Each of Buyer and PCC agree that the VC 5 Estimate shall mean
$1,482,206 and that the Final VC 5 Cost shall be equal to the VC 5
Estimate. Buyer hereby acknowledges that PCC has delivered
documentation reasonably acceptable to Buyer detailing and supporting
the VC 5 Estimate in accordance with Section 2.2(a) of the Agreement.
Buyer hereby acknowledges that PCC has delivered documentation
reasonably acceptable to Buyer detailing and supporting the Final VC 5
Cost in accordance with Section 2.2(b) of the Agreement.
6. Each of PCC and Buyer agree that in satisfaction of Section 2.12 of
the Agreement, the face amount of the Promissory Note shall be fixed
at $2,516,882.
7. A new Section 2.14 of the Agreement is inserted into the Agreement as
follows:
2.14 Subleases.
(a) Each of PCC and Buyer agree that at the Closing, Buyer
shall sublease the Equipment set forth on Schedule 1.37(b) attached to
the Agreement (other than the Transamerica Equipment) from the
applicable Asset Sale Company pursuant to the subleases substantially
in the forms attached hereto as Exhibits A-1, A-2, A-3, A-4 and A-5
(the "Subleases").
(b) At the Closing, PCC shall cause the applicable Asset Sale
Company to, and Buyer shall execute and deliver the Subleases.
8. Sections 5.6(b) and (c) of the Agreement are deleted in their entirety
and replaced with the following:
"(b) Prior to the Closing Date: (i) Buyer shall deliver a copy
to PCC of the filing that is necessary to cause the applicable
Governmental Authority to transfer any one of the Permits (the "Initial
Filing") to Buyer in accordance with Law, in a form that satisfies all
requirements of the applicable Governmental Authority; and (ii)
following approval by PCC, Buyer shall file the Initial Filing with the
appropriate Governmental Authority.
(c) Promptly following the Closing Date through the
application of best efforts, and in any event no later than 30 days
after the Closing, Buyer shall
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make all filings other than the Initial Filing with the appropriate
Governmental Authorities necessary to transfer the Permits to Buyer in
accordance with Law and thereafter, as required by Law, shall post
replacement bonds."
9. PCC and Buyer agree that the completion of the actions set forth in
Section 4 and 7 of this letter agreement that are required to be
completed by Buyer shall be deemed to satisfy all of Buyer's
obligations: (i) to obtain the consent of the applicable third party
lessor in accordance with Section 5.4 and Section 6.1(e) of the
Agreement; and (ii) with respect to such Equipment leases pursuant to
Section 5.6(g) of the Agreement (with the exception of the Equipment
being leased from Deere Credit, Inc. pursuant to leases expiring in
2004).
10. The Schedules to the Agreement are hereby amended and restated in
their entirety as attached hereto as Exhibit A.
11. Except as amended by this letter agreement, the Agreement shall
continue in full force and effect.
12. This letter agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any executed counterpart
of this letter agreement or other signature hereto delivered by a
party by facsimile shall be deemed for all purposes as being good and
valid execution and delivery of this letter agreement by such party.
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Sincerely,
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-----------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ACKNOWLEDGED AND AGREED:
PARAMONT COAL COMPANY VIRGINIA, LLC
By: /s/ Michael J. Quillen
-----------------------------------
Name: Michael J. Quillen
Title: Attorney-in-fact
4
Exhibit 2.7
INDEMNIFICATION AND GUARANTY AGREEMENT
INDEMNIFICATION AND GUARANTY AGREEMENT, dated as of December 13, 2002, by
and among PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), THE PITTSTON
COMPANY, a Virginia corporation ("Pittston"), ALPHA NATURAL RESOURCES, LLC, a
Delaware limited liability company ("Buyer's Ultimate Parent") and PARAMONT COAL
COMPANY VIRGINIA, LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, Buyer and PCC have entered into an asset purchase agreement dated
October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto, as the same may be amended from time to time in accordance
with the terms thereof, being hereinafter referred to as the "Acquisition
Agreement"), pursuant to which Buyer will purchase or acquire from PCC and
certain of its Affiliates certain assets, and assume certain liabilities, all
upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, PCC and Buyer desire to provide for the terms upon which they will
indemnify each other with respect to certain matters relating to the
transactions contemplated by the Acquisition Agreement;
WHEREAS, Pittston owns, indirectly, all of the outstanding capital stock of
PCC and, as an inducement to Buyer to enter into the Acquisition Agreement, has
agreed to guarantee the obligations of PCC and certain of PCC's Affiliates under
this Agreement and the Acquisition Agreement; and
WHEREAS, Buyer's Ultimate Parent owns, indirectly, all of the outstanding
membership interests of Buyer and, as an inducement to PCC to enter into the
Acquisition Agreement, has agreed to guarantee the obligations of Buyer under
this Agreement and the Acquisition Agreement;
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NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Adverse Consequences.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
1.3. Basket.
"Basket" shall have the meaning set forth in Section 2.1(b)(i) hereof.
2
1.4. Buyer.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
1.5. Buyer Indemnified Persons.
"Buyer Indemnified Persons" shall mean Buyer, its Affiliates (including,
after Closing, one or more Buyer Affiliates formed to hold the Virginia coal
operations of PCC acquired pursuant to the Acquisition Agreement), and their
respective members, directors, officers, employees, consultants, agents,
attorneys and representatives.
1.6. Buyer's Ultimate Parent.
"Buyer's Ultimate Parent" shall have the meaning set forth in the preamble
to this Agreement.
1.7. Buyer's Ultimate Parent Guaranty.
"Buyer's Ultimate Parent Guaranty" shall have the meaning set forth in
Section 3.2 hereof.
1.8. Claim Notice.
"Claim Notice" shall have the meaning set forth in Section 2.3(b) hereof.
1.9. Dispute.
"Dispute" shall have the meaning set forth in Article VII hereof.
1.10. Indemnified Party.
"Indemnified Party" shall have the meaning set forth in Section 2.3(b)
hereof.
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1.11. Indemnifying Party.
"Indemnifying Party" shall have the meaning set forth in Section 2.3(b)
hereof.
1.12. Other Acquisition Agreements.
"Other Acquisition Agreements" shall mean the agreements set forth on
Schedule A attached hereto.
1.13. Other Indemnification Agreements.
"Other Indemnification Agreements" shall mean the agreements set forth on
Schedule B attached hereto.
1.14. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.15. Pittston.
"Pittston" shall have the meaning set forth in the preamble to this
Agreement.
1.16. Pittston Guaranty.
"Pittston Guaranty" shall have the meaning set forth in Section 3.1 hereof.
1.17. Pittston Indemnified Persons.
"Pittston Indemnified Persons" shall mean Pittston, PCC, the Asset Sale
Companies and their respective directors, officers, employees, agents,
stockholders and their respective Affiliates, and their respective directors,
officers, employees, consultants, agents, attorneys and representatives.
4
ARTICLE II
INDEMNIFICATION
2.1. Indemnification by PCC.
(a) PCC agrees to indemnify and hold harmless Buyer Indemnified
Persons from and against, and reimburse them for, any and all
Adverse Consequences that any Buyer Indemnified Persons may
suffer or incur or become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by PCC to Buyer in the Acquisition Agreement either:
(A) as of the date on which such representation or warranty
was made or (B) as of the Closing Date (provided that the
consummation of the transactions contemplated by the
Acquisition Agreement in accordance with the terms shall not
be deemed without more to have cause a breach of any
representation or warranty);
(ii) any failure by PCC to carry out, perform, satisfy or
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under the Acquisition
Agreement (other than Article VII and Article VIII thereof);
(iii) any failure by PCC to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under Article VII and/or
Article VIII of the Acquisition Agreement; and
(iv) any failure by PCC or the Asset Sale Companies to satisfy
the Retained Liabilities.
(b) Notwithstanding the provisions of Section 2.1(a), PCC shall not
be required to indemnify any of Buyer Indemnified Persons with
respect to the matters described in Sections 2.1(a)(i) and
2.1(a)(ii):
5
(i) unless and until the sum of (A) the Adverse Consequences for
which indemnification pursuant to (1) Sections 2.1(a)(i) and
2.1(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of
the Other Indemnification Agreements is sought plus (B) any
amounts paid by Buyer to obtain any of the consents listed
on Schedule 6.1(e)(i) of the Acquisition Agreement or in
Schedule 6.1(e)(i) of the Other Acquisition Agreements shall
exceed $100,000 (the "Basket"), in which case the entire
amount of such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted pursuant to
Section 2.3, (i) on or before thirty (30) days after the
Closing Date for any breach of PCC's representations
specified in Section 3.5(c) or Section 3.5(d) of the
Acquisition Agreement, (ii) on or before the fifth
anniversary of the Closing Date for any breach of PCC's
representations specified in Section 3.7 of the Acquisition
Agreement and (iii) on or before the second anniversary of
the Closing Date for any other matter described in Sections
2.1(a)(i) or 2.1(a)(ii); and
(iii) for any matter, to the extent that the aggregate amount of
the Adverse Consequences for which Buyer Indemnified Persons
have been indemnified pursuant to Sections 2.1(a)(i) and
2.1(a)(ii) or in Sections 2.1(a)(i) and 2.1(a)(ii) of the
Other Indemnification Agreements exceeds $15,000,000 (the
"Cap").
(c) Notwithstanding the foregoing, PCC agrees that any claim by a
Buyer Indemnified Person for indemnification (i) arising out of,
relating to, in the nature of or caused by any breach of PCC's
representations specified in Sections 3.1, 3.2, 3.3, 3.5(a) and
3.13 of the Acquisition Agreement or (ii) pursuant to Sections
2.1(a)(iii) and 2.1(a)(iv), shall not be subject to the
provisions of paragraph (b) of this Section 2.1.
6
(d) PCC agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Buyer Indemnified
Persons for Adverse Consequences suffered through and after the
date of the claim for indemnification (including any Adverse
Consequences Buyer Indemnified Persons may suffer after the end
of any applicable survival period, as long as a claim for
indemnification is made before the end of the applicable survival
period and the Adverse Consequences suffered relate to such
claim).
2.2. Indemnification by Buyer.
(a) Buyer agrees to indemnify and hold harmless Pittston Indemnified
Persons from and against and reimburse them for, any and all
Adverse Consequences that any Pittston Indemnified Persons may
suffer or incur or become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by Buyer in the Acquisition Agreement either: (A) as of
the date on which such representation or warranty was made
or (B) as of the Closing Date (provided that the
consummation of the transactions contemplated by the
Acquisition Agreement in accordance with its terms shall not
be deemed without more to have caused a breach of any
representation or warranty);
(ii) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under the Acquisition
Agreement (other than Article VII and Article VIII thereof
and with respect to the Permits);
7
(iii) any liability that any Pittston Indemnified Persons may
suffer or incur or become subject to because of: (A) any
failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in the Acquisition Agreement
relating to the Permits, or (B) the use by Buyer or its
post-Closing Affiliates of any Permit held by PCC or any of
its pre-Closing Affiliates;
(iv) the ownership of the Purchased Assets on or after the
Closing Date;
(v) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under Article VII and/or
Article VIII of the Acquisition Agreement, excluding the
Retained Liabilities;
(vi) any liability that any Pittston Indemnified Person may
suffer or incur or become subject to because of any actions
it takes pursuant to Sections 5.10(d), 5.10(e) or 5.10(f) of
the Acquisition Agreement; provided, however, that this
Section 2.2(a)(vi) shall not apply to any liability
resulting from or arising out of any Pittston Indemnified
Person's conduct in bad faith or willful misconduct;
(vii) any liability that any Pittston Indemnified Person may
suffer or incur or become subject to because of any actions
it takes pursuant to the Administrative Services Agreement;
provided, however, that this Section 2.2(a)(vii) shall not
apply to any liability resulting from or arising out of any
Pittston Indemnified Person's conduct in bad faith or
willful misconduct;
8
(viii) any liability that any Pittston Indemnified Person may
suffer or incur or become subject to because of any actions
it takes pursuant to the Subleases; provided, however, that
this Section 2.2(a)
(viii) shall not apply to any liability resulting from or arising
out of any Pittston Indemnified Person's default under the
terms of the Subleases, conduct in bad faith or willful
misconduct; and
(ix) any failure by Buyer to satisfy the Assumed Liabilities.
(b) The foregoing notwithstanding, Buyer shall not be required to
indemnify any Pittston Indemnified Persons with respect to the
matters described in Sections 2.2(a)(i) and 2.2(a)(ii):
(i) unless and until the sum of (A) Adverse Consequences for
which indemnification pursuant to (1) Sections 2.2(a)(i) and
2.2(a)(ii) or (2) in Sections 2.2(a)(i) and 2.2(a)(ii) of
the Other Indemnification Agreements is sought plus (B) any
amounts paid by PCC to obtain any of the consents listed on
Schedule 6.1(e)(ii) of the Acquisition Agreement or in
Schedule 6.1(e)(ii) of the Other Acquisition Agreements
shall exceed the Basket, in which case the entire amount of
such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted on or before the
second anniversary of the Closing Date pursuant to Section
2.3; and
(iii) for any matter, to the extent that the aggregate amount of
Adverse Consequences for which the Pittston Indemnified
Persons have been indemnified pursuant to Sections 2.2(a)(i)
and 2.2(a)(ii) or in Sections 2.2(a)(i) and 2.2(a)(ii) of
the Other Indemnification Agreements exceeds the Cap.
9
(c) Notwithstanding the foregoing, Buyer agrees that any claim by a
Pittston Indemnified Person for indemnification (i) arising out
of, relating to, in the nature of or caused by any breach of
Buyer's representations specified in Sections 4.1, 4.2, 4.3 and
4.4 of the Acquisition Agreement or (ii) pursuant to Sections
2.2(a)(iii) through (ix), shall not be subject to the provisions
of paragraph (b) of this Section 2.2.
(d) Notwithstanding the foregoing, nothing in Section 2.2(a)(iv)
shall diminish the right of any Buyer Indemnified Person to seek
indemnification from PCC after the Closing Date pursuant to the
terms of this Agreement.
(e) Buyer agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Pittston
Indemnified Persons for Adverse Consequences suffered through and
after the date of the claim for indemnification (including any
Adverse Consequences Pittston Indemnified Persons may suffer
after the end of any applicable survival period, as long as a
claim for indemnification is made before the end of the
applicable survival period and the Adverse Consequences suffered
relate to such claim).
2.3. Indemnification Procedures.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved pursuant to this Section 2.3.
(b) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice (a "Claim Notice") to the
party required to provide such indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has notice of any
Adverse Consequence which may give rise to a claim for
indemnification against the other party under this Agreement,
provided, however, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the
10
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is
prejudiced. The Indemnified Party shall not be required to
commence litigation or take any action against any third party
prior to delivery of the Claim Notice.
(c) The Indemnifying Party will have the right (at its expense) to
assume the investigation and/or defense of any Adverse
Consequence or any litigation resulting therefrom so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing
(within 20 days after the Indemnified Party has given the Claim
Notice) that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of the Adverse
Consequence, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial
resources to defend, and otherwise indemnify for, the Adverse
Consequence and fulfill its indemnification obligations hereunder
and (iii) the Adverse Consequence involves only money damages and
does not seek an injunction or other equitable relief.
(d) So long as the Indemnifying Party is conducting the defense of
the Adverse Consequence in accordance with Section 2.3(c), (A)
the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Adverse
Consequence, (B) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect
to the Adverse Consequence without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably), and (C)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Adverse
Consequence without the prior written consent of the Indemnified
11
Party; provided, that the Indemnifying Party may consent to such
judgment or enter into such settlement without the prior written
consent of the Indemnified Party so long as an unconditional term
of any such judgment or settlement includes the giving by the
claimant or plaintiff to the Indemnified Party of a release from
all liability with respect to such Adverse Consequence.
(e) In the event any of the conditions in Section 2.3(c) is or
becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Adverse Consequence in
any manner it may reasonably deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly
and periodically for the costs of defending against the Adverse
Consequence (including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequence the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of or caused by
the Adverse Consequence to the fullest extent provided in this
Agreement.
(f) Any indemnification with respect to the matters set forth in
Section 2.1(a)(iv) and addressed expressly in the Cooperation
Agreement shall be conducted exclusively in accordance with the
Cooperation Agreement. Notwithstanding any provision of this
Agreement, PCC shall have no obligation to indemnify any Buyer
Indemnified Person with respect to any claim or matter to the
extent that any Buyer Indemnified Person has failed to comply
with its obligations under the Cooperation Agreement with respect
to such claim or matter or has taken any action that prevents,
hinders or delays PCC from managing or disposing of such claim or
matter in the manner elected by PCC in its sole discretion.
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2.4. Insurance Proceeds.
The amount of any indemnification payable in connection with any
transaction contemplated by this Agreement or the Acquisition Agreement shall be
net of any insurance proceeds available, under any insurance policies in effect
at the time that are maintained in the Ordinary Course of Business, to a Buyer
Indemnified Person or a Pittston Indemnified Person, respectively, in connection
with the events or circumstances giving rise to the indemnification. For
purposes of this Section 2.4, any pollution and legal liability insurance
policies or an insurance policy covering loss in connection with the
representations and warranties contained in the Acquisition Agreement will be
deemed not to be maintained in the Ordinary Course of Business.
2.5. Exclusivity of Rights and Procedures.
The parties agree that, except as set forth in Section 2.3(f) of this
Agreement, the Paramont Service Agreement, Article VII of the Acquisition
Agreement or in any Articles titled "Certain Tax Matters" of the Other
Acquisition Agreements, this Agreement shall constitute the sole and exclusive
remedy of the parties hereto with respect to the subject matters addressed in
this Agreement, the Acquisition Agreement and the transactions contemplated by
the Acquisition Agreement. Each party to this Agreement hereby waives and
releases the other parties from any and all claims and other causes of action,
including claims for contribution, related to those subject matters, other than
claims (i) pursuant to the terms of this Agreement, (ii) related to the Retained
Liabilities (in the case of Buyer Indemnified Persons) or the Assumed
Liabilities (in the case of the Pittston Indemnified Persons), (iii) for fraud,
and (iv) for injunctive relief.
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ARTICLE III
GUARANTIES
3.1. Pittston Guaranty.
(a) Pittston hereby irrevocably and unconditionally guarantees to
Buyer (the "Pittston Guaranty") the full and punctual performance
and compliance by PCC with each and every covenant, term and
condition to be performed or complied with by PCC under this
Agreement and the Acquisition Agreement. The Pittston Guaranty
expressed in this Section 3.1 is an absolute, present, primary
and continuing guaranty of performance and compliance and not of
collectibility and is in no way conditioned or contingent upon
any attempt to enforce such performance or compliance by PCC or
upon any other condition or contingency.
(b) Pittston hereby expressly waives (i) notice of acceptance of the
Pittston Guaranty and (ii) any other notice given to PCC in
accordance with the provisions of the Agreement on any default
under the Agreement or otherwise. Pittston hereby authorizes
Buyer to forbear with respect to, amend, modify, enlarge, extend,
compromise and discharge any or all of the obligations of PCC
under the Agreement without notice to or consent by Pittston.
Pittston acknowledges and agrees that its liability under the
Pittston Guaranty is joint and several with PCC and, upon any
default by PCC, Buyer shall not be obligated to first attempt
enforcement against PCC. Pittston hereby waives any and all
defenses to enforcement of the Pittston Guaranty, now existing or
hereafter arising, which may be available to guarantors, sureties
and other secondary parties at law or in equity.
(c) Pittston represents and warrants to Buyer that (i) Pittston is a
corporation validly existing and in good standing under the laws
of the Commonwealth of Virginia; (ii) all necessary corporate
action has been duly taken by it to authorize the execution,
delivery and performance by it of the Pittston Guaranty, (iii)
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the Pittston Guaranty is being executed on Pittston's behalf by a
duly authorized representative, (iv) the Pittston Guaranty is the
legally valid and binding obligation of Pittston enforceable in
accordance with its terms, and (v) the execution and the delivery
of the Pittston Guaranty will not (A) conflict with, or result in
a violation or breach of, or a default, right to accelerate,
right to exercise any remedy or loss of rights under, or result
in the creation of any Lien (other than Permitted Liens) under or
pursuant to, any provision of Pittston's Articles of
Incorporation or Bylaws or of any material franchise, mortgage,
deed of trust, lease, license, instrument, agreement, consent,
approval, waiver or understanding to which Pittston is a party or
by which Pittston is bound, or any Law or any order, judgment,
writ, injunction or decree to which Pittston is a party or by
which Pittston may be bound or affected; (B) require the
approval, consent or authorization of, prior notice to, or filing
or registration with any Governmental Authority or contravene,
conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel or terminate any authorization
or permit issued by a Governmental Authority that is held by
Pittston or that otherwise relates to the Pittston's business; or
(C) give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which
Pittston is subject.
(d) Pittston agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by
Buyer Indemnified Persons in enforcing Pittston's liability to
Buyer Indemnified Persons under the Pittston Guaranty whether or
not a civil action or similar proceeding (including claims and
proceedings in and before the bankruptcy court or arbitrators) is
filed, prosecuted or appealed. If an action or proceeding is
15
filed, prosecuted or appealed, the reasonableness of such
attorney fees shall be determined by the trial judge and if,
appealed, by the appellate court.
(e) The Pittston Guaranty shall be binding upon Pittston and its
successors and assigns, and shall inure to the benefit of and be
enforceable by Buyer and its successors and assigns. For purposes
of the Pittston Guaranty, Pittston shall be deemed to include the
surviving entity in any merger or consolidation involving
Pittston, which survivor shall be bound by the provisions of the
Pittston Guaranty and this Agreement.
3.2. Buyer's Ultimate Parent Guaranty.
(a) Buyer's Ultimate Parent hereby irrevocably and unconditionally
guarantees to PCC (the "Buyer's Ultimate Parent Guaranty") the
full and punctual performance and compliance by Buyer with each
and every covenant, term and condition to be performed or
complied with by Buyer under this Agreement, the Acquisition
Agreement and the Promissory Note. Buyer's Ultimate Parent
Guaranty expressed in this Section 3.2 is an absolute, present,
primary and continuing guaranty of performance and compliance and
not of collectibility and is in no way conditioned or contingent
upon any attempt to enforce such performance or compliance by
Buyer or upon any other condition or contingency.
(b) Buyer's Ultimate Parent hereby expressly waives (i) notice of
acceptance of Buyer's Ultimate Parent Guaranty and (ii) any other
notice given to Buyer in accordance with the provisions of the
Agreement on any default under the Agreement or otherwise.
Buyer's Ultimate Parent hereby authorizes PCC to forbear with
respect to, amend, modify, enlarge, extend, compromise and
discharge any or all of the obligations of Buyer under the
Agreement without notice to or consent by Buyer's Ultimate
Parent. Buyer's Ultimate Parent acknowledges and agrees that its
16
liability under Buyer's Ultimate Parent Guaranty is joint and
several with Buyer and, upon any default by Buyer, PCC shall not
be obligated to first attempt enforcement against Buyer. Buyer's
Ultimate Parent hereby waives any and all defenses to enforcement
of Buyer's Ultimate Parent Guaranty, now existing or hereafter
arising, which may be available to guarantors, sureties and other
secondary parties at law or in equity.
(c) Buyer's Ultimate Parent represents and warrants to PCC that (i)
Buyer's Ultimate Parent is a limited liability company validly
existing and in good standing under the laws of the State of
Delaware; (ii) all necessary corporate action has been duly taken
by it to authorize the execution, delivery and performance by it
of Buyer's Ultimate Parent Guaranty, (iii) Buyer's Ultimate
Parent Guaranty is being executed on Buyer's Ultimate Parent's
behalf by a duly authorized representative, (iv) Buyer's Ultimate
Parent Guaranty is the legally valid and binding obligation of
Buyer's Ultimate Parent enforceable in accordance with its terms,
and (v) the execution and the delivery of Buyer's Ultimate Parent
Guaranty will not (A) conflict with, or result in a violation or
breach of, or a default, right to accelerate, right to exercise
any remedy or loss of rights under, or result in the creation of
any Lien (other than Permitted Liens) under or pursuant to, any
provision of Buyer's Ultimate Parent's Certificate of Formation,
Operating Agreement or other organizational documents or of any
material franchise, mortgage, deed of trust, lease, license,
instrument, agreement, consent, approval, waiver or understanding
to which Buyer's Ultimate Parent is a party or by which Buyer's
Ultimate Parent is bound, or any Law or any order, judgment,
writ, injunction or decree to which Buyer's Ultimate Parent is a
party or by which Buyer's Ultimate Parent may be bound or
affected; (B) require the approval, consent or authorization of,
prior notice to, or filing or registration with any Governmental
Authority or contravene, conflict with or result in a violation
of any of the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel or
terminate any authorization or permit issued by a Governmental
Authority that is held by Buyer's Ultimate Parent or that
otherwise relates to Buyer's Ultimate Parent's business; or (C)
17
give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which
Buyer's Ultimate Parent is subject.
(d) Buyer's Ultimate Parent agrees to pay all reasonable costs and
expenses, including reasonable attorney fees and related costs,
incurred by the Pittston Indemnified Persons in enforcing Buyer's
Ultimate Parent's liability to the Pittston Indemnified Persons
under Buyer's Ultimate Parent Guaranty whether or not a civil
action or similar proceeding (including claims and proceedings in
and before the bankruptcy court or arbitrators) is filed,
prosecuted or appealed. If an action or proceeding is filed,
prosecuted or appealed, the reasonableness of such attorney fees
shall be determined by the trial judge and if, appealed, by the
appellate court.
(e) Buyer's Ultimate Parent Guaranty shall be binding upon Buyer's
Ultimate Parent and its successors and assigns, and shall inure
to the benefit of and be enforceable by PCC and its successors
and assigns. For purposes of Buyer's Ultimate Parent Guaranty,
Buyer's Ultimate Parent shall be deemed to include the surviving
entity in any merger or consolidation involving Buyer's Ultimate
Parent, each of whom shall be bound by the provisions of the
Buyer's Ultimate Parent Guaranty and this Agreement.
ARTICLE IV
SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
18
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
ARTICLE V
NOTICES
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other parties in the
manner provided by this Article V:
if to PCC or Pittston, to them at:
Pittston Coal Company
448 N.E. Main Street
P. O. Box 5100
Lebanon, Virginia 24266
Attention: President
with a copy to:
Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P. O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
and a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
19
if to Buyer:
Paramont Coal Company Virginia, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
if to Buyer's Ultimate Parent, to it at:
Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
20
ARTICLE VI
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but this
Agreement and the rights, interests or obligations hereunder shall not be
assignable by Buyer's Ultimate Parent, Buyer, Pittston or PCC without the prior
written consent of the other parties and any attempt to make such an assignment
without such consent shall be void and of no effect.
ARTICLE VII
ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to designate an arbitrator within fourteen (14) calendar days after arbitration
is requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Article VII shall be the exclusive means to resolve all
Disputes.
ARTICLE VIII
MISCELLANEOUS
8.1. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
21
8.2. Integration.
This Agreement and any other agreement entered into contemporaneously with
this Agreement among PCC, Pittston, Buyer and Buyer's Ultimate Parent or the
Affiliates of any of them constitute the entire agreement and supercede all
prior agreements and understandings not reflected in the Acquisition Agreement,
both written and oral, among the parties with respect to the subject matter
hereof.
8.3. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument.
8.4. Governing Law.
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Commonwealth of Virginia, without
regard to the conflicts of laws principles thereof.
22
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
PARAMONT COAL COMPANY VIRGINIA, LLC,
a Delaware limited liability company
By:/s/ Michael J. Quillen
-----------------------------------------
Name: Michael J. Quillen
Title: Attorney-in-fact
ALPHA NATURAL RESOURCES, LLC, a Delaware
limited liability company
By:/s/ Michael J. Quillen
-----------------------------------------
Name: Michael J. Quillen
Title: President
PITTSTON COAL COMPANY,
a Delaware corporation
By:/s/ Michael D. Brown
-----------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
THE PITTSTON COMPANY,
a Virginia corporation
By:/s/ James B. Hartough
-----------------------------------------
Name: James B. Hartough
Title: Vice President - Corporate Finance
and Treasurer
23
Schedule A
- ----------
Asset Purchase Agreement by and between Pittston Coal Company and
Dickenson-Russell Coal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Land and Reserves, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Coal Sales Co., LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Terminal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Maxxim
Rebuild Co., LLC, dated as of October 29, 2002, as amended.
24
Schedule B
----------
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Dickenson-Russell Coal Company, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Land and Reserves, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Coal Sales Co., LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Terminal Company, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Maxxim Rebuild Co., LLC and Alpha Natural Resources, LLC,
dated as of December 13, 2002.
25
Exhibit 2.8
COOPERATION AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
PARAMONT COAL COMPANY VIRGINIA, LLC
December 13, 2002
Table of Contents
Page
----
ARTICLE I DEFINITIONS............................................................................................2
1.1. Acquisition Agreement.................................................................................2
1.2. Affiliates, Successors, Assigns, Lessees or Contractors...............................................2
1.3. Agreement.............................................................................................3
1.4. Coal Act Liabilities..................................................................................3
1.5. Communications........................................................................................3
1.6. Employee Related Liabilities..........................................................................3
1.7. Paramont Virginia.....................................................................................3
1.8. PCC...................................................................................................3
1.9. Recurrence Claim......................................................................................3
1.10. Third Parties.........................................................................................3
1.11. UMWA..................................................................................................4
1.12. Workers' Compensation and Federal Black Lung Liabilities..............................................4
ARTICLE II COAL ACT LIABILITIES..................................................................................4
2.1. General...............................................................................................4
ARTICLE III WORKERS' COMPENSATION AND FEDERAL BLACK LUNG LIABILITIES.............................................6
3.1. General...............................................................................................6
3.2. Litigation and Disputes...............................................................................7
3.3. No Adverse Changes....................................................................................8
3.4. Recurrence of Prior Claims............................................................................8
ARTICLE IV EMPLOYEE RELATED LIABILITIES..........................................................................9
4.1. Employee Related Liabilities..........................................................................9
ARTICLE V DISPUTE RESOLUTION....................................................................................10
ARTICLE VI TERM.................................................................................................11
ARTICLE VII MISCELLANEOUS.......................................................................................11
7.1. Cooperation..........................................................................................11
7.2. Continuing Obligations...............................................................................12
7.3. Paramont Virginia Communication with Third Parties...................................................12
7.4. Litigation Support...................................................................................13
7.5. Confidentiality......................................................................................13
7.6. Governing Law........................................................................................15
7.7. Successors and Assigns...............................................................................15
7.8. Notices and Payments.................................................................................15
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT, made as of December 13, 2002, by and between
PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), on its own behalf and on
behalf of its Affiliates, and PARAMONT COAL COMPANY VIRGINIA, LLC, a Delaware
limited liability company ("Paramont Virginia"), on its own behalf and on behalf
of its Affiliates.
RECITALS
WHEREAS, Paramont Virginia, PCC and certain Affiliates of PCC have entered
into a certain asset purchase agreement as set forth on Schedule A, dated as of
October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto being hereinafter referred to as the "Acquisition Agreement"),
pursuant to which Paramont Virginia has agreed to purchase or acquire from PCC
and certain of its Affiliates certain assets, and assume certain liabilities,
all upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, pursuant to the Acquisition Agreement, PCC has agreed to retain
certain liabilities and certain assets; and
WHEREAS, PCC, PCC Parent, Paramont Virginia and Alpha Natural Resources,
LLC, a Delaware limited liability company, have entered into the Indemnification
and Guaranty Agreement; and
WHEREAS, PCC and Paramont Virginia desire to establish certain
administrative procedures with respect to their respective obligations under the
Acquisition Agreement; provided, however, that nothing in this Agreement is
intended in any way to reallocate risk or modify the allocation of liabilities
in the Acquisition Agreement or the Indemnification and Guaranty Agreement; and
provided, further, that nothing in this Agreement, the Acquisition Agreement or
the Indemnity Agreement is intended to, nor should be construed to, establish a
single employer, joint employer, common employer and/or alter ego relationship
between PCC and its Affiliates on the one hand and Paramont Virginia and its
Affiliates on the other hand.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and in the Acquisition Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, PCC and Paramont Virginia agree that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Affiliates, Successors, Assigns, Lessees or Contractors.
"Affiliates, Successors, Assigns, Lessees or Contractors" shall mean
Paramont Virginia's Affiliates, contractual successors and assigns, and lessees
and contractors who, as part of a contractual arrangement with Paramont Virginia
or one of its Affiliates, offer employment to the current or former Employees of
an Asset Sale Company.
2
1.3. Agreement.
"Agreement" shall mean this Cooperation Agreement, together with the
Schedule[s] attached hereto, as the same may be amended from time to time in
accordance with the terms hereof.
1.4. Coal Act Liabilities.
"Coal Act Liabilities" shall mean those Retained Liabilities specified in
Section 1.89(j) of the Acquisition Agreement.
1.5. Communications.
"Communications" shall have the meaning set forth in Section 2.1(a) hereof.
1.6. Employee Related Liabilities.
"Employee Related Liabilities" shall mean those Retained Liabilities
specified in Sections 1.89(d), 1.89(e), 1.89(f), 1.89(i), 1.89(k), 1.89(l), and
1.89(n) of the Acquisition Agreement.
1.7. Paramont Virginia.
"Paramont Virginia" shall have the meaning set forth in the preamble to
this Agreement.
1.8. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.9. Recurrence Claim.
"Recurrence Claim" shall have the meaning set forth in Section 3.4 hereof.
1.10. Third Parties.
"Third Parties" shall have the meaning set forth in Section 7.3 hereof.
3
1.11. UMWA.
"UMWA" shall mean the International Union, United Mine Workers of America,
including its district and local unions.
1.12. Workers' Compensation and Federal Black Lung Liabilities.
"Workers' Compensation and Federal Black Lung Liabilities" shall mean those
Retained Liabilities specified in Sections 1.89(b) and 1.89(c) of the
Acquisition Agreement.
ARTICLE II
COAL ACT LIABILITIES
2.1. General.
In order to assist PCC with regard to the satisfaction of the Coal Act
Liabilities, PCC and Paramont Virginia agree as follows:
(a) Notices and Communication.
In the event Paramont Virginia or any of its Affiliates, Successors,
Assigns, Lessees or Contractors receive from any administrative, judicial or
other source any claims, communications, correspondence, notices, invoices
and/or other documents (collectively, "Communications") that are related to the
Coal Act Liabilities, Paramont Virginia agrees that it shall, and shall cause
its Affiliates, Successors, Assigns, Lessees or Contractors to:
(i) promptly send to PCC or its designated Affiliate a copy of
any such Communications; and
(ii) cooperate with PCC in notifying the sender of the
Communications that such Communications should be sent to
PCC or its designated Affiliate.
4
(b) Litigation.
PCC shall have the exclusive right to pursue and/or defend currently
pending litigation or to commence and/or defend future litigation, with respect
to any issue relating to the Coal Act Liabilities, including, but not limited
to, claims pertaining to specific beneficiaries, statutory construction or the
constitutionality of the Coal Act, as PCC deems necessary or appropriate.
(c) Administration. PCC or one or more of its Affiliates shall be
solely responsible for administering the Coal Act Liabilities and
shall take such actions as it deems necessary or appropriate to
administer the Coal Act Liabilities, including, but not limited
to:
(i) pursuing administrative or judicial challenges to the
assignment of beneficiaries to PCC or any of its Affiliates
in accordance with the terms of the Coal Act;
(ii) administering claims under the individual employer plan
required to be maintained under Section 9711 of the Coal
Act, including entering into agreements with third party
administrators and resolving or litigating claim disputes;
(iii) implementing managed care and/or other methods of delivery;
and
(iv) discussing managed care and cost containment options with
the UMWA.
5
ARTICLE III
WORKERS' COMPENSATION AND FEDERAL BLACK LUNG LIABILITIES
3.1. General.
In order to assist PCC with regard to the satisfaction of the Workers'
Compensation and Federal Black Lung Liabilities, PCC and Paramont Virginia agree
as follows:
(a) Administration.
PCC or one or more of its Affiliates shall be solely responsible for
administering the Workers' Compensation and Black Lung Liabilities, including
making such determinations, awarding and denying such benefits, seeking such
administrative and judicial rulings and remedies and taking all such other
actions as PCC shall deem necessary or appropriate. (b) Notices and
Communication.
(i) Paramont Virginia and PCC agree to cooperate with each other in
providing any notices that may be necessary to the appropriate
Governmental Authority regarding the allocation between PCC, on
the one hand, and Paramont Virginia, on the other hand, of the
Workers' Compensation and Federal Black Lung Liabilities.
(ii) In the event Paramont Virginia or any of its Affiliates,
Successors, Assigns, Lessees or Contractors receive any
Communications that are related to the Workers' Compensation and
Federal Black Lung Liabilities, Paramont Virginia agrees that it
shall, and shall cause its Affiliates, Successors, Assigns,
Lessees or Contractors to, send promptly to PCC or its designated
Affiliate a copy of any such Communications.
(iii) Paramont Virginia and PCC agree to cooperate with each other in
providing such notices of the allocation of liabilities under the
Acquisition Agreement as Paramont Virginia and PCC deems
appropriate to any insurer or third party administrator providing
services or benefits related to the Workers' Compensation and
Federal Black Lung Liabilities.
6
3.2. Litigation and Disputes.
PCC shall have the right to resolve or defend against any claim that is
related to the Workers' Compensation and Federal Black Lung Liabilities in such
manner as PCC in its discretion deems appropriate, in accordance with such
procedures as PCC deems appropriate and with the controlling Workers'
Compensation Act and federal black lung Laws, including raising the defense that
Paramont Virginia is the responsible operator under the federal black lung Laws
because Paramont Virginia or its Affiliates, Successors, Assigns, Lessees or
Contractors is a successor-in-interest to PCC or its Affiliates; provided,
however, that Paramont Virginia shall have the right to respond that PCC is the
responsible operator under the federal black lung Laws notwithstanding Paramont
Virginia's acquisition of the Purchased Assets. PCC also shall have the right to
institute or defend against any litigation related to the Workers' Compensation
and Federal Black Lung Liabilities, except that PCC shall promptly notify
Paramont Virginia of any workers' compensation or federal black lung claim in
which it intends to assert that Paramont Virginia is responsible for payment of
the same under the Acquisition Agreement, in which case Paramont Virginia shall
have the right to intervene in any such action to oppose PCC's position. Any
dispute as to which entity is the responsible entity for such workers'
compensation claims shall be determined in accordance with the Workers'
Compensation Acts, and any dispute as to which entity is the responsible
operator for such black lung claims shall be determined in accordance with the
federal black lung Laws.
7
3.3. No Adverse Changes.
Paramont Virginia agrees that it will, and will cause its Affiliates,
Successors, Assigns, Lessees or Contractors to, use its or their commercially
reasonable efforts to retain in effect any lawful program or practice of PCC or
its Affiliates in effect at Closing that is intended to reduce employer
liability or the length of time an employee is entitled to receive benefits
under the Workers' Compensation Act.
3.4. Recurrence of Prior Claims.
In the event Paramont Virginia or any of its Affiliates, Successors,
Assigns, Lessees or Contractors receives a claim under the applicable Workers'
Compensation Acts or federal black lung Laws and Paramont Virginia or its
Affiliates, Successors, Assigns, Lessees or Contractors believes in good faith
that such claim relates to, or is a recurrence of, a prior claim that
constituted a Workers' Compensation or Federal Black Lung Liability (a
"Recurrence Claim"), the provisions of this Section 3.4 shall govern. Paramont
Virginia shall promptly notify PCC of any Recurrence Claim and the basis for its
determination that such claim is a Recurrence Claim prior to communicating its
determination to any other person or entity. If PCC agrees with Paramont
Virginia that such claim is a Recurrence Claim, such claim shall be deemed a
Workers' Compensation and Federal Black Lung Liability, and the rights and
obligations of the parties shall be as provided in this Article III. If PCC
disagrees with Paramont Virginia's position, the matter will be submitted to the
appropriate Governmental Authority for a determination, with each side being
responsible for its respective costs in such procedure. Paramont Virginia
recognizes that in the event the employee who has filed the claim disagrees with
the position of the parties with respect to a Recurrence Claim, the employee may
file a claim with the appropriate Governmental Authority for a determination. In
any such case, PCC and Paramont Virginia shall each have the right to defend its
position, with each side bearing the cost of its own defense.
8
ARTICLE IV
EMPLOYEE RELATED LIABILITIES
4.1. Employee Related Liabilities.
In order to assist PCC with regard to the satisfaction of the Employee
Related Liabilities, PCC and Paramont Virginia agree as follows:
(a) Administration. PCC or one or more of its Affiliates shall be
solely responsible for administering the Employee Related
Liabilities, making such determinations, awarding and denying
such benefits, seeking such administrative and judicial rulings
and remedies and taking all such other actions as PCC shall deem
necessary or appropriate.
(b) Notices and Communication.
(i) PCC has the exclusive right to provide such notices as PCC
deems necessary or appropriate to Employees or other
beneficiaries regarding any matters related to the Employee
Related Liabilities and to any third parties providing
services or benefits related to the Employee Related
Liabilities.
(ii) In the event Paramont Virginia or any of its Affiliates,
Successors, Assigns, Lessees or Contractors receives any
Communications that are related to the Employee Related
Liabilities, Paramont Virginia shall promptly send, and
shall cause its Affiliates, Successors, Assigns, Lessees or
Contractors promptly to send, such Communications to PCC or
its designated Affiliate.
9
(iii) Paramont Virginia agrees to provide on a monthly basis for
a period of 12 months following the Closing Date, the names
and social security numbers of any non-Classified Employees
hired by Paramont Virginia or its Affiliates, Successors,
Assigns, Lessees or Contractors and further agrees to
provide, and shall cause its Affiliates, Successors,
Assigns, Lessees or Contractors to provide, all information
in its or their possession or under its or their control
reasonably requested by PCC in order to administer and
satisfy any Employee Related Liabilities.
(c) Litigation. PCC shall have the exclusive right to pursue and/or
defend currently pending litigation, or to commence and/or defend
future litigation, with respect to any issue related to any
Employee Related Liabilities, as PCC shall deem necessary or
appropriate.
ARTICLE V
DISPUTE RESOLUTION
Disputes under or alleged violations of this Agreement shall be handled in
accordance with the Dispute resolution procedure set forth in Article VII of the
Indemnification and Guaranty Agreement.
10
ARTICLE VI
TERM
The term of this Agreement shall commence as of the Closing Date and shall
continue through the completed satisfaction of all of the Coal Act Liabilities,
Workers' Compensation and Federal Black Lung Liabilities and the Employee
Related Liabilities.
ARTICLE VII
MISCELLANEOUS
7.1. Cooperation.
(a) To the extent permitted by Law and on a timely basis, Paramont
Virginia agrees to take any reasonable action, provide
information and execute any appropriate documents, and shall
cause its Affiliates, Successors, Assigns, Lessees or Contractors
to take any reasonable action, provide information and execute
any appropriate documents, that PCC reasonably requests in order
to assist PCC with regard to the administration and satisfaction
of the Coal Act Liabilities, Workers' Compensation and Federal
Black Lung Liabilities and the Employee Related Liabilities. Upon
written request by Paramont Virginia, PCC shall reimburse
Paramont Virginia for costs above $10,000 per year that are
reasonably incurred by Paramont Virginia or its Affiliates as a
result of actions taken by it or them under this Agreement. Prior
to payment of such costs, PCC shall be entitled to receive a
detailed invoice of such costs from Paramont Virginia if so
requested by PCC.
(b) PCC and Paramont Virginia shall cooperate with each other to
determine the timing and manner of transferring the Books and
Records to Paramont Virginia after the Closing, provided,
however, that Paramont Virginia or its Affiliates shall have
immediate access to all such Books and Records while still in the
possession of PCC and provided, further, that PCC or its
Affiliates shall have reasonable access to, and shall be allowed
to copy at its sole expense, any Books and Records to which PCC
11
reasonably believes it needs access or for which PCC reasonably
believes it needs copies after the Closing.
7.2. Continuing Obligations.
Any failure by PCC or by Paramont Virginia or its Affiliates, Successors,
Assigns, Lessees, or Contractors to comply with any of their obligations in this
Agreement shall not relieve PCC or Paramont Virginia of any of their Liabilities
or obligations under the Acquisition Agreement.
7.3. Paramont Virginia Communication with Third Parties.
Unless otherwise agreed to in writing by PCC or except as permitted
specifically by this Agreement and the Acquisition Agreement, neither Paramont
Virginia nor any of its Affiliates, Successors, Assigns, Lessees or Contractors
will make any public statements or communicate with the United Mine Workers of
America Combined Benefit Fund, the 1992 UMWA Benefit Plan, any beneficiary of
any Employee Benefit Plan, or any other Person or entity (collectively, "Third
Parties") with respect to or concerning the Coal Act Liabilities, Workers'
Compensation and Federal Black Lung Liabilities and the Employee Related
Liabilities. Notwithstanding the foregoing, in the event PCC fails to take such
actions as are necessary to comply with its obligations under the Acquisition
Agreement and this Agreement with respect to any of the Coal Act Liabilities,
Workers' Compensation and Federal Black Lung Liabilities or the Employee Related
Liabilities within a reasonable time after receiving notice from Paramont
Virginia that attempts have been or are being made to obtain information
concerning or to impose any of the Coal Act Liabilities, Workers' Compensation
and Federal Black Lung Liabilities or the Employee Related Liabilities on
Paramont Virginia or any of its Affiliates, Successors, Assigns, Lessees or
Contractors, Paramont Virginia shall be permitted to communicate with the
12
appropriate Third Party regarding PCC's obligations with respect to such Coal
Act Liabilities, Workers' Compensation and Federal Black Lung Liabilities or the
Employee Related Liabilities. In addition, notwithstanding anything in the
foregoing to the contrary, in the event any Third Party contacts Paramont
Virginia to inquire about PCC's or any of its Affiliates obligations with
respect to such Coal Act Liabilities, Workers' Compensation and Federal Black
Lung Liabilities or the Employee Related Liabilities under this Agreement,
Paramont Virginia is permitted to direct such Third Party to contact PCC for
additional information.
7.4. Litigation Support.
In the event and for as long as PCC is actively contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand related to the Coal Act Liabilities, Workers' Compensation and
Federal Black Lung Liabilities and the Employee Related Liabilities, Paramont
Virginia will, to the extent reasonable, cooperate, and shall cause its
Affiliates, Successors, Assigns, Lessees or Contractors to cooperate, with PCC
and its counsel in the contest or defense, make available their personnel and
provide such testimony and access to their books, documents and records as shall
be reasonably necessary in connection with the contest or defense.
7.5. Confidentiality.
Except as otherwise provided in this Agreement, each party hereto covenants
and agrees to keep confidential the existence of this Agreement and the contents
of this Agreement at all times while any provision of this Agreement is in
force, unless and to the extent that a party shall be required to disclose the
same by generally accepted accounting principles, Law or judicial order or
decree or administrative regulation or order or in order to comply with its
obligations hereunder; provided, however, that any party that believes it may be
13
required to disclose this Agreement or any provisions hereof shall promptly
notify the other hereto in writing and afford such other party the opportunity
to determine whether disclosure is in fact required or if the scope of the
required disclosure can be reduced and provided further, however, that
notwithstanding anything in this Section 7.5 or in Section 7.3 hereof to the
contrary, without notifying the other party, any party may disclose the
existence and contents of this Agreement:
(a) to any employees within the party's organization who need to know
of this Agreement in order for the party to comply with its
obligations hereunder, so long as such employees at the time of
disclosure are required to comply with this Section 7.5;
(b) to Paramont Virginia's Affiliates, Successors, Assigns, Lessees,
Contractors and their employees, attorneys, accountants,
consultants and lenders who need to know of the Agreement, so
long as such entities and persons agree to comply with this
Section 7.5;
(c) to any third-party contractor whose services the party requires
in order for the party to comply with its obligations hereunder
so long as such contractor is contractually obligated to comply
with this Section 7.5;
(d) in the financial statements of the party as required by generally
accepted accounting principles; or
(e) to any attorneys, accountants, consultants or lenders of a party
for whom the party agrees to be responsible for the compliance
herewith.
14
7.6. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, but without reference to the choice of law
provision thereof. 7.7. Successors and Assigns.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, except that PCC may assign its rights hereunder to any Affiliate of
PCC after the Closing Date without the consent of Paramont Virginia and Paramont
Virginia may assign its rights hereunder to any Affiliate of Paramont Virginia
after the Closing Date without the consent of PCC. 7.8. Notices and Payments.
All Communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five (5) days of being mailed by registered or certified United States mail,
postage prepaid, return receipt requested, in all cases addressed to the person
for whom it is intended at his address set forth below or to such other address
as a party shall have designated by notice in writing to the other party in the
manner provided by this Section 7.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
15
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
If to Paramont Virginia: Paramont Coal Company Virginia, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
16
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above. PARAMONT COAL COMPANY VIRGINIA, LLC
By: /s/ Michael J. Quillen
-------------------------------------
Name: Michael J. Quillen
Title: Attorney-in-fact
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
17
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
ALPHA LAND AND RESERVES, LLC
October 29, 2002
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS 1
1.1. Administrative Services Agreement.......................................1
1.2. Affiliate...............................................................2
1.3. Agreement...............................................................2
1.4. Asset Sale Companies...................................................2
1.5. Assignment and Assumption Agreements....................................2
1.6. Assumed Liabilities.....................................................2
1.7. Bills of Sale...........................................................3
1.8. Books and Records......................................................3
1.9. Business................................................................3
1.10. Buyer...................................................................3
1.11. Buyer Closing Certificate...............................................3
1.12. Buyer's Ultimate Parent.................................................4
1.13. CERCLA..................................................................4
1.14. CERCLIS.................................................................4
1.15. Closing.................................................................4
1.16. Closing Date............................................................4
1.17. Coal Act................................................................4
1.18. Code....................................................................4
1.19. Contaminated............................................................5
1.20. Contracts...............................................................5
1.21. Conveyance Deeds........................................................5
1.22. CPA Arbitrator..........................................................5
1.23. Dispute.................................................................5
1.24. Environment.............................................................5
1.25. Environmental Laws......................................................6
1.26. Environmental Matter....................................................6
1.27. Environmental or Response Action........................................7
1.28. EPA.....................................................................7
1.29. Governmental Authority..................................................7
1.30. Hazardous Substances....................................................8
1.31. Income Tax or Income Taxes..............................................8
1.32. Indemnification and Guaranty Agreement..................................8
1.33. Intercreditor Agreement.................................................8
1.34. IRS.....................................................................8
1.35. Knowledge of PCC........................................................9
1.36. Law.....................................................................9
1.37. Lien....................................................................9
1.38. Liability...............................................................9
1.39. Material Adverse Effect.................................................9
1.40. Mining Activities......................................................10
1.41. Mining Data............................................................10
TABLE OF CONTENTS
(continued)
Page
----
1.42. Mining Environmental Liabilities.......................................10
1.43. MSHA...................................................................10
1.44. Ordinary Course of Business............................................10
1.45. OSM....................................................................10
1.46. PCC....................................................................10
1.47. PCC Closing Certificate................................................11
1.48. PCC Group..............................................................11
1.49. PCC Parent.............................................................11
1.50. Permitted Liens........................................................11
1.51. Person.................................................................11
1.52. Post-Closing Period....................................................11
1.53. Pre-Closing Period.....................................................11
1.54. Purchase Price.........................................................12
1.55. Purchased Assets.......................................................12
1.56. RCRA...................................................................12
1.57. Real Property..........................................................12
1.58. Reclamation Laws.......................................................12
1.59. Related Persons........................................................12
1.60. Release................................................................13
1.61. Retained Liabilities...................................................13
1.62. Royalty Agreement......................................................15
1.63. SMCRA..................................................................15
1.64. Straddle Period........................................................16
1.65. Tax or Taxes...........................................................16
1.66. Tax Return.............................................................16
1.67. VDEQ...................................................................16
1.68. VDMME..................................................................16
ARTICLE II PURCHASE AND SALE OF ASSETS.......................................17
2.1. Transfer of Assets.....................................................17
2.2. Bills of Sale, Assignment and Assumption Agreements, Conveyance Deeds
and Other Documents....................................................17
2.3. Assumption of Liabilities..............................................18
2.4. Proration of Liabilities...............................................18
2.5. Indemnification and Guaranty Agreement.................................18
2.6. Administrative Services Agreement......................................18
2.7. Intercreditor Agreement................................................18
2.8. Additional Documents...................................................19
2.9. Allocation of Purchase Price and Assumed Liabilities...................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PCC............................20
3.1. Incorporation..........................................................21
3.2. Execution, Delivery and Performance....................................21
TABLE OF CONTENTS
(continued)
Page
----
3.3. Authorization..........................................................22
3.4. Absence of Changes.....................................................23
3.5. Real Property..........................................................25
3.6. Environmental Compliance...............................................28
3.7. Contracts..............................................................30
3.8. Litigation; Claims.....................................................31
3.9. No Broker..............................................................31
3.10. Restrictions on Business Activities....................................32
3.11. Powers of Attorney.....................................................32
3.12. Transactions With Affiliates...........................................32
3.13. Absence of Certain Payments............................................32
3.14. Disclosure.............................................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................33
4.1. Organization...........................................................33
4.2. Execution, Delivery and Performance....................................33
4.3. Authorization..........................................................34
4.4. No Broker..............................................................34
4.5. Reclamation and Environmental Compliance...............................35
4.6. Financing..............................................................35
4.7. Disclosure.............................................................35
ARTICLE V CERTAIN COVENANTS..................................................35
5.1. Business in Ordinary Course............................................35
5.2. Compliance with Law....................................................36
5.3. Cooperation............................................................36
5.4. Notices and Consents...................................................36
5.5. Publicity..............................................................37
5.6. Replacement Bonds; Insurance and Guarantees; Other Filings.............37
5.7. Exclusivity............................................................38
5.8. Access.................................................................38
5.9. Notice of Developments.................................................39
5.10. Further Assurances.....................................................39
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING...................................39
6.1. Conditions Precedent to Each Party's Obligations.......................39
6.2. Conditions Precedent to Obligations of Buyer...........................41
6.3. Conditions Precedent to Obligations of PCC.............................42
ARTICLE VII CERTAIN TAX MATTERS..............................................44
7.1. Property Taxes.........................................................44
7.2. Sales and Use Taxes....................................................45
7.3. Transfer Taxes.........................................................46
TABLE OF CONTENTS
(continued)
Page
----
7.4. Access for Tax Returns.................................................46
ARTICLE VIII TERMINATION.....................................................46
8.1. Termination............................................................46
8.2. Effect of Termination..................................................48
ARTICLE IX MISCELLANEOUS.....................................................48
9.1. Entire Agreement.......................................................48
9.2. Amendment..............................................................49
9.3. Extension; Waiver......................................................49
9.4. Expenses...............................................................49
9.5. Bulk Sales Waiver......................................................49
9.6. Governing Law..........................................................49
9.7. Assignment.............................................................50
9.8. Notices................................................................50
9.9. Counterparts; Headings.................................................51
9.10. Interpretation; Construction...........................................51
9.11. Severability...........................................................52
9.12. No Reliance............................................................52
9.13. Retention of and Access to Records.....................................52
9.14. Arbitration............................................................53
EXHIBITS
Exhibit A Outline of Administrative Services Agreement
Exhibit B Assignment and Assumption Agreements
Exhibit C Bills of Sale
Exhibit D Buyer Closing Certificate
Exhibit E Conveyance Deeds
Exhibit F Indemnification and Guaranty Agreement
Exhibit G PCC Closing Certificate
Exhibit H Opinion of Counsel to PCC
Exhibit I Opinion of Counsel to Buyer
SCHEDULES
Schedule 1.4 Asset Sale Companies
Schedule 1.6 Assumed Liabilities
Schedule 1.20 Contracts of Asset Sale Companies
Schedule 1.35 Knowledge of PCC
Schedule 1.42 Mining Environmental Liabilities
Schedule 1.50 Permitted Liens
Schedule 1.57 Real Property of the Asset Sale Companies
Schedule 1.61(a) Retained Liabilities
Schedule 1.61(m) Excluded Contracts
Schedule 3.1 Foreign States
Schedule 3.2 Conflicts
Schedule 3.5(a) Real Property Matters
Schedule 3.5(d) Real Property - Third Party Mining Rights
Schedule 3.6 Permits and Environmental Compliance
Schedule 3.7(b) Contract Exceptions
Schedule 3.7(c) Consents
Schedule 3.8 Litigation; Claims
Schedule 3.12 Transactions with Affiliates
Schedule 5.4(a) PCC Consents
Schedule 5.4(b) Buyer Consents
Schedule 6.1(e)(i) PCC Material Consents
Schedule 6.1(e)(ii) Buyer Material Consents
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT is made as of the 29th day of October, 2002,
by and between PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), and ALPHA
LAND AND RESERVES, LLC, a Delaware limited liability company ("Buyer").
