FORMATION AND TRANSFER AGREEMENT
Exhibit 10.71
THIS FORMATION AND TRANSFER AGREEMENT (this “Agreement”) is made, entered into and
effective as of the 29th day of December, 2011 by and among Cyprus Creek Land
Resources, LLC, a Delaware limited liability company with principal offices at 000 Xxxxxx Xxxxxx,
Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000 (“Cyprus”) and Cyprus Creek Land Company, a Delaware
corporation with its offices at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000; and
Xxxxxxxxx Coal Company, Inc., a Delaware corporation with principal offices at 0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000 (herein “Xxxxxxxxx”), and Western Land Company,
LLC, a Kentucky limited liability company with its office at 000 Xxxxx Xxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000.
RECITALS
A. Cyprus and Xxxxxxxxx desire to form a limited liability company under the laws of
the State of Delaware and intend to enter into a Certificate of Formation and a Limited Liability
Company Agreement, as described herein (collectively, the “Organization Documents”), to form the
proposed limited liability company under the name Xxxxxxx Mining Company, LLC (herein the
“Company”). The parties acknowledge and ratify the filing of the Certificate of Formation for the
Company on November 29, 2011 with the Secretary of State of Delaware.
B. Cyprus and Xxxxxxxxx desire to set out in this Agreement the documents and procedures to be
taken in connection with the formation of the Company and the fulfillment of the initial capital
contributions and scheduled capital contributions to the Company as further described in the
Organization Documents.
C. The parties to this Agreement further desire to set out in this Agreement (i) certain
conditions to the closing of the formation of the Company and the completion of the initial capital
contributions and scheduled capital contributions, and (ii) certain other terms, provisions,
representations and warranties relating to the formation of the Company and the assets comprising
the initial capital contributions and scheduled capital contributions to the Company.
D. Cyprus Creek Land Company is an affiliate of Cyprus and desires to join in the execution of
this Agreement for the purpose of acknowledging its agreement to join in the execution of the
Conveyance Documents.
E. Western Land Company, LLC is an affiliate of Xxxxxxxxx and desires to join in the execution
of this Agreement for the purpose of acknowledging its agreement to join in the execution of the
Conveyance Documents. Pursuant to Section 4 of that certain Royalty Deferment and Option
Agreement dated October 11, 2011, Western Mineral Development, LLC is contractually obligated to
quitclaim its interests in the Xxxxxxxxx Assets to Western Land
Company, LLC.
AGREEMENT
In consideration of the foregoing Recitals which are incorporated herein, the mutual
covenants contained in this Agreement and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
12/28/11
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1. Definitions. As used herein, the following terms shall have the
following meanings:
1.1 Agreement: This Formation and Transfer Agreement, including all exhibits hereto.
1.2 Xxxxxxxxx: Xxxxxxxxx Coal Company, Inc., a Delaware corporation.
1.3 Xxxxxxxxx Assets: As defined in Section 4.2.
1.4 Xxxxxxxxx Representations and Warranties: As defined in Section 9.
1.5 Closing: As defined in Section 8.
1.6 Closing Agenda: As defined in Section 7.
1.7 Closing Date: As defined in Section 8.
1.8 Closing Documents: As defined in Section 7.
1.9 Company: Xxxxxxx Mining Company, LLC, a Delaware limited liability company to be
formed pursuant to the terms of this Agreement.
1.10 Conveyance Documents: The deeds, leases, subleases, agreements and instruments
listed on Schedule 1 attached hereto, substantially in the forms attached hereto but with such
modifications that are reasonably requested by either party that do not alter in any material
respect the nature or extent of the Scheduled Capital Contributions or the substantive rights of
the parties pursuant to the Organization Documents.
1.11 Cyprus: Cyprus Creek Land Resources, LLC, a Delaware limited liability
company.
1.12 Cyprus Assets: As defined in Section 4.1.
1.13 Cyprus Representations and Warranties: As defined in Section 10.
1.14 Indemnity Claim: As defined in Section 11.2.
1.15 Initial Capital Contributions: The Initial Capital Contributions described in Section 4.
1.16 Members: Cyprus and Xxxxxxxxx and their respective successors, if any, under the
Organization Documents.
