EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
AMONG
ATLANTIC RICHFIELD COMPANY,
ARCO UINTA COAL COMPANY,
ARCH COAL, INC.,
AND
ARCH WESTERN ACQUISITION CORPORATION
* Portions of this document have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 24b-2 under the U.S.
Securities Exchange Act of 1934, as amended. Such portions have been
filed separately with the Commission and are identified in this
document by the following legend: "[Confidential Treatment
Requested]*."
TABLE OF CONTENTS
ARTICLE 1 Definitions.........................................................1
1.1 Definitions ...........................................................1
1.2 Cross References, Interpretation ......................................9
ARTICLE 2 Purchase and Sale of LLC Interests..................................9
2.1 Sale of LLC Interests .................................................9
2.2 Payment of Purchase Price .............................................9
2.3 Adjustment to Unadjusted Purchase Price ...............................9
2.4 Transfer Taxes .......................................................11
ARTICLE 3 Closing............................................................11
3.1 Other Transactions ...................................................11
3.2 Closing Date .........................................................12
3.3 ARCO and Seller's Deliveries .........................................12
3.4 Arch's and Buyer's Deliveries ........................................13
3.5 Simultaneous Transactions ............................................14
ARTICLE 4 Representations and Warranties of ARCO and Seller..................14
4.1 Organization and Good Standing of ARCO and Seller ....................14
4.2 Authority ............................................................14
4.3 No Violations ........................................................14
4.4 Approvals, Consents and Other Actions ................................14
4.5 Formation and Good Standing of the Companies .........................14
4.6 Title to the LLC Interests ...........................................15
4.7 Capitalization .......................................................15
4.8 Real Property ........................................................15
4.9 Buildings, Structures and Tangible Personal Property; Other
Securities ...........................................................16
4.10 Material Contracts ...................................................16
4.11 Insurance Policies ...................................................16
4.12 Taxes ................................................................16
4.13 Licenses, Permits, Authorizations ....................................17
4.14 Litigation ...........................................................17
4.15 Compliance with Laws .................................................17
4.16 Labor Matters ........................................................17
4.17 Employee Benefit Plans ...............................................17
4.18 Bank Accounts ........................................................19
4.19 Broker Liability .....................................................19
4.20 Financial Statements .................................................19
4.21 Black Lung Disclosure ................................................19
4.22 Conduct of Business ..................................................20
4.23 Assets ...............................................................20
4.24 CERCLA................................................................20
4.25 Disclaimer of Certain Representations and Warranties .................20
4.26 No Other Commitment to Sell LLC Interests ............................20
4.27 Absence of Undisclosed Liabilities ...................................20
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ARTICLE 5 Representations and Warranties of Arch and Buyer...................21
5.1 Organization and Good Standing .......................................21
5.2 Authority ............................................................21
5.3 No Violations ........................................................21
5.4 Approvals and Consents ...............................................21
5.5 Financial Capability .................................................21
5.6 Accredited Investor ..................................................21
5.7 Investment Intent ....................................................21
5.8 Arch's and Buyer's Inquiry ...........................................22
5.9 Broker Liability .....................................................22
5.10 Qualification, Compliance with Acreage Limitations ...................22
5.11 No Independent Contact with ITOCHU ...................................22
ARTICLE 6 Covenants and Agreements of the Parties............................22
6.1 Access to Information ................................................22
6.2 Conduct of the Business Pending the Closing ..........................24
6.3 Notification .........................................................24
6.4 Antitrust Notification ...............................................24
6.5 Fees and Expenses ....................................................25
6.6 Publicity ............................................................25
6.7 Post-Closing Assistance ..............................................25
6.8 Guarantees ...........................................................25
6.9 Name Changes .........................................................25
6.10 Surety Bonds .........................................................26
6.11 Black Lung Liability .................................................26
6.12 Litigation Support ...................................................26
6.13 Insurance ............................................................27
6.14 Arch's and Buyer's Environmental Responsibilities ....................27
6.15 ARCO's and Seller's Environmental Responsibilities ..................27
6.16 Other Liabilities ....................................................27
6.17 ITOCHU Buy/Sell Agreement ............................................28
6.18 Commercially Reasonable Efforts ......................................28
6.19 [Confidential Treatment Requested]*...................................28
6.20 Substitute Member in CFC Agreement ...................................30
6.21 West Elk Mine Surface Facilities .....................................30
6.22 Disclosure Schedules .................................................31
ARTICLE 7 Employees and Employee Benefits....................................31
7.1 Retention of Employees and Continuation of Benefits ..................31
7.2 Retention of Retirement Plans for Companies ..........................31
7.3 ARCO's Pension Plan ..................................................32
7.4 Thrift Plan ..........................................................32
7.5 Other Employee Benefits ..............................................32
7.6 Flexible Spending Accounts ...........................................33
7.7 Cooperation ..........................................................33
7.8 Black Lung Matters ...................................................33
7.9 Employee Termination by Buyer ........................................33
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ARTICLE 8 Taxes..............................................................34
8.1 Certain Tax Matters ..................................................34
ARTICLE 9 Indemnification....................................................35
9.1 Arch's and Buyer's Indemnification ...................................35
9.2 ARCO's and Seller's Indemnification ..................................36
9.3 Monetary Limitation ..................................................36
9.4 Nature and Survival; Time Limits .....................................37
9.5 Limitation on Remedies; Mitigation ...................................37
9.6 General Provisions ...................................................37
9.7 Tax Treatment ........................................................38
ARTICLE 10 Conditions to Closing.............................................39
10.1 Conditions Precedent to Obligations of Arch and Buyer ...............39
10.2 Conditions Precedent to Obligations of ARCO and Seller ..............40
ARTICLE 11 Termination of Agreement..........................................41
11.1 Termination Before Closing ..........................................41
11.2 Effect of Termination ...............................................41
ARTICLE 12 Miscellaneous.....................................................41
12.1 Entire Agreement ....................................................41
12.2 Construction ........................................................42
12.3 Governing Law .......................................................42
12.4 Notices .............................................................42
12.5 Waiver ..............................................................42
12.6 Binding Effect; Assignment ..........................................43
12.7 Amendment ...........................................................43
12.8 Counterparts ........................................................43
12.9 No Third Party Beneficiaries ........................................43
12.10 Jurisdiction; Service of Process ....................................43
12.11 Disclaimer for Communications .......................................44
ATTACHMENTS
Disclosure Schedule
Exhibit A (referenced in Section 1.1, "Preliminary Interim Date Balance
Sheet" definition)
Exhibit B (referenced in Section 1.1, "Seller's Knowledge" definition)
Exhibit C (referenced in Section 7.9(b))
Exhibit D (referenced in Section 12.10(b))
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THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into as of March 22, 1998 (the "Effective Date"), among Atlantic Richfield
Company, a Delaware corporation ("ARCO"), ARCO Uinta Coal Company, a Delaware
corporation ("Seller"), Arch Western Acquisition Corporation, a Delaware
corporation ("Buyer"), and Arch Coal, Inc., a Delaware corporation ("Arch").
Recitals
A. On the Closing Date, Seller will be the owner of (i) all of the
membership interests in Mountain Coal Company L.L.C., a Delaware limited
liability company ("MCC"), (ii) all of the membership interests in a Delaware
limited liability company to be formed by Seller ("AU Sub"), and (iii) 65% of
the membership interests in Canyon Fuel Company, LLC, a Delaware limited
liability company ("CFC," and together with MCC and AU Sub, collectively the
"Companies," and each individually, a "Company"). Seller's 65% membership
interest in CFC is referred to herein as the "CFC Interests," and the CFC
Interests, together with Seller's membership interest in MCC and AU Sub, are
referred to herein as the "LLC Interests."
B. Subject to the terms and conditions hereof, Buyer wishes to purchase
from Seller, and Seller wishes to sell to Buyer, all of the LLC Interests on the
terms and subject to the conditions set forth herein.
C. Simultaneously with the execution and delivery of this Agreement, ARCO,
Delta Housing Inc., a Delaware corporation ("Delta"), Arch, Buyer and Arch
Western Resources LLC, a Delaware limited liability company, are entering into a
Contribution Agreement (the "Contribution Agreement").
D. The satisfaction of the conditions precedent to closing set forth in
the Contribution Agreement are conditions precedent to the Closing of the
transactions and obligations set forth in this Agreement.
Agreement
In consideration of, and subject to, the mutual promises, agreements,
terms and conditions made herein, and intending to be legally bound, the parties
agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used herein, the following terms shall have the
meanings set forth below:
"ACC" shall mean the United States assets of ARCO Coal Company, a division
of ARCO.
"Adjustment" shall have the meaning set forth in Section 2.3(b).
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"Affiliate" of any specified Person shall mean any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, such specified Person, and the
term "affiliated with" shall have a correlative meaning. For the purposes of
this definition, "control" (including with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise. As used with respect to ARCO, "Affiliate" shall not include ARCO
Chemical Company, a Delaware corporation, or Vastar Resources, Inc., a Delaware
corporation. As used with respect to Arch (except for the purposes of Section
9.2), "Affiliate" shall not include Ashland Inc., a Kentucky corporation, or any
of its subsidiaries other than Arch.
"Agent" shall have the meaning set forth in Section 12.10(b).
"Agreement" shall have the meaning set forth in the introduction to this
Agreement.
"Antitrust Division" shall have the meaning set forth in Section 6.4.
"Applicable Rate" shall mean six percent per annum.
"Arch" shall have the meaning set forth in the introduction to this
Agreement.
"ARCO" shall have the meaning set forth in the introduction to this
Agreement.
"ARCO Accumulation and Savings Plans" shall have the meaning set forth in
Section 7.4.
"ARCO Retirement Plan" shall have the meaning set forth in Section 7.3.
"Audited Financial Statements" shall have the meaning set forth in Section
2.3(a).
"AU Sub" shall have the meaning set forth in the Recitals to this
Agreement.
"Bankruptcy" shall mean (i) the commencement of any voluntary or
involuntary bankruptcy case by or against a Person as debtor under Title 11 of
the United States Code or any successor or equivalent statute, (ii) the
insolvency or inability of a Person
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to satisfy its obligations as they become due or (iii) the general assignment by
any Person for the benefit of creditors under state Law.
"Black Lung Discount Rate" shall mean seven percent per annum.
"Buyer" shall have the meaning set forth in the introduction to this
Agreement.
"Buyer Indemnitees" shall have the meaning set forth in Section 9.2.
"Buyer's Retirement Plan" shall have the meaning set forth in Section 7.3.
"Buyer's Savings Plan" shall have the meaning set forth in Section 7.4.
"CERCLA" shall mean the Federal Comprehensive Environmental Response,
Compensation and Liability Act (as amended by the Superfund Amendments and
Reauthorization Act of 1986).
"CFC" shall have the meaning set forth in the Recitals to this Agreement.
"CFC Agreement" shall mean the Second Amended and Restated Limited
Liability Company Agreement of Canyon Fuel Company, LLC, dated as of January 1,
1997, as in effect on the Closing Date.
"CFC Interests" shall have the meaning set forth in the Recitals to this
Agreement.
"Closing" shall have the meaning set forth in Section 3.2.
"Closing Date" shall have the meaning set forth in Section 3.2.
"Closing Date Balance Sheet" shall mean the unaudited, pro forma,
combined, consolidated balance sheet of the Companies as of the close of
business on the Closing Date, which shall be derived from the combined,
consolidated unaudited balance sheet of ACC as of the same date, prepared as
though the Proposed Transactions had not been consummated. The Closing Date
Balance Sheet shall be prepared on a basis consistent with the Interim Date
Balance Sheet.
"Closing Date Members' Equity" shall have the meaning set forth in Section
2.3(b).
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Combined Buyer's Losses" shall have the meaning set forth in Section
9.3(a).
"Company" or "Companies" shall have the meaning set forth in the Recitals
to this Agreement.
"Contribution Agreement" shall have the meaning set forth in the Recitals
to this Agreement.
"Delta" shall have the meaning set forth in the Recitals to this
Agreement.
"Disagreement Notice" shall have the meaning set forth in Section 2.3(c).
"Disclosure Schedule" shall mean the Disclosure Schedule attached to this
Agreement and incorporated herein for all purposes, which is the same Disclosure
Schedule as is attached to and incorporated in the Contribution Agreement.
"Effective Date" shall have the meaning set forth in the introduction to
this Agreement.
"Employees" shall have the meaning set forth in Section 4.17(a).
"Environmental Laws" shall mean Laws aimed at abatement of pollution;
protection of the environment; ensuring public safety from environmental
hazards; management, storage or control of Hazardous Materials; releases or
threatened releases of Hazardous Materials into the environment, including
ambient air, surface water and groundwater; and all other Laws relating to the
manufacturing, processing, distribution, use, treatment, storage, disposal,
handling or transportation of Hazardous Materials, including CERCLA, Clean Air
Act, Clean Water Act, Solid Wastes Disposal Act (as amended by the Resource
Conservation and Recovery Act), Toxic Substances Control Act, Emergency Planning
and Community Right to Know Act, Surface Mining Control and Reclamation Act,
Mine Safety and Health Act, Safe Drinking Water Act and any regulations issued
under each of such statutes, and any state or local counterparts, and any other
Laws to the extent relating to reclamation of lands affected by mining.
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"Environmental Liabilities" shall mean any and all claims, actions, causes
of action, damages, losses, liabilities, obligations, penalties, judgments,
amounts paid in settlement, assessments, costs, disbursements or expenses
(including attorneys' fees and costs, experts' fees and costs and consultants'
fees and costs) of any kind or nature (including those absolute, accrued or
contingent, unknown or otherwise and including further, liability for study,
testing or investigatory costs, cleanup costs, response costs, removal costs,
remediation costs, containment costs, restoration costs, corrective action costs
or business losses) arising out of, based on, resulting from or alleging (i) the
presence, release, threatened release, discharge or emission into the
environment of any Hazardous Materials existing or arising on, beneath or above
any property, including claims with respect to other properties based upon
claims relating to migration or emanation (or threatened migration or emanation)
of Hazardous Materials from the property to such other properties, whether or
not immediately adjacent to the property, (ii) the violation of any
Environmental Laws involving any property, including claims with respect to
other properties based upon claims relating to migration or emanation (or
threatened migration or emanation) of Hazardous Materials from the property to
such other properties, whether or not immediately adjacent to the property, and
(iii) natural resources damages, penalties or fines, or property damages or
personal injuries claimed by private (non-governmental) parties.
