EXHIBIT 2.2
CONTRIBUTION AGREEMENT
among
ARCH COAL, INC.
ARCH WESTERN ACQUISITION CORPORATION
ATLANTIC RICHFIELD COMPANY
DELTA HOUSING INC.
and
ARCH WESTERN RESOURCES LLC
Dated: MARCH 22, 1998
* Portions of this document have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 24b-2 under the U.S.
Securities Exchange Act of 1934, as amended. Such portions have been
filed separately with the Commission and are identified in this
document by the following legend: "[Confidential Treatment
Requested]*."
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.....................................................2
1.1 DEFINITIONS........................................................2
1.2 CROSS REFERENCES, INTERPRETATION..................................10
ARTICLE 2 CONTRIBUTIONS TO THE COMPANY...................................10
2.1 CONTRIBUTION OF CONTRIBUTED MEMBERSHIP INTERESTS..................10
2.2 CASH CONTRIBUTION.................................................11
2.3 MEMBERSHIP INTERESTS..............................................11
2.4 FURTHER ASSURANCES................................................11
2.5 TRANSFER TAXES....................................................11
2.6 ADJUSTMENT TO SPECIAL DISTRIBUTION................................12
2.7 LITTLE THUNDER LEASE..............................................13
ARTICLE 3 CLOSING........................................................14
3.1 ARCO PRE-CLOSING ACTIONS..........................................14
3.2 ARCH PRE-CLOSING ACTIONS..........................................14
3.3 CLOSING DATE......................................................15
3.4 CLOSING ACTIONS...................................................15
3.5 SIMULTANEOUS TRANSACTIONS.........................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ARCO AND DELTA HOUSING.......17
4.1 ORGANIZATION AND GOOD STANDING....................................17
4.2 AUTHORITY.........................................................17
4.3 NO VIOLATIONS.....................................................17
4.4 APPROVALS, CONSENTS AND OTHER ACTIONS.............................18
4.5 FORMATION AND GOOD STANDING OF TBCC AND SL........................18
4.6 TITLE TO THE MEMBERSHIP INTERESTS.................................18
4.7 CAPITALIZATION....................................................18
4.8 REAL PROPERTY.....................................................18
4.9 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY..............19
4.10 MATERIAL CONTRACTS................................................19
4.11 INSURANCE POLICIES................................................19
4.12 TAXES.............................................................20
4.13 LICENSES, PERMITS, AUTHORIZATIONS.................................20
4.14 LITIGATION........................................................20
4.15 COMPLIANCE WITH LAWS..............................................20
4.16 LABOR MATTERS.....................................................21
4.17 EMPLOYEE BENEFIT PLANS............................................21
4.18 BANK ACCOUNTS.....................................................22
4.19 BROKER LIABILITY..................................................22
4.20 FINANCIAL STATEMENTS..............................................22
4.21 BLACK LUNG DISCLOSURE.............................................23
4.22 CONDUCT OF BUSINESS...............................................23
4.23 ASSETS............................................................23
4.24 CERCLA............................................................23
4.25 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES..............23
4.26 NO OTHER COMMITMENT TO SELL LLC INTERESTS.........................24
4.27 ABSENCE OF UNDISCLOSED LIABILITIES................................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ARCH AND ACQUISITION CORP....24
5.1 ORGANIZATION AND GOOD STANDING....................................24
5.2 AUTHORITY.........................................................24
5.3 NO VIOLATIONS.....................................................24
5.4 APPROVALS, CONSENTS AND OTHER ACTIONS.............................24
5.5 FINANCIAL CAPABILITY..............................................25
5.6 ARCH'S AND ACQUISITION CORP.'S INQUIRY............................25
5.7 ORGANIZATION, QUALIFICATION AND GOOD STANDING OF AOW..............25
5.8 TITLE TO THE MEMBERSHIP INTERESTS.................................25
5.9 CAPITALIZATION....................................................25
5.10 REAL PROPERTY.....................................................25
5.11 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY..............26
5.12 MATERIAL CONTRACTS................................................26
5.13 INSURANCE POLICIES................................................26
5.14 TAXES.............................................................26
5.15 LICENSES, PERMITS, AUTHORIZATIONS.................................26
5.16 LITIGATION........................................................27
5.17 COMPLIANCE WITH LAWS..............................................27
5.18 LABOR MATTERS.....................................................27
5.19 EMPLOYEE BENEFIT PLANS............................................27
5.20 BANK ACCOUNTS.....................................................28
5.21 FINANCIAL STATEMENTS..............................................28
5.22 BROKER LIABILITY..................................................28
5.23 ASSETS............................................................28
5.24 QUALIFICATION, COMPLIANCE WITH ACREAGE LIMITATIONS................28
5.25 CERCLA............................................................28
5.26 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES..............28
5.27 BLACK LUNG DISCLOSURE.............................................28
5.28 ABSENCE OF UNDISCLOSED LIABILITIES................................29
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................29
6.1 DUE ORGANIZATION; GOOD STANDING AND POWER.........................29
6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT...........................29
6.3 NO CONSENTS REQUIRED; NO CONFLICT WITH INSTRUMENTS TO WHICH THE
COMPANY IS A PARTY................................................29
6.4 ACCREDITED INVESTOR...............................................29
6.5 INVESTMENT INTENT.................................................30
ARTICLE 7 COVENANTS AND AGREEMENTS OF THE PARTIES........................30
7.1 ACCESS TO INFORMATION.............................................30
7.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING.......................31
7.3 NOTIFICATION......................................................32
7.4 ANTITRUST NOTIFICATION............................................32
7.5 FEES AND EXPENSES.................................................32
7.6 PUBLICITY.........................................................32
7.7 POST-CLOSING ASSISTANCE...........................................32
7.8 GUARANTEES........................................................33
7.9 NAME CHANGES......................................................33
7.10 SURETY BONDS......................................................33
7.11 BLACK LUNG LIABILITY..............................................34
7.12 LITIGATION SUPPORT................................................34
7.13 INSURANCE.........................................................34
7.14 ARCH'S AND ACQUISITION CORP.'S ENVIRONMENTAL RESPONSIBILITIES.....34
7.15 ARCO'S AND DELTA HOUSING'S ENVIRONMENTAL RESPONSIBILITIES.........35
7.16 OTHER LIABILITIES.................................................35
7.17 DISCLOSURE SCHEDULES..............................................35
7.18 COMMERCIALLY REASONABLE EFFORTS...................................35
ARTICLE 8 EMPLOYEES AND EMPLOYEE BENEFITS................................36
8.1 RETENTION OF EMPLOYEES AND CONTINUATION OF BENEFITS...............36
8.2 RETENTION OF RETIREMENT PLANS FOR ARCO PARTIES....................36
8.3 ARCO'S PENSION PLAN...............................................36
8.4 THRIFT PLAN.......................................................37
8.5 OTHER EMPLOYEE BENEFITS...........................................37
8.6 FLEXIBLE SPENDING ACCOUNTS........................................37
8.7 COOPERATION.......................................................38
8.8 BLACK LUNG MATTERS................................................38
8.9 TRANSFEREE TERMINATION BY ARCH....................................38
ARTICLE 9 TAXES..........................................................39
9.1 ARCO TAX MATTERS..................................................39
9.2 ARCH TAX MATTERS..................................................40
ARTICLE 10 INDEMNIFICATION...............................................41
10.1 ARCH'S AND ACQUISITION CORP.'S INDEMNIFICATION....................41
10.2 ARCO'S AND DELTA HOUSING'S INDEMNIFICATION........................41
10.3 MONETARY LIMITATION...............................................43
10.4 NATURE AND SURVIVAL; TIME LIMITS..................................43
10.5 LIMITATION ON REMEDIES; MITIGATION................................43
10.6 GENERAL PROVISIONS................................................44
10.7 TAX TREATMENT.....................................................45
10.8 COOPERATION AND COMMUNICATION.....................................45
10.9 EFFECTING THE INDEMNITY...........................................46
ARTICLE 11 CONDITIONS TO CLOSING.........................................46
11.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCH AND ACQUISITION CORP..46
11.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCO AND DELTA HOUSING.....47
ARTICLE 12 TERMINATION OF AGREEMENT......................................48
12.1 TERMINATION BEFORE CLOSING........................................48
12.2 EFFECT OF TERMINATION.............................................49
ARTICLE 13 MISCELLANEOUS.................................................49
13.1 ENTIRE AGREEMENT..................................................49
13.2 CONSTRUCTION......................................................49
13.3 GOVERNING LAW.....................................................49
13.4 NOTICES...........................................................49
13.5 WAIVER............................................................50
13.6 BINDING EFFECT; ASSIGNMENT........................................50
13.7 AMENDMENT.........................................................50
13.8 COUNTERPARTS......................................................50
13.9 NO THIRD PARTY BENEFICIARIES......................................50
13.10 JURISDICTION; SERVICE OF PROCESS..................................50
13.11 DISCLAIMER FOR COMMUNICATIONS.....................................52
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
SCHEDULES
ARCO DISCLOSURE SCHEDULE
ARCH DISCLOSURE SCHEDULE
EXHIBITS
EXHIBIT 1.1 INDIVIDUALS WITH KNOWLEDGE
EXHIBIT 2.6 PRELIMINARY INTERIM DATE BALANCE SHEET
EXHIBIT 3.4(c)(1) COMPANY AGREEMENT
EXHIBIT 3.4(c)(2) TAX SHARING AGREEMENT
EXHIBIT 8.9(b) TERMINATION PLANS AND PROVISIONS
EXHIBIT 13.10(b) AGENT FOR SERVICE
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "AGREEMENT"), dated as of March 22,
1998 (the "EFFECTIVE DATE") among Arch Coal, Inc., a Delaware corporation
("ARCH"), Arch Western Acquisition Corporation, a Delaware corporation
("ACQUISITION CORP."), Atlantic Richfield Company, a Delaware corporation
("ARCO"), Delta Housing Inc., a Delaware corporation ("DELTA HOUSING"), and Arch
Western Resources LLC, a Delaware limited liability company (the "Company").
WHEREAS, ARCO currently owns all of the outstanding capital stock of
ARCO Uinta, and ARCO Uinta will own all of the outstanding membership interests
in AUS; and
WHEREAS, ARCO Uinta will sell all of its membership interests in MCC
LLC, CFC and AUS to Acquisition Corp. for the consideration and upon the terms
and conditions set forth in the Purchase Agreement; and
WHEREAS, ARCO will transfer its interest in TBCC to the Company in
exchange for a membership interest in the Company; and
WHEREAS, ARCO will contribute its membership interest in the Company to
Delta Housing; and
WHEREAS, Delta Housing will transfer to the Company its membership
interest in SL; and
WHEREAS, Acquisition Corp. will transfer its membership interests in
AOW, AUS, MCC LLC and CFC to the Company in exchange for membership interests in
the Company; and
WHEREAS, the Company desires to accept the assignment, conveyance and
transfer of the membership interests in TBCC, SL, AOW, AUS, MCC LLC and CFC upon
the terms and conditions hereinafter set forth; and
WHEREAS, Acquisition Corp. and Delta Housing desire to enter into the
Company Agreement to govern the conduct and operation of the Company and its
business after the Closing;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms shall have the
meanings set forth below:
"ACC" shall mean the United States assets of ARCO Coal Company, a
division of ARCO.
"ACQUISITION CORP." shall have the meaning set forth in the Preamble.
"ACT" shall mean ARCO Coal Terminal, a Delaware corporation.
"ADJUSTMENT" shall have the meaning set forth in Section 2.6(b).
"AFFILIATE" of any specified Person shall mean any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified Person, and the
term "affiliated with" shall have a correlative meaning. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement, or
otherwise. As used with respect to any Arch Party (except for purposes of
Section 10.2), "Affiliate" shall not include Ashland Inc., a Kentucky
corporation, or any of its subsidiaries other than Arch. As used with respect to
any ARCO Party, "Affiliate" shall not include ARCO Chemical Company, a Delaware
corporation, or Vastar Resources, Inc., a Delaware corporation.
"AGENT" shall have the meaning set forth in Section 13.10(b).
"AGREED RATE" shall mean six percent per annum.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ANTITRUST DIVISION" shall have the meaning set forth in Section 7.4.
"AOW" means Arch of Wyoming LLC, a Delaware limited liability company.
"AOW CLOSING DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.21.
"ARCH" shall have the meaning set forth in the Preamble.
"ARCH DISCLOSURE SCHEDULE" shall mean the document attached hereto
titled as such.
"ARCH INDEMNITEES" shall mean Arch and the Arch Parties.
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"ARCH OF WYOMING" shall mean Arch of Wyoming, Inc., a Delaware
corporation.
"ARCH PARTIES" shall mean Acquisition Corp., AOW, MCC LLC, AUS and CFC.
"ARCH PRE-CLOSING TAX PERIOD" shall have the meaning set forth in
Section 9.2(a).
"ARCH'S RETIREMENT PLAN" shall have the meaning set forth in Section
8.3.
"ARCH'S SAVINGS PLAN" shall have the meaning set forth in Section 8.4.
"ARK" shall mean Ark Land Company, a Delaware corporation and
wholly-owned subsidiary of Arch.
"ARCO" shall have the meaning set forth in the Preamble.
"ARCO ACCUMULATION AND SAVINGS PLANS" shall have the meaning set forth
in Section 8.4.
"ARCO DISCLOSURE SCHEDULE" shall mean the document attached hereto and
titled as such.
"ARCO INDEMNITEES" shall mean ARCO and the ARCO Parties.
"ARCO PARTIES" shall mean SL and TBCC.
"ARCO RETIREMENT PLAN" shall have the meaning set forth in Section 8.3.
"ARCO UINTA" shall mean ARCO Uinta Coal Company, a Delaware
corporation.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall have the meaning set forth
in Section 10.8(e).
"AUS" means a Delaware limited liability company to be formed by ARCO
Uinta.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 2.6(a).
"AUTHORITY" shall mean any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal (or any
commonwealth, territory or possession thereof), state, local or foreign, or any
agency, department or instrumentality thereof, or any court or arbitrator
(public or private).
"BANKRUPTCY" shall mean (i) the commencement of any voluntary or
involuntary bankruptcy case by or against a Person as debtor under Title 11 of
the United States Code or any successor or equivalent statute, (ii) the
insolvency or the inability of a Person to satisfy its obligations as they
become due or (iii) the general assignment by any Person for the benefit of
creditors under state Law.
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"BLACK LUNG DISCOUNT RATE" shall mean seven percent (7%) per annum.
"CERCLA" shall mean the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as amended by the Superfund Amendments
and Reauthorization Act of 1986).
"CFC" shall mean Canyon Fuel Company, LLC, a Delaware limited liability
company owned 65% by ARCO Uinta.
"CFC AGREEMENT" shall mean the Second Amended and Restated Limited
Liability Company Agreement of Canyon Fuel Company LLC, dated as of January 1,
1997, as in effect on the Closing Date.
"CH20" shall mean CH-Twenty, Inc., a Delaware corporation.
"CARBON BASIN RESERVES" shall have the meaning set forth in Section
3.2(c).
"CASH CONTRIBUTION" shall have the meaning set forth in Section 2.2.
"CATEGORY 4 (10-YEAR) EQUIPMENT" shall have the meaning set forth in
the Little Thunder Lease.
"CLOSING" shall have the meaning set forth in Section 3.3.
"CLOSING DATE" shall have the meaning set forth in Section 3.3.
"CLOSING DATE BALANCE SHEET" shall mean the unaudited, pro forma,
combined, consolidated balance sheet of TBCC (including the LTL Property and the
state coal leases to be owned by SL) as of the close of business on the Closing
Date, which shall be derived from the combined, consolidated unaudited balance
sheet of ACC as of the same date, prepared as though the Proposed Transactions
had not been consummated. The Closing Date Balance Sheet shall be prepared on a
basis consistent with the Interim Date Balance Sheet.
"CLOSING DATE MEMBERS' EQUITY" shall have the meaning set forth in
Section 2.6(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMBINED LOSSES" shall have the meaning set forth in Section 10.3(a).
"COMPANIES" shall mean CFC, AUS, TBCC, SL and MCC LLC.
"COMPANY" shall have the meaning set forth in the Preamble.
4
"COMPANY AGREEMENT" shall mean that certain Limited Liability Company
Agreement of Arch Western Resources LLC, to be dated as of the Closing Date
between Acquisition Corp. and Delta Housing substantially in the form attached
hereto as Exhibit 3.4(c)(1).
"COMPANY DEBT" shall have the meaning set forth in Section 3.4(e).
"CONDITIONAL AGREEMENT" shall have the meaning set forth in Section
10.8(e).
"CONTRIBUTED ARCH INTERESTS" shall have the meaning set forth in
Section 2.1(a).
"CONTRIBUTED ARCO INTERESTS" shall have the meaning set forth in
Section 2.1(c).
"CONTRIBUTED LLCS" shall mean TBCC, SL, AUS, MCC LLC, CFC and AOW as
the context may require.
"CONTRIBUTED MEMBERSHIP INTERESTS" shall mean the Contributed Arch
Interests and the Contributed ARCO Interests.
"CONTRIBUTING MEMBERS" shall mean ARCO, Delta Housing and Acquisition
Corp., each of which may be referred to individually as a "Contributing Member,"
as the context may require.
"DELTA HOUSING" shall have the meaning set forth in the Preamble.
