EXHIBIT 3.20
AMENDED AND RESTATED VENTURE AGREEMENT
OF
COLONY BAY COAL COMPANY
Amended and Restated Venture Agreement (the "Agreement"), dated and
effective as of the 1st day of January, 1983, by and between WALNUT COAL
COMPANY, a West Virginia corporation ("Walnut"), and XXXXXXX COAL COMPANY, a
Delaware corporation ("Xxxxxxx"), (Walnut and Xxxxxxx being hereinafter
sometimes collectively called "Partners" and individually called a
"Partner"),
W I T N E S S E T H :
WHEREAS, Walnut and Xxxxxxx have heretofore entered into a certain
Venture Agreement dated as of November 20, 1980 (the "Original Agreement"),
pursuant to which Walnut and Xxxxxxx have formed a partnership (the
"Partnership") under the West Virginia Uniform Partnership Act and have
adopted the Original Agreement as the Articles of Partnership of the
Partnership; and
WHEREAS, the Partnership has and is engaged in the coal mining
business in West Virginia as further described below; and
WHEREAS, the Partners desire to provide that Walnut shall furnish
to the Partnership certain services in connection with the continued
operation of the Colony Bay Reserve (as defined below), for the compensation
and on the other terms set forth herein;
NOW, THEREFORE, to effect the foregoing and in consideration of the
mutual covenants and benefits herein set forth and contemplated the Partners
(i) agree that the Original Agreement is hereby amended and restated in its
entirety by this Agreement, and (ii) further agree as follows:
SECTION 1. ORGANIZATION OF THE PARTNERSHIP
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1.1 Organization.
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(a) The Partners hereby adopt this Agreement as the Amended and
Restated Articles of Partnership of the Partnership in the place and stead
of the Original Agreement and hereby agree that the Partnership shall be
continued for the limited purposes and scope set forth herein.
(b) Except to the extent otherwise provided herein, the rights and
liabilities of the Partners and the conduct and termination of the
Partnership shall continue to be governed by the West Virginia Uniform
Partnership Act.
(c) The Partners will promptly execute all certificates and other
documents, and make all such filings and recordings and perform such other
acts as may now or hereafter be necessary or desirable, to comply with the
requirements of West Virginia law for the carrying on of the business of
the Partnership.
(d) Each Partner shall continue to be a general partner and each
Partner's interest in the Partnership
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shall continue to be fifty percent (hereinafter called its "Partnership
Interest").
(e) All real and other property including permits and licenses
owned by or granted to or held by the Partnership shall continue to be
deemed to be owned by or granted to or held by the Partnership as an
entity, and no Partner, individually, shall have any ownership of, or right
to use, any such property, except as provided in this Agreement.
1.2 Name. The name of the Partnership shall continue to be "COLONY
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BAY COAL COMPANY", and the Partnership's business and affairs shall continue
to be conducted only under that name.
1.3 Effective Date and Term. This Agreement shall be effective as
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of the date hereof (hereinafter called the "Effective Date") and the
Partnership shall continue in effect until terminated as provided in Section
8 hereof.
1.4 Principal Office. The principal office and place of business
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of the Partnership shall be Bluestone Coal Building, 000 Xxxxx Xxxxxxxxxx
Xxxxx, Xxxxxxx, Xxxx Xxxxxxxx 00000 or such other location as the Partners
may designate.
1.5 Purposes and Scope. The sole purpose of the Partnership shall
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be to engage in the business of mining coal in the seams and veins of coal in
the areas covered
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by the SubSublease and Consent dated November 20, 1980 between Eastern
Royalty Corp. ("Royalty") and the Partnership (said subleased premises being
hereinafter called the "Colony Bay Reserve") and in other activities
incidental to such business, which activities may from time to time include:
(a) developing strip, deep or auger mines and conducting mining operations in
and on the Colony Bay Reserve; (b) acquiring by purchase, lease, sublease or
otherwise rights to mine and extract coal in the Colony Bay Reserve; (c)
acquiring by purchase, lease, sublease or otherwise surface land or rights to
the use of surface land; (d) acquiring by purchase, lease or otherwise such
machinery, equipment and other facilities as may be necessary or advisable
for such operations; (e) entering into such engineering, operating or mining
agreements with third parties as may be necessary or advisable to accomplish
the foregoing; (f) transporting coal produced from such operations by such
means as may be necessary or advisable (but not acting as a common carrier in
connection therewith); (g) selling such coal and engaging in marketing
activities incidental thereto; and (h) performing all other activities,
including the borrowing of money and the mortgaging of real estate or
personal property of the Partnership in connection therewith, as are
necessary or incidental to conducting such business.
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The Partnership shall have the power to do any act and thing and to
enter into any contract incidental to, or necessary, proper or advisable for,
the accomplishment or attainment of the purpose of the Partnership specified
in this Agreement.
1.6 Partner's Authority. Except as otherwise provided in this
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Agreement, neither Partner alone shall have any authority to act for, or to
assume any obligations or responsibilities on behalf of, the other Partner or
the Partnership. Each Partner will indemnify the Partnership and the other
Partner against any claim, loss or damage to the Partnership or other Partner
which may result from the Partner's breach of this Subsection 1.6.
SECTION 2. OTHER AND COMPETING BUSINESS
Except as otherwise provided herein, nothing contained in this
Agreement shall be deemed to restrict in any way the freedom of either
Partner, or any Affiliate of either Partner, to conduct, independently of the
Partnership, and whether or not in competition with the Partnership, any
business or activity outside the Colony Bay Reserve (other than the business
contemplated to be performed by the Partnership under and in accordance with
this Agreement) without any accountability to the Partnership or to the other
Partner. No provision of this Agreement shall be interpreted in such a
manner as to impose limitations
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upon the activities of either Partner which will have the effect of limiting
competition. For the purposes of this Agreement, "Affiliate" means, as to
any entity, a person, corporation, company, trust, firm or other entity which
directly or indirectly controls, or is controlled by, or is under common
control with, such entity.