"ERISA" shall have the meaning set forth in Section 4.17(a).
"Final Judgment" shall mean a judgment by a court of competent
jurisdiction or a binding award in arbitration from which no further appeal or
review may be taken, a settlement or a confession of judgment.
"FTC" shall have the meaning set forth in Section 6.4.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States, from time to time.
"Hazardous Materials" shall mean any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radio active or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor, PCBs and asbestos or
asbestos-containing materials.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" shall have the meaning set forth in Section 9.6(a).
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"Indemnifying Party" shall have the meaning set forth in Section 9.6(a).
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"Independent Accountants" shall have the meaning set forth in Section
2.3(d).
"Intended Use" shall have the meaning set forth in Section 6.21(a).
"Interim Date" shall mean December 31, 1997.
"Interim Date Balance Sheet" shall mean the unaudited, pro forma,
combined, consolidated, balance sheet for the Companies, which shall be derived
from and consistent with the combined, consolidated audited balance sheet of ACC
as of the close of business on the Interim Date. The Interim Date Balance Sheet
shall be prepared on a basis consistent with the Preliminary Interim Date
Balance Sheet and, except for changes with respect to corporate adjustments and
income tax calculations and the effect thereof on total member's equity in the
Companies, will be substantially identical to the Preliminary Interim Date
Balance Sheet.
"Interim Date Members' Equity" shall have the meaning set forth in Section
2.3(b).
"ITOCHU" shall mean ITOCHU Coal International Inc.
"Laws" shall mean all existing Federal, state and local laws (statutory or
common), rules, ordinances, regulations, grants, leases, orders, directives,
judgments, decrees and other governmental restrictions of any kind or nature,
including permits and other similar requirements, whether legislative,
municipal, administrative or judicial in nature.
"LLC Interests" shall have the meaning set forth in the Recitals to this
Agreement.
"Losses" shall have the meaning set forth in Section 9.3(a).
"Material Adverse Effect" (i) as used in Sections 3.3(i), 6.22, 10.1(a)
and 11.1(b), shall mean a breach or breaches of the representations and
warranties of ARCO and/or Seller under this Agreement and ARCO and/or Delta
under the Contribution Agreement that in the aggregate, if the Proposed
Transactions were consummated, would give rise to indemnification obligations
owed to Buyer Indemnitees by ARCO and/or Seller under this Agreement and ARCO
and/or Delta under the Contribution Agreement (without regard to any applicable
limits in Section 9.3 of this Agreement or Section 10.3 of the Contribution
Agreement), together totaling more than One Hundred and Ten Million Dollars, and
(ii) as used in Section 10.1(g), shall mean (without duplication) the sum of (a)
aggregate reductions in the actual value of the business of the Companies
(excluding any reduction attributable to the portion of CFC's membership
interests owned by ITOCHU) and TBCC, on a combined, consolidated basis and taken
as a whole, resulting from any events or occurrences referred to in Section
10.1(g), and (b) a breach or breaches of the representations and warranties of
ARCO and/or Seller under this Agreement and ARCO and/or Delta under the
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Contribution Agreement that in the aggregate, if the Proposed Transactions were
consummated, would give rise to indemnification obligations owed to Buyer
Indemnitees by ARCO and/or Seller under this Agreement and ARCO and/or Delta
under the Contribution Agreement (without regard to any applicable limits in
Section 9.3 of this Agreement or Section 10.3 of the Contribution Agreement),
together totaling more than One Hundred and Ten Million Dollars.
"MCC" shall have the meaning set forth in the Recitals to this Agreement.
"Other Liabilities"' shall have the meaning set forth in Section 6.16(b).
"Other Properties" shall have the meaning set forth in Section 6.15.
"Participants" shall have the meaning set forth in Section 7.5.
"PBGC" shall have the meaning set forth in Section 4.17(e).
"Performance Bonds" shall have the meaning set forth in Section 6.10.
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"Person" shall mean and include, any individual, partnership, joint
venture, corporation, limited liability company, trust, joint-stock company,
unincorporated entity or association, organization or other legal entity.
"Plans" shall have the meaning set forth in Section 4.17(a).
"Post-Closing Surety Bonds" and "Post-Closing Surety Bond" shall have the
meaning set forth in Section 6.10.
"Pre-Closing Tax Period" shall have the meaning set forth in Section
8.1(a).
"Preliminary Interim Date Balance Sheet" shall mean the document attached
as Exhibit A.
"Present Value Benefit" shall mean the present value (based on a discount
rate equal to the short-term applicable federal rate as determined under Section
1274(d) of the Code at the time of determination, and assuming that the
Indemnified Party will be liable for income taxes at all relevant times at the
maximum marginal rates) of any income tax benefit.
"Properties" shall have the meaning set forth in Section 6.14.
"Proposed Transactions" shall have the meaning set forth in Section 3.2.
"Purchase Price" shall have the meaning set forth in Section 2.2.
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"Report" shall have the meaning set forth in Section 2.3(d).
"Retirement Plans" shall have the meaning set forth in Section 7.2.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the introduction to this
Agreement.
"Seller Indemnitees" shall have the meaning set forth in Section 9.1.
"Seller's Group" shall mean ARCO, Seller and any Affiliate of ARCO or
Seller (other than the Companies).
"Seller's Knowledge" shall mean the actual knowledge of the individuals
identified on Exhibit B, without any duty of inquiry.
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"Statement" shall have the meaning set forth in Section 2.3(b).
"Substitute Surety Bonds" and "Substitute Surety Bond" shall have the
meaning set forth in Section 6.10.
"Surety Bonds" and "Surety Bond" shall have the meaning set forth in
Section 6.10.
"Surface Movement" shall have the meaning set forth in Section 6.21(a).
"Tax" or "Taxes" shall mean any tax or taxes, similar charge, fee, impost,
levy or other assessment (including income taxes, severance taxes, excise taxes,
sales taxes, franchise taxes, real estate taxes, Transfer Taxes, transfer gain
taxes, value-added taxes, use taxes, ad valorem taxes, withholding taxes,
payroll taxes or minimum taxes), together with any related liabilities,
penalties, fines, additions to tax or interest imposed by the United States or
any state, county, local or foreign government agency or taxing authority, or
any subdivision thereof.
"Tax Return" or "Tax Returns" shall mean all returns, reports, estimates
and information statements relating to, or required to be filed in connection
with any Taxes pursuant to the statutes, rules and regulations of the United
States or any state, county, local or foreign government subdivision, agency or
taxing authority.
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"TBCC" shall mean Thunder Basin Coal Company, L.L.C., a Delaware limited
liability company.
"Transfer Taxes" shall have the meaning set forth in Section 2.4.
"Transferees" shall have the meaning set forth in Section 7.1(a).
"Unadjusted Purchase Price" shall have the meaning set forth in Section
2.2.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 4.20.
"VEBA" shall have the meaning set forth in Section 4.17(a).
"West Elk Surface Movement Event" shall have the meaning set forth in
Section 6.21(b).
1.2 Cross References, Interpretation. References to "Articles" refer to
Articles of this Agreement. References to "Sections" refer to Sections and
subsections of this Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa. Whenever the word "including" is used in this Agreement
it shall be read to mean "including without limitation." The headings in this
Agreement are inserted for convenience only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
ARTICLE 2
PURCHASE AND SALE OF LLC INTERESTS
2.1 Sale of LLC Interests. At the Closing, Seller shall sell, transfer
and deliver to Buyer, and Buyer shall purchase from Seller, the LLC Interests,
subject to the terms and conditions set forth herein.
2.2 Payment of Purchase Price. At the Closing, Buyer shall pay to Seller,
in immediately available funds, by wire transfer to the account or accounts
designated by Seller not later than two days prior to the Closing Date, an
aggregate of Three Hundred Ninety Million U.S. Dollars (U.S.$390,000,000) (the
"Unadjusted Purchase Price"), which shall be subject to the adjustment set forth
in Section 2.3 (as adjusted, the "Purchase Price").
2.3 Adjustment to Unadjusted Purchase Price.
(a) Seller shall deliver to Buyer as soon as available, but in no
event later than 30 days after the Effective Date, the consolidated balance
sheet of ACC at December 31, 1997, and 1996, and its consolidated statements of
income, of equity investment and of cash flows for each of the three years in
the period ended December 31, 1997, together with the related notes thereto and
the respective audit opinion thereon of the independent auditors of ACC (the
"Audited Financial Statements"). Within 30 days after the Effective Date, Seller
shall prepare
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and deliver to Buyer a copy of the Interim Date Balance Sheet. Within 90 days
after the Closing Date, Seller shall prepare and deliver to Buyer the Closing
Date Balance Sheet.
(b) The Unadjusted Purchase Price shall be adjusted (the
"Adjustment") (i) upwards on a dollar-for-dollar basis for up to $10 million of
capital expenditures made by any of the Companies during the period from October
1, 1997, to December 31, 1997; and (ii) upwards or downwards on a
dollar-for-dollar basis for the amount by which total members' equity as
reflected on the Closing Date Balance Sheet (the "Closing Date Members' Equity")
exceeds or is less than total members' equity as reflected on the Interim Date
Balance Sheet (the "Interim Date Members' Equity"). For purposes of the
preceding sentence, the change in total members' equity will include the net
change in intercompany accounts. During the period from the Interim Date through
the Closing Date, intercompany accounts will, in part, (i) increase by
contributions of cash for operating costs and capital by Seller's Group and (ii)
decrease by cash distributions to Seller's Group. In determining the Adjustment,
any change in deferred tax asset or deferred tax liability from that reflected
on the Interim Date Balance Sheet and the corresponding effect on Closing Date
Members' Equity, except for provisions made in the ordinary course related to
income earned since the Interim Date, shall be ignored. If the Closing Date
Members' Equity exceeds the Interim Date Members' Equity, the Buyer shall pay
Seller an amount equal to such excess as set forth below. If the Interim Date
Members' Equity exceeds the Closing Date Members' Equity, the Seller shall pay
Buyer an amount equal to such excess as set forth below. Seller shall prepare
and deliver to Buyer, simultaneously with the delivery of the Closing Date
Balance Sheet, a statement (the "Statement") setting forth in reasonable detail
Seller's calculation of Closing Date Members' Equity.
(c) If Buyer disagrees with the Closing Date Balance Sheet or the
Statement, it shall, within 30 days after the receipt of the Closing Date
Balance Sheet and the Statement, deliver a notice to Seller (the "Disagreement
Notice"), setting forth its calculation of the Adjustment and specifying, in
reasonable detail, those items or amounts in the Closing Date Balance Sheet
and/or the Statement as to which Buyer disagrees and the reasons for such
disagreement. Buyer shall be deemed to have agreed with all items and amounts
contained in the Closing Date Balance Sheet and the Statement other than those
specified in a timely Disagreement Notice. If Buyer does not deliver a
Disagreement Notice to Seller within such 30-day period, Buyer shall be deemed
to have accepted the Closing Date Balance Sheet and the Statement, whereupon the
Closing Date Balance Sheet and the Statement shall become final and binding.
(d) If a Disagreement Notice is timely delivered to Seller pursuant
to this Section 2.3, the parties shall use their good faith efforts to reach
agreement on the disputed items or amounts in order to determine the Adjustment,
which in no event shall be more favorable to Seller than reflected in the
Statement nor more favorable to Buyer than shown in the calculations delivered
by Buyer pursuant to the Disagreement Notice. If the parties do not resolve all
disputed items or amounts within ten business days after delivery of the
Disagreement Notice, this Agreement and the disputed items and amounts will be
submitted to an independent nationally recognized accounting firm without any
current material financial relationship to either Buyer or Seller, or their
respective Affiliates (the "Independent Accountants"), as mutually selected by
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Seller and Buyer, or if Seller and Buyer cannot agree, as recommended by the
independent accountants regularly employed to audit Seller's and Buyer's
financial statements, for determination of the appropriate Adjustment pursuant
to this Section 2.3. The written report of the Independent Accountants (the
"Report") shall be delivered to Seller and Buyer promptly, but in no event later
than 30 days after such disputed items are submitted to the Independent
Accountants, and shall be final, conclusive and binding upon the parties. The
procedures for resolution of disputes concerning the Closing Date Balance Sheet
and the Statement set forth in Sections 2.3(c) and 2.3(d) shall be final and
exclusive of any other litigation, proceeding, contest, appeal or arbitration in
relation thereto, so that no party shall be entitled to subject any claim,
controversy or dispute with respect to the foregoing to arbitration or to any
court or tribunal. The fees and expenses of the Independent Accountants shall be
borne equally by Seller and Buyer.
(e) Within five business days after the final determination of the
Adjustment, Buyer shall pay Seller or Seller shall pay Buyer, as the case may
be, a sum of money equal to the Adjustment, plus interest at the Applicable Rate
from the Closing Date to the date the payment is made. Any amount payable
pursuant to this Section 2.3(e) will be made in immediately available funds to
an account or accounts designated by the party receiving such payment.
(f) From the Closing Date until the final determination of the
Adjustment, Seller, including its officers, employees, agents and
representatives, and the Independent Accountants, shall have access to the
Companies and their books, records and employees who are responsible for
financial matters in order to assist in preparing the Closing Date Balance Sheet
and the Statement and in determining the Adjustment. Buyer shall provide and
shall cause the Companies to provide any assistance reasonably requested by
Seller in connection with the foregoing.
2.4 Transfer Taxes. Buyer shall be solely liable for and shall pay all
applicable sales, transfer, use, stamp, conveyance, value-added, real property
transfer, recording, stock transfer and other similar taxes, if any, together
with all recording or filing fees, notarial fees and other similar costs of
Closing, that may be imposed upon, or payable, collectible or incurred in
connection with the transfer of the LLC Interests to Buyer ("Transfer Taxes").
