EXHIBIT 2.1
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (the "Agreement") is made and
entered into between U.S. COAL, INC., a Tennessee corporation, and NEW RIVER
PROCESSING, INC., a Tennessee corporation whose address is 000 Xxxx Xxxxxx,
Xxxxxxxxxx, XX 00000 (collectively referred to as "Seller"), and NATIONAL COAL
CORPORATION, a Tennessee corporation whose address is 000 Xxxxxxxx Xx.,
Xxxxxxxxx, XX 00000 ("Buyer").
RECITALS
A. Seller desires to sell certain assets to Buyer, and Buyer
desires to purchase such assets from Seller, all on the terms and conditions
contained in this Agreement; and
B. In connection with its execution of the letter of intent dated
March 15, 2004 (the "Letter of Intent"), Buyer deposited with Xxxxxx, Xxxxx &
Xxxxxx, P.C. ("Escrow Agent") an xxxxxxx money deposit of $500,000.00 in
consideration of Seller executing the Letter of Intent (hereinafter referred to
as the "Xxxxxxx Money Deposit"), with Buyer being entitled to credit for same
against the purchase price as hereinafter outlined.
In consideration of, and subject to, the mutual promises, agreements,
terms and conditions made herein, and intending to be legally bound, the parties
agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms when
capitalized shall have the respective meanings ascribed thereto in this ss. 1.1
(and any obligations stated
in this ss. 1.1 shall be fully binding on Buyer and Seller in accordance with
the terms hereof):
(a) "ACQUIRED ASSETS" means those specific assets to be
conveyed to Buyer hereunder, including, without limitation (i) the Tangible
Personal Property and Equipment; (ii) the Owned Real Property; (iii) the Leases
(including any non recouped minimum royalties as of the Closing); (iv) all of
the rights, title and interest of Seller in and to each of the Contracts; and
(v) any transferable interest of Seller in and to the Permits; provided,
however, the term "Acquired Assets" shall not include any of the Excluded Assets
which are expressly excluded from the Acquired Assets. Any other assets which
are (i) currently used by Seller in connection with its coal mining and
processing operations; and (ii) not specifically identified as Excluded Assets,
shall be included in the Acquired Assets.
(b) "ASSUMED AGREEMENTS" means each of the Leases and
Contracts.
(c) "ASSUMED OBLIGATIONS" means (i) the Reclamation
Liability and Obligations, (ii) the Water Treatment Liability and Obligations,
(iii) any and all claims and obligations specifically stated in this Agreement
to be a Buyer Assumed Obligation, (iv) any and all amounts and obligations
accruing and to be performed under each of the Assumed Agreements from and after
the date of Closing, and (v) all obligations under the Permits.
(d) "CLOSING" means the transfer of the Acquired Assets
to the Buyer in exchange for the Purchase Price. "Closing Time" shall mean the
time of Closing specified in ss. 3.4.
(e) "CODE" means the Internal Revenue Code of 1986, as
amended.
2
(f) "CONTRACTS" means those contracts listed on SCHEDULE
6 attached.
(g) "ENVIRONMENTAL LAWS" means, except as otherwise
provided, Laws aimed at abatement of pollution generally; protection of the
environment generally; ensuring public safety from environmental hazards,
management, storage or control of hazardous materials and substances generally;
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances as wastes into the environment
generally, including, without limitation, ambient air, surface water and
groundwater generally; and all other Laws relating generally to the
manufacturing, processing, distribution, use, treatment, storage, disposal,
handling or transportation of petroleum or petroleum products, asbestos,
polychlorinated biphenyls ("PCBs"), pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes ("Hazardous Substances"),
including, without limitation, the Federal Comprehensive Environmental Response,
Compensation and Liability Act (as amended by the Superfund Amendments and
Reauthorization Act of 1986), Clean Air Act, Clean Water Act, Solid Wastes
Disposal Act (as amended by the Resource Conservation and Recovery Act), Toxic
Substances Control Act, Water and Pollution Control Act Emergency Planning and
Community Right to Know Act, Safe Drinking Water Act and any regulations issued
under each of such statutes, and any state or local counterparts.
Notwithstanding the foregoing and anything else in this Agreement to the
contrary, none of the following Laws shall be considered Environmental Laws, and
the following Laws are herein referred to as "Mining Laws" - any and all laws
aimed at or relating to (i) reclamation relating to mining and/or similar
activities, including, without limitation, the Surface Mining Control and
Reclamation Act ("SMCRA") and Mine
3
Safety and Health Act ("MSHA") and any regulations issued under each of such
statutes and any state or local counterparts, (ii) coal mining and other
coal-mining activities, (iii) any Reclamation Liability and Obligations, (iv)
any Water Treatment Liability and Obligations, and/or (v) bonding or security
relating to coal mining and coal-mining activities and/or for reclamation and
similar activities relating to coal mining and coal-mining activities.
(h) "EXCLUDED ASSETS" means any and all (i) cash on hand,
cash deposits (including without limitation bonds, collateral and utility
deposits), insurance rebates and cash equivalents held by or for Seller, (ii)
Receivables, Tax credits, Tax refunds (including but not limited to any refund
of the Federal Coal Excise Tax) and other Tax benefits of Seller, (iii) rights,
title and interest of Seller in and to Tax and other records other than those
records relating directly to any particular Acquired Asset, and (iv) rights,
title and interest of Seller in and to the assets listed in SCHEDULE 1 attached.
(i) "KNOWLEDGE" means the conscious awareness of any
officer or director of the applicable party, the conscious awareness of any
employee or contractor of the applicable party with supervisory duties or
responsibilities associated with the applicable issue, and any other person
affiliated with the applicable party who would be reasonably expected to have
knowledge of the applicable issue.
(j) "LAW" OR "LAWS" means all past, existing and future
Federal, state and local laws (statutory or common), rules, ordinances,
regulations, grants, leases, orders, directives, judgments, decrees and other
governmental restrictions of any kind or nature, including, without limitation,
permits and other similar requirements, whether legislative, municipal,
administrative or judicial in nature.
4
(k) "LEASES" means the rights, title and interest of the
Seller in and to the real property leases and/or subleases described in SCHEDULE
3 attached.
(l) "LEASED REAL PROPERTY" means the real property that
is leased by Seller pursuant to the Leases.
(m) "LOSSES" shall mean, subject to any applicable
express limitations in Article 8 of this Agreement, any and all losses, claims,
damages, liabilities, costs and expenses (including, without implied limitation,
but subject to the express limitations in Article 8 of the Agreement, judgments
and costs of settlement and reasonable attorneys' fees and costs).
(n) "MATERIALLY ADVERSE EFFECT" shall mean an unfavorable
or adverse event or occurrence, or the result thereof, that is materially
adverse to the party suffering such adverse event or occurrence, as determined
in good faith by such party.
(o) "OWNED REAL PROPERTY" means the rights, title and
interest of the Seller in and to the real property of Seller described in
SCHEDULE 4 attached hereto and incorporated herein by reference.
(p) "PERMITS" shall mean those permits of Seller which
are described on SCHEDULE 5 attached.
(q) "PERMITTED LIENS AND ENCUMBRANCES" means any and all
(i) liens for Taxes not yet due, (ii) statutory liens arising in the ordinary
course of business by operation of Law with respect to a liability that is not
yet due, (iii) minor imperfections of title or similar liens which will not have
a Materially Adverse Effect on the Buyer or its coal mining and processing
operations on the Leased Real Property, and (iv) except as may otherwise be
provided in this Agreement, matters of public record (other than liens
5
and mortgages) created prior to the date of this Agreement which burden or
encumber any of Seller's rights, title or interest in the Owned Real Property or
any of the Leases.
