EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
between
RAG COAL INTERNATIONAL AG
and
AMERICAN COAL ACQUISITION CORP.
dated as of
May 24, 2004
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................1
1.1. Certain Defined Terms...................................................1
1.2. Other Interpretive Provisions..........................................15
ARTICLE II PURCHASE AND SALE.....................................................16
2.1. Transaction Overview...................................................16
2.2. Consideration..........................................................16
2.3. The Closing............................................................17
2.4. Deliveries at the Closing..............................................17
2.5. Payments On or Before Closing..........................................18
2.6. Form of Payments.......................................................19
2.7. Working Capital True Up................................................19
2.8. Capital Expenditure True Up............................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.............................21
3.1. Organization...........................................................22
3.2. Authorization; Enforceability..........................................22
3.3. Capital Stock..........................................................22
3.4. Ownership of the Shares................................................23
3.5. Ownership of Seller....................................................23
3.6. Financial Statements...................................................23
3.7. Absence of Undisclosed Liabilities.....................................24
3.8. No Conflicts or Approvals..............................................24
3.9. Governmental Authorization.............................................24
3.10. Compliance; Permits; Companies' Surety Bonds...........................25
3.11. Proceedings............................................................27
3.12. Absence of Certain Changes.............................................27
3.13. Tax Matters............................................................27
3.14. Employee Benefits......................................................31
3.15. Labor and Employee Relations...........................................33
3.16. Intellectual Property..................................................34
3.17. Contracts..............................................................35
3.18. Environmental Matters..................................................37
3.19. Insurance..............................................................39
3.20. Personal Property Assets...............................................40
3.21. Real Property..........................................................40
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3.22. Intercompany Accounts; Transactions with Affiliates....................42
3.23. No Brokers' or Other Fees..............................................43
3.24. Entire Business........................................................43
3.25. Solvency...............................................................43
3.26. Customers and Suppliers................................................43
3.27. Grants and Allowances..................................................43
3.28. Absence of Certain Payments; Illegal Acts..............................44
3.29. Offers.................................................................44
3.30. Debt; Security Interests...............................................44
3.31. Forecasts..............................................................44
3.32. Disclosure.............................................................44
3.33. No Other Representations or Warranties.................................44
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...............................45
4.1. Organization...........................................................45
4.2. Authorization; Enforceability..........................................45
4.3. No Conflicts or Approvals..............................................45
4.4. Governmental Authorization.............................................45
4.5. No Brokers' or Other Fees..............................................46
4.6. Permit Blocking........................................................46
4.7. Financial Ability to Perform...........................................46
4.8. Disclosure.............................................................46
4.9. No Other Representations or Warranties.................................46
ARTICLE V COVENANTS AND AGREEMENTS...............................................46
5.1. Conduct of Business Prior to the Closing...............................46
5.2. Access; Cooperation and Further Assurances.............................51
5.3. Tax Matters............................................................52
5.4. Further Actions........................................................64
5.5. Nonsolicitation........................................................65
5.6. Competing Transaction; Return of Confidential Information..............67
5.7. Intercompany Accounts; Affiliate Agreements............................68
5.8. Intercompany Insurance.................................................68
5.9. Name Changes...........................................................68
5.10. Guarantees; Surety Bonds...............................................69
5.11. Permits................................................................70
5.12. Reserved...............................................................71
5.13. Cooperation in Financing...............................................71
5.14. Sale or Transfer of RAG Colorado Entities..............................71
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5.15. Plant Closings and Layoffs; Communications with Labor Organizations....71
5.16. Resignations of Directors and Officers.................................72
5.17. Repayment of Debt......................................................72
5.18. Additional Financial Statements........................................72
5.19 Long Term Incentive Plan...............................................73
5.20 Environmental Insurance; Impoundment...................................73
ARTICLE VI CONDITIONS TO SELLER's OBLIGATIONS....................................73
6.1. Representations and Warranties.........................................74
6.2. Performance............................................................74
6.3. Officer's Certificate..................................................74
6.4. Governmental Approvals.................................................74
6.5. Other Approvals........................................................74
6.6. Injunctions............................................................74
6.7. Seller Guarantees and Seller Bonds.....................................74
6.8. Closing Deliveries.....................................................74
ARTICLE VII CONDITIONS TO BUYER's OBLIGATIONS....................................75
7.1. Representations and Warranties.........................................75
7.2. Performance............................................................75
7.3. Officer's Certificate..................................................75
7.4. Governmental Approvals.................................................75
7.5. Other Approvals........................................................75
7.6. Injunctions............................................................75
7.7. Buyer's Financing......................................................76
7.8. Intercompany Accounts; Affiliate Agreements............................76
7.9. Absence of Companies Material Adverse Effect...........................76
7.10. Closing Deliveries.....................................................76
7.11. Cumberland Mine Operations.............................................76
7.12. Sale or Transfer of RAG Colorado Entities..............................76
7.13. Companies' Debt........................................................76
7.14. Cash...................................................................77
7.15. Power of Attorney......................................................77
ARTICLE VIII TERMINATION.........................................................77
8.1. Termination............................................................77
8.2. Procedure and Effect of Termination....................................77
ARTICLE IX INDEMNIFICATION.......................................................78
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9.1. Indemnification........................................................78
ARTICLE X MISCELLANEOUS..........................................................85
10.1. Fees and Expenses......................................................85
10.2. Governing Law..........................................................85
10.3. Amendment..............................................................85
10.4. Assignment.............................................................85
10.5. Waiver.................................................................85
10.6. Notices................................................................85
10.7. Complete Agreement.....................................................87
10.8. Counterparts...........................................................87
10.9. Failure or Delay.......................................................87
10.10. Publicity..............................................................87
10.11. Headings...............................................................88
10.12. Severability...........................................................88
10.13. Third Parties..........................................................88
10.14. Arbitration............................................................88
10.15. Specific Performance...................................................88
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SCHEDULES
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Schedule 1.1(A) Companies
Schedule 1.1(B) Knowledge of Buyer
Schedule 1.1(C) Knowledge of Seller
Schedule 1.1(D) Mining Authorizations
Schedule 1.1(E) Reserved
Schedule 1.1(F) Seller Bonds
Schedule 1.1(G) Seller Guarantees
Schedule 1.1(H) Working Capital
Schedule 2.2 Capital Leases
Schedule 3.1 Jurisdictions
Schedule 3.3 Capital Stock
Schedule 3.6(a) Audited Financial Statements
Schedule 3.6(b) March 31 Financial Statements
Schedule 3.7 Undisclosed Liabilities
Schedule 3.8 Conflicts or Approvals
Schedule 3.9 Governmental Authorization - Seller
Schedule 3.10(a) Compliance with Permits
Schedule 3.10(c)(ii) Material Mining Applications
Schedule 3.10(d)(i) Companies' Surety Bonds
Schedule 3.10(d)(ii) Compliance with Companies' Surety Bonds
Schedule 3.10(f) Actions Regarding Non-Compliance with Laws
Schedule 3.11(a) Proceedings
Schedule 3.11(b) Real Property Disputes
Schedule 3.12 Absence of Certain Changes
Schedule 3.13 Tax Matters
Schedule 3.14(a) Benefit Plans
Schedule 3.14(b) Benefit Plan Representations
Schedule 3.14(c) Benefits Beyond Termination
Schedule 3.14(d) Severance and Other Payments
Schedule 3.14(e) Benefit Plan Liabilities
Schedule 3.14(f) International Benefit Plans
Schedule 3.15(a) Collective Bargaining Agreements and Employee Relations
Schedule 3.15(b) Consultants, Contract Employees, and Leased Employees
Schedule 3.15(c) Company Employees
Schedule 3.15(d) Compliance with Employment Laws
Schedule 3.15(e) Workers' Compensation Claims
Schedule 3.16(a) Intellectual Property
Schedule 3.16(b) Software and Hardware
Schedule 3.17(a) Contracts
Schedule 3.17(b) Termination of Material Contracts; Performance
Schedule 3.18 Environmental Matters
Schedule 3.19 Insurance Policies
Schedule 3.20 Personal Property Assets
Schedule 3.21(a) Leased Real Property
Schedule 3.21(b) Owned Real Property
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Schedule 3.21(b)(i) Out Conveyances
Schedule 3.21(c) Claims Regarding Mined Coal
Schedule 3.22(a) Intercompany Accounts
Schedule 3.22(b) Transactions with Affiliates
Schedule 3.24 Entire Business
Schedule 3.26(a) Top Ten Customers
Schedule 3.26(b) Top Ten Suppliers
Schedule 3.29 Offers
Schedule 3.30 Debt
Schedule 4.4 Governmental Authorization - Buyer
Schedule 5.1(a)(A) Conduct of Business Prior to Closing
Schedule 5.1(a) Capital Expenditure Budget
Schedule 5.1(b) Certain Material Events
Schedule 5.1(c) Debt To Be Repaid
Schedule 5.4 Consents
Schedule 5.7 Affiliate Agreements
Schedule 5.9 Name Changes
Schedule 5.10 Seller Guarantees to be Released at Closing
Schedule 5.11 Required Permits
Schedule 6.4 Governmental Approvals - Seller Obligation to Close
Schedule 6.5 Other Approvals - Seller Obligation to Close
Schedule 7.4 Governmental Approvals - Buyer Obligation to Close
Schedule 7.5 Other Approvals - Buyer Obligation to Close
Schedule 7.11(a) Cumberland Mine Issue
Schedule 7.11(b) Cumberland Mine
EXHIBITS
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Exhibit A Opinion of Counsel of Seller
Exhibit B Opinion of Counsel of Buyer
Exhibit C Escrow Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of May 24, 2004, is entered
into by RAG Coal International AG, a company incorporated under the laws of
Germany ("Seller"), and American Coal Acquisition Corp., a Delaware corporation
("Buyer"). Each of Buyer and Seller are referred to in this Agreement as a
"Party" and collectively as the "Parties."
WHEREAS, Seller owns 137,143 shares of RAG American Coal Holding,
Inc., a Delaware corporation ("RACH"), representing all of the issued and
outstanding shares of RACH, and RACH in turn owns, directly or indirectly, all
of the issued and outstanding shares (or analogous ownership interests) of the
other Companies (as defined below) that are engaged in the coal mining business
in the United States and in activities related thereto; and
WHEREAS, Seller desires to sell, and Buyer desires to acquire,
directly or indirectly, all of the issued and outstanding shares of RACH and
each of the other Companies, upon the terms and subject to the conditions set
forth in this Agreement; and
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms. (a) As used in this Agreement, the
following terms shall have the following meanings:
"Actual Cap Ex Statement" shall have the meaning set forth in Section
2.8(b).
"Actual WC Statement" shall have the meaning set forth in Section
2.7(b).
"Additional General Foods Lease Liability" shall mean any Liabilities
arising out of the General Foods Lease to the extent such Liabilities exceed the
reserve therefor on the balance sheet contained in the Most Recent Financial
Statements.
"Affiliate" shall mean, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person, and, in the case of Buyer, includes First Reserve Fund IX, L.P.,
Blackstone Capital Partners IV, L.P. (and their respective General Partners and
management companies), and American Metals & Coal International, Inc., and, in
the case of Seller, does not include (other than for purposes of Section
5.1(b)(xv)) DBT or any wholly-owned subsidiary of DBT.
"Affiliate Agreement" shall have the meaning set forth in Section
3.17(a)(xii).
"Affiliated Group" shall mean any affiliated group within the meaning
of Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign tax law.
"Agreement" shall mean this Stock Purchase Agreement (including the
Schedules), as amended, modified or supplemented from time to time.
"Allocation Statement" shall have the meaning set forth in Section
5.3(a)(iii).
"Annual Operating Expenses Budget" shall mean the Annual Operating
Expenses Budget attached as Schedule 3.18(vi) hereto.
"Audited Balance Sheet" shall have the meaning set forth in Section
3.7.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.6.
"Base WC Amount" shall mean US$70,682,000.
"Basket" shall have the meaning set forth in Section 9.1(d)(i)(A).
"Benefit Plans" shall have the meaning set forth in Section 3.14(a).
"Budgeted Cap Ex" shall mean the aggregate amount of Capital
Expenditures pertaining to the business of the Companies that are scheduled to
be made pursuant to the Capital Expenditures Budget during the period beginning
on January 1, 2004 and ending on the Closing Date (pro rated for any portion of
a month during such period).
"Business" shall mean the mining, processing, and sale of coal
produced by the Companies in the States of Illinois, West Virginia and Wyoming
and in the Commonwealth of Pennsylvania and the trading of coal by the Companies
as conducted as of the date of this Agreement.
"Business Day" shall mean any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in the
City of New York.
"Buyer" shall have the meaning set forth in the first sentence of this
Agreement.
"Buyer Indemnitees" shall have the meaning set forth in Section
9.1(a).
"Buyer Refunds" shall have the meaning set forth in Section 5.3(f).
"CA Tax Sharing Agreement" shall have the meaning set forth in Section
5.3(h).
"Cap Ex True Up" shall have the meaning set forth in Section 2.8(b).
"Capital Expenditures" shall mean the aggregate amount of cash
expenditures during a period to acquire or improve property, plant and equipment
(including leasehold improvements) and recorded as an increase to property,
plant and equipment in the Companies
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balance sheet during such period as determined in accordance with GAAP applied
consistently with past practices.
"Capital Expenditure Budget" shall have the meaning set forth in
Section 5.1.
"Cash" shall mean the sum of cash and cash equivalents (as determined
under GAAP), net of outstanding checks.
"Claim for Indemnification" shall mean a written notice by Buyer or
Seller to the other asserting a claim under Article IX delivered in accordance
with Section 10.6; provided, however, that such notice shall be sufficient if it
provides a description of the claim in reasonable detail (to the extent such
information is available to the party giving notice), and a general description
of the Losses that the Indemnified Party may suffer, with an estimate of the
extent of the dollar amount of Losses, to the extent such information can
reasonably be determined at the time notice is given.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Closing Balance Sheet" shall mean a consolidated balance sheet of the
Companies as of the close of business on the Closing Date immediately preceding
the Transaction (without giving effect to any purchase accounting adjustments
arising from the Transaction) and reflecting the RAG Colorado Entities as a
discontinued operation for all such periods, that is prepared in accordance with
GAAP applied consistently with past practices and which shall be prepared and
certified by the Chief Financial Officer of RACH.
"Coal Act" shall mean the Coal Industry Retiree Health Benefit Act of
1992 as it may be amended from time to time (codified at Subtitle J of the
Code).
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall mean the direct and indirect subsidiaries of Seller
that are listed on Schedule 1.1(A), including RACH, and "Company" shall mean any
such subsidiary.
"Companies Material Adverse Effect" shall mean any change, occurrence
or development that, individually, or together with any other change, occurrence
or development, has a material adverse effect on (a) the business, assets,
Liabilities, results of operations, prospects or financial condition of the
Companies, taken as a whole, and a "Companies Material Adverse Effect" shall be
deemed to have occurred if any such material adverse effect exists on any date,
without regard to the duration of such material adverse effect; provided however
that the term "Companies Material Adverse Effect" shall exclude any effect (i)
resulting from changes in general United States economic and political
conditions (including changes in commodity prices, interest rates and/or
currency exchange rates), or applicable Law and generally accepted accounting
principles that do not disproportionately affect the Companies, (ii)
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resulting from changes affecting companies in the United States coal mining
industry generally, in each case, that do not disproportionately affect the
Companies or (iii) resulting from the Cumberland Mine Issue (provided that the
operations at the Cumberland Mine shall have returned to the "normal production
level" (as defined in Section 7.11) for the calendar month immediately preceding
the calendar month of the Closing Date and the resolution of such issues related
to the Cumberland Mine Issue do not diminish the future profitability or
prospects of the Cumberland Mine or the Companies) or (b) the ability of Seller
to perform its obligations hereunder or consummate the transactions contemplated
hereby on a timely basis.
"Companies' Surety Bonds" shall have the meaning set forth in Section
3.10(d).
"Company Employees" shall have the meaning set forth in Section
3.14(a).
"Competing Transaction" shall have the meaning set forth in Section
5.6(a).
"Competition Law" shall mean any Law that is designed or intended to
prohibit, restrict or regulate antitrust, monopolization, restraint of trade or
competition.
"Confidentiality Agreement" shall mean each of (i) that certain Letter
Agreement dated February 10, 2004, among Blackstone Management Partners IV, LLC,
First Reserve Corporation and Seller; and (ii) that certain Letter Agreement
dated February 18, 2004 between American Metals and Coal International and
Seller.
"Consent" shall mean any consent, approval, authorization,
consultation, waiver, permit, grant, agreement, license, certificate, exemption,
order, registration, declaration, filing or notice of, with or to any Person, or
the expiration or termination of the waiting period under any Competition Law,
in each case required to permit the consummation of any of the transactions
contemplated hereby.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, by contract or otherwise, including
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Cumberland Mine" shall have the meaning set forth in Section 7.11.
"Cumberland Mine Issue" shall have the meaning set forth in Section
7.11.
"Customer Agreement" shall mean each coal supply or coal sales
agreement entered into in the ordinary course of the Companies' business
pursuant to which any Company is obligated to pay to any customer any refund,
rebate or credit of Taxes in amounts and on terms consistent with past practice,
including without limitation those agreements identified in Items 4 and 5 of
Schedule 3.13(h).
"DBT" shall mean DBT GmbH, a wholly-owned subsidiary of Seller.
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"DBT Agreement" shall have the meaning set forth in Section
3.17(a)(xix).
"Debt" shall, as applied to any Person, mean, without duplication:
(a) all indebtedness for borrowed money, including, all principal,
interest or other obligations evidenced by or under a note, bond, debenture,
letter of credit, draft or similar instrument;
(b) that portion of obligations with respect to capitalized or
synthetic leases that is properly classified as a Liability on a balance sheet
in conformity with GAAP;
(c) Liabilities under or pursuant to interest rate cap contracts, swap
contracts, foreign currency exchange contracts and other hedging or similar
contracts (including breakage or associated fees);
(d) all obligations to pay the deferred purchase price of property or
services (including the earned portion of any so-called "earn-out" obligations)
(but in no event shall "Debt" include any royalty amounts payable pursuant to
any Mining Authorization);
(e) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to acquired property;
(f) all indebtedness and obligations of the types described in the
foregoing clauses (a) through (e) to the extent secured by any Encumbrance,
other than Permitted Encumbrances, on any property or asset owned or held by
that Person, regardless of whether the indebtedness secured thereby shall have
been incurred or assumed by that Person or is otherwise nonrecourse to the
credit of that Person; and
(g) all guarantees of any of the foregoing.
"Dispute" shall have the meaning set forth in Section 10.14.
"Employment Contracts" shall mean any management, consulting, profit
sharing, stock option, stock purchase, pension, retainer, welfare, stock
appreciation or other equity-incentive, deferred compensation, retirement,
change in control, severance and employment contract or commitment to enter into
the same involving aggregate annual payment to any person of $50,000 or more.
"Encumbrance" shall mean any charge, claim, community or other marital
property interest, right of way, easement, encroachment, servitude, right of
first option, right of first refusal, restriction on use, mortgage, pledge,
lien, encumbrance, receipt of income, charge, restriction on transfer, other
security or equity interest, or defect in title.
"Environment" shall mean surface or ground water, water supply,
sediments, land surface or subsurface strata, indoor or outdoor air, and any
other environmental medium; provided, however, that for all purposes of this
Agreement, references to indoor air shall not include ambient air conditions in
any mine.
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"Environmental Claim" shall mean any notice or Proceeding by any
Person alleging Liability or potential Liability (including Liability or
potential Liability for investigatory costs, cleanup or response costs,
governmental response costs, natural resource damages, fines or penalties)
relating to any Environmental Losses or in respect of any Environmental Laws.
"Environmental Insurance Policy" shall have the meaning set forth in
Section 5.20.
"Environmental Law" shall mean collectively, all Laws that relate to
(a) the prevention, abatement or elimination of pollution, or the protection of
the Environment, or of natural resources, including (i) Laws applicable to
Mining Activities or related activities (other than the Mine Safety and Health
Act (30 U.S.C. Section 801 et seq.)); and (ii) all Reclamation Laws, (b) the
generation, handling, treatment, storage, disposal or transportation of waste
materials, (c) the regulation of or exposure to Hazardous Materials, including
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Sections 9601 et Seq ("CERCLA"), the Endangered Species Act, 16 U.S.C.
Sections 1531 et seq., the Federal Land Policy and Management Act, 43 U.S.C.
Sections 1701 et seq., the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901 et seq.
("RCRA"), the Clean Air Act, 42 U.S.C. Sections 7401 et. seq., the Clean Water
Act, 33 U.S.C. Sections 1251 et seq., the Toxic Substances Control Act, 15
U.S.C. Sections 2601 et seq., the Emergency Planning and Community Right to Know
Act, 42 U.S.C. Sections 11001 et seq., each as amended, and any similar state
Law.
"Environmental Losses" shall mean Losses arising from a Release of
Hazardous Materials or noncompliance with or Liability under any Environmental
Law or Permits required pursuant to any Environmental Law.
"Environmental Permit" shall mean any consent, approval,
authorization, permit, license, franchise, or certificate under or pursuant to
any Environmental Law.
"ERISA" shall have the meaning set forth in Section 3.14(a).
"ERISA Affiliate" shall have the meaning set forth in Section 3.14(a).
"Escrow Agent" has the meaning set forth in Section 2.2.
"Escrow Agreement" shall mean the Escrow Agreement entered into
concurrently herewith and attached hereto as Exhibit C.
"Escrow Amount" shall mean (a) if Seller delivers to Buyer on or prior
to the Closing the Seller FIRPTA Certificate, the amount (if any) required to be
withheld by Buyer from the RACH Purchase Price pursuant to such Seller FIRPTA
Certificate, and (b) otherwise, 10% of the RACH Purchase Price.
"Estimated Cap Ex" shall have the meaning set forth in Section 2.8(a).
"Estimated Cap Ex Statement" shall mean a statement, prepared and
certified by the Chief Financial Officer of Seller, that sets forth the
estimated amount of Capital Expenditures
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pertaining to the business of the Companies (excluding Capital Expenditures by
the RAG Colorado Entities) that were made by the Companies during the period
beginning on January 1, 2004 and ending on the Closing Date.
"Estimated WC Amount" shall have the meaning set forth in Section
2.7(a).
"Excluded Companies" shall mean each of RACC and each subsidiary
thereof and RAG energy sales, Inc.
"Excluded Taxable Year" shall mean any taxable period or year
beginning prior to the Exclusion Date.
"Exclusion Date" shall mean July 1, 1999.
"Final Determination" shall have the meaning set forth in Section
9.1(h).
"GAAP" shall mean United States generally accepted accounting
principles as in effect at the time of the subject financial statements.
"General Foods Lease" shall mean that certain Lease dated December 15,
1994 by and among Shawmut Bank Connecticut, National Association, as owner
trustee under a Trust Agreement dated December 15, 1994 with General Foods
Credit Corporation, as lessor, and the lessees thereunder, together with that
certain Sublease dated June 30, 1999 by and among Cyprus Amax Leasing
Corporation and the other sublessors thereunder and the sublessees thereunder.
"Governmental Approval" shall mean any Consent of, with or to any
Governmental Authority.
"Governmental Authority" shall mean any United States or other
federal, state, provincial or local government or other political subdivision
thereof, any entity, authority, tribunal, agency or body exercising executive,
legislative, judicial, regulatory, fiscal or administrative functions of any
such government or political subdivision, and any supranational organization of
sovereign states exercising such functions for such sovereign states.
"Governmental Order" shall mean, with respect to any Person, any
judgment, order, writ, injunction, decree, stipulation, agreement, determination
or award entered or issued by or with any Governmental Authority and binding on
such Person.
"Hazardous Materials" shall mean any material or substance defined as
a "hazardous substance," "toxic substance," "hazardous waste," "pollutant" or
"contaminant" or any other term of similar import under any Environmental Law or
any other materials which are regulated or give rise to liability under
Environmental Laws, including petroleum (including crude oil or any fraction
thereof), asbestos and asbestos containing materials, acidic mine drainage,
radiation and radioactive materials, lead containing paints, molds and other
harmful biologic agents and polychlorinated biphenyls.
"HIPAA" shall mean the Health Insurance Portability and Accountability
Act of 1996, as amended, and all rules and regulations thereunder
7
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, or any successor law, and regulations and rules promulgated
pursuant to that act or any successor law.
"Impoundment Plan" shall have the meaning set forth in Section 5.20.
"Income Tax" shall mean any Tax based upon, measured by, or calculated
with respect to net income or profits (including, but not limited to, any
capital gains or similar Tax).
"Income Tax Return" shall mean any Tax Return relating to Income
Taxes, including any schedule or attachment thereto, and including any amendment
thereof.
"Indemnified Item" shall have the meaning set forth in Section 5.3(o).
"Indemnified Party" shall have the meaning set forth in Section
9.1(e).
"Indemnifying Party" shall have the meaning set forth in Section
9.1(e).
"Indemnity Termination Date" shall have the meaning set forth in
Section 9.1(c).
"Intellectual Property" shall mean all (i) patents, (ii) inventions,
discoveries, processes, formulae, designs, models, industrial designs, know-how,
confidential information, proprietary information and trade secrets, whether or
not patented or patentable, (iii) trademarks, service marks, trade names, brand
names, trade dress, slogans, logos and internet domain names, (iv) copyrights
and other copyrightable works and works in progress, databases and Software, (v)
all other (a) intellectual property rights and (b) foreign equivalent or
counterpart rights and forms of protection of a similar or analogous nature or
having similar effect, in each case, in any jurisdiction throughout the world,
(vi) any renewals, extensions, continuations, divisionals, reexaminations or
reissues or equivalent or counterpart of any of the foregoing in any
jurisdiction throughout the world, and (vii) all registrations and applications
for registration of any of the foregoing.
"Intercompany Account" shall have the meaning set forth in Section
3.22.
"Knowledge of Buyer" shall mean the actual knowledge of the
individuals listed on Schedule 1.1(B) and what such individual would reasonably
be expected to have known after reasonable inquiry within the scope of such
individual's job responsibilities.
"Knowledge of Seller" shall mean the actual knowledge of the
individuals listed on Schedule 1.1(C) and what such individual would reasonably
be expected to have known after reasonable inquiry within the scope of such
individual's job responsibilities.
"Law" shall mean any applicable Governmental Order or any applicable
provision of any constitution, law (including principles of the common law),
legally binding directive, treaty, statute, rule, regulation or restriction of
any Governmental Authority.
8
"Leased Fixtures and Improvements" shall have the meaning set forth in
Section 3.21(a).
"Leased Real Property" shall have the meaning set forth in Section
3.21(a).
"Liabilities" shall mean any and all liabilities and obligations of
every kind and description whatsoever, whether such liabilities or obligations
are known or unknown, disclosed or undisclosed, matured or unmatured, accrued or
unaccrued, absolute or conditional, asserted or unasserted, liquidated or
unliquidated, whether due or to become due, contingent or otherwise, including
Losses.
"Losses" shall mean any and all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, Liabilities, obligations, liens,
losses, expenses, fees, damages, dues, fines, Taxes, injunctions, judgments,
orders, decrees, rulings, penalties, amounts paid in settlement, and costs (in
each case including reasonable out-of-pocket expenses (including court costs and
reasonable attorneys', accountants', technical consultants', engineers',
appraisers', and experts' fees and expenses)).
"LTIP Payments" shall have the meaning set forth in Section 5.19.
"March 31 Financial Statements" shall have the meaning set forth in
Section 3.6.
"Material Contracts" shall have the meaning set forth in Section
3.17(a).
"Material Mining Applications" shall have the meaning set forth in
Section 3.10(c)(ii).
"Material Tax Liability" shall mean any liability for Taxes
individually or in the aggregate that exceeds $50,000.
"Mining Activities" shall mean those activities of the Companies
related to the Business that involve surface mining, underground mining, auger
mining, processing, sale or transporting of coal and coal by-products. For the
purpose of this definition, "Mining Activities" shall include any activities
regulated under SMCRA and Laws governing, controlling or applying to coal mining
operations.
"Mining Authorization" shall mean the mining leases, licenses, Permits
and other mining authorities held by each of the Companies, and which are listed
on Schedule 1.1(D).
"Month End Balance Sheet" shall mean a consolidated balance sheet of
the Companies for the most recent month then ended (or, if not yet available, a
good faith estimate of the consolidated balance sheet of the Companies for the
most recent month then ended) and reflecting the RAG Colorado Entities as a
discontinued operation for all such periods, that is prepared in accordance with
GAAP applied consistently with past practices and which shall be prepared and
certified by the Chief Financial Officer of Seller.
9
"Most Recent Financial Statements" shall mean (a) the March 31
Financial Statements as of and for the three months ended March 31, 2004, or (b)
if the condition set forth in Section 5.18 shall apply, the financial statements
delivered pursuant to Section 5.18.
"Neutral Auditor" shall have the meaning set forth in Section 2.7(b).
"Non-Corporate Company" shall mean each limited partnership or limited
liability company identified on Schedule 3.3.
"ordinary course of business" shall mean, the usual, regular and
ordinary course of a business consistent with the past practice thereof, in
frequency and amount, or with current business plans (as such business plans
have been disclosed to Buyer).
