Business-Combination Transaction Communication — Rule 425 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 425 Business-Combination Transaction Communication HTML 46K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, HTML 616K Liquidation or Succession
3: EX-4.1 Instrument Defining the Rights of Security Holders HTML 30K
4: EX-10.1 Material Contract HTML 115K
5: EX-10.2 Material Contract HTML 270K
6: EX-10.3 Material Contract HTML 74K
7: EX-10.4 Material Contract HTML 152K
8: EX-10.5 Material Contract HTML 104K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Representation
of the Company and its Stockholders
107
iv
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND
PLAN OF MERGER (this “Agreement”)
dated as of April 2, 2008 by and among Magnum Coal Company, a Delaware
corporation (the “Company”),
Patriot Coal Corporation, a Delaware corporation (“Parent”),
Colt Merger Corporation, a Delaware corporation and a wholly-owned subsidiary of
Parent (“Merger
Subsidiary”), and ArcLight Energy Partners Fund I, L.P., a Delaware
limited partnership, and ArcLight Energy Partners Fund II, L.P., a Delaware
limited partnership, acting jointly, as Stockholder Representative for the
Designated Stockholders in accordance with Section 11.05 and for certain other
purposes as set forth herein (the “Stockholder
Representative”).
WHEREAS,
the Boards of Directors of each of Parent, the Company and Merger Subsidiary
have determined that the merger of Merger Subsidiary with and into the Company,
with the Company being the surviving corporation (the “Merger”)
is advisable and in the best interests of Parent, the Company and Merger
Subsidiary and their respective stockholders;
WHEREAS,
for U.S. federal income tax purposes, it is intended that the Merger shall
qualify as a “reorganization” within the meaning of Section 368(a) of the Code,
and that this Agreement constitute a “plan of reorganization” within the meaning
of Section 1.368-2(g) of the Treasury regulations promulgated under the
Code;
WHEREAS,
in order to induce Parent and Merger Subsidiary to enter into this Agreement,
concurrently with the execution and delivery of this Agreement, Parent and the
holders of shares of Company Stock representing approximately 98.955% of the
issued and outstanding Company Stock, have executed and delivered support
agreements (collectively, the “Support
Agreements”) pursuant to which, among other things, each such holder
agreed to execute and deliver an irrevocable written consent approving this
Agreement and the Merger (the “Stockholder
Consents”) immediately after the execution and delivery of this
Agreement; and
WHEREAS,
in order to induce Parent and Merger Subsidiary to enter into this Agreement,
concurrently with the execution and delivery of this Agreement, Parent, the
Designated Stockholders and the Stockholder Representative have executed and
delivered a Voting and Standstill Agreement (the “Voting
Agreement”).
NOW,
THEREFORE, in consideration of the foregoing and the representations, warranties
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
intending to be legally bound do hereby agree as follows:
1
ARTICLE
1
Definitions
Section
1.01. Definitions. (a) As used herein, the following terms
have the following meanings:
“Acquisition
Proposal” means, other than the transactions contemplated by this
Agreement, any offer, proposal or inquiry relating to, or any Third Party
indication of interest in, (A) any acquisition or purchase, direct or indirect,
of 20% or more of the consolidated assets of the Company and its Subsidiaries or
over 20% or more of any class of equity or voting securities of the Company or
any of its Subsidiaries whose assets, individually or in the aggregate,
constitute more than 20% of the consolidated assets of the Company and its
Subsidiaries, (B) a merger, consolidation, share exchange, business combination,
sale of substantially all the assets, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving the Company or
any of its Subsidiaries whose assets, individually or in the aggregate,
constitute more than 20% of the consolidated assets of the Company and its
Subsidiaries, (C) any other transaction that, if consummated, would result in
one or more Third Parties beneficially owning 20% or more of any class of equity
or voting securities of the Company or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 20% of the consolidated
assets of the Company and its Subsidiaries, or (D) any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Merger. Notwithstanding the
foregoing, any action taken by the Company that is expressly consented to by
Parent pursuant to the consent provision of Section
6.01,
shall not be deemed an Acquisition Proposal
hereunder.
“Affiliate”
means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with such Person, and, for
the purposes hereof, the term “control”
means the power to direct the management and policies of such Person (directly
or indirectly), whether through ownership of securities, by contract or
otherwise (and the terms controlling
and controlled
have the meanings correlative to the foregoing).
“Applicable
Law” means, with respect to any Person, any federal, state, local or
foreign law (statutory, common or otherwise), constitution, treaty, convention,
ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling
or other similar requirement enacted, adopted, promulgated or applied by a
Governmental Authority that is binding upon or applicable to such Person, as
amended unless expressly specified otherwise.
“ArcLight
Funds” means ArcLight Energy Partners Fund I, L.P. and ArcLight Energy
Partners Fund II, L.P., and when so referred to herein as an ArcLight Fund, not
acting in their capacity as Stockholder Representative.
2
“Business
Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by Applicable
Law to close.
“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act
of 1980.
“Code”
means the Internal Revenue Code of 1986.
“Company
Balance Sheet” means the audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 2007 and the notes (other than
(i) the first paragraph under the caption “Off-Balance Sheet Arrangements” in
note 2, (ii) the first and second sentences under note 10, (iii) the
first, second and third sentences under the caption “Other Postretirement
Benefits” in note 11, (iv) the first sentence in the first paragraph of note 16,
(v) the first and second sentences in the second paragraph of note 16 and
(vi) the first and fifth paragraphs of note 18) to the financial statements
referred to in Section 4.07(b).
“Company
Convertible Debt” means the Company’s issued and outstanding convertible
indebtedness, originally issued in an aggregate principal amount of
$100,000,000.
“Company
Convertible Debt Notes” means the promissory notes issued to the holders
of Company Convertible Debt in connection with the issuance of the Company
Convertible Debt.
“Company
Convertible Debt NPA” means the Note Purchase Agreement dated as of March26, 2008 (as it may be amended consistent with Section
6.06)
relating to the Company Convertible Debt.
“Company
Credit Agreement”
means the Credit Agreement dated as of March21, 2006 among
the Company, the Lenders party thereto, Lehman Brothers Inc., as sole lead
arranger and book runner, Lehman Commercial Paper Inc., as administrative agent
and collateral agent and Bank of Montreal, as syndication agent, as amended or
modified from time to time.
“Company
Disclosure Schedule” means the disclosure schedule dated the date hereof
regarding this Agreement that has been provided by the Company to Parent and
Merger Subsidiary.