(r) "PERSON" means and includes any individual,
partnership, joint venture, corporation, limited liability company, trust,
joint-stock company, unincorporated entity or association, organization or other
legal entity.
(s) "PRESENT VALUE BENEFIT" means the present value
(based on a discount rate equal to the short-term applicable federal rate as
determined under ss. 1274(d) of the Code at the time of determination, and
assuming that the Indemnified Party will be liable for Tax at all relevant times
at the maximum marginal rates) of any income Tax benefit.
(t) "RECEIVABLES" means any and all amounts which (i) are
due or owing to the Seller immediately prior to the Closing Time, (ii) any and
all amounts which become due at or after the Closing Time for loans, advances,
goods or services provided by the Seller prior to the Closing Time. Buyer
acknowledges that receivables arising from any coal shipped prior to the Closing
Time shall constitute a Receivable under this Agreement.
(u) "RECLAMATION LIABILITY AND OBLIGATIONS" means,
whether attributable to operations conducted before or after the Closing, (i)
any and all obligations for reclamation, restoration, remediation and
revegetation as required under the Federal Surface Mining Control and
Reclamation Act, and all state and local Laws addressing similar concerns,
(including, without limitation, backfilling, grading, soil replacement and other
measures necessary or required to restore, remediate or maintain affected land,
mine closings, buildings, facilities, impoundments, primary and secondary
6
sedimentation control structures, embankments, structures, roads, highways and
appurtenances related to such reclamation, restoration, remediation and
revegetation liabilities and obligations with respect to such geographic areas,
regardless of whether such obligations or liabilities are related to activities,
events, operations, permit and other proceedings and appeal therefrom or time
periods before or after the Closing Time) relating to all or any part of the
Owned Real Property or Leased Real Property under applicable Law or the Permits,
and (ii) any and all reclamation, restoration, remediation and revegetation
liabilities and obligations with respect to any geographic areas which are
covered by any of the Permits, or any road or highway agreements of the Seller.
(v) "RETAINED OBLIGATIONS" means any obligations or
liabilities of Seller, whether such liabilities or obligations relate to
payment, performance or otherwise, other than the Assumed Obligations.
Notwithstanding anything else to the contrary in this Agreement, such Retained
Obligations include, without limitation, any outstanding accounts payable, any
accrued payroll and employee welfare or benefit obligations, any accrued Taxes
(federal, state and local) and any other expenses of Seller, as well as
post-Closing obligations to Seller's employees and/or former employees and their
respective dependents or beneficiaries under applicable Law. The parties
acknowledge and agree that Retained Obligations do not include Reclamation
Liability and Obligations or any other obligations that are a part of Buyer's
Assumed Obligations.
(w) "SELLER'S GROUP" means Seller, all of Seller's
officers and directors, any Person who controls, directly or indirectly, Seller,
each affiliate of Seller and any other member of the affiliated group that
includes Seller.
7
(x) "TANGIBLE PERSONAL PROPERTY AND EQUIPMENT" means all
tangible personal property and equipment of Seller listed on SCHEDULE 2
attached.
(y) "TAX" or "TAXES" means any tax or taxes, and any
similar charge, fee, impost, levy or other assessment (including, without
limitation, income taxes, severance taxes, excise taxes, sales taxes, franchise
taxes, real estate taxes, transfer taxes, transfer gain taxes, use taxes, ad
valorem taxes, withholding taxes, payroll taxes, or minimum taxes), together
with any related liabilities, penalties, fines, additions to tax or interest
imposed by the United States or any state, county, local or foreign government
subdivision, agency or taxing authority.
(z) "WATER TREATMENT LIABILITY AND OBLIGATIONS" means,
whether attributable to operations conducted before or after the Closing, any
and all existing future obligations for the treatment or pre-treatment of
surface water or ground water, as required under the federal Clean Water Act and
all state and local Laws addressing similar concerns with respect to any of the
all or any part of the Owned Real Property, Leased Real Property or any other
geographic areas which are covered by any of the Permits, so as to satisfy the
conditions required under the Permits necessary for release of the bonds or
security securing said Permits and the permittee's obligations thereunder
(regardless of whether or not Buyer has become a successor/operator under any
such Permits).
ARTICLE 2 - PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and under
the conditions of this Agreement, Buyer agrees to purchase from Seller, and
Seller agrees
8
to sell, transfer, convey and deliver to Buyer all of the Acquired Assets for
the consideration specified below in ss. 2.2 and 2.3 of this Agreement.
2.2 ASSUMPTION OF OBLIGATIONS. Effective as of Closing Time, Buyer
shall assume and agrees to timely pay and perform all of the Assumed
Obligations.
2.3 CASH PURCHASE PRICE. The cash purchase price for the Acquired
Assets shall be Four Million Two Hundred Thousand Dollars ($4,200,000.00) (the
"Purchase Price"), to be paid as follows:
(a) Pursuant to ss. 3.1, at Closing, Buyer shall pay to
Escrow Agent the sum of Three Million Seven Hundred Thousand Dollars
($3,700,000.00) less the amount of interest earned on the Xxxxxxx Money Deposit
as of the Closing Time, by means of wire transfer of immediately available funds
to the Escrow Account in accordance with wiring instructions provided by Escrow
Agent.
(b) Pursuant to ss. 3.4, the entire Purchase Price, less
amounts due to be paid to fully satisfy any and all liens and encumbrances
against the Acquired Assets other than the Permitted Encumbrances, shall be paid
to Seller by Escrow Agent out of the Escrow Account by means of wire transfer of
immediately available funds in accordance with wiring instructions provided by
Seller. The parties shall execute a written authorization at Closing directing
Escrow Agent to make such payment and releasing Escrow Agent from any further
obligations.
In addition to payment of the Purchase Price, Buyer shall commence
performance of the Assumed Obligations.
2.4 RETAINED OBLIGATIONS. Seller shall timely satisfy each of its
Retained Obligations as they come due whether before or after Closing.
9
ARTICLE 3 - CLOSING
3.1 CLOSING. The Closing of the purchase and sale of the Acquired
Assets and the assumption of the Assumed Obligations contemplated hereby shall
take place at the offices of Escrow Agent, 0000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxx at 9:00 a.m. local time on April 16, 2004, or at such other
place and time the parties may mutually agree.
3.2 SELLER'S DELIVERABLES. Seller shall deliver, or cause to be
delivered, to Buyer at the Closing the following:
(a) a duly executed Warranty Xxxx of Sale for all
Tangible Personal Property and Equipment in the form of the WARRANTY XXXX OF
SALE attached hereto as EXHIBIT 1;
(b) duly executed warranty deeds for the Owned Real
Property;
(c) duly executed assignments of the Leases, including
consents if necessary, in the form of the ASSIGNMENT AND ASSUMPTION OF LEASE
attached hereto as EXHIBIT 2;
(e) such documentation as Buyer may reasonably request
prior to the Closing relative to transferring any of the Acquired Assets for
which a certificate of title has been issued by any governmental authority or
which in the reasonable opinion of Buyer's counsel are sufficient to vest title
to Acquired Assets in Buyer;
(f) duly executed assignments of the Contracts, including
consents if necessary, in the form of the ASSIGNMENT AND ASSUMPTION OF CONTRACT
attached hereto as EXHIBIT 3;
10
(g) such documentation as Buyer may reasonably request
prior to the Closing relative to Seller's ownership, leasehold or other interest
in any of the Acquired Assets, including copies of all title documentation,
deeds, leases, licenses, title reports, title policies and surveys in Seller's
possession relating to the Owned Real Property and the Leased Real Property;
(h) all of Seller's files relating to the Permits;
(i) certificates of existence or good standing for Seller
issued by the Secretary of State of Tennessee; and
(j) corporate resolutions, certified by the Secretary of
Seller, confirming that this Asset Purchase and Sale Agreement and all
transactions contemplated hereunder have been approved by Seller's Board of
Directors, and showing that the persons executing this Asset Purchase and Sale
Agreement (and any documents required for closing) on behalf of Seller are duly
authorized to do so.
