EXHIBIT 99.2
SECURITY AND PLEDGE AGREEMENT
This SECURITY AND PLEDGE AGREEMENT (the "Agreement"), made and
entered into as of May 8, 2002, is by and among certain employee stockholders in
Holdings (as defined below) set forth on Annex A attached hereto (collectively,
the "Employee Stockholders"), Alliance Resource Holdings II, Inc., a Delaware
corporation ("ARH-II"), AMH II, LLC, a Delaware limited liability company
("AMH-II") (the Employee Stockholders, ARH-II and AMH-II, collectively, the
"Pledgors"), Alliance Resource Holdings, Inc., a Delaware corporation
("Holdings"), Alliance Resource GP, LLC, a Delaware limited liability company
(the "SGP"), The Beacon Group Energy Investment Fund, L.P., a Delaware limited
partnership ("Beacon Investors"), MPC Partners, LP, a Delaware limited
partnership ("MPC Partners"), Xxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") and S. Xxxx Xxxxxx ("Xxxxxx") (Beacon Investors, MPC Partners,
Neafsey, Greenwood and Xxxxxx, collectively, the "Pledgees"), and JPMorgan Chase
Bank, as agent for the Pledgees under the Collateral Agent Agreement (as
hereinafter defined) (the "Agent"). Capitalized terms not otherwise defined
herein have the meanings given to such terms in the Exchange Agreement (as
hereinafter defined).
RECITALS
WHEREAS, ARH-II, Holdings, the Employee Stockholders, Beacon
Investors, MPC Partners, Neafsey, Greenwood and Xxxxxx are simultaneously
herewith entering into that certain Exchange Agreement of even date herewith
(the "Exchange Agreement"), pursuant to which (i) the Employee Stockholders are
exchanging all of their shares of common stock in Holdings for shares of common
stock in ARH-II (the "Management ARH-II Shares") pursuant to the terms and
conditions therein, and (ii) Pledgees are selling all of their shares of common
stock in Holdings to ARH-II in exchange for cash consideration and the
Promissory Notes, also pursuant to the terms and conditions therein; and
WHEREAS, AMH-II, Beacon-Alliance Limited Member, LLC ("BALM"),
Beacon-Alliance Managing Member, LLC ("BAMM") and the Employee Stockholders are
simultaneously herewith entering into that certain Membership Interest Purchase
Agreement of even date herewith (the "Purchase Agreement"), pursuant to which
BALM and BAMM are selling their respective membership interests (such interests,
collectively, the "MGP Interests") in Alliance Resource Management GP, LLC (the
"MGP"), to AMH-II; and
WHEREAS, it is a condition precedent to the closing of the
transactions under the Purchase Agreement that the transactions contemplated by
the Exchange Agreement close simultaneously therewith; and
WHEREAS, upon the closing, the Employee Stockholders will own
membership units of AMH-II (the "Management AMH-II Units") in the same
proportions that they own Management ARH-II Shares, and are pledging their
Management AMH-II Units as set forth below in order to induce the Pledgees to
enter into the Exchange Agreement and to cause the consummation of the
transactions thereunder; and
WHEREAS, AMH-II is entering into this Agreement for the
purposes set forth below in order to cause the consummation of the transactions
under the Purchase Agreement by inducing the Pledgees to enter into the Exchange
Agreement and to cause the consummation of the transactions thereunder; and
WHEREAS, upon the consummation of the Transactions, ARH-II
will be the owner of 578,457 shares (the "Holdings Shares") of common stock, par
value $0.0001 per share, of Holdings, representing all of the issued and
outstanding capital stock of Holdings; and
WHEREAS, Holdings owns a 100% limited liability company
interest in the SGP (the "SGP Interest");
and
WHEREAS, the SGP holds 1,232,780 common units and 6,422,531
subordinated units (such units, collectively, the "MLP Interest") in Alliance
Resource Partners, L.P., a Delaware limited partnership (the "MLP"),
constituting in the aggregate a 49.2% limited partner interest in the MLP; and
WHEREAS, Holdings and the SGP have determined that it is in
their respective best interests for ARH-II to be owned by the Employee
Stockholders, and are entering into this Agreement for the purposes set forth
below in order to cause the transactions contemplated by the Exchange Agreement
to be consummated; and
WHEREAS, BALM and BAMM have modified the Operating Agreement
of the MGP dated as of June 28, 1999 (as amended, the "MGP Operating Agreement")
to allow for the exercise of the Pledgees' expanded board rights as set forth in
Section 10(e) hereof; and
WHEREAS, as security for the timely and full performance of
the Obligations, the Pledgees are requiring that (i) each of the Employee
Stockholders pledge all of his Management ARH-II Shares (as set forth on Annex A
attached hereto) to the Agent for the ratable benefit of the Pledgees, (ii) each
of the Employee Stockholders pledge all of his membership units in AMH-II (as
set forth on Annex A attached hereto) (the "AMH-II Units") to the Agent for the
ratable benefit of the Pledgees, (iii) ARH-II pledge the Holdings Shares to the
Agent for the ratable benefit of the Pledgees, (iv) AMH-II pledge the MGP
Interests to the Agent for the ratable benefit of the Pledgees, and (v) that the
Employee Stockholders, ARH-II, AMH-II, Holdings and the SGP make certain
covenants to the Pledgees and the Agent, all on the terms and conditions herein;
and
WHEREAS, SGP is entering into this Agreement specifically for
the purposes of making certain representations and warranties, and certain
covenants to the Pledgees and the Agent, and agreeing to be bound herein solely
with respect to such matters; and
WHEREAS, as contemplated by the Exchange Agreement,
simultaneously with entering into this Agreement, the Pledgees are entering into
a Collateral Agent Agreement with Pledgors and Agent, in the form attached
hereto as Exhibit A (the "Collateral Agent Agreement"), pursuant to which the
Agent is appointed and agrees to serve as the collateral agent of the Pledgees
in connection with the enforcement of the rights of the Pledgees under the
Promissory Notes and this Agreement; and
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NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereby agree as
follows:
Section 1. Pledge.
