EXHIBIT 2.1
PURCHASE AGREEMENT
by and between
NATIONAL COAL CORP.
AND
XXXX STEEL PRODUCTS, INC.,
AND
XXXXX X. XXXX, XX
AND
XXXXXXX X. XXXX
JUNE 18, 2007
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS ...................................................1
1.1 DEFINITIONS ................................................1
1.2 RULES OF INTERPRETATION ....................................6
ARTICLE 2 PURCHASE AND SALE OF STOCK ....................................7
2.1 PURCHASE AND SALE OF STOCK .................................7
2.2 TRANSFERRED ASSETS .........................................8
2.3 NON-ASSIGNMENT OF ASSETS ...................................8
2.4 AMOUNTS HELD IN TRUST ......................................8
2.5 TRANSFER TAXES .............................................8
2.6 WORKING CAPITAL ADJUSTMENT .................................9
2.7 CORPORATE INDEBTEDNESS .....................................9
ARTICLE 3 PURCHASE PRICE; CLOSING AND DELIVERIES ........................9
3.1 CLOSING ....................................................9
3.2 SELLER'S DELIVERIES ........................................9
3.3 SELLER'S DELIVERIES .......................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLER .................10
4.1 ORGANIZATION ..............................................10
4.2 AUTHORIZATION AND VALIDITY ................................10
4.3 NO CONFLICT OR VIOLATION ..................................11
4.4 CONSENTS AND APPROVALS ....................................11
4.5 COMPLIANCE WITH LAW .......................................11
4.6 LITIGATION ................................................11
4.7 DISPUTES ..................................................11
4.8 TITLE .....................................................12
4.9 PERSONAL PROPERTY USED IN THE BUSINESS ....................12
4.10 CONTRACTS AND LEASES ......................................12
4.11 RENEGOTIATIONS ............................................12
4.12 EQUIPMENT LEASES ..........................................12
4.13 TAX RETURNS ...............................................12
4.14 LABOR MATTERS .............................................12
4.15 FINANCIAL ADVISORS ........................................13
4.16 REAL PROPERTY .............................................13
4.17 ENVIRONMENTAL MATTERS .....................................14
4.18 RESERVES ..................................................15
4.19 PERMITTING ................................................15
4.20 DISTANCE AND POST-MINING LAND USE WAIVERS .................15
4.21 ADVERSE EVENTS OR CIRCUMSTANCES ...........................15
4.22 FINANCIAL STATEMENTS ......................................15
4.23 NO UNDISCLOSED LIABILITIES ................................16
4.24 DISCLOSURE ................................................16
4.25 RELATIONSHIPS WITH RELATED PERSONS ........................16
4.26 EMPLOYEE TERMINATIONS .....................................16
4.27 INSURANCE .................................................16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BUYER ..................16
5.1 ORGANIZATION ..............................................16
5.2 AUTHORIZATION AND VALIDITY ................................16
5.3 CONSENTS AND APPROVALS ....................................17
5.4 NO CONFLICT OR VIOLATION ..................................17
5.5 FINANCIAL ADVISORS ........................................17
5.6 PERMITTING ................................................17
ARTICLE 6 SURVIVAL OF REPRESENTATION AND WARRANTIES ....................17
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES ................17
ARTICLE 7 CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES ...............18
7.1 CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER .........18
7.2 CONDITIONS TO EACH PARTY'S OBLIGATIONS ....................19
ARTICLE 8 COVENANTS ....................................................20
8.1 COVENANTS OF SELLER .......................................20
8.2 COVENANTS OF BUYER ........................................21
8.3 COVENANTS OF THE PARTIES ..................................23
ARTICLE 9 EMPLOYEES ....................................................25
9.1 EMPLOYEE RECORDS ..........................................25
9.2 PAYMENTS TO CERTAIN EMPLOYEES .............................25
ARTICLE 10 INDEMNIFICATION...............................................25
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10.1 SURVIVAL ..................................................25
10.2 INDEMNIFICATION BY THE OWNERS .............................25
10.3 INDEMNIFICATION BY THE BUYER ..............................26
10.4 CLAIMS ....................................................27
10.5 BASKET ....................................................27
ARTICLE 11 TERMINATION...................................................28
11.1 TERMINATION ...............................................28
11.2 EFFECT OF TERMINATION; REMEDIES ...........................28
11.3 EXPENSE REIMBURSEMENT .....................................28
11.4 XXXXXXX MONEY DEPOSIT .....................................29
ARTICLE 12 MISCELLANEOUS ................................................29
12.1 EXPENSES ..................................................29
12.2 NOTICES ...................................................29
12.3 AMENDMENTS ................................................30
12.4 WAIVER ....................................................31
12.5 HEADINGS ..................................................31
12.6 ASSIGNMENT ................................................31
12.7 PARTIES IN INTEREST .......................................31
12.8 COUNTERPARTS ..............................................31
12.9 SEVERABILITY ..............................................31
12.10 ENTIRE AGREEMENT ..........................................32
12.11 GOVERNING LAW .............................................32
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PURCHASE AGREEMENT
This is an Purchase Agreement (this "Agreement"), dated as of June 18,
2007, by and between National Coal Corp., a Florida corporation, (the "Buyer")
and Xxxx Steel Products, Inc., an Alabama corporation, (the "Corporation"), and
Xxxxx X. Xxxx, XX and Xxxxxxx X. Xxxx (collectively, the "Owners") (the
Corporation and the Owners collectively the "Seller").
RECITALS
A. The Corporation is engaged in the business of mining coal and
activities directly or indirectly relating thereto.
B. The Owners desire to sell to the Buyer all right, title and interest
of the Owners in and to the Stock of the Corporation, being all of the issued,
outstanding Stock of the Corporation, along with the retention by the
Corporation of all the Corporate Assets (defined below), and except the
Transferred Assets (defined below), for the consideration and upon the terms and
conditions hereinafter set forth.
C. The Buyer desires to purchase the Corporate Stock with the
Corporation retaining the Corporate Assets (other than the Transferred Assets)
and the Corporate Liabilities (defined below) from the Seller, and the Seller
desires to sell, convey, assign and transfer to the Buyer, the Corporate Stock
with the Corporation retaining the Corporate Assets (other than the Transferred
Assets) and the Corporate Liabilities, all in the manner and subject to the
terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein and of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Seller and the Buyer agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms have the meanings
set forth below:
"Accounts Receivable" means all accounts receivable and the
right to payment from customers of the Seller and the full benefit of all
security for such accounts or debts including all accounts receivable
representing amounts receivable in respect of goods shipped or products sold or
services rendered to customers.
"Affiliate" means, with respect to a specific Person, any
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the Person specified. The
term "control" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership, by contract or otherwise.
"Black Lung Liabilities" shall mean any Liability or benefit
obligations related to black lung claims and benefits under the Black Lung
Benefits Act of 1972, 30 U.S.C. xx.xx. 901 et
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SEQ., the Federal Mine Safety and Health Act of 1977, 30 U.S.C. xx.xx. 801 ET
SEQ_, the Black Lung Benefits Reform Act of 1977, Pub. L. No. 95-239, 92 Stat.
95 (1978), the Black Lung Benefits Amendments of 1981, Pub. L. No. 97-119, Title
11, 95 Stat. 1643, in each case as amended, if applicable, and occupational
pneumoconiosis, silicosis or other lung disease liabilities and benefits arising
under state law or regulation or any other Federal law or regulation now or
hereafter in existence.
"Business" shall mean the business of the Corporation in
exploring for, mining, loading and shipping coal from the Real Property.
"Business Days" means any day other than a Saturday, Sunday or
other day on which national or state banking associations are required or
permitted by law to be closed in Alabama.
"Claim" means any written action, suit, Proceeding, hearing,
investigation, litigation, charge, complaint, claim, or demand.
"Code" means the Internal Revenue Code of 1986, as amended.
"Corporate Liabilities" means Liabilities of the Corporation,
including any and all accrued liabilities due to be paid in the future, listed
on Schedule 4.23, and which Schedule 4.23 shall be updated weekly and on the day
before the Closing and provided to the Buyer.
"Xxxxx Creek Property" means the property subject to that
certain Coal Mining Lease dated February, 2005 between United States Steel
Corporation and Xxxx Steel Products, Inc and that certain Coal Mining Lease
dated April, 2005 between RGGS Land and Minerals Ltd., L.P. and Xxxx Steel
Products, Inc.
"Employees" mean the employees of the Corporation at the date
of the Closing.
"Environmental Law" means any applicable federal, state or
local law, statute, rule, regulation or ordinance relating to the regulation,
pollution, preservation or protection of human health, safety, the environment,
or natural resources or to emissions, discharges, Releases or threatened
Releases of pollutants, contaminants, Hazardous Materials or wastes into the
environment (including ambient air, soil surface water, ground water, wetlands,
land or subsurface strata), including, but not limited to, common law claims
such as nuisance, negligence and trespass.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended. "GAAP" means generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
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"Hazardous Materials" means (a) petroleum or petroleum
products, fractions, derivatives or additives, natural or synthetic gas,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls and radon
gas; (b) any substances defined as or included in the definition of "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "extremely
hazardous substances," "restricted hazardous wastes," "toxic substances," toxic
chemicals or "toxic pollutants," "contaminants" or "pollutants" or words of
similar import under any Environmental Law; (c) radioactive materials,
substances and waste, and radiation; and (d) any other substance exposure to
which is regulated under any Environmental Law.
"Indebtedness" of any Person means any obligations of such
Person, whether or not contingent, (a) for borrowed money, (b) evidenced by
notes, bonds, indentures or similar instruments, (c) for the deferred purchase
price of goods and services, other than trade payables incurred in the ordinary
course of business, (d) under capital leases, and (e) in the nature of
guarantees of the obligations described in clauses (a) through (d) above of any
other Person.
"Knowledge" means an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual is actually
aware of such fact or other matter, provided that, with respect to Seller,
Seller will be deemed to have "Knowledge" of a particular fact or other matter,
if any officer or director of the Corporation, the geologist, or the mine
superintendent at each of the Corporation's mines is actually aware of such fact
or other matter.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental Authority and includes,
without limitation, all Environmental Laws.