"DESIGNATED ARCO REPRESENTATIVE" shall mean an employee of Delta
Housing or an Affiliate designated by Delta Housing from time to time. The
initial Designated ARCO Representative will be designated at Closing. Delta
Housing may change such designation by giving Acquisition Corp. notice.
"DISAGREEMENT NOTICE" shall have the meaning set forth in Section
2.6(c).
"DISCLOSURE SCHEDULE" shall mean the ARCO Disclosure Schedule or the
Arch Disclosure Schedule, as the context requires.
"EFFECTIVE DATE" shall have the meaning set forth in the Preamble.
"EMPLOYEES" shall have the meaning set forth in Section 4.17(a).
"ENVIRONMENTAL LAWS" shall mean Laws aimed at abatement of pollution;
protection of the environment; ensuring public safety from environmental
hazards; management, storage or control of Hazardous Materials; releases or
threatened releases of Hazardous Materials into the environment, including,
ambient air, surface water and groundwater; and all other Laws relating to the
manufacturing, processing, distribution, use, treatment, storage, disposal,
handling or transportation of Hazardous Materials, including CERCLA, Clean Air
Act, Clean Water Act, Solid Wastes Disposal Act (as amended by the Resource
Conservation and Recovery Act), Toxic
5
Substances Control Act, Emergency Planning and Community Right to Know Act,
Surface Mining Control and Reclamation Act, Mine Safety and Health Act, Safe
Drinking Water Act and any regulations issued under each of such statutes, and
any state or local counterparts, and any other Laws to the extent relating to
reclamation of lands affected by mining.
"ENVIRONMENTAL LIABILITIES" shall mean any and all claims, actions,
causes of action, damages, losses, liabilities, obligations, penalties,
judgments, amounts paid in settlement, assessments, costs, disbursements or
expenses (including attorneys' fees and costs, experts' fees and costs and
consultants' fees and costs) of any kind or nature (including those absolute,
accrued or contingent, unknown or otherwise and including, further, liability
for study, testing or investigatory costs, cleanup costs, response costs,
removal costs, remediation costs, containment costs, restoration costs,
corrective action costs or business losses) arising out of, based on, resulting
from or alleging (i) the presence, release, threatened release, discharge or
emission into the environment of any Hazardous Materials existing or arising on,
beneath or above any property, including claims with respect to other properties
based upon claims relating to migration or emanation (or threatened migration or
emanation) of Hazardous Materials from the property to such other properties,
whether or not immediately adjacent to the property, (ii) the violation of any
Environmental Laws involving any property, including claims with respect to
other properties based upon claims relating to migration or emanation (or
threatened migration or emanation) of Hazardous Materials from the property to
such other properties, whether or not immediately adjacent to the property, and
(iii) natural resources damages, penalties or fines, or property damages or
personal injuries claimed by private (non-governmental) parties.
"ERISA" shall have the meaning set forth in Section 4.17(a).
"FINAL JUDGMENT" shall mean a judgment by a court of competent
jurisdiction or a binding award in arbitration from which no further appeal or
review may be taken, a settlement or a confession of judgment.
"FTC" shall have the meaning set forth in Section 7.4.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States, from time to time.
"HAZARDOUS MATERIALS" shall mean any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor, polychlorinated biphenyls
and asbestos or asbestos-containing materials.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
10.6(a).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
10.6(a).
6
"INDEPENDENT ACCOUNTANTS" shall have the meaning set forth in Section
2.6(d).
"INTERIM DATE" shall mean December 31, 1997.
"INTERIM DATE BALANCE SHEET" shall mean the unaudited, pro forma,
combined, consolidated balance sheet for TBCC (including the LTL Property and
the state coal leases to be owned by SL) which shall be derived from and
consistent with the combined, consolidated audited balance sheet of ACC as of
the close of business on the Interim Date. The Interim Date Balance Sheet shall
be prepared on a basis consistent with the Preliminary Interim Date Balance
Sheet and, except for changes with respect to corporate adjustments and income
tax calculations and the effect thereof on total member's equity in TBCC, will
be substantially identical to the Preliminary Interim Date Balance Sheet.
"INTERIM DATE MEMBERS' EQUITY" shall have the meaning set forth in
Section 2.6(b).
"KNOWLEDGE" shall mean the actual knowledge of the individuals
identified on Exhibit 1.1, without any duty of inquiry.
"LAWS" shall mean all existing Federal, state and local laws (statutory
or common), rules, ordinances, regulations, grants, leases, orders, directives,
judgments, decrees and other governmental restrictions of any kind or nature,
including permits and other similar requirements, whether legislative,
municipal, administrative or judicial in nature.
"LAXT" shall mean L. A. Export Terminal, a Delaware corporation.
"LITTLE THUNDER LEASE" shall mean that certain Master Lease dated
August 8, 1997 between LTLC and TBCC, as amended by Amendment to Master Lease
dated January 27, 1998.
"LOSSES" shall have the meaning set forth in Section 10.3(a).
"LTLC" shall mean Little Thunder Leasing Company, a Delaware
corporation.
"LTL PROPERTY" shall mean all of the property and equipment subject to
the Little Thunder Lease, except for the Category 4 (10-Year) Equipment.
"MATERIAL ADVERSE EFFECT" (i) as used in Sections 3.4(m), 7.17, 11.1(a)
and 12.1(b), shall mean a breach or breaches of the representations and
warranties of ARCO and/or Delta Housing under this Agreement and ARCO and/or
ARCO Uinta under the Purchase Agreement that in the aggregate, if the Proposed
Transactions were consummated, would give rise to indemnification obligations
owed to Arch Indemnitees by ARCO and/or Delta Housing under this Agreement and
ARCO and/or ARCO Uinta under the Purchase Agreement (without regard to any
applicable limits of Section 10.3 of this Agreement or Section 9.3 of the
Purchase Agreement), together totaling more than One Hundred and Ten Million
Dollars, and (ii) as used in Section 11.1(g), shall mean (without duplication)
the sum of (a) aggregate reductions in the actual value of the business of the
ARCO Parties, on a combined, consolidated basis and taken as a whole, resulting
7
from any events or occurrences referred to in Section 11.1(g), and (b) a breach
or breaches of the representations and warranties of ARCO and/or Delta Housing
under this Agreement and ARCO and/or ARCO Uinta under the Purchase Agreement
that in the aggregate, if the Proposed Transactions were consummated, would give
rise to indemnification obligations owed to Arch Indemnitees by ARCO and/or
Delta Housing under this Agreement and ARCO and ARCO Uinta under the Purchase
Agreement (without regard to any applicable limits in Section 10.3 of this
Agreement or Section 9.3 of the Purchase Agreement), together totaling more than
One Hundred and Ten Million Dollars.
"MCC" shall mean Mountain Coal Company, a Delaware corporation.
"MCC LLC" shall mean Mountain Coal Company L.L.C., a Delaware limited
liability company.
"OTHER LIABILITIES" shall have the meaning set forth in Section
7.16(b).
"OTHER LOSSES" shall have the meaning set forth in Section 10.3(a).
"OTHER PROPERTIES" shall have the meaning set forth in Section 7.15.
"PBGC" shall have the meaning set forth in Section 4.17(e).
"PARTICIPANTS" shall have the meaning set forth in Section 8.5.
"PERFORMANCE BONDS" shall have the meaning set forth in Section 7.10.
"PERSON" shall mean and include, any individual, partnership, joint
venture, corporation, limited liability company, trust, joint-stock company,
unincorporated entity or association, organization or other legal entity.
"PLANS" shall have the meaning set forth in Section 4.17(a).
"POST CLOSING SURETY BOND" shall have the meaning set forth in Section
7.10.
"PRE-CLOSING TAX PERIOD" shall have the meaning set forth in Section
9.1(a).
"PRELIMINARY INTERIM DATE BALANCE SHEET" shall mean the document
attached as Exhibit 2.6.
"PRESENT VALUE BENEFIT" shall mean the present value (based on a
discount rate equal to the short-term applicable federal rate as determined
under Section 1274(d) of the Code at the time of determination, and assuming
that the Indemnified Party will be liable for income taxes at all relevant times
at the maximum marginal rates) of any income tax benefit.
"PROPERTIES" shall have the meaning set forth in Section 7.14.
8
"PROPOSED TRANSACTIONS" shall have the meaning set forth in Section
3.3.
"PURCHASE AGREEMENT" shall mean the Purchase and Sale Agreement by and
among ARCO, ARCO Uinta, Arch and Acquisition Corp. dated as of the date of this
Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2 of the
Purchase Agreement.
"REPORT" shall have the meaning set forth in Section 2.6(d).
"SL" shall mean State Leases LLC, a Delaware limited liability company.
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended.
"SPECIAL DISTRIBUTION" shall have the meaning set forth in Section
3.4(f).
"STATE COAL LEASES" shall mean the ARCO state coal leases identified on
the ARCO Disclosure Schedule.
"STATEMENT" shall have the meaning set forth in Section 2.6(b).
"SUBSTITUTE SURETY BOND" shall have the meaning set forth in Section
7.10.
"SURETY BOND" shall have the meaning set forth in Section 7.10.
"TBCC" shall mean Thunder Basin Coal Company L.L.C., a Delaware limited
liability company.
"TAX" or "TAXES" shall mean any tax or taxes, similar charge, fee,
impost, levy or other assessment (including income taxes, severance taxes,
excise taxes, sales taxes, franchise taxes, real estate taxes, Transfer Taxes,
transfer gain taxes, value added taxes, use taxes, ad valorem taxes, withholding
taxes, payroll taxes, or minimum taxes), together with any related liabilities,
penalties, fines, additions to tax or interest imposed by the United States or
any state, county, local or foreign government, agency or taxing authority, or
any subdivision thereof.
"TAX RETURN" or "TAX RETURNS" shall mean all returns, reports,
estimates and information statements relating to, or required to be filed in
connection with, any Taxes pursuant to the statutes, rules and regulations of
the United States or any state, county, local or foreign government subdivision,
agency or taxing authority.
"TAX SHARING AGREEMENT" shall mean the Tax Sharing Agreement by and
among Arch, Acquisition Corp., Delta Housing and the Company, to be dated as of
the Closing Date substantially in the form attached hereto as Exhibit 3.4(c)(2).
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"THUNDER CLOUD FEDERAL LEASE TRACT" shall mean that proposed federal
coal lease of the tract of land located in the State of Wyoming known as the
"Thunder Cloud Tract."
"TRANSFER TAXES" shall have the meaning set forth in Section 2.5.
"TRANSFEREES" shall have the meaning set forth in Section 8.1(a).
[Confidential Treatment Requested]*
[Confidential Treatment Requested]*
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.20.
"VEBA" shall have the meaning set forth in Section 4.17(a).
1.2 CROSS REFERENCES, INTERPRETATION. References to "Articles" refer
to Articles of this Agreement. References to "Sections" refer to Sections and
subsections of this Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa. Whenever the word "including" is used in this Agreement
it shall be read to mean "including without limitation." The headings in this
Agreement are inserted for convenience only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
ARTICLE 2
CONTRIBUTIONS TO THE COMPANY
2.1 CONTRIBUTION OF CONTRIBUTED MEMBERSHIP INTERESTS.
(a) On the terms and subject to the conditions set forth in
this Agreement, Acquisition Corp. shall cause its membership interests in AUS,
CFC, MCC LLC and AOW (collectively, the "CONTRIBUTED ARCH INTERESTS") to be
contributed, conveyed, transferred, assigned and delivered to the Company, and
the Company shall accept and acquire the Contributed Arch Interests in exchange
for 991/2% common membership interest of Acquisition Corp. in the Company.
(b) The contribution, conveyance, transfer and assignment of the
Contributed Arch Interests contemplated hereby shall be made by the delivery by
Acquisition Corp. of a duly executed assignment transferring the Contributed
Arch Interests to the Company.
(c) On the terms and subject to the conditions set forth in this
Agreement, (i) ARCO shall cause its interest in TBCC, and (ii) Delta Housing
shall cause its interest in SL (collectively the "CONTRIBUTED ARCO INTERESTS")
to be contributed, conveyed, transferred, assigned and delivered to the Company,
and the Company shall accept and acquire, the Contributed ARCO Interests in
exchange for 1/2% common and 1/2% preferred membership interests in the Company.
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(d) The contribution, conveyance, transfer and assignment of the
Contributed ARCO Interests contemplated hereby shall be made by the delivery by
ARCO, with respect to TBCC, of a duly executed assignment transferring the TBCC
membership interest, and by the delivery by Delta Housing, with respect to SL,
of a duly executed assignment transferring the SL membership interest, in each
case to the Company. The assignment of ARCO's membership interest in the Company
to Delta Housing contemplated hereby shall be made by the delivery by ARCO of a
duly executed assignment transferring the membership interest in the Company to
Delta Housing.
2.2 CASH CONTRIBUTION. Acquisition Corp. shall also contribute
$25,000,000 in cash to the Company (the "CASH CONTRIBUTION").
2.3 MEMBERSHIP INTERESTS. In consideration of the respective
contributions by the Contributing Members of the Contributed Membership
Interests and the Cash Contribution to the Company as described in Sections 2.1
and 2.2, and in reliance upon the respective representations, warranties and
covenants made herein by each of the Contributing Members, the Company agrees to
grant to the Contributing Members all right, title and interest of a member in
the Company pursuant and subject to the terms of this Agreement and the Company
Agreement. The initial membership interest of each of the Contributing Members
in the Company after giving effect to all the transactions contemplated
hereunder and under the Purchase Agreement shall be as set forth in the Company
Agreement.
2.4 FURTHER ASSURANCES.
(a) On and from time to time after the Closing Date, the Contributing
Members and their respective Affiliates will execute and deliver, or cause to be
executed and delivered, such other instruments of conveyance, assignment,
transfer and delivery as the Company may reasonably request in order to fulfill
and implement the terms of this Agreement, to vest in the Company the membership
interests in the Contributed LLCs, or to otherwise enable the Company to realize
the benefits intended to be afforded hereby.
(b) On and from time to time after the Closing Date, the Company will
execute and deliver, or cause the Contributed LLCs to execute and deliver, such
other instruments of assumption, conveyance, assignment, transfer, power of
attorney or assurance as the Contributing Members may reasonably request in
order to enable the Contributing Members to realize the benefits intended to be
afforded hereby.
2.5 TRANSFER TAXES. The Company shall be solely liable for and shall
pay all applicable sales, transfer, use, stamp, conveyance, value-added, real
property transfer, recording, stock transfer and other similar taxes, if any,
together with all recording or filing fees, notarial fees and other similar
costs of Closing, that may be imposed upon, or payable, collectible or incurred
in connection with the transfer of the Contributed Membership Interests to the
Company (the "TRANSFER TAXES"). The Company shall indemnify and hold harmless
ARCO, Delta Housing or their Affiliates with respect to all Transfer Taxes.
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2.6 ADJUSTMENT TO SPECIAL DISTRIBUTION.
(a) ARCO shall deliver to Acquisition Corp. as soon as available, but
in no event later than 30 days after the Effective Date, the consolidated
balance sheet of ACC at December 31, 1997, and 1996, and its consolidated
statements of income, of equity investment and of cash flows for each of the
three years in the period ended December 31, 1997, together with the related
notes thereto and the respective audit opinion thereon of the independent
auditors of ACC (the "AUDITED FINANCIAL STATEMENTS"). Within 30 days after the
Effective Date, ARCO shall prepare and deliver to Acquisition Corp. a copy of
the Interim Date Balance Sheet. Within 90 days after the Closing Date, ARCO
shall prepare and deliver to the Company the Closing Date Balance Sheet.
(b) The Special Distribution shall be adjusted (the "ADJUSTMENT")
upwards or downwards on a dollar-for-dollar basis for the amount by which total
members' equity as reflected on the Closing Date Balance Sheet (the "CLOSING
DATE MEMBERS' EQUITY") exceeds or is less than total members' equity as
reflected on the Interim Date Balance Sheet (the "INTERIM DATE MEMBERS'
EQUITY"). For purposes of the preceding sentence, the change in total members'
equity will include the net change in intercompany accounts. During the period
from the Interim Date through the Closing Date, intercompany accounts will, in
part, (i) increase by contributions of cash for operating costs and capital by
ARCO, Delta Housing or any of their Affiliates, and (ii) decrease by cash
distributions to ARCO, Delta Housing or any of their Affiliates. In determining
the Adjustment, any change in deferred tax asset or deferred tax liability from
that reflected on the Interim Date Balance Sheet and the corresponding effect on
the Closing Date Members' Equity, except for provisions made in the ordinary
course related to income earned since the Interim Date, shall be ignored. If the
Closing Date Members' Equity exceeds the Interim Date Members' Equity, the
adjustment to the Special Distribution shall be effected by a payment from
Acquisition Corp. to Delta Housing of an amount equal to such excess as set
forth below. If the Interim Date Members' Equity exceeds the Closing Date
Members' Equity, the adjustment to the Special Distribution shall be effected by
a payment from Delta Housing to Acquisition Corp. of an amount equal to such
excess as set forth below. ARCO shall prepare and deliver to Acquisition Corp.,
simultaneously with the delivery of the Closing Date Balance Sheet, a statement
(the "STATEMENT") setting forth in reasonable detail ARCO's calculation of
Closing Date Members' Equity. A payment under this Section 2.6 shall for tax
purposes be treated as a contribution to the Company by the member making the
payment and a distribution from the Company to the member receiving it unless
otherwise required by law. Any payment received by either member is agreed to be
a reimbursement of capital expenditures under Section 1.707-4(d) of the Treasury
Regulations. No payment or receipt under this Section 2.6 shall have a net
effect on the capital accounts or percentage interests of the members in the
Company.