3.3 BUYER'S DELIVERABLES. Buyer shall deliver, or cause to be
delivered, to Seller at the Closing the following:
(a) the portion of the purchase price due at Closing in
the manner and amount specified in subsection 2.3(a) of this Agreement;
(b) duly executed Assignment and Assumption of Lease
Agreements in the form of the ASSIGNMENT AND ASSUMPTION OF LEASE which is
attached hereto as EXHIBIT 2;
(c) duly executed assignments of the Contracts in the
form of the ASSIGNMENT AND ASSUMPTION OF CONTRACT attached hereto as EXHIBIT 3;
and
11
(d) certificates of existence or good standing for Buyer
issued by the Secretary of State of Tennessee.
3.4 CLOSING TIME. The Closing Time shall be 6:00 p.m. eastern
daylight savings time, April 16, 2004, or at such other time the parties may
mutually agree in writing at Closing. At Closing, Escrow Agent shall pay from
the Escrow Account those amounts necessary to satisfy in full any amounts
identified by the parties as owed with respect to any liens or encumbrances
(other than Permitted Encumbrances) on the Acquired Assets and shall distribute
the balance of the Escrow Account to Seller by means of a wire transfer to
Seller's account based on wiring instructions provided by Seller. The Escrow
Agent shall be entitled to rely upon the terms of this Agreement and shall have
no liability to either the Buyer or the Seller for its acts as Escrow Agent,
except that Escrow Agent shall be liable for any actions or nonactions which are
taken or not taken in a knowing and willful violation of the terms of this
Agreement. Neither Buyer nor Seller shall have authority subsequent to
completion of the Closing to defer or delay the Closing Time. If any dispute
arises about the Closing or the proper action to be taken by the Escrow Agent at
Closing, Escrow Agent may file an interpleader action to resolve such dispute,
and Escrow Agent's expenses and reasonable attorney fees shall be paid from the
interpleaded funds. Buyer agrees to assume all risk of loss with regard to the
Acquired Assets from completion of the Closing through the Closing Time.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF SELLE
R
Seller represents and warrants to Buyer as follows:
12
4.1 ORGANIZATION AND GOOD STANDING OF SELLER. Each corporation
comprising Seller is a corporation duly organized and validly existing in good
standing under the laws of the State of Tennessee.
4.2 AUTHORITY. Seller has full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder, and the
consummation of the transactions contemplated herein by Seller has been (or will
be) authorized by all necessary corporate action on Seller's part. This
Agreement constitutes a valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to applicable laws of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
4.3 NO VIOLATIONS. Except for any violation, breach, default or
event that will not have a Materially Adverse Effect, the execution and delivery
of this Agreement by Seller does not, and the consummation of the transactions
contemplated hereby will not (i) violate any of the provisions of the charter or
bylaws of Seller; (ii) violate any statute, rule, regulation, ordinance, code,
order, judgment, writ, injunction, decree or award applicable to Seller or its
properties or assets; or (iii) constitute an event that, with notice or lapse of
time or both, would result in any such violation; provided, however, that
nothing in this Article 4 shall be construed to be a representation that (i) any
of the Permits or security therefor are transferable; (ii) Buyer can conduct any
mining, reclamation or other activities on any of the Owned Real Property or
Leased Real
13
Property without obtaining its own permits; or (iii) Seller can obtain any
Consents required for the assignment or transfer of any Lease or Contract.
4.4 APPROVALS, CONSENTS AND OTHER ACTIONS. Except for (i) consents
required to transfer certain Acquired Assets listed on SCHEDULE 7 attached
("Consents"), (ii) governmental approvals of the transfers of the Permits or
Buyer's obtaining Permits to replace the Permits, and (iii) any consent,
approval, license, permit, order, authorization, registration, declaration or
filing, the failure of which to obtain or make would not have a Material Adverse
Effect, no consent, approval, license, permit, order or authorization of or
registration, declaration or filing with any court, administrative agency,
commission or other governmental authority or instrumentality, or any other
third party is required to be made or obtained by or with respect to Seller in
connection with the execution, delivery and performance of this Agreement.
4.5 TITLE TO TANGIBLE PERSONAL PROPERTY AND EQUIPMENT. Seller is
the owner of the Tangible Personal Property and Equipment, and Seller will
transfer ownership and possession of the Tangible Personal Property and
Equipment to Buyer at Closing, free and clear from any and all liens and
encumbrances.
4.6 TITLE TO OWNED REAL PROPERTY. At Closing, the Owned Real
Property will be conveyed by Seller to Buyer pursuant to the form of the
WARRANTY DEED attached hereto as EXHIBIT 4, free and clear of any liens or
encumbrances other than Permitted Liens and Encumbrances.
4.7 RIGHTS IN LEASED REAL PROPERTY. At Closing, Seller's right,
title and interest in the Leases will be assigned to Buyer by an assignment in
the form of the ASSIGNMENT AND ASSUMPTION OF LEASE attached hereto as EXHIBIT 2,
and Seller shall deliver
14
leasehold title to and possession of the Leased Real Property to Buyer at
Closing, free and clear of any liens or encumbrances created by or through
Seller other than Permitted Liens and Encumbrances.
4.8 ENVIRONMENTAL MATTERS. Seller makes no representation or
warranties to Buyer with regard or respect to Seller's compliance with
Environmental Laws, Mining Laws, Permits, environmental permits, certificates,
licenses, approvals, registrations and authorizations required under all
applicable Environmental Laws and Mining Laws, including those relating to
Hazardous Substances, except that Seller represents and warrants that as of the
Closing Time there will be no unabated notices of violation issued by any
regulatory authority applicable to any of Seller's permitted mine operations.
4.9 DEFINED BENEFIT PLAN. Seller is not obligated to any defined
benefit pension plan which is governed by the Employee Retirement Income
Security Act of 1974, as amended, which would become binding on Buyer.
4.10 BROKER LIABILITY. There is no fee or commission due with
respect to any broker, finder or similar consultant retained by or acting on
behalf of Seller in connection with this Agreement or the transactions
contemplated hereby.
4.11 LABOR MATTERS. Seller is not a party to or otherwise subject
to any collective bargaining agreement with any labor union or association.
There are no negotiations, demands or proposals that are pending or have been
conducted or made with or by any labor union or association, and there are no
pending or, to the Knowledge of Seller, threatened strikes, work stoppages or
material labor disputes.
15
4.12 LEASE AND CONTRACT OBLIGATIONS. As of the Closing, Seller
shall have paid and satisfied all monetary obligations accruing prior to the
Closing Time under all Leases and Contracts assigned to Buyer pursuant to this
Agreement other than the Permits. To Seller's Knowledge, Seller is not and as of
the Closing Time will not be in default of its obligations under any Lease or
Contract. Buyer acknowledges the disclosures made by Seller with regard to the
status of certain Leases and Contracts on the Schedules attached hereto and
agrees to accept assignment of such Leases and Contracts subject to such
disclosures.