RECITALS
--------
WHEREAS, PCC owns, directly or indirectly, all of the outstanding capital
stock of the corporations listed on Schedule 1.4 (the "Asset Sale Companies");
WHEREAS, PCC desires to cause to be sold and assigned, and Buyer desires to
purchase and assume, certain of the assets and certain of the Liabilities (as
hereinafter defined) of the Asset Sale Companies;
WHEREAS, PCC desires to cause the Asset Sale Companies to retain certain
assets and certain Liabilities;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PCC and Buyer agree
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1. Administrative Services Agreement.
"Administrative Services Agreement" shall mean the agreement by and between
PCC and Buyer, an outline of which is attached hereto as Exhibit A.
1
1.2. Affiliate.
"Affiliate" shall mean, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, none of Dominion Terminal Associates or any of its partners,
other than Pittston Coal Terminal Corporation, shall be deemed an Affiliate of
PCC or any of its Affiliates.
1.3. Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, which are incorporated into this Asset
Purchase Agreement by this reference, as the same may be amended from time to
time in accordance with the terms hereof.
1.4. Asset Sale Companies.
"Asset Sale Companies" shall have the meaning given to it in the Recitals
to this Agreement. The term "Asset Sale Company" shall mean one of the Asset
Sale Companies.
1.5. Assignment and Assumption Agreements.
"Assignment and Assumption Agreements" shall mean the assignment and
assumption agreements substantially in the form of Exhibit B attached hereto.
1.6. Assumed Liabilities.
"Assumed Liabilities" shall mean all Liabilities of the Asset Sale
Companies listed on Schedule 1.6.
2
1.7. Bills of Sale.
"Bills of Sale" shall mean the bills of sale substantially in the form of
Exhibit C attached hereto.
1.8. Books and Records.
"Books and Records" shall mean the original or true and complete copies of
all of the books and records of the Asset Sale Companies pertaining to the
Purchased Assets, including but not limited to, customer lists, purchase orders
and invoices, sales orders and sales order log books, credit and collection
records, plats, drawings and specifications, environmental and mining reports
and studies, correspondence and miscellaneous records with respect to customers
and supply sources, lessors and lessees, maps, core logs, engineering data,
equipment maintenance records and all other general correspondence, records,
books and files owned by any Asset Sale Company, but excluding any and all Tax
Returns, books and records relating to the Retained Liabilities and corporate
records of the Asset Sale Companies.
1.9. Business.
"Business" shall mean the business of owning and leasing coal reserves by
the Asset Sale Companies.
1.10. Buyer.
"Buyer" shall have the meaning given to it in the preamble of this
Agreement.
1.11. Buyer Closing Certificate.
"Buyer Closing Certificate" shall mean the certificate of Buyer
substantially in the form of Exhibit D attached hereto.
3
1.12. Buyer's Ultimate Parent.
"Buyer's Ultimate Parent" shall mean Alpha Natural Resources, LLC, a
Delaware limited liability company.
1.13. CERCLA.
"CERCLA" shall have the meaning set forth in Section 1.25 hereof.
1.14. CERCLIS.
"CERCLIS" shall have the meaning set forth in Section 3.6 hereof.
1.15. Closing.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement beginning at 10:00 a.m., local time, on the Closing Date, at the
offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia 23219.
1.16. Closing Date.
"Closing Date" shall mean November 30, 2002 or such other date as the
parties may mutually agree in writing.
1.17. Coal Act.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of 1992
as amended through the Closing Date (codified at Subtitle J of the Code).
1.18. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate, any predecessor or successor provisions of Law, and all regulations
thereunder.
4
1.19. Contaminated.
"Contaminated" shall mean the presence of one or more Hazardous Substances
in such quantity or concentration as to: (i) violate any Environmental Law; (ii)
require disclosure to any Governmental Authority; (iii) require remediation or
removal; (iv) interfere with or prevent the use of the Real Property or any of
the Purchased Assets as customarily intended; or (v) create any contribution
Liability to fund the clean up of the Real Property.
1.20. Contracts.
"Contracts" shall mean the contracts, agreements, personal and real
property leases, relationships and commitments, written or oral, of the Asset
Sale Companies listed on Schedule 1.20.
1.21. Conveyance Deeds.
"Conveyance Deeds" shall mean the deeds substantially in the form of
Exhibit E attached hereto, with such revisions as shall be agreed upon by the
parties hereto in connection with the Royalty Agreement.
1.22. CPA Arbitrator.
"CPA Arbitrator" shall have the meaning set forth in Section 2.9 hereof.
1.23. Dispute.
"Dispute" shall have the meaning set forth in Section 9.14 hereof.
1.24. Environment.
"Environment" shall mean surface or ground water, water supply, soil or the
ambient air.
5
1.25. Environmental Laws.
"Environmental Laws" shall mean collectively, all federal, foreign, state,
and local Laws in effect as of the Closing Date that relate to (a) the
prevention, abatement or elimination of pollution, or the protection of the
environment, or of natural resources, including, without limitation, Laws
applicable to coal mining operations or related activities, (b) the generation,
handling, treatment, storage, disposal or transportation of waste materials, (c)
the regulation of or exposure to Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C.ss.ss.9601 et. seq. ("CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act, as amended, 42
U.S.C.ss.ss.6901 et. seq. ("RCRA"), the Clean Air Act, 42 U.S.C.ss.ss.7401 et.
seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et. seq., the Toxic Substances
Control Act, 15 U.S.C.ss.ss.2601 et. seq., the Emergency Planning and Community
Right to Know Act, 42 U.S.C.ss.ss.11001 et. seq., and any foreign, state,
county, municipal, or local statutes, Laws or ordinances similar or analogous to
the federal statutes listed in this sentence.
1.26. Environmental Matter.
"Environmental Matter" shall mean any assertion of a violation, claim or
directive by any Governmental Authority or any other Person for personal injury,
damage to property or the Environment, nuisance, contamination or other adverse
effects on the Environment, or for damages or restrictions resulting from or
related to (i) the operation of PCC's or its Affiliates' business or any
predecessor or the ownership, use or operation at or on any real property or
other assets owned, operated or leased by PCC or its Affiliates or any
predecessor; or (ii) the existence or the continuation of a Release of, or
exposure to, or the transportation, storage or treatment of any Hazardous
Substance into the Environment from or related to any real property or assets
6
currently or formerly owned, operated or leased by PCC or its Affiliates or any
activities on or operations thereof.
1.27. Environmental or Response Action.
"Environmental or Response Action" shall mean all actions required (i) to
clean up, remove, treat or in any other way address any Hazardous Substance or
other substance; (ii) to prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Substance or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor Environment; (iii) to perform pre-remedial studies and
investigations or post-remedial monitoring and care; (iv) to bring facilities on
any real property currently or formerly owned, operated or leased by PCC or its
Affiliates and the facilities located and operations conducted thereon into
compliance with all Environmental Laws and Reclamation Laws and all permits and
other authorizations, and the filing of all notifications and reports required
under any Environmental Laws and Reclamation Laws; or (v) for the purpose of
environmental protection of any real property currently or formerly owned,
operated or leased by PCC or its Affiliates.
1.28. EPA.
"EPA" shall have the meaning set forth in Section 3.6 hereof.
1.29. Governmental Authority.
"Governmental Authority" shall mean any governmental, judicial,
legislative, executive, administrative or regulatory authority of the United
States, or of any foreign, state or local government or any subdivision, agency,
commission, office, authority or bureau thereof or any quasi-governmental entity
or authority of any nature.
7
1.30. Hazardous Substances.
"Hazardous Substances" shall mean any substance, chemical, waste, solid,
material, pollutant or contaminant that is defined or listed as hazardous or
toxic under any applicable Environmental Laws. Without limiting the generality
of the foregoing it shall also include any radioactive material, including any
naturally-occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. 2011, et seq., any amendments or authorizations
thereof, any asbestos-containing materials in any form or condition, any
polychlorinated biphenyls in any form or condition, radioactive waste, or
natural gas, natural gas liquids, liquified natural gas, condensate, or
derivatives or byproducts thereof or oil and petroleum products or by products
and constituents thereof.
1.31. Income Tax or Income Taxes.
"Income Tax" or "Income Taxes" shall mean any Tax based on or measured by
net income.
1.32. Indemnification and Guaranty Agreement.
"Indemnification and Guaranty Agreement" shall mean the agreement by and
among PCC Parent, PCC, Buyer and Buyer's Ultimate Parent substantially in the
form of Exhibit F attached hereto.
1.33. Intercreditor Agreement.
"Intercreditor Agreement" shall mean the Intercreditor Agreement by and
among PCC, Buyer and Buyer's third-party lenders, to be dated as of the Closing
Date, in a form to be agreed upon by the parties hereto.
1.34. IRS.
"IRS" shall mean the United States Internal Revenue Service.
8
1.35. Knowledge of PCC.
"Knowledge of PCC" shall mean, for the individuals listed on Schedule 1.35,
any such individual's actual knowledge and what any such individual should have
known after reasonable inquiry within the scope of that individual's job
responsibilities.
1.36. Law.
"Law" and "Laws" shall mean any applicable United States or foreign,
federal, state, local or other law or governmental requirement of any kind, and
the rules, regulations and orders promulgated thereunder.
1.37. Lien.
"Lien" shall mean any lien, encumbrance, mortgage, charge, claim,
restriction, pledge, security interest or imposition of any kind.
1.38. Liability.
"Liability" shall mean any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), including any
liability for Taxes. Liabilities shall mean one or more items of Liability.
1.39. Material Adverse Effect.
"Material Adverse Effect" shall mean any event, change or occurrence that
individually, or together with any other event, change or occurrence, has a
material adverse impact on the Business, taken as a whole, without regard to the
duration of such material adverse impact.
9
1.40. Mining Activities.
"Mining Activities" shall mean those activities, if any, of the Asset Sale
Companies that have taken place on or through the use of the Purchased Assets
that involve surface, underground and auger mining, processing or transporting
of coal and the handling of coal by-products.
1.41. Mining Data.
"Mining Data" shall have the meaning set forth in Section 3.5(c) hereof.
1.42. Mining Environmental Liabilities.
"Mining Environmental Liabilities" shall mean Liabilities that relate to or
arise from both of the following: (i) any of the Hazardous Substances set forth
on Schedule 1.42 and (ii) an Environmental Matter or Environmental and Response
Action associated with Mining Activities to the extent that such Mining
Activities conformed to industry standard practices at the time such Mining
Activities were conducted.
1.43. MSHA.
"MSHA" shall have the meaning set forth in Section 3.6 hereof.
1.44. Ordinary Course of Business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.45. OSM.
"OSM" shall have the meaning set forth in Section 3.6 hereof.
1.46. PCC.
"PCC" shall have the meaning given to it in the preamble to this Agreement.
10
1.47. PCC Closing Certificate.
"PCC Closing Certificate" shall mean the certificate of PCC substantially
in the form of Exhibit G attached hereto.
1.48. PCC Group.
"PCC Group" shall have the meaning given to it in Section 1.61(l).
1.49. PCC Parent.
"PCC Parent" shall mean The Pittston Company, a Virginia corporation.
1.50. Permitted Liens.
"Permitted Liens" shall mean: (i) Liens for property Taxes not due and
payable; (ii) encumbrances that would be apparent in a physical inspection of
the surface of the Real Property; (iii) all instruments of record in the offices
of the Clerk of the Circuit Court for each county where the Real Property is
located; and (iv) those Liens affecting the Purchased Assets that are listed on
Schedule 1.50.
1.51. Person.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Authority.
1.52. Post-Closing Period.
"Post-Closing Period" shall mean any taxable period beginning after the
Closing Date.
1.53. Pre-Closing Period.
"Pre-Closing Period" shall mean any taxable period ending on or before the
Closing Date.
11
1.54. Purchase Price.
"Purchase Price" shall mean the cash amount of $6,160,000, plus the Royalty
Agreement.
1.55. Purchased Assets.
"Purchased Assets" shall mean all right, title and interest in and to the
Books and Records, Real Property and Mining Data of the Asset Sale Companies and
the rights of the Asset Sale Companies with respect to the Contracts.
1.56. RCRA.
"RCRA" shall have the meaning set forth in Section 1.25 hereof.
1.57. Real Property.
"Real Property" shall mean the real property rights and interests owned,
leased or subleased by the Asset Sale Companies and any improvements, fixtures,
easements, rights of way, and other appurtenants thereto (such as appurtenant
rights in and to public streets) that are listed on Schedule 1.57.
1.58. Reclamation Laws.
"Reclamation Laws" shall mean all federal, state and local Laws, as now or
hereafter in effect, relating to coal mining reclamation activities or
Liabilities. For purposes of this definition, "coal mining" shall include, but
not be limited to, any activities defined under the Surface Mining Control and
Reclamation Act of 1977, as amended, as "surface coal mining operations."
1.59. Related Persons.
"Related Persons" shall mean related persons as that term is defined in
Section 9701(c)(2) of the Coal Act, except that it shall not include successors
in interest.
12
1.60. Release.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping or disposing into the
Environment of Hazardous Substances.
1.61. Retained Liabilities.
"Retained Liabilities" shall mean all of the Liabilities of each Asset Sale
Company, other than the Assumed Liabilities, including, without limitation, the
following:
(a) the Liabilities listed on Schedule 1.61(a);
(b) all Liabilities for terminated contract miner performance escrow
amounts (including interest) accrued up to the Closing Date;
(c) all Liabilities for accounts payable for which goods have been shipped
and delivered (whether or not invoiced) or services have been
performed (whether or not invoiced) and related notes, trade payables
and earned royalties, to the extent that an Asset Sale Company
received a benefit before the Closing Date;
(d) all inter-company indebtedness owed by any Asset Sale Company to the
PCC Parent or any of the PCC Parent's Affiliates;
(e) except as set forth on Schedule 1.6, all Liabilities for the claims,
legal actions, suits, litigation, arbitrations, disputes or
investigations listed on Schedules 3.5(c) and 3.8;
(f) all Liabilities of any of the Asset Sale Companies for unpaid Taxes
with respect to any Tax year or portion thereof ending on or before
the Closing Date or for any Tax year beginning before and ending after
the Closing Date to the extent allocable to the
13
portion of such period beginning before and ending on the Closing Date
(to the extent of any inconsistencies with Article VII hereof, Article
VII shall be controlling);
(g) all amounts payable as the result of the consummation of the
transactions contemplated by this Agreement that arise due to any
change of control provision of any Contract other than those Contracts
listed on Schedule 5.4(b);
(h) all Liabilities of any of the Asset Sale Companies for the unpaid
Taxes of any Person (including PCC and its subsidiaries) under Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise;
(i) all Liabilities for any Environmental Matter or Environmental or
Response Action related to real property or any other asset owned,
operated or leased by PCC or any of its Affiliates that is not a
Purchased Asset (except to the extent otherwise provided in any other
agreement entered into contemporaneously with this Agreement pursuant
to which reclamation and other services are to be performed on PCC's
or its Affiliates' idle properties);
(j) all Liabilities for any Environmental Matter or Environmental or
Response Action (other than Mining Environmental Liabilities) to the
extent the underlying claim relates to or arises from any activity on
or through the use of the Purchased Assets and is attributable to acts
or omissions occurring at or prior to the Closing;
(k) all Liabilities of PCC that become a Liability of Buyer under any bulk
transfer Law of any jurisdiction;
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(l) (1) all Liabilities, if any, of any Asset Sale Company and its Related
Persons (collectively, the "PCC Group") under the Coal Act, and (2)
all Liabilities, if any, of the PCC Group under any post-Closing
amendments to the Coal Act for (i) beneficiaries eligible under the
Coal Act who are assigned to a member of the PCC Group or for whom a
member of the PCC Group is required to provide or pay for medical
benefits pursuant to Sections 9711 or 9712 of the Coal Act or (ii)
death benefit premiums or unassigned beneficiary premiums (as those
terms are used in Sections 9704(c) and 9704(d) of the Coal Act) for
beneficiaries eligible under the Coal Act, that are assessed against
any member of the PCC Group; provided, for the avoidance of doubt,
that the Liabilities retained pursuant to (1) and (2) above shall not
be affected by Buyer or any of its Affiliates being identified under
the Coal Act or any post-Closing amendments thereto as a successor,
successor in interest or "Related person" under the Coal Act or any
post-Closing amendments thereto to any member of the PCC Group solely
as a result of Buyer's purchase of the Purchased Assets; and
(m) all Liabilities under the contracts, agreements, personal and real
property leases, relationships and commitments of the Asset Sale
Companies listed on Schedule 1.61(m).
1.62. Royalty Agreement.
"Royalty Agreement" shall mean that $20 million Royalty Agreement between
Buyer and PCC based upon the tonnage of coal mined at the Real Property and
earnings of the Business, to be dated as of the Closing Date, in a form to be
agreed upon by PCC and Buyer.
1.63. SMCRA.
"SMCRA" shall have the meaning set forth in Section 3.6 hereof.
15
1.64. Straddle Period.
"Straddle Period" shall mean any taxable period covering days before and
after the Closing Date.
1.65. Tax or Taxes.
"Tax" or "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
custom duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, reclamation fees or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, but shall not
include, for purposes of this Agreement only, Liabilities under the Coal Act, of
whatever nature and regardless of how denominated.
1.66. Tax Return.
"Tax Return" shall mean any original or amended report, return,
declaration, claim for refund, statement, document, schedule, attachment or
other information supplied or required to be supplied to a Governmental
Authority with respect to Taxes, including any return of an affiliated, combined
or unitary group.
1.67. VDEQ.
"VDEQ" shall have the meaning set forth in Section 3.6 hereof.
1.68. VDMME.
"VDMME" shall have the meaning set forth in Section 3.6 hereof.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets.
On the Closing Date, PCC (on behalf of the Asset Sale Companies) shall
cause to be sold, conveyed, transferred, assigned, and delivered to Buyer, and
Buyer shall acquire, the Purchased Assets. At the Closing, subject to the terms
and conditions of this Agreement, PCC agrees to: (i) cause title to the
Purchased Assets to be transferred and delivered to Buyer; and (ii) perform its
obligations under this Agreement to be performed at or before Closing. In full
payment for the Purchased Assets, Buyer shall: (i) assume the Assumed
Liabilities; (ii) pay to PCC (which shall receive such amounts on behalf of the
Asset Sale Companies) the Purchase Price by wire transfer of cash or other
immediately available funds and execute and deliver to PCC the Royalty
Agreement; and (iii) perform its obligations under this Agreement to be
performed at or before Closing. Buyer shall not assume or have any
responsibility with respect to any Liability of PCC Parent, PCC or the Asset
Sale Companies that is not an Assumed Liability.
2.2. Bills of Sale, Assignment and Assumption Agreements, Conveyance Deeds
and Other Documents.
At the Closing, PCC shall cause each of the Asset Sale Companies to: (i)
execute and deliver to Buyer the Bills of Sale, the Assignment and Assumption
Agreements, the Conveyance Deeds and such other documents as may be necessary to
convey to Buyer the Purchased Assets; and (ii) perform its obligations under the
Agreement to be performed at or before the Closing.
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2.3. Assumption of Liabilities.
At the Closing, Buyer shall execute and deliver to PCC the Assignment and
Assumption Agreements and such other documents and instruments as may be
necessary for Buyer to assume all of the Assumed Liabilities. Buyer shall not
assume or have any responsibility, however, with respect to any Liability of PCC
Parent, PCC or the Asset Sale Companies that is not an Assumed Liability.
2.4. Proration of Liabilities.
PCC and Buyer shall cooperate with each other to provide for payments due
with respect to the Assumed Liabilities and the Retained Liabilities during the
payment period in which the Closing occurs with all such Liabilities prorated as
of the Closing Date, if applicable.
2.5. Indemnification and Guaranty Agreement.
At the Closing, PCC, PCC Parent, Buyer's Ultimate Parent and Buyer shall
execute and deliver the Indemnification and Guaranty Agreement.
2.6. Administrative Services Agreement.
At the Closing, PCC and Buyer shall execute and deliver the Administrative
Services Agreement pursuant to which PCC or one of its Affiliates will provide
certain services to Buyer or its Affiliates for a transition period.
2.7. Intercreditor Agreement.
At the Closing, in order to set forth certain agreements among PCC, Buyer
and Buyer's third-party lenders, PCC, Buyer and Buyer's third-party lenders
shall execute and deliver the Intercreditor Agreement.
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2.8. Additional Documents.
At the Closing, PCC and Buyer shall, and PCC shall cause the Asset Sale
Companies to, execute and deliver all such other documents or instruments
necessary or appropriate to effect the transactions contemplated by this
Agreement, including the documents provided in Section 5.6 hereof and in this
Article II.
2.9. Allocation of Purchase Price and Assumed Liabilities.
The Purchase Price and the Assumed Liabilities (to the extent they
constitute part of the amount realized for federal Income Tax purposes) shall be
allocated among the Purchased Assets in accordance with a schedule to be agreed
upon by Buyer and PCC after the Closing Date. Buyer shall prepare such
allocation schedule and deliver it to PCC upon a date to be agreed upon between
the parties, which date shall be no later than 60 days after the Closing Date.
PCC shall be deemed to agree with such allocation schedule unless, within ten
(10) days after the date PCC receives the allocation schedule from Buyer, PCC
notifies Buyer in writing of (i) each allocation with which it disagrees and
(ii) for each such allocation, the amount that PCC proposes to allocate. If PCC
provides such notice to Buyer, the parties shall proceed in good faith to
resolve mutually the disputed allocation amounts within fifteen (15) days after
the date on which PCC notifies Buyer of a disagreement with Buyer's proposed
allocation. If PCC and Buyer cannot resolve any such differences, the parties
agree to submit such differences to arbitration in Abingdon, Virginia, by the
accounting firm of Deloitte & Touche, LLP or another accounting firm acceptable
to both parties (the "CPA Arbitrator"). The CPA Arbitrator shall make such
review and examination of the relevant facts and documents as the CPA Arbitrator
deems appropriate and shall permit each of Buyer and PCC to make a written
presentation of their respective positions. Within forty-five (45) days after
submission of such dispute by both
19
parties, the CPA Arbitrator shall resolve such dispute in writing and shall
prepare and deliver its decision, which shall (i) be based upon a determination
of the fair market value of the Purchased Assets, (ii) defer to valuations that
have been prepared in accordance with generally accepted valuation techniques
absent manifest error, (iii) be final and binding upon the parties without
further recourse or collateral attack and (iv) accept either Buyer's or PCC's
position in its entirety. The party whose position is not accepted by the CPA
Arbitrator shall pay all fees and costs of such CPA Arbitrator to arbitrate such
dispute. The allocation schedule shall include, at a minimum, information
necessary to complete Part II of IRS Form 8594. The allocation to the Purchased
Assets is intended to comply with the requirements of Section 1060 of the Code.
The parties shall cooperate to comply with all substantive and procedural
requirements of Section 1060, and except for any adjustment to the Purchase
Price hereunder, after the completion and agreement by the parties to the
allocation schedule, such allocation schedule shall be adjusted only if and to
the extent necessary to comply with such requirements of Section 1060. Buyer and
PCC agree that they will not take nor will they permit any Affiliate to take,
for Income Tax purposes, any position inconsistent with such allocation schedule
to the Purchased Assets; provided, however, that (i) Buyer's cost for the
Purchased Assets may differ from the total amount allocated hereunder to reflect
the inclusion in the total cost of items (for example, capitalized acquisition
costs) not included in the total amount so allocated and (ii) the amount
realized by the Asset Sale Companies may differ from the total amount allocated
hereunder to reflect transaction costs that reduce the amount realized for
federal Income Tax purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PCC
PCC hereby represents and warrants to Buyer that the statements contained
in this Article III are correct and complete, except as set forth in the
Schedules delivered by PCC to Buyer in
20
connection with this Agreement. The Schedules are arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Article
III.
3.1. Incorporation.
PCC and each of the Asset Sale Companies are corporations duly organized,
validly existing and in good standing under the Laws of the respective state or
commonwealth of each such company's incorporation. PCC and each of the Asset
Sale Companies that is not a corporation incorporated under the Laws of Virginia
are duly qualified or licensed to transact business as a foreign corporation in
Virginia and are in good standing under the laws of Virginia. Set forth on
Schedule 3.1 is the name of each state or other jurisdiction in which each such
company has either paid taxes or had an office in the three years prior to the
date of this Agreement.
3.2. Execution, Delivery and Performance.
The execution, delivery and performance by PCC of this Agreement and by PCC
and the applicable Asset Sale Company of each other agreement or instrument to
which it is a party executed in connection herewith or delivered pursuant hereto
and the consummation of the transactions contemplated herein and therein will
not, with or without the giving of notice or the passage of time, or both: (i)
conflict with, or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under, or result in
the creation of any Lien (other than Permitted Liens) under or pursuant to, any
provision of PCC's or any Asset Sale Company's Articles of Incorporation or
Bylaws or of any material franchise, mortgage, deed of trust, Lien, lease,
license, instrument, agreement, consent, approval, waiver or understanding to
which PCC or any Asset Sale Company is a party or by which any Asset Sale
Company is bound, or any Law or any order, judgment, writ, injunction or decree
to which PCC or any Asset
21
Sale Company is a party or by which PCC, any Asset Sale Company or the Purchased
Assets may be bound or affected; (ii) require the approval, consent or
authorization of, prior notice to, or filing or registration with any
Governmental Authority or contravene, conflict with or result in a violation of
any of the terms or requirements of, or give any Governmental Authority the
right to revoke, withdraw, suspend, cancel or terminate any authorization issued
by a Governmental Authority that is held by PCC or the Asset Sale Companies or
that otherwise relates to the Purchased Assets; or (iii) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under any Law
to which PCC or any Asset Sale Company is subject.
3.3. Authorization.
PCC has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder and each of PCC and the Asset Sale
Companies has full power and authority to enter into and deliver each other
agreement or instrument to which it is a party executed in connection herewith
and delivered pursuant hereto and to perform its obligations thereunder. PCC's
execution, delivery and performance of this Agreement and the execution,
delivery and performance of all other agreements and instruments by PCC and each
of the Asset Sale Companies in connection herewith and delivered pursuant hereto
and the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of PCC and each of the Asset Sale
Companies. This Agreement and all other agreements or instruments executed by
PCC or any of the Asset Sale Companies in connection
22
herewith and delivered by PCC or any of the Asset Sale Companies pursuant hereto
have been duly executed and delivered by PCC or such Asset Sale Companies and
this Agreement and all other agreements and instruments executed by PCC or any
of the Asset Sale Companies in connection herewith and delivered by PCC or any
of the Asset Sale Companies pursuant hereto constitute the legal, valid and
binding obligation of PCC or such Asset Sale Company, as the case may be,
enforceable in accordance with their respective terms (subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights).
3.4. Absence of Changes.
Except as contemplated by this Agreement, since December 31, 2001, none of
the Asset Sale Companies has, with respect to the Purchased Assets:
(a) borrowed or agreed to borrow any funds or incurred, or become subject
to, any Liability, or issued any note, bond or other debt security, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation, except Liabilities incurred in the Ordinary Course of
Business, none of which would reasonably be expected to result in an
impact greater than $100,000;
(b) paid any Liability other than current Liabilities in the Ordinary
Course of Business;
(c) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of any of the Real Property, or, other
than in the Ordinary Course of Business, any other Purchased Assets;
(d) except in the Ordinary Course of Business, entered into any agreement,
contract, lease or license (or series of related agreements,
contracts, leases and licenses) or made or permitted any material
amendment to or termination, acceleration, modification or
cancellation of any Contract or breached any provision of any
Contract;
23
(e) merged or consolidated with any other Person;
(f) mortgaged, pledged or subjected to any Lien any of its assets or
properties, other than Permitted Liens;
(g) made any capital expenditure (or series of related capital
expenditures) either (x) involving more than $100,000 or (y) outside
the Ordinary Course of Business;
(h) made any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related
capital investments, loans and acquisitions) either (x) involving
$100,000 or (y) outside the Ordinary Course of Business;
(i) delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
(j) cancelled, compromised, waived or released any right or claim (or
series of related rights and claims) either (x) involving more than
$100,000 or (y) outside the Ordinary Course of Business;
(k) made any loan to, or entered into any other transaction with, any of
the directors, officers and employees of such Asset Sale Company
outside the Ordinary Course of Business;
(l) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such
contract;
(m) suffered any damage, destruction or loss, whether or not covered by
insurance, that has had or would reasonably be expected to have a
Material Adverse Effect;
24
(n) implemented or adopted any change in its accounting methods or
principles or the application thereof; or
(o) entered into any agreement, arrangement or understanding with respect
to any of the foregoing.
3.5. Real Property.
(a) PCC has made available to Buyer all deeds, leases, bills of sale,
documents of title, abstracts, surveys, plats and maps in the
possession of the Asset Sale Companies or their Affiliates that relate
to the Real Property. With respect to the Real Property:
(i) the Asset Sale Companies have marketable title to the owned Real
Property, taken as a whole, and the Real Property is free and
clear of any Lien (other than Permitted Liens);
(ii) there are no pending or, to the Knowledge of PCC, threatened
condemnation proceedings, lawsuits, or administrative actions
relating to the Real Property;
(iii) the legal description for the parcels contained in the deed
thereof describes such parcel fully and adequately, and the
buildings and improvements are located within the boundary lines
of the described parcels of land;
(iv) none of the Asset Sale Companies have been notified that any
buildings or improvements located on the Real Property are in
violation of applicable zoning laws and ordinances; and
25
(v) there are no outstanding options or rights of first refusal to
purchase the parcel of Real Property, or any portion thereof or
interest therein.
(b) Schedule 1.57 identifies the coal leases, coal subleases and surface
leases that comprise a portion of the Real Property. PCC has made
available to Buyer all coal leases, coal subleases and surface leases
listed on Schedule 1.57. With respect to each such lease and sublease:
(i) the lease or sublease is legal, valid, binding, enforceable, and
in full force and effect;
(ii) except for the consents set forth on Schedule 3.7(c) that are
required to be obtained and the notices given, the lease or
sublease will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including
the assignments and assumptions referred to above);
(iii) no Asset Sale Company nor, to the Knowledge of PCC, any other
party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no Asset Sale Company nor, to the Knowledge of PCC, any other
party to the lease or sublease has repudiated any provision
thereof; and
(v) none of the Asset Sale Companies has assigned, transferred,
conveyed or subjected to a Lien any interest in the leasehold or
subleasehold, other than those created pursuant to the terms of
that lease or sublease.
26
(c) There is not any third party adverse claim to any of the Real
Property, other than Permitted Liens, and, to the Knowledge of PCC, no
party is in wrongful possession of any parcel of the Real Property.
(d) PCC has made available to Buyer geological data, reserve data, mine
maps, core hole logs and associated data, coal measurements, coal
samples, lithologic data, coal reserve calculations or reports,
washability analyses or reports, mine plans, mining permit
applications and supporting data, engineering studies and all other
information, maps, reports and data, if any, in the possession of the
Asset Sale Companies and relating to or affecting the Real Property,
including the coal reserves, coal ownership, coal leases to the Asset
Sale Companies, coal leases from the Asset Sale Companies to third
parties, mining conditions, mines, and mining plans, if any, of the
Asset Sale Companies as prepared and utilized by the Asset Sale
Companies in any Mining Activities (collectively, the "Mining Data").
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, BUYER
ACCEPTS THE ASSET SALE COMPANIES' COAL RESERVES IN OR UNDER THE REAL
PROPERTY, AS IS, WHERE IS, TOGETHER WITH THE MINING DATA, FREE OF ANY
WARRANTY (EXPRESS OR IMPLIED) WITH REGARD TO THE MINEABILITY,
WASHABILITY, RECOVERABILITY, VOLUME, OR QUANTITY OR QUALITY OF ANY
COAL RESERVE. The coal reserves mined by the Asset Sale Companies
(whether such reserves are owned or leased by the Asset Sale
Companies) are not subject to any mining rights of any other Person.
3.6. Environmental Compliance.
(a) Each Asset Sale Company is in material compliance with all
Environmental Laws related to the Purchased Assets. Neither PCC nor
any Asset Sale Company has been notified by any Governmental Authority
of any current, alleged or unresolved violation of any Environmental
Laws applicable to Mining Activities. if any, including any
investigatory, remedial or corrective obligations, that would result
in (i) closure, suspension or restriction of any mine or
mining-related activity on the Real Property or (ii) exposure of Buyer
to the imposition of any fines or other civil or criminal monetary
penalty in excess of $5,000.
(b) To the Knowledge of PCC, after the Closing, Buyer will not be liable
for any fines, penalties, fees, Taxes or other governmental charges
assessed with respect to notices of violation, cessation orders,
closure orders, show cause orders or other governmental enforcement
actions issued prior to Closing with respect to the Purchased Assets.
Neither this Agreement nor the consummation of the transactions that
are the subject of this Agreement will result in any Buyer Liabilities
for site investigation or cleanup, or notification to or consent of
any Governmental Agency or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property transfer"
Environmental Laws.
(c) None of the Purchased Assets is identified on (i) the current or
proposed National Priorities List under 40 C.F.R. ss. 300, (ii) the
Comprehensive Environmental Response, Compensation and Liability
Inventory System ("CERCLIS") list, or (iii) any list arising from a
federal, state or local statute similar to CERCLA. To the Knowledge of
PCC, the Real Property is not Contaminated with any Hazardous
Substance.
27
(d) (A) None of the Purchased Assets has been or is being used in any
manner associated with the production, manufacture, processing,
generation, storage, treatment, disposal, management, shipment or
transportation of Hazardous Substances and no such Purchased Assets
are Contaminated by any Hazardous Substance; (B) there are no
underground storage tanks regulated pursuant to RCRAss. 9001 (42
U.S.C. ss. 6991) or equivalent authorized state program, and no above
ground storage tanks, located at, on, in or under the Purchased
Assets; (C) there is no asbestos-containing material in any form or
condition located at, on, in or under the Purchased Assets; (D) there
are no materials or equipment containing polychlorinated biphenyls
located at, on, in or under the Purchased Assets, (E) there are no
landfills or other areas located at, on, in or under the Purchased
Assets where Hazardous Substances have been disposed, and (F) neither
PCC nor any Asset Sale Company has disposed of any Hazardous Substance
at any offsite disposal area located on the property of any other
Person, other than a facility permitted by any Governmental Authority
with jurisdiction to receive such Hazardous Substance.
(e) No Asset Sale Company has, with respect to the Purchased Assets,
either expressly or by operation of Law, assumed or undertaken any
Liability, including without limitation, any Liability for corrective
or remedial action, of any other Person relating to any Environmental
Laws.
(f) To the Knowledge of PCC, no conditions existing as of the Closing Date
and relating to the Purchased Assets or the activities of the Asset
Sale Companies or any of their respective predecessors or Affiliates
will prevent or materially hinder Buyer's compliance with
Environmental Laws, require Buyer to undertake any investigatory,
remedial or corrective actions pursuant to Environmental Laws or
impose upon Buyer any other Liabilities pursuant to Environmental
Laws, including without limitation, any Environmental Laws relating to
onsite or offsite releases or threatened releases of Hazardous
Substances or imposing Liability for personal injury, property damage
or natural resource damage.
28
3.7. Contracts.
(a) PCC has made available to Buyer copies of all of the written
Contracts, or a written summary setting forth the terms and conditions
where no copies exist, including all amendments, modifications,
waivers and elections applicable thereto.
(b) As to the Asset Sale Companies party thereto: (i) the Contracts are
valid and binding, enforceable in accordance with their respective
terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally
the enforcement of creditors' rights), and are in full force and
effect; (ii) the consummation of the transactions contemplated herein
will not, with or without the giving of notice or the passage of time,
or both, conflict with, or result in a violation or breach of, or a
default, right to accelerate, right to exercise any remedy or loss of
rights under the Contracts; (iii) no Asset Sale Company, nor to the
Knowledge of PCC, any other party is in material breach or default,
and no event has occurred that, with notice or lapse of time, would
constitute a breach or default, or permit termination, modification or
acceleration, under the Contracts; and (iv) no Asset Sale Company, nor
to the Knowledge of PCC, any other party has repudiated any provision
of the Contracts.
(c) Schedule 3.7(c) sets forth the consents and approvals of third parties
and Governmental Authorities required to be obtained as a result of
the transactions contemplated by this Agreement.
29
3.8. Litigation; Claims.
(a) Schedules 3.5(c), 3.6 and 3.8 list all claims, legal actions, suits,
litigation, arbitrations, disputes, investigations, proceedings by or
before any Governmental Authority involving more than $100,000 and all
orders, decrees or judgments, now pending or in effect, or, to the
Knowledge of PCC, threatened or contemplated, against or affecting the
Asset Sale Companies, the Purchased Assets, or the consummation of the
transactions contemplated by this Agreement, except to the extent
involving Taxes for Pre-Closing Periods.
(b) There are no existing claims by or disputes involving more than
$100,000 with Persons owning or occupying lands or realty adjoining or
near any of the Real Property regarding Mining Activities, if any, by
the Asset Sale Companies or regarding the location of boundary lines,
encroachments, mineral rights, subsidence, water quantity or quality,
blasting damage, transportation of coal or other materials, nuisances
or any other similar matter.
3.9. No Broker.
None of the Asset Sale Companies, PCC or the PCC Parent has had any
dealings, negotiations or communications with or retained any broker or
other intermediary in connection with the transactions contemplated by this
Agreement and none of the foregoing is committed to any Liability for any
brokers' or finders' fees or any similar fees in connection with the
transactions contemplated hereby, other than Rothschild Inc., who shall be
compensated solely by PCC or an Affiliate of PCC.
30
3.10. Restrictions on Business Activities.
Except for this Agreement, there is no agreement, judgment,
injunction, order or decree binding upon PCC or any of the Asset Sale
Companies that has or would reasonably be expected to have the effect of
prohibiting the conduct of the Business.
3.11. Powers of Attorney.
There are no outstanding powers of attorney executed on behalf of any
of the Asset Sale Companies affecting the Purchased Assets.
3.12. Transactions With Affiliates.
The Contracts do not include any Liability between any Asset Sale
Company and any Affiliate of such Asset Sale Company. At the Closing, the
Purchased Assets will not include any receivable or other Liability from an
Affiliate of any Asset Sale Company.
3.13. Absence of Certain Payments.
During the five (5) year period prior to the date of this Agreement,
to the Knowledge of PCC, none of the Asset Sale Companies have (nor has any
director, officer, agent, or employee of any Asset Sale Company nor any
other person, acting on behalf of any Asset Sale Company) directly or
indirectly: used any of such company's funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from such company's funds; violated any provision of the Foreign
Corrupt Practices Act of 1977 applicable to such company; established or
maintained any unlawful or unrecorded fund of such company's monies or
other assets; made any false or fictitious entry on the books or records of
such company; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment, to any person or entity, private or
public, regardless of form, whether in money, property, or services, to
obtain favorable treatment in securing business or to obtain special
concessions for such company, or to pay for favorable treatment for
business secured or for special concessions already obtained for such
company.
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3.14. Disclosure.
The representations and warranties contained in this Article III do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Article III not misleading. ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to PCC that:
4.1. Organization.
Buyer is a duly formed limited liability company, validly existing and
in good standing under the Laws of the State of Delaware.
4.2. Execution, Delivery and Performance.
The execution, delivery and performance of this Agreement and each
other agreement or instrument executed in connection herewith or delivered
pursuant hereto and the consummation of the transactions contemplated
herein and therein will not, with or without the giving of notice or the
passage of time, or both, (i) conflict with, or result in a violation or
breach of, or a default, right to accelerate or loss of rights under, or
result in the creation of any Lien, under or pursuant to, any provision of
Buyer's organizational documents or of any franchise, mortgage, deed of
trust, lease, license, instrument, agreement, consent, approval, waiver or
understanding, any Law, or any finding, order, judgment, writ, injunction
or decree to which Buyer is a party or by which Buyer or its respective
assets may be bound or affected; or (ii) require the approval, consent or
authorization of, or prior notice to, filing with or registration with, any
Governmental Authority, or any other Person or entity.
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4.3. Authorization.
Buyer has full power and authority to enter into and deliver this
Agreement, and each other agreement or instrument (to which it is a party)
executed in connection herewith or delivered pursuant hereto and to perform
its obligations hereunder and thereunder. Buyer's execution, delivery and
performance of this Agreement and all other agreements and instruments
executed in connection herewith or delivered pursuant hereto and the
transactions contemplated hereby have been duly authorized by all requisite
action. This Agreement and all other agreements or instruments executed by
Buyer in connection herewith or delivered by Buyer pursuant hereto have
been duly executed and delivered by Buyer and this Agreement and all other
agreements and instruments executed by Buyer in connection herewith or
delivered by Buyer pursuant hereto constitute Buyer's legal, valid and
binding obligation, enforceable in accordance with their respective terms
(subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting generally the enforcement of
creditors' rights).
4.4. No Broker.
Buyer has had no dealings, negotiations or communications with any
broker or other intermediary in connection with the transactions
contemplated by this Agreement nor is it committed to any Liability for any
brokers' or finders' fees or any similar fees in connection with the
transactions contemplated hereby.
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4.5. Reclamation and Environmental Compliance.
Buyer and all operators it owns or controls are in compliance with all
Environmental Laws and Reclamation Laws in all material respects, and are
not "permit blocked" under the Applicant Violator System administered by
the Department of the Interior.
4.6. Financing.
Buyer will have available to it, at the Closing, financial resources
sufficient to consummate the transactions contemplated by this Agreement.
4.7. Disclosure.
The representations and warranties contained in this Article IV do not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Article IV not misleading.
ARTICLE V
CERTAIN COVENANTS
5.1. Business in Ordinary Course.
Except as provided in this Agreement, between the date of this
Agreement and the Closing, PCC shall cause each of the Asset Sale
Companies, in relation to the Purchased Assets, to: (i) carry on its
business in the Ordinary Course of Business; (ii) use commercially
reasonable efforts to preserve intact its Business, current business
organization and properties until the Closing Date, and maintain the
relations and good will with its suppliers, customers, landlords,
creditors, agents, and others having business relationships with such Asset
Sale Company; (iii) not enter into any contract or other obligation binding
upon such Asset Sale Company involving an expenditure, purchase, sale, cost
or commitment (unless such contract is cancelable in thirty or fewer days,
involves less than $100,000, or is for consumable purchases) without the
prior written consent of Buyer; and (iv) report regularly to Buyer
concerning the status of the business and finances of such Asset Sale
Company.
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5.2. Compliance with Law.
Between the date of this Agreement and the Closing, each of the Asset
Sale Companies shall comply in all material respects with all Laws and with
all orders of any Governmental Authority.
5.3. Cooperation.
Subject to the terms and conditions herein provided, each of PCC and
Buyer agrees to use its commercially reasonable efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things
necessary, proper and advisable under Law, to consummate and make effective
the transactions contemplated by this Agreement. In case at any time after
the Closing Date any further action is necessary or desirable to carry out
the purposes of this Agreement, PCC and Buyer will, and PCC will cause the
Asset Sale Companies to, execute any additional instruments reasonably
necessary to consummate the transactions contemplated hereby.
5.4. Notices and Consents.
PCC and Buyer each will use their commercially reasonable efforts to
obtain consents of all Governmental Authorities and other third parties
necessary to the consummation of the transactions contemplated by this
Agreement. PCC shall have responsibility for providing any notices to third
parties that may be required by the transactions contemplated by this
Agreement and for obtaining, or causing to be obtained, at its sole cost
and expense, the consents listed on Schedule 5.4(a) and Buyer shall have
responsibility for obtaining, at its sole cost and expense, all consents
listed on Schedule 5.4(b), with the other party in each case using its
commercially reasonable efforts to assist the responsible party in
obtaining such consents.
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5.5. Publicity.
All general notices, releases, statements and communications to any
suppliers, distributors and customers of the Asset Sale Companies, to the
general public and to the press relating to the transactions contemplated
by this Agreement shall be made only at such times and in such manner as
may be mutually agreed upon by PCC and Buyer; provided, however, that
either party hereto (or, in the case of PCC, the PCC Parent) shall be
entitled to make a public announcement of the foregoing if: (a) in the
opinion of its legal counsel, such announcement is required to comply with
Law or any listing agreement with any national securities exchange or
inter-dealer quotation system; and (b) such disclosing party gives a
reasonable period of notice and opportunity to comment to the other party
hereto of its intention to make such public announcement; provided, that,
failure to comment within 24 hours of receipt of such notice shall be
deemed a waiver of the opportunity to comment and provided, further, that
nothing in this Section 5.5 shall operate to prohibit any Asset Sale
Company or Buyer from communicating, after the Closing Date, with their
respective suppliers, distributors, customers and Governmental Authorities
the fact that the transaction has occurred or to employees regarding their
employment or the terms and conditions thereof, the operation of the
Purchased Assets or matters necessarily related thereto.
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5.6. Replacement Bonds; Insurance and Guarantees; Other Filings.
At or prior to the Closing Date, Buyer shall have: (i) secured
replacement bonds, replacement sureties, guarantees or other financial
security, if applicable, sufficient to allow PCC and the Persons who will
be its Affiliates after the Closing Date to be relieved or released as of
the Closing Date from all financial commitments, guarantees, collateral
agreements or similar undertakings listed on Schedule 5.6; (ii) obtained
property and liability insurance customary for a company that is engaged in
the Business or a business similar to the Business to insure the Purchased
Assets; and (iii) delivered copies of such documents to PCC.
5.7. Exclusivity.
PCC will not (nor will it cause or permit any of the Asset Sale
Companies to) (i) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating directly or indirectly to the
acquisition of the Purchased Assets, or any portion thereof, or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner, any effort or attempt by any Person to do or seek any of the
foregoing. PCC will notify Buyer immediately if any Person makes any
proposal, offer, inquiry or contact with respect to any of the foregoing.
5.8. Access.
At or prior to the Closing Date, PCC will permit (and will cause each
of the Asset Sale Companies to permit) representatives of Buyer to have
full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Asset Sale Companies, to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to each of the Asset Sale
Companies as related to the Purchased Assets. Copies of and access to
accounting records, ledgers and other pertinent documents or work papers
related to the Purchased Assets will be made available to Buyer at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Asset Sale Companies, upon request.
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5.9. Notice of Developments.
Each party will give prompt written notice to the other party of any
material adverse development causing a breach of any of its own
representations and warranties in Article III and Article IV above. No
disclosure by any party pursuant to this Section 5.9, however, shall be
deemed to amend or supplement the Schedules to such representations and
warranties or to prevent or cure any misrepresentation, breach of warranty
or breach of covenant.
5.10. Further Assurances.
The parties shall cooperate in a commercially reasonable manner with
each other and with their respective representatives in connection with any
steps required to be taken as part of their respective obligations under
this Agreement, and shall (a) furnish upon request to each other such
further information; (b) execute and deliver to each other such other
documents; and (c) do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this
Agreement and the transactions contemplated.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party to consummate the
transactions contemplated by this Agreement are subject to the satisfaction
at or prior to the Closing Date of the following conditions precedent:
(a) no action, suit, proceeding, order, decree or injunction
shall have been commenced, threatened or entered by or before any
Governmental Authority that remains in force and that (i) prohibits,
seeks to prohibit, or imposes or seeks substantial damages in
connection with, the consummation of the transactions contemplated by
this Agreement, (ii) seeks or imposes relief that causes or would
cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (iii) affects adversely the right
of Buyer to own the Purchased Assets or to operate the Business on or
after the Closing Date;
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(b) PCC Parent, PCC, Buyer and Buyer's Ultimate Parent shall have
executed and delivered to each other party thereto the Administrative
Services Agreement, the Indemnification and Guaranty Agreement and any
other documentation required in all transactions contemplated or
covered by all such agreements, all in form and substance as set forth
in Exhibits A and F attached hereto and the same shall be in full
force and effect;
(c) all other transactions pursuant to which Buyer or any of its
Affiliates acquire assets related to the Business shall have been
consummated prior to or simultaneously with the transactions
contemplated by this Agreement;
(d) PCC and Buyer shall have executed and delivered to each other
all such other documents or instruments necessary or appropriate to
effect the transactions contemplated by this Agreement, including the
documents provided in Section 5.6 hereof; and
(e) PCC shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(i) and PCC shall have provided such
payments as may be reasonably required to obtain all such consents.
Buyer shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(ii) and Buyer shall have provided
such payments, guarantees and/or assurances as may be reasonably
required to obtain all such consents.
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6.2. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver at or prior to
the Closing Date of the following conditions precedent:
(a) all of the representations and warranties of PCC set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or limitation
with respect to materiality (whether by reference to "Material Adverse
Effect" or otherwise), shall be true and correct in all respects as of
the date hereof and at and as of the Closing Date with the same effect
as though such representations and warranties were made at and as of
the Closing unless the aggregate failure of such representations or
warranties to be true and correct does not have a Material Adverse
Effect; provided that if a representation or warranty is expressly
made only as of a specific date, it need only be true and correct in
all respects as of such date, and Buyer shall have received the PCC
Closing Certificate required by Section 6.2(g) below dated as of the
Closing Date executed by PCC to such effect;
(b) all of the covenants and obligations that PCC is required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing Date shall have been duly performed and complied with in
all material respects;
(c) all proceedings and actions, corporate or other, to be taken
by PCC or the Asset Sale Companies in connection with the transactions
contemplated by this Agreement and all documents incident thereto,
including all actions necessary to authorize the execution, delivery
and performance of this Agreement and the transactions contemplated
hereby, shall have been taken and shall be reasonably satisfactory in
form and substance to Buyer and Buyer's counsel;
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(d) PCC shall have, and shall have caused the Asset Sale
Companies to have, executed and delivered the Bills of Sale, the
Assignment and Assumption Agreements, the Conveyance Deeds and such
other documents as may be necessary to convey to Buyer the Purchased
Assets;
(e) between the date of this Agreement and the Closing Date,
there shall not have been a change, event or occurrence that,
individually, or together with any other change, event or occurrence,
has had or could reasonably be expected to have a Material Adverse
Effect;
(f) Buyer shall have received an opinion of counsel to PCC
addressed to Buyer substantially in the form of Exhibit H; and
(g) Buyer shall have received an executed copy of the PCC Closing
Certificate.