"Liabilities" means all Indebtedness, obligations, claims and
other liabilities of a Person, whether absolute, accrued, contingent, fixed or
otherwise or whether due or to become due.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, judgment lien, tax lien, mechanic's lien, materialman's lien,
other lien, adverse Claim, levy, charge, Option, right of first refusal, charge,
debenture, indenture, deed of trust, right-of-way, restriction, encroachment,
license, lease, security agreement, or other encumbrance of any kind, and other
restrictions or limitations on the use or ownership of real or personal property
or irregularities in title thereto or any conditional sale contract, title
retention contract or other contract to give any of the foregoing.
"Loss" means any loss, Claim, damage, liability or expense
(including reasonable attorneys' fees).
"Material Adverse Effect" means (a) an adverse effect on the
validity or enforceability of this Agreement or any of the Related Agreements in
any material respect, (b) an adverse effect on the condition (financial or
other), business, assets, results of operations, ability to conduct business or
properties of the Seller or the Buyer (as applicable), or the Corporate Assets,
taken as a whole, in any material respect, or (c) an impairment of the ability
of the Seller
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or the Buyer (as applicable) to fulfill its obligations under this Agreement or
any of the Related Agreements in any material respect.
"Mining Title" means a leasehold interest in all or an
undivided interest in surface and/or coal together with no less than those real
properties, easements, licenses, privileges, rights, and appurtenances as are
necessary to mine, remove, process, and transport coal in the manner presently
conducted.
"Non-Competition Agreements" means Non-competition Agreements
to be entered into with each Owner in Form satisfactory to the parties pursuant
to which each Owner will agree that for a period of five years from the date
hereof, such Owner shall not directly or indirectly own, operate or be an
employee of a coal mine or coal mining business in the State of Alabama;
provided, however, that either Owner may be an employee or consultant to the
Buyer. The form of Non-Competition Agreement shall be added as Exhibit A hereto
on or before June 30, 2007.
"Non-Reclamation Environmental Laws" means any Environmental
Law other than (i) the Surface Mining Control and Reclamation Act of 1977, 30
U.S.C. 1201 et seq., as amended ("SMCRA") and (ii) any applicable Alabama state
statute existing or adopted to implement and enforce SMCRA and the federal and
state regulations promulgated thereunder.
"Non-Reclamation Environmental Liabilities" means Liabilities
arising from any Environmental Law other than under the Surface Mining Control
and Reclamation Act of 1977, 30 U.S.C. ss. 1201 ET SEQ., as amended ("SMCRA"),
and any applicable Alabama state statue existing or adopted to implement and
enforce SMCRA, and the federal and state regulations promulgated thereunder.
"Non-Reclamation Permit" means any Permit issued to Seller
under authority of any law or regulation other than SMCRA or its Alabama state
law equivalent and the regulations promulgated thereunder.
"Order" means any writ, judgment, decree, injunction, or
similar order of any Governmental Authority, in each such case whether
preliminary or final.
"Permit" means any permit, approval, certificate,
registration, license or other authorization required under any law or
regulation to operate the Business, other than the Excluded Permits (as
hereafter defined).
"Permitted Lien" means any Lien (a) which is listed on
Schedule 1.1(a); (b) created by the Buyer; (c) in favor of lessors of any
Purchased Asset to secure payment of rentals or royalties; (d) constituting
easements, rights-of-way, restrictions or minor defects or irregularities in
title incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses or restrictions on the use of the Real
Property or minor imperfections in title thereto, none of which individually or
in the aggregate will have a Material Adverse Effect on mining operations on the
Real Property; (e) imposed by any Governmental Authority for Taxes, assessments,
or charges not yet due or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Corporation in accordance with GAAP; (f) imposed
by Law which was incurred
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in the ordinary course of business, such as carriers', warehousemen's',
landlords', and mechanics' Liens and other similar Liens arising in the ordinary
course of business, none of which individually or in the aggregate will have a
Material Adverse Effect on mining operations on the Real Property; (g) pursuant
to a pledge or deposit under workers' compensation, unemployment insurance, or
other social security legislation or securing the liability to insurance
carriers; (h) pursuant to a pledge or deposit to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds, and other obligations of a like nature incurred in the
ordinary course of business; (i) consisting of rights and easements of owners of
undivided interests in any Real Property where the Corporation owns less than
100% of the fee interest; (j) consisting of rights and interests of owners of
interests in the surface of any Real Property where the Corporation does not own
or lease such surface interest; (k) of lessees of minerals other than coal
(including oil and gas) where the Corporation does not own or lease such other
minerals; (1) consisting of rights of others to subjacent or lateral support and
absence of subsidence rights; (m) consisting of obligations or duties affecting
any property of the Corporation to any municipality or public authority with
respect to any franchise, grant, license, or permit, none of which individually
or in the aggregate will have a Material Adverse Effect on mining operations on
the Real Property; and (n) constituting any extension, renewal, or replacement
of the foregoing.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, entity, trust, union, association or Governmental
Authority.
"Proceeding" means any action, suit, proceeding, arbitration,
investigation or audit, whether or not by any Governmental Authority.
"Related Agreements" means (a) the Non-Competition Agreements
and (b) any other agreement, certificate or similar document to be executed by
any party hereto as required by this Agreement.
"Related Person" means, with respect to a specific Person, any
officer, director, manager, employee, agent, shareholder, member,
representative, successor or assign of such Person.
"Release" means any release, issuance, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment or into
or out of any property, including the movement of Hazardous Materials through
the air, soil, surface water, ground water or property other than as
specifically authorized by and in compliance with all Environmental Laws and
Environmental Permits.
"Taxes" means any and all taxes, fees, levies, duties,
tariffs, import and other charges, imposed by any taxing authority, together
with any related interest, penalties or other additions to tax, or additional
amounts imposed by any taxing authority, and without limiting the generality of
the foregoing, shall include net income alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, franchise, profits,
license, transfer, recording, escheat, withholding, payroll, employment, excise,
severance, stamp, occupation,
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premium, property, windfall profit, environmental, custom duty, or other tax,
governmental fee or other like assessment or charge of any kind whatsoever.
"Tax Returns" means all federal, state, local, provincial and
foreign returns, declarations, claims for refunds, forms, statements, reports,
schedules, and information returns or statements, and any amendments thereof
(including, without limitation, any related or supporting information or
Schedule attached thereto) required to be filed with any Taxing authority in
connection with any Tax or Taxes.
1.2 RULES OF INTERPRETATION.
(a) The singular includes the plural and the plural
includes the singular.
(b) The word "or" is not exclusive.
(c) A reference to a Person includes its permitted
successors and permitted assigns. (d) The words "include," "includes" and
"including" are not limiting.
(e) A reference in a document to an Article, Section,
Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit,
Schedule, Annex or Appendix of such document unless otherwise indicated.
Exhibits, Schedules, Annexes or Appendices to any document shall be deemed
incorporated by reference in such document. To the extent that any disclosure
set forth in any particular Schedule hereto is applicable to the disclosure
required to be made in any other Schedule hereto, such disclosure shall for
purposes of this Agreement be deemed to be made on all relevant Schedules.
(f) References to any document, instrument or agreement
(a) shall include all exhibits, schedules and other attachments thereto, (b)
shall include all documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document, instrument or agreement,
or replacement or predecessor thereto, as amended, modified and supplemented
from time to time and in effect at any given time.
(g) The words "hereof," "herein" and "hereunder" and
words of similar import when used in any document shall refer to such document
as a whole and not to any particular provision of such document.
(h) References to "days" shall mean calendar days, unless
the term "Business Days" shall be used.
(i) This Agreement is the result of negotiations among,
and has been reviewed by the parties hereto; accordingly, this Agreement shall
be deemed to be the product of all of the parties, and no ambiguity shall be
construed in favor of or against any party.
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ARTICLE 2
PURCHASE AND SALE OF STOCK
2.1 PURCHASE AND SALE OF STOCK. Upon the terms and subject to the
conditions contained in this Agreement, at the Closing, the Owners shall sell,
assign, transfer and convey to the Buyer and the Buyer shall purchase, acquire,
and accept from the Owners the Owners' Stock in the Corporation (the "Corporate
Stock"), and being all of the issued, outstanding stock of the Corporation; the
Corporation shall retain all of the Corporation's right, title, and interest in
and to all of its assets (the "Corporate Assets"), not herein otherwise
transferred, including but not limited to the following assets:
(a) the leased real property identified on Schedule
2.1(a) including the Corporation's Alabama mines (the "Real Property") and all
leases related thereto ( the "Real Property Leases"), all of such Real Property
being shown on the maps attached as collective Schedule 4.16(b);
(b) the machinery, equipment, furniture, fixtures,
vehicles, tools, supplies, improvements and other tangible personal property,
having a per item value of not less than ONE THOUSAND ($1000.00) DOLLARS, owned
by the Corporation and identified on Schedule 2.1(b) (the "Owned Equipment")
and, to the extent transferable, all rights of the Corporation to warranties and
licenses received from manufacturers for the Owned Equipment;
(c) the machinery, equipment, furniture, fixtures,
vehicles, tools, supplies, improvements and other tangible personal property, if
any, having a per item value of not less than ONE THOUSAND ($1,000.00) DOLLARS,
which is leased by the Corporation and identified on Schedule 2.1(c)(i) (the
"Leased Equipment", and collectively with the Owned Equipment, the "Equipment")
and, to the extent transferable, all rights of the Corporation to warranties and
licenses received from manufacturers and lessors of the Leased Equipment. The
Leased Equipment is leased under the equipment leases identified on Schedule
2.1(c)(ii) (the "Equipment Leases" and together with the Real Property Leases,
the "Leases");
(d) all of the Corporation's Permits, approvals, orders,
authorizations, consents, licenses, certificates, franchises, exemptions of, or
filings or registrations with or issued by any Governmental Authority, which
have been issued or granted to or are owned, used or held by the Seller in
connection with the Business and the Real Property and all pending applications
therefore, to the extent transfer is permitted by law, all of which Permits are
listed on Schedule 2.1(d);
(e) all rights and interests of the Corporation in, to
and under the contracts, including but not limited to the coal supply contracts
(the "Contract(s)") which are listed on Schedule 2.1(e) hereto and all accounts
receivable due therefrom;
(f) all stockpiled coal inventory, pit inventory and coal
located on the Real Property, at any loadout facility, and in transit under any
Contract as of the Closing, [as determined by a survey conducted on the day
before the Closing] (the "Stockpile and Pit Inventory");
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(g) all maps, reserve studies, engineering reports, core
hole and exploration data, title reports and opinions, mine projections, and all
other books, records, files and other documentation and written materials
relating to the business of the Corporation and Corporate Assets (the
"Records");
(h) all Real Property, Equipment and other assets of
every kind and nature used by Seller in the mining business or acquired by
Seller for use in the business of the Corporation or associated therewith; and
(i) all accounts of whatever nature, including but not
limited to operation accounts, deposits, trusts accounts, payroll accounts,
certificates of deposit, escrow accounts, letters of credit, and prepaid items
or accounts, used in the operation of the business of the Corporation, all of
which are listed in attached Schedule 2.1 (i).
