EXHIBIT 99.3
FORM OF
PROMISSORY NOTE
THIS PROMISSORY NOTE IS SUBJECT TO RESTRICTIONS ON
TRANSFER AND MAY NOT BE ASSIGNED OR TRANSFERRED EXCEPT
IN COMPLIANCE WITH SECTION 3.6 HEREOF.
$ May , 2002
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FOR VALUE RECEIVED, Alliance Resource Holdings II, Inc., a
Delaware corporation ("Maker"), promises to pay to __________________, a
____________ ("Payee"), in lawful money of the United States of America, the
principal sum of _______________________ ($__________) (the "Principal Sum"),
together with interest in arrears on the unpaid principal balance at an annual
rate equal to ten percent (10%) compounded annually (the "Rate"), in the manner
provided below. Interest shall be calculated on the basis of a year of 365 or
366 days, as applicable, and charged for the actual number of days elapsed.
This Promissory Note has been executed and delivered pursuant
to and in accordance with the terms and conditions of that certain Exchange
Agreement dated of even date herewith (the "Exchange Agreement"), by and among
Maker, Payee, and certain other parties thereto, the Security Agreement and the
other Transaction Documents. This Promissory Note is subject to the terms and
conditions of the Exchange Agreement and the Security Agreement, which are, by
this reference, incorporated herein and made a part hereof. Capitalized terms
used in this Promissory Note without definition shall have the respective
meanings set forth in the Exchange Agreement.
Section 1. Payments.
Section 1.1 Principal and Interest. Subject to Section 1.4
below, the principal amount of this Promissory Note, together with any accrued
interest on the unpaid principal amount, shall be due and payable on or before
March 1, 2005 (the "Maturity Date").
Section 1.2 Manner of Payment. All payments of principal and
interest on this Promissory Note shall be made by wire transfer by Maker to the
account(s) specified in writing by Payee pursuant to Section 2.4(d)(i) of the
Exchange Agreement, or to such other account(s) in the United States of America
as Payee shall designate to Maker in writing. If any payment of principal or
interest on this Promissory Note is due on a day which is not a Business Day,
such payment shall be due on the next succeeding Business Day, and such
extension of time shall be taken into account in calculating the amount of
interest payable under this Promissory Note. "Business Day" means any day other
than a Saturday, Sunday or any other day on which commercial banks are
authorized or required by law to be closed in the City or State of New York.
Section 1.3 Permitted Prepayment. Maker may, without premium
or penalty, at any time and from time to time, prepay all or any portion of the
outstanding principal balance
due under this Promissory Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated to
(but not including) the date of such prepayment. Any prepayments shall be
applied first in reduction of the First Prepayment, and second, in reduction of
the Second Prepayment.
Section 1.4 Mandatory Prepayments. Notwithstanding anything
contained herein to the contrary, Maker shall be required to prepay (a)
$________ [approximately 54.545% of aggregate principal amount] of the principal
amount, together with any accrued interest thereon, on or before March 1, 2003
(the "First Prepayment"), and (b) $__________ [approximately 45.455% of
aggregate principal amount] of the principal amount, together with any accrued
interest thereon (the "Second Prepayment"), on or before March 1, 2004;
provided, however, that if payment in full of the First Prepayment and/or the
Second Prepayment, as the case may be, can only be made from assets of the SGP,
and if so made would either (i) cause the cash, cash equivalents, and tangible
assets, net of depreciation and related liabilities, of Alliance Resource GP,
LLC (the "SGP"), a wholly owned, indirect subsidiary of Maker, its direct and
indirect subsidiaries to be less than $34,000,000; (ii) cause the SGP to sell
any subordinated units of Alliance Resource Partners, L.P. (the "MLP") held by
the SGP, or otherwise cause Alliance Resource Holdings, Inc. ("Holdings"), a
wholly-owned, direct subsidiary of Maker, to collect any principal and interest
on a loan made by Holdings to Alliance Resource Management GP, LLC (the "MGP")
prior to the date hereof to acquire common units of the MLP, or (iii) cause
Holdings to collect any principal or interest on a loan made by Holdings to the
Employee Stockholders prior to or on the date hereof to partially finance the
Employee Stockholders' capital contributions to AMH-II, then Maker may defer by
written notice to Payee, the due date and the payment of the First Prepayment
and/or the Second Prepayment, as applicable, to the extent necessary to avoid
the occurrence of the events described in clauses (i), (ii) or (iii) for a
period of time, but in no event later than the Maturity Date, with interest
continuing to accrue at the Rate on the unpaid principal amount. For purposes
hereof tangible assets of the SGP shall include those assets reflected on Annex
A attached hereto (including other tangible assets purchased or otherwise
acquired with or using the proceeds arising from or in connection with the sale
or disposition of the tangible assets listed in Annex A), and related
liabilities shall mean all liabilities associated with or relating to tangible
assets of the SGP, including, without limitation, all debt obligations,
reclamation liabilities, royalty obligations, and cash taxes and other taxes,
both current and deferred, which may be generated or incurred as a result of any
sale, transfer or disposition of such assets.
Section 1.5 Security Agreement; Collateral Agent Agreement.