(a) As security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations (as defined in Section 1(e) below), each of the
Employee Stockholders severally, but not jointly, hereby pledges to the Agent,
for the ratable benefit of the Pledgees, and grants to the Agent a continuing
security interest in the following (the "ARH-II Collateral"):
(i) the Management ARH-II Shares held by such
Employee Stockholder and the certificates representing such
Management ARH-II Shares, and all products and proceeds of any of
such Management ARH-II Shares including, without limitation, all
distributions, dividends, cash, instruments, subscriptions,
warrants and any other rights and options and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Management ARH-II
Shares, whether payable as profits, distributions, repayments of
loans or capital or otherwise ("Distributions") and including,
without limitation, all "proceeds" as such term is defined in the
UCC ("Proceeds"). As used herein, the term "UCC" refers to the
Uniform Commercial Code as in effect from time to time in the
State of New York;
(ii) all additional shares of stock of, or equity
interest in, ARH-II from time to time acquired by such Employee
Stockholder in any manner, and the certificates representing such
additional shares or interest (any such additional shares or
interest will constitute part of the Management ARH-II Shares
under and as defined in this Agreement), and all products and
proceeds of any such additional Management ARH-II Shares,
including, without limitation, all distributions, dividends, cash,
instruments, subscriptions, warrants and any other rights and
options and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or
all of such additional Management ARH-II Shares;
(iii) all other claims of any kind or nature and any
instruments, certificates, chattel paper or other writings
evidencing such claims, whether in contract or tort and whether
arising by operation of law, consensual agreement or otherwise, at
any time acquired by such Employee Stockholder against ARH-II or
any subsidiary of ARH-II or any other person having any liability
to stockholders with respect to the Management ARH-II Shares; and
(iv) any investment property (as defined in the UCC)
now owned or hereafter acquired by such Employee Stockholder with
respect to any of the property described in clauses (i), (ii) or
(iii) above.
(b) As security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations (as defined in Section 1(e) below), each of the
Employee Stockholders severally, but not jointly, hereby
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pledges to the Agent, for the ratable benefit of the Pledgees, and grants to the
Agent a continuing security interest in the following (the "AMH-II Collateral"):
(i) the Management AMH-II Units held by such Employee
Stockholder and the certificates representing such Management
AMH-II Units, and all products and proceeds of any of such
Management AMH-II Units including, without limitation,
Distributions and Proceeds.
(ii) all additional shares of stock of, or equity
interest in, AMH-II from time to time acquired by such Employee
Stockholder in any manner, and the certificates representing such
additional shares or interest (any such additional shares or
interest will constitute part of the Management AMH-II Units under
and as defined in this Agreement), and all products and proceeds
of any such additional Management AMH-II Units, including, without
limitation, all distributions, dividends, cash, instruments,
subscriptions, warrants and any other rights and options and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
additional Management AMH-II Units;
(iii) all other claims of any kind or nature and any
instruments, certificates, chattel paper or other writings
evidencing such claims, whether in contract or tort and whether
arising by operation of law, consensual agreement or otherwise, at
any time acquired by such Employee Stockholder against AMH-II or
any subsidiary of AMH-II or any other person having any liability
to stockholders with respect to the Management AMH-II Units; and
(iv) any investment property (as defined in the UCC)
now owned or hereafter acquired by such Employee Stockholder with
respect to any of the property described in clauses (i), (ii) or
(iii) above.
(c) As security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations (as defined in Section 1(e) below), ARH-II hereby
pledges to the Agent, for the ratable benefit of the Pledgees, and grants to the
Agent a continuing security interest in the following (the "Holdings
Collateral"):
(i) the Holdings Shares and the certificates
representing the Holdings Shares, and all products and proceeds of
any of the Holdings Shares including, without limitation,
Distributions and Proceeds.
(ii) all additional shares of stock of, or equity
interest in, Holdings from time to time acquired by ARH-II in any
manner, and the certificates representing such additional shares
or interest (any such additional shares or interest will
constitute part of the Holdings Shares under and as defined in
this Agreement), and all products and proceeds of any such
additional Holdings Shares, including, without limitation, all
distributions, dividends, cash, instruments, subscriptions,
warrants and any other rights and options and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such additional
Holdings Shares;
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(iii) all other claims of any kind or nature and any
instruments, certificates, chattel paper or other writings
evidencing such claims, whether in contract or tort and whether
arising by operation of law, consensual agreement or otherwise, at
any time acquired by ARH-II against Holdings or any subsidiary of
Holdings or any other person having any liability to stockholders
with respect to the Holdings Shares; and
(iv) any investment property (as defined in the UCC)
now owned or hereafter acquired by ARH-II with respect to any of
the property described in clauses (i), (ii) or (iii) above.
(d) As security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations (as defined in Section 1(e) below), AMH-II hereby
pledges to the Agent, for the ratable benefit of the Pledgees, and grants to the
Agent a continuing security interest in the following (the "MGP Collateral"):
(i) the MGP Interests and the certificates
representing the MGP Interests, and all products and proceeds of
any of the MGP Interests including, without limitation,
Distributions and Proceeds.
(ii) all additional membership interests of, or
equity interest in, the MGP from time to time acquired by AMH-II
in any manner, and the certificates representing such additional
interest (any such additional interest will constitute part of the
MGP Interests under and as defined in this Agreement), and all
products and proceeds of any such additional MGP Interests,
including, without limitation, all distributions, dividends, cash,
instruments, subscriptions, warrants and any other rights and
options and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or
all of such additional MGP Interests;
(iii) all other claims of any kind or nature and any
instruments, certificates, chattel paper or other writings
evidencing such claims, whether in contract or tort and whether
arising by operation of law, consensual agreement or otherwise, at
any time acquired by AMH-II against the MGP or any subsidiary of
the MGP or any other person having any liability to members with
respect to the MGP Interests; and
(iv) any investment property (as defined in the UCC)
now owned or hereafter acquired by AMH-II with respect to any of
the property described in clauses (i), (ii) or (iii) above.
(e) For the purposes of this Agreement, "Obligations" means
with respect to each of the Pledgors, (i) all present and future liabilities,
obligations, covenants, duties, and debts owing by each such Pledgor under this
Agreement and the Promissory Notes, and (ii) all payment obligations arising
under Article VI of the Exchange Agreement or Article V of the Purchase
Agreement.
(f) The ARH-II Collateral, AMH-II Collateral, the Holdings
Collateral and the MGP Collateral are collectively referred to herein as the
"Pledged Collateral".
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(g) The Pledgees acknowledge and agree that their rights and
obligations among themselves with respect to the Pledged Collateral are governed
by the terms and conditions of the Collateral Agent Agreement, which is, by this
reference, incorporated herein and made a part hereof.