(c) If Acquisition Corp. disagrees with the Closing Date Balance Sheet
or the Statement, it shall, within 30 days after the receipt of the Closing Date
Balance Sheet and the Statement, deliver a notice to ARCO (the "DISAGREEMENT
NOTICE"), setting forth its calculation of the Adjustment and specifying, in
reasonable detail, those items or amounts in the Closing Date Balance Sheet
and/or the Statement as to which Acquisition Corp. disagrees and the reasons for
such disagreement. Acquisition Corp. shall be deemed to have agreed with all
items and amounts contained in the Closing Date Balance Sheet and the Statement
other than those
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specified in a timely Disagreement Notice. If Acquisition Corp. does not deliver
a Disagreement Notice to ARCO within such 30-day period, Acquisition Corp. shall
be deemed to have accepted the Closing Date Balance Sheet and the Statement,
whereupon the Closing Date Balance Sheet and the Statement shall become final
and binding.
(d) If a Disagreement Notice is timely delivered to ARCO pursuant to
this Section 2.6, the parties shall use their good faith efforts to reach
agreement on the disputed items or amounts in order to determine the Adjustment,
which in no event shall be more favorable to ARCO than reflected in the
Statement nor more favorable to Acquisition Corp. than shown in the calculations
delivered by Acquisition Corp. pursuant to the Disagreement Notice. If the
parties do not resolve all disputed items or amounts within ten business days
after delivery of the Disagreement Notice, this Agreement and the disputed items
and amounts will be submitted to an independent nationally recognized accounting
firm without any current material financial relationship to either Acquisition
Corp. or ARCO, or their respective Affiliates (the "INDEPENDENT ACCOUNTANTS"),
as mutually selected by ARCO and Acquisition Corp., or if ARCO and Acquisition
Corp. cannot agree, as recommended by the independent accountants regularly
employed to audit ARCO's and Acquisition Corp.'s financial statements, for
determination of the appropriate Adjustment pursuant to this Section 2.6. The
written report of the Independent Accountants (the "REPORT") shall be delivered
to ARCO and Acquisition Corp. promptly, but in no event later than 30 days after
such disputed items are submitted to the Independent Accountants, and shall be
final, conclusive and binding upon the parties. The procedures for resolution of
disputes concerning the Closing Date Balance Sheet and the Statement set forth
in Sections 2.6(c) and 2.6(d) shall be final and exclusive of any other
litigation, proceeding, contest, appeal or arbitration in relation thereto, so
that no party shall be entitled to subject any claim, controversy or dispute
with respect to the foregoing to arbitration or to any court or tribunal. The
fees and expenses of the Independent Accountants shall be borne equally by ARCO
and Acquisition Corp.
(e) Within five business days after the final determination of the
Adjustment, Acquisition Corp. shall pay ARCO or ARCO shall pay Acquisition
Corp., as the case may be, a sum of money equal to the Adjustment, plus interest
at the Agreed Rate from the Closing Date to the date the payment is made. Any
amount payable pursuant to this Section 2.6(e) will be made in immediately
available funds to an account or accounts designated by the party receiving such
payment.
(f) From the Closing Date until the final determination of the
Adjustment, ARCO or Delta Housing, including their officers, employees, agents
and representatives, and the Independent Accountants, shall have access to the
ARCO Parties and their respective books, records and employees who are
responsible for financial matters in order to assist in preparing the Closing
Date Balance Sheet and the Statement and in determining the Adjustment.
Acquisition Corp. shall provide and shall cause the ARCO Parties to provide any
assistance requested by Delta Housing in connection with the foregoing.
2.7 LITTLE THUNDER LEASE. Arch, Acquisition Corp. and the Company
agree not to take any action, or cause TBCC to take any action, to terminate the
Little Thunder Lease with respect
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to any Category (as defined in the Little Thunder Lease) of LTL Property prior
to one year following the Closing.
ARTICLE 3
CLOSING
3.1 ARCO PRE-CLOSING ACTIONS. Prior to the Closing, pursuant to
instruments and documents reasonably satisfactory to Arch:
(a) ARCO shall have contributed all the issued and outstanding stock
of MCC to ARCO Uinta and MCC shall have merged with and into MCC LLC.
(b) LTLC shall have transferred all of its assets to ARCO in exchange
for ARCO stock. LTLC shall be liquidated or merged into CH20.
(c) At the direction of ARCO, LTLC shall transfer to TBCC the
Category 4 (10-year) Equipment and ARCO's rights in such equipment, subject to
the terms of the Little Thunder Lease. The effect of such transfer will be to
terminate the Little Thunder Lease with respect to such Category 4 (10-year)
Equipment.
(d) ACT shall have merged into ARCO and the stock of LAXT owned by
ACT shall have transferred to ARCO by operation of Law.
(e) ARCO shall have formed AUS and ARCO shall have contributed the
headquarters assets identified on the ARCO Disclosure Schedule and all ARCO's
shares of the issued and outstanding stock in LAXT to AUS.
(f) ARCO shall transfer its membership interest in AUS to ARCO Uinta.
(g) ARCO shall have assigned its rights in the LTL Property (subject
to the Little Thunder Lease) to Delta Housing.
(h) ARCO shall have formed SL and ARCO shall have contributed the
State Coal Leases and other real and personal property relating to the coal
business to SL.
(i) ARCO shall have transferred its membership interest in SL to
Delta Housing.
(j) ARCO and ARCO Uinta shall have executed and delivered the
Purchase Agreement.
3.2 ARCH PRE-CLOSING ACTIONS. Prior to or concurrently with the
Closing, pursuant to instruments and documents reasonably satisfactory to ARCO:
(a) Arch and Acquisition Corp. shall have executed and delivered the
Purchase Agreement.
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(b) Arch shall have caused Arch of Wyoming to be merged with and into
AOW.
(c) The Carbon Basin Reserves as described on the Arch Disclosure
Schedule ("CARBON BASIN Reserves") shall have been contributed by Ark to
Acquisition Corp.
(d) All the issued and outstanding common stock of Acquisition Corp.
shall have been distributed by Ark to Arch.
(e) The Carbon Basin Reserves shall have been contributed by
Acquisition Corp. to AOW in exchange for the membership interests in AOW.
3.3 CLOSING DATE. The closing ("CLOSING") of the transactions
contemplated herein (the "PROPOSED TRANSACTIONS"), as well as the simultaneous
Closing of the transactions contemplated in the Purchase Agreement, shall take
place in New York, New York, at a mutually agreeable site, at 10:00 A.M., local
time, on the later of (a) 45 days after the date hereof, or (b) the third
business day after the satisfaction of all conditions to Closing set forth in
Sections 11.1 and 11.2 or at such other place or time as the parties may
mutually agree. The date upon which the Closing occurs is referred to in this
Agreement as the "CLOSING DATE."
3.4 CLOSING ACTIONS. At the Closing ARCO and Arch shall cause the
following to occur:
(a) CASH CONTRIBUTION. Acquisition Corp. shall make the Cash
Contribution;
(b) ASSIGNMENT OF MEMBERSHIP INTEREST. ARCO shall duly execute and
deliver assignments of its membership interest in the Company to Delta Housing;
(c) THE COMPANY AGREEMENT AND TAX SHARING AGREEMENT. Acquisition Corp.
and Delta Housing shall execute and deliver the Company Agreement substantially
in the form of Exhibit 3.4 and Arch, Acquisition Corp. Delta Housing and the
Company shall execute and deliver the Tax Sharing Agreement;
(d) FINANCING DOCUMENTS. The Company shall, and shall cause its
respective Affiliates to, execute and deliver all agreements, undertakings and
actions required to be delivered by them in connection with the issuance of the
Company Debt;
(e) COMPANY DEBT. The Company shall incur indebtedness of Six Hundred
Seventy-Five Million Dollars ($675,000,000) (the "COMPANY DEBT");
(f) SPECIAL DISTRIBUTION TO DELTA HOUSING. Contemporaneously with the
Closing, the Company and the other parties to the Company Agreement shall take
all steps necessary to cause the Company to make a special distribution to Delta
Housing in the amount of Seven Hundred Million Dollars ($700,000,000) (the
"SPECIAL DISTRIBUTION");
(g) ASSIGNMENT OF INDEMNITY PAYMENTS. Arch and Acquisition Corp. shall
assign to the Company their respective rights to any indemnity payment that
either Arch or Acquisition
15
Corp. may be entitled to receive pursuant to the Purchase Agreement except to
the extent that such payments are made (i) in order to make Arch or Acquisition
Corp. whole for out of pocket costs or (ii) with respect to assets purchased
from ARCO Uinta pursuant to the Purchase Agreement that Acquisition Corp. is not
contributing to the Company;
(h) MEMBERSHIP INTERESTS AFTER SPECIAL DISTRIBUTION. Upon the
completion of the Special Distribution and consummation of the other
transactions contemplated hereby, the membership interests of Acquisition Corp.
and Delta Housing in the Company shall be as set forth in the Company Agreement;
(i) ARCO BOARD RESOLUTIONS. ARCO shall deliver a copy, certified as of
the Closing Date by ARCO's and Delta Housing's Secretary or Assistant Secretary,
of the resolutions duly adopted by the Boards of Directors of ARCO, Delta
Housing, and LTLC authorizing the transactions contemplated by this Agreement;
(j) ARCO CERTIFICATES OF GOOD STANDING. ARCO shall deliver short form
certificates of existence and/or good standing for ARCO, Delta Housing, SL and
TBCC in their respective jurisdictions of incorporation or formation, as
certified as of a recent date by the Secretary of State or other appropriate
authority of such jurisdictions;
(k) ARCO OPINION OF COUNSEL. ARCO and Delta Housing shall deliver the
opinion of their counsel required by Section 11.1(d);
(l) ARCO INCUMBENCY CERTIFICATES. ARCO shall deliver a certificate of
the Secretary or an Assistant Secretary of ARCO and Delta Housing, certifying as
of the Closing Date as to the incumbency and signatures of the officer(s) or
representatives of ARCO and Delta Housing authorized to sign this Agreement and
the other documents to be delivered hereunder or pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;
(m) ARCO AND DELTA HOUSING OFFICER CERTIFICATES. ARCO and Delta
Housing shall each deliver a certificate dated the Closing Date stating that the
representations and warranties of ARCO and Delta Housing set forth herein,
including those with respect to TBCC, remain true and correct in all respects on
and as of the Closing Date as if made on and as of such date (except for
representations and warranties made as of a specified date, which shall be true
and correct in all respects as of such date), except for any breach of such
representations and warranties that would not individually or in the aggregate
have a Material Adverse Effect, and that all covenants and conditions to be
complied with and performed by ARCO and/or Delta Housing, as the case may be, on
or prior to the Closing Date, including notifications under Section 7.3 have
been substantially complied with or performed;
(n) ARCH BOARD RESOLUTIONS. Arch shall deliver a copy, certified as of
the Closing Date by Arch's, Acquisition Corp.'s, Ark's and Arch of Wyoming's
Secretary or Assistant Secretary, of the resolutions duly adopted by the Boards
of Directors of Arch, Acquisition Corp., Ark and Arch of Wyoming authorizing the
transactions contemplated by this Agreement;
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(o) ARCH CERTIFICATES OF GOOD STANDING. Arch shall deliver a current
short form certificate of good standing for Arch, Acquisition Corp., Ark and
Arch of Wyoming in their respective jurisdictions of incorporation, as certified
as of a recent date by the Secretary of State or other appropriate authority of
such jurisdiction;
(p) ARCH OPINION OF COUNSEL. Arch and Acquisition Corp. shall deliver
the opinion of their counsel required by Section 11.2(d);
(q) ARCH INCUMBENCY CERTIFICATES. Arch shall deliver a certificate of
the Secretary or Assistant Secretary of Arch, Acquisition Corp., Ark and Arch of
Wyoming certifying as of the Closing Date as to the incumbency and signatures of
the officer(s) of Arch and Acquisition Corp. authorized to sign this Agreement
and the other documents to be delivered hereunder or pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary; and
(r) ARCH OFFICER CERTIFICATE. Arch shall deliver a certificate dated
the Closing Date of an officer of Arch stating that the representations and
warranties of Arch and Acquisition Corp. set forth herein, remain true and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (except for representations and warranties made as of a
specified date, which shall be true and correct in all material respects as of
such date) and that all covenants and conditions to be complied with and
performed by Arch and/or Acquisition Corp. on or prior to the Closing Date have
been substantially complied with and performed.
3.5 SIMULTANEOUS TRANSACTIONS. All of the transactions and deliveries
identified in this Article 3 shall be deemed to occur simultaneously on the
Closing Date, and no one transaction shall be deemed completed until all are
completed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ARCO AND DELTA HOUSING
ARCO and Delta Housing represent and warrant, jointly and severally, to
the Company as of the Effective Date (or such other date as is specified
therein), as follows:
4.1 ORGANIZATION AND GOOD STANDING. ARCO and Delta Housing are
corporations duly incorporated, validly existing and in good standing under the
laws of their state of incorporation.
4.2 AUTHORITY. ARCO and Delta Housing have full corporate power and
authority to enter into this Agreement and to perform their respective
obligations hereunder. This Agreement constitutes a valid and binding obligation
of each of ARCO and Delta Housing, enforceable against ARCO and Delta Housing in
accordance with its terms, subject to applicable laws of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and to general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
4.3 NO VIOLATIONS. Except as set forth in Section 4.3 of the
Disclosure Schedule, the execution and delivery of this Agreement by each of
ARCO and Delta Housing do not, and the
17
consummation of the transactions contemplated hereby will not, (i) violate any
provisions of the certificate of incorporation or bylaws of ARCO or Delta
Housing or of the limited liability company agreement of TBCC or, as of the
Closing, the limited liability company agreement of SL, (ii) result in the
breach of, or constitute a default under, any material agreement or other
material instrument to which Delta Housing, TBCC or SL is a party or to which
any of their respective properties or assets are bound, (iii) violate any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award applicable to ARCO, Delta Housing, TBCC, SL or their respective
properties or assets, or (iv) constitute an event that, with notice, lapse of
time or both, would result in any such violation, breach or default.
4.4 APPROVALS, CONSENTS AND OTHER ACTIONS. Except (i) with respect to
the filings required under the HSR Act, (ii) as contemplated by this Agreement,
or (iii) as set forth in Section 4.4 of the Disclosure Schedule, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission or
other governmental authority or instrumentality, or any third party is required
to be made or obtained by or with respect to ARCO or Delta Housing in connection
with the execution, delivery and performance of this Agreement by ARCO or Delta
Housing.
4.5 FORMATION AND GOOD STANDING OF TBCC AND SL. TBCC is, and, as of
the Closing Date, SL shall be, a limited liability company duly organized,
validly existing and in good standing under the laws of their states of
formation.
4.6 TITLE OF THE MEMBERSHIP INTERESTS. ARCO and Delta Housing hold or
will hold of record and own or will own beneficially, and will transfer or cause
to be transferred to the Company on the Closing Date, the Contributed ARCO
Interests, and, upon delivery to the Company at the Closing of assignment
documents, and the registration of the transfer of the Contributed ARCO
Interests on the books of the ARCO Parties will transfer to the Company the
Contributed Interests free and clear of any security interests, pledges, liens
and encumbrances, except as set forth in the limited liability company
agreements of the ARCO Parties.
4.7 CAPITALIZATION. Section 4.7 of the Disclosure Schedule sets forth
a list of the ARCO Parties and their respective jurisdictions of formation and
their respective ownership of outstanding membership interests as of the Closing
Date. As of the Closing Date, contributed ARCO Interests have been validly
issued in accordance with Laws of the applicable jurisdictions and the
respective formation agreements and constitute all of the issued and outstanding
membership interests of TBCC and SL. Except as set forth in the limited
liability company agreements of TBCC and SL and except as set forth in Section
4.7 as of the Closing Date, of the Disclosure Schedule, no ARCO Party has any
outstanding securities, subscriptions, options or other agreements or
commitments obligating it to issue additional membership interests, or any other
securities.