“Company
Material Adverse Effect” means a material adverse effect on (a) the
ability of the Company to consummate the transactions contemplated by this
Agreement without material delay or (b) the condition (financial or otherwise),
business, assets, liabilities or results of operations of the Company and its
Subsidiaries, taken as a whole; provided
that for purposes of this clause (b),
3
none
of the following shall be deemed, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be a Company Material Adverse Effect: (i) any adverse
change, effect, event, occurrence, state of facts or development attributable to
conditions affecting the industry in which the Company or its Subsidiaries
participates, the U.S. economy as a whole or the capital or financial markets
(including public and private debt markets) in general or the markets in which
the Company or its Subsidiaries operate, except to the extent, in any such case,
disproportionately impacting the Company or its Subsidiaries, taken as a whole,
as compared to the other entities operating in such industries or markets,
respectively (and in any such case, only such disproportionate impact shall be
taken into account in determining if a Company Material Adverse Effect has
occurred); (ii) any adverse change, effect, event, occurrence, state of facts or
development arising from or relating to any change in accounting requirements or
principles or any change in Applicable Law (or the interpretation thereof)
except to the extent, in either case, disproportionately impacting the Company
or its Subsidiaries, taken as a whole, as compared to the other entities
operating in the industries in which the Company and its Subsidiaries operate
(and in any such case, only such disproportionate impact shall be taken into
account in determining if a Company Material Adverse Effect has occurred)
(provided that any such adverse change, effect, event, occurrence, state of
facts or development to the extent arising from or relating to the failure by
the Company or any of its Subsidiaries to comply with any change in Applicable
Law shall not be disregarded under this clause (ii)); (iii) any adverse change,
effect, event, occurrence, state of facts or development arising from or
relating to compliance with the Company’s obligations under this Agreement or
any other Transaction Document or (iv) the breach of this Agreement or any other
Transaction Document by Parent or Merger Subsidiary (or any of their Affiliates
party to any other Transaction Document). The term “Company Material
Adverse Effect” as used in any representation or warranty in Article
4 shall include (A) in the context of Article
11 (other than to the extent relating to Section
4.30)
an adverse effect of $20,000,000 or more and (B) in the context of Article
11 to the extent relating to Section
4.30 and in the context of Section
9.02,
an adverse effect of $60,000,000 or more.
“Company
Restricted Stock” means any and all shares of the Company Stock that have
been awarded in the form of restricted stock (whether vested or unvested) to
employees and directors of, and consultants to, the Company under the Stock
Plan.
“Company
Stock” means the common stock, $0.01 par value, of the
Company.
“Company
Stockholders Agreement” means the Stockholders Agreement dated as of
March 21, 2006 among the Company and the investors party thereto.
4
“Confidentiality
Agreements” means (i) the Confidentiality Agreement dated as of November7, 2007 between Parent and the Company relating to confidential information of
Parent and (ii) the Confidentiality Agreement dated as of November 7, 2007
between Parent and the Company relating to confidential information of the
Company.
“Covered
Contract” means (in each case, other than agreements solely
between or among the Company and its wholly-owned Subsidiaries and not
containing any rights of or obligations to any Third Party):
(i) any
agreement or series of related agreements for the purchase, sale (other than
coal supply or coal product sales agreements), receipt, lease or use of
materials, supplies, goods, services, equipment or other assets providing for
(A) annual payments by or to the Company or any of its Subsidiaries of
$5,000,000 or more, (B) aggregate payments by or to the Company or any of its
Subsidiaries of $10,000,000 or more or (C) a term in excess of three
years;
(ii) any
partnership, joint venture, limited liability company, operating, shareholder,
investor rights or other similar agreement or arrangement with any Person (other
than any limited liability company or operating agreement of any wholly-owned
Subsidiary of the Company);
(iii) any
distributor, dealer, sales agency, sales representative, marketing or similar
contracts providing for (A) annual payments by or to the Company or any of its
Subsidiaries of $100,000 or more, (B) aggregate payments by or to the Company or
any of its Subsidiaries of $250,000 or more or (C) a term in excess of three
years;
(iv) any
agreement or series of related agreements relating to, or entered into in
connection with, the acquisition or disposition of the equity securities of any
Person, any business or any material amount of assets outside the ordinary
course of business (in each case, whether by merger, sale of stock, sale of
assets or otherwise);
(v) any
agreement relating to indebtedness for borrowed money, the deferred purchase
price of property or the prepaid sale of goods or products (in any such case,
whether incurred, assumed, guaranteed or secured by any asset and, in the case
of agreements relating to the deferred purchase price of property, with a value
in excess of $5,000,000 per asset or $10,000,000 in the aggregate for all such
assets), including indentures, mortgages, loan agreements, capital leases,
security agreements or other agreements for the incurrence of indebtedness,
other than trade accounts payable incurred in the ordinary course of
business;
5
(vi) any
agreement relating to any interest rate, currency or commodity derivative or
hedging transaction (excluding any agreements for the purchase of diesel fuel
where physical delivery is intended);
(vii) any
agreement (including any keepwell agreement) under which (A) any Person has
directly or indirectly guaranteed any liabilities or obligations of the Company
or any of its Subsidiaries (other than any such guarantees by the Company and
its wholly-owned Subsidiaries) or (B) the Company or any of its Subsidiaries
has, directly or indirectly, guaranteed any liabilities or obligations of any
other Person (other than the Company or any wholly-owned
Subsidiary);
(viii) any
agreement that (A) limits the freedom of the Company or any of its Subsidiaries
to compete in any line of business or with any Person or in any area or which
would so limit the freedom of Parent, the Company or any of their respective
Affiliates after the Effective Time or (B) contains exclusivity or “most favored
nation” obligations or restrictions binding on the Company or any of its
Subsidiaries or that would be binding on Parent or its Affiliates after the
Effective Time;
(ix) any
employment, consultancy, deferred compensation, loan, retention, bonus,
severance, retirement or other similar agreement or arrangement (including any
amendment to any such existing agreement or arrangement) with any director,
officer or employee of the Company or any of its Subsidiaries (other than loans
to non-executive employees not in excess of $10,000 individually or $100,000 in
the aggregate);
(x) to the
extent not otherwise included in the definition of “Covered Contract” hereunder,
any consulting agreement or similar arrangement with an independent contractor
(i) providing for annual payments by the Company or any of its Subsidiaries of
$250,000 or more, (ii) providing for aggregate payments by the Company or any of
its Subsidiaries of $500,000 or more, (iii) providing for a term in excess of
three years or (iv) to the extent that, after entry into such agreement or