4.13 DISCLOSURE. The representations and warranties and statements
of Seller contained in this Agreement do not contain any untrue statement of
material fact, and when taken together in light of the circumstances under which
they were made, do not fail to state any material fact necessary to make the
representations, warranties and statements not misleading.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized and validly existing in good standing under the laws of Florida.
5.2 AUTHORITY. Buyer has full power and authority to enter into
this Agreement and to perform its obligations hereunder, and the consummation of
the transactions contemplated herein by Buyer has been (or will be) authorized
by all necessary corporate action on Buyer's part. This Agreement constitutes a
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, subject to
16
applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
5.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated hereby
will not: (i) violate any of the provisions of the certificate or articles of
incorporation or bylaws of Buyer; (ii) violate any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award applicable
to Buyer or its properties or assets; or (iii) constitute an event that, with
notice or lapse of time or both, would result in any such violation.
5.4 APPROVALS. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other governmental authority or
instrumentality, or any third party is required to be made or obtained by or
with respect to Buyer in connection with the execution, delivery and performance
of this Agreement by Buyer, except as may be required by the Securities Exchange
Commission.
5.5 BROKER LIABILITY. There is no fee or commission due with
respect to any broker, finder or similar consultant retained by or acting on
behalf of Buyer in connection with this Agreement or the transactions
contemplated hereby.
5.6 PERMIT BLOCKING. Neither Buyer nor any affiliate of Buyer has
been notified (nor is there any pending or, to the Knowledge of Buyer,
threatened notification) by the Federal Office of Surface Mining or the agency
of any state administering the SMCRA
17
and/or any state surface mining laws, all as amended from time to time, that it
is (i) ineligible to receive surface mining permits, or (ii) under investigation
to determine whether its eligibility to receive a SMCRA or state permit should
be revoked (i.e., "permit blocked"), and to the Knowledge of Buyer there is no
basis therefor.
5.7 DISCLOSURE. The representations and warranties and statements
of Buyer contained in this Agreement do not contain any untrue statement of the
material fact, and when taken together in light of the circumstances under which
they were made, do not fail to state any material fact necessary to make the
representations, warranties and statements not misleading.
ARTICLE 6 -COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 CONFIDENTIALITY. Prior to the Closing, Buyer shall hold in
trust and keep (and shall cause its directors, officers, employees,
representatives, advisors and affiliates to keep) confidential all information
relating to this Agreement, the Seller and the Acquired Assets (including any
such information received prior to the date hereof); and, in addition thereto,
Buyer and its affiliates shall comply with the confidentiality obligations
applicable to Buyer as are set forth in the Confidentiality Agreement between
Buyer and Seller dated August 11, 2003, a copy of which is attached hereto as
EXHIBIT 5 (the "Confidentially Agreement"), and the Confidentiality Agreement
shall remain in full force and effect and shall not be merged into this
Agreement.
6.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING. Notwithstanding
anything in this Agreement to the contrary, Seller may, in its sole discretion,
shut down or reduce any and all work between the date of this Agreement and the
Closing, and Seller shall
18
not be obligated to operate in the ordinary course or consistent with past
practices prior to the Closing; provided that between the date of this Agreement
and the Closing, Seller shall maintain all of the Owned Real Property, Leased
Real Property and Tangible Personal Property and Equipment in good repair, order
and condition, reasonable wear and use excepted. Between the date of this
Agreement and the Closing Time, Seller shall not amend any of the Leases or
Contracts, and Seller shall not enter into any new leases or agreements
affecting the Owned Real Property or Leased Real Property, without the prior
consent of Buyer, which shall not be unreasonably withheld, delayed or
conditioned.
6.3 NOTIFICATION.
(a) Between the date of this Agreement and Closing,
Seller will notify Buyer in writing if Seller becomes aware of any fact or
condition that causes or constitutes a breach of any of Seller's representations
and warranties prior to Closing, or would cause or constitute a breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the attached Schedules, Seller
shall promptly deliver to Buyer a supplement to the applicable Schedule
specifying such change, and Seller's supplement shall be deemed to have amended
the applicable Schedule or Exhibit for all purposes unless Buyer timely
exercises its right to terminate this Agreement pursuant to subsection 10.1(b)
of this Agreement. If Buyer fails to terminate this Agreement as provided in ss.
10.1, Seller's notice and supplement delivered pursuant to this Subsection
6.3(a) shall be deemed to
19
have cured any misrepresentation or breach of representation or warranty that
otherwise might have existed by reason of such factor condition.
(b) Between the date of this Agreement and Closing, Buyer
will notify Seller in writing if Buyer becomes aware of any fact or condition
that causes or constitutes a breach of any of Buyer's representations and
warranties prior to Closing, or would cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition.
(c) Between the date of this Agreement and Closing,
Seller and Buyer shall cooperate in good faith in an effort to obtain all
Consents from the appropriate third parties. In the event that all Consents are
not obtained by the scheduled time of Closing, then (i) Buyer shall have the
option of waiving the requirement of obtaining one or more Consents as a
condition to Closing, in which event the Closing of the transaction shall occur
as scheduled pursuant to Article 3, or (ii) in the event Buyer elects not to
waive such condition, Seller shall have the option, exercisable in its
discretion, of delaying the Closing for a period not to exceed forty-five (45)
days in order to obtain all required Consents. In the event Seller elects to
delay the Closing under this Subsection 6.3(c) and all Consents have not been
obtained by the end of such forty-five-day period, then Buyer shall have the
option of waiving the requirement for the obtaining of such Consents, in which
case, the Closing shall proceed, or terminating this Agreement in accordance
with Buyer's rights under Section 10.1.
6.4 FEES AND EXPENSES. Except as otherwise specifically provided
in this Agreement, Seller and Buyer shall each bear its own attorneys fees and
any other fees
20
and expenses incurred in connection with this Agreement and in connection with
all obligations required to be performed by each of them under this Agreement.
6.5 PUBLICITY. Neither party hereto shall issue any press release
or public statement relating to or concerning this Agreement or the matters
contained herein without obtaining the prior approval of the other party of the
contents and the manner of presentation and publication thereof, which approval
shall not be unreasonably withheld, conditioned or delayed.
6.6 POST-CLOSING ASSISTANCE. From and after the Closing, upon the
request of either party, the other party hereto shall do, execute, acknowledge
and deliver all such further acts, assurances, deeds, assignments, transfers,
conveyances and other instruments and papers as may be reasonably required or
appropriate to carry out the transactions contemplated by this Agreement. Seller
shall be permitted to store Excluded Assets at the properties of the Buyer at no
cost to Seller for a period not to exceed thirty (30) days following Closing,
and Buyer will reasonably cooperate with Seller in the relocation and/or sale of
such Excluded Assets by Seller during the thirty (30) day period following the
Closing. After the Closing, at Seller's request and expense, Buyer shall employ
its best efforts to assist the Seller in obtaining the full benefit of any and
all Tax credits, Tax refunds and Tax benefits related to all Taxes paid and all
other matters related to Seller's business prior to the Closing.
6.7 PERMIT TRANSFER:
(a) Within thirty (30) days after Closing Buyer and
Seller shall file any and all necessary applications for approval of transfer of
rights pursuant to the Permits or application for successor operator permits
with the applicable regulatory authorities
21
(the "Applications"). At the time of transfer of each Permit, Buyer shall post
all bonds (or other appropriate collateral of a type satisfactory to the
appropriate regulatory authority) necessary to substitute Buyer's bonds for
Seller's bonds identified in Schedule 9 ("Bonds") so that Seller may apply and
obtain the release of the Bonds. Any and all necessary filing fees for the
Applications, the cost of advertising the filing of the Applications and any and
all costs payable to any governmental authority in connection with the
Applications shall be borne by Buyer; otherwise, each party will bear its own
costs and expenses in connection with such transfer of the Permits. Each party
hereto shall bear all its bond fees and other costs with respect to the bonds
and other security it has posted or may post in connection with the foregoing.