"organizational document" shall mean, as to any Person, its
constitution, certificate or articles of incorporation, its regulations or
by-laws or any equivalent documents under the law of such Person's jurisdiction
of incorporation or organization.
"Owned Fixtures and Improvements" shall have the meaning set forth in
Section 3.21(b).
"Owned Real Property" shall have the meaning set forth in Section
3.21(b).
"Party" shall have the meaning set forth in the first paragraph of
this Agreement.
"PBGC" shall have the meaning set forth in Section 3.14(b).
"Peabody Agreement" shall mean that certain stock purchase agreement
dated as of February 29, 2004 among Peabody Energy Corporation, BTU Worldwide,
Inc., Seller and RACH.
"Pension Plan" shall have the meaning set forth in Section 3.14(c).
"Permit" shall mean any consent, approval, authorization (other than
any Mining Authorization), permit, license, franchise, or certificate which the
Law requires any Company to hold in order to develop and operate its respective
assets and conduct its respective business (including any authorization or
permit relating to coal mining, preparation, load out or reclamation
operations).
"Permitted Encumbrance" shall mean, (i) liens for Taxes, assessments
and other charges of Governmental Authorities not yet due and payable or being
contested in good faith by appropriate proceedings during which collection or
enforcement against the property is stayed if adequate reserves are maintained
to the extent required or permitted by GAAP, (ii) mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other like liens arising or incurred
in the ordinary course of business or by operation of law, in each case, if the
underlying obligations are not delinquent and if adequate reserves are
maintained to the extent required or permitted by GAAP, (iii) easements,
encroachments, rights of way and zoning, building and other similar restrictions
or title defects which do not result from the incurrence of any Debt, and (iv)
any conditions shown by current, accurate ALTA/ACSM surveys performed, signed
and sealed by
10
surveyors or engineers licensed in the state in which the surveyed property is
located and which have been provided to Buyer on or prior to the date of this
Agreement; provided none of the foregoing described shall materially detract
from the value of the property to which they relate or impair the continued use
and operation of the property to which they relate in the ordinary course of
business of the applicable Company.
"Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization, joint venture, limited
liability company, Governmental Authority or other entity.
"Post-Closing Tax Period" shall mean any taxable period or year
beginning after the Closing Date.
"Post-Closing Tax Return" shall have the meaning set forth in Section
5.3(a)(i).
"Pre-Closing Tax Period" shall mean any taxable period or year ending
on or before the Closing Date.
"Pre-Closing Tax Returns" shall have the meaning set forth in Section
5.3(a)(ii).
"Prior Tax Benefit" shall have the meaning set forth in Section
5.3(o).
"Proceeding" shall mean any action, claim, demand, suit, proceeding,
arbitration, hearing, citation, summons, subpoena, inquiry, notice of violation
or Liability or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any Governmental Authority.
"Property Taxes" shall have the meaning set forth in Section
5.3(c)(iii).
"Purchase Price" shall have the meaning set forth in Section 2.2.
"RACC" shall have the meaning given in Section 2.1.
"RACH" shall have the meaning given in the recitals to this Agreement.
"RACH FIRPTA Certificate" shall have the meaning set forth in Section
5.3(k).
"RACH Purchase Price" shall have the meaning given in Section 2.2.
"RACH Shares" shall mean all of the issued and outstanding shares of
capital stock of RACH.
"RAG" shall have the meaning given in Section 3.5.
"RAG Colorado Entities" shall mean, collectively, Twentymile Coal
Company, Colorado Yampa Coal Company, RAG Empire Corporation and RAG Shoshone
Coal Corporation.
"RAG Colorado Entity Liability" shall have the meaning given in
Section 5.14.
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"RAG Colorado Tax Liability" shall mean any and all liability of any
Company for Taxes imposed on or payable by such Company in respect of (i) the
sale of the RAG Colorado Entities pursuant to the Peabody Agreement, (ii) any
related distribution or dividend of the proceeds of such sale by any Company and
(iii) any Tax indemnity payment to, or Tax obligation of, any third party (other
than the Companies, the Buyer (or any Affiliate thereof) or any successor or
transferee of any of the foregoing) pursuant to the Peabody Agreement.
"RAG West" shall mean RAG Coal West, Inc.
"RAG West Acquisition" shall have the meaning given in Section 2.1.
"RAG West Purchase Price" shall have the meaning given in Section 2.2
"RAG West Shares" shall mean all of the issued and outstanding shares
of capital stock of RAG West and RAG Wyoming.
"RAG Wyoming" shall mean RAG Wyoming Land Company.
"Real Property" shall mean the Owned Real Property and the Leased Real
Property.
"Reclamation Laws" shall mean all Laws relating to reclamation Mining
Activities or reclamation Liabilities including the Surface Mining Control and
Reclamation Act of 1977, as amended, and applicable Illinois, Pennsylvania,
Utah, West Virginia and Wyoming Law.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of Hazardous Materials into or upon the Environment (including the
abandonment or discarding of barrels, containers, and other closed receptacles
containing any Hazardous Material).
"Remaining L/Cs" shall have the meaning set forth in Section 5.10(a).
"Reported Section 338(h)(10) Tax Amount" shall have the meaning set
forth in Section 5.3(c)(vii).
"Revised Financial Statements" shall have the meaning set forth in
Section 5.18(a).
"Rockspring Impoundment" shall mean the Trace Branch Refuse
Impoundment operated by Rockspring Development, Inc.
"SMCRA" shall mean the Surface Mining Control and Reclamation Act of
1977, as amended.
"Section 338(h)(10) Allocation" shall have the meaning set forth in
Section 5.3(i).
"Section 338(h)(10) Election" shall have the meaning set forth in
Section 5.3(i).
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"Section 338(h)(10) Estimate" shall have the meaning set forth in
Section 5.3(c)(vii).
"Section 338(h)(10) Tax Cost" shall mean $10,000,000.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the first sentence of
this Agreement.
"Seller Bonds" shall mean those deposits, trust funds, bid bonds,
performance bonds and surety bonds (and all such similar undertakings) set forth
on Schedule 1.1(F).
"Seller FIRPTA Certificate" shall have the meaning set forth in
Section 5.3(k).
"Seller Guarantees" shall mean those guarantees, indemnities, letters
of credit, letters of comfort and similar credit obligations set forth on
Schedule 1.1(G).
"Seller Indemnitees" shall have the meaning set forth in Section
9.1(b).
"Seller Insurance Policies" shall have the meaning set forth in
Section 5.8.
"Shares" shall mean the RACH Shares and the RAG West Shares,
collectively.
"Short Term Loan" shall have the meaning set forth in Section 5.1(c).
"Software" shall mean management information systems software,
information systems software, computer systems software, telecommunication
systems software or related systems software.
"Straddle Period" shall mean any Taxable period or year commencing
before, and ending after, the Closing Date.
"Straddle Return" shall mean any Tax Return for a Straddle Period.
"Subject Claims" shall have the meaning set forth in Section 5.8.
"Subject Liabilities" shall have the meaning set forth in Section 5.8.
"subsidiaries" shall mean any and all corporations, partnerships,
limited liability companies and other entities with respect to which a Person,
directly or indirectly, owns securities having the power to elect a majority of
the board of directors or similar body governing the affairs of such entity.
"Tax" or "Taxes" shall mean any taxes of any kind, including but not
limited to:
(a) those measured on, measured by or referred to as, income,
alternative or add-on minimum, estimated, gross receipts, escheat, capital,
capital gains, sales, use, ad valorem, franchise, profits, license, privilege,
transfer, registration, withholding, payroll, employment, unemployment, social,
disability, real property, personal property, excise, severance, stamp,
13
occupation, premium, value added, goods and services, property, environmental
(including taxes under Code Section 59A) or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to Tax or additional amounts
imposed with respect thereto by any Governmental Authority, whether disputed or
not; and
(b) any contractual obligation of any of the Companies that was
entered into by the applicable Company prior to the Closing to indemnify another
Person (other than any of the Companies) for Taxes.
"Tax Benefit" shall have the meaning set forth in Section 5.3(o).
"Tax Claim" shall have the meaning set forth in Section 5.3(d)(i).
"Tax Indemnification Claim" shall have the meaning set forth in
Section 5.3(e)(i).
"Tax Return" shall mean any return, report, declaration, form,
election letter, statement or other information or document required to be or
prepared by a Person, filed with any Taxing Authority with respect to Taxes,
including, but not limited to, any schedule or attachment thereto or amendment
thereof.
"Taxing Authority" shall mean, with respect to any Tax, the
Governmental Authority thereof that imposes such Tax and the agency, court or
other body (if any) charged with the interpretation, administration or
collection of such Tax for such Governmental Authority.
"Third Parties" shall have the meaning set forth in Section 5.6(a).
"Third Party Claim" shall mean any action, lawsuit, claim, proceeding,
condemnation, investigation, audit or other legal proceeding by or before any
Governmental Authority or any arbitration or other alternative dispute
resolution proceeding made or brought by any Person who is not a Party or an
Affiliate of a Party; provided, however, that, other than for purposes of
Section 5.3, any matters involving the provision of services by any Company or
its agents or contractors, or sale or rental of any Company's products, raised
by present or former customers of any Company shall not be a Third Party Claim.
"Transaction" shall have the meaning set forth in Section 2.1.
"Transfer Taxes" shall have the meaning set forth in Section 5.3(j).
"WARN Act" shall have the meaning set forth in Section 5.15(a)
"Welfare Plan" shall have the meaning set forth in Section 3.14(b).
"WC True Up" shall have the meaning set forth in Section 2.7(b).
"Workers' Compensation Laws" shall mean Laws that provide for awards
to employees and their dependents for employment-related accidents and
occupational diseases,
14
including, but not limited to, the Federal Black Lung Benefits Act, as amended,
29 U.S.C. Section 801 et seq.
"Working Capital" shall mean the sum of net consolidated trade
accounts receivable and net consolidated product inventory of a Person and its
consolidated subsidiaries less the consolidated trade accounts payable
(excluding any accounts payable for or relating to any Liability for Taxes) of
such Person and its consolidated subsidiaries as of such date determined in
accordance with GAAP applied consistently with such Person's and its
consolidated subsidiaries past practices as set forth on Schedule 1.1(H). For
the avoidance of doubt, amounts classified as "Other accounts receivable",
"Notes receivable" and "Materials and supplies inventory" in the Closing Balance
Sheet shall be excluded from the calculation of Working Capital.
1.2. Other Interpretive Provisions. (a) The words "hereof," "herein,"
"hereby" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole (including any Schedules hereto) and
not to any particular provision of this Agreement, and all Article, Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified. The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation." The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such
terms. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references to "dollars"
or "US$" shall be deemed references to the lawful money of the United States of
America.
(b) The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises regarding this Agreement, this Agreement will be construed
as if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(c) Nothing in the Schedules shall be deemed adequate to disclose an
exception to a representation or warranty made unless the Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Any matter disclosed on a Schedule pursuant to any Section of
this Agreement shall be deemed to have been disclosed for purposes of another
Section or Sections of this Agreement if the relevance or applicability of such
disclosure to the subject matter of such other Section or Sections is obvious on
the face of such disclosure. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). The Schedules will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Agreement.
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ARTICLE II
PURCHASE AND SALE
2.1. Transaction Overview. This Agreement relates to the sale by
Seller and the acquisition by Buyer, directly or indirectly, of all of the
issued and outstanding shares of RACH and all of the Companies, on the Closing
Date and subject to the terms and conditions set forth in this Agreement (the
"Transaction"). Unless otherwise agreed in writing by the parties hereto, the
Transaction will be effected in a series of sequential steps, as follows: (a)
Seller will cause RAG American Coal Company, LLC, a limited liability company
formed under the laws of the U.S. State of Delaware and an indirect wholly owned
subsidiary of Seller ("RACC"), to sell to Buyer, and Buyer will acquire from
RACC, on the terms and subject to the conditions of this Agreement, all of the
issued and outstanding shares of RAG West and RAG Wyoming, each a company
incorporated under the laws of the U.S. State of Delaware, in a transaction with
respect to which Buyer and RACC shall make an election pursuant to Section
338(h)(10) of the Code (the "RAG West Acquisition"); and (b) Seller will sell to
Buyer, and Buyer will acquire from Seller, on the terms and subject to the
conditions of this Agreement, all of the issued and outstanding shares of RACH.
All steps of the Transaction shall be deemed to occur in the sequence set forth
above, but no step of the Transaction shall be deemed to be consummated unless
the entire Transaction is consummated.
2.2. Consideration. On the Closing Date and subject to the terms and
conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the parties contained herein and in
consideration of the sale, assignment and transfer of the Shares, Buyer will:
(a) pay to RACC the sum of US$375,000,000 in cash, representing the agreed
consideration in the RAG West Acquisition (the "RAG West Purchase Price"); (b)
pay to Seller the sum of (x) US$600,000,000 in cash, representing the agreed
consideration for the acquisition of the RACH Shares (the "RACH Purchase
Price"), minus (y) the Escrow Amount (if any); and (c) if the Escrow Amount is
greater than zero, pay to Coudert Brothers LLP , as escrow agent (the "Escrow
Agent"), the Escrow Amount in cash into the escrow account. The Purchase Price
shall be increased or decreased, as the case may be, by the aggregate of the WC
True Up pursuant to Section 2.7 and the Cap Ex True Up pursuant to Section 2.8.
The aggregate of the RAG West Purchase Price plus the RACH Purchase Price is
referred to hereinafter as the "Purchase Price". In the event the Cash of the
Companies on hand as of the Closing (after giving effect to the repayment of all
Debt in accordance with Section 7.13) shall exceed the total of (i) $50,000,000,
plus (ii) the amount required to satisfy all LTIP Payments required to be made
pursuant to Section 5.19, the Purchase Price shall be increased by an amount
equal to the amount of such excess Cash; provided, however, that any increase in
the Purchase Price attributable to such excess Cash shall not exceed the sum of
the following: (aa) the amount of any net reduction in the Purchase Price
arising from operation of the WC True Up and the Cap Ex True Up, plus (bb)
US$10,000,000. In the event any capital lease set forth on Schedule 2.2 is not
paid off in full by the Companies prior to Closing, the Purchase Price payable
to Seller at Closing shall be reduced by the payoff amount for such lease set
forth on Schedule 2.2; provided, however, that the Purchase Price shall only be
reduced by the amount for which a Company is the primary obligor under any such
lease. Any adjustments to Purchase Price pursuant to the WC True Up in Section
2.7 and the Cap Ex True Up in Section 2.8 shall be reflected as increases or
decreases, as the case may be, to the RACH Purchase Price, unless otherwise
required by Law. The Escrow Amount plus any interest and other income accrued
16
thereon will be distributed to the Seller and to the applicable Taxing Authority
in accordance with the terms of the Escrow Agreement.
2.3. The Closing. Unless this Agreement shall have been terminated
pursuant to ARTICLE VIII, subject to the satisfaction or waiver of the
conditions set forth in ARTICLES VI and VII, the closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at the offices of
Coudert Brothers LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, on the
tenth (10th) Business Day following the satisfaction or waiver of the conditions
set forth in Article VI and Article VII (the "Closing Date"), or at such other
place and time as may be agreed upon by Seller and Buyer.
2.4. Deliveries at the Closing. At the Closing, Seller shall deliver
or cause to be delivered to Buyer:
(i) stock certificates evidencing the Shares, duly endorsed in
blank, or accompanied by stock powers duly executed in blank and with
any required stock transfer tax stamps affixed and stock certificates
evidencing the issued shares of all other Companies;
(ii) a receipt from Seller for the Purchase Price;
(iii) copies of the resolutions of the board of directors of
Seller, authorizing and approving this Agreement and the transactions
contemplated hereby, and resolutions of the board of directors of RACC
approving the transactions contemplated hereby, each of which shall be
certified by the corporate secretary or other senior officer or
officers of Seller and RACC, as applicable, reasonably acceptable to
Buyer to be true and complete and in full force and effect and
unmodified as of the Closing Date;
(iv) the certificates required by Section 7.3 and the
documentation required by Sections 7.5, 7.8, 7.11, 7.13 and 7.14;
(v) the Seller FIRPTA Certificate or a copy of the Seller's
application to obtain such a certificate that was filed by the Seller
with the U.S. Internal Revenue Service;
(vi) an opinion of counsel to Seller addressed to Buyer
substantially in the form of Exhibit A;
(vii) the RACH FIRPTA Certificate;
(viii) a certificate of good standing, existence or similar
document with respect to Seller and each Company issued by the
appropriate Governmental Authority of the jurisdiction of
incorporation or formation as of a date not more than five (5) days
prior to the Closing Date;
(ix) the written resignations of all directors and officers of
each Company (except for those officers and directors the resignations
of which Buyer
17
advises Seller should not be obtained), with each such resignation to
be effective as of the Closing Date;
(x) five (5) copies of Form 8023, duly executed by RACH, for each
of RAG West and RAG Wyoming as described in Section 5.3(i); and
(xii) the Revised Financial Statements.
(b) At or prior to the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
(i) the Purchase Price by wire transfer of immediately available
funds;
(ii) a receipt from Buyer for the Shares;
(iii) copies of the resolutions of the board of directors of
Buyer authorizing and approving this Agreement and all other
transactions and agreements contemplated hereby, certified by the
secretary of Buyer or other senior officer or officers of Buyer
reasonably acceptable to Seller to be true and complete and in full
force and effect and unmodified as of the Closing Date;
(iv) the certificate required by Section 6.3;
(v) a copy of Buyer's certificate of incorporation filed in the
State of Delaware, certified by the Secretary of State as of a date
not more than five (5) days prior to the Closing Date;
(vi) a copy of Buyer's Bylaws, certified as true, complete and
correct by Buyer's secretary or other senior officer or officers of
Buyer reasonably acceptable to Seller;
(vii) an opinion of counsel to Buyer addressed to Seller
substantially in the form of Exhibit B;
(viii) a certificate of good standing with respect to Buyer
issued by the Secretary of State of the State of Delaware as of a date
not more than five (5) days prior to the Closing Date;
(ix) such guarantees, bonds and other documents as are required
by Section 5.10; and
(x) five (5) copies of Form 8023, duly executed by Buyer for each
of RAG West and RAG Wyoming as described in Section 5.3(i).
2.5. Payments On or Before Closing. In accordance with Section 10.1
hereof, Seller shall pay on or before the Closing all amounts payable for
investment banking fees and legal and other similar fees and expenses of any
Company or for which any Company may be liable related to the transactions
contemplated in this Agreement.
18
2.6. Form of Payments. All payments hereunder shall be made by
delivery to the recipient by depositing, by bank wire transfer, the required
amount in U.S. dollars (in immediately available funds) to an account of the
recipient, which account shall be designated by the recipient in writing at
least three (3) Business Days prior to the date of the required payment.
2.7. Working Capital True Up.
(a) At least two (2) Business Days prior to the Closing, Seller shall
deliver to Buyer the Month End Balance Sheet. If the Working Capital of the
Companies as calculated based on the Month End Balance Sheet and in accordance
with Schedule 1.1(H) (the "Estimated WC Amount") is greater than the Base WC
Amount, then the Purchase Price shall be increased at Closing on a
dollar-for-dollar basis by the amount of such excess. If the Estimated WC Amount
is less than the Base WC Amount, then the Purchase Price shall be decreased at
Closing on a dollar-for-dollar basis by the amount of such deficit.
(b) As soon as practicable, but in any event no later than thirty (30)
days following the Closing Date, Buyer shall cause RACH to prepare and deliver
to Buyer and Seller (i) the Closing Balance Sheet, upon which a payment (the "WC
True Up") will be based and (ii) a written statement (the "Actual WC
Statement"), prepared by the Chief Financial Officer of RACH, certifying the
amount of the WC True Up, which may be a positive or negative number, and
setting forth the calculation of such amount. The WC True Up shall be an amount
equal to (A) the actual amount of Working Capital of the Companies on the
Closing Date as determined based on the Closing Balance Sheet, less (B) the
Estimated WC Amount. If, within ten (10) Business Days following delivery of the
Closing Balance Sheet and the Actual WC Statement to Seller, Seller shall not
have given Buyer notice of Seller's objection to the computation of the WC True
Up (which notice shall contain a statement of the basis of such objection), then
the amount of WC True Up at the Closing Date will be final and binding upon the
Parties, absent manifest error. If Seller gives notice to Buyer of Seller's
objection, and Buyer and Seller are unable to resolve the issues in dispute
within thirty (30) days after delivery of such notice of objection, such issues
will be submitted for resolution to PriceWaterhouseCoopers LLP, independent
certified public accountants, or such other firm of "Big Four" independent
certified public accountants mutually selected by the Parties (the "Neutral
Auditor"). The Neutral Auditor shall be engaged within fifteen (15) days after
the expiration of the thirty (30) day period set forth in the preceding
sentence. The Neutral Auditor shall make such review and examination of the
relevant facts and documents as the Neutral Auditor deems appropriate, and shall
permit each of Buyer and Seller to make a written presentation of their
respective positions; provided, however, that the Neutral Auditor shall require
all facts, documents and written presentations from Buyer and Seller to be
completely submitted within thirty (30) days after the Neutral Auditor has been
engaged. Within thirty (30) days after submission of such facts, documents and
written presentations, the Neutral Auditor shall resolve all disputed items in
writing and shall prepare and deliver its decision, which shall be final and
binding upon the Parties without further recourse or collateral attack and, as
to each disputed matter, shall accept (x) either Buyer's or Seller's position on
each disputed matter set forth in Seller's notice of objection provided pursuant
to the third sentence of this Section 2.7(b) or (y) the stipulated position of
Buyer and Seller with respect to any matter which prior to such stipulation was
disputed. All costs of the dispute resolution process contemplated by this
Section 2.7(b) (including, without limitation, the
19
Neutral Auditor's fees, but exclusive of attorneys' fees) shall be borne by the
Party who is the least successful in such process, which shall be determined by
comparing (x) the position asserted by each Party on all disputed matters taken
together to (y) the final decision of the Neutral Auditor on all disputed
matters taken together. For purposes of the preceding sentence: the "disputed
matters" shall be all matters raised in Seller's notice of objection provided
pursuant to the third sentence of this Section 2.7(b) and the "position
asserted" by Seller shall be determined by reference to the notice of objection;
and the "position asserted" by the Buyer shall be determined by reference to
Buyer's written presentation submitted pursuant to the sixth sentence of this
Section 2.7(b). The Neutral Auditor shall not preside over any hearing of the
Parties nor permit the Parties to make any oral arguments to the Neutral
Auditor.
(c) Within five (5) Business Days of the completion of the
computations required by Section 2.7(b), if the WC True Up is a positive number,
it shall be paid by Buyer to Seller, and if it is a negative number, it shall be
paid by Seller to Buyer, in either case by wire transfer of immediately
available funds. Any such payment shall be made in the manner provided for in
Section 2.6.
(d) Except as set forth in this Section 2.7, the Company and Seller
shall each bear its own expenses incurred in connection with the preparation and
review of the Closing Balance Sheet and the Actual WC Statement.
2.8. Capital Expenditure True Up.
(a) At least two (2) Business Days prior to the Closing, Seller shall
deliver to Buyer the Estimated Cap Ex Statement. If the aggregate amount of
Capital Expenditures pertaining to the business of the Companies as set forth on
the Estimated Cap Ex Statement (the "Estimated Cap Ex") is greater than the
Budgeted Cap Ex, then, the Purchase Price shall be increased at Closing on a
dollar-for-dollar basis by the amount of such excess. If the Estimated Cap Ex is
less than the Budgeted Cap Ex, then the Purchase Price shall be decreased at
Closing on a dollar-for-dollar basis by the amount of such deficit.
(b) As soon as practicable, but in any event no later than thirty (30)
days following the Closing Date, Buyer shall cause RACH to prepare and deliver
to Buyer and Seller a written statement (the "Actual Cap Ex Statement"),
prepared by the Chief Financial Officer of RACH, certifying the amount of the
Cap Ex True Up, which may be a positive or negative number, and setting forth
the calculation of such amount. The "Cap Ex True Up" shall be an amount equal to
(A) the actual amount of Capital Expenditures pertaining to the business of the
Companies (excluding Capital Expenditures by the RAG Colorado Entities) made by
the Companies during the period beginning on January 1, 2004 and ending on the
Closing Date, less (B) the Estimated Cap Ex. If, within ten (10) Business Days
following delivery of the Actual Cap Ex Statement to Seller, Seller shall not
have given Buyer notice of Seller's objection to any of the computations therein
(which notice shall contain a statement of the basis of such objection), then
the Actual Cap Ex Statement (including the calculation of the amount of the Cap
Ex True Up at the Closing Date) will be final and binding upon the Parties,
absent manifest error. If Seller gives notice to Buyer of Seller's objection,
and Buyer and Seller are unable to resolve the issues in dispute within thirty
(30) days after delivery of such notice of objection, such issues
20
will be submitted for resolution to the Neutral Auditor. The Neutral Auditor
shall be engaged within fifteen (15) days after the expiration of the thirty
(30) day period set forth in the preceding sentence. The Neutral Auditor shall
make such review and examination of the relevant facts and documents as the
Neutral Auditor deems appropriate, and shall permit each of Buyer and Seller to
make a written presentation of their respective positions; provided, however,
that the Neutral Auditor shall require all facts, documents and written
presentations from Buyer and Seller to be completely submitted within thirty
(30) days after the Neutral Auditor has been engaged. Within thirty (30) days
after submission of such facts, documents and written presentations, the Neutral
Auditor shall resolve all disputed items in writing and shall prepare and
deliver its decision, which shall be final and binding upon the Parties without
further recourse or collateral attack and, as to each disputed matter, shall
accept (x) either Buyer's or Seller's position on each disputed matter in the
Actual Cap Ex Statement set forth in Seller's notice of objection provided
pursuant to the third sentence of this Section 2.8(b) or (y) the stipulated
position of Buyer and Seller with respect to any matter which prior to such
stipulation was disputed. All costs of the dispute resolution process
contemplated by this Section 2.8(b) (including, without limitation, the Neutral
Auditor's fees, but exclusive of attorneys' fees) shall be borne by the Party
who is the least successful in such process, which shall be determined by
comparing (x) the position asserted by each Party on all disputed matters taken
together to (y) the final decision of the Neutral Auditor on all disputed
matters taken together. For purposes of the preceding sentence: the "disputed
matters" shall be all matters raised in Seller's notice of objection provided
pursuant to the third sentence of this Section 2.8(b) and the "position
asserted" by Seller shall be determined by reference to the notice of objection;
and the "position asserted" by the Buyer shall be determined by reference to
Buyer's written presentation submitted pursuant to the sixth sentence of this
Section 2.8(b). The Neutral Auditor shall not preside over any hearing of the
Parties nor permit the Parties to make any oral arguments to the Neutral
Auditor.
(c) Within five (5) Business Days of the completion of the
computations required by Section 2.8(b), if the Cap Ex True Up is a positive
number, it shall be paid by Buyer to Seller, and if it is a negative number, it
shall be paid by Seller to Buyer, in either case by wire transfer of immediately
available funds. Any such payment shall be made in the manner provided for in
Section 2.6.
(d) Except as set forth in this Section 2.8, the Company and Seller
shall each bear its own expenses incurred in connection with the preparation and
review of the Actual Cap Ex Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), provided that if a representation and
warranty speaks as of a specific date or time, it need only be correct and
complete as of such date or time:
21
3.1. Organization. Seller and each of the Companies is a corporation,
partnership or limited liability company, as the case may be, duly incorporated,
formed or organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation, formation or organization. Seller and each of the
Companies has the requisite corporate or other power and authority to own, lease
and operate its assets and to carry on its business as now being conducted and
is duly qualified or licensed to do business and is in good standing in the
jurisdictions in which the ownership of its property or the conduct of its
business requires such qualification or license, unless the failure to have such
qualification or license is not material to the Business of the Companies taken
as a whole. Schedule 3.1 sets forth the jurisdictions where each Company is
qualified or licensed to do business. The organizational documents of each
Company, as currently in effect, the minute books (containing the records of
meetings of the stockholders (or members), the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of each of the Companies are correct and complete, and
complete and correct copies thereof have previously been made available to
Buyer. None of the Companies are in default under or in violation of any
provision of its respective organizational documents.
3.2. Authorization; Enforceability. Seller has the requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by Seller,
and the performance of its obligations hereunder, has been duly authorized by
all necessary corporate action on the part of Seller, and, upon such
authorization, no other corporate or stockholder proceedings or actions are
necessary to authorize and consummate this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Seller, and, assuming due authorization, execution and delivery by Buyer,
constitutes a valid and binding agreement of Seller and is enforceable against
Seller in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
3.3. Capital Stock. Schedule 3.3 sets forth for each Company (i) its
name and jurisdiction of incorporation or organization, (ii) the number of
authorized, issued and outstanding and treasury shares of its capital stock or
other ownership interests, (iii) the identity of the stockholders or owners of
each of the Companies and (iv) the number of shares or other ownership interests
held by each such stockholder or owner. All of the issued and outstanding shares
or other ownership interests of each of the Companies were duly authorized and
have been validly issued, are fully paid and nonassessable, are held of record
and beneficially by the respective entities as set forth on Schedule 3.3 and
each such record and beneficial owner of such shares or other ownership
interests has good and valid title to the shares as set forth on Schedule 3.3.