Buyer shall indemnify and hold harmless any member of Seller's Group with
respect to all Transfer Taxes.
ARTICLE 3
CLOSING
3.1 Other Transactions.
(a) Prior to or concurrently with the Closing, each of Seller and
Buyer shall take, or cause to be taken, the actions required of such party by
this Section 3.1 and in accordance with the transactions contemplated in the
Contribution Agreement.
(b) Prior to the Closing, ARCO shall transfer, or shall cause to be
transferred, to AU Sub the properties, rights or interests indicated as being
owned by AU Sub on the Disclosure Schedule.
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3.2 Closing Date. The closing ("Closing") of the transactions
contemplated herein (the "Proposed Transactions"), including the purchase and
sale of the LLC Interests, shall take place in New York, New York, at a mutually
agreeable site at 10:00 A.M., local time, on the later of (a) 45 days after the
date hereof or (b) the third business day after the satisfaction of all
conditions to Closing set forth in Sections 10.1 and 10.2, or at such other
place or time as the parties may mutually agree. The date upon which the Closing
occurs is referred to in this Agreement as the "Closing Date."
3.3 ARCO's and Seller's Deliveries. ARCO and Seller shall deliver, or
cause to be delivered, to Buyer at the Closing the following:
(a) duly executed assignment documents transferring the LLC
Interests from Seller to Buyer;
(b) all minute books, membership records and other books and records
of the Companies;
(c) a copy, certified as of the Closing Date, by ARCO's or Seller's
Secretary or Assistant Secretary, as the case may be, of the resolutions duly
adopted by the Board of Directors of ARCO and Seller, authorizing the
transactions contemplated by this Agreement;
(d) short form certificates of existence and/or good standing for
ARCO, Seller and each Company in their respective jurisdictions of incorporation
or formation, as certified as of a recent date by the Secretary of State or
other appropriate authority of such jurisdictions;
(e) the opinion of counsel to ARCO required by Section 10.1(d);
(f) copies of the certificate of formation for each Company, as
certified as of a recent date by the Secretary of State or other appropriate
authority of their respective jurisdiction of formation;
(g) copies of the limited liability company agreements of each
Company as in effect on the Closing Date, certified by a duly authorized
representative of each Company;
(h) certificates of the Secretary or Assistant Secretary of ARCO and
Seller, as the case may be, certifying as of the Closing Date as to the
incumbency and signatures of the officer(s) of ARCO and/or Seller authorized to
sign this Agreement and the other documents to be delivered hereunder, together
with evidence of the incumbency of each such Secretary or Assistant Secretary;
(i) certificates dated the Closing Date of officers of ARCO and
Seller, as the case may be, stating that the representations and warranties of
ARCO and Seller, as the case may be, set forth herein remain true and correct in
all respects on and as of the Closing Date as if made on and as of such date
(except for representations and warranties made as of a specific date, which
shall be true and correct in all respects as of such date), except for any
breach or breaches of such representations and warranties that would not
individually or in the aggregate have a
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Material Adverse Effect, and that all covenants and conditions to be complied
with and performed by ARCO and/or Seller on or prior to the Closing Date,
including notifications under Section 6.3, have been substantially complied with
or performed; and
(j) the resignations of the officers and directors of MCC and AU
Sub, and any officers and directors of CFC that are employees of ARCO, as
required pursuant to Section 10.1(f).
3.4 Arch's and Buyer's Deliveries. Arch and Buyer shall deliver, or
cause to be delivered, to Seller at the Closing the following:
(a) the Unadjusted Purchase Price in the manner and amount specified
in Section 2.2;
(b) a copy, certified as of the Closing Date by Arch's or Buyer's
Secretary or Assistant Secretary, as the case may be, of the resolutions duly
adopted by the Board of Directors of Arch and Buyer, authorizing the
transactions contemplated by this Agreement;
(c) short form certificates of good standing for Arch and Buyer in
their respective jurisdiction of incorporation, as certified as of a recent date
by the Secretary of State or other appropriate authority of such jurisdiction;
(d) the opinion of counsel to Buyer required by Section 10.2(d);
(e) copies of the certificates of incorporation of Arch and Buyer,
as certified as of a recent date by the Secretary of State or other appropriate
authority of their respective jurisdiction of incorporation;
(f) copies of the bylaws of Arch and Buyer as in effect on the
Closing Date, certified as of the Closing Date by the Secretary or Assistant
Secretary of Arch or Buyer, as the case may be;
(g) certificates of the Secretary or Assistant Secretary of Arch and
Buyer, as the case may be, certifying as of the Closing Date as to the
incumbency and signatures of the officer(s) or representatives of Arch and Buyer
authorized to sign this Agreement and the other documents to be delivered
hereunder, together with evidence of the incumbency of each such Secretary or
Assistant Secretary; and
(h) certificates dated the Closing Date of an officer of Buyer and
an officer of Arch, as the case may be, stating that the representations and
warranties of Arch and Buyer, as the case may be, set forth herein remain true
and correct in all material respects on and as of the Closing Date as if made on
and as of such date (except for representations and warranties made as of a
specified date, which shall be true and correct in all material respects as of
such date) and that all covenants and conditions to be complied with and
performed by Arch and/or Buyer on or prior to the Closing Date have been
substantially complied with or performed.
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3.5 Simultaneous Transactions. All of the transactions and deliveries
identified in this Article 3 shall be deemed to occur simultaneously on the
Closing Date, and no one transaction shall be deemed completed until all are
completed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ARCO AND SELLER
ARCO and Seller represent and warrant, jointly and severally, to Arch and
Buyer, as of the Effective Date (or such other date as is specified therein), as
follows:
4.1 Organization and Good Standing of ARCO and Seller. ARCO and Seller
are corporations duly incorporated, validly existing and in good standing under
the laws of their respective states of incorporation.
4.2 Authority. ARCO and Seller have full corporate power and authority to
enter into this Agreement and to perform their respective obligations hereunder.
This Agreement constitutes a valid and binding obligation of each of ARCO and
Seller, enforceable against ARCO and Seller in accordance with its terms,
subject to applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
4.3 No Violations. Except as set forth in Section 4.3 of the Disclosure
Schedule, the execution and delivery of this Agreement by ARCO and Seller do
not, and the consummation of the transactions contemplated hereby will not, (i)
violate any provisions of the certificate of incorporation or bylaws of ARCO or
Seller or of the limited liability company agreement of any Company; (ii) result
in the breach of, or constitute a default under, any material agreement or other
material instrument to which ARCO, Seller or any Company is a party or to which
any of their respective properties or assets are bound; (iii) violate any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award applicable to ARCO, Seller or any Company or their respective
properties or assets; or (iv) constitute an event that, with notice, lapse of
time or both, would result in any such violation, breach or default.
4.4 Approvals, Consents and Other Actions. Except (i) with respect to the
filings required under the HSR Act, (ii) as contemplated by this Agreement or
(iii) as set forth in Section 4.4 of the Disclosure Schedule, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission or
other governmental authority or instrumentality, or any third party is required
to be made or obtained by or with respect to ARCO or Seller in connection with
the execution, delivery and performance of this Agreement by ARCO or Seller.
4.5 Formation and Good Standing of the Companies. Each of MCC and CFC is,
and as of the Closing Date, AU Sub shall be, a limited liability company, duly
organized, validly existing and in good standing under the laws of their
respective states of formation.
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4.6 Title to the LLC Interests. Seller holds or will hold of record and
owns or will own beneficially, and will transfer or cause to be transferred to
Buyer on the Closing Date, the LLC Interests, and, upon delivery to Buyer at the
Closing of assignment documents in accordance with Section 3.3(a), registration
of the transfer of the LLC Interests on the books of each respective Company and
payment of the Unadjusted Purchase Price therefor, Seller will transfer to Buyer
the LLC Interests, free and clear of any security interests, pledges, liens and
encumbrances, except as set forth in the limited liability company agreements of
each Company.
4.7 Capitalization. Section 4.7 of the Disclosure Schedule sets forth a
list of the Companies, their respective jurisdictions of formation and their
respective ownership of outstanding membership interests as of the Closing Date.
ARCO, Seller and/or their Affiliates own all of the outstanding membership
interests of MCC and 65% of the outstanding membership interests of CFC. As of
the Closing Date, Seller will own all of the outstanding membership interests of
AU Sub. Except as set forth in the limited liability company agreements of each
Company and except as set forth in Section 4.7 of the Disclosure Schedule, as of
the Closing Date, no Company will have any outstanding securities,
subscriptions, options or other agreements or commitments obligating it to issue
additional membership interests or any other securities.
4.8 Real Property. Section 4.8 of the Disclosure Schedule sets forth, as
of the Closing Date, a list of all material real property, leaseholds, water
rights and other material interests in real property or water held by the
Companies. Except as set forth in Section 4.8 of the Disclosure Schedule, each
Company will hold, as of the Closing Date, an interest in the real property
described in Section 4.8 of the Disclosure Schedule sufficient to permit each
Company to operate its businesses in the ordinary course and consistent with
past practices, according to the terms of the instrument, conveyance or document
creating such interest, free and clear of all liens, encumbrances, equities,
claims, covenants, conditions, reservations, restrictions, easements, rights of
way and other agreements, except for (a) liens for Taxes not yet due and
payable, or that may hereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings or that are listed or
described in the Disclosure Schedule, (b) liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics, workmen and materialmen and construction or
similar liens arising by operation of law or in the ordinary course of business
in respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings, (c) liens to be released at or prior to
the Closing, (d) rights reserved to or vested in any Federal, state or local
governmental body, authority or agency to control or regulate any such real
property interests in any manner, (e) easements, reservations, rights-of-way,
restrictions, covenants, conditions and other similar encumbrances, whether of
record or apparent on the premises (including road, highway, pipeline, railroad
and utility easements, and defects in the chain of title), that do not
materially and adversely affect the present use of such real property, and (f)
other defects and irregularities in title or encumbrances that are not
substantial or material in character, amount or extent. Except as set forth in
Section 4.8 of the Disclosure Schedule, each of the material leases, subleases,
easements, licenses and agreements described in Section 4.8 of the Disclosure
Schedule is in full force and effect according to the terms of each respective
instrument, and to Seller's Knowledge, each holder of such leases, subleases,
easements, licenses and agreements has complied with all material requirements
in connection therewith, and there is
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not under any such lease, sublease, easement, license or agreement, any existing
material breach or default (or event that, with notice, lapse of time or both,
would constitute a material breach or default) by a Company.
4.9 Buildings, Structures and Tangible Personal Property; Other
Securities. Section 4.9 of the Disclosure Schedule lists (i) all material
buildings, structures and improvements and all material items of machinery,
equipment and other tangible personal property owned or leased by ARCO, Seller
or any of their Affiliates as of February 28, 1998, that will be owned or leased
by any Company on the Closing Date, and (ii) all securities of any other Person
held by any of the Companies on the Closing Date. Since February 28, 1998, no
such assets have been acquired or disposed of except in the ordinary course of
business.
4.10 Material Contracts. Section 4.10 of the Disclosure Schedule lists all
material contracts and agreements and all documents evidencing rights of or
commitments by any Company to which any Company is a party or its property or
assets are bound as of the Closing Date. Except as set forth in Section 4.10 of
the Disclosure Schedule, each such contract, agreement and document is in full
force and effect according to the terms of each respective instrument, and each
Company which is a party to such contracts, agreements and documents has
complied with all requirements in connection therewith, and there is not under
any such contract, agreement or document, any existing breach or default (or
event that, with notice, lapse of time or both, would constitute a breach or
default) by a Company.
4.11 Insurance Policies. Section 4.11 of the Disclosure Schedule lists all
policies of insurance issued by third-party insurers for the 1998 policy period,
including amounts of coverage thereof, that are maintained by ARCO or Seller for
the benefit of the Companies or by a Company for which such Company is named as
an insured party, in each case as of the Closing Date. Except as set forth in
Section 4.11 of the Disclosure Schedule, such policies are in full force and
effect and all premiums due have been paid.
4.12 Taxes.
(a) Except as set forth in Section 4.12(a) of the Disclosure
Schedule, with respect to Tax Returns that relate to taxable periods that end
before January 1, 1997, each Company has filed or caused to be filed with the
appropriate local, state, Federal and foreign governmental entities all Tax
Returns required to be filed by such Companies on or prior to the Closing Date
(taking into account all extensions of due dates), and has paid or caused to be
paid or adequately provided for all Taxes shown thereon as owing.
(b) Except as set forth in Section 4.12(b) of the Disclosure
Schedule, with respect to Tax Returns that relate to taxable periods that end on
or after January 1, 1997, each Company has filed or caused to be filed with the
appropriate local, state, Federal and foreign governmental entities all Tax
Returns required to be filed by such Companies on or prior to the Closing Date
(taking into account all extensions of due dates), and has paid or caused to be
paid or adequately provided for all Taxes shown thereon as owing. For all
taxable periods that begin prior to the Closing Date for which a Tax Return is
not due on or prior to the Closing Date (whether or not such taxable period ends
on or after the Closing Date), the Closing Date Balance
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Sheet shall provide an adequate reserve for Taxes to fully pay such Taxes up to
and including the Closing Date (as if the Taxable Period ended on the Closing
Date).
4.13 Licenses, Permits, Authorizations. Section 4.13 of the Disclosure
Schedule lists all material licenses, permits (including mining permits and the
amount of any bond or other surety for each mining permit), certificates, bonds,
consents, rights and other such authorizations issued or granted, as of the
Closing Date, to each of the Companies by local, state or Federal governmental
authorities or agencies. Except as set forth in Section 4.13 of the Disclosure
Schedule, each of the licenses, permits, certificates, bonds, consents, rights
and other authorizations listed in Section 4.13 of the Disclosure Schedule is in
full force and effect according to the material terms of each instrument, each
holder of such licenses, permits, certificates, bonds, consents, rights and
other authorizations has complied with all material requirements in connection
therewith, and there is not under any such licenses, permits, certificates,
bonds, consents, rights and other authorizations any existing material breach or
default (or event that, with notice, lapse of time or both, would constitute a
material breach or default) by a Company.
