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EXHIBIT 2.2
ANNEX 1.1(o)
MANUFACTURE, SERVICE, USE AND LICENSE AGREEMENT
This Manufacture, Service, Use and License Agreement (this
"Agreement"), dated as of November 11, 1997, is between (i) AEI HOLDING
COMPANY, INC., a Delaware corporation ("Holdco"); and (ii) XXXXXXXXX
ENTERPRISES, INC., a Kentucky corporation ("AEI").
RECITALS
A. Pursuant to an Exchange Agreement, dated October 20, 1997, among
Holdco, AEI, Xxxxx Xxxxxxxxx and Xxxxxx Xxxxxxx (the "Exchange Agreement"), AEI,
Xxxxx Xxxxxxxxx and Xxxxxx Xxxxxxx have agreed to transfer to Holdco certain
capital stock and mining operations and assets.
B. As a condition to the parties' obligation to close the transactions
contemplated in the Exchange Agreement, the parties have agreed to enter into
this Agreement.
C. In accordance with the terms and conditions set forth below, Holdco
desires to engage AEI to (i) manufacture highwall mining equipment (including,
without limitation, continuous miners), and (ii) repair and provide replacement
parts for all highwall mining equipment (including, without limitation,
continuous miners) transferred to Holdco (or an Affiliate (defined below))
pursuant to the Exchange Agreement or acquired in the future from AEI (the
"Equipment"), and AEI desires to be so engaged.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties to this Agreement,
the parties hereby agree as follows:
1. Definitions. As used in this Agreement only, the following terms
shall have the following meanings:
(a) "Xxxxxxxxx Brothers" shall mean Xxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx, and their respective spouses and
issue.
(b) "Affiliate" shall mean any of the Xxxxxxxxx Brothers or
any Person in which the Xxxxxxxxx Brothers (collectively or individually)
directly, or indirectly through one or more intermediaries, own or control fifty
percent (50%) or more of the voting power.
(c) "Change of Control" shall mean the acquisition by any
Person of securities or other ownership interests representing more than fifty
percent (50%) of the voting power of Holdco.
(d) "Closing" shall mean the consummation of the transactions
contemplated in the Exchange Agreement.
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(e) "Control," "Controls" or "Controlled" shall mean the
ownership of fifty percent (50%) or more of the voting rights of a Person.
(f) "Cost" shall mean the direct expenses incurred by AEI in
repairing or manufacturing Equipment for Holdco, plus Overhead
(g) "Overhead" shall mean the indirect expenses of AEI that
are necessary and customary in the business of repairing, designing, providing
replacement parts for and manufacturing coal mining equipment, allocated on a
per-shop-hour basis using the same method used immediately prior to the Closing
but based on the actual indirect expenses of AEI.
(h) "Person" shall mean any individual, firm, trust,
partnership, limited liability company, corporation or other business entity.
(i) "Purchaser" shall mean a Person, other than Holdco or an
Affiliate, that acquires all of the stock, or all or substantially all of the
assets, of Holdco, an Affiliate, a Purchaser or a Purchaser's Related Party.
(j) "Related Party" shall mean (i) any Person that directly,
or indirectly through one or more intermediaries, Controls, is Controlled by, or
is Controlled by a Person that Controls, a party to this Agreement or a
Purchaser, and (ii) any spouse, parent or issue of any party to this Agreement
or a Purchaser.
(k) "United States Intellectual Property" shall mean trade
names, trademarks, service marks, copyrights, pending or issued registrations
for any of the foregoing, patents and patent applications, unpatented
inventions, trade secrets and other confidential or proprietary information,
computer programs, processes, formulas and methods arising under United States
law that relate to or involve highwall mining and are owned or held by AEI as of
the date of this Agreement or subsequently developed or acquired.