arrangement, the Company and its Subsidiaries shall have entered into consulting
agreements or similar arrangements with independent contractors providing for
aggregate payments by the Company or any of its Subsidiaries in excess of
$1,000,000 pursuant to all of such agreements or
arrangements;
(xi) any
collective bargaining agreement;
(xii) any
contracts or agreements relating to the provision of contract mining (excluding
any agreement solely with respect to the provision of contract labor) by or to
the Company or any of its Subsidiaries providing for (i) annual payments by or
to the Company or
6
any of its
Subsidiaries of $5,000,000 or more, (ii) aggregate payments by or to the Company
or any of its Subsidiaries of $10,000,000 or more or (iii) a term in excess of
three years;
(xiii) any lease
or sublease of or relating to (A) real property leased to others, (B) tangible
personal property leased to others or (C) mining or exploration rights leased to
others, in each case providing for (i) annual payments to the Company or any of
its Subsidiaries of $500,000 or more, (ii) aggregate payments to the Company or
any of its Subsidiaries of $1,000,000 or more or (iii) a term in excess of three
years;
(xiv) any lease
or sublease of or relating to (A) real property to be leased by the Company or
any of its Subsidiaries, or (B) mining or exploration rights to be leased by the
Company or any of its Subsidiaries, in each case providing for (i) annual
payments by the Company or any of its Subsidiaries of $1,000,000 or more, (ii)
aggregate payments by the Company or any of its Subsidiaries of $5,000,000 or
more or (iii) a term in excess of three years;
(xv) any
contracts or agreements related to the storage, transportation or processing of
the Company’s or its Subsidiaries’ coal (including stock piling and loading
agreements) providing for either (i) annual payments by the Company or any of
its Subsidiaries of $5,000,000 or more, (ii) aggregate payments by the Company
or any of its Subsidiaries of $10,000,000 or more or (iii) a term in excess of
three years;
(xvi) any (A)
coal supply agreement or coal product sales agreement providing for sales in
excess of $250,000,000 in the aggregate or a term in excess of three years or
(B) any coal purchase agreement providing for purchases in excess of $10,000,000
individually or $100,000,000 in the aggregate or a term in excess of three
years; or
(xvii) any other
agreement, commitment, arrangement or plan not of a type described above but
with a value in excess of $2,500,000 (provided that the aggregate value of all
such agreements, commitments, arrangements or plans with a value in excess of
$1,000,000 shall not exceed $5,000,000).
“Damages”
means any and all damage, loss, diminution in value, liability, fines, penalties
and expenses (including reasonable expenses of investigation and reasonable
attorneys’ fees and expenses in connection with any action, suit or proceeding
whether involving a Third Party claim or a claim to enforce the provisions
hereof).
“Delaware
Law” means the General Corporation Law of the State of
Delaware.
7
“Designated
Stockholders” means the Stockholders set forth on Section
1.01(a) of the Company Disclosure Schedule.
“Environmental
Claim” means any notice, notification, demand, request for information,
citation, summons, order, complaint, investigation, action, claim, suit,
proceeding or review (or any basis therefor) of any nature, civil, criminal,
regulatory or otherwise, by any Person alleging liability or potential liability
(including liability or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resource damages, fines or
penalties) relating to or arising out of any Environmental Laws or any Hazardous
Materials.
“Environmental
Laws” means any Applicable Laws or any agreement with any Governmental
Authority or other third party, relating to human health or to remediation,
restoration or protection of the environment or natural resources or other
environmental matters, including Applicable Laws relating to storage, treatment,
management, generation or transportation of Hazardous Materials, land use,
development, pollution, waste disposal, toxic materials, conservation of natural
resources and resource allocation (including any Applicable Law relating to
development or exploitation of any natural resource) or use or disposal of
Hazardous Materials, including, without limitation, the following
statutes: (a) CERCLA, (b) the federal Resource Conservation and
Recovery Act of 1976, (c) the federal Hazardous Materials Transportation Act,
(d) the federal Toxic Substances Control Act, (e) the federal Clean Water Act,
(f) the federal Clean Air Act, (g) the federal Safe Drinking Water Act, (h) the
federal National Environmental Policy Act of 1969, (i) the federal Emergency
Planning and Community Right-to-Know Act, (j) the federal Mine Safety Act of
1977, (k) the federal Surface Coal Mining Land Conservation and Reclamation Act,
(l) the federal Abandoned Mined Lands and Water Reclamation Act and (m) the
federal Coal Mine Health and Safety Act, and, in each case, any comparable state
or local statutes.
“Environmental
Permits”
means all permits, licenses, franchises, certificates, approvals and other
similar authorizations of Governmental Authorities relating to or required by
Environmental Laws and affecting, or relating to, as applicable, the business of
the Company and its Subsidiaries as currently (unless expressly specified
otherwise) conducted or the business of Parent and its Subsidiaries as currently
(unless expressly specified otherwise) conducted.
“ERISA”
means the Employee Retirement Income Security Act of 1974.
“ERISA
Affiliate” of any entity means any other entity that, together with such
entity, would be treated as a single employer under Section 414 of the
Code.
“Escrow
Agent” means an escrow agent mutually agreed by Parent and the Company
prior to Closing.
8
“Escrow
Agreement” means the Escrow Agreement among Parent, the Stockholder
Representative and the Escrow Agent, substantially in the form of Exhibit A
hereto.
“GAAP”
means generally accepted accounting principles in the United
States.
“Governmental
Authority” means any transnational, domestic or foreign federal, state or
local, governmental authority, department, court, agency or official, including
any political subdivision thereof.
“Hazardous
Materials” means any material or substance defined as a “hazardous
substance,”“toxic substance,”“hazardous waste,”“solid waste,”“pollutant” or
“contaminant” or any other term of similar import under any Environmental Law,
or any other materials which are regulated or give rise to liability under
Environmental Laws, including petroleum (including crude oil or any fraction
thereof), asbestos and asbestos-containing materials, acidic mine drainage,
radiation and radioactive materials, lead-containing paints, molds and other
harmful biologic agents, and polychlorinated biphenyls.
“HSR
Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
“Identified
Mining Laws” means (a) the federal Mine Safety Act of 1977, (b) the
federal Surface Coal Mining Land Conservation and Reclamation Act, (c) the West
Virginia Surface Coal Mining and Reclamation Act, (d) the federal Abandoned
Mined Lands and Water Reclamation Act, (e) the federal Coal Mine Health and
Safety Act (as amended by the Mine Improvement and New Emergency Response Act of
2006), (f) with respect to any Person, any state or local statutes comparable to
the statutes referred to in the preceding clauses (a)-(e) that are binding upon
or applicable to such Person, (g) any other Applicable Laws similar to any of
the items in the preceding clauses (a)-(f) and relating primarily to mining,
miner health and safety, reclamation, land use and development and exploitation
or restoration of natural resources and (h) any written agreements with any
Governmental Authority relating to any of the foregoing.