4.14 Litigation. Except as set forth in Section 4.14 of the Disclosure
Schedule, (i) none of the Companies is a party to any lawsuit, claim or
proceeding or to Seller's Knowledge, any investigation, and (ii) none of the
Companies is in default under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality applicable to it or any of its properties or assets.
4.15 Compliance with Laws. Except as set forth in Section 4.15 of the
Disclosure Schedule, each of the Companies is in compliance in all material
respects with all applicable statutes, laws, ordinances, rules, orders and
regulations of any governmental authority or instrumentality.
4.16 Labor Matters. Except as set forth in Section 4.16 of the Disclosure
Schedule, none of the Companies is a party to any collective bargaining
agreement with any labor union or association, there are no formal negotiations,
demands or proposals that are pending or have been recently conducted or made
with or by any labor union or association, and there are no pending strikes,
work stoppages or material labor disputes involving the Companies.
4.17 Employee Benefit Plans.
(a) Section 4.17 of the Disclosure Schedule sets forth a list of all
"employee benefit plans" as defined in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other pension or
retirement, savings, profit sharing, deferred compensation, stock option
(including restricted or performance units), severance, vacation, medical,
vision, dental, long term disability, life insurance, group accident,
occupational death, business travel, long term care, educational assistance,
floating holiday, personal business, gainshare, bonus, financial counseling,
welfare or sick leave or other employee benefit plan, procedure, policy or
practice of any nature, as well as any employment, consulting, engagement or
retention agreement or agreements, and any trust or funding mechanism for each
plan or arrangement described above (collectively, the "Plans") covering
employees of a Company and
17
any employees of ARCO and/or Seller whose employment is related primarily to one
or more of the businesses of the Companies (collectively, the "Employees"). With
respect to each Plan maintained by the Companies, ARCO and/or Seller have
delivered to Buyer true, correct and complete copies of all documents and
summary plan descriptions creating or evidencing any such Plan, and, to the
extent applicable, the most recent (i) determination letter and any outstanding
request for determination letter for such Plan; (ii) Form 5500 and attached
Schedule B (including any related actuarial valuation report) for such Plan; and
(iii) ruling letter and any outstanding request for a ruling letter with respect
to the tax-exempt status of any Voluntary Employees' Beneficiary Association
("VEBA") as defined in Code Section 501(c)(9).
(b) Except as set forth in Section 4.17 of the Disclosure Schedule,
each Plan complies with and has been administered, operated and maintained in
compliance with all applicable material provisions of ERISA, the Code and other
applicable laws. Except as set forth in Section 4.17 of the Disclosure Schedule,
none of the Companies has engaged in a prohibited transaction that would subject
it to a material tax imposed under Section 4975 of the Code.
(c) Neither Seller nor any Company is or has within the preceding
five years been a party to or contributed to any "multi-employer plan," as
defined in Section 4001(a)(3) of ERISA. Except as set forth in Section 4.17 of
the Disclosure Schedule, neither Seller nor any Company has been a party to or
contributed to any such multi-employer plan since September 26, 1980.
(d) Each Plan that is intended to qualify under Code Sections 401(a)
and 501(a) is so qualified and has been determined by the Internal Revenue
Service to so qualify or has an outstanding determination letter request, and
nothing has occurred to cause the loss of the Plan's qualified status since the
issuance of the most recent favorable determination letter by the IRS with
respect to such Plan.
(e) No accumulated funding deficiency, except for annual minimum
contributions which are not yet due, within the meaning of ERISA Section 302 or
Code Section 412 has been incurred with respect to any Plan of the Companies.
The Companies do not have any liability for (i) any lien imposed under ERISA
Section 302(f) or Code Section 412(n), (ii) any interest payments required under
ERISA Section 302(e) or Code Section 412(m) or (iii) any excise tax imposed by
Code Section 4971. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted or threatened a proceeding to terminate any Plan pursuant to Subtitle
1 of Title IV of ERISA. No Plan has been the subject of a reportable event (as
defined in ERISA Section 4043) as to which a notice would be required to be
filed with the PBGC.
(f) With respect to each Plan, no action, suit, grievance, claim,
arbitration or other manner of litigation with respect to the assets of the Plan
(other than routine claims for benefits made in the ordinary course of Plan
administration for which Plan administrator review procedures have not been
exhausted) is pending, or to Seller's Knowledge, threatened or imminent against
or with respect to the Plan or any Plan sponsor or fiduciary (as defined in
ERISA Section 3(21)).
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(g) Except as otherwise provided in this Agreement, each Plan
(including any Plan covering former employees of any Company) which is
established and maintained by the Companies may be amended or terminated by the
Companies or Buyer on or at any time after the Closing Date.
(h) No payment under any Plan made within two years after the
Closing Date shall constitute an "excess parachute payment" under Section 280G
of the Code.
4.18 Bank Accounts. Section 4.18 of the Disclosure Schedule sets forth
the name of each bank, savings and loan or other financial institution in which
any Company has any account or safe deposit box.
4.19 Broker Liability. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of ARCO, Seller or their Affiliates
in connection with this Agreement or the transactions contemplated hereby, ARCO
and Seller shall be solely responsible and liable for any brokerage, finder's or
similar consultant's fee or other commission in respect of such broker, finder
or similar consultant.
4.20 Financial Statements. The Audited Financial Statements to be
delivered in accordance with Section 2.3(a) shall have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities Exchange Act of 1934, as
amended. The audited balance sheets of ACC at December 31, 1997, and 1996
(including the notes thereto), present fairly the financial position of ACC at
such dates, and the consolidated statement of income, of equity investment and
of cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1997, fairly present the results of operations, equity
investment and cash flows of ACC for each of such years. The unaudited balance
sheets (if any) of ACC as of the last day of each calendar quarter ending
subsequent to December 31, 1997, and prior to the Closing Date, and consolidated
statements of income, of equity investment and of cash flows for the quarterly
periods then ended (the "Unaudited Financial Statements") have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities Exchange Act of 1934, as
amended. Each balance sheet (if any) included among the Unaudited Financial
Statements (including the notes thereto) fairly presents the financial position
of ACC as of the date thereof, and each consolidated statement of income, of
equity investment and of cash flows included among the Unaudited Financial
Statements (including the notes thereto) fairly presents the results of
operations, equity investment and cash flows of ACC for each period presented.
The Interim Date Balance Sheet and the Closing Date Balance Sheet will be
derived from the combined, consolidated balance sheets of ACC. The Interim Date
Balance Sheet (including the related notes) will fairly present the combined
consolidated financial position of the Companies as of its date.
4.21 Black Lung Disclosure. The present actuarial value (determined using
the Black Lung Discount Rate) of the Companies' black lung liability as of the
Interim Date does not exceed that which has been reserved for by the Companies
on the Interim Date Balance Sheet.
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4.22 Conduct of Business. Except as set forth in Section 4.22 of the
Disclosure Schedule, since the Interim Date, the Companies have conducted their
respective businesses only in, and have not engaged in any transaction other
than in, the ordinary and usual course of such businesses or as described in the
Contribution Agreement, and there has not been any change by the Companies in
accounting principles, practices or methods that is not required by GAAP. Except
as provided for herein and other than in the ordinary course consistent with
past practice, since the Interim Date there has not been (i) any increase in the
compensation payable or which could become payable by the Companies to their
respective officers or employees or (ii) any amendment of any of the Companies'
Plans.
4.23 Assets. Except as set forth in Section 4.23 of the Disclosure
Schedule, prior to the Closing Date, ARCO and/or Seller will have transferred or
caused to be transferred to the Companies all tangible and intangible assets of
every description held by ARCO, Seller or any Affiliate of ARCO and/or Seller
under intercompany agreements and arrangements with ARCO, Seller or any
Affiliate of ARCO and/or Seller or otherwise and used exclusively by the
Companies in the conduct of the Companies' respective businesses on and since
the Interim Date.
4.24 CERCLA. None of the Properties is listed on the National Priority
List pursuant to CERCLA or on any similar list pursuant to any state
Environmental Laws.
4.25 Disclaimer of Certain Representations and Warranties. ARCH AND BUYER
ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF ARCO,
SELLER OR ANY AFFILIATE, EMPLOYEE OR AGENT OF ARCO OR SELLER HAS MADE ANY
REPRESENTATION, PROMISE, COVENANT OR WARRANTY REGARDING ANY OF THE COMPANIES,
THEIR PROPERTIES, ASSETS, BUSINESS, OPERATIONS, LIABILITIES OR OBLIGATIONS, OR
OTHERWISE. ARCO AND SELLER HEREBY DISCLAIM ANY IMPLIED WARRANTIES, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN.
4.26 No Other Commitment to Sell LLC Interests. Neither ARCO nor Seller
has sold or has committed to sell the LLC Interests to any other Person, except
to the extent that ITOCHU may have the right to initiate certain procedures
under the provisions contained in Articles 9 and 10 of the CFC Agreement with
respect to the CFC Interests.
4.27 Absence of Undisclosed Liabilities. To Seller's Knowledge, none of
the Companies has any material liabilities, whether accrued, or contingent,
other than (i) liabilities (or reserves therefor) set forth in the Preliminary
Interim Date Balance Sheet, (ii) liabilities set forth in the Disclosure
Schedule, and (iii) liabilities incurred since the date of the Preliminary
Interim Date Balance Sheet in connection with this Agreement or in the ordinary
course of business, consistent with past practices.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ARCH AND BUYER
Arch and Buyer represent and warrant, jointly and severally, to ARCO and
Seller, as of the Effective Date, as follows:
5.1 Organization and Good Standing. Arch and Buyer are corporations duly
incorporated, validly existing and in good standing under the laws of their
states of incorporation.
5.2 Authority. Arch and Buyer have full corporate power and authority to
enter into this Agreement and to perform their respective obligations hereunder.
This Agreement constitutes a valid and binding obligation of each of Arch and
Buyer, enforceable against Arch and Buyer in accordance with its terms, subject
to applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
5.3 No Violations. The execution and delivery of this Agreement by Arch
and Buyer does not, and the consummation of the transactions contemplated hereby
will not, (i) violate any of the provisions of the certificates of incorporation
or bylaws of Arch or Buyer; (ii) result inthe breach of, or constitute a default
under, any material agreement or other material instrument to which Arch or
Buyer is a party or to which any of their respective properties or assets are
bound; (iii) violate any statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award applicable to Arch, Buyer or their
respective properties or assets; or (iv) constitute an event that, with notice,
lapse of time or both, would result in any such violation, breach or default.
5.4 Approvals and Consents. Except with respect to the filings required
under the HSR Act, no consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency, commission or other governmental authority or instrumentality, or any
third party is required to be made or obtained by or with respect to Arch or
Buyer in connection with the execution, delivery and performance of this
Agreement by Arch or Buyer.
5.5 Financial Capability. Arch and Buyer have the financial capability to
perform all of their obligations under this Agreement, and Buyer has available
all funds necessary to pay the Unadjusted Purchase Price, the Adjustment (if
payable by Buyer) and any other amounts contemplated by this Agreement.
5.6 Accredited Investor. Buyer is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act.
5.7 Investment Intent. Buyer is acquiring the LLC Interests for its own
account for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in any transaction that would be in
violation of the securities laws of the United States or
21
any state thereof. Arch and Buyer each acknowledge that the LLC Interests have
not been registered or qualified under, and are sold in reliance upon an
exemption from the registration requirements of, the Securities Act and any
applicable state securities or "Blue Sky" laws, and may not be offered, sold,
transferred, pledged, hypothecated or otherwise assigned unless they are
registered under the Securities Act and any applicable securities or "Blue Sky"
laws of any state or an exemption from such registration is available.
5.8 Arch's and Buyer's Inquiry. Arch and Buyer and their representatives
have reviewed or received copies of, or had the opportunity to review, including
in a data room maintained by Seller, such information from ARCO, Seller and each
of the Companies as they have requested, and have had the opportunity to make
such inquiry of representatives of ARCO, Seller and each of the Companies as
they deem appropriate. Arch and Buyer acknowledge that there are no
representations or warranties, expressed or implied, except as expressly set
forth in this Agreement.
5.9 Broker Liability. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of Arch or Buyer, in connection
with this Agreement or the Proposed Transactions, Arch or Buyer, as the case may
be, shall be solely responsible and liable for any brokerage, finder's or
similar consultant's fee or other commission in respect of such broker, finder
or similar consultant.
5.10 Qualification, Compliance with Acreage Limitations. Each of Arch and
Buyer is qualified under all applicable Laws to hold the interests in Federal
and state coal leases it will acquire at the Closing. Immediately after the
consummation of the Proposed Transactions, neither Arch nor Buyer will itself,
directly or indirectly, or in combination with any Person, own holdings of
Federal or state coal leases in excess of any applicable limitations.
5.11 No Independent Contact with ITOCHU. None of Arch, Buyer, any
Affiliate of either or any officer, director, employee, agent or representative
of any of the foregoing has, or prior to the Closing will have, communicated
with or contacted ITOCHU in respect of the transactions contemplated by this
Agreement, other than in the presence of one or more representatives of ARCO or
as otherwise authorized by ARCO.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 Access to Information.
(a) Arch and Buyer acknowledge that prior to the Effective Date,
Seller has caused each of the Companies to give Buyer and its authorized
representatives reasonable access to the employees, offices, properties and a
data room containing certain books and records of the Companies and their
predecessors, has permitted Buyer to make inspections of and tour the Companies'
mines and has furnished Buyer with certain financial and operating data and
other information with respect to the business, assets, properties, operations,
liabilities and obligations of each of the Companies and their predecessors.