At the Closing, the Stock and the Corporate Assets will be delivered
free and clear of all Liens other than Permitted Liens. Except as otherwise
expressly provided herein, the Corporate Assets will otherwise be transferred on
an AS IS, WHERE IS basis and with all faults.
2.2 TRANSFERRED ASSETS. Notwithstanding any provision of Section
2.1, the Owners shall retain all of its right, title and interest in, and the
definition of Corporate Assets shall not include any of the equipment listed on
Schedule 2.2 (collectively, the "Transferred Assets").
2.3 NON-ASSIGNMENT OF ASSETS. This Agreement shall not constitute
an agreement to assign or transfer any assets of the Seller, if an attempted
transfer or assignment thereof, without the approval, authorization or consent
of, or granting or issuance of any license or permit by, any third party thereto
(or with respect thereto), would constitute a breach thereof or in any way
negatively affect the rights of the Seller or the Buyer, as the assignee or
transferee of such asset, as the case may be, thereunder. If the Closing occurs
and such authorization, consent, approval, license or permit is required for the
transfer or assignment of any asset of the Seller at or before the Closing, but
not obtained, the Seller will cooperate with the Buyer without further
consideration (other than as provided in clause (b) of this Section 2.3) in any
arrangement reasonably acceptable to the Buyer and the Seller, designed to both
(a) provide the Buyer with the benefits of any such asset, and (b) cause the
Buyer to bear all costs and obligations of or under any such asset. Any transfer
or assignment to the Buyer of any asset that shall require the consent,
approval, authorization of, or granting of any license or permit by any third
party for such assignment or transfer as aforesaid shall be made subject to such
consent, approval, authorization, license or permit being obtained.
2.4 AMOUNTS HELD IN TRUST. Any amounts received by the Corporation
after the Closing with respect to any Transferred Asset shall be held by the
Corporation in trust for the Owners until promptly (not later than 15 days) paid
to the Owners. Likewise, any amounts received by the Owners after the Closing
payable to the Corporation (other than with respect to the Transferred Assets)
shall be held by the Owners in trust for the Buyer or Corporation until promptly
(not later than 15 days) paid to the Buyer or Corporation, as appropriate.
2.5 TRANSFER TAXES. The Buyer shall be liable for all sales, use
and other transfer Taxes imposed by law upon Buyer and all filing and recording
fees arising from or relating to the
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consummation of the transactions contemplated by this Agreement, including all
transfer Taxes imposed by law upon Buyer with respect to the Real Property.
2.6 WORKING CAPITAL ADJUSTMENT. The Purchase Price (as defined in
Section3.3) shall be increased or decreased, as applicable, with respect to the
working capital of the Corporation as follows (hereinafter referred to as the
"Working Capital Adjustment"):
(a) The Purchase Price shall be increased by an amount,
if any, by which Working Capital (as defined below) of the Corporation at the
end of the Business day prior to Closing exceeds $0.00 (the "Target Working
Capital").
(b) The Purchase Price shall be decreased by an amount,
if any, by which Working Capital of the Corporation at the end of the Business
day prior to Closing is less than the Target Working Capital.
(c) No later than thirty (30) days after the Closing,
Seller will cause its regular accountant to prepare a calculation of the
Corporation's working capital (the "Closing Working Capital Statement") of the
Corporation as of the Closing Date, using the same methodologies, assumptions
and accounting practices as were used in the preparation of the December 31,
2006 balance sheet of the Corporation. If the Closing Working Capital Statement
results in a Working Capital Adjustment, the party required to pay the
adjustment shall pay the adjustment to the other party no later than five (5)
business days after the date on which the Closing Working Capital Statement is
delivered.
(d) For purposes hereof, the term "working capital" shall
mean the Corporation's current assets less its current liabilities as of the
close of business. Current assets and current liabilities used in calculating
working capital shall be those assets and liabilities listed on Schedule 2.6(d).
2.7 CORPORATE INDEBTEDNESS. At or prior to Closing, Sellers shall
cause all of the Equipment financing obligations of the Corporation listed on
Schedule 2.7 to be repaid in full.
ARTICLE 3
PURCHASE PRICE; CLOSING AND DELIVERIES
3.1 CLOSING. The parties shall hold a closing (the "Closing") as
soon as reasonably possible after satisfaction of the conditions to closing in
Article 7, but in no event later than September 30, 2007, or such later date to
which the Seller and the Buyer shall agree (the "Closing Date").
3.2 SELLER'S DELIVERIES. The sale, transfer, assignment and
delivery by the Owners of all of the outstanding, issued Stock of the
Corporation to the Buyer, as herein provided, shall be effected on the Closing
Date by each Seller's execution and the delivery of: (i) the Related Agreements
to which the Seller is a party, (ii) other instruments of transfer and
conveyance reasonably satisfactory in form and substance to counsel for the
Buyer and the Seller, which shall include, without limitation, all documents of
title and instruments of conveyance necessary to transfer record and/or
beneficial ownership to the Buyer, of the Corporate Stock, and any property
constituting Corporate Assets owned by the Corporation which requires execution,
9
endorsement and/or delivery of a document in order to vest record or beneficial
ownership thereof in the Buyer, (iii) a certificate executed by Seller as to the
accuracy of the representations and warranties as of the date of this Agreement
and as of the Closing Date, and as to Seller's compliance with and performance
of the covenants and obligations to be performed or complied with at or before
the Closing, (iv) a certificate of the Secretary of Seller certifying and
attaching copies of all requisite resolutions of Seller's Board of Directors and
Shareholders approving the execution and delivery of this Agreement and
consummation of the contemplated transactions; and (v) evidence reasonably
satisfactory to Buyer of the repayment of the corporate obligations set forth in
Schedule 2.7.
3.3 SELLER'S DELIVERIES. At the Closing:
(a) In exchange for the Corporate Stock, the Buyer shall
transfer to or at the direction of the Owners the following consideration, (the
"Purchase Price"): Fifty-Five Million Dollars ($55,000,000.00), payable in cash
in immediately available funds to the account or accounts specified by the
Owners;
(b) The Seller shall execute and deliver to the Buyer the
Related Agreements to which the Buyer is a party and such other agreements as
are reasonably satisfactory in form and substance to counsel for the Seller; and
(c) Buyer shall deliver to Seller a certificate executed
by Buyer as to the accuracy of the representations and warranties as of the date
of this Agreement and as of the Closing Date, and as to Buyer's compliance with
and performance of the covenants and obligations to be performed or complied
with at or before the Closing, and a certificate of the Secretary of Buyer
certifying and attaching copies of all requisite resolutions of Buyer's Board of
Directors approving the execution and delivery of this Agreement and
consummation of the contemplated transactions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
In order to induce the Buyer to enter into this Agreement, each Seller
jointly and severally makes the representations and warranties set forth below
which are true, correct and complete on the date hereof (subject to the approval
of each Seller's Board of Directors) and shall be true, correct and complete as
of the Closing:
4.1 ORGANIZATION. The Corporation is a corporation duly organized
and validly existing under the Laws of the State of Alabama.
4.2 AUTHORIZATION AND VALIDITY. The Corporation has all requisite
corporate power and authority to enter into this Agreement and the Related
Agreements to which it is a party, subject to the receipt of the consents,
waivers, authorizations and approvals set forth on Schedule 4.2. The execution
and delivery of this Agreement and the performance of the obligations hereunder
have been duly authorized by all necessary corporate action by the Corporation.
This Agreement and the Related Agreements to which each Seller is a party have
been, or will be,
10
duly executed by each Seller party thereto and constitute its valid and binding
obligation, enforceable against it in accordance with their terms.
4.3 NO CONFLICT OR VIOLATION. Subject to the receipt of the
consents, waivers, authorizations and approvals set forth on Schedule 4.2, the
execution, delivery and performance by each Seller of this Agreement and the
Related Agreements to which it is a party (a) do not and will not violate or
conflict with any provision of the organizational or governing documents of the
Corporation, (b) do not and will not violate any provision of any Law or any
Order applicable to such Seller, and (c) do not and will not violate or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which such Seller is a party
or by which it is bound or to which any of such Seller's properties or assets
are subject, except for any such violation, conflict, breach or default which
would not reasonably be expected to have a Material Adverse Effect.
4.4 CONSENTS AND APPROVALS. Schedule 4.2 sets forth a true and
complete list of each material consent, waiver, authorization or approval of any
Governmental Authority or of any other Person that is required in connection
with the execution, delivery and performance of this Agreement, including but
not limited to the consents of the lessors under the Leases and consents and
approvals of other parties to any of the Contracts (the "Consents") other than
such consents, waivers, authorizations or approvals which will not have a
Material Adverse Effect.
4.5 COMPLIANCE WITH LAW. Except as set forth on Schedule 4.5, no
Seller has received written notice or, to Seller's Knowledge, any other
communication (whether written or oral), of any violation of any Law, nor is any
Seller in default with respect to any Order, applicable to the Corporate Assets,
other than violations or defaults the consequences of which would not reasonably
be expected to have a Material Adverse Effect.