“Intellectual
Property Rights” means (i) trademarks, service marks, brand names,
certification marks, trade dress, domain names and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
(ii) inventions and discoveries, whether patentable or not, in any jurisdiction;
patents, applications for patents (including, without limitation, divisions,
continuations, continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; (iii) trade
secrets and confidential information and rights in any jurisdiction to limit the
use or
9
disclosure
thereof by any person (the “Trade
Secrets”); (iv) writings and other works, whether copyrightable or not,
in any jurisdiction, and any and all copyright rights, whether registered or
not; and registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; (v) moral rights, database
rights, design rights, industrial property rights, publicity rights and privacy
rights; and (vi) any similar intellectual property or proprietary
rights.
“knowledge”
of any Person that is not an individual means the actual knowledge of (i) with
respect of the Company, Paul Vining, Keith St. Clair, Dwayne Francisco, Robert
Bennett, David Turnbull, Richard Verheij, John Eagan and Mark Cornell, and (ii)
with respect to Parent, Richard M. Whiting, Mark N. Schroeder, Jiri Nemec,
Charles A. Ebetino, Jr., Joseph W. Bean, Michael V. Altrudo, Gary Halstead and
Sara E. Wade.
“Lien”
means, with respect to any property or asset, any mortgage, lien, lease, levy,
pledge, charge, security interest, restrictive covenant, easement, encroachment,
right of way, right to use or acquire, title defect, interest created under any
bill of sale, trust or power, encumbrance or other adverse claim of any kind in
respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
“1933
Act” means the Securities Act of 1933.
“1934
Act” means the Securities Exchange Act of 1934.
“Market
Value” means the average of the closing price of Parent Stock on the New
York Stock Exchange (or if Parent Stock is not then traded on the New York Stock
Exchange, the principal stock exchange on which Parent Stock is then traded) for
the 10 consecutive trading days immediately preceding (i) with respect to a
payment of Escrow Shares from the Escrow Account, the applicable date on which
shares of Parent Stock are to be released from the Escrow Account, (ii) with
respect to the calculation of the Net Per Share Number, the Closing Date and
(iii) with respect to a payment made pursuant to the last sentence of
Section 11.02(c), the applicable
date on which payment is to be made.
“Net
Per Share Number” means “X” as determined by the following
formula: X = (11,901,729-(Excess Transaction Expenses Deduction
Amount/Market Value))/Company Outstanding Stock Number.
“Parent
Balance Sheet” means the audited consolidated balance sheet of Parent and
its Subsidiaries as of December 31, 2007 and the notes to the financial
statements referred to in Section
5.08(b).
“Parent
Disclosure Schedule” means the disclosure schedule dated the date hereof
regarding this Agreement that has been provided by Parent to the
Company.
“Parent
Employee Plan” means each material “employee benefit plan,” as defined in
Section 3(3) of ERISA, and, whether or not subject to ERISA, each material
employment, severance, change in control, retention or similar contract, plan,
arrangement or policy and each other material plan or arrangement (written or
oral) providing for compensation, bonuses, profit-sharing, stock option or other
equity-based rights or other forms of incentive or deferred compensation,
vacation benefits, insurance (including any self-insured arrangements), health
or medical benefits, employee assistance program, disability or sick leave
benefits, workers’ compensation, supplemental unemployment benefits, severance
benefits, post-employment or retirement benefits (including compensation,
pension, health, medical or life insurance benefits) and any other material
plan, agreement, program or policy which is maintained, sponsored or contributed
to by Parent or any ERISA Affiliate of Parent and covers any current or former
director, officer, employee or independent consultant of Parent or any of its
Subsidiaries, or with respect to which Parent or any of its Subsidiaries has any
liability.
“Parent
Material Adverse Effect” means a material adverse effect on (a) the
ability of Parent to consummate the transactions contemplated by this Agreement
without material delay or (b) the condition (financial or otherwise), business,
assets, liabilities or results of operations of Parent and its Subsidiaries,
taken as a whole; provided
that for purposes of this clause (b), none of the following shall be deemed,
either alone or in combination, to constitute, and none of the following shall
be taken into account in determining whether there has been or will be a Parent
Material Adverse Effect: (i) any adverse change, effect, event, occurrence,
state of facts or development attributable to conditions affecting the industry
in which Parent or its Subsidiaries participates, the U.S. economy as a whole or
the capital or financial markets (including public and private debt markets) in
general or the markets in which Parent or its Subsidiaries operate, except to
the extent, in any such case, disproportionately impacting Parent or its
Subsidiaries, taken as a whole, as compared to the other entities operating in
such industries or markets, respectively (and in any such case, only such
disproportionate impact shall be taken into account in determining if a Parent
Material Adverse Effect has occurred); (ii) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to any change
in accounting requirements or principles or any change in Applicable Law (or the
interpretation thereof) except to the extent, in either case, disproportionately
impacting Parent or its Subsidiaries, taken as a whole, as compared to the other
entities operating in the industries in which Parent and its Subsidiaries
operate (and in any such case, only such disproportionate impact shall be taken
into account in determining if a Parent Material Adverse Effect has occurred)
11
(provided
that any such adverse change, effect, event, occurrence, state of facts or
development to the extent arising from or relating to the failure by Parent or
any of its Subsidiaries to comply with any change in Applicable Law shall not be
disregarded under this clause (ii)); (iii) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to compliance
with Parent’s obligations under this Agreement or any other Transaction
Document; (iv) a decline in the price or trading volume of Parent Stock on the
New York Stock Exchange (provided
that any underlying cause or causes for any change in the price or trading
volume of Parent Stock on the New York Stock Exchange may be considered in
determining whether a Parent Material Adverse Effect has occurred); or (v) the
breach of this Agreement or any other Transaction Document by the Company (or
any of its Affiliates or Stockholders party to any other Transaction
Document). The term “Parent Material Adverse Effect” as used in any
representation or warranty in Article
5 shall include (A) in the context of Article
11 (other than to the extent relating to Section
5.27)
an adverse effect of $50,000,000 or more and (B) in the context of Article
11 to the extent relating to Section
5.27 and in the context of Section
9.03,
an adverse effect of $150,000,000 or more.