SECTION 3. CONTRIBUTIONS TO THE PARTNERSHIP
As and when the Partnership determines from time to time that it
requires cash, each Partner hereby agrees that it shall make cash
contributions to the Partnership in an amount equal to fifty percent of each
such cash requirement.
SECTION 4. MANAGEMENT OF THE PARTNERSHIP
4.1 Management of the Colony Bay Reserve.
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(a) Walnut, as managing general partner, shall supervise, manage and
direct the operation of all of the mines and mining activities of the
Partnership, upon the terms and conditions set forth below:
(i) Walnut shall at its expense perform or cause to be
performed or furnished, all of the work and services described in
Appendix A attached hereto and with the authority and in accordance
with the terms and conditions set forth in said Appendix A.
(ii) The Partnership shall pay to Walnut, as a guaranteed
payment (as such term is defined in Section 707(c) of the Internal
Revenue Code of
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1954, as amended), a management fee based upon the number of tons of
raw coal mined by the Partnership in each calendar year, as follows,
subject to adjustment as hereinafter provided:
(1) $1.43 per ton for all coal mined up to but not in excess
of 700,000 tons in any year;
(2) $1.37 per ton for all coal mined in excess of 700,000
tons up to but not in excess of 1,200,000 tons in any year; and
(3) $1.12 per ton for all coal mined in excess of 1,200,000
in any year.
(iii) The management fee set forth in subsection (ii) above
shall be adjusted from time to time for all costs incurred by Walnut
in the performance of its services hereunder that are directly
applicable to such services and that result from complying or
preparing to comply with any federal, state or local law, regulation
or order enacted or adopted after the date hereof or from any
amendment or change in any existing federal, state or local law,
regulation or order changed or amended after the date hereof. In the
event of such an enactment, adoption, change or amendment, Walnut
shall determine the cost of complying or preparing to comply, Xxxxxxx
shall have the right to examine and question any such
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determination and, if the Partners shall agree on the amount of the
adjustment, the amount so determined shall be added to the management
fee (as then adjusted) to be effective as incurred by Walnut. If the
Partners shall not agree, the amount of such adjustment shall be
determined by arbitration under Section 9 hereof.
(iv) The management fee (as adjusted pursuant to subsection
(iii) above) shall be further adjusted annually as of May 1 (but not
below (x) $1.43 per ton for all coal mined up to but not in excess of
700,000 tons in any year, (y) $1.21 per ton for all coal mined in
excess of 700,000 tons up to but not in excess of 1,200,000 tons in
any year and (z) $.99 per ton for all coal mined in excess of
1,200,000 tons in any year, in each case subject to adjustment
pursuant to subsection (iii) above) by a percentage amount equal to
the percentage increase or decrease in the average gross selling price
of all of the coal produced by the Partnership during the preceding
calendar year as compared to a base gross selling price of $32.00 per
ton. The average gross selling price for any calendar year shall be
the gross f.o.b. mine sale price, including any premium-penalty
adjustments for coal quality, for such coal sold during such calendar
year, whether or not actually paid by
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vendees and without deduction for taxes, commissions, royalties or any
other matter or thing, divided by the total number of net tons of such
coal sold during such year.
An example of such adjustment is as follows:
MF = Management Fee = $1.43
BP = Base Gross Selling Price = $32.00
AP = Average Gross Selling Price = $40.00
AF = Adjusted Management Fee
AF = (MF) AP
--
BP
AF = ($1.43) $40 = $1.43 (1.25) = $1.79
----
$32
(v) In all adjustments of the management fee, any fraction of
one cent shall be rounded to the nearest whole cent by dropping the
last significant integer if five or less or by rounding up if six or
more.
(vi) As used herein, the term "ton" shall mean a net ton of
2,000 pounds.
(vii) All sums due hereunder shall be payable monthly by the
15th day of each month for the preceding calendar month.
(viii) The Partnership shall, at its expense, employ all labor
necessary to carry on the operation of its mines and mining
activities, including all mine superintendents, both deep and surface,
mine engineering and mine office staffs,
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and all other employees below the level of mine superintendent, all of
whom shall be employees of and shall be under the direction and
control of the Partnership, but who shall be subject to supervision by
Walnut.
(ix) Walnut shall, at its expense, (1) employ all
supervisory and management personnel above the level of mine
superintendent necessary for the efficient and economic operation of
the mines and mining activities of the Partnership, and furnish to
them such employee benefits, including pension, profit-sharing,
insurance and bonus plans, as it may deem advisable; (2) supply
appropriate transportation facilities for such supervisory personnel,
in its discretion; (3) oversee all services and work performed at the
mine; (4) perform overhead engineering and other work not appropriate
for performance at the mining site; and (5) be responsible for all
planning and forecasting. The cost of all necessary legal, accounting
and other professional services not rendered by officers or employees
of Walnut shall be borne by the Partnership
(x) Term. The provisions of this Section 4.1 shall take effect
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as of the Effective Date and shall continue in effect until November
20, 1986, and shall continue automatically thereafter from
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year to year, subject, however, to the right of Walnut or the
Partnership to terminate the provisions of this Section 4.1 on
November 20, 1986, or thereafter, by giving six months' written notice
to the other party of such election to terminate said provisions in
the manner and form provided for giving of notice herein.
(b) Nothing contained in this Section 4.1 shall be deemed or
construed to create any rights of ownership in Walnut (beyond or in
addition to its rights as Partner in the Partnership pursuant to the terms
of this Agreement) of any documents, records, reports, plans or any other
instruments created, written or copied by Walnut pursuant to the
performance of its management responsibilities under this Section 4.1. All
such records and documents shall be available to Xxxxxxx for inspection and
copying during normal business hours and shall be delivered to Xxxxxxx upon
the termination of this Agreement or the termination of Walnut's management
responsibilities under the provisions of this Section 4.1.
(c) No termination (for whatever reason) of Walnut's management
responsibilities under the provisions of this Section 4.1 or default in the
performance by Walnut or the Partnership of any obligations hereunder,
shall be deemed or construed to constitute a default under the remaining
provisions of
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this Agreement or to create any right of termination of this Agreement or
to constitute, require or permit any dissolution of or withdrawal of Walnut
from the Partnership.