1.17 Notices: As defined in Section 13.7.
1.18 Organization Documents: As defined in Recital A.
1.18 Scheduled Capital Contributions: The Scheduled Capital Contributions
described in Section 4.
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2. Formation of the Company. Subject to the terms and conditions of this
Agreement, Cyprus and Xxxxxxxxx hereby agree to form the Company under the laws of the State of
Delaware, and further agree to make their respective Initial Capital Contributions and Scheduled
Capital Contributions to the Company as described in Section 4. The Company shall be established
upon the execution of the Limited Liability Company Agreement attached hereto as Exhibit A. The
terms of the Organization Documents shall govern the rights, interests, duties and obligations of
the Members relative to the Company, and shall govern over any conflicting provisions contained in
this Agreement.
3. Members’ Interest in the Company. Upon the Closing and formation of the Company,
Xxxxxxxxx shall have a member interest in the Company of 51% and Cyprus shall have a member
interest in the Company of 49%, as further set forth in, and governed by the terms of, the Limited
Liability Company Agreement.
4. Initial Capital Contributions and Scheduled Capital Contributions to
the Company. Subject to the terms and provisions of this Agreement and upon the fulfillment of
the conditions precedent set out or described in Section 6 and the execution of the Organization
Documents by both Members, (a) each Member shall, upon execution of the Organization Documents by
both members, make its initial capital contribution to the Company of $30,000.00 in cash (the
“Initial Capital Contributions”), and (b) on the milestone dates set forth in the “Contribution
Schedule” attached as Exhibit A to the Limited Liability Company Agreement (the “Contribution
Schedule”), each Member shall make their respective additional contributions of property as
indicated in the Contribution Schedule (collectively, the “Scheduled Capital Contributions”).
4.1 Scheduled Capital Contribution by Cyprus. Cyprus shall contribute to the Company,
by means of the applicable Conveyance Documents, those assets, agreements and interests in real
property described on the Contribution Schedule (“Cyprus Assets”), consisting primarily of coal
reserves and property rights located in Muhlenberg County, Kentucky. The parties agree that the
fair market value of the Cyprus Assets is $44,492,000.00. Cyprus Creek Land Company hereby agrees
to join in the execution of the Conveyance Documents.
4.2 Scheduled Capital Contribution by Xxxxxxxxx. Xxxxxxxxx shall contribute to the
Company, by means of the applicable Conveyance Documents, those assets, agreements and
interests in real property described on the Contribution Schedule (the “Xxxxxxxxx Assets”).
The parties agree that the fair market value of the Xxxxxxxxx Assets is $46,308,000.00. Western
Land Company, LLC hereby agrees to join in the execution of the Conveyance Documents.
5. Closing. The Closing of the transactions contemplated by this Agreement shall be
conducted in accordance with Section 8 hereto and the operations of the Company shall commence as
of the Closing Date.
6. Conditions Precedent to Formation. The obligations of both Cyprus and
Xxxxxxxxx to execute (or cause the execution of) the Organization Documents and make, or cause to
be made, the Initial Capital Contributions and complete the other transactions described in this
Agreement are subject to the completion of all of the items comprising the Closing Agenda, or the
mutual waiver by Cyprus and Xxxxxxxxx of completion of any items not so completed. It is a
further condition each party’s obligation to close the transactions set forth
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in this Agreement that all representations and warranties made by the other party in Subsection 9
and 10 respectively remain true and accurate as of the Closing Date.
7. Closing Agenda. The contribution by the Company Members of their respective Initial
Capital Contributions, and the completion of the other transactions set forth herein, shall be
effected by the execution and delivery of all the documents listed on Schedule 7 to this Agreement
and such other documents as are necessary or desirable in connection therewith or which are
otherwise referred to in this Agreement (the “Closing Documents”). The Closing Documents shall be
in form and substance acceptable to both Cyprus and Xxxxxxxxx and shall be consistent with the
terms of this Agreement. Cyprus and Xxxxxxxxx acknowledge that included within the Closing
Documents are certain third-party consents, certificates, opinions and approvals. The parties agree
to cooperate and proceed diligently with the acquisition of such third-party items, but do not
waive the requirement that all Closing Documents, including the third-party consents listed in the
Closing Documents, be obtained or be hereafter waived in writing by Cyprus and Xxxxxxxxx as a
condition to Closing. All of the activities described in this Section 7 are collectively described
as the “Closing Agenda.”