“Parent
Proxy Statement” means the proxy statement of Parent to be filed by
Parent with the SEC in connection with the Parent Stock Issuance (which shall be
included in the Registration Statement).
“Parent
Stock” means the common stock, $0.01 par value, of Parent.
“PBGC”
means the Pension Benefit Guaranty Corporation.
“Permitted
Liens” means (i) Liens disclosed on the Company Balance Sheet or Parent
Balance Sheet, as applicable, (ii) Liens for taxes not yet due or being
contested in good faith (and, in either case, for which adequate accruals or
reserves have been established on the Company Balance Sheet or Parent Balance
Sheet, as applicable), (iii) deposits made in the ordinary course of business
securing the performance of bids, trade contracts, leases, statutory
obligations, surety, customs and appeal bonds and other obligations of like
nature incurred as or incidental to and in the ordinary course of business, (iv)
any statutory Lien arising in the ordinary course of business by operation of
Applicable Law with respect to a liability that is not yet due or delinquent or
being contested in good faith (and for which adequate accruals or reserves have
been established on the Company Balance Sheet or Parent Balance Sheet, as
applicable), (v) any imperfection of title or similar Lien, (vi) easements,
zoning restrictions, rights-of-way, encroachments and similar encumbrances on
real property imposed by law or arising in the ordinary course of business or
which are necessary or desirable in connection with the business or the
development thereof, (vii) any terms and conditions included in the contracts
set forth on Section 1.01(a)(vii) of the
Company Disclosure Schedule or the Parent Disclosure Schedule, as applicable,
(viii) customary bank setoff rights under the agreements set forth on
Section
12
1.01(a)(viii) of the Company Disclosure Schedule or the Parent Disclosure
Schedule, as applicable, or to which a bank is entitled with respect to an
account with such bank, (ix) any interest or title of a lessor under any lease
entered into by the Company or any of its Subsidiaries, or Parent or any of its
Subsidiaries, as the case may be, in the ordinary course of business and
covering only the assets so leased, (x) Liens disclosed on Section
1.01(a)(x) of the Company Disclosure Schedule or Section
1.01(a)(x) of the Parent Disclosure Schedule, as applicable; provided
that (a) the term “Permitted Lien” shall not include any Lien securing
indebtedness except as provided in clauses (i) and (x), (b) in the case of
clauses (v), (vi), (vii) and (ix) above, such Liens individually or in the
aggregate with other such Liens do not materially detract from the value or
materially interfere with any present or intended use of the property or assets
to which they relate, and (c) in the case of clause (iv) above, such Liens
individually or in the aggregate with other such Liens do not materially
interfere with any present or intended use of the property or assets to which
they relate.
“Person”
means an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including a government or
political subdivision or a department, agency or instrumentality
thereof.
“Registration
Rights Agreement” means the Registration Rights Agreement among Parent
and the other parties thereto, in the form attached as Exhibit B
hereto.
“Registration
Statement” means the Registration Statement of Parent to be filed by
Parent with the SEC with respect to the issuance of Parent Stock in connection
with the Merger (which shall include the Parent Proxy Statement).
“Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing of Hazardous Materials into
any occupied structure or upon the environment, including surface water, ground
water, a drinking water supply, land surface or subsurface strata or ambient air
(including the abandonment or discarding of barrels, containers, and other
closed receptacles containing any Hazardous Material).
“SEC”
means the Securities and Exchange Commission.
“Stockholders”
means the holders of shares of Company Stock, including Company Restricted
Stock.
“Stock
Plan” means the Magnum Coal Company 2006 Stock Incentive Plan, as adopted
by the Company on March 21, 2006.
“Subsidiary”
means, with respect to any Person, any entity of which securities or other
ownership interests having ordinary voting power to elect a
13
majority
of the board of directors or other persons performing similar functions are at
any time directly or indirectly owned by such Person.
“Third
Party” means (i) for purposes of this Agreement other than Article
11,
any Person, including as defined in Section 13(d) of the 1934 Act, other than
Parent or any of its Affiliates and (ii) for purposes of Article
11,
any Person other than any Parent Indemnified Party, any Stockholder Indemnified
Party or the Stockholder Representative.
“Transaction
Documents” means this Agreement, the Escrow Agreement, the Registration
Rights Agreement, the Stockholder Consents, the Support Agreements, the Voting
Agreement and any and all other agreements, certificates and documents required
to be delivered by any party hereto prior to or at the Closing pursuant to the
terms of this Agreement.
“Transaction
Expenses” means any out-of-pocket amount paid or to be paid, and any
payment obligations incurred, by or on behalf of the Company or any of its
Subsidiaries in connection with this Agreement, the other Transaction Documents,
the Merger and the other transactions contemplated hereby including, but not
limited to, professional fees and related expenses for services rendered by
counsel, actuaries, auditors, accountants, investment bankers, brokers, finders
or other intermediaries, experts, consultants and other advisors, in each case
only to the extent incurred since January 1, 2008; provided
that “Transaction Expenses” shall not include “change in control”, severance or
similar payments to employees that are only payable upon a termination of
employment after the Closing.
“Transaction
Expenses Cap” means the sum of (i) $4,000,000 and (ii) the amount of fees
and expenses payable by the Company to Citigroup Global Markets Inc. in
connection with the Merger pursuant to the engagement agreement provided to
Parent prior to the date hereof.