4.6 LITIGATION. Except as set forth on Schedule 4.6, there are no
Claims, actions, suits, Proceedings or investigations related to the Corporate
Assets or Business pending or threatened in writing, before any federal or state
court brought by or against any Seller that could reasonably be expected to have
a Material Adverse Effect, nor to Seller's Knowledge, has any such Claim,
action, suit, or investigation been threatened verbally. No event has occurred
or circumstance exists as a result of action or inaction by Seller, or, to
Seller's Knowledge, by any other person, that may give rise to or serve as a
basis for the commencement of any such Claim, action, suit, Proceeding or
investigation. Seller has delivered or made available to Buyer copies of all
pleadings, correspondence, and other documents relating to each matter listed in
Schedule 4.6.
4.7 DISPUTES. Except as set forth in Schedule 4.7, to Seller's
Knowledge there are no existing Claims by or disputes between Seller and any
other Person owning, controlling or occupying lands or realty adjoining or near
any of the Real Property or the Business operations regarding adverse
possession, the location of boundary lines, encroachments, mineral rights,
subsidence, water quality or quantity, flood damage, blasting damage, trespass,
waste, transportation of coal or other materials, noise, dust, nuisances or any
other similar matter.
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4.8 TITLE. The Seller will have, and at the Closing will transfer
to Buyer, good and marketable title to the Corporate Stock, the Corporate
Assets, and Records. At the Closing, the Corporation shall own all of the
Corporate Assets free and clear of all Liens, other than Permitted Liens.
4.9 PERSONAL PROPERTY USED IN THE BUSINESS. Schedule 4.9 sets
forth a true and complete list of all the material machinery, equipment,
vehicles and other tangible personal property owned or leased by Corporation and
used in the Business. Except as shown on Schedule 4.9, Corporation has used no
other such material personal property in the ordinary course of Business during
the twelve (12) months preceding the date hereof except such personal property
as has been junked, scrapped or sold and replaced by equivalent personal
property.
4.10 CONTRACTS AND LEASES.
(a) Other than as set forth on Schedule 4.10, no Seller
nor, to any Seller's Knowledge, any other party to any of the Contracts or the
Leases, has commenced any action against any of the parties to any of the
Contracts or the Leases or given or received any written notice or, to Seller's
Knowledge, any other form of notice, of any material default or violation under
any Contract or Lease. Each of the Contracts and the Leases is, and will be at
the Closing, valid, binding and in full force and effect against the Corporation
and, to the Seller's knowledge the other parties thereto, and is enforceable
according to its terms, except as otherwise set forth on Schedule 4.10. Seller
is not in material default under any Lease or Contract and no event has occurred
which, with the passage of time or expiration of any grace period would
constitute a material default of Seller's obligations under such Lease or
Contract, and to Seller's Knowledge, no other party to any such Lease or
Contract is in default thereunder.
4.11 RENEGOTIATIONS. Except as set forth on Schedule 4.11, there
are no renegotiations of, or attempts to renegotiate, any Contracts or Leases
and no Person has made written demand or, to Seller's Knowledge, other form of
demand (whether written or oral) for such renegotiation.
4.12 EQUIPMENT LEASES. Schedule 2.1(c)(ii) is a true and complete
list of all Equipment Leases, indicating the names of the parties to such
Leases, each item of property or equipment subject to such lease, and as to
capital leases, the payoff amount under each such capital lease that, if paid to
the lessor thereunder, would fully satisfy the remaining obligations under such
capital lease.
4.13 TAX RETURNS. The Corporation has filed all Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
material respects. All material Taxes owed by the Corporation (whether or not
shown on any Tax Return) have been paid. The Corporation is not currently the
beneficiary of any extension of time within which to file any Income Tax Return.
The Corporation has withheld and paid all Taxes required to be have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, and all
Forms W-2 and 1099 required with respect thereto have been properly completed
and timely filed.
4.14 LABOR MATTERS. The Seller represents and warrants that (a) no
Employee of the Corporation is currently represented by a labor union or other
collective labor organization or
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association; (b) there are no collective bargaining agreements or memoranda of
understanding by which the Corporation is bound or applicable to any Employees;
(c) to the Knowledge of the Seller, there is no union or independent
organizational activity among any Employees underway; (d) there are no pending
or threatened or actual actions against the Corporation by any employees; (e)
all employees have has been paid as required; and (f) all bonuses and other
earned amounts have been paid.
4.15 FINANCIAL ADVISORS. Neither the Seller nor any Person on the
Seller's behalf has agreed to pay any brokerage fee, finder's fee or commission
which could become the obligation of the Buyer with respect to the transactions
contemplated by this Agreement.
4.16 REAL PROPERTY
(a) Seller (i) has heretofore made available to Buyer
true and complete copies of the Leases (inclusive of subleases) covering the
Real Property and (ii) has set forth on the list in Schedule 2.1(a) with respect
to each Real Property, as applicable: the parties; the date of the agreement;
recording information; recoupment balances as of May 31, 2007; and overriding
royalties.
(b) To the Seller's Knowledge, the maps attached hereto
as collective Schedule 4.16(b) accurately and completely depicts the Real
Property in all material respects; provided, however, that such maps do not
depict, and were not prepared in accordance with, an engineer's survey of the
Real Property, but rather depicts an approximate representation of the Real
Property.
(c) The Seller has Mining Title to the Real Property.
(d) The Seller has obtained all easements and rights of
way required to use and operate the Real Property in all material respects in
the manner in which the Real Property is currently being used and operated and
in the manner in which the Permits affecting the specific Real Property so
provide.
(e) Except as set forth on Schedule 4.16(e), the Seller
has not received written notice of, and has no Knowledge of, any Proceedings
pending or, to the Knowledge of the Seller, threatened regarding the use or
possession of the Real Property, including subsidence claims, condemnation,
expropriation or similar Claims.
(f) Except as set forth on Schedule 4.16(f), the
Corporation is not a party to any lease, assignment or similar arrangement under
which the Corporation is a lessor, grantor, or assignor with respect to, or
under which any portion of, the Real Property is made available for use by any
third party.
(g) Except as set forth on Schedule 4.16(g) and except as
provided in the Real Property Leases, to Seller's Knowledge: (i) there are no
matters that materially adversely affect the rights of Seller to the Real
Property, and (ii) each of the Lessors under the Real Property Leases has
adequate rights to the Real Property to enter into the Real Property Leases and
perform its obligations thereunder.
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(h) to Seller's Knowledge, there are no existing disputes
between the Corporation, on one hand, and any of the lessors or sublessor with
respect to the Real Property or any other party having rights under or with
respect to any of the Real Property, on the other hand that would have a
material adverse effect on the Corporation's rights under the Real Property
Leases.
(i) Except as shown on Schedule 4.16(i), Seller has done
nothing to impair or encumber the Real Property Leases or any fixtures,
improvements and transportation facilities located on the Real Property;
(j) Except as set forth in Schedule 4.16(j), Seller has
received no written notice or, to Seller's Knowledge, other communication
(whether written or oral) of claims that the Corporation has failed to mine any
coal which it should have mined or mined any coal that it did not have the right
to mine or mined any coal in such reckless and imprudent fashion as to give rise
to any claims for loss, waste or trespass and, to Seller's Knowledge, no facts
exist upon which such a claim could be based. Seller has made available to Buyer
the most recent complete and correct version of all of the following items to
the extent such items are (i) in the possession or under the control of Seller,
(ii) relate to or affect the Corporate Assets and Business, including the coal
reserves, coal ownership, mining conditions, mines, and mining plans on the Real
Property, and (iii) material or relevant to the conduct of the Business:
geological data, reserve data, existing mine maps, surveys, core hole logs and
associated data, coal measurements, coal samples, lithologic data, coal reserve
calculations or reports, washability analyses or reports, mine plans, mining
permit applications and supporting data, engineering studies and all other books
and records, information, maps, reports and data.
(k) Except as shown on Schedule 4.16(k), the Real
Property includes all real property and interests in real property used by the
Corporation in the operation of the Business during the twelve (12) months
preceding the date hereof or in which Seller has an interest and which is useful
in mining the Real Property.
4.17 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.17:
(a) The Corporation has complied and is now in compliance
in all material respects, with all Environmental Laws applicable to the
Corporate Assets.
(b) During the prior five (5) years, the Corporation has
not received any written, or to Seller's Knowledge, other communication from any
Governmental Authority or any other Person alleging that the Business and/or the
Corporate Assets are not in full compliance with any Environmental Law, except
for notices of violation received in the ordinary course of business.
(c) To the Knowledge of the Seller, no Release has
occurred on or beneath the Real Property, except for inventories of Hazardous
Materials to be used, and wastes generated therefrom, in the ordinary course of
business of the Seller (which inventories and wastes, if any, were and are
stored or disposed of in accordance with applicable Environmental Laws) and
except for any such Release which would not result in a Material Adverse Effect.
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(d) All Permits required for operation of the Business
and Corporate Assets in the manner currently operated are described in Schedule
2.1(d). Except as otherwise disclosed in Schedule 4.17(d), the Permits described
in such Schedules are in full force and effect. There is no Proceeding pending
or, to the Knowledge of Seller, threatened which might affect (i) the validity
of any Permit, or (ii) the ability of the Corporation to obtain on or before the
Closing Date any Permit which has not been obtained at the date of this
Agreement.
(e) To Seller's Knowledge, all underground storage tanks,
and the capacity and contents of such tanks, located on the Real Property are
identified in Schedule 4.17(e); and except as described in such Schedule, there
is no asbestos contained in or forming part of any Real Property.
(f) There is no Proceeding pending against Seller, or to
Seller's Knowledge, any Purchased Asset, nor is any such Proceeding, known by
Seller to be, threatened, in which any material violation of any Environmental
Law by Seller, or concerning a Purchased Asset is alleged, nor to the Knowledge
of Seller is there any basis for any such Proceeding.
4.18 RESERVES. The Sellers have no Knowledge that the reports
prepared by XxXxxxx Engineering Corp. relating to the Corporation's coal
reserves that have been delivered to the Buyer are inaccurate or incomplete in
any material respect.