None of the issued and outstanding shares of the Companies has been issued in
violation of any preemptive or similar rights. Except as set forth on Schedule
3.3, with regard to each Company there are no outstanding (i) shares of capital
stock (preferred or otherwise) or voting securities, (ii) securities convertible
into or exercisable or exchangeable for shares of capital stock (preferred or
otherwise) or voting securities, (iii) options, warrants, purchase rights,
subscription rights, or other rights or agreements to acquire from such Company,
or other obligations of such Company to issue, transfer, sell or otherwise cause
to become outstanding any shares of capital stock, voting securities or
securities convertible into or exercisable or
22
exchangeable for shares of capital stock or voting securities, (iv) obligations
of such Company to repurchase, redeem or otherwise acquire any securities or (v)
voting trusts, proxies or other agreements or understandings with respect to or
concerning securities. All of the shares or other ownership interests of the
Companies have been issued in compliance with the Securities Act and applicable
state securities laws. None of the Companies directly or indirectly controls or
holds any securities of, or has any direct or indirect equity participation in,
any Person (other than securities of another of the Companies).
3.4. Ownership of the Shares. (a) Seller is the record, legal and
beneficial owner of, and has good and valid title to, all of the issued and
outstanding RACH Shares. Immediately prior to the Closing (after giving effect
to the payment of all Debt and releases of security interests held by creditors
relating thereto), Seller will be the record, legal and beneficial owner of all
of the issued and outstanding RACH Shares free and clear of any Encumbrances (or
any agreement, obligation or commitment to give or create such Encumbrance), and
will transfer and deliver to Buyer at the Closing good and valid title to such
RACH Shares, free and clear of any Encumbrances or Third Party interests or
rights, in each case after taking into account the repayment of certain Debt at
the Closing. The Seller does not own, directly or indirectly, any capital stock
or other securities of any Person that is currently in a business which is
substantially similar to the business currently conducted by any Company.
(b) RACC is the record, legal and beneficial owner of, and has good
and valid title to, all of the issued and outstanding RAG West Shares.
Immediately prior to the Closing (after giving effect to the payment of all Debt
and releases of security interests held by creditors relating thereto), RACC
will be the record, legal and beneficial owner of all of the issued and
outstanding RAG West Shares, free and clear of any Encumbrances (or any
agreement, obligation or commitment to give or create such Encumbrance), and
will transfer and deliver to Buyer at Closing good and valid title to the RAG
West Shares, free and clear of any Encumbrances or Third Party interests or
rights, in each case after taking into account the repayment of certain Debt at
the Closing.
3.5. Ownership of Seller. RAG AG, a company incorporated under the
laws of Germany ("RAG"), indirectly owns all of the issued and outstanding
capital stock of, and other equity and voting interests in, Seller.
3.6. Financial Statements. Schedule 3.6(a) sets forth the audited
consolidated balance sheets of the Companies as of December 31, 2002 and 2003
and the related audited consolidated statements of operations and comprehensive
income and cash flows for the twelve-months ended December 31, 2002 and 2003
(together, the "Audited Financial Statements"). Schedule 3.6(b) sets forth the
unaudited consolidated balance sheets of the Companies as of March 31, 2003 and
2004 and unaudited consolidated statements of operations and comprehensive
income and cash flows for the Companies' for the three (3) months ended March
31, 2003 and 2004, reflecting the RAG Colorado Entities as a discontinued
operation for all such periods (together, the "March 31 Financial Statements").
Each of the balance sheets and statements of operations and comprehensive income
and cash flows included in the Audited Financial Statements (including the notes
thereto) and the March 31 Financial Statements (i) has been prepared in
accordance with GAAP, applied on a consistent basis during the periods involved
(except, with regard to the Most Recent Financial Statements, for the absence of
notes
23
and subject to routine year-end audit adjustments which are not material in
amount); (ii) fairly presents the financial position of the Companies as of the
dates thereof and their results of operations and cash flows for the periods
then ended; and (iii) are consistent with the books and records of the Companies
(and in the case of the March 31 Financial Statements, reflecting the RAG
Colorado Entities as a discontinued operation). The Companies have maintained
systems of internal accounting controls sufficient to provide reasonable
assurances that (A) all transactions are executed in accordance with
management's general or specific authorization, (B) all transactions are
recorded as necessary to permit the preparation of annual and interim financial
statements in conformity with GAAP and to maintain proper accountability for
items, and (C) access to their property and assets is permitted only in
accordance with management's general or specific authorization.
3.7. Absence of Undisclosed Liabilities. None of the Companies has any
Liabilities other than Liabilities (i) reflected or reserved against in the
balance sheet as at December 31, 2003 included in the Audited Financial
Statements (the "Audited Balance Sheet") or not required by GAAP to be so
reflected, reserved or disclosed, (ii) incurred in the ordinary course of
business since December 31, 2003, none of which results from, arises out of,
relates to, is in the nature of, or was caused by (x) any breach of contract or
warranty, tort, infringement, or violation of law or (y) any violation of
Section 5.1 of this Agreement (and which, if incurred prior to the date hereof,
would not have been in breach of Section 5.1 of this Agreement if this Agreement
was in full force and effect at such time) or (iii) disclosed on Schedule 3.7.
3.8. No Conflicts or Approvals. Except as set forth on Schedule 3.8,
the execution, delivery and performance by Seller of this Agreement and the
consummation by Seller and the Companies of the transactions contemplated hereby
does not and will not (i) violate, conflict with or result in a breach by Seller
or any of the Companies of their respective organizational documents, (ii)
violate, conflict with or result in a breach of, constitute a default by Seller
or any of the Companies, result in the acceleration of (or create an event
which, with notice or lapse of time or both, would constitute a default or
result in the acceleration of), or require any consent or other action by any
Person under, or give rise to any penalty, right of termination, modification,
cancellation or acceleration or loss of a material benefit or require any notice
under, any material note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement, arrangement or other instrument
to which Seller or any of the Companies or any of their respective properties or
assets may be bound, (iii) violate or result in a material breach of any
Governmental Order or Law applicable to Seller or any of the Companies or any of
their respective properties or assets or (iv) result in the creation of any
Encumbrance, other than Permitted Encumbrances, upon any of the properties or
assets of Seller or any of the Companies.
3.9. Governmental Authorization. Except as set forth on Schedule 3.9,
the execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby (i) will require no action
by or in respect of, or any Consent from, any Governmental Authority, (ii) will
not, to the Knowledge of Seller, give any Governmental Authority the right to
challenge any material portion of the transactions contemplated by this
Agreement or exercise any remedy or obtain any relief that is material to the
Companies under any Law to which the Companies are subject, or (iii) will not
contravene, conflict with or result in a material violation of any of the terms
or requirements of, or give any
24
Governmental Authority the right to revoke, withdraw, suspend, cancel, or
terminate any material authorization or Permit issued by a Governmental
Authority that is held by Seller or the Companies or that otherwise relates to
the Companies.
3.10. Compliance; Permits; Companies' Surety Bonds. (a) The Companies
have conducted their respective Businesses and developed and operated their
assets in material compliance with all Permits, except as set forth on Schedule
3.10(a).
(b) Except in respect of Environmental Permits, which are addressed
exclusively at Section 3.18(viii), (i) each of the Companies possesses all
Permits necessary to own, lease, develop and operate its assets and conduct its
Business in all material respects as currently conducted. None of the Companies
has received any written or, to the Knowledge of Seller, other communication
from any Governmental Authority alleging that any such Permit held by it may be
modified, suspended or revoked, and, to the Knowledge of Seller, with regard to
each such Permit (A) no modification, suspension or revocation is threatened;
and (B) no facts exist that provide valid grounds for modification, suspension
or revocation; and (ii) Seller has made available to Buyer true and complete
copies of (A) all the Permits as amended, supplemented and modified and (B) any
and all pending applications for additional Permits that have been submitted to
any Governmental Authority by the Companies pertaining to the Business or the
Companies' assets.
(c) (i) There are no material mining leases, licenses, permits or
other mining authorizations owned by any of the Companies other than
the Mining Authorizations. The Companies hold the legal or beneficial
title to the interest in each of the Mining Authorizations and each
such Mining Authorization is in full force and effect.
(ii) There are no material applications for mining leases,
licenses, permits and other mining authorizations in the name of any
of the Companies other than those set forth on Schedule 3.10(c)(ii)
(the "Material Mining Applications"); and the Companies will, on grant
of any of such applications, hold a legal or beneficial title to the
interest in each such application as set forth on Schedule
3.10(c)(ii). Except as set forth on Schedule 3.10(c)(ii), each of the
Material Mining Applications has been made in accordance with
applicable Laws. Except as set forth on Schedule 3.10(c)(ii), none of
Seller or any Company has received any written or, to the Knowledge of
Seller, other communication that indicates that any of the Material
Mining Applications will not be granted.
(iii) Each Company has complied in all material respects with the
terms and conditions of the Mining Authorizations and, to the
Knowledge of Seller, with regard to each such Mining Authorization (i)
no modification, suspension or revocation thereof is threatened; and
(ii) no facts exist that permit or, upon the giving of notice or the
lapse of time or otherwise would permit, revocation or termination of
such Mining Authorization, except for expirations of Mining
Authorizations. There are no matters that adversely affect the title
of any Company to any Mining Authorization or the use of the Mining
Authorizations
25
for the purposes of the business of any Company and in accordance with
their terms, which are material to the business of the Companies taken
as a whole.
(d) The Companies have posted all deposits, letters of credit,
guarantees, indemnities, trust funds, bid bonds, performance bonds, reclamation
bonds and surety bonds (and all such similar undertakings) required to be posted
in connection with their operations, including those necessary to secure the
performance of the Companies' respective reclamation or other obligations
pursuant to, in connection with or as a condition of, the Permits (collectively,
the "Companies' Surety Bonds"). Except as set forth on Schedule 3.10(d)(i), the
Companies' Surety Bonds are in amounts, and are in all other respects,
sufficient for their purpose and are in full force and effect and, to the
Knowledge of Seller, no facts exist that will require the Companies to increase
the amounts of the Companies' Surety Bonds. All of the Companies' Surety Bonds
are listed on Schedule 3.10(d)(i) and such list includes all obligees,
beneficiaries, amounts, effective dates and the purpose of each such Companies'
Surety Bond. Except as disclosed on Schedule 3.10(d)(ii): (A) each of the
Companies is in compliance in all material respects with all Companies' Surety
Bonds applicable to it; and (B) the operation of each Company's coal mining and
processing operations and the state of reclamation with respect to the
Companies' Surety Bonds and Permits are "current" or in "deferred status"
regarding reclamation obligations and otherwise, are in compliance in all
material respects with all applicable mining, reclamation and other analogous
Laws.
(e) Neither Seller nor any Company, nor any Person "owned or
controlled" by Seller or any Company, nor any Person which "owns or controls"
any Company, has been notified in writing or, to the Knowledge of Seller,
otherwise notified, by the Federal Office of Surface Mining or the agency of any
state administering the SMCRA or any comparable state statute, that it is: (i)
ineligible to receive additional surface mining permits; or (ii) is under
investigation to determine whether their eligibility to receive such Permits
should be revoked, i.e., "permit blocked." To the Knowledge of Seller, no facts
exist that presently or upon the giving of notice or the lapse of time or
otherwise would render any of the Companies ineligible to receive surface mining
permits. As used herein, the terms "owned or controlled" and "owns or controls"
shall be defined as set forth in 30 C.F.R. Section 773.5 (1998).
(f) The Companies have complied in all material respects with all
applicable Laws, including human health Laws, employee health Laws, and
workplace safety and health Laws, including without limitation, the Mine Safety
and Health Act (30 U.S.C. Section 801 et seq.) and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) and except as set forth on Schedule
3.10(f), no 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. Seller makes no representation or warranties
in this Section 3.10(f) with respect to Taxes, for which the only
representations and warranties of the Seller are set forth in Section 3.13, or
compliance with Environmental Laws, for which the only representations and
warranties of Seller are set forth in Section 3.18. Other than with respect to
health and safety Laws, the Seller makes no representation or warranties in this
Section 3.10(f) with respect to employment, employee benefits, employment
practices or wage payment Laws, for which the sole representations and
warranties of Seller are set forth in Sections 3.14 and 3.15.
26
3.11. Proceedings. Except as set forth on Schedule 3.11(a), there are
no Proceedings pending or, to the Knowledge of Seller threatened, involving
Seller or any Company or any of their respective properties or any of their
respective directors or officers in their capacities as such that (i) involves
or, if adversely determined, would reasonably be expected to involve an award of
damages in the excess of US$500,000 against any Company or seeks to restrict the
operation of any Company in any material respect, (ii) in any manner challenges
or seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement or (iii) are in respect of any Mining
Authorizations. To the Knowledge of Seller, there is no reason to believe that
any other similar Proceeding may be brought or threatened against the Companies
or any of the Companies' assets. There is no judgment, decree, injunction or
order of a Governmental Authority outstanding against any of the Companies or in
respect of the Mining Authorizations. None of the Companies have received any
written notification that any such investigation or inquiry is being conducted
by any Governmental Authority in respect of the business or affairs of any of
the Companies; and, to the Knowledge of Seller, none of the Companies has
received any other notification that any investigation or inquiry is being
conducted by any Governmental Authority in respect of the business or affairs of
any of the Companies; furthermore, to the Knowledge of Seller, (i) no such
investigation or inquiry is threatened, and (ii) no facts exist that provide
valid grounds for any such investigation or inquiry that if determined adversely
to any of the Companies would reasonably be expected to involve an award of
damages in excess of US$500,000 or impair the continued use and operation of the
property to which it relates in the ordinary course of business of the
applicable Company. Except as set forth on Schedule 3.11(b), there are no
existing material claims by or material disputes between Persons owning,
controlling or occupying lands or realty adjoining or near any of the Real
Property and Reserves of the Companies or Seller or regarding adverse
possession, the location of boundary lines, encroachments, mineral rights,
subsidence, water quality or quantity, flood damage, blasting damage, trespass,
waste, transportation of coal or other materials, nuisances or any other similar
matter.
3.12. Absence of Certain Changes. Except as disclosed on Schedule
3.12, since December 31, 2003 the business and operations of the Companies have
been conducted in the ordinary course and there has not been any condition,
change or event which has had, or would reasonably be expected to have,
individually or in the aggregate, a Companies Material Adverse Effect; and no
Company has taken any action, or entered into any transaction described in
Section 5.1(b).
3.13. Tax Matters. Except as set forth on Schedule 3.13:
(a) In respect of each Company and each taxable year (other than, in
respect of each Excluded Company, Excluded Taxable Years), and, to the Knowledge
of Seller, in respect of each Excluded Company in respect of each Excluded
Taxable Year, all Income Tax Returns and all other material Tax Returns required
to be filed prior to the Closing Date by or on behalf of such Company for such
taxable year (separately or as part of a consolidated, combined or unitary
group) have been or shall be timely filed (subject to permitted extensions
applicable to such filing), all such Tax Returns were correct and complete in
all material respects and all Taxes due and owing on such Tax Returns by the
Companies (whether or not shown on any Tax Returns) have been or shall be paid
within the prescribed period or any extension thereof, other than Taxes that are
being contested in good faith for which adequate accruals or reserves have
27
been established on the Most Recent Financial Statements or shall be made or
established on the books of the applicable Company or Companies as of the
Closing Date. Neither RACH nor any Company has established reserves for Taxes
(other than reserves for deferred Taxes established to reflect timing
differences between book and Tax income) in the December 31, 2003 Audited
Financial Statements in excess of $1,757,310. In respect of each Company other
than any Excluded Company, and, in respect of each Excluded Company, since the
Exclusion Date to the Knowledge of Seller, no claim has been made by a Taxing
Authority in a jurisdiction where such Company does not file Tax Returns that
such Company is or may be subject to taxation by that jurisdiction.
(b) Seller has made available to Buyer correct and complete copies of
all material Tax Returns filed by, and examination reports and statements of
deficiencies assessed against or agreed to by, any of the Companies for Tax
years beginning on or after January 1, 2000, and for periods beginning prior to
January 1, 2000, to the extent such Tax Returns, examination reports and
statements of deficiencies are within the possession of Seller and the
applicable statute of limitations has not expired (or, in the case of any such
Tax Return filed for, and examination report or statement of deficiency assessed
against or agreed to by, an Affiliated Group, the portion of such Tax Return,
assessment or statement of deficiency relating to or relevant to the
determination of Tax liability for a Post-Closing Tax Period or Straddle Period
of any of the Companies).
(c) There are no Encumbrances for Taxes encumbering any of the RACH
Shares, RAG West Shares or any securities, assets or properties of any Company,
except Encumbrances for Taxes not yet due and payable or Taxes being contested
in good faith for which adequate reserves or accruals have been made or
established on the Most Recent Financial Statements or on the books of the
applicable Company or Companies as of the Closing Date.
(d) There has not been any audit of any Tax Return filed by any
Company (other than an Excluded Company) or any Affiliated Group with which any
Company (other than an Excluded Company) currently files a Tax Return in respect
of which the applicable Company received a written notice from the relevant
Taxing Authority, for any taxable year beginning on or after January 1, 1999.
There has not been any audit of any Tax Return filed by any Excluded Company in
respect of which the applicable Excluded Company received a written notice from
the relevant Taxing Authority, for any taxable year beginning on or after
January 1, 2000 and, to the Knowledge of Seller, in respect of any Excluded
Company, there has not been any audit of any Tax Return filed by any Excluded
Company on a separate return basis for the taxable year beginning January 1,
1999. In respect of each Company, there are no (i) examinations, audits,
proceedings or disputes relating to Taxes by or with, as applicable, any Taxing
Authority in respect of which the applicable Company received a written notice
from the relevant Taxing Authority that are pending or, to the Knowledge of
Seller, were threatened by any Taxing Authority against such Company, (ii)
unresolved claims for Taxes asserted in writing or, to the Knowledge of Seller,
asserted or threatened to be asserted by any Taxing Authority against such
Company, or (iii) unresolved claims in competent authority pursuant to any
income tax, trade tax or social insurance tax treaty, against any Company, that,
in each case, would reasonably be expected to result in a Material Tax Liability
to the Companies for any taxable period (or any portion thereof) ending on or
before the Closing Date.
28
(e) None of the Companies is currently a beneficiary of any extension
of time within which to file any Tax Return.
(f) Since January 1, 1998, with respect to the Companies (other than
the Excluded Companies), and since the Exclusion Date with respect to the
Excluded Companies, all Taxes that each Company is or was required by Law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Taxing Authority (including withholding
of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions
under any state or foreign law) except to the extent that the failure to
withhold, collect or pay such Taxes would not result in a Material Tax Liability
to the Companies.
(g) Other than in connection with extensions of time for filing Tax
Returns, none of the Companies has granted any extension or waiver of the
statute of limitations period applicable to any Tax or Tax Return, or agreed to
any extension of time with respect to a Tax assessment or deficiency, which
period (after giving effect to such extension or waiver) has not yet expired.
(h) None of the Companies is a party to, is bound by or has any
obligation under, any Tax sharing agreement or similar contract or arrangement
or any agreement that obligates it to make after the Closing any payment
computed by reference to Taxes, taxable income or taxable losses of any other
person (other than any of the Companies).
(i) Each Company has collected all sales and use Taxes required to be
collected, and has remitted or will remit on a timely basis, such amounts to the
appropriate Taxing Authorities, or have been furnished properly completed
exemption certificates except to the extent that the failure to collect or remit
such Taxes or to be furnished such exemption certificate would not result in a
Material Tax Liability to the Companies. Each Company (i) has in its (or its
Affiliates') possession all material records and supporting documents required
by all applicable sales and use Tax statutes and regulations regarding the
collection and payment of sales and use Taxes required to be collected and paid
over by such Company and regarding all exempt transactions by such Company for
all periods open under the applicable statute of limitations, and (ii) has
maintained all such records and supporting documents in material compliance with
all sales and use Tax statutes and regulations applicable thereto except, in
each case, to the extent that the failure to so possess or maintain such records
and documents would not result in a Material Tax Liability to the Companies.
(j) None of the Companies has executed any power of attorney with
respect to any matter relating to Taxes of any Company that is currently in
force.
(k) Since January 1, 1998 none of the Companies (other than the
Excluded Companies), and since the Exclusion Date none of the Excluded
Companies, has been a member of an Affiliated Group filing a consolidated
federal Income Tax Return (other than the Affiliated Group of which they are
currently members and with which they file a consolidated Tax Return). Further,
(i) none of the Companies (other than the Excluded Companies) has any liability
for the Taxes of any Person (other than the Companies) for any taxable year or
period beginning on or after January 1, 1998, (ii) none of the Excluded
Companies has any liability for the Taxes of any Person (other than the
Companies) for any taxable year or period beginning after the Exclusion
29
Date and, to the Knowledge of Seller, none of the Excluded Companies has any
liability for the Taxes of any Person (other than the Companies) for any taxable
year or period beginning on or after January 1, 1998, in each case, under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law).
(l) Since January 1, 1998 none of the Companies (other than the
Excluded Companies), and since the Exclusion Date none of the Excluded
Companies, has distributed stock of another person, or has had its stock
distributed by another person, in a transaction that was purported or intended
to be governed in whole or in part by Section 355 or 361 of the Code.
(m) Since January 1, 1998 with respect to each Company (other than the
Excluded Companies), and since the Exclusion Date with respect to the Excluded
Companies, there has been no contract or agreement, plan or arrangement by any
of the Companies covering any person that, individually or collectively, could
give rise to the payment of any amount by reason of the transactions described
in Section 2.1(a) and (b), or any other transaction occurring prior to the date
hereof, that would not be deductible by any of the Companies by reason of
Section 280G or Section 162(m) of the Code. For any taxable year beginning on or
after January 1, 1999, with respect to each Company (other than the Excluded
Companies), and with respect to the Excluded Companies, for any taxable year
beginning on or after the Exclusion Date, each Company has disclosed on its
federal income Tax Returns all positions taken therein for which there was no
substantial authority for such positions.
(n) RACH and each Company (other than the Non-Corporate Companies)
currently is, and on the Closing Date will be, a member of a consolidated group
within the meaning of Treasury Regulation Section 1.1502-1(h).
(o) None of the Companies will be required to include in any
Post-Closing Tax Period taxable income attributable to income accrued for U.S.
federal and state Income Tax purposes, as applicable, in a Pre-Closing Tax
Period but not recognized for U.S. federal and state Income Tax purposes, as
applicable, in any taxable year or period beginning on or prior to the Closing
Date as a result of any: (A) "closing agreement" as described in Section 7121 of
the Code (or any corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Closing; (B) prepaid income received
on or prior to the Closing Date or; (C) the installment method of accounting,
the completed contract method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code (or any
comparable provisions of state, local or foreign tax law).
(p) None of the Companies (other than the Excluded Companies), and
since the Exclusion Date, none of the Excluded Companies, has participated in a
"listed transaction" (as such term is defined under Treasury Regulation Section
1.6011-4(b)(2)) that is required to be disclosed under Treasury Regulation
Section 1.6011-4.
(q) No assets of the Companies are required to be treated as being
owned by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, or are "tax-exempt property" within the
meaning of Section 168(h)(1) of the Code.
30
(r) None of the net operating losses or other tax credit carryforwards
of any Company is limited by Section 382 of the Code, other than as related to
the transactions contemplated by this Agreement.
3.14. Employee Benefits. (a) Schedule 3.14(a) contains a true and
complete list of all "employee benefit plans" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), all multiemployer plans (within the meaning of Section 3(37) of
ERISA), and all other employee benefit plans, payroll practices, programs,
policies, and arrangements, including, but not limited to, all severance,
retention, change in control, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, phantom stock, employee loan, death
benefit, group insurance, medical, dental, pension, life insurance (including
all life insurance policies to which any Company is the owner or beneficiary),
Section 125 of the Code "cafeteria" or "flexible" benefit plan, and Black Lung
Trusts, whether funded or not, and whether covered by ERISA or not, and any
insurance or other funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise, whether formal or informal, oral or written, legally binding or not,
under which (i) any current or former employee, officer, director or consultant,
contract employee, leased employee of any of the Companies (the "Company
Employees") has any present or future right to benefits and which are
contributed to, sponsored by or maintained by Seller or any of the Companies, or
(ii) any of the Companies has any present or future Liability, including
Liability that could arise from their status as a trade or business under common
control with another trade or business, whether or not incorporated, which would
make them a "single employer" within the meaning of Section 4001(b)(1) of ERISA
or Section 414 of the Code (an "ERISA Affiliate"). All such plans, agreements,
programs, policies and arrangements shall be collectively referred to as the
"Benefit Plans".
(b) Except as set forth on Schedule 3.14(b), with respect to each
Benefit Plan: (i) if intended to qualify under Section 401(a) of the Code, such
Benefit Plan has received a determination letter from the applicable
Governmental Authority stating that it so qualifies and that its trust has been
determined to be exempt from taxation under Section 501(a) of the Code and to
the Knowledge of Seller, the qualification under Section 401(a) of the Code of
such Benefit Plan has not been adversely affected; (ii) such Benefit Plan is in
material compliance in form and in operation and has been administered in
material compliance with its terms and the applicable provisions of ERISA, the
Code and other applicable Law; (iii) all reports, returns, and other
documentation (including Form 5500 annual reports, summary annual reports,
PBGC-1s and summary plan descriptions) that are required to have been filed with
the Internal Revenue Service, the Department of Labor, Pension Benefit Guaranty
Corporation (the "PBGC") or any other Governmental Authority have been filed on
a timely basis and have been distributed on a timely basis to the employees
entitled to receive the same; (iv) each Benefit Plan which is a "welfare plan"
(as defined in Section 3(1) of ERISA)(a "Welfare Plan") is in material
compliance with the requirements of COBRA and HIPAA; (v) no material non-exempt
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred that gives rise to or might reasonably be
expected to give rise to any Liability on the part of the Companies; (vi) all
contributions, premiums or other payments required to be made to such Benefit
Plan as of the date hereof (taking into account any extensions of time for the
making of such contributions, premiums or other payments) have been made in
full; (vii) all contributions, premiums or other payments for any period ending
on or before the Closing Date
31
which are not yet due will be accrued in accordance with GAAP; (viii) Seller has
provided to Buyer current, complete and correct copies of each Benefit Plan and
to the extent applicable: any related trust or other funding agreement, the most
recent determination letter, any summary plan descriptions and other written
communications to Company Employees regarding the same, the annual report (Form
5500) and attached schedules for the most recent year, and the audited financial
statements and the actuarial valuation reports for the most recent three years
with respect thereto; (ix) to the Knowledge of Seller, none of the Companies
have made any oral representations to any Company Employees that modify in any
material respect the rights or benefits to be provided under any Benefit Plan
document; (x) no proposed amendments or changes to the Benefit Plans are now
under active consideration for adoption within the twelve months immediately
following the date hereof; (xi) no Benefit Plan has incurred an accumulated
funding deficiency, as defined in Section 302 of ERISA or Section 412 of the
Code, whether or not waived; (xii) for each Benefit Plan that is intended to be
qualified under Section 401(a) of the Code, Seller has provided to Buyer copies
of the latest statement of assets it has received from its asset manager(s), the
most recent final actuarial valuation reports, and for periods thereafter, the
most recent preliminary actuarial valuation reports; (xiii) no "reportable
event" (as such term is defined in Section 4043 of ERISA) that could reasonably
be expected to result in Liability, has occurred with respect to any Benefit
Plan; (xiv) no Benefit Plan is a split-dollar life insurance program or
otherwise provides for loans to executive officers (within the meaning of the
Xxxxxxxx-Xxxxx Act of 2002); (xv) none of Seller or the 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, to the Knowledge of Seller, engaged in any
transaction described in Sections 4069 or 4212(c) of ERISA; (xvi) each Benefit
Plan that is a "pension plan" (as defined in Section 3(2) of ERISA) (a "Pension
Plan") that is not intended to be qualified under Sections 401(a) or 403(a) of
the Code is intended to be 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 Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA; (xvii)
no assets of any of the Companies are allocated to or held in a "rabbi trust" or
similar funding vehicle; (xviii) no Welfare Plan is a "multiple employer welfare
arrangement" as defined in Section 3(40) of ERISA and (xix) no Company has
received any services from an individual whom it treated as an independent
contractor or leased employee, but who has been determined by any Governmental
Authority to be a common law employee for purposes of such Benefit Plan.
(c) Except as set forth on Schedule 3.14(c), no Benefit Plan provides
medical or death benefits with respect to current or former employees of the
Companies beyond their termination of employment (other than (i) to the extent
required by applicable Law and (ii) benefits the full cost of which is borne by
the current or former employee or his beneficiary).
(d) Except as set forth on Schedule 3.14(d), the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with any other event, (i) entitle any former or current employee of
the Companies, or any other Person to any severance pay, termination pay or
other, similar payments for which Buyer or any of the Companies will have any
Liability after the Closing; or (ii) accelerate the time of payment or vesting
of, or increase the amount of compensation due, with respect to any such
employee or
32
any other Person under any Benefit Plan for which Buyer or any Company will be
liable after the Closing.
