Exhibit 10.4
SHAREHOLDER SERVICES CONTRACT
THIS SHAREHOLDER SERVICES CONTRACT ("Services Contract"), executed as of
April 4, 1997, by and among ARCH MINERAL CORPORATION, a Delaware corporation,
with a mailing address of Xxxxx 000, XxxxXxxxx Xxx, Xx. Xxxxx, Xxxxxxxx 00000
("Arch Mineral"), ASHLAND COAL, INC., a Delaware corporation, with a mailing
address of X.X. Xxx 0000, Xxxxxxxxxx, Xxxx Xxxxxxxx 00000 ("Ashland Coal"),
CARBOEX INTERNATIONAL, LTD., a Bahamian corporation, with a mailing address of
Xxxxx Xxxxx, X. X. Xxx X-0000, Xxxxxx, Bahamas ("Carboex") and ASHLAND INC., a
Kentucky corporation, with a mailing address of X.X. Xxx 000, Xxxxxxx, Xxxxxxxx
00000 ("Ashland"), recites and provides as follows:
WITNESSETH:
WHEREAS, Ashland Coal, Ashland and Carboex are parties to that certain
Shareholders Services Contract dated October 13, 1981, originally among Ashland
Coal, Ashland and Saarberg Coal International GmbH ("SCI"), as amended by letter
agreement dated August 8, 1988 to add Carboex as a party effective February 7,
1982, and by letter agreement dated March 9, 1995, to remove Saarbergwerke AG,
legal successor to SCI, as a party to the Contract, a copy of which Shareholders
Services Contract, as amended, is attached as Exhibit A (the "ACI Shareholders
Services Contract"); and
WHEREAS, Ashland Coal is party to that certain Agreement and Plan of Merger
(the "Merger Agreement") dated as of April 4, 1997,
among Arch Mineral, Ashland Coal, and AMC Merger Corporation providing for a
business combination of Ashland Coal and Arch Mineral and the conversion of
Ashland Coal's outstanding capital stock into shares of Arch Mineral common
stock as of the Effective Time (as that term is defined in the Merger Agreement)
and the changing of the name of Arch Mineral to Arch Coal, Inc. ("Arch Coal");
and
WHEREAS, in light of the transactions contemplated in the Merger Agreement,
Ashland, Carboex and ACI wish to terminate the ACI Shareholders Services
Contract and ACI and Ashland are entering into this Services Contract solely for
that purpose; and
WHEREAS, the Carboex may, from time to time, request Arch Mineral to
provide to it services not normally rendered to it as a shareholder; and
WHEREAS, Arch Mineral and Carboex desire to evidence the terms and
conditions under which such services will be provided; and
WHEREAS, for convenience of reference Arch Mineral is referred to herein as
Arch Coal;
NOW THEREFORE, for and in consideration of the foregoing and the mutual
benefit to be derived therefrom and the mutual covenants and agreements herein
contained, Arch Coal, Ashland Coal, Ashland and Carboex mutually agree as
follows:
1. From time to time the Carboex may desire Arch Coal to render services
to it in connection with its respective coal business other than with Arch Coal
and other than those services Arch Coal is required to perform for Carboex as a
shareholder, it
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being intended that nothing contained herein shall in any way affect those
services or obligations owed by Arch Coal to Carboex as a shareholder. There
shall also be excluded from this Services Contract testing services provided by
Hobet Mining, Inc. in the ordinary and regular course of its business to
Carboex. Whenever services are desired, a representative of Carboex desiring
such services (the "Shareholder Representative") shall contact the President,
any Senior Vice President, or any Vice President of Arch Coal (the "Arch Coal
Representative") describing the nature of the services desired and when such
services are desired to be performed. The Arch Coal Representative shall advise
Carboex whether or not Arch Coal can perform such services and if they can be
timely performed. If the Shareholder Representative and the Arch Coal
Representative agree on the nature of the services to be performed and when they
shall be performed, Arch Coal shall provide such services upon an "if, as, and
when available" basis as determined solely by Arch Coal, but otherwise as
provided for in this Services Contract. It is understood that Arch Coal is only
agreeing to perform services for Carboex as herein provided and Arch Coal will
not be required or authorized to make any managerial decisions on behalf of
Carboex and shall have no responsibility for the ultimate use made by Carboex of
the services rendered by Arch Coal. The Shareholder Representative will be
designated by Carboex promptly after execution of this Services Contract.