4.19 PERMITTING. Schedule 2.1(d) sets forth a complete and correct
list of all material Permits, whether for coal mining, reclamation, or other
operational purposes, currently held by the Corporation in connection with the
conduct of the Business related to the Corporate Assets. The Permits constitute
all material permits, licenses, and governmental authorizations necessary to
conduct the Business as currently conducted by the Corporation. Except as set
forth on Schedule 4.19, the Corporation (a) has not been subject to any bond
forfeiture, permit suspension or revocation or similar effort or Proceeding
instituted by any Governmental Authority, (b) is in material compliance with all
terms and conditions of its Permits, (c) is in material compliance with all
Laws, including, without limitation, all Environmental Laws, or (d) is not
permit blocked on the Applicant Violator System by any Governmental Authority.
4.20 DISTANCE AND POST-MINING LAND USE WAIVERS. All landowner
distance and post-mining land use waivers filed in connection with the Permits
are identified on Schedule 4.20.
4.21 ADVERSE EVENTS OR CIRCUMSTANCES. Except as otherwise disclosed
in the Schedules hereto or in the Financial Statements, the Owners have no
Knowledge of any event or circumstance that has occurred that is reasonably
likely to result in a Material Adverse Effect on the Corporation. The
representation contained in this Section 4.21 specifically excludes any events
or circumstances generally known in the coal mining industry and any events or
circumstances that would affect the financial markets or the coal mining
industry as a whole, including, but not limited to, changes in laws, rules or
regulations, general industry pricing conditions, and other changes not directly
relating to the Corporation's business or operations.
4.22 FINANCIAL STATEMENTS. The Corporation has delivered to Buyer
unaudited financial statements for the Corporation for the years ended December
31, 2005 and 2006, as well as unaudited financial statements for the calendar
quarter ending March 31, 2007 (the
15
"Financial Statements"). Except as set forth on Schedule 4.22, to the Seller's
knowledge the Financial Statements are (i) complete and correct in all material
respects and have been prepared from the books and records of the Corporation
and (ii) present fairly the financial condition of the Corporation and its
results of operations as at and for the period then ended. The Financial
Statements have been prepared in a consistent manner in conformity with the
Corporation's historical accounting practices.
4.23 NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule
4.23, other than Debts, liabilities or obligations arising in the ordinary
course of business since March 31, 2007, the Corporation has no Debts,
liabilities or obligations of any nature relative to the Business and Corporate
Assets (whether absolute, accrued, contingent, or otherwise) that would be
required to be reflected on the balance sheet of the Corporation prepared in
accordance with GAAP. Seller has paid and satisfied all vendors and suppliers to
the Business, except for payment not yet due and payable.
4.24 DISCLOSURE. The representations or warranties made by Seller
in this Agreement, as qualified by the Schedules, do not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein or therein, in light of the circumstances in which they
were made, not misleading.
4.25 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth on
Schedule 4.25, no Related Person of the Corporation has, or since January 1,
2004 has had, any material interest in the Corporate Assets or any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to the Business.
4.26 EMPLOYEE TERMINATIONS. The Corporation has not terminated more
than 50 employees at the Business since April 1, 2007.
4.27 INSURANCE. Schedule 4.27 sets forth the insurance policies
held by the Corporation, including but not limited to liability and property
insurance, and workers comp, including coverage for statutory black lung claims.
All listed policies are in full force and effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
In order to induce the Seller to enter into this Agreement, the Buyer
makes the representations and warranties set forth below, which are true,
correct and complete on the date hereof and shall be true, correct and complete
as of the Closing:
5.1 ORGANIZATION. The Buyer is a corporation duly organized and
validly existing under the Laws of the State of Tennessee, and is authorized to
do business in every jurisdiction in which the failure to be so qualified could
result in a Material Adverse Effect. The Buyer has all requisite corporate power
and authority to own its properties and assets and to consummate the
transactions contemplated hereby.
5.2 AUTHORIZATION AND VALIDITY. The Buyer has all requisite
corporate power and authority to enter into this Agreement and the Related
Agreements to which it is a party. The execution and delivery of this Agreement
and the Related Agreements to which it is a party and
16
the performance of the obligations hereunder and thereunder have been duly
authorized by all necessary corporate action by the Buyer. This Agreement and
the Related Agreements to which the Buyer is a party have been, or will be, duly
executed by the Buyer and constitute its valid and binding obligation,
enforceable against it in accordance with their terms.
5.3 CONSENTS AND APPROVALS. Except as disclosed on Schedule 5.3,
no consent, approval or action of, filing with or notice to, any Governmental
Authority or any other Person, on the part of the Buyer is required in
connection with the execution, delivery and performance of this Agreement or any
of the Related Agreements to which the Buyer is a party or the consummation of
the transactions contemplated hereby or thereby.
5.4 NO CONFLICT OR VIOLATION. Except with respect to the consents
and approvals identified in Section 7.2(c), the execution, delivery and
performance by the Buyer of this Agreement and the Related Agreements to which
it is a party (a) do not and will not violate or conflict with any provision of
the organizational or governing documents of the Buyer, (b) do not and will not
violate any provision of any Law or any Order applicable to the Buyer, and (c)
do not and will not violate or result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which the Buyer is a party or by which it is bound or to which any
of the Buyer's properties or assets are subject, except for any such violation,
conflict, breach or default which would not reasonably be expected to have a
Material Adverse Effect.
5.5 FINANCIAL ADVISORS. Neither the Buyer nor any Person on the
Buyer's behalf has agreed to pay any brokerage fee, finder's fee or commission
which could become the obligation of the Seller with respect to the transactions
contemplated by this Agreement.
5.6 PERMITTING. Except as set forth on Schedule 5.6, Buyer (a) has
not been subject to any bond forfeiture, permit suspension or revocation or
similar effort or Proceeding instituted by any Governmental Authority, (b) is in
material compliance with all terms and conditions of its permits, (c) is in
material compliance with all Laws, including, without limitation, all
Environmental Laws, or (d) is not permit blocked on the Applicant Violator
System by any Governmental Authority.
ARTICLE 6
SURVIVAL OF REPRESENTATION AND WARRANTIES
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller set forth in Article 4 of this
Agreement shall survive the Closing for two years after the date hereof. The
representations and warranties of Buyer set forth in Article 5 of this Agreement
shall survive the Closing for two years after the date hereof. Any proceeding
related to any such representations or warranties must be instituted within the
such two year period, or shall be thereafter waived and barred.
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ARTICLE 7
CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES
7.1 CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER. The
obligation of the Seller to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, at or before the Closing, of the
following conditions, any one or more of which may be waived by the Seller in
its sole discretion:
(a) REPRESENTATIONS, WARRANTIES AND OBLIGATIONS OF THE
BUYER. All representations and warranties made by the Buyer taken as a whole,
shall be true and correct in all material respects on the date of this Agreement
and on and as of the Closing Date (except to the extent that any such
representation and warranty is made as of a specified date, in which case such
representation and warranty shall continue to be made as of such specified
date), and the covenants and agreements of the Buyer to be performed on or
before the Closing Date shall have been duly performed in all material respects
in accordance with this Agreement, and the Seller shall have received a
certificate, dated the Closing Date and signed by an officer of the Buyer to
that effect; and
(b) RELEASE OF OBLIGATIONS. The Owners shall be released
from any and all obligations under those certain letters of credit put in place
to satisfy the bonding requirements of the Alabama Surface Mining Commission, as
well as all bonds, letters of credit and guaranties set forth on Schedule 8.2(e)
simultaneously with Closing.
7.2 CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER. The
obligations of the Buyer to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing, of the
following conditions, any one or more of which may be waived by the Buyer in its
sole discretion:
(a) REPRESENTATIONS, WARRANTIES AND OBLIGATIONS OF THE
SELLER. All representations and warranties made by the Seller shall be true and
correct in all material respects on the date of this Agreement and on and as of
the Closing Date (except to the extent that any such representation and warranty
is made as of a specified date, in which case such representation and warranty
shall continue to be made as of such specified date), and the covenants and
agreements of the Seller to be performed on or before the Closing Date shall
have been duly performed in all material respects in accordance with this
Agreement, and the Buyer shall have received a certificate, dated the Closing
Date and signed by an officer of each Seller, to that effect.
(b) BOARD APPROVAL. The Buyer's Board of Directors shall
have approved this Agreement and the Related Agreements, and the consummation of
the transactions contemplated hereby and thereby; PROVIDED, HOWEVER, that such
approval shall be obtained on or prior to the later of (i) July 18, 2007, or
(ii) the day which is 14 days after receipt by the Buyer of the audited
Financial Statements for 2005, 2006 and reviewed financial statements for the
period ended May 31, 2007 required to be delivered pursuant to Section 8.1(h),
and if the Buyer has not terminated this Agreement on or prior to such date, the
condition contained in this Section 7.2(d) shall no longer have any effect and
shall not be a condition to the Buyer's obligation to close, and if the Buyer
has not terminated this Agreement on or prior to July 18, 2007, the condition
contained in
18
this Section 7.2(b) shall no longer have any effect and shall not be a condition
to the Buyer's obligation to close. (c) DUE DILIGENCE. The Buyer shall be
satisfied in its reasonable discretion with the results of its due diligence
investigation of the Corporation and its assets and liabilities; PROVIDED,
HOWEVER, that such due diligence investigation shall be completed on or prior to
the later of (i) July 18, 2007, or (ii) the date that is 14 days after receipt
by the Buyer of the audited Financial Statements for 2005, 2006 and reviewed
financial statements for the period ended May 31, 2007 required to be delivered
pursuant to Section 8.1(h), and if the Buyer has not terminated this Agreement
on or prior to such date, the condition contained in this Section 7.2(d) shall
no longer have any effect and shall not be a condition to the Buyer's obligation
to close and if the Buyer has not terminated this Agreement on or prior to July
18, 2007, the condition contained in this Section 7.2(c) shall no longer have
any effect and shall not be a condition to the Buyer's obligation to close. (d)
FINANCING. The Buyer's lender for this transaction shall be satisfied with its
due diligence review of the Business and Corporate Assets; PROVIDED, HOWEVER,
that such due diligence review shall be completed on or prior to the later of
(i) August 18, 2007 or (ii) the day which is 21 days after receipt by the Buyer
of the audited financial statements for 2004, 2005, 2006 and reviewed financial
statements for the period ended May 31, 2007 required to be delivered pursuant
to Section 8.1(h), and if the Buyer has not terminated this Agreement on or
prior to such date, the condition contained in this Section 7.2(d) shall no
longer have any effect and shall not be a condition to the Buyer's obligation to
close.