2. Non-Exclusive License of Technology. AEI grants Holdco and all
Affiliates a perpetual non-exclusive license in its United States Intellectual
Property to operate the Equipment to conduct highwall mining on or in connection
with real property that is owned or controlled (currently or in the future) by
Holdco or any Affiliate; provided, however, that neither Holdco nor any
Affiliate may operate such Equipment on property acquired after the date this
Agreement is assigned by AEI to any Person other than an Affiliate unless such
property is located in the United States east of the Mississippi River and, at
the time of the acquisition, employees operating mining equipment on such
property are not represented by a union. Notwithstanding the preceding sentence,
neither Holdco nor any Affiliate may use any Equipment in connection with any
contract mining arrangement between Holdco or an Affiliate, on the one hand, and
any other Person that is not an Affiliate, on the other hand, regardless of who
owns or controls the property that is the subject of the contract mining
arrangement. Holdco and all Affiliates are granted such license as part of the
consideration Holdco is receiving for the transfer of shares of its capital
stock to AEI, and neither Holdco nor any Affiliate shall be required to pay any
royalty, fee or other payment to AEI in connection with or as consideration for
such license.
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3. Obligations of AEI.
(a) At the request of Holdco or any Affiliate, AEI shall
repair the Equipment (including providing all parts required in connection with
making such repairs), provide replacement parts for the Equipment and
manufacture new Equipment until Holdco or such Affiliate terminates its rights
under this Agreement. AEI shall use its best efforts to repair Equipment,
deliver replacement parts and deliver newly manufactured Equipment by the date
requested by Holdco or an Affiliate. Neither Holdco nor any Affiliate shall have
an obligation to purchase Equipment or parts from, or have Equipment repaired
by, or obtain any other services from, AEI. AEI shall be entitled to provide all
goods and services encompassed by this Agreement to Persons other than Holdco
and Affiliates.
(b) At the request of a Purchaser or such Purchaser's Related
Party, AEI shall repair the Equipment and any continuous miners acquired from
AEI (including providing all parts required in connection with making such
repairs), provide replacement parts for the Equipment and any such continuous
miners and manufacture new continuous miners until such Purchaser or such
Related Party terminates its rights under this Agreement. AEI shall use its best
efforts to repair Equipment or continuous miners, deliver replacement parts and
deliver newly manufactured continuous miners by the date requested by the
Purchaser or such Purchaser's Related Party. Neither a Purchaser nor any such
Purchaser's Related Parties shall have an obligation to purchase continuous
miners or parts from, or have Equipment or continuous miners repaired by, or
obtain any other services from, AEI. AEI shall be entitled to provide all goods
and services encompassed by this Agreement to Persons other than a Purchaser and
its Related Parties.
4. Fees. Holdco or an Affiliate, as the case may be, shall pay AEI the
following fees and costs for the services, parts and newly manufactured
Equipment provided under this Agreement:
(a) Repair and Manufacture. Holdco or an Affiliate, as the
case may be, shall pay AEI one hundred ten percent (110%) of AEI's Cost to
repair or manufacture the Equipment; provided, however, that Holdco or an
Affiliate, as the case may be, shall pay for any parts required in connection
with making repairs to the Equipment in accordance with Section 4(b). The one
hundred ten percent (110%) xxxx-up on repair services shall not be applied to
any replacement parts which Holdco or an Affiliate, as the case may be, pays for
in accordance with Section 4(b).
(b) Parts. For each part that AEI replaces into a piece of
Equipment or otherwise provides to Holdco or an Affiliate, Holdco or such
Affiliate, as the case may be, shall pay AEI one hundred twenty percent (120%)
of AEI's Cost for such part; provided that Cost shall include Overhead only if
the part is manufactured by AEI.
(c) Professional Services. Holdco or an Affiliate, as the case
may be, shall pay AEI an hourly rate for engineering, design and other
professional services equal to two and one-half (2 1/2) times the gross hourly
rate (excluding fringe benefits and Overhead) paid by AEI to each individual
involved in providing such services to Holdco or such Affiliate.
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5. Transport of Equipment. Holdco or an Affiliate, as the case may be,
shall be required, at its sole cost and expense, to transport Equipment
requiring repair to AEI's repair shops located at Coalton, Kentucky (the
"Shops"), and to transport repaired Equipment from the Shops to the destination
selected by Holdco or such Affiliate. Holdco or an Affiliate, as the case may
be, shall be required to pay any and all shipping charges incurred by AEI in
delivering a replacement part or newly manufactured piece of Equipment to Holdco
or such Affiliate.