6.3. Conditions Precedent to Obligations of PCC.
The obligation of PCC to consummate and cause the consummation of the
transactions contemplated by this Agreement is subject to the satisfaction
or waiver at or prior to the Closing Date of the following conditions
precedent:
(a) all of the representations and warranties of Buyer set forth in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, without regard to any qualification or limitation with respect to
materiality, shall be true and correct in all respects as of the date
hereof and at and as of the Closing Date with the same effect as though
such representations and warranties were made at and as of the Closing
unless the aggregate failure of such representations or warranties to be
true and correct does not have a material adverse effect on Buyer's ability
to consummate the transactions contemplated by this Agreement or fulfill
its post-Closing obligations hereunder; provided that if a representation
or warranty is expressly made only as of a specific date, it need only be
true and correct in all respects as of such date, and PCC shall have
received Buyer's Closing Certificate required by Section 6.3(j) below dated
as of the Closing Date executed by Buyer to such effect;
(b) all of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing Date shall have been duly performed and complied with in all
material respects;
(c) all proceedings and actions, corporate or other, to be taken by
Buyer in connection with the transactions contemplated by this Agreement,
and all documents incident thereto, including all actions necessary to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, shall have been taken and shall be
reasonably satisfactory in form and substance to PCC and its counsel;
(d) PCC shall have received, on behalf of the Asset Sale Companies,
the Purchase Price by wire transfer of cash or other immediately available
funds and the execution and delivery by Buyer of the Royalty Agreement;
(e) Buyer and Buyer's third-party lenders shall have executed and
delivered the Intercreditor Agreement;
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(f) Buyer shall have executed and delivered the Assignment and
Assumption Agreements and such other documents as may be necessary for
Buyer to assume all of the Assumed Liabilities;
(g) Buyer shall have delivered to PCC satisfactory evidence of
compliance with Section 5.6;
(h) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that, individually, or
together with any other change, event or occurrence, has had or could
reasonably be expected to have a Material Adverse Effect;
(i) PCC shall have received an opinion of counsel to Buyer addressed
to PCC substantially in the form of Exhibit I; and
(j) PCC shall have received an executed copy of Buyer's Closing
Certificate.
ARTICLE VII
CERTAIN TAX MATTERS
7.1. Property Taxes.
Property Taxes of the Asset Sale Companies with respect to the
Purchased Assets (including, without limitation, property Taxes payable as
a tenant or lessee under any lease) will be pro-rated as of the Closing
Date and, notwithstanding any other provision of this Agreement, the
economic burden of any such property Tax will be borne by (i) the Asset
Sale Companies for all Pre-Closing Periods and the portion of any Straddle
Period through the Closing Date and (ii) by Buyer for all Post-Closing
Periods and the portion of any Straddle Period after the Closing Date.
Accordingly, notwithstanding any other provision of this Agreement, (i) if
any Asset Sale Company pays such a property Tax with respect to a
Post-Closing Period or the portion of Straddle Period after the Closing
Date, Buyer will reimburse PCC on behalf of such Asset Sale Company within
15 days after receiving from PCC written demand for the amount of such
property Tax, and (ii) if Buyer pays such a property Tax with respect to a
Pre-Closing Period or the portion of a Straddle Period through the Closing
Date, PCC on behalf of the Asset Sale Companies will reimburse Buyer within
15 days after receiving from Buyer written demand for the amount of such
property Tax. For purposes of pro-rating property Taxes, the amount of any
property Tax attributable to the portion of a Straddle Period through the
Closing Date shall be deemed to be the amount of such property Taxes for
the entire Straddle Period multiplied by a fraction, the numerator of which
is the number of days in the Straddle Period through the Closing Date and
the denominator of which is the number of days in the entire Straddle
Period. In determining the Straddle Period for property Taxes, the Tax
period as reflected on the statement of Taxes due, property Tax bill,
property "tax ticket," or any other request for payment from a Governmental
Authority will determine the taxable period (e.g., a Virginia property Tax
bill that indicates the tax year as 2002 is for a Tax for the taxable
period January 1, 2002 through December 31, 2002).
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7.2. Sales and Use Taxes.
Buyer and PCC or the Asset Sale Companies hereby intend that the
transaction be an occasional sale within the meaning of Virginia Code
Section 58.1-602 and regulations thereunder, and therefore exempt from
Virginia sales and use Tax pursuant to Virginia Code Section 58.1-609. PCC
will be responsible for sales and use Taxes payable as a result of the
failure of this transaction to qualify as an occasional sale or as an
exempt transaction under any other Virginia law; provided, however, that
any use Tax payable as a result of this transaction that would be payable
regardless of whether the transaction qualifies as an occasional sale or
not shall be paid by Buyer.
7.3. Transfer Taxes.
All transfer, recording and similar Taxes arising in connection with
the transactions contemplated hereunder shall be borne equally by PCC and
Buyer. PCC and Buyer shall (and they shall cause their respective
Affiliates to) cooperate to comply with all Tax Return requirements for
such Taxes and provide such documentation and take such other actions as
may be necessary to minimize the amount of any such Taxes.
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7.4. Access for Tax Returns.
Following the Closing Date, Buyer shall, at reasonable times, and in a
manner so as not to interfere with normal business operations, allow PCC
(and if requested by PCC, representatives of federal, state or local
agencies) access to the Purchased Assets for purposes of reviewing
information pertinent to any Tax Return filed by PCC Parent or any of its
Affiliates, including the Asset Sale Companies.
ARTICLE VIII
TERMINATION
8.1. Termination.
This Agreement may be terminated prior to the Closing Date only as
follows:
(a) by mutual written consent of PCC and Buyer;
(b) by either PCC or Buyer, if the Closing Date shall not have
occurred prior to the close of business on December 31, 2002 or such
later date as the parties may agree in writing (provided, that the
right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause, in whole or in part, of, or
has resulted in, the failure of the conditions in Article VI to be
satisfied and the Closing Date to occur on or before such date);
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(c) by PCC or Buyer if an action, suit, or proceeding, shall have
been commenced or threatened by or before any Governmental Authority,
or any order, decree or injunction shall have been entered therein,
that (i) prohibits, seeks to prohibit, or imposes or seeks substantial
damages in connection with, the consummation of the transactions
contemplated by this Agreement, (ii) seeks or imposes relief that
causes or would cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (iii) affects
adversely the right of Buyer to own the Purchased Assets or to operate
the Business;
(d) by Buyer if (i) the representations of PCC contained in this
Agreement are not true and correct in all material respects as if made
at and as of that time, except for failures to be true and correct
that are capable of being and are cured within fifteen (15) days after
written notice from Buyer to PCC of such failure; or (ii) PCC has
failed to comply materially with its respective obligations under this
Agreement, except for failures to comply that are capable of being and
are cured within fifteen (15) days after written notice from Buyer to
PCC of such failure;
(e) by PCC if (i) the representations of Buyer contained in this
Agreement are not true and correct in all material respects as if made
at and as of that time, except for failures to be true and correct
that are capable of being and are cured within fifteen (15) days after
written notice from PCC to Buyer of such failure; or (ii) Buyer has
failed to comply materially with its obligations under this Agreement,
except for failures to comply that are capable of being and are cured
within fifteen (15) days after written notice from the PCC to Buyer of
such failure; or
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(f) by PCC, if by November 25, 2002, Buyer has not obtained
approval by its third party lenders of the Conveyance Deeds, Royalty
Agreement and Intercreditor Agreement with such terms as are
reasonably acceptable to PCC.
8.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 8.1 hereof, all
further obligations of the parties under or pursuant to this Agreement
shall terminate without further Liability of either party to the other
except: (a) as set forth in Section 9.4; and (b) for breaches of
representations, warranties, or covenants or for fraud. PCC and Buyer
hereby agree that the provisions of this Section 8.2 and of Section 9.4
shall survive any termination of this Agreement pursuant to the provisions
of this Article VIII.
ARTICLE IX
MISCELLANEOUS
9.1. Entire Agreement.
This Agreement, the documents referred to herein and to be delivered
pursuant hereto and any other agreement entered into contemporaneously with
this Agreement among PCC, PCC Parent, Buyer and Buyer's Ultimate Parent or
the Affiliates of any of them constitute the entire agreement between the
parties pertaining to the subject matter hereof, and supersede all prior
agreements, understandings, negotiations and discussions of the parties,
whether oral or written, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof, except as specifically set forth herein or therein.
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9.2. Amendment.
This Agreement may be amended by an instrument in writing and signed
on behalf of all of the parties hereto at any time.
9.3. Extension; Waiver.
At any time prior to the Closing Date, the parties may (i) extend the
time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance with any of the
agreements or conditions contained herein, other than the conditions
contained in Section 6.1(a) hereof as it relates to the entry of an order
in any proceeding by or before a Governmental Authority. Any agreement on
the part of any party to any such extension or waiver shall be valid only
if set forth in an instrument in writing and signed on behalf of such
party.
9.4. Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of
their respective counsel, investment bankers, financial advisors,
accountants and other experts and the other expenses incident to the
negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby.
9.5. Bulk Sales Waiver.
Buyer hereby waives compliance with all applicable bulk sales Laws.
9.6. Governing Law.
This Agreement shall be construed and interpreted according to the
Laws of the Commonwealth of Virginia, without regard to the conflicts of
Law rules thereof.
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9.7. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, provided that PCC may assign its rights
hereunder to any Affiliate of PCC after the Closing Date without the
consent of Buyer and Buyer may assign its rights hereunder to any Affiliate
of Buyer prior to, at or after the Closing Date without the consent of PCC
and, further provided, that nothing in this Agreement shall prevent a
successor in interest to either party from enforcing the provisions of this
Agreement.
9.8. Notices.
All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given
when delivered personally or by messenger or by overnight delivery service,
or within five days of being mailed by registered or certified United
States mail, postage prepaid, return receipt requested, in all cases
addressed to the person for whom it is intended at his address set forth
below or to such other address as a party shall have designated by notice
in writing to the other party in the manner provided by this Section 9.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
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And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
If to Buyer: Alpha Land and Reserves, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
9.9. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together
constitute but one and the same Agreement. The Table of Contents and
Article and Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
9.10. Interpretation; Construction.
(a) Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the
singular and all words in any gender shall extend to and include all
genders.
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(b) This Agreement has been fully negotiated by the parties
hereto and shall not be construed by any Governmental Authority
against either party as the drafting party.
9.11. Severability.
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
9.12. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement and PCC and Buyer
assume no Liability to any third party because of any reliance on the
representations, warranties and agreements of PCC and Buyer contained in
this Agreement, other than Section 5.5 hereof, which is intended to be for
the benefit of the Persons expressly covered thereby and may be enforced by
such Persons.
9.13. Retention of and Access to Records.
After the Closing Date, Buyer shall retain for a period consistent
with Buyer's record retention policies and practices those books and
records relating to the Asset Sale Companies delivered to Buyer. Buyer also
shall provide to PCC and its Affiliates reasonable access thereto, during
normal business hours and on at least three days' prior written notice, to
enable them to prepare financial statements or Tax Returns or deal with Tax
audits or litigation. Buyer shall deliver to PCC at least thirty days
written notice prior to the destruction or other disposal of any such books
and records. PCC and its Affiliates may elect to take delivery of any such
books and records that Buyer intends to destroy or otherwise dispose of and
to copy any such books and records that Buyer intends to keep, all at their
own expense.
9.14. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute"), excluding any dispute or disagreement among the
parties concerning the allocation of Purchase Price and Assumed
Liabilities, which shall be resolved pursuant to Section 2.9, shall be
decided by binding arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association. PCC and Buyer
shall jointly select one arbitrator. If the two parties shall fail to
select an arbitrator within fourteen calendar days after arbitration is
requested, then such arbitrator shall be selected by the American
Arbitration Association or any successor thereto upon application of either
party. No Dispute shall be consolidated in any arbitration with any
dispute, claim or controversy of any other party. The arbitration shall be
conducted in Roanoke, Virginia, and any court having jurisdiction thereof
may immediately issue judgment on the arbitration award. The parties agree
that the arbitration provided for in this Section 9.14 shall be the
exclusive means to resolve all Disputes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
ALPHA LAND AND RESERVES, LLC
By: /s/ Eddie Neely
-------------------------------
Name: Eddie Neely
Title: Vice President
50
SCHEDULE 1.4
ASSET SALE COMPANIES
Clinchfield Coal Company, a Virginia corporation
Pyxis Resources Company, a Virginia corporation
Paramont Coal Corporation, a Delaware corporation
Motivation Coal Company, a Virginia corporation
Exhibit 2.10
PITTSTON COAL COMPANY
448 N. E. Main Street
Lebanon, Virginia 24266
December 13, 2002
Alpha Land and Reserves, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Agreement"), dated as of
October 29, 2002, as amended to but not including the date hereof, by and
between Pittston Coal Company ("PCC") and Alpha Land and Reserves, LLC
("Buyer"). Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
PCC and Buyer desire to amend certain provisions of the Agreement and, in
consideration of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The condition precedent to the obligations of PCC to consummate and
cause the consummation of the transactions contemplated by the
Agreement contained in Section 6.3(e) of the Agreement has been
satisfied by the agreement of the parties to the form of Intercreditor
Agreement attached to the Royalty Agreement as executed by the parties
thereto on December 13, 2002.
2. The Schedules to the Agreement are hereby amended and restated in
their entirety as attached hereto as Exhibit A.
3. Except as amended by this letter agreement, the Agreement shall
continue in full force and effect.
4. This letter agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any executed counterpart
of this letter agreement or other signature hereto delivered by a
party by facsimile shall be deemed for all purposes as being good and
valid execution and delivery of this letter agreement by such party.
1
Sincerely,
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-----------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ACKNOWLEDGED AND AGREED:
ALPHA LAND AND RESERVES, LLC
By: /s/ Eddie Neely
-----------------------------------
Name: Eddie Neely
Title: Vice President
2
Exhibit 2.11
INDEMNIFICATION AND GUARANTY AGREEMENT
INDEMNIFICATION AND GUARANTY AGREEMENT, dated as of December 13, 2002, by
and among PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), THE PITTSTON
COMPANY, a Virginia corporation ("Pittston"), ALPHA NATURAL RESOURCES, LLC, a
Delaware limited liability company ("Buyer's Ultimate Parent") and ALPHA LAND
AND RESERVES, LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, Buyer and PCC have entered into an asset purchase agreement dated
October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto, as the same may be amended from time to time in accordance
with the terms thereof, being hereinafter referred to as the "Acquisition
Agreement"), pursuant to which Buyer will purchase or acquire from PCC and
certain of its Affiliates certain assets, and assume certain liabilities, all
upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, PCC and Buyer desire to provide for the terms upon which they will
indemnify each other with respect to certain matters relating to the
transactions contemplated by the Acquisition Agreement;
WHEREAS, Pittston owns, indirectly, all of the outstanding capital stock of
PCC and, as an inducement to Buyer to enter into the Acquisition Agreement, has
agreed to guarantee the obligations of PCC and certain of PCC's Affiliates under
this Agreement and the Acquisition Agreement; and
WHEREAS, Buyer's Ultimate Parent owns, indirectly, all of the outstanding
membership interests of Buyer and, as an inducement to PCC to enter into the
Acquisition Agreement, has agreed to guarantee the obligations of Buyer under
1
this Agreement and the Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Adverse Consequences.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
1.3. Basket.
"Basket" shall have the meaning set forth in Section 2.1(b)(i) hereof.
2
1.4. Buyer.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
1.5. Buyer Indemnified Persons.
"Buyer Indemnified Persons" shall mean Buyer, its Affiliates (including,
after Closing, one or more Buyer Affiliates formed to hold the Virginia coal
operations of PCC acquired pursuant to the Acquisition Agreement), and their
respective members, directors, officers, employees, consultants, agents,
attorneys and representatives.
1.6. Buyer's Ultimate Parent.
"Buyer's Ultimate Parent" shall have the meaning set forth in the preamble
to this Agreement.
1.7. Buyer's Ultimate Parent Guaranty.
"Buyer's Ultimate Parent Guaranty" shall have the meaning set forth in
Section 3.2 hereof.
1.8. Claim Notice.
"Claim Notice" shall have the meaning set forth in Section 2.3(b) hereof.
1.9. Dispute.
"Dispute" shall have the meaning set forth in Article VII hereof.
1.10. Indemnified Party.
"Indemnified Party" shall have the meaning set forth in Section 2.3(b)
hereof.
3
1.11. Indemnifying Party.
"Indemnifying Party" shall have the meaning set forth in Section 2.3(b)
hereof.
1.12. Other Acquisition Agreements.
"Other Acquisition Agreements" shall mean the agreements set forth on
Schedule A attached hereto.
1.13. Other Indemnification Agreements.
"Other Indemnification Agreements" shall mean the agreements set forth on
Schedule B attached hereto.
1.14. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.15. Pittston.
"Pittston" shall have the meaning set forth in the preamble to this
Agreement.
1.16. Pittston Guaranty.
"Pittston Guaranty" shall have the meaning set forth in Section 3.1 hereof.
1.17. Pittston Indemnified Persons.
"Pittston Indemnified Persons" shall mean Pittston, PCC, the Asset Sale
Companies and their respective directors, officers, employees, agents,
stockholders and their respective Affiliates, and their respective directors,
officers, employees, consultants, agents, attorneys and representatives.
4
ARTICLE II
INDEMNIFICATION
2.1. Indemnification by PCC.
(a) PCC agrees to indemnify and hold harmless Buyer Indemnified
Persons from and against, and reimburse them for, any and all
Adverse Consequences that any Buyer Indemnified Persons may
suffer or incur or become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by PCC to Buyer in the Acquisition Agreement either:
(A) as of the date on which such representation or warranty
was made or (B) as of the Closing Date (provided that the
consummation of the transactions contemplated by the
Acquisition Agreement in accordance with the terms shall not
be deemed without more to have cause a breach of any
representation or warranty);
(ii) any failure by PCC to carry out, perform, satisfy or
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under the Acquisition
Agreement (other than Article VII thereof);
(iii) any failure by PCC to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under Article VII of the
Acquisition Agreement; and
(iv) any failure by PCC or the Asset Sale Companies to satisfy
the Retained Liabilities.
(b) Notwithstanding the provisions of Section 2.1(a), PCC shall not
be required to indemnify any of Buyer Indemnified Persons with
respect to the matters described in Sections 2.1(a)(i) and
2.1(a)(ii):
5
(i) unless and until the sum of (A) the Adverse Consequences for
which indemnification pursuant to (1) Sections 2.1(a)(i) and
2.1(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of
the Other Indemnification Agreements is sought plus (B) any
amounts paid by Buyer to obtain any of the consents listed
on Schedule 6.1(e)(i) of the Acquisition Agreement or in
Schedule 6.1(e)(i) of the Other Acquisition Agreements shall
exceed $100,000 (the "Basket"), in which case the entire
amount of such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted pursuant to
Section 2.3, (i) on or before the fifth anniversary of the
Closing Date for any breach of PCC's representations
specified in Section 3.6 of the Acquisition Agreement and
(ii) on or before the second anniversary of the Closing Date
for any other matter described in Sections 2.1(a)(i) or
2.1(a)(ii); and
(iii) for any matter, to the extent that the aggregate amount of
the Adverse Consequences for which Buyer Indemnified Persons
have been indemnified pursuant to Sections 2.1(a)(i) and
2.1(a)(ii) or in Sections 2.1(a)(i) and 2.1(a)(ii) of the
Other Indemnification Agreements exceeds $15,000,000 (the
"Cap").
(c) Notwithstanding the foregoing, PCC agrees that any claim by a
Buyer Indemnified Person for indemnification (i) arising out of,
relating to, in the nature of or caused by any breach of PCC's
representations specified in Sections 3.1, 3.2, 3.3, and 3.9 of
the Acquisition Agreement or (ii) pursuant to Sections
2.1(a)(iii) and 2.1(a)(iv), shall not be subject to the
provisions of paragraph (b) of this Section 2.1.
6
(d) PCC agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Buyer Indemnified
Persons for Adverse Consequences suffered through and after the
date of the claim for indemnification (including any Adverse
Consequences Buyer Indemnified Persons may suffer after the end
of any applicable survival period, as long as a claim for
indemnification is made before the end of the applicable survival
period and the Adverse Consequences suffered relate to such
claim).
2.2. Indemnification by Buyer.
(a) Buyer agrees to indemnify and hold harmless Pittston Indemnified
Persons from and against and reimburse them for, any and all
Adverse Consequences that any Pittston Indemnified Persons may
suffer or incur or become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by Buyer in the Acquisition Agreement either: (A) as of
the date on which such representation or warranty was made
or (B) as of the Closing Date (provided that the
consummation of the transactions contemplated by the
Acquisition Agreement in accordance with its terms shall not
be deemed without more to have caused a breach of any
representation or warranty);
(ii) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under the Acquisition
Agreement (other than Article VII thereof);
(iii) the ownership of the Purchased Assets on or after the
Closing Date;
7
(iv) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings,
liabilities or obligations in or under Article VII of the
Acquisition Agreement, excluding the Retained Liabilities;
(v) any liability that any Pittston Indemnified Person may
suffer or incur or become subject to because of any actions
it takes pursuant to the Administrative Services Agreement;
provided, however, that this Section 2.2(a)(v) shall not
apply to any liability resulting from or arising out of any
Pittston Indemnified Person's conduct in bad faith or
willful misconduct; and
(vi) any failure by Buyer to satisfy the Assumed Liabilities.
(b) The foregoing notwithstanding, Buyer shall not be required to
indemnify any Pittston Indemnified Persons with respect to the
matters described in Sections 2.2(a)(i) and 2.2(a)(ii):
(i) unless and until the sum of (A) Adverse Consequences for
which indemnification pursuant to (1) Sections 2.2(a)(i) and
2.2(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of
the Other Indemnification Agreements is sought plus (B) any
amounts paid by PCC to obtain any of the consents listed on
Schedule 6.1(e)(ii) of the Acquisition Agreement or in
Schedule 6.1(e)(ii) of the Other Acquisition Agreements
shall exceed the Basket, in which case the entire amount of
such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted on or before the
second anniversary of the Closing Date pursuant to Section
2.3; and
8
(iii) for any matter, to the extent that the aggregate amount of
Adverse Consequences for which the Pittston Indemnified
Persons have been indemnified pursuant to Sections 2.2(a)(i)
and 2.2(a)(ii) or in Sections 2.1(a)(i) and 2.1(a)(ii) of
the Other Indemnification Agreements exceeds the Cap.
(c) Notwithstanding the foregoing, Buyer agrees that any claim by a
Pittston Indemnified Person for indemnification (i) arising out
of, relating to, in the nature of or caused by any breach of
Buyer's representations specified in Sections 4.1, 4.2, 4.3 and
4.4 of the Acquisition Agreement or (ii) pursuant to Sections
2.2(a)(iii) through 2.2(a)(vi), shall not be subject to the
provisions of paragraph (b) of this Section 2.2.
(d) Notwithstanding the foregoing, nothing in Section 2.2(a)(iii)
shall diminish the right of any Buyer Indemnified Person to seek
indemnification from PCC after the Closing Date pursuant to the
terms of this Agreement.
(e) Buyer agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Pittston
Indemnified Persons for Adverse Consequences suffered through and
after the date of the claim for indemnification (including any
Adverse Consequences Pittston Indemnified Persons may suffer
after the end of any applicable survival period, as long as a
claim for indemnification is made before the end of the
applicable survival period and the Adverse Consequences suffered
relate to such claim).
2.3. Indemnification Procedures.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved pursuant to this Section 2.3.
9
(b) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice (a "Claim Notice") to the
party required to provide such indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has notice of any
Adverse Consequence which may give rise to a claim for
indemnification against the other party under this Agreement,
provided, however, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is
prejudiced. The Indemnified Party shall not be required to
commence litigation or take any action against any third party
prior to delivery of the Claim Notice.
(c) The Indemnifying Party will have the right (at its expense) to
assume the investigation and/or defense of any Adverse
Consequence or any litigation resulting therefrom so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing
(within 20 days after the Indemnified Party has given the Claim
Notice) that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of the Adverse
Consequence, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial
resources to defend, and otherwise indemnify for, the Adverse
Consequence and fulfill its indemnification obligations hereunder
and (iii) the Adverse Consequence involves only money damages and
does not seek an injunction or other equitable relief.
(d) So long as the Indemnifying Party is conducting the defense of
the Adverse Consequence in accordance with Section 2.3(c), (A)
the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Adverse
Consequence, (B) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect
10
to the Adverse Consequence without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably), and (C)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Adverse
Consequence without the prior written consent of the Indemnified
Party; provided, that the Indemnifying Party may consent to such
judgment or enter into such settlement without the prior written
consent of the Indemnified Party so long as an unconditional term
of any such judgment or settlement includes the giving by the
claimant or plaintiff to the Indemnified Party of a release from
all liability with respect to such Adverse Consequence.
(e) In the event any of the conditions in Section 2.3(c) is or
becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Adverse Consequence in
any manner it may reasonably deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly
and periodically for the costs of defending against the Adverse
Consequence (including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequence the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of or caused by
the Adverse Consequence to the fullest extent provided in this
Agreement.
2.4. Insurance Proceeds.
The amount of any indemnification payable in connection with any
transaction contemplated by this Agreement or the Acquisition Agreement shall be
net of any insurance proceeds available, under any insurance policies in effect
at the time that are maintained in the Ordinary Course of Business, to a Buyer
Indemnified Person or a Pittston Indemnified Person, respectively, in connection
11
with the events or circumstances giving rise to the indemnification. For
purposes of this Section 2.4, any pollution and legal liability insurance
policies or an insurance policy covering loss in connection with the
representations and warranties contained in the Acquisition Agreement will be
deemed not to be maintained in the Ordinary Course of Business.
2.5. Exclusivity of Rights and Procedures.
The parties agree that, except as set forth in Article VII of the
Acquisition Agreement or in any Articles titled "Certain Tax Matters" of the
Other Acquisition Agreements, this Agreement shall constitute the sole and
exclusive remedy of the parties hereto with respect to the subject matters
addressed in this Agreement, the Acquisition Agreement and the transactions
contemplated by the Acquisition Agreement. Each party to this Agreement hereby
waives and releases the other parties from any and all claims and other causes
of action, including claims for contribution, related to those subject matters,
other than claims (i) pursuant to the terms of this Agreement, (ii) related to
the Retained Liabilities (in the case of Buyer Indemnified Persons) or the
Assumed Liabilities (in the case of the Pittston Indemnified Persons), (iii) for
fraud, and (iv) for injunctive relief.
ARTICLE III
GUARANTIES
3.1. Pittston Guaranty.
(a) Pittston hereby irrevocably and unconditionally guarantees to
Buyer (the "Pittston Guaranty") the full and punctual performance
and compliance by PCC with each and every covenant, term and
condition to be performed or complied with by PCC under this
Agreement and the Acquisition Agreement. The Pittston Guaranty
expressed in this Section 3.1 is an absolute, present, primary
12
and continuing guaranty of performance and compliance and not of
collectibility and is in no way conditioned or contingent upon
any attempt to enforce such performance or compliance by PCC or
upon any other condition or contingency.
(b) Pittston hereby expressly waives (i) notice of acceptance of the
Pittston Guaranty and (ii) any other notice given to PCC in
accordance with the provisions of the Agreement on any default
under the Agreement or otherwise. Pittston hereby authorizes
Buyer to forbear with respect to, amend, modify, enlarge, extend,
compromise and discharge any or all of the obligations of PCC
under the Agreement without notice to or consent by Pittston.
Pittston acknowledges and agrees that its liability under the
Pittston Guaranty is joint and several with PCC and, upon any
default by PCC, Buyer shall not be obligated to first attempt
enforcement against PCC. Pittston hereby waives any and all
defenses to enforcement of the Pittston Guaranty, now existing or
hereafter arising, which may be available to guarantors, sureties
and other secondary parties at law or in equity.
(c) Pittston represents and warrants to Buyer that (i) Pittston is a
corporation validly existing and in good standing under the laws
of the Commonwealth of Virginia; (ii) all necessary corporate
action has been duly taken by it to authorize the execution,
delivery and performance by it of the Pittston Guaranty, (iii)
the Pittston Guaranty is being executed on Pittston's behalf by a
duly authorized representative, (iv) the Pittston Guaranty is the
legally valid and binding obligation of Pittston enforceable in
accordance with its terms, and (v) the execution and the delivery
of the Pittston Guaranty will not (A) conflict with, or result in
a violation or breach of, or a default, right to accelerate,
right to exercise any remedy or loss of rights under, or result
in the creation of any Lien (other than Permitted Liens) under or
pursuant to, any provision of Pittston's Articles of
Incorporation or Bylaws or of any material franchise, mortgage,
13
deed of trust, lease, license, instrument, agreement, consent,
approval, waiver or understanding to which Pittston is a party or
by which Pittston is bound, or any Law or any order, judgment,
writ, injunction or decree to which Pittston is a party or by
which Pittston may be bound or affected; (B) require the
approval, consent or authorization of, prior notice to, or filing
or registration with any Governmental Authority or contravene,
conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel or terminate any authorization
or permit issued by a Governmental Authority that is held by
Pittston or that otherwise relates to the Pittston's business; or
(C) give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which
Pittston is subject.
(d) Pittston agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by
Buyer Indemnified Persons in enforcing Pittston's liability to
Buyer Indemnified Persons under the Pittston Guaranty whether or
not a civil action or similar proceeding (including claims and
proceedings in and before the bankruptcy court or arbitrators) is
filed, prosecuted or appealed. If an action or proceeding is
filed, prosecuted or appealed, the reasonableness of such
attorney fees shall be determined by the trial judge and if,
appealed, by the appellate court.
(e) The Pittston Guaranty shall be binding upon Pittston and its
successors and assigns, and shall inure to the benefit of and be
enforceable by Buyer and its successors and assigns. For purposes
of the Pittston Guaranty, Pittston shall be deemed to include the
surviving entity in any merger or consolidation involving
Pittston, which survivor shall be bound by the provisions of the
Pittston Guaranty and this Agreement.
14
3.2. Buyer's Ultimate Parent Guaranty.
(a) Buyer's Ultimate Parent hereby irrevocably and unconditionally
guarantees to PCC (the "Buyer's Ultimate Parent Guaranty") the
full and punctual performance and compliance by Buyer with each
and every covenant, term and condition to be performed or
complied with by Buyer under this Agreement, the Acquisition
Agreement, the Promissory Note and the Royalty Agreement. Buyer's
Ultimate Parent Guaranty expressed in this Section 3.2 is an
absolute, present, primary and continuing guaranty of performance
and compliance and not of collectibility and is in no way
conditioned or contingent upon any attempt to enforce such
performance or compliance by Buyer or upon any other condition or
contingency.
(b) Buyer's Ultimate Parent hereby expressly waives (i) notice of
acceptance of Buyer's Ultimate Parent Guaranty and (ii) any other
notice given to Buyer in accordance with the provisions of the
Agreement on any default under the Agreement or otherwise.
Buyer's Ultimate Parent hereby authorizes PCC to forbear with
respect to, amend, modify, enlarge, extend, compromise and
discharge any or all of the obligations of Buyer under the
Agreement without notice to or consent by Buyer's Ultimate
Parent. Buyer's Ultimate Parent acknowledges and agrees that its
liability under Buyer's Ultimate Parent Guaranty is joint and
several with Buyer and, upon any default by Buyer, PCC shall not
be obligated to first attempt enforcement against Buyer. Buyer's
Ultimate Parent hereby waives any and all defenses to enforcement
of Buyer's Ultimate Parent Guaranty, now existing or hereafter
arising, which may be available to guarantors, sureties and other
secondary parties at law or in equity.
(c) Buyer's Ultimate Parent represents and warrants to PCC that (i)
Buyer's Ultimate Parent is a limited liability company validly
existing and in good standing under the laws of the State of
Delaware; (ii) all necessary corporate action has been duly taken
15
by it to authorize the execution, delivery and performance by it
of Buyer's Ultimate Parent Guaranty, (iii) Buyer's Ultimate
Parent Guaranty is being executed on Buyer's Ultimate Parent's
behalf by a duly authorized representative, (iv) Buyer's Ultimate
Parent Guaranty is the legally valid and binding obligation of
Buyer's Ultimate Parent enforceable in accordance with its terms,
and (v) the execution and the delivery of Buyer's Ultimate Parent
Guaranty will not (A) conflict with, or result in a violation or
breach of, or a default, right to accelerate, right to exercise
any remedy or loss of rights under, or result in the creation of
any Lien (other than Permitted Liens) under or pursuant to, any
provision of Buyer's Ultimate Parent's Certificate of Formation,
Operating Agreement or other organizational documents or of any
material franchise, mortgage, deed of trust, lease, license,
instrument, agreement, consent, approval, waiver or understanding
to which Buyer's Ultimate Parent is a party or by which Buyer's
Ultimate Parent is bound, or any Law or any order, judgment,
writ, injunction or decree to which Buyer's Ultimate Parent is a
party or by which Buyer's Ultimate Parent may be bound or
affected; (B) require the approval, consent or authorization of,
prior notice to, or filing or registration with any Governmental
Authority or contravene, conflict with or result in a violation
of any of the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel or
terminate any authorization or permit issued by a Governmental
Authority that is held by Buyer's Ultimate Parent or that
otherwise relates to Buyer's Ultimate Parent's business; or (C)
give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which
Buyer's Ultimate Parent is subject.
(d) Buyer's Ultimate Parent agrees to pay all reasonable costs and
expenses, including reasonable attorney fees and related costs,
16
incurred by the Pittston Indemnified Persons in enforcing Buyer's
Ultimate Parent's liability to the Pittston Indemnified Persons
under Buyer's Ultimate Parent Guaranty whether or not a civil
action or similar proceeding (including claims and proceedings in
and before the bankruptcy court or arbitrators) is filed,
prosecuted or appealed. If an action or proceeding is filed,
prosecuted or appealed, the reasonableness of such attorney fees
shall be determined by the trial judge and if, appealed, by the
appellate court.
(e) Buyer's Ultimate Parent Guaranty shall be binding upon Buyer's
Ultimate Parent and its successors and assigns, and shall inure
to the benefit of and be enforceable by PCC and its successors
and assigns. For purposes of Buyer's Ultimate Parent Guaranty,
Buyer's Ultimate Parent shall be deemed to include the surviving
entity in any merger or consolidation involving Buyer's Ultimate
Parent, each of whom shall be bound by the provisions of the
Buyer's Ultimate Parent Guaranty and this Agreement.
ARTICLE IV
SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
ARTICLE V
NOTICES
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other parties in the
manner provided by this Article V:
17
if to PCC or Pittston, to them at:
Pittston Coal Company
448 N.E. Main Street
P. O. Box 5100
Lebanon, Virginia 24266
Attention: President
with a copy to:
Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P. O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
and a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
if to Buyer:
Alpha Land and Reserves, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
18
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
if to Buyer's Ultimate Parent, to it at:
Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
19
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
ARTICLE VI
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but this
Agreement and the rights, interests or obligations hereunder shall not be
assignable by Buyer's Ultimate Parent, Buyer, Pittston or PCC without the prior
written consent of the other parties and any attempt to make such an assignment
without such consent shall be void and of no effect.
ARTICLE VII
ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to designate an arbitrator within fourteen (14) calendar days after arbitration
is requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
20
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Article VII shall be the exclusive means to resolve all
Disputes.
ARTICLE VIII
MISCELLANEOUS
8.1. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
8.2. Integration.
This Agreement and any other agreement entered into contemporaneously with
this Agreement among PCC, Pittston, Buyer and Buyer's Ultimate Parent or the
Affiliates of any of them constitute the entire agreement and supercede all
prior agreements and understandings not reflected in the Acquisition Agreement,
both written and oral, among the parties with respect to the subject matter
hereof.
8.3. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument.
8.4. Governing Law.
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Commonwealth of Virginia, without
regard to the conflicts of laws principles thereof.
21
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ALPHA LAND AND RESERVES, LLC,
a Delaware limited liability company
By:/s/ Eddie Neely
------------------------------------------
Name: Eddie Neely
Title: Vice President
ALPHA NATURAL RESOURCES, LLC, a Delaware
limited liability company
By:/s/ Michael J. Quillen
------------------------------------------
Name: Mike Quillen
Title: President
PITTSTON COAL COMPANY,
a Delaware corporation
By:/s/ Michael D. Brown
------------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
THE PITTSTON COMPANY,
a Virginia corporation
By:/s/ James B. Hartough
-----------------------------------------
Name: James B. Hartough
Title: Vice President - Corporate Finance
and Treasurer
22
Schedule A
Asset Purchase Agreement by and between Pittston Coal Company and
Dickenson-Russell Coal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Paramont
Coal Company Virginia, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Coal Sales Co., LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Terminal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Maxxim
Rebuild Co., LLC, dated as of October 29, 2002, as amended.
23
Schedule B
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Dickenson-Russell Coal Company, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Paramont Coal Company Virginia, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Coal Sales Co., LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Terminal Company, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Maxxim Rebuild Co., LLC and Alpha Natural Resources, LLC,
dated as of December 13, 2002.
24
Exhibit 2.12
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
ALPHA COAL SALES CO., LLC
October 29, 2002
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS...................................................................................... 1
1.1. Affiliate..............................................................................................1
1.2. Agreement..............................................................................................2
1.3. Asset Sale Companies...................................................................................2
1.4. Assignment and Assumption Agreements...................................................................2
1.5. Assumed Liabilities....................................................................................2
1.6. Business...............................................................................................2
1.7. Buyer..................................................................................................2
1.8. Buyer Closing Certificate..............................................................................3
1.9. Buyer's Parent.........................................................................................3
1.10. Closing...............................................................................................3
1.11. Closing Date.........................................................................................3
1.12. Coal Act.............................................................................................3
1.13. Code..................................................................................................3
1.14. Contracts.............................................................................................3
1.15. Dispute...............................................................................................4
1.16. Governmental Authority................................................................................4
1.17. Indemnification and Guaranty Agreement................................................................4
1.18. Knowledge of PCC......................................................................................4
1.19. Law...................................................................................................4
1.20. Lien..................................................................................................4
1.21. Liability.............................................................................................5
1.22. Material Adverse Effect...............................................................................5
1.23. Ordinary Course of Business...........................................................................5
1.24. PCC...................................................................................................5
1.25. PCC Closing Certificate...............................................................................5
1.26. PCC Group.............................................................................................5
1.27. PCC Parent............................................................................................5
1.28. Permitted Liens.......................................................................................6
1.29. Person................................................................................................6
1.30. Pre-Closing Periods...................................................................................6
1.31. Purchase Price........................................................................................6
1.32. Purchased Assets......................................................................................6
1.33. Related Persons.......................................................................................6
1.34. Retained Liabilities..................................................................................6
1.35. Tax...................................................................................................7
1.36. Tax Return............................................................................................8
ARTICLE II PURCHASE AND SALE OF ASSETS..........................................................................8
2.1. Transfer of Assets...................................................................................8
2.2. Assignment and Assumption Agreements and Other Documents.............................................8
2.3. Assumption of Liabilities............................................................................9
2.4. Proration of Liabilities; Payment Reimbursement......................................................9
2.5. Indemnification and Guaranty Agreement...............................................................9
2.6. Additional Documents.................................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PCC..............................................................10
3.1. Incorporation.........................................................................................10
3.2. Execution, Delivery and Performance...................................................................10
3.3. Authorization.........................................................................................11
3.4. Contracts.............................................................................................12
3.5. Litigation; Claims....................................................................................13
3.6. No Broker.............................................................................................13
3.7. Undisclosed Liabilities...............................................................................13
3.8. Legal Compliance......................................................................................14
3.9. Transactions with Affiliates..........................................................................14
3.10. Disclosure...........................................................................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................14
4.1. Organization........................................................................................15
4.2. Execution, Delivery and Performance.................................................................15
4.3. Authorization.......................................................................................15
4.4. No Broker...........................................................................................16
4.5. Financing...........................................................................................16
4.6. Disclosure..........................................................................................16
ARTICLE V CERTAIN COVENANTS....................................................................................16
5.1. Operation in Ordinary Course........................................................................16
5.2. Compliance with Law.................................................................................17
5.3. Cooperation.........................................................................................17
5.4. Notices and Consents................................................................................18
5.5. Publicity...........................................................................................18
5.6. Exclusivity.........................................................................................19
5.7. Access..............................................................................................19
5.8. Notice of Developments..............................................................................20
5.9. Further Assurances..................................................................................20
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.....................................................................20
6.1. Conditions Precedent to Each Party's Obligations....................................................20
6.2. Conditions Precedent to Obligations of Buyer........................................................22
6.3. Conditions Precedent to Obligations of PCC..........................................................23
ARTICLE VII TERMINATION........................................................................................25
7.1. Termination...........................................................................................25
7.2. Effect of Termination.................................................................................26
ARTICLE VIII MISCELLANEOUS.....................................................................................27
8.1. Entire Agreement......................................................................................27
8.2. Amendment.............................................................................................27
8.3. Extension; Waiver.....................................................................................27
8.4. Expenses..............................................................................................28
8.5. Bulk Sales Waiver.....................................................................................28
8.6. Governing Law.........................................................................................28
8.7. Assignment............................................................................................28
8.8. Notices...............................................................................................28
8.9. Counterparts; Headings................................................................................30
8.10. Interpretation; Construction.........................................................................30
8.11. Severability.........................................................................................30
8.12. No Reliance..........................................................................................30
8.13. Retention of and Access to Records...................................................................31
8.14. Arbitration..........................................................................................31
EXHIBITS
Exhibit A Assignment and Assumption Agreements
Exhibit B Buyer Closing Certificate
Exhibit C Indemnification and Guaranty Agreement
Exhibit D PCC Closing Certificate
Exhibit E Opinion of Counsel to PCC
Exhibit F Opinion of Counsel to Buyer
SCHEDULES
Schedule 1.3 Asset Sale Companies
Schedule 1.14 Contracts of Asset Sale Companies
Schedule 1.18 Knowledge of PCC
Schedule 1.28 Permitted Liens
Schedule 1.34(c) Excluded Contracts
Schedule 3.1 Foreign States
Schedule 3.2 Conflicts
Schedule 3.4(b) Contract Exceptions
Schedule 3.4(c) Consents
Schedule 3.5 Litigation; Claims
Schedule 3.9 Transactions with Affiliates
Schedule 5.4(a) PCC Consents
Schedule 5.4(b) Buyer Consents
Schedule 6.1(e)(i) PCC Material Consents
Schedule 6.1(e)(ii) Buyer Material Consents
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 29th day of October, 2002,
by and between PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), and ALPHA
COAL SALES CO., LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, PCC owns, directly or indirectly, all of the outstanding capital
stock of the corporations listed on Schedule 1.3 (the "Asset Sale Companies");
WHEREAS, PCC desires to cause to be sold and assigned, and Buyer desires to
purchase and assume, certain of the assets and certain of the Liabilities (as
hereinafter defined) of the Asset Sale Companies;
WHEREAS, PCC desires to cause the Asset Sale Companies to retain certain
assets and certain Liabilities;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PCC and Buyer agree
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1. Affiliate.
"Affiliate" shall mean, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, none of Dominion Terminal Associates or any of its partners,
other than Pittston Coal Terminal Corporation, shall be deemed an Affiliate of
PCC or any of its Affiliates.
1
1.2. Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, which are incorporated into this Asset
Purchase Agreement by this reference, as the same may be amended from time to
time in accordance with the terms hereof.
1.3. Asset Sale Companies.
"Asset Sale Companies" shall have the meaning given to it in the Recitals
to this Agreement. The term "Asset Sale Company" shall mean one of the Asset
Sale Companies.
1.4. Assignment and Assumption Agreements.
"Assignment and Assumption Agreements" shall mean the assignment and
assumption agreements substantially in the form of Exhibit A attached hereto.
1.5. Assumed Liabilities.
"Assumed Liabilities" shall mean the performance of any and all obligations
required to be performed under the Contracts by Buyer from and after the Closing
other than any Retained Liabilities.
1.6. Business.
"Business" shall mean the coal sale business conducted by the Asset Sale
Companies using the Purchased Assets.
1.7. Buyer.
"Buyer" shall have the meaning given to it in the preamble of this
Agreement.
2
1.8. Buyer Closing Certificate.
"Buyer Closing Certificate" shall mean the certificate of Buyer
substantially in the form of Exhibit B attached hereto.
1.9. Buyer's Parent.
"Buyer's Parent" shall mean Alpha Natural Resources, LLC, a Delaware
limited liability company.
1.10. Closing.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement beginning at 10:00 a.m., local time, on the Closing Date, at the
offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia 23219.
1.11. Closing Date.
"Closing Date" shall mean November 30, 2002 or such other date as the
parties may mutually agree in writing.
1.12. Coal Act.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of 1992
as amended through the Closing Date (codified at Subtitle J of the Code).
1.13. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate, any predecessor or successor provisions of Law, and all regulations
thereunder.
1.14. Contracts.
"Contracts" shall mean the contracts, agreements, relationships and
commitments, written or oral, of the Asset Sale Companies listed on Schedule
1.14.
3
1.15. Dispute.
"Dispute" shall have the meaning set forth in Section 8.14 hereof.
1.16. Governmental Authority.
"Governmental Authority" shall mean any governmental, judicial,
legislative, executive, administrative or regulatory authority of the United
States, or of any foreign, state or local government or any subdivision, agency,
commission, office, authority or bureau thereof or any quasi-governmental entity
or authority of any nature.
1.17. Indemnification and Guaranty Agreement.
"Indemnification and Guaranty Agreement" shall mean the agreement by and
among PCC Parent, PCC, Buyer and Buyer's Parent substantially in the form of
Exhibit C attached hereto.
1.18. Knowledge of PCC.
"Knowledge of PCC" shall mean, for the individuals listed on Schedule 1.18,
any such individual's actual knowledge and what any such individual should have
known after reasonable inquiry within the scope of that individual's job
responsibilities.
1.19. Law.
"Law" and "Laws" shall mean any applicable United States or foreign,
federal, state, local or other law or governmental requirement of any kind, and
the rules, regulations and orders promulgated thereunder.
1.20. Lien.
"Lien" shall mean any lien, encumbrance, mortgage, charge, claim,
restriction, pledge, security interest or imposition of any kind.
4
1.21. Liability.
"Liability" shall mean any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), including any
liability for Taxes. Liabilities shall mean one or more items of Liability.
1.22. Material Adverse Effect.
"Material Adverse Effect" shall mean any event, change or occurrence that
individually, or together with any other event, change or occurrence, has a
material adverse impact on the Business, taken as a whole, without regard to the
duration of such material adverse impact.
1.23. Ordinary Course of Business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency). 1.24. PCC.
"PCC" shall have the meaning given to it in the preamble to this Agreement.
1.25. PCC Closing Certificate.
"PCC Closing Certificate" shall mean the certificate of PCC substantially
in the form of Exhibit D attached hereto.
1.26. PCC Group.
"PCC Group" shall have the meaning given to it in Section 1.34.
1.27. PCC Parent.
"PCC Parent" shall mean The Pittston Company, a Virginia corporation.
5
1.28. Permitted Liens.
"Permitted Liens" shall mean those Liens affecting the Purchased Assets
that are listed on Schedule 1.28.
1.29. Person.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Authority.
1.30. Pre-Closing Periods.
"Pre-Closing Periods" shall mean any taxable period ending on or before the
Closing Date.
1.31. Purchase Price.
"Purchase Price" shall mean $2,000,000.
1.32. Purchased Assets.
"Purchased Assets" shall mean the rights of the Asset Sale Companies with
respect to the Contracts, other than the rights to payment for any coal that has
been delivered or shipped prior to Closing Date to any customer, whether or not
invoiced.
1.33. Related Persons.
"Related Persons" shall mean related persons as that term is defined in
Section 9701(c)(2) of the Coal Act, except that it shall not include successors
in interest.
1.34. Retained Liabilities.
"Retained Liabilities" shall mean (a) all Liability of each Asset Sale
Company for any coal that has been shipped or delivered prior to Closing Date to
any customer, whether or not invoiced, (b) (1) all Liabilities, if any, of the
Asset Sale Companies and its Related Persons (collectively, the "PCC Group")
6
under the Coal Act, and (2) all Liabilities, if any, of the PCC Group under any
post-Closing amendments to the Coal Act for (i) beneficiaries eligible under the
Coal Act who are assigned to a member of the PCC Group or for whom a member of
the PCC Group is required to provide or pay for medical benefits pursuant to
Sections 9711 or 9712 of the Coal Act or (ii) death benefit premiums or
unassigned beneficiary premiums (as those terms are used in Sections 9704(c) and
9704(d) of the Coal Act) for beneficiaries eligible under the Coal Act, that are
assessed against any member of the PCC Group; provided, for the avoidance of
doubt, that the Liabilities retained pursuant to (b)(1) and (b)(2) above shall
not be affected by Buyer or any of its Affiliates being identified under the
Coal Act or any post-Closing amendments thereto as a successor, successor in
interest or "Related person" under the Coal Act or any post-Closing amendments
thereto to any member of the PCC Group solely as a result of Buyer's purchase of
the Purchased Assets and (c) all Liabilities under the contracts, agreements,
personal and real property leases, relationships and commitments of the Asset
Sale Companies listed on Schedule 1.34(c).
1.35. Tax.
"Tax" or "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
custom duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, reclamation fees or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, but shall not
include, for purposes of this Agreement only, Liabilities under the Coal Act, of
whatever nature and regardless of how denominated.
7
1.36. Tax Return.
"Tax Return" shall mean any original or amended report, return,
declaration, claim for refund, statement, document, schedule, attachment or
other information supplied or required to be supplied to a Governmental
Authority with respect to Taxes, including any return of an affiliated, combined
or unitary group.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets.
On the Closing Date, PCC (on behalf of the Asset Sale Companies) shall
cause to be sold, conveyed, transferred, assigned, and delivered to Buyer, and
Buyer shall acquire, the Purchased Assets. At the Closing, subject to the terms
and conditions of this Agreement, PCC agrees to: (i) cause all rights in the
Purchased Assets to be transferred and delivered to Buyer; and (ii) perform its
obligations under this Agreement to be performed at or before Closing. In full
payment for the Purchased Assets, Buyer shall: (i) assume the Assumed
Liabilities; (ii) pay to PCC (which shall receive such amounts on behalf of the
Asset Sale Companies) the Purchase Price by wire transfer of cash or other
immediately available funds; and (iii) perform its obligations under this
Agreement to be performed at or before Closing. Buyer shall not assume or have
any responsibility with respect to any Liability of PCC Parent, PCC or the Asset
Sale Companies that is not an Assumed Liability.
2.2. Assignment and Assumption Agreements and Other Documents.
At the Closing, PCC shall cause each of the Asset Sale Companies to: (i)
execute and deliver to Buyer the Assignment and Assumption Agreements and such
other documents as may be necessary to convey to Buyer the Purchased Assets; and
(ii) perform its obligations under the Agreement to be performed at or before
the Closing.
8
2.3. Assumption of Liabilities.
At the Closing, Buyer shall execute and deliver to PCC the Assignment and
Assumption Agreements and such other documents and instruments as may be
necessary for Buyer to assume all of the Assumed Liabilities. Buyer shall not
assume or have any responsibility, however, with respect to any Liability of PCC
Parent, PCC or the Asset Sale Companies that is not an Assumed Liability.
2.4. Proration of Liabilities; Payment Reimbursement.
PCC and Buyer shall cooperate with each other to provide for payments due
with respect to the Assumed Liabilities. If, following the Closing, Buyer or any
of its post-Closing Affiliates receives any payment in any form with respect to
any Asset Sale Company (other than the Purchased Assets) that should have been
paid to PCC or its Affiliates, Buyer shall forward, or shall cause such
post-Closing Affiliate to forward, such payment to PCC within five business days
of receipt. If, following the Closing, PCC or any of its post-Closing Affiliates
receives any payment in any form with respect to the Purchased Assets that
should have been paid to Buyer or its Affiliates, PCC shall forward, or shall
cause such post-Closing Affiliate to forward, such payment to Buyer within five
business days of receipt.
2.5. Indemnification and Guaranty Agreement.
At the Closing, PCC, PCC Parent, Buyer's Parent and Buyer shall execute and
deliver the Indemnification and Guaranty Agreement.
2.6. Additional Documents.
At the Closing, PCC and Buyer shall, and PCC shall cause the Asset Sale
Companies to, execute and deliver all such other documents or instruments
necessary or appropriate to effect the transactions contemplated by this
Agreement, including the documents provided in this Article II.
9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PCC
PCC hereby represents and warrants to Buyer that the statements contained
in this Article III are correct and complete, except as set forth in the
Schedules delivered by PCC to Buyer in connection with this Agreement. The
Schedules are arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article III.
3.1. Incorporation.
PCC and each of the Asset Sale Companies are corporations duly organized,
validly existing and in good standing under the Laws of the respective state or
commonwealth of each such company's incorporation. PCC and each of the Asset
Sale Companies that is not a corporation incorporated under the Laws of Virginia
are duly qualified or licensed to transact business as a foreign corporation in
Virginia and are in good standing under the Laws of Virginia. Set forth on
Schedule 3.1 is the name of each state or other jurisdiction in which each such
company has either paid taxes or had an office in the three years prior to the
date of this Agreement.