(b) Buyer will file with the Applications (or at such
later time as may be expressly permitted by Subsection (a) above) bonds or other
appropriate collateral of a type satisfactory to the appropriate regulatory
authority as surety for the reclamation of the boundaries affected by each
Permit, including all areas therein previously affected by the Seller, with good
and sufficient surety satisfactory to the regulatory agency. The parties shall
take all reasonable steps necessary to ensure that promptly upon approval of the
transfer of the Permits or reissuance of the Permits to Buyer by the appropriate
regulatory agency or agencies, Seller shall be released and absolved from all
liability and obligation under the Permits and all Bonds and all deposits,
letters of credit or collateral by Seller posted as security for such Bonds and
any cash bonds or letters of credit posted by the Seller directly with the
regulatory agency in connection therewith shall be refunded in full and/or
returned to Seller.
22
(c) Subject to any required administrative consent or
approval and any other requirement of any governmental authority, and upon
Buyer's funding of the Bond Escrow under Subsection 6.7(f), Seller, to the
extent Seller has a legal right to do so, grants to Buyer the right to engage in
mining operations and reclamation activities on the premises permitted under the
Permits, subject to the terms and conditions of this Agreement, each Lease and
the Permits. Should Buyer elect to begin mining operations prior to issuance of
new Permits to Buyer, Buyer shall cause to be prepared and the parties hereto
shall jointly submit to the regulatory authority such change of operator forms
as are required by the regulatory authority and Buyer shall operate solely as an
independent contractor and not as an agent, employee, or servant of Seller.
Subject to its continuing obligations and liabilities under the Permits, the
Bonds for which shall be supplied by Buyer, Seller shall have no right or
obligation in any way to direct, supervise or control such mining and
reclamation activities of Buyer under this subsection. Except as otherwise
provided in this Agreement, (i) all of Buyer's post-Closing operations pursuant
to this subsection shall be at the sole cost, risk and expense of Buyer and
shall be conducted by Buyer strictly in accordance and in full compliance with
any and all applicable Laws, and (ii) any benefit gained from such post-Closing
operations by Buyer pursuant to this subsection shall likewise be for the sole
account and benefit of Buyer. Except as otherwise provided in this Agreement,
Buyer shall receive no compensation from Seller and Seller shall receive no
additional compensation from Buyer as a result of conducting mining operations
pursuant to this Subsection.
23
(d) Buyer and Seller agree to diligently prosecute the
Application process contemplated hereby for the transfer of the Permits and/or
the change of operator. In the event of the denial of the transfer of any of the
Permits by the appropriate regulatory authority or the issuance of any new
permits by the appropriate regulatory authority, Buyer shall, at Buyer's
expense, until such denial is permanently reversed, diligently pursue and
exhaust all administrative and judicial remedies afforded to Buyer in the event
of such denial. In any event, Buyer shall remain liable for all the Assumed
Obligations notwithstanding the failure of the Buyer to obtain permits necessary
to effectively utilize the Acquired Assets.
(e) Buyer shall at all times after Closing and in all
events (whether or not Permits are ever transferred or issued to Buyer)
indemnify each member of Seller's Group for all Losses incurred by each member
of Seller's Group in connection with any and all post-Closing notices of
violations and any and all actions or failure to act of Buyer relating to the
Acquired Assets, the Permits (including bonds and other security therefor), the
Owned Real Property, the Leased Real Property and/or Buyer's mining operations
conducted pursuant to this ss. 6.7, which Losses shall constitute a Buyer
Assumed Obligation.
(f) At Closing, Buyer shall deposit the sum of
$826,424.00 into a separate escrow account (the "Bond Escrow") with the law firm
of Kite, Xxxxx & Associates, P.A., in Sevierville, Tennessee for the benefit of
Seller, as security for Buyer's obligations under this ss. 6.7 to obtain the
release of Seller's Bonds. The Bond Escrow shall be held and disbursed in
accordance with the terms of the Bond Escrow Agreement attached as EXHIBIT 6.
24
6.8 ASSUMED OBLIGATIONS AND POST-CLOSING COMPLIANCE WITH LAWS.
From and after the Closing, Buyer shall timely perform, pay and discharge all
Assumed Obligations and comply with all Environmental Laws, Mining Laws and all
other Laws and shall release, indemnify and hold harmless Seller and each member
of Seller's Group from any and all Losses related to such Assumed Obligations
and any post-Closing failure to comply with Environmental Laws or other Laws as
required by this ss. 6.8.
6.9 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES RELATIONSHIP
BETWEEN THE PARTIES. It is the explicit intent and understanding of the parties
hereto that none of the parties nor any of their respective affiliates,
representatives, advisors or agents is making any representation or warranty
whatsoever, oral or written, express or implied, other than those set forth in
this Agreement, and none of the parties is relying on any statement,
representation or warranty, oral or written, express or implied, made by any
other party or such other party's affiliates, representatives, advisors or
agents, except for the representations and warranties expressly set forth in
this Agreement. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT,
THE SELLER EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION
AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE ACQUIRED ASSETS
OR THE BUSINESS OF THE SELLER AND, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN
THIS AGREEMENT, IT IS UNDERSTOOD THAT THE ACQUIRED ASSETS ARE CONVEYED "AS IS"
AND "WHERE IS." Without limiting the generality of and in furtherance of the
preceding sentences, Buyer acknowledges that Seller makes no representations or
warranties to
25
Buyer regarding any forecasts, projections, estimates, business plans or
budgets, if any, heretofore delivered to or made available to Buyer or its
affiliates, representatives, advisors or agents in respect of future revenues,
expenses or expenditures, future results of operations (or any component
thereof), future cash flows, the Assumed Obligations or the future financial
condition (or any component thereof) of Buyer, the Acquired Assets or operations
relating to the Acquired Assets. The parties hereto agree that this is an arm's
length transaction in which the parties' undertakings and obligations are
limited to the performance of their obligations under this Agreement. Buyer
acknowledges that it is a sophisticated investor, that it has undertaken, and
that Seller has given Buyer such opportunities as it has requested to undertake,
a full investigation of Seller and the business of Seller (including the assets,
contracts, permits, licenses, coal reserve data and information, premises,
properties, environmental matters, facilities, books and records of Seller), and
that it has only a contractual relationship with Seller, based solely on the
terms of the this Agreement, and that there is no special relationship of trust
or reliance between Buyer and Seller.
6.10 NO SHOP PROVISION. Prior to the earlier of the termination of
this Agreement or the Closing, Seller shall not, without the prior written
consent of Buyer, except in the ordinary course of business, (a) sell any of the
Acquired Assets, or (b) consider or solicit any third-party proposals for the
purchase and sale of the Acquired Assets.
6.11 BEST EFFORTS. Prior to the earlier of the termination of this
Agreement or the Closing, Seller and Buyer shall each use its best efforts to
obtain all Consents and
26
satisfy the conditions to the transactions contemplated by this Agreement which
may be a condition to either party's obligation to close.
6.12 PRE-CLOSING DUE DILIGENCE. Seller shall, if and when
reasonably requested by Buyer, grant Buyer, its employees, contractors or agents
full access to Seller's books, records, equipment and properties relative to the
Acquired Assets and Assumed Obligations, excluding however any financial
statements, tax returns, ledgers and other financial books and records of
Seller. Moreover, if and when reasonably requested, Seller will permit Buyer to
discuss the Acquired Assets and Assumed Obligations with Seller's officers
during normal business hours at Seller's offices upon reasonable notice.