Section 2. Deliveries. At the Closing:
(a) The Employee Stockholders shall deliver to the Agent all
certificates or instruments representing or evidencing the Management ARH-II
Shares, which will be in form suitable for transfer by delivery or will be
accompanied by instruments of transfer or assignment duly executed in blank, all
in form and substance reasonably satisfactory to the Agent.
(b) The Employee Stockholders shall deliver to the Agent all
certificates or instruments representing or evidencing the Management AMH-II
Units, which will be in form suitable for transfer by delivery or will be
accompanied by instruments of transfer or assignment duly executed in blank, all
in form and substance reasonably satisfactory to the Agent.
(c) ARH-II shall deliver to the Agent all certificates or
instruments representing or evidencing the Holdings Shares, which will be in
form suitable for transfer by delivery or will be accompanied by instruments of
transfer or assignment duly executed in blank, all in form and substance
reasonably satisfactory to the Majority-in-Interest.
(d) AMH-II shall deliver to the Agent all certificates or
instruments representing or evidencing the MGP Interests, which will be in form
suitable for transfer by delivery or will be accompanied by instruments of
transfer or assignment duly executed in blank, all in form and substance
reasonably satisfactory to the Majority-in-Interest.
(e) For purposes of this Agreement, "Majority-in-Interest"
means, at any particular time, Pledgees that hold not less than sixty percent
(60%) of the aggregate outstanding principal amount under the Promissory Notes.
Section 3. Representations and Warranties of Pledgors,
Holdings and SGP.
(a) Each Employee Stockholder, severally but not jointly,
represents and warrants to the Pledgees and the Agent that upon the Closing:
(i) Such Employee Stockholder will be the legal and
beneficial owner of his Management ARH-II Shares, free and clear
of any Encumbrances on such Management ARH-II Shares other than
the security interest granted to the Agent for the ratable benefit
of the Pledgees herein.
(ii) The Management ARH-II Shares will constitute
100% of the issued and outstanding capital stock of ARH-II.
(iii) Except for the Management ARH-II Shares, there
will be no outstanding options, warrants or other rights to
subscribe for or purchase voting or non-voting capital stock of
ARH-II, nor any notes, bonds, debentures or other evidences of
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indebtedness that (A) will at any time be convertible into capital
stock of ARH-II, or (B) will have or at any time would have voting
rights with respect to ARH-II.
(iv) Such Employee Stockholder will be the legal and
beneficial owner of his Management AMH-II Units, free and clear of
any Encumbrances on his Management AMH-II Units other than the
security interest granted to the Agent for the ratable benefit of
the Pledgees herein.
(v) The Management AMH-II Units will constitute 100%
of the issued and outstanding membership units or other equity
interest in AMH-II.
(vi) Except for the Management AMH-II Units, there
are no outstanding options, warrants or other rights to subscribe
for or purchase voting or non-voting capital stock of AMH-II, nor
any notes, bonds, debentures or other evidences of indebtedness
that (A) will at any time be convertible into capital stock of
AMH-II, or (B) will have or at any time would have voting rights
with respect to AMH-II.
(b) ARH-II represents and warrants to the Pledgees and the
Agent that upon the Closing, assuming the accuracy of the representations of the
Pledgees under the Exchange Agreement:
(i) ARH-II will be the legal and beneficial owner of
the Holdings Shares, free and clear of any Encumbrances on the
Holdings Shares other than the security interest granted to the
Agent for the ratable benefit of the Pledgees herein.
(ii) The Holdings Shares will constitute 100% of the
issued and outstanding capital stock of Holdings.
(iii) Except for the Holdings Shares, there are no
outstanding options, warrants or other rights to subscribe for or
purchase voting or non-voting capital stock of Holdings, nor any
notes, bonds, debentures or other evidences of indebtedness that
(A) will at any time be convertible into capital stock of
Holdings, or (B) will have or at any time would have voting rights
with respect to Holdings.
(c) AMH-II represents and warrants to the Pledgees and the
Agent that upon the Closing, assuming the accuracy of the representations of
BALM and BAMM under the Purchase Agreement:
(i) AMH-II will be the legal and beneficial owner of
the MGP Interests, free and clear of any Encumbrances on the MGP
Interests other than the security interest granted to the Agent
for the ratable benefit of the Pledgees herein.
(ii) The MGP Interests will constitute 74.1% of the
membership interests in the MGP, and will include the managing
member interest in the MGP.
(iii) Except for (A) the MGP Interests and (B) the
25.9% limited liability company interest of Alliance Management
Holdings, LLC in the MGP, there will be no outstanding options,
warrants or other rights to acquire membership interests in the
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MGP, nor any notes, bonds, debentures or other evidences of
indebtedness that (1) will at any time be convertible into an
equity interest in the MGP, or (2) will have or at any time would
have voting rights with respect to the MGP.
(iv) simultaneous with the Closing, AMH-II is
entering into a Loan and Security Agreement with Holdings (the
"AMH-II Loan Agreement"), pursuant to which AMH-II will pledge to
Holdings all distributions received from the MGP as collateral for
the obligations of AMH-II under the AMH-II Loan Agreement in
connection with a loan (the "Holdings Loan") in the amount of
$2,915,788.88 being made by Holdings to AMH-II at Closing to
finance the purchase price payable by AMH-II under the Purchase
Agreement.
(d) Holdings represents and warrants to the Pledgees and the
Agent that:
(i) Holdings is the legal and beneficial owner of the
SGP Interest, free and clear of any Encumbrances on the SGP
Interest.
(ii) the SGP Interest constitutes 100% of the
membership interests in the SGP.
(iii) there are no outstanding options, warrants or
other rights to acquire membership interests in the SGP, nor any
notes, bonds, debentures or other evidences of indebtedness that
(1) will at any time be convertible into an equity interest in
SGP, or (2) will have or at any time would have voting rights with
respect to SGP.
(iv) simultaneous with the Closing, Holdings is
entering into the AMH-II Loan Agreement with AMH-II.
(e) SGP represents and warrants to the Pledgees and the Agent
that:
(i) SGP is the legal and beneficial owner of the MLP
Interest, free and clear of any Encumbrances on the MLP Interest.
(ii) The MLP Interest represents 1,232,780 common
units and 6,422,531 subordinated units in the MLP.
(f) The Employee Stockholders represent and warrant to the
Pledgees and the Agent that they are pledging the AMH-II Collateral to the
Agent, for the ratable benefit of the Pledgees, in order to induce the Pledgees
to enter into the Exchange Agreement and to cause the consummation of the
transactions contemplated thereunder.
Section 4. Covenants of Pledgors, Holdings and SGP.
(a) Each of the Employee Stockholders, severally but not
jointly, covenants to the Pledgees and the Agent:
(i) to perform all acts that may be necessary to
maintain, preserve and protect the ARH-II Collateral and the
AMH-II Collateral being pledged by such
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Employee Stockholder, the lien granted to Agent hereunder by such
Employee Stockholder and the first priority of such lien;
(ii) to promptly deliver to the Agent all originals
of certificates and other documents, instruments and agreements
evidencing the ARH-II Collateral and the AMH-II Collateral being
pledged by such Employee Stockholder, which are now held or
hereafter received by such Employee Stockholder;
(iii) to procure, execute and deliver from time to
time any endorsements, assignments, financing statements and other
documents, instruments and agreements and take other actions
deemed necessary, as the Majority-in-Interest may request, to
perfect, maintain and protect the Agent's lien with respect to the
ARH-II Collateral and the AMH-II Collateral being pledged by such
Employee Stockholder hereunder and priority thereof;
(iv) not to create, permit or suffer to exist, and to
defend the ARH-II Collateral and the AMH-II Collateral being
pledged by such Employee Stockholder against, and take such other
action as is necessary to remove, any Encumbrance on such ARH-II
Collateral or AMH-II Collateral, and will defend the right, title
and interest of the Agent in and to any Pledgor's rights under
such ARH-II Collateral and AMH-II Collateral against the claims
and demands of all Persons whomsoever;
(v) not to enter into any agreement or understanding
that purports to or may restrict or inhibit the Pledgees' rights
or remedies hereunder with respect to the ARH-II Collateral or
AMH-II Collateral being pledged by such Employee Stockholder,
including, without limitation, the Agent's or the Pledgees' right
to sell or otherwise dispose of such ARH-II Collateral or AMH-II
Collateral; and
(vi) not to sell, dispose of, transfer (directly or
indirectly) or grant any option with respect to, or covenant to
sell, dispose of, transfer (directly or indirectly) or grant any
option with respect to, any of the ARH-II Collateral or AMH-II
Collateral except in accordance with the terms of that certain
Employee Stockholders' Agreement of even date herewith by and
among ARH-II, AMH-II and the Employee Stockholders.
(b) ARH-II covenants to the Pledgees and the Agent:
(i) to perform all acts that may be necessary to
maintain, preserve and protect the Holdings Collateral, the lien
granted to Agent hereunder and the first priority of such lien;
(ii) to promptly deliver to the Agent all originals
of certificates and other documents, instruments and agreements
evidencing the Holdings Collateral, which are now held or
hereafter received by ARH-II;
(iii) to procure, execute and deliver from time to
time any endorsements, assignments, financing statements and other
documents, instruments and agreements and take other actions
deemed necessary, as the Pledgees or the Agent may
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request, to perfect, maintain and protect the Agent's lien with
respect to the Holdings Collateral hereunder and priority thereof;
(iv) not to create, permit or suffer to exist, and to
defend the Holdings Collateral against, and take such other action
as is necessary to remove, any Encumbrance on the Holdings
Collateral, and will defend the right, title and interest of the
Agent in and to any Pledgor's rights under the Holdings Collateral
against the claims and demands of all Persons whomsoever;
(v) not to enter into any agreement or understanding
that purports to or may restrict or inhibit the Pledgees' rights
or remedies hereunder with respect to the Holdings Collateral,
including, without limitation, the Agent's right to sell or
otherwise dispose of the Holdings Collateral;
(vi) not to declare or pay any distribution or
dividend, purchase, redeem, retire, defease or otherwise acquire
for value any capital stock now or hereafter outstanding, return
any capital to its stockholders, make any distribution of assets,
cash, cash equivalents, capital stock, obligations or securities
to its stockholders;
(vii) not to sell, dispose of, transfer (directly or
indirectly) or grant any option with respect to, or covenant to
sell, dispose of, transfer (directly or indirectly) or grant any
option with respect to, any of the Holdings Collateral; and
(viii) to cause (A) any Person who is issued capital
stock in ARH-II, or (B) any Person who receives capital stock in
ARH-II in a transfer permitted under Section 4(a)(vi) above, at
the time of such issuance or transfer, as the case may be, to
enter into this Agreement and the Collateral Agent Agreement, to
pledge such stock to Pledgors, and to otherwise perform the
obligations of the Employee Stockholders hereunder (including the
delivery of the any certificates representing the ARH-II
Collateral to the Agent).
(c) AMH-II covenants to the Pledgees and the Agent:
(i) to perform all acts that may be necessary to
maintain, preserve and protect the MGP Collateral, the lien
granted to Agent hereunder and the first priority of such lien;
(ii) to promptly deliver to the Agent all originals
of certificates and other documents, instruments and agreements
evidencing the MGP Collateral, which are now held or hereafter
received by AMH-II;
(iii) to procure, execute and deliver from time to
time any endorsements, assignments, financing statements and other
documents, instruments and agreements and take other actions
deemed necessary, as the Majority-in-Interest may request, to
perfect, maintain and protect the Agent's lien with respect to the
MGP Collateral hereunder and priority thereof;
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(iv) not to create, permit or suffer to exist, and to
defend the MGP Collateral against, and take such other action as
is necessary to remove, any Encumbrance on the MGP Collateral, and
will defend the right, title and interest of the Agent in and to
any Pledgor's rights under the MGP Collateral against the claims
and demands of all Persons whomsoever;
(v) not to create, permit or suffer to exist, and to
defend the MGP Collateral against, and take such other action as
is necessary to remove, any Encumbrance on the MGP Collateral, and
will defend the right, title and interest of the Agent in and to
any Pledgor's rights under the MGP Collateral against the claims
and demands of all Persons whomsoever;
(vi) not to declare or pay any distribution or
purchase, redeem, retire, defease or otherwise acquire for value
any membership units or other equity interest now or hereafter
outstanding, return any capital to its members, make any
distribution of assets, cash, cash equivalents, membership units,
other equity interest, obligations or securities to its members;
(vii) until such time that the Holdings Loan has been
repaid in full, will use all distributions received from the MGP
to repay all amounts owing to Holdings in respect of the Holdings
Loan;
(viii) not to sell, dispose of, transfer (directly or
indirectly) or grant any option with respect to, or covenant to
sell, dispose of, transfer (directly or indirectly) or grant any
option with respect to the MGP Interests;
(ix) to cause the MGP (A) to remain the sole managing
general partner of the MLP, (B) not to sell, dispose of, transfer
(directly or indirectly) or grant any option with respect to, or
covenant to sell, dispose of, transfer (directly or indirectly)or
grant any option with respect to its 0.99% General Partner
Interest in the MLP, its 1.0001% General Partner Interest in
Alliance Resource Operating Partners, L.P., or its 0.001% managing
member interest in Alliance Coal, LLC, or (C) not to issue any
capital stock, membership interests or other equity interest or
otherwise cause the MGP Interest to be less than 74.1% of the
membership interests in the MGP;
(x) to cause (A) any Person who is issued membership
units or any other equity interest in AMH-II, or (B) any Person
who receives membership units or other equity interest in AMH-II
in a transfer permitted under Section 4(a)(vi) above, at the time
of such issuance or transfer, as the case may be, to enter into
this Agreement and the Collateral Agent Agreement, to pledge such
units or other equity interest to Pledgors and to otherwise
perform the obligations of the Employee Stockholders hereunder in
connection with their pledge of the AMH-II Collateral (including
the delivery of the any certificates representing the AMH-II
Collateral to the Agent);
(xi) to cause at least three (3) individuals,
designated by the Majority-in-Interest, to be appointed to the
Board of Directors of the MGP, which Board shall have
11
no more than seven (7) directors except by the exercise of the
rights and remedies of the Majority-in-Interest or the Agent as
provided in Section 10 hereof.
(xii) not to cause the MGP Operating Agreement to be
modified in a manner adverse in any material respect to the
Pledgees or otherwise vitiate the rights and remedies of the
Pledgees as provided in Section 10 hereof without the prior
written consent of the Majority-in-Interest.
(d) Holdings covenants to the Pledgees and the Agent:
(i) not to declare or pay any distribution or
dividend, purchase, redeem, retire, defease or otherwise acquire
for value any capital stock now or hereafter outstanding, return
any capital to its stockholders, make any distribution of assets,
cash, cash equivalents, capital stock, obligations or securities
to its stockholders or issue or sell any capital stock of any kind
whatsoever, except to the extent that (a) such distribution or
other payment is immediately applied by ARH-II, as the sole
stockholder of Holdings, to the repayment, in whole or in part, of
the Obligations, and/or (b) such distribution or other payment is
applied by ARH-II, as the sole stockholder of Holdings, toward the
payment of any federal, state or local income or severance taxes
or other such taxes by ARH-II which are due and payable;
(ii) not to issue any capital stock or any other
equity interest; and
(iii) not to sell, dispose of, transfer (directly or
indirectly) or grant any option with respect to, or covenant to
sell, dispose of, transfer (directly or indirectly) or grant any
option with respect to, the SGP Interest.
(e) SGP covenants to the Pledgees and the Agent not to issue
any capital stock, membership interests or any other equity interest.
Section 5. Voting Rights.
(a) Subject to the provisions of Sections 3 and 4 above, and
so long as no Default or Event of Default has occurred and is continuing, (i)
the Employee Stockholders will be entitled to exercise any and all voting rights
and other rights pertaining to the Management ARH-II Shares, (ii) the Employee
Stockholders will be entitled to exercise any and all voting rights and other
rights pertaining to the Management AMH-II Units, (iii) ARH-II will be entitled
to exercise any and all voting and other rights pertaining to the Holdings
Shares, and (iv) AMH-II will be entitled to exercise any and all voting and
other rights pertaining to the MGP Interests or any part thereof.
(b) The Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgors all such proxies and other instruments
as the Pledgors may reasonably request for the purpose of enabling the Pledgors
to exercise the voting and other rights which they are entitled to exercise
pursuant to Section 5(a) above. The Agent shall be entitled to receive and rely
upon an instruction from the Majority-in-Interest with respect to any such proxy
or other instrument.
12
Section 6. Power of Attorney. Pledgors hereby appoint and
constitute the Agent as the Pledgors' attorney-in-fact for purposes of (i)
collecting any Pledged Collateral, (ii) conveying any items of Pledged
Collateral to any purchaser thereof, (iii) making any payments or taking any
actions under Section 10 hereof, and (iv) otherwise doing all things necessary
to carry out this Agreement, in each case, pursuant to the terms and conditions
of this Agreement and subject to the Agent's receipt and reliance upon
instructions from the Majority-in-Interest. Agent's authority will include,
without limitation, upon the occurrence and during the continuance of an Event
of Default, the authority to endorse and negotiate, for the Agent's own account,
any checks or instruments in the name of the Agent, to execute or receipt for
any document, to transfer title to any item of the Pledged Collateral, and to
take any other actions necessary or incident to the powers granted to the Agent
in this Agreement. Pledgors ratify and approve all acts of such attorney.
Neither the Agent nor its attorneys will be liable for any acts or omissions or
for any error of judgment or mistake of fact or law except for their gross
negligence or willful misconduct. This power of attorney, being coupled with an
interest, is irrevocable until this Agreement has been terminated.
Section 7. Agent May Perform. If the Pledgors fail to perform
any obligation contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by ARH-II and AMH-II under
Section 10(g) hereof. In any such case, the Agent may receive and rely upon
instructions from the Majority-in-Interest.
Section 8. No Assumption of Duties; Reasonable Care. The
rights and powers granted to the Agent hereunder are being granted in order to
preserve and protect the Pledgees' security interest in and to the Pledged
Collateral granted hereby and will not be interpreted to, and will not, impose
any duties on the Agent in connection therewith. The Agent will be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially as instructed by the Majority-in-Interest or substantially equal
to that which the Agent accords its own property.
Section 9. Foreclosure Events; Material Events; Other Events.