3.2. Execution, Delivery and Performance.
The execution, delivery and performance by PCC of this Agreement and by PCC
and the applicable Asset Sale Company of each other agreement or instrument to
which it is a party executed in connection herewith or delivered pursuant hereto
and the consummation of the transactions contemplated herein and therein will
not, with or without the giving of notice or the passage of time, or both: (i)
conflict with, or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under, or result in
10
the creation of any Lien (other than Permitted Liens) under or pursuant to, any
provision of PCC's or any Asset Sale Company's Articles of Incorporation or
Bylaws or of any material franchise, mortgage, deed of trust, Lien, lease,
license, instrument, agreement, consent, approval, waiver or understanding to
which PCC or any Asset Sale Company is a party or by which any Asset Sale
Company is bound, or any Law or any order, judgment, writ, injunction or decree
to which PCC or any Asset Sale Company is a party or by which PCC, any Asset
Sale Company or the Purchased Assets may be bound or affected; (ii) require the
approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or contravene, conflict with or
result in a violation of any of the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel or
terminate any authorization issued by a Governmental Authority that is held by
PCC or the Asset Sale Companies or that otherwise relates to the Purchased
Assets; or (iii) give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated hereunder or exercise any remedy
or obtain any relief under any Law to which PCC or any Asset Sale Company is
subject.
3.3. Authorization.
PCC has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder and each of PCC and the Asset Sale
Companies has full power and authority to enter into and deliver each other
agreement or instrument to which it is a party executed in connection herewith
and delivered pursuant hereto and to perform its obligations thereunder. PCC's
execution, delivery and performance of this Agreement and the execution,
delivery and performance of all other agreements and instruments by PCC and each
of the Asset Sale Companies in connection herewith and delivered pursuant hereto
and the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of PCC and each of the Asset Sale
11
Companies. This Agreement and all other agreements or instruments executed by
PCC or any of the Asset Sale Companies in connection herewith and delivered by
PCC or any of the Asset Sale Companies pursuant hereto have been duly executed
and delivered by PCC or such Asset Sale Companies and this Agreement and all
other agreements and instruments executed by PCC or any of the Asset Sale
Companies in connection herewith and delivered by PCC or any of the Asset Sale
Companies pursuant hereto constitute the legal, valid and binding obligation of
PCC or such Asset Sale Company, as the case may be, enforceable in accordance
with their respective terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally the
enforcement of creditors' rights).
3.4. Contracts.
(a) PCC has made available to Buyer copies of all of the written
Contracts, or a written summary setting forth the terms and
conditions where no copies exist, including all amendments,
modifications, waivers and elections applicable thereto.
(b) As to the Asset Sale Companies party thereto: (i) the Contracts
are valid and binding, enforceable in accordance with their
respective terms (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights), and
are in full force and effect; (ii) the consummation of the
transactions contemplated herein will not, with or without the
giving of notice or the passage of time, or both, conflict with,
or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under
the Contracts; (iii) no Asset Sale Company, nor to the Knowledge
of PCC, any other party is in material breach or default, and no
event has occurred that, with notice or lapse of time, would
constitute a breach or default, or permit termination,
modification or acceleration, under the Contracts; and (iv) no
Asset Sale Company, nor to the Knowledge of PCC, any other party
has repudiated any provision of the Contracts.
12
(c) Schedule 3.4(c) sets forth the consents and approvals of third
parties and Governmental Authorities required to be obtained as a
result of the transactions contemplated by this Agreement.
3.5. Litigation; Claims.
Schedule 3.5 lists all claims, legal actions, suits, litigation,
arbitrations, disputes, investigations, proceedings by or before any
Governmental Authority involving more than $100,000 and all orders, decrees or
judgments, now pending or in effect, or, to the Knowledge of PCC, threatened or
contemplated, against or affecting the Asset Sale Companies, the Purchased
Assets, or the consummation of the transactions contemplated by this Agreement,
except to the extent involving Taxes for Pre-Closing Periods.
3.6. No Broker.
None of the Asset Sale Companies, PCC or the PCC Parent has had any
dealings, negotiations or communications with or retained any broker or other
intermediary in connection with the transactions contemplated by this Agreement
and none of the foregoing is committed to any Liability for any brokers' or
finders' fees or any similar fees in connection with the transactions
contemplated hereby, other than Rothschild Inc., who shall be compensated solely
by PCC or an Affiliate of PCC.
3.7. Undisclosed Liabilities.
As it may affect the Purchased Assets, none of the Asset Sale Companies has
any material Liability (and there is no basis for any present or future action,
13
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability), except for the Liabilities
represented by the Contracts.
3.8. Legal Compliance.
As it may affect the Purchased Assets, each of the Asset Sale Companies and
their respective predecessors and Affiliates has complied in all material
respects with all Laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of federal, state,
local and foreign governments (and all agencies thereof) and no material action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand or
notice has been filed or commenced against any of them alleging any failure so
to comply.
3.9. Transactions with Affiliates.
The Contracts do not include any Liability between any Asset Sale Company
and any Affiliate of such Asset Sale Company.
3.10. Disclosure.
The representations and warranties contained in this Article III do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article III not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to PCC that:
14
4.1. Organization.
Buyer is a duly formed limited liability company, validly existing and in
good standing under the Laws of the State of Delaware.
4.2. Execution, Delivery and Performance.
The execution, delivery and performance of this Agreement and each other
agreement or instrument executed in connection herewith or delivered pursuant
hereto and the consummation of the transactions contemplated herein and therein
will not, with or without the giving of notice or the passage of time, or both,
(i) conflict with, or result in a violation or breach of, or a default, right to
accelerate or loss of rights under, or result in the creation of any Lien, under
or pursuant to, any provision of Buyer's organizational documents or of any
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding, any Law, or any finding, order,
judgment, writ, injunction or decree to which Buyer is a party or by which Buyer
or its respective assets may be bound or affected; or (ii) require the approval,
consent or authorization of, or prior notice to, filing with or registration
with, any Governmental Authority, or any other Person or entity.
4.3. Authorization.
Buyer has full power and authority to enter into and deliver this
Agreement, and each other agreement or instrument (to which it is a party)
executed in connection herewith or delivered pursuant hereto and to perform its
obligations hereunder and thereunder. Buyer's execution, delivery and
performance of this Agreement and all other agreements and instruments executed
in connection herewith or delivered pursuant hereto and the transactions
contemplated hereby have been duly authorized by all requisite action. This
Agreement and all other agreements or instruments executed by Buyer in
connection herewith or delivered by Buyer pursuant hereto have been duly
15
executed and delivered by Buyer and this Agreement and all other agreements and
instruments executed by Buyer in connection herewith or delivered by Buyer
pursuant hereto constitute Buyer's legal, valid and binding obligation,
enforceable in accordance with their respective terms (subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights).
4.4. No Broker.
Buyer has had no dealings, negotiations or communications with any broker
or other intermediary in connection with the transactions contemplated by this
Agreement nor is it committed to any Liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated hereby.
4.5. Financing.
Buyer will have available to it, at the Closing, financial resources
sufficient to consummate the transactions contemplated by this Agreement.
4.6. Disclosure.
The representations and warranties contained in this Article IV do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article IV not misleading.
ARTICLE V
CERTAIN COVENANTS
5.1. Operation in Ordinary Course.
Except as provided in this Agreement, between the date of this Agreement
and the Closing, PCC shall cause each of the Asset Sale Companies, in relation
to the Purchased Assets, to: (i) carry on its business in the Ordinary Course of
Business; (ii) use commercially reasonable efforts to preserve intact its
16
current business organization and properties until the Closing Date, and
maintain the relations and good will with its suppliers, customers, landlords,
creditors, agents, and others having business relationships with such Asset Sale
Company; (iii) not enter into any contract modification or other obligation
binding upon the Purchased Assets or an expenditure, purchase, sale, cost or
commitment in excess of $100,000, except such coal sales agreements pursuant to
which all obligations will be satisfied prior to Closing; and (iv) report
regularly to Buyer concerning the status of the business and finances of such
Asset Sale Company.
5.2. Compliance with Law.
Between the date of this Agreement and the Closing, each of the Asset Sale
Companies shall comply in all material respects with all Laws and with all
orders of any Governmental Authority.
5.3. Cooperation.
Subject to the terms and conditions herein provided, each of PCC and Buyer
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper and
advisable under Law, to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, PCC and Buyer will, and PCC will cause the Asset Sale Companies to,
execute any additional instruments reasonably necessary to consummate the
transactions contemplated hereby.
17
5.4. Notices and Consents.
PCC and Buyer each will use their commercially reasonable efforts to obtain
consents of all Governmental Authorities and other third parties necessary to
the consummation of the transactions contemplated by this Agreement. PCC shall
have responsibility for providing any notices to third parties that may be
required by the transactions contemplated by this Agreement and for obtaining,
or causing to be obtained, at its sole cost and expense, the consents listed on
Schedule 5.4(a) and Buyer shall have responsibility for obtaining, at its sole
cost and expense, all consents listed on Schedule 5.4(b), with the other party
in each case using its commercially reasonable efforts to assist the responsible
party in obtaining such consents.
5.5. Publicity.
All general notices, releases, statements and communications to any
employees, suppliers, distributors and customers of the Asset Sale Companies, to
the general public and to the press relating to the transactions contemplated by
this Agreement shall be made only at such times and in such manner as may be
mutually agreed upon by PCC and Buyer; provided, however, that either party
hereto (or, in the case of PCC, the PCC Parent) shall be entitled to make a
public announcement of the foregoing if: (a) in the opinion of its legal
counsel, such announcement is required to comply with Law or any listing
agreement with any national securities exchange or inter-dealer quotation
system; and (b) such disclosing party gives a reasonable period of notice and
opportunity to comment to the other party hereto of its intention to make such
public announcement; provided, that, failure to comment within 24 hours of
receipt of such notice shall be deemed a waiver of the opportunity to comment;
and provided, further, that nothing in this Section 5.5 shall operate to
prohibit any Asset Sale Company or Buyer from communicating, after the Closing
18
Date, with their respective suppliers, distributors, customers and Governmental
Authorities the fact that the transaction has occurred or to employees regarding
their employment or the terms and conditions thereof, the operation of the
Purchased Assets or matters necessarily related thereto.
5.6. Exclusivity.
PCC will not (nor will it cause or permit any of the Asset Sale Companies
to) (i) solicit, initiate or encourage the submission of any proposal or offer
from any Person relating directly or indirectly to the acquisition of the
Purchased Assets, or any portion thereof, or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. PCC will notify Buyer immediately if
any Person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
5.7. Access.
At or prior to the Closing Date, PCC will permit (and will cause each of
the Asset Sale Companies to permit) representatives of Buyer to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Asset Sale Companies, to all premises, properties,
personnel, books, records (including Tax records), contracts and documents of or
pertaining to each of the Asset Sale Companies as related to the Purchased
Assets. Copies of and access to accounting records, ledgers and other pertinent
documents or work papers related to the Purchased Assets will be made available
to Buyer at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Asset Sale Companies, upon request.
19
5.8. Notice of Developments.
Each party will give prompt written notice to the other party of any
material adverse development causing a breach of any of its own representations
and warranties in Article III and Article IV above. No disclosure by any party
pursuant to this Section 5.8, however, shall be deemed to amend or supplement
the Schedules to such representations and warranties or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
5.9. Further Assurances.
The parties shall cooperate in a commercially reasonable manner with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the transactions
contemplated.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions precedent:
(a) no action, suit, proceeding, order, decree or injunction shall
have been commenced, threatened or entered by or before any
Governmental Authority that remains in force and that (i)
prohibits, seeks to prohibit, or imposes or seeks substantial
20
damages in connection with, the consummation of the transactions
contemplated by this Agreement, (ii) seeks or imposes relief that
causes or would cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (iii)
affects adversely the right of Buyer to own the Purchased Assets
or to operate the Business on or after the Closing Date;
(b) PCC Parent, PCC, Buyer and Buyer's Parent shall have executed and
delivered to each other party thereto the Indemnification and
Guaranty Agreement and any other documentation required by such
agreement, in form and substance as set forth in Exhibit C
attached hereto and the same shall be in full force and effect;
(c) all other transactions pursuant to which Buyer or any of its
Affiliates acquire assets related to the Business shall have been
consummated prior to or simultaneously with the transactions
contemplated by this Agreement;
(d) PCC and Buyer shall have executed and delivered to each other all
such other documents or instruments necessary or appropriate to
effect the transactions contemplated by this Agreement; and
(e) PCC shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(i) and PCC shall have provided
such payments as may be reasonably required to obtain all such
consents. Buyer shall have obtained, or caused to have been
obtained, the consents listed in Schedule 6.1(e)(ii) and Buyer
shall have provided such payments, guarantees and/or assurances
as may be reasonably required to obtain all such consents.
21
6.2. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions precedent:
(a) all of the representations and warranties of PCC set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or
limitation with respect to materiality (whether by reference to
"Material Adverse Effect" or otherwise), shall be true and
correct in all respects as of the date hereof and at and as of
the Closing Date with the same effect as though such
representations and warranties were made at and as of the Closing
unless the aggregate failure of such representations or
warranties to be true and correct does not have a Material
Adverse Effect; provided that if a representation or warranty is
expressly made only as of a specific date, it need only be true
and correct in all respects as of such date, and Buyer shall have
received the PCC Closing Certificate required by Section 6.2(g)
below dated as of the Closing Date executed by PCC to such
effect;
(b) all of the covenants and obligations that PCC is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects;
(c) all proceedings and actions, corporate or other, to be taken by
PCC or the Asset Sale Companies in connection with the
transactions contemplated by this Agreement and all documents
incident thereto, including all actions necessary to authorize
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, shall have been taken and shall
be reasonably satisfactory in form and substance to Buyer and
Buyer's counsel;
22
(d) PCC shall have, and shall have caused the Asset Sale Companies to
have, executed and delivered the Assignment and Assumption
Agreements and such other documents as may be necessary to convey
to Buyer the Purchased Assets;
(e) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that,
individually, or together with any other change, event or
occurrence, has had or could reasonably be expected to have a
Material Adverse Effect;
(f) Buyer shall have received an opinion of counsel to PCC addressed
to Buyer substantially in the form of Exhibit E; and
(g) Buyer shall have received an executed copy of the PCC Closing
Certificate.
6.3. Conditions Precedent to Obligations of PCC.
The obligation of PCC to consummate and cause the consummation of the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions precedent:
(a) all of the representations and warranties of Buyer set forth in
this Agreement or in any Exhibit, Schedule or document delivered
pursuant hereto, without regard to any qualification or
limitation with respect to materiality, shall be true and correct
in all respects as of the date hereof and at and as of the
Closing Date with the same effect as though such representations
and warranties were made at and as of the Closing unless the
aggregate failure of such representations or warranties to be
23
true and correct does not have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by
this Agreement or fulfill its post-Closing obligations hereunder;
provided that if a representation or warranty is expressly made
only as of a specific date, it need only be true and correct in
all respects as of such date, and PCC shall have received Buyer's
Closing Certificate required by Section 6.3(h) below dated as of
the Closing Date executed by Buyer to such effect;
(b) all of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects;
(c) all proceedings and actions, corporate or other, to be taken by
Buyer in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, including all
actions necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby, shall have been taken and shall be reasonably
satisfactory in form and substance to PCC and its counsel;
(d) PCC shall have received, on behalf of the Asset Sale Companies,
the Purchase Price by wire transfer of cash or other immediately
available funds;
(e) Buyer shall have executed and delivered the Assignment and
Assumption Agreements and such other documents as may be
necessary for Buyer to assume all of the Assumed Liabilities;
(f) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that,
individually, or together with any other change, event or
occurrence, has had or could reasonably be expected to have a
Material Adverse Effect;
24
(g) PCC shall have received an opinion of counsel to Buyer addressed
to PCC substantially in the form of Exhibit F; and
(h) PCC shall have received an executed copy of Buyer's Closing
Certificate.
ARTICLE VII
TERMINATION
7.1. Termination.
This Agreement may be terminated prior to the Closing Date only as follows:
(a) by mutual written consent of PCC and Buyer;
(b) by either PCC or Buyer, if the Closing Date shall not have
occurred prior to the close of business on December 31, 2002 or
such later date as the parties may agree in writing (provided,
that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause,
in whole or in part, of, or has resulted in, the failure of the
conditions in Article VI to be satisfied and the Closing Date to
occur on or before such date);
(c) by PCC or Buyer if an action, suit, or proceeding, shall have
been commenced or threatened by or before any Governmental
Authority, or any order, decree or injunction shall have been
entered therein, that (i) prohibits, seeks to prohibit, or
imposes or seeks substantial damages in connection with, the
consummation of the transactions contemplated by this Agreement,
(ii) seeks or imposes relief that causes or would cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, or (iii) affects adversely the right of
Buyer to own the Purchased Assets or to operate the Business;
25
(d) by Buyer if (i) the representations of PCC contained in this
Agreement are not true and correct in all material respects as if
made at and as of that time, except for failures to be true and
correct that are capable of being and are cured within fifteen
(15) days after written notice from Buyer to PCC of such failure;
or (ii) PCC has failed to comply materially with its respective
obligations under this Agreement, except for failures to comply
that are capable of being and are cured within fifteen (15) days
after written notice from Buyer to PCC of such failure; or
(e) by PCC if (i) the representations of Buyer contained in this
Agreement are not true and correct in all material respects as if
made at and as of that time, except for failures to be true and
correct that are capable of being and are cured within fifteen
(15) days after written notice from PCC to Buyer of such failure;
or (ii) Buyer has failed to comply materially with its
obligations under this Agreement, except for failures to comply
that are capable of being and are cured within fifteen (15) days
after written notice from the PCC to Buyer of such failure.
7.2. Effect of Termination.
If this Agreement is terminated pursuant to Article VII hereof, all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further Liability of either party to the other except: (a) as set forth
in Section 8.4; and (b) for breaches of representations, warranties, or
covenants or for fraud. PCC and Buyer hereby agree that the provisions of this
Section 7.2 and of Section 8.4 shall survive any termination of this Agreement
pursuant to the provisions of this Article VII.
26
ARTICLE VIII
MISCELLANEOUS
8.1. Entire Agreement.
This Agreement, the documents referred to herein and to be delivered
pursuant hereto and any other agreement entered into contemporaneously with this
Agreement among PCC, PCC Parent, Buyer and Buyer's Parent or the Affiliates of
any of them constitute the entire agreement between the parties pertaining to
the subject matter hereof, and supersede all prior agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. 8.2. Amendment.
This Agreement may be amended by an instrument in writing and signed on
behalf of all of the parties hereto at any time.
8.3. Extension; Waiver.
At any time prior to the Closing Date, the parties may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein, other than the conditions contained in Section 6.1(a) hereof
as it relates to the entry of an order in any proceeding by or before a
Governmental Authority. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
and signed on behalf of such party.
27
8.4. Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of their
respective counsel, investment bankers, financial advisors, accountants and
other experts and the other expenses incident to the negotiation and preparation
of this Agreement and consummation of the transactions contemplated hereby.
8.5. Bulk Sales Waiver.
Buyer hereby waives compliance with all applicable bulk sales Laws.
8.6. Governing Law.
This Agreement shall be construed and interpreted according to the Laws of
the Commonwealth of Virginia, without regard to the conflicts of Law rules
thereof.
8.7. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, provided that PCC may assign its rights
hereunder to any Affiliate of PCC after the Closing Date without the consent of
Buyer and Buyer may assign its rights hereunder to any Affiliate of Buyer prior
to, at or after the Closing Date without the consent of PCC and, further
provided, that nothing in this Agreement shall prevent a successor in interest
to either party from enforcing the provisions of this Agreement.
8.8. Notices.
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
28
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other party in the
manner provided by this Section 8.8: If to PCC: Pittston Coal Company 448 N.E.
Main Street P.O. Box 5100 Lebanon, Virginia 24266 Attention: President
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
If to Buyer: Alpha Coal Sales Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
29
8.9. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and Section headings
in this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
8.10. Interpretation; Construction.
(a) Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and
include the singular and all words in any gender shall extend to
and include all genders.
(b) This Agreement has been fully negotiated by the parties hereto
and shall not be construed by any Governmental Authority against
either party as the drafting party.
8.11. Severability.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
8.12. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement and PCC and Buyer assume
no Liability to any third party because of any reliance on the representations,
warranties and agreements of PCC and Buyer contained in this Agreement, other
30
than Section 5.5 hereof, which are intended to be for the benefit of the Persons
expressly covered thereby and may be enforced by such Persons.
8.13. Retention of and Access to Records.
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record retention policies and practices those books and records relating
to the Asset Sale Companies delivered to Buyer. Buyer also shall provide to PCC
and its Affiliates reasonable access thereto, during normal business hours and
on at least three days' prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or litigation. Buyer
shall deliver to PCC at least thirty days written notice prior to the
destruction or other disposal of any such books and records. PCC and its
Affiliates may elect to take delivery of any such books and records that Buyer
intends to destroy or otherwise dispose of and to copy any such books and
records that Buyer intends to keep, all at their own expense.
8.14. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be decided by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to select an arbitrator within fourteen calendar days after arbitration is
requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Section 8.14 shall be the exclusive means to resolve all
Disputes.
31
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ALPHA COAL SALES CO., LLC
By: /s/ Scott Kroh
---------------------------------------
Name: Scott Kroh
Title: President
32
SCHEDULE 1.3
ASSET SALE COMPANIES
Clinchfield Coal Company, a Virginia corporation
Pittston Coal Sales Corp., a Virginia corporation
Motivation Coal Company, a Virginia corporation
A-1
PITTSTON COAL COMPANY
448 N. E. Main Street
Lebanon, Virginia 24266
December 13, 2002
Alpha Coal Sales Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Agreement"), dated as of
October 29, 2002, as amended to but not including the date hereof, by and
between Pittston Coal Company ("PCC") and Alpha Coal Sales Co., LLC ("Buyer").
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Agreement.
PCC and Buyer desire to amend certain provisions of the Agreement and, in
consideration of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The Schedules to the Agreement are hereby amended and restated in
their entirety as attached hereto as Exhibit A.
2. Except as amended by this letter agreement, the Agreement shall
continue in full force and effect.
3. This letter agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any executed counterpart
of this letter agreement or other signature hereto delivered by a
party by facsimile shall be deemed for all purposes as being good and
valid execution and delivery of this letter agreement by such party.
Sincerely,
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-----------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ACKNOWLEDGED AND AGREED:
ALPHA COAL SALES CO., LLC
By: /s/ Michael J. Quillen
-----------------------------------
Name: Michael J. Quillen
Title: Attorney-in-fact
INDEMNIFICATION AND GUARANTY AGREEMENT
INDEMNIFICATION AND GUARANTY AGREEMENT, dated as of December 13, 2002, by
and among PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), THE PITTSTON
COMPANY, a Virginia corporation ("Pittston"), ALPHA NATURAL RESOURCES, LLC, a
Delaware limited liability company ("Buyer's Parent") and ALPHA COAL SALES CO.,
LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, Buyer and PCC have entered into an asset purchase agreement dated
October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto, as the same may be amended from time to time in accordance
with the terms thereof, being hereinafter referred to as the "Acquisition
Agreement"), pursuant to which Buyer will purchase or acquire from PCC and
certain of its Affiliates certain assets, and assume certain liabilities, all
upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, PCC and Buyer desire to provide for the terms upon which they will
indemnify each other with respect to certain matters relating to the
transactions contemplated by the Acquisition Agreement;
WHEREAS, Pittston owns, indirectly, all of the outstanding capital stock of
PCC and, as an inducement to Buyer to enter into the Acquisition Agreement, has
agreed to guarantee the obligations of PCC and certain of PCC's Affiliates under
this Agreement and the Acquisition Agreement; and
WHEREAS, Buyer's Parent owns all of the outstanding membership interests of
Buyer and, as an inducement to PCC to enter into the Acquisition Agreement, has
agreed to guarantee the obligations of Buyer under this Agreement and the
Acquisition Agreement;
1
NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the
Recitals to this Agreement.
1.2. Adverse Consequences.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
1.3. Basket.
"Basket" shall have the meaning set forth in Section 2.1(b)(i) hereof.
1.4. Buyer.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
2
1.5. Buyer Indemnified Persons.
"Buyer Indemnified Persons" shall mean Buyer, its Affiliates
(including, after Closing, one or more Buyer Affiliates formed to hold the
Virginia coal operations of PCC acquired pursuant to the Acquisition
Agreement), and their respective members, directors, officers, employees,
consultants, agents, attorneys and representatives.
1.6. Buyer's Parent.
"Buyer's Parent" shall have the meaning set forth in the preamble to
this Agreement.
1.7. Buyer's Parent Guaranty.
"Buyer's Parent Guaranty" shall have the meaning set forth in Section
3.2 hereof.
1.8. Claim Notice.
"Claim Notice" shall have the meaning set forth in Section 2.3(b)
hereof.
1.9. Dispute.
"Dispute" shall have the meaning set forth in Article VII hereof.
1.10. Indemnified Party.
"Indemnified Party" shall have the meaning set forth in Section 2.3(b)
hereof.
1.11. Indemnifying Party.
"Indemnifying Party" shall have the meaning set forth in Section
2.3(b) hereof.
3
1.12. Other Acquisition Agreements.
"Other Acquisition Agreements" shall mean the agreements set forth on
Schedule A attached hereto.
1.13. Other Indemnification Agreements.
"Other Indemnification Agreements" shall mean the agreements set forth
on Schedule B attached hereto.
1.14. PCC.
"PCC" shall have the meaning set forth in the preamble to this
Agreement.
1.15. Pittston.
"Pittston" shall have the meaning set forth in the preamble to this
Agreement.
1.16. Pittston Guaranty.
"Pittston Guaranty" shall have the meaning set forth in Section 3.1
hereof.
1.17. Pittston Indemnified Persons.
"Pittston Indemnified Persons" shall mean Pittston, PCC, the Asset
Sale Companies and their respective directors, officers, employees, agents,
stockholders and their respective Affiliates, and their respective
directors, officers, employees, consultants, agents, attorneys and
representatives.
4
ARTICLE II
INDEMNIFICATION
2.1. Indemnification by PCC.
(a) PCC agrees to indemnify and hold harmless Buyer Indemnified
Persons from and against, and reimburse them for, any and all Adverse
Consequences that any Buyer Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by PCC to Buyer in the Acquisition Agreement either: (A) as of
the date on which such representation or warranty was made or (B) as
of the Closing Date (provided that the consummation of the
transactions contemplated by the Acquisition Agreement in accordance
with the terms shall not be deemed without more to have cause a breach
of any representation or warranty);
(ii) any failure by PCC to carry out, perform, satisfy or
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under the Acquisition Agreement; and
(iii) any failure by PCC or the Asset Sale Companies to satisfy
the Retained Liabilities.
(b) Notwithstanding the provisions of Section 2.1(a), PCC shall not be
required to indemnify any of Buyer Indemnified Persons with respect to the
matters described in Sections 2.1(a)(i) and 2.1(a)(ii):
(i) unless and until the sum of (A) the Adverse Consequences for
which indemnification pursuant to (1) Sections 2.1(a)(i) and
2.1(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by
Buyer to obtain any of the consents listed on Schedule 6.1(e)(i) of
the Acquisition Agreement or in Schedule 6.1(e)(i) of the Other
Acquisition Agreements, shall exceed $100,000 (the "Basket"), in which
case the entire amount of such Adverse Consequences is recoverable;
5
(ii) unless the right to indemnity is asserted pursuant to
Section 2.3 on or before the second anniversary of the Closing Date
for any matter described in Sections 2.1(a)(i) or 2.1(a)(ii); and
(iii) for any matter, to the extent that the aggregate amount of
the Adverse Consequences for which Buyer Indemnified Persons have been
indemnified pursuant to Sections 2.1(a)(i) and 2.1(a)(ii) or in
Sections 2.1(a)(i) and 2.1(a)(ii) of the Other Indemnification
Agreements exceeds $15,000,000 (the "Cap").
(c) Notwithstanding the foregoing, PCC agrees that any claim by a
Buyer Indemnified Person for indemnification (i) arising out of, relating
to, in the nature of or caused by any breach of PCC's representations
specified in Sections 3.1, 3.2, 3.3 and 3.6 of the Acquisition Agreement or
(ii) pursuant to Section 2.1(a)(iii), shall not be subject to the
provisions of paragraph (b) of this Section 2.1.
(d) PCC agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Buyer Indemnified Persons
for Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Buyer Indemnified
Persons may suffer after the end of any applicable survival period, as long
as a claim for indemnification is made before the end of the applicable
survival period and the Adverse Consequences suffered relate to such
claim).
6
2.2. Indemnification by Buyer.
(a) Buyer agrees to indemnify and hold harmless Pittston Indemnified
Persons from and against and reimburse them for, any and all Adverse
Consequences that any Pittston Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by Buyer in the Acquisition Agreement either: (A) as of the date
on which such representation or warranty was made or (B) as of the
Closing Date (provided that the consummation of the transactions
contemplated by the Acquisition Agreement in accordance with its terms
shall not be deemed without more to have caused a breach of any
representation or warranty);
(ii) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under the Acquisition Agreement;
(iii) the ownership of the Purchased Assets on or after the
Closing Date; and
(iv) any failure by Buyer to satisfy the Assumed Liabilities.
(b) The foregoing notwithstanding, Buyer shall not be required to
indemnify any Pittston Indemnified Persons with respect to the matters
described in Sections 2.2(a)(i) and 2.2(a)(ii):
7
(i) unless and until the sum of (A) Adverse Consequences for
which indemnification pursuant to (1) Sections 2.2(a)(i) and
2.2(a)(ii) or (2) in Sections 2.2(a)(i) and 2.2(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by PCC
to obtain any of the consents listed on Schedule 6.1(e)(ii) of the
Acquisition Agreement or in Schedule 6.1(e)(ii) of the Other
Acquisition Agreements, shall exceed the Basket, in which case the
entire amount of such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted on or before the
second anniversary of the Closing Date pursuant to Section 2.3; and
(iii) for any matter, to the extent that the aggregate amount of
Adverse Consequences for which the Pittston Indemnified Persons have
been indemnified pursuant to Sections 2.2(a)(i) and 2.2(a)(ii) or in
Sections 2.2(a)(i) and 2.2(a)(ii) of the Other Indemnification
Agreements is sought exceeds the Cap.
(c) Notwithstanding the foregoing, Buyer agrees that any claim by a
Pittston Indemnified Person for indemnification (i) arising out of,
relating to, in the nature of or caused by any breach of Buyer's
representations specified in Sections 4.1, 4.2, 4.3 and 4.4 of the
Acquisition Agreement or (ii) pursuant to Sections 2.2(a)(iii) through
(iv), shall not be subject to the provisions of paragraph (b) of this
Section 2.2.
(d) Notwithstanding the foregoing, nothing in Section 2.2(a)(iii)
shall diminish the right of any Buyer Indemnified Person to seek
indemnification from PCC after the Closing Date pursuant to the terms of
this Agreement.
(e) Buyer agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Pittston Indemnified Persons
for Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Pittston
Indemnified Persons may suffer after the end of any applicable survival
period, as long as a claim for indemnification is made before the end of
the applicable survival period and the Adverse Consequences suffered relate
to such claim).
8
2.3. Indemnification Procedures.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved pursuant to this Section 2.3.
(b) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice (a "Claim Notice") to the party
required to provide such indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has notice of any Adverse Consequence
which may give rise to a claim for indemnification against the other party
under this Agreement, provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced. The Indemnified
Party shall not be required to commence litigation or take any action
against any third party prior to delivery of the Claim Notice.
(c) The Indemnifying Party will have the right (at its expense) to
assume the investigation and/or defense of any Adverse Consequence or any
litigation resulting therefrom so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing (within 20 days after the
Indemnified Party has given the Claim Notice) that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of the
Adverse Consequence, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend, and
otherwise indemnify for, the Adverse Consequence and fulfill its
indemnification obligations hereunder and (iii) the Adverse Consequence
involves only money damages and does not seek an injunction or other
equitable relief.
9
(d) So long as the Indemnifying Party is conducting the defense of the
Adverse Consequence in accordance with Section 2.3(c), (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Adverse Consequence, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Adverse Consequence without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Adverse
Consequence without the prior written consent of the Indemnified Party;
provided, that the Indemnifying Party may consent to such judgment or enter
into such settlement without the prior written consent of the Indemnified
Party so long as an unconditional term of any such judgment or settlement
includes the giving by the claimant or plaintiff to the Indemnified Party
of a release from all liability with respect to such Adverse Consequence.
(e) In the event any of the conditions in Section 2.3(c) is or becomes
unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Adverse Consequence in any manner it may reasonably deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Adverse Consequence
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequence
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Adverse Consequence to the fullest
extent provided in this Agreement.
10
2.4. Insurance Proceeds.
The amount of any indemnification payable in connection with any
transaction contemplated by this Agreement or the Acquisition Agreement
shall be net of any insurance proceeds available, under any insurance
policies in effect at the time that are maintained in the Ordinary Course
of Business, to a Buyer Indemnified Person or a Pittston Indemnified
Person, respectively, in connection with the events or circumstances giving
rise to the indemnification. For purposes of this Section 2.4, any
pollution and legal liability insurance policies or an insurance policy
covering loss in connection with the representations and warranties
contained in the Acquisition Agreement will be deemed not to be maintained
in the Ordinary Course of Business.
2.5. Exclusivity of Rights and Procedures.
The parties agree that this Agreement shall constitute the sole and
exclusive remedy of the parties hereto with respect to the subject matters
addressed in this Agreement, the Acquisition Agreement and the transactions
contemplated by the Acquisition Agreement. Each party to this Agreement
hereby waives and releases the other parties from any and all claims and
other causes of action, including claims for contribution, related to those
subject matters, other than claims (i) pursuant to the terms of this
Agreement, (ii) related to the Retained Liabilities (in the case of Buyer
Indemnified Persons) or the Assumed Liabilities (in the case of the
Pittston Indemnified Persons), (iii) for fraud, and (iv) for injunctive
relief.
11
ARTICLE III
GUARANTIES
3.1. Pittston Guaranty.
(a) Pittston hereby irrevocably and unconditionally guarantees to
Buyer (the "Pittston Guaranty") the full and punctual performance and
compliance by PCC with each and every covenant, term and condition to be
performed or complied with by PCC under this Agreement and the Acquisition
Agreement. The Pittston Guaranty expressed in this Section 3.1 is an
absolute, present, primary and continuing guaranty of performance and
compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce such performance or compliance by
PCC or upon any other condition or contingency.
(b) Pittston hereby expressly waives (i) notice of acceptance of the
Pittston Guaranty and (ii) any other notice given to PCC in accordance with
the provisions of the Agreement on any default under the Agreement or
otherwise. Pittston hereby authorizes Buyer to forbear with respect to,
amend, modify, enlarge, extend, compromise and discharge any or all of the
obligations of PCC under the Agreement without notice to or consent by
Pittston. Pittston acknowledges and agrees that its liability under the
Pittston Guaranty is joint and several with PCC and, upon any default by
PCC, Buyer shall not be obligated to first attempt enforcement against PCC.
Pittston hereby waives any and all defenses to enforcement of the Pittston
Guaranty, now existing or hereafter arising, which may be available to
guarantors, sureties and other secondary parties at law or in equity.
(c) Pittston represents and warrants to Buyer that (i) Pittston is a
corporation validly existing and in good standing under the laws of the
Commonwealth of Virginia; (ii) all necessary corporate action has been duly
taken by it to authorize the execution, delivery and performance by it of
the Pittston Guaranty, (iii) the Pittston Guaranty is being executed on
Pittston's behalf by a duly authorized representative, (iv) the Pittston
Guaranty is the legally valid and binding obligation of Pittston
enforceable in accordance with its terms, and (v) the execution and the
delivery of the Pittston Guaranty will not (A) conflict with, or result in
a violation or breach of, or a default, right to accelerate, right to
exercise any remedy or loss of rights under, or result in the creation of
any Lien (other than Permitted Liens) under or pursuant to, any provision
of Pittston's Articles of Incorporation or Bylaws or of any material
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding to which Pittston is a party or
by which Pittston is bound, or any Law or any order, judgment, writ,
injunction or decree to which Pittston is a party or by which Pittston may
be bound or affected; (B) require the approval, consent or authorization
of, prior notice to, or filing or registration with any Governmental
Authority or contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Authority the right
to revoke, withdraw, suspend, cancel or terminate any authorization or
permit issued by a Governmental Authority that is held by Pittston or that
otherwise relates to the Pittston's business; or (C) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under
any Law to which Pittston is subject.
12
(d) Pittston agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by Buyer
Indemnified Persons in enforcing Pittston's liability to Buyer Indemnified
Persons under the Pittston Guaranty whether or not a civil action or
similar proceeding (including claims and proceedings in and before the
bankruptcy court or arbitrators) is filed, prosecuted or appealed. If an
action or proceeding is filed, prosecuted or appealed, the reasonableness
of such attorney fees shall be determined by the trial judge and if,
appealed, by the appellate court.
(e) The Pittston Guaranty shall be binding upon Pittston and its
successors and assigns, and shall inure to the benefit of and be
enforceable by Buyer and its successors and assigns. For purposes of the
Pittston Guaranty, Pittston shall be deemed to include the surviving entity
in any merger or consolidation involving Pittston, which survivor shall be
bound by the provisions of the Pittston Guaranty and this Agreement.
13
3.2. Buyer's Parent Guaranty.
(a) Buyer's Parent hereby irrevocably and unconditionally guarantees
to PCC (the "Buyer's Parent Guaranty") the full and punctual performance
and compliance by Buyer with each and every covenant, term and condition to
be performed or complied with by Buyer under this Agreement and the
Acquisition Agreement. Buyer's Parent Guaranty expressed in this Section
3.2 is an absolute, present, primary and continuing guaranty of performance
and compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce such performance or compliance by
Buyer or upon any other condition or contingency.
(b) Buyer's Parent hereby expressly waives (i) notice of acceptance of
Buyer's Parent Guaranty and (ii) any other notice given to Buyer in
accordance with the provisions of the Agreement on any default under the
Agreement or otherwise. Buyer's Parent hereby authorizes PCC to forbear
with respect to, amend, modify, enlarge, extend, compromise and discharge
any or all of the obligations of Buyer under the Agreement without notice
to or consent by Buyer's Parent. Buyer's Parent acknowledges and agrees
that its liability under Buyer's Parent Guaranty is joint and several with
Buyer and, upon any default by Buyer, PCC shall not be obligated to first
attempt enforcement against Buyer. Buyer's Parent hereby waives any and all
defenses to enforcement of Buyer's Parent Guaranty, now existing or
hereafter arising, which may be available to guarantors, sureties and other
secondary parties at law or in equity.
14
(c) Buyer's Parent represents and warrants to PCC that (i) Buyer's
Parent is a limited liability company validly existing and in good standing
under the laws of the State of Delaware; (ii) all necessary corporate
action has been duly taken by it to authorize the execution, delivery and
performance by it of Buyer's Parent Guaranty, (iii) Buyer's Parent Guaranty
is being executed on Buyer's Parent's behalf by a duly authorized
representative, (iv) Buyer's Parent Guaranty is the legally valid and
binding obligation of Buyer's Parent enforceable in accordance with its
terms, and (v) the execution and the delivery of Buyer's Parent Guaranty
will not (A) conflict with, or result in a violation or breach of, or a
default, right to accelerate, right to exercise any remedy or loss of
rights under, or result in the creation of any Lien (other than Permitted
Liens) under or pursuant to, any provision of Buyer's Parent's Certificate
of Formation, Operating Agreement or other organizational documents or of
any material franchise, mortgage, deed of trust, lease, license,
instrument, agreement, consent, approval, waiver or understanding to which
Buyer's Parent is a party or by which Buyer's Parent is bound, or any Law
or any order, judgment, writ, injunction or decree to which Buyer's Parent
is a party or by which Buyer's Parent may be bound or affected; (B) require
the approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or contravene, conflict with
or result in a violation of any of the terms or requirements of, or give
any Governmental Authority the right to revoke, withdraw, suspend, cancel
or terminate any authorization or permit issued by a Governmental Authority
that is held by Buyer's Parent or that otherwise relates to Buyer's
Parent's business; or (C) give any Governmental Authority or other Person
the right to challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which Buyer's
Parent is subject.
15
(d) Buyer's Parent agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by the
Pittston Indemnified Persons in enforcing Buyer's Parent's liability to the
Pittston Indemnified Persons under Buyer's Parent Guaranty whether or not a
civil action or similar proceeding (including claims and proceedings in and
before the bankruptcy court or arbitrators) is filed, prosecuted or
appealed. If an action or proceeding is filed, prosecuted or appealed, the
reasonableness of such attorney fees shall be determined by the trial judge
and if, appealed, by the appellate court.
(e) Buyer's Parent Guaranty shall be binding upon Buyer's Parent and
its successors and assigns, and shall inure to the benefit of and be
enforceable by PCC and its successors and assigns. For purposes of Buyer's
Parent Guaranty, Buyer's Parent shall be deemed to include the surviving
entity in any merger or consolidation involving Buyer's Parent, each of
whom shall be bound by the provisions of the Buyer's Parent Guaranty and
this Agreement.
ARTICLE IV
SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
16
ARTICLE V
NOTICES
All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given
when delivered personally or by messenger or by overnight delivery service,
or within five days of being mailed by registered or certified United
States mail, postage prepaid, return receipt requested, in all cases
addressed to the person for whom it is intended at his address set forth
below or to such other address as a party shall have designated by notice
in writing to the other parties in the manner provided by this Article V:
if to PCC or Pittston, to them at:
Pittston Coal Company
448 N.E. Main Street
P. O. Box 5100
Lebanon, Virginia 24266
Attention: President
with a copy to:
Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P. O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
and a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
if to Buyer:
Alpha Coal Sales Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
17
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
if to Buyer's Parent, to it at:
Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
18
ARTICLE VI
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
this Agreement and the rights, interests or obligations hereunder shall not
be assignable by Buyer's Parent, Buyer, Pittston or PCC without the prior
written consent of the other parties and any attempt to make such an
assignment without such consent shall be void and of no effect.
ARTICLE VII
ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to designate an arbitrator within fourteen (14) calendar days after arbitration
is requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Article VII shall be the exclusive means to resolve all
Disputes.
19
ARTICLE VIII
MISCELLANEOUS
8.1. Headings.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
8.2. Integration.
This Agreement and any other agreement entered into contemporaneously
with this Agreement among PCC, Pittston, Buyer and Buyer's Parent or the
Affiliates of any of them constitute the entire agreement and supercede all
prior agreements and understandings not reflected in the Acquisition
Agreement, both written and oral, among the parties with respect to the
subject matter hereof.
8.3. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one
and the same instrument.
8.4. Governing Law.
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Commonwealth of Virginia,
without regard to the conflicts of laws principles thereof.
20
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ALPHA COAL SALES CO., LLC,
a Delaware limited liability company
By:/s/ Michael J. Quillen
-----------------------------------------
Name: Michael J. Quillen
Title: Attorney-in-fact
ALPHA NATURAL RESOURCES, LLC, a Delaware limited
liability company
By:/s/ Michael J. Quillen
-----------------------------------------
Name: Michael J. Quillen
Title: President
PITTSTON COAL COMPANY,
a Delaware corporation
By:/s/ Michael D. Brown
-----------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
THE PITTSTON COMPANY,
a Virginia corporation
By:/s/ James B. Hartough
-----------------------------------------
Name: James B. Hartough
Title: Vice President - Corporate Finance
and Treasurer
Schedule A
Asset Purchase Agreement by and between Pittston Coal Company and
Dickenson-Russell Coal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Paramont
Coal Company Virginia, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Land and Reserves, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Terminal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Maxxim
Rebuild Co., LLC, dated as of October 29, 2002, as amended.
Schedule B
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Dickenson-Russell Coal Company, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Paramont Coal Company Virginia, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Land and Reserves, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Terminal Company, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Maxxim Rebuild Co., LLC and Alpha Natural Resources, LLC,
dated as of December 13, 2002.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
ALPHA TERMINAL COMPANY, LLC
October 29, 2002
TABLE OF CONTENTS
Page
-i-
ARTICLE I DEFINITIONS...........................................................................................1
1.1.Affiliate................................................................................................1
1.2.Agreement................................................................................................2
1.3.Asset Sale Company.......................................................................................2
1.4.Assigned Contracts.......................................................................................2
1.5.Assignment and Assumption Agreements.....................................................................2
1.6.Assignment and Assumption of Consortium Documents........................................................2
1.7.Assignment and Assumption of Parent Company Agreement....................................................3
1.8.Assumed Liabilities......................................................................................3
1.9.Assumed Parent Company Liabilities.......................................................................3
1.10. Assumed Partner Liabilities...........................................................................3
1.11. Business..............................................................................................3
1.12. Buyer.................................................................................................3
1.13. Buyer Closing Certificate.............................................................................3
1.14. Buyer Designee........................................................................................3
1.15. Buyer's Parent........................................................................................4
1.16. Closing...............................................................................................4
1.17. Closing Date..........................................................................................4
1.18. Coal Act..............................................................................................4
1.19. Code..................................................................................................4
1.20. Consortium Agreement..................................................................................4
1.21. Consortium Documents..................................................................................5
1.22. Contaminated..........................................................................................5
1.23. CPA Arbitrator........................................................................................5
1.24. Dispute...............................................................................................5
1.25. DTA...................................................................................................5
1.26. DTA Activities........................................................................................6
1.27. DTA Environmental Liabilities.........................................................................6
1.28. DTA Partners..........................................................................................6
1.29. DTA Revenue Bonds.....................................................................................6
1.30. Environmental Laws....................................................................................6
1.31. Facilities............................................................................................7
1.32. Governmental Authority................................................................................7
1.33. Hazardous Substances..................................................................................7
1.34. Indemnification and Guaranty Agreement................................................................8
1.35. Knowledge of PCC......................................................................................8
1.36. Law...................................................................................................8
1.37. Lease Agreement.......................................................................................8
1.38. Liability.............................................................................................9
1.39. Lien..................................................................................................9
1.40. Loan Agreement........................................................................................9
1.41. Material Adverse Effect...............................................................................9
1.42. Operating Agreement...................................................................................9
1.43. Ordinary Course of Business..........................................................................10
1.44. Parent Company Agreement.............................................................................10
1.45. Partner Matter.......................................................................................10
1.46. PCC..................................................................................................10
1.47. PCC Closing Certificate..............................................................................10
1.48. PCC Group............................................................................................10
1.49. PCC Parent...........................................................................................10
1.50. Permits..............................................................................................11
1.51. Permitted Liens......................................................................................11
1.52. Person...............................................................................................11
1.53. Pre-Closing Period...................................................................................11
1.54. Purchased Assets.....................................................................................11
1.55. Related Persons......................................................................................11
1.56. Retained Contract Rights.............................................................................11
1.57. Retained Contract Liabilities........................................................................12
1.58. Retained Liabilities.................................................................................13
1.59. Tax or Taxes.........................................................................................13
1.60. Tax Return...........................................................................................14
1.61. Throughput Agreement.................................................................................14
1.62. Transportation Agreement.............................................................................14
1.63. Voting Agreement.....................................................................................15
3
ARTICLE II PURCHASE AND SALE OF ASSETS..........................................................................15
2.1.Transfer of Assets......................................................................................15
2.2.Assignment and Assumption Agreements and Other Documents................................................15
2.3.Assumption of Liabilities...............................................................................16
2.4.Proration of Liabilities................................................................................16
2.5.Indemnification and Guaranty Agreement..................................................................16
2.6.Additional Documents....................................................................................17
2.7.Partner Status..........................................................................................17
2.8.Allocation of Assumed Liabilities.......................................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PCC................................................................19
3.1.Incorporation...........................................................................................19
3.2.Execution, Delivery and Performance.....................................................................19
3.3.Authorization...........................................................................................20
3.4.Purchased Assets........................................................................................21
3.5.DTA Facilities..........................................................................................21
3.6.DTA Permits.............................................................................................22
3.7.Absence of Changes......................................................................................22
3.8.Assigned Contracts......................................................................................24
3.9.Litigation; Claims......................................................................................25
3.10. Legal Compliance.....................................................................................26
3.11. Environmental Compliance.............................................................................26
3.12. No Broker............................................................................................27
3.13. Powers of Attorney...................................................................................27
3.14. Transactions With Affiliates.........................................................................27
3.15. Absence of Certain Payments..........................................................................28
3.16. Disclosure...........................................................................................28
4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................28
4.1.Organization............................................................................................29
4.2.Execution, Delivery and Performance.....................................................................29
4.3.Authorization...........................................................................................29
4.4.No Broker...............................................................................................30
4.5.Reclamation and Environmental Compliance................................................................30
4.6.Financing...............................................................................................30
4.7.Disclosure..............................................................................................31
ARTICLE V CERTAIN COVENANTS....................................................................................31
5.1.Operation in Ordinary Course............................................................................31
5.2.Compliance with Law.....................................................................................31
5.3.Cooperation.............................................................................................32
5.4.Notices and Consents....................................................................................32
5.5.Publicity...............................................................................................33
5.6.Exclusivity.............................................................................................33
5.7.Access..................................................................................................34
5.8.Notice of Developments..................................................................................34
5.9.Further Assurances......................................................................................34
5.10. Voting Agreement.....................................................................................35
5.11. Subsequent Transfer of Purchased Assets..............................................................37
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING......................................................................38
6.1.Conditions Precedent to Each Party's Obligations........................................................38
6.2.Conditions Precedent to Obligations of Buyer............................................................39
6.3.Conditions Precedent to Obligations of PCC..............................................................41
ARTICLE VII CERTAIN TAX MATTERS..................................................................................42
7.1.Distributive Share of DTA for 2002......................................................................42
7.2.Transfer Taxes..........................................................................................43
7.3.Access for Tax Returns..................................................................................43
ARTICLE VIII TERMINATION................................................................................43
8.1.Termination.............................................................................................43
8.2.Effect of Termination...................................................................................45
5
ARTICLE IX MISCELLANEOUS........................................................................................45
9.1.Entire Agreement........................................................................................45
9.2.Amendment...............................................................................................45
9.3.Extension; Waiver.......................................................................................46
9.4.Expenses................................................................................................46
9.5.Bulk Sales Waiver.......................................................................................46
9.6.Governing Law...........................................................................................46
9.7.Assignment..............................................................................................46
9.8.Notices.................................................................................................47
9.9.Counterparts; Headings..................................................................................48
9.10. Interpretation; Construction.........................................................................49
9.11. Severability.........................................................................................49
9.12. No Reliance..........................................................................................49
9.13. Retention of and Access to Records...................................................................49
9.14. Arbitration..........................................................................................50
6
EXHIBITS
Exhibit A-1 Assignment and Assumption of Consortium Documents
Exhibit A-2 Assignment and Assumption of Parent Company Agreement
Exhibit B Buyer Closing Certificate
Exhibit C Indemnification and Guaranty Agreement
Exhibit D PCC Closing Certificate
Exhibit E Opinion of Counsel to PCC
Exhibit F Opinion of Counsel to Buyer
Exhibit G Voting Agreement
7
SCHEDULES
Schedule 1.4 Assigned Contracts
Schedule 1.9 Assumed Parent Company Liabilities
Schedule 1.10 Assumed Partner Liabilities
Schedule 1.35 Knowledge of PCC
Schedule 1.51 Permitted Liens
Schedule 3.1 Foreign States
Schedule 3.2 Conflicts
Schedule 3.4 Purchased Assets
Schedule 3.5 DTA Facilities
Schedule 3.7 Absence of Changes
Schedule 3.8(a) Excluded Contracts
Schedule 3.8(c) Consents
Schedule 3.9 Litigation; Claims
Schedule 3.11 Environmental Compliance
Schedule 3.13 Powers of Attorney
Schedule 3.14 Transactions with Affiliates
Schedule 5.4(a) PCC Consents
Schedule 5.4(b) Buyer Consents
Schedule 6.1(e)(i) PCC Material Consents
Schedule 6.1(e)(ii) Buyer Material Consents
8
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 29th day of October,
2002, by and between PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), and
ALPHA TERMINAL Company, LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, PCC owns directly all of the outstanding capital stock of
Pittston Coal Terminal Corporation, a Virginia corporation (the "Asset Sale
Company");
WHEREAS, PCC desires to cause to be sold and assigned, and Buyer
desires to purchase and assume, certain of the assets and certain of the
Liabilities (as hereinafter defined) of the Asset Sale Company;
WHEREAS, PCC desires to cause the Asset Sale Company to retain certain
assets and certain Liabilities; NOW, THEREFORE, in consideration of the
mutual covenants, conditions and agreements set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, PCC and Buyer agree that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1. Affiliate.
"Affiliate" shall mean, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, none of Dominion Terminal Associates or any of its partners,
other than the Asset Sale Company, shall be deemed an Affiliate of PCC or any of
its Affiliates.
9
1.2. Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, which are incorporated into this Asset
Purchase Agreement by this reference, as the same may be amended from time to
time in accordance with the terms hereof.
1.3. Asset Sale Company.
"Asset Sale Company" shall have the meaning given to it in the Recitals to
this Agreement.
1.4. Assigned Contracts.
"Assigned Contracts" shall mean the Consortium Documents and the other
written contracts, agreements, personal and real property leases, relationships
and commitments, of the Asset Sale Company listed on Schedule 1.4.
1.5. Assignment and Assumption Agreements.
"Assignment and Assumption Agreements" shall mean, collectively, the
Assignment and Assumption of Consortium Documents and the Assignment and
Assumption of Parent Company Agreement.
1.6. Assignment and Assumption of Consortium Documents.
"Assignment and Assumption of Consortium Documents" shall mean the
assignment and assumption agreement substantially in the form of Exhibit A-1
attached hereto.