(d) Any termination of this Agreement or dissolution of or withdrawal
of Walnut from the Partnership (for whatever reason) shall terminate
Walnut's management responsibilities under the provisions of this Section
4.1.
(e) The amounts received by Walnut pursuant to the terms of
subsection (a)(ii) (as adjusted pursuant to subsections (a)(iii) and (iv))
of this Section 4.1 shall constitute a guaranteed payment (as such term is
defined in Section 707 of the Internal Revenue Code of 1954, as amended
(the "Code")) to Walnut for its services as managing general partner and no
such payment shall, for purposes of any other provision of this Agreement,
be deemed or construed to constitute (i) net income of the Partnership
allocable to Walnut, or (ii) a distribution of income by the Partnership to
Walnut, nor shall any adjustment be made of Walnut's Partnership Interest
or any other percentage, contribution or account by reason of receipt of
any such amounts by Walnut.
(f) The Partnership will appoint officers or employees of Walnut as
its authorized representatives, from time to time, to do and perform such
specific acts as may be designated by the Partnership and which are
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deemed convenient or necessary for the day-to-day operation of the business
of the Partnership.
(g) The Partnership shall at its expense provide appropriate
insurance coverage against liabilities arising from its operations and
activities, including property damage, in such amounts and with such
insurers as shall be determined by the Partnership. Such policies shall
name Xxxxxxx and Walnut as co-insureds where appropriate.
(h) Walnut shall perform its services under this Section 4.1 and
Appendix A in such manner as to provide efficient and economical planning,
construction, development and mining operations for the Partnership.
Walnut agrees that it will exercise its best efforts in carrying out its
obligations under this Section 4.1 and Appendix A.
4.2 General Management of the Partnership.
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(a) The ultimate responsibility for the affairs of the Partnership
shall be in the Partners, and each Partner shall have the right to
participate fully and actively in the management of the business of the
Partnership as herein provided. Subject to the provisions of this
Agreement and except to the extent otherwise provided in Section 4.1 and
Appendix A, all action and decisions in the management of the business of
the Partnership shall be taken jointly by agreement between both Partners.
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(b) Each Partner has, by notice to the other Partner, appointed a
"Managing Agent" and one or more "Executive Agents" (herein collectively
called "Agents"). At any time and from time to time, either Partner may
remove and appoint a replacement for any of its Agents by notice to the
other Partner, and shall do so immediately in the event of the death,
resignation or substantial inability or incapacity of any of its Agents.
In the absence or incapacity of a Partner's Managing Agent, one of such
Partner's Executive Agents (in the order designated by such Partner) shall
have the responsibility of and shall act for such Managing Agent. Each
Partner represents and warrants that each Agent so appointed by it by such
notice has and shall have all authority requisite to the duties of such
Agent hereunder.
(c) Agreement on behalf of either Partner pursuant to this Agreement
(except as contemplated in Subsection 4.2(f) hereof) shall be communicated
through its Managing Agent. Except to the extent otherwise provided in
Section 4.1, the Managing Agents shall be responsible for the day-to-day
management of the business of the Partnership. Meetings of the Managing
Agents (and any other Agents) shall be held at such intervals and at such
places as the Managing Agents shall determine. Action may be taken and
decisions made (subject to the limitations set forth in Subsections 4.2(e)
and 4.2(f)
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hereof) by either written or oral agreement of the Managing Agents for each
Partner. Actions taken and decisions made by a Managing Agent (or an
Executive Agent acting for a Managing Agent) shall be binding upon the
Partner by whom he was appointed.
(d) The Managing Agents may from time to time adopt detailed rules
and procedures not inconsistent with this Agreement (including Appendix A)
for the management of the business of the Partnership, including rules and
procedures for the establishment of one or more managing committees, the
membership of such managing committees and the delegation of
responsibilities of the Managing Agents to such managing committees.
(e) The following actions shall require in every event the written
consent of each Partner signed either by its Managing Agent or by another
officer thereof duly authorized "thereunto:
(i) The entering into of any contract or agreement (including
without limitation any contract or agreement for engineering,
architectural, construction, environmental, financial or other
consulting services, or any lease or other acquisition of equipment or
facilities or extension of credit on behalf of a supplier) calling
for, or reasonably expected to
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call for, the payment over its term by the Partnership of more than
$100,000.
(ii) The entering into of any contract or agreement for the
sale or marketing of coal, the term of which exceeds one year; and the
establishment of general policies, terms and conditions under which
any other sale of coal will be made.
(iii) Incurring, guaranteeing or otherwise becoming liable for
indebtedness for borrowed money in an amount in excess of $100,000 in
the aggregate.
(iv) The acquisition of any land or other interests in real
estate reasonably estimated to have a price in excess of $100,000.
(v) The sale or transfer of any property or asset of the
Partnership, other than obsolete or worn out assets and property or
assets reasonably estimated to be worth in each case less than
$l00,000, except in the ordinary course of business.
(vi) The employment or discharge of employees of the
Partnership at the level of the Mine Superintendent.
(vii) The adoption of pension and other employee benefit and the
awarding of bonuses to employees.
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(viii) The waiver by the Partnership of any default by
Walnut under Section 4.1 hereof or the assignment, termination,
extension or amendment of any of the obligations of Walnut under
Section 4.1 hereof.
(ix) The waiver by the Partnership of any default by Eastern
Associated Coal Corp. ("EACC") under the Coal Cleaning Contract (the
"Cleaning Contract") or by Associated Coal Sales Corp. ("ACSC") or
Xxxxxxx, Xxxxxx & Bullitt, Inc. ("CCB") under the Coal Sales Agreement
(the "Sales Agreement"), each dated as of November 20, 1980, entered
into with the Partnership or the termination, extension, amendment or
assignment of either agreement or the consent to the assignment of
either agreement by EACC, ACSC or CCB.