(a) Foreclosure Events. The occurrence of any one or more of
the following events will constitute a "Foreclosure Event" hereunder:
(i) Any party shall fail to pay any sums due and
owing under this Agreement or the Notes, which failure continues
for five (5) days after written notice thereof, or shall fail to
pay any other Obligations due and owing in respect of Article VI
of the Exchange Agreement and/or Article V of the Purchase
Agreement in accordance with their terms;
(ii) There shall have occurred a Significant
Transaction;
(iii) AMH-II, ARH-II, Holdings or the SGP shall
generally not pay its respective debts as such debts become due
and owing, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the
benefit of
13
its creditors; or any proceeding shall be instituted by or against
AMH-II, ARH-II, Holdings or the SGP seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or
for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a
period of sixty (60) days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for it, or for any substantial
part of its property) shall occur; or AMH-II, ARH-II, Holdings or
the SGP shall take any corporate action to authorize any of the
actions set forth above in this subsection (iii);
(iv) All amounts owing under that certain
$100,000,000 Credit Agreement dated as of August 16, 1999 by and
among the SGP and the other parties thereto, as it may be amended
from time to time (or, if such agreement is terminated, any senior
credit agreement entered into by the MLP, Alliance Resource
Operating Partners, L.P. or Alliance Coal, LLC) (the "Credit
Agreement") are accelerated and declared due and payable pursuant
to Section 6.01 (or any successor provision) of the Credit
Agreement; and
(v) All amounts owing under the Senior Notes (as
defined under the Credit Agreement) are accelerated and declared
due and payable pursuant to the terms and conditions of Section
12.1 of the Note Purchase Agreement dated as of August 16, 1999 by
and among the SGP and the other parties thereto.
(b) Material Events. The occurrence of any one or more of the
following events will constitute a "Material Event" hereunder; provided that the
Agent shall be deemed to have knowledge of such event only to the extent that an
officer in its escrow unit of its Institutional Trust Services business has
actual knowledge of such event and the consequences thereof hereunder or shall
have received written notice from one or more Pledgees stating that such notice
constitutes "notice of default hereunder":
(i) Any Foreclosure Event;
(ii) Any breach by a Pledgor, Holdings or SGP of its
covenants made under and in connection with this Agreement, and
the same remains unremedied thirty (30) calendar days or more
following written notice thereof from the Agent or the
Majority-in-Interest to the Pledgors;
(iii) The Lenders under (and as defined in) the
Credit Agreement shall have commenced the exercise of remedies
available to them under the Credit Agreement, including, without
limitation, the reduction or termination of Commitments (under and
as defined in Section 6.01 (or any successor provision) of the
Credit Agreement);
14
(iv) Any breach of the covenants, after the
expiration of any applicable cure period, provided in Sections
5.01(m) (Compliance with Terms of Leaseholds), 5.01(n)
(Maintenance of Controlled Reserve Base), 5.02(c) (Change in
Nature of Business), 5.02(i) (Amendments of Constitutive
Documents), 5.03(e) (Litigation notices) and 5.03(l) (Rating
Agency Reports) under the Credit Agreement; and
(v) Any default, after the expiration of any
applicable cure period, under Sections 6.01(e) (failure to pay
outstanding debt of at least $10,000,000), 6.01(f) (bankruptcy),
6.01(h) (non-monetary judgments likely to have a "Material Adverse
Effect"), and 6.01(o) (cancellation, termination, etc. of organic
agreements, if likely to have a Material Adverse Effect) under the
Credit Agreement.
(c) Other Events. The occurrence of any one or more of the
following events will constitute an "Other Event" hereunder:
(i) Any Foreclosure Event;
(ii) Any Material Event; or
(iii) Any other breach by a Pledgor, Holdings or SGP
of a representation or warranty contained in this Agreement, and
the same remains unremedied thirty (30) calendar days or more
following written notice thereof from the Majority-in-Interest or
the Agent to the Pledgors.
Section 10. Remedies. The following remedies shall apply as a
consequence of the occurrence of a Foreclosure Event, Material Event or Other
Event:
(a) If an Other Event has occurred and is continuing, then the
Majority-in-Interest or the Agent upon instruction from the Majority-in-Interest
shall have and be entitled to commence such actions as may be available to it or
the Majority-in-Interest under the Agreement, but such actions shall not include
any actions or rights to proceed against or foreclose on the Pledged Collateral
except as otherwise set forth in Section 10(b) below.
(b) If a Foreclosure Event shall have occurred and be
continuing, then:
(i) The sole remedy of the Agent and the Pledgees
(except as otherwise set forth in Section 10(b)(ii) and Section
10(c) below) shall be to accept and take title to all (but not
less than all) of the Pledged Collateral (the "Foreclosure") in
full payment and satisfaction of the Obligations as provided in
Section 9-620(a) of the UCC. The Pledgors jointly and severally
agree pursuant to Section 9-620(c) of the UCC to consent to an
acceptance of the Pledged Collateral in full satisfaction of the
Obligations in any record or writing provided to them and shall
execute and deliver to the Agent or the Pledgees such record or
writing upon request of the Agent or the Majority-in-Interest
after the occurrence of the Foreclosure Event, and shall not
object to any unconditional proposal by the Agent or the Pledgors
to accept and take title to all of the Pledged Collateral in full
satisfaction of the Obligations. If any of the Pledgors fails to
consent to acceptance of the Pledged Collateral in full
satisfaction of the Obligations or objects to any unconditional
proposal by the Agent or Pledgees to accept all of the Collateral,
then
15
the Agent and the Pledgees shall have all rights and remedies
available to a secured party under the UCC in respect of the
Pledged Collateral following the occurrence of a Foreclosure
Event, provided that the Agent or the Pledgees must exercise such
remedies with respect to all, but not less than all, of the
Pledged Collateral. In the event of a Foreclosure, the Agent or
the Pledgees shall not be required to account to the Pledgors for
any surplus in respect of the Pledged Collateral, notwithstanding
any requirements of applicable law, compliance with any and all of
which is hereby waived as set forth above. Following a
Foreclosure, none of the Employee Stockholders shall have any
further liability to the Pledgees in respect of the Obligations,
and no deficiency judgment shall be permitted against any of the
Employee Stockholders.