4.8 REAL PROPERTY. Section 4.8 of the Disclosure Schedule sets forth,
as of the Closing Date, a list of all material real property, leaseholds, water
rights and other material interests in real property or water held by the ARCO
Parties. Except as set forth in Section 4.8 of the Disclosure Schedule, each of
the ARCO Parties will hold, as of the Closing Date, an interest in the real
property described in Section 4.8 of the Disclosure Schedule sufficient to
permit each of
18
the ARCO Parties to operate its business in the ordinary course and consistent
with past practice, according to the terms of the instrument, conveyance or
document creating such interest, free and clear of all liens, encumbrances,
equities, claims, covenants, conditions, reservations, restrictions, easements,
rights of way and other agreements, except for (a) liens for Taxes not yet due
and payable, or that may hereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings or that are listed or
described in the Disclosure Schedule, (b) liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics, workmen and materialmen and construction or
similar liens arising by operation of law or in the ordinary course of business
in respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings, (c) liens to be released at or prior to
the Closing, (d) rights reserved to or vested in any Federal, state or local
governmental body, authority or agency to control or regulate any such real
property interests in any manner, and all Laws, (e) easements, reservations,
rights-of-way, restrictions, covenants, conditions and other similar
encumbrances, whether of record or apparent on the premises (including road,
highway, pipeline, railroad and utility easements, and defects in the chain of
title) that do not materially and adversely affect the present use of such real
property, and (f) other defects and irregularities in title or encumbrances that
are not substantial or material in character, amount or extent. Except as set
forth in Section 4.8 of the Disclosure Schedule, each of the material leases,
subleases, easements, licenses and agreements described in Section 4.8 of the
Disclosure Schedule is in full force and effect according to the terms of each
respective instrument, and to ARCO's Knowledge, with respect to TBCC, each
holder of such leases, subleases, easements, licenses and agreements has
complied with all material requirements in connection therewith, and there is
not under any such lease, sublease, easement, license or agreement, any existing
material breach or default (or event that, with notice, lapse of time or both,
would constitute a material breach or default) by TBCC or SL.
4.9 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY. Section 4.9
of the Disclosure Schedule lists all material buildings, structures and
improvements and all material items of machinery, equipment and other tangible
personal property owned or leased by ARCO, the ARCO Parties or any of their
Affiliates as of February 28, 1998, that will be owned or leased by ARCO or any
ARCO Party on the Closing Date. Since February 28, 1998, no such assets have
been acquired or disposed of except in the ordinary course of business.
4.10 MATERIAL CONTRACTS. Section 4.10 of the Disclosure Schedule lists
all material contracts and agreements and all documents evidencing rights of or
commitments by any of the ARCO Parties to which any ARCO Party is a party or its
property or assets are bound as of the Closing Date. Except as set forth in
Section 4.10 of the Disclosure Schedule, each such contract, agreement or
document is in full force and effect according to the terms of each respective
instrument, and each ARCO Party which is a party to such contracts, agreements
and documents has complied with all requirements in connection therewith, and
there is not under any such contract, agreement or document any existing
material breach or default (or event that, with notice, lapse of time or both,
would constitute a material breach or default) by an ARCO Party.
4.11 INSURANCE POLICIES. Section 4.11 of the Disclosure Schedule lists
all policies of insurance issued by third-party insurers for the 1998 policy
period, including amounts of coverage thereof, that are maintained by ARCO for
the benefit of the ARCO Parties or by an ARCO Party for which such ARCO Party is
named as an insured party, in each case as of the
19
Closing Date. Except as set forth in Section 4.11 of the Disclosure Schedule,
such policies are in full force and effect and all premiums due have been paid.
4.12 TAXES.
(a) Except as set forth in Section 4.12(a) of the Disclosure Schedule,
with respect to Tax Returns that relate to taxable periods that end before
January 1, 1997, TBCC has filed or caused to be filed with the appropriate
local, state, Federal and foreign governmental entities all Tax Returns required
to be filed by the ARCO Parties on or prior to the Closing Date (taking into
account all extensions of due dates), and has paid or caused to be paid or
adequately provided for all Taxes shown thereon as owing.
(b) Except as set forth in Section 4.12(b) of the Disclosure Schedule,
with respect to Tax Returns that relate to taxable periods that end on or after
January 1, 1997, TBCC has filed or caused to be filed with the appropriate
local, state, Federal and foreign governmental entities all Tax Returns required
to be filed by TBCC on or prior to the Closing Date (taking into account all
extensions of due dates), and has paid or caused to be paid or adequately
provided for all Taxes shown thereon as owing. For all taxable periods that
begin prior to the Closing Date for which a Tax Return is not due on or prior to
the Closing Date (whether or not such taxable period ends on or after the
Closing Date), the Closing Date Balance Sheet shall provide an adequate reserve
for Taxes to fully pay such Taxes up to and including the Closing Date (as if
the Taxable Period ended on the Closing Date).
4.13 LICENSES, PERMITS, AUTHORIZATIONS. Section 4.13 of the Disclosure
Schedule lists all of the material licenses, permits (including mining permits
and the amount of any bond or other surety for each mining permit),
certificates, bonds, consents, rights and other such authorizations issued or
granted as of the Closing Date to each of the ARCO Parties by local, state or
Federal governmental authorities or agencies. Except as set forth in Section
4.13 of the Disclosure Schedule, each of the licenses, permits, certificates,
bonds, consents, rights and other authorizations listed in Section 4.13 of the
Disclosure Schedule is in full force and effect according to the material terms
of each instrument, each holder of such licenses, permits, certificates, bonds,
consents, rights and other authorizations has complied with all material
requirements in connection therewith, and there is not under any such licenses,
permits, certificates, bonds, consents, rights and other authorizations any
existing material breach or default (or event that, with notice, lapse of time
or both, would constitute a material breach or default) by the ARCO Parties.
4.14 LITIGATION. Except as set forth in Section 4.14 of the Disclosure
Schedule, (i) none of the ARCO Parties is a party to any lawsuit, claim or
proceeding or, to ARCO's Knowledge, any investigation, and (ii) none of the ARCO
Parties are in default under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality applicable to them or any of their properties or assets.
4.15 COMPLIANCE WITH LAWS. Except as set forth in Section 4.15 of the
Disclosure Schedule, each of the ARCO Parties is in compliance in all material
respects with all applicable Laws.
20
4.16 LABOR MATTERS. Except as set forth in Section 4.16 of the
Disclosure Schedule, no ARCO Party is a party to any collective bargaining
agreement with any labor union or association, there are no formal negotiations,
demands or proposals that are pending or have been recently conducted or made
with or by any labor union or association, and there are no pending strikes,
work stoppages or material labor disputes involving the ARCO Parties.
4.17 EMPLOYEE BENEFIT PLANS.
(a) Section 4.17 of the Disclosure Schedule sets forth a list of all
"employee benefit plans" as defined in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other pension or
retirement, savings, profit sharing, deferred compensation, stock option
(including restricted or performance units), severance, vacation, medical,
vision, dental, long term disability, life insurance, group accident,
occupational death, business travel, long term care, educational assistance,
floating holiday, personal business, gainshare, bonus, financial counseling,
welfare or sick leave or other employee benefit plan, procedure, policy or
practice of any nature as well as any employment, consulting, engagement, or
retention agreement or agreements, and any trust or funding mechanism for each
plan or arrangement described above (collectively, the "PLANS") covering any
employees of TBCC and employees of ARCO whose employment is related primarily to
one or more businesses of the ARCO Parties (collectively, "EMPLOYEES"). With
respect to each Plan maintained by TBCC, ARCO has delivered to the Company true,
correct and complete copies of all documents and summary plan descriptions
creating or evidencing any such Plan, and, to the extent applicable, the most
recent (i) determination letter and any outstanding request for determination
letter for such Plan; (ii) Form 5500 and attached Schedule B (including any
related actuarial valuation report) for such Plan; and (iii) ruling letter and
any outstanding request for a ruling letter with respect to the tax-exempt
status of any Voluntary Employees' Beneficiary Association ("VEBA") as defined
in Code Section 501(c)(9).
(b) Except as set forth in Section 4.17 of the Disclosure Schedule,
each Plan complies with and has been administered, operated and maintained in
compliance with all applicable material provisions of ERISA, the Code and other
applicable laws. Except as set forth in Section 4.17 of the Disclosure Schedule,
the ARCO Parties have not engaged in a prohibited transaction that would subject
it to a material tax imposed under Section 4975 of the Code.
(c) No ARCO Party is or has within the preceding five years been a
party to or contributed to any "multi-employer plan," as defined in Section
4001(a)(3) of ERISA. Except as set forth in Section 4.17 of the Disclosure
Schedule, no ARCO Party has been a party to or contributed to any such
multi-employer plan since September 26, 1980.
(d) Each Plan that is intended to qualify under Code Sections 401(a)
and 501(a) is so qualified and has been determined by the Internal Revenue
Service to so qualify or has an outstanding determination letter request, and
nothing has occurred to cause the loss of the Plan's qualified status since the
issuance of the most recent favorable determination letter by the IRS with
respect to such Plan.
21
(e) No accumulated funding deficiency, except for annual minimum
contributions which are not yet due, within the meaning of ERISA Section 302 or
Code Section 412 has been incurred with respect to any Plan of the ARCO Parties.
The ARCO Parties do not have any liability for (i) any lien imposed under ERISA
Section 302(f) or Code Section 412(n), (ii) any interest payments required under
ERISA Section 302(e) or Code Section 412(m), or (iii) any excise tax imposed by
Code Section 4971. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted or threatened a proceeding to terminate any Plan pursuant to Subtitle
1 of Title IV of ERISA. No Plan has been the subject of a reportable event (as
defined in ERISA Section 4043) as to which a notice would be required to be
filed with the PBGC.
(f) With respect to each Plan, no action, suit, grievance, claim,
arbitration or other manner of litigation with respect to the assets of the Plan
(other than routine claims for benefits made in the ordinary course of Plan
administration for which Plan administrator review procedures have not been
exhausted) is pending, or to ARCO's Knowledge, threatened or imminent against or
with respect to the Plan or any Plan sponsor or fiduciary (as defined in ERISA
Section 3(21)).
(g) Except as otherwise provided in this Agreement, each Plan
(including any Plan covering former employees of TBCC) which is established and
maintained by TBCC may be amended or terminated by TBCC or Acquisition Corp. on
or at any time after the Closing Date.
(h) No payment under any Plan made within two years after the Closing
Date shall constitute an "excess parachute payment" under Section 280G of the
Code.
4.18 BANK ACCOUNTS. Section 4.18 of the Disclosure Schedule sets forth
the name of each bank, savings and loan or other financial institution in which
TBCC or SL has any account or safe deposit box.
4.19 BROKER LIABILITY. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of ARCO, Delta Housing or their
Affiliates, in connection with this Agreement or the transactions contemplated
hereby, ARCO and Delta Housing shall be solely responsible and liable for any
brokerage, finder's or similar consultant's fee or other commission in respect
of such broker, finder or similar consultant.
4.20 FINANCIAL STATEMENTS. The Audited Financial Statements to be
delivered in accordance with Section 2.6(a) shall have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities Exchange Act of 1934, as
amended. The audited balance sheets of ACC at December 31, 1997 and 1996
(including the notes thereto) present fairly the financial position of ACC at
such dates, and the consolidated statement of income, of equity investment and
of cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1997, fairly present the results of operations, equity
investment and cash flows of ACC for each of such years. The unaudited balance
sheets (if any) of ACC as of the last day of each calendar quarter ending
subsequent to December 31, 1997 and prior to the Closing Date, and consolidated
statements of income, of equity investment and of cash flows for the quarterly
periods then ended (the "UNAUDITED FINANCIAL STATEMENTS") have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities
22
Exchange Act of 1934, as amended. Each balance sheet (if any) included among the
Unaudited Financial Statements (including the notes thereto) fairly presents the
financial position of ACC as of the date thereof, and each consolidated
statement of income, of equity investment and of cash flows included among the
Unaudited Financial Statements (including the notes thereto) fairly presents the
results of operations, equity investment and cash flows of ACC for each period
presented. The Interim Date Balance Sheet and the Closing Date Balance Sheet
will be derived from the combined, consolidated balance sheets of ACC. The
Interim Date Balance Sheet (including the related notes) will fairly present
TBCC's financial position as of its date.
4.21 BLACK LUNG DISCLOSURE. The present actuarial value (determined
using the Black Lung Discount Rate) of TBCC's black lung liability as of the
Interim Date does not exceed that which has been reserved for by TBCC on the
Interim Date Balance Sheet.
4.22 CONDUCT OF BUSINESS. Except as set forth in Section 4.22 of the
Disclosure Schedule, since the Interim Date, the ARCO Parties have conducted
their respective businesses only in, and have not engaged in any transaction
other than in, the ordinary and usual course of such businesses or as described
in the Purchase Agreement and there has not been any change by the ARCO Parties
in accounting principles, practices or methods that is not required by GAAP.
Except as provided for herein and other than in the ordinary course consistent
with past practice, since the Interim Date there has not been (i) any increase
in the compensation payable or which could become payable by the ARCO Parties to
their respective officers or employees or (ii) any amendment of any of the ARCO
Parties' Plans.
4.23 ASSETS. Except (i) as set forth in Section 4.23 of the Disclosure
Schedule and (ii) for the LTL Property that will be owned by Delta Housing and
remain subject to the Little Thunder Lease, prior to the Closing Date, ARCO will
have transferred or caused to be transferred to the ARCO Parties all tangible
and intangible assets of every description therefor held by ARCO or any
Affiliate of ARCO under intercompany agreements and arrangements with ARCO and
its Affiliates or otherwise and used exclusively by the ARCO Parties in the
conduct of the ARCO Parties' respective businesses on and since the Interim
Date.
4.24 CERCLA. None of the Properties are listed on the National
Priority List pursuant to CERCLA or on any similar list pursuant to any state
Environmental Laws.
4.25 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES. ARCH AND
ACQUISITION CORP. ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, NONE OF ARCO, DELTA HOUSING OR ANY AFFILIATE, EMPLOYEE OR AGENT OF
ARCO OR DELTA HOUSING HAS MADE ANY REPRESENTATION, PROMISE, COVENANT OR WARRANTY
REGARDING ANY OF THE ARCO PARTIES, THEIR PROPERTIES, ASSETS, BUSINESS,
OPERATIONS, LIABILITIES OR OBLIGATIONS, OR OTHERWISE. ARCO AND DELTA HOUSING
HEREBY DISCLAIM ANY IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREIN.
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4.26 NO OTHER COMMITMENT TO SELL LLC INTERESTS. Neither ARCO nor Delta
Housing has sold or has committed to sell the membership interests of the ARCO
Parties to any other Person.
4.27 ABSENCE OF UNDISCLOSED LIABILITIES. To ARCO's and TBCC's
Knowledge, none of the ARCO Parties has any material liabilities, whether
accrued or contingent, other than (i) liabilities (or reserves therefor) set
forth in the Preliminary Interim Date Balance Sheet, (ii) liabilities set forth
in the ARCO Disclosure Schedule, and (iii) liabilities incurred since the date
of the Preliminary Interim Date Balance Sheet in connection with this Agreement
or in the ordinary course of business, consistent with past practices.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ARCH AND ACQUISITION CORP.
Arch and Acquisition Corp. represent and warrant, jointly and
severally, to ARCO, Delta Housing and the Company as of the Effective Date (or
such other date as is specified therein), as follows:
5.1 ORGANIZATION AND GOOD STANDING. Arch and Acquisition Corp. are
corporations duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.
5.2 AUTHORITY. Arch and Acquisition Corp. have full corporate power
and authority to enter into this Agreement and to perform their respective
obligations hereunder. This Agreement constitutes a valid and binding obligation
of each of Acquisition Corp. and Arch, enforceable against Acquisition Corp. and
Arch in accordance with its terms, subject to applicable laws of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and to general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
5.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Arch and Acquisition Corp. does not, and the consummation of the Proposed
Transactions will not, (a) violate any of the provisions of the certificates of
incorporation or bylaws of Arch or Acquisition Corp.; (b) result in the breach
of, or constitute a default under, any material agreement or other material
instrument to which Arch or Acquisition Corp. is a party or by which any of
their respective properties or assets are bound; (c) violate any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award
applicable to Arch, Acquisition Corp. or any of their respective properties or
assets; or (d) constitute an event that, with notice, lapse of time or both,
would result in any such violation, breach or default.
5.4 APPROVALS, CONSENTS AND OTHER ACTIONS. Except with respect to the
filings required under the HSR Act, no consent, approval, license, permit, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other governmental authority or
instrumentality, or any third party is required to be made or obtained by or
with respect to Arch or Acquisition Corp. in connection with the execution,
delivery and performance of this Agreement by Arch or Acquisition Corp.
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5.5 FINANCIAL CAPABILITY. Arch and Acquisition Corp. have the
financial capability to perform all of their obligations under this Agreement,
and Acquisition Corp. has available all funds necessary to pay the Special
Distribution, the Adjustment (if payable by Acquisition Corp.) and any other
amounts contemplated by this Agreement.
5.6 ARCH'S AND ACQUISITION CORP.'S INQUIRY. Arch and Acquisition Corp.
and their representatives have reviewed or received copies of, or had the
opportunity to review, including in a data room maintained by ARCO, such
information from ARCO and each of the ARCO Parties as they have requested, and
have had the opportunity to make such inquiry of representatives of ARCO, Delta
Housing and each of the ARCO Parties as they deem appropriate. Arch and
Acquisition Corp. acknowledge that there are no representations or warranties,
expressed or implied, except as expressly set forth in this Agreement.
5.7 ORGANIZATION, QUALIFICATION AND GOOD STANDING OF AOW. As of the
Closing, AOW shall be a limited liability company, duly organized, validly
existing and in good standing under the laws of its state of formation. AOW has
all requisite limited liability company power and authority to own and lease the
properties it currently owns and leases and to conduct its activities as such
activities are currently conducted. AOW is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a material adverse effect on the financial condition of AOW.
5.8 TITLE OF THE MEMBERSHIP INTERESTS. Acquisition Corp. holds or will
hold of record and owns beneficially, and will transfer or cause to be
transferred to the Company on the Closing Date, upon delivery to the Company at
the Closing of an assignment, the Contributed Arch Interests, free and clear of
any security interests, pledges, liens and encumbrances except as set forth in
Section 5.8 of the Disclosure Schedule.