(f) The following actions shall require in every event the written
consent of each Partner, executed by an officer thereof duly authorized
"thereunto (with evidence of specific authority from the board of directors
of the appropriate Partner):
(i) Any amendment, modification, change or variation in or to
this Agreement.
(ii) Any discontinuance or substantial reduction of the
business of the Partnership contemplated by this Agreement.
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(iii) The liquidation or dissolution of the Partnership, except
pursuant to Section 8 hereof.
(iv) Any merger or consolidation of the Partnership into or
with any other entity, or any transfer, assignment or encumbrance of a
Partner's Partnership Interest except pursuant to Section 7 hereof.
(g) Notwithstanding the limitations, obligations and liabilities
established between the Partners hereunder, any person transacting business
with the Partnership may rely upon the fact that each Partner and each
Managing Agent is an agent of the Partnership for the purposes of its
business, and the act of any Partner or Managing Agent, including the
execution in the Partnership's name of any instrument for apparently
carrying on in the usual way the business of the Partnership (as
interpreted under the West Virginia Uniform Partnership Act), will bind the
Partnership unless the person with whom he is dealing has knowledge of the
fact that he has no such authority.
(h) Either Partner alone shall have the right at any time to assert
and enforce at law, in equity or otherwise, in the name and on behalf of
the Partnership any claim which the Partnership may have against Walnut in
connection with its performance under Section 4.1 hereof (subject to the
provisions of Section 9 hereof), or against EACC in connection with its
performance under
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the Cleaning Contract or against ACSC or COB in connection with their
performance under the Sales Agreement. The Partnership shall pay the costs
and expenses (including reasonable legal fees) of enforcing any such claim
provided that the recovery to the Partnership with respect to such claim
exceeds such costs and expenses.
SECTION 5. ACCOUNTING MATTERS; BOOKS AND RECORDS; TAX RETURNS
5.1 Fiscal Year. The fiscal year of the Partnership shall continue
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to be the calendar year.
5.2 Books and Reports. The Partnership shall cause to be prepared
-----------------
and maintained complete books and records, on an accrual basis, regarding all
phases of its business, including without limitation, construction, marketing
activities, procurement and purchasing, contract administration, financial
planning, administration, accounting, reporting, legal, capital expenditures,
and taxes, royalties and other operation expenses, capital and operation
budgets and other reporting procedures. The Partnership shall keep its
books of accounts in accordance with generally accepted accounting principles
consistently followed, except as otherwise agreed in writing by the Partners.
Each Partner shall have the right (at its own expense) to inspect, audit and
copy any and all such books and records at all reasonable times, which right
may be exercised through
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one or more Agents or employees of such Partner designated by such Partner
and by one or more attorneys, independent engineers or independent certified
public accountants designated by such Partner.
5.3 Financial Records; Independent Audits. Promptly after the end of
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each month, the Partnership will cause to be prepared and deliver to each
Partner financial statements and related reports reflecting the financial
position of the Partnership at the close of the month and the results of
operations of the Partnership for the month. The Partnership shall have an
audit of its books made as soon as practicable after the close of each fiscal
year by Xxxxxx Xxxxxxxx & Co. or such other nationally recognized firm of
public accountants as the Partners shall designate, and shall furnish each
Partner copies of such financial statements and related reports reflecting
the financial position of the Partnership at the close of the fiscal year and
the results of operation of the Partnership for the fiscal year, together
with the certificate of the public accountants covering the results of such
audit.
5.4 Taxes and Tax Returns. The Partnership shall prepare and file
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all tax returns required to be filed by the Partnership pursuant to the Code
or any successor statutes, and all state and local tax returns required to be
filed by the Partnership. The Partnership shall not make an election to
defer development
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expenditures under Section 616(b) of the Code, entitled "Development
Expenditures". In the preparation of the Partnership tax returns,
depreciation methods will be adopted and other elections will be made to
maximize percentage depletion over the life of the project. When percentage
depletion is unaffected the most rapid available method of depreciation will
be elected. No changes in the accounting methods for the purpose of
preparation of tax returns of the Partnership shall be made without the
consent of each Partner.
SECTION 6. PROFITS, LOSSES AND DISTRIBUTIONS
6.1 Profits and Losses. All profits and losses of the Partnership
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shall be shared equally by the Partners except as set forth below:
(a) For book and tax purposes, all expenses of the Partnership with
respect to royalty obligations payable to Royalty relating to the Colony
Bay Reserve in excess of the royalty obligations payable by EACC to The
Charleston National Bank, as Trustee and successor in interest of Xxxxxx X.
Xxxxxxx et ux., pursuant to the Agreement of Lease dated January 29, 1946,
-- --
as amended, and relating to the Colony Bay Reserve (the "Excess Royalty
Payments") shall be allocated only to Xxxxxxx. The Partnership shall
distribute to Walnut cash equal to the Excess Royalty Payments, such
distributions to be made contemporaneously with the payment of royalty
obligations giving rise to such Excess Royalty Payments.
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(b) The allocation between the Partners of percentage depletion for
tax purposes shall be made so that Walnut is allocated the amount it would
have been entitled to receive if the Partnership's royalty obligation
referred to in clause (a) above were no greater than the royalty obligation
of EACC referred to in said clause. In the event there is an insufficient
amount of percentage depletion to allocate to Walnut pursuant to the
preceding sentence, Xxxxxxx shall pay to Walnut cash equal to the pretax
value to Walnut of such deficiency.
(c) The Partners may from time to time enter into additional
agreements allocating for tax or book purposes certain items of income and
expense.
6.2 Distributions. Except as otherwise specifically provided in this
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Agreement, all distributions of any Partnership assets shall be made only as
and when determined by the prior written agreement of both Partners and all
distributions of any Partnership assets, including those on termination and
dissolution of the Partnership, shall be shared equally by the Partners.