8. Closing Date. The parties shall proceed diligently with the preparation of the
Closing Documents, and the fulfillment of the other conditions precedent set out in Section 6, so
that the formation and effectiveness of the Company, and the completion of the Initial Capital
Contributions by the Company Members (collectively, the “Closing”) occurs on or prior to December
29th, 2011 (the “Closing Date”). If the Closing does not occur by the Closing Date for
any reason, and the Closing is not extended by the mutual agreement of Cyprus and Xxxxxxxxx, then
this Agreement shall terminate and be null and void and of no further force or effect.
9. Representation and Warranties of Xxxxxxxxx. Xxxxxxxxx hereby represents and
warrants to Cyprus as follows, which representations and warranties constitute a material
inducement to Cyprus’s entering into this Agreement, and performing hereunder, including, without
limitation, making its Initial Capital Contribution and Scheduled Capital Contributions. The
representations and warranties of Xxxxxxxxx set forth herein or in any of the Closing Documents
(collectively the “Xxxxxxxxx Representations and Warranties”) shall be deemed to be remade as of
the Closing and shall survive the Closing, including the execution and delivery of the Closing
Documents.
9.1 Due Organization. Xxxxxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the power and authority to own
its property and carry on its business as owned and carried on as of the date hereof.
9.2 Due Authorization. Xxxxxxxxx has the requisite power and authority to execute
and deliver this Agreement and the Closing Documents to which it is a party and to perform its
obligations hereunder and thereunder. The execution, delivery, and performance of this Agreement
and the Closing Documents to which Xxxxxxxxx is a party have been duly authorized by Xxxxxxxxx.
This Agreement has been, and the Closing Documents when executed and delivered by Xxxxxxxxx will
be, duly executed and delivered by Xxxxxxxxx. This Agreement constitutes, and the Closing Documents
when so executed shall constitute, the legal, valid and binding obligations of Xxxxxxxxx
enforceable in accordance with their respective terms.
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9.3
No Conflict with Restrictions; No Default. Neither the execution, delivery or
performance of this Agreement or the Closing Documents by Xxxxxxxxx
shall: (i) conflict with,
violate or result in a breach of any of the terms, conditions or provisions of any law, regulation,
order, writ, injunction, decree, determination or award of any court, any governmental
department, board, agency or instrumentality, domestic or foreign, or any arbitrator which are
applicable to Xxxxxxxxx; (ii) conflict with or violate any of the terms, conditions or provisions
of the certificate of incorporation of Xxxxxxxxx; or (iii) result in the creation or imposition of
any lien upon the Company (except the pledge of members interests in favor of PNC Bank, as
contemplated in the Limited Liability Company Agreement) or any of the Xxxxxxxxx Assets.
9.4 Governmental Authorizations and Third-Party Consents. There is no registration,
declaration or filing with, or consent, approval, license, permit or authorization or order by any
governmental or regulatory authority, domestic or foreign, or by any third party which is required
in connection with the valid execution, delivery and acceptance by Xxxxxxxxx of this Agreement or
the Closing Documents that has not been obtained.
9.5 Permittee Status. Xxxxxxxxx represents and warrants that, to
Xxxxxxxxx’x knowledge, neither it nor any of its owners, nor any entity owned or controlled by any
of its owners, has been notified by any state or federal agency that any of the entities listed
above is ineligible to receive coal mining permits in any state.
9.6 Litigation. Except as disclosed on Schedule 9.6 to this Agreement, there are no
claims, actions, suits, proceedings or investigations pending before or being conducted by any
court, government officer or agency, or arbitrator relating to Xxxxxxxxx which could reasonably be
expected to materially affect Xxxxxxxxx’x ability to enter into this Agreement, to complete the
actions contained in the Closing Agenda, or to make its Initial Capital Contribution. To the best
of the knowledge of Xxxxxxxxx, no such claims, actions, suits, proceedings or investigations are
threatened.
10. Representation and Warranties of Cyprus. Cyprus hereby represents and warrants to
Xxxxxxxxx as follows, which representations and warranties constitute a material inducement to
Xxxxxxxxx entering into this Agreement and making its Initial Capital Contribution and Scheduled
Capital Contributions. The representations and warranties of Cyprus set forth herein or in any of
the Closing Documents (collectively the “Cyprus Representations and Warranties”) shall be deemed
to be remade as of the Closing and shall survive the Closing, including the execution and delivery
of the Closing Documents.