6.13 INSURANCE. Prior to exercising the rights granted herein, and
specifically those rights granted in ss. 6.7, Buyer shall (and shall require any
contractor engaged by Buyer to perform services on its behalf to) procure and
maintain in full force and effect through the date the Permits are effectively
transferred, at its sole expense, insurance as required by the regulatory
authority and to substitute for Seller's insurance as required by the regulatory
authority, including the following insurance coverage:
(a) comprehensive general liability insurance including
broad form contractual liability, specifying the indemnification provisions
contained in this Agreement, with a minimum coverage of $1,000,000.00 combined
single limit;
(b) workers' compensation and employers liability
insurance adequate to satisfy all legal obligations under state or federal
workers' compensation statutes; and
27
(c) automobile and/or excess umbrella liability insurance
(owned, hired and non-owned vehicles) with minimum bodily injury and property
damage limits of $1,000,000.00 for each occurrence.
Seller shall be named as an additional insured on the policies listed
in subsections (a) and (c) herein, and Seller shall be provided with
Certificates of Insurance evidencing the coverages described above (including
the fact that Seller is a named additional insured). All such certificates shall
contain an agreement by the insurers that such policies shall not be canceled or
materially changed without the insurer giving at least thirty (30) days prior
written notice to Seller, and said policies shall waive subrogation against
Seller.
6.14 SELLER'S EMPLOYEES. Seller will notify its employees of the
transaction contemplated by this Agreement subsequent to the pre-Closing and
prior to the Closing Time. Seller shall terminate all Seller employees (other
than Seller's principals) as of the Closing Time and Buyer will offer employment
to all such employees on terms comparable to those provided by Seller.
6.15 TITLE MATTERS. Subsequent to Closing, Seller shall use
commercially reasonable efforts to cure the following defects in the various
titles to sundry tracts of the real property being sold by Seller, within sixty
(60) days after Closing, to wit:
(i) obtaining a transfer of its loading dock rights to
the Southern Railway facility in that parcel of land listed as, or adjacent to,
County Tax Map 077, Parcel 00301, in Xxxxxxxx County, Tennessee;
(ii) obtaining an affidavit indicating that Xxxxxx
Xxxxxxx, one of the heirs of Xxxxxx Xxxxxxx, is deceased and that Xxxxxx Xxxxxxx
and Xxxx Xxxxx Newport
28
were Xxxxxx Xxxxxxx'x sole and only heirs at law, and giving reference to that
deed recorded in Warranty Deed Book 130, page 165, in the Xxxxx County,
Tennessee, Register of Deeds Office, or indicating in some other manner the
process, including recordation of documents, whereby Wiley and Xxxxxxx Xxxxxxxx
obtained Xxxxxx Xxxxxxx'x interest in the tract of land described in that deed,
and currently known as Tax Map 141, parcel 00701, in Xxxxx County, Tennessee;
(iii) obtaining an affidavit stating that Xxxxxxxxx
Xxxxxxxx is the same person as Xxxxxxxxx X. Xxxxxxxx, with reference to that
Mining Lease recorded in Miscellaneous Book 101, page 549, in the Xxxxx County,
Tennessee, Register of Deeds office, regarding Tax Map 141, Parcel 03400 in
Xxxxx County, Tennessee; and
(iv) obtaining an affidavit stating that Xxx Xxxx is
deceased and that Xxxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx and Xxxxxx Xxxx were Xxx Xxxx'x sole and only heirs at law, and giving
reference to that deed recorded in Warranty Deed Book 93, page 208, in the Xxxxx
County, Tennessee, Register of Deeds Office, or indicating in some other manner
the process, including recordation of documents, whereby Xxxxxx and Xxxxxxx X.
Xxxx obtained Xxx Xxxx'x interest in the tract of land described in that deed,
and currently known as Tax Map 141, Parcel 00500 in Xxxxx County, Tennessee.
The aforesaid defects and/or clouds on the titles to the above
respective parcels shall constitute Permitted Encumbrances during the said
60-day period or until cured, whichever occurs first. Provided, however, that in
the event that, despite the Seller's use of its commercially reasonable efforts,
a defect and/or cloud listed above remains uncured after such 61-day period,
then and in that event such defect encumbrance
29
and/or cloud shall remain a Permitted Encumbrance and Seller shall have no
liability to Buyer as a result of such Permitted Encumbrance. If Seller fails to
use commercially reasonable efforts, then, after the 60-day period, Buyer may
use commercial reasonable efforts to cure such defects at Seller's expense.
ARTICLE 7 - TAXES, PRORATIONS AND ADJUSTMENTS
7.1 CERTAIN TAX MATTERS. Buyer will, at all times after the
Closing, use its best efforts to assist the Seller in obtaining all credits,
deductions, carry forwards and other Tax benefits relating to any period prior
to the Closing.
7.2 PRORATIONS AND ADJUSTMENTS. All unmined mineral taxes, ad
valorem taxes and all real estate taxes other than transfer taxes shall be
prorated to the date of Closing.
7.3 TRANSFER TAXES. All sales taxes, use taxes, real estate
transfer taxes, motor vehicle and other personal property transfer taxes and all
other taxes imposed on or relating to the sale of the Acquired Assets to Buyer,
the use of the Acquired Assets by Buyer or the transfer of the Acquired Assets
to Buyer (including any industrial machinery taxes) shall be borne solely by
Buyer and shall constitute Buyer Assumed Obligations.
7.4 TAX ALLOCATION. Buyer and Seller agree that for the purposes
of this Agreement, Buyer and Seller shall jointly allocate the Purchase Price to
the Acquired Assets in accordance with the allocation set forth in SCHEDULE 8
attached. Each party hereto shall deliver to the other all appropriate IRS forms
reflecting such allocations.
30
7.5 UTILITIES. Seller and Buyer shall cooperate to arrange for all
utilities at Seller's facilities to be transferred to Buyer as of the Closing
Time, and all utility bills of Seller covering periods prior to and after the
Closing Time shall be prorated as of the Closing Time. Promptly after Closing,
Buyer shall substitute its deposits for all utility deposits posted by Seller
and cooperate with Seller's efforts to obtain the release and return of Seller's
utility deposits. If requested by a utility, Buyer shall execute a new contract
for utility service.
7.6 FINAL SETTLEMENT. Buyer and Seller shall enter into a final
settlement of all proration amounts under this Article 7 within 60 days
following the Closing, and the party responsible for payment of any net
proration amount shall pay such amount to the other party at the time of
settlement.
ARTICLE 8 - INDEMNIFICATION
8.1 SELLER'S INDEMNIFICATION. Subject to the limitations set forth
below in this Article 8, Seller shall indemnify and hold harmless Buyer and its
officers, directors, employees, agents and affiliates (collectively, the "Buyer
Indemnitees") from and against any and all Losses to which they or any of them
may become subject, to the extent caused by:
(a) any breach or default in performance by Seller of any
covenant, obligation or agreement of Seller contained in this Agreement; or
(b) any breach of any representation, warranty,
agreement, covenant, obligation or other undertaking or agreement made by Seller
in this Agreement, after
31
giving effect to any supplement to the Schedules or Exhibits made at or prior to
the Closing.