SECTION 7. RESTRICTIONS ON TRANSFER OF PARTNERSHIP INTERESTS
Neither Partner may transfer, sell, alienate, assign or otherwise
dispose of all or any part of its interest in the Partnership, whether
voluntarily, involuntarily or by operation of law, or at a judicial
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sale or otherwise; provided, however, that nothing herein contained shall be
construed to prohibit either (a) the transfer of Walnut's entire interest in
the Partnership to Bluestone Coal Corporation ("Bluestone") or to any entity
100% of the equity of which is owned directly or indirectly by Bluestone, or
(b) the transfer of Xxxxxxx' entire interest in the Partnership to Eastern
Gas and Fuel Associates, a Massachusetts voluntary association ("Eastern"),
or to any entity 100% of the equity of which is owned directly or indirectly
by Eastern, so long as such transferee shall, immediately upon such transfer,
become a Partner and expressly assume in writing the due and punctual
performance of all the obligations of the transferring Partner under this
Agreement and consent and undertake in writing to assume and perform all the
obligations hereunder not theretofore performed and discharged by such
Partner and to execute this Agreement and be bound by all the terms and
provisions hereof; provided, however, that no such transfer shall be
permitted without the express written consent of the nontransferring Partner
if such transfer would, in the reasonable opinion of the nontransferring
Partner, result in adverse tax consequences to the nontransferring Partner
under the Code. Whenever pursuant to this Section 7 any transferee is
entitled to become a Partner, the other Partner agrees
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to execute an appropriate instrument admitting such transferee as a Partner.
SECTION 8. TERM; DISSOLUTION; TERMINATION
8.1 Effective Date and Term. The Partnership shall be subject to the
-----------------------
terms and provisions of this Agreement as of the Effective Date and shall
continue until terminated in accordance with the provisions of this Section
8. No Partner shall have the right to and each Partner agrees not to
dissolve, terminate or liquidate, or to petition a court for the dissolution,
termination or liquidation of the Partnership, except as provided in this
Agreement.
8.2 Events of Dissolution.
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(a) The Partnership shall dissolve:
(i) upon the unanimous written agreement of the Partners to
dissolve the Partnership;
(ii) on November 20, 2079;
(iii) upon written notice given by Walnut at any time after the
sixth anniversary of the Effective Date;
(iv) upon the dissolution of a Partner; or
(v) if (A) a Partner shall (1) apply for or consent to the
appointment of a receiver, trustee, assignee for creditors or
liquidator of such Partner, or of all or a substantial part of such
Partner's assets, (2) be subject to an order for relief or be
adjudicated a bankrupt or insolvent
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under any bankruptcy or insolvency statute, or file a voluntary
petition in bankruptcy, or be unable to pay its debts generally as
they come due, (3) make a general assignment for the benefit of
creditors, (4) file a petition or an answer seeking reorganization or
arrangement with creditors or to utilize any insolvency law, or (5)
file an answer admitting the material allegations, or consent to, or
default in answering a petition filed against such Partner in any
bankruptcy, reorganization or insolvency proceeding; or (B) a
voluntary petition seeking reorganization of a Partner or an
arrangement with creditors (or any call of creditors) of a Partner or
appointing a receiver, trustee or liquidator of a Partner or of all or
a substantial part of the assets of a Partner, shall be filed and such
petition shall not be dismissed for any period of sixty consecutive
days.
(b) Upon the dissolution of the Partnership pursuant to either
Subsection 8.2(a)(i) or 8.2(a)(ii), the Partnership and its business shall
promptly be wound-up and terminated. Upon the dissolution of the
Partnership caused by any event set forth in Subsection 8.2(a)(iii) through
8.2(a)(v), inclusive, (A) the Partner giving the written notice
contemplated by Subsection 8.2(a)(iii) or as to whom the event described in
Subsections 8.2(a)(iv) or 8.2(a)(v) has occurred (the
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"Withdrawing Partner") shall immediately cease to be a Partner, and (B) the
business of the Partnership shall not be wound-up and terminated unless the
remaining Partner shall so elect.
(c) Subject to the provisions of Section 8.2(b) above, in the event
of the occurrence of an event set forth in Subsections 8.2(a)(iii) through
8.2(a)(v), inclusive:
(i) the remaining Partner may send such notices of the
dissolution to such persons and entities as the remaining Partner may
deem appropriate and necessary under the circumstances;
(ii) the remaining Partner shall either continue or promptly
settle the business of the Partnership and, in either case, account
for the interest of the Partners, and such procedure may include
without limitation at the option of the remaining Partner either (A) a
purchase by the remaining Partner of the interest in the Partnership
of the Withdrawing Partner at a price equal to an amount determined in
accordance with an appraisal of the interest of the Withdrawing
Partner (net of all liabilities and obligations to be assumed by the
remaining Partner in accordance with Subsection 8.4(d) hereof) made by
three generally recognized competent coal mining appraisers one of
whom shall be selected by the
26
Withdrawing Partner, another by the remaining Partner and the third by
the other two appraisers so selected; provided, however, that such
appraisal shall assign no value to the goodwill of the Partnership,
and provided further that such appraisal shall value the assets of the
Partnership as located and erected at the Colony Bay Reserve and as if
such assets were to be used at that location but without regard to the
potential earning power of such assets, or (B) a sale of all or any
part of the assets of the Partnership;
(iii) the goodwill of the Partnership (including the name,
records and files) shall belong to and remain solely vested in the
remaining Partner; and the remaining Partner shall have the right at
all times to continue the business and affairs of the Partnership; and
(iv) the prior written consent of the remaining Partner shall
be required prior to either (A) any disposition of the Partnership
interest of the Withdrawing Partner, or (B) any act by any judge,
trustee or court of bankruptcy which may adversely affect the property
or the business of the Partnership.
8.3 Voluntary Termination and Purchase by Xxxxxxx.
---------------------------------------------
(a) Xxxxxxx shall have the right on and after the sixth anniversary
of the Effective Date to terminate the
27
Partnership at any time by giving to Walnut a notice of termination (the
"Termination Notice") which shall state that Xxxxxxx will purchase Walnut's
interest in the Partnership at a price determined as hereinafter provided.