6. Payment. AEI shall send Holdco or an Affiliate, as the case may be,
an invoice for all fees and costs for repairing, providing replacement parts
for, or manufacturing a particular piece of Equipment within thirty (30) days
after such repair is completed or such replacement part or newly manufactured
Equipment is delivered. The party receiving the invoice shall pay such invoice
in full within thirty (30) days after receipt. Beginning thirty (30) days after
the due date for a particular payment, until such payment is made in full, the
party receiving the invoice shall be required to pay AEI interest on the
outstanding balance at the rate of two percent (2%) plus the interest rate
published in the Wall Street Journal as the prime rate charged by United States
national banks.
7. Restrictions on Transfer and Use. Without the prior written consent
of AEI, Holdco or an Affiliate shall be entitled to sell, assign, lease or
otherwise transfer any or all of the Equipment or its rights therein to any
Affiliate or a Purchaser; provided, however, that any Purchaser that acquires
any Equipment, or any right or interest therein, shall have only those rights
expressly set forth in Section 8; and provided further that neither Holdco nor
any Affiliate shall sell, assign, lease or otherwise transfer any Equipment, or
any right or interest therein, to any Purchaser, unless such Purchaser executes
a written acknowledgment that its rights are limited to those expressly set
forth in Section 8. Except as set forth in this Section 7, neither Holdco nor
any Affiliate shall sell, assign, lease or otherwise transfer any Equipment, or
any right or interest therein, without obtaining the prior written consent of
AEI, which consent may be withheld in the sole and absolute discretion of AEI.
8. Rights and Obligations of a Purchaser. A Purchaser and its Related
Parties shall have the following rights and obligations with respect to the use
and transfer of the Equipment:
(a) License for Equipment. A Purchaser and its Related Parties
shall have a perpetual non-exclusive license to use AEI's United States
Intellectual Property to operate the Equipment to conduct highwall mining on or
in connection with real property that the Purchaser or such Related Party
acquired from the Person that transferred the Equipment to the Purchaser or such
Related Party; provided, however, that such Person was entitled to operate the
Equipment on such property.
(b) License for Continuous Miners. Notwithstanding Section
8(a), a Purchaser and its Related Parties shall have a perpetual non-exclusive
license to use AEI's United States Intellectual Property to operate continuous
miners (whether acquired directly from AEI or in connection with an acquisition
of Equipment) to conduct any mining or related activities on any property owned
or controlled by the Purchaser or such Related Party.
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(c) Manufacture and Repair of Continuous Miners. A Purchaser
and its Related Parties shall be entitled to purchase continuous miners from
AEI, and have such continuous miners repaired, for one hundred twenty percent
(120%) of AEI's Cost to manufacture or repair, as the case may be, such
continuous miners.
(d) Repair of Equipment. A Purchaser and its Related Parties
shall be entitled to have AEI repair any Equipment at one hundred ten percent
(110%) of AEI's cost to repair such Equipment; provided that any replacement
parts required in connection with making such repairs shall not be subject to
the one hundred ten percent (110%) xxxx-up, but shall be subject to the xxxx-up
provided in Section 8(e).
(e) Parts. A Purchaser and its Related Parties shall be
entitled to have AEI provide replacement parts, including replacement parts
required in connection with repair services provided by AEI, for any continuous
miners or Equipment at one hundred twenty percent (120%) of AEI's Cost for such
part; provided that Cost shall include Overhead only if such part is
manufactured by AEI.
(f) Transfer. Without the prior written consent of AEI, a
Purchaser or its Related Parties shall be entitled to sell, assign, lease or
otherwise transfer any or all of the Equipment or the continuous miners or any
right or interest therein to any of such Purchaser's Related Parties or to a
Person that acquired all of the stock, or all or substantially all of the
assets, of the Purchaser or any of its Related Parties; provided, however, that
neither the Purchaser nor its Related Parties shall sell, assign, lease or
otherwise transfer any Equipment or any right or interest therein, except as set
forth in this Section 8(f), without obtaining the prior written consent of a
member of AEI, which consent may be withheld in the sole and absolute discretion
of AEI.