2. Services provided by Arch Coal to Carboex will, to the extent possible,
be provided through the same or similarly
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qualified personnel using the same or similar equipment and facilities which
Arch Coal uses for its own services of a similar nature. Arch Coal will give due
consideration to the recommendations of Carboex regarding the selection of
personnel, equipment and facilities; provided, however, the selection of
personnel, equipment and facilities shall always be within the sole discretion
of Arch Coal. The services shall at all times be performed expeditiously to the
best of Arch Coal's ability.
3. For the services provided by Arch Coal to Carboex hereunder, Carboex
agrees to pay Arch Coal for services rendered to it an amount of money
calculated by multiplying the number of hours spent by each exempt employee
performing such services by the Hourly Rate ("Hourly Rate") for such employee
for the category set forth on Exhibit B attached hereto and made a part hereof
to which such employee belongs. The Hourly Rate has been determined by (i)
taking the average of the salaries of those exempt employees for each category
(the "Category Salary") who it is believed will be providing such services and
dividing the Category Salary by 1,852 (which approximates each exempt employee's
available man hours per year), and adding to the result determined pursuant to
(i) above, (a) 35% of such result to cover fringe benefits and payroll taxes,
and (b) 42% of such result to cover administrative and overhead expenses. In
addition, Carboex shall reimburse Arch Coal for actual direct expenses (except
any such expenses included in the Hourly Rate) incurred by Arch Coal in
connection with providing services to Carboex. Time spent traveling in
connection with
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providing such services shall be included as part of the time spent performing
such services. As used in this Services Contract, "exempt employee" means an
employee of Arch Coal within the meaning of 29 CFR Section 541 et seq. The
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"Executive Officers" category set forth on Exhibit A shall include the President
and any Senior Vice President of Arch Coal, and the Presidents of Arch Coal's
operating subsidiaries. If an employee who provides services is a member of more
than one category set forth on Exhibit B, the highest rate shall apply.
4. On January 1 and July 1 ("Revisions Dates") of each year Arch Coal will
recalculate the Category Salary for each category set forth on Exhibit B using
the salaries then in effect for the exempt employees in each category and the
new Category Salary so calculated shall be used to redetermine the Hourly Rate
which redetermined Hourly Rate shall be effective until the next Revision Date.
Promptly after each recalculation, Arch Coal shall provide Carboex with the
redetermined Hourly Rate for each category set forth on Exhibit B.
5. This Services Contract shall become effective as of the Effective Time
as that term is defined in the Merger Agreement and shall continue in full force
and effect until the earlier of (1) the date thirty (30) days after a party's
receipt of written notice electing to terminate this Services Contract (or such
later date specified in such notice), or (2) the date Carboex and its affiliates
no longer beneficially own at least 63% of the shares of
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Arch Coal's capital stock that Carboex obtained at the Effective Time in the
conversion under the Merger Agreement.
6. Arch Coal's employees engaged in providing services under this Services
Contract shall maintain a record of the time spent on-such services, accurate to
the hour, describing in reasonable detail the services performed. The Arch Coal
Representative or the Controller of Arch Coal shall collect such records and
Arch Coal's Accounting Department shall submit them to Carboex on or before the
tenth (10) day of each calendar month for services performed during the
preceding calendar month together with a statement for such services determined
by using the Hourly Rate and evidence of any direct expenses incurred in
connection with providing such services. The first statement will cover a charge
for services rendered from the effective date of this Services Contract through
the end of the calendar month in which it is executed. Carboex agrees to pay for
such services in full within twenty (20) days after receipt of each statement.