Upon giving the Termination Notice, Xxxxxxx will have the rights of the
remaining Partner as contemplated by Subsections 8.2(b) and 8.2(c) hereof
and shall have the obligation to purchase Walnut's interest in the
Partnership. The purchase price for such purchase shall be the sum of (i)
the price contemplated by Subsection 8.2(c)(ii)(A) and (ii) one-half of the
aggregate income of the Partnership for any period of 36 consecutive
calendar months beginning not more than 36 months prior to the date of the
Termination Notice and ending not more than 36 months after the date of the
Termination Notice, said period to be designated by Walnut within thirty
days after receipt of the Termination Notice. The income of the Partnership
shall be determined by generally accepted accounting principles applied on
a consistent basis except as otherwise agreed in writing by the Partners.
The income of the Partnership for any period subsequent to the date of the
Termination Notice shall be the pretax income of Xxxxxxx (without deduction
for the Excess Royalty Payments) derived from the business of the
Partnership continued by Xxxxxxx as the remaining Partner after termination
of the Partnership. If Walnut designates
28
any period which ends after the Closing (hereinafter defined in Subsection
8.4(a)), the purchase price payable at the Closing shall be the amount
contemplated by Subsection 8.2(c)(ii)(A) and the balance of the purchase
price, if any, shall be payable as soon as practicable after the end of
such period and the determination of such balance.
(b) Xxxxxxx shall have the option of making payment of the purchase
price contemplated by Subsection 8.3(a) hereof in shares of common stock of
Eastern. In the event Xxxxxxx elects to make payment in such stock,
Xxxxxxx shall deliver at the Closing, in lieu of the check contemplated by
Subsection 8.4(c) hereof, certificates representing the number of shares
(rounded to the nearest full share) of such stock obtained by dividing the
amount of the payment by the average of the daily closing sales prices for
such stock on the New York Stock Exchange for the last five trading days
immediately preceding the date of the Termination Notice and, as soon as
the balance of the purchase price, if any, has been determined, shall
deliver certificates representing the number of shares (rounded as
aforesaid) of such stock obtained by dividing the amount of such balance by
the average of said daily closing prices for the last five trading days
immediately preceding such date of delivery. Walnut agrees that any shares
of common stock of Eastern delivered to Walnut pursuant to
29
the foregoing will be acquired for its own account and for investment and
not with a view to or in connection with any distribution thereof. Walnut
agrees to confirm this understanding upon each delivery of such shares and
to acknowledge that such shares will not be registered under the Securities
Act of 1933 based upon such representation. Walnut shall also agree that
such shares shall not be sold or transferred unless either (i) such shares
shall first have been registered under said Act or (ii) Eastern first shall
have been furnished with an opinion of its legal counsel stating that such
sale or transfer is an exempted transaction under said Act. If the sale or
transfer is pursuant to the foregoing clause (ii), Eastern shall also be
furnished with a written agreement by the transferee of such shares not to
sell or transfer such shares again without complying with the requirements
provided for in this Subsection 8.3(b); provided, however, that no such
agreement shall be required if the opinion referred to in clause (ii)
states that such shares may be transferred by the transferee immediately
after acquisition without registration under said Act. Until such shares
have been registered under said Act or until Eastern shall have received an
opinion of counsel pursuant to the next preceding sentence stating that
such shares may be transferred by the transferee thereof immediately after
the acquisition without registration
30
of such shares under said Act, each certificate representing shares
delivered pursuant to this Subsection 8.3(b) shall bear the following
legend:
"The shares represented by this certificate are subject to certain
restrictions on sale or transfer as set forth in an agreement dated as
of ___________, 1983 between the issuer hereof and the initial holder
of the shares delivered pursuant to such agreement. The issuer hereof
will furnish a copy of such agreement to any registered holder hereof
upon written request and without charge."
8.4 Purchase by Remaining Partner. If the remaining Partner elects
-----------------------------
to purchase the interest in the Partnership of the Withdrawing Partner
pursuant to Subsection 8.2(c)(ii)(A) hereof or if Xxxxxxx purchases the
interest in the Partnership of Walnut pursuant to Subsection 8.3 hereof,
the following provisions shall govern the purchase by the remaining Partner
or Xxxxxxx (the "purchasing party") of the interest in the Partnership of
the Withdrawing Partner or Walnut (the "selling party"):
(a) The closing ("Closing") of any such purchase and sale shall be
held at the principal office of the Partnership, or another mutually
acceptable place.
31
(b) At the Closing, the selling party shall execute and deliver to
the purchasing party all bills of sale and other instruments of transfer
and conveyance, in form and substance satisfactory to the purchasing party,
as may be necessary to convey, transfer, assign and deliver to the
purchasing party ownership of all of the selling party's interest in the
Partnership, free and clear of all liens and encumbrances. The selling
party agrees, from time to time at the request of the purchasing party, at
or after the date of Closing to execute and deliver such instruments of
conveyance, assignment, transfer and consent as may be required or
advisable for the effective conveyance and transfer of the business,
properties, assets, name, goodwill and rights included in the selling
party's interest in the Partnership or otherwise to vest ownership of all
of the assets of the Partnership in the purchasing party.
(c) At the Closing, the purchasing party shall pay to the selling
party the purchase price determined as of the date of the Closing pursuant
to Subsection 8.2(c)(ii)(A) or Subsection 8.3(a), as the case may be, which
purchase price shall be adjusted downward by the amount of any contribution
to the capital of the Partnership which both the purchasing party and the
selling party agreed to make prior to the Closing if the purchasing party
made such contribution but the selling party did not make such contribution
prior to the
32
Closing. Subject to the provisions of Subsection 8.3(b), said purchase
price shall be paid by a cashier's or certified check from a bank
acceptable to the selling party.