10
1.7. Assignment and Assumption of Parent Company Agreement.
"Assignment and Assumption of Parent Company Agreement" shall mean the
assignment and assumption agreement substantially in the form of Exhibit A-2
attached hereto.
1.8. Assumed Liabilities.
"Assumed Liabilities" shall mean all Assumed Partner Liabilities and all
Assumed Parent Company Liabilities.
1.9. Assumed Parent Company Liabilities.
"Assumed Parent Company Liabilities" shall mean all Liabilities of PCC
Parent listed on Schedule 1.9, and, in any event, excludes any Retained
Liabilities.
1.10. Assumed Partner Liabilities.
"Assumed Partner Liabilities" shall mean all Liabilities of the Asset Sale
Company listed on Schedule 1.10, and, in any event, excludes any Retained
Liabilities.
1.11. Business.
"Business" shall mean the ownership of the Purchased Assets.
1.12. Buyer.
"Buyer" shall have the meaning given to it in the preamble of this
Agreement.
1.13. Buyer Closing Certificate.
"Buyer Closing Certificate" shall mean the certificate of Buyer
substantially in the form of Exhibit B attached hereto.
1.14. Buyer Designee.
"Buyer Designee" shall have the meaning set forth in Section 5.10.
11
1.15. Buyer's Parent.
"Buyer's Parent" shall mean Alpha Natural Resources, LLC, a Delaware
limited liability company.
1.16. Closing.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement beginning at 10:00 a.m., local time, on the Closing Date, at the
offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia 23219.
1.17. Closing Date.
"Closing Date" shall mean November 30, 2002 or such other date as the
parties may mutually agree in writing.
1.18. Coal Act.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of 1992
as amended through the Closing Date (codified at Subtitle J of the Code).
1.19. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate, any predecessor or successor provisions of Law, and all regulations
thereunder.
1.20. Consortium Agreement.
"Consortium Agreement" shall mean the Second Amended and Restated
Consortium Agreement, dated as of July 1, 1987, initially by and among Ashland
Terminal, Inc., a Delaware corporation, Cavalier Coal Terminal Company, a
Delaware corporation, James River Coal Terminal Company, a Delaware corporation,
Peabody Terminals, Inc., a Delaware corporation, BHP-Utah Terminal Company, a
Delaware corporation, Westmoreland Terminal Company, a Delaware corporation, and
the Asset Sale Company, as amended by the First Amendment thereto dated as of
March 31, 1989, the Second Amendment thereto dated as of .September 30, 1989,
the Third Amendment thereto dated as of September 11, 1990, and the Fourth
Amendment thereto dated as of November 15, 1992, the Fifth Amendment thereto
dated as of December 31, 2001.
12
1.21. Consortium Documents.
"Consortium Documents" shall mean, collectively, the Consortium Agreement,
the Operating Agreement, the Throughput Agreement, the Transportation Agreement
and the Parent Company Agreement.
1.22. Contaminated.
"Contaminated" shall mean the presence of one or more Hazardous Substances
in such quantity or concentration as to: (i) violate any Environmental Law; (ii)
require disclosure to any Governmental Authority; (iii) require remediation or
removal; (iv) interfere with or prevent the use of any of the Purchased Assets
or the Facilities as customarily intended; or (v) create any contribution
Liability to fund the clean up of the Facilities.
1.23. CPA Arbitrator.
"CPA Arbitrator" shall have the meaning set forth in Section 2.8 hereof.
1.24. Dispute.
"Dispute" shall have the meaning set forth in Section 9.14 hereof.
1.25. DTA.
"DTA" shall mean Dominion Terminal Associates, a Virginia general
partnership.
13
1.26. DTA Activities.
"DTA Activities" shall mean those activities of DTA that have taken place
on or through the use of the Facilities that involve receiving, unloading,
storing, and handling and loading coal and coal by-products.
1.27. DTA Environmental Liabilities.
"DTA Environmental Liabilities" shall mean any obligation the Asset Sale
Company may have as a DTA Partner for Liabilities that relate or arise from any
Hazardous Substance related to the DTA Activities conducted in accordance with
standard industry practices.
1.28. DTA Partners.
"DTA Partners" shall mean all of the partners of DTA.
1.29. DTA Revenue Bonds.
"DTA Revenue Bonds" shall mean $43,160,000 principal amount of Coal
Terminal Revenue Refunding Bonds, Series 1992, due June 1, 2020, issued by the
Peninsula Ports Authority of Virginia, and any amendments, modifications,
refundings or refinancings thereof.
1.30. Environmental Laws.
"Environmental Laws" shall mean collectively, all federal, foreign, state,
and local Laws in effect as of the Closing Date that relate to (a) the
prevention, abatement or elimination of pollution, or the protection of the
environment, or of natural resources, including, without limitation, Laws
applicable to coal mining operations or related activities, (b) the generation,
handling, treatment, storage, disposal or transportation of waste materials, (c)
the regulation of or exposure to Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C.ss.ss.9601 et. seq. ("CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act, as amended, 42
U.S.C.ss.ss.6901 et. seq. ("RCRA"), the Clean Air Act, 42 U.S.C.ss.ss.7401 et.
seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et. seq., the Toxic Substances
Control Act, 15 U.S.C.ss.ss.2601 et. seq., the Emergency Planning and Community
Right to Know Act, 42 U.S.C.ss.ss.11001 et. seq., and any foreign, state,
county, municipal, or local statutes, Laws or ordinances similar or analogous to
the federal statutes listed in this sentence.
14
1.31. Facilities.
"Facilities" shall have the meaning set forth in the Lease Agreement.
1.32. Governmental Authority.
"Governmental Authority" shall mean any governmental, judicial,
legislative, executive, administrative or regulatory authority of the United
States, or of any foreign, state or local government or any subdivision, agency,
commission, office, authority or bureau thereof or any quasi-governmental entity
or authority of any nature.
1.33. Hazardous Substances.
"Hazardous Substances" shall mean any substance, chemical, waste, solid,
material, pollutant or contaminant that is defined or listed as hazardous or
toxic under any applicable Environmental Laws. Without limiting the generality
of the foregoing it shall also include any radioactive material, including any
naturally-occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. 2011, et seq., any amendments or authorizations
thereof, any asbestos-containing materials in any form or condition, any
polychlorinated biphenyls in any form or condition, radioactive waste, or
natural gas, natural gas liquids, liquified natural gas, condensate, or
derivatives or byproducts thereof or oil and petroleum products or by products
and constituents thereof.
15
1.34. Indemnification and Guaranty Agreement.
"Indemnification and Guaranty Agreement" shall mean the agreement by and
among PCC Parent, PCC, Buyer and Buyer's Parent substantially in the form of
Exhibit C attached hereto.
1.35. Knowledge of PCC.
"Knowledge of PCC" shall mean, for the individuals listed on Schedule 1.35,
any such individual's actual knowledge and what any such individual should have
known after reasonable inquiry within the scope of that individual's job
responsibilities.
1.36. Law.
"Law" and "Laws" shall mean any applicable United States or foreign,
federal, state, local or other law or governmental requirement of any kind, and
the rules, regulations and orders promulgated thereunder.
1.37. Lease Agreement.
"Lease Agreement" shall mean the Lease dated as of October 15, 1982,
initially by and among the Peninsula Ports Authority of Virginia, Armco Terminal
Company, a Delaware corporation, Ashland Terminal, Inc., a Delaware corporation,
Sierra Coal Company, a Delaware corporation, Westmoreland Terminal Company, a
Delaware corporation, and the Asset Sale Company, as amended by the First
Amendment thereto dated February 27, 1984, the Second Amendment thereto date as
of July 31, 1986, the Third Amendment thereto dated as of July 1, 1987 and the
Fourth Amendment thereto dated as of November 15, 1992.
16
1.38. Liability.
"Liability" shall mean any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), including any
liability for Taxes. "Liabilities" shall mean one or more items of Liability.
1.39. Lien.
"Lien" shall mean any lien, encumbrance, mortgage, charge, claim,
restriction, pledge, security interest or imposition of any kind.
1.40. Loan Agreement.
"Loan Agreement" shall mean the Loan Agreement, dated as of November 15,
1992, between Peninsula Ports Authority of Virginia and DTA.
1.41. Material Adverse Effect.
"Material Adverse Effect" shall mean any event, change or occurrence that
individually, or together with any other event, change or occurrence, has a
material adverse impact on the Business, taken as a whole, without regard to the
duration of such material adverse impact.
1.42. Operating Agreement.
"Operating Agreement" shall mean the Amended and Restated Operating
Agreement, dated as of January 1, 1988, initially by and among DTA, Ashland
Terminal, Inc., BHP-Utah Terminal Company, Cavalier Coal Terminal Company, James
River Coal Terminal, Peabody Terminals, Inc, Westmoreland Terminal Company and
the Asset Sale Company, as amended by the First Amendment thereto dated as of
January 1, 1989, the Second Amendment thereto dated as of September 11, 1990,
the Third Amendment thereto dated as of August 24, 2000 and the Fourth Amendment
thereto dated as of December 31, 2001.
17
1.43. Ordinary Course of Business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.44. Parent Company Agreement.
"Parent Company Agreement" shall mean the Seventh Amended and Restated
Parent Company Agreement, dated as of September 11, 1990, by and among Ashland
Coal, Inc., a Delaware Corporation, Peabody Holding Company, Inc., a New York
corporation, Westmoreland Coal Company, a Delaware corporation, and PCC Parent.
1.45. Partner Matter.
"Partner Matter" shall have the meaning set forth in Section 5.10 hereof.
1.46. PCC.
"PCC" shall have the meaning given to it in the preamble to this Agreement.
1.47. PCC Closing Certificate.
"PCC Closing Certificate" shall mean the certificate of PCC substantially
in the form of Exhibit D attached hereto.
1.48. PCC Group.
"PCC Group" shall have the meaning set forth in Section 1.53 hereof.
1.49. PCC Parent.
"PCC Parent" shall mean The Pittston Company, a Virginia corporation.
18
1.50. Permits.
"Permits shall have the meaning set forth in Section 3.6 hereof.
1.51. Permitted Liens.
"Permitted Liens" shall mean those Liens affecting the Purchased Assets
that are listed on Schedule 1.51.
1.52. Person.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Authority.
1.53. Pre-Closing Period.
"Pre-Closing Period" shall mean any taxable period ending on or before the
Closing Date.
1.54. Purchased Assets.
"Purchased Assets" shall mean the rights of the Asset Sale Company with
respect to the Assigned Contracts, including in any event all of the Asset Sale
Company's rights as a partner in DTA (subject to Section 2.7 hereof) but
excluding the Retained Contract Rights.
1.55. Related Persons.
"Related Persons" shall mean related persons as that term is defined in
Section 9701(c)(2) of the Coal Act, except that it shall not include successors
in interest.
1.56. Retained Contract Rights.
"Retained Contract Rights" shall mean any and all rights under or interest
in the Assigned Contracts relating to the DTA Revenue Bonds, including without
limitation any right to, or to cause DTA to, pay, prepay, defease, call, redeem,
refund, refinance, modify or satisfy the DTA Revenue Bonds, in whole or in part,
reset any interest rate related thereto, perform any obligation of the Peninsula
Ports Authority of Virginia in respect thereof or amend, modify, restate,
terminate or assign, or cause the amendment, modification, restatement,
termination or assignment of, any document (including any Consortium Document)
related thereto. Without limiting the foregoing, the Retained Contract Rights
shall include any right enumerated in Sections 3.2, 3.3 or 3.4 of the Throughput
Agreement.
19
1.57. Retained Contract Liabilities.
"Retained Contract Liabilities" shall mean any and all Liabilities of the
Asset Sale Company under the Assigned Contracts (excluding in any event the
Assumed Liabilities) relating to the DTA Revenue Bonds, including without
limitation (i) any obligation to, or cause DTA to, pay, prepay, defease, redeem,
refund, refinance or satisfy the DTA Revenue Bonds, pay any interest thereon, or
pay any costs and expenses related thereto, (ii) any Liability enumerated in
Sections 3.2, 3.3 or 3.4 of the Throughput Agreement, (iii) any Liability
relating solely to the DTA Revenue Bonds enumerated in Section 6.1 of the
Consortium Agreement and (iv) any Liability relating to the DTA Revenue Bonds
arising out of or in connection with DTA's obligations under the Loan Agreement
or the Lease Agreement, except to the extent, in each case, that such
Liabilities (excluding the obligations to pay the principal of and interest on
the DTA Revenue Bonds and the related expenses set forth in Section 5.2 of the
Loan Agreement in amounts and in accordance with the schedule of principal and
interest payments in effect as of the date hereof with such changes as PCC shall
approve, which are and shall remain solely the Liability of the Asset Sale
Company and PCC) are caused by the negligence, misconduct or breach of any
obligation of Buyer or Buyer's Parent with respect to the Purchased Assets or
under the Assigned Contracts, the Assignment and Assumption Agreements or the
Indemnification and Guaranty Agreement.
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1.58. Retained Liabilities.
"Retained Liabilities" shall mean (a) (1) all Liabilities, if any, of the
Asset Sale Company and its Related Persons (collectively, the "PCC Group") under
the Coal Act, and (2) all Liabilities, if any, of the PCC Group under any
post-Closing amendments to the Coal Act for (i) beneficiaries eligible under the
Coal Act who are assigned to a member of the PCC Group or for whom a member of
the PCC Group is required to provide or pay for medical benefits pursuant to
Sections 9711 or 9712 of the Coal Act or (ii) death benefit premiums or
unassigned beneficiary premiums (as those terms are used in Sections 9704(c) and
9704(d) of the Coal Act) for beneficiaries eligible under the Coal Act, that are
assessed against any member of the PCC Group; provided, for the avoidance of
doubt, that the Liabilities retained pursuant to (1) and (2) above shall not be
affected by Buyer or any of its Affiliates being identified under the Coal Act
or any post-Closing amendments thereto as a successor, successor in interest or
"Related person" under the Coal Act or any post-Closing amendments thereto to
any member of the PCC Group solely as a result of Buyer's purchase of the
Purchased Assets; (b) all Liabilities, if any, of the Asset Sale Company for
cash advances or other contributions to DTA in respect of Terminal Operating
Expenses (as defined in the Operating Agreement) accrued through, and allocable
to the period ending on, the Closing Date; and (c) all Retained Contract
Liabilities.
1.59. Tax or Taxes.
"Tax" or "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
custom duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, reclamation fees or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, but shall not
include, for purposes of this Agreement only, Liabilities under the Coal Act, of
whatever nature and regardless of how denominated.
21
1.60. Tax Return.
"Tax Return" shall mean any original or amended report, return,
declaration, claim for refund, statement, document, schedule, attachment or
other information supplied or required to be supplied to a Governmental
Authority with respect to Taxes, including any return of an affiliated, combined
or unitary group.
1.61. Throughput Agreement.
"Throughput Agreement" shall mean the Amended and Restated Throughput and
Handling Agreement, dated as of July 1, 1987, initially by and among Ashland
Terminal, Inc., Cavalier Coal Terminal Company, James River Coal Terminal
Company, Peabody Terminals, Inc., Westmoreland Terminal Company, the Asset Sale
Company and DTA, as amended by the First Amendment thereto dated as of September
30, 1989, the Second Amendment thereto dated as of September 11, 1990, the Third
Amendment thereto dated as of November 15, 1992, and the Fourth Amendment
thereto dated as of June 2, 1994.
1.62. Transportation Agreement.
"Transportation Agreement" shall mean the Fifth Amendment effective as of
January 1, 1988 to the Transportation Agreement, dated as of April 24, 1982,
initially by and among CSX Transportation, Inc., Ashland Terminal, Inc.,
Cavalier Coal Terminal Company, James River Coal Terminal Company, Peabody
Terminals, Inc., BHP-Utah Terminal Company, Westmoreland Terminal Company, the
Asset Sale Company and DTA, as amended by the Sixth Amendment thereto dated as
of January 1, 1989, and the Seventh Amendment thereto dated as of September 11,
1990.
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1.63. Voting Agreement.
"Voting Agreement" shall mean the voting agreement substantially in the
form of Exhibit G attached hereto.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets.
On the Closing Date, PCC (on behalf of the Asset Sale Company) shall cause
to be sold, conveyed, transferred and assigned to Buyer, and Buyer shall
acquire, the Purchased Assets. At the Closing, subject to the terms and
conditions of this Agreement, PCC agrees to: (i) cause all of its rights and
interest in the Purchased Assets to be transferred to Buyer; and (ii) perform
its obligations under this Agreement to be performed at or before Closing. In
consideration for the Purchased Assets, Buyer shall: (i) assume the Assumed
Partner Liabilities; (ii) cause Buyer's Parent to assume the Assumed Parent
Liabilities; and (iii) perform its obligations under this Agreement to be
performed at or before Closing. Buyer and Buyer's Parent shall not assume or
have any responsibility with respect to any Liability of PCC Parent, PCC, the
PCC Group or the Asset Sale Company that is not an Assumed Liability.
2.2. Assignment and Assumption Agreements and Other Documents.
At the Closing, PCC shall cause the Asset Sale Company and PCC Parent to:
(i) execute and deliver to Buyer the Assignment and Assumption Agreements and
such other documents as may be necessary to convey to Buyer the Purchased
Assets; and (ii) perform its obligations under the Agreement to be performed at
or before the Closing.
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2.3. Assumption of Liabilities.
At the Closing, Buyer shall execute and deliver, and shall cause Buyer's
Parent to execute and deliver, to PCC the Assignment and Assumption Agreements
and such other documents and instruments as may be necessary for Buyer and
Buyer's Parent to assume all of the Assumed Liabilities. Buyer and Buyer's
Parent shall not assume or have any responsibility, however, with respect to any
Liability of PCC Parent, PCC, the PCC Group or the Asset Sale Company that is
not an Assumed Liability.
2.4. Proration of Liabilities.
PCC and Buyer shall cooperate with each other to provide for payments due
with respect to the Assumed Liabilities and the Retained Liabilities. If,
following the Closing, Buyer or any of its post-Closing Affiliates receives or
is the beneficiary of any payment or credit in any form with respect to the
Asset Sale Company (other than the Purchased Assets) or DTA that should (or, but
for the Closing, would) have been paid or credited to PCC or its Affiliates,
Buyer shall forward, or shall cause such post-Closing Affiliate to forward, an
amount equal to such payment or credit to PCC within five business days of
receipt. If, following the Closing, PCC or any of its post-Closing Affiliates
receives any payment in any form with respect to the Purchased Assets that
should have been paid to Buyer or its Affiliates, PCC shall forward, or shall
cause such post-Closing Affiliate to forward, such payment to Buyer within five
business days of receipt.
2.5. Indemnification and Guaranty Agreement.
At the Closing, PCC and Buyer shall, and PCC shall cause the PCC Parent and
Buyer shall cause Buyer's Parent to, execute and deliver the Indemnification and
Guaranty Agreement.
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2.6. Additional Documents.
At the Closing, PCC and Buyer shall, and PCC shall cause the Asset Sale
Company and the PCC Parent to, and Buyer shall cause Buyer's Parent to, execute
and deliver all such other documents or instruments necessary or appropriate to
effect the transactions contemplated by this Agreement, including the documents
provided in this Article II.
2.7. Partner Status.
It is the desire and intention of the parties that Buyer become, and that
the Asset Sale Company withdraw and be released as, a full partner in DTA. To
that end, each of PCC and Buyer will use its commercially reasonable efforts to
cause the other DTA Partners to execute such documents as may be necessary to
(a) admit Buyer as a full partner in DTA, (b) cause the withdrawal of the Asset
Sale Company as a full partner in DTA and release the Asset Sale Company from
all of its Liabilities under the Consortium Documents (other than any Retained
Liabilities), and (c) amend the Transportation Agreement to evidence the
foregoing, provided that all such documents and amendments shall provide that
the Retained Contract Rights and Retained Liabilities shall remain with the
Asset Sale Company.
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2.8. Allocation of Assumed Liabilities.
The Assumed Liabilities (to the extent they constitute part of the amount
realized for federal Income Tax purposes) shall be allocated among the Purchased
Assets in accordance with a schedule to be agreed upon by Buyer and PCC after
the Closing Date. Buyer shall prepare such allocation schedule and deliver it to
PCC upon a date to be agreed upon between the parties, which date shall be no
later than 60 days after the Closing Date. PCC shall be deemed to agree with
such allocation schedule unless, within ten (10) days after the date PCC
receives the allocation schedule from Buyer, PCC notifies Buyer in writing of
(i) each allocation with which it disagrees and (ii) for each such allocation,
the amount that PCC proposes to allocate. If PCC provides such notice to Buyer,
the parties shall proceed in good faith to resolve mutually the disputed
allocation amounts within fifteen (15) days after the date on which PCC notifies
Buyer of a disagreement with Buyer's proposed allocation. If PCC and Buyer
cannot resolve any such differences, the parties agree to submit such
differences to arbitration in Abingdon, Virginia by the accounting firm of
Deloitte & Touche, LLP or another accounting firm mutually acceptable to both
parties (the "CPA Arbitrator") to resolve such differences. The CPA Arbitrator
shall make such review and examination of the relevant facts and documents as
the CPA Arbitrator deems appropriate and shall permit each of Buyer and PCC to
make a written presentation of their respective positions. Within forty-five
(45) days after submission of such dispute by both parties, the CPA Arbitrator
shall resolve such dispute in writing and shall prepare and deliver its
decision, which shall (i) be based upon a determination of the fair market value
of the Purchased Assets, (ii) defer to valuations that have been prepared in
accordance with generally accepted valuation techniques absent manifest error,
(iii) be final and binding upon the parties without further recourse or
collateral attack and (iv) accept either Buyer's or PCC's position in its
entirety. The party whose position is not accepted by the CPA Arbitrator shall
pay all fees and costs of such CPA Arbitrator to arbitrate such dispute. The
allocation schedule shall include, at a minimum, information necessary to
complete Part II of IRS Form 8594. The allocation to the Purchased Assets is
intended to comply with the requirements of Section 1060 of the Code. The
parties shall cooperate to comply with all substantive and procedural
requirements of Section 1060 and, after the completion and agreement by the
parties to the allocation schedule, such allocation schedule shall be adjusted
only if and to the extent necessary to comply with such requirements of Section
1060. Buyer and PCC agree that they will not take nor will they permit any
Affiliate to take, for Income Tax purposes, any position inconsistent with such
allocation schedule to the Purchased Assets; provided, however, that (i) Buyer's
cost for the Purchased Assets may differ from the total amount allocated
hereunder to reflect the inclusion in the total cost of items (for example,
capitalized acquisition costs) not included in the total amount so allocated and
(ii) the amount realized by the Asset Sale Company may differ from the total
amount allocated hereunder to reflect transaction costs that reduce the amount
realized for federal Income Tax purposes.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PCC
PCC hereby represents and warrants to Buyer that the statements contained
in this Article III are correct and complete, except as set forth in the
Schedules delivered by PCC to Buyer in connection with this Agreement. The
Schedules are arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article III.
3.1. Incorporation.
PCC and the Asset Sale Company are corporations duly organized, validly
existing and in good standing under the Laws of the respective state or
commonwealth of each such company's incorporation. PCC is duly qualified or
licensed to transact business as a foreign corporation in Virginia and is in
good standing under the laws of Virginia. Set forth on Schedule 3.1 is the name
of each state or other jurisdiction in which each such company has either paid
taxes or had an office in the three years prior to the date of this Agreement.
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3.2. Execution, Delivery and Performance.
The execution, delivery and performance by PCC of this Agreement and by PCC
and the Asset Sale Company of each other agreement or instrument to which it is
a party executed in connection herewith or delivered pursuant hereto and the
consummation of the transactions contemplated herein and therein will not, with
or without the giving of notice or the passage of time, or both: (i) conflict
with, or result in a violation or breach of, or a default, right to accelerate,
right to exercise any remedy or loss of rights under, or result in the creation
of any Lien (other than Permitted Liens) under or pursuant to, any provision of
PCC's or the Asset Sale Company's Articles of Incorporation or Bylaws or of any
material franchise, mortgage, deed of trust, Lien, lease, license, instrument,
agreement, consent, approval, waiver or understanding to which PCC or the Asset
Sale Company is a party or by which the Asset Sale Company is bound, or any Law
or any order, judgment, writ, injunction or decree to which PCC or the Asset
Sale Company is a party or by which PCC, the Asset Sale Company or the Purchased
Assets may be bound or affected; (ii) require the approval, consent or
authorization of, prior notice to, or filing or registration with any
Governmental Authority or, contravene, conflict with or result in a violation of
any of the terms or requirements of, or give any Governmental Authority the
right to revoke, withdraw, suspend, cancel or terminate any authorization issued
by a Governmental Authority that is held by PCC or the Asset Sale Company or
that otherwise relates to the Purchased Assets; or (iii) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under any Law
to which PCC or the Asset Sale Company is subject.
3.3. Authorization.
PCC has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder and each of PCC, PCC Parent and the
Asset Sale Company has full power and authority to enter into and deliver each
other agreement or instrument to which it is a party executed in connection
herewith and delivered pursuant hereto and to perform its obligations
thereunder. PCC's execution, delivery and performance of this Agreement and the
execution, delivery and performance of all other agreements and instruments by
PCC, PCC Parent and the Asset Sale Company in connection herewith and delivered
pursuant hereto and the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of PCC, PCC Parent and
the Asset Sale Company. This Agreement and all other agreements or instruments
executed by PCC, PCC Parent or the Asset Sale Company in connection herewith and
delivered by PCC, PCC Parent or the Asset Sale Company pursuant hereto have been
duly executed and delivered by PCC, PCC Parent or the Asset Sale Company and
this Agreement and all other agreements and instruments executed by PCC, PCC
Parent or the Asset Sale Company in connection herewith and delivered by PCC,
PCC Parent or the Asset Sale Company pursuant hereto constitute the legal, valid
and binding obligation of PCC, PCC Parent or the Asset Sale Company, as the case
may be, enforceable in accordance with their respective terms (subject to any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting generally the enforcement of creditors' rights).
3.4. Purchased Assets.
The Asset Sale Company owns a valid interest in the Purchased Assets,
including without limitation a 32.5% partnership interest in DTA, free from
Liens and restrictions on transfer, other than Permitted Liens.
3.5. DTA Facilities.
To the Knowledge of PCC, the Lease Agreement is a valid and enforceable
lease of the Facilities (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally the
enforcement of creditors' rights). No rights of the Asset Sale Company under the
Lease Agreement have been assigned or otherwise transferred as security for any
obligation of the Asset Sale Company. The consummation of the transactions
contemplated by this Agreement will not create or constitute, either with or
without notice or the passage of time, a default or event of default under the
Lease Agreement or require the consent of any other party to the Lease Agreement
in order to avoid a default or event of default.
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3.6. DTA Permits.
To the Knowledge of PCC, DTA owns or holds all permits, licenses, orders,
certificates, registrations, approvals, consents and authorizations
(collectively, "Permits") of all Governmental Authorities and all other Permits
necessary for the conduct of its business as currently conducted.
3.7. Absence of Changes.
To the Knowledge of PCC, since December 31, 2001, DTA has not:
(a) borrowed or agreed to borrow any funds or incurred, or become subject
to, any Liability, or issued any note, bond or other debt security, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation, except Liabilities incurred in the Ordinary Course of
Business, none of which would reasonably be expected to result in an
impact greater than $100,000;
(b) paid any Liability other than current Liabilities in the Ordinary
Course of Business;
(c) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of any of its assets or properties, or
canceled or otherwise terminated, or agreed to cancel or otherwise
terminate, other than in the Ordinary Course of Business, any Permits;
29
(d) except in the Ordinary Course of Business, entered into any agreement,
contract, lease or license (or series of related agreements,
contracts, leases or licenses) or made or permitted any material
amendment to or termination, acceleration, modification or
cancellation of any written contract or agreement to which it is a
party or breached any provision of any such contract or agreement;
(e) merged or consolidated with any other Person;
(f) mortgaged, pledged or subjected to any Lien any of its assets or
properties;
(g) made any capital expenditure (or series of related capital
expenditures) (x) involving more than $100,000 or (y) outside the
Ordinary Course of Business;
(h) made any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related
capital investments, loans and acquisitions) either (x) involving
$100,000 or (y) outside the Ordinary Course of Business;
(i) delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
(j) cancelled, compromised, waived or released any right or claim (or
series of related rights and claims) either (x) involving more than
$100,000 or (y) outside the Ordinary Course of Business;
(k) made any loan to, or entered into any other transaction with, any of
the partners, managers or employees of DTA outside the Ordinary Course
of Business;
(l) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such
contract;
30
(m) except in the Ordinary Course of Business adopted, amended, modified
or terminated any bonus, profit-sharing, incentive, severance or other
plan, contract or commitment for the benefit of any of employees of
DTA, or taken any such action with respect to any other employee
benefit plan;
(n) made any other change in employment terms for any of the managers or
employees of DTA outside the Ordinary Course of Business;
(o) suffered any damage, destruction or loss (excluding operating losses),
whether or not covered by insurance, that has had or would reasonably
be expected to have a Material Adverse Effect;
(p) implemented or adopted any change in its accounting methods or
principles or the application thereof; or
(q) entered into any agreement, arrangement or understanding with respect
to any of the foregoing.
3.8. Assigned Contracts.
(a) PCC has made available to Buyer copies of all of the written Assigned
Contracts, or a written summary setting forth the terms and conditions
where no copies exist, including all amendments, modifications,
waivers and elections applicable thereto. The Assigned Contracts are
all of the agreements related to the Purchased Assets to which the
Asset Sale Company or PCC Parent is a party.
(b) As to the Asset Sale Company party thereto: (i) the Assigned Contracts
are valid and binding, enforceable in accordance with their respective
terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally
the enforcement of creditors' rights), and are in full force and
effect; (ii) the consummation of the transactions contemplated herein
will not, with or without the giving of notice or the passage of time,
or both, conflict with, or result in a violation or breach of, or a
default, right to accelerate, right to exercise any remedy or loss of
rights under the Assigned Contracts; (iii) the Asset Sale Company is
not, nor to the Knowledge of PCC, is any other party in material
breach or default, and no event has occurred that, with notice or
lapse of time, would constitute a breach or default, or permit
termination, modification or acceleration, under the Assigned
Contracts; and (iv) the Asset Sale Company has not, nor to the
Knowledge of PCC has any other party, repudiated any provision of the
Assigned Contracts.
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(c) Schedule 3.8(c) sets forth the consents and approvals of third parties
and Governmental Authorities required to be obtained as a result of
the transactions contemplated by this Agreement. PCC has provided the
written notices of right of first refusal to all general partners of
DTA as specified in Sections 7.2(ii)(a),(b),(c) and (d) of the
Consortium Agreement and the time periods applicable to each right of
first refusal have expired without notice being made by any such
partner of its exercise of any such right.
3.9. Litigation; Claims.
Schedule 3.9 lists all claims, legal actions, suits, litigation,
arbitrations, disputes, investigations, proceedings by or before any
Governmental Authority involving more than $100,000 and all orders, decrees or
judgments, now pending or in effect, or, to the Knowledge of PCC, threatened or
contemplated, against or affecting the Asset Sale Company, the Purchased Assets
or the consummation of the transactions contemplated by this Agreement, except
to the extent involving Taxes for Pre-Closing Periods.
32
3.10. Legal Compliance.
As it may affect the Purchased Assets, the Asset Sale Company and its
predecessors and Affiliates and, to the Knowledge of PCC, DTA, have complied in
all material respects with all Laws as presently in effect, and no material
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice is pending against any of the Asset Sale Company and its
predecessors and Affiliates or, to the Knowledge of PCC, DTA, alleging any
failure so to comply.
3.11. Environmental Compliance.
(a) To the Knowledge of PCC, DTA is in material compliance with all
Environmental Laws related to the Facilities.
(b) To the Knowledge of PCC, (A) none of the Facilities has been or is
being used in any manner associated with the production, manufacture,
processing, generation, storage, treatment, disposal, management,
shipment or transportation of Hazardous Substances and none of such
Facilities is Contaminated by any Hazardous Substance; (B) there are
no underground storage tanks regulated pursuant to RCRAss.9001 (42
U.S.C.ss. 6991) or equivalent authorized state program, and no above
ground storage tanks, located at, on, in or under the Facilities; (C)
there is no asbestos-containing material in any form or condition
located at, on, in or under the Facilities; (D) there are no materials
or equipment containing polychlorinated biphenyls located at, on, in
or under the Facilities, (E) there are no landfills or other areas
located at, on, in or under the Facilities where Hazardous Substances
have been disposed; and (F) DTA has not disposed of any Hazardous
Substance at any offsite disposal area located on the property of any
other Person, other than a facility permitted by any Governmental
Authority with jurisdiction to receive such Hazardous Substance.
33
(c) To the Knowledge of PCC, DTA has not, with respect to the Facilities,
either expressly or by operation of Law, assumed or undertaken any
Liability, including without limitation, any Liability for corrective
or remedial action, of any other Person relating to any Environmental
Laws.
3.12. No Broker.
None of the Asset Sale Company, PCC or the PCC Parent has had any dealings,
negotiations or communications with or retained any broker or other intermediary
in connection with the transactions contemplated by this Agreement and none of
the foregoing is committed to any Liability for any brokers' or finders' fees or
any similar fees in connection with the transactions contemplated hereby, other
than Rothschild Inc., who shall be compensated solely by PCC or an Affiliate of
PCC.
3.13. Powers of Attorney.
There are no outstanding powers of attorney executed on behalf of the Asset
Sale Company affecting the Purchased Assets.
3.14. Transactions With Affiliates.
The Assigned Contracts do not include any Liability between the Asset Sale
Company and any Affiliate of the Asset Sale Company. At the Closing, the
Purchased Assets will not include any receivable or other Liability from an
Affiliate of the Asset Sale Company.
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3.15. Absence of Certain Payments.
During the five (5) year period prior to the date of this Agreement, to the
Knowledge of PCC, neither the Asset Sale Company nor DTA has (nor has any
director, officer, agent, or employee of the Asset Sale Company or DTA nor any
other person, acting on behalf of the Asset Sale Company or DTA) directly or
indirectly: used any of such company's funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from such company's funds;
violated any provision of the Foreign Corrupt Practices Act of 1977 applicable
to such company; established or maintained any unlawful or unrecorded fund of
such company's monies or other assets; made any false or fictitious entry on the
books or records of such company; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment, to any person or entity, private
or public, regardless of form, whether in money, property, or services, to
obtain favorable treatment in securing business or to obtain special concessions
for such company, or to pay for favorable treatment for business secured or for
special concessions already obtained for such company.
3.16. Disclosure.
The representations and warranties contained in this Article III do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article III not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to PCC that:
4.1. Organization.
Buyer is a duly formed limited liability company, validly existing and in
good standing under the Laws of the State of Delaware.
4.2. Execution, Delivery and Performance.
The execution, delivery and performance of this Agreement and each other
agreement or instrument executed in connection herewith or delivered pursuant
hereto and the consummation of the transactions contemplated herein and therein
will not, with or without the giving of notice or the passage of time, or both,
(i) conflict with, or result in a violation or breach of, or a default, right to
accelerate or loss of rights under, or result in the creation of any Lien, under
or pursuant to, any provision of Buyer's organizational documents or of any
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding, any Law, or any finding, order,
judgment, writ, injunction or decree to which Buyer is a party or by which Buyer
or its respective assets may be bound or affected; or (ii) require the approval,
consent or authorization of, or prior notice to, filing with or registration
with, any Governmental Authority, or any other Person or entity.
4.3. Authorization.
Buyer has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder, and each of Buyer and Buyer's Parent
has full power and authority to enter into and deliver each other agreement or
instrument to which it is a party executed in connection herewith or delivered
pursuant hereto and to perform its obligations thereunder. Buyer's execution,
delivery and performance of this Agreement and the execution, delivery and
performance of all other agreements and instruments by Buyer and Buyer's Parent
in connection herewith or delivered pursuant hereto and the transactions
contemplated hereby have been duly authorized by all requisite action on the
part of Buyer and Buyer's Parent. This Agreement and all other agreements or
instruments executed by Buyer or Buyer's Parent in connection herewith or
delivered by Buyer or Buyer's Parent pursuant hereto have been duly executed and
delivered by Buyer and this Agreement and all other agreements and instruments
executed by Buyer or Buyer's Parent in connection herewith or delivered by Buyer
pursuant hereto constitute the legal, valid and binding obligation of Buyer or
Buyer's Parent, as the case may be, enforceable in accordance with their
respective terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally the
enforcement of creditors' rights).
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4.4. No Broker.
Buyer has had no dealings, negotiations or communications with any broker
or other intermediary in connection with the transactions contemplated by this
Agreement nor is it committed to any Liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated hereby.
4.5. Reclamation and Environmental Compliance.
Buyer and all operators it owns or controls are in compliance with all
Environmental Laws in all material respects.
4.6. Financing.
Buyer will have available to it, at the Closing, financial resources
sufficient to consummate the transactions contemplated by this Agreement.
4.7. Disclosure.
The representations and warranties contained in this Article IV do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article IV not misleading.
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ARTICLE V
CERTAIN COVENANTS
5.1. Operation in Ordinary Course.
Except as provided in this Agreement, between the date of this Agreement
and the Closing, PCC shall cause the Asset Sale Company, in relation to the
Purchased Assets, to: (i) carry on its business in the Ordinary Course of
Business; (ii) use commercially reasonable efforts to preserve intact its
current business organization and properties until the Closing Date, and
maintain the relations and good will with its suppliers, customers, landlords,
creditors, agents, and others having business relationships with the Asset Sale
Company; (iii) not enter into any contract or other obligation binding upon the
Asset Sale Company involving its employees, any union, or an expenditure,
purchase, sale, cost or commitment (unless such contract is cancelable in thirty
or fewer days, involves less than $100,000, or is for consumable purchases)
without the prior written consent of Buyer; and (iv) report regularly to Buyer
concerning the status of the business and finances of the Asset Sale Company.
5.2. Compliance with Law.
Between the date of this Agreement and the Closing, the Asset Sale Company
shall comply in all material respects with all applicable Laws and with all
orders of any Governmental Authority.
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5.3. Cooperation.
Subject to the terms and conditions herein provided, each of PCC and Buyer
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper and
advisable under Law, to consummate and make effective the transactions
contemplated by this Agreement, including obtaining the consents, approvals and
releases required by Sections 2.7, 6.1 and 6.3. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, PCC and Buyer will, and PCC will cause the Asset
Sale Company and the PCC Parent to, execute any additional instruments
reasonably necessary to consummate the transactions contemplated hereby.
5.4. Notices and Consents.
PCC and Buyer each will use their commercially reasonable efforts to obtain
consents of all Governmental Authorities and other third parties necessary to
the consummation of the transactions contemplated by this Agreement. PCC and
Buyer will use their commercially reasonable efforts to cause the other DTA
Partners to (a) execute such documents as may be necessary to admit Buyer, and
cause the withdrawal and release of the Asset Sale Company, as a full partner in
DTA and (b) amend the Transportation Agreement to evidence the foregoing. PCC
shall have responsibility for providing any notices to third parties that may be
required by the transactions contemplated by this Agreement and for obtaining,
or causing to be obtained, at its sole cost and expense, the consents listed on
Schedule 5.4(a) and Buyer shall have responsibility for obtaining, at its sole
cost and expense, all consents listed on Schedule 5.4(b).
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5.5. Publicity.
All general notices, releases, statements and communications to any
employees, suppliers, distributors and customers of the Asset Sale Company, to
the general public and to the press relating to the transactions contemplated by
this Agreement shall be made only at such times and in such manner as may be
mutually agreed upon by PCC and Buyer; provided, however, that either party
hereto (or, in the case of PCC, the PCC Parent) shall be entitled to make a
public announcement of the foregoing if: (a) in the opinion of its legal
counsel, such announcement is required to comply with Law or any listing
agreement with any national securities exchange or inter-dealer quotation
system; and (b) such disclosing party gives a reasonable period of notice and
opportunity to comment to the other party hereto of its intention to make such
public announcement; provided that, failure to comment within 24 hours of
receipt of such notice shall be deemed a waiver of the opportunity to comment;
and provided, further, that nothing in this Section 5.5 shall operate to
prohibit the Asset Sale Company or Buyer from communicating, after the Closing
Date, with their respective suppliers, distributors, customers and Governmental
Authorities the fact that the transaction has occurred or to employees regarding
their employment or the terms and conditions thereof, the operation of the
Purchased Assets or matters necessarily related thereto.
5.6. Exclusivity.
PCC will not (nor will it cause or permit the Asset Sale Company or the PCC
Parent to) (i) solicit, initiate or encourage the submission of any proposal or
offer from any Person relating directly or indirectly to the acquisition of the
Purchased Assets, or any portion thereof, or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. PCC will notify Buyer immediately if
any Person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
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5.7. Access.
At or prior to the Closing Date, PCC will permit (and will cause the Asset
Sale Company to permit) representatives of Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Asset Sale Company, to all premises, properties,
personnel, books, records (including Tax records), contracts and documents of or
pertaining to the Purchased Assets. Copies of and access to accounting records,
ledgers and other pertinent documents or work papers related to the Purchased
Assets will be made available to Buyer at all reasonable times, and in a manner
so as not to interfere with the normal business operations of the Asset Sale
Company, upon request.
5.8. Notice of Developments.
Each party will give prompt written notice to the other party of any
material adverse development causing a breach of any of its own representations
and warranties in Article III and Article IV above. No disclosure by any party
pursuant to this Section 5.8, however, shall be deemed to amend or supplement
the Schedules to such representations and warranties or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
5.9. Further Assurances.
The parties shall cooperate in a commercially reasonable manner with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the transactions
contemplated.
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5.10. Voting Agreement.
(a) In furtherance of the desire of the parties that Buyer have all
the rights of a full partner in DTA, PCC hereby agrees that, from and after
the Closing Date, until such time as Buyer shall have been admitted as a
full partner in DTA, PCC shall, or shall cause the Asset Sale Company to,
give Buyer prior written notice of any matter submitted to the DTA partners
(whether such matter is submitted to a vote, written consent or other
approval) (a "Partner Matter"). The notice provided to Buyer shall include
a description of the Partner Matter and the date and time fixed for taking
action on such Partner Matter, and such notice shall be given no later than
the earlier of (a) two days after the Asset Sale Company becomes aware
(whether by written notice or otherwise) of any Partner Matter to be
submitted to the DTA partners for consideration and (b) prior to the time
any action is taken on such Partner Matter. As soon as practicable
following receipt of such notice by Buyer, and in any event no later than
the time specified for action in such notice, Buyer shall inform PCC or the
Asset Sale Company in writing of how Buyer would elect to vote, whether
Buyer would grant consent or approval, or how Buyer would elect to act on
the Partner Matter and PCC shall cause the Asset Sale Company to vote its
interest as a partner in DTA as Buyer may so instruct, subject to the
Retained Contract Rights and Section 5.10(b) hereof. Alternatively, at
Buyer's request, the Asset Sale Company shall appoint a person designated
by Buyer, in its sole discretion, as the agent of the Asset Sale Company
(the "Buyer Designee"), pursuant to the Consortium Agreement and the other
Consortium Documents, to (i) receive all notices regarding Partner Matters,
(ii) attend or otherwise participate in any meetings of the DTA Partners
and (iii) vote on Partner Matters, subject to the Retained Contract Rights
and Section 5.10(b) hereof. Buyer agrees to, or to cause the Buyer Designee
to: (i) send a copy of each written notice received by the Buyer Designee
regarding a Partner Matter within two days after receipt of such notice to
the Asset Sale Company; (ii) when possible, give the Asset Sale Company an
opportunity to have a representative observe meetings of the DTA partners;
and (iii) deliver to the Asset Sale Company a written summary of all
actions taken with respect to a Partner Matter within two days of such
action. Buyer agrees to indemnify and hold harmless the Pittston
Indemnified Persons from any and all Adverse Consequences resulting from
actions by the Asset Sale Company pursuant to this Section 5.10 or by the
Buyer Designee (as such terms are defined in the Indemnification and
Guaranty Agreement). On the Closing Date, Buyer shall, and PCC shall cause
the Asset Sale Company to, enter into the Voting Agreement. The parties
acknowledge and agree that the Voting Agreement shall be assignable by
Buyer to a third party Transferee in connection with a Transfer pursuant to
Section 5.11 or to an Affiliate.
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(b) Pursuant to this Asset Purchase Agreement, the Asset Sale Company
has retained as part of the Retained Contract Rights any and all rights to
take, and to cause DTA to take or prevent DTA from taking, any action in
respect of the Retained Contract Rights, the Loan Agreement or the DTA
Revenue Bonds. In the event Buyer exercises its rights under the Voting
Agreement, Buyer shall not, and shall not permit DTA to, take any action in
respect of the Retained Contract Rights, the Loan Agreement, the DTA
Revenue Bonds, or any other action that creates a Liability for the Asset
Sale Company related to the DTA Revenue Bonds. Further, Buyer shall not,
and shall not permit DTA to, breach any provision or covenant contained in
Sections 2.2(f), 3.2, 6.1, 6.3 and 6.4 of the Loan Agreement.
5.11. Subsequent Transfer of Purchased Assets.
If, at any time following the Closing Date, but prior to the time that
Buyer has been admitted (and the Asset Sale Company released) as a full partner
in DTA, Buyer (or any of its Affiliates) desires to sell, assign or otherwise
transfer (a "Transfer") all or any portion of the Purchased Assets to another
Person (the "Transferee"), then Buyer shall provide written notice of such
proposed Transfer to PCC, together with a copy of the most recent financial
statements of such Transferee, which PCC shall agree to keep confidential and
not use for any purpose other than evaluating the creditworthiness of the
Transferee. Provided that the net assets (i.e., total assets minus total
liabilities) of the Transferee as of the date of such most recent financial
statements and as of the date of such Transfer is not less than $25,000,000,
then PCC shall consent to such Transfer and shall, and shall cause the Asset
Sale Company to, take all actions as may be reasonably requested by Buyer to
effect the Transfer and use its commercially reasonable efforts to cause the
Transferee to be admitted as a full partner of DTA (and, in the event the
Transferee is not so admitted as a DTA Partner, to provide the Transferee with
the same rights and benefits as provided to Buyer hereunder in respect of the
Purchased Assets and the Asset Sale Company's partnership interest in DTA,
including without limitation, the rights set forth in the Voting Agreement);
each of Buyer and PCC shall be required to bear its own costs and expenses of
all such actions only in respect of one such Transfer (regardless of whether
such Transfer involves a transfer of all or a portion of Buyer's interest in
DTA), and Buyer shall be required to bear the costs and expenses of all such
actions (and shall reimburse PCC and the Asset Sale Company promptly upon
request for any expense reasonably incurred by them in connection with such
actions) with respect to any additional Transfer of Purchased Assets.
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ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions precedent:
(a) no action, suit, proceeding, order, decree or injunction shall
have been commenced, threatened or entered by or before any Governmental
Authority that remains in force and that (i) prohibits, seeks to prohibit,
or imposes or seeks substantial damages in connection with, the
consummation of the transactions contemplated by this Agreement, (ii) seeks
or imposes relief that causes or would cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(iii) affects adversely the right of Buyer to own the Purchased Assets or
to operate the Business on or after the Closing Date;
(b) PCC Parent, PCC, Buyer and Buyer's Parent shall have executed and
delivered to each other party thereto the Indemnification and Guaranty
Agreement and any other documentation required in all transactions
contemplated or covered by such agreement, in form and substance as set
forth in Exhibit C attached hereto and the same shall be in full force and
effect;
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(c) All other transactions pursuant to which Buyer or any of its
Affiliates acquire assets related to the Business shall have been
consummated prior to or simultaneously with the transactions contemplated
by this Agreement;
(d) PCC and Buyer shall have executed and delivered to each other all
such other documents or instruments necessary or appropriate to effect the
transactions contemplated by this Agreement; and
(e) PCC shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(i) and PCC shall have provided such
payments and/or assurances as may be reasonably required to obtain all such
consents. Buyer shall have obtained, or caused to have been obtained, the
consents listed in Schedule 6.1(e)(ii) and Buyer shall have provided such
payments, guarantees and/or assurances as may be reasonably required to
obtain all such consents.
6.2. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions precedent:
(a) all of the representations and warranties of PCC set forth in this
Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, without regard to any qualification or limitation with respect to
materiality (whether by reference to "Material Adverse Effect" or
otherwise), shall be true and correct in all respects as of the date hereof
and at and as of the Closing Date with the same effect as though such
representations and warranties were made at and as of the Closing unless
the aggregate failure of such representations or warranties to be true and
correct does not have a Material Adverse Effect; provided that if a
representation or warranty is expressly made only as of a specific date, it
need only be true and correct in all respects as of such date, and Buyer
shall have received the PCC Closing Certificate required by Section 6.2(g)
below dated as of the Closing Date executed by PCC to such effect;
(b) all of the covenants and obligations that PCC is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing Date shall have been duly performed and complied with in all
material respects;
(c) all proceedings and actions, corporate or other, to be taken by
PCC, the Asset Sale Company or PCC Parent in connection with the
transactions contemplated by this Agreement and all documents incident
thereto, including all actions necessary to authorize the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby, shall have been taken and shall be reasonably
satisfactory in form and substance to Buyer and Buyer's counsel;
(d) PCC shall have, and shall have caused the Asset Sale Company to
have, executed and delivered the Assignment and Assumption Agreements and
such other documents as may be necessary to convey to Buyer the Purchased
Assets;
(e) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that, individually, or
together with any other change, event or occurrence, has had or could
reasonably be expected to have a Material Adverse Effect;
(f) Buyer shall have received an opinion of counsel to PCC addressed
to Buyer substantially in the form of Exhibit E; and
(g) Buyer shall have received an executed copy of the PCC Closing
Certificate.
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6.3. Conditions Precedent to Obligations of PCC.
The obligation of PCC to consummate and cause the consummation of the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions precedent:
(a) all of the representations and warranties of Buyer set forth in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, without regard to any qualification or limitation with respect to
materiality, shall be true and correct in all respects as of the date
hereof and at and as of the Closing Date with the same effect as though
such representations and warranties were made at and as of the Closing
unless the aggregate failure of such representations or warranties to be
true and correct does not have a material adverse effect on Buyer's ability
to consummate the transactions contemplated by this Agreement or fulfill
its post-Closing obligations hereunder; provided that if a representation
or warranty is expressly made only as of a specific date, it need only be
true and correct in all respects as of such date, and PCC shall have
received Buyer's Closing Certificate required by Section 6.3(g) below dated
as of the Closing Date executed by Buyer to such effect;
(b) all of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing Date shall have been duly performed and complied with in all
material respects;
(c) all proceedings and actions, corporate or other, to be taken by
Buyer and Buyer's Parent in connection with the transactions contemplated
by this Agreement, and all documents incident thereto, including all
actions necessary to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby, shall have been
taken and shall be reasonably satisfactory in form and substance to PCC and
its counsel;
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(d) Buyer shall have executed and delivered the Assignment and
Assumption Agreements (subject to Section 2.7) and such other documents as
may be necessary for Buyer to assume all of the Assumed Liabilities;
(e) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that, individually, or
together with any other change, event or occurrence, has had or could
reasonably be expected to have a Material Adverse Effect;
(f) PCC shall have received an opinion of counsel to Buyer addressed
to PCC substantially in the form of Exhibit F;
(g) PCC shall have received an executed copy of Buyer's Closing
Certificate; and
(h) PCC and PCC Parent shall have been released from all requirements
and obligations related to the Assumed Liabilities for the period after the
Closing Date.
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ARTICLE VII
CERTAIN TAX MATTERS
7.1. Distributive Share of DTA for 2002.
Within 15 days after Closing, if Buyer has been admitted as a partner in
DTA, PCC and Buyer agree that they shall jointly request DTA to determine each
DTA partner's (including Buyer) 2002 distributive share of any item of income,
gain, loss, deduction or credit of the partnership by not only closing the books
at year end, but also by determining the distributive share of the items noted
as if the books were closed on the Closing Date. The intent under this section
is not to simply allocate such items between PCC and Buyer based upon the number
of days of partnership interest ownership in calendar year 2002.
7.2. Transfer Taxes.
All transfer, recording and similar Taxes arising in connection with the
transactions contemplated hereunder shall be borne equally by PCC and Buyer. PCC
and Buyer shall (and they shall cause their respective Affiliates to) cooperate
to comply with all Tax Return requirements for such Taxes and provide such
documentation and take such other actions as may be necessary to minimize the
amount of any such Taxes.
7.3. Access for Tax Returns.
Following the Closing Date, Buyer shall, at reasonable times, and in a
manner so as not to interfere with normal business operations, allow PCC (and if
requested by PCC, representatives of federal, state or local agencies) access to
the Purchased Assets for purposes of reviewing information pertinent to any Tax
Return filed by PCC Parent or any of its Affiliates, including the Asset Sale
Company.