(e) Except as set forth on Schedule 3.14(e), (i) no Benefit Plan which
is a Pension Plan has been completely or partially terminated; (ii) no fiduciary
has any Liability for a material breach of fiduciary duty or any other material
failure to act or comply in connection with the administration or investment of
the assets of any such Benefit Plan; (iii) no action, suit, claim, proceeding,
hearing, or investigation with respect to any such Benefit Plan (other than
routine claims for benefits) is pending or, to the Knowledge of Seller,
threatened; and, to the Knowledge of Seller, no facts or circumstances exist
that could give rise to any such actions, suits, claims, proceedings, hearings
or investigations, (iv) none of the Companies, nor any ERISA Affiliate, nor
Seller have any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability as defined
in ERISA Section 4201); (v) no written or, to the Knowledge of Seller, oral
communication has been received from the PBGC in respect of any Benefit Plan
subject to Title IV of ERISA concerning the funded status of any such plan or
any transfer of assets and liabilities from any such plan in connection with the
transactions contemplated herein, (vi) no administrative investigation, audit or
other administrative proceeding by the Department of Labor, the PBGC, the
Internal Revenue Service or other Governmental Authorities are pending, in
progress or, to the Knowledge of Seller, threatened (including, without
limitation, any routine requests for information from the PBGC), (vii) no acts
or events contemplated by the Peabody Agreement will impose any Liability on the
Companies or the Benefit Plans, (viii) to the Knowledge of Seller, no
Liabilities or Encumbrances exist and no event has occurred or is contemplated
or threatened by any Person, that would impose any material Liability on any
Company or any Benefit Plan (other than routine claims for benefits) under
ERISA, the Code, or other applicable Law, and (ix) no Benefit Plan that is a
multiemployer plan is in reorganization or insolvent (as those terms are defined
in Sections 4241 and 4245 of ERISA, respectively).
(f) Except as set forth on Schedule 3.14(f), no Benefit Plan is
maintained outside the jurisdiction of the United States, or covers any employee
residing or working outside the United States.
3.15. Labor and Employee Relations. (a) Except as set forth on
Schedule 3.15(a), (i) none of the Companies is presently a party to, bound by,
or negotiating with respect to any written collective bargaining agreement with
any union in respect of the Company Employees; (ii) there is not currently any
unfair labor practice charge, action, inquiry, proceeding, complaint, claim, or
investigation pending or, to the Knowledge of Seller, threatened against any
Company or otherwise affecting any Company; (iii) there is no written grievance
or arbitration proceeding pending or, to the Knowledge of Seller, threatened
against any Company; (iv) there is not currently nor has there been during the
twelve months prior to the date of this Agreement any labor strike, slowdown,
work stoppage, dispute, union organizational campaigns or representation
proceedings, lockout or other labor controversy in effect, or, to the Knowledge
of Seller, threatened against the Companies; (v) none of the Companies is a
party to, or otherwise bound by, any consent decree, order, award, or citation
by any Governmental Authority relating to Company Employees, employment
practices, or the payment of any wages or benefits; and (vi) to the Knowledge of
Seller, there is no actual or alleged breach of the material terms of any
contractual obligations governing the employment of the Company Employees.
33
(b) Except as set forth on Schedule 3.15(b) no consultant, contract
employee, or leased employee has been engaged by any Company to whom annual
payments could reasonably be expected to exceed US$50,000 in the aggregate.
(c) Schedule 3.15(c) sets forth a list of all Company Employees,
broken down by Company and location, and then broken down into the following
categories: (1) those who are active, (2) those who are on an approved leave of
absence, including those receiving any short-term or long-term disability or
salary continuation benefits, and those receiving any benefits under a Workers'
Compensation Law, and (3) those who are on a panel or have any right to be
recalled or rehired by any of the Companies.
(d) Except as set forth on Schedule 3.15(d), each of Seller and the
Companies are in compliance in all material respects with all Laws pertaining to
the hiring, employment and termination of the employment of employees, labor
relations, equal employment opportunities, fair employment practices, terms and
conditions of employment, hours of work and payment of wages or compensation,
granting of leaves of absences, and other similar employment activities,
including the Code, ERISA, the National Labor Relations Act, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair
Labor Standards Act, COBRA, HIPAA, the Worker Adjustment and Retraining
Notification Act of 1988, and all other applicable Laws. Each of the Seller and
the Companies also have complied in all material respects with all obligations
imposed on them under Law to they extent they are a government contractor,
including Executive Order 11246 of 1964, Vietnam Era Veterans Readjustment Act
of 1974, Section 503 of the Rehabilitation Act of 1973, 15 U.S. C. Section
637(d)(3), and 48 C.F.R. Section 52.219.
(e) Each of the Companies are in compliance in all material respects
with all Workers' Compensation Laws. All pending claims under each Workers'
Compensation Law are set forth on Schedule 3.15(e).
3.16. Intellectual Property. (a) Except as set forth on Schedule
3.16(a), (i) one or more of the Companies legally or beneficially owns or has
the sole and exclusive (as applicable) and enforceable right to use, transfer
and license all Intellectual Property material to the conduct of the Business of
the Companies as it is currently conducted, free from (A) any Encumbrances other
than Permitted Encumbrances, and (B) any requirement of royalty payments or
other license fees or payments and (ii) to the Knowledge of Seller, (A) the
operation of the Business of the Companies does not infringe or otherwise
violate any Intellectual Property of any other Person and (B) none of the
Intellectual Property owned by any of the Companies is being infringed by any
other Person. The Companies take all commercially reasonable actions to protect
and enforce their material Intellectual Property.
(b) Except as set forth on Schedule 3.16(b), each Company owns or has
a license to use (directly from a third party other than Seller or a non-Company
Affiliate of Seller) all Software or hardware that is used in the conduct of its
Business as currently conducted. None of the Software or hardware is owned or
licensed by Seller or any Affiliate of Seller (that is not a Company). No
Company relies on the assistance of Seller or any of its Affiliates (that is not
a Company) in administering, operating or maintaining the Software or hardware.
34
3.17. Contracts. Schedule 3.17(a) sets forth a complete list of each
of the following contracts, agreements, commitments, or other arrangements (in
each case, whether written or oral) to which any Company is a party or by which
any of them is bound (collectively, the "Material Contracts"):
(i) any option, purchase and sale contract or lease (whether real
or personal property, equipment, machinery, or other assets, tangible
or intangible) providing for annual payments of US$500,000 or more (or
US$2,000,000 or more over the term of such option, purchase and sale
contract or lease), excluding any such contracts that are terminable
by the relevant Company on not more than thirty (30) days' notice
without payment by any Company of any penalty;
(ii) any agreement with respect to any hedging, swap, forward,
future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of
these transactions;
(iii) contracts involving the expenditure by any Company of more
than US$500,000 in any instance (or any contract involving aggregate
expenditures by any Company of more than US$2,000,000) for the
purchase of materials, goods, supplies, equipment, services or capital
assets, excluding any such contracts that are terminable by the
Companies without penalty on not more than thirty (30) days' notice;
(iv) contracts providing for payments to any Company of more than
US$500,000 in any instance (or any contract providing for aggregate
payments to any Company of more than US$2,000,000) for the sale of
coal, natural gas, materials, goods, supplies, equipment or services,
excluding any such contracts that are terminable by the Companies
without penalty on not more than thirty (30) days' notice;
(v) outstanding guarantees, subordination agreements and
indemnity agreements, whether or not entered into in the ordinary
course, under which any Company may become liable for or obligated to
discharge, or any asset of any Company is or may become subject to the
satisfaction of, any Indebtedness, obligations, performance or
undertaking of other Persons (other than any Company) involving the
potential expenditure by any Company after the date of this Agreement
of more than US$500,000 in any instance (or any such guarantee,
subordination agreement or indemnity agreement involving the potential
aggregate expenditure by any Company of more than US$2,000,000);
(vi) any agreement relating to indebtedness for borrowed money
(whether incurred, assumed, guaranteed or secured by any asset),
including notes, indentures, mortgages, loan or credit agreements,
capital and equipment leases, security agreements, or other agreements
for the incurrence of Debt, other than
35
(A) trade accounts payable incurred in the ordinary course of business
and (B) any such agreement relating to indebtedness owed to Seller or
any of its Affiliates to be repaid on or before the Closing Date or
owed to any Company;
(vii) agreements concerning material Intellectual Property,
including those under which any Company has licensed material
Intellectual Property to or from any other Person;
(viii) partnership, limited liability company, joint venture
agreements or other agreements involving a sharing of profits or
expenses by any Company;
(ix) any agreement relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or
otherwise), under which any Company will have any Liabilities
exceeding $500,000 not reflected in the Audited Financial Statements;
(x) exclusive distributor, dealer, sales agency or similar
contracts under which any Company is obligated to pay after the date
of this Agreement an amount in excess of US$500,000 during any
calendar year (or any such contract providing for aggregate payments
by any Company in excess of US$2,000,000);
(xi) any contract providing that any Company will receive future
payments aggregating more than US$500,000 per annum or US$2,000,000 in
the aggregate prior to the expiration of such contract;
(xii) any agreement with (A) Seller or any of its Affiliates
(excluding the Companies) or (B) any director or executive officer of
Seller or any of its Affiliates (excluding the Companies), or any
Person who is an immediate relative of any such Person, or any
combination of such Persons (each such agreement described in clauses
(A) and (B), an "Affiliate Agreement");
(xiii) any outstanding power-of-attorney empowering any Person
not a current employee of any Company to act on behalf of any Company;
(xiv) any employee collective bargaining agreement with any labor
union or employees covering former, current or future employees of any
Company or work done, being done or to be done in the future by any of
the Companies;
(xv) mining and exploration leases, material Permits and
applications therefor;
(xvi) contracts that restrict any Company after the date of this
Agreement from engaging in any line of business in any geographic area
or competing with any Person;
(xvii) Employment Contracts;
36
(xviii) any contract or agreement for the payment or receipt of
license fees, commissions or royalties to or from any Person
anticipated to be in excess of US$500,000 individually or on an annual
basis (or any such contract or agreement providing for aggregate
payments to or from any Person anticipated to be in excess of
US$2,000,000), exclusive of any arrangement in respect of royalty
payments pursuant to mining and exploration leases, which are
addressed in Section 3.17(a)(i) above;
(xix) each contract or agreement with DBT or any subsidiary of
DBT other than routine purchase orders for services or spare parts
(each a "DBT Agreement"), and in respect of each DBT Agreement,
Schedule 3.17(a) sets forth the amount owing to DBT by each Company
pursuant thereto; and
(xx) any other material agreement, commitment, arrangement or
plan not made in the ordinary course of business.
(b) Except as set forth on Schedule 3.17(b), each Material Contract is
in full force and effect, and is a valid and binding agreement of each Company
which is a party thereto and, to the Knowledge of Seller, each of the other
parties thereto, enforceable by or against such Company and, to the Knowledge of
Seller, each of such other parties thereto in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a Proceeding in equity or at law). Except as
set forth on Schedule 3.17(b), consummation of the transactions contemplated by
this Agreement will not terminate or cause any Material Contract to become
terminable by any other party thereto or result in a material alteration of any
Material Contract. Each of the Companies and Seller has performed all material
obligations required to be performed by it to date under the Material Contracts
except as disclosed on Schedule 3.17(b). Except as set forth on Schedule
3.17(b), no Company or Seller, nor to the Knowledge of Seller any other party,
has repudiated any material provision of the Material Contracts or, to the
Knowledge of Seller, has any basis to do so. Except as set forth on Schedule
3.17(b), no condition exists or event has occurred that (whether with or without
notice or lapse of time or both) would constitute a default, an event of default
(however described), breach, or breach of covenant or undertaking in any
material respect by (x) any Company under any Material Contract or (y) to the
Knowledge of Seller, any other party to any Material Contract. Seller has
heretofore made available to Buyer true and complete copies of all such Material
Contracts (or in the case of a Material Contract that is an oral agreement, a
reasonably detailed summary thereof), including all amendments, modifications,
waivers and consents applicable thereto.
(c) Each DBT Agreement was negotiated and entered into on arms' length
terms between the parties thereto and on a basis no less favorable to the
Company that is a party to such DBT Agreement than if the Company were unrelated
to DBT.
3.18. Environmental Matters. Except as set forth on Schedule 3.18:
(i) each of the Companies is, and at all prior times has been in
compliance in all material respects with all Environmental Laws and
all of its
37
Environmental Permits, including requirements related to all filings
and maintenance of all material information, documentation, and
records, except that with respect to the Excluded Companies prior to
the Exclusion Date this representation is made to the Knowledge of
Seller;
(ii) none of the Companies is subject to any material
Environmental Claim or has received written or, to the Knowledge of
Seller, other notice of any threatened material Environmental Claim,
regarding or resulting from activities of any Company, the Business of
any Company or any property or assets currently or formerly owned,
operated or used by any Company, or regarding any other activity,
business, property or asset for which any Company is asserted to be
liable;
(iii) none of the Companies is subject to any Governmental Order
under any Environmental Law, that would interfere in any material
respect with the ability of such Company to continue to operate its
assets and conduct its business as currently conducted;
(iv) (a) none of the Companies has Released or arranged for the
Release of any Hazardous Materials at any location in violation of, or
that would require notification under, any Environmental Law, or in a
manner that would reasonably be expected to result in material
Liability to any Company under Environmental Laws or in violation of
its Environmental Permits; (b), to the Knowledge of Seller, no other
Person has Released any Hazardous Materials, at any location in
violation of, or that would require notification under, any
Environmental Law, or in a manner that would reasonably be expected to
result in material Liability to any Company under Environmental Laws
or in violation of its Environmental Permits, (c) to the Knowledge of
Seller, Hazardous Materials are not otherwise present, at any property
currently or formerly owned or operated by any Company in violation of
Environmental Law or in a manner that would reasonably be expected to
result in material Liability to any Company under Environmental Law or
in violation of its Environmental Permits, and (d) there are no
landfills or disposal areas located at, on, in or under the assets of
the Companies that are not exclusively associated with the Companies'
Mining Activities; provided, however, that with respect to the
Excluded Companies prior to the Exclusion Date the representation in
clause (a) of this Section 3.18(iv) is made to the Knowledge of
Seller;
(v) (a) no property currently owned or operated by any Company is
listed or, to the Knowledge of Seller, proposed for listing on the
CERCLA National Priorities List or CERCLIS list or any similar
Governmental Authority's list of sites at which remedial or response
action is or may be necessary; (b) to the Knowledge of Seller, no
property formerly owned or operated by any Company is listed or
proposed for listing on any list referred to in the preceding clause
(a); (c) no Company is (and, to the Knowledge of Seller, there are no
facts that exist that could reasonably be expected to cause any
Company to be) a potentially responsible party under CERCLA or any
similar state law in connection with any
38
site or facility actually or allegedly containing or used for the
treatment, storage or disposal of Hazardous Materials; and (d) no
property currently owned or operated by any Company contains asbestos
or asbestos-containing materials, in either case in a condition
constituting a violation of Environmental Law or as would reasonably
be expected to result in material Liability to any Company;
(vi) to the Knowledge of Seller, during the next five fiscal
years none of the Companies is reasonably expected to require (a) a
Capital Expenditure of more than US$2,000,000 in excess of the amounts
set forth on the Capital Expenditure Budget or (b) an increase in
annual operating expenses of more than US$2,000,000 in excess of the
amounts set forth on the Annual Operating Expenses Budget attached
hereto as Schedule 3.18(vi) for such year, in order to achieve or
maintain compliance with Environmental Laws or Permits required
pursuant to Environmental Laws, as such Environmental Laws and Permits
are in effect and are interpreted by the relevant regulatory
authorities as of the date hereof;
(vii) none of the Companies has stored, transported or accepted
for transport any Hazardous Materials in a manner or to a location,
including any Real Property or any property formerly owned or operated
by any of the Companies (or any of their predecessors), that would
reasonably be expected to result in material Liability to any Company
under Environmental Law and any such Hazardous Materials have been
treated, transported and stored substantially in compliance with all
applicable Environmental Laws; provided, however, that with respect to
the Excluded Companies prior to the Exclusion Date, the representation
in this Section 3.18(vii) is made to the Knowledge of Seller;
(viii) each of the Companies has obtained all Environmental
Permits material to the operation of its assets and the Business as it
is currently and for the last fiscal year has been conducted, all of
which are in full force and effect and listed on Schedule 3.18(viii);
(ix) except as listed on Schedule 3.18(ix), there are not
currently and since January 1, 1996 there have not been any
underground storage tanks "owned," or "operated" (as defined by
applicable Environmental Law) by any Company or present or located on
the Company's Real Property;
(x) to the Knowledge of Seller, Seller has not withheld from
Buyer any information in its or the Companies' possession or control
pertaining to the history of all Real Property and any property
formerly owned or operated by the Companies (or any of their
predecessors) which would indicate any material non-compliance by any
Company with, or material liability of any Company under, any
Environmental Law for which any Company is currently asserted to be
liable.
3.19. Insurance. Schedule 3.19 lists all insurance policies held in
the name of any of the Companies or that provides coverage to the assets and
operations of any Company and any Company Employees, specifying the insurer,
amount of coverage and type of insurance.
39
Except as set forth on Schedule 3.19, all such policies are in full force and
effect and will continue to be so on substantially similar terms immediately
following the consummation of the transactions contemplated by this Agreement,
all premiums due thereon have been paid and, where applicable, each Company has
complied in all material respects with the provisions of such policies, no event
has occurred which, with notice or the lapse of time, would constitute a breach
or default under the policy and none of Seller or any Company has received any
written or, to the Knowledge of Seller, other notice from any of its insurance
brokers or carriers that such broker or carrier has cancelled or terminated
coverage or will not be willing or able to renew their existing coverage. All
insurance policies not held in the name of any Company but which cover the
assets and operations of the business of any Company and any Company Employees
are in full force and effect (subject to changes made in the ordinary course of
business that will not materially reduce the coverage thereunder) and will
remain in full force and effect until the Closing, at which time coverage
thereunder will be discontinued with respect to the Companies and the business
of the Companies. To the Knowledge of Seller, as at the date hereof and as of
the Closing Date, there are no claims outstanding under any insurance policy
described in this Section 3.19 and relating to the business of any Company in
excess of US$1,000,000, and no event has occurred which might give rise to any
such claim.
3.20. Personal Property Assets. (a) Schedule 3.20 sets forth a true
and complete list of all the material machinery, equipment, vehicles,
preparation plants or other coal processing facilities, loadout and other
transportation facilities and other tangible personal property now owned or
leased by each Company and indicates which of the Companies owns or leases such
asset. As to each asset shown on Schedule 3.20, each Company has good and
marketable title to, or holds by a valid, enforceable and existing lease or
license with respect to such asset, free and clear of all Encumbrances, except
for Permitted Encumbrances. Except as set forth on Schedule 3.20, no rights of
the Companies under such leases or licenses have been assigned or otherwise
transferred as security for any obligation of the Companies.
(b) The title or leasehold interests to the assets set forth on
Schedule 3.20 includes all tangible assets used by the Companies to conduct the
Business as currently conducted. Such assets have been maintained, in all
material respects, in accordance with normal mining industry practice and,
except for normal wear and tear, are suitable for the purposes for which the
Companies are presently using them.
(c) Schedule 2.2 is a true and complete list of all capital leases of
the Companies, indicating which of the Companies is a party to such capital
leases and the payoff amount under such capital lease that, if paid to the
lessor thereunder, would fully satisfy the Company's remaining obligations under
such capital lease as a primary obligor.
3.21. Real Property. Leased Properties. Schedule 3.21(a) lists all
real property and water rights, and other material interests in land, including
coal, mining and surface rights, easements, rights of way and options, and all
material rights of the Companies to timber, and natural gas (including coalbed
methane and gob gas), leased or subleased by any Company (the "Leased Real
Property"). Seller has heretofore made available to Buyer true and complete
copies of the leases and subleases covering the Leased Real Property (as amended
to the date of this Agreement and the date of Closing). With respect to each
lease and sublease and except as
40
otherwise specified on Schedule 3.21(a) (or on Schedule 3.20 in the case of the
Leased Fixtures and Improvements):
(i) such lease or sublease is, to the Knowledge of Seller, in
full force and effect in all respects and enforceable in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a Proceeding in equity or at law);
(ii) the Companies have a valid leasehold interest in all Leased
Real Property and all fixtures and improvements on such Leased Real
Property, including all preparation plants or other coal processing
facilities, loadout and other transportation facilities (the "Leased
Fixtures and Improvements"), in each case, free and clear of any
Encumbrances, except for Permitted Encumbrances;
(iii) (A) none of the Companies is in material default under any
such lease or sublease and, to the Knowledge of Seller no event has
occurred which, with the passage of time or expiration of any grace
period would constitute a material default of any Company's
obligations under such lease or sublease, (B) to the Knowledge of
Seller, no other party to any such lease or sublease is in material
default thereunder and (C) none of the Companies has received a
written or, to the Knowledge of Seller, other notice of default with
respect to such lease or sublease;
(iv) there are no unwritten or oral modifications to such leases
or any course of dealing or business operations that can be construed
as a material modification to such leases;
(v) no such lease or sublease has been mortgaged, deeded in trust
or subjected to an Encumbrance by any Company; and
(vi) there are no other matters that materially adversely affect
the rights of any Company to the Leased Real Property or the Leased
Fixtures and Improvements.
(b) Owned Properties. Schedule 3.21(b) lists all real property and
water rights, and other material interests in land, including coal, mining and
surface rights, easements, rights of way and options, and all material rights of
the Companies to timber, and natural gas (including coalbed methane and gob
gas), owned by any of the Companies (the "Owned Real Property"). Conveyances,
leases and easements by any Company to any third party in respect of any Owned
Real Property are listed on Schedule 3.21(b)(i). All existing surveys, title
insurance policies, title insurance abstracts and other evidence of title (if
any) in the possession of any of the Companies relating to any Owned Real
Property have been heretofore made available to Buyer. With respect to each such
parcel of the Owned Real Property, except as otherwise specified on Schedule
3.21(b) or Schedule 3.21(b)(i) (or Schedule 3.20 in the case of the Owned
41
Fixtures and Improvements) or where the failure of any of the following to be
true and correct would not reasonably be expected to be materially adverse to
the use of such parcel of the Owned Real Property:
(i) the identified owner has good and marketable fee simple title
to the parcel of the Owned Real Property and all fixtures and
improvements on such Owned Real Property, including all preparation
plants or other coal processing facilities, loadout and other
transportation facilities (the "Owned Fixtures and Improvements"),
free and clear of any Encumbrances, except for Permitted Encumbrances;
(ii) there are no pending or, to the Knowledge of Seller,
threatened condemnation Proceedings, eminent domain or requisition
Proceedings; and
(iii) there are no other matters that materially adversely affect
the title of any Company to the Owned Real Property or the Owned
Fixtures and Improvements.
(c) Additional Representations Related to Real Property. Except as set
forth on Schedule 3.21(c), none of the Companies nor Seller has received any
written or, to the Knowledge of Seller, other notice of claims that any Company
has mined any coal that it did not have the right to mine or mined any coal in
such reckless and imprudent fashion as to give rise to any claims for loss,
waste or trespass and, to the Knowledge of Seller, no facts exist upon which
such a claim could be based provided, however, that the foregoing
representations shall be deemed to be made to the Knowledge of Seller in respect
of any such notice or claim received by any Company prior to Seller's (or
Seller's Affiliate's) acquisition thereof. Seller has made available to Buyer
the most recent complete and correct version of each of the following items to
the extent such items are (a) in the possession of the Companies, (b) relate to
or affect the Real Property, including the coal reserves, coal ownership, mining
conditions, mines, and mining plans of the Companies and (c) material to the
conduct of the Business of any Company: geological data, reserve data, existing
mine maps, surveys, 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 books and records, information, maps, reports
and data.
3.22. Intercompany Accounts; Transactions with Affiliates. (a)
Schedule 3.22(a) contains a complete list of all intercompany balances between
Seller or any of its Affiliates, on one hand, and any Company, on the other hand
(each such account, an "Intercompany Account").
(b) Except as set forth on Schedule 3.22(b), (i) no Company is party
to any contract, agreement, commitment or other arrangement (in each case,
whether written or oral) with Seller or any of its Affiliates (other than any
other Company), (ii) none of Seller or any of its Affiliates (other than the
Companies) has any interest in any of the property or assets used by the
Companies and (iii) none of Seller or any of its Affiliates (other than the
Companies) provides any services to any of the Companies.
42
3.23. No Brokers' or Other Fees. Except for Xx. Xxxxxxxxx+Partner GmbH
and Deutsche Bank AG, whose fees and expenses will be paid by Seller, no Person
has acted directly or indirectly as a broker, finder, investment banker or
financial advisor in connection with the transactions contemplated hereby, and
no Person is entitled to any fee or commission or like payment in connection
with the transactions contemplated hereby based upon any agreement, arrangement
or other understanding made by or on behalf of Seller or the Companies or under
which Buyer or the Companies could become liable or obligated.
3.24. Entire Business. Each Company owns, or has valid leasehold
interests in, all the assets and properties (real or personal) necessary for the
conduct of the business of such Company, (a) as currently conducted or (b) as
proposed to be conducted over the next twelve (12) months, except, in the case
of clause (b) above, any items (i) set forth on Schedule 3.24, (ii) set forth in
the Capital Expenditure Budget or the Annual Operating Expenses Budget or (iii)
which, if not obtained, would not be material to any Company.
3.25. Solvency. None of the Companies has stopped or suspended payment
of its debts, become unable to pay its debts as they become due, or otherwise
become insolvent in any jurisdiction. None of the Companies is the subject of
any pending, rendered or threatened insolvency proceedings of any character.
None of the Companies has made an assignment for the benefit of creditors or
taken any action with a view to or that would constitute a valid basis for the
institution of any such insolvency proceedings.
3.26. Customers and Suppliers. Schedule 3.26(a) contains a list of the
top ten customers of the Companies as a whole (determined on the basis of
revenues) for each of the last two fiscal years and Schedule 3.26(b) contains a
list of the top ten suppliers of the Companies as a whole (determined on the
basis of cost of items purchased) for the last two fiscal years. Since January
1, 2002, to the Knowledge of Seller, there has not been (i) any material change
adverse to any Company in the business relationship of any Company with any of
its material customers or suppliers, including the customers and suppliers
listed on Schedules 3.26(a) and (b), respectively, or (ii) any change adverse to
any Company in any material term (including credit terms) of the agreements or
other arrangements with any such customers or suppliers, in each case other than
in the ordinary course of business. During the past three years, no Company has
received customer complaints concerning its products and services, nor has any
Company had any of its products returned by a purchaser thereof, other than
complaints and returns in the ordinary course which have not, and are not likely
to have, individually or in the aggregate, a Companies Material Adverse Effect.
To the Knowledge of Seller, none of the customers of or suppliers to any Company
intends to cancel, terminate or otherwise materially modify its relationship
with such Company, whether as a result of the consummation of the transactions
described herein or otherwise.
3.27. Grants and Allowances. None of the Companies has received any
grant, allowance, aid or subsidy from any Governmental Authority during the last
five (5) years which, to the Knowledge of Seller, is currently due and owing as
a result of any act or failure to act by any Company or which would become due
and owing as a result of the sale of the Shares to Buyer and, in such case,
would reasonably be expected to result in an aggregate Liability to any of the
Companies (or loss of grant, allowance, aid and/or subsidy) in excess of
US$2,000,000.
43
3.28. Absence of Certain Payments; Illegal Acts. Since June 30, 1999,
none of the Companies have (nor, to the Knowledge of Seller, has any director,
officer, agent, or employee of any Company nor any other person, acting on
behalf of any 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 unlawful 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 make any unlawful payment for favorable treatment for business
secured or for special concessions already obtained for such Company. To the
Knowledge of Seller, none of the Companies has committed any criminal or illegal
act which has had or would reasonably be expected to have, individually or in
the aggregate, a Companies Material Adverse Effect.
3.29. Offers. Each offer, tender or quotation, whether written or
verbal, made by any Company in respect of the business of such Company, which is
outstanding and capable of acceptance by a Third Party, was made in the ordinary
course of business and all such offers, tenders or quotations that provide for
annual payments of US$2,000,000 or more in the aggregate are set forth on
Schedule 3.29.
3.30. Debt; Security Interests. Schedule 3.30 lists all of the
outstanding Debt of the Companies, including the payee thereof and the amount
outstanding. None of the Companies has granted or created, or agreed to grant or
create, any Encumbrances other than Permitted Encumbrances and any Encumbrances
disclosed in the Audited Financial Statements.
3.31. Forecasts. All forecasts, projections, models, budgets or
estimates heretofore delivered to Buyer by Seller and its Affiliates and their
respective representatives and advisers have been prepared in good faith, and
without any intention to mislead, on the basis of the information available at
the time of their preparation.
3.32. 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.
3.33. No Other Representations or Warranties. Except for the
representations and warranties of Seller contained in this Agreement and
Seller's Schedules, Seller makes no express or implied representation or
warranty to Buyer.