(b) Each of
the following terms is defined in the Section set forth opposite such
term:
Term
Section
Acceptable
Parent Financing Terms
8.10(a)
Agreement
Preamble
Alternate
Financing Documents
8.10(a)
Books
and Records
7.07
Certificates
2.03(a)
Closing
2.01(b)
Closing
Date
2.01(b)
Company
Preamble
Company
Core Representations
Article
4
Company
Covenant Breach
11.02
Company
Employee
7.04(a)
14
Term
Section
Company
Employee Plans
4.16(a)
Company
Leased Real Property
4.22(a)
Company
Leased Tangible Property
4.22(b)
Company
Material Environmental Applications
4.19(h)
Company
Material Mining Applications
4.10(b)
Company
Outstanding Stock Number
9.02(j)
Company
Outstanding Stock Number Certificate
9.02(j)
Company
Owned Real Property
4.22(d)
Company
Owned Tangible Property
4.22(e)
Company
Permits
4.25
Company
Securities
4.05(b)
Company
Stockholder Approval
4.02(a)
Company
Subsidiary Securities
4.06(b)
Company
Surety Bonds
4.10(c)
Company
Warranty Breach
11.02
Continuing
Employee
7.04(a)
D&O
Insurance
7.06(b)
Deductible
Amount
11.02(a)
Deminimis
Amount
11.02(a)
Direct
Indemnification Claims
11.02(c)
Dissenting
Shares
2.09
Effective
Time
2.01(b)
e-mail
12.01
End
Date
10.01(b)(i)
Escrow
Account
2.08(a)
Escrow
Availability Amount
11.03(a)
Escrow
Property
2.08(a)
Escrow
Only Claims
11.02(b)
Escrow
Shares
2.08(a)
Excess
Transaction Expenses Deduction Amount
9.02(h)
Exchange
Agent
2.03(a)
Indemnified
Party
11.03
Indemnifying
Party
11.03
Information
Statement
6.02(b)
Material
Contract
4.21(b)
Merger
Preamble
Merger
Consideration
2.02(a)
Merger
Subsidiary
Preamble
Multiemployer
Plan
4.16(c)
Non-Core
Cap Availability Amount
11.03(a)
Parent
Preamble
Parent
Board Recommendation
8.09(e)
Parent
Cap
11.02(d)
15
Term
Section
Parent
Core Claims
11.02(e)
Parent
Core Representations
Article
5
Parent
Covenant Breach
11.02(d)
Parent
Credit Agreement
5.26
Parent
Indemnified Parties
11.02(a)
Parent
Financing
5.26
Parent
Financing Commitment Letter
5.26
Parent
Leased Real Property
5.22(b)
Parent
Leased Tangible Property
5.22(a)
Parent
Material Contract
5.21
Parent
Material Mining Applications
5.11(b)
Parent
Non-Core Claims
11.02(e)
Parent
Owned Real Property
5.22(d)
Parent
Owned Tangible Property
5.22(e)
Parent
Permits
5.24
Parent
SEC Documents
5.07(a)
Parent
Securities
5.05(b)
Parent
Stock Issuance
5.02(a)
Parent
Stockholder Approval
5.02(a)
Parent
Stockholder Meeting
8.09(a)
Parent
Subsidiary Securities
5.06(b)
Parent
Surety Bonds
5.11(c)
Parent
Warranty Breach
11.02
Preferred
Stock
5.05(a)
Pro
Rata Share
2.08(b)
Related
Person
4.26
Representatives
6.03(a)
Rights
Agreement
5.20(b)
Seller
Group
12.13
Stockholder
Consents
Preamble
Stockholder
Control
Preamble
Stockholder
Indemnified Parties
11.02(d)
Stockholder
Representative
Preamble
Superior
Proposal
6.03(c)
Support
Agreements
Recitals
Surviving
Corporation
2.01(a)
Tax
4.14(j)
Taxing
Authority
4.14(j)
Tax
Return
4.14(j)
Tax
Sharing Agreements
4.14(j)
Third
Party Interests
4.06(b)
TSA
5.16
368
Reorganization
4.15
Voting
Agreement
Recitals
16
Section
1.02. Other
Definitional and Interpretative Provisions. The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof. References to Articles, Sections, Exhibits and
Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement
unless otherwise specified. All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized terms used
in any Exhibit or Schedule but not otherwise defined therein, shall have the
meaning as defined in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words
“without limitation”, whether or not they are in fact followed by those words or
words of like import. “Writing”, “written” and comparable terms refer
to printing, typing and other means of reproducing words (including electronic
media) in a visible form. References to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof; provided
that with respect to any agreement or contract listed on any schedules hereto,
all such amendments, modifications or supplements must also be listed in the
appropriate schedule. References to any Person include the successors
and permitted assigns of that Person. References from or through any
date mean, unless otherwise specified, from and including or through and
including, respectively. References to “law” or “laws” shall be
deemed also to include any Applicable Law. References to any
particular statute or law shall be to such statute or law as amended from time
to time, and to the rules and regulations promulgated thereunder and enforceable
interpretations thereof. Any references in this Agreement to
compliance by any Person with any Applicable Law, permit, authorization,
agreement or other item shall include compliance by any business, assets or
operations of such Person.
ARTICLE
2
The
Merger
Section
2.01. The
Merger. (a) At the
Effective Time, Merger Subsidiary shall be merged with and into the Company in
accordance with Delaware Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation (the
“Surviving
Corporation”).
(b) The
closing of the Merger (the “Closing”)
shall take place at the offices of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York10017 at 10:00 A.M., three Business Days after the
date on which the last of the conditions set forth in Article 9 shall have been
satisfied or waived (other than those conditions that (i) by their nature are to
be satisfied at Closing and (ii) will
17
be
satisfied at Closing), or on such other date, time and place as the Company and
Parent may mutually agree (the “Closing
Date”). On the Closing Date the Company and Merger Subsidiary
shall file a certificate of merger with the Delaware Secretary of State and make
all other filings or recordings required by Delaware Law in connection with the
Merger. The Merger shall become effective at such time (the “Effective
Time”) as the certificate of merger is duly filed with the Delaware
Secretary of State (or at such later time as may be specified in the certificate
of merger by agreement of the parties).
(c) From and
after the Effective Time, the effect of the Merger shall be as provided in this
Agreement and the applicable provisions of Delaware Law. Without
limiting the generality of the foregoing, at the Effective Time, all of the
property, rights, privileges, powers and franchises of the Company and Merger
Subsidiary shall vest in the Surviving Corporation, and all of the debts,
liabilities, obligations and duties of the Company and Merger Subsidiary shall
become the debts, liabilities, obligations and duties of the Surviving
Corporation.
Section
2.02. Conversion
of Shares. At the Effective Time:
(a) except as
otherwise provided in Section 2.02(b) and Section 2.09, and subject to Section
2.04(b), each share of Company Stock (including Company Restricted Stock and
shares of Company Stock issued upon conversion of the Company Convertible Debt
Notes) outstanding immediately prior to the Effective Time shall be converted
into the right to receive the Net Per Share Number of shares of Parent Stock
(together with the cash in lieu of fractional shares of Parent Stock as
specified below, the “Merger
Consideration”); provided
that, notwithstanding the foregoing, the parties acknowledge and agree that the
Escrow Shares shall be deducted from the Parent Stock deliverable to each
Designated Stockholder based on that Designated Stockholder’s Pro Rata Share of
the Escrow Shares as set forth in Section 2.08 and such Escrow Shares shall be
deliverable to such Designated Stockholders only as provided in the Escrow
Agreement.