ARTICLE VIII
TERMINATION
8.1. Termination.
This Agreement may be terminated prior to the Closing Date
only as follows:
(a) by mutual written consent of PCC and Buyer;
(b) by either PCC or Buyer, if the Closing Date shall not have
occurred prior to the close of business on December 31, 2002 or such later
date as the parties may agree in writing (provided, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause, in whole or in part, of, or has resulted in, the
failure of the conditions in Article VI to be satisfied and the Closing
Date to occur on or before such date);
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(c) by PCC or Buyer if an action, suit, or proceeding, shall have been
commenced or threatened by or before any Governmental Authority, or any
order, decree or injunction shall have been entered therein, that (i)
prohibits, seeks to prohibit, or imposes or seeks substantial damages in
connection with, the consummation of the transactions contemplated by this
Agreement, (ii) seeks or imposes relief that causes or would cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affects adversely the right of Buyer to own the
Purchased Assets or to operate the Business;
(d) by Buyer if (i) the representations of PCC contained in this
Agreement are not true and correct in all material respects as if made at
and as of that time, except for failures to be true and correct that are
capable of being and are cured within fifteen (15) days after written
notice from Buyer to PCC of such failure or (ii) PCC has failed to comply
materially with its respective obligations under this Agreement, except for
failures to comply that are capable of being and are cured within fifteen
(15) days after written notice from Buyer to PCC of such failure; or
(e) by PCC if (i) the representations of Buyer contained in this
Agreement are not true and correct in all material respects as if made at
and as of that time, except for failures to be true and correct that are
capable of being and are cured within fifteen (15) days after written
notice from PCC to Buyer of such failure or (ii) Buyer has failed to comply
materially with its obligations under this Agreement, except for failures
to comply that are capable of being and are cured within fifteen (15) days
after written notice from the PCC to Buyer of such failure.
8.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 8.1 hereof, all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further Liability of either party to the other except: (a) as set forth
in Section 9.4; and (b) for breaches of representations, warranties, or
covenants or for fraud. PCC and Buyer hereby agree that the provisions of this
Section 8.2 and of Section 9.4 shall survive any termination of this Agreement
pursuant to the provisions of this Article VIII.
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ARTICLE IX
MISCELLANEOUS
9.1. Entire Agreement.
This Agreement, the documents referred to herein and to be delivered
pursuant hereto and any other agreement entered into contemporaneously with this
Agreement among PCC, PCC Parent, Buyer and Buyer's Parent or the Affiliates of
any of them constitute the entire agreement between the parties pertaining to
the subject matter hereof, and supersede all prior agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein.
9.2. Amendment.
This Agreement may be amended by an instrument in writing and signed on
behalf of all of the parties hereto at any time.
9.3. Extension; Waiver.
At any time prior to the Closing Date, the parties may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein, other than the conditions contained in Section 6.1(a) hereof
as it relates to the entry of an order in any proceeding by or before a
Governmental Authority. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
and signed on behalf of such party.
9.4. Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of their
respective counsel, investment bankers, financial advisors, accountants and
other experts and the other expenses incident to the negotiation and preparation
of this Agreement and consummation of the transactions contemplated hereby.
9.5. Bulk Sales Waiver.
Buyer hereby waives compliance with all applicable bulk sales Laws.
9.6. Governing Law.
This Agreement shall be construed and interpreted according to the Laws of
the Commonwealth of Virginia, without regard to the conflicts of Law rules
thereof.
9.7. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, provided that PCC may assign its rights
hereunder to any Affiliate of PCC after the Closing Date without the consent of
Buyer and Buyer may assign its rights hereunder to any Affiliate of Buyer prior
to, at or after the Closing Date without the consent of PCC and, further
provided, that nothing in this Agreement shall prevent a successor in interest
to either party from enforcing the provisions of this Agreement.
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9.8. Notices.
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, or, in the case of notices pursuant to
Section 5.10 hereof, by confirmed facsimile on the business day transmitted, if
such facsimile transmission was sent prior to 5:00 p.m., in all cases addressed
to the person for whom it is intended at his address set forth below or to such
other address as a party shall have designated by notice in writing to the other
party in the manner provided by this Section 9.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
Facsimile: (276) 889-6160
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
Facsimile: (804) 289-9765
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And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
Facsimile: (804) 344-7999
If to Buyer: Alpha Terminal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
Facsimile:
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
Facsimile:
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Facsimile:
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
Facsimile:
9.9. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and Section headings
in this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
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9.10. Interpretation; Construction.
(a) Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural,
all words in the plural number shall extend to and include the singular and
all words in any gender shall extend to and include all genders.
(b) This Agreement has been fully negotiated by the parties hereto and
shall not be construed by any Governmental Authority or arbitrator against
either party as the drafting party.
9.11. Severability.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
9.12. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement and PCC and Buyer assume
no Liability to any third party because of any reliance on the representations,
warranties and agreements of PCC and Buyer contained in this Agreement, other
than Section 5.5 hereof, which are intended to be for the benefit of the Persons
expressly covered thereby and may be enforced by such Persons.
9.13. Retention of and Access to Records.
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record retention policies and practices those books and records relating
to the Asset Sale Company delivered to Buyer. Buyer also shall provide to PCC
and its Affiliates reasonable access thereto, during normal business hours and
on at least three days' prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or litigation. Buyer
shall deliver to PCC at least thirty days written notice prior to the
destruction or other disposal of any such books and records. PCC and its
Affiliates may elect to take delivery of any such books and records that Buyer
intends to destroy or otherwise dispose of and to copy any such books and
records that Buyer intends to keep, all at their own expense.
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9.14. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute"), excluding any dispute or disagreement among the parties
concerning the allocation of the Assumed Liabilities, which shall be resolved
pursuant to Section 2.8, or with respect to the Voting Agreement, which shall be
resolved pursuant to the provisions thereof, shall be decided by binding
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association. PCC and Buyer shall jointly select one arbitrator. If
the two parties shall fail to select an arbitrator within fourteen calendar days
after arbitration is requested, then such arbitrator shall be selected by the
American Arbitration Association or any successor thereto upon application of
either party. No Dispute shall be consolidated in any arbitration with any
dispute, claim or controversy of any other party. The arbitration shall be
conducted in Roanoke, Virginia, and any court having jurisdiction thereof may
immediately issue judgment on the arbitration award. The parties agree that the
arbitration provided for in this Section 9.14 shall be the exclusive means to
resolve all Disputes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ALPHA TERMINAL COMPANY, LLC
By: /s/ Eddie Neely
-------------------------------
Name: Eddie Neely
Title: Vice President
PITTSTON COAL COMPANY
448 N. E. Main Street
Lebanon, Virginia 24266
December 13, 2002
Alpha Terminal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Agreement"), dated
as of October 29, 2002, as amended to but not including the date hereof by and
between Pittston Coal Company ("PCC") and Alpha Terminal Company, LLC ("Buyer").
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Agreement.
PCC and Buyer desire to amend certain provisions of the Agreement and, in
consideration of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Section 1.61 of the Agreement is amended by inserting immediately
after "November 15, 1992" at the end of Section 1.61 of the Agreement
with the following:
", and the Fourth Amendment thereto, dated as of June 2, 1994"
2. The Schedules to the Agreement are hereby amended and restated in
their entirety as attached hereto as Exhibit A.
3. Except as amended by this letter agreement, the Agreement shall
continue in full force and effect.
4. This letter agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any executed counterpart
of this letter agreement or other signature hereto delivered by a
party by facsimile shall be deemed for all purposes as being good and
valid execution and delivery of this letter agreement by such party.
Sincerely,
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-----------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ACKNOWLEDGED AND AGREED:
ALPHA TERMINAL COMPANY, LLC
By: /s/ Eddie Neely
-----------------------------------
Name: Eddie Neely
Title: Vice President
INDEMNIFICATION AND GUARANTY AGREEMENT
INDEMNIFICATION AND GUARANTY AGREEMENT, dated as of December 13, 2002,
by and among PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), THE PITTSTON
COMPANY, a Virginia corporation ("Pittston"), ALPHA NATURAL RESOURCES, LLC, a
Delaware limited liability company ("Buyer's Parent") and ALPHA TERMINAL
COMPANY, LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, Buyer and PCC have entered into an asset purchase agreement
dated October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto, as the same may be amended from time to time in accordance
with the terms thereof, being hereinafter referred to as the "Acquisition
Agreement"), pursuant to which Buyer will purchase or acquire from PCC and
certain of its Affiliates certain assets, and assume certain liabilities, all
upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, PCC and Buyer desire to provide for the terms upon which they
will indemnify each other with respect to certain matters relating to the
transactions contemplated by the Acquisition Agreement;
WHEREAS, Pittston owns, indirectly, all of the outstanding capital
stock of PCC and, as an inducement to Buyer to enter into the Acquisition
Agreement, has agreed to guarantee the obligations of PCC and certain of PCC's
Affiliates under this Agreement and the Acquisition Agreement; and
WHEREAS, Buyer's Parent owns all of the outstanding membership
interests of Buyer and, as an inducement to PCC to enter into the Acquisition
Agreement, has agreed to guarantee the obligations of Buyer under this Agreement
and the Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have
the meanings specified below. All capitalized terms used but not otherwise
defined in this Agreement shall have the meanings specified in the Acquisition
Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Adverse Consequences.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
1.3. Basket.
"Basket" shall have the meaning set forth in Section 2.1(b)(i) hereof.
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1.4. Buyer.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
1.5. Buyer Indemnified Persons.
"Buyer Indemnified Persons" shall mean Buyer, its Affiliates (including,
after Closing, one or more Buyer Affiliates formed to hold the Virginia coal
operations of PCC acquired pursuant to the Acquisition Agreement), and their
respective members, directors, officers, employees, consultants, agents,
attorneys and representatives.
1.6. Buyer's Parent.
"Buyer's Parent" shall have the meaning set forth in the preamble to this
Agreement.
1.7. Buyer's Parent Guaranty.
"Buyer's Parent Guaranty" shall have the meaning set forth in Section 3.2
hereof.
1.8. Claim Notice.
"Claim Notice" shall have the meaning set forth in Section 2.3(b) hereof.
1.9. Dispute.
"Dispute" shall have the meaning set forth in Article VII hereof.
1.10. Indemnified Party.
"Indemnified Party" shall have the meaning set forth in Section 2.3(b)
hereof.
1.11. Indemnifying Party.
"Indemnifying Party" shall have the meaning set forth in Section 2.3(b)
hereof.
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1.12. Other Acquisition Agreements.
"Other Acquisition Agreements" shall mean the agreements set forth on
Schedule A attached hereto.
1.13. Other Indemnification Agreements.
"Other Indemnification Agreements" shall mean the agreements set forth on
Schedule B attached hereto.
1.14. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.15. Pittston.
"Pittston" shall have the meaning set forth in the preamble to this
Agreement.
1.16. Pittston Guaranty.
"Pittston Guaranty" shall have the meaning set forth in Section 3.1 hereof.
1.17. Pittston Indemnified Persons.
"Pittston Indemnified Persons" shall mean Pittston, PCC, the Asset Sale
Companies and their respective directors, officers, employees, agents,
stockholders and their respective Affiliates, and their respective directors,
officers, employees, consultants, agents, attorneys and representatives.
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ARTICLE II
INDEMNIFICATION
2.1. Indemnification by PCC.
(a) PCC agrees to indemnify and hold harmless Buyer Indemnified
Persons from and against, and reimburse them for, any and all Adverse
Consequences that any Buyer Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by PCC to Buyer in the Acquisition Agreement either: (A) as of
the date on which such representation or warranty was made or (B) as
of the Closing Date (provided that the consummation of the
transactions contemplated by the Acquisition Agreement in accordance
with the terms shall not be deemed without more to have cause a breach
of any representation or warranty);
(ii) any failure by PCC to carry out, perform, satisfy or
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under the Acquisition Agreement (other than
Article VII thereof);
(iii) any failure by PCC to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under Article VII of the Acquisition Agreement;
and
(iv) any failure by PCC or the Asset Sale Company to satisfy the
Retained Liabilities.
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(b) Notwithstanding the provisions of Section 2.1(a), PCC shall not be
required to indemnify any of Buyer Indemnified Persons with respect to the
matters described in Sections 2.1(a)(i) and 2.1(a)(ii):
(i) unless and until the sum of (A) the Adverse Consequences for
which indemnification pursuant to (1) Sections 2.1(a)(i) and
2.1(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by
Buyer to obtain any of the consents listed on Schedule 6.1(e)(i) of
the Acquisition Agreement or in Schedule 6.1(e)(i) of the Other
Acquisition Agreements, shall exceed $100,000 (the "Basket"), in which
case the entire amount of such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted pursuant to
Section 2.3 on or before the second anniversary of the Closing Date
for any other matter described in Section 2.1(a)(i) or (ii); and
(iii) for any matter, to the extent that the aggregate amount of
the Adverse Consequences for which Buyer Indemnified Persons have been
indemnified pursuant to Sections 2.1(a)(i) and 2.1(a)(ii) or in
Sections 2.1(a)(i) and 2.1(a)(ii) of the Other Indemnification
Agreements exceeds $15,000,000 (the "Cap").
(c) Notwithstanding the foregoing, PCC agrees that any claim by a
Buyer Indemnified Person for indemnification (i) arising out of, relating
to, in the nature of or caused by any breach of PCC's representations
specified in Sections 3.1, 3.2, 3.3, 3.4 and 3.12 of the Acquisition
Agreement or (ii) pursuant to Section 2.1(a)(iii), shall not be subject to
the provisions of paragraph (b) of this Section 2.1.
(d) PCC agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Buyer Indemnified Persons
for Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Buyer Indemnified
Persons may suffer after the end of any applicable survival period, as long
as a claim for indemnification is made before the end of the applicable
survival period and the Adverse Consequences suffered relate to such
claim).
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2.2. Indemnification by Buyer.
(a) Buyer agrees to indemnify and hold harmless Pittston Indemnified
Persons from and against and reimburse them for, any and all Adverse
Consequences that any Pittston Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by Buyer in the Acquisition Agreement either: (A) as of the date
on which such representation or warranty was made or (B) as of the
Closing Date (provided that the consummation of the transactions
contemplated by the Acquisition Agreement in accordance with its terms
shall not be deemed without more to have caused a breach of any
representation or warranty);
(ii) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under the Acquisition Agreement (other than
Article VII thereof);
(iii) the ownership of the Purchased Assets on or after the
Closing Date;
(iv) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under Article VII of the Acquisition Agreement;
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(v) any liability that any Pittston Indemnified Person may suffer
or incur or become subject to as a result of (A) any action taken by
the Asset Sale Company pursuant to the Voting Agreement; and (B) any
action taken by the Buyer Designee; and
(vi) any failure by Buyer to satisfy the Assumed Liabilities.
(b) The foregoing notwithstanding, Buyer shall not be required to
indemnify any Pittston Indemnified Persons with respect to the matters
described in Sections 2.2(a)(i) and 2.2(a)(ii):
(i) unless and until the sum of (A) Adverse Consequences for
which indemnification pursuant to (1) Sections 2.2(a)(i) and
2.2(a)(ii) or (2) in Sections 2.2(a)(i) and 2.2(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by PCC
to obtain any of the consents listed on Schedule 6.1(e)(ii) of the
Acquisition Agreement or in Schedule 6.1(e)(ii) of the Other
Acquisition Agreements, shall exceed the Basket, in which case the
entire amount of such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted on or before the
second anniversary of the Closing Date pursuant to Section 2.3; and
(iii) for any matter, to the extent that the aggregate amount of
Adverse Consequences for which the Pittston Indemnified Persons have
been indemnified pursuant to Sections 2.2(a)(i) and 2.2(a)(ii) or in
Sections 2.2(a)(i) and 2.2(a)(ii) of the Other Indemnification
Agreements exceeds the Cap.
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(c) Notwithstanding the foregoing, Buyer agrees that any claim by a
Pittston Indemnified Person for indemnification (i) arising out of,
relating to, in the nature of or caused by any breach of Buyer's
representations specified in Sections 4.1, 4.2, 4.3 and 4.4 of the
Acquisition Agreement or (ii) pursuant to Sections 2.2(a)(iii) through
2.2(a)(vi), shall not be subject to the provisions of paragraph (b) of this
Section 2.2.
(d) Notwithstanding the foregoing, nothing in Section 2.2(a)(iii)
shall diminish the right of any Buyer Indemnified Person to seek
indemnification from PCC after the Closing Date pursuant to the terms of
this Agreement.
(e) Buyer agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Pittston Indemnified Persons
for Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Pittston
Indemnified Persons may suffer after the end of any applicable survival
period, as long as a claim for indemnification is made before the end of
the applicable survival period and the Adverse Consequences suffered relate
to such claim).
2.3. Indemnification Procedures.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved pursuant to this Section 2.3.
(b) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice (a "Claim Notice") to the party
required to provide such indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has notice of any Adverse Consequence
which may give rise to a claim for indemnification against the other party
under this Agreement, provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced. The Indemnified
Party shall not be required to commence litigation or take any action
against any third party prior to delivery of the Claim Notice.
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(c) The Indemnifying Party will have the right (at its expense) to
assume the investigation and/or defense of any Adverse Consequence or any
litigation resulting therefrom so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing (within 20 days after the
Indemnified Party has given the Claim Notice) that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of the
Adverse Consequence, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend, and
otherwise indemnify for, the Adverse Consequence and fulfill its
indemnification obligations hereunder and (iii) the Adverse Consequence
involves only money damages and does not seek an injunction or other
equitable relief.
(d) So long as the Indemnifying Party is conducting the defense of the
Adverse Consequence in accordance with Section 2.3(c), (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Adverse Consequence, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Adverse Consequence without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Adverse
Consequence without the prior written consent of the Indemnified Party;
provided, that the Indemnifying Party may consent to such judgment or enter
into such settlement without the prior written consent of the Indemnified
Party so long as an unconditional term of any such judgment or settlement
includes the giving by the claimant or plaintiff to the Indemnified Party
of a release from all liability with respect to such Adverse Consequence.
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(e) In the event any of the conditions in Section 2.3(c) is or becomes
unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Adverse Consequence in any manner it may reasonably deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Adverse Consequence
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequence
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Adverse Consequence to the fullest
extent provided in this Agreement.
2.4. Insurance Proceeds.
The amount of any indemnification payable in connection with any
transaction contemplated by this Agreement or the Acquisition Agreement shall be
net of any insurance proceeds available, under any insurance policies in effect
at the time that are maintained in the Ordinary Course of Business, to a Buyer
Indemnified Person or a Pittston Indemnified Person, respectively, in connection
with the events or circumstances giving rise to the indemnification. For
purposes of this Section 2.4, any pollution and legal liability insurance
policies or an insurance policy covering loss in connection with the
representations and warranties contained in the Acquisition Agreement will be
deemed not to be maintained in the Ordinary Course of Business.
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2.5. Exclusivity of Rights and Procedures.
The parties agree that, except as set forth in Article VII of the
Acquisition Agreement or in any other Articles titled "Certain Tax Matters" of
the Other Acquisition Agreements, this Agreement shall constitute the sole and
exclusive remedy of the parties hereto with respect to the subject matters
addressed in this Agreement, the Acquisition Agreement and the transactions
contemplated by the Acquisition Agreement. Each party to this Agreement hereby
waives and releases the other parties from any and all claims and other causes
of action, including claims for contribution, related to those subject matters,
other than claims (i) pursuant to the terms of this Agreement, (ii) related to
the Assumed Liabilities (in the case of the Pittston Indemnified Persons), (iii)
for fraud, and (iv) for injunctive relief.
ARTICLE III
GUARANTIES
3.1. Pittston Guaranty.
(a) Pittston hereby irrevocably and unconditionally guarantees to
Buyer (the "Pittston Guaranty") the full and punctual performance and
compliance by PCC with each and every covenant, term and condition to be
performed or complied with by PCC under this Agreement and the Acquisition
Agreement. The Pittston Guaranty expressed in this Section 3.1 is an
absolute, present, primary and continuing guaranty of performance and
compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce such performance or compliance by
PCC or upon any other condition or contingency.
(b) Pittston hereby expressly waives (i) notice of acceptance of the
Pittston Guaranty and (ii) any other notice given to PCC in accordance with
the provisions of the Agreement on any default under the Agreement or
otherwise. Pittston hereby authorizes Buyer to forbear with respect to,
amend, modify, enlarge, extend, compromise and discharge any or all of the
obligations of PCC under the Agreement without notice to or consent by
Pittston. Pittston acknowledges and agrees that its liability under the
Pittston Guaranty is joint and several with PCC and, upon any default by
PCC, Buyer shall not be obligated to first attempt enforcement against PCC.
Pittston hereby waives any and all defenses to enforcement of the Pittston
Guaranty, now existing or hereafter arising, which may be available to
guarantors, sureties and other secondary parties at law or in equity.
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(c) Pittston represents and warrants to Buyer that (i) Pittston is a
corporation validly existing and in good standing under the laws of the
Commonwealth of Virginia; (ii) all necessary corporate action has been duly
taken by it to authorize the execution, delivery and performance by it of
the Pittston Guaranty, (iii) the Pittston Guaranty is being executed on
Pittston's behalf by a duly authorized representative, (iv) the Pittston
Guaranty is the legally valid and binding obligation of Pittston
enforceable in accordance with its terms, and (v) the execution and the
delivery of the Pittston Guaranty will not (A) conflict with, or result in
a violation or breach of, or a default, right to accelerate, right to
exercise any remedy or loss of rights under, or result in the creation of
any Lien (other than Permitted Liens) under or pursuant to, any provision
of Pittston's Articles of Incorporation or Bylaws or of any material
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding to which Pittston is a party or
by which Pittston is bound, or any Law or any order, judgment, writ,
injunction or decree to which Pittston is a party or by which Pittston may
be bound or affected; (B) require the approval, consent or authorization
of, prior notice to, or filing or registration with any Governmental
Authority or contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Authority the right
to revoke, withdraw, suspend, cancel or terminate any authorization or
permit issued by a Governmental Authority that is held by Pittston or that
otherwise relates to the Pittston's business; or (C) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under
any Law to which Pittston is subject.
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(d) Pittston agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by Buyer
Indemnified Persons in enforcing Pittston's liability to Buyer Indemnified
Persons under the Pittston Guaranty whether or not a civil action or
similar proceeding (including claims and proceedings in and before the
bankruptcy court or arbitrators) is filed, prosecuted or appealed. If an
action or proceeding is filed, prosecuted or appealed, the reasonableness
of such attorney fees shall be determined by the trial judge and if,
appealed, by the appellate court.
(e) The Pittston Guaranty shall be binding upon Pittston and its
successors and assigns, and shall inure to the benefit of and be
enforceable by Buyer and its successors and assigns. For purposes of the
Pittston Guaranty, Pittston shall be deemed to include the surviving entity
in any merger or consolidation involving Pittston, which survivor shall be
bound by the provisions of the Pittston Guaranty and this Agreement.
3.2. Buyer's Parent Guaranty.
(a) Buyer's Parent hereby irrevocably and unconditionally guarantees
to PCC (the "Buyer's Parent Guaranty") the full and punctual performance
and compliance by Buyer with each and every covenant, term and condition to
be performed or complied with by Buyer under this Agreement and the
Acquisition Agreement. Buyer's Parent Guaranty expressed in this Section
3.2 is an absolute, present, primary and continuing guaranty of performance
and compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce such performance or compliance by
Buyer or upon any other condition or contingency.
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(b) Buyer's Parent hereby expressly waives (i) notice of acceptance of
Buyer's Parent Guaranty and (ii) any other notice given to Buyer in
accordance with the provisions of the Agreement on any default under the
Agreement or otherwise. Buyer's Parent hereby authorizes PCC to forbear
with respect to, amend, modify, enlarge, extend, compromise and discharge
any or all of the obligations of Buyer under the Agreement without notice
to or consent by Buyer's Parent. Buyer's Parent acknowledges and agrees
that its liability under Buyer's Parent Guaranty is joint and several with
Buyer and, upon any default by Buyer, PCC shall not be obligated to first
attempt enforcement against Buyer. Buyer's Parent hereby waives any and all
defenses to enforcement of Buyer's Parent Guaranty, now existing or
hereafter arising, which may be available to guarantors, sureties and other
secondary parties at law or in equity.
(c) Buyer's Parent represents and warrants to PCC that (i) Buyer's
Parent is a limited liability company validly existing and in good standing
under the laws of the State of Delaware; (ii) all necessary corporate
action has been duly taken by it to authorize the execution, delivery and
performance by it of Buyer's Parent Guaranty, (iii) Buyer's Parent Guaranty
is being executed on Buyer's Parent's behalf by a duly authorized
representative, (iv) Buyer's Parent Guaranty is the legally valid and
binding obligation of Buyer's Parent enforceable in accordance with its
terms, and (v) the execution and the delivery of Buyer's Parent Guaranty
will not (A) conflict with, or result in a violation or breach of, or a
default, right to accelerate, right to exercise any remedy or loss of
rights under, or result in the creation of any Lien (other than Permitted
Liens) under or pursuant to, any provision of Buyer's Parent's Certificate
of Formation, Operating Agreement or other organizational documents or of
any material franchise, mortgage, deed of trust, lease, license,
instrument, agreement, consent, approval, waiver or understanding to which
Buyer's Parent is a party or by which Buyer's Parent is bound, or any Law
or any order, judgment, writ, injunction or decree to which Buyer's Parent
is a party or by which Buyer's Parent may be bound or affected; (B) require
the approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or contravene, conflict with
or result in a violation of any of the terms or requirements of, or give
any Governmental Authority the right to revoke, withdraw, suspend, cancel
or terminate any authorization or permit issued by a Governmental Authority
that is held by Buyer's Parent or that otherwise relates to Buyer's
Parent's business; or (C) give any Governmental Authority or other Person
the right to challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which Buyer's
Parent is subject.
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(d) Buyer's Parent agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by the
Pittston Indemnified Persons in enforcing Buyer's Parent's liability to the
Pittston Indemnified Persons under Buyer's Parent Guaranty whether or not a
civil action or similar proceeding (including claims and proceedings in and
before the bankruptcy court or arbitrators) is filed, prosecuted or
appealed. If an action or proceeding is filed, prosecuted or appealed, the
reasonableness of such attorney fees shall be determined by the trial judge
and if, appealed, by the appellate court.
(e) Buyer's Parent Guaranty shall be binding upon Buyer's Parent and
its successors and assigns, and shall inure to the benefit of and be
enforceable by PCC and its successors and assigns. For purposes of Buyer's
Parent Guaranty, Buyer's Parent shall be deemed to include the surviving
entity in any merger or consolidation involving Buyer's Parent, each of
whom shall be bound by the provisions of the Buyer's Parent Guaranty and
this Agreement.
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ARTICLE IV
SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
ARTICLE V
NOTICES
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other parties in the
manner provided by this Article V:
if to PCC or Pittston, to them at:
Pittston Coal Company
448 N.E. Main Street
P. O. Box 5100
Lebanon, Virginia 24266
Attention: President
with a copy to:
Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P. O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
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and a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
if to Buyer:
Alpha Terminal Company, LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
if to Buyer's Parent, to it at:
Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
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with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
19
ARTICLE VI
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but this
Agreement and the rights, interests or obligations hereunder shall not be
assignable by Buyer's Parent, Buyer, Pittston or PCC without the prior written
consent of the other parties and any attempt to make such an assignment without
such consent shall be void and of no effect.
ARTICLE VII
ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to designate an arbitrator within fourteen (14) calendar days after arbitration
is requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Article VII shall be the exclusive means to resolve all
Disputes.
20
ARTICLE VIII
MISCELLANEOUS
8.1. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
8.2. Integration.
This Agreement and any other agreement entered into contemporaneously with
this Agreement among PCC, Pittston, Buyer and Buyer's Parent or the Affiliates
of any of them constitute the entire agreement and supercede all prior
agreements and understandings not reflected in the Acquisition Agreement, both
written and oral, among the parties with respect to the subject matter hereof.
8.3. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument.
8.4. Governing Law.
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Commonwealth of Virginia, without
regard to the conflicts of laws principles thereof.
21
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ALPHA TERMINAL COMPANY, LLC,
a Delaware limited liability company
By:/s/ Eddie Neely
----------------------------------------
Name: Eddie Neely
Title: Vice President
ALPHA NATURAL RESOURCES, LLC, a Delaware limited
liability company
By:/s/ Michael J. Quillen
-----------------------------------------
Name: Mike Quillen
Title: President
PITTSTON COAL COMPANY,
a Delaware corporation
By:/s/ Michael D. Brown
-----------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
THE PITTSTON COMPANY,
a Virginia corporation
By:/s/ James B. Hartough
-----------------------------------------
Name: James B. Hartough
Title: Vice President - Corporate Finance
and Treasurer
22
Schedule A
Asset Purchase Agreement by and between Pittston Coal Company and
Dickenson-Russell Coal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Paramont
Coal Company Virginia, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Land and Reserves, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Coal Sales Co., LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Maxxim
Rebuild Co., LLC, dated as of October 29, 2002, as amended.
23
Schedule B
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Dickenson-Russell Coal Company, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Paramont Coal Company Virginia, LLC and Alpha Natural
Resources, LLC, dated as of December 132002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Land and Reserves, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Coal Sales Co., LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Maxxim Rebuild Co., LLC and Alpha Natural Resources, LLC,
dated as of December 13, 2002.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
MAXXIM REBUILD CO., LLC
October 29, 2002
1
ARTICLE I DEFINITIONS............................................................................................1
1.1. Administrative Services Agreement.....................................................................1
1.2. Affiliate.............................................................................................2
1.3. Agreement.............................................................................................2
1.4. Asset Sale Companies..................................................................................2
1.5. Assignment and Assumption Agreements..................................................................2
1.6. Assumed Liabilities...................................................................................2
1.7. Bills of Sale.........................................................................................3
1.8. Books and Records.....................................................................................3
1.9. Business..............................................................................................3
1.10. Buyer.................................................................................................3
1.11. Buyer's Affiliates, Successors, Assigns, Lessees or Contractors.......................................3
1.12. Buyer Closing Certificate.............................................................................4
1.13. Buyer's Parent........................................................................................4
1.14. Closing...............................................................................................4
1.15. Closing Date..........................................................................................4
1.16. Coal Act..............................................................................................4
1.17. COBRA.................................................................................................4
1.18. Code..................................................................................................5
1.19. Contaminated..........................................................................................5
1.20. Contracts.............................................................................................5
1.21. Controlled Group......................................................................................5
1.22. Cooperation Agreement.................................................................................5
1.23. CPA Arbitrator........................................................................................5
1.24. Dispute...............................................................................................5
1.25. Employee..............................................................................................6
1.26. Employee Benefit Plans................................................................................6
1.27. Environment...........................................................................................6
1.28. Environmental Laws....................................................................................6
1.29. Environmental Matter..................................................................................7
1.30. Environmental or Response Action......................................................................7
1.31. EPA...................................................................................................8
1.32. Equipment.............................................................................................8
1.33. ERISA.................................................................................................8
1.34. ERISA Affiliates......................................................................................8
1.35. Fiduciary.............................................................................................8
1.36. Governmental Authority................................................................................8
1.37. Hazardous Substances..................................................................................9
1.38. Health and Safety Requirements........................................................................9
1.39. HIPAA.................................................................................................9
1.40. Income Tax or Income Taxes............................................................................9
1.41. Indemnification and Guaranty Agreement...............................................................10
2
1.42. Intellectual Property................................................................................10
1.43. IRS..................................................................................................10
1.44. Knowledge of PCC.....................................................................................10
1.45. Law..................................................................................................11
1.46. Lien.................................................................................................11
1.47. Liability............................................................................................11
1.48. Material Adverse Effect..............................................................................11
1.49. Medical Plans........................................................................................11
1.50. Multiemployer Plan...................................................................................12
1.51. Ordinary Course of Business..........................................................................12
1.52. Parts, Fuel and Supplies Inventory...................................................................12
1.53. PBGC.................................................................................................12
1.54. PCC..................................................................................................12
1.55. PCC Closing Certificate..............................................................................12
1.56. PCC Group............................................................................................12
1.57. PCC Parent...........................................................................................12
1.58. Pension Plans........................................................................................12
1.59. Permitted Liens......................................................................................13
1.60. Person...............................................................................................13
1.61. Post-Closing Period..................................................................................13
1.62. Pre-Closing Period...................................................................................13
1.63. Purchase Price.......................................................................................13
1.64. Purchased Assets.....................................................................................13
1.65. Qualified Plans......................................................................................13
1.66. Real Property........................................................................................14
1.67. Related Persons......................................................................................14
1.68. Release..............................................................................................14
1.69. Repair Activities....................................................................................14
1.70. Repair Environmental Liabilities.....................................................................14
1.71. Retained Liabilities.................................................................................15
1.72. Straddle Period......................................................................................20
1.73. Tax or Taxes.........................................................................................20
1.74. Tax Return...........................................................................................21
1.75. WARN Act.............................................................................................21
1.76. Welfare Plans........................................................................................21
1.77. Workers' Compensation Acts...........................................................................21
ARTICLE II PURCHASE AND SALE OF ASSETS.........................................................................21
2.1. Transfer of Assets...................................................................................21
2.2. Bills of Sale, Assignment and Assumption Agreements and Other Documents..............................22
2.3. Assumption of Liabilities............................................................................22
2.4. Proration of Liabilities.............................................................................22
2.5. Indemnification and Guaranty Agreement...............................................................22
3
2.6. Cooperation Agreement................................................................................23
2.7. Administrative Services Agreement....................................................................23
2.8. Additional Documents.................................................................................23
2.9. Allocation of Purchase Price and Assumed Liabilities.................................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PCC..............................................................25
3.1. Incorporation........................................................................................25
3.2. Execution, Delivery and Performance.................................................................25
3.3. Authorization........................................................................................26
3.4. Absence of Changes...................................................................................27
3.5. Real Property........................................................................................30
3.6. Purchased Assets.....................................................................................31
3.7. Intellectual Property................................................................................32
3.8. Environmental Compliance.............................................................................32
3.9. Contracts............................................................................................34
3.10. Litigation; Claims...................................................................................35
3.11. Employee Benefits....................................................................................36
3.12. Employment Matters...................................................................................40
3.13. No Broker............................................................................................41
3.14. Health and Safety Requirements.......................................................................41
3.15. Restrictions on Business Activities..................................................................42
3.16. Powers of Attorney...................................................................................42
3.17. Transactions With Affiliates.........................................................................42
3.18. Absence of Certain Payments..........................................................................42
3.19. Warranties...........................................................................................43
3.20. Disclosure...........................................................................................43
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................43
4.1. Organization.........................................................................................43
4.2. Execution, Delivery and Performance..................................................................43
4.3. Authorization........................................................................................44
4.4. No Broker............................................................................................45
4.5. Environmental Compliance.............................................................................45
4.6. Financing............................................................................................45
4.7. Disclosure...........................................................................................45
ARTICLE V CERTAIN COVENANTS....................................................................................45
5.1. Operation in Ordinary Course.........................................................................45
5.2. Compliance with Law..................................................................................46
5.3. Cooperation..........................................................................................46
5.4. Notices and Consents.................................................................................46
5.5. Publicity............................................................................................47
5.6. Replacement Bonds; Insurance and Guarantees; Other Filings...........................................48
4
5.7. Exclusivity..........................................................................................48
5.8. Access...............................................................................................49
5.9. Notice of Developments...............................................................................49
5.10. Further Assurances...................................................................................49
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.....................................................................50
6.1. Conditions Precedent to Each Party's Obligations.....................................................50
6.2. Conditions Precedent to Obligations of Buyer.........................................................51
6.3. Conditions Precedent to Obligations of PCC...........................................................53
ARTICLE VII CERTAIN TAX MATTERS................................................................................54
7.1. Property Taxes.......................................................................................54
7.2. Sales and Use Taxes..................................................................................56
7.3. Transfer Taxes.......................................................................................56
7.4. Access for Tax Returns...............................................................................56
ARTICLE VIII COVENANTS REGARDING EMPLOYEES.....................................................................57
8.1. Employees............................................................................................57
ARTICLE IX TERMINATION 57
9.1. Termination..........................................................................................57
9.2. Effect of Termination................................................................................59
ARTICLE X MISCELLANEOUS........................................................................................59
10.1. Entire Agreement.....................................................................................59
10.2. Amendment............................................................................................59
10.3. Extension; Waiver....................................................................................59
10.4. Expenses.............................................................................................60
10.5. Bulk Sales Waiver....................................................................................60
10.6. Governing Law........................................................................................60
10.7. Assignment...........................................................................................60
10.8. Notices..............................................................................................61
10.9. Counterparts; Headings...............................................................................62
10.10. Interpretation; Construction........................................................................62
10.11. Severability........................................................................................63
10.12. No Reliance.........................................................................................63
10.13. Retention of and Access to Records..................................................................63
10.14. Arbitration.........................................................................................64
5
EXHIBITS
Exhibit A Administrative Services Agreement
Exhibit B Assignment and Assumption Agreements
Exhibit C Bills of Sale
Exhibit D Buyer Closing Certificate
Exhibit E Cooperation Agreement
Exhibit F Indemnification and Guaranty Agreement
Exhibit G PCC Closing Certificate
Exhibit H Opinion of Counsel to PCC
Exhibit I Opinion of Counsel to Buyer
6
SCHEDULES
Schedule 1.4 Asset Sales Companies
Schedule 1.6 Assumed Liabilities
Schedule 1.20 Contracts of Asset Sale Companies
Schedule 1.32(a) Equipment Owned by Asset Sale Companies
Schedule 1.32(b) Equipment Leased by Asset Sale Companies
Schedule 1.42(a) Intellectual Property Owned by the Asset Sale Companies
Schedule 1.42(b) Intellectual Property Leased by the Asset Sale Companies
Schedule 1.44 Knowledge of PCC
Schedule 1.52 Parts, Fuel and Supplies Inventory
Schedule 1.59 Permitted Liens
Schedule 1.66 Real Property Leases and Subleases
Schedule 1.70 Repair Environmental Liabilities
Schedule 1.71(a) Retained Liabilities
Schedule 1.71(u) Excluded Contracts
Schedule 3.1 Foreign States
Schedule 3.2 Conflicts
Schedule 3.4 Absence of Changes
Schedule 3.7 Intellectual Property Exceptions
Schedule 3.8 Environmental Compliance
Schedule 3.9(b) Contract Exceptions
Schedule 3.9(c) Consents
Schedule 3.10 Litigation; Claims
Schedule 3.11(a) Employee Benefit Plans
Schedule 3.16 Powers of Attorney
Schedule 3.17 Transactions with Affiliates
Schedule 3.19 Warranties
Schedule 5.4(a) PCC Consents
Schedule 5.4(b) Buyer Consents
Schedule 5.6 PCC Guaranties
Schedule 6.1(e)(i) PCC Material Consents
Schedule 6.1(e)(ii) Buyer Material Consents
7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 29th day of October, 2002,
by and between PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), and MAXXIM
REBUILD Co., LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, PCC owns directly all of the outstanding capital stock of the
corporations listed on Schedule 1.4 (the "Asset Sale Companies");
WHEREAS, PCC desires to cause to be sold and assigned, and Buyer desires to
purchase and assume, certain of the assets and certain of the Liabilities (as
hereinafter defined) of the Asset Sale Companies;
WHEREAS, PCC desires to cause the Asset Sale Companies to retain certain
assets and certain Liabilities;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PCC and Buyer agree
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1. Administrative Services Agreement.
"Administrative Services Agreement" shall mean the agreement by and between
PCC and Buyer, substantially in the form of Exhibit A attached hereto.
8
1.2. Affiliate.
"Affiliate" shall mean, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, none of Dominion Terminal Associates or any of its partners,
other than Pittston Coal Terminal Corporation, shall be deemed an Affiliate of
PCC or any of its Affiliates.
1.3. Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, which are incorporated into this Asset
Purchase Agreement by this reference, as the same may be amended from time to
time in accordance with the terms hereof.
1.4. Asset Sale Companies.
"Asset Sale Companies" shall have the meaning given to it in the Recitals
to this Agreement. The term "Asset Sale Company" shall mean one of the Asset
Sales Companies.
1.5. Assignment and Assumption Agreements.
"Assignment and Assumption Agreements" shall mean the assignment and
assumption agreements substantially in the form of Exhibit B attached hereto.
1.6. Assumed Liabilities.
"Assumed Liabilities" shall mean all Liabilities of the Asset Sale
Companies listed on Schedule 1.6.
9
1.7. Bills of Sale.
"Bills of Sale" shall mean the bills of sale substantially in the form of
Exhibit C attached hereto.
1.8. Books and Records.
"Books and Records" shall mean the original or true and complete copies of
all of the books and records of the Asset Sale Companies pertaining to the
Purchased Assets, including but not limited to, customer lists, employee records
for those Employees employed by Buyer on or immediately following the Closing
Date, purchase orders and invoices, sales orders and sales order log books,
credit and collection records, plats, drawings and specifications, environmental
reports and studies, correspondence and miscellaneous records with respect to
customers and supply sources, lessors and lessees, equipment maintenance records
and all other general correspondence, records, books and files owned by the
Asset Sale Companies, but excluding any and all Tax Returns, books and records
relating to the Retained Liabilities and corporate records of the Asset Sale
Companies.
1.9. Business.
"Business" shall mean the equipment repairing, rebuilding and servicing
business conducted by the Asset Sale Companies using the Purchased Assets.
1.10. Buyer.
"Buyer" shall have the meaning given to it in the preamble of this
Agreement.
1.11. Buyer's Affiliates, Successors, Assigns, Lessees or Contractors.
"Buyer's Affiliates, Successors, Assigns, Lessees or Contractors" shall
mean Buyer's Affiliates, Buyer's contractual successors and assigns, and lessees
and contractors who, as part of a contractual arrangement with Buyer or one of
its Affiliates, offer employment to the current or former Employees of an Asset
Sale Company.
10
1.12. Buyer Closing Certificate.
"Buyer Closing Certificate" shall mean the certificate of Buyer
substantially in the form of Exhibit D attached hereto.
1.13. Buyer's Parent.
"Buyer's Parent" shall mean Alpha Natural Resources, LLC, a Delaware
limited liability company.
1.14. Closing.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement beginning at 10:00 a.m., local time, on the Closing Date, at the
offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia 23219.
1.15. Closing Date.
"Closing Date" shall mean November 30, 2002 or such other date as the
parties may mutually agree in writing.
1.16. Coal Act.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of 1992
as amended through the Closing Date (codified at Subtitle J of the Code).
1.17. COBRA.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1986, as amended.
11
1.18. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate, any predecessor or successor provisions of Law, and all regulations
thereunder.
1.19. Contaminated.
"Contaminated" shall mean the presence of one or more Hazardous Substances
in such quantity or concentration as to: (i) violate any Environmental Law; (ii)
require disclosure to any Governmental Authority; (iii) require remediation or
removal; (iv) interfere with or prevent the use of any of the Real Property or
Purchased Assets as customarily intended; or (v) create any contribution
Liability to fund the clean up of the Real Property.
1.20. Contracts.
"Contracts" shall mean the contracts, agreements, personal and real
property leases, relationships and commitments, written or oral, of the Asset
Sale Companies listed on Schedule 1.20.
1.21. Controlled Group.
"Controlled Group" shall have the meaning set forth in Codess.1563.
1.22. Cooperation Agreement.
"Cooperation Agreement" shall mean the agreement by and among the PCC
Parent, PCC and Buyer substantially in the form of Exhibit E attached hereto.
1.23. CPA Arbitrator.
"CPA Arbitrator" shall have the meaning set forth in Section 2.9 hereof.
1.24. Dispute.
"Dispute" shall have the meaning set forth in Section 10.14 hereof.
12
1.25. Employee.
"Employee" shall mean any Person (i) employed by and rendering personal
services for an Asset Sale Company or (ii) receiving short-term or long-term
disability benefits from an Asset Sale Company under an Employee Benefit Plan.
The term "current and former Employees" shall mean any Persons who fall within
the term Employee at any time prior to the Closing Date.
1.26. Employee Benefit Plans.
"Employee Benefit Plans" shall have the meaning set forth in Section 3.11
hereof.
1.27. Environment.
"Environment" shall mean surface or ground water, water supply, soil or the
ambient air.
1.28. Environmental Laws.
"Environmental Laws" shall mean collectively, all federal, foreign, state,
and local Laws in effect as of the Closing Date that relate to (a) the
prevention, abatement or elimination of pollution, or the protection of the
environment, including, without limitation, Laws applicable to the generation,
handling, treatment, storage, disposal or transportation of waste materials, (b)
the regulation of or exposure to Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C.ss.ss.9601 et. seq., the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act, as amended, 42 U.S.C.ss.ss.6901 et.
seq., the Clean Air Act, 42 U.S.C.ss.ss.7401 et. seq., the Clean Water Act, 33
U.S.C.ss.ss.1251 et. seq., the Toxic Substances Control Act, 15 U.S.C.ss.ss.2601
et. seq., the Emergency Planning and Community Right to Know Act, 42
U.S.C.ss.ss.11001 et. seq., and any foreign, state, county, municipal, or local
statutes, Laws or ordinances similar or analogous to the federal statutes listed
in this sentence.
13
1.29. Environmental Matter.
"Environmental Matter" shall mean any assertion of a violation, claim or
directive by any Governmental Authority or any other Person for personal injury,
damage to property or the Environment, nuisance, contamination or other adverse
effects on the Environment, or for damages or restrictions resulting from or
related to (i) the operation of PCC's or its Affiliates' business or any
predecessor or the ownership, use or operation at or on any real property or
other assets owned, operated or leased by PCC or its Affiliates or any
predecessor; or (ii) the existence or the continuation of a Release of, or
exposure to, or the transportation, storage or treatment of any Hazardous
Substance into the Environment from or related to any real property or assets
currently or formerly owned, operated or leased by PCC or its Affiliates or any
activities on or operations thereof.
1.30. Environmental or Response Action.
"Environmental or Response Action" shall mean all actions required (i) to
clean up, remove, treat or in any other way address any Hazardous Substance or
other substance; (ii) to prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Substance or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor Environment; (iii) to perform pre-remedial studies and
investigations or post-remedial monitoring and care; (iv) to bring facilities on
any real property currently or formerly owned, operated or leased by PCC or its
Affiliates and the facilities located and operations conducted thereon into
compliance with all Environmental Laws and all permits and other authorizations,
and the filing of all notifications and reports required under any Environmental
Laws; or (v) for the purpose of environmental protection of any real property
currently or formerly owned, operated or leased by PCC or its Affiliates.
14
1.31. EPA.
"EPA" shall have the meaning set forth in Section 3.8 hereof.
1.32. Equipment.
"Equipment" shall mean the tangible machinery, vehicles, equipment,
furniture, fixtures, furnishings, trailers, tools, parts and other personal
property owned or leased by the Asset Sale Companies listed on Schedules 1.32(a)
and 1.32(b), respectively.
1.33. ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.34. ERISA Affiliates.
"ERISA Affiliates" shall mean any trade or business (whether or not
incorporated) that is part of the same Controlled Group as, or under common
control with, or part of an affiliated service group that includes, PCC and each
of the Asset Sale Companies within the meaning of Section 414(b), (c), (m) or
(o) of the Code.
1.35. Fiduciary.
"Fiduciary" shall have the meaning set forth in ERISA ss.3(21)
1.36. Governmental Authority.
"Governmental Authority" shall mean any governmental, judicial,
legislative, executive, administrative or regulatory authority of the United
States, or of any foreign, state or local government or any subdivision, agency,
commission, office, authority or bureau thereof or any quasi-governmental entity
or authority of any nature.
15
1.37. Hazardous Substances.
"Hazardous Substances" shall mean any substance, chemical, waste, solid,
material, pollutant or contaminant that is defined or listed as hazardous or
toxic under any applicable Environmental Laws. Without limiting the generality
of the foregoing it shall also include any radioactive material, including any
naturally-occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. 2011, et seq., any amendments or authorizations
thereof, any asbestos-containing materials in any form or condition, any
polychlorinated biphenyls in any form or condition, radioactive waste, or
natural gas, natural gas liquids, liquified natural gas, condensate, or
derivatives or byproducts thereof or oil and petroleum products or by products
and constituents thereof.
1.38. Health and Safety Requirements.
"Health and Safety Requirements" shall mean all applicable federal, state,
local and foreign Laws concerning public health and safety and worker health and
safety each as in effect as of the Closing Date, other than Environmental Laws.
1.39. HIPAA.
"HIPAA" shall mean the Health Insurance Portability and Accountability Act
of 1996, as amended, and all rules and regulations thereunder.
1.40. Income Tax or Income Taxes.
"Income Tax or "Income Taxes" shall mean any Tax based on or measured by
net income.
16
1.41. Indemnification and Guaranty Agreement.
"Indemnification and Guaranty Agreement" shall mean the agreement by and
among PCC Parent, PCC, Buyer and Buyer's Parent substantially in the form of
Exhibit F attached hereto.
1.42. Intellectual Property.
"Intellectual Property" shall mean the trademarks, service marks, patents,
copyrights (including any registrations, applications, licenses or rights
relating to any of the foregoing), technology, logos, trade secrets,
confidential information related to the Purchased Assets, inventions, know-how,
designs, technical data, drawings, customer and supplier lists, pricing and cost
information, or computer programs and processes and all goodwill associated
therewith and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions
owned or licensed or leased by the Asset Sale Companies listed on Schedules
1.42(a) and 1.42(b), respectively, including, without limitation, the
trademarks, service marks, logos or other rights related to the name "Maxxim."
1.43. IRS.
"IRS" shall mean the United States Internal Revenue Service.
1.44. Knowledge of PCC.
"Knowledge of PCC" shall mean, for the individuals listed on Schedule 1.44,
any such individual's actual knowledge and what any such individual should have
known after reasonable inquiry within the scope of that individual's job
responsibilities.
17
1.45. Law.
"Law" and "Laws" shall mean any applicable United States or foreign,
federal, state, local or other law or governmental requirement of any kind, and
the rules, regulations and orders promulgated thereunder.
1.46. Lien.
"Lien" shall mean any lien, encumbrance, mortgage, charge, claim,
restriction, pledge, security interest or imposition of any kind.
1.47. Liability.
"Liability" shall mean any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), including any
liability for Taxes. Liabilities shall mean one or more items of Liability.
1.48. Material Adverse Effect.
"Material Adverse Effect" shall mean any event, change or occurrence that
individually, or together with any other event, change or occurrence, has a
material adverse impact on the Business, taken as a whole, without regard to the
duration of such material adverse impact.
1.49. Medical Plans.
"Medical Plans" shall mean any and all benefit plans that provide medical,
vision and dental benefits to current or former Employees sponsored or
maintained by or on behalf of, or for the benefit of, PCC or any Asset Sale
Company, including the Comprehensive Medical Expense Benefits Plan of The
Pittston Company and Its Subsidiaries.
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1.50. Multiemployer Plan.
"Multiemployer Plan" shall have the meaning set forth in Section 3.11
hereof.
1.51. Ordinary Course of Business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.52. Parts, Fuel and Supplies Inventory.
"Parts, Fuel and Supplies Inventory" shall include the categories of items
listed on Schedule 1.52.
1.53. PBGC.
"PBGC" shall mean the Pension Benefits Guaranty Corporation.
1.54. PCC.
"PCC" shall have the meaning given to it in the preamble to this Agreement.
1.55. PCC Closing Certificate.
"PCC Closing Certificate" shall mean the certificate of PCC substantially
in the form of Exhibit G attached hereto.
1.56. PCC Group.
"PCC Group" shall have the meaning set forth in Section 1.71(i) hereof.
1.57. PCC Parent.
"PCC Parent" shall mean The Pittston Company, a Virginia corporation.
1.58. Pension Plans.
"Pension Plans" shall have the meaning set forth in Section 3.11 hereof.
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1.59. Permitted Liens.
"Permitted Liens" shall mean those Liens affecting the Purchased Assets
that are listed on Schedule 1.59.
1.60. Person.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Authority.
1.61. Post-Closing Period.
"Post-Closing Period" shall mean any taxable period beginning
after the Closing Date.
1.62. Pre-Closing Period.
"Pre-Closing Period" shall mean any taxable period ending on or before the
Closing Date.
1.63. Purchase Price.
"Purchase Price" shall mean $3,000,000.
1.64. Purchased Assets.
"Purchased Assets" shall mean all right, title and interest in and to the
Parts, Fuel and Supplies Inventory, Equipment, Books and Records, Real Property
and Intellectual Property of the Asset Sale Companies and the rights of the
Asset Sale Companies with respect to the Contracts.
1.65. Qualified Plans.
"Qualified Plans" shall have the meaning set forth in Section 3.11 hereof.
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1.66. Real Property.
"Real Property" shall mean the real property rights and interests leased or
subleased by the Asset Sale Companies and any improvements, fixtures, easements,
rights of way and other appurtenants thereto (such as appurtenant rights in and
to public streets) that are listed on Schedule 1.66.
1.67. Related Persons.
"Related Persons" shall mean related persons as that term is defined in
Section 9701(c)(2) of the Coal Act, except that it shall not include successors
in interest.
1.68. Release.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping or disposing into the
Environment of Hazardous Substances.
1.69. Repair Activities.
"Repair Activities" shall mean those activities of the Asset Sale Companies
that have taken place on or through the use of the Purchased Assets that involve
equipment repairing, rebuilding and servicing.
1.70. Repair Environmental Liabilities.
"Repair Environmental Liabilities" shall mean Liabilities that relate to or
arise from both of the following: (i) any of the Hazardous Substances set forth
on Schedule 1.70 and (ii) an Environmental Matter or Environmental and Response
Action associated with Repair Activities to the extent that such Repair
Activities conformed to industry standard practices at the time such Repair
Activities were conducted.
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1.71. Retained Liabilities.
"Retained Liabilities" shall mean all of the Liabilities of each Asset Sale
Company, other than the Assumed Liabilities, including, without limitation, the
following:
(a) the Liabilities listed on Schedule 1.71(a);
(b) all Liabilities arising under applicable Workers' Compensation
Acts for or based upon the employment of (i) the current and former
Employees of the Asset Sale Companies who are not hired by Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors, and (ii)
the current and former Employees of the Asset Sale Companies who are hired
by Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors, but only with respect to claims where the date of injury or
the date of last injurious exposure occurred prior to the date such
Employees began working for Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors;
(c) all Liabilities arising under the federal black lung Laws for or
based upon the employment of (i) the current and former Employees of the
Asset Sale Companies who are not hired by Buyer or one of Buyer's
Affiliates, Successors, Assigns, Lessees or Contractors and (ii) the
current and former Employees of the Asset Sale Companies who are hired by
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors, to the extent and in the amounts provided in the federal black
lung Laws, but only until such time as Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors becomes the responsible
operator under the federal black lung Laws for such Employees;
(d) all Liabilities for medical, vision, dental and other benefits and
expenses covered under the Medical Plans including related insurance costs
or premiums for or based upon the employment of (i) the current and former
Employees of the Asset Sale Companies who are not hired by Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors, (ii) the
current or former Employees of the Asset Sale Companies who are hired by
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors, but only with respect to the period prior to the date such
Employees began working for Buyer or one of Buyer's Affiliates, Successors,
Assigns, Lessees or Contractors and (iii) in either case, all such
Liabilities under COBRA, HIPAA and other Laws, including all Liabilities of
a Fiduciary for breach of fiduciary duty or any other failure to act or
comply in connection with the administration of such Medical Plans;
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(e) unless such Liabilities are otherwise retained pursuant to Section
1.71(i) hereof, all Liabilities arising under or based upon the Employee
Benefit Plans sponsored or maintained by, on behalf of or for the benefit
of the Asset Sale Companies or its Employees or in which the Asset Sale
Companies participated (other than the Medical Plans), including all
Liabilities arising from or related to the termination thereof or
Liabilities of a Fiduciary for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan;
(f) all Liabilities for salaries, wages, bonuses, vacation days,
personal days and similar forms of leave or compensation for or based upon
the employment of (i) the current and former Employees of the Asset Sale
Companies who are not hired by Buyer or one of Buyer's Affiliates,
Successors, Assigns, Lessees or Contractors, and (ii) the current and
former Employees of the Asset Sale Companies who are hired by Buyer or one
of Buyer's Affiliates, Successors, Assigns, Lessees or Contractors, that
are accrued, due or earned up to the date such Employees began working for
Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors and for which such Employees are eligible;
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(g) all Liabilities for accounts payable for which goods have been
shipped and delivered (whether or not invoiced) or services have been
performed (whether or not invoiced) and related notes, trade payables and
earned royalties, to the extent that an Asset Sale Company received a
benefit before the Closing Date;
(h) all Liabilities for claims of any current or former Employees
pursuant to the WARN Act arising out of acts or omissions of the Asset Sale
Companies prior to and including the Closing Date;
(i) (1) all Liabilities, if any, of any Asset Sale Company and its
Related Persons (collectively, the "PCC Group") under the Coal Act, and (2)
all Liabilities, if any, of the PCC Group under any post-Closing amendments
to the Coal Act for (i) beneficiaries eligible under the Coal Act who are
assigned to a member of the PCC Group or for whom a member of the PCC Group
is required to provide or pay for medical benefits pursuant to Sections
9711 or 9712 of the Coal Act or (ii) death benefit premiums or unassigned
beneficiary premiums (as those terms are used in Sections 9704(c) and
9704(d) of the Coal Act) for beneficiaries eligible under the Coal Act,
that are assessed against any member of the PCC Group; provided, for the
avoidance of doubt, that the Liabilities retained pursuant to (1) and (2)
above shall -------- not be affected by Buyer or any of its Affiliates
being identified under the Coal Act or any post-Closing amendments thereto
as a successor, successor in interest or "Related person" under the Coal
Act or any post-Closing amendments thereto to any member of the PCC Group
solely as a result of Buyer's purchase of the Purchased Assets;
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(j) unless such Liabilities are otherwise retained pursuant to Section
1.71(i) hereof, all Liabilities, if any, of such Asset Sale Company for
retiree medical benefits with respect to current or former Employees of
such Asset Sale Company (and their eligible dependents and beneficiaries)
who, on or prior to the Closing Date, satisfy the requirements for retiree
medical benefits under any Employee Benefit Plan in which such Asset Sale
Company participates;
(k) all Liabilities relating to assets held in trust under any
Qualified Plan sponsored or maintained by, on behalf of or for the benefit
of such Asset Sale Company or its current or former Employees or in which
such Asset Sale Company participates arising or relating to the period
prior to the Closing Date;
(l) all inter-company indebtedness owed by any Asset Sale Company to
the PCC Parent or any of the PCC Parent's Affiliates;
(m) all Liabilities arising out of or in connection with compliance
prior to the Closing Date with Health and Safety Requirements pertaining to
the Purchased Assets, and all Liabilities arising out of or in connection
with compliance with all Laws relating to equal employment opportunity,
employment, or labor relations concerning the employment of any Employee by
the Asset Sale Companies, or relating to any other action taken or not
taken by the Asset Sale Companies concerning (i) the current and former
Employees of the Asset Sale Companies who are not hired by Buyer or one of
Buyer's Affiliates, Successors, Assigns, Lessees or Contractors, and (ii)
the current and former Employees of the Asset Sale Companies who are hired
by Buyer or one of Buyer's Affiliates, Successors, Assigns, Lessees or
Contractors, but only with respect to matters arising out of the employment
of such Employees by the Asset Sale Companies;
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(n) except as set forth on Schedule 1.6, all Liabilities for the
claims, legal actions, suits, litigation, arbitrations, disputes or
investigations listed on Schedules 3.8 and 3.10;
(o) all Liabilities of any of the Asset Sale Companies for unpaid
Taxes with respect to any Tax year or portion thereof ending on or before
the Closing Date or for any Tax year beginning before and ending after the
Closing Date to the extent allocable to the portion of such period
beginning before and ending on the Closing Date (to the extent of any
inconsistencies with Article VII hereof, Article VII shall be controlling);
(p) all amounts payable as the result of the consummation of the
transactions contemplated by this Agreement that arise due to any change of
control provision of any Contract other than those Contracts listed on
Schedule 5.4(b);
(q) all Liabilities of any of the Asset Sale Companies for the unpaid
Taxes of any Person (including PCC and its subsidiaries) under Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise;
(r) all Liabilities for any Environmental Matter or Environmental or
Response Action related to real property or any other asset owned, operated
or leased by PCC or any of its Affiliates that is not a Purchased Asset
(except to the extent otherwise provided any other agreement entered into
contemporaneously with this Agreement pursuant to which reclamation and
other services are to be performed on PCC's or its Affiliates' idle
properties);
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(s) all Liabilities for any Environmental Matter or Environmental or
Response Action (other than Repair Environmental Liabilities) to the extent
the underlying claim relates to or arises from any activity on or through
the use of the Purchased Assets and is attributable to acts or omissions
occurring at or prior to the Closing;
(t) all Liabilities of PCC that become a Liability of Buyer under any
bulk transfer Law of any jurisdiction; and
(u) all Liabilities under the contracts, agreements, personal and real
property leases, relationships and commitments of the Asset Sale Companies
listed on Schedule 1.71(u)
1.72. Straddle Period.
"Straddle Period" shall mean any taxable period covering days before and
after the Closing Date.
1.73. Tax or Taxes.
"Tax" or "Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
custom duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, reclamation fees or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, but shall not
include, for purposes of this Agreement only, Liabilities under the Coal Act, of
whatever nature and regardless of how denominated.
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1.74. Tax Return.
"Tax Return" shall mean any original or amended report, return,
declaration, claim for refund, statement, document, schedule, attachment or
other information supplied or required to be supplied to a Governmental
Authority with respect to Taxes, including any return of an affiliated, combined
or unitary group.
1.75. WARN Act.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended.
1.76. Welfare Plans.
"Welfare Plans" shall have the meaning set forth in Section 3.11 hereof.
1.77. Workers' Compensation Acts.
"Workers' Compensation Acts" shall mean Laws that provide for awards to
employees and their dependents for employment-related accidents and diseases.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets.
On the Closing Date, PCC (on behalf of the Asset Sale Companies) shall
cause to be sold, conveyed, transferred, assigned, and delivered to Buyer, and
Buyer shall acquire, the Purchased Assets. At the Closing, subject to the terms
and conditions of this Agreement, PCC agrees to: (i) cause title to the
Purchased Assets to be transferred and delivered to Buyer; and (ii) perform its
obligations under this Agreement to be performed at or before Closing. In full
payment for the Purchased Assets, Buyer shall: (i) assume the Assumed
Liabilities; (ii) pay to PCC (which shall receive such amounts on behalf of the
Asset Sale Companies) the Purchase Price by wire transfer of cash or other
immediately available funds; and (iii) perform its obligations under this
Agreement to be performed at or before Closing. Buyer shall not assume or have
any responsibility with respect to any Liability of PCC Parent, PCC, the PCC
Group or the Asset Sale Companies that is not an Assumed Liability.
2.2. Bills of Sale, Assignment and Assumption Agreements and Other
Documents.
At the Closing, PCC shall cause each of the Asset Sale Companies to: (i)
execute and deliver to Buyer the Bills of Sale, the Assignment and Assumption
Agreements and such other documents as may be necessary to convey to Buyer the
Purchased Assets; and (ii) perform its obligations under the Agreement to be
performed at or before the Closing.
2.3. Assumption of Liabilities.
At the Closing, Buyer shall execute and deliver to PCC the Assignment and
Assumption Agreements and such other documents and instruments as may be
necessary for Buyer to assume all of the Assumed Liabilities. Buyer shall not
assume or have any responsibility, however, with respect to any Liability of PCC
Parent, PCC, the PCC Group or the Asset Sale Companies that is not an Assumed
Liability.
2.4. Proration of Liabilities.
PCC and Buyer shall cooperate with each other to provide for payments due
with respect to the Assumed Liabilities and the Retained Liabilities during the
payment period in which the Closing occurs with all such Liabilities prorated as
of the Closing Date, if applicable.
2.5. Indemnification and Guaranty Agreement.
At the Closing, PCC, PCC Parent, Buyer's Parent and Buyer shall execute and
deliver the Indemnification and Guaranty Agreement.
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2.6. Cooperation Agreement.
At the Closing, PCC and Buyer shall, and PCC shall cause PCC Parent to,
execute and deliver the Cooperation Agreement pursuant to which Buyer, PCC
Parent and PCC shall provide each other certain information and other assistance
in connection with the collection, administration and/or satisfaction of certain
of the Retained Liabilities.
2.7. Administrative Services Agreement.
At the Closing, PCC and Buyer shall execute and deliver the Administrative
Services Agreement pursuant to which PCC or one of its Affiliates will provide
certain services to Buyer and the Asset Sale Companies for a transition period.
2.8. Additional Documents.
At the Closing, PCC and Buyer shall, and PCC shall cause the Asset Sale
Companies to, execute and deliver all such other documents or instruments
necessary or appropriate to effect the transactions contemplated by this
Agreement, including the documents provided in Section 5.6 hereof and in this
Article II.
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2.9. Allocation of Purchase Price and Assumed Liabilities.
The Purchase Price and the Assumed Liabilities (to the extent they
constitute part of the amount realized for federal Income Tax purposes) shall be
allocated among the Purchased Assets in accordance with a schedule to be agreed
upon by Buyer and PCC after the Closing Date. Buyer shall prepare such
allocation schedule and deliver it to PCC upon a date to be agreed upon between
the parties, which date shall be no later than 60 days after the Closing Date.
PCC shall be deemed to agree with such allocation schedule unless, within ten
(10) days after the date PCC receives the allocation schedule from Buyer, PCC
notifies Buyer in writing of (i) each allocation with which it disagrees and
(ii) for each such allocation, the amount that PCC proposes to allocate. If PCC
provides such notice to Buyer, the parties shall proceed in good faith to
resolve mutually the disputed allocation amounts within fifteen (15) days after
the date on which PCC notifies Buyer of a disagreement with Buyer's proposed
allocation. If PCC and Buyer cannot resolve any such differences, the parties
agree to submit such differences to arbitration in Abingdon, Virginia, by the
accounting firm of Deloitte & Touche, LLP or another accounting firm acceptable
to both parties (the "CPA Arbitrator"). The CPA Arbitrator shall make such
review and examination of the relevant facts and documents as the CPA Arbitrator
deems appropriate and shall permit each of Buyer and PCC to make a written
presentation of their respective positions. Within forty-five (45) days after
submission of such dispute by both parties, the CPA Arbitrator shall resolve
such dispute in writing and shall prepare and deliver its decision, which shall
(i) be based upon a determination of the fair market value of the Purchased
Assets, (ii) defer to valuations that have been prepared in accordance with
generally accepted valuation techniques absent manifest error, (iii) be final
and binding upon the parties without further recourse or collateral attack and
(iv) accept either Buyer's or PCC's position in its entirety. The party whose
position is not accepted by the CPA Arbitrator shall pay all fees and costs of
such CPA Arbitrator to arbitrate such dispute. The allocation schedule shall
include, at a minimum, information necessary to complete Part II of IRS Form
8594. The allocation to the Purchased Assets is intended to comply with the
requirements of Section 1060 of the Code. The parties shall cooperate to comply
with all substantive and procedural requirements of Section 1060, and except for
any adjustment to the Purchase Price hereunder, after the completion and
agreement by the parties to the allocation schedule, such allocation schedule
shall be adjusted only if and to the extent necessary to comply with such
requirements of Section 1060. Buyer and PCC agree that they will not take nor
will they permit any Affiliate to take, for Income Tax purposes, any position
inconsistent with such allocation schedule to the Purchased Assets; provided,
however, that (i) Buyer's cost for the Purchased Assets may differ from the
total amount allocated hereunder to reflect the inclusion in the total cost of
items (for example, capitalized acquisition costs) not included in the total
amount so allocated and (ii) the amount realized by the Asset Sale Companies may
differ from the total amount allocated hereunder to reflect transaction costs
that reduce the amount realized for federal Income Tax purposes.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PCC
PCC hereby represents and warrants to Buyer that the statements contained
in this Article III are correct and complete, except as set forth in the
Schedules delivered by PCC to Buyer in connection with this Agreement. The
Schedules are arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article III.
3.1. Incorporation.
PCC and each of the Asset Sale Companies are corporations duly organized,
validly existing and in good standing under the Laws of the respective state or
commonwealth of each such company's incorporation. PCC and each of the Asset
Sale Companies are duly qualified or licensed to transact business as foreign
corporations in Virginia and are in good standing under the laws of Virginia.
Set forth on Schedule 3.1 is the name of each state or other jurisdiction in
which each such company has either paid taxes or had an office in the three
years prior to the date of this Agreement.
3.2. Execution, Delivery and Performance.
The execution, delivery and performance by PCC of this Agreement and by PCC
and the applicable Asset Sale Company of each other agreement or instrument to
which it is a party executed in connection herewith or delivered pursuant hereto
and the consummation of the transactions contemplated herein and therein will
not, with or without the giving of notice or the passage of time, or both: (i)
conflict with, or result in a violation or breach of, or a default, right to
accelerate, right to exercise any remedy or loss of rights under, or result in
the creation of any Lien (other than Permitted Liens) under or pursuant to, any
provision of PCC's or any Asset Sale Company's Articles of Incorporation or
Bylaws or of any material franchise, mortgage, deed of trust, Lien, lease,
license, instrument, agreement, consent, approval, waiver or understanding to
which PCC or any Asset Sale Company is a party or by which any Asset Sale
Company is bound, or any Law or any order, judgment, writ, injunction or decree
to which PCC or any Asset Sale Company is a party or by which PCC, any Asset
Sale Company or the Purchased Assets may be bound or affected; (ii) require the
approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or, contravene, conflict with or
result in a violation of any of the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel or
terminate any authorization issued by a Governmental Authority that is held by
PCC or the Asset Sale Companies or that otherwise relates to the Purchased
Assets; or (iii) give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated hereunder or exercise any remedy
or obtain any relief under any Law to which PCC or any Asset Sale Company is
subject.
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3.3. Authorization.
PCC has full power and authority to enter into and deliver this Agreement
and to perform its obligations hereunder and each of PCC and the Asset Sale
Companies has full power and authority to enter into and deliver each other
agreement or instrument to which it is a party executed in connection herewith
and delivered pursuant hereto and to perform its obligations thereunder. PCC's
execution, delivery and performance of this Agreement and the execution,
delivery and performance of all other agreements and instruments by PCC and each
of the Asset Sale Companies in connection herewith and delivered pursuant hereto
and the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of PCC and each of the Asset Sale
Companies. This Agreement and all other agreements or instruments executed by
PCC or any of the Asset Sale Companies in connection herewith and delivered by
PCC or any of the Asset Sale Companies pursuant hereto have been duly executed
and delivered by PCC or any such Asset Sale Companies and this Agreement and all
other agreements and instruments executed by PCC or any of the Asset Sale
Companies in connection herewith and delivered by PCC or any of the Asset Sale
Companies pursuant hereto constitute the legal, valid and binding obligation of
PCC or such Asset Sale Company, as the case may be, enforceable in accordance
with their respective terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting generally the
enforcement of creditors' rights).
3.4. Absence of Changes.
Except as contemplated by this Agreement, since December 31, 2001, none of
the Asset Sale Companies has, with respect to the Purchased Assets:
(a) borrowed or agreed to borrow any funds or incurred, or become
subject to, any Liability, or issued any note, bond or other debt security,
or guaranteed any indebtedness for borrowed money or capitalized lease
obligation, except Liabilities incurred in the Ordinary Course of Business,
none of which would reasonably be expected to result in an impact greater
than $100,000;
(b) paid any Liability other than current Liabilities in the Ordinary
Course of Business;
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(c) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of any of the Real Property, Equipment, or,
other than in the Ordinary Course of Business, any other Purchased Assets
or cancelled or otherwise terminated, or agreed to cancel or otherwise
terminate, other than in the Ordinary Course of Business, any licenses,
franchises, certificates, concessions and other governmental approvals and
authorizations;
(d) except in the Ordinary Course of Business, entered into any
agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses) or made or permitted any material amendment
to or termination, acceleration, modification or cancellation of any
Contract or breached any provision of any Contract;
(e) merged or consolidated with any other Person;
(f) mortgaged, pledged or subjected to any Lien any of its assets or
properties, other than Permitted Liens;
(g) made any capital expenditure (or series of related capital
expenditures) either (x) involving more than $100,000 or (y) outside the
Ordinary Course of Business;
(h) made any capital investment in, any loan to, or any acquisition of
the securities or assets of, any other Person (or series of related capital
investments, loans and acquisitions) either (x) involving $100,000 or (y)
outside the Ordinary Course of Business;
(i) delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
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(j) cancelled, compromised, waived or released any right or claim (or
series of related rights and claims) either (x) involving more than
$100,000 or (y) outside the Ordinary Course of Business;
(k) made any loan to, or entered into any other transaction with, any
of the directors, officers and employees of such Asset Sale Company outside
the Ordinary Course of Business;
(l) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such
contract;
(m) except in the Ordinary Course of Business adopted, amended,
modified or terminated any bonus, profit-sharing, incentive, severance or
other plan, contract or commitment for the benefit of any of the directors,
officers and Employees of the Asset Sale Companies, or taken any such
action with respect to any other Employee Benefit Plan;
(n) made any other change in employment terms for any of the
directors, officers and Employees of the Asset Sale Companies outside the
Ordinary Course of Business;
(o) suffered any damage, destruction or loss, whether or not covered
by insurance, that has had or would reasonably be expected to have a
Material Adverse Effect;
(p) implemented or adopted any change in its accounting methods or
principles or the application thereof; or
(q) entered into any agreement, arrangement or understanding with
respect to any of the foregoing.
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3.5. Real Property
(a) Schedule 1.66 identifies the leases and subleases that comprise a
portion of the Real Property. PCC has made available to Buyer all such
leases and subleases listed on Schedule 1.66. With respect to each such
lease and sublease:
(i) the lease or sublease is legal, valid, binding, enforceable
and in full force and effect;
(ii) except for the consents set forth on Schedule 3.9(b) that
are required to be obtained and the notices given, the lease or
sublease will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the consummation of
the transactions contemplated hereby (including the assignments and
assumptions referred to above);
(iii) neither the Asset Sale Companies nor, to the Knowledge of
PCC, any other party to the lease or sublease is in breach or default
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
(iv) neither the Asset Sale Companies nor, to the Knowledge of
PCC, any other party to the lease or sublease has repudiated any
provision thereof; and
(v) none of the Asset Sale Companies has assigned, transferred,
conveyed or subjected to a Lien any interest in the leasehold or
subleasehold, other than those created pursuant to the terms of that
lease or sublease.
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(b) There is not any third party adverse claim to any of the Real
Property, other than Permitted Liens and, to the Knowledge of PCC, no party
is in wrongful possession of any parcel of the Real Property.
3.6. Purchased Assets.
(a) The Asset Sale Companies (i) own good and transferable title to
all of the Purchased Assets free and clear of all Liens and restrictions on
transfer, other than Permitted Liens or (ii) lease such Purchased Assets
under a valid and enforceable lease (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting
generally the enforcement of creditors' rights). No rights of the Asset
Sale Companies under such leases have been assigned or otherwise
transferred as security for any obligation of the Asset Sale Companies. The
consummation of the transactions contemplated by this Agreement will not
create or constitute, either with or without notice or the passage of time
a default or event of default under any such lease or require the consent
of any other party to such lease in order to avoid a default or event of
default.
(b) Except for the items set forth on Schedule 1.71(u), the Purchased
Assets include all tangible and intangible assets owned by the Asset Sale
Companies and used in the Business.
(c) The Equipment that is currently in use has been maintained in
accordance with normal industry practice and is suitable for the purposes
for which the Asset Sale Companies are presently using such Equipment.
3.7. Intellectual Property.
No third party has asserted any interest in the Intellectual Property, nor
has any third party alleged that any Asset Sale Company has infringed on any
Intellectual Property of any third party. To the Knowledge of PCC, none of the
Asset Sale Companies interferes with, infringes upon, misappropriates, or
otherwise comes into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of the Business as presently
conducted.
3.8. Environmental Compliance.
(a) Each Asset Sale Company is in material compliance with all
Environmental Laws related to the Purchased Assets.
(b) PCC has made available to Buyer true and complete copies of all
licenses, franchises, certificates, concessions and other governmental
approvals and authorizations held by each of PCC and the Asset Sale
Companies pertaining to the Purchased Assets, as amended, supplemented and
modified through the date hereof.
(c) Schedule 3.8 includes a true and complete list of all of the
citations, notices of non-compliance and notices of violation received by
each of PCC and the Asset Sale Companies with respect to the Purchased
Assets from federal Environmental Protection Agency ("EPA") or any other
Governmental Authority that remain outstanding.
(d) To the Knowledge of PCC, after the Closing, Buyer will not be
liable for any fines, penalties, fees, Taxes or other governmental charges
assessed with respect to notices of violation, cessation orders, closure
orders, show cause orders or other governmental enforcement actions issued
prior to Closing with respect to the Purchased Assets. Neither this
Agreement nor the consummation of the transactions that are the subject of
this Agreement will result in any Buyer Liabilities for site investigation
or cleanup, or notification to or consent of any Governmental Agency or
third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental Laws.
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(e) None of the Purchased Assets is identified on (i) the current or
proposed National Priorities List under 40 C.F.R. ss. 300, (ii) the
Comprehensive Environmental Response, Compensation and Liability Inventory
System list or (iii) any list arising from a federal, state or local
statute similar to CERCLA. To the Knowledge of PCC, the Real Property is
not Contaminated with any Hazardous Substance.
(f) (A) None of the Purchased Assets has been or is being used in any
manner associated with the production, manufacture, processing, generation,
storage, treatment, disposal, management, shipment or transportation of
Hazardous Substances and no such Purchased Assets are Contaminated by any
Hazardous Substance; (B) there are no underground storage tanks regulated
pursuant to RCRAss.9001 (42 U.S.C.ss. 6991) or equivalent authorized state
program, and no above ground storage tanks, located at, on, in or under the
Purchased Assets; (C) there is no asbestos-containing material in any form
or condition located at, on, in or under the Purchased Assets; (D) there
are no materials or equipment containing polychlorinated biphenyls located
at, on, in or under the Purchased Assets, (E) there are no landfills or
other areas located at, on, in or under the Purchased Assets where
Hazardous Substances have been disposed; and (F) neither PCC nor the Asset
Sale Companies has disposed of any Hazardous Substance at any offsite
disposal area located on the property of any other Person, other than a
facility permitted by any Governmental Authority with jurisdiction to
receive such Hazardous Substance.
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(g) None of the Asset Sale Companies has, with respect to the
Purchased Assets, either expressly or by operation of Law, assumed or
undertaken any Liability, including without limitation, any Liability for
corrective or remedial action, of any other Person relating to any
Environmental Laws.
(h) To the Knowledge of PCC, no conditions existing as of the Closing
Date and relating to the Purchased Assets or the activities of the Asset
Sale Companies or any of their respective predecessors or Affiliates will
prevent or materially hinder Buyer's compliance with Environmental Laws,
require Buyer to undertake any investigatory, remedial or corrective
actions pursuant to Environmental Laws or impose upon Buyer any other
Liabilities pursuant to Environmental Laws, including without limitation,
any Environmental Laws relating to onsite or offsite releases or threatened
releases of Hazardous Substances or imposing Liability for personal injury,
property damage or natural resource damage.
3.9. Contracts.
(a) PCC has made available to Buyer copies of all of the written
Contracts, or a written summary setting forth the terms and conditions
where no copies exist, including all amendments, modifications, waivers and
elections applicable thereto.
(b) As to the Asset Sale Companies party thereto: (i) the Contracts
are valid and binding, enforceable in accordance with their respective
terms (subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting generally the enforcement of
creditors' rights), and are in full force and effect; (ii) the consummation
of the transactions contemplated herein will not, with or without the
giving of notice or the passage of time, or both, conflict with, or result
in a violation or breach of, or a default, right to accelerate, right to
exercise any remedy or loss of rights under the Contracts; (iii) no Asset
Sale Company is, nor to the Knowledge of PCC, is any other party in
material breach or default, and no event has occurred that, with notice or
lapse of time, would constitute a breach or default, or permit termination,
modification or acceleration, under the Contracts; and (iv) no Asset Sale
Company has, nor to the Knowledge of PCC, has any other party repudiated
any provision of the Contracts.
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(c) Schedule 3.9(c) sets forth the consents and approvals of third
parties and Governmental Authorities required to be obtained as a result of
the transactions contemplated by this Agreement.
3.10. Litigation; Claims.
(a) Schedules 3.8 and 3.10 list all claims, legal actions, suits,
litigation, arbitrations, disputes, investigations, proceedings by or
before any Governmental Authority involving more than $100,000 and all
orders, decrees or judgments, now pending or in effect, or, to the
Knowledge of PCC, threatened or contemplated, against or affecting the
Asset Sale Companies, the Purchased Assets, or the consummation of the
transactions contemplated by this Agreement, except to the extent involving
Taxes for Pre-Closing Periods.
(b) There are no existing claims by or disputes involving more than
$100,000 with Persons owning or occupying lands or realty adjoining or near
any of the Purchased Assets regarding Repair Activities by the Asset Sale
Companies or regarding the location of boundary lines, encroachments,
mineral rights, subsidence, water quantity or quality, blasting damage,
transportation of coal or other materials, nuisances or any other similar
matter.
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3.11. Employee Benefits.
(a) Schedule 3.11(a) contains a list of all "employee benefit plans"
(as defined in Section 3(3) of ERISA) and all other employee benefit plans,
programs or arrangements, including each severance pay, bonus, deferred
compensation, incentive compensation, stock purchase, stock option or other
equity-based compensation, death benefit, group insurance, hospitalization
or other medical, dental, health, life (including all individual life
insurance policies as to which any of the Asset Sale Companies is the
owner, beneficiary or both), disability or other insurance, Code Section
125 "cafeteria" or "flexible" benefit plan, pension, savings,
profit-sharing or retirement plan, program or arrangement: (i) under which
Employees or former Employees are entitled to participate by reason of
their employment with any of the Asset Sale Companies or their respective
ERISA Affiliates, whether or not any of the foregoing is funded, whether
insured or self-funded, and with respect to which any of the Asset Sale
Companies is a party or a sponsor or a fiduciary thereof or by which any of
the Asset Sale Companies is bound; or (ii) with respect to which any of the
Asset Sale Companies otherwise may have, as of the Closing Date, any direct
or indirect Liability (the "Employee Benefit Plans"). Schedule 3.11(a)
identifies: (i) each Employee Benefit Plan that is a "pension plan" (as
defined in Section 3(2) of ERISA) (the "Pension Plans"), and denotes those
Pension Plans intended to be qualified under Section 401(a) of the Code
(the "Qualified Plans"); (ii) each Employee Benefit Plan that is a
"multiemployer plan" (as defined in Section 3(37) or Section 4001(a)(3) of
ERISA) (a "Multiemployer Plan"); and (iii) each Employee Benefit Plan that
is a "welfare plan" (as defined in Section 3(1) of ERISA) (the "Welfare
Plans").
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(b) Each Qualified Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and has received, pursuant to a request that
accurately described such Qualified Plan, a favorable determination letter
from the IRS to the effect that the form of such Qualified Plan satisfies
the requirements of Section 401(a) of the Code and that its related trust
is exempt from taxation under Section 501(a) of the Code. To the Knowledge
of PCC, there are no facts or circumstances that would jeopardize or
adversely affect in any material respect the qualification under Code
Section 401(a) of any Qualified Plan.
(c) As of the Closing Date, full payment to each Employee Benefit Plan
of all contributions (including all employer contributions and employee
salary reduction contributions) that are required to be made by the Asset
Sale Companies under the terms thereof and under ERISA or the Code in
respect of the current and prior plan years, if any, have been made for all
Employee Benefit Plans (except for The Savings and Investment Plan of The
Pittston Company and Its Subsidiaries, which payment shall be made as soon
as possible after the Closing Date). All contributions that are required to
be made by the Asset Sale Companies for any period ending on or before the
Closing Date that are not yet due have been paid to each such Employee
Benefit Plan or accrued in accordance with the past custom and practice of
the Asset Sale Companies. All premiums that are due on or before the
Closing Date have been paid with respect to each such Welfare Plan. As of
the latest actuarial determination, no "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived, exists with respect to any Pension Plan. The present value of all
accumulated benefit obligations under each Qualified Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standard
No. 87) did not as of the last annual valuation date applicable thereto
exceed the fair market value of the assets of such Qualified Plan. No
"reportable event" within the meaning of Section 4043 of ERISA has occurred
in connection with any of the Pension Plans.
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(d) Employee Benefit Plan Compliance.
(i) Each Employee Benefit Plan (other than the Multiemployer
Plans) has been administered substantially in accordance with its
terms;
(ii) each Employee Benefit Plan (other than the Multiemployer
Plans) and each related trust, insurance contract or fund complies in
form and in operation and has been administered substantially in
accordance with any applicable provisions of ERISA, the Code and all
other Laws, all reports, returns and other documentation (including
Form 5500 Annual Reports and PBGC-1s) that are required to have been
filed with the IRS, the United States Department of Labor, the PBGC or
any other Governmental Authority have been filed on a timely basis in
each instance in which the failure to file such reports, returns and
other documents would result in any material Liability to PCC or the
Asset Sale Companies;
(iii) other than routine claims for benefits, no Liens, lawsuits
or complaints to or by any Person or Governmental Authority have been
filed or, to the Knowledge of PCC, are contemplated or threatened,
with respect to any Employee Benefit Plan (other than the
Multiemployer Plans) except for those that would not reasonably be
expected to result in any material Liability to PCC or the Asset Sale
Companies.
(e) Neither PCC nor any of the Asset Sale Companies has received a
written notice of, or incurred, any withdrawal liability with respect to a
Multiemployer Plan.
(f) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any Person to severance pay for which Buyer
will be liable after the Closing; (ii) accelerate the time of payment or
vesting of, increase the amount of, or satisfy a condition to the
compensation due to any Person under any Employee Benefit Plan for which
Buyer will be liable after the Closing; or (iii) result in the payment of
an amount that could, individually or in combination with any other such
payment, constitute an "excess parachute payment" under Code Section
280G(b)(1).
(g) No "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) has occurred with respect to any
Employee Benefit Plan subject to ERISA, other than such a transaction
subject to an administrative or statutory exemption, with respect to which
a Tax, penalty or other amount may reasonably be expected to be imposed on
any of the Asset Sale Companies or their respective ERISA Affiliates.
(h) Neither the PCC Parent, PCC, the Asset Sale Companies nor any of
their respective ERISA Affiliates, nor any organization with respect to
which any such entity is a successor or parent corporation, within the
meaning of Section 4069(b) of ERISA, has engaged in any transaction
described in Sections 4069 or 4212(c) of ERISA.
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(i) Each Pension Plan that is not qualified under Code Section 401(a)
or 403(a) is exempt from Parts 2, 3 and 4 of Title I of ERISA as an
unfunded plan that is maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees, pursuant to ERISA Sections 201(2), 301(a)(3) and
401(a)(1).
(j) No assets of any of the Asset Sale Companies are allocated to or
held in a "rabbi trust" or similar funding vehicle.
(k) Neither the PCC Parent, PCC, the Asset Sale Companies nor any of
their respective ERISA Affiliates has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section 4121
of ERISA), is insolvent (within the meaning of Section 4245 of ERISA) or
has been terminated (within the meaning of Title IV of ERISA), and to the
Knowledge of PCC, no Multiemployer Plan is reasonably expected to be in
reorganization, insolvent or terminated.
(l) No Welfare Plan is a "multiple employer welfare arrangement" as
defined in Section 3(40) of ERISA.
3.12. Employment Matters.
None of the Asset Sale Companies is a party to, bound by, or negotiating
with respect to any agreement with any labor union, association or other
employee group, nor is any unit of Employees of the Asset Sale Companies
represented by any labor union or similar association. No labor union or
employee organization has been certified or recognized as the collective
bargaining representative of any Employees of the Asset Sale Companies. To the
Knowledge of PCC, there are no active union organizational campaigns or
representation proceedings underway or threatened with respect to any Employees
of the Asset Sale Companies, nor are there any existing or threatened labor
strikes, work stoppages, slowdowns, grievances, unfair labor practice charges,
discrimination charges or labor arbitration proceedings affecting Repair
Activities at or deliveries to any mine or other facility of the Asset Sale
Companies. Each of the Asset Sale Companies has been and is in compliance with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not reasonably be expected to impose any material Liability on
the Asset Sale Companies.
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3.13. No Broker.
None of the Asset Sale Companies, PCC or the PCC Parent has had any
dealings, negotiations or communications with or retained any broker or other
intermediary in connection with the transactions contemplated by this Agreement
and none of the foregoing is committed to any Liability for any brokers' or
finders' fees or any similar fees in connection with the transactions
contemplated hereby, other than Rothschild Inc., who shall be compensated solely
by PCC or an Affiliate of PCC.
3.14. Health and Safety Requirements.
As it relates to the Purchased Assets, each of the Asset Sale Companies has
complied with all applicable Health and Safety Requirements and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
is currently outstanding against any of them alleging any failure to so comply,
except for those that would not reasonably be expected to have a Material
Adverse Effect.
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3.15. Restrictions on Business Activities.
Except for this Agreement, there is no agreement, judgment, injunction,
order or decree binding upon PCC or any of the Asset Sale Companies that has or
would reasonably be expected to have the effect of prohibiting the conduct of
the Business.
3.16. Powers of Attorney.
There are no outstanding powers of attorney executed on behalf of any of
the Asset Sale Companies affecting the Purchased Assets.
3.17. Transactions With Affiliates.
The Contracts do not include any Liability between any Asset Sale Company
and any Affiliate of such Asset Sale Company. At the Closing, the Purchased
Assets will not include any receivable or other Liability from an Affiliate of
any Asset Sale Company.
3.18. Absence of Certain Payments.
During the five (5) year period prior to the date of this Agreement, to the
Knowledge of PCC, none of the Asset Sale Companies has (nor has any director,
officer, agent, or employee of any Asset Sale Company nor any other person,
acting on behalf of any Asset Sale Company) directly or indirectly: used any of
such company's funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from such company's funds; violated any provision
of the Foreign Corrupt Practices Act of 1977 applicable to such company;
established or maintained any unlawful or unrecorded fund of such company's
monies or other assets; made any false or fictitious entry on the books or
records of such company; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment, to any person or entity, private or public,
regardless of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions for such
company, or to pay for favorable treatment for business secured or for special
concessions already obtained for such company.
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3.19. Warranties.
Schedule 3.19 lists all (a) material pending customer complaints and
inquiries involving any services provided by any Asset Sale Company prior to the
Closing, (b) pending or, to the Knowledge of PCC, threatened, liability claims
regarding any service sold or provided by the Company, and (c) material charge
backs, material additional work to be undertaken as field work or otherwise, or
other material claims with respect to any services provided currently.
3.20. Disclosure.
The representations and warranties contained in this Article III do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article III not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to PCC that:
4.1. Organization.
Buyer is a duly formed limited liability company, validly existing and in
good standing under the Laws of the State of Delaware.
4.2. Execution, Delivery and Performance.
The execution, delivery and performance of this Agreement and each other
agreement or instrument executed in connection herewith or delivered pursuant
hereto and the consummation of the transactions contemplated herein and therein
will not, with or without the giving of notice or the passage of time, or both,
(i) conflict with, or result in a violation or breach of, or a default, right to
accelerate or loss of rights under, or result in the creation of any Lien, under
or pursuant to, any provision of Buyer's organizational documents or of any
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding, any Law, or any finding, order,
judgment, writ, injunction or decree to which Buyer is a party or by which Buyer
or its respective assets may be bound or affected; or (ii) require the approval,
consent or authorization of, or prior notice to, filing with or registration
with, any Governmental Authority, or any other Person or entity.
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4.3. Authorization.
Buyer has full power and authority to enter into and deliver this
Agreement, and each other agreement or instrument (to which it is a party)
executed in connection herewith or delivered pursuant hereto and to perform its
obligations hereunder and thereunder. Buyer's execution, delivery and
performance of this Agreement and all other agreements and instruments executed
in connection herewith or delivered pursuant hereto and the transactions
contemplated hereby have been duly authorized by all requisite action. This
Agreement and all other agreements or instruments executed by Buyer in
connection herewith or delivered by Buyer pursuant hereto have been duly
executed and delivered by Buyer and this Agreement and all other agreements and
instruments executed by Buyer in connection herewith or delivered by Buyer
pursuant hereto constitute Buyer's legal, valid and binding obligation,
enforceable in accordance with their respective terms (subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors' rights).
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4.4. No Broker.
Buyer has had no dealings, negotiations or communications with any broker
or other intermediary in connection with the transactions contemplated by this
Agreement nor is it committed to any Liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated hereby.
4.5. Environmental Compliance.
Buyer and all operators it owns or controls are in compliance with all
Environmental Laws in all material respects.
4.6. Financing.
Buyer will have available to it, at the Closing, financial resources
sufficient to consummate the transactions contemplated by this Agreement.
4.7. Disclosure.
The representations and warranties contained in this Article IV do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Article IV not misleading.
ARTICLE V
CERTAIN COVENANTS
5.1. Operation in Ordinary Course.
Except as provided in this Agreement, between the date of this Agreement
and the Closing, PCC shall cause each of the Asset Sale Companies, in relation
to the Purchased Assets, to: (i) carry on its business in the Ordinary Course of
Business; (ii) use commercially reasonable efforts to preserve intact its
current business organization, Repair Activities and properties until the
Closing Date, and maintain the relations and good will with its suppliers,
customers, landlords, creditors, agents, and others having business
relationships with such Asset Sale Company; (iii) not enter into any contract or
other obligation binding upon such Asset Sale Company involving its Employees,
any union, or an expenditure, purchase, sale, cost or commitment (unless such
contract is cancelable in thirty or fewer days, involves less than $100,000, or
is for consumable purchases) without the prior written consent of Buyer; and
(iv) report regularly to Buyer concerning the status of the business, Repair
Activities and finances of such Asset Sale Company.
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5.2. Compliance with Law.
Between the date of this Agreement and the Closing, each of Asset Sale
Companies shall comply in all material respects with all applicable Laws and
with all orders of any Governmental Authority.
5.3. Cooperation.
Subject to the terms and conditions herein provided, each of PCC and Buyer
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper and
advisable under Law, to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, PCC and Buyer will, and PCC will cause the Asset Sale Companies to,
execute any additional instruments reasonably necessary to consummate the
transactions contemplated hereby.
5.4. Notices and Consents.
PCC and Buyer each will use their commercially reasonable efforts to obtain
consents of all Governmental Authorities and other third parties necessary to
the consummation of the transactions contemplated by this Agreement. PCC shall
have responsibility for providing any notices to third parties that may be
required by the transactions contemplated by this Agreement and for obtaining,
or causing to be obtained, at its sole cost and expense, the consents listed on
Schedule 5.4(a) and Buyer shall have responsibility for obtaining, at its sole
cost and expense, all consents listed on Schedule 5.4(b), which Schedule shall
include all Equipment leases.
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5.5. Publicity.
All general notices, releases, statements and communications to any
Employees, suppliers, distributors and customers of the Asset Sale Companies, to
the general public and to the press relating to the transactions contemplated by
this Agreement shall be made only at such times and in such manner as may be
mutually agreed upon by PCC and Buyer; provided, however, that either party
hereto (or, in the case of PCC, the PCC Parent) shall be entitled to make a
public announcement of the foregoing if: (a) in the opinion of its legal
counsel, such announcement is required to comply with Law or any listing
agreement with any national securities exchange or inter-dealer quotation
system; and (b) such disclosing party gives a reasonable period of notice and
opportunity to comment to the other party hereto of its intention to make such
public announcement; provided, that, failure to comment within 24 hours of
receipt of such notice shall be deemed a waiver of the opportunity to comment;
and provided, further, that nothing in this Section 5.5 shall operate to
prohibit any Asset Sale Company or Buyer from communicating, after the Closing
Date, with its respective suppliers, distributors, customers and the Government
the fact that the transaction has occurred, or with its employees regarding
their employment or the terms and conditions thereof, the operation of the
Purchased Assets or matters necessarily related thereto.
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5.6. Replacement Bonds; Insurance and Guarantees; Other Filings.
(a) At or prior to the Closing Date, Buyer shall have: (i) secured
replacement bonds, replacement sureties, guarantees or other financial
security, if applicable, sufficient to allow PCC and the Persons who will
be its Affiliates after the Closing Date to be relieved or released as of
the Closing Date from all financial commitments, guarantees, collateral
agreements or similar undertakings listed on Schedule 5.6; (ii) obtained
property and liability insurance customary for a company that is engaged in
the Business or a business similar to the Business to insure the Purchased
Assets; and (iii) delivered copies of such documents to PCC.
(b) On or prior to the Closing, Buyer shall deliver to PCC: (i) a
Certificate of Good Standing for self-insured status or evidence of
insurance coverage with respect to Buyer's Liabilities for workers'
compensation and federal black lung benefits that arise out of employment
by Buyer or any of its Affiliates of Employees on and after the Closing
Date, to the extent and in the amounts provided in applicable Laws; and
(ii) certification from the Department of Labor of approval of self-insured
status in the event Buyer is to be self-insured for federal black lung
claim liability.
5.7. Exclusivity.
PCC will not (nor will it cause or permit any of the Asset Sale Companies
to) (i) solicit, initiate or encourage the submission of any proposal or offer
from any Person relating directly or indirectly to the acquisition of the
Purchased Assets, or any portion thereof, or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. PCC will notify Buyer immediately if
any Person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
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5.8. Access.
At or prior to the Closing Date, PCC will permit (and will cause each of
the Asset Sale Companies to permit) representatives of Buyer to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Asset Sale Companies, to all premises, properties,
personnel, books, records (including Tax records), contracts and documents of or
pertaining to each of the Asset Sale Companies as related to the Purchased
Assets. Copies of and access to accounting records, ledgers and other pertinent
documents or work papers related to the Purchased Assets will be made available
to Buyer at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Asset Sale Companies, upon request.
5.9. Notice of Developments.
Each party will give prompt written notice to the other party of any
material adverse development causing a breach of any of its own representations
and warranties in Article III and Article IV above. No disclosure by any party
pursuant to this Section 5.9, however, shall be deemed to amend or supplement
the Schedules to such representations and warranties or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
5.10. Further Assurances.
The parties shall cooperate in a commercially reasonable manner with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the transactions
contemplated.
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ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions precedent:
(a) no action, suit, proceeding, order, decree or injunction shall
have been commenced, threatened or entered by or before any Governmental
Authority that remains in force and that (i) prohibits, seeks to prohibit,
or imposes or seeks substantial damages in connection with, the
consummation of the transactions contemplated by this Agreement, (ii) seeks
or imposes relief that causes or would cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(iii) affects adversely the right of Buyer to own the Purchased Assets or
to operate the Business on or after the Closing Date;
(b) PCC Parent, PCC, Buyer and Buyer's Parent shall have executed and
delivered to each other party thereto the Administrative Services
Agreement, the Cooperation Agreement and the Indemnification and Guaranty
Agreement and any other documentation required in all transactions
contemplated or covered by all such agreements, all in form and substance
as set forth in Exhibits A, E and F attached hereto and the same shall be
in full force and effect;
53
(c) all other transactions pursuant to which Buyer or any of its
Affiliates acquire assets related to the Business shall have been
consummated prior to or simultaneously with the transactions contemplated
by this Agreement;
(d) PCC and Buyer shall have executed and delivered to each other all
such other documents or instruments necessary or appropriate to effect the
transactions contemplated by this Agreement, including the documents
provided in Section 5.6 hereof; and
(e) PCC shall have obtained, or caused to have been obtained, the
consents listed in Schedule (e)(i) and PCC shall have provided such
payments as may be reasonably required to obtain all such consents. Buyer
shall have obtained, or caused to have been obtained, the consents listed
in Schedule (e)(ii) and Buyer shall have provided such payments, guarantees
and/or assurances as may be reasonably required to obtain all such
consents.
6.2. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions precedent:
(a) all of the representations and warranties of PCC set forth in this
Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, without regard to any qualification or limitation with respect to
materiality (whether by reference to "Material Adverse Effect" or
otherwise), shall be true and correct in all respects as of the date hereof
and at and as of the Closing Date with the same effect as though such
representations and warranties were made at and as of the Closing unless
the aggregate failure of such representations or warranties to be true and
correct does not have a Material Adverse Effect; provided that if a
representation or warranty is expressly made only as of a specific date, it
need only be true and correct in all respects as of such date, and Buyer
shall have received the PCC Closing Certificate required by Section 6.2(f)
below dated as of the Closing Date executed by PCC to such effect;
54
(b) all of the covenants and obligations that PCC is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing Date shall have been duly performed and complied with in all
material respects;
(c) all proceedings and actions, corporate or other, to be taken by
PCC or the Asset Sale Companies in connection with the transactions
contemplated by this Agreement and all documents incident thereto,
including all actions necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby,
shall have been taken and shall be reasonably satisfactory in form and
substance to Buyer and Buyer's counsel;
(d) PCC shall have, and shall have caused the Asset Sale Companies to
have, executed and delivered the Bills of Sale, the Assignment and
Assumption Agreements and such other documents as may be necessary to
convey to Buyer the Purchased Assets;
(e) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that, individually, or
together with any other change, event or occurrence, has had or could
reasonably be expected to have a Material Adverse Effect;
55
(f) Buyer shall have received an opinion of counsel to PCC addressed
to Buyer substantially in the form of Exhibit H; and
(g) Buyer shall have received an executed copy of the PCC Closing
Certificate.
6.3. Conditions Precedent to Obligations of PCC.
The obligation of PCC to consummate and cause the consummation of the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions precedent:
(a) all of the representations and warranties of Buyer set forth in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, without regard to any qualification or limitation with respect to
materiality, shall be true and correct in all respects as of the date
hereof and at and as of the Closing Date with the same effect as though
such representations and warranties were made at and as of the Closing
unless the aggregate failure of such representations or warranties to be
true and correct does not have a material adverse effect on Buyer's ability
to consummate the transactions contemplated by this Agreement or fulfill
its post-Closing obligations hereunder; provided that if a representation
or warranty is expressly made only as of a specific date, it need only be
true and correct in all respects as of such date, and PCC shall have
received Buyer's Closing Certificate required by Section 6.3(h) below dated
as of the Closing Date executed by Buyer to such effect;
(b) all of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing Date shall have been duly performed and complied with in all
material respects;
56
(c) all proceedings and actions, corporate or other, to be taken by
Buyer in connection with the transactions contemplated by this Agreement,
and all documents incident thereto, including all actions necessary to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, shall have been taken and shall be
reasonably satisfactory in form and substance to PCC and its counsel;
(d) PCC shall have received, on behalf of the Asset Sale Companies,
the Purchase Price by wire transfer of cash or other immediately available
funds;
(e) Buyer shall have executed and delivered the Assignment and
Assumption Agreements and such other documents as may be necessary for
Buyer to assume all of the Assumed Liabilities;
(f) Buyer shall have delivered to PCC satisfactory evidence of
compliance with Section 5.6;
(g) between the date of this Agreement and the Closing Date, there
shall not have been a change, event or occurrence that, individually, or
together with any other change, event or occurrence, has had or could
reasonably be expected to have a Material Adverse Effect;
(h) PCC shall have received an opinion of counsel to Buyer addressed
to PCC substantially in the form of Exhibit I; and
(i) PCC shall have received an executed copy of Buyer's Closing
Certificate.
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ARTICLE VII
CERTAIN TAX MATTERS
7.1. Property Taxes.
Property Taxes of the Asset Sale Companies with respect to the Purchased
Assets (including, without limitation, property Taxes payable as a tenant or
lessee under any lease) will be pro-rated as of the Closing Date and,
notwithstanding any other provision of this Agreement, the economic burden of
any such property Tax will be borne by (i) the Asset Sale Companies for all
Pre-Closing Periods and the portion of any Straddle Period through the Closing
Date and (ii) by Buyer for all Post-Closing Periods and the portion of any
Straddle Period after the Closing Date. Accordingly, notwithstanding any other
provision of this Agreement, (i) if any Asset Sale Company pays such a property
Tax with respect to a Post-Closing Period or the portion of Straddle Period
after the Closing Date, Buyer will reimburse PCC on behalf of such Asset Sale
Company within 15 days after receiving from PCC written demand for the amount of
such property Tax, and (ii) if Buyer pays such a property Tax with respect to a
Pre-Closing Period or the portion of a Straddle Period through the Closing Date,
PCC on behalf of the Asset Sale Companies will reimburse Buyer within 15 days
after receiving from Buyer written demand for the amount of such property Tax.
For purposes of pro-rating property Taxes, the amount of any property Tax
attributable to the portion of a Straddle Period through the Closing Date shall
be deemed to be the amount of such property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days in the
Straddle Period through the Closing Date and the denominator of which is the
number of days in the entire Straddle Period. In determining the Straddle Period
for property Taxes, the Tax period as reflected on the statement of Taxes due,
property Tax bill, property "tax ticket," or any other request for payment from
a Governmental Authority will determine the taxable period (e.g., a Virginia
property Tax bill that indicates the tax year as 2002 is for a Tax for the
taxable period January 1, 2002 through December 31, 2002).
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7.2. Sales and Use Taxes.
Buyer and PCC or the Asset Sale Companies hereby intend that the
transaction be an occasional sale within the meaning of Virginia Code Section
58.1-602 and regulations thereunder, and therefore exempt from Virginia sales
and use Tax pursuant to Virginia Code Section 58.1-609. PCC will be responsible
for sales and use Taxes payable as a result of the failure of this transaction
to qualify as an occasional sale or as an exempt transaction under any other
Virginia law; provided, however, that any use Tax payable as a result of this
transaction that would be payable regardless of whether the transaction
qualifies as an occasional sale or not shall be paid by Buyer.
7.3. Transfer Taxes.
All transfer, recording and similar Taxes arising in connection with the
transactions contemplated hereunder shall be borne equally by PCC and Buyer. PCC
and Buyer shall (and they shall cause their respective Affiliates to) cooperate
to comply with all Tax Return requirements for such Taxes and provide such
documentation and take such other actions as may be necessary to minimize the
amount of any such Taxes.
7.4. Access for Tax Returns.
Following the Closing Date, Buyer shall, at reasonable times, and in a
manner so as not to interfere with normal business operations, allow PCC (and if
requested by PCC, representatives of federal, state or local agencies) access to
the Purchased Assets for purposes of reviewing information pertinent to any Tax
Return filed by PCC Parent or any of its Affiliates, including the Asset Sale
Companies.
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ARTICLE VIII
COVENANTS REGARDING EMPLOYEES
8.1. Employees.
(a) Subject to the requirements of applicable Laws, but no later than
immediately prior to the Closing, PCC will cause the Asset Sale Companies
to terminate the employment of its Employees with respect to the Purchased
Assets.
(b) From time to time after the Closing Date, PCC and Buyer may
require information with respect to current or former Employees. Without
intending to limit the obligations of the parties in the exchange of
information with respect to any other matter or in accordance with the
Cooperation Agreement, PCC and Buyer agree to furnish such information to
the other, if available, promptly after receipt of a written request
therefor.