44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV), provided that if a representation and
warranty speaks as of a specific date or time, it need only be correct and
complete as of such date or time:
4.1. Organization. Buyer is a corporation duly incorporated, validly
existing and in good standing under the Laws of its jurisdiction of
incorporation. Buyer has the requisite corporate power and authority to own,
lease and operate its assets and to carry on its business as now being conducted
and is duly qualified or licensed to do business and is in good standing in the
jurisdictions in which the ownership of its property or the conduct of its
business requires such qualification or license unless the failure to have such
qualification or license is not material to the business of Buyer.
4.2. Authorization; Enforceability. Buyer has the requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by Buyer and
the performance of their respective obligations hereunder has been duly
authorized by all necessary action on the part of Buyer and, upon such
authorization, no other proceedings or actions by Buyer's board of directors are
necessary to authorize or consummate this Agreement, or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Buyer and, assuming due authorization, execution and delivery by Seller,
constitutes a valid and binding agreement of Buyer and is enforceable against
Buyer in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).
4.3. No Conflicts or Approvals. (a) The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby does not (i) violate, conflict with or result
in a breach by Buyer of its organizational documents, (ii) violate, conflict
with or result in a breach of, constitute a default by Buyer, result in the
acceleration of (or create an event which, with notice or lapse of time or both,
would constitute a default or result in the acceleration of) or require any
consent or other action by any Person under, or give rise to any right of
termination, modification, cancellation or acceleration or require any notice
under, any material note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement, arrangement or other instrument
to which Buyer or any of its properties or assets may be bound, (iii) violate or
result in a material breach of any Governmental Order or Law applicable to Buyer
or any of their respective properties or assets or (iv) result in the creation
of any Encumbrance, other than Permitted Encumbrances, upon any of the
properties or assets of Buyer.
4.4. Governmental Authorization. Except as set forth on Schedule 4.4,
the execution, delivery and performance by Buyer of this Agreement and the
consummation of the
45
transactions contemplated hereby (i) will require no action by or in respect of,
or any Consent from, any Governmental Authority, (ii) will not, to the Knowledge
of Buyer, give any Governmental Authority the right to challenge any material
portion of the transactions contemplated by this Agreement or exercise any
remedy or obtain any relief that is material to Buyer under any Law to which
Buyer is subject, or (iii) will not contravene, conflict with or result in a
material violation of any of the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, or
terminate any material authorization or Permit issued by a Governmental
Authority that is held by Seller or the Companies or that otherwise relates to
the Companies.
4.5. No Brokers' or Other Fees. No Person has acted directly or
indirectly as a broker, finder, investment banker or financial advisor in
connection with the transactions contemplated hereby, and no Person is entitled
to any fee or commission or like payment in connection with the transactions
contemplated hereby based upon any agreement, arrangement or other understanding
made by or on behalf of Buyer or under which Seller could become liable or
obligated.
4.6. Permit Blocking. Neither Buyer nor any of its Affiliates has been
notified by the U.S. Office of Surface Mining Reclamation and Enforcement, or
the agency of any state administering the SMCRA, that Buyer or any of its
Affiliates (i) is ineligible to receive surface mining permits or (ii) is under
investigation to determine whether its eligibility to receive a SMCRA permit
should be revoked, and to the Knowledge of Buyer, no such notification has been
threatened.
4.7. Financial Ability to Perform. As of the Closing Date, Buyer shall
have available to it (a) funds sufficient to enable it to deliver the Purchase
Price and (b) the credit capacity sufficient to post new bonds to cause the
replacement of the Seller Bonds in accordance with Section 5.10.
4.8. 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.
4.9. No Other Representations or Warranties. Except for the
representations and warranties of Buyer contained in this Agreement and Buyer's
Schedules, Buyer makes no other express or implied representation or warranty to
Seller.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1. Conduct of Business Prior to the Closing. (a) Seller covenants
and agrees that, except (i) as expressly provided in this Agreement, (ii) as
disclosed on Schedule 5.1(a)(A) or (iii) with the prior written consent of
Buyer, from the date hereof to Closing, (A) the business of each Company (and
the maintenance of their respective books, accounts and records, inventory
levels) shall be conducted only in the ordinary course of business and in
compliance
46
with all Laws, Environmental Laws and Permits, (B) the obligations of each
Company shall be paid or performed when due (and no Company shall change in any
material respect its practices in connection with the payment of accounts
payable in respect of its purchases), (C) Seller and the Companies will use
commercially reasonable efforts to cause the present business organization and
business relationships and customer relationships of each Company to be
preserved and their respective rights and operations to be maintained in all
material respects, (D) each Company shall continue to make such Capital
Expenditures pertaining to the business of such Company as are reasonably
consistent with the capital expenditure budget of the Companies attached hereto
as Schedule 5.1(a) (the "Capital Expenditure Budget") and the past practice of
the Company, (E) each Company shall use reasonable efforts to retain the
services of its respective officers and key employees and maintain relationships
with its respective officers and key employees, (F) each Company shall use
reasonable efforts to maintain and keep (i) the Business substantially intact,
including present operations, physical facilities, working conditions, Permits,
insurance policies, and relationships with lessors, licensors, suppliers,
customers, and employees and (ii) its properties and assets in as good repair
and condition as at present, ordinary wear and tear excepted, (G) each Company
shall use reasonable efforts to keep in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained and (H)
each Company shall collect its receivables only in the ordinary course of
business and in the same manner as previously collected.
(b) Without limiting the foregoing, Seller covenants and agrees that,
except (A) as expressly provided in this Agreement; or (B) as disclosed on
Schedule 5.1(b), from the date hereof until the Closing:
(i) None of the Companies shall amend its organizational
documents;
(ii) None of the Companies shall (A) declare, set aside, make or
pay any dividend or other distribution payable in cash, shares of
capital stock or property with respect to such Company's shares of
capital stock, except for payment of cash dividends or other
distributions to Seller not in excess of (i) US$200,000,000 in the
aggregate during the period January 1, 2004 to the Closing Date, plus
(ii) the amount of the net after-tax proceeds of the sale of the RAG
Colorado Entities (subject to the obligations of Section 5.14); (B)
redeem, purchase or otherwise acquire directly or indirectly such
Company's shares of capital stock or other ownership interests of such
Company; (C) issue, transfer, sell, pledge, dispose of or encumber any
shares of capital stock or other ownership interests of, or securities
convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital
stock or other ownership interests of shares of any class of capital
stock of such Company; or (D) split, recapitalize, combine or
reclassify any shares of its capital stock;
(iii) None of the Companies shall (A) adopt, establish, enter
into any new employee benefit plan, agreement, program, policy, trust,
fund or other arrangement that would be a Benefit Plan if it were in
existence on the date of this Agreement or amend or terminate any
Benefit Plan (except for changes required by applicable Law and as
contemplated by the Peabody Agreement), (B) increase
47
any compensation or fringe benefit of, or enter into or amend any
employment, severance, termination or similar agreement or arrangement
with any Company Employees, except for normal increases in base salary
in the ordinary course of business and the payment of cash bonuses or
incentive compensation to Company Employees pursuant to and consistent
with existing plans or programs, (C) loan or advance any money or
other property to any director, officer or other Company Employee, or
enter into any other transaction with any director, officer or Company
Employee outside the ordinary course of business, (D) grant any equity
or equity-based awards to any Company Employee, (E) except with the
prior written consent of Buyer (which consent shall not be
unreasonably withheld), sign or agree to any new collective bargaining
or other agreements with any union (other than local agreements that
settle grievances without precedent), (F) agree to provide any
severance or other post-termination benefits to any Company Employees
beyond those provided by the Benefit Plans and Employment Contracts in
effect as of the date of this Agreement or (G) with respect to any
amounts due to be contributed to a Benefit Plan on or before the
Closing Date, delay the contribution thereof or seek an extension of
time to make the contribution, where in either case it would delay the
contribution to a date after the Closing Date;
(iv) None of the Companies shall sell, lease or dispose of any
material assets of such Company, except for the sale of (a) the RAG
Colorado Entities, (b) personal property sold in an arms length
transaction to a purchaser not an Affiliate of Seller in the ordinary
course of business consistent with past practice which are not used or
proposed to be used in the operations of any Company and the
disposition of which would not impair the ability of any Company to
conduct its Business, and (c) inventory in the ordinary course of
business;
(v) None of the Companies shall acquire or invest in any assets
that are material to such Company, except as expressly provided in the
2004 Capital Expenditure Budget or in this Agreement and except for
the purchase of inventory in the ordinary course of business;
(vi) None of the Companies shall: (A) create, incur or assume any
long-term or short-term debt or issue any debt securities except for
borrowings under existing lines of credit in the ordinary course of
business; (B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except in the ordinary course of
business in an immaterial amount; (C) make any loans, advances or
capital contributions to, or investments in, any other Person other
than in the ordinary and usual course of business consistent with past
practice and that shall not exceed US$500,000 individually or
US$2,000,000 in the aggregate; or (D) mortgage, pledge sell, transfer,
dispose of or otherwise subject to any Encumbrance any of its material
properties or assets, tangible or intangible, or create any
Encumbrance of any kind with respect to any such asset;
48
(vii) None of the Companies shall acquire (by merger,
consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any
equity interest therein or extend any credit to or purchase any debt
obligation of any Person, provided, however, that each Company may
continue to sell coal upon payment terms consistent with its past
practice or otherwise customary in the industry in the ordinary course
of its Business;
(viii) None of the Companies shall adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization;
(ix) None of the Companies shall change any of the accounting
methods, policies or practices used by it unless in the determination
of the Companies' independent accountants such change is required by
GAAP, and Seller shall have notified Buyer in advance of such change;
(x) Except with the prior written consent of Buyer (which consent
shall not be unreasonably withheld, conditioned or delayed), none of
the Companies shall (A) make any Tax election or take any position on
any Tax Return filed on or after the date of this Agreement or adopt
any method therein that is materially inconsistent with elections
made, positions taken or methods used in preparing or filing similar
returns in prior periods, (B) change any annual Tax accounting period,
(C) enter into any Tax sharing agreement, (D) enter into any
settlement or compromise of any Tax liability, (E) file any amended
Tax Return with respect to any Tax, (F) enter into any closing
agreement relating to any Tax, (G) surrender any right to claim a Tax
refund or (H) make Tax accruals or establish reserves for Taxes in a
manner inconsistent with the Companies' past practice if, and to the
extent that, any such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action in each case
would have the effect of increasing the Tax liability of Buyer or any
of the Companies for any Post-Closing Tax Period individually or in
the aggregate in an amount in excess of $25,000 in any single taxable
year;
(xi) Except with the prior written consent of Buyer (which
consent shall not be unreasonably withheld, conditioned or delayed)
none of the Companies shall enter into any contract, agreement or
understanding that, if in existence on the date hereof, would
constitute a Material Contract or, change, waive or otherwise modify,
cancel or terminate any Material Contract, provided that the Companies
shall be permitted to enter into new agreements, or changes or
modifications to existing agreements, for the supply of coal to the
extent such new agreements, changes or modifications are of a nature
that are in the ordinary course of business, are not materially
adverse to any of the Companies and are not individually (A) in
respect of more than 1,000,000
49
tons, with regard to shipments from mines operated by RAG West and RAG
Wyoming, or more than 100,000 tons with regard to shipments from other
locations or (B) for a term in excess of twelve (12) months;
(xii) None of the Companies shall (A) pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) or (B) waive, release or transfer
any rights of material value or forgive, cancel or compromise any
indebtedness due or owning to such Company, in each case of (A) or
(B), other than in the ordinary course of business;
(xiii) None of the Companies shall settle or compromise any
Proceeding (whether or not commenced prior to the date of this
Agreement) other than any Liability, obligation or restriction that
does not restrict or adversely affect in any manner the conduct of the
business or operation of any Company after Closing provided that in no
event shall any of the Companies settle or compromise any Proceeding
that involves a monetary payment in excess of US$500,000 or
US$2,000,000 in the aggregate for the settlement or compromise of all
such Proceedings;
(xiv) None of the Companies shall enter into any new line of
business in which any Company is not engaged as of the date hereof;
(xv) None of the Companies shall enter into any transaction,
agreement or arrangement (whether written or oral) with Seller or any
of their respective Affiliates (other than any other Company),
provided however that the Companies may enter into transactions,
agreements or arrangements with DBT or its subsidiaries in the
ordinary course of the Companies' Business consistent with past
practice not to exceed US$2,000,000 in the aggregate other than
transactions, agreements or arrangements otherwise reflected in the
Capital Expenditure Budget;
(xvi) Except (i) with the prior written consent of Buyer (which
consent shall not be unreasonably withheld, conditioned or delayed),
or (ii) where such expenditure is required in the best interest of the
Companies (in the reasonable judgment of Seller) in cases where time
is of the essence in order to respond to events adversely affecting
the Companies' operations and prompt notice of such expenditure is
given to Buyer, none of the Companies shall incur or commit to make
Capital Expenditures, other than in accordance with the current
Capital Expenditure Budget;
(xvii) None of the Companies shall fail to comply, in any
material respect, with any applicable Laws or Governmental Orders;
(xviii) None of the Companies shall grant any license or
sublicense of rights under or with respect to any Intellectual
Property;
50
(xix) None of the Companies shall fail to take any action
required on its part in order to maintain or renew any Permits
required for its business or take any action that results in the loss
of such Permits;
(xx) None of the Companies shall authorize or enter into an
agreement, arrangement or commitment to do any of the foregoing.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, (x) the Companies shall have the right to repay the debt obligations
set forth on Schedule 5.1(c), and (y) RACH shall have the right to obtain loans
from Seller (or from any Affiliate of Seller, other than any one of the
Companies) (collectively the "Short Term Loan") and to transfer the proceeds of
the Short Term Loan to any of the Companies (whether as a capital contribution,
advance or otherwise) for the purpose of enabling the Companies to repay any or
all of the debt obligations set forth on Schedule 5.1(c), it being understood
that the Short Term Loan shall be deemed to be Debt for purposes of this
Agreement (including, without limitation, for purposes of the condition set
forth in Section 7.13).
5.2. Access; Cooperation and Further Assurances.
(a) Seller shall cause each Company to afford Buyer and its officers,
employees, accountants, counsel and other authorized representatives, including
representatives of any Person providing financing to Buyer in connection with
the transactions contemplated in this Agreement, access during normal business
hours throughout the period from the date hereof to the Closing or the date of
termination of this Agreement, to it and its properties, contracts, commitments,
books and records and Seller shall, and shall cause each Company to, cooperate
in all reasonable respects with Buyer's investigations and examinations of the
Companies and shall cause its and the Companies' respective representatives to
furnish promptly to Buyer such additional financial and operating data and other
information as to its and the Companies' respective business and properties as
Buyer or its duly authorized representatives may from time to time reasonably
request. In the event that Seller determines that disclosure of any such
information would be in violation of applicable Laws or the provisions of any
confidentiality agreement to which Seller or any Company is a party, Seller will
use its best efforts to institute appropriate substitute disclosure arrangements
that do not violate any such Laws or confidentiality obligations, to the extent
reasonable under the circumstances. Unless otherwise required by Law and until
the Closing Date, Buyer will hold any such information which is nonpublic in
confidence in accordance with the provisions of the Confidentiality Agreements.
Notwithstanding the provisions of this Agreement and the provisions of the
Confidentiality Agreements, Buyer may disclose in documents related to Buyer's
financing of the transaction, financial and other information concerning the
Companies and the transactions contemplated hereby; provided that such
disclosure in Buyer's reasonable judgment is reasonably necessary for marketing
purposes.
(b) Following the Closing, Seller and Buyer will from time to time,
execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by the other party to confirm and assure the rights and
obligations provided for in this Agreement and render effective the consummation
of the transactions contemplated hereby and thereby.
51
5.3. Tax Matters.
(a) Tax Returns.
(i) Post-Closing Tax Periods. Buyer shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for Post-Closing Tax
Periods ("Post-Closing Tax Returns") for the Companies. Buyer shall pay (or
shall cause to be paid) any Taxes due with respect to such Post-Closing Tax
Returns. Buyer shall file a consolidated U.S. federal Income Tax Return for the
period beginning immediately after the Closing Date as the common parent of a
consolidated group and shall include in each such group (and shall include in
its income the income of) RACH and all the other Companies which are members of
RACH's Affiliated Group immediately prior to the Closing (and shall cause each
such Company to join such consolidated group).
(ii) Pre-Closing Tax Periods. After the Closing, Buyer shall (and
shall cause the Companies to) timely prepare (in a manner consistent with the
Companies' prior practice) and file all Tax Returns related to Pre-Closing Tax
Periods ("Pre-Closing Tax Returns" and each a "Pre-Closing Tax Return") for the
Companies that are filed after the Closing Date. Buyer shall provide to Seller a
draft of each such Pre-Closing Tax Return at least seventy-five (75) days prior
to the due date for filing such Pre-Closing Tax Return (including any
extension). Seller shall have the right to review and to comment on, and to
reasonably request that changes be made to, each such Pre-Closing Tax Return and
to deliver to Buyer any changes to each such Pre-Closing Tax Returns no later
than thirty (30) days prior to the due date for filing such Pre-Closing Tax
Return. Seller and Buyer agree to consult and to attempt to resolve in good
faith any issue arising as a result of the review of such Pre-Closing Tax
Returns and mutually to consent to the filing of such Pre-Closing Tax Returns as
promptly as possible. If Buyer and Seller cannot agree on all issues arising as
a result of Seller's review of any such Pre-Closing Tax Return, then, within
twenty (20) days prior to the due date for filing such Pre-Closing Tax Return,
Seller and Buyer shall refer the matter to the Neutral Auditor to arbitrate the
dispute in New York City, New York. Seller and Buyer shall equally share the
fees and expenses of such Neutral Auditor and its determination as to any issue
in dispute shall be concluded within five (5) days of the due date for filing
such Pre-Closing Tax Return and such determination shall be binding on Seller,
the Companies and Buyer and shall be enforceable in a court of competent
jurisdiction.
(iii) Straddle Returns. Buyer shall (and shall cause the
Companies to) timely prepare (in a manner consistent with the Companies' prior
practices, to the extent such practices are in compliance with applicable Law)
and file all Straddle Returns for the Companies, provided, however, that no such
Tax Return shall be filed without the prior written consent of Seller. With
respect to each Straddle Return for each Company, Buyer shall deliver to Seller,
at least seventy-five (75) days prior to the due date for filing such Straddle
Return (including any extension), a draft of such Straddle Return together with
a draft statement setting forth the allocation of taxable income and Taxes under
Section 5.3(c)(iii) for the corresponding Straddle Period ("Allocation
Statement"). Seller shall have the right to review and to comment on, and to
reasonably request that changes be made to, each such Straddle Return and
Allocation Statement and to deliver to Buyer any changes to each such Straddle
Return and Allocation Statement no later than thirty (30) days prior to the due
date for filing such Straddle Return.
52
Seller and Buyer agree to consult and to attempt to resolve in good faith any
issue arising as a result of such review of Straddle Returns and Allocation
Statements and mutually to consent to the filing of Straddle Returns as promptly
as possible. If Buyer and Seller cannot agree on all issues arising as a result
of any such Seller's review of Straddle Return and Allocation Statement, then,
within twenty (20) days prior to the due date for filing such Straddle Return,
Seller and Buyer shall refer the matter to the Neutral Auditor to arbitrate the
dispute in New York City, New York. Seller and Buyer shall equally share the
fees and expenses of such Neutral Auditor, and its determination as to any issue
in dispute shall be concluded within five (5) days of the due date for filing
such Straddle Return and such determination shall be binding on Seller, the
Companies and Buyer and shall be enforceable in a court of competent
jurisdiction.
(iv) General. Buyer shall (and shall cause the Companies to)
close (and, if permissible, elect to close), for U.S. federal, state and local
and foreign Tax purposes, the taxable year or period of each of the Companies as
of the close of the Closing Date, to the extent (i) permitted by applicable Law,
and (ii) the Parties agree in good faith that the applicable closing of the
taxable year or period will not have an adverse effect on the Tax liabilities of
the Parties, their respective Affiliates or the applicable Company.
Notwithstanding the provisions of Sections 5.3(a)(i) and 5.3(a)(ii) above, in
the case that the number of days in the period commencing immediately after the
end of the applicable Pre-Closing Tax Period or Straddle Period and ending on
the due date (including all applicable extensions) for filing the Tax Return
corresponding to such Pre-Closing Tax Period or Straddle Period is less than
100, each of the numbers seventy five (75), thirty (30), twenty (20) and five
(5) in Sections 5.3(a)(i) and 5.3(a)(ii) above shall be reduced proportionately.
(b) Amended Returns/Elections.
(i) If Seller so requests (and at its sole cost and expense), the
Companies shall and Buyer shall cause the Companies to prepare and timely file
(to the extent determined by Seller, at its sole discretion, to be advisable or
beneficial), amended Tax Returns for the Companies for any Pre-Closing Tax
Period (whether filed on a separate or on a consolidated, combined or unitary
basis) provided, however, that no Company shall be required to file an amended
Tax Return if such filing shall result in Tax liability for a Post-Closing Tax
Period or for the portion of any Straddle Period allocated to Buyer in
accordance with Section 5.3(c)(iii), unless (a) Buyer provides its prior consent
(which consent shall not be unreasonably withheld, conditioned or delayed), (b)
Seller agrees to reimburse, in advance of such filing, the applicable Company
for such Tax liability plus any reasonable costs associated with such filing and
(c) Buyer determines in its reasonable discretion that such filing is in
accordance with applicable Law. Without limiting the provisions of Section
5.3(a) above, Buyer shall not, and shall cause the Companies and its other
Affiliates not to, amend any Tax Return of the Companies relating to any
Pre-Closing Tax Period or Straddle Period, make any election with respect to, or
that may affect the Tax Liability of any Company for, any Pre-Closing Tax Period
or Straddle Period, or carryback any item to any Pre-Closing Tax Period or
Straddle Period of any Company allocated to Seller in accordance with Section
5.3(c)(iii), unless (a) Seller provides its prior written consent (which consent
shall not be unreasonably withheld, conditioned or delayed), (b) Buyer agrees to
reimburse, in advance of such filing, the Seller for such Tax liability and to
release Seller from any and all Liability under this Agreement arising as a
result
53
of such amendment, carryback or election and (c) Seller determines in its
reasonable discretion that such filing is in accordance with applicable Law.
(ii) At Seller's request, Buyer shall cause each of the Companies
(or any successor thereof) to make or join with Seller in making any election;
provided, however, that no Company shall be required to make or join in making
in any such election if such election shall result in an increase of its or
Buyer's Tax liability for a Post-Closing Tax Period or for the portion of any
Straddle Period allocated to Buyer in accordance with Section 5.3(c)(iii),
unless (a) Buyer provides its prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), (b) Seller agrees to reimburse,
in advance of making such election, the applicable Company for such Tax
liability plus any reasonable costs associated with such filing and to release
Buyer from any and all Liability under this Agreement arising as a result of
such election and (c) Buyer determines in its reasonable discretion that such
filing is in accordance with applicable Law.
(c) Tax Indemnity.
(i) Seller shall indemnify Buyer and its respective Affiliates
(including each Company) and hold them harmless (without duplication, including
with respect to amounts payable under Article IX hereof) from (a) all liability
for Taxes of each Company for any Pre-Closing Tax Period, (b) all liability for
Taxes of each Company for any Straddle Period to the extent allocated to the
portion of the Straddle Period ending on the Closing Date in accordance with
Section 5.3(c)(iii), (c) all liability of any Company for Taxes of any member
(other than (A) any of the Companies, and (B) any other member of an affiliated,
consolidated, combined or unitary group of which Buyer or any Affiliate thereof
is or will be the parent) of any affiliated consolidated, combined or unitary
group of which such Company is or was a member on or prior to the Closing
pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar
state, local or foreign law or regulations; provided, however, that this clause
(c) shall only apply to the extent such Taxes arise out of the Company's
membership in such affiliated, consolidated, combined or unitary group during a
Pre-Closing Tax Period or as a transferee or successor (as a result of any
transaction effected by such Company before the Closing), (d) all liability for
Taxes of any Company arising out of a breach of the representations and
warranties contained in Section 3.13, (e) U.S. federal, state and local Income
Taxes imposed on any Company in respect of gain or income directly recognized on
the transactions deemed to occur pursuant to the making of the Section
338(h)(10) Election to the extent such Taxes are in excess of the amounts
payable to Buyer pursuant to Section 5.3(c)(vii), (f) any liability for Taxes
resulting from the failure by Seller (or any Affiliate thereof (other than the
Companies)) or from the failure prior to the Closing of any Company to perform
or observe in any respect Seller's (or its) obligations and covenants under
Section 5.1(b)(x) and Section 5.3 of this Agreement, (g) any payments required
to be made by any Company after the Closing Date to any third party (other than
any Company, Buyer (or any Affiliate thereof) or any successor or transferee of
any of the foregoing) under any Tax sharing, Tax indemnity, Tax allocation or
similar contracts, whether or not written, entered into by such Company prior to
the Closing (other than payments required under Customer Agreements), (h) any
RAG Colorado Tax Liability, (i) any withholding tax (including any interest and
penalties thereon) imposed on Buyer by a Taxing Authority with respect to the
amount (if any) required to be withheld by Buyer pursuant to Section 1445 of the
Code and the regulations thereunder on account of any U.S. federal income tax
liability of Seller
54
in respect of the Transaction, to the extent exceeding the aggregate amounts
paid to any Taxing Authority pursuant to the Escrow Agreement or otherwise
withheld by Buyer pursuant to Section 1445 of the Code and the regulations
thereunder from the Purchase Price and (j) in the case of clauses (a), (b), (c),
(d), (e), (f), (g), (h) or (i), unless otherwise provided in Section 5.3(c)(vi)
below, all reasonable legal, accounting, appraisal, consulting, or similar fees
and expenses attributable to such Taxes or liabilities, provided, however, that
in the case of clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i) above,
Seller shall be liable only to the extent that such Taxes (and other
indemnifiable amounts) (A) are not recovered by Buyer (or any Affiliate
thereof), using their reasonable efforts to obtain such recoverable amount, from
a third party or third parties that are not Affiliates of Buyer, (B) are in
excess of the lesser of (i) the aggregate amount, if any, reserved for Taxes on
the December 31, 2003 Audited Financial Statements (excluding any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income or any reserve not in accordance with GAAP or not consistent with past
practices) of the Companies or (ii) US$1,448,754, (C) are in excess of the
amounts reflected as an accrued Tax liability as of the Closing Date on the
books of the applicable Company or Companies, provided, however, that any such
accrued Tax liability shall be in accordance with GAAP and consistent with past
practices as of the Closing Date, (D) do not constitute Transfer Taxes governed
by Section 5.3(j), and (E) do not constitute amounts payable to any Person (i)
in the nature of Buyer Refunds (as defined in Section 5.3(f) below) under the CA
Tax Sharing Agreement, the Peabody Agreement or a Customer Agreement, or (ii)
for or in connection with any refund (within the meaning of Section 5.3(f)
below) of Taxes or other amounts pursuant to any Customer Agreement.
Notwithstanding the foregoing, the indemnity provided by this Section 5.3(c)(i)
shall not extend to any Tax or other amount to the extent that it directly
arises as a result of one or more of the following: (A) any representation or
warranty by Buyer under this Agreement being incorrect in any respect, (B) the
failure by Buyer (or any Affiliate thereof) to perform or observe in any respect
Buyer's (or its) obligations under, or any covenant or condition in, this
Agreement or any Tax sharing, Tax indemnity, Tax allocation or similar
agreement, or (C) the willful misconduct or the gross negligence of any of Buyer
or any Affiliate thereof.
(ii) Buyer shall, and after the Closing shall cause each Company
to, indemnify Seller and its Affiliates and hold them harmless from (A) all
liability for Taxes of any Company for any taxable period ending after the
Closing Date (except that in the case of a Straddle Period, this indemnity will
cover only such Taxes that are allocated to the portion of the Straddle Period
beginning after the Closing Date pursuant to Section 5.3(c)(iii)), (B) any
liability for Taxes resulting from the failure by Buyer (or its Affiliates) to
perform or observe in any respect Buyer's (or its Affiliates') obligations
under, or any covenant or condition in, Section 5.3 of this Agreement and (C)
all liabilities for Taxes resulting from a breach of any of Buyer's
representations in Article IV, (D) to the extent that the aggregate amounts paid
by Seller to Buyer pursuant to Section 5.3(c)(vii) exceed the U.S. federal,
state and local income Taxes imposed on any Company in respect of gain or income
directly recognized on the transactions deemed to occur pursuant to the making
of the Section 338(h)(10) Election, such excess amount, and (E) all reasonable
legal, accounting, appraisal, consulting or similar fees and expenses)
attributable to such Taxes or liabilities. Notwithstanding the foregoing, the
indemnity provided by this Section 5.3(c)(ii) shall not extend to any Tax or
other amount to the extent that it directly arises as a result of one or more of
the following: (A) any representation or warranty by Seller under this Agreement
being incorrect in any respect, (B) the failure by Seller (or any Affiliate
thereof) to perform or observe in any respect Seller's (or its) obligations
under, or any covenant
55
or condition in, this Agreement, or (C) the willful misconduct or the gross
negligence of any of Seller or any Affiliate thereof.