5.9 CAPITALIZATION. Section 5.9 of the Disclosure Schedule sets forth
the form and jurisdiction of formation for AOW. Except as set forth in Section
5.9 of the Disclosure Schedule, AOW does not have any outstanding securities,
subscriptions, options or other agreements or commitments obligating it to issue
shares of its capital stock or membership interests.
5.10 REAL PROPERTY. Section 5.10 of the Disclosure Schedule sets forth
a list of all material real property, leaseholds, water rights and other
material interests in real property or water held by AOW. Except as set forth in
Section 5.10 of the Disclosure Schedule, AOW holds an interest in the real
property described in Section 5.10 of the Disclosure Schedule as held by it,
according to the terms of the instrument, conveyance or document creating such
interest, free and clear or all liens, encumbrances, equities, claims,
covenants, conditions, reservations, restrictions, easements, rights of way and
other agreements known to Arch and Acquisition Corp., except for (a) liens for
Taxes not yet due and payable, or which may hereafter be paid without penalty,
or that are being contested in good faith by appropriate proceedings or which
are listed or described in the Disclosure Schedule, (b) liens in favor of
vendors, carriers, warehousemen, repairmen, mechanics, workmen and materialmen
and construction or similar liens arising by operation of law or in the ordinary
course of business in respect of obligations that are not yet due or that are
25
being contested in good faith by appropriate proceedings, (c) liens to be
released at or prior to the Closing, (d) rights reserved to or vested in any
Federal, state or local governmental body, authority or agency to control or
regulate any such real property interests in any manner, and all Laws, (e)
easements, reservations, rights-of-way, restrictions, covenants, conditions and
other similar encumbrances, whether of record or apparent on the premises,
including road, highway, pipeline, railroad and utility easements, and defects
in the chain of title that do not materially and adversely affect the present
use of such real property, and (f) other defects and irregularities in title or
encumbrances that are not material in character, amount or extent. Except as set
forth in Section 5.10 of the Disclosure Schedule, each of the material leases,
subleases, easements, licenses and agreements described in Section 5.10 of the
Disclosure Schedule is in full force and effect according to the terms of each
respective instrument, and, to Arch and Acquisition Corp.'s knowledge, each
holder of such lease, sublease, easement, license or agreements has complied
with all material requirements in connection therewith, and there is not under
any such lease, sublease, easement, license or agreement, any existing material
breach or default (or event that, with notice, lapse of time or both, would
constitute a material breach or default) by AOW.
5.11 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY. Section
5.11 of the Disclosure Schedule lists all material buildings, structures and
improvements and all material items of machinery, equipment and other tangible
personal property owned or leased by AOW.
5.12 MATERIAL CONTRACTS. Section 5.12 of the Disclosure Schedule lists
all material contracts and agreements and all documents evidencing rights of or
commitments to which AOW is a party or its property or assets are bound. Except
as set forth in Section 5.12 of the Disclosure Schedule, each such contract,
agreement or document is in full force and effect according to the terms of each
respective instrument, and AOW has complied with all requirements in connection
therewith, and there is not under any such contract, agreement or document any
existing material breach or default (or event that, with notice, lapse of time
or both, would constitute a material breach or default) by AOW.
5.13 INSURANCE POLICIES. Section 5.13 of the Disclosure Schedule lists
all material policies of insurance issued by third-party insurers for the 1998
policy period, including amounts of coverage thereof, that are maintained by
Arch for the benefit of AOW or by AOW for which AOW is named as an insured
party. Except as set forth in Section 5.13 of the Disclosure Schedule, such
policies are in full force and effect and all premiums due have been paid.
5.14 TAXES. Except as set forth in Section 5.14 of the Disclosure
Schedule, AOW has filed or caused to be filed with the appropriate local, state,
Federal and foreign governmental entities all material Tax Returns required to
be filed by AOW on or prior to the Closing Date (taking into account all
extensions of due dates), and have paid or caused to be paid or adequately
provided for all Taxes shown thereon as owing.
5.15 LICENSES, PERMITS, AUTHORIZATIONS. Section 5.15 of the Disclosure
Schedule lists all of the material licenses, permits (including mining permits
and the amount of any bond or other surety for each mining permit),
certificates, bonds, consents, rights and other such authorizations issued or
granted to AOW by local, state or Federal governmental authorities or agencies.
Except as set forth in Section 5.15 of the Disclosure Schedule, each of the
licenses,
26
permits, certificates, bonds, consents, rights and other authorizations listed
in Section 5.15 of the Disclosure Schedule is in full force and effect according
to the material terms of each instrument, each holder of such licenses, permits,
certificates, bonds, consents, rights and other authorizations has complied with
all material requirements in connection therewith, and there is not under any
such licenses, permits, certificates, bonds, consents, rights and other
authorizations any existing material breach or default (or event that, with
notice, lapse of time or both, would constitute a material breach or default) by
AOW.
5.16 LITIGATION. Except as set forth in Section 5.16 of the Disclosure
Schedule, (i) AOW is not a party to any lawsuit, claim, or other proceeding, or,
to Arch or Acquisition Corp.'s knowledge, any investigation, and (ii) AOW is not
in default under any judgment, order or decree of any court, administrative
agency or commission or other governmental authority or instrumentality
applicable to it or any of its property or assets.
5.17 COMPLIANCE WITH LAWS. Except as set forth in Section 5.17 of the
Disclosure Schedule, AOW is in compliance in all material respects with all
applicable Laws.
5.18 LABOR MATTERS. Except as set forth in Section 5.18 of the
Disclosure Schedule, AOW is not a party to any collective bargaining agreement
with any labor union or association, there are no formal negotiations, demands
or proposals that are pending or have been recently conducted or made with or by
any labor union or association, and there are not pending any strikes, work
stoppages or material labor disputes involving AOW.
5.19 EMPLOYEE BENEFIT PLANS.
(a) Section 5.19 of the Disclosure Schedule sets forth a list of all
"employee benefit plans" as defined in Section 3 of ERISA, and any other pension
or retirement, savings, profit sharing, deferred compensation, stock option
(including restricted or performance units), severance, vacation, medical,
vision, dental, long term disability, life insurance, group accident,
occupational death, business travel, long term care, educational assistance,
floating holiday, personal business, gain-share, bonus, financial counseling,
welfare or sick leave or other employee benefit plan, procedure, policy or
practice of any nature (collectively, the "PLANS") covering employees of AOW.
(b) Except as set forth in Section 5.19 of the Disclosure Schedule,
with respect to each Plan that is an "employee pension benefit plan" as defined
in Section 3(2) of ERISA and that is not a "multi employer plan" as defined in
Section 3(37) of ERISA, AOW is in compliance with all applicable provisions of
ERISA and the Code. Except as set forth in Section 5.19 of the Disclosure
Schedule, AOW has not engaged in a prohibited transaction that would subject it
to a material tax imposed under Section 4975 of the Code.
(c) Within the preceding five years, AOW has not been a party to or
contributed to any "multi employer plan," as defined in Section 4001(a)(3) or
ERISA.
27
5.20 BANK ACCOUNTS. Section 5.20 of the Disclosure Schedule sets forth
the name of each bank, savings and loan or other financial institution in which
AOW has any account or safe deposit box, and the names of all Persons authorized
to draw thereon or have access thereto.
5.21 FINANCIAL STATEMENTS. A balance sheet (the "AOW CLOSING DATE
BALANCE SHEET") will be prepared as of the Closing Date for AOW in accordance
with AOW's historic accounting principles in each case as applied on a
consistent basis during the periods indicated (except as otherwise stated in
this Section 5.21), and will fairly present the combined financial position of
AOW as of the dates thereof.
5.22 BROKER LIABILITY. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of Arch or Acquisition Corp., in
connection with this Agreement or the transactions contemplated hereby, Arch or
Acquisition Corp., as the case may be, shall be solely responsible and liable
for any brokerage, finder's or similar consultant's fee or other commission in
respect of such broker, finder or similar consultant.
5.23 ASSETS. Except as set forth in Section 5.26 of the Disclosure
Schedule, prior to the Closing Date, Acquisition Corp. has transferred or caused
to be transferred to AOW all tangible and intangible assets of every description
therefor held by Acquisition Corp. or any Affiliate of Arch under intercompany
agreements and arrangements with Arch and its Affiliates or otherwise and used
exclusively by AOW in the conduct of AOW's business on and since December 31,
1997.
5.24 QUALIFICATION, COMPLIANCE WITH ACREAGE LIMITATIONS. Each of
Acquisition Corp. and the Company is qualified under all applicable Laws to hold
the interests in Federal and state coal leases it will acquire at the Closing.
Immediately after the consummation of the Proposed Transactions neither Arch nor
Acquisition Corp. will itself, directly or indirectly, or in combination with
any Person, own holdings of Federal or state coal leases in excess of any
applicable limitations.
5.25 CERCLA. None of the Carbon Basin Reserves are listed on the
National Priority List pursuant to CERCLA or any similar list pursuant to state
Environmental Laws.
5.26 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES. ARCO AND
DELTA HOUSING ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
NONE OF ARCH, ACQUISITION CORP. NOR ANY AFFILIATE, EMPLOYEE OR AGENT OF ARCH OR
ACQUISITION CORP. HAS MADE ANY REPRESENTATION, PROMISE, COVENANT OR WARRANTY
REGARDING AOW, ITS PROPERTIES, ASSETS, BUSINESS, OPERATIONS, LIABILITIES OR
OBLIGATIONS, OR OTHERWISE. ARCH AND ACQUISITION CORP. HEREBY DISCLAIM ANY
IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
5.27 BLACK LUNG DISCLOSURE. Section 5.27 of the Disclosure Schedule
lists all pending claims against AOW for federal black lung liability.
28
5.28 ABSENCE OF UNDISCLOSED LIABILITIES. To Arch's and Acquisition
Corp.'s knowledge, AOW has no material liabilities, whether accrued or
contingent, other than liabilities set forth in the Arch Disclosure Schedule and
liabilities incurred since the Effective Date in connection with this Agreement
or in the ordinary course of business, consistent with past practices.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Contributing Member as
follows:
6.1 DUE ORGANIZATION; GOOD STANDING AND POWER. The Company is a
limited liability company duly formed and validly existing under the laws of the
State of Delaware. The Company has all power and authority to enter into this
Agreement and to perform its obligations hereunder and thereunder. As of the
Closing, the Company will be duly authorized, qualified or licensed to do
business as a foreign limited liability company, in each of the jurisdictions in
which its right, title or interest in or to any asset, or the conduct of its
business, requires such authorization, qualification or licensing, except where
the failure to so qualify would not have a material adverse effect on the
ability of the Company to perform its obligations hereunder and under all
agreements delivered pursuant hereto.
6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary company action on the part of the Company. No other
Company action is necessary for the authorization, execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity regardless of whether
such enforceability is considered in a proceeding in equity or at law.
6.3 NO CONSENTS REQUIRED; NO CONFLICT WITH INSTRUMENTS TO WHICH THE
COMPANY IS A PARTY. The execution, delivery and performance of this Agreement by
the Company and the consummation by it of the transactions contemplated hereby
(i) will not require any consent and (ii) will not violate (with or without the
giving of notice or the lapse of time or both), conflict with, or result in the
breach or termination of any provision of, or constitute a default under, or
result in the acceleration of the performance of the obligations of the Company
under any agreement to which the Company is a party or by which the Company or
any of its assets or properties is bound.
6.4 ACCREDITED INVESTOR. The Company is an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act.
29
6.5 INVESTMENT INTENT. The Company is acquiring the Contributed
Membership Interests for its own account for the purpose of investment and not
with a view to, or for sale in connection with, any distribution thereof in any
transaction that would be in violation of the securities laws of the United
States or any state thereof. The Company acknowledges that the Contributed
Member Interests have not been registered or qualified under, and are sold in
reliance upon an exemption from the registration requirements of, the Securities
Act and any applicable state securities or "Blue Sky" laws, and may not be
offered, sold, transferred, pledged, hypothecated or otherwise assigned unless
they are registered under the Securities Act and any applicable securities or
"Blue Sky" laws of any state or an exemption from such registration is
available.
ARTICLE 7
COVENANTS AND AGREEMENTS OF THE PARTIES
7.1 ACCESS TO INFORMATION.
(a) Arch and Acquisition Corp. acknowledge that prior to the Effective
Date, ARCO has caused each of the ARCO Parties to give Arch and its authorized
representatives reasonable access to the employees, offices, properties, and a
data room containing certain books and records of the ARCO Parties, has
permitted Arch and Acquisition Corp. to make inspections of and tour the ARCO
Parties' mines, and has furnished Arch with certain financial and operating data
and other information with respect to the business, assets, properties,
operations, liabilities and obligations of the ARCO Parties. Prior to the
Closing Date, Acquisition Corp. shall have reasonable access during normal
business hours to the operations, facilities, employees and representatives of
ARCO and the ARCO Parties as reasonably necessary to (i) verify the
representations and warranties given by ARCO and Delta Housing hereunder or ARCO
and ARCO Uinta under the Purchase Agreement, and (ii) begin planning for an
orderly transition process with respect to the Proposed Transactions; PROVIDED,
HOWEVER, Acquisition Corp. will not have access to any financial data or other
information relating to TBCC's bid on the Thunder Cloud Federal Lease Tract .
Except as set forth in the preceding sentence or otherwise provided in this
Agreement, from and after the Effective Date, neither Arch nor Acquisition Corp.
shall have the right to access the employees, offices, properties, books and
records of ARCO or the ARCO Parties, to inspect the ARCO Parties' mines or other
properties, or to inspect or have furnished financial or operating data or other
information with respect to the business, assets, properties, operations,
liabilities or obligations of ARCO or the ARCO Parties.
(b) Prior to the Closing, Arch shall keep (and shall cause its
directors, officers, employees, representatives, advisors and Affiliates to
keep) all information relating to ARCO and the ARCO Parties (including any such
information received prior to the date hereof) confidential, and shall use such
information only, on the terms and conditions as are set forth in the
confidentiality agreements between ARCO and Arch, together with any supplement
or amendment reasonably requested by ARCO from time to time. After the Closing,
each party hereto agrees to keep the terms and conditions of this Agreement
confidential, and to redact any provisions reasonably requested by any other
party (including Section 10.2(c)) from copies of this Agreement filed with the
Securities and Exchange Commission, except for such matters that may be required
to be disclosed by law or applicable stock exchange requirements or that are
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generally available in the public domain other than as a result of a breach of
this Agreement by such party.
(c) After the Closing, Acquisition Corp. shall at its own expense or
at the expense of the ARCO Parties, cause the ARCO Parties to preserve and keep,
or transport to a storage site of its own selection where it shall preserve and
keep, the books and records of each of the ARCO Parties obtained by Acquisition
Corp. or retained by the ARCO Parties, including financial or business
transaction records, books of original entry, tax records and supporting
documents, for a period of seven years from the Closing Date or such longer
period if required under applicable Laws. Within 60 days after the Closing, ARCO
shall provide Acquisition Corp. with a list or inventory of the document types
and inclusive dates of the records transmitted to Acquisition Corp. or retained
by the ARCO Parties. Acquisition Corp. shall make or shall cause the ARCO
Parties to make such acquired or retained records as are dated up to the Closing
Date and included in the inventory provided by ARCO, including the general
ledger and mining reports, available to ARCO as may be reasonably requested by
ARCO in connection with, among other things, any of ARCO's financial reporting
or Tax filing obligations, for a period of seven years from the Closing Date or
such longer period if required under applicable Laws. For a period of 15 years
after the Closing Date, Acquisition Corp. shall notify ARCO in writing, on an
annual basis, of the document types and, if applicable, inclusive dates of any
such retained records, that it or the ARCO Parties intend to destroy during the
following one-year period. If ARCO desires access to such records for a period
of time longer than specified in Acquisition Corp.'s annual notice, ARCO shall
notify Acquisition Corp. in writing, not more than 60 days following ARCO's
receipt of Acquisition Corp.'s annual notice, of its desire to retain such
records, and Acquisition Corp. shall deliver, or cause the ARCO Parties to
deliver, such records to ARCO. If ARCO does not notify Acquisition Corp. of its
desire to retain records within such 60-day period, Acquisition Corp. or the
ARCO Parties may dispose of such records according to prudent records management
practices in the ordinary course of business.
(d) The parties hereby acknowledge that any in-house counsel of the
ARCO Parties or ARCO who are Employees and who participated in the preparation,
negotiation or consummation of this Agreement or the Proposed Transactions were
providing legal representation for ARCO and, notwithstanding any other provision
of this Agreement, neither the ARCO Parties or ARCO nor such counsel shall be
required to disclose under any circumstance any information or documents covered
by the attorney-client privilege or the work-product doctrine as such
information or documents were developed in the course of such representation.
All such information and documents shall remain the sole and exclusive property
of ARCO.