ARTICLE IX
TERMINATION
9.1. Termination.
This Agreement may be terminated prior to the Closing Date
only as follows:
(a) by mutual written consent of PCC and Buyer;
(b) by either PCC or Buyer, if the Closing Date shall not have
occurred prior to the close of business on December 31, 2002 or such later
date as the parties may agree in writing (provided, that the right to
terminate this Agreement under this Section 9.1(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause, in whole or in part, of, or has resulted in, the
failure of the conditions in Article VI to be satisfied and the Closing
Date to occur on or before such date);
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(c) by PCC or Buyer if an action, suit, or proceeding, shall have been
commenced or threatened by or before any Governmental Authority, or any
order, decree or injunction shall have been entered therein, that (i)
prohibits, seeks to prohibit, or imposes or seeks substantial damages in
connection with, the consummation of the transactions contemplated by this
Agreement, (ii) seeks or imposes relief that causes or would cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, or (iii) affects adversely the right of Buyer to own the
Purchased Assets or to operate the Business;
(d) by Buyer if (i) the representations of PCC contained in this
Agreement are not true and correct in all material respects as if made at
and as of that time, except for failures to be true and correct that are
capable of being and are cured within fifteen (15) days after written
notice from Buyer to PCC of such failure; or (ii) PCC has failed to comply
materially with its respective obligations under this Agreement, except for
failures to comply that are capable of being and are cured within fifteen
(15) days after written notice from Buyer to PCC of such failure; or
(e) by PCC if (i) the representations of Buyer contained in this
Agreement are not true and correct in all material respects as if made at
and as of that time, except for failures to be true and correct that are
capable of being and are cured within fifteen (15) days after written
notice from PCC to Buyer of such failure; or (ii) Buyer has failed to
comply materially with its obligations under this Agreement, except for
failures to comply that are capable of being and are cured within fifteen
(15) days after written notice from the PCC to Buyer of such failure.
9.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 9.1 hereof, all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further Liability of either party to the other except: (a) as set forth
in Section 10.4; and (b) for breaches of representations, warranties, or
covenants or for fraud. PCC and Buyer hereby agree that the provisions of this
Section 9.2 and of Section 10.4 shall survive any termination of this Agreement
pursuant to the provisions of this Article IX.
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ARTICLE X
MISCELLANEOUS
10.1. Entire Agreement.
This Agreement, the documents referred to herein and to be delivered
pursuant hereto and any other agreement entered into contemporaneously with this
Agreement among PCC, PCC Parent, Buyer and Buyer's Parent or the Affiliates of
any of them constitute the entire agreement between the parties pertaining to
the subject matter hereof, and supersede all prior agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein.
10.2. Amendment.
This Agreement may be amended by an instrument in writing and signed on
behalf of all of the parties hereto at any time.
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10.3. Extension; Waiver.
At any time prior to the Closing Date, the parties may (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document, certificate or writing delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein, other than the conditions contained in Section
6.1(a) hereof as it relates to the entry of an order in any proceeding by or
before a Governmental Authority. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing and signed on behalf of such party.
10.4. Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of their
respective counsel, investment bankers, financial advisors, accountants and
other experts and the other expenses incident to the negotiation and preparation
of this Agreement and consummation of the transactions contemplated hereby.
10.5. Bulk Sales Waiver.
Buyer hereby waives compliance with all applicable bulk sales Laws.
10.6. Governing Law.
This Agreement shall be construed and interpreted according to the Laws of
the Commonwealth of Virginia, without regard to the conflicts of Law rules
thereof.
10.7. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, provided that PCC may assign its rights
hereunder to any Affiliate of PCC after the Closing Date without the consent of
Buyer and Buyer may assign its rights hereunder to any Affiliate of Buyer prior
to, at or after the Closing Date without the consent of PCC and, further
provided, that nothing in this Agreement shall prevent a successor in interest
to either party from enforcing the provisions of this Agreement.
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10.8. Notices.
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other party in the
manner provided by this Section 10.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
64
If to Buyer: Maxxim Rebuild Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
10.9. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and Section headings
in this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
10.10. Interpretation; Construction.
(a) Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural,
all words in the plural number shall extend to and include the singular and
all words in any gender shall extend to and include all genders.
(b) This Agreement has been fully negotiated by the parties hereto and
shall not be construed by any Governmental Authority against either party
as the drafting party.
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10.11. Severability.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.12. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement and PCC and Buyer assume
no Liability to any third party because of any reliance on the representations,
warranties and agreements of PCC and Buyer contained in this Agreement, other
than Section 5.5 and Article VIII hereof, which are intended to be for the
benefit of the Persons expressly covered thereby and may be enforced by such
Persons.
10.13. Retention of and Access to Records.
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record retention policies and practices those books and records relating
to the Asset Sale Companies delivered to Buyer. Buyer also shall provide to PCC
and its Affiliates reasonable access thereto, during normal business hours and
on at least three days' prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or litigation. Buyer
shall deliver to PCC at least thirty days written notice prior to the
destruction or other disposal of any such books and records. PCC and its
Affiliates may elect to take delivery of any such books and records that Buyer
intends to destroy or otherwise dispose of and to copy any such books and
records that Buyer intends to keep, all at their own expense.
66
10.14. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute"), excluding any dispute or disagreement among the parties
concerning the allocation of Purchase Price and Assumed Liabilities, which shall
be resolved pursuant to Section 2.9, shall be decided by binding arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association. PCC and Buyer shall jointly select one arbitrator. If the two
parties shall fail to select an arbitrator within fourteen calendar days after
arbitration is requested, then such arbitrator shall be selected by the American
Arbitration Association or any successor thereto upon application of either
party. No Dispute shall be consolidated in any arbitration with any dispute,
claim or controversy of any other party. The arbitration shall be conducted in
Roanoke, Virginia, and any court having jurisdiction thereof may immediately
issue judgment on the arbitration award. The parties agree that the arbitration
provided for in this Section 10.14 shall be the exclusive means to resolve all
Disputes.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
MAXXIM REBUILD CO., LLC
By: /s/ Eddie Neely
-------------------------------
Name: Eddie Neely
Title: Vice President
68
SCHEDULE 1.4
ASSET SALE COMPANIES
Maxxim Rebuild Company, Inc., a Delaware corporation
Pittston Coal Management Company, a Virginia corporation
PITTSTON COAL COMPANY
448 N. E. Main Street
Lebanon, Virginia 24266
December 13, 2002
Maxxim Rebuild Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Agreement"), dated as of
October 29, 2002, as amended to but not including the date hereof, by and
between Pittston Coal Company ("PCC") and Maxxim Rebuild Co., LLC ("Buyer").
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Agreement.
PCC and Buyer desire to amend certain provisions of the Agreement and, in
consideration of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The Schedules to the Agreement are hereby amended and restated in
their entirety as attached hereto as Exhibit A.
2. Except as amended by this letter agreement, the Agreement shall
continue in full force and effect.
3. This letter agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any executed counterpart
of this letter agreement or other signature hereto delivered by a
party by facsimile shall be deemed for all purposes as being good and
valid execution and delivery of this letter agreement by such party.
[SIGNATURE PAGE FOLLOWS]
Sincerely,
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-----------------------------------
Name: Michael D. Brown
Title: Vice President - Development
and Technical Resources
ACKNOWLEDGED AND AGREED:
MAXXIM REBUILD CO., LLC
By: /s/ Eddie Neely
-----------------------------------
Name: Eddie Neely
Title: Vice President
INDEMNIFICATION AND GUARANTY AGREEMENT
INDEMNIFICATION AND GUARANTY AGREEMENT, dated as of December 13, 2002,
by and among PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), THE PITTSTON
COMPANY, a Virginia corporation ("Pittston"), ALPHA NATURAL RESOURCES, LLC, a
Delaware limited liability company ("Buyer's Parent") and MAXXIM REBUILD CO.,
LLC, a Delaware limited liability company ("Buyer").
RECITALS
WHEREAS, Buyer and PCC have entered into an asset purchase agreement
dated October 29, 2002 (such agreement, together with the Exhibits and Schedules
attached thereto, as the same may be amended from time to time in accordance
with the terms thereof, being hereinafter referred to as the "Acquisition
Agreement"), pursuant to which Buyer will purchase or acquire from PCC and
certain of its Affiliates certain assets, and assume certain liabilities, all
upon the terms and subject to the conditions set forth in the Acquisition
Agreement;
WHEREAS, PCC and Buyer desire to provide for the terms upon which they
will indemnify each other with respect to certain matters relating to the
transactions contemplated by the Acquisition Agreement;
WHEREAS, Pittston owns, indirectly, all of the outstanding capital
stock of PCC and, as an inducement to Buyer to enter into the Acquisition
Agreement, has agreed to guarantee the obligations of PCC and certain of PCC's
Affiliates under this Agreement and the Acquisition Agreement; and
WHEREAS, Buyer's Parent owns all of the outstanding membership
interests of Buyer and, as an inducement to PCC to enter into the Acquisition
Agreement, has agreed to guarantee the obligations of Buyer under this Agreement
and the Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Adverse Consequences.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
1.3. Basket.
"Basket" shall have the meaning set forth in Section 2.1(b)(i) hereof.
2
1.4. Buyer.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
1.5. Buyer Indemnified Persons.
"Buyer Indemnified Persons" shall mean Buyer, its Affiliates (including,
after Closing, one or more Buyer Affiliates formed to hold the Virginia coal
operations of PCC acquired pursuant to the Acquisition Agreement), and their
respective members, directors, officers, employees, consultants, agents,
attorneys and representatives.
1.6. Buyer's Parent.
"Buyer's Parent" shall have the meaning set forth in the preamble to this
Agreement.
1.7. Buyer's Parent Guaranty.
"Buyer's Parent Guaranty" shall have the meaning set forth in Section 3.2
hereof.
1.8. Claim Notice.
"Claim Notice" shall have the meaning set forth in Section 2.3(b) hereof.
1.9. Dispute.
"Dispute" shall have the meaning set forth in Article VII hereof.
1.10. Indemnified Party.
"Indemnified Party" shall have the meaning set forth in Section 2.3(b)
hereof.
1.11. Indemnifying Party.
"Indemnifying Party" shall have the meaning set forth in Section 2.3(b)
hereof.
3
1.12. Other Acquisition Agreements.
"Other Acquisition Agreements" shall mean the agreements set forth on
Schedule A attached hereto.
1.13. Other Indemnification Agreements.
"Other Indemnification Agreements" shall mean the agreements set forth on
Schedule B attached hereto.
1.14. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.15. Pittston.
"Pittston" shall have the meaning set forth in the preamble to this
Agreement.
1.16. Pittston Guaranty.
"Pittston Guaranty" shall have the meaning set forth in Section 3.1 hereof.
1.17. Pittston Indemnified Persons.
"Pittston Indemnified Persons" shall mean Pittston, PCC, the Asset Sale
Companies and their respective directors, officers, employees, agents,
stockholders and their respective Affiliates, and their respective directors,
officers, employees, consultants, agents, attorneys and representatives.
4
ARTICLE II
INDEMNIFICATION
2.1. Indemnification by PCC.
(a) PCC agrees to indemnify and hold harmless Buyer Indemnified
Persons from and against, and reimburse them for, any and all Adverse
Consequences that any Buyer Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by PCC to Buyer in the Acquisition Agreement either: (A) as of
the date on which such representation or warranty was made or (B) as
of the Closing Date (provided that the consummation of the
transactions contemplated by the Acquisition Agreement in accordance
with the terms shall not be deemed without more to have cause a breach
of any representation or warranty);
(ii) any failure by PCC to carry out, perform, satisfy or
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under the Acquisition Agreement (other than
Article VII and Article VIII thereof);
(iii) any failure by PCC to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under Article VII and/or Article VIII of the
Acquisition Agreement; and
(iv) any failure by PCC or the Asset Sale Companies to satisfy
the Retained Liabilities.
(b) Notwithstanding the provisions of Section 2.1(a), PCC shall not be
required to indemnify any of Buyer Indemnified Persons with respect to the
matters described in Sections 2.1(a)(i) and 2.1(a)(ii):
5
(i) unless and until the sum of (A) the Adverse Consequences for
which indemnification pursuant to (1) Sections 2.1(a)(i) and
2.1(a)(ii) or (2) in Sections 2.1(a)(i) and 2.1(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by
Buyer to obtain any of the consents listed on Schedule 6.1(e)(i) of
the Acquisition Agreement or in Schedule 6.1(e)(i) of the Other
Acquisition Agreements, shall exceed $100,000 (the "Basket"), in which
case the entire amount of such Adverse Consequences is recoverable;
(ii) unless the right to indemnity is asserted pursuant to
Section 2.3, (i) on or before thirty (30) days after the Closing Date
for any breach of PCC's representations specified in Section 3.6(c) of
the Acquisition Agreement, (ii) on or before the fifth anniversary of
the Closing Date for any breach of PCC's representations specified in
Section 3.8 of the Acquisition Agreement and (iii) on or before the
second anniversary of the Closing Date for any other matter described
in Section 2.1(a)(i) or (ii); and
(iii) for any matter, to the extent that the aggregate amount of
the Adverse Consequences for which Buyer Indemnified Persons have been
indemnified pursuant to Sections 2.1(a)(i) and 2.1(a)(ii) or in
Sections 2.1(a)(i) and 2.1(a)(ii) of the Other Indemnification
Agreements exceeds $15,000,000 (the "Cap").
(c) Notwithstanding the foregoing, PCC agrees that any claim by a
Buyer Indemnified Person for indemnification (i) arising out of, relating
to, in the nature of or caused by any breach of PCC's representations
specified in Sections 3.1, 3.2, 3.3, 3.6(a) and 3.13 of the Acquisition
Agreement or (ii) pursuant to Sections 2.1(a)(iii) and 2.1(a)(iv), shall
not be subject to the provisions of paragraph (b) of this Section 2.1.
6
(d) PCC agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Buyer Indemnified Persons
for Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Buyer Indemnified
Persons may suffer after the end of any applicable survival period, as long
as a claim for indemnification is made before the end of the applicable
survival period and the Adverse Consequences suffered relate to such
claim).
2.2. Indemnification by Buyer.
(a) Buyer agrees to indemnify and hold harmless Pittston Indemnified
Persons from and against and reimburse them for, any and all Adverse
Consequences that any Pittston Indemnified Persons may suffer or incur or
become subject to as a result of:
(i) the inaccuracy or breach of any representation or warranty
made by Buyer in the Acquisition Agreement either: (A) as of the date
on which such representation or warranty was made or (B) as of the
Closing Date (provided that the consummation of the transactions
contemplated by the Acquisition Agreement in accordance with its terms
shall not be deemed without more to have caused a breach of any
representation or warranty);
(ii) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under the Acquisition Agreement (other than
Article VII and Article VIII thereof);
7
(iii) the ownership of the Purchased Assets on or after the
Closing Date;
(iv) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations in or under Article VII and/or Article VIII of the
Acquisition Agreement, excluding the Retained Liabilities;
(v) any liability that any Pittston Indemnified Person may suffer
or incur or become subject to because of any actions it takes pursuant
to the Administrative Services Agreement; provided, however, that this
Section 2.2(a)(v) shall not apply to any liability resulting from or
arising out of any Pittston Indemnified Person's conduct in bad faith
or willful misconduct; and
(vi) any failure by Buyer to satisfy the Assumed Liabilities.
(b) The foregoing notwithstanding, Buyer shall not be required to
indemnify any Pittston Indemnified Persons with respect to the matters
described in Sections 2.2(a)(i) and 2.2(a)(ii):
(i) unless and until the sum of (A) Adverse Consequences for
which indemnification pursuant to (1) Sections 2.2(a)(i) and
2.2(a)(ii) or (2) in Sections 2.2(a)(i) and 2.2(a)(ii) of the Other
Indemnification Agreements is sought plus (B) any amounts paid by PCC
to obtain any of the consents listed on Schedule 6.1(e)(ii) of the
Acquisition Agreement or in Schedule 6.1(e)(ii) of the Other
Acquisition Agreements, shall exceed the Basket, in which case the
entire amount of such Adverse Consequences is recoverable;
8
(ii) unless the right to indemnity is asserted on or before the
second anniversary of the Closing Date pursuant to Section 2.3; and
(iii) for any matter, to the extent that the aggregate amount of
Adverse Consequences for which the Pittston Indemnified Persons have
been indemnified pursuant to Sections 2.2(a)(i) and 2.2(a)(ii) or in
Sections 2.2(a)(i) and 2.2(a)(ii) of the Other Indemnification
Agreements exceeds the Cap.
(c) Notwithstanding the foregoing, Buyer agrees that any claim by a
Pittston Indemnified Person for indemnification (i) arising out of,
relating to, in the nature of or caused by any breach of Buyer's
representations specified in Sections 4.1, 4.2, 4.3 and 4.4 of the
Acquisition Agreement or (ii) pursuant to Sections (a)(iii) through
2.2(a)(vi), shall not be subject to the provisions of paragraph (b) of this
Section 2.2.
(d) Notwithstanding the foregoing, nothing in Section 2.2(a)(iii)
shall diminish the right of any Buyer Indemnified Person to seek
indemnification from PCC after the Closing Date pursuant to the terms of
this Agreement.
(e) Buyer agrees that its indemnification obligation under this
Agreement includes the obligation to indemnify Pittston Indemnified Persons
for Adverse Consequences suffered through and after the date of the claim
for indemnification (including any Adverse Consequences Pittston
Indemnified Persons may suffer after the end of any applicable survival
period, as long as a claim for indemnification is made before the end of
the applicable survival period and the Adverse Consequences suffered relate
to such claim).
9
2.3. Indemnification Procedures.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved pursuant to this Section 2.3.
(b) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice (a "Claim Notice") to the party
required to provide such indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has notice of any Adverse Consequence
which may give rise to a claim for indemnification against the other party
under this Agreement, provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced. The Indemnified
Party shall not be required to commence litigation or take any action
against any third party prior to delivery of the Claim Notice.
(c) The Indemnifying Party will have the right (at its expense) to
assume the investigation and/or defense of any Adverse Consequence or any
litigation resulting therefrom so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing (within 20 days after the
Indemnified Party has given the Claim Notice) that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of the
Adverse Consequence, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend, and
otherwise indemnify for, the Adverse Consequence and fulfill its
indemnification obligations hereunder and (iii) the Adverse Consequence
involves only money damages and does not seek an injunction or other
equitable relief.
10
(d) So long as the Indemnifying Party is conducting the defense of the
Adverse Consequence in accordance with Section 2.3(c), (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Adverse Consequence, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Adverse Consequence without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Adverse
Consequence without the prior written consent of the Indemnified Party;
provided, that the Indemnifying Party may consent to such judgment or enter
into such settlement without the prior written consent of the Indemnified
Party so long as an unconditional term of any such judgment or settlement
includes the giving by the claimant or plaintiff to the Indemnified Party
of a release from all liability with respect to such Adverse Consequence.
(e) In the event any of the conditions in Section 2.3(c) is or becomes
unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Adverse Consequence in any manner it may reasonably deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Adverse Consequence
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequence
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Adverse Consequence to the fullest
extent provided in this Agreement.
11
(f) Any indemnification with respect to the matters set forth in
Section 2.1(a)(iv) and addressed expressly in the Cooperation Agreement
shall be conducted exclusively in accordance with the Cooperation
Agreement. Notwithstanding any provision of this Agreement, PCC shall have
no obligation to indemnify any Buyer Indemnified Person with respect to any
claim or matter to the extent that any Buyer Indemnified Person has failed
to comply with its obligations under the Cooperation Agreement with respect
to such claim or matter or has taken any action that prevents, hinders or
delays PCC from managing or disposing of such claim or matter in the manner
elected by PCC in its sole discretion.
2.4. Insurance Proceeds.
The amount of any indemnification payable in connection with any
transaction contemplated by this Agreement or the Acquisition Agreement shall be
net of any insurance proceeds available, under any insurance policies in effect
at the time that are maintained in the Ordinary Course of Business, to a Buyer
Indemnified Person or a Pittston Indemnified Person, respectively, in connection
with the events or circumstances giving rise to the indemnification. For
purposes of this Section 2.4, any pollution and legal liability insurance
policies or an insurance policy covering loss in connection with the
representations and warranties contained in the Acquisition Agreement will be
deemed not to be maintained in the Ordinary Course of Business.
2.5. Exclusivity of Rights and Procedures.
The parties agree that, except as set forth in Section 2.3(f) of this
Agreement, Article VII of the Acquisition Agreement or any Articles titled
"Certain Tax Matters" of the Other Acquisition Agreements, this Agreement shall
constitute the sole and exclusive remedy of the parties hereto with respect to
the subject matters addressed in this Agreement, the Acquisition Agreement and
the transactions contemplated by the Acquisition Agreement. Each party to this
Agreement hereby waives and releases the other parties from any and all claims
and other causes of action, including claims for contribution, related to those
subject matters, other than claims (i) pursuant to the terms of this Agreement,
(ii) related to the Retained Liabilities (in the case of Buyer Indemnified
Persons) or the Assumed Liabilities (in the case of the Pittston Indemnified
Persons), (iii) for fraud, and (iv) for injunctive relief.
12
ARTICLE III
GUARANTIES
3.1. Pittston Guaranty.
(a) Pittston hereby irrevocably and unconditionally guarantees to
Buyer (the "Pittston Guaranty") the full and punctual performance and
compliance by PCC with each and every covenant, term and condition to be
performed or complied with by PCC under this Agreement and the Acquisition
Agreement. The Pittston Guaranty expressed in this Section 3.1 is an
absolute, present, primary and continuing guaranty of performance and
compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce such performance or compliance by
PCC or upon any other condition or contingency.
(b) Pittston hereby expressly waives (i) notice of acceptance of the
Pittston Guaranty and (ii) any other notice given to PCC in accordance with
the provisions of the Agreement on any default under the Agreement or
otherwise. Pittston hereby authorizes Buyer to forbear with respect to,
amend, modify, enlarge, extend, compromise and discharge any or all of the
obligations of PCC under the Agreement without notice to or consent by
Pittston. Pittston acknowledges and agrees that its liability under the
Pittston Guaranty is joint and several with PCC and, upon any default by
PCC, Buyer shall not be obligated to first attempt enforcement against PCC.
Pittston hereby waives any and all defenses to enforcement of the Pittston
Guaranty, now existing or hereafter arising, which may be available to
guarantors, sureties and other secondary parties at law or in equity.
13
(c) Pittston represents and warrants to Buyer that (i) Pittston is a
corporation validly existing and in good standing under the laws of the
Commonwealth of Virginia; (ii) all necessary corporate action has been duly
taken by it to authorize the execution, delivery and performance by it of
the Pittston Guaranty, (iii) the Pittston Guaranty is being executed on
Pittston's behalf by a duly authorized representative, (iv) the Pittston
Guaranty is the legally valid and binding obligation of Pittston
enforceable in accordance with its terms, and (v) the execution and the
delivery of the Pittston Guaranty will not (A) conflict with, or result in
a violation or breach of, or a default, right to accelerate, right to
exercise any remedy or loss of rights under, or result in the creation of
any Lien (other than Permitted Liens) under or pursuant to, any provision
of Pittston's Articles of Incorporation or Bylaws or of any material
franchise, mortgage, deed of trust, lease, license, instrument, agreement,
consent, approval, waiver or understanding to which Pittston is a party or
by which Pittston is bound, or any Law or any order, judgment, writ,
injunction or decree to which Pittston is a party or by which Pittston may
be bound or affected; (B) require the approval, consent or authorization
of, prior notice to, or filing or registration with any Governmental
Authority or contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Authority the right
to revoke, withdraw, suspend, cancel or terminate any authorization or
permit issued by a Governmental Authority that is held by Pittston or that
otherwise relates to the Pittston's business; or (C) give any Governmental
Authority or other Person the right to challenge any of the transactions
contemplated hereunder or exercise any remedy or obtain any relief under
any Law to which Pittston is subject.
14
(d) Pittston agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by Buyer
Indemnified Persons in enforcing Pittston's liability to Buyer Indemnified
Persons under the Pittston Guaranty whether or not a civil action or
similar proceeding (including claims and proceedings in and before the
bankruptcy court or arbitrators) is filed, prosecuted or appealed. If an
action or proceeding is filed, prosecuted or appealed, the reasonableness
of such attorney fees shall be determined by the trial judge and if,
appealed, by the appellate court.
(e) The Pittston Guaranty shall be binding upon Pittston and its
successors and assigns, and shall inure to the benefit of and be
enforceable by Buyer and its successors and assigns. For purposes of the
Pittston Guaranty, Pittston shall be deemed to include the surviving entity
in any merger or consolidation involving Pittston, which survivor shall be
bound by the provisions of the Pittston Guaranty and this Agreement.
3.2. Buyer's Parent Guaranty.
(a) Buyer's Parent hereby irrevocably and unconditionally guarantees
to PCC (the "Buyer's Parent Guaranty") the full and punctual performance
and compliance by Buyer with each and every covenant, term and condition to
be performed or complied with by Buyer under this Agreement and the
Acquisition Agreement. Buyer's Parent Guaranty expressed in this Section
3.2 is an absolute, present, primary and continuing guaranty of performance
and compliance and not of collectibility and is in no way conditioned or
contingent upon any attempt to enforce such performance or compliance by
Buyer or upon any other condition or contingency.
(b) Buyer's Parent hereby expressly waives (i) notice of acceptance of
Buyer's Parent Guaranty and (ii) any other notice given to Buyer in
accordance with the provisions of the Agreement on any default under the
Agreement or otherwise. Buyer's Parent hereby authorizes PCC to forbear
with respect to, amend, modify, enlarge, extend, compromise and discharge
any or all of the obligations of Buyer under the Agreement without notice
to or consent by Buyer's Parent. Buyer's Parent acknowledges and agrees
that its liability under Buyer's Parent Guaranty is joint and several with
Buyer and, upon any default by Buyer, PCC shall not be obligated to first
attempt enforcement against Buyer. Buyer's Parent hereby waives any and all
defenses to enforcement of Buyer's Parent Guaranty, now existing or
hereafter arising, which may be available to guarantors, sureties and other
secondary parties at law or in equity.
15
(c) Buyer's Parent represents and warrants to PCC that (i) Buyer's
Parent is a limited liability company validly existing and in good standing
under the laws of the State of Delaware; (ii) all necessary corporate
action has been duly taken by it to authorize the execution, delivery and
performance by it of Buyer's Parent Guaranty, (iii) Buyer's Parent Guaranty
is being executed on Buyer's Parent's behalf by a duly authorized
representative, (iv) Buyer's Parent Guaranty is the legally valid and
binding obligation of Buyer's Parent enforceable in accordance with its
terms, and (v) the execution and the delivery of Buyer's Parent Guaranty
will not (A) conflict with, or result in a violation or breach of, or a
default, right to accelerate, right to exercise any remedy or loss of
rights under, or result in the creation of any Lien (other than Permitted
Liens) under or pursuant to, any provision of Buyer's Parent's Certificate
of Formation, Operating Agreement or other organizational documents or of
any material franchise, mortgage, deed of trust, lease, license,
instrument, agreement, consent, approval, waiver or understanding to which
Buyer's Parent is a party or by which Buyer's Parent is bound, or any Law
or any order, judgment, writ, injunction or decree to which Buyer's Parent
is a party or by which Buyer's Parent may be bound or affected; (B) require
the approval, consent or authorization of, prior notice to, or filing or
registration with any Governmental Authority or contravene, conflict with
or result in a violation of any of the terms or requirements of, or give
any Governmental Authority the right to revoke, withdraw, suspend, cancel
or terminate any authorization or permit issued by a Governmental Authority
that is held by Buyer's Parent or that otherwise relates to Buyer's
Parent's business; or (C) give any Governmental Authority or other Person
the right to challenge any of the transactions contemplated hereunder or
exercise any remedy or obtain any relief under any Law to which Buyer's
Parent is subject.
16
(d) Buyer's Parent agrees to pay all reasonable costs and expenses,
including reasonable attorney fees and related costs, incurred by the
Pittston Indemnified Persons in enforcing Buyer's Parent's liability to the
Pittston Indemnified Persons under Buyer's Parent Guaranty whether or not a
civil action or similar proceeding (including claims and proceedings in and
before the bankruptcy court or arbitrators) is filed, prosecuted or
appealed. If an action or proceeding is filed, prosecuted or appealed, the
reasonableness of such attorney fees shall be determined by the trial judge
and if, appealed, by the appellate court.
(e) Buyer's Parent Guaranty shall be binding upon Buyer's Parent and
its successors and assigns, and shall inure to the benefit of and be
enforceable by PCC and its successors and assigns. For purposes of Buyer's
Parent Guaranty, Buyer's Parent shall be deemed to include the surviving
entity in any merger or consolidation involving Buyer's Parent, each of
whom shall be bound by the provisions of the Buyer's Parent Guaranty and
this Agreement.
17
ARTICLE IV
SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
ARTICLE V
NOTICES
All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five days of being mailed by registered or certified United States mail, postage
prepaid, return receipt requested, in all cases addressed to the person for whom
it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other parties in the
manner provided by this Article V:
if to PCC or Pittston, to them at:
Pittston Coal Company
448 N.E. Main Street
P. O. Box 5100
Lebanon, Virginia 24266
Attention: President
with a copy to:
Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P. O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
18
and a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
if to Buyer:
Maxxim Rebuild Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
if to Buyer's Parent, to it at:
Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
19
with a copy to:
First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
ARTICLE VI
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but this
Agreement and the rights, interests or obligations hereunder shall not be
assignable by Buyer's Parent, Buyer, Pittston or PCC without the prior written
consent of the other parties and any attempt to make such an assignment without
such consent shall be void and of no effect.
ARTICLE VII
ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
PCC and Buyer shall jointly select one arbitrator. If the two parties shall fail
to designate an arbitrator within fourteen (14) calendar days after arbitration
is requested, then such arbitrator shall be selected by the American Arbitration
Association or any successor thereto upon application of either party. No
Dispute shall be consolidated in any arbitration with any dispute, claim or
controversy of any other party. The arbitration shall be conducted in Roanoke,
Virginia, and any court having jurisdiction thereof may immediately issue
judgment on the arbitration award. The parties agree that the arbitration
provided for in this Article VII shall be the exclusive means to resolve all
Disputes.
20
ARTICLE VIII
MISCELLANEOUS
8.1. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
8.2. Integration.
This Agreement and any other agreement entered into contemporaneously with
this Agreement among PCC, Pittston, Buyer and Buyer's Parent or the Affiliates
of any of them constitute the entire agreement and supercede all prior
agreements and understandings not reflected in the Acquisition Agreement, both
written and oral, among the parties with respect to the subject matter hereof.
8.3. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument.
8.4. Governing Law.
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Commonwealth of Virginia, without
regard to the conflicts of laws principles thereof.
21
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
MAXXIM REBUILD CO., LLC,
a Delaware limited liability company
By:/s/ Eddie Neely
-----------------------------------------------
Name: Eddie Neely
Title: Vice President
ALPHA NATURAL RESOURCES, LLC, a Delaware limited
liability company
By:/s/ Mike Quillen
-----------------------------------------------
Name: Mike Quillen
Title: President
PITTSTON COAL COMPANY,
a Delaware corporation
By:/s/ Michael D. Brown
-----------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
THE PITTSTON COMPANY,
a Virginia corporation
By:/s/ James B. Hartough
-----------------------------------------
Name: James B. Hartough
Title: Vice President - Corporate Finance
and Treasurer
22
Schedule A
Asset Purchase Agreement by and between Pittston Coal Company and
Dickenson-Russell Coal Company, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Paramont
Coal Company Virginia, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Land and Reserves, LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Coal Sales Co., LLC, dated as of October 29, 2002, as amended.
Asset Purchase Agreement by and between Pittston Coal Company and Alpha
Terminal Company, LLC, dated as of October 29, 2002, as amended.
23
Schedule B
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Dickenson-Russell Coal Company, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Paramont Coal Company Virginia, LLC and Alpha Natural
Resources, LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Land and Reserves, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Coal Sales Co., LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Indemnification and Guaranty Agreement by and among The Pittston Company,
Pittston Coal Company, Alpha Terminal Company, LLC and Alpha Natural Resources,
LLC, dated as of December 13, 2002.
Exhibit 2.21
COOPERATION AGREEMENT
BY AND BETWEEN
PITTSTON COAL COMPANY
AND
MAXXIM REBUILD CO., LLC
December 13, 2002
Table of Contents
Page
-----
ARTICLE I DEFINITIONS............................................................................................2
1.1. Acquisition Agreement.................................................................................2
1.2. Affiliates, Successors, Assigns, Lessees or Contractors...............................................2
1.3. Agreement.............................................................................................3
1.4. Coal Act Liabilities..................................................................................3
1.5. Communications........................................................................................3
1.6. Employee Related Liabilities..........................................................................3
1.7. Maxxim LLC............................................................................................3
1.8. PCC...................................................................................................3
1.9. Recurrence Claim......................................................................................3
1.10. Third Parties.........................................................................................3
1.11. UMWA..................................................................................................4
1.12. Workers' Compensation and Federal Black Lung Liabilities..............................................4
ARTICLE II COAL ACT LIABILITIES..................................................................................4
2.1. General...............................................................................................4
ARTICLE III WORKERS' COMPENSATION AND FEDERAL BLACK LUNG LIABILITIES.............................................6
3.1. General...............................................................................................6
3.2. Litigation and Disputes...............................................................................7
3.3. No Adverse Changes....................................................................................8
3.4. Recurrence of Prior Claims............................................................................8
ARTICLE IV EMPLOYEE RELATED LIABILITIES..........................................................................9
4.1. Employee Related Liabilities..........................................................................9
ARTICLE V DISPUTE RESOLUTION....................................................................................10
ARTICLE VI TERM.................................................................................................11
ARTICLE VII MISCELLANEOUS.......................................................................................11
7.1. Cooperation..........................................................................................11
7.2. Continuing Obligations...............................................................................12
7.3. Maxxim LLC Communication with Third Parties..........................................................12
7.4. Litigation Support...................................................................................13
7.5. Confidentiality......................................................................................13
7.6. Governing Law........................................................................................14
7.7. Successors and Assigns...............................................................................15
7.8. Notices and Payments.................................................................................15
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT, made as of December 13, 2002, by and between
PITTSTON COAL COMPANY, a Delaware corporation ("PCC"), on its own behalf and on
behalf of its Affiliates, and MAXXIM REBUILD CO., LLC, a Delaware limited
liability company ("Maxxim LLC"), on its own behalf and on behalf of its
Affiliates.
RECITALS
WHEREAS, Maxxim LLC, PCC and certain Affiliates of PCC have entered into a
certain asset purchase agreement as set forth on Schedule A, dated as of October
29, 2002 (such agreement, together with the Exhibits and Schedules attached
thereto being hereinafter referred to as the "Acquisition Agreement"), pursuant
to which Maxxim LLC has agreed to purchase or acquire from PCC and certain of
its Affiliates certain assets, and assume certain liabilities, all upon the
terms and subject to the conditions set forth in the Acquisition Agreement;
WHEREAS, pursuant to the Acquisition Agreement, PCC has agreed to retain
certain liabilities and certain assets; and
WHEREAS, PCC, PCC Parent, Maxxim LLC and Alpha Natural Resources, LLC, a
Delaware limited liability company, have entered into the Indemnification and
Guaranty Agreement; and
WHEREAS, PCC and Maxxim LLC desire to establish certain administrative
procedures with respect to their respective obligations under the Acquisition
Agreement; provided, however, that nothing in this Agreement is intended in any
way to reallocate risk or modify the allocation of liabilities in the
Acquisition Agreement or the Indemnification and Guaranty Agreement; and
provided, further, that nothing in this Agreement, the Acquisition Agreement or
the Indemnity Agreement is intended to, nor should be construed to, establish a
single employer, joint employer, common employer and/or alter ego relationship
between PCC and its Affiliates on the one hand and Maxxim LLC and its Affiliates
on the other hand.
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NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and in the Acquisition Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, PCC and Maxxim LLC agree that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified below. All capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in the Acquisition Agreement.
1.1. Acquisition Agreement.
"Acquisition Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
1.2. Affiliates, Successors, Assigns, Lessees or Contractors.
"Affiliates, Successors, Assigns, Lessees or Contractors" shall mean Maxxim
LLC's Affiliates, contractual successors and assigns, and lessees and
contractors who, as part of a contractual arrangement with Maxxim LLC or one of
its Affiliates, offer employment to the current or former Employees of an Asset
Sale Company.
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1.3. Agreement.
"Agreement" shall mean this Cooperation Agreement, together with the
Schedule[s] attached hereto, as the same may be amended from time to time in
accordance with the terms hereof.
1.4. Coal Act Liabilities.
"Coal Act Liabilities" shall mean those Retained Liabilities specified in
Section 1.71(i) of the Acquisition Agreement.
1.5. Communications.
"Communications" shall have the meaning set forth in Section 2.1(a) hereof.
1.6. Employee Related Liabilities.
"Employee Related Liabilities" shall mean those Retained Liabilities
specified in Sections 1.71(d), 1.71(e), 1.71(f), 1.71(h), 1.71(j), 1.71(k), and
1.71(m) of the Acquisition Agreement.
1.7. Maxxim LLC.
"Maxxim LLC" shall have the meaning set forth in the preamble to this
Agreement.
1.8. PCC.
"PCC" shall have the meaning set forth in the preamble to this Agreement.
1.9. Recurrence Claim.
"Recurrence Claim" shall have the meaning set forth in Section 3.4 hereof.
1.10. Third Parties.
"Third Parties" shall have the meaning set forth in Section 7.3 hereof.
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1.11. UMWA.
"UMWA" shall mean the International Union, United Mine Workers of America,
including its district and local unions.
1.12. Workers' Compensation and Federal Black Lung Liabilities.
"Workers' Compensation and Federal Black Lung Liabilities" shall mean those
Retained Liabilities specified in Sections 1.71(b) and 1.71(c) of the
Acquisition Agreement. ARTICLE II........ COAL ACT LIABILITIES
2.1. General.
In order to assist PCC with regard to the satisfaction of the Coal Act
Liabilities, PCC and Maxxim LLC agree as follows:
(a) Notices and Communication.
In the event Maxxim LLC or any of its Affiliates, Successors, Assigns,
Lessees or Contractors receive from any administrative, judicial or other source
any claims, communications, correspondence, notices, invoices and/or other
documents (collectively, "Communications") that are related to the Coal Act
Liabilities, Maxxim LLC agrees that it shall, and shall cause its Affiliates,
Successors, Assigns, Lessees or Contractors to:
(i) promptly send to PCC or its designated Affiliate a copy of any
such Communications; and
(ii) cooperate with PCC in notifying the sender of the Communications
that such Communications should be sent to PCC or its designated
Affiliate.
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(b) Litigation.
PCC shall have the exclusive right to pursue and/or defend currently
pending litigation or to commence and/or defend future litigation, with respect
to any issue relating to the Coal Act Liabilities, including, but not limited
to, claims pertaining to specific beneficiaries, statutory construction or the
constitutionality of the Coal Act, as PCC deems necessary or appropriate.
(c) Administration. PCC or one or more of its Affiliates shall be solely
responsible for administering the Coal Act Liabilities and shall take
such actions as it deems necessary or appropriate to administer the
Coal Act Liabilities, including, but not limited to:
(i) pursuing administrative or judicial challenges to the assignment
of beneficiaries to PCC or any of its Affiliates in accordance
with the terms of the Coal Act;
(ii) administering claims under the individual employer plan required
to be maintained under Section 9711 of the Coal Act, including
entering into agreements with third party administrators and
resolving or litigating claim disputes;
(iii) implementing managed care and/or other methods of delivery; and
(iv) discussing managed care and cost containment options with the
UMWA.
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ARTICLE III
WORKERS' COMPENSATION AND FEDERAL BLACK LUNG LIABILITIES
3.1. General.
In order to assist PCC with regard to the satisfaction of the Workers'
Compensation and Federal Black Lung Liabilities, PCC and Maxxim LLC agree as
follows:
(a) Administration.
PCC or one or more of its Affiliates shall be solely responsible for
administering the Workers' Compensation and Black Lung Liabilities, including
making such determinations, awarding and denying such benefits, seeking such
administrative and judicial rulings and remedies and taking all such other
actions as PCC shall deem necessary or appropriate.
(b) Notices and Communication.
(i) Maxxim LLC and PCC agree to cooperate with each other in
providing any notices that may be necessary to the appropriate
Governmental Authority regarding the allocation between PCC, on
the one hand, and Maxxim LLC, on the other hand, of the Workers'
Compensation and Federal Black Lung Liabilities.
(ii) In the event Maxxim LLC or any of its Affiliates, Successors,
Assigns, Lessees or Contractors receive any Communications that
are related to the Workers' Compensation and Federal Black Lung
Liabilities, Maxxim LLC agrees that it shall, and shall cause its
Affiliates, Successors, Assigns, Lessees or Contractors to, send
promptly to PCC or its designated Affiliate a copy of any such
Communications.
(iii) Maxxim LLC and PCC agree to cooperate with each other in
providing such notices of the allocation of liabilities under the
Acquisition Agreement as Maxxim LLC and PCC deems appropriate to
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any insurer or third party administrator providing services or
benefits related to the Workers' Compensation and Federal Black
Lung Liabilities.
3.2. Litigation and Disputes.
PCC shall have the right to resolve or defend against any claim that is
related to the Workers' Compensation and Federal Black Lung Liabilities in such
manner as PCC in its discretion deems appropriate, in accordance with such
procedures as PCC deems appropriate and with the controlling Workers'
Compensation Act and federal black lung Laws, including raising the defense that
Maxxim LLC is the responsible operator under the federal black lung Laws because
Maxxim LLC or its Affiliates, Successors, Assigns, Lessees or Contractors is a
successor-in-interest to PCC or its Affiliates; provided, however, that Maxxim
LLC shall have the right to respond that PCC is the responsible operator under
the federal black lung Laws notwithstanding Maxxim LLC's acquisition of the
Purchased Assets. PCC also shall have the right to institute or defend against
any litigation related to the Workers' Compensation and Federal Black Lung
Liabilities, except that PCC shall promptly notify Maxxim LLC of any workers'
compensation or federal black lung claim in which it intends to assert that
Maxxim LLC is responsible for payment of the same under the Acquisition
Agreement, in which case Maxxim LLC shall have the right to intervene in any
such action to oppose PCC's position. Any dispute as to which entity is the
responsible entity for such workers' compensation claims shall be determined in
accordance with the Workers' Compensation Acts, and any dispute as to which
entity is the responsible operator for such black lung claims shall be
determined in accordance with the federal black lung Laws.
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3.3. No Adverse Changes.
Maxxim LLC agrees that it will, and will cause its Affiliates, Successors,
Assigns, Lessees or Contractors to, use its or their commercially reasonable
efforts to retain in effect any lawful program or practice of PCC or its
Affiliates in effect at Closing that is intended to reduce employer liability or
the length of time an employee is entitled to receive benefits under the
Workers' Compensation Act. 3.4. Recurrence of Prior Claims.
In the event Maxxim LLC or any of its Affiliates, Successors, Assigns,
Lessees or Contractors receives a claim under the applicable Workers'
Compensation Acts or federal black lung Laws and Maxxim LLC or its Affiliates,
Successors, Assigns, Lessees or Contractors believes in good faith that such
claim relates to, or is a recurrence of, a prior claim that constituted a
Workers' Compensation or Federal Black Lung Liability (a "Recurrence Claim"),
the provisions of this Section 3.4 shall govern. Maxxim LLC shall promptly
notify PCC of any Recurrence Claim and the basis for its determination that such
claim is a Recurrence Claim prior to communicating its determination to any
other person or entity. If PCC agrees with Maxxim LLC that such claim is a
Recurrence Claim, such claim shall be deemed a Workers' Compensation and Federal
Black Lung Liability, and the rights and obligations of the parties shall be as
provided in this Article III. If PCC disagrees with Maxxim LLC's position, the
matter will be submitted to the appropriate Governmental Authority for a
determination, with each side being responsible for its respective costs in such
procedure. Maxxim LLC recognizes that in the event the employee who has filed
the claim disagrees with the position of the parties with respect to a
Recurrence Claim, the employee may file a claim with the appropriate
Governmental Authority for a determination. In any such case, PCC and Maxxim LLC
shall each have the right to defend its position, with each side bearing the
cost of its own defense.
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ARTICLE IV
EMPLOYEE RELATED LIABILITIES
4.1. Employee Related Liabilities.
In order to assist PCC with regard to the satisfaction of the Employee
Related Liabilities, PCC and Maxxim LLC agree as follows:
(a) Administration. PCC or one or more of its Affiliates shall be solely
responsible for administering the Employee Related Liabilities, making
such determinations, awarding and denying such benefits, seeking such
administrative and judicial rulings and remedies and taking all such
other actions as PCC shall deem necessary or appropriate.
(b) Notices and Communication.
(i) PCC has the exclusive right to provide such notices as PCC deems
necessary or appropriate to Employees or other beneficiaries
regarding any matters related to the Employee Related Liabilities
and to any third parties providing services or benefits related
to the Employee Related Liabilities.
(ii) In the event Maxxim LLC or any of its Affiliates, Successors,
Assigns, Lessees or Contractors receives any Communications that
are related to the Employee Related Liabilities, Maxxim LLC shall
promptly send, and shall cause its Affiliates, Successors,
Assigns, Lessees or Contractors promptly to send, such
Communications to PCC or its designated Affiliate.
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(iii) Maxxim LLC agrees to provide on a monthly basis for a period of
12 months following the Closing Date, the names and social
security numbers of any non-Classified Employees hired by Maxxim
LLC or its Affiliates, Successors, Assigns, Lessees or
Contractors and further agrees to provide, and shall cause its
Affiliates, Successors, Assigns, Lessees or Contractors to
provide, all information in its or their possession or under its
or their control reasonably requested by PCC in order to
administer and satisfy any Employee Related Liabilities.
(c) Litigation. PCC shall have the exclusive right to pursue and/or defend
currently pending litigation, or to commence and/or defend future
litigation, with respect to any issue related to any Employee Related
Liabilities, as PCC shall deem necessary or appropriate.
ARTICLE V
DISPUTE RESOLUTION
Disputes under or alleged violations of this Agreement shall be handled in
accordance with the Dispute resolution procedure set forth in Article VII of the
Indemnification and Guaranty Agreement.
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ARTICLE VI
TERM
The term of this Agreement shall commence as of the Closing Date and shall
continue through the completed satisfaction of all of the Coal Act Liabilities,
Workers' Compensation and Federal Black Lung Liabilities and the Employee
Related Liabilities.
ARTICLE VII
MISCELLANEOUS
7.1. Cooperation.
(a) To the extent permitted by Law and on a timely basis, Maxxim LLC
agrees to take any reasonable action, provide information and execute
any appropriate documents, and shall cause its Affiliates, Successors,
Assigns, Lessees or Contractors to take any reasonable action, provide
information and execute any appropriate documents, that PCC reasonably
requests in order to assist PCC with regard to the administration and
satisfaction of the Coal Act Liabilities, Workers' Compensation and
Federal Black Lung Liabilities and the Employee Related Liabilities.
Upon written request by Maxxim LLC, PCC shall reimburse Maxxim LLC for
costs above $10,000 per year that are reasonably incurred by Maxxim
LLC or its Affiliates as a result of actions taken by it or them under
this Agreement. Prior to payment of such costs, PCC shall be entitled
to receive a detailed invoice of such costs from Maxxim LLC if so
requested by PCC.
(b) PCC and Maxxim LLC shall cooperate with each other to determine the
timing and manner of transferring the Books and Records to Maxxim LLC
after the Closing, provided, however, that Maxxim LLC or its
Affiliates shall have immediate access to all such Books and Records
while still in the possession of PCC and provided, further, that PCC
or its Affiliates shall have reasonable access to, and shall be
allowed to copy at its sole expense, any Books and Records to which
PCC reasonably believes it needs access or for which PCC reasonably
believes it needs copies after the Closing.
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7.2. Continuing Obligations.
Any failure by PCC or by Maxxim LLC or its Affiliates, Successors, Assigns,
Lessees, or Contractors to comply with any of their obligations in this
Agreement shall not relieve PCC or Maxxim LLC of any of their Liabilities or
obligations under the Acquisition Agreement.
7.3. Maxxim LLC Communication with Third Parties.
Unless otherwise agreed to in writing by PCC or except as permitted
specifically by this Agreement and the Acquisition Agreement, neither Maxxim LLC
nor any of its Affiliates, Successors, Assigns, Lessees or Contractors will make
any public statements or communicate with the United Mine Workers of America
Combined Benefit Fund, the 1992 UMWA Benefit Plan, any beneficiary of any
Employee Benefit Plan, or any other Person or entity (collectively, "Third
Parties") with respect to or concerning the Coal Act Liabilities, Workers'
Compensation and Federal Black Lung Liabilities and the Employee Related
Liabilities. Notwithstanding the foregoing, in the event PCC fails to take such
actions as are necessary to comply with its obligations under the Acquisition
Agreement and this Agreement with respect to any of the Coal Act Liabilities,
Workers' Compensation and Federal Black Lung Liabilities or the Employee Related
Liabilities within a reasonable time after receiving notice from Maxxim LLC that
attempts have been or are being made to obtain information concerning or to
impose any of the Coal Act Liabilities, Workers' Compensation and Federal Black
Lung Liabilities or the Employee Related Liabilities on Maxxim LLC or any of its
Affiliates, Successors, Assigns, Lessees or Contractors, Maxxim LLC shall be
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permitted to communicate with the appropriate Third Party regarding PCC's
obligations with respect to such Coal Act Liabilities, Workers' Compensation and
Federal Black Lung Liabilities or the Employee Related Liabilities. In addition,
notwithstanding anything in the foregoing to the contrary, in the event any
Third Party contacts Maxxim LLC to inquire about PCC's or any of its Affiliates
obligations with respect to such Coal Act Liabilities, Workers' Compensation and
Federal Black Lung Liabilities or the Employee Related Liabilities under this
Agreement, Maxxim LLC is permitted to direct such Third Party to contact PCC for
additional information.
7.4. Litigation Support.
In the event and for as long as PCC is actively contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand related to the Coal Act Liabilities, Workers' Compensation and
Federal Black Lung Liabilities and the Employee Related Liabilities, Maxxim LLC
will, to the extent reasonable, cooperate, and shall cause its Affiliates,
Successors, Assigns, Lessees or Contractors to cooperate, with PCC and its
counsel in the contest or defense, make available their personnel and provide
such testimony and access to their books, documents and records as shall be
reasonably necessary in connection with the contest or defense.
7.5. Confidentiality.
Except as otherwise provided in this Agreement, each party hereto covenants
and agrees to keep confidential the existence of this Agreement and the contents
of this Agreement at all times while any provision of this Agreement is in
force, unless and to the extent that a party shall be required to disclose the
same by generally accepted accounting principles, Law or judicial order or
decree or administrative regulation or order or in order to comply with its
obligations hereunder; provided, however, that any party that believes it may be
required to disclose this Agreement or any provisions hereof shall promptly
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notify the other hereto in writing and afford such other party the opportunity
to determine whether disclosure is in fact required or if the scope of the
required disclosure can be reduced and provided further, however, that
notwithstanding anything in this Section 7.5 or in Section 7.3 hereof to the
contrary, without notifying the other party, any party may disclose the
existence and contents of this Agreement:
(a) to any employees within the party's organization who need to know
of this Agreement in order for the party to comply with its
obligations hereunder, so long as such employees at the time of
disclosure are required to comply with this Section 7.5;
(b) Maxxim LLC's Affiliates, Successors, Assigns, Lessees,
Contractors and their employees, attorneys, accountants,
consultants and lenders who need to know of the Agreement, so
long as such entities and persons agree to comply with this
Section 7.5;
(c) to any third-party contractor whose services the party requires
in order for the party to comply with its obligations hereunder
so long as such contractor is contractually obligated to comply
with this Section 7.5;
(d) in the financial statements of the party as required by generally
accepted accounting principles; or
(e) to any attorneys, accountants, consultants or lenders of a party
for whom the party agrees to be responsible for the compliance
herewith.
7.6. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, but without reference to the choice of law
provision thereof.
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7.7. Successors and Assigns.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, except that PCC may assign its rights hereunder to any Affiliate of
PCC after the Closing Date without the consent of Maxxim LLC and Maxxim LLC may
assign its rights hereunder to any Affiliate of Maxxim LLC after the Closing
Date without the consent of PCC. 7.8. Notices and Payments.
All Communications, notices and disclosures required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or within
five (5) days of being mailed by registered or certified United States mail,
postage prepaid, return receipt requested, in all cases addressed to the person
for whom it is intended at his address set forth below or to such other address
as a party shall have designated by notice in writing to the other party in the
manner provided by this Section 7.8:
If to PCC: Pittston Coal Company
448 N.E. Main Street
P.O. Box 5100
Lebanon, Virginia 24266
Attention: President
With a copy to: Pittston Coal Company
c/o The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, Virginia 23226-8100
Attention: General Counsel
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And a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: Louanna O. Heuhsen, Esq.
If to Maxxim LLC: Maxxim Rebuild Co., LLC
c/o Alpha Natural Resources, LLC
406 West Main Street
Abingdon, Virginia 24212
Attention: Vice President
With a copy to: First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut 06830
Attention: Alex T. Krueger
First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Bartlit Beck Herman Palenchar & Scott
1899 Wynkoop Street, Suite 800
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
MAXXIM REBUILD CO., LLC
By: /s/ Eddie Neely
-----------------------------------------
Name: Eddie Neely
Title: Vice President
PITTSTON COAL COMPANY
By: /s/ Michael D. Brown
-----------------------------------------
Name: Michael D. Brown
Title: Vice President - Development and
Technical Resources
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