9. Term. Any Person's rights under this Agreement shall expire thirty
(30) days after such Person gives written notice to all applicable parties to
this Agreement that it no longer desires to exercise its rights under this
Agreement. Sections 2, 7 and 8 shall survive the expiration of this Agreement.
10. Change of Control. In the event of a Change of Control, this
Agreement shall terminate, except for the rights and obligations contained in
Section 8, and Holdco and all Affiliates shall be deemed to be Purchasers
beginning on the day following the day on which the Change of Control occurs.
11. Disputed Costs.
(a) Dispute Resolution. Holdco and AEI agree to negotiate in
good faith to settle any disputed costs, controversies, disputes or claims
arising among the parties in connection with, or with respect to, any provision
of this Agreement, but such negotiations shall not affect Holdco's obligation to
pay for all costs and charges which are not in dispute. All disputes which have
not been resolved within thirty (30) calendar days after either party has
notified the other in writing of such dispute shall be submitted for arbitration
in accordance with the rules of the American Arbitration Association or any
successor thereof. Arbitration shall take place at an appointed time and place
in Lexington, Kentucky.
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(b) Selection of Arbitrators. Holdco and AEI each shall select
one (1) arbitrator (who shall not be counsel for such party), and the two (2) so
designated shall select a third arbitrator. If either party shall fail to
designate an arbitrator within seven (7) calendar days after arbitration is
requested, or if the two (2) arbitrators shall fail to select a third arbitrator
within fourteen (14) calendar days after arbitration is requested, then such
arbitrator shall be selected by the American Arbitration Association or any
successor thereto upon application of either party. Judgment upon any award of
the majority of arbitrators shall be binding and shall be entered in a court of
competent jurisdiction. Subject to the provisions of this Agreement, including
but not limited to Section 13(d), the award of the arbitrators may grant any
relief that a court of general jurisdiction has authority to grant, including,
without limitation, an award of damages and/or injunctive relief, and shall
assess, in addition, the cost of the arbitration, including the reasonable fees
of the arbitrator, reasonable attorneys' fees and costs of all prevailing
parties, against all non-prevailing parties.
(c) Temporary Injunctive Relief. Nothing herein contained
shall bar the right of any of the parties to seek and obtain temporary
injunctive relief from a court of competent jurisdiction in accordance with
applicable law against threatened conduct that will cause loss or damage,
pending completion of the arbitration, and the prevailing party therein shall be
entitled to an award of its reasonable attorneys' fees and costs.
(d) Arbitration Rules. All disputes and claims shall be
determined by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "Rules") in effect on the date hereof,
except that such Rules shall be modified by this Agreement.
(e) Arbitration Proceedings. All arbitral proceedings arising
under, or in connection with, this Agreement shall be governed by the Federal
Rules of Civil Procedure. Notwithstanding the previous sentence, the
arbitrators' award shall be made no later than ninety (90) days after their
appointment. Subject to the parties' right to be treated fairly, the arbitrators
may shorten the periods of time otherwise applicable to the arbitral proceedings
under the Rules or the Federal Rules of Civil Procedure to permit the award to
be made within the time limitation set forth in the previous sentence.
12. Relationship of the Parties. It is expressly agreed that AEI will
provide the labor and perform the work and services specified by this Agreement
as an independent contractor. Nothing contained herein shall be construed as
creating a partnership, single enterprise, joint venture or joint employer
relationship between AEI and Holdco, or their respective employees.
13. Miscellaneous.
(a) Benefit and Binding Effect. This Agreement shall be
binding on, and inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, successors and assigns.
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(b) Notices. Any notice, approval or consent authorized or
required hereunder shall be in writing and (i) delivered personally, (ii) sent
postage prepaid by certified mail or registered mail, return receipt requested,
or (iii) sent by a nationally recognized carrier, directed to the other party at
its address set forth in this Section 13(b) or such other addresses or parties
as may be designated by either AEI or Holdco by notice given from time to time
in accordance with this Section 13(b):
If to AEI:
Xxxxxxxxx Enterprises, Inc.