Prior to the Closing Date, Buyer shall have reasonable access during normal
business hours to the operations, facilities, employees and
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representatives of Seller, the Companies or ARCO as reasonably necessary to (i)
verify the representations and warranties given by Seller and/or ARCO hereunder,
or by ARCO and/or Delta under the Contribution Agreement, and (ii) begin
planning for an orderly transition process with respect to transactions
contemplated by this Agreement. Except as set forth in the preceding sentence or
otherwise provided in this Agreement, from and after the Effective Date, neither
Arch nor Buyer shall have the right to access the employees, offices,
properties, books and records of any of the Companies, to inspect the Companies'
mines or other properties or to inspect or have furnished financial or operating
data or other information with respect to the business, assets, properties,
operations, liabilities or obligations of Seller or any of the Companies.
(b) Prior to the Closing, Buyer shall keep (and shall cause its
directors, officers, employees, representatives, advisors and Affiliates to
keep) all information relating to each of the Companies (including any such
information received prior to the date hereof) confidential, and shall use such
information only, on the terms and conditions as are set forth in the
confidentiality agreements between Seller and Buyer, together with any
supplements or amendments thereto reasonably requested by Seller from time to
time. After the Closing, each party hereto agrees to keep the terms and
conditions of this Agreement confidential, and to redact any provisions
reasonably requested by any other party (including Sections 6.19 and Section
6.21) from copies of this Agreement filed with the Securities and Exchange
Commission, except for such matters as may be required to be disclosed by law or
applicable stock exchange requirements or that are generally available in the
public domain other than as a result of a breach of this Agreement by such
party.
(c) After the Closing, Buyer shall, at its own expense or at the
expense of the Companies, cause each Company to preserve and keep, or transport
to a storage site of its own selection where it shall preserve and keep, the
books and records of each of the Companies obtained by Buyer or retained by the
Companies, including financial or business transaction records, books of
original entry, tax records and supporting documents, for a period of seven
years from the Closing Date or such longer period if required under applicable
Laws. Within 60 days after the Closing, Seller shall provide Buyer with a list
or inventory of the document types and inclusive dates of the records
transmitted to Buyer or retained by the Companies. Buyer shall make or shall
cause the Companies to make such acquired or retained records as are dated up to
the Closing Date and included in the inventory provided by Seller, including the
general ledger and mining reports, available to Seller as may be reasonably
requested by Seller in connection with, among other things, any of Seller's
financial reporting or Tax filing obligations, for a period of seven years from
the Closing Date or such longer period if required under applicable Laws. For a
period of 15 years after the Closing Date, Buyer shall notify Seller in writing,
on an annual basis, of the document types and, if applicable, inclusive dates of
any such retained records, that it or the Companies intend to destroy during the
following one-year period. If Seller desires access to such records for a period
of time longer than specified in Buyer's annual notice, Seller shall notify
Buyer in writing, not more than 60 days following Seller's receipt of Buyer's
annual notice, of its desire to retain such records, and Buyer shall deliver, or
cause the Companies to deliver, such records to Seller. If Seller does not
notify Buyer of its desire to retain records
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within such 60-day period, Buyer or the Companies may dispose of such records
according to prudent records management practices in the ordinary course of
business.
(d) The parties hereby acknowledge that any in-house counsel of the
Companies or Seller who are Employees and who participated in the preparation,
negotiation or consummation of this Agreement or the transactions contemplated
hereby were providing legal representation for the Seller and, notwithstanding
any other provision of this Agreement, neither the Companies or Seller nor such
counsel shall be required to disclose under any circumstance any information or
documents covered by the attorney-client privilege or the work-product doctrine
as such information or documents were developed in the course of such
representation. All such information and documents shall remain the sole and
exclusive property of Seller.
6.2 Conduct of the Business Pending the Closing. From the Effective Date
to the Closing Date, except in connection with the transactions contemplated by
this Agreement and the Contribution Agreement, or as otherwise consented to in
writing by Buyer (which consent shall not be unreasonably withheld, conditioned
or delayed), Seller and/or ARCO shall use commercially reasonable efforts, and
consistent with its obligations under the limited liability company agreements
of each of the Companies and TBCC, to cause each Company and TBCC to (a) conduct
its business in the ordinary course and consistent with past practices, except
that (i) none of the properties or assets listed in the Disclosure Schedule
valued at $250,000 or more may be transferred, disposed of encumbered or
hypothecated, (ii) no individual capital expenditure by any Company or TBCC in
excess of $1 million or capital expenditures aggregating (for all Companies and
TBCC) in excess of $25 million shall be made or committed and (iii) no Company
or TBCC shall enter into any coal supply agreement with a term in excess of one
year or materially amend any coal supply agreement disclosed in the Disclosure
Schedule having a term in excess of one year (but TBCC shall have the right, but
not the obligation, to bid on the Thunder Cloud Federal Lease Tract on such
terms and conditions, including the amount of any bonus bid, as it elects in its
sole discretion), (b) keep in full force and effect its limited liability
company existence, (c) comply in all material respects with all material
contracts, agreements and commitments set forth in Section 4.10 of the
Disclosure Schedule to which it is a party, (d) use commercially reasonable
efforts to retain its employees and maintain its business relationships with
customers and suppliers and (e) maintain all facilities, equipment and other
tangible assets in accordance with past maintenance practices of such Company or
TBCC.
6.3 Notification. Between the Effective Date and the Closing Date, Seller
and Buyer will each, promptly upon becoming aware thereof, notify the other in
writing of any fact or condition that causes or constitutes a breach of any of
the other party's representations and warranties made as of the Effective Date
or of any default in the other party's performance of its covenants and
agreements herein.
6.4 Antitrust Notification. Seller and Buyer shall, as promptly as
practicable, but in no event later than ten business days after the Effective
Date, file with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") the
notification and report form required for the Proposed Transactions pursuant to
the HSR Act. Seller and Buyer shall furnish to each other such necessary
information and
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reasonable assistance as may be requested in connection with the preparation of
any filing required to be made under the HSR Act. Seller and Buyer shall use
commercially reasonable efforts to respond as promptly as practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation and to obtain as promptly as practicable any
clearance required under the HSR Act for the purchase and sale of the LLC
Interests.
6.5 Fees and Expenses. Except as otherwise specifically provided in this
Agreement, Seller and Buyer shall bear their own fees and expenses incurred in
connection with this Agreement (including fees and expenses of their respective
investment bankers) and in connection with all obligations required to be
performed by each of them under this Agreement.
6.6 Publicity. Except as otherwise required by law or applicable stock
exchange requirements, no party hereto shall issue any press release or public
statement relating to or concerning this Agreement or the matters contained
herein, without obtaining the prior approval of the other party hereto of the
contents and the manner of presentation and publication thereof, which approval
shall not be unreasonably withheld, conditioned or delayed.
6.7 Post-Closing Assistance. From and after the Closing Date, upon the
request of either Arch or Buyer, on the one hand, or ARCO or Seller, on the
other, the parties hereto shall do, execute, acknowledge and deliver all such
further acts, assurances, deeds, assignments, transfers, conveyances and other
instruments and papers as may be reasonably required or appropriate to carry out
the transactions contemplated by this Agreement.
6.8 Guarantees. ARCO and/or Seller have provided certain guarantees,
indemnities and similar obligations with respect to the Companies, which
guarantees, indemnities and obligations are set forth in Section 6.8 of the
Disclosure Schedule. Arch and Buyer agree to cooperate with ARCO and Seller and
use their best efforts to cause the release of each such guarantee, indemnity
and obligation, including the substitution of Arch, Buyer and/or an Affiliate of
Arch or Buyer as the guarantor, indemnitor or responsible party thereunder and
the release of ARCO and Seller, on or as soon as practicable after the Closing.
Without limiting the foregoing, Arch and Buyer hereby undertake, assume and
agree to perform, pay and discharge all such guarantees, indemnities and
obligations, and Arch and Buyer shall indemnify and hold harmless any member of
Seller's Group, including any officers, directors or Affiliates of such member,
with respect to all Losses arising out of or relating to any such guarantee,
indemnity or obligation.
6.9 Name Changes. No later than 30 days following the Closing Date,
Buyer shall amend the certificate of incorporation of each Company to remove the
word "ARCO" or any similarity or reference thereto. The new corporate name of
the Companies adopted by Buyer shall not contain any word or words confusingly
similar to "ARCO" or the "Atlantic Richfield Company." No later than six months
following the Closing Date, Buyer shall remove the marks and names "ARCO," "ARCO
COAL" and "ATLANTIC RICHFIELD" and the Spark Design and any other words, names
or symbols proprietary to Seller, from all tangible and intangible properties,
real and personal, acquired by Buyer hereunder.
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6.10 Surety Bonds. Buyer will use commercially reasonable efforts to
submit surety bonds (collectively, "Substitute Surety Bonds" and individually, a
"Substitute Surety Bond"), effective as of the Closing, in substitution for
ARCO's or Seller's surety bonds listed in Section 4.13 of the Disclosure
Schedule (collectively, "Surety Bonds" and individually, a "Surety Bond"). If
all the Substitute Surety Bonds are not effective 90 days after the Closing
Date, Buyer shall be required to pay ARCO or Seller, in consideration of ARCO or
Seller keeping in effect those Surety Bonds for which a Substitute Surety Bond
is not then effective (collectively, the "Post-Closing Surety Bonds" and
individually, a "Post-Closing Surety Bond"), an amount equal to one-half of one
percent of the face value of the Post-Closing Surety Bonds per month (or pro
rata portion thereof) until such time as Substitute Surety Bonds are effective,
it being agreed that the aggregate face value of the Post-Closing Surety Bonds
shall be reduced dollar-for-dollar by the face value of Substitute Surety Bonds
as such Substitute Surety Bonds become effective after the Closing Date without
regard to whether any of the Post-Closing Surety Bonds are released. In the
event Substitute Surety Bonds in substitution for all the Post-Closing Surety
Bonds are not effective within 180 days after the Closing Date, in lieu of
Buyer's payment obligation under the preceding sentence, Buyer shall obtain, for
the benefit of ARCO and/or Seller, performance bonds or other assurances, from
such surety providers and with such terms and conditions reasonably acceptable
to ARCO and Seller (the "Performance Bonds") in an aggregate face value equal to
the aggregate face value of the Post-Closing Surety Bonds on and after such
180th day, it being agreed that the aggregate face value of the Performance
Bonds shall be reduced dollar-for-dollar by the face value of Substitute Surety
Bonds as such Substitute Surety Bonds thereafter become effective without regard
to whether any of the Post-Closing Surety Bonds secured by the Performance Bonds
are released. Without limiting the foregoing, Arch and Buyer shall indemnify and
hold harmless each member of Seller's Group with respect to all Losses arising
under the Surety Bonds.
6.11 Black Lung Liability. Arch and Buyer have reviewed any reserves and
accruals of the Companies, including those which are with respect to potential
liability under the Black Lung Benefits Act of 1972, as amended, the Black Lung
Benefits Reform Act of 1977, as amended, and other applicable Federal and state
black lung acts or laws designed to provide such benefits to employees. Buyer
acknowledges that, except with respect to any breach of the representation and
warranty made by Seller in Section 4.21 in respect of black lung liabilities,
any Loss in respect of black lung shall not form the basis for any assertion of
a breach of a representation or warranty contained in this Agreement.
6.12 Litigation Support. From and after the Closing Date, Arch and Buyer
shall indemnify and hold harmless each member of Seller's Group with respect to
all Losses arising out of or relating to any matter set forth in Section 4.14 of
the Disclosure Schedule. Without limiting the foregoing, if and for so long as
ARCO or Seller is defending or contesting any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction involving any of the Companies,
Arch and Buyer shall cooperate and shall cause the Companies to cooperate (on
and after the Closing Date) with ARCO or Seller and its counsel and agents in
such defense or contest, make available its and their personnel and provide
26
such testimony and access to its and their books and records as shall be
necessary in connection with such defense or contest, all at Buyer's cost.
6.13 Insurance. Buyer has reviewed the insurance policies set forth in
Section 4.11 of the Disclosure Schedule. Seller agrees that all such insurance
policies shall remain in full force and effect until the Closing. All coverage
and benefits under such insurance policies and any other insurance policies of
Seller or its Affiliates (subject to the terms thereof) shall cease at the
Closing. On and after the Closing Date, Buyer shall be solely responsible for
obtaining and maintaining any and all insurance coverage and protection relating
to the respective business, assets, properties, operations, liabilities and
obligations of the Companies.
6.14 Arch's and Buyer's Environmental Responsibilities. Arch and Buyer
hereby acknowledge and agree that all Environmental Liabilities asserted against
the Companies with respect or related to any property listed in Section 6.14 of
the Disclosure Schedule (the "Properties") shall be retained by the Companies on
and following the Closing Date, and that all Environmental Liabilities asserted
against any member of Seller's Group with respect or related to the Properties
shall be assumed by Arch and Buyer. From and after the Closing Date, Arch and
Buyer shall perform, pay and discharge or cause the Companies to perform, pay
and discharge all retained and assumed Environmental Liabilities, and shall
indemnify and hold harmless each member of Seller's Group with respect to such
Environmental Liabilities.
6.15 ARCO's and Seller's Environmental Responsibilities. ARCO and Seller
hereby acknowledge and agree that all Environmental Liabilities resulting from
the ownership or operation of properties other than the Properties (the "Other
Properties") by the Companies or any of their predecessors or Affiliates (unless
caused by Buyer, Arch, the Companies or any of their respective Affiliates on or
after the Closing Date) shall be assumed by ARCO and Seller. From and after the
Closing Date, ARCO and Seller shall perform, pay and discharge any such
Environmental Liabilities assumed pursuant to this Section 6.15, and shall
indemnify and hold harmless each Buyer Indemnitee with respect to such
Environmental Liabilities.