Maker's obligations under this Promissory Note are secured by the grant by
Maker, the Employee Stockholders and AMH-II of a security interest in the
Pledged Collateral (as defined in the Security Agreement) pursuant to the terms
and conditions of that certain Security and Pledge Agreement of even date
herewith (the "Security Agreement") by and among Maker, AMH-II, the Employee
Stockholders, Holdings, the SGP, Beacon Investors, MPC Partners, Xxxxxxx,
Xxxxxxxxx and Xxxxxx (Beacon Investors, MPC Partners, Xxxxxxx, Xxxxxxxxx and
Xxxxxx, collectively, the "Pledgees"), and the Agent. The respective rights and
obligations of Payee and the other Pledgees among themselves with respect to the
Pledged Collateral are governed by that certain Collateral Agent Agreement dated
as of even date herewith (the "Collateral Agent Agreement") by and among Maker,
AMH-II, the Employee Stockholders, Holdings, the SGP, the Pledgees and the
Agent. Xxxxx acknowledges that, notwithstanding anything contained
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herein to the contrary, its rights and obligations with respect to the Pledged
Collateral are subject to the terms and conditions of the Security Agreement and
Collateral Agent Agreement.
Section 2. Defaults.
Section 2.1 Events of Default. The occurrence of any one or
more of the following events with respect to Maker shall constitute an event of
default hereunder ("Event of Default"):
(a) If Maker fails to pay when due any payment of principal or
interest on this Promissory Note and such failure continues for five (5) days or
more after such payment is due.
(b) If any other "Foreclosure Event" (as defined in the
Security Agreement) occurs under the Security Agreement.
Section 2.2 Remedies. Upon the occurrence of an Event of
Default hereunder (unless all Events of Default have been cured or waived by
Xxxxx), Payee may, at its option, subject to the terms and conditions of the
Security Agreement, (a) by written notice to Maker, declare the entire unpaid
principal balance of this Promissory Note, together with all accrued interest
thereon, immediately due and payable regardless of any prior forbearance, and
(b) exercise any and all rights and remedies available to it.
Section 3. Miscellaneous.
Section 3.1 Waiver. The rights and remedies of Payee under
this Promissory Note shall be cumulative and not alternative. No waiver by Payee
of any right or remedy under this Promissory Note shall be effective unless in a
writing signed by Xxxxx. Neither the failure nor any delay in exercising any
right, power or privilege under this Promissory Note will operate as a waiver of
such right, power or privilege and no single or partial exercise of any such
right, power or privilege by Payee will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right of Payee arising out of this Promissory Note can be discharged by Payee,
in whole or in part, by a waiver or renunciation of the claim or right unless in
a writing, signed by Xxxxx, (b) no waiver that may be given by Payee will be
applicable except in the specific instance for which it is given, and (c) no
notice to or demand on Maker will be deemed to be a waiver of any obligation of
Maker or of the right of Payee to take further action without notice or demand
as provided in this Promissory Note. Maker hereby waives presentment, demand,
protest and notice of dishonor and protest.
Section 3.2 Waiver of Conflict of Interest. The Pledgors,
Holdings and the SGP each acknowledge that Xxxxxx X. Xxxxxxx ("Xxxxxxx") (i) is
providing legal counsel to each of ARH-II and AMH-II (but not the Employee
Stockholder or any Pledgee) in connection with this Promissory Note and the
Transactions and certain Affiliates thereof a party to the other Transaction
Documents contemplated by this Promissory Note and the Transactions, and (ii) is
also participating as a principal in the Transactions (solely as an Employee
Stockholder) and representing his own interest in that context. Each Pledgor,
the Holdings and the SGP hereby unconditionally (x) waives any conflict of
interest arising from Xxxxxxx'x representation of such Pledgor, Holdings or the
SGP or any other party hereto or to any Transaction Document, or
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xxxxxxx from or in any way related to his principal participation in the
Transactions or his representation of his own interest in that context, and (y)
waives, and agrees not to assert, any such conflict of interest as a defense to
the enforceability of this Promissory Note or any other Transaction Document.
Section 3.3 Notices. Any notice required or permitted to be
given hereunder shall be given in accordance with Section 8.3 of the Exchange
Agreement.
Section 3.4 Severability. If any provision of this Promissory
Note is held invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Promissory Note will remain in full force and
effect. The parties further agree that if any provision contained herein is, to
any extent, held invalid or unenforceable in any respect under the laws
governing this Promissory Note, they will take any actions necessary to render
the remaining provisions of this Promissory Note valid and enforceable to the
fullest extent permitted by law and, to the extent necessary, will amend or
otherwise modify this Promissory Note to replace any provision contained herein
that is held invalid or unenforceable with a valid and enforceable provision
giving effect to the intent of the parties.
Section 3.5 Governing Law. This Promissory Note will be
governed by and construed under the laws of the State of New York without regard
to conflicts of laws principles that would require the application of any other
law.
Section 3.6 Parties in Interest. This Promissory Note shall
bind Maker and its successors and assigns. This Promissory Note shall not be
assigned or transferred by Payee except (a) upon a showing of a reasonable
business justification by Payee as set forth in a written request for consent
submitted to Maker in which Payee provides reasonable details and an explanation
regarding such request and (b) upon the express written consent of Maker (which
consent must not be unreasonably withheld), or except by will or by operation of
law, but only upon written notice to Maker. Each transferee or assignee of this
Promissory Note must comply with the provisions of this Section 3.6 in order to
effect any subsequent transfer or assignment hereof.
Section 3.7 Section Headings; Construction. The headings of
Sections in this Promissory Note are provided for convenience only and will not
affect its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Promissory
Note unless otherwise specified. All words used in this Promissory Note will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Promissory Note in its entirety and not to any specific
Section or subsection hereof.
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IN WITNESS WHEREOF, Xxxxx has executed and delivered this
Promissory Note as of the date first stated above.
MAKER:
ALLIANCE RESOURCE HOLDINGS II, INC.
By:
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Name:
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Its:
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