(b) each share
of Company Stock held by the Company as treasury stock shall be canceled, and no
payment shall be made with respect thereto; and
(c) each share
of common stock of Merger Subsidiary outstanding immediately prior to the
Effective Time shall be converted into and become one share of common stock of
the Surviving Corporation with the same rights, powers and privileges as the
shares so converted and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
Section
2.03. Surrender
and Payment. (a) Parent shall act as agent or prior to the
Effective Time Parent shall appoint an agent (Parent or such agent, as
applicable, the “Exchange
Agent”) for the purpose of exchanging for the Merger Consideration
certificates representing shares of Company Stock, including Company Restricted
Stock (the “Certificates”). Parent
shall make available to
18
the
Exchange Agent, as needed, the Merger Consideration to be paid in respect of the
Certificates. Promptly after the Effective Time (but not later than
ten Business Days after the Closing), Parent shall send, or shall cause the
Exchange Agent to send, to each holder of shares of Company Stock at the
Effective Time, a letter of transmittal and instructions (which shall specify
that the delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the Certificates to the Exchange Agent) for use in such
exchange.
(b) Each
holder of shares of Company Stock that have been converted into the right to
receive the Merger Consideration shall be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration in respect of the Company Stock
represented by such Certificate, but subject to Section 2.08. The
shares of Parent Stock constituting part of such Merger Consideration, at
Parent’s option, shall be in uncertificated book-entry form; provided
that, except with respect to shares then held in the Escrow Account, if
such shares of Parent Stock are in uncertificated book-entry form, upon request
by the Stockholder Representative or any Stockholder, Parent shall provide to
such Person a certificate of Parent’s transfer agent of the registration of such
shares of Parent Stock in the name of the applicable
Stockholder. Until so surrendered or transferred, as the case may be,
each such Certificate shall represent after the Effective Time for all purposes
only the right to receive such Merger Consideration.
(c) If any
portion of the Merger Consideration is to be paid to a Person other than the
Person in whose name the surrendered Certificate, is registered, it shall be a
condition to such payment that (i) such Certificate shall be properly endorsed
or shall otherwise be in proper form for transfer and (ii) the Person requesting
such payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of such payment to a Person other than the registered
holder of such Certificate or establish to the reasonable satisfaction of the
Exchange Agent that such tax has been paid or is not
payable.
(d) After the
Effective Time, there shall be no further registration of transfers of shares of
Company Stock. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article 2.
(e) Any
portion of the Merger Consideration made available to the Exchange Agent
pursuant to Section 2.03(a) that remains unclaimed by the holders of shares of
Company Stock twelve months after the Effective Time shall be returned to
Parent, upon demand, and any such holder who has not exchanged shares of Company
Stock for the Merger Consideration in accordance with this Section 2.03 prior to
that time shall thereafter look only to Parent for payment of the Merger
Consideration, and any dividends and distributions with respect
19
thereto,
in respect of such shares without any interest
thereon. Notwithstanding the foregoing, Parent shall not be liable to
any holder of shares of Company Stock for any amounts paid to a public official
pursuant to applicable abandoned property, escheat or similar
laws. Any amounts remaining unclaimed by holders of shares of Company
Stock two years after the Effective Time (or such earlier date, immediately
prior to such time when the amounts would otherwise escheat to or become
property of any Governmental Authority) shall become, to the extent permitted by
Applicable Law, the property of Parent free and clear of any claims or interest
of any Person previously entitled thereto.
(f) No
dividends or other distributions with respect to Parent Stock constituting part
of the Merger Consideration, and no cash payment in lieu of fractional shares as
provided in Section 2.05, shall be paid to the holder of any Certificates not
surrendered until such Certificates are surrendered as provided in this
Section. Following such surrender, there shall be paid, without
interest, to the Person in whose name the shares of Parent Stock have been
registered, at the time of such surrender or transfer, the amount of any cash
payable in lieu of fractional shares to which such Person is entitled pursuant
to Section 2.05 and the amount of all dividends or other distributions, if any,
with a record date after the Effective Time previously paid or payable on the
date of such surrender with respect to such shares of Parent Stock; provided
that all dividends and distributions with respect to the Escrow Shares shall be
held in the Escrow Account together with the associated Escrow
Shares.
Section
2.04. Certain
Adjustments.
(a) If, during
the period between the date of this Agreement and the Effective Time, any change
in the outstanding shares of capital stock of the Company (except for the
issuance of the shares of Company Stock on conversion of the Company Convertible
Debt Notes) or Parent shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, the Merger Consideration shall be appropriately adjusted; provided
that no adjustment to the Merger Consideration shall be made for any change in
the outstanding shares of capital stock of Parent that results from (i) any
exercise of options to purchase shares of Parent Stock granted under Parent’s
stock option or compensation plans or arrangements, which plans or arrangements
have been disclosed in the Parent SEC Documents, and any issuance of shares
pursuant to any such plans or arrangements or (ii) any bona fide issuance of
shares in which Parent receives fair value (as determined in good faith by
Parent’s Board of Directors) for such shares.
(b) Subject to
any adjustments required by Section 2.04(a), Parent shall not be obligated to
issue in excess of 11,901,729 shares of Parent Stock (less (i) a number of
shares, if any, equal to the Excess Transaction Expenses Deduction Amount
divided by the Market Value as calculated for purposes of determining the Net
Per Share Number and (ii) any fractional shares to the extent provided in
20
Section
2.05) as Merger Consideration (including, for the avoidance of doubt, the Escrow
Shares).
Section
2.05. Fractional
Shares. No fractional shares of Parent Stock shall be issued
in the Merger. All fractional shares of Parent Stock that a holder of
shares of Company Stock would otherwise be entitled to receive as a result of
the Merger shall be aggregated and if a fractional share results from such
aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash without interest determined by multiplying the closing sale price
of a share of Parent Stock on the New York Stock Exchange on the trading day
immediately preceding the Effective Time by the fraction of a share of Parent
Stock to which such holder would otherwise have been
entitled.
Section
2.06. Withholding
Rights.
(a) Each of
the Surviving Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable to any Person pursuant to this Article
2 such amounts as it is required to deduct and withhold with respect to the
making of such payment under any provision of federal, state, local or foreign
tax law. Any withheld amounts shall be timely remitted to the
appropriate Taxing Authority and a receipt therefor shall be delivered to the
Stockholder Representative. If the Surviving Corporation or Parent,
as the case may be, so withholds amounts, such amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Stock in respect of which the Surviving Corporation or Parent, as the
case may be, made such deduction and withholding.