(d) At the Closing, the purchasing party shall by a legally
enforceable agreement, effective upon the effectiveness of the sale of the
selling party's interest in the Partnership:
(i) assume and become obligated to pay, or discharge any
indebtedness, lien, mortgage or encumbrance on the assets of the
Partnership incurred in accordance with this Agreement to the extent
that the selling party has personal liability with respect thereto;
(ii) assume and become obligated to pay, or perform or
discharge the obligations and liabilities that the selling party may
have incurred in accordance with this Agreement to third parties as a
Partner in the Partnership (other than liabilities for which the
purchasing party may have a claim against the selling party due to the
selling party's breach of, or default under, the terms of this
Agreement);
(iii) assume and become obligated to pay, or perform or
discharge the obligations and liabilities that any Affiliate of the
selling party may have incurred to third parties as a guarantor
33
of obligations of the Partnership or to support financing arrangements
of the Partnership in some other manner such as an agreement to
maintain the working capital of the Partnership;
(iv) release and discharge the selling party of all obligations
and liabilities (except those on account of or arising out of any
breach of or default under the terms of this Agreement) to the
purchasing party or the Partnership incurred hereunder or otherwise in
connection with the operation of the business of the Partnership in
accordance with this Agreement; and
(v) save, defend and indemnify the selling party and its
Affiliates against and hold them harmless from any and all liabilities
specified in clauses (i) through (iv) of this Subsection 8.4(d).
8.5 Continuing Conduct of the Partnership. During the pendency of
-------------------------------------
any claim against a Partner for a breach of or for default under the terms of
this Agreement or during pendency of the procedures provided for in
Subsections 8.2, 8.3 and 8.4 hereof, the business and affairs of the
Partnership shall be conducted so as to maintain and preserve the value of
the Partnership as a going concern. During any period of winding up, the
business and affairs of the Partnership shall be conducted so as to maintain
and preserve the assets of the Partnership in a manner consistent with the
34
winding-up of the affairs thereof. Each Partner will indemnify the
Partnership and the other Partner against any claim, loss or damage to the
Partnership or such other Partner which may result from the Partner's breach
of this Subsection 8.5.
8.6 Liquidation and Distribution Procedure. In the event of any
--------------------------------------
liquidation and distribution as a result of the termination of the
Partnership, the assets of the Partnership after payment of or provision for
all just debts of the Partnership shall be distributed in accordance with the
provisions of the West Virginia Uniform Partnership Act except as otherwise
provided herein.
SECTION 9. ARBITRATION
Either Partner may cause to be submitted to arbitration all disputes,
controversies or questions of interpretation arising out of this Agreement or
any breach or default hereunder by giving to the other Partner notice to that
effect. The arbitration shall be held in Charleston, West Virginia and shall
be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association as in effect at the time of such arbitration
except as follows. The Partner desiring arbitration shall include in its
notice to the other Partner the name of the arbitrator chosen by it. Within
twenty days after receipt of such notice, the Partner receiving notice shall,
by written notice to the
35
Partner desiring arbitration, name the arbitrator chosen by it and within
twenty days after the appointment of the second arbitrator an additional
arbitrator shall be selected by the two arbitrators theretofore appointed;
provided, however, if one of the Partners shall have failed to appoint an
arbitrator as hereinabove provided, the sole arbitrator appointed by the
other Partner shall arbitrate the matter alone. If the two arbitrators shall
have failed to select an additional arbitrator within the above-stated time,
the additional arbitrator shall be appointed by the Chief Judge of the United
States Court of Appeals for the Fourth Circuit, acting in his individual
capacity, or in the event of his failure to appoint the additional
arbitrator, by the Regional Director of the American Arbitration Association
for Charleston, West Virginia. No arbitrator shall be an employee or former
employee of the Partnership, either Partner, or an Affiliate of either
Partner. After their selection, the arbitrators (or sole arbitrator as the
case may be) shall proceed promptly with the arbitration proceedings and
shall come to a decision and shall deliver a written report thereof to both
Partners no later than ninety days after the selection of the last of their
number (or in the case of a sole arbitrator, 110 days after his selection).
Each Partner shall pay the costs and expenses of the arbitrator appointed by
it and shall share equally the other costs and expenses of the
36
arbitration, including the costs and expenses of the additional arbitrator.
The right of either Partner to seek or obtain any remedy pursuant to this
Section 9 shall be in addition to the remedies provided for in Section 8
hereof and shall survive the dissolution of the Partnership or the sale and
purchase of a Partner's interest in the Partnership pursuant to Subsections
8.2 and 8.3 hereof.
SECTION 10. FORCE MAJEURE
If either Partner fails to perform or commits a breach of any
provision or covenant of this Agreement, other than the obligation to make
contributions as provided herein, and the cause of such breach or failure is
Force Mature, it shall be excused to the extent and for the period required
------------
by such cause. Force Majeure shall mean a strike, flood, fire, or other
-------------
casualty, act of God, act of government or other occurrence or circumstance
not due to the defaulting Partner's fault or negligence and not within such
Partner's reasonable control.
SECTION 11. GENERAL
11.1 Notices. All notices, demands or requests required or permitted
-------
to be given pursuant to this Agreement shall be in writing and shall be
deemed to have been given when delivered personally or when deposited in the
United States mail, postage prepaid, by registered or
37
certified mail, with return receipt requested, addressed as follows:
(a) If to Walnut to:
Walnut Coal Corporation
c/o Bluestone Coal Corporation
P. O. Xxx 0000
Xxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
or at such other address as Walnut may have furnished Xxxxxxx by notice.
(b) If to Xxxxxxx to:
Xxxxxxx Coal Company
c/o Eastern Associated Coal Corp.
Koppers Building
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
with a copy to:
Eastern Gas and Fuel Associates
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
or at such other address as Xxxxxxx xxx have furnished Walnut by notice.
11.2 Amendment. This Agreement may not be amended except by a
---------
written instrument executed by both Partners.
11.3 Applicable Law. This Agreement and the performance of the
--------------
Partners hereunder shall be interpreted, construed and enforced in accordance
with the laws of the State of West Virginia and no presumption shall be
deemed to exist in favor of or against either Partner as a result of the
preparation or negotiation of the same.
38
11.4 Entire Agreement. This Agreement constitutes the entire
-----------------
agreement between the parties hereto relative to the organization and
operation of the Partnership for the purposes herein contemplated and there
are no other expressed or implied understandings, representations or
warranties, oral or written, relating to the Colony Bay Reserve or the
subject matter of this Agreement, which shall be deemed to exist or to bind
any of the Parties hereto, their respective successors or assigns except as
referred to herein.