8.2 BUYER'S INDEMNIFICATION. Subject to the limitations set forth
in this Article 8, Buyer shall release, indemnify and hold harmless each member
of Seller's Group (collectively, the "Seller Indemnitees") from and against any
and all Losses to which they or any of them may become subject, to the extent
caused by:
(a) any breach or default in performance by Buyer of any
covenant, obligation or agreement of Buyer contained in this Agreement or in any
other agreement entered into by Buyer pursuant to this Agreement;
(b) any breach of any representation, warranty,
agreement, covenant, obligation or other undertaking or agreement made by Buyer
in this Agreement;
(c) any failure by Buyer to fully and timely perform or
pay any of the Assumed Obligations; or
(d) any activities or the exercise of any rights by Buyer
with respect to the Acquired Assets after Closing, including but not limited to
those rights granted in Subsection 6.7 (c).
8.3 NATURE AND SURVIVAL. TIME LIMITS.
(a) All representations and warranties set forth in
Articles 4 and 5 of this Agreement shall survive the Closing (unless the party
not making the representation or warranty knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
effect until the first anniversary of the Closing, at which time any and all
liability arising out of or relating to such representations and warranties
shall terminate unless the party not making the representation has
32
theretofore notified the other party in writing and in reasonable detail
specifying the bases for a claim or claims.
(b) Except for the representations and warranties
described in Articles 4 and 5 of this Agreement, all covenants, obligations,
agreements and other undertakings of the parties set forth in this Agreement
shall survive indefinitely.
(c) In the event that Seller or its authorized
representatives (including, but not limited to Seller's non-employee
consultants) has any Knowledge of any fact, event or circumstance that
constitutes (or would constitute) or indicates (or would indicate) a breach of
any representation, warranty or covenant made by Buyer in this Agreement, and
Seller fails to disclose the same in writing to Buyer prior to Closing such that
Buyer is unaware of such breach at or before Closing, then such breach shall not
form the basis of any claim of indemnity hereunder. In the event that Buyer or
its authorized representatives (including but not limited to Buyer's
non-employee consultants) has any Knowledge of any fact, event or circumstance
that constitutes (or would constitute) or indicates (or would indicate) a breach
of any representation, warranty or covenant made by Seller in this Agreement,
and Buyer fails to disclose the same in writing to Seller prior to Closing such
that such that Seller is unaware of such breach at or before Closing, then such
breach shall not form the basis of any claim of indemnity hereunder.
8.4 GENERAL PROVISIONS. In the case of any claim for
indemnification brought pursuant to this Agreement:
(a) The party entitled to indemnification (the
"Indemnified Party") shall notify the party obligated to provide indemnification
(the "Indemnifying Party") promptly
33
upon receipt of notice of the commencement of the claim for which
indemnification is sought pursuant to this Article 8, in writing and in
reasonable detail, and within any applicable time limits specified in this
Agreement. The Indemnified Party shall use all reasonable efforts to mitigate
any Losses. In case any such action is brought against any Indemnified Party,
the Indemnifying Party shall be entitled to participate therein and, to the
extent it may wish, to assume the defense thereof. Subsequent to such assumption
of defense, the Indemnifying Party shall not be liable to the Indemnified Party
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof; provided, however, that the Indemnified
Party shall thereafter have the right to participate in the defense of such
claim and to be represented, solely at its expense, by advisory counsel selected
by it, it being understood that the Indemnifying Party shall control such
defense, and any settlement of such claim shall require the consent of the
Indemnified Party, which consent may not be unreasonably withheld conditioned or
delayed. Whether or not the Indemnifying Party shall have assumed the defense of
a claim for which the Indemnified Party is entitled to be indemnified pursuant
to ss. 8.1 or ss. 8.2 of this Agreement, the Indemnified Party shall not admit
any liability with respect to, or settle, compromise or discharge, such claim
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld, conditioned or delayed.
(b) The Indemnified Party will, at the expense of the
Indemnifying Party, cooperate with the Indemnifying Party in the defense of any
such action and shall furnish any documents and endeavor to make available any
witnesses under its control.
34
(c) Any recovery shall be (i) limited to the Losses
actually incurred for which indemnification is provided (after giving effect to
the Present Value Benefit, realized or realizable by the Indemnified Party in
connection with or as a result of the occurrence of the Loss for which the
indemnity payment is to be made) and shall not include punitive damages,
indirect damages, or consequential damages (including, without limitation, lost
profits) incurred by the Indemnified Party, and (ii) net of insurance proceeds
received by the Indemnified Party relative to such Losses. The foregoing
limitations shall apply before application of the monetary limitations specified
herein. If the amount to be netted hereunder from any payment by the
Indemnifying Party is determined after payment by the Indemnifying Party of any
amount otherwise required to be paid pursuant to any indemnity provision of this
Agreement, the Indemnified Party shall repay to the Indemnifying Party, promptly
after such determination, any amount that the Indemnifying Party would not have
had to pay pursuant to said indemnity provision had such determination been made
at the time of such payment.
ARTICLE 9 - CONDITIONS TO CLOSING
9.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation
of Buyer to close the transaction contemplated by this Agreement is subject to
the satisfaction (or waiver by Buyer), prior to or at the pre-Closing, of each
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Except for any breach
of the representations and warranties of Seller contained in this Agreement that
would not have a Materially Adverse Effect, the representations and warranties
of Seller in this Agreement shall be true and correct in all material respects
immediately prior to the pre-Closing, with the same effect as though made
immediately prior to the pre-
35
Closing (except for representations and warranties made as of a specific date,
which shall be true and correct in all material respects as of such date), after
giving effect to any deemed amendment pursuant to ss. 6.3;
(b) COVENANTS. Seller shall have performed or complied in
all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Seller prior to or at pre-Closing;
(c) NO PROHIBITION. There shall not be in effect any
injunction or order issued by any court or administrative agency of competent
jurisdiction preventing the consummation of the transactions contemplated by
this Agreement at the pre-Closing; and
(d) CONSENTS. Seller shall have received and delivered
all Consents to Buyer. Notwithstanding anything contained in this Agreement to
the contrary, if Buyer elects to close the transactions contemplated hereby,
notwithstanding that a condition to Closing has not been satisfied or met, Buyer
shall be deemed to have waived any conditions to Buyer's obligations to close.
9.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation
of Seller to close the transactions contemplated by this Agreement is subject to
the satisfaction (or waiver by Seller) of each of the following conditions prior
to or at the pre-Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects immediately prior to the pre-Closing, with the same effect
as though made immediately prior to the pre-Closing (except for representations
and warranties made as
36
of a specific date of which shall be true and correct in all material respects
as of such date);
(b) COVENANTS. Buyer shall have performed or complied in
all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Buyer prior to or at the
pre-Closing; and
(c) NO PROHIBITION. There shall not be in effect any
injunction or order issued by any court. or administrative agency of competent
jurisdiction preventing the consummation of the transactions contemplated by
this Agreement on the pre-Closing.
Notwithstanding anything contained in this Agreement to the contrary,
if Seller elects to close the transactions contemplated hereby, notwithstanding
that a condition to Closing has not been satisfied or met, Seller shall be
deemed to have waived any conditions to Seller's obligations to close.