(ii) The Agent, upon instructions from the
Majority-in-Interest, may (i) notify Holdings, the MGP, ARH-II or
AMH-II to pay all dividends or distributions on the Pledged
Collateral to the Agent, receive and collect all such dividends or
distributions and make application thereof to the Obligations in
such order as the Agent may determine, (ii) register all of the
Holdings Shares, the MGP Interests, the Management ARH-II Shares
or the Management AMH-II Units in the name of Agent or its
nominee, or (iii) exercise any and all voting rights attendant to
the Holdings Shares, the MGP Interests, the Management ARH-II
Shares or the Management AMH-II Units, as if it were the absolute
owner thereof, all without liability, but the Agent will have no
duty to Pledgors to exercise any such right, privilege or option
and will not be responsible for any failure to do so or delay in
so doing.
(c) If a Material Event shall have occurred and be continuing,
then, in addition to its other rights and remedies, the Agent or the
Majority-in-Interest may notify the Pledgors in writing that the Agent intends
or the Majority-in-Interest intends to exercise its rights under this Section
10(c). Effective immediately upon the giving of such written notice, and until
such time as the Material Event shall be cured (if capable of cure) and/or the
Obligations have been fully paid and discharged, the Pledgors will cause the
authorized number of directors of the MGP to be immediately increased to nine
(9), and (b) the Pledgors will cause Agent or the Majority-in-Interest to be
entitled immediately to designate the two (2) additional directors created by
such increase in the size of the Board of Directors of the MGP, such that the
Agent together with the Pledgees shall have the right to designate the majority
of the directors of the Board of Directors of the MGP. At such time, if any,
that the Material Event is cured (if capable of cure) or the Obligations shall
have been fully paid and discharged, the composition of the Board of Directors
will automatically revert to its previous composition as set forth in the MGP
Operating Agreement and such additionally designated directors shall be deemed
to have resigned from the Board of Directors of the MGP. Pledgors, jointly and
severally, hereby agree to take, at any time and from time to time, all action
necessary to effectuate the foregoing, including such amendments to the MGP
Operating Agreement as the Agent or the Pledgees may reasonably require.
(d) Except as otherwise specifically provided herein, Pledgors
hereby waive presentment and demand (to the maximum extent permitted by
applicable law) with respect to breaches of the payment obligations under
Promissory Notes.
16
Section 11. Exculpation. The Agent and the Pledgees, and each
of their employees, agents and representatives (each, a "Pledgee Person") shall
not incur any liability whatsoever for the taking of any action in accordance
with the terms and provisions of this Agreement, for any mistake or error in
judgment, for compliance with any applicable law, or any attachment, order or
other directive of any court or other authority (irrespective of any conflicting
term or provision of this Agreement), or for any act or omission of any Pledgee
Person in connection with this Agreement, unless occasioned by such Pledgee
Person's own gross negligence, willful misconduct or violation of law, and the
Pledgors hereby waive any and all claims and actions whatsoever against the
Pledgee Persons arising out of or related to any of the foregoing; provided,
however, that the provisions of this Section 11 shall not exculpate any Pledgee
Person from any liability for acts or omissions in its capacity as a member of
the Board of Directors of the MGP. The Agent undertakes to perform only such
duties as are expressly set forth herein without gross negligence or bad faith
and no duties shall be implied. The Agent may rely upon and shall not be liable
for acting or refraining from acting upon any written notice, instruction or
request furnished to it hereunder and believed by it to be genuine and to have
been signed or presented by the proper party or parties. The Agent shall be
under no duty to inquire into or investigate the validity, accuracy or content
of any such document. The Agent shall not be liable for any loss or damage to
any person for any action taken or omitted by it in good faith except to the
extent that a court of competent jurisdiction determines that the Agent's gross
negligence or willful misconduct was the primary cause of such loss or damage to
such person. The Agent may execute any of its powers and perform any of its
duties hereunder directly or through agents or attorneys (and shall be liable
only for the careful selection of any such agent or attorney) and may consult
with counsel, accountants and other skilled persons to be selected and retained
by it. In the event that the Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands from any person
which, in its opinion, conflict with any of the provisions of this Agreement, it
shall be entitled to refrain from taking any action and its sole obligation
shall be to keep safely all property held under the terms of this Agreement
until it shall be directed otherwise in writing by all of the other parties
hereto or by a final order or judgment of a court of competent jurisdiction.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of act. The provisions of this Section 11 shall survive the termination of
this Agreement.
Section 12. Termination. This Agreement and the security
interest created in favor of the Agent for the ratable benefit of the Pledgees
pursuant to this Agreement will terminate when all of the Obligations are
indefeasibly paid and performed in full in cash, and at such time the Agent upon
instruction from the Majority-in-Interest, upon which the Agent may exclusively
rely, shall promptly thereafter redeliver any certificates delivered to Agent by
any Pledgor and held by it hereunder to such Pledgors and shall execute and
deliver to the Pledgors such instruments and documents as such Pledgors
reasonably request to evidence such termination. Such redelivery will be without
warranty by or recourse to the Agent, and will be at the expense of such
Pledgors.
17
Section 13. Miscellaneous.
(a) Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when: (i) delivered by hand (with written confirmation of
receipt), (ii) sent by facsimile with confirmation of transmission by the
transmitting equipment, (iii) received by the addressee, if sent by certified
mail, return receipt requested, or (iv) received by the addressee, if sent by a
nationally recognized overnight delivery service, return receipt requested, in
each case to the appropriate addresses or facsimile numbers set forth below (or
to such other addresses or facsimile numbers as a party may designate by notice
to the other parties):
Employee
Stockholders: To the address set forth on Annex A
with a copy to: ARH-II and AMH-II (as given below)
ARH-II, AMH-II,
Holdings
or the SGP: Alliance Resource Holdings II, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx III, President
Fax: (000) 000-0000
Alliance Resource Holdings II, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq., Secretary
Fax: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
000 Xxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. X'Xxxxx, Esq.
Fax: (000) 000-0000
Agent: JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
18
Pledgee: The Beacon Group Energy Investment Fund, L.P.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. (Xxxx) Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx XX, Esq.
Fax: (000) 000-0000
Pledgee: MPC Partners, LP
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. (Xxxx) Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx XX, Esq.