11.5 Further Assurances. Each of the Parties hereto shall from time
------------------
to time and at all times do all such other further acts as may reasonably be
necessary in order fully to perform and carry out the terms and intent
hereof.
11.6 Admission of Additional Partners. Except as provided in
--------------------------------
Section 7 hereof, no additional Partners may be admitted to the Partnership
except upon the unanimous consent of the Partners and upon such terms and
conditions as they may agree upon.
11.7 Severability. If any provisions of this Agreement or the
------------
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of the Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law.
39
11.8 Binding Agreement. Subject to the restrictions on transfers
-----------------
and other dispositions set forth herein, this Agreement shall inure to the
benefit of and be binding upon the undersigned Partners and their respective
successors and assigns.
11.9 Headings. The headings of sections in this Agreement are for
--------
convenience only and are not a part of this Agreement.
40
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement by their duly authorized officers as of the day and year first
above written.
WALNUT COAL CORPORATION
By: [Executed]
-------------------------------
XXXXXXX COAL COMPANY
By: [Executed]
-------------------------------
41
APPENDIX A
Procedures for Conduct of Management of
---------------------------------------
Colony Bay Reserve by Managing General Partner
----------------------------------------------
Terms used herein and not otherwise defined herein are used herein as
defined in the Amended and Restated Venture Agreement of Colony Bay Coal
Company (the "Agreement").
1. Services Included. Walnut shall at its expense provide or
-----------------
make provision for all of the managerial, administrative and technical
services reasonably required to enable the Partnership to conduct its
operations in a proper and businesslike manner. The services of Walnut
hereunder shall include, without implied limitation, (i) all upper management
services in connection with operations, purchasing, labor relations,
insurance, supervisory engineering, and, to the extent set out in Section 2
of these Procedures, accounting; (ii) all negotiations with and proceedings
before federal and state agencies having jurisdiction over the Partnership's
operations; (iii) the supervision of~the preparation of all mine permit
applications, reclamation plans, and mining plans and projections; and (iv)
the approval of and preparation of contracts with all miners and truckers
engaged by contract.
2. Accounting.
----------
(a) Walnut shall (i) keep and maintain complete books and
records, on the accrual basis of
42
accounting and in accordance with generally accepted accounting principles,
with respect to all phases of the business of the Partnership; (ii) maintain
all other records necessary or appropriate to recording and managing the
business and tax affairs of the Partnership, including the preparation and
filing of all federal, state and local tax returns, and including all books
and records provided for in (S) 5.2 of the Agreement; (iii) provide the
Partnership with appropriate financial statements on a monthly basis and at
such other times and for such other periods as may be reasonably required by
the Partnership.
(b) All books and records maintained for the Partnership by Walnut
hereunder shall be open to inspection by the Partnership or any of the
Partners at all reasonable times, and shall be the property of the
Partnership.
3. Bank Accounts. All receipts and income of the Partnership shall
-------------
be deposited in accounts in such bank or banks as may from time to time be
designated by the Partnership. Withdrawals from such accounts shall be made
upon the signature or signatures of such person or persons as may be
authorized by the Partnership from time to time.
4. Fund Deposits and Reports. Walnut shall be responsible for
-------------------------
maintaining all records, and for making all deposits and paying all premiums
(with funds of the
43
Partnership), on behalf of the Partnership and its employees, with respect to
the West Virginia Workmen's Compensation Fund, The West Virginia Coal Workers
Pneumoconiosis Fund, The West Virginia Unemployment Compensation Fund, and
any other such funds, as may be required by law, regulation or labor
contract, and for processing all claims by employees of the Partnership. All
legal expenses with respect to the processing or contest of such claims shall
be borne by the Partnership.
5. Materials and Supplies. Walnut shall oversee the ordering, for
----------------------
the Partnership's account, of all materials and supplies necessary for the
operation of the mines and mining activities of the Partnership, subject to
consultation between the Partners from time to time with respect to
suppliers, prices, etc.
6. Purchases, Leases and Equipment. Walnut shall be responsible for
-------------------------------
making recommendations to the Partnership with respect to the leasing or
purchase of equipment, coal deposits and surface lands. No equipment, coal
lands, or other property shall be leased or purchased by Walnut for the
Partnership's account without the express consent or approval of the
Partnership.
7. Relationship to the Agreement. In the event of any conflict or
-----------------------------
inconsistency between the Agreement and these Procedures, the terms of the
Agreement shall prevail and control.
44
THIS AGREEMENT, made as of the 11th day of August, 1987, by and
between XXXXXXX COAL COMPANY, a Delaware corporation ("Xxxxxxx"), and EASTERN
ASSOCIATED COAL CORP., a West Virginia corporation ("EACC");
WHEREAS, the parties hereto are the owners of all interests in Colony
Bay Coal Company, a general partnership formed under the Uniform Partnership
Act as adopted in West Virginia; and
WHEREAS, said partnership was continued and restated in an Amended and
Restated Venture Agreement of Colony Bay Coal Company dated January 1, 1983;
and
WHEREAS, the partnership was originally formed between Walnut Coal
Corporation and Xxxxxxx Coal Company; however, by Venture Interest Purchase
Agreement dated August 11, 1987, EACC purchased all of the partnership
interest of Walnut Coal Corporation;
NOW, THEREFORE, for valuable consideration Xxxxxxx does hereby agree
that EACC shall be admitted as a partner to the general partnership and that
EACC shall have all of the rights and interests in said partnership as were
previously held and owned by Walnut Coal Corporation. EACC does hereby agree
to perform all of the covenants and obligations of Walnut as set forth in
said Amended and Restated Venture Agreement. In all other respects the
parties do hereby ratify and affirm the said Amended and Restated Venture
Agreement.
45
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by officers thereunto duly authorized.
XXXXXXX COAL COMPANY
By [Executed]
---------------------------
Its ________________________
EASTERN ASSOCIATED COAL CORP.
By [Executed]
---------------------------
Its ________________________
46