(e) FINANCIALS. Buyer shall have received from
Corporation's accountant the financial statements required by Section 8.1(h).
(f) CONSENTS. The Seller shall have obtained all consents and approvals set
forth on Schedule 4.2
7.3 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver on or before the Closing
of the following conditions:
(a) INJUNCTIONS. There shall not be outstanding any Order
prohibiting the consummation of the transactions contemplated by this Agreement
and no action shall have been commenced which could reasonably be expected to
prohibit the consummation of the transactions contemplated hereby.
(b) NO CHANGE IN LAW. There shall not have been any
action taken or any statute enacted by any Governmental Authority which would
render the parties unable to consummate the transactions contemplated hereby or
make the transactions contemplated hereby illegal or prohibit the consummation
of the transactions contemplated hereby.
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ARTICLE 8 COVENANTS
8.1 COVENANTS OF SELLER. The Seller covenants as follows:
(a) ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
The Seller shall cooperate in a commercially reasonable manner with the Buyer's
due diligence investigation of the Corporate Assets and the Corporate
Liabilities, and shall afford to the Buyer, and to the accountants, counsel and
representatives of the Buyer, reasonable access during normal business hours
throughout the period before the Closing (or the earlier termination of this
Agreement pursuant to Article 10) to all books and records of the Seller
relating to the Corporate Assets and the Corporate Liabilities. Upon reasonable
prior notice, the Seller shall also afford the Buyer reasonable access, taking
into account the Seller's resources and other commitments, during normal
business hours, to all Corporate Assets throughout the period before the
Closing. During the period from the date hereof to the Closing Date, all
information provided to the Buyer or its agents or representatives by or on
behalf of the Seller or its agents or representatives (whether pursuant to this
Section or otherwise) will be governed and protected by the confidentiality
agreement executed by the Buyer.
(b) FURTHER ASSURANCES. At the request and the sole
expense of the Buyer, at any time after the Closing Date, the Owners shall
execute and deliver such documents as the Buyer or its counsel may reasonably
request to effectuate the purposes of this Agreement. After the Closing Date,
Owners agree to furnish to Buyer, as promptly as practical, such information and
assistance relating to the Business and Corporate Assets as is reasonably
requested by Buyer, including but not limited to, all books, records and other
documents relating thereto, including tax and financial records, and will
provide Buyer access to Owners employees and consultants to gain information.
(c) CONDUCT OF OPERATIONS. From the date hereof until the
Closing, the Seller shall carry on the Business related to the Corporate Assets
in the ordinary course and in material compliance with the provisions of
applicable Law, except as otherwise permitted or contemplated by this Agreement
or as otherwise consented to by the Buyer in writing, such consent not to be
unreasonably withheld or delayed. From the date hereof until the Closing, Seller
will maintain the Corporate Assets, including all buildings, equipment,
machinery and tangible property in good repair and working order, ordinary wear
and tear excepted, consistent with past practice. Seller will not enter into any
new agreements, including but not limited to coal supply agreements, vendor
agreements, employment agreements, etc., without the prior written approval of
the Buyer, not to be unreasonably withheld.
(d) NO SOLICITATION. The Seller agrees that it shall
immediately cease and cause to be terminated all existing and future
discussions, negotiations and communications with any Persons for the term of
this Agreement with respect to any proposal or offer to acquire in any manner a
material portion of the Stock and the Corporate Assets other than the
transactions contemplated by this Agreement (each an "Acquisition Proposal").
(e) NOTIFICATION AND DISCLOSURE. Between the date of this
Agreement and the Closing Date, Seller will promptly notify Buyer in writing if
Seller becomes aware of any fact or
20
condition that causes or constitutes a breach of the representations and
warranties of Seller or Buyer as of the date of this Agreement, or if Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty of Seller or Buyer
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition.
(f) RECLAMATION. Seller will, to the extent required by
Law, maintain and continue contemporaneous reclamation of the Real Property
through the Closing Date in accordance with applicable law and consistent with
past practices.
(g) CONSENTS. Seller shall use its commercially
reasonable efforts to secure all Consents prior to Closing. In the event of a
Closing prior to the date Seller obtains any such Consents, Seller will use its
best efforts to obtain such Consents within sixty (60) days after Closing.
(h) FINANCIAL STATEMENTS OF BUSINESS. On or before June
30, 2007, Buyer shall have received from the Corporation audited financial
statements for the Corporation for the period beginning January 1, 2005 through
December 31, 2006, and Seller shall have delivered to Buyer reviewed financials
statements for the period beginning January 1, 2007 and ending May 31, 2007.
Further, at least seven (7) days prior to Closing the Seller shall deliver to
the Buyer reviewed financial statements for each calendar quarter which has
passed within 30 days prior to the Closing Date.
(i) SCHEDULES. Seller shall revise the Schedules on a
weekly basis and on the day before the Closing, if necessary, to reflect changes
or events since the date of this Agreements, and with respect to the weekly
updates, shall immediately be delivered to the Buyer and with respect to the
update on the day before the closing, shall be delivered to the Buyer at
Closing.
(j) RESTRICTION. Seller shall not, without the prior
written consent of the Buyer, sell any real property owned by it within the
exterior boundary of the Real Property to any third party, or lease such
property, until the Permits have been reclaimed and all bonds posted by Buyer
have been released.
8.2 COVENANTS OF BUYER. The Buyer covenants as follows:
(a) FURTHER ASSURANCES. At the request and the sole
expense of the Seller, at any time after the Closing Date, the Buyer shall
execute and deliver such documents as the Seller or its counsel may reasonably
request to effectuate the purposes of this Agreement.
(b) ACCESS TO BOOKS AND RECORDS. After the Closing, the
Buyer agrees to furnish or cause to be furnished to the Seller, as promptly as
practicable, such information and assistance relating to the Stock, the
Corporate Assets and the Corporate Liabilities as is reasonably necessary for
the preparation and filing of any Tax Return, claim for refund or other required
or optional filings relating to Tax matters, for the preparation for and proof
of facts during any Tax audit, for the preparation for any Tax protest, for the
prosecution or defense of any suit or other proceeding relating to Tax matters
and for the answer to any inquiry from any
21
Governmental Authority relating to Tax matters. The Buyer agrees to retain
possession, at its own expense, of all accounting, business, financial and Tax
records and information (i) relating to the Corporate Assets or the Corporate
Liabilities that are in existence on the Closing Date and transferred to the
Buyer hereunder, or (ii) coming into existence after the Closing Date that
relate to the Corporate Assets or the Corporate Liabilities before the Closing,
for a period of at least six years from the Closing Date, and will give the
Seller notice and an opportunity to retain any such records if the Buyer
determines to destroy or dispose of any or all of them after such period. In
addition, from and after the Closing, the Buyer agrees that it will provide
access to the Seller and its attorneys, accountants and other representatives
(after reasonable notice and during normal business hours and without charge to
Owner or costs to the Buyer), to the books, records, documents and other
information relating to the Corporation, the Corporate Assets or the Corporate
Liabilities as the Seller may deem necessary to properly prepare for, file,
prove, answer, prosecute and/or defend any such Tax Return, claim, filing, Tax
audit, Tax protest, suit, proceeding or answer. Such access shall include,
without limitation, access to any computerized information retrieval systems
relating to the Corporation, Corporate Assets or the Corporate Liabilities.
(c) WORKERS' COMPENSATION; OCCUPATIONAL DISEASE. The
Buyer will continue the existing or obtain new workers' compensation insurance,
including occupational disease coverage (including black lung), in accordance
with all Laws applicable to the Buyer, covering all of the Employees hired by
the Buyer. The Buyer will post any necessary bonds and meet all other
requirements necessary to obtain such insurance coverage.
(d) REPLACEMENT OF CORPORATE GUARANTEES. Effective as of
the Closing, the Buyer shall replace and cause the Owners and Related Persons to
be discharged from, effective as of the Closing Date, all corporate guarantees
and indemnities set forth in Schedule 8.2(d); provided, however, that with
respect to the letters of credit posted by the Corporation to secure the
Corporation's bonding obligations with the Alabama Surface Mining Commission, if
the Buyer is replacing the letters of credit, and the Buyer has posted
replacement bonds or letters of credit and has provided reasonable security
therefor, Buyer shall have up to fourteen (14) days after Closing to obtain the
release of Owners' guarantees of those letters of credit or such additional time
as is reasonably required by the Alabama Surface Mining Commission through no
fault of Buyer. With respect to any such personal guarantees and indemnities
listed on Schedule 8.2(d) which are not, as of the Closing Date, replaced with
corporate guaranties or indemnities obtained by the Buyer, the Buyer shall
continue to use its commercially reasonable efforts to replace and cause the
Owners and Related Persons to be discharged from their respective Liabilities
under such guarantees and indemnities.
(e) REPLACEMENT OF BONDS AND LETTERS OF CREDIT. Effective
as of the Closing, the Buyer shall cause all letters of credit, surety bonds,
performance bonds and similar bonds posted by the Owners with respect to the
Corporate Assets as set forth on Schedule 8.2(e), other than the bonds relating
to the Permits, to be terminated and released.
(f) NOTIFICATION AND DISCLOSURE. Between the date of this
Agreement and the Closing Date, Buyer will promptly notify Seller in writing if
Buyer becomes aware of any fact or condition that causes or constitutes a breach
of the representations and warranties of Buyer or Seller as of the date of this
Agreement, or if Buyer becomes aware of the occurrence after the
22
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty of Buyer or Seller had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition.
(g) NAME OF CORPORATION. As promptly as practical after
the Closing, and in any event no later than 14 days after closing, the Buyer
shall cause the name of the Corporation to be changed to a name not using "Xxxx
Steel" or the name "Xxxx" as part of the name.
8.3 COVENANTS OF THE PARTIES.
(a) CONSENTS. The parties shall promptly apply for and
diligently prosecute all applications for, and shall use commercially reasonable
efforts promptly to obtain, such consents, authorizations and approvals from
such Governmental Authorities as shall be necessary or appropriate to permit the
consummation of the transactions contemplated by this Agreement, and shall use
commercially reasonable efforts to bring about the satisfaction as soon as
practicable of all the conditions necessary to effect the consummation of the
transactions contemplated by this Agreement. Seller shall promptly and
diligently commence to use commercially reasonable efforts to obtain the
Consents from third parties and to continue to do so after the Closing.