Fax: (000) 000-0000
Pledgee: Xxxx X. Xxxxxxx
00 Xxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Pledgee: Xxxxxxx X. Xxxxxxxxx
0000 Xxxx 000xx
Xxxxx, XX 00000
Pledgee: S. Xxxx Xxxxxx
0000 Xxxx 00xx Xxxxx
Xxxxx, XX 00000
(b) Jurisdiction, Service of Process. Any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby may be brought in either (i) the courts of the State of New York, County
of New York, or, if it has or can acquire jurisdiction, in the United States
District Court located therein, or (ii) the courts of the State of Delaware,
County of New Castle, or if it has or can acquire jurisdiction, in the United
States District Court located therein, and each of the parties irrevocably
submits to the exclusive jurisdiction of either such court in any such action or
proceeding, waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the action or
proceeding will be heard and determined only in any such court, and agrees not
to bring any action or proceeding arising out of or relating to this Agreement
or the transactions
19
contemplated hereby in any other court. Process in any action or proceeding
referred to in the preceding sentence may be served on any party by mail at the
notice address set forth herein.
(c) Waiver. No delay or failure by any party to exercise any
right under this Agreement and no partial or single exercise of that right, will
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
(d) Waiver of Conflict of Interest. The Pledgors, Holdings and
the SGP each acknowledge that Xxxxxx X. Xxxxxxx ("Xxxxxxx") (i) is providing
legal counsel solely to ARH-II and AMH-II and certain Affiliates thereof (but
not to any Employee Stockholder or any Pledgee) in connection with this
Agreement and the Transactions, and (ii) is also participating as a principal in
the Transactions (solely as an Employee Stockholder) and representing his own
interest in that context. Each Pledgor, Holdings and the SGP hereby
unconditionally (x) waives any conflict of interest arising from Xxxxxxx'x
representation of such Pledgor, Holdings or the SGP or any other party hereto or
to any Transaction Document, or arising from or in any way related to his
principal participation in the Transactions or his representation of his own
interest in that context, and (y) waives, and agrees not to assert, any such
conflict of interest as a defense to the enforceability of this Promissory note
or any other Transaction Document.
(e) Entire Agreement and Modification. This Agreement
supersedes all prior agreements, whether written or oral, between the parties
with respect to its subject matter and (together with the Exchange Agreement,
the Purchase Agreement, the Promissory Notes and the Collateral Agent Agreement)
constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement signed on behalf of all of the parties
hereto.
(f) Assignments, Successors, and No Third-Party Rights. The
Pledgors may not assign any of their rights or delegate any of its obligations
under this Agreement without the prior written consent of the Agent; provided,
however, that the Employee Stockholders may assign their rights and delegate
their obligations under this Agreement in any transfer permitted under Section
4(a)(vi) hereunder without the prior written consent of the Agent, and any such
Employee Stockholders will be released from his obligations hereunder to the
extent of any such transfer. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right under or with respect to this Agreement or any
provision of this Agreement, except such rights as shall inure to a successor or
permitted assignee pursuant to this Section 11(f).
(g) Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. The parties
further agree that if any provision contained herein is, to any extent, held
invalid or unenforceable in any respect under the laws governing this Agreement,
they will take any actions necessary to render the remaining provisions of this
Agreement valid and enforceable to the fullest extent permitted by law and, to
the extent necessary, will amend or otherwise modify this Agreement to replace
any provision contained
20
herein that is held invalid or unenforceable with a valid and enforceable
provision giving effect to the intent of the parties.
(h) Section Headings, Construction, Schedules. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All words used in this Agreement will be
construed to be of such gender or number as the context requires. All references
to documents, instruments or agreements will be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto. The language used in the
Agreement will be construed, in all cases, according to its fair meaning, and
not for or against any party hereto. The parties acknowledge that each party has
reviewed this Agreement and that rules of construction to the effect that any
ambiguities are to be resolved against the drafting party will not be available
in the interpretation of this Agreement.
(i) Governing Law. This Agreement will be governed by and
construed under the laws of the State of New York without regard to conflicts of
laws principles that would require the application of any other law.
(j) Execution of Agreement, Counterparts. This Agreement may
be executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement. The exchange of copies of this
Agreement and of signature pages by facsimile transmission will constitute
effective execution and delivery of this Agreement as to the parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile will be deemed to be their original signatures
for any purpose whatsoever.
(k) Further Assurances. The parties shall cooperate reasonably
with each other and with their respective representatives and agents in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the parties agree (i) to furnish upon
request to each other such further information, (ii) to execute and deliver to
each other such other documents, and (iii) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the transactions contemplated hereby.
(l) Funds Transfers. In the event funds transfer instructions
are given (other than in writing at the time of execution of this Agreement),
whether in writing, by telecopier, electronically or otherwise, the Agent is
authorized to seek confirmation of such instructions by telephone call-back to
the person or persons designated in a writing actually received and acknowledged
by the Agent, and the Agent may rely upon the confirmation of anyone purporting
to be the person or persons so designated. The Agent and the beneficiary's bank
in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by any party hereto to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The
Agent may apply any of the deposited funds for any payment order it executes
using any such identifying number, even where its use may result in a person
other than the beneficiary being paid, or the transfer of funds to a bank other
than the beneficiary's bank or an intermediary bank designated. The parties to
this Agreement acknowledge that these security procedures are commercially
reasonable.
21
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22
IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the date first written above.
AGENT:
JPMORGAN CHASE BANK
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
PLEDGEES:
THE BEACON GROUP ENERGY INVESTMENT
FUND, L.P.
By: Beacon Energy Investors, LLC
its general partner
By: Energy Fund GP, Inc.,
a member
By: /s/ Xxxxxxx X. Xxxxxx Xx.
--------------------------------------
Name: Xxxxxxx X. Xxxxxx Xx.
Title: Managing Director
MPC PARTNERS, LP
By: Energy Fund Sub, Inc.,
its general partner
By: /s/ Xxxxxxx X. Xxxxxx Xx.
--------------------------------------
Name: Xxxxxxx X. Xxxxxx Xx.
Title: Managing Director
/s/ Xxxx X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ S. Xxxx Xxxxxx
--------------------------------------
S. Xxxx Xxxxxx
2
HOLDINGS:
ALLIANCE RESOURCE HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------
Its: Senior Vice President - Law and
Administration
SGP, with respect solely to ALLIANCE RESOURCE GP, LLC
Sections 3(e), 4(e), 9(a)(iii),
9(b)(ii) and 9(c)(iii) By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Its: Senior Vice President - Law and
Administration
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PLEDGORS:
ARH-II:
ALLIANCE RESOURCE HOLDINGS II, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
--------------------------------
Its: Secretary
AMH-II:
AMH II, LLC
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------
Its: Secretary
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