7.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING. From the Effective
Date to the Closing Date, except in connection with the transactions
contemplated by this Agreement and the Purchase Agreement, or as otherwise
consented to in writing by Acquisition Corp. (which consent shall not be
unreasonably withheld, conditioned or delayed), ARCO shall use commercially
reasonable efforts, and consistent with its obligations under the limited
liability company agreements of the ARCO Parties to cause each of the ARCO
Parties to (a) conduct its business in the ordinary course and consistent with
past practices, except that (i) none of the properties or assets listed in the
ARCO Disclosure Schedule valued at $250,000 or more may be transferred, disposed
of, encumbered or hypothecated, (ii) no individual capital expenditure by
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any ARCO Party in excess of $1 million or capital expenditures aggregating (for
all ARCO Parties) in excess of $25 million shall be made or committed, and (iii)
no ARCO Party shall enter into any coal supply agreement with a term in excess
of one year or materially amend any coal supply agreement disclosed in the
Disclosure Schedule having a term in excess of one year (but TBCC shall have the
right, but not the obligation, to bid on the Thunder Cloud Federal Lease Tract
on such terms and conditions, including the amount of any bonus bid, as it
elects in its sole discretion), (b) keep in full force and effect its limited
liability company existence, (c) comply in all material respects with all
Material Contracts set forth in Section 4.10 of the Disclosure Schedule to which
each is a party, (d) use commercially reasonable efforts to retain its employees
and maintain its business relationships with customers and suppliers, and (e)
maintain all facilities, equipment and other tangible assets in accordance with
past maintenance practices of the ARCO Parties.
7.3 NOTIFICATION. Between the Effective Date and the Closing Date,
ARCO and Arch will each, promptly upon becoming aware thereof, notify the other
in writing of any fact or condition that causes or constitutes a breach of any
of the other party's representations and warranties made as of the Effective
Date or any default in the other party's performance of its covenants and
agreements herein.
7.4 ANTITRUST NOTIFICATION. The appropriate parties hereto shall, as
promptly as practicable, but in no event later than ten business days after the
date of this Agreement, file with the Federal Trade Commission (the "FTC") and
the Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION")
the notification and report form required for the proposed transactions
contemplated hereby pursuant to the HSR Act. The appropriate parties hereto
shall furnish to each other such necessary information and reasonable assistance
as may be requested in connection with the preparation of any filing required to
be made under the HSR Act. The appropriate parties shall use all commercially
reasonable efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation and to obtain as promptly as practicable any clearance required
under the HSR Act for the contribution of the assets hereunder.
7.5 FEES AND EXPENSES. Except as otherwise specifically provided in
this Agreement, the parties shall bear their own fees and expenses incurred in
connection with this Agreement (including fees and expenses of their respective
investment bankers) and in connection with all obligations required to be
performed by each of them under this Agreement.
7.6 PUBLICITY. Except as otherwise required by law or applicable stock
exchange requirements, no party hereto shall issue any press release or public
statement relating to or concerning this Agreement or the matters contained
herein, without obtaining the prior approval of the other parties hereto of the
contents and the manner of presentation and publication thereof, which approval
shall not be unreasonably withheld, conditioned or delayed.
7.7 POST-CLOSING ASSISTANCE. From and after the Closing Date, upon the
request of Arch or Acquisition Corp., on the one hand, or ARCO and Delta
Housing, on the other, the parties hereto shall do, execute, acknowledge and
deliver all such further acts, assurances, deeds,
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assignments, transfers, conveyances and other instruments and papers as may be
reasonably required or appropriate to carry out the transactions contemplated by
this Agreement.
7.8 GUARANTEES. ARCO and/or Delta Housing provided certain guarantees,
indemnities and similar obligations with respect to the ARCO Parties, which
guarantees, indemnities and obligations are set forth in Section 7.8 of the
Disclosure Schedule. Arch and Acquisition Corp. agree to cooperate with ARCO and
use its best efforts to cause the release of each such guarantee, indemnity and
obligation, including the substitution of Arch, Acquisition Corp. and/or an
Affiliate of Arch or Acquisition Corp. as the guarantor, indemnitor or
responsible party thereunder and the release of ARCO and Delta Housing on or as
soon as practicable after the Closing. Without limiting the foregoing, Arch and
Acquisition Corp. hereby undertake, assume and agree to perform, pay and
discharge all such guarantees, indemnities and obligations, and Arch and
Acquisition Corp. shall indemnify and hold harmless each of ARCO and Delta
Housing, including any officers, directors or Affiliates of ARCO and Delta
Housing with respect to all Losses arising out of or relating to any such
guarantee, indemnity or obligation.
7.9 NAME CHANGES. No later than 30 days following the Closing Date,
Acquisition Corp. shall cause the Company to amend the certificate of
incorporation of each of the ARCO Parties to remove the word "ARCO" or any
similarity or reference thereto. The new corporate name of the ARCO Parties
adopted by Acquisition Corp. shall not contain any word or words confusingly
similar to "ARCO" or the "Atlantic Richfield Company." No later than six months
following the Closing Date, Arch shall remove the marks and names "ARCO," "ARCO
COAL" and "ATLANTIC RICHFIELD" and the Spark Design and any other words, names
or symbols proprietary to ARCO, from all tangible and intangible properties,
real and personal, acquired by Acquisition Corp. and the Company hereunder.
7.10 SURETY BONDS. Acquisition Corp. will use commercially reasonable
efforts to submit surety bonds (collectively, "SUBSTITUTE SURETY BONDS" and
individually, a "SUBSTITUTE SURETY BOND"), effective as of the Closing, in
substitution for ARCO's or Delta Housing's surety bonds and self bonds listed in
Section 4.13 of the Disclosure Schedule (collectively, "SURETY BONDS" and
individually, a "SURETY BOND"). If all the Substitute Surety Bonds are not
effective 90 days after the Closing Date, Acquisition Corp. shall be required to
pay ARCO or Delta Housing, in consideration of ARCO or Delta Housing keeping in
effect those Surety Bonds for which a Substitute Surety Bond is not then
effective (collectively, the "POST-CLOSING SURETY BONDS" and individually, a
"POST-CLOSING SURETY BOND"), an amount equal to one-half of one percent of the
face value of the Post-Closing Surety Bonds per month (or pro rata portion
thereof) until such time as Substitute Surety Bonds are effective, it being
agreed that the aggregate face value of the Post-Closing Surety Bonds shall be
reduced dollar-for-dollar by the face value of Substitute Surety Bonds as such
Substitute Surety Bonds become effective after the Closing Date without regard
to or whether any of the Post-Closing Surety Bonds are released. In the event
Substitute Surety Bonds in substitution for all the Post-Closing Surety Bonds
are not effective within 180 days after the Closing Date, in lieu of Acquisition
Corp.'s payment obligation under the preceding sentence, Acquisition Corp. shall
obtain, for the benefit of ARCO performance bonds or other assurances, from such
surety providers and with such terms and conditions reasonably acceptable to
ARCO and Delta Housing (the "PERFORMANCE BONDS") in an
33
aggregate face value equal to the aggregate face value of the Post-Closing
Surety Bonds on and after such 180th day, it being agreed that the aggregate
face value of the Performance Bonds shall be reduced dollar-for-dollar by the
face value of Substitute Surety Bonds as such Substitute Surety Bonds thereafter
become effective without respect to whether any of the Post-Closing Surety Bonds
secured by the Performance Bonds are released. Without limiting the foregoing,
Arch and Acquisition Corp. shall indemnify and hold harmless ARCO, Delta Housing
and their Affiliates with respect to all Losses arising under the Surety Bonds.
7.11 BLACK LUNG LIABILITY. Arch and Acquisition Corp. have reviewed
any reserves and accruals of the ARCO Parties, including those which are with
respect to potential liability under the Black Lung Benefits Act of 1972, as
amended, the Black Lung Benefits Reform Act of 1977, as amended, and other
applicable Federal and state black lung acts or laws designed to provide such
benefits to employees. Arch acknowledges that, except with respect to any breach
of the representation and warranty made by ARCO in Section 4.21 in respect of
black lung liabilities, any Loss in respect of black lung shall not form the
basis for any assertion of a breach of a representation or warranty contained in
this Agreement.
7.12 LITIGATION SUPPORT. From and after the Closing Date, Arch and
Acquisition Corp shall indemnify and hold harmless ARCO, Delta Housing and their
Affiliates with respect to all Losses arising out of or relating to any matter
set forth in Section 4.14 of the ARCO Disclosure Schedule. Without limiting the
foregoing, if and for so long as ARCO is defending or contesting any action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the ARCO Parties, Arch and Acquisition Corp. shall cooperate and shall cause the
ARCO Parties to cooperate (on and after the Closing Date) with ARCO or Delta
Housing and its counsel and agents in such defense or contest, make available
its and their personnel, and provide such testimony and access to its and their
books and records as shall be necessary in connection with such defense or
contest all at Acquisition Corp.'s cost.
7.13 INSURANCE. Arch has reviewed the insurance policies set forth in
Section 4.11 of the Disclosure Schedule. ARCO agrees that all such insurance
policies shall remain in full force and effect until the Closing. All coverage
and benefits under such insurance policies and any other insurance policies of
ARCO or its Affiliates, subject to the terms thereof, shall cease at the
Closing. On and after the Closing Date, Arch shall be solely responsible for
obtaining and maintaining any and all insurance coverage and protection relating
to the respective business, assets, properties, operations, liabilities and
obligations of the ARCO Parties.
7.14 ARCH'S AND ACQUISITION CORP.'S ENVIRONMENTAL RESPONSIBILITIES.
Arch and Acquisition Corp. hereby acknowledge and agree that all Environmental
Liabilities asserted against the ARCO Parties related to any property listed in
Section 7.14 of the Disclosure Schedule (the "PROPERTIES") shall be retained by
the ARCO Parties on and following the Closing Date and that all Environmental
Liabilities asserted against ARCO, Delta Housing or their Affiliates with
respect or related to the Properties shall be assumed by Arch and Acquisition
Corp. From and after the Closing Date, Arch and Acquisition Corp. shall perform,
pay and discharge, or cause the ARCO Parties to perform, pay and discharge all
retained and assumed
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Environmental Liabilities, and shall indemnify and hold harmless ARCO, Delta
Housing and their Affiliates with respect to such Environmental Liabilities.
7.15 ARCO'S AND DELTA HOUSING'S ENVIRONMENTAL RESPONSIBILITIES. ARCO
and Delta Housing hereby acknowledge and agree that all Environmental
Liabilities resulting from the ownership or operation of properties other than
the Properties (the "OTHER PROPERTIES") by the ARCO Parties or any of their
predecessors or Affiliates (unless caused by Acquisition Corp., Arch, the ARCO
Parties or any of their respective Affiliates on or after the Closing Date),
shall be assumed by ARCO and Delta Housing. From and after the Closing Date,
ARCO and Delta Housing shall perform, pay and discharge any such Environmental
Liabilities assumed pursuant to this Section 7.15, and shall indemnify and hold
harmless each Arch Indemnitee with respect to such Environmental Liabilities.
7.16 OTHER LIABILITIES.
(a) Except as otherwise expressly provided in this Agreement and
without limiting ARCO's or Delta Housing's liability for breaches of
representations and warranties and defaults of covenants and agreements under
this Agreement and the Purchase Agreement in addition to the Environmental
Liabilities, Arch and Acquisition Corp. hereby acknowledge and agree that, all
Other Liabilities shall be retained by the ARCO Parties on and following the
Closing Date. Except with respect to Other Liabilities retained by Delta Housing
or required to be indemnified by ARCO and Delta Housing, in each case as
expressly provided under this Agreement and the Purchase Agreement from and
after the Closing Date, Acquisition Corp. shall perform, pay or discharge or
cause the ARCO Parties to perform, pay or discharge such Other Liabilities, and
shall indemnify and hold harmless each of ARCO and Delta Housing and any
officer, director, employee, agent or Affiliate of ARCO or Delta Housing with
respect to such Other Liabilities.
(b) "OTHER LIABILITIES" shall mean any and all claims, actions, causes
of action, damages, losses, liabilities, obligations, penalties, judgments,
amounts paid in settlement, assessments, costs, disbursements or expenses
(including attorneys' fees and costs, experts' fees and costs and consultants'
fees and costs) of any kind or nature, whether existing on the Closing Date or
arising thereafter (including those absolute, accrued, contingent, unknown or
otherwise), that are asserted against an ARCO Party or ARCO, Delta Housing or
any of their Affiliates arising out of, based on or relating to the business,
assets, properties, operations, liabilities or obligations of any and all of the
ARCO Parties, other than Environmental Liabilities.
7.17 DISCLOSURE SCHEDULES. The parties hereto shall have ten (10) days
after the Effective Date to revise the Disclosure Schedules delivered hereunder
by written notice to the other party; provided, however, that no such revision
shall materially alter the nature or effect of the specific item so modified, or
alone or in the aggregate have a Material Adverse Effect. The revised Disclosure
Schedules shall become the Disclosure Schedules to the Agreement as if initially
attached hereto.
7.18 COMMERCIALLY REASONABLE EFFORTS. Each of Arch, Acquisition Corp.,
ARCO and Delta Housing will use commercially reasonable efforts to take all
actions and do all things necessary in order to consummate and make effective
the transactions contemplated by this
35
Agreement (including the satisfaction, but not the waiver, of the closing
conditions set forth in Sections 11.1 and 11.2).
ARTICLE 8
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 RETENTION OF EMPLOYEES AND CONTINUATION OF BENEFITS.
(a) Section 8.1(a) of the Disclosure Schedule sets forth a list of the
Employees who will be retained in employment by TBCC ("TRANSFEREES"), which list
shall be updated and supplemented by ARCO and agreed to by Acquisition Corp. on
and as of the Closing Date. Acquisition Corp. shall take such action as may be
necessary to provide that as of the Closing Date, the Transferees shall remain
employed by the ARCO Parties or shall be employed by Acquisition Corp. and the
Transferees shall, except as otherwise provided, participate in Acquisition
Corp.'s employee benefit plans offered to similarly situated employees.
(b) Without limiting the foregoing, for purposes of this Article 8,
Arch shall ensure that on and following the Closing Date, the Transferees shall
receive credit with respect to any benefit plan, arrangement or other right
whether contemplated in Section 4.17 of the Disclosure Schedule or otherwise,
for any period of employment with ARCO or the ARCO Parties (including any
applicable predecessors or Affiliates) prior to the Closing Date for eligibility
and vesting purposes under each employee benefit plan, arrangement or other
right; provided, however, that in no event shall any Transferees be given credit
for any such purpose for any period of employment that was not counted for such
purpose under any applicable plan, arrangement or Plan of ARCO or the ARCO
Parties prior to the Closing Date.
8.2 RETENTION OF RETIREMENT PLANS FOR ARCO PARTIES. Section 8.2 of the
Disclosure Schedule sets forth a list of any retirement plan established and
maintained by the ARCO Parties or ARCO (collectively, the "RETIREMENT PLANS").
Acquisition Corp. shall take such action as may be necessary to cause any
applicable ARCO Party to continue to administer and maintain its respective
Retirement Plan until December 31, 1998. On and following the Closing Date,
Acquisition Corp. shall be responsible for retaining the sponsorship and all
assets, accounts, liabilities and obligations of the Retirement Plans applicable
to Transferees or former employees of the applicable ARCO Party, and Acquisition
Corp. shall release, indemnify and hold harmless ARCO, Delta Housing and any of
their Affiliates with respect to all Losses arising out of or relating to the
Retirement Plans. Acquisition Corp. agrees that if, after December 31, 1998, the
defined benefit Retirement Plan is merged into the Arch's Retirement Plan, the
opening balance credits in the Arch's Retirement Plan with respect to
Transferees shall be no less than the assets of the merged Retirement Plan
allocable to the Transferees, and Transferees shall be entitled to the
transition credits, though not longer than December 31, 2012, based on their
years of Retirement Plan benefit accrual service, as provided by the Arch's
Retirement Plan as of the Closing Date.
8.3 ARCO'S PENSION PLAN. As of the Closing Date, any Transferees who
are participants in the Atlantic Richfield Retirement Plan II (the "ARCO
RETIREMENT PLAN") shall no longer participate in such plan. Arch shall take such
action as may be necessary to provide that
36
all such Transferees shall participate in Arch's cash balance defined benefit
retirement plan ("ARCH'S RETIREMENT PLAN"). Arch understands and agrees that the
accrued benefits of any Transferees under the ARCO Retirement Plan shall not
increase following the Closing Date and that any surplus under such plan with
respect to such Transferees shall be retained by ARCO. Arch agrees to provide
open balance credits in Arch's Retirement Plan with respect to Transferees based
on the Transferee's monthly accrued benefit under the ARCO Retirement Plan and
the conversion factor under Arch's Retirement Plan, as in effect on the Closing
Date. Such Transferee's open balance credits shall be reduced by the present
value of the Transferee's accrued benefit under the ARCO Retirement Plan. Arch
also agrees to provide Transferees with transition credits, though not longer
than December 31, 2012, based on their years of ARCO Retirement Plan benefit
accrual service, similar to the credits provided under Arch's Retirement Plan,
as in effect on the Closing Date.
8.4 THRIFT PLAN. As of the Closing Date, any Transferees who are
participants in the Atlantic Richfield Capital Accumulation Plan II and the
Atlantic Richfield Savings Plan II (collectively, "ARCO ACCUMULATION AND SAVINGS
PLANS") shall no longer participate in such plans. Arch shall take such action
as may be necessary to provide that all such Transferees shall participate in
Arch's defined contribution retirement plan(s) (collectively, the "ARCH'S
SAVINGS PLAN"). Arch shall allow Transferees to make direct rollovers under
Section 401(a)(31) of the Code or elective transfers under Treas. Reg.