ARTICLE 10 -TERMINATION OF AGREEMENT
10.1 TERMINATION BEFORE CLOSING: This Agreement may be terminated
(subject to the provisions of ss. 10.2 of this Agreement below) at any time
before pre-Closing:
(a) by the mutual consent of Seller and Buyer in writing;
(b) by Buyer in the event of Seller's material breach or
default under this Agreement;
(c) by Seller in the event of Buyer's material breach or
default under this Agreement;
37
(d) by Buyer within 5 business days after receipt by
Buyer of a notice given by Seller pursuant to ss. 6.3 of this Agreement, if the
matters disclosed in the notice would have a Materially Adverse Effect;
(e) by Buyer if all Consents are not obtained by
pre-Closing unless Seller elects to extend the time for Closing pursuant to
Subsection 6.3(a);
(f) by Buyer if the Closing has not occurred on or prior
to June 8, 2004, other than as a result of Buyer's material breach or default of
this Agreement; or
(g) by Seller if the Closing has not occurred on or prior
to June 8, 2004, other than as a result of Seller's material breach or default
of this Agreement.
10.2 EFFECT OF TERMINATION. Notwithstanding any other provision of
this Agreement, if this Agreement is terminated pursuant to ss. 10.1, except as
hereafter otherwise expressly provided, all rights and obligations of the
parties under this Agreement will terminate without liability of any party to
any other party and the exercise of a right of termination shall act as an
exclusive election of remedies for such terminating party or parties except as
otherwise provided in this ss. 10.2; provided, however, that the rights and
obligations in ss. 6.1, 6.5 and this ss. 10.2 shall survive the termination of
this Agreement.
10.3 ESCROW ACCOUNT. In the event this Agreement is validly
terminated pursuant to ss. 10.1, the parties shall direct the Escrow Agent to
distribute all monies held
38
in the Escrow Account to the Buyer unless such termination occurred by reason of
Seller exercising its right of termination under Subsection 10.1(c) or (g) in
which case the Seller shall be entitled to retain the entire Escrow Account and
the Escrow Agent shall be authorized to distribute the Escrow Account to Seller.
In the event of a dispute with regard to distribution of the Escrow Account upon
termination of the Agreement, the Escrow Agent may file an interpleader action
to resolve such dispute and Escrow Agent's expenses and reasonable attorney fees
shall be paid from the interpleader funds.
ARTICLE 11 - DEFAULT
11.1 BUYER DEFAULT AND SELLER REMEDIES. If Buyer fails to perform
or observe any covenant, provision, term, restriction, or condition required to
be performed or observed by Buyer and imposed by law or under the terms of this
Agreement or any assignment and assumption agreement entered into pursuant to
this Agreement, then in such event and as often as the same occurs, Seller may
commence an action in any court of competent jurisdiction for liquidated or
money damages, specific performance or any other legal or equitable relief.
Exercise of any one of the foregoing remedies shall not preclude Seller from
exercising every other remedy provided under this Agreement (including retention
of the Escrow Agent Deposit) or otherwise available under Law, it being the
intention of the parties that Seller's remedies shall be cumulative and shall
survive termination, expiration, cancellation or forfeiture of this Agreement.
11.2 SELLER DEFAULT AND BUYER REMEDIES. If Seller fails to perform
or observe any covenant, provision, term, restriction, or condition required to
be performed or
39
observed by Seller and imposed by law or under the terms of this Agreement, then
in such event and as often as the same occurs, Buyer may commence an action in
any court of competent jurisdiction for money damages, specific performance or
any other legal or equitable relief. Exercise of any one of the foregoing
remedies shall not preclude Buyer from exercising every other remedy provided
herein or at law, it being the intention of the parties that Buyer's remedies
shall be cumulative and shall survive termination, expiration, cancellation or
forfeiture of this Agreement.
ARTICLE 12 - MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits attached hereto each of which is incorporated by reference, and the
Letter of Intent set forth the entire agreement and understanding of the parties
with respect to the transactions contemplated herein and supersedes any previous
agreements and understandings between the parties with respect thereto. To the
extent the Letter of Intent conflicts with the terms of this Agreement, this
Agreement shall control.
12.2 CONSTRUCTION. This Agreement is the result of arm's-length
negotiations between, and has been prepared and reviewed by, each party hereto
and its respective counsel. Accordingly, this Agreement shall be deemed to be
the product of both parties hereto.
12.3 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Tennessee, without giving effect to its conflicts
of law principles. The parties hereby specifically submit themselves to the
jurisdiction of the state courts located in Xxxx County, Tennessee, and hereby
covenant and agree that the venue
40
and forum for any claim, controversy or proceeding arising under or related to
this Agreement shall be brought and maintained in such courts.
12.4 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing, by facsimile, by
overnight courier or by registered or certified mail, postage prepaid and return
receipt requested, and shall be deemed to have been duly given or made upon: (i)
delivery by hand, (ii) one business day after being sent by overnight courier,
(iii) 4 business days after being deposited in the United States mail, postage
prepaid, or (iv) in the case of transmission by facsimile, when confirmation of
receipt is obtained. Such communications shall be addressed and directed to the
parties listed below as follows:
If to Seller, to: U.S. Coal, Inc.
Attn: Xx. Xxxxxxx X. Xxxx
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
If to Buyer, to: National Coal Corp.
Attn: Xx. Xxx Xxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
12.5 WAIVER. Waivers of or consents to departures from the
provisions hereof may be given, provided that the same shall be in writing and
be signed by each of the parties hereto. No such waiver or consent shall be
construed as a waiver of or consent to any other departure from any such
provisions or any other provisions hereof.
12.6 BINDING EFFECT, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as hereafter otherwise provided, no assignment or
transfer of this Agreement or of any rights or obligations hereunder may be
made, in whole or in part, by any party (by
41
operation of Law or otherwise) without the prior written consent of the other
party hereto, and any purported assignment without consent shall be void.
12.7 AMENDMENT. Except for any deemed amendment pursuant to ss.
6.3, this Agreement may not be amended, modified or supplemented unless the same
shall be in writing and signed by each of the parties hereto.
12.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same document.
12.9 NO THIRD-PARTY BENEFICIARIES. The terms, agreements and
provisions of the parties set forth in this Agreement are not intended for, nor
shall they be for the benefit of or enforceable by, any Person not a party
hereto.
12.10 HEADINGS. The descriptive headings of the Articles, Sections,
Schedules, Exhibits and paragraphs of this Agreement are inserted for
convenience only and do not constitute a part or affect the interpretation of
this Agreement.
42
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement this 15th day of April, 2004.
U.S. COAL, INC., NATIONAL COAL CORPORATION,
a Tennessee corporation a Tennessee corporation
By: /S/ XXXXXXX X. XXXX By: /S/ XXX X. XXX
--------------------------------- ---------------------------------
Xxxxxxx X. Xxxx, President Xxx X. Xxx, President
NEW RIVER PROCESSING INC.,
a Tennessee corporation
By: /S/ XXXXXXX X. XXXX
---------------------------------
Xxxxxxx X. Xxxx, President
43
OMITTED EXHIBITS AND SCHEDULES
TO ASSET PURCHASE AND SALE AGREEMENT
The following Exhibits and Schedules to the Asset Purchase and Sale
Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The
Registrant hereby agrees to furnish supplementally a copy of any omitted
attachment to the Securities and Exchange Commission upon request.
SCHEDULE 1: Excluded Assets
SCHEDULE 2: Tangible Personal Property and Equipment
SCHEDULE 3: Leased Real Property
SCHEDULE 4: Owned Real Property
SCHEDULE 5: Permits
SCHEDULE 6: Contracts
SCHEDULE 7: Consents
SCHEDULE 8: Tax Allocation of Purchase Price
SCHEDULE 9: Bonds
EXHIBIT 1: Warranty Xxxx of Sale
EXHIBIT 2: Assignment and Assumption of Lease
EXHIBIT 3: Assignment and Assumption of Contract
EXHIBIT 4: Warranty Deed
EXHIBIT 5: Confidentially Agreement
EXHIBIT 6: Bond Escrow Agreement
44