(iii) In the case of each Straddle Period of each Company:
(A) The amount of real, personal and intangible property
Taxes ("Property Taxes") of such Company for such Straddle Period allocable to
the portion of the Straddle Period ending on the Closing Date shall be equal to
the amount of Property Taxes imposed in respect of real, personal and intangible
property owned by such Company on or prior to the Closing for the entire
Straddle Period, multiplied by a fraction, the numerator of which is the number
of days during the portion of the Straddle Period beginning on the first date in
such Straddle Period on which such real, personal or intangible property was
owned by such Company and ending on the Closing Date and the denominator of
which is the number of days in the entire Straddle Period. All Property Taxes of
such Company for the Straddle Period not allocated to the portion of the
Straddle Period ending on the Closing Date pursuant to the preceding sentence
shall be allocated to the portion of the Straddle Period beginning after the
Closing Date;
(B) The amount of any Taxes of such Company (other than
Property Taxes) allocable to the portion of the Straddle Period ending on the
Closing Date shall be determined based on an interim closing of the Company's
books as of the close of the Closing Date, consistent with its past practice for
reporting items, except that exemptions, allowances or deductions that are
calculated on a time basis, such as deduction for depreciation, shall be
apportioned on a time basis (and for this purpose, the taxable period of any
partnership or other pass-though entity in which such Company directly or
indirectly holds a beneficial interest shall be deemed to terminate at such
time); and
(C) In respect of each Company, Buyer shall (or shall cause
such Company to) timely pay all Taxes due in respect of all Straddle Periods of
such Company; provided, however, that Seller shall pay to Buyer, at least two
(2) Business Days prior to the date on which such Taxes are due to the relevant
Taxing Authority, an amount equal to the portion of such Taxes that would be
indemnifiable by Seller under Section 5.3(c)(i)(b) with respect to such Taxes
and Straddle Period.
(iv) Notwithstanding anything to the contrary in this Agreement,
for purposes of this Section 5.3(c), all Taxes relating to any transaction or
event outside the ordinary course of business occurring after the Closing, and
all liability for Taxes resulting from any Tax election made not at Seller's
request (other than the Section 338(h)(10) Election) after the Closing by Buyer,
any Company or any Affiliate of any of the foregoing, shall be deemed to be for
a Post-Closing Tax Period. Buyer shall report all transactions not in the
ordinary course of business occurring on the Closing Date after Closing on
Buyer's federal Income Tax Return to the extent permitted by Treasury Regulation
Section 1.1502-76(b)(1)(ii)(B).
(v) For the avoidance of doubt, no indemnification payment under
Section 5.3(c) shall be subject to the limitations on indemnity contained in
Section 9.1(d).
56
(vi) Notwithstanding anything to the contrary herein (except as
provided in Sections 5.3(b), 5.3(f), and 5.3(j), each of which sets forth the
Party responsible for paying certain fees and expenses related to Tax filings),
it is agreed that all accounting, legal, appraisal, consulting or similar fees
and all cost and other expenses relating to the preparation and filing of all
Tax Returns required to be filed (or have been regularly filed), by, for or on
behalf of any Company or Buyer after the Closing shall be borne solely by the
Companies or Buyer, and shall not be reimbursed or paid for by Seller.
(vii) On or before November 30, 2004, Buyer shall prepare and
deliver to Seller a good faith estimate (with reasonable supporting
documentation) of the U.S. federal, state and local Income Taxes that will be
imposed on any Company in respect of gain or income directly recognized on the
transactions deemed to occur pursuant to the making of the Section 338(h)(10)
Election (the "Section 338(h)(10) Estimate"). If, within thirty (30) days
following delivery of the Section 338(h)(10) Estimate, Seller shall not have
given Buyer notice of Seller's objection to the Section 338(h)(10) Estimate
(which notice shall contain a statement of the basis of such objection), Seller
shall pay to Buyer such Section 338(h)(10) Estimate on December 31, 2004. If
Seller gives notice to Buyer of Seller's objection, and Buyer and Seller are
unable to resolve the dispute within thirty (30) days after delivery of such
notice of objection, the dispute will be submitted for resolution to the Neutral
Auditor. Notwithstanding such dispute, Seller shall pay Buyer on December 31,
2004 the greater of (i) the portion of the Section 338(h)(10) Estimate that is
not in dispute or (ii) the Section 338(h)(10) Tax Cost. The Neutral Auditor
shall arbitrate the dispute in New York City, New York and its determination as
to any issue in dispute shall be concluded within twenty (20) days of such
referral by Seller and Buyer. Such determination shall be binding on Seller, the
Companies and Buyer and shall be enforceable in a court of competent
jurisdiction. All costs of the dispute resolution process contemplated by this
Section 5.3(c)(vii) (including, without limitation, the Neutral Auditor's fees,
but exclusive of attorneys' fees) shall be borne by the Party who is the least
successful in such process, which shall be determined by comparing (x) the
estimate asserted by each Party regarding the amount of such Tax to (y) the
final decision of the Neutral Auditor of such amount. Buyer shall pay to Seller,
within ten (10) days from the date on which the U.S. federal, state and local
Income Tax Returns on which the U.S. federal, state and local Income Taxes of
the Companies in respect of gain or income recognized on the transactions deemed
to occur pursuant to the making of the Section 338(h)(10) Election are filed (in
the aggregate, the "Reported Section 338(h)(10) Tax Amount", respectively), the
excess (if any) of (A) the aggregate amounts paid by Seller to Buyer pursuant to
this Section 5.3(c)(vii) over (B) the Reported Section 338(h)(10) Tax Amount.
(d) Tax Claims.
(i) If Seller or Buyer (or any Affiliate thereof) becomes aware
of any pending or threatened tax audit, assessment, Proceeding or any other
claim by any Taxing Authority or any other Person, which, if successful, might
result in an indemnity payment to an indemnified person under Section 5.3(c) (a
"Tax Claim"), then the Person becoming so aware shall promptly give a written
notice to the indemnifying Party of such Tax Claim and of any counterclaim such
Person proposes to assert, provided, however, that the failure to give such
notice shall not affect the indemnification provided hereunder except to the
extent the indemnifying Party has been actually prejudiced as a result of such
failure. Such notice shall
57
contain factual information (to the extent known) describing the asserted Tax
liability in reasonable detail and shall be accompanied by copies of any notice
or other document received from or filed with any Taxing Authority in respect of
any such Tax Claim.
(ii) With respect to any Tax Claim relating to a Pre-Closing Tax
Period of any Company or that could otherwise affect Seller's liability under
Section 5.3(c)(other than Tax Claims governed by Section 5.3(d)(iii) or (iv)
below), Seller shall be entitled to control all Proceedings (at Seller's sole
cost and expense) and may make all decisions taken in connection with such Tax
Claim (including selection of counsel) and, without limiting the foregoing, may
in its sole discretion pursue or forego any and all administrative appeals,
Proceedings, hearings and conferences with any Taxing Authority with respect
thereto, and settle or comprise any such Tax Claim, and may, in its sole
discretion, either pay (or cause the payment of) the Tax claimed and xxx for a
refund, where applicable law permits such refund suits, or contest the Tax Claim
in any permissible manner; provided, however, that (a) Seller shall provide
Buyer with a timely and reasonably detailed account of each stage of the
proceedings related to such Tax Claim, (b) Seller shall not settle, compromise
or abandon any such Tax Claim in a manner that would have the effect of
increasing the Tax liability of Buyer or any of the Companies for any
Post-Closing Tax Period or the portion of the Straddle Period allocable to Buyer
pursuant to Section 5.3(c)(iii), without obtaining the prior written consent of
Buyer (which consent shall not be unreasonably withheld, conditioned or
delayed), and (c) Buyer shall have the right to retain separate counsel at its
sole cost and expense and, to the extent that such Tax Claim could result in a
Tax liability to Buyer for any Post-Closing Tax Period or Straddle Period, to
reasonably participate in the aspects of the prosecution or defense of such Tax
Claim relevant to such Tax liability. If Seller requests that a Tax Claim under
its control pursuant to this Section be contested, and such requested contest,
as a prerequisite thereto, shall require the payment of such asserted Tax Claim,
Seller shall provide an advance in the amount of such requested payment (or if
lesser, the portion of such amount indemnifiable by it in respect of such Tax
Claim under Section 5.3), to the indemnified person on an interest free basis
(an "Advance") and such indemnified person shall promptly pay such Tax Claim to
the applicable Taxing Authority.
(iii) Seller and Buyer shall, in good faith with each other,
jointly control and participate in all Proceedings taken in connection with any
Tax Claim relating to Taxes of any Company for any Straddle Period of any
Company. None of Seller, Buyer or any Company (or any Affiliate thereof) shall
settle, compromise or abandon any such Tax Claim without the prior written
consents of both Buyer and Seller, which consents shall not be unreasonably
withheld, conditioned or delayed. Seller and Buyer agree to consult and to
attempt to resolve in good faith any issue arising as a result of the joint
control and participation in all Proceedings. If Seller and Buyer cannot agree
on all issues arising as a result of any such Proceeding, then Seller and Buyer
shall refer the matter to the Neutral Auditor to arbitrate the dispute in New
York City, New York. Seller and Buyer shall equally share the fees and expenses
of such Neutral Auditor and its determination as to any issue in dispute shall
be concluded within twenty (20) days of such referral by Seller and Buyer and
such determination shall be binding on Seller, the Companies and Buyer and shall
be enforceable in a court of competent jurisdiction. Reasonable out of pocket
expenses with respect to such contests shall be borne by Seller and Buyer in
proportion to their responsibility for such Taxes as set forth in Section
5.3(c)(iii) hereof.
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(iv) Buyer shall control all Proceedings (at Buyer's sole cost
and expense) with respect to any Tax Claim relating to a Post-Closing Tax Period
of any Company, and, to the extent that such Tax Claim could affect the Tax
Liability of any Company for any Pre-Closing Tax Period or Straddle Period or
otherwise affect Buyer's liability under Section 5.3(c), shall (and shall cause
the Companies and any other Affiliate thereof to) (a) defend against such Tax
Claim diligently and in good faith, (b) provide Seller with a timely and
reasonably detailed account of each stage of the Proceedings related to such Tax
Claim, (c) provide Seller with the right to reasonably participate in the
defense of such Tax Claim at its own expense, and (d) not settle, compromise or
abandon any such Tax Claim without obtaining the prior written consent of
Seller, which consent shall not be unreasonably withheld, conditioned or
delayed.
(e) Timing of Payment.
(i) Any party making an indemnification claim pursuant to this
Section 5.3 shall provide the indemnifying party a written demand seeking
indemnification pursuant to this Section 5.3 accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable ("Tax Indemnification Claim").
(ii) If the Tax Indemnification Claim does not involve a Third
Party Claim, unless the indemnifying party shall have given notice of its
objection to the claim, the indemnifying party shall pay the claim to the
indemnified party within fourteen (14) days from (A) if such Tax Indemnification
Claim is related to Tax or to any other obligation to any third party, the date
such Tax or other obligation is actually paid by the indemnified party to the
appropriate Taxing Authority or person and evidence of payment of such amount is
provided to the indemnifying party, or (B) otherwise, the date such Tax
Indemnification Claim is delivered to the indemnifying party.
If the indemnifying party gives such notice of objection and the
parties are unable to resolve the dispute within thirty (30) days after delivery
of such objection, the dispute will be submitted for resolution to the Neutral
Auditor. The Neutral Auditor shall arbitrate the dispute in New York City, New
York and its determination as to any issue in dispute shall be concluded within
thirty (30) days of such referral by the parties. Such determination shall be
binding on the parties and shall be enforceable in a court of competent
jurisdiction, and following such determination the indemnifying party shall pay
the claim to the indemnified party within fourteen (14) days from (A) if such
Tax Indemnification Claim is related to Tax or to any other obligation to any
third party, the date such Tax or other obligation is actually paid by the
indemnified party to the appropriate Taxing Authority or person and evidence of
payment of such amount is provided to the indemnifying party or, if later, the
date such determination of the Neutral Auditor is delivered to the indemnifying
party, or (B) otherwise, the date such determination of the Neutral Auditor is
delivered to the indemnifying party. All costs of the dispute resolution process
contemplated by this Section 5.3(e) (including, without limitation, the Neutral
Auditor's fees, but exclusive of attorneys' fees) shall be borne by the Party
who is the least successful in such process, which shall be determined by
comparing (x) the position asserted by each Party relating to the proper amount
of such claim to (y) the final decision of the Neutral Auditor of such amount.
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(iii) If the Tax Indemnification Claim involves a Third Party
Claim, unless the indemnifying party shall have given notice of its objection to
the claim, the indemnifying party shall pay the claim to the indemnified party
within fourteen (14) days from the later of (A) the date such Third Party Claim
is actually paid by the indemnified party to the appropriate Taxing Authority or
person and evidence of payment of such amount is provided to the indemnifying
party, or (B) otherwise, the date such Tax Indemnification Claim is delivered to
the indemnifying party. Notwithstanding the foregoing, if the indemnifying party
shall have given notice of its objection to such Tax Indemnification Claim, then
any liability for a Tax Indemnification Claim shall become due and payable only
upon a final determination (as defined below) of the liability of the
indemnified person for such Third Party Claim, and shall be paid by the
indemnifying party to the indemnified party within fourteen (14) days after the
later of: (A) the date on which a final determination with respect to such Third
Party Claim is made, or (B) the date on which such Third Party Claim is actually
paid to the appropriate Taxing Authority or person and evidence of payment of
such amount is provided to the indemnifying party. For purposes of the preceding
sentence, a "final determination" shall be deemed to occur with respect to any
liability for Taxes or Third Party Claim when (i) there is a decision, judgment,
decree or other order by any court of competent jurisdiction, which decision,
judgment, decree or other order has become final with respect to the indemnified
person (i.e., all allowable appeals have been exhausted or the time period
within which such appeals may be filed has expired), (ii) there is a closing
agreement made under Section 7121 of the Code (or any analogous provision under
the laws of any other jurisdiction) binding in respect of the indemnified person
or other administrative settlement with the Internal Revenue Service or other
governmental authority, (iii) the time for instituting a claim for refund in
respect of the indemnified Taxes has expired, or, if a claim was filed, the time
for instituting suit with respect thereto has expired, or (iv) the Tax or the
Third Party Claim are paid, and, pursuant to a written agreement between Seller
and Buyer, no claim for refund is filed, and no other contest of such Taxes or
Third Party Claim is made. Upon a final determination of a Tax Claim as to which
an Advance has been made by Seller, such Advance shall be offset against the
full indemnified amount then due by Seller to the indemnified person pursuant to
Section 5.3 hereto by reason of such Tax Claim, if any, and the remainder of
such Advance, if any, shall be paid by the indemnified person to Seller within
five (5) Business Days of such final determination.
(f) Refunds. If Buyer or any Affiliate of Buyer (including the
Companies) receives any refund or credits of any Taxes attributable to any
Pre-Closing Tax Period or any Straddle Period (to the extent such Taxes would be
allocated to the portion of the Straddle Period ending on the Closing Date in
accordance with Section 5.3(c)(iii)) of any Company or which would otherwise be
indemnifiable by Seller under Section 5.3(c), Buyer shall promptly pay to Seller
the amount of any such refund or credits of Taxes (including any interest
received or credited in respect thereof reduced by reasonable direct expenses or
costs incurred in obtaining the refund). Notwithstanding the preceding sentence,
any refunds or credits of Taxes (i) to the extent accrued in the Audited
Financial Statements or Most Recent Financial Statements, (ii) received by any
Company for (x) Black Lung Excise Taxes, (y) SMCRA Abandoned Mine Lands
royalties, or (z) West Virginia severance Taxes on exported coal or (iii) to the
extent required to be paid, pursuant to any Customer Agreement, to reimburse or
otherwise pay to a customer an amount determined by reference to such Tax refund
or credit (together "Buyer
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Refunds"), to the extent not paid prior to the Closing to any third party
entitled to receive or be reimbursed for such refunds or credits (A) shall
remain the property of the Companies and (B) to the extent received by the
Companies after the date hereof and prior to Closing, will remain in the
accounts of the Companies after Closing and will be in addition to the
Companies' Cash on hand requirement under Section 7.14. For purposes of this
Section 5.3(f), the term "refund" shall include a reduction in Taxes and the use
of an overpayment of Taxes as an audit or other Tax offset, and receipt of a
refund shall occur upon the filing of a return or an adjustment thereto using
such reduction, overpayment or offset, or upon the receipt of cash (except to
the extent that such refund is applied to reduce a Tax liability of any Company
for any Pre-Closing Tax Period or that is allocated to the portion of the
Straddle Period ending on the Closing Date in accordance with Section
5.3(c)(iii)). Upon the reasonable request of Seller, Buyer shall prepare and
file, or cause to be prepared and filed, all claims for refunds relating to such
pre-Closing Taxes; provided, however, that Seller shall reimburse Buyer for
Buyer's reasonable expenses in connection with the preparation and filing of
such claims for refund. Further, Buyer will not be required to file any claims
for refunds to the extent that the filing of such claims would increase the Tax
liability of Buyer or any Affiliate of Buyer (including the Companies) unless
(a) Buyer provides its prior consent (which consent shall not be unreasonably
withheld, conditioned or delayed), (b) Seller agrees to reimburse, in advance of
making such election, the applicable Company for such Tax liability plus any
reasonable costs associated with such filing and (c) Buyer determines in its
reasonable discretion that such filing is in accordance with applicable Law.
(g) Cooperation; Records Retention. Seller and Buyer shall (and Buyer
shall cause the Companies and its Affiliates, officers, employees, agents,
auditors and other representatives to) cooperate fully, as and to the extent
reasonably requested by the other Party, in connection with the preparation and
filing of Tax Returns pursuant to this Section 5 and any Tax Claim, which
cooperation shall include the retention and, upon request, the provision to the
requesting person of records and information which are reasonably relevant to
such Tax Returns or Tax Claim, and making employees available on a mutually
convenient basis to provide additional information or explanation of any
material provided hereunder or to testify at proceedings relating to such Tax
Returns or Tax Claim. Buyer and Seller shall (and Buyer shall cause the
Companies and its Affiliates to) (i) retain all books and records with respect
to Tax matters pertinent to the Companies (or any Affiliate thereof) relating to
any whole or partial taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by Buyer
or Seller, any extensions thereof) of the respective taxable periods, and to
abide by all record retention law and agreements entered into with any Taxing
Authority, and (ii) give the other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other Party so requests, Seller or Buyer, as the case may be, shall allow the
other Party, at its own expense, to take possession of such books and records.
Seller and Buyer further agree, upon reasonable request, to use their best
efforts to obtain any certificate or other document from any Governmental
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby) on either Seller or any of the
Companies for any taxable period beginning prior to the Closing Date.
(h) Tax Sharing Agreements. Seller shall cause the provisions of any
agreement, arrangement or practice with respect to Taxes (including any Tax
sharing
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agreements) between Seller or any of its Affiliates (other than any of the
Companies), on the one hand, and any of the Companies, on the other hand, to be
terminated on or before the Closing Date and to have no further effect.
Notwithstanding the foregoing, the Parties agree that the Tax Sharing and
Indemnification Agreement among Cyprus Amax Mineral Company, Amax Energy, Inc.,
Cyprus Amax Coal Company and Seller, dated June 30, 1999 (the "CA Tax Sharing
Agreement") and the Peabody Agreement will not terminate upon the Closing, and
after the Closing, upon Seller's request, the Companies shall, and Buyer shall
cause the Companies (and any Affiliate thereof) to, cooperate with Seller and
its Affiliates and take (or refrain from taking) any action (including the
preparation or filing of a Tax Return) and do all things reasonably necessary to
satisfy Seller's, Seller's Affiliates' or any of the Companies' obligations and
responsibilities (including the obligations and responsibilities of Cyprus Amax
Coal Company assumed by RACH) with respect to or in connection with any Company
under the CA Tax Sharing Agreement or the Peabody Agreement (including the
transfer of Tax refunds to other persons under such agreements).
(i) Section 338(h)(10) Election. RACH and Buyer shall (and Seller
shall cause RACH to) join in timely making an election under Section 338(h)(10)
of the Code (and any comparable election under state or local Tax law)
(collectively, a "Section 338(h)(10) Election") with respect to the RAG West
Acquisition, and shall cooperate in the completion and timely filing of such
elections in accordance with the provisions of Treasury Regulation Section
1.338(h)(10)-1 (or any comparable provisions of state or local Tax law) or any
successor provision. For the purpose of making the Section 338(h)(10) Election,
on or prior to the Closing Date, Buyer and RACH each shall execute five copies
of Internal Revenue Service Form 8023 (or successor form) for each Section
338(h)(10) Election with respect to RAG West and RAG Wyoming. Within ninety (90)
days after the Closing Date, Buyer shall prepare and deliver to Seller for its
review and consent drafts of IRS Forms 8883 and details regarding the allocation
of the Purchase Price and the Liabilities of RAG West and RAG Wyoming (plus
other relevant items) among the assets of RAG West and RAG Wyoming in a manner
consistent with Sections 338 and 1060 of the Code and the Treasury Regulations
thereunder (together, the "Section 338 Allocation"); provided that in no case
shall the purchase price attributable to the purchase of the RAG West Shares be
inconsistent with the RAG West Purchase Price described in Section 2.2 unless
otherwise required by Law. Seller and Buyer shall negotiate in good faith to
resolve any disputed items within sixty (60) days of receipt by Seller. If
Seller and Buyer are unable to agree on the Section 338 Allocation within such
sixty (60) days, Seller and Buyer shall request the Neutral Auditor in New York
City, New York to decide the allocation of any disputed items. Seller and Buyer
shall equally share the fees and expenses of such Neutral Auditor. Neither
Seller nor Buyer (nor any of their respective Affiliates) shall take any
position on any Tax Return or with any Taxing Authority that is inconsistent
with such allocation (unless, and then only to the extent, otherwise required by
applicable law and provided that a prior written notice is provided to the other
Party at least 10 days prior to the date such an inconsistent position is so
taken).
(j) Transfer Taxes. All transfer, documentary, sales, use,
registration and other such Taxes (including all applicable real estate transfer
Taxes, but excluding any Taxes based on or attributable to income or gains) and
related fees (including any penalties, interest and additions to Tax) ("Transfer
Taxes") arising out of or incurred in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement shall be borne
equally
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by Buyer and Seller. The Party that is legally required to file a Tax Return
relating to Transfer Taxes shall be responsible for preparing and timely filing
any such Tax Return. Buyer and Seller shall have the right to review and comment
on each such Tax Return and no such Tax Return will be filed without the prior
written consents of both Buyer and Seller (which consents shall not be
unreasonably withheld, conditioned or delayed). Seller and Buyer agree to
consult and to attempt to resolve in good faith any issue related to any such
Tax Return. If Seller and Buyer cannot agree on all issues related to any such
Tax Return, then, within twenty (20) days prior to the due date for filing any
such Tax Return, Seller and Buyer shall refer the matter to the Neutral Auditor
to arbitrate the dispute in New York City, New York. Seller and Buyer shall
equally share the fees and expenses of such Neutral Auditor and its
determination as to any issue in dispute shall be concluded within five (5) days
of the due date for filing such Tax Return and such determination shall be
binding on Seller, the Companies and Buyer and shall be enforceable in a court
of competent jurisdiction.
(k) FIRPTA. RACH shall deliver to Buyer at the Closing a duly executed
and acknowledged certificate of non-foreign status described in Treasury
Regulation Section 1.1445-2(b)(2) (the "RACH FIRPTA Certificate"). Seller shall
deliver to Buyer at the Closing a withholding certificate described in Treasury
Regulation Section 1.1445-3 (the "Seller FIRPTA Certificate") or a copy of
Seller's application to obtain such a certificate that was filed by Seller with
the U.S. Internal Revenue Service.
(l) Confidentiality. Any information related to Taxes provided by
Seller to Buyer or the Companies or by Buyer or the Companies to Seller shall be
maintained by the recipient in confidence, except as may otherwise be necessary
or advisable in connection with the filing of Tax Returns or reports, refund
claims, tax audits, tax claims and tax litigation, or as required by Law.
(m) Survival. Notwithstanding anything herein to the contrary, the
obligations of the Parties set forth in this Section 5.3 shall remain in effect
until, but shall expire, sixty (60) days after the expiration of the applicable
statute of limitations. Furthermore, notwithstanding anything to the contrary in
Section 9.1(c), the representations and warranties set forth in Section 3.13 and
the covenants set forth in Section 5.1(b)(x) shall survive until sixty (60) days
after the applicable statute of limitations.
(n) Exclusivity. Notwithstanding any other provision of this
Agreement, any matter or liability related to Taxes shall be governed solely by
Sections 3.13, 5.1(b)(x), and this Section 5.3. Without limiting the foregoing,
it is agreed that Sections 2.5 and Article IX shall not apply in respect to any
liability for Taxes.
(o) Reimbursement for Tax Benefit. Buyer agrees to pay over to Seller
the amount of any Tax Benefits actually realized by Buyer, any Company, any
Buyer Indemnitee, any Affiliate of any of the foregoing or any successor or
transferee of any of the foregoing from or attributable to (i) the Taxes, Losses
or other Liability, obligation or item giving rise to the applicable
indemnification claim under this Section 5.3 or Article IX ("Indemnified Item")
or (ii) any other Tax Benefit payable under this Section ("Prior Tax Benefit"),
provided that such Tax Benefit is actually realized by any such Person in any
taxable period or year beginning on or prior to the third anniversary of the
date on which the indemnification payment in respect of the
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Indemnified Item (or the original Indemnified Item giving rise to the Prior Tax
Benefit) is made by the indemnifying party under this Section 5.3 or Article IX.
The indemnified party shall pay to the indemnifying party the Tax Benefit
promptly after the Tax Benefit is actually realized, provided, however, that
such payment will not be made prior to the payment of the applicable
indemnification payment under this Section 5.3 or Article IX in respect of the
applicable Indemnified Item by the indemnifying party, and provided, further,
that to the extent that such Tax Benefit is subsequently denied by a Taxing
Authority, the indemnifying party shall refund to the indemnified party the
appropriate portion of the amount previously paid to the indemnifying party
pursuant to this Section 5.3(p) in respect of such Tax Benefit (by recalculating
the amount of such Tax Benefit).
For purposes of this subsection (o), a "Tax Benefit" means an amount
by which the Tax liability of the party (or group of corporations including the
party) is actually reduced, plus any related interest received from the relevant
Taxing Authority. Where a party has other losses, deductions, credits or items
available to it, the Tax Benefit from any Indemnified Item shall be deemed to be
realized last after any other losses, deductions, credits or items are realized.
Any indemnification amount payable by any Party under this Section 5.3
or Article IX to any indemnified person shall be offset against, and reduced by,
the amount of any Tax Benefits payable to such indemnified Party by such
indemnified person. Buyer shall (and shall cause each of its Affiliates
(including the Companies)) to file all Tax Returns, use its respective
commercially reasonable efforts to take, or cause to be taken, all appropriate
actions, and do, or cause to be done, all things necessary, proper or advisable
under applicable Laws or otherwise as reasonably necessary to realize all such
Tax Benefits that may be available.
(p) Treatment of Indemnification Payments. All indemnification
payments made under this Agreement shall be treated by Buyer and Seller as an
adjustment to the Purchase Price, unless otherwise required by applicable Law.
(q) Subrogation. Upon payment of any indemnification amount payable by
any Party under this Section 5.3, the indemnifying party shall be subrogated, to
the extent of such payment, to all of the rights of recovery of the indemnified
party (or any Affiliates thereof) against any third party with respect to the
matters to which the indemnification claim corresponding to such indemnification
amount relates.
5.4. Further Actions.
(a) Buyer and Seller shall use their respective commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper or advisable under
applicable Laws or otherwise to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable, provided that the
obligation to transfer Permits shall be further subject to the terms of Section
5.11. From the date of this Agreement until the Closing Date, Seller will, and
will cause the Companies to, give any notices to third parties, and will use its
commercially reasonable efforts (and will bear any associated commercially
reasonable costs) to obtain, as promptly as practicable all Consents
64
necessary in order to consummate the transactions contemplated by this
Agreement, which Consents are set forth on Schedule 5.4.
(b) Seller and Buyer shall (i) take all actions necessary to file as
soon as practicable all notifications, filings and other documents required to
obtain all authorizations, approvals, consents or waivers from Governmental
Authorities, including under the Competition Laws, (ii) respond as promptly as
practicable to any inquiries received from any Governmental Authority for
additional information or documentation under the Competition Laws and (iii)
respond as promptly as practicable to all inquiries and requests received from
any Governmental Authority with jurisdiction over the transactions contemplated
hereby (or any part thereof) in connection therewith. Buyer and Seller shall
consult with each other and keep each other informed of the status of the
matters referred to in this Section 5.4 and, except to the extent confidential
treatment has been given to any document filed with a Governmental Authority
pursuant to this Section 5.4, shall provide each other with copies of all such
documents prepared on its behalf and all correspondence relating thereto. Seller
and Buyer shall use their reasonable best efforts to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated hereby
under any Competition Laws by any Governmental Authorities with regulatory
jurisdiction over the enforcement of such Competition Laws; provided that in no
event shall Buyer or any of their respective Affiliates have any obligation to
dispose of, hold separate or otherwise restrict its enjoyment of any of their
respective assets or properties (including any Company following the Closing).