10.1 Due Formation. Cyprus is a Delaware limited liability company and has the power
and authority to own its property and carry on its business as owned and carried on as of the date
hereof.
10.2 Due Authorization. Cyprus has the power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement has been duly authorized by its sole member. This Agreement has been, and the
Closing Documents when authorized, executed and delivered by Cyprus will have been, duly executed
and delivered by Cyprus. This Agreement constitutes, and the Closing Documents when so executed
shall constitute, the legal, valid and binding obligations of Cyprus enforceable in accordance with
their respective terms.
10.3
No Conflict With Restrictions; No Default. Neither the execution, delivery or
performance of this Agreement or the Closing Documents by Cyprus shall: (i) conflict with,
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violate or result in a breach of any of the terms, conditions or provisions of any law,
regulation, order, writ, injunction, decree, determination or award of any court, any governmental
department, board, agency or instrumentality, domestic or foreign, or any arbitrator which are
applicable to Cyprus; (ii) conflict with or violate any of the terms, conditions or provisions of
the organizational agreements of Cyprus; or (iii) result in the creation or imposition of any lien
upon the Company or any of the Cyprus Assets.
10.4 Governmental Authorizations and Third-Party Consents. There is no registration,
declaration or filing with, or consent, approval, license, permit or authorization or order by any
governmental or regulatory authority, domestic or foreign, or by any third party which is required
in connection with the valid execution, delivery or acceptance by Cyprus of this Agreement or the
Closing Documents that has not been obtained.
10.5
Permittee Status. Cyprus represents and warrants that, to its knowledge,
neither it nor any of its owners, nor any entity owned or controlled by any of its owners, has been
notified by any state or federal agency that any of the entities listed above is ineligible to
receive coal mining permits in any state.
10.6 Litigation. Except as disclosed on Schedule 10.6 to this Agreement, there are
no claims, actions, suits, proceedings or investigations pending before or being conducted by any
court, government officer or agency, or arbitrator relating to Cyprus which could reasonably be
expected to materially affect Cyprus’s ability to enter into this Agreement, to complete the
actions contained in the Closing Agenda, or to make its Initial Capital Contribution. To the
best of the knowledge of Cyprus, no such claims, actions, suits, proceedings or investigations
are threatened.
11. Indemnification. In addition to any other indemnity obligations set out in this
Agreement, Xxxxxxxxx hereby agrees to indemnify and hold Cyprus harmless, and Cyprus hereby agrees
to indemnify and hold Xxxxxxxxx harmless, from and against any and all claims, demands, suits,
proceedings, judgments, losses, liabilities, damages, costs and expenses of every kind and nature
(including, but not limited to, reasonable attorneys’ fees and any and all related litigation
costs and expenses as a consequence of any such proceedings described in this Section 11), imposed
upon or incurred by the indemnified party as a result of or in connection with (i) any
misrepresentation or breach of warranty or failure of any of the representations and warranties
made by the indemnifying party in or pursuant to this Agreement (or any Closing Document) to have
been true and complete in all material respects as of the Closing (“Representation Indemnity
Claim”) or (ii) any breach of any covenant or agreement of the indemnifying party set forth herein
or in any of the Closing Documents (“Covenant Indemnity Claim”; Representation Indemnity Claims
and Covenant Indemnity Claims are collectively referred to as “Indemnity Claims”).
11.1 Notice of Indemnity Claim. If a party intends to assert an Indemnity Claim, it
shall provide the other party with written notice of such Indemnity Claim promptly after the facts
providing the basis for such Indemnity Claim are known. No Representation Indemnity Claim may be
asserted after 18 months from the Closing Date, but any Representation Indemnity Claim made prior
to 18 months from the Closing Date shall remain valid and enforceable. Except for statutes of
limitation under applicable law, there are no time limits for Covenant Indemnity Claims. An
Indemnity Claim notice shall set forth, in detail, the specific character and factual basis for
each individual Indemnity Claim asserted therein. At the time the Indemnity Claim is made and
thereafter, any party asserting the Indemnity Claim shall provide
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the other party with copies of any materials in its possession describing the facts or containing
information providing the basis for the Indemnity Claim. If the indemnity Claim involves a claim by
a third party, the party against which the Indemnity Claim is asserted may assume, at its sole
expense, the defense of the claim by the third party if such party against which the Indemnity
Claim is asserted agrees in writing with respect to such Indemnity Claim that it is obligated
hereunder to indemnify and hold the party asserting the Indemnity Claim harmless in accordance with
the terms of this Section 11.1. The failure of the party against which the Indemnity Claim is
asserted to assume the defense of any such claim shall not affect any indemnification obligation
under this Agreement.