1.411(d)-4, Q&A-3 of their account balances from the ARCO Accumulation and
Savings Plans to Arch's Savings Plan. Arch and ARCO understand and acknowledge
that Transferees who are participants in the ARCO Accumulation and Savings Plans
may at their election choose to leave their contributions in either or both of
the ARCO Accumulation and Savings Plans.
8.5 OTHER EMPLOYEE BENEFITS. Except as specifically set forth in
Sections 8.3 and 8.4, as of the Closing Date (i) Employees of the ARCO Parties
(and their respective beneficiaries and dependents) shall no longer participate
in any employee benefit plan or arrangement maintained by ARCO and (ii) Arch and
the Company shall assume or retain (as applicable) all liabilities relating to
Transferees or former employees of the ARCO Parties (and their respective
beneficiaries and dependents). Without limiting the provisions of Section 8.1,
Arch shall continue to provide until December 31, 1998 under plans comparable to
plans applicable to Transferees prior to the Closing, the following benefits:
(i) the group health coverage currently provided to the Transferees, former
employees and their dependents, or any sub-group thereof (collectively, the
"PARTICIPANTS"), or comparable group health coverage which shall (A) waive any
pre-existing condition limitations on benefits for the Participants, (B) waive
any eligibility waiting periods for the Participants, and (C) give effect, in
determining or applying any deductible and maximum out-of-pocket limitations, to
claims incurred, amounts paid by or on behalf of and amounts reimbursed to the
Participants under ARCO's or an ARCO Party's group health plan during the
calendar year in effect as of the Closing Date, and (ii) benefits under the
employee benefit plans described in Section 4.17 of the Disclosure Schedule.
Without limiting the foregoing, Arch agrees to provide coverage to the
Transferees as required by the Consolidated Omnibus Budget Reconciliation Act of
1985.
8.6 FLEXIBLE SPENDING ACCOUNTS. ARCO and Acquisition Corp. agree to
cooperate with each other in all reasonable respects to effect an orderly
transition for Employees from the
37
flexible spending account plans in which such Employees currently participate to
Arch's comparable plans as appropriate and to the extent permitted by applicable
law.
8.7 COOPERATION. ARCO and Acquisition Corp. agree to cooperate with
each other in all reasonable respects with respect to administrative issues
arising out of this Agreement that relate to the Plans of ARCO, Acquisition
Corp. or their respective Affiliates.
8.8 BLACK LUNG MATTERS. After the Closing, and subject to Arch's and
Acquisition Corp.'s right to indemnity for ARCO's and/or Delta Housing's breach
of its representation and warranty in Section 4.21 of this Agreement,
Acquisition Corp. shall pay or cause the ARCO Parties to pay all liabilities of
ARCO or Delta Housing under the Federal Mine Safety and Health Act of 1977, as
amended, and applicable Federal and state laws for claims for disability or
death due to "black lung" or pneumoconiosis, whenever created.
8.9 TRANSFEREE TERMINATION BY ARCH.
(a) In the event the employment of any Transferee is terminated for
any or no reason following the Closing Date, ARCO shall have no liability with
respect to any severance or other post-employment benefits applicable to such
termination, and Arch shall indemnify and hold harmless ARCO, Delta Housing or
their Affiliates for all losses, claims, damages, liabilities, costs and
expenses (including any attorney fees) arising out of or relating to any
termination of employment or any severance or other post-employment benefit with
respect to the Transferees following the Closing Date. Without limiting the
foregoing, Arch agrees to defend and indemnify ARCO, Delta Housing or their
Affiliates for any losses, claims, damages, liabilities, costs and expenses
(including any attorney fees) arising out of or relating to any claim for
severance benefits for whatever reason or basis, including, without limitation,
a change of a Transferee's terms and conditions of employment with Arch such as
a change in compensation or employee benefit plans.
(b) Without limiting the generality of the foregoing, in the event the
employment of any Transferee is terminated for any or no reason, other than for
cause in accordance with Arch's applicable disciplinary procedures, if any,
within one year following the Closing Date, Arch shall provide such Transferee
severance benefits, including, without limitation, the payment of an allowance
and the continuation of medical and dental coverage and the R-60, in accordance
with the provisions of the Atlantic Richfield Special Termination Allowance
Plan, as amended, and the Atlantic Richfield Termination Allowance Plan Policy
Provisions copies of which are attached hereto as Exhibit 8.9(b), and any
individual severance arrangement as set forth in Section 4.17 of the Disclosure
Schedule applicable to the Transferees prior to the Closing Date.
(c) Notwithstanding anything else in this Agreement, Acquisition Corp.
shall not be required to provide severance benefits for any of the individuals
set forth in Section 8.9(c) of the Disclosure Schedule.
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ARTICLE 9
TAXES
9.1 ARCO TAX MATTERS.
(a) ARCO will prepare and file or cause to be prepared and filed all
Tax Returns for the ARCO Parties required to be filed prior to the Closing Date
with the appropriate United States, state, local and foreign governmental
entities for any taxable period of the ARCO Parties that ends on or before the
Closing Date (the "PRE-CLOSING TAX PERIOD"). ARCO will make all payments shown
thereon as owing with respect to any such Tax Return. ARCO will prepare and, if
required to do so by applicable law, deliver to the Company for signing and
filing any state income Tax Returns of the ARCO Parties with respect to any
Pre-Closing Tax Period (including any short period) that have not been filed
prior to the Closing Date. The Company will make all payments shown thereon as
owing with respect to any such Tax Returns.
(b) Except as otherwise provided in Section 9.1(a) or (c), the Company
will prepare and file or cause to be prepared and filed all Tax Returns for the
ARCO Parties that are required to be filed with the appropriate United States,
state, local and foreign governmental entities for all periods as to which such
Tax Returns are due after the Closing Date. The Company will pay or cause to be
paid all taxes required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include
but not end on the Closing Date, to the extent permissible pursuant to
applicable law, ARCO will, and the Company will cause the ARCO Parties to, (i)
take all steps as are or may be reasonably necessary, including the filing of
elections or returns with applicable taxing authorities, to cause such period to
end on the Closing Date; or (ii) if clause (i) is inapplicable, report the
operations of the ARCO Parties only for the portion of such period ending on or
immediately before the Closing Date in a combined, consolidated, or unitary Tax
Return filed by ARCO, notwithstanding that such taxable period does not end on
the Closing Date. If clause (ii) applies to a taxable period of the ARCO
Parties, the portion of such taxable period included in such return filed by
ARCO will be treated as a Pre-Closing Tax Period described in Section 9.1(a) and
Arch will not be responsible for filing such return for such year pursuant to
Section 9.1(b).
(d) In order to assist ARCO in the preparation of all Tax Returns that
ARCO is required to prepare pursuant to Section 9.1(a), the Company will prepare
or cause the ARCO Parties to prepare and deliver within 60 days of receipt
ARCO's standard Federal and state tax return data gathering packages relating to
the ARCO Parties. In addition to providing such packages, the Company will
promptly provide or cause to be provided to ARCO such other information as ARCO
may reasonably request (including access to books, records and personnel) in
order for the operations of the ARCO Parties to be properly reported in such Tax
Returns, for the preparation for any Tax audit or for the prosecution or defense
of any claim, suit or proceeding relating to Taxes.
(e) To the extent refunds of Taxes are not recorded on the Closing
Date Balance Sheet, the Company will pay or cause to be paid to ARCO all refunds
or credits of Taxes (including any interest thereon) received by the Company
after the Closing Date and attributable to Taxes paid by ARCO with respect to
any Pre-Closing Tax Period. Such payment will be
39
made to ARCO within 30 days after receipt of any such refund from or allowance
of such credit by the relevant taxing authority.
(f) ARCO will indemnify and hold the Company harmless from and against
any and all liability for any taxable period as a result of Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law) for taxes
of any corporation or other entity, other than the ARCO Parties, which is or has
been affiliated with ARCO.
9.2 ARCH TAX MATTERS.
(a) Arch will prepare and file or cause to be prepared and filed all
Federal and state income Tax Returns for AOW required to be filed with the
appropriate United States, state, local and foreign governmental entities for
any taxable period of such member that ends on or before the Closing Date (the
"ARCH PRE-CLOSING TAX PERIOD"). Arch will prepare and, if required to do so by
applicable law, deliver to the Company for signing and filing any state income
Tax Returns of AOW with respect to any Arch Pre-Closing Tax Period (including
any short period) that have not been filed prior to the Closing Date. Arch will
make all payments shown thereon as owing with respect to any such Tax Returns.
(b) Except as otherwise provided in Section 9.2(a), the Company will
prepare and file or cause to be prepared and filed all Tax Returns for AOW that
are required to be filed with the appropriate United States, state, local and
foreign governmental entities for all periods as to which such Tax Returns are
due after the Closing Date. The Company will pay or cause to be paid all taxes
required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include
but not end on the Closing Date, to the extent permissible pursuant to
applicable law, Arch will, and the Company will cause AOW to, (i) take all steps
as are or may be reasonably necessary, including the filing of elections or
returns with applicable taxing authorities, to cause such period to end on the
Closing Date; or (ii) if clause (i) is inapplicable, report the operations of
AOW only for the portion of such period ending on or immediately before the
Closing Date in a combined, consolidated, or unitary Tax Return filed by Arch,
notwithstanding that such taxable period does not end on the Closing Date. If
clause (ii) applies to a taxable period of AOW, the portion of such taxable
period included in such return filed by Arch will be treated as an Arch
Pre-Closing Tax Period described in Section 9.2(a) and the Company will not be
responsible for filing such return for such year pursuant to Section 9.2(b).
(d) In order to assist Arch in the preparation of all Tax Returns that
Arch is required to prepare pursuant to Section 9.2(a), the Company will prepare
or cause AOW to prepare and deliver within 60 days of receipt Arch's standard
Federal and state tax return data gathering packages relating to AOW. In
addition to providing such packages, the Company will promptly provide or cause
to be provided to Arch such other information as Arch may reasonably request
(including access to books, records and personnel) in order for the operations
of AOW to be properly reported in such Tax Returns, for the preparation for any
Tax audit or for the prosecution or defense of any claim, suit or proceeding
relating to Taxes.
40
(e) The Company will pay or cause to be paid to Arch all refunds or
credits of income taxes (including any interest thereon) received by the Company
after the Closing Date and attributable to income taxes paid by Arch with
respect to any Arch Pre-Closing Tax Period. Such payment will be made to Arch
within 30 days after receipt of any such refund from or allowance of such credit
by the relevant taxing authority.
(f) Arch will indemnify and hold the Company harmless from and against
any and all liability for any taxable period as a result of Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law) for taxes
of any corporation or other entity, other than AOW, which is or has been
affiliated with Arch.
ARTICLE 10
INDEMNIFICATION
10.1 ARCH'S AND ACQUISITION CORP.'S INDEMNIFICATION. Subject to the
limitations set forth in this Article 10, Arch and Acquisition Corp., jointly
and severally, shall indemnify and hold harmless each of ARCO, Delta Housing and
their respective officers, directors, employees, agents and Affiliates, other
than the ARCO Parties (collectively, the "ARCO INDEMNITEES") from and against
any and all Losses to which they or any of them may become subject, including as
a result of claims by third parties, to the extent caused by:
(a) any breach or default in performance by Arch, Acquisition Corp. or
the Company of any covenant, obligation or agreement of Acquisition Corp.
contained in this Agreement, including those obligations of Arch or Acquisition
Corp. set forth in Articles 3, 7, 8 and 9 hereof, specifically including any
covenant, obligation or agreement of Arch or Acquisition Corp. in respect of
Environmental Liabilities related to the Properties as provided in Section 7.14,
and in respect of the Other Liabilities as provided in Section 7.16(a);
(b) any breach of any representation or warranty made by Arch, any
Arch Parties or the Company in this Agreement, or in any certificate, instrument
or other document delivered by or on behalf of Arch or any Arch Party at the
Closing;
and as otherwise expressly provided for in this Agreement, including in respect
of Transfer Taxes as provided in Section 2.5.
10.2 ARCO'S AND DELTA HOUSING'S INDEMNIFICATION. Subject to the
limitations set forth in this Article 10, ARCO and Delta Housing, jointly and
severally, shall indemnify and hold harmless Arch, Acquisition Corp. and their
respective officers, directors, employees, agents and Affiliates, including
after the Closing the ARCO Parties and their officers, directors, employees,
agents and Affiliates, (collectively, the "ARCH INDEMNITEES") from and against
any and all Losses to which they or any of them may become subject, including as
a result of claims by third parties, to the extent caused by;
(a) any breach or default in performance by ARCO or Delta Housing of
any covenant, obligation or agreement of ARCO or Delta Housing contained in this
Agreement, including those obligations of ARCO and Delta Housing set forth in
Articles 3, 7, 8 and 9 hereof,
41
specifically including any covenant, obligation or agreement of ARCO or Delta
Housing in respect of Environmental Liabilities related to the ownership or
operation of the Other Properties, as provided in Section 7.15 and in respect of
certain Tax liabilities under Section 9.1(f);
(b) any breach of any representation or warranty made by ARCO or Delta
Housing in this Agreement or in any certificate, instrument or other document
delivered by or on behalf of ARCO or Delta Housing at the Closing;
(c) [Confidential Treatment Requested]*
42
10.3 MONETARY LIMITATION.
(a) As used in this Agreement, "LOSSES" shall mean any losses, claims,
damages, liabilities, out-of-pocket costs and expenses (including judgment costs
of settlement and reasonable attorneys', consultants' and experts' fees). "OTHER
LOSSES" shall mean any Losses as defined in the Purchase Agreement. "COMBINED
Losses" shall mean the aggregate of all Losses of Arch Indemnitees and all Other
Losses of Arch Indemnitees that ARCO, ARCO Uinta or Delta Housing are obligated
to indemnify against pursuant to this Agreement or pursuant to the Purchase
Agreement. Notwithstanding the foregoing, the dollar amount of any Losses shall
be determined after taking into account the limitations set forth in Section
10.6(d).
(b) ARCO, ARCO Uinta and Delta Housing shall have no obligation to
indemnify any Arch Indemnitee pursuant to Section 10.2(a) or Section 10.2(b)
(other than for any breach of the representations, warranties or covenants set
forth in Sections 4.6, 4.12(b), 4.26 and 7.15) unless and until the Combined
Losses incurred or sustained by all Arch Indemnitees exceeds $25 million
(provided that no individual Loss or Other Loss of less than $500,000 shall be
counted against such $25 million), and then only for the excess over $25
million. In addition, the liability of ARCO, ARCO Uinta and Delta Housing to
indemnify the Arch Indemnitees for Combined Losses other than Losses arising
under Sections 4.6, 4.26, 7.15, 7.21 and 10.2(c) shall in no event exceed $500
million in the aggregate.
10.4 NATURE AND SURVIVAL; TIME LIMITS.
(a) All representations and warranties set forth in Articles 4, 5 and
6 shall survive the Closing and continue in effect until the first anniversary
of the Closing Date, at which time any and all liability arising out of or
relating to such representations and warranties shall terminate provided that
ARCO's and Delta Housing's representations and warranties set forth in Section
4.6 as to title of the Contributed ARCO Interests to which Acquisition Corp.'s
indemnification obligations apply shall survive the Closing for three years. Any
claim against any party hereto for indemnification pursuant to this Agreement as
a result of any breach of representation or warranty made by such party must be
made promptly, and in all events within the period of time during which such
representation or warranty survives the Closing pursuant to this Section
10.4(a), if any.
(b) Except for the representations and warranties described in Section
10.4(a), all covenants, obligations and agreements of the parties set forth in
this Agreement, including those obligations set forth in Articles 7, 8 and 9
hereof, shall survive indefinitely.
10.5 LIMITATION ON REMEDIES; MITIGATION. The indemnification provided
in this Agreement, subject to any applicable limitations thereto set forth in
this Agreement, shall be the sole and exclusive remedy available to a party for
any breach, default or violation of this Agreement by the other party. The
Indemnified Party shall use all reasonable efforts to mitigate any Losses.
43
10.6 GENERAL PROVISIONS. In the case of any claim for indemnification
brought pursuant to this Agreement:
(a) The party entitled to indemnification (the "INDEMNIFIED PARTY")
shall notify the party obligated to provide indemnification (the "INDEMNIFYING
PARTY") promptly upon (i) receipt of notice of the commencement of the claim by
a third party for which indemnification is sought pursuant to this Agreement;
(ii) becoming aware of a claim for indemnification not involving a claim by a
third party, and (iii) the occurrence of any material event or change with
respect to any ongoing claim in writing and in reasonable detail, and within any
applicable time limits specified in this Agreement.
(b) In case any such claim is brought against any Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, or in
respect of any ongoing action, the Indemnifying Party will be entitled to
participate therein and, to the extent it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense thereof. Subsequent
to such assumption of defense, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; PROVIDED, HOWEVER,
that the Indemnified Party shall thereafter have the right to participate in the
defense of such claim and to be represented, solely at its expense, by advisory
counsel selected by it. In all cases in which the Indemnifying Party assumes the
defense of such claim, the Indemnifying Party shall control such defense, and
any settlement of such claim shall require the consent of the Indemnified Party,
which consent may not be unreasonably withheld, conditioned or delayed.
Notwithstanding anything to the contrary contained in this Section 10.6, the
Indemnified Party shall have the right to employ separate counsel at its sole
cost and expense if there shall be available one or more defenses or one or more
counterclaims available to the Indemnified Party which conflicts with one or
more defenses or one or more claims or counterclaims available to the
Indemnifying Party. Whether or not the Indemnifying Party shall have assumed the
defense of a claim for which the Indemnified Party is entitled to be
indemnified, the Indemnified Party shall not admit any liability with respect
to, or settle, compromise or discharge, such claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed.
(c) The Indemnified Party will, at the expense of the Indemnifying
Party, cooperate and consult with the Indemnifying Party in the defense of any
such action and shall furnish any documents and endeavor to make available any
witnesses under its control.
(d) Any indemnification payment shall be (i) limited to the Losses
actually incurred (after giving effect to the Present Value Benefit, realized or
realizable by the Indemnified Party in connection with or as a result of the
incurrence of the Loss for which the indemnity payment is to be made) and shall
not include punitive damages, indirect damages, or consequential damages
(including lost profits) incurred by the Indemnified Party, (ii) net of
insurance proceeds received by the Indemnified Party (and the amount of
indemnification payable under this Agreement shall not include the amount of any
insurance proceeds actually recovered by the Indemnified Party with respect to a
Loss) and (iii) in the case of Arch Indemnitees net of any reserves of TBCC
reflected on the Interim Date Balance Sheet applicable thereto. The foregoing
limitations shall
44
apply before application of the monetary limitations specified in Section
10.3(b). If the amount to be netted hereunder from any payment by the
Indemnifying Party is determined after the Indemnifying Party has already paid
any amount required to be paid pursuant to this Agreement, the Indemnified Party
shall repay to the Indemnifying Party, promptly after such determination, any
amount that the Indemnifying Party would not have had to pay pursuant to this
Agreement had such determination been made at the time of such payment.
10.7 TAX TREATMENT. Any indemnity payment made under this Article
shall be treated for tax purposes as a contribution to the Company (and a
related increase in tax basis) by the member who makes, or is affiliated with
the party who makes, such payment unless otherwise required by law. No payment
under this Article 10 shall have a net effect on the capital accounts or
percentage interests of the members in the Company.
10.8 COOPERATION AND COMMUNICATION.
(a) The parties to this Agreement (i) acknowledge that they are
subject to a covenant of good faith and fair dealing with respect to this
Agreement and (ii) agree to use commercially reasonable efforts to communicate
with and cooperate with each other with respect to any dealings they may have
with other parties which could reasonably be expected to affect the obligations
of the parties under this Agreement.
(b) [Confidential Treatment Requested]*
(c) [Confidential Treatment Requested]*
45
(d) [Confidential Treatment Requested]*
(e) Acquisition Corp. and ARCO shall execute an Assignment and
Assumption Agreement (the "ASSIGNMENT AND ASSUMPTION AGREEMENT") in a form
acceptable to ARCO and Arch, whereby ARCO will assign, and TBCC will assume, all
rights and obligations of ARCO pursuant to the Conditional Agreement identified
in the Disclosure Schedule (the "CONDITIONAL AGREEMENT"). [Confidential
Treatment Requested]*
10.9 EFFECTING THE INDEMNITY. Any indemnity payment to be made by a
party hereto shall be made to the Company, except as set forth in the next
sentence, notwithstanding any other provision of the Agreement. Any indemnity
payment which is intended to make another party whole for out of pocket costs
incurred by that party shall be made to the member that incurred, or is
affiliated with the person that incurred, those costs.
ARTICLE 11
CONDITIONS TO CLOSING
11.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCH AND ACQUISITION CORP.
The obligations of Arch and Acquisition Corp. under this Agreement are subject
to the satisfaction (or waiver by Arch), prior to or on the Closing Date, of
each of the following conditions:
(a) Any breach or breaches of the representations and warranties of
ARCO or Delta Housing contained in this Agreement or of ARCO and ARCO Uinta in
the Purchase Agreement at and as of the Closing Date, after giving effect to
such representations and warranties as though made on and as of the Closing Date
(except for representations and warranties made as of a specific date, which
shall be given effect as of such date), that alone or in the aggregate do not
have a Material Adverse Effect.
(b) ARCO and Delta Housing shall have performed or complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by ARCO or Delta Housing prior to or at the
Closing, including notifications under Section 7.3.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any Federal laws,
any of the transactions contemplated by this Agreement.
(d) Arch shall have received an opinion, dated the Closing Date, of
counsel employed by ARCO, in form and substance reasonably acceptable to Arch
and Acquisition Corp.
46
(e) There shall not be in effect any injunction or order issued by any
court or administrative agency of competent jurisdiction preventing in any
material respect the consummation of the transactions contemplated by this
Agreement on the Closing Date.
(f) Arch shall have received such resignations of the officers and
directors of the ARCO Parties as shall have been requested by Arch in writing
not less than 30 days prior to the Closing Date, subject to the provisions of
Article 8.
(g) Since the Effective Date, there have been no adverse events or
occurrences other than adverse events or occurrences as a result of general
economic conditions or other conditions affecting the industry in which the ARCO
Parties operate (including fluctuations in coal prices and legislative or
regulatory conditions) that together with the total amount of claims of the Arch
Indemnitees for ARCO's or Delta Housing's breaches of their representation or
warranties contained in this Agreement or in the Purchase Agreement as of the
Closing Date, have a Material Adverse Effect.
(h) The transactions contemplated in the Purchase Agreement shall be
consummated concurrently with the Closing.
If the Closing occurs, nothing in this Section 11.1 shall be construed
to limit Arch's or Acquisition Corp.'s indemnification rights or the amount of
ARCO's or Delta Housing's indemnification obligations, and it is expressly
agreed that unless waived in writing by Arch or Acquisition Corp. at or prior to
the Closing, any remedy available to Arch or Acquisition Corp. for ARCO's or
Delta Housing's breach of its representations and warranties or substantial
failure to perform or comply with any obligation or covenant, including ARCO's
or Delta Housing's indemnification obligations after the Closing in respect of
such breaches and failures occurring on or prior to Closing, shall survive
Closing and be unaffected thereby.
11.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCO AND DELTA HOUSING.
The obligations of ARCO and Delta Housing under this Agreement are subject to
the satisfaction (or waiver by ARCO and Delta Housing), prior to or on the
Closing Date, of each of the following conditions:
(a) The representations and warranties of Arch or Acquisition Corp.
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, with the same effect as though made on and as of
the Closing Date (except for representations and warranties made as of a
specific date, which shall be true and correct in all material respects as of
such date).
(b) Arch and Acquisition Corp. shall have performed or complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Arch and Acquisition Corp. prior to or at
the Closing.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to
47
challenge as violative of any Federal laws, any of the transactions contemplated
by this Agreement.
(d) ARCO shall have received an opinion, dated the Closing Date, of
Xxxxxx X. Xxxxx, counsel for Arch and Acquisition Corp., in form and substance
reasonably acceptable to ARCO and Delta Housing.
(e) There shall not be in effect any injunction or order issued by any
court or administrative agency of competent jurisdiction preventing the
consummation of the transactions contemplated by this Agreement on the Closing
Date.
(f) The transactions contemplated in the Purchase Agreement shall be
consummated concurrently with the Closing.
(g) Any consents necessary to transfer operating permits for mines
owned by either of the ARCO Parties shall have been obtained unless Arch and
Acquisition Corp. shall have agreed to indemnify ARCO and the ARCO Parties from
any Losses arising out of the failure to obtain such consents.
If the Closing occurs, nothing in this Section 11.2 shall be construed
to limit ARCO or Delta Housing's indemnification rights or the amount of Arch or
Acquisition Corp.'s indemnification obligations, and it is expressly agreed that
unless waived in writing by ARCO or Delta Housing at or prior to the Closing,
any remedy available to ARCO or Delta Housing in writing for Arch's or
Acquisition Corp.'s breach of their representations and warranties or
substantial failure to perform or comply with any obligation or covenant,
including Arch's and Acquisition Corp.'s indemnification obligations after the
Closing in respect of such breaches and failures occurring on or prior to
Closing, shall survive Closing and be unaffected hereby.
ARTICLE 12
TERMINATION OF AGREEMENT
12.1 TERMINATION BEFORE CLOSING. This Agreement may be terminated at
any time before Closing:
(a) by the mutual consent of ARCO, Delta Housing, Acquisition Corp.
and Arch in writing;
(b) by Arch (i) if there have been breaches by ARCO or Delta Housing
of any representations or warranties of ARCO and/or Delta Housing contained in
this Agreement or by ARCO and/or ARCO Uinta in the Purchase Agreement that alone
or in the aggregate have a Material Adverse Effect, and if the breaches have
continued for a period of 30 days following Arch's notification to ARCO of such
breaches, or (ii) if events have occurred which have made it impossible to
satisfy the conditions precedent to the obligations of Arch and Acquisition
Corp. set forth in Section 11.1;
48
(c) by ARCO (i) if there have been material breaches by Arch or
Acquisition Corp. of any representations or warranties of Arch and/or
Acquisition Corp. contained in this Agreement or in the Purchase Agreement, and
if the breaches have continued for a period of 30 days following ARCO's
notification to Arch of such breaches, or (ii) if events have occurred which
have made it impossible to satisfy the conditions precedent to the obligations
of ARCO and Delta Housing set forth in Section 10.2;
(d) by Arch if Closing has not occurred on or prior to 75 days after
the Effective Date other than primarily as a result of Arch's or Acquisition
Corp.'s breach or default of this Agreement; or
(e) by ARCO if the Closing has not occurred on or prior to 75 days
after the Effective Date other than primarily as a result of ARCO or Delta
Housing's breach or default of this Agreement.
12.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 12.1, all further obligations of the parties under this Agreement
will terminate and there shall be no liability on the part of any party to this
Agreement, except for material willful breaches of and intentional misstatements
in or pursuant to this Agreement prior to the time of such termination;
provided, however, that the obligations in Sections 7.1(b), 7.5, 7.6, 12.2, 13.3
and 13.10 shall survive the termination of this Agreement.
ARTICLE 13
MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Disclosure Schedule, the Company Agreement, Purchase Agreement and the Tax
Sharing Agreement, set forth the entire agreement and understanding of the
parties in respect of the transactions contemplated herein and supersedes any
previous agreements and understandings between the parties with respect thereto.
13.2 CONSTRUCTION. This Agreement is the result of arms-length
negotiations between, and has been prepared and reviewed by, each party hereto
and its respective counsel. Accordingly, this Agreement shall be deemed to be
the product of each party hereto.
13.3 GOVERNING LAW. The validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties
hereto shall be governed by the substantive laws of the State of Delaware
without regard to the principles of conflict of laws of the State of Delaware or
any other jurisdiction (except those that cannot be waived) that would call for
the application of the substantive law of any jurisdiction other than the State
of Delaware.
13.4 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing, by facsimile, by
overnight courier or by registered or certified mail, postage prepaid and return
receipt requested, and shall be deemed to have been duly given or made upon: (i)
delivery by hand, (ii) one business day after being sent by overnight courier,
(iii) four business days after being deposited in the United States mail,
postage prepaid,
49
or (iv) in the case of transmission by facsimile, when confirmation of receipt
is obtained. Such communications shall be addressed and directed to the parties
listed below as follows:
If to ARCO or Delta Housing: Atlantic Richfield Company
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 - Treasurer
Facsimile: (000) 000-0000 - General Counsel
Attention: Treasurer
Attention: General Counsel
If to Arch or Acquisition Corp.: Arch Coal, Inc.
XxxxXxxxx Xxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxx
If to the Company: Arch Western Resources LLC
XxxxXxxxx Xxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxx
13.5 WAIVER. Waivers of or consents to departures from the provisions
hereof may be given; PROVIDED, however, that the same shall be in writing and be
signed by the parties hereto. No such waiver or consent shall be construed as a
waiver of or consent to any other departure from any such provisions or any
other provisions hereof.
13.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. No assignment of this Agreement or of any rights or
obligations hereunder may be made, in whole or in part, by any party (by
operation of law or otherwise) without the prior written consent of the other
parties hereto, and any purported assignment without consent shall be void.
13.7 AMENDMENT. This Agreement may not be amended, modified or
supplemented unless the same shall be in writing and signed by the parties
hereto.
13.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same document.
13.9 NO THIRD PARTY BENEFICIARIES. The terms, agreements and
provisions of the parties set forth in this Agreement are not intended for, nor
shall they be for the benefit of or enforceable by, any Person not a party
hereto, including each of the ARCO Parties.
13.10 JURISDICTION; SERVICE OF PROCESS
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(a) Each party to this Agreement hereby irrevocably submits itself to
the non-exclusive jurisdiction of the Supreme Court for the State of New York,
sitting in the Borough of Manhattan, or the United States District Court for the
Southern District of New York, (i) for the purposes of any suit, action or other
proceeding brought by any other party, or its respective successors or assigns
arising out of the transactions contemplated by this Agreement or the Purchase
Agreement, (ii) to enforce a resolution, settlement, order or award made
pursuant thereto, or any obligation for the payment of money contained herein.
To the extent permitted by applicable Law, each party to this Agreement hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that (a) it is not personally
subject to the jurisdiction of the above-named courts, (b) the suit, action or
proceeding is brought in an inconvenient forum, (c) the venue of the suit,
action or proceeding is improper, or (d) a resolution, settlement or order made
pursuant thereto, or such an obligation for the payment of money, may not be
enforced in or by such court. Nothing contained herein shall be deemed to waive
the right of a party to seek removal of a matter from state court to Federal
court if such removal is otherwise permissible.
(b) Each party to this Agreement hereby consents to service of process
on it at the office for service of process set forth below as its office for
service of process and additionally irrevocably designates and appoints the
person named in Exhibit 13.10(b) as its "Agent" and attorney-in-fact to receive
service of process in any action, suit or proceeding with respect to any matter
as to which it submits to jurisdiction as set forth above, it being agreed that
service upon Agent shall constitute valid service upon the party or its
successors or assigns. Each party agrees that (x) the sole responsibilities of
the Agent shall be (i) to receive such process, (ii) to send a copy of any such
process so received to such party, by registered airmail, return receipt
requested, at the address for it set forth in Section 13.4, or at the last
address filed in writing by it with the Agent, and (iii) to give prompt
telecopied notice of receipt thereof to it at such address (y) the Agent shall
have no responsibility for the receipt or nonreceipt by the respective party of
such process, nor for any performance or nonperformance by the respective party
or its respective successors or assigns, and (z) failure of the Agent to send a
copy of any such process or otherwise to give notice thereof to the respective
party shall not affect the validity of such service or any judgment in any
action, suit or proceeding based thereon. If service of process cannot be
effected in the foregoing manner, each party further irrevocably consents to the
service of process in any action, suit or proceeding by the mailing of copies
thereof by registered or certified airmail, postage prepaid, return receipt
requested, to it at its address set forth in Section 13.4 hereof. The foregoing,
however, shall not limit the right of the party to serve process in any other
manner permitted by Law. Any judgment against a party in any suit for which such
party has no further right of appeal shall be conclusive, and may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and of the amount of any indebtedness
or liability of such party therein described; PROVIDED, HOWEVER, that the
plaintiff may at its option bring suit, or institute other judicial proceedings,
against such party or any of its assets in the courts of any country or place
where such party or such assets may be found. Each party further covenants and
agrees that for three years following the Closing Date, it shall maintain a duly
appointed agent for the service of summonses and other legal processes in New
York.
51
For purposes of this Section 13.10, the Agent and offices for service
of process for each of the parties shall be as set forth in Exhibit 13.10(b) or
such other person or offices as shall be designated in writing by any party to
the other parties.
13.11 DISCLAIMER FOR COMMUNICATIONS. Except as and to the extent set
forth in this Agreement, ARCO, Delta Housing and their respective Affiliates
make no representations, promise, covenant or warranty regarding the ARCO
Parties, their assets, business, operations, liabilities or obligations, or
otherwise, and disclaim all liability and responsibility for any representation,
warranty, disclosure or statement made or communicated (orally or in writing) to
Arch, Acquisition Corp. or their respective Affiliates or to any officer,
stockholder, director, employee, agent, consultant or representative of Arch,
Acquisition Corp. or their respective Affiliates, including any information
provided by any investment banking firm or other agent of ARCO or Delta Housing,
or any opinion, statement or advice which may have been provided to Arch,
Acquisition Corp. or their respective Affiliates by any officer, stockholder,
director, employee, agent, consultant or representative of ARCO, Delta Housing
or the ARCO Parties.
52
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
ARCH COAL, INC.
/s/ Xxxxx X. Xxxxx
----------------------------------------------
By: Xxxxx X.Xxxxx
Title: Vice President
ARCH WESTERN ACQUISITION CORPORATION
/s/ Xxxxxx X. Xxxxx
----------------------------------------------
By: Xxxxxx X. Xxxxx
Title: President
ATLANTIC RICHFIELD COMPANY
/s/ Xxxxx X. Dallas
----------------------------------------------
By: Xxxxx X. Dallas
Title: Senior Vice President and Treasurer
DELTA HOUSING INC.
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
By: Xxxxxxx X. Xxxxxx
Title: Treasurer
ARCH WESTERN RESOURCES LLC
/s/ Xxxxxx X. Xxxxx
----------------------------------------------
By: Xxxxxx X. Xxxxx
Title: President
53