(c) Without limiting the generality of the foregoing, each of the
Parties will (i) file (and the Seller will cause the Companies to file) any
notification, report forms and related material that it may be required to file
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act, and will use its commercially
reasonable efforts to obtain (and the Seller will cause the Companies to obtain)
an early termination of the applicable waiting period, (ii) file any
notification that is necessary pursuant to Regulation (EC) No 139/2004, and will
use its commercially reasonable efforts to (1) obtain a decision from the
European Commission pursuant to Article 6(1)(b) of Regulation (EC) No 139/2004
in terms reasonably satisfactory to Buyer, declaring that the Transaction is
compatible with the common market, or (2) obtain a decision of the European
Commission pursuant to Article 10(6) of Regulation (EC) No 139/2004
(collectively, the "EU Process")and (iii) make (and the Seller will cause the
Companies to make) any further filings pursuant thereto that may be necessary,
proper, or advisable in connection therewith.
(d) Seller shall give prompt written notice to Buyer of the occurrence
of any Companies Material Adverse Effect. At all times prior to the Closing, (i)
Seller will promptly notify Buyer in writing of any fact, condition, event or
occurrence that will result in the failure of any of the conditions contained in
ARTICLE VII to be satisfied, promptly upon Seller becoming aware of the same and
(ii) Buyer will promptly notify Seller in writing of any fact, condition, event
or occurrence that will result in the failure of any of the conditions contained
in ARTICLE VI to be satisfied, promptly upon Buyer becoming aware of the same.
5.5. Nonsolicitation.
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(a) Seller agrees that for a period of two (2) years after the Closing
Date, it will not, and it will cause each of its Affiliates (including DBT for
purposes of this Section 5.5) not to, (a) entice, induce or attempt to cause
(other than pursuant to general advertising not directed to such employees), any
executive officer or other key employee of any Company to terminate his or her
employment with any Company or (b) hire or employ any such executive officer or
other key employee; provided, however, that the foregoing restrictions shall not
be applicable with respect to any Person whose employment with Buyer or its
subsidiaries (including, after the Closing, any Company) has been terminated by
Buyer or their subsidiaries (including after the Closing, any Company) prior to
such solicitation or employment.
(b) If and only if this Agreement is terminated prior to Closing, each
of Seller and Buyer agree that it shall not, and it shall cause its Affiliates
not to, during the two years following termination of this Agreement pursuant to
its terms, (i) entice, induce or attempt to cause (other than pursuant to
general advertising not directed to such employees), any executive, officer or
other key employee of the other Party or any of such other Party's Affiliates to
terminate his or her employment with such other Party or (ii) employ any,
executive officer or other key employee of such other Party or any of such other
Party's Affiliates; provided, however, that the foregoing restrictions shall not
be applicable with respect to any Person whose employment with such other Party
has been terminated by such other Party prior to such solicitation or
employment.
(c) Seller shall not, and shall cause its Affiliates not to, for a
period of two years after the Closing Date, take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other Person from having a business relationship or potential
business relationship with the Companies, from time to time, or from maintaining
business relationships or entering into a new business relationship with the
Companies, from time to time, after the Closing. Seller shall, and shall cause
its Affiliates to, refer all inquiries relating to the Business of the Companies
to Buyer from and after the Closing. Buyer acknowledges its understanding that,
following the Closing Date, Affiliates of Seller will engage in coal sales and
coal trading activities in competition with the Companies, Buyer and their
respective Affiliates, and nothing in this Agreement is intended or should be
construed to limit or restrict in any way the right of Affiliates of Seller to
engage in such coal sales and coal trading activities (including the right of
Affiliates of Seller to solicit future business from current customers of any
Company).
(d) Seller acknowledges and agrees that the covenants set forth in
this Section 5.5 are necessary to protect the goodwill of the Companies being
purchased by Buyer. Seller further acknowledges and agrees that Buyer's
willingness to enter into this Agreement is conditioned and dependent upon
Seller's promise to be bound by this Section 5.5. Each of Seller and Buyer
hereby agrees that any remedy at law for any breach by it or its Affiliates of
this Section 5.5 would be inadequate and that the non-breaching Party shall be
entitled to injunctive or other equitable relief in such case in addition to any
other right such non-breaching Party may have, whether at law or in equity. If
it is ever held that any part of any of the covenants of this Section 5.5 is too
broad to permit enforcement of such covenants to their fullest extent, each of
Seller and Buyer hereby agrees that a court of competent jurisdiction is hereby
authorized and directed to enforce such covenants to the maximum extent
permitted by law, and each such Party
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hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such covenants. Seller and
Buyer each acknowledges that in relation to this Agreement and in particular
this clause it has received legal advice or has had the opportunity of obtaining
legal advice.
5.6. Competing Transaction; Return of Confidential Information.
(a) From the date hereof until the earlier of the Closing or the
termination of this Agreement in accordance with its terms, Seller will not, and
will cause its Affiliates and their respective officers, directors,
representatives and agents not to, directly or indirectly (i) solicit or
encourage the submission of any inquiries, indications of interest, proposals or
offers from any Person other than Buyer (collectively, "Third Parties"),
concerning the sale of any equity securities or all or any part of the assets of
RACH or any Company to, or any merger, consolidation or recapitalization or
other business combination transaction involving RACH or any Company with, any
such Third Party (a "Competing Transaction") or (ii) enter into, participate or
continue any discussions or negotiations regarding, or enter into any agreements
with, any Third Party relating to, a Competing Transaction, or provide any
information concerning this Agreement (including the fact of its existence),
RACH or any Company to any Third Party that could reasonably be expected to have
an interest in acquiring any capital stock, assets or business of RACH or any
Company or that could reasonably be expected to disclose any such information to
any such Person, including any Third Parties (or their representatives) with
which Seller, or any of its Affiliates or representatives had provided
information with respect to RACH or the Companies or conducted negotiations
prior to the date of this Agreement. Seller will promptly notify Buyer, after
the receipt by Seller or any of its Affiliates, from a Third Party, of any
requests or inquiries (in each case whether written or oral) from any Third
Party regarding a Competing Transaction or relating to the circumstances
described in this Section 5.6(a), and, if known by Seller, of the principal
terms of such proposal, excluding the identity of any party thereto, any party
on whose behalf such proposal is delivered or the identity of any of their
respective representatives.
(b) Seller shall instruct each Third Party to whom it delivered
confidential information in connection with a Competing Transaction or other
possible sale of RACH or any Company to (i) return to Seller or destroy such
information (and copies thereof) and (ii) certify in writing any such
destruction, in each case, to the extent such Third Parties shall be required to
do so pursuant to applicable confidentiality agreements.
(c) From and after the Closing Date, Seller shall, and shall cause its
Affiliates, consultants, advisors, agents and representatives to, (i) hold in
strict confidence to the same extent as provided for in the Confidentiality
Agreements and this Agreement as if Seller and its Affiliates, consultants,
advisors, agents and representatives were deemed to be bound by reciprocal
confidentiality obligations, all information relating to the Companies and their
businesses, as conducted before, on and after Closing and (ii) not use such
information to the detriment of the business of any Company. In addition, Seller
agrees to use its reasonable best efforts to enforce all confidentiality
agreements, if any, entered into between Seller or any of its Affiliates and any
of their employees or representatives, in each case to the extent such
provisions pertain to the business or assets of any Company.
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5.7. Intercompany Accounts; Affiliate Agreements. All Intercompany
Accounts shall be settled at the end of each calendar quarter and at the Closing
Date in accordance with Seller's past practice. All Affiliate Agreements shall
be terminated on or prior to the Closing without any liabilities of any Company
remaining thereunder, except for Affiliate Agreements relating to the supply of
coal and firm offers to buy coal made by Seller or any of their respective
Affiliates (other than any Company) and entered into or received by any Company
in the ordinary course of business consistent with past practice and which
contain arms-length terms, each of which such Affiliate Agreements and firm
offers are set forth on Schedule 5.7.
5.8. Intercompany Insurance. Prior to the Closing Date, Seller will
cooperate with Buyer to provide Buyer access to insurance company or third-party
administrator loss runs reflecting Seller's ongoing claim activity from
pre-Closing policy years. The rights of the Companies on and after the Closing
under the insurance policies controlled by Seller or its Affiliates (the "Seller
Insurance Policies") with respect to pre-Closing occurrences and wrongful acts
shall not in any way adversely be affected by the transactions contemplated in
this Agreement. To the extent that (i) any Seller Insurance Policies, cover any
loss, liability, claim, damage or expense relating to any Company or its
Business (the "Subject Liabilities") and relating to or arising out of
occurrences or wrongful acts prior to the Closing Date, and (ii) the Seller
Insurance Policies continue after the Closing to permit claims to be made
thereunder with respect to the Subject Liabilities relating to or arising out of
occurrences or wrongful acts prior to the Closing Date ("Subject Claims"),
Seller and its Affiliates shall cooperate with Buyer in submitting Subject
Claims, including filing, furnishing required notices on behalf of Buyer under
the Seller Insurance Policies or pursuing claims previously made. Seller shall
use its commercially reasonable efforts so that, on and after the Closing, the
Seller Insurance Policies will continue to protect the Companies with respect to
pre-Closing occurrences and wrongful acts to the same extent as the Insurance
Policies applied to the Companies prior to the Closing. Seller and its
Affiliates shall also exercise commercially reasonable efforts to cause the
Seller Insurance Policies to be modified to allow for the assignment to Buyer of
all benefits, rights and obligations thereunder in respect of any Subject
Liabilities. To the extent any such policies are not so assigned, upon receipt
by Seller or its Affiliates of any insurance proceeds relating to any Subject
Claims made under the Seller Insurance Policies, Seller or its Affiliates will
promptly pay such insurance proceeds to Buyer. Any and all refunds of premiums
paid by Seller or its Affiliates (including any Company) prior to the Closing
date under any insurance maintained by Seller or such Affiliate on behalf of any
Company shall be for the account of, and retained by or promptly paid to, Seller
or such Affiliate, as the case may be. Seller also agrees to continue to
indemnify the current and former directors and officers of the Companies for a
period of at least four years against pre-Closing acts, errors or omissions
pursuant to Seller's organizational documents and shall continue to maintain
director and officer insurance coverage for such current and former directors
and officers of the Companies under Seller's ongoing director and officer
insurance.
5.9. Name Changes. No later than thirty (30) Business Days following
the Closing Date, Buyer shall cause the organizational documents of each Company
whose corporate name currently includes "RAG" to be amended so as not to include
"RAG" or any word, phrase or acronym confusingly similar thereto. Buyer shall
use commercially reasonable efforts to cover, redact or remove "RAG" and any
other words, names or symbols proprietary to Seller and
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its Affiliates (and, to the extent not including the phrase "RAG", identified to
Buyer by Seller on Schedule 5.9) from all tangible properties of the Companies
as promptly as possible following the Closing Date; provided that Buyer shall
have one hundred twenty (120) days after the Closing to cover, redact or remove
from any of the assets of the Companies any logo or sign visible to the public
indicating that such assets are owned or operated by RACH, Seller or any of
their Affiliates; provided further that Buyer will not be required to remove or
delete "RAG" or any other words, names or symbols proprietary to Seller and its
Affiliates from internal documents, invoices, contracts, documents, maps,
permits, geologic logs or working papers that it uses for internal or non-public
purposes; provided, further that Buyer will cover, redact or remove such words,
names or symbols from any such items before distribution or use with outside
third parties to the extent reasonably practicable under the circumstances.
5.10. Guarantees; Surety Bonds. (a) Seller Guarantees. At or prior to
Closing, Buyer shall cause Seller and all Affiliates of Seller who are parties
to the Seller Guarantees set forth on Schedule 5.10 to be fully released and
discharged with respect thereto, in each case, as of the Closing Date. With
respect to any Seller Guarantees that are not set forth on Schedule 5.10 (the
"Remaining L/Cs"), and which are not fully released and discharged as of the
Closing Date, Buyer and Seller shall work together in good faith and shall use
their respective commercially reasonable efforts, to replace such Guarantees and
cause Seller and all Affiliates of Seller to be fully released and discharged
therefrom as promptly as practicable following the Closing. Following the date
of this Agreement and prior to Closing without the prior written consent of
Buyer (which consent shall not be unreasonably withheld), Seller shall not enter
into any guarantees, indemnities, letters of credit, letters of comfort or
similar obligations that would have been "Seller Guarantees" had they been
entered into on or prior to the date hereof. Any such guarantees, indemnities,
letters of credit, letters of comfort or similar obligations the entry into
which shall have been approved by Buyer shall be deemed to be "Seller
Guarantees" and shall be deemed to be included on Schedule 1.1(G) for all
purposes of this Agreement.
(b) Bonds. At or prior to Closing, Buyer shall: (i) secure, in
accordance with Law, irrevocable commitments to issue replacement bonds for all
Seller Bonds sufficient to cause the applicable Governmental Authority to
transfer the applicable Permits to Buyer in accordance with Law; and (ii)
deliver copies of such documents to Seller. After the Closing Date, Buyer shall
use commercially reasonable efforts to secure a new bond in replacement of the
Seller Bonds. Each such replacement surety bond so provided by Buyer shall
provide on its face that it "supersedes and replaces" the applicable Seller
Bond. Furthermore, at the time of such replacement, Buyer shall deliver, or
cause to be delivered, to Seller, such other documents as may reasonably be
requested by Seller in order to permit Seller to effect the full release and
discharge of Seller and all Affiliates of Seller as contemplated hereby with
respect to the Seller Bonds. Until Buyer secures the replacement of the
applicable Seller Bonds in accordance with the provisions of this Section
5.10(b), Seller shall maintain in full force and effect the Seller Bonds until
the beneficiary of such bond accepts Buyer's replacements thereof. Following the
date of this Agreement and prior to Closing, without the prior written consent
of Buyer (which consent will not be unreasonably withheld) Seller shall not
enter into any deposits, trust funds, bid bonds, performance bonds, surety bonds
or similar undertakings that would have been "Seller Bonds" had they been
entered into on or prior to the date hereof. Any such deposits, trust funds, bid
bonds, performance bonds, surety bonds or similar undertakings the entry into
which shall have been approved by Buyer shall be deemed to be "Seller Bonds" and
shall be deemed to
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be included on Schedule 1.1(F) for all purposes of this Agreement. Buyer shall
reimburse Seller on a monthly basis for all reasonable and documented costs and
expenses incurred by Seller or the Affiliates of Seller with respect to all such
Seller Bonds that remain outstanding following the Closing Date.
(c) Indemnification After Closing. Until the Seller Guarantees and
Seller Bonds have been released and discharged in accordance with Sections
5.10(a) and 5.10(b), Buyer shall indemnify and hold Seller and all Affiliates of
Seller harmless from and against, and pay and reimburse Seller and all
Affiliates of Seller for, any and all (i) Losses of Seller or any Affiliates of
Seller, as the case may be, that Seller or any of its Affiliates suffer as a
result of being required to make any payment under the Seller Guarantees or
Seller Bonds after the Closing Date related to either (x) the failure of any
Company to meet its obligations underlying the Seller Guarantees or Seller Bonds
or (y) the failure of Seller and its Affiliates (other than any Company) to be
fully released from the Seller Guarantees or Seller Bonds, and (ii) reasonable
and documented costs and expenses incurred by Seller or any of its Affiliates
(including premium payments, bank fees or similar costs) after the Closing Date
relating to extension or renewal of Seller Bonds or Seller Guarantees that have
not been fully released and discharged. Any payment required to be made by Buyer
under this Section shall be made within ten (10) Business Days after Buyer's
receipt of written notice from Seller or any Affiliate of Seller describing in
reasonable detail the amount owing hereunder.
(d) Refund of Premiums. All funds in respect of premiums that are
refunded in respect of Seller Guarantees on account of the replacement thereof
by Buyer pursuant to this Section shall be for the account of Seller and its
Affiliates. Buyer shall pay over or cause the Companies to pay over to Seller
any such refunds received by any Company after the Closing promptly upon receipt
of such refunds.
(e) Required Efforts. Notwithstanding the foregoing, in no event shall
any Party hereto be required to or otherwise file any lawsuit or to take other
legal action, make any amendment to any Seller Guarantee or waive any rights
thereunder or pay any amount, in order to cause the replacement and/or release
and discharge of any Seller Guarantee. After the Closing, Buyer will not, and
will not permit any Company to, renew, extend, amend or supplement any loan,
contract, lease or other obligation underlying any Seller Bond with respect to
which Seller and its Affiliates are not fully released and discharged as of the
Closing Date in any manner that would materially extend or materially increase
the Liability of Seller or any Affiliate of Seller under such Seller Bond
without providing Seller with evidence satisfactory to Seller that Seller and
its Affiliates have been fully released and discharged therefrom.
5.11. Permits. At or prior to Closing, Buyer and Seller shall use
their respective commercially reasonable efforts to obtain, as promptly as
practicable, all required approvals of Governmental Authorities to transfer the
Permits that are set forth on Schedule 5.11, which schedule lists all such
approvals that are required to be received at or prior to Closing to consummate
the transactions contemplated by this Agreement. With respect to any Permits
that may be transferred or otherwise approved by a Governmental Authority
following the consummation of the transactions contemplated by this Agreement,
Buyer agrees to submit transfer applications for such Permits within thirty (30)
days after Closing, and to use commercially reasonable efforts to have all such
Permits transferred in accordance with such
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requirements of the Governmental Authority within ninety (90) days thereafter.
Seller shall assist Buyer in obtaining such transfers and approvals. In
addition, Seller shall cooperate with Buyer in any reasonable arrangement
designed to provide Buyer with the benefits under such Permits pending their
transfer. Buyer shall indemnify and hold harmless Seller from and against any
loss or Liability incurred in connection with Seller's obligations under the
immediately preceding sentence.
5.12. Reserved.
5.13. Cooperation in Financing. Prior to the Closing, Seller shall
provide assistance to Buyer, and shall cause the Companies to, reasonably
cooperate with Buyer and its representatives in connection with the financing of
the transactions contemplated by this Agreement. Such cooperation shall include
arranging for officers of the Companies to meet with prospective lenders and
investors in customary presentations, meetings, road shows and due diligence
sessions, and the execution and delivery of any pledge and security documents,
other definitive financing documents, or other certificates, legal opinions or
documents as may be reasonably be requested by Buyer. In addition, Seller shall
request, and shall use commercially reasonable efforts to cause, the independent
auditors of the Companies to provide reasonable cooperation to Buyer in
connection with the financing of the transactions contemplated by this
Agreement, such cooperation to include providing consent to Buyer to prepare and
use Seller's audit reports relating to the Companies and providing any necessary
"comfort letters". Without limiting the foregoing, Seller shall assist Buyer (at
Buyer's cost and expense) in preparing selected financial data of the Companies
reasonably requested by Buyer or its auditors for the fiscal years ended
December 31, 1999 and 2000.
5.14. Sale or Transfer of RAG Colorado Entities. Buyer and Seller
acknowledge that Seller has caused the sale of the RAG Colorado Entities to a
Third Party. Seller shall be responsible for satisfying any Liabilities
resulting from or pursuant to (A) the RAG Colorado Entities, or the RAG Colorado
Entities' operations, real property or other assets, (B) the sale or transfer of
the RAG Colorado Entities and the spin off of certain assets and liabilities
from the Retirement Plan for Certain Hourly Employees of RAG American Coal
Company and the Retirement Plan for Salaried Employees of RAG American Coal
Company or (C) the Peabody Agreement (collectively, the "RAG Colorado Entity
Liability"). The RAG Colorado Entity Liability shall include Liabilities for or
related to any individuals hired, terminated, or rejected for employment by the
RAG Colorado Entities and any obligations or Liabilities under the Benefit Plans
for such individuals, but shall not include any RAG Colorado Tax Liability,
which Liabilities are subject to Section 5.3(c)(i)(h). Seller shall use
commercially reasonable efforts to procure from BTU Worldwide, Inc. and Peabody
Energy Corporation their agreement to make any and all claims for
indemnification under the Peabody Agreement against Seller and not against any
of the Companies. Seller shall use best efforts to respond to any and all claims
and correspondence received by the Companies related to the Peabody Agreement
and to administer all obligations of Seller and Seller Parent thereunder.
5.15. Plant Closings and Layoffs; Communications with Labor
Organizations.
(a) None of the Companies shall, at any time within the 90-day period
prior to the Closing Date, effectuate a 'plant closing' or 'mass layoff' as
those terms are defined in the
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Worker Adjustment and Retraining Notification Act ("WARN") or any state law,
affecting in whole or in part any site of employment, facility, operating unit
or Company Employee, without notifying the Buyer in advance and obtaining the
advance approval of the Buyer (which approval shall not be unreasonably
withheld), and complying with all provisions of WARN or any state law.
(b) None of the Companies shall lay off any group of thirty (30) or
more Company Employees from any single site of employment within ninety (90)
days prior to the Closing Date without notifying Buyer in advance and obtaining
advance approval from Buyer (which approval shall not be unreasonably
conditioned, delayed or withheld).
(c) Seller shall cause the Companies to have engaged in all
notifications to and communications to and with any labor organization
representing employees of the Companies as may be required by law or any
collective bargaining agreement, in connection with the transactions
contemplated by this Agreement.
5.16. Resignations of Directors and Officers. At or prior to the
Closing Date, Seller shall cause each director and officer of each Company to
submit his or her written resignation effective as of the Closing (except for
the resignations of those officers and directors which Buyer advises Seller in
writing should not be obtained).
5.17. Repayment of Debt. At or prior to the Closing Date, Seller shall
repay, or cause to be repaid, all Debt of the Companies (including any
prepayment penalties associated with repayment of the Debt), other than the
Remaining L/Cs, and shall remove, or cause to be removed, any and all
Encumbrances (other than Permitted Encumbrances) on any of the securities or
assets or properties of the Companies. Notwithstanding the foregoing, neither
Seller nor any Company shall be obligated to make any payment pursuant to the
General Foods Lease (a) other than in accordance with the terms thereof,
provided, however, that the Companies' failure to pay off all remaining amounts
under the General Foods Lease in respect of which a Company is the primary
obligor shall be subject to the Purchase Price reduction set forth in Section
2.2; or (b) in respect of any amount for which Seller is not the primary
obligor.
5.18. Additional Financial Statements. (a) On or prior to the Closing
Date, Seller shall deliver to Buyer audited consolidated balance sheets of the
Companies as of December 31, 2001, 2002 and 2003 and the related audited
consolidated statements of operations and comprehensive income and cash flows
for the twelve-months ended December 31, 2001, 2002 and 2003, reflecting the RAG
Colorado Entities as a discontinued operation for all such periods (together,
the "Revised Financial Statements"). The Revised Financial Statements shall be
prepared in a manner consistent with the preparation of the Audited Financial
Statements. The delivery of the Revised Financial Statements shall be deemed to
constitute a representation and warranty by Seller regarding the Revised
Financial Statements in the wording set forth in the first and third sentences
of Section 3.6, as if the Revised Financial Statements were referred to therein.
(b) In the event that the Closing shall not have occurred on or prior
to July 31, 2004, Seller shall deliver to Buyer, on July 31, 2004, the unaudited
consolidated balance sheet of the Companies as of the end of the Companies' then
most recent fiscal quarter and unaudited consolidated statements of operations
and comprehensive income and cash flows for the
72
Companies' then most recent fiscal quarter. Such financial statements shall be
prepared in a manner consistent with the preparation of the March 31 Financial
Statements. The delivery of such financial statements shall be deemed to
constitute a representation and warranty by Seller regarding such financial
statements in the wording set forth in the second and third sentences of Section
3.6, as if such financial statements (and not the March 31 Financial Statements)
were referred to therein.
5.19 Long Term Incentive Plan. Seller shall pay any and all
Liabilities arising out of or related to the RAG Coal International AG Long-Term
Incentive Plan including, but not limited to, any and all Liabilities for any of
the Company Employees that (i) are due and payable or accrued on or prior to the
Closing Date, or (ii) become due and payable as a result of the transactions
contemplated by this Agreement (the "LTIP Payments"). Neither Buyer nor any
Company shall have any Liability for the LTIP Payments and such LTIP Payments
shall not be considered as part of the Companies' Cash or otherwise reduce the
minimum Companies' Cash on hand requirement under Section 7.14.
5.20 Environmental Insurance; Impoundment. Prior to Closing, Buyer and
Seller shall cooperate to obtain insurance commitments from an insurance company
satisfactory to Buyer for insurance coverage (the "Environmental Insurance
Policy") for any Liability in respect of a breakthrough of the Rockspring
Impoundment to the underground mine works and any release of coal refuse,
including shales, clay, water, and any other pollutants or contaminants,
associated with a breakthrough or failure of the Rockspring Impoundment. Buyer
shall pay all premiums related to the Environmental Insurance Policy. Buyer
acknowledges that Seller and the Companies are currently implementing a
remediation plan for the Rockspring Impoundment, which plan includes closing the
related slurry pool by backfilling with coarse refuse and an anticipated
conversion to a slurry cell operating method at the existing refuse area (the
"Impoundment Plan"). Buyer shall cause the Companies to continue to perform the
actions contemplated by the Impoundment Plan in all material respects, provided
that Buyer and the Companies may modify the Impoundment Plan or pursue
alternative remediation procedures if Buyer reasonably believes, on the basis of
written advice of its environmental consultants (a copy of which shall be
delivered to Seller), that any such modification or alternative is an
improvement over the procedures contemplated under the Impoundment Plan, is a
more cost effective means of remediation, is necessary for the health and/or
safety of the Companies' employees or the Environment or is otherwise required
by applicable Law. Any such copy of written advice of Buyer's environmental
consultants shall be held in strict confidence by Seller to the same extent as
provided for in Section 5.6(c).
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to effect the Closing under this Agreement is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, unless validly waived in writing by Seller.
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6.1. Representations and Warranties. The representations and
warranties of Buyer in this Agreement that are qualified by materiality (whether
by reference to any threshold amount or otherwise) shall be true and correct in
all respects as of the date hereof and at and as of the Closing Date and the
representations and warranties of Buyer in this Agreement that are not qualified
by materiality shall be true and correct in all material respects as of the date
hereof and at and as of the Closing Date, in each case with the same effect as
though such representations and warranties were made at and as of the Closing,
provided that if a representation and warranty speaks as of a specific date or
time, it need only be true and correct in all respects or true and correct in
all material respects, as applicable, as of such date or time.
6.2. Performance. Buyer shall have performed and complied with all
covenants, agreements and obligations required by this Agreement to be so
performed or complied with by it and that are qualified by materiality, and
shall have performed and complied in all material respects with all other
covenants, agreements and obligations required by this Agreement to be so
performed or complied with by it, all at or prior to the Closing.
6.3. Officer's Certificate. Buyer shall have delivered to Seller a
certificate, dated as of the Closing Date and executed by an authorized
executive officer of Buyer certifying to the fulfillment of the conditions
specified in Sections 6.1 and 6.2.
6.4. Governmental Approvals. All Governmental Approvals with respect
to the transactions contemplated hereby listed on Schedule 6.4, including all
required approvals, clearance or decisions under the HSR Act and the EU Process
and the approval of any Governmental Authority for the transfer of any Permits
listed on Schedule 5.11, shall have been obtained and all conditions relating to
such Governmental Approvals shall have been satisfied.
6.5. Other Approvals. All Consents from Persons other than
Governmental Authorities with respect to the transactions contemplated hereby
listed on Schedule 6.5 shall have been obtained.
6.6. Injunctions. There shall not be in effect any Law or Governmental
Order that (i) restrains, prohibits, imposes or seeks to impose substantial
damages in connection with, or declares illegal the consummation of the
transactions contemplated by this Agreement, or (ii) seeks or imposes relief
that causes or would cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, and no Governmental Authority
of competent jurisdiction shall have instituted or threatened a Proceeding
seeking to impose any of the foregoing.
6.7. Seller Guarantees and Seller Bonds. Seller shall have received
evidence reasonably satisfactory to it that Buyer has complied in all material
respects with the provisions of Section 5.10.
6.8. Closing Deliveries. Buyer shall have delivered, or caused to be
delivered, all of the closing deliveries required by Section 2.4(b).
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ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of Buyer to effect the Closing under this Agreement is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, unless waived in writing by Buyer.
7.1. Representations and Warranties. The representations and
warranties of Seller in this Agreement that are qualified by materiality
(whether by reference to Companies Material Adverse Effect, any threshold amount
or otherwise) shall be true and correct in all respects as of the date hereof
and at and as of the Closing Date and the representations and warranties of
Seller in this Agreement that are not qualified by materiality shall be true and
correct in all material respects as of the date hereof and at and as of the
Closing Date, in each case with the same effect as though such representations
and warranties were made at and as of the Closing, provided that if a
representation and warranty speaks as of a specific date or time, it need only
be true and correct in all respects or true and correct in all material
respects, as applicable, as of such date or time.
7.2. Performance. Seller shall have performed and complied with all
covenants, agreements and obligations required by this Agreement to be so
performed or complied with by it and which are qualified by materiality, and
shall have performed and complied in all material respects with all other
covenants, agreements and obligations required by this Agreement to be so
performed or complied with by it, all at or prior to the Closing.