12. Brokers. Each party hereto hereby represents and warrants to the other parties
hereto that there are no claims for brokerage or other commissions or finders or other similar fees
as of the date hereof in connection with the transactions contemplated by this Agreement. Each
party hereto hereby agrees to indemnify and hold harmless the other party and the Company from and
against all liabilities, costs, damages, and expenses from any such claim resulting from its
action.
13. Miscellaneous.
13.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
13.2 Entire Agreement; Modification. This Agreement and the Closing
Documents constitute the entire agreement of the parties hereto pertaining to the subject matter
hereof and supersede any previously written or oral discussions or representations. No supplement,
modification or waiver (except as provided herein relative to conditions precedent) of this
Agreement or the Closing Documents, or any provision hereof or thereof, shall be binding unless in
writing and executed by the parties.
13.3 No Third-Party Beneficiaries. Nothing in this Agreement shall entitle any person
other than the parties named in and executing this Agreement to any claim, cause of action, remedy
or right of any kind except that the Company shall be beneficiaries of this Agreement.
13.4 Expenses. Except as set forth below, each party shall be liable for its own
expenses in connection with the preparation and performance of this Agreement, the Closing
Documents, and the acquisition of government approvals for the Closing.
13.5
Assignment. This Agreement may not be assigned, in whole or in part, by any party
without the consent of the other parties. Any attempted assignment without the consent of all
parties shall be void. Subject to the foregoing, this Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and assigns.
13.6 Further Assurances. The parties hereto shall take such further actions and
execute such further documents after the Closing as may be required to fulfill the intentions of
the parties expressed herein and in the Closing Documents relative to the formation of the Company
and the Initial Capital Contributions and Scheduled Capital Contributions.
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13.7 Notices. All notices, consents, elections, requests, reports, demands and other
communications hereunder (collectively, “Notices”) shall be in writing and shall be personally
delivered or mailed by registered or certified mail, postage prepaid and addressed as follows:
Cyprus Creek Land Resources, LLC
|
Xxxxxxxxx Coal Company, Inc. | |
000 Xxxxxx Xxxxxx, Xxxxx 000
|
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000 | |
Xx. Xxxxx, Xxxxxxxx 00000
|
Xx. Xxxxx, Xxxxxxxx 00000 | |
| Xxxxxxxxx Energy, Inc. | ||
| Attn: Xxxxxx X. Xxxxxx, President | ||
| 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000 | ||
| Xx. Xxxxx, Xxxxxxxx 00000 |
or to such other address or to such other person as any party hereto shall have last
designated by notice to the other party in accordance with the foregoing. All such Notices shall
be effective as of the date received by the addressee. If such addressee refuses to accept
delivery of any such Notice, such Notice shall be deemed to have been delivered on the date of
such refusal.
13.8 Survival. The terms of this Agreement shall survive the closing and the
formation of the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and date first
above written.
| CYPRUS CREEK LAND RESOURCES, LLC | ||||||
| By: | /s/ X.X. Xxxxxx | |||||
| Its: | VP | |||||
| CYPRUS CREEK LAND COMPANY | ||||||
| By: | /s/ X.X. Xxxxxx | |||||
| Its: | XX | |||||
| XXXXXXXXX COAL COMPANY, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||
| It: | President | |||||
| WESTERN LAND COMPANY, LLC | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||
| It: | Manager | |||||
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| 1. | Execution of Organization Documents |
| - | Certificate of Formation | ||
| - | Limited Liability Company Agreement |
| 2. | Execution of the Company agreements |
| - | the Management Agreement (attached hereto as Appendix 1) | ||
| - | the Sales Representation Agreement (attached hereto as Appendix 2) |
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