0000 Xxxxx Xxx Xxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxx, Xxxx & Heyburn PLLC
2700 Lexington Financial Center
Xxxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Holdco or an Affiliate:
AEI Holding Company, Inc.
0000 Xxxxx Xxx Xxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxx, Xxxx & Xxxxxxx PLLC
2700 Lexington Financial Center
Xxxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
A notice, approval or consent shall be deemed received (i) upon the delivery
thereof in person, (ii) five (5) days after depositing thereof in any office of
the United States Postal Service or any successor governmental agency, or (iii)
three (3) days after giving thereof to a nationally recognized overnight
carrier. Any party may change its address for receiving notices and
communications by giving the other party appropriate written notice thereof.
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(c) Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, representations and understandings of the
parties and their principals and affiliates with respect thereto. No amendment
to, or modification of, this Agreement shall be valid or effective unless agreed
to in writing by all of the parties hereto. No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, nor shall any waiver constitute a continuing waiver. No waiver shall
be valid or binding unless agreed to in writing by the party granting the
waiver.
(d) Limitations. Damages made payable as a result of either
party's default under this Agreement shall be limited to those actual damages
incurred by such party seeking relief. In no event shall any party, its
respective affiliates, agents or attorneys, be liable for any indirect,
punitive, special, extraordinary or consequential damages, or any damages other
than, or in addition to, actual damages under this Agreement or with respect to
the transactions contemplated hereunder.
(e) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(f) Headings. The headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit or describe
the scope and intent of this Agreement or any of the provisions thereof.
(g) Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
(h) Signatures by Facsimile. Facsimile signatures shall be
considered original signatures for the purpose of execution and enforcement of
the rights delineated in this Agreement.
(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Kentucky, without
regard to its conflict of laws principles.
(j) Assignment.
(i) Without the prior written consent of AEI: (i)
Holdco or any Affiliate shall have the right to assign some or all of its rights
and obligations under this Agreement to any Affiliate; (ii) a Purchaser or such
Purchaser's Related Party shall have the right to assign some or all of its
rights and obligations under this Agreement to such Related Party; and (iii)
Holdco, an Affiliate, a Purchaser or such Purchaser's Related Party shall have
the right to assign some or all of its rights and obligations under this
Agreement to a Person that acquires all of the stock, or all or substantially
all, of the assets of Holdco, such Affiliate, such Purchaser or such Purchaser's
Related Party, provided that such Person shall thereafter have only the rights
of a Purchaser that are expressly set forth in Section 8. Except as specifically
provided in this Section 13(j)(i) or Section 8, neither Holdco nor any
Affiliate, Purchaser or Purchaser's Related Party shall transfer, sell or assign
its rights under this Agreement without obtaining the prior written consent of a
member of AEI.
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(ii) Without the prior written consent of Holdco, AEI
shall have the right to assign its rights under this Agreement to any Related
Party of AEI, Mining Technologies, Inc., a Kentucky corporation, a Related Party
of Mining Technologies, Inc., or a Person that acquires all or substantially all
of the assets of AEI. Except as set forth in the preceding sentence, no member
of AEI shall transfer, sell or assign its rights under this Agreement without
obtaining the prior written consent of Holdco, which consent shall not be
unreasonably withheld or delayed.
(iii) Notwithstanding any provision of this Agreement
to the contrary, any party having rights under this Agreement may assign such
rights and obligations, without the consent of any other party to this
Agreement, to a creditor for purposes of securing any credit extended to such
party by such creditor.
(k) Compliance. The parties agree that they will cause their
respective subsidiaries and affiliated entities to comply with the terms of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above, but actually on the dates set forth below.
HOLDCO: AEI HOLDING COMPANY, INC., a Delaware
corporation
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Title: Chief Financial Officer
Date: November 11, 1997
AEI: XXXXXXXXX ENTERPRISES, INC., a Kentucky
corporation
By: /s/ Xxx Xxxxx
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Name: Xxx Xxxxx
Title: Chief Financial Officer
Date: November 11, 1997
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