7.3. Officer's Certificate. Seller shall have delivered to Buyer a
certificate, dated as of the Closing Date and executed by an authorized
executive officer of Seller, certifying (a) to the fulfillment of the conditions
specified in Sections 7.1 and 7.2 and (b) that the copies of (i) the charters or
similar formation documents filed in the jurisdiction of incorporation or
formation for Seller and each Company and (ii) the Bylaws or similar governance
documents for Seller and each Company, that were available in Seller's data room
in Baltimore, Maryland or were delivered to Buyer prior to the date of this
Agreement, are complete and correct in all respects.
7.4. Governmental Approvals. All Governmental Approvals with respect
to the transactions contemplated hereby listed on Schedule 7.4, including all
required approvals, clearance or decisions under the HSR Act and the EU Process
and approval of any Governmental Authority for the transfer of any Permits
listed on Schedule 5.11, shall have been obtained and all conditions relating to
such Governmental Approvals shall have been satisfied.
7.5. Other Approvals. All Consents from Persons other than
Governmental Authorities with respect to the transactions contemplated hereby
listed on Schedule 7.5 shall have been obtained and such Consents shall be on
terms satisfactory to Buyer.
7.6. Injunctions. There shall not be in effect any Law or Governmental
Order that (i) restrains, prohibits, imposes or seeks to impose substantial
damages in connection with, or declares illegal 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
75
Agreement to be rescinded following consummation, or (iii) materially adversely
affects the right of Buyer to own the Companies or to operate the Business on or
after the Closing Date, and no Governmental Authority of competent jurisdiction
shall have instituted or threatened a Proceeding seeking to impose any of the
foregoing.
7.7. Buyer's Financing. Buyer shall have obtained on terms and
conditions reasonably satisfactory to it (A) all of the financing it needs in
order to consummate the transactions contemplated hereby, to pay all related
transaction expenses, and to fund the working capital requirements of the
Companies after the Closing and (B) all of the Companies' bonding requirements
to conduct the Business after the Closing Date.
7.8. Intercompany Accounts; Affiliate Agreements. Buyer shall have
received evidence, in form and substance to its satisfaction, that all
Intercompany Accounts and Affiliate Agreements shall have been terminated at or
prior to the Closing without any Liabilities of any Company remaining
thereunder, except for those Affiliate Agreements set forth on Schedule 5.7.
7.9. Absence of Companies Material Adverse Effect. Since the date of
this Agreement, there shall not have occurred any change, occurrence or
development which has had, or would reasonably be expected to have, individually
or in the aggregate, a Companies Material Adverse Effect.
7.10. Closing Deliveries. Seller shall have delivered, or caused to be
delivered, all of the Closing deliveries required by Section 2.4(a).
7.11. Cumberland Mine Operations. Buyer shall have received such
information and documentation as Buyer may reasonably request from Seller to
confirm, in Buyer's reasonable judgment, that: (a) the temporary curtailment of
the Cumberland Mine's operations resulting from the Mine Safety and Health
Administration's rejection of a proposed ventilation plan for Cumberland Mine,
as described on Schedule 7.11(a) (the "Cumberland Mine Issue"), and the
subsequent resolution of all matters related to the Cumberland Mine Issue, will
not diminish the future profitability or prospects of the Cumberland Mine or of
the Companies; and (b) the operations at the Cumberland Mine shall have returned
to the "normal production level" (as defined below) for one calendar month
before the Closing Date. For purposes of this Section 7.11, "normal production
level" shall mean production of at least 550,000 saleable tons of coal. For
purposes of this Section 7.11, "Cumberland Mine" shall mean that certain mining
facility described on Schedule 7.11(b).
7.12. Sale or Transfer of RAG Colorado Entities. Prior to the Closing
Date, Seller shall have sold or transferred the RAG Colorado Entities in
accordance with Section 5.14.
7.13. Companies' Debt. At or prior to the Closing Date, Seller shall
have repaid, or have caused to be repaid, all Debt of the Companies (including
any prepayment penalties associated with repayment of the Debt), other than the
Remaining L/Cs, and shall have removed, or have caused to be removed, any and
all Encumbrances (other than Permitted Encumbrances) on any of the securities or
assets or properties of the Companies, and Buyer shall have received evidence
satisfactory to it of the foregoing.
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7.14. Cash. Buyer shall have received evidence reasonably satisfactory
to it that the Companies shall have not less than US$50,000,000 in Cash on hand
as of the Closing.
7.15. Power of Attorney. That certain power of attorney in favor of
Seller identified on Schedule 1.1(G) shall be terminated prior to or
simultaneously with the Closing.
ARTICLE VIII
TERMINATION
8.1. Termination.
This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of Seller and Buyer;
(b) by Seller, on the one hand, or Buyer, on the other hand, if the
Closing has not occurred on or before (i) July 31, 2004, in the event the
condition set forth in clause (b) of Section 7.11 is satisfied with reference to
the month of May 2004; or (ii) September 30, 2004, in all other circumstances;
(c) by Seller, on the one hand, or Buyer, on the other hand, if the
other Party not seeking to terminate shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, and such breach or failure to perform
(i) is not cured within thirty (30) days after written notice thereof from the
non-breaching Party or, in the case where the date or period of time specified
for performance has lapsed, promptly following written notice thereof from the
non-breaching Party or (ii) is incapable of being cured by the non-terminating
Party; or
(d) by Seller, on the one hand, or Buyer, on the other hand, if any of
the conditions to such Party's obligations to perform set forth in Article VI or
Article VII, as applicable, becomes incapable of fulfillment; provided, however,
that such party may not seek termination pursuant to this Section 8.1(d) if such
condition is incapable of fulfillment due to the failure of the Party wishing to
terminate to perform the agreements contained herein required to be performed by
such Party at or prior to the Closing.
8.2. Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 8.1, the terminating Party shall
forthwith provide written notice thereof to the other Party. If this Agreement
is terminated and the transactions contemplated by this Agreement are abandoned
as provided herein, neither Party to this Agreement will have any Liability
under this Agreement to the other except that nothing herein shall relieve any
Party from any Liability for any willful breach of any of the representations,
warranties, covenants and agreements set forth in this Agreement. The provisions
of this Section 8.2, Article IX, Section 10.1 and Section 10.10 shall survive
any termination pursuant to Section 8.1.
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ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. (a) Indemnification by Seller. Subject to the
limitations set forth in this Section 9.1, and except with regard to matters
relating to Taxes, which shall be governed exclusively by Section 5.3, Seller
agrees to indemnify, defend and hold Buyer and its Affiliates and their
respective officers, directors, partners, members, stockholders, employees,
agents, representatives, successors and permitted assigns (collectively, the
"Buyer Indemnitees"), harmless from and in respect of any and all Losses that
they may incur or that may be imposed on any of them through and after the date
of the Claim for Indemnification (including any Losses any of them may incur or
that may be imposed on any of them after the end of any applicable survival
period in respect of such Claim for Indemnification) arising out of or related
to:
(i) any inaccuracy of any representation or the breach of any
warranty of Seller contained in this Agreement or in any document,
certificate or instrument delivered by Seller in connection with this
Agreement (or in the event any Third Party alleges facts that, if
true, would mean Seller has breached), without regard to materiality
qualifiers (including Companies Material Adverse Effect and dollar
thresholds) contained therein;
(ii) any breach or default in the performance of any covenant,
undertaking or other agreement or obligation of Seller contained in
this Agreement or any agreement or instrument executed in connection
herewith or delivered pursuant hereto;
(iii) any Liability, cost or expense arising out of or related to
any Debt of any Company outstanding as of the Closing;
(iv) any RAG Colorado Entity Liability;
(v) any Liability in respect of any claim by any third party
arising out of or related to the Cumberland Mine Issue;
(vi) any Additional General Foods Lease Liability; and
(vii) the successful enforcement by any Buyer Indemnitee of its
rights under this Section 9.1(a).
(b) Indemnification by Buyer. Subject to the limitations set forth in
this Section 9.1, and except with regard to matters relating to Taxes, which
shall be governed exclusively by Section 5.3, Buyer agrees to indemnify, defend
and hold Seller and its Affiliates and their respective officers, directors,
partners, members, stockholders, employees, agents, representatives, successors
and permitted assigns (collectively, the "Seller Indemnitees"), harmless from
and in respect of any and all Losses that they may incur or that may be imposed
on any of them through and after the date of the Claim for Indemnification
(including any Losses any of them may incur after the end of any applicable
survival period in respect of such Claim for Indemnification) arising out of or
relating to:
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(i) any inaccuracy of any representation or the breach of any
warranty of Buyer contained in this Agreement or in any document,
certificate or instrument delivered by Buyer in connection with this
Agreement (or in the event any Third Party alleges facts that, if
true, would mean Seller has breached), without regard to materiality
qualifiers contained therein;
(ii) any breach or default in the performance of any covenant,
undertaking or other agreement or obligation of Buyer contained in
this Agreement or any agreement or instrument executed in connection
herewith or pursuant hereto; and
(iii) the successful enforcement by any Seller Indemnitee of its
rights under this Section 9.1(b).
(c) Survival of Representations, Warranties and Indemnities. The
several representations, warranties, covenants, undertakings and agreements of
the Parties contained in or made pursuant to this Agreement or in any agreement
or instrument executed in connection herewith or delivered pursuant hereto, and
the rights of the Parties to seek indemnification with respect thereto, shall
survive the Closing and continue in full force and effect thereafter; provided,
however, that, except in respect of any Claims for Indemnification as to which
written notice shall have been duly given to the Indemnifying Party (as
hereinafter defined) pursuant to Section 9.1(e) hereof prior to the relevant
expiration date set forth below, and subject to the provisions of Sections
9.1(c) and 9.1(d), such representations, warranties, covenants, undertakings and
agreements, and the rights of the Parties to seek indemnification with respect
thereto, shall expire on the following dates (each, an "Indemnity Termination
Date"):
(i) in the case of claims arising out of or related to any breach
or inaccuracy in the representations and warranties set forth in
Sections 3.1, 3.2, 3.3, 3.4, 3.20(c), 3.23, 3.30, 4.1 and 4.2 and
claims arising under Section 9.1(a)(iii), 9.1(a)(iv), 9.1(a)(v),
9.1(a)(vi), 9.1(a)(vii), 9.1(a)((viii) and 9.1(b)(iii), there shall be
no expiration date;
(ii) in the case of claims arising under Section 3.14, sixty (60)
days after the expiration of the applicable statute of limitations;
(iii) in the case of claims arising out of any inaccuracies in
the representations and warranties set forth in Section 3.18, on the
fifth (5th) anniversary of the Closing Date;
(iv) in the case of claims arising out of the breach of any
covenants required to be performed after the Closing Date, on the
thirtieth (30th) day after the obligations under any covenant, which
by its terms has a termination date, ceases to exist, and those
covenants that by their terms have no termination date shall continue
indefinitely; and
(v) in the case of all other Claims for Indemnification arising
under this Agreement or under any instrument delivered pursuant
hereto, on the third (3rd) anniversary of the Closing Date.
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Any Claim for Indemnification under this Agreement which is made in
good faith and in writing prior to the expiration of such claim on the Indemnity
Termination Date shall survive such expiration until mutually resolved or
otherwise determined hereunder, as applicable, and the Indemnity Termination
Date for all purposes hereunder shall automatically be extended with respect to
such claim (but not any other claims) until such claim is so mutually resolved
or otherwise determined hereunder. Any such claim not so made in writing prior
to the expiration of such claim on the relevant Indemnity Termination Date shall
be deemed to have been waived.
(d) Limitations. (i) Except as otherwise set forth in this Section
9.1(d)(ii), any recovery by any Party under this ARTICLE IX with respect to
Claims for Indemnification pursuant to this Section 9.1 shall be limited as
follows:
(A) no Party shall be entitled to any recovery unless and
until the total of all claims brought by such Party for indemnity
or damages pursuant to this Section 9.1 exceeds Fifteen Million
U.S. Dollars (US$15,000,000) (the "Basket") and such Party then
shall be entitled to recover only the amount by which such claims
for indemnity or damages exceed Fifteen Million U.S. Dollars
(US$15,000,000), provided that the Basket (as it applies to
Claims for Indemnification made by Buyer Indemnitees) shall be
reduced by any deductible or risk retention (up to a maximum of
US$5,000,000) that is paid by Buyer or the Companies pursuant to
the terms of the Environmental Insurance Policy;
(B) no Party shall be entitled to any recovery of any amount
in excess of Two Hundred Million U.S. Dollars (US$200,000,000) in
respect of all claims brought by such Party for indemnity or
damages pursuant to this Section 9.1 in the aggregate; and
(C) no amount shall be payable pursuant to this Section 9.1
with respect to any matter or series of related matters resulting
in aggregate Losses to the claiming Party of less than One and
One-Half Million U.S. Dollars (US$1,500,000), and such Losses
shall not be included in calculating the threshold of
US$15,000,000 referred to above.
(ii) Notwithstanding the foregoing:
a. The following claims shall not be subject to the limitations
described in clauses (A), (B) or (C) of Section 9.1(d)(i) set forth above:
i. any claims for any inaccuracy or breach of the representations
or warranties under Sections 3.1, 3.2, 3.3, 3.4, 3.14, 3.20(c), 3.23,
3.30, 4.1 or 4.2;
ii. any claims pursuant to Section 9.1(a)(ii) or 9.1(b)(ii) to
the extent related to a breach of the covenants in the following
Sections: 5.1(a)(D),
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5.1(b)(ii), 5.1(b)(iv), 5.1(b)(vi), 5.1(b)(viii), 5.1(b)(xiv),
5.1(b)(xv), 5.2, 5.3, 5.5, 5.6, 5.7, 5.10, 5.11, 5.14, and 5.17; and
iii. any claims pursuant to Sections 9.1(a)(iii), 9.1(a)(iv),
9.1(a)(v), 9.1(a)(vi), 9.1(a)(vii), 9.1(a)(viii), and 9.1(b)(iii).
b. The following claims shall not be subject to the limitations
described in clauses (A) and (C) of Section 9.1(d)(i) above:
i. any claims pursuant to Section 9.1(a)(ii) or 9.1(b)(ii), to
the extent related to a breach of the covenants in the following
Sections: 5.1 (except as otherwise specified in Section
9.1(d)(ii)(a)(ii) above), 5.4, 5.8, 5.9, 5.12, 5.13, 5.15, 5.16 and
5.18.
(iii) Notwithstanding anything to the contrary in this Agreement: (w)
Seller shall have no liability or obligation to Buyer for any Loss to the extent
the Liability attributable to such Loss is reflected or specifically reserved
against (other than reserved for deferred Taxes established to reflect timing
differences between book and Tax income), but only to the extent so reflected or
specifically reserved, in the consolidated balance sheet included as part of the
Most Recent Financial Statements, and the amount of any such Loss, to the extent
so reflected or specifically reserved, shall not count toward any threshold
referred to above; (x) any amount payable by an Indemnifying Party in respect of
any Loss shall be reduced by any related insurance recovery received by the
Indemnified Party (net of any costs incurred in order to obtain such recovery
and the effect of any retrospective rate increase) and by any payments received
by such Indemnified Party from third parties who are not Affiliates of such
Indemnified Party; (y) the calculation of the amount of any Losses arising out
of the breach of more than one representation or warranty shall be determined
without duplication of the same Loss; and (z) upon payment of any amount
pursuant to a Claim for Indemnification hereunder, the Indemnifying Party (as
defined in Section 9.1(e)) shall be subrogated, to the extent of such payment,
to all of the rights of recovery of the Indemnified Party (as defined in Section
9.1(e)) against any Third Party with respect to the matters to which such claim
relates.
(e) Matters Involving Third Party Claims.
(i) If any Third Party shall notify any Party (the "Indemnified
Party") with respect to a Third Party Claim which may give rise to a
Claim for Indemnification against any other Party (the "Indemnifying
Party") under this Article IX, then the Indemnified Party shall
promptly provide a Claim for Indemnification to the Indemnifying
Party; provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying
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Party notifies the Indemnified Party in writing within fifteen (15)
days after the Indemnified Party has made a Claim for Indemnification
that the Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Losses the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim, (B) 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 against the Third Party Claim and
fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or
other equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of
the Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently; provided
that if the Indemnified Party has reasonably determined that Losses
that may be incurred may exceed either individually, or when
aggregated with other Claims for Indemnification (including Third
Party Claims), the amount set forth in Section 9.1(d)(i)(B), then the
Indemnifying Party shall not have the right to assume the defense of
such Third Party Claim on behalf of the Indemnified Party. In the
event the proviso in the preceding sentence shall become applicable:
(x) the Indemnifying Party may retain separate counsel at its sole
cost and expense and participate in the defense of such Third Party
Claim; and (y) the Indemnifying Party shall be entitled to enter into
a settlement or consent to entry of a judgment with regard to a Third
Party Claim without the prior written consent of the Indemnified Party
if (and only if) (1) the amount paid in settlement or pursuant to
entry of judgment does not exceed the amount set forth in Section
9.1(d)(i)(B), (2) such amount is paid by the Indemnifying Party, and
(3) the settlement includes a provision releasing the Indemnified
Party from any Liability under such Third Party Claim. Failure to
timely respond shall constitute a final and binding acceptance of the
Claim for Indemnification by the Indemnifying Party, and the Claim for
Indemnification shall be paid in accordance with Section 9.1(h).
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 9(e)(ii), (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim
(provided that the fees and expenses of such counsel shall be at the
expense of the Indemnifying Party if: (i) the named parties in such
Third Party Claim (including any impleaded parties) include both an
Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by such counsel that there may be one or
more legal defenses available to it that are different from or
additional to those available to Indemnifying Party or (ii) the
Indemnified Party has been advised by counsel that representation by
the Indemnifying Party is inappropriate in light of an actual or
potential conflict of interest between them), (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party
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(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 Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld unreasonably)
(and in no event shall the Indemnifying Party consent to the entry of
any judgment or enter into any settlement with respect to a Third
Party Claim if the amount to be paid in settlement exceeds the amount
set forth in Section 9.1(d)(B) or the settlement does not include a
provision releasing the Indemnified Parties from all Liabilities with
respect thereto). For purposes of clause (C) above, the consent of the
Indemnified Party shall be deemed to have been withheld unreasonably
if it is withheld with regard to a settlement or entry of judgment
pursuant to which: (x) there is no finding or admission of violation
of Law; (y) the sole relief to the claimant is money damages paid in
full by the Indemnifying Party; and (z) such settlement or entry of
judgment has no effect on any other claims that may be made against
the Indemnified Party.
(iv) In the event any of the conditions in Section 9(e)(ii) 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 Third Party Claim in any manner it
reasonably may 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 Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Party will remain responsible
for any Losses the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Article IX.
(f) Matters not Involving Third Party Claims. Buyer or Seller may make
a claim for any matter that does not involve a Third Party Claim in any amount
to which they may be entitled under this Article IX by providing a Claim for
Indemnification against the other promptly after such Indemnified Party has
notice of any Adverse Consequence which may give rise to a Claim for
Indemnification; provided, however, that no delay on the part of Buyer or Seller
in notifying the other shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party is
actually prejudiced by such delay. The Indemnifying Party shall have thirty (30)
days to object to the Claim for Indemnification by delivery of a written notice
of such objection to the Indemnified Party specifying in reasonable detail the
basis for such objection. Failure to timely respond shall constitute a final and
binding acceptance of the Claim for Indemnification by the Indemnifying Party,
and the Claim for Indemnification shall be paid in accordance with Section
9.1(h). If an objection is timely interposed by the Indemnifying Party, then the
Indemnified Party and the Indemnifying Party shall negotiate in good faith for a
period of twenty (20) Business Days from the date the Indemnified Party receives
such objection prior to commencing any arbitration, formal legal action, suit or
proceeding with respect to such Claim for Indemnification.
(g) Other Indemnification Provisions. Buyer and Seller each
acknowledges and agrees that, except as provided in the immediately succeeding
sentence, the indemnification
83
provisions in this Article IX and the termination rights in Article VIII shall
be the exclusive remedies of Buyer, the Buyer Indemnitees, Seller, Seller
Indemnitees, the Companies and their Affiliates with respect to the transactions
contemplated by this Agreement. Each of Buyer and Seller hereby waives any claim
or cause of action pursuant to common or statutory law or otherwise against the
other Party and its Affiliates with respect to Losses or obligations of any
nature whatsoever that relate to this Agreement or are attributable to the
Companies, or the ownership and operation of the Companies, whether arising
before, on or after the Closing Date other than claims (i) pursuant to the terms
of this Agreement, (ii) for fraud, intentional misrepresentation or similar
cause of action, (iii) matters of statutory contribution and (iv) for injunctive
relief and other equitable remedies. Seller shall not have any right of
contribution from RACH or the other Companies with respect to any Loss claimed
by Buyer. No right of indemnification hereunder shall be limited by reason of
any investigation or audit conducted before or after the Closing or the
knowledge of the non-breaching Party of any breach of a representation,
warranty, covenant or agreement contained in this Agreement or the decision of
any Party to complete the Closing.
(h) Payment of Claims. Upon Final Determination of the amount of a
Claim for Indemnification, the Indemnifying Party shall pay the amount of such
claim by wire transfer of immediately available funds to an account designated
by the Indemnified Party within fourteen (14) days of the date of such Final
Determination. Any amount not paid within such fourteen (14) day period shall
accrue interest at a rate equal to the London Inter-Bank Offered Rate as
published in The Wall Street Journal in effect for one-month borrowings of U.S.
Dollars on the date of the Final Determination plus 600 basis points per annum
compounded daily beginning on the fifteenth (15th) day after such Final
Determination is made, until the date on which the full amount of such Claim for
Indemnification plus accrued interest is paid. A "Final Determination" of a
claim shall be (i) a final judgment of any court determining the validity of a
disputed claim, if no appeal is pending from such judgment or if the time to
appeal therefrom has elapsed (it being understood that the Indemnified Party
shall have no obligation to appeal); or (ii) a final award of any arbitrator or
arbitration panel determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within which to
move to set such award aside has elapsed; or (iii) a written termination of the
dispute with respect to such claim signed by all of the parties thereto or their
attorneys; or (iv) a written acknowledgment of the Indemnifying Party that it no
longer disputes the validity of such claim; or (v) the date on which an
Indemnifying Party fails to respond to a Claim for Indemnification as specified
in Section 9(e)(ii) or Section 9(f); or (vi) such other evidence of final
determination of a disputed claim as shall be reasonably acceptable to the
Parties.
(i) Consequential and Punitive Damages. Notwithstanding any other
provision of this Agreement to the contrary, no Indemnifying Party shall be
liable to an Indemnified Party for any consequential or punitive damages, except
to the extent that Losses incurred by an Indemnified Party that result from a
Third Party Claim include consequential or punitive damages.
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ARTICLE X
MISCELLANEOUS
10.1. Fees and Expenses. Except as otherwise provided in this
Agreement, Seller, on the one hand, and Buyer, on the other hand, shall bear
their own fees and expenses and the fees and expenses of their respective
Affiliates (including, in the case of Seller, each Company) in connection with
the preparation and negotiation of this Agreement and the consummation of the
transactions contemplated by this Agreement, provided however that 50% of the
filing fee payable pursuant to the HSR Act shall be paid by Seller and 50% by
Buyer. Seller, on one hand, and Buyer, on the other hand, shall bear the fees
and expenses of any broker or finder retained by such Party and their respective
Affiliates (including, in the case of Seller, each Company) in connection with
the transactions contemplated by this Agreement. Seller agrees that none of RACH
or the Companies has borne or will bear any of Seller's costs and expenses
(including any of its legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
10.2. Governing Law. This Agreement shall be construed under and
governed by the Laws of the State of New York.
10.3. Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement that
specifically references this Agreement and is executed by all of the parties
hereto.
10.4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party hereto without
the prior written consent of the other parties; provided that Buyer may assign
this Agreement or any of its rights, interests and obligations under this
Agreement to one or more of its respective Affiliates and cause such Affiliate
to perform its obligations hereunder. Notwithstanding the foregoing, no
assignment by either of Seller or Buyer to any of their respective Affiliates
shall in any way affect such party's rights or relieve such party of any of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties hereto and their respective successors and permitted assigns, and is
not intended to confer upon any Person other than the parties hereto and their
respective successors and permitted assigns any rights or remedies hereunder.
10.5. Waiver. Any of the terms or conditions of this Agreement which
may be lawfully waived may be waived in writing at any time by each Party which
is entitled to the benefits thereof. Any waiver of any of the provisions of this
Agreement by any Party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such Party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
10.6. Notices. (a) Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if (i) personally delivered,
(ii) sent by a
85
internationally recognized overnight courier service to the recipient at the
address below indicated, (iii) sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) successfully transmitted by
facsimile with confirmation of receipt:
If to Buyer:
American Coal Acquisition Corp.
c/o First Reserve Corporation
Attention: Xxxx X. Xxxxxxx
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telephone No. 000-000-0000
Fax No. 000-000-0000
and
c/o The Blackstone Group L.P.
Attention: Xxxxx Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax No.: (000) 000-0000
With a copy to:
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx LLP
Attention: Xxxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone No. 000-000-0000
Fax No. 000-000-0000
If to Seller:
RAG Coal International AG
Attention: Wolf-Xxxxxx Xxxxxxxxxxxx
Rellinghauser Stra'b'e 1-11
45128 Essen
Telephone No. 00-000-000-00
Fax No. 00-000-000-0000
86
With a copy to:
Coudert Brothers LLP
Attention: Xxxxxxx Xxxxxxxx
Xxxxx X. XxXxxxxxx
1114 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. 000-000-0000
Fax No. 000-000-0000
or to such other address as any Party hereto may, from time to time, designate
in a written notice given in like manner, provided, however, that any notice of
change of address or facsimile number shall be effective only upon receipt.
(b) Except as otherwise provided herein, any notice under this
Agreement will be deemed to have been given (x) on the date such notice is
personally delivered or delivered by facsimile, (y) the next succeeding Business
Day after the date such notice is delivered to the overnight courier service if
sent by overnight courier, or (z) five (5) Business Days after the date such
notice is sent by registered or certified mail; provided that in each case
notices received after 4:00 p.m. (local time of the recipient) shall be deemed
to have been duly given on the next Business Day.
10.7. Complete Agreement. This Agreement, the Schedules and Exhibits,
the Confidentiality Agreements and the other documents and writings referred to
herein or delivered pursuant hereto contain the entire understanding of the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
10.8. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
10.9. Failure or Delay. No failure on the part of any Party to
exercise, and no delay in exercising, any right, power or privilege hereunder
operates as a waiver thereof; nor does any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. No notice to or
demand on any Party in any case entitles such Party to any other or further
notice or demand in similar or other circumstances.
10.10. Publicity. Seller and Buyer will consult with each other and
will mutually agree upon any publication or press release of any nature with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such publication or press release prior to such consultation and
agreement except as required by Law or by obligations pursuant to any listing
agreement with any securities exchange or any securities exchange regulation, in
which case the Party proposing to issue such publication or press release shall
make all reasonable efforts to consult with the other Party before issuing any
such publication or press release.
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10.11. Headings. The headings, table of contents and index contained
in this Agreement are for reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.12. Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
10.13. Third Parties. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any Person or corporation, other
than the Parties hereto and their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
10.14. Arbitration. Any dispute, controversy or claim arising out of
or relating to this Agreement (a "Dispute") (excluding any (i) dispute or
disagreement among the Parties concerning the WC True Up, which shall be
resolved pursuant to the provisions of Section 2.7(b), (i) dispute or
disagreement among the Parties concerning the Cap Ex True Up, which shall be
resolved pursuant to the provisions of Section 2.8(b), (iii) dispute or
disagreement among the Parties concerning Pre-Closing Tax Returns, Straddle
Returns, Tax Claims, the Section 338(h)(10) Election or Transfer Taxes, which
shall be resolved pursuant to the provisions of Sections 5.3(a)(ii),
5.3(a)(iii), 5.3(d)(iii), 5.3(i) and 5.3(j), respectively, and (iv) matters
covered by Section 10.15), shall be settled by binding arbitration in accordance
with the commercial arbitration rules of the Center for Public Resources. Any
such Dispute shall be arbitrated on an individual basis, and shall not be
consolidated in any arbitration with any dispute, claim or controversy of any
other Party. The arbitration shall be conducted in New York City, New York, 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.
10.15. Specific Performance. (a) With respect to Sections 5.5, 5.6 and
10.10, each of the parties hereto acknowledges and agrees that in the event of
any breach of such provisions, the non-breaching Party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (a) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law with respect to
such provisions and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or inequity, to compel specific performance of
such provisions.
(b) Notwithstanding anything to the contrary contained herein, the
parties hereto agree not to make any claim to the remedy of rescission with
respect to this Agreement except to the extent that a claim for rescission is
based on fraud, fraudulent inducement, bad faith or willful misconduct.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer, in each case as of the date first
above written.
RAG COAL INTERNATIONAL AG
By: /s/ Xx. Xxxxxxx Xxxxxxxxxxx
------------------------------
Name: Xx. Xxxxxxx Xxxxxxxxxxx
Title: CEO
By: /s/ Xxxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: CFO
AMERICAN COAL ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
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