Notwithstanding anything to the contrary contained herein, the parties hereto
agree that as a condition to obtaining the consent of any third party to any
coal supply contract or any other Contract to permit the consummation of the
transactions contemplated hereby, no party hereto shall have any obligation to
(i) pay any remuneration to third parties in exchange for such party's consent
or approval; (ii) file any lawsuit or take other legal action as against such
third party with respect to any thereof, or (iii) make any amendment thereof or
waive any rights thereunder if as a result of such amendment or waiver such coal
supply contract or any other Contract would contain terms and conditions that
are less favorable in any material respect than the terms and conditions of such
coal supply contract or other Contract as in existence on the Closing Date.
(b) PUBLICITY. Each of the Seller and the Buyer shall
consult with the other regarding their initial press releases with respect to
the execution of this Agreement. Thereafter, so long as this Agreement is in
effect, neither the Seller or the Buyer, nor any of their respective affiliates,
shall issue any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
the other party (such consent not to be unreasonably withheld), except for any
SEC form 8-K filing, press release or other announcement that may be required by
law or the rules of a national securities exchange or trading market applicable
to Buyer as a publicly traded company, in which case the party required to make
the release or announcement shall use its reasonable best efforts to provide the
other party with a reasonable opportunity to review and comment on such release
or announcement in advance of its issuance (including the 8-K filing).
(c) PERMIT MATTERS. Promptly after execution of this
Agreement, the Buyer shall file, for pre-approval, drafts of (x) all documents
and information necessary to obtain any necessary replacements of, or changes
to, any Permits and (y) all notices of change of ownership and control, as may
be required by law; provided, however, that if such filing cannot be made on a
confidential basis, the filing shall be made immediately after the public
disclosure of the
23
transaction contemplated hereby. Immediately upon Closing (or as soon as
possible under appropriate regulation), the Buyer shall file (i) all documents
and information necessary to obtain, and thereafter shall diligently pursue the
obtaining of any necessary replacements of, or changes to, any Permits and (ii)
all notices of change of ownership and control, as may be required by law. The
Seller shall cooperate with the Buyer in all commercially reasonable ways to
file and prosecute such applications at the sole cost and expense of the Buyer.
Except as otherwise provided in this Agreement, the Buyer shall bear any risk or
expense associated with not having appropriate Permits in effect following the
Closing, except that Seller covenants and agrees its shall not do anything to
cause the Permits to be revoked or suspended prior to the time notices of change
of ownership and control with respect to the Permits are accepted.
(d) SUCCESSOR OPERATOR. Simultaneous with the Closing,
the Corporation shall file, at Buyer's sole cost and expense, all forms to cause
the change of ownership and control to cause the Buyer to be named as Owner on
the Permits listed on Schedule 8.3(d), and to allow the Corporation to continue
coal mining operations under the Permits until the acceptance of the notice of
change of ownership and control regarding the Permits.
(e) OBTAINING TRANSFER. Both before and after the
Closing, the Owners and the Buyer shall cooperate with one another and provide
commercially reasonable assistance as needed to the other to effect, where
necessary, the assignment of the Contracts and the assignment or change of
ownership and control for the Permits and take such other steps as reasonably
necessary to allow Corporation to continue and conduct operations until the
notice of change of ownership and control is accepted for the Permits.
(f) COOPERATION IN BUYER FINANCING. Prior to the Closing,
Buyer shall use commercially reasonable efforts to complete the financing for
the transactions contemplated hereby, and Seller shall provide reasonable
assistance to Buyer in connection with the financing of the contemplated
transactions. Notwithstanding the foregoing, Seller shall not be obligated to
provide assistance with Buyer's financing in any manner or to any extent which
would interfere with the business or operations of Seller or Seller's Related
Persons.
(g) COOPERATION RELATED TO ROCK RESERVE. Buyer
acknowledges that Owners have a relationship with the Lessor of the Xxxxx Creek
Property and said Lessor would like for Owners to mine a rock quarry, which lies
beneath a coal seam that the Corporation leases. Buyer will cooperate with
Owners' efforts to mine such rock quarry so long as it does not unreasonably
interfere with the Corporation's ability (i) to mine the coal lying above the
rock or (ii) to complete reclamation of the coal seam and obtain a release of
Buyer's bonds relating to such reclamation obligation within the time period
reasonably expected by Buyer if mining of such rock had not been conducted.
24
ARTICLE 9
EMPLOYEES
9.1 EMPLOYEE RECORDS. Prior to the Closing, the Seller shall
provide the Buyer with records and other relevant data within the Seller's
control or access relating to the employment history of, and benefit matters
relating to the employees of the Corporation, as the Buyer shall reasonably
request, to the extent legally permitted. Schedule 9.1 hereto lists all employee
benefits of the Company.
9.2 PAYMENTS TO CERTAIN EMPLOYEES. Schedule 9.2 provides a list of
certain employees, as well as amounts to be paid to such employees conditioned
upon their continued employment with the Corporation after the Closing. The
Buyer shall enter into an agreement with each such employee relating to such
payments, pursuant to which 10% of such payment will be paid at Closing, an
additional 10% on December 31, 2007, and the balance on December 31, 2008 if the
employee remains employed by the Corporation at the time such payment is due. If
the employee is terminated by the Corporation without good cause, the employee
shall be entitled to the remaining balance upon such termination. The total of
all of the payments shall be deducted from the Purchase Price. At Closing, the
Buyer shall place in escrow an amount equal to the aggregate payments set forth
on Schedule 9.2. As set forth above, the money in escrow shall be distributed to
the named employees. If the conditions of payment are not fulfilled, any and all
unpaid money shall be paid pro rata to the Owners. Neither the Corporation nor
the Buyer has any rights to the payments contemplated under this Section 9.2.
ARTICLE 10
INDEMNIFICATION
10.1 SURVIVAL. Except as otherwise set forth in this Section 10. 1,
the representations and warranties made in this Agreement shall survive the
Closing and remain in full force and effect for a period of one year after the
Closing Date. If notice of any claim for indemnification under this Section 10
shall have been given within the applicable survival period, the representations
and warranties that are the subject of such indemnification claim shall survive
until such time as such claim is finally resolved.
10.2 INDEMNIFICATION BY THE OWNERS.
(a) From and after the Closing Date and for one year
thereafter, the Owners shall indemnify and hold harmless the Buyer, its
Affiliates (including, after the Closing, the Corporation), their respective
officers, directors, employees and agents from and against any and all claims,
losses, liabilities, actions or causes of action, assessments, damages, fines,
penalties, costs and expenses (including, without limitation, reasonable fees
and out-of-pocket disbursements of counsel) (collectively, "LOSSES"), based
upon, arising out of, or resulting from, any of the following:
(i) any breach by the Seller of any of the
representations or warranties made by the Seller in this Agreement;
(ii) any failure by the Seller to perform any of
his or its covenants or agreements contained in this Agreement.
25
(b) Notwithstanding Section 10.2(a), the Buyer's rights
to indemnification under this Section 10 shall be limited as follows:
(i) the amount of any Losses incurred by the
Buyer shall be reduced by the net amount the Buyer or the Corporation recovers
(after deducting all attorneys' fees, expenses and other costs of recovery) from
any insurer or other third party liable for such Losses, and the Buyer shall use
reasonable best efforts to effect any such recovery. There shall be no
duplicative payments or indemnities by any Seller;
(ii) if the amount of any limitation pursuant to
this Section 10.2(b) is determined after payment by any Seller to the Buyer of
any amount otherwise required to be paid pursuant to this Section 10, the Buyer
shall repay to such Seller, promptly after such determination, any amount that
such Seller would not have had to pay pursuant to this Section 10 had such
determination been made at the time of such payment;
(iii) in no event shall any Seller be liable for
consequential or punitive damages. After the Closing, the Buyer shall take, and
shall cause the Corporation to take, all reasonable steps to mitigate any
Losses, upon becoming aware of any event which could reasonably be expected to
give rise thereto.
(iv) in no event shall the Seller's liability
hereunder exceed $12,000,000 in the aggregate.
10.3 INDEMNIFICATION BY THE BUYER.
(a) From and after the Closing Date the Buyer and the
Corporation shall indemnify and hold harmless the Seller, from and against any
and all Losses based upon or resulting from any of the following:
(i) any breach by the Buyer of any of the
representations or warranties made by the Buyer in this Agreement; or
(ii) any failure by the Buyer to perform any of
its covenants or agreements contained in this Agreement; or
(iii) any Losses suffered or incurred by any
Seller as a result of Buyer's or the Corporation's post-closing operation except
for Losses (i) that are attributable to the operations of the Corporation prior
to the Closing, or (ii) that result from or are caused by, any breach of any
covenant or agreement, or any misrepresentation made herein, by any such Seller.
(b) Notwithstanding Section 10.3(a), the Seller's rights
to indemnification under this Section 10 shall be limited as follows:
(i) the amount of any Losses incurred by the
Seller shall be reduced by the net amount the Seller recovers (after deducting
all attorneys' fees, expenses and other costs of recovery) from any insurer or
other third party liable for such Losses, and the Seller shall use reasonable
best efforts to effect any such recovery;
26
(ii) if the amount of any limitation pursuant to
this Section 10.3(b) is determined after payment by the Buyer to the Seller of
any amount otherwise required to be paid pursuant to this Section 10, the Seller
shall repay to the Buyer, promptly after such determination, any amount that the
Buyer would not have had to pay pursuant to this Section 10 had such
determination been made at the time of such payment;
(iii) in no event shall the Buyer be liable for
consequential or punitive damages. After the Closing, the Seller shall take all
reasonable steps to mitigate any Losses, upon becoming aware of any event which
could reasonably be expected to give rise thereto.