(b) Without
limiting the generality of Section 2.06(a), Parent shall be entitled to treat
the Company as a United States Real Property Holding Corporation, as defined in
Section 897 of the Code. Accordingly, Parent shall be entitled to
deduct and withhold from payments to each Stockholder pursuant to Section 1445
of the Code, unless such Stockholder provides certification of non-foreign
status or other evidence of exemption from 1445 withholding (in the forms
attached hereto as Exhibit 2.06(b)).
Section
2.07. Lost
Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate the
Exchange Agent will issue, in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to be paid in respect of the shares of
Company Stock or Company Restricted Stock represented by such Certificate, as
contemplated by this Article 2.
21
Section
2.08. Escrow
Account.
(a) The
Company agrees that at the Closing a number of shares of Parent Stock equal to
10% of the aggregate number of shares of Parent Stock to be issued to the
Stockholders in the Merger pursuant to Section 2.02 (the “Escrow
Shares”) shall (in lieu of being delivered to the Designated
Stockholders, and with the portion of such Escrow Shares attributable to each
Designated Stockholder being such Designated Stockholder’s Pro Rata Share) be
delivered by Parent to the Escrow Agent for deposit into a separate account (the
“Escrow
Account”) in accordance with the terms of the Escrow
Agreement. The Escrow Shares deposited with the Escrow Agent shall be
applied by the Escrow Agent in accordance with the terms of the Escrow Agreement
to pay amounts (if any) owing under Article 11 (with such Escrow Shares valued
at Market Value in accordance with the definition thereof), with all remaining
property in the Escrow Account to be distributed to the Designated Stockholders
in accordance with Section 2.08(b). For the purposes of the
definition of “Escrow Shares”, any dividends or distributions paid on an Escrow
Share and the interest earned thereon shall also be deemed to be part of such
“Escrow Share”. For the purposes of this Agreement, “Escrow
Property” means, at any given time, the Escrow Shares and any other funds
or property contained in the Escrow Account at such
time.
(b) On the
first Business Day after the first anniversary of the Closing Date, an amount of
Escrow Property equal to (x) the amount of Escrow Property remaining in the
Escrow Account at such time less
(y) such amount of Escrow Property with an aggregate value (calculated, to the
extent any Escrow Shares are held in the Escrow Account, based on the Market
Value of such Escrow Shares at such time) equal to the aggregate amount of bona
fide claims for indemnification submitted in good faith and outstanding at such
time (plus applicable interest on such claims), shall be released from the
Escrow Account for distribution to the Persons who were Designated Stockholders
immediately prior to the Effective Time in accordance with their Pro Rata
Shares. Any remaining Escrow Property in the Escrow Account at the
time all such claims for indemnification are resolved shall be released from the
Escrow Account for distribution to the Persons who were Designated Stockholders
immediately prior to the Effective Time in accordance with their Pro Rata
Shares. For these purposes, “Pro
Rata Share” means, with respect to each Designated Stockholder the
quotient of (i) the number of shares of Parent Stock to be issued to such
Designated Stockholder in the Merger pursuant to Section 2.02, divided
by (y) the aggregate number of shares of Parent Stock to be issued to all
Designated Stockholders in the Merger pursuant to Section 2.02. The
Escrow Agent shall hold the Escrow Property in escrow pursuant to the Escrow
Agreement. Distributions of any Escrow Property from the Escrow
Account shall be governed by the terms and conditions of the Escrow
Agreement.
Section
2.09. Dissenting
Shares. Notwithstanding any provision of this Agreement to the
contrary, if required by Delaware Law (but only to the extent
22
required
thereby), shares of Company Stock that are issued and outstanding immediately
prior to the Effective Time (other than shares of Company Stock to be canceled
pursuant to Section 2.02(b)) and that are held by holders of such shares who
have not voted in favor of the adoption of this Agreement or consented thereto
in writing and who have properly exercised appraisal rights with respect thereto
in accordance with, and who have complied with, Section 262 of Delaware Law (the
“Dissenting
Shares”) will not be convertible into the right to receive the Merger
Consideration, and holders of such Dissenting Shares will be entitled to receive
payment of the fair value of such Dissenting Shares in accordance with the
provisions of such Section 262 unless and until any such holder fails to perfect
or effectively withdraws or loses its rights to appraisal and payment under
Delaware Law. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such Dissenting Shares
will thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, and the Surviving Corporation shall
remain liable for payment of the Merger Consideration for such shares, subject
to Section 2.08. At the Effective Time, any holder of Dissenting
Shares shall cease to have any rights with respect thereto, except the rights
provided in Section 262 of Delaware Law and as provided in the previous
sentence. The Company will give Parent prompt notice of any demands
received by the Company for appraisals of shares of Company
Stock.
ARTICLE
3
The
Surviving Corporation
Section
3.01. Certificate
of Incorporation. At the Effective Time, the certificate of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be amended in the Merger to read in its entirety as set forth in
Exhibit 3.01 hereto, and, as so amended, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter changed or amended
as provided therein or by Applicable Law.
Section
3.02. Bylaws. At
the Effective Time, the bylaws of the Company, as in effect immediately prior to
the Effective Time, shall be amended and restated in their entirety as set forth
in Exhibit 3.02 hereto, and as so amended and restated, shall be the bylaws of
the Surviving Corporation, until thereafter changed or amended as provided
therein or by Applicable Law.
Section
3.03. Directors
and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with
Applicable Law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of
Merger Subsidiary at the Effective Time shall be the officers of the Surviving
Corporation.
23
ARTICLE
4
Representations
and Warranties of the Company
Subject to Section
12.04,
except as set forth in the Company Disclosure Schedule, the Company represents
and warrants to Parent, on and as of the date of this Agreement and, solely with
respect to the representations and warranties in Sections 4.01, 4.02, 4.03, 4.04, 4.05, 4.06, 4.12, 4.13, 4.20, 4.26 (such
representations and warranties, the “Company
Core Representations”) and Section
4.30,
as of the Effective Time, that:
Section
4.01. Corporate
Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate powers required to carry on its business as
currently conducted. In all material respects, the Company is duly
qualified to do business as a foreign corporation and, as applicable in the
relevant jurisdiction, is in good standing in all jurisdictions where such
qualification is necessary. The Company has heretofore delivered or
made available to Parent prior to the date hereof true and complete copies of
the certificate of incorporation and bylaws of the Company as currently in
effect.
Section
4.02. Corporate
Authorization. (a) The
execution, delivery and performance by each of the Company and the Stockholder
Representative of this Agreement and each other Transaction Document to which
the Company or the Stockholder Representative is or will be a party and the
consummation of the transactions contemplated hereby and thereby are within its
corporate or limited partnership powers, as applicable, and, except for the
affirmative vote in connection with the consