Exhibit 10.3
ASSIGNMENT, ASSUMPTION AND AMENDMENT
------------------------------------
OF
--
COAL SALES AGENCY AGREEMENT
---------------------------
THIS AGREEMENT is executed this 4th day of April, 1997, by and among ARCH
MINERAL CORPORATION, a Delaware corporation ("Arch Mineral"); ASHLAND COAL,
INC., a Delaware, corporation ("ACI"); and SAARBERGWERKE AG ("SAG") and CARBOEX
INTERNATIONAL, LTD. ("CBX"), companies organized under the laws of the Federal
Republic of Germany and the Bahamas, respectively (hereinafter SAG and CBX are
together referred to as "Sales Agent").
WITNESSETH:
WHEREAS, ACI and Sales Agent are parties to that certain Coal Sales Agency
Agreement dated as of December 12, 1991 as amended by an Amendment No. 1 to Coal
Sales Agency Agreement dated January 26, 1993, and a letter agreement dated
March 27, 1995, attached hereto as Exhibit A (the "Coal Sales Agency
Agreement"); and
WHEREAS, ACI and Arch Mineral are parties to that certain Agreement and
Plan of Merger (the "Merger Agreement") dated as of April 4, 1997, among Arch
Mineral, ACI, and AMC Merger Corporation, which Merger Agreement provides for a
business combination of ACI and Arch Mineral, the changing of the name of Arch
Mineral to Arch Coal, Inc. ("Arch Coal") and the conversion of outstanding ACI
capital stock to Arch Mineral capital stock as of the Effective Time (as that
term is defined in the Merger Agreement); and
WHEREAS, in light of the transactions contemplated by the Merger Agreement,
ACI desires to assign and Sales Agent desires ACI
to assign, all ACI's interest under the Coal Sales Agency Agreement to Arch
Mineral and ACI is entering into this Agreement solely for that purpose; and
WHEREAS, contingent upon the consummation of the transactions contemplated
by the Merger Agreement and beginning at the Effective Time, Arch Mineral
desires to utilize exclusively the marketing and technical services of Sales
Agent to develop and promote the long-term sale of high vol coking coal and PCI
product produced from coal reserves presently and in the future controlled by
Arch Mineral and its subsidiaries (the "Products") for use in the steel making
process in those countries listed on Schedule 1 attached hereto (the "Area of
Responsibility"; and each country therein, an "Area Country") by accepting ACI's
assignment and assuming all of ACI's obligations under the Coal Sales Agency
Agreement, in each case as of the Effective Time; and
WHEREAS, Sales Agent desires to evidence its consent to such assignment and
assumption; and
WHEREAS, concurrently with the effectiveness of the assignment and
assumption, Sales Agent and Arch Mineral wish to amend the Coal Sales Agency
Agreement as herein provided; and
WHEREAS, for convenience Arch Mineral is hereinafter referred to as Arch
Coal.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and the mutual benefit to be derived therefrom, the parties
agree as follows:
2
1. Assignment.
----------
ACI assigns to Arch Coal all of ACI's right, title and interest in and to
the Coal Sales Agency Agreement and delegates to Arch Coal all of ACI's duties
and obligations thereunder, in each case effective as of the Effective Time, and
thereupon ACI shall be released from any liability to Sales Agent arising out of
the performance or non-performance of the Coal Sales Agency Agreement at or
after the Effective Time, provided, however, that ACI's assignment and Arch
-------- -------
Coal's assumption shall not operate as an assignment and assumption of, or
otherwise affect, any sales contract or commitment entered into by ACI prior,
on, or after the Effective Time, or its rights to payment with respect thereto.
2. Assumption.
----------
Arch Coal hereby accepts assignment from ACI of such right, title and
interest in and under the Coal Sales Agency Agreement and agrees to fully assume
and perform all of the duties and obligations of ACI thereunder from and after
the Effective Time, provided, however, that Arch Coal's acceptance and
-------- -------
assumption herein shall not be deemed to obligate Arch Coal in any respect under
any sales contract or commitment entered into by ACI on, or after the Effective
Time, including with respect to ACI's obligation to supply coal thereunder.
3. Consent.
-------
Sales Agent hereby consents to the assignment of the Coal Sales Agency
Agreement by ACI to Arch Coal and Arch Coal's assumption of all the duties and
obligations of ACI.
3
4. Amendments.
----------
Each of Arch Coal and the Sales Agent agree that the Coal Sales Agency
Agreement shall be amended as follows from and after the Effective Time:
(a) The first sentence of Section 3 is amended and restated as follows:
"Arch Coal shall make available a minimum of 250,000 tons (2,000 lbs.) of
high vol coking coal to the extent produced from its properties (the
"Committed Tonnage") per calendar year for sale by Arch Coal in acceptance
of customer orders pursuant to this Agreement, provided, however, Sales
-------- -------
Agent shall have the right, upon written notice by the preceding October 31
with respect to any calendar year during the term of this Agreement, to
require that up to 82,500 tons (2,000 lbs.) of PCI product be available in
place of high vol coking coal for sale during the succeeding calendar
year."
(b) Paragraph 5 is deleted in its entirety and replaced with the following:
"5. Term. This Agreement shall become effective as of the Effective Time, and
----
the initial term of this Agreement shall expire December 31, 2004. The
parties agree to discuss an elective extension of this Agreement at least
one year prior to the expiration of this Agreement."
(c) The second sentence of subsection (b) of Section 7 is amended and restated
as follows:
4
"A "Qualifying Disposition" shall mean disposition of all or any
portion of Arch Coal stock held by CBX the effect of which is
that CBX and its affiliates no longer beneficially own at least
63 per cent of the Arch Coal stock obtained by CBX at the
Effective Time in the conversion under the Merger Agreement."
(d) The first sentence of Section 12 is amended and restated as follows:
"This Agreement shall be governed by and construed in accordance
with the laws of the State of West Virginia, U.S.A., except for
any conflict of laws rules which would require the application of
the laws of any other jurisdiction."
(e) The addresses for notices to Arch Coal and CBX in Section 13 is
amended and restated as follows:
Arch Mineral Corporation Carboex International Ltd.
Suite 300 Sasoon Building
CityPlace Xxx Xxxxxxx Xxxxxx & Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000 P. O. Box N - 272
Attention: Senior Vice Nassau, Bahamas
President-Marketing
Fax: (000) 000-0000
(After the Effective Time, notices shall be
directed instead to "Arch Coal, Inc.".)
(f) Schedule 1 is amended and restated as set forth in Annex 1 to this
Agreement.
(g) Schedule 2 is amended and restated as set forth in Annex 2 to this
Agreement.
5
5. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of West Virginia, U.S.A., except for any conflict of laws or
rules which would require the application of the laws of any other jurisdiction.
6. Entire Agreement.
----------------
This Agreement contains the entire agreement between the parties hereto
respecting the subject matter hereof, and supersedes all prior oral or written
communications, and all contemporaneous oral agreements and understandings.
This Agreement may not be modified, supplemented, amended, explained or waived
by parole evidence, custom or customary dealings or practices between the
parties or in any other way, except in writing signed by the duly authorized
representatives of the parties. This Agreement may be executed in several
counterparts and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
ARCH MINERAL CORPORATION
By: /s/ Xxxxxx X. Xxxx
Its: Pres. & CEO
6
ASHLAND COAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
Its: President
SAARBERGWERKE AG
By: [SIGNATURE APPEARS HERE]
Its: ________________________
CARBOEX INTERNATIONAL LTD.
By: /s/ Xxxx Xxxxxxx Xxxxxxxx
Its: Director
7
ANNEX 1
SCHEDULE 1
AREA OF RESPONSIBILITY*
Albania Luxemburg
Algeria Morocco
Austria Netherlands
Belgium Norway
Bulgaria Poland
countries comprising
the former Czechoslovakia Portugal
Denmark Romania
Egypt countries comprising
the former Soviet Union
Finland Sweden
France Switzerland
Greece Tunisia
Hungary Turkey
Ireland United Kingdom
Italy Yugoslavia
* Territory presently comprising the listed countries, each herein referred to
as an "Area Country".
8
ANNEX 2
SCHEDULE 2
CARBOEX INTERNATIONAL LTD. ("CBX") has an existing relationship with
Ruhrkohle AG, pursuant to which, on an annually renegotiated basis, CBX supplies
coal to meet a portion of the annual requirements of TURKIYE DEMIR VE CELIK
ISLETMELERI ("TDCI"). CBX may continue to supply such coal to TDCI, pursuant to
the foregoing, without violating Section 8 of the Coal Sales Agency Agreement.
9
EXHIBIT A
COAL SALES AGENCY AGREEMENT
Coal Sales Agency Agreement between Ashland Coal, Inc., Saarbergwerke AG, and
Carboex International Ltd., dated December 12, 1991, is incorporated herein by
reference (Exhibit 10.31 to the Company's Form 10-K for the year ended December
31, 1991, filed with the SEC on March 4, 1992)
10