The parties agree to use every reasonable effort to have all requests made by
the Shareholder Representative to the Arch Coal Representative; however, if any
request for services is made by someone other than the Shareholder
Representative, or to someone other than the Arch Coal Representative, and Arch
Coal performs such services, Arch Coal shall be paid for such services as herein
provided.
7. In connection with any use by Carboex of Arch Coal's aircraft, Carboex
shall pay Arch Coal at Arch Coal's prevailing rate in effect from time to time.
Arch Coal, if requested by
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Carboex, shall advise Carboex of the rate prior to use by Carboex of the
aircraft.
8. Arch Coal agrees to keep confidential any proprietary information
furnished to Arch Coal by Carboex in connection with providing the services
requested by Carboex except to the extent that such information (i) has already
been disclosed by Carboex or others, (ii) is already public information, or
(iii) in the reasonable opinion of Arch Coal is required to be disclosed by a
court of competent jurisdiction or by governmental reporting requirements. Any
information furnished by Carboex to Arch Coal shall remain the property of
Carboex, and any reports, maps or information generated by Arch Coal for Carboex
shall become the property of Carboex.
9. Anything herein contained to the contrary notwithstanding, it is
understood that Arch Coal has agreed to perform services to Carboex as a
convenience, and in this regard, it is understood that the performance of all
services shall be at the sole risk of Carboex and Arch Coal shall not be liable
to Carboex for any cost, damage, expense or loss incurred by Carboex, including,
without limitation, any special, indirect or consequential damages arising from,
or alleged to have arisen from, the failure based on imputed knowledge of Arch
Coal supervisory personnel to perform or the misperformance of Arch Coal, unless
such failure based on imputed knowledge or misperformance results directly from
the gross negligence of Arch Coal.
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10. In the event that any party hereto is rendered unable, wholly or in
part, by force majeure to carry out or fulfill its obligations under this
Services Contract, it is agreed that the party claiming force majeure shall give
notice and reasonably full particulars of the force majeure cause or causes by
telephone or telegraph (and promptly confirmed by letter) to the other party as
soon as possible after the occurrence of the force majeure cause or causes and
thereupon the obligations of both parties insofar as and to the extent they are
affected by such force majeure, shall be suspended during the continuation of
the force majeure, but for no longer; provided, however, that such force majeure
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cause or causes shall, insofar as possible, be remedied with all reasonable
dispatch, but nothing contained herein shall be construed as requiring a party
to settle any labor dispute by acceding to any opposing demands when such course
is inadvisable in the discretion of the party having the difficulty. The term
"force majeure" as used herein shall mean acts of God, strikes, concerted acts
of workmen, acts or omissions of subcontractors or independent contractors,
lockouts or other industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, washouts, arrests or restraints, requisitions and
priorities of the government, either federal, state, civil or military, civil
disturbances, explosions, future rules, regulations, orders, laws, or
proclamations of governmental authorities acting under claim or color of
authority, disruption or breakdown in transportation
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facilities, and any other cause or causes, whether or not of the type or kind
specifically enumerated, which are not reasonably within the control of the
party claiming force majeure. Furthermore, the parties agree to render
assistance to each other, to the fullest extent possible, to eliminate the
condition of force majeure.
11. The parties hereto shall not assign this Services Contract in whole or
in part, or assign in whole or in part any of their respective rights hereunder,
or delegate all or any part of their respective obligations or duties hereunder,
in every case without the prior written consent of the other party; provided,
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however, that such consent shall not be required for assignment or delegation in
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connection with a sale of all or substantially all of the assets of the
assigning or delegating party.
12. All notices required pursuant to this Services Contract shall be in
writing and shall be sufficient in all respects if delivered in person or sent
by first class airmail, or by telex or telecopy confirmed by such mail to:
Arch Mineral Corporation
Xxxxx 000
XxxxXxxxx Xxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
(After the Effective Time, notices shall be
directed instead to "Arch Coal, Inc..)