10.4 CLAIMS. When a party seeking indemnification under Section
10.2 or 10.3 (the "Indemnified Party") receives notice of any claims made by
third parties (individually, a "Third Party Claim" and collectively, "Third
Party Claims") or has any other claim for indemnification other than a Third
Party Claim, which is to be the basis for a claim for indemnification hereunder,
the Indemnified Party shall give prompt written notice thereof to the other
party (the "Indemnifying Party") reasonably indicating (to the extent known) the
nature of such claims and the basis thereof; provided, however, that failure of
the Indemnified Party to give the Indemnifying Party prompt notice as provided
herein shall not relieve the Indemnifying Party of any of its obligations
hereunder. Upon notice from the Indemnified Party, the Indemnifying Party may,
but shall not be required to, assume the defense of any such Third Party Claim,
including its compromise or settlement, and the Indemnifying Party shall pay all
reasonable costs and expenses thereof and shall be fully responsible for the
outcome thereof, provided, however, that in such case, the Indemnifying Party
shall have no obligation to pay any further costs or expenses of legal counsel
of the Indemnified Party thereafter incurred in connection with such defense
other than reasonable costs of investigation. No compromise or settlement in
respect of any Third Party Claims may be effected by the Indemnifying Party
without the Indemnified Party's prior written consent (which consent shall not
be unreasonably withheld), unless the sole relief is monetary damages that are
paid in full by the Indemnifying Party. The Indemnifying Party shall give notice
to the Indemnified Party as to its intention to assume the defense of any such
Third Party Claim within 30 days after the date of receipt of the Indemnified
Party's notice in respect of such Third Party Claim. If the Indemnifying Party
does not, within 30 days after the Indemnified Party's notice is given, give
notice to the Indemnified Party of its assumption of the defense of the Third
Party Claim, the Indemnifying Party shall be deemed to have waived its rights to
control the defense thereof. If the Indemnified Party assumes the defense of any
Third Party Claim because of the failure of the Indemnifying Party to do so in
accordance with this Section 10.4, it may do so in such reasonable manner as it
may deem appropriate, and the Indemnifying Party shall pay all reasonable costs
and expenses of such defense. The Indemnifying Party shall have no liability
with respect to any compromise or settlement thereof effected without its prior
written consent (which consent shall not be unreasonably withheld or delayed),
unless the sole relief granted was equitable relief for which it would have no
liability or to which it would not be subject.
10.5 BASKET. No party shall have any obligation to indemnify any
other party for Losses under any indemnity claim until such time, if ever, as
the aggregate amount of all such Losses incurred by the Buyer in the case of
indemnification under Section 10.2 or by the Seller in the case of
indemnification under Section 10.3 shall exceed $250,000, and then only to the
27
extent of such excess; provided, however, that this limitation shall not apply
to Buyer's obligation to pay the Purchase Price.
ARTICLE 11
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) By mutual consent of the Buyer and the Seller;
(b) By either the Seller or the Buyer after September 30,
2007, or such later date to which the Closing has been extended pursuant to the
terms hereof, if the Closing has not occurred by such date; provided, however,
that as of such date the party terminating this Agreement is not in material
default or breach under this Agreement; or
(c) Provided the terminating party is not otherwise in
material default or breach of this Agreement, and has not failed or refused to
close without justification hereunder, by either the Buyer or the Seller,
without prejudice to other rights and remedies which the terminating party may
have, if the other party shall (i) have materially failed to perform its
covenants or agreements contained herein required to be performed on or prior to
the Closing Date, or (ii) have materially breached any of its representations or
warranties contained herein; provided, however, that in the case of clause (i)
or (ii), the defaulting party shall have a period of ten (10) days following
written notice from the non-defaulting party to cure any breach of this
Agreement, if such breach is curable.
11.2 EFFECT OF TERMINATION; REMEDIES. In the event of termination
pursuant to Section 10. 1, this Agreement shall become null and void and have no
effect (other than Section 8.3(b) and Articles 10 and 11, and 12 which shall
survive termination), with no Liability on the part of the Seller or the Buyer,
or their respective Affiliates or Related Persons, with respect to this
Agreement, except for (i) the Liability of a party for its own expenses pursuant
to Section 11.1; and (ii) any Liability arising out of the material breach by a
party of any covenant or agreement contained in this Agreement; provided,
however, that notwithstanding any other provision of this Agreement, the Seller
and its Affiliates and Related Persons shall have no further liability
whatsoever to the Buyer or any of its Affiliates or Related Persons, and the
Buyer and its Affiliates and Related Persons shall have no further remedies
whatsoever against the Seller or any of its Affiliates or Related Persons upon
payment of the Expense Reimbursement or an amount equal thereto.
11.3 EXPENSE REIMBURSEMENT. If either party hereto shall have
terminated this Agreement pursuant to Section 11.1(c) hereto, and prior to such
termination the terminating party shall have satisfied the conditions precedent
to the other party's obligation to consummate the transactions contemplated by
this Agreement set forth in Section 7, then the non-terminating party shall
reimburse the terminating party for the actual amount of its reasonable,
documented, out-of-pocket expenses, including reasonable internal costs for its
personnel, incurred in connection with the negotiation and execution of this
Agreement and the transactions contemplated hereby (the "Expense Reimbursement")
in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in
the aggregate. The Expense Reimbursement shall,
28
within ten (10) business days following the occurrence of the event giving rise
to the obligation to pay the Expense Reimbursement, be paid by wire transfer of
immediately available funds to such account as the terminating party may
designate in writing to the non-terminating party. The obligation to make such
payment shall not relieve the non-terminating party from any other obligations
or liabilities to the other party hereunder.
11.4 XXXXXXX MONEY DEPOSIT. Within one (1) day after execution and
delivery of this Agreement, Buyer shall deposit in escrow the sum of $250,000
pending consummation of the transactions contemplated by this Agreement pursuant
to the terms of an Escrow Agreement (the "Deposit Escrow Agreement"),
substantially in the form and of the content attached hereto as Exhibit C among
Buyer, Seller and a bank selected by Seller and reasonably acceptable to Buyer,
as escrow agent (the "Escrow Agent"). In the event Seller terminates this
Agreement pursuant to section 11.1(c) hereof, the escrowed funds shall be paid
to the Seller upon the terms and conditions of the Escrow Agreement as
liquidated damages. If the Buyer terminates this Agreement because of a failure
of a condition precedent to the Buyer's obligations to close the transactions
contemplated hereby, the xxxxxxx money shall be returned to Buyer. Buyer and
Seller hereby acknowledge that the amount of damages which would be incurred by
the Seller as a result of the Buyer's default under this Agreement are difficult
to ascertain and that the amount of liquidated damages provided for in this
Section 11.4 is reasonable and does not include any amount as a penalty. Subject
to and at the Closing, the escrowed funds shall be released to Seller and Buyer
shall receive a credit toward the Purchase Price in the amount of the escrowed
funds so released.
ARTICLE 12
MISCELLANEOUS
12.1 EXPENSES. Except as provided in Sections 11.3 and 11.4 above,
whether or not the transactions contemplated hereby are consummated, the Seller
and the Buyer shall bear their own expenses, including, without limitation,
fees, disbursements and other costs of any brokers, finders, investment bankers,
attorneys, accountants and other advisors, in connection with this Agreement and
the transactions contemplated hereby.
12.2 NOTICES. All notices under this Agreement shall be given to
the parties at the following addresses (i) by personal delivery; (ii) by
facsimile transmission; (iii) by registered or certified mail, postage prepaid,
return receipt requested; or (iv) by nationally recognized overnight or other
express courier services:
(a) If to the Buyer:
National Coal Corporation
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: 000-000-0000
Facsimile: 000-000-0000
29
With a copy to:
National Coal Corporation
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Seller:
Xxxxxxx X. Xxxx
0 Xxxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
And
Xxxxx X. Xxxx, XX
0 Xxxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxx Xxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
All notices shall be effective and shall be deemed delivered (i) if by
personal delivery, on the date of delivery if delivered during normal business
hours of the recipient, and if not delivered during such normal business hours,
on the next Business Day following delivery; (ii) if by facsimile transmission,
on the next Business Day following dispatch of such facsimile; (iii) if by
courier service, on the third (3rd) Business Day after dispatch thereof, and
(iv) if by mail, on the fifth (5th) Business Day after dispatch thereof. Any
party hereto may change its address by notice to all parties hereto delivered in
accordance with this Section 12.2.
12.3 AMENDMENTS. No supplement, modification or waiver of this
Agreement shall be binding unless in writing and executed by each party hereto.
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12.4 WAIVER. At any time prior to the Closing, the Buyer or the
Seller may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
obligations of the other party or any of the conditions to its own obligations
contained herein to the extent permitted by law. Any agreement on the part of
the Buyer, on the one hand, and the Seller, on the other hand, to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of the Buyer and the Seller. The failure of a party to exercise
any right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other similar or dissimilar
provision hereof, nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
12.5 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party; provided, however, Buyer shall have the right to
assign its rights under this Agreement to any Affiliate of Buyer; provided,
further, that in the event of such assignment by Buyer, Buyer shall remain
liable for all of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective successors and permitted
assigns.
12.7 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their successors and
permitted assigns, and nothing in this Agreement, expressed or implied, is
intended to confer upon any other Person any rights or remedies of any nature
under or by reason of this Agreement.
12.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including via facsimile or e-mail signatures), each of which shall
be deemed to constitute an original, but all of which shall constitute one and
the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties hereto.
12.9 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable. In such
case, the parties hereto shall promptly meet and negotiate substitute provisions
for those rendered or declared illegal or unenforceable so as to preserve as
nearly as possible the contemplated economic effects of the transactions
contemplated hereby.
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12.10 ENTIRE AGREEMENT. This Agreement and the Exhibits and
Schedules hereto and the Related Agreements constitute the entire agreement
among the parties hereto and supersede all prior agreements and understandings
oral or written, among the parties hereto with respect to the subject matter
hereof and thereof. There are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth specifically herein or contemplated hereby.
12.11 GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Alabama without regard to or
application of its conflict of laws rules.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized representatives of the Buyer and the Seller on the date
first above written.
BUYER: NATIONAL COAL CORPORATION
By: /s/ Xxxxxx Xxxxxx
---------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
SELLER XXXX STEEL PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President & Owner
/s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxx
-------------------------------
Xxxxxxx X. Xxxx
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