6.16 Other Liabilities.
(a) Except as otherwise expressly provided in this Agreement and
without limiting ARCO's or Seller's liability for breaches of representations
and warranties and defaults of covenants and agreements under this Agreement and
the Contribution Agreement, in addition to the Environmental Liabilities, Arch
and Buyer hereby acknowledge and agree that all Other Liabilities shall be
retained by the Companies on and following the Closing Date. Except with respect
to Other Liabilities retained by Seller or required to be indemnified by ARCO
and/or Seller, in each case as expressly provided under this Agreement, and by
ARCO and/or Delta, in each case as expressly provided under the Contribution
Agreement, from and after the Closing Date, Buyer shall perform, pay or
discharge or cause the Companies to perform, pay or discharge such Other
Liabilities, and shall indemnify and hold harmless any member of Seller's Group
and any officer, director, employee, agent or Affiliate of such member with
respect to such Other Liabilities.
27
(b) "Other Liabilities" shall mean any and all claims, actions,
causes of action, damages, losses, liabilities, obligations, penalties,
judgments, amounts paid in settlement, assessments, costs, disbursements or
expenses (including attorneys' fees and costs, experts' fees and costs and
consultants' fees and costs) of any kind or nature, whether existing on the
Closing Date or arising thereafter (including those absolute, accrued,
contingent, unknown or otherwise), that are asserted against a Company or any
member of Seller's Group (including liability for property damages, business
losses, personal injuries, penalties or fines and any losses of any character
whatsoever arising from or relating to any surface slippage or subsidence at the
West Elk Mine, except as provided in Section 6.21) arising out of, based on or
relating to the business, assets, properties, operations, liabilities or
obligations of any and all Companies, other than Environmental Liabilities.
6.17 ITOCHU Buy/Sell Agreement. Seller and Buyer acknowledge that the
execution and delivery of this Agreement may give ITOCHU the right to initiate,
at its election, certain procedures under the provisions contained in Articles 9
and 10 of the CFC Agreement and agree to use commercially reasonable efforts to
cause ITOCHU to waive any such rights relating to the Proposed Transactions
prior to the Closing Date. Within five days after the Effective Date, Seller
shall give ITOCHU a "notice of proposed Transfer" pursuant to Section 9.1.2 of
the CFC Agreement.
6.18 Commercially Reasonable Efforts. Each of Seller and Buyer will use
commercially reasonable efforts to take all actions and do all things necessary
in order to consummate and make effective the transactions contemplated by this
Agreement (including the satisfaction, but not the waiver, of the closing
conditions set forth in Sections 10.1 and 10.2).
6.19 [Confidential Treatment Requested; material omitted from pp. 28-30.]*
28
29
6.20 Substitute Member in CFC Agreement. Buyer shall use its best
efforts, in accordance with the terms of the CFC Agreement, to cause any
references to Seller in the CFC Agreement to be amended to refer to Buyer,
including references to Seller contained in Sections 5.2.5, 5.7, 5.10, 6.1, 9.1
and 10.5.3 of the CFC Agreement.
6.21 West Elk Mine Surface Facilities.
(a) The parties hereto acknowledge that movement of the surface of
the earth (a "Surface Movement") at the West Elk Mine has in the past required,
and may after the Effective Date require, certain remedial activities in order
to permit the use, including the conveying and loading of coal (the "Intended
Use"), of the surface facilities of the West Elk Mine. Prior to the Closing
Date, Seller and ARCO shall take such periodic remedial activities as they
reasonably determine are appropriate to permit the Intended Use of the surface
facilities of the West Elk Mine. In addition, to the extent remedial activities
are required as a result of a Surface Movement occurring prior to the Closing
Date, if not previously remediated, Seller and/or ARCO shall, at their election,
either (i) during the 15-day period following the Closing Date perform at
Seller's and/or ARCO's cost and expense such actions as are reasonably required
to permit the Intended Use of the surface facilities of the West Elk Mine, or
(ii) reimburse Buyer for the actual costs reasonably incurred by Buyer to
perform, during the 15-day period following the Closing Date, actions reasonably
required to permit the Intended Use of the surface facilities of the West Elk
Mine. During such 15-day period, Buyer and Arch shall
30
reasonably cooperate with ARCO and Seller in any activities conducted by either
pursuant to this Section 6.21(a).
(b) If any Surface Movement occurs prior to the Closing Date that
precludes the Intended Use of the surface facilities of the West Elk Mine, and
that is not capable of being substantially remedied within the 15-day period
following the Closing Date or which is not substantially remedied by Seller or
ARCO within such 15-day period pursuant to Section 6.21(a) (a "West Elk Surface
Movement Event"), Seller and ARCO shall indemnify and hold harmless Buyer
against any and all Losses caused by and resulting from such West Elk Surface
Movement Event. ARCO and Seller shall have no obligation to indemnify any Buyer
Indemnitee for any Losses arising from or relating to any Surface Movement that
occurs at the West Elk Mine on or after the Closing Date.
6.22 Disclosure Schedules. The parties hereto shall have ten (10) days
after the Effective Date to revise the Disclosure Schedules delivered hereunder
by written notice to the other party; provided, however, that no such revision
shall materially alter the nature or effect of the specific item so modified, or
alone or in the aggregate have a Material Adverse Effect. The revised Disclosure
Schedules shall become the Disclosure Schedules to the Agreement as if initially
attached hereto.
ARTICLE 7
EMPLOYEES AND EMPLOYEE BENEFITS
7.1 Retention of Employees and Continuation of Benefits.
(a) Section 7.1(a) of the Disclosure Schedule sets forth a list of
the Employees who will be retained in employment by the Buyer ("Transferees"),
which list shall be updated and supplemented by ARCO and agreed to by Buyer on
and as of the Closing Date. Buyer shall take such action as may be necessary to
provide that as of the Closing Date, the Transferees shall remain employed by
the Companies or shall be employed by Buyer and Transferees shall, except as
otherwise provided, participate in Buyer's employee benefit plans offered to
similarly situated employees.
(b) Without limiting the foregoing, for purposes of this Article 7,
Buyer shall ensure that on and following the Closing Date, the Transferees shall
receive credit with respect to any benefit plan, arrangement or other right
whether contemplated in Section 4.17 of the Disclosure Schedule or otherwise for
any period of employment with ARCO or the Companies (including any applicable
predecessors or Affiliates) prior to the Closing Date for eligibility and
vesting purposes under each employee benefit plan, arrangement or other right;
provided, however, that in no event shall any Transferees be given credit for
any such purpose for any period of employment that was not counted for such
purpose under any applicable plan, arrangement or Plan of ARCO or the Companies
prior to the Closing Date.
7.2 Retention of Retirement Plans for Companies. Section 7.2 of the
Disclosure Schedule sets forth a list of any retirement plan established and
maintained by the Companies (collectively, the "Retirement Plans"). Buyer shall
take such action as may be necessary to cause
31
any applicable Company to continue to administer and maintain its respective
Retirement Plan until December 31, 1998. On and following the Closing Date,
Buyer shall be responsible for retaining the sponsorship and all assets,
accounts, liabilities and obligations of the Retirement Plans applicable to
Transferees or former employees of the applicable Companies, and Buyer shall
release, indemnify and hold harmless ARCO and any member of Seller's Group with
respect to all Losses arising out of or relating to the Retirement Plans. Buyer
agrees that if, after December 31, 1998, the defined benefit Retirement Plan is
merged into the Buyer's Retirement Plan, the opening balance credits in the
Buyer's Retirement Plan with respect to Transferees shall be no less than the
assets of the merged Retirement Plan allocable to the Transferees, and
Transferees shall be entitled to the transition credits, though not longer than
December 31, 2012, based on their years of Retirement Plan benefit accrual
service, as provided by the Buyer's Retirement Plan as of the date of such
merger.
7.3 ARCO's Pension Plan. As of the Closing Date, any Transferees who are
participants in the Atlantic Richfield Retirement Plan II (the "ARCO Retirement
Plan") shall no longer participate in such plan. Buyer shall take such action as
may be necessary to provide that all such Transferees shall participate in
Buyer's cash balance defined benefit retirement plan (the "Buyer's Retirement
Plan"). Buyer understands and agrees that the accrued benefits of any
Transferees under the ARCO Retirement Plan shall not increase following the
Closing Date and that any surplus under such plan with respect to such
Transferees shall be retained by ARCO. Buyer agrees to provide open balance
credits in Buyer's Retirement Plan with respect to Transferees based on the
Transferee's monthly accrued benefit under the ARCO Retirement Plan and the
conversion factor under the Buyer's Retirement Plan, as in effect on the Closing
Date. Such Transferee's open balance credits shall be reduced by the present
value of the Transferee's accrued benefit under the ARCO Retirement Plan. Buyer
also agrees to provide Transferee's with transition credits, though not longer
than December 31, 2012, based on their years of ARCO Retirement Plan benefit
accrual service, as provided under Buyer's Retirement Plan, as in effect on the
Closing Date.
7.4 Thrift Plan. As of the Closing Date, any Transferees who are
participants in the Atlantic Richfield Capital Accumulation Plan II and the
Atlantic Richfield Savings Plan II (collectively, the "ARCO Accumulation and
Savings Plans") shall no longer participate in such plans. Buyer shall take such
action as may be necessary to provide that all such Transferees shall
participate in Buyer's defined contribution retirement plan(s) (collectively,
the "Buyer's Savings Plan"). Buyer shall allow Transferees to make direct
rollovers under Section 401(a)(31) of the Code or elective transfers under
Treas. Reg. 1.411(d)-4, Q&A-3 of their account balances from the ARCO
Accumulation and Savings Plans to Buyer's Savings Plan. Buyer and Seller
understand and acknowledge that Transferees who are participants in the ARCO
Accumulation and Savings Plans may at their election choose to leave their
contributions in either or both of the ARCO Accumulation and Savings Plans.
7.5 Other Employee Benefits. Except as specifically set forth in Sections
7.2, 7.3 and 7.4, as of the Closing Date (i) Employees of ARCO or the Companies
(and their respective beneficiaries and dependents) shall no longer participate
in any employee benefit plan or arrangement maintained by ARCO and (ii) Buyer
and the Companies shall assume or retain (as
32
applicable) all liabilities relating to Transferees or former employees of the
Companies (and their respective beneficiaries and dependents). Without limiting
the provisions of Section 7.1, Buyer shall continue to provide until December
31, 1998 under plans comparable to plans applicable to Transferees prior to the
Closing, the following benefits: (i) the group health coverage currently
provided to the Transferees, former employees and their dependents, or any
sub-group thereof (collectively, the "Participants"), or comparable group health
coverage which shall (A) waive any pre-existing condition limitations on
benefits for the Participants, (B) waive any eligibility waiting periods for the
Participants, and (C) give effect, in determining or applying any deductible and
maximum out-of-pocket limitations, to claims incurred, amounts paid by or on
behalf of and amounts reimbursed to the Participants under ARCO's or a Company's
group health plan during the calendar year in effect as of the Closing Date, and
(ii) benefits under the employee benefit plans described in Section 4.17 of the
Disclosure Schedule. Without limiting the foregoing, Buyer agrees to provide
coverage to the Transferees as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985.
7.6 Flexible Spending Accounts. Seller and Buyer agree to cooperate with
each other in all reasonable respects to effect an orderly transition for
Employees from the flexible spending account plans in which such Employees
currently participate to Buyer's comparable plans as appropriate and to the
extent permitted by applicable law.
7.7 Cooperation. Seller and Buyer agree to cooperate with each other in
all reasonable respects with respect to administrative issues arising out of
this Agreement that relate to the Plans of Seller, Buyer or their respective
Affiliates.
7.8 Black Lung Matters. After the Closing, and subject to Arch's and
Buyer's right to indemnity for ARCO's and/or Seller's breach of its
representation and warranty in Section 4.21 of this Agreement, Buyer shall pay
or cause the Companies to pay all liabilities of Seller or the Companies under
the Federal Mine Safety and Health Act of 1977, as amended, and applicable
Federal and state laws for claims for disability or death due to "black lung" or
pneumoconiosis, whenever created.
7.9 Employee Termination by Buyer.
(a) In the event the employment of any Transferee is terminated for
any or no reason following the Closing Date, ARCO shall have no liability with
respect to any severance or other post-employment benefits applicable to such
termination, and Buyer shall indemnify and hold harmless ARCO and any member of
Seller's Group for all losses, claims, damages, liabilities, costs and expenses
(including any attorney fees) arising out of or relating to any termination of
employment or any severance or other post-employment benefit with respect to the
Transferees following the Closing Date. Without limiting the foregoing, Buyer
agrees to defend and indemnify ARCO or any member of Seller's Group for any
losses, claims, damages, liabilities, costs and expenses (including any attorney
fees) arising out of or relating to any claim for severance benefits for
whatever reason or basis, including a change of a Transferee's terms and
conditions of employment with the Buyer such as a change in compensation or
employee benefit plans.
33
(b) Without limiting the generality of the foregoing, in the event
the employment of any Transferee is terminated for any or no reason, other than
for cause in accordance with Buyer's applicable disciplinary procedures, if any,
within one year following the Closing Date, Buyer shall provide such Transferee
severance benefits, including the payment of an allowance and the continuation
of medical and dental coverage and the R-60, in accordance with the provisions
of the Atlantic Richfield Special Termination Allowance Plan, as amended, the
Atlantic Richfield Termination Allowance Plan Policy Provisions, the Canyon Fuel
Company Special Termination Allowance Plan and the Canyon Fuel Company Special
Termination Plan Policy Provisions, copies of which are attached hereto as
Exhibit C, and any individual severance arrangement as set forth in Section 4.17
of the Disclosure Schedule, applicable to the Transferees prior to the Closing
Date.
(c) Notwithstanding anything else in this Agreement, Buyer shall not
be required to provide severance benefits for any of the individuals set forth
in Section 7.9(c) of the Disclosure Schedule.
ARTICLE 8
TAXES
8.1 Certain Tax Matters.
(a) Seller will prepare and file or cause to be prepared and filed
all Tax Returns for each Company required to be filed prior to the Closing Date
with the appropriate United States, state, local and foreign governmental
entities for any taxable period of each Company that ends on or before the
Closing Date (the "Pre-Closing Tax Period"). Seller will make all payments shown
thereon as owing with respect to any such Tax Return. Seller will prepare and,
if required to do so by applicable law, deliver to Buyer for signing and filing
any state income Tax Returns of each Company with respect to any Pre-Closing Tax
Period (including any short period) that have not been filed prior to the
Closing Date. Buyer will make all payments shown thereon as owing with respect
to any such Tax Return.
(b) Except as otherwise provided in Section 8.1(a) or (c), Buyer
will prepare and file or cause to be prepared and filed all Tax Returns for each
Company that are required to be filed with the appropriate United States, state,
local and foreign governmental entities for all periods as to which such Tax
Returns are due after the Closing Date. Buyer will pay or cause to be paid all
Taxes required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include
but not end on the Closing Date, to the extent permissible pursuant to
applicable law, Seller will, and Buyer will cause each Company to, (i) take all
steps as are or may be reasonably necessary, including the filing of elections
or returns with applicable taxing authorities, to cause such period to end on
the Closing Date; or (ii) if clause (i) is inapplicable, report the operations
of each Company only for the portion of such period ending on or immediately
before the Closing Date in a combined, consolidated or unitary Tax Return filed
by Seller, notwithstanding that such taxable period does not end on the Closing
Date. If clause (ii) applies to a taxable period of a Company, the portion of
such taxable period included in such return filed by Seller will be
34
treated as a Pre-Closing Tax Period described in Section 8.1(a) and Buyer will
not be responsible for filing such return for such year pursuant to Section
8.1(b).
(d) In order to assist Seller in the preparation of all Tax Returns
that Seller is required to prepare pursuant to Section 8.1(a), Buyer will
prepare or cause each Company to prepare and deliver within 60 days of receipt
Seller's standard Federal and state tax return data gathering packages relating
to the Companies. In addition to providing such packages, Buyer will promptly
provide or cause to be provided to Seller such other information as Seller may
reasonably request (including access to books, records and personnel) in order
for the operations of the Companies to be properly reported in such Tax Returns,
for the preparation for any Tax audit or for the prosecution or defense of any
claim, suit or proceeding relating to Taxes.
(e) To the extent refunds of Taxes are not recorded on the Closing
Balance Sheet, Buyer will pay or cause to be paid to Seller all refunds or
credits of Taxes (including any interest thereon) received by Buyer or CFC after
the Closing Date and attributable to Taxes paid by Seller with respect to any
Pre-Closing Tax Period. Such payment will be made to Seller within 30 days after
receipt of any such refund from or allowance of such credit by the relevant
taxing authority.
(f) Seller will indemnify and hold Buyer harmless from and against
any and all liability for any taxable period as a result of Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law) for taxes
of any corporation or other entity, other than the Companies, which is or has
been affiliated with the Seller.
ARTICLE 9
INDEMNIFICATION
9.1 Arch's and Buyer's Indemnification. Subject to any applicable
limitations set forth in this Article 9, Arch and Buyer, jointly and severally,
shall indemnify and hold harmless each member of Seller's Group and their
respective officers, directors, employees, agents and Affiliates, other than the
Companies (collectively, the Seller Indemnitees"), from and against any and all
Losses to which they or any of them may become subject, including as a result of
claims by third parties, to the extent caused by:
(a) any breach or default in performance by Arch or Buyer of any
covenant, obligation or agreement of Arch or Buyer contained in this Agreement,
including those obligations of Arch and Buyer set forth in Articles 3, 6, 7 and
8 hereof, specifically including any covenant, obligation or agreement of Arch
or Buyer in respect of Environmental Liabilities related to the Properties as
provided in Section 6.14, and in respect of Other Liabilities as provided in
Section 6.16(a); or
(b) any breach of any representation or warranty made by Arch or
Buyer in this Agreement or in any certificate, instrument or other document
delivered by or on behalf of Arch or Buyer at the Closing;
35
and as otherwise expressly provided for in this Agreement, including in respect
of Transfer Taxes as provided in Section 2.4.
9.2 ARCO's and Seller's Indemnification. Subject to any applicable
limitations set forth in this Article 9, ARCO and Seller, jointly and severally,
shall indemnify and hold harmless Arch, Buyer and their respective officers,
directors, employees, agents and Affiliates, including after the Closing, the
Companies (other than CFC) and their officers, directors, employees, agents and
Affiliates (collectively, the "Buyer Indemnitees"), from and against any and all
Losses to which they or any of them may become subject, including as a result of
claims by third parties, to the extent caused by:
(a) any breach or default in performance by ARCO or Seller, as the
case may be, of any covenant, obligation or agreement of ARCO or Seller
contained in this Agreement including those obligations of ARCO and Seller set
forth in Articles 3, 6, 7 and 8 hereof, specifically including any covenant,
obligation or agreement of ARCO or Seller in respect of Environmental
Liabilities related to the ownership or operation of the Other Properties, as
provided in Section 6.15, and in respect of certain Tax liabilities under
Section 8.1(f); or
(b) any breach of any representation or warranty made by ARCO or
Seller in this Agreement or in any certificate, instrument or other document
delivered by or on behalf of ARCO or Seller at the Closing;
and as otherwise expressly provided for in this Agreement.
9.3 Monetary Limitation.
(a) As used in this Agreement, "Losses" shall mean any losses,
claims, damages, liabilities, out-of-pocket costs and expenses (including
judgment costs of settlement and reasonable attorneys', consultants' and
experts' fees). "Other Losses" shall mean any Losses as defined in the
Contribution Agreement. "Combined Buyer's Losses" shall mean the aggregate of
all Losses of Buyer Indemnitees and all Other Losses of Buyer Indemnitees that
ARCO, Seller or Delta are obligated to indemnify against pursuant to this
Agreement or pursuant to the Contribution Agreement, [Confidential Treatment
Requested]*. Notwithstanding the foregoing, the dollar amount of any Losses
shall be determined after taking into account the limitations set forth in
Section 9.6(d).
(b) ARCO, Seller and Delta shall have no obligation to indemnify any
Buyer Indemnitee pursuant to Section 9.2 (other than for any breach of the
representations, warranties or covenants set forth in Sections 4.6, 4.12(b),
4.26, 6.15 and 6.21), unless and until the Combined Buyer's Losses incurred or
sustained by all Buyer Indemnitees exceeds $25 million (provided that no
individual Loss or Other Loss of less than $500,000 shall be counted against
such $25 million), and then only for the excess over $25 million. In addition,
the liability of ARCO, Seller and Delta to indemnify the Buyer Indemnitees for
Combined Buyer's Losses (other than Losses arising under Sections 4.6, 4.26,
6.15 and 6.21 of this Agreement [Confidential Treatment
Requested]* shall in no event exceed $500 million in the aggregate.
36
9.4 Nature and Survival; Time Limits.
(a) All representations and warranties set forth in Articles 4 and 5
shall survive the Closing and continue in effect until the first anniversary of
the Closing Date, at which time any and all liability arising out of or relating
to such representations and warranties shall terminate, provided that ARCO's and
Seller's representations and warranties under Section 4.6 as to title to the LLC
Interests to which Buyer's indemnification obligations apply shall survive the
Closing for three years. Any claim against any party hereto for indemnification
pursuant to this Agreement as a result of any breach of representation or
warranty made by such party must be made promptly, and in all events within the
period of time during which such representation or warranty survives the Closing
pursuant to this Section 9.4(a), if any.
(b) Except for the representations and warranties described in
Section 9.4(a), all covenants, obligations and agreements of the parties set
forth in this Agreement, including those obligations set forth in Articles 6, 7
and 8 hereof, shall survive indefinitely.
9.5 Limitation on Remedies; Mitigation. The indemnification provided in
this Agreement, subject to any applicable limitations thereto set forth in this
Agreement, shall be the sole and exclusive remedy available to a party for any
breach, default or violation of this Agreement by the other party. The
Indemnified Party shall use all reasonable efforts to mitigate any Losses.
9.6 General Provisions. In the case of any claim for indemnification
brought pursuant to this Agreement:
(a) The party entitled to indemnification (the "Indemnified Party")
shall notify the party obligated to provide indemnification (the "Indemnifying
Party") promptly upon (i) receipt of notice of the commencement of the claim by
a third party for which indemnification is sought pursuant to this Agreement,
(ii) becoming aware of a claim for indemnification not involving a claim by a
third party and (iii) the occurrence of any material event or change with
respect to any ongoing claim, in writing and in reasonable detail, and within
any applicable time limits specified in this Agreement.
(b) In case any such claim is brought against any Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, or in
respect of any ongoing action, the Indemnifying Party will be entitled to
participate therein and, to the extent it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense thereof. Subsequent
to such assumption of defense, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; provided, however,
that the Indemnified Party shall thereafter have the right to participate in the
defense of such claim and to be represented, solely at its expense, by advisory
counsel selected by it. In all cases in which the Indemnifying Party assumes the
defense of such claim, the Indemnifying Party shall control such defense, and
any settlement of such claim shall require the consent of the Indemnified Party,
which consent may not be unreasonably withheld, conditioned or delayed.
Notwithstanding anything to the contrary contained in this Section 9.6, the
Indemnified Party shall have the right to employ separate
37
counsel at its sole cost and expense if there shall be available one or more
defenses or one or more counterclaims available to the Indemnified Party which
conflicts with one or more defenses or one or more claims or counterclaims
available to the Indemnifying Party. Whether or not the Indemnifying Party shall
have assumed the defense of a claim for which the Indemnified Party is entitled
to be indemnified, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such claim without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed.
(c) The Indemnified Party will, at the expense of the Indemnifying
Party, cooperate and consult with the Indemnifying Party in the defense of any
such action and shall furnish any documents and endeavor to make available any
witnesses under its control.
(d) Any indemnification payment shall be (i) limited to the Losses
actually incurred (after giving effect to the Present Value Benefit, realized or
realizable by the Indemnified Party in connection with or as a result of the
incurrence of the Loss for which the indemnity payment is to be made) and shall
not include punitive damages, indirect damages or consequential damages
(including lost profits) incurred by the Indemnified Party, (ii) net of
insurance proceeds received by the Indemnified Party (and the amount of
indemnification payable under this Agreement shall not include the amount of any
insurance proceeds actually recovered by the Indemnified Party with respect to a
Loss) and (iii) in the case of Buyer Indemnitees, net of any reserves of the
Companies reflected on the Interim Date Balance Sheet applicable thereto. The
foregoing limitations shall apply before application of the monetary limitations
specified in Section 9.3(b). If the amount to be netted hereunder from any
payment by the Indemnifying Party is determined after the Indemnifying Party has
already paid any amount required to be paid pursuant to this Agreement, the
Indemnified Party shall repay to the Indemnifying Party, promptly after such
determination, any amount that the Indemnifying Party would not have had to pay
pursuant to this Agreement had such determination been made at the time of such
payment.
(e) Notwithstanding anything to the contrary contained herein, any
indemnification obligation of Seller or ARCO pursuant to this Agreement relating
to a Loss realized by CFC shall be limited to reflect the then-existing
ownership percentage of the membership interests in CFC owned by Buyer and/or
its Affiliates (without giving effect to any increase in Buyer's and/or its
Affiliates' ownership of membership interests in CFC subsequent to the Closing
Date).
9.7 Tax Treatment. Any indemnity payment by Arch and/or Buyer under this
Agreement shall be treated as an increase in the Purchase Price for tax
purposes, and any indemnity payment by ARCO and/or Seller under this Agreement
shall be treated as a decrease in the Purchase Price for tax purposes unless
otherwise required by applicable Laws, in which case such payment shall be made
in an amount sufficient to indemnify the party on a net after-tax basis taking
into account any tax deduction allowed the indemnified party with respect to the
indemnified event.
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ARTICLE 10
CONDITIONS TO CLOSING
10.1 Conditions Precedent to Obligations of Arch and Buyer. The obligation
of Arch and Buyer to purchase and pay for the LLC Interests is subject to the
satisfaction (or waiver by Buyer), prior to or on the Closing Date, of each of
the following conditions:
(a) Any breach or breaches of the representations and warranties of
ARCO or Seller contained in this Agreement or in the Contribution Agreement at
and as of the Closing Date, after giving effect to such representations and
warranties as though made on and as of the Closing Date (except for
representations and warranties made as of a specific date, which shall be given
effect as of such date), that alone or in the aggregate do not have a Material
Adverse Effect.
(b) ARCO and Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by ARCO or Seller prior to or at the Closing,
including notifications under Section 6.3.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any Federal laws,
any of the transactions contemplated by the Agreement.
(d) Buyer shall have received an opinion, dated the Closing Date, of
counsel employed by ARCO, in form and substance reasonably acceptable to Arch
and Buyer.
(e) There shall not be in effect any injunction or order issued by
any court or administrative agency of competent jurisdiction preventing in any
material respect the consummation of the transactions contemplated by this
Agreement on the Closing Date.
(f) Buyer shall have received such resignations of the officers and
directors of the Companies as shall have been requested by Buyer in writing not
less than 30 days prior to the Closing Date, subject to the provisions of
Article 7.
(g) Since the Effective Date, there have been no adverse events or
occurrences, other than adverse events or occurrences as a result of general
economic conditions or other conditions affecting the industry in which the
Companies operate (including fluctuations in coal prices and legislative or
regulatory conditions) that together with the total amount of the claims of
Buyer Indemnitees for ARCO's or Seller's breaches of their representations or
warranties contained in this Agreement or the Contribution Agreement as of the
Closing Date, have a Material Adverse Effect.
(h) The transactions contemplated in the Contribution Agreement
shall be consummated concurrently with the Closing.
39
If the Closing occurs, nothing in this Section 10.1 shall be construed to
limit Buyer's indemnification rights or the amount of ARCO's or Seller's
indemnification obligations, and it is expressly agreed that unless waived in
writing by Arch and Buyer at or prior to the Closing, any remedy available to
Arch or Buyer for ARCO's or Seller's breach of its representations and
warranties or substantial failure to perform or comply with any obligation or
covenant, including Arch's or Seller's indemnification obligations after the
Closing in respect of such breaches and failures occurring on or prior to
Closing, shall survive Closing and be unaffected thereby.
10.2 Conditions Precedent to Obligations of ARCO and Seller. The
obligation of ARCO and Seller to sell and deliver the LLC Interests to Arch and
Buyer is subject to the satisfaction (or waiver by Seller), prior to or on the
Closing Date, of each of the following conditions:
(a) The representations and warranties of Arch and Buyer contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date, with the same effect as though made on and as of the
Closing Date (except for representations and warranties made as of a specific
date of which shall be true and correct in all material respects as of such
date).
(b) Arch and Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Arch or Buyer prior to or at the Closing.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any Federal laws,
any of the transactions contemplated by this Agreement.
(d) Seller shall have received an opinion, dated the Closing Date,
of counsel for Buyer, in form and substance reasonably acceptable to ARCO and
Seller.
(e) There shall not be in effect any injunction or order issued by
any court or administrative agency of competent jurisdiction preventing the
consummation of the transactions contemplated by this Agreement on the Closing
Date.
(f) The transactions contemplated in the Contribution Agreement
shall be consummated concurrently with the Closing.
(g) Any consents necessary to transfer operating permits for mines
owned by any of the Companies shall have been obtained, unless Arch and Buyer
shall have agreed to indemnify ARCO and Seller from any Losses arising out of
the failure to obtain such consents.
If the Closing occurs, nothing in this Section 10.2 shall be construed to
limit ARCO's or Seller's indemnification rights or the amount of Arch's or
Buyer's indemnification obligations, and it is expressly agreed that, unless
waived by ARCO and Seller in writing at or prior to the Closing, any remedy
available to ARCO or Seller for Arch's or Buyer's breach of their
40
representations and warranties or substantial failure to perform or comply with
any obligation or covenant, including Arch's and Buyer's indemnification
obligations after the Closing in respect of such breaches and failures occurring
on or prior to Closing, shall survive Closing and be unaffected thereby.
ARTICLE 11
TERMINATION OF AGREEMENT
11.1 Termination Before Closing. This Agreement may be terminated at any
time before Closing:
(a) by the mutual consent of ARCO, Seller, Arch and Buyer in
writing;
(b) by Buyer(i) if there have been breaches by ARCO or Seller of
any representations or warranties of ARCO and/or Seller contained in this
Agreement or in the Contribution Agreement that alone or in the aggregate have a
Material Adverse Effect, and if the breaches have continued for a period of 30
days following Buyer's notification to Seller of such breaches, or (ii) if
events have occurred which have made it impossible to satisfy the conditions
precedent to the obligations of Arch and Buyer set forth in Section 10.1;
(c) by Seller (i) if there have been material breaches by Arch or
Buyer of any representations or warranties of Arch and/or Buyer contained in
this Agreement or in the Contribution Agreement, and if the breaches have
continued for a period of 30 days following Seller's notification to Buyer of
such breaches, or (ii) if events have occurred which have made it impossible to
satisfy the conditions precedent to the obligations of ARCO and Seller set forth
in Section 10.2;
(d) by Buyer if Closing has not occurred on or prior to 75 days
after the Effective Date other than primarily as a result of Buyer's breach or
default of this Agreement; or
(e) by Seller if the Closing has not occurred on or prior to 75
days after the Effective Date other than primarily as a result of Seller's
breach or default of this Agreement.
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1, all further obligations of the parties under this Agreement will
terminate and there shall be no liability on the part of any party to this
Agreement, except for material willful breaches of and intentional misstatements
in or pursuant to this Agreement prior to the time of such termination;
provided, however, that the obligations in Sections 6.1(b), 6.5, 6.6, 11.2, 12.3
and 12.10 shall survive the termination of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 Entire Agreement. This Agreement, including the Exhibits and the
Disclosure Schedule, and, to the extent referenced herein, the Contribution
Agreement set forth the entire
41
agreement and understanding of the parties in respect of the transactions
contemplated herein and supersedes any previous agreements and understandings
between the parties with respect thereto.
12.2 Construction. This Agreement is the result of arms-length
negotiations between, and has been prepared and reviewed by, each party hereto
and its respective counsel. Accordingly, this Agreement shall be deemed to be
the product of each party hereto.
12.3 Governing Law. The validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties hereto
shall be governed by the substantive laws of the State of Delaware without
regard to the principles of conflict of laws of the State of Delaware or any
other jurisdiction (except those that cannot be waived) that would call for the
application of the substantive law of any jurisdiction other than the State of
Delaware.
12.4 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing, by facsimile, by overnight
courier or by registered or certified mail, postage prepaid and return receipt
requested, and shall be deemed to have been duly given or made upon: (i)
delivery by hand, (ii) one business day after being sent by overnight courier,
(iii) four business days after being deposited in the United States mail,
postage prepaid, or (iv) in the case of transmission by facsimile, when
confirmation of receipt is obtained. Such communications shall be addressed and
directed to the parties listed below as follows:
If to Seller or ARCO: Atlantic Richfield Company
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: 000-000-0000 (Treasurer)
Facsimile: 000-000-0000 (General Counsel)
Attention: Treasurer
Attention: General Counsel
If to Buyer: Arch Western Acquisition Corporation
c/o Arch Coal, Inc.
XxxxXxxxx Xxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxx
If to Arch: Arch Coal, Inc.
XxxxXxxxx Xxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxx
12.5 Waiver. Waivers of or consents to departures from the provisions
hereof may be given; provided, however, that the same shall be in writing and be
signed by each of the parties
42
hereto. No such waiver or consent shall be construed as a waiver of or consent
to any other departure from any such provisions or any other provisions hereof.
12.6 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. No assignment of this Agreement or of any rights or
obligations hereunder may be made, in whole or in part, by any party (by
operation of law or otherwise) without the prior written consent of the other
party hereto, and any purported assignment without consent shall be void.
12.7 Amendment. This Agreement may not be amended, modified or
supplemented unless the same shall be in writing and signed by each of the
parties hereto.
12.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same document.
12.9 No Third Party Beneficiaries. The terms, agreements and provisions
of the parties set forth in this Agreement are not intended for, nor shall they
be for the benefit of or enforceable by, any Person not a party hereto,
including each of the Companies.
12.10 Jurisdiction; Service of Process.
(a) Each party to this Agreement hereby irrevocably submits itself
to the non-exclusive jurisdiction of the Supreme Court for the State of New
York, sitting in the Borough of Manhattan, or the United States District Court
for the Southern District of New York, (i) for the purposes of any suit, action
or other proceeding brought by any other party, or its respective successors or
assigns arising out of this Agreement or transactions contemplated by this
Agreement or the Contribution Agreement, (ii) to enforce a resolution,
settlement, order or award made pursuant thereto, or any obligation for the
payment of money contained herein. To the extent permitted by applicable Law,
each party to the Agreement hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that (a) it is not personally subject to the jurisdiction of the
above-named courts, (b) the suit, action or proceeding is brought in an
inconvenient forum, (c) the venue of the suit, action or proceeding is improper,
or (d) a resolution, settlement or order made pursuant thereto, or such an
obligation for the payment of money, may not be enforced in or by such court.
Nothing contained herein shall be deemed to waive the right of a party to seek
removal of a matter from state court to Federal court if such removal is
otherwise permissible.
(b) Each party to this Agreement hereby consents to service of
process on it at the office for service of process set forth below as its office
for service of process and additionally irrevocably designates and appoints the
person named in Exhibit D as its "Agent" and attorney-in-fact to receive service
of process in any action, suit or proceeding with respect to any matter as to
which it submits to jurisdiction as set forth above, it being agreed that
service upon Agent shall constitute valid service upon the party or its
successors or assigns. Each party agrees that (x) the sole responsibilities of
the Agent shall be (i) to receive such process, (ii) to send a copy of any such
process so received to such party, by registered airmail, return receipt
requested, at the address for it set forth in Section 12.4, or at the last
address filled in writing by
43
it with the Agent, and (iii) to give prompt telecopied notice of receipt thereof
to it at such address (y) the Agent shall have no responsibility for the receipt
or nonreceipt by the respective party of such process, nor for any performance
or nonperformance by the respective party or its respective successors or
assigns, and (z) failure of the Agent to send a copy of any such process or
otherwise to give notice thereof to the respective party shall not affect the
validity of such service or any judgment in any action, suit or proceeding based
thereon. If service of process cannot be effected in the foregoing manner, each
party further irrevocably consents to the service of process in any action, suit
or proceeding by the mailing of copies thereof by registered or certified
airmail, postage prepaid, return receipt requested, to it at its address set
forth in Section 12.4 hereof. The foregoing, however, shall not limit the right
of the party to serve process in any other manner permitted by Law. Any judgment
against a party in any suit for which such party has no further right of appeal
shall be conclusive, and may be enforced in other jurisdictions by suit on the
judgment, a certified or true copy of which shall be conclusive evidence of the
fact and of the amount of any indebtedness or liability of such party therein
described; provided, however, that the plaintiff may at its option bring suit,
or institute other judicial proceedings, against such party or any of its assets
in the courts of any country or place where such party or such assets may be
found. Each party further covenants and agrees that for 3 years following the
Closing Date, it shall maintain a duly appointed agent for the service of
summonses and other legal processes in New York.
(c) For purposes of this Section 12.10, the Agent and offices for
service of process for each of the parties shall be as set forth on Exhibit D or
such other person or offices as shall be designated in writing by any party to
the other parties.
12.11 Disclaimer for Communications. Except as and to the extent set forth
in this Agreement ARCO, Seller and their respective Affiliates make no
representation, promise, covenant or warranty regarding any of the Companies,
their assets, business, operations, liabilities or obligations, or otherwise,
and disclaim all liability and responsibility for any representation, warranty,
disclosure or statement made or communicated (orally or in writing) to Arch,
Buyer or their respective Affiliates or to any officer, stockholder, director,
employee, agent, consultant or representative of Arch, Buyer or their respective
Affiliates, including any information provided by any investment banking firm or
other agent of ARCO or Seller, or any opinion, statement or advice which may
have been provided to Arch, Buyer or its respective Affiliates by any officer,
stockholder, director, employee, agent, consultant or representative of ARCO,
Seller or the Companies.
44
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the date first written above.
ATLANTIC RICHFIELD COMPANY
/s/ Xxxxx X. Dallas
------------------------------------------
By: Xxxxx X. Dallas
Title: Senior Vice President and Treasurer
ARCO UINTA COAL COMPANY
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
By: Xxxxxxx X. Xxxxxx
Title: Treasurer
ARCH COAL, INC.
/s/ Xxxxx X. Xxxxx
------------------------------------------
By: Xxxxx X. Xxxxx
--------------------------------------
Title: Vice President
-----------------------------------
ARCH WESTERN ACQUISITION
CORPORATION
/s/ Xxxxxx X. Xxxxx
------------------------------------------
By: Xxxxxx X. Xxxxx
--------------------------------------
Title: President
-----------------------------------
45
DISCLOSURE SCHEDULES TO
THE PURCHASE AND SALE AGREEMENT
I. DISCLOSURE SCHEDULE - Atlantic Richfield Company
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.8 Real Property
Schedule 4.11 Insurance Policies
Schedule 4.14 Litigation
Schedule 4.17 Employee Benefit Plans
Schedule 4.23 Assets
Schedule 6.8 Guarantees
Schedule 7.1 Retention of Employees and Continuation of Benefits
Schedule 7.2 Retention of Retirement Plans for Companies
Schedule 7.9(c) Employee Termination By Buyer
II. DISCLOSURE SCHEDULE - AU SUB
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.12 Taxes
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
III. DISCLOSURE SCHEDULE - Mountain Coal Company, L.L.C.
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.8 Real Property
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.11 Insurance Policies
Schedule 4.12 Taxes
Schedule 4.13 Licenses, Permits, Authorizations
Schedule 4.14 Litigation
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
Schedule 4.23 Assets
Schedule 6.8 Guarantees
Schedule 6.14 Environmental Matters/Properties
Schedule 7.1 Retention of Employees and Continuation of Benefits
Schedule 7.2 Retention of Retirement Plans for Companies
IV. DISCLOSURE SCHEDULE - Canyon Fuel Company, L.L.C.
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.8 Real Property
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.11 Insurance Policies
Schedule 4.12 Taxes
Schedule 4.13 Licenses, Permits, Authorizations
Schedule 4.14 Litigation
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
Schedule 4.23 Assets
Schedule 6.8 Guarantees
Schedule 6.14 Environmental Matters/Properties
Schedule 7.1 Retention of Employees and Continuation of Benefits
Schedule 7.2 Retention of Retirement Plans for Companies
V. DISCLOSURE SCHEDULE - Thunder Basin Coal Company, L.L.C.
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.8 Real Property
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.11 Insurance Policies
Schedule 4.12 Taxes
Schedule 4.13 Licenses, Permits, Authorizations
Schedule 4.14 Litigation
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
Schedule 4.23 Assets
Schedule 7.8 Guarantees
Schedule 7.14 Environmental Matters/Properties
Schedule 8.1 Retention of Employees and Continuation of Benefits
Schedule 8.2 Retention of Retirement Plans for Companies
VI. DISCLOSURE SCHEDULE - State Leases LLC
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.8 Real Property
VII. DISCLOSURE SCHEDULE - Acquisition Corp.
Schedule 5.3 No Violations
Schedule 5.4 Approvals, Consents and Other Actions
Schedule 5.8 Title to Membership Interests
Schedule 5.9 Capitalization
Schedule 5.10 Real Property
Schedule 5.11 Buildings, Structures and Tangible Personal Property
Schedule 5.12 Material Contracts
Schedule 5.13 Insurance Policies
Schedule 5.14 Taxes
Schedule 5.15 Licenses, Permits, Authorizations
Schedule 5.16 Litigation
Schedule 5.17 Compliance with Laws
Schedule 5.18 Labor Matters
Schedule 5.19 Employee Benefit Plans
Schedule 5.20 Bank Accounts
Schedule 5.22 Absence of Undisclosed Liabilities
Schedule 5.23 Assets