Ashland Inc.
X.X. Xxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
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Carboex International, Ltd.
Xxxxx Xxxxxx Xxxxxxx
Xx. 0
Xxxxxx 00
Xxxxx
Attention: Assistant to the Chairman
Ashland Coal, Inc.
X.X. Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: President
13. Arch Coal and Carboex are Equal Opportunity Employers. It is,
therefore, understood that this Services Contract is subject to the rules and
regulations adopted by the Secretary of Labor under Executive Order No. 11246,
as amended.
14. No action or failure to act by Carboex or Arch Coal shall constitute a
waiver of any right or duty afforded either of them under this Services
Contract, nor shall any such action or failure to act constitute an approval of
or acquiescence in any breach thereunder, except as may be specifically agreed
in writing.
15. Nothing contained in this Services Contract shall create for, or give
to, any third party any claim or right of action against the parties hereto
which would not arise but for the existence of this Services Contract.
16. This Services Contract shall be construed, and the rights of the
parties shall be determined in accordance with the laws of the State of West
Virginia.
17. This Services Contract and the attached Exhibit B constitute the
complete and final expression of the agreement between Carboex and Arch Coal
with respect to the subject matter hereof. This Services Contract supersedes all
prior negotiations,
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proposals, and agreements, either oral or written, between the parties and shall
govern and control all transactions, rights, duties and remedies between the
parties related to this Services Contract. The conduct of the parties hereto
arising subsequent to the execution and delivery of this Services Contract shall
not modify or vary the interpretation of the Services Contract or any of the
provisions, unless and to the extent such conduct affirmatively and clearly
indicates that all parties hereto place the same interpretation upon it. All
communications between the parties which are about or affect the right, duty or
remedy of either party to this Services Contract, and any amendments,
alterations or modifications thereof, shall be in writing or shall be confirmed
promptly in writing and shall be signed by a duly authorized officer of each of
the parties hereto. As to any conflict between the Exhibit B attached hereto or
documents incorporated by reference and the main text of this Services Contract,
the terms and conditions stated in the main text shall govern in all cases. 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.
18. Whenever in this Services Contract "Arch Coal," "Ashland Coal",
"Ashland" or "Carboex" is used, such term shall include any entity of which Arch
Coal, Ashland Coal, Ashland or Carboex, respectively, own directly or indirectly
through other affiliates
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or subsidiaries, more than 50% of the voting shares or equivalent interests;
provided, however, "Ashland" shall not be deemed to include Arch Coal or Ashland
Coal.
19. Ashland Coal, Ashland and Carboex agree that the ACI Shareholders
Services Contract is terminated and that all rights and obligations of the
parties thereto are extinguished, in each case as of the Effective Time as that
term is defined in the Merger Agreement. Notwithstanding the foregoing, any
claims and liabilities arising prior to such termination shall survive such
termination and the termination of this Services Contract.
IN WITNESS WHEREOF, Arch Coal, Ashland Coal, Ashland, and Carboex have
caused their respective duly authorized officers to sign this Services Contract
as of the day and year first above written.
ASHLAND COAL, INC. ASHLAND INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
Its: President Its: Senior Vice President,
General Counsel and Secretary
ARCH MINERAL CORPORATION CARBOEX INTERNATIONAL, LTD.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxxx
Its: Pres. & CEO Its: Director
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EXHIBIT A
SHAREHOLDERS SERVICES CONTRACT
Shareholders Services Contract by and between Ashland Coal, Inc., Ashland Oil,
Inc. and Saarberg Coal International GMBH, dated October 13, 1981 is
incorporated herein by reference (Exhibit 10.41 to Ashland Coal, Inc.'s
Registration Statement on Form S-1 (Registration No. 33-22425) filed with the
SEC on June 9, 1988, as amended)
EXHIBIT B
to
SHAREHOLDERS SERVICES CONTRACT
CATEGORY HOURLY RATE
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Executive Officers $
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Other Officers
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Department Heads
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Managers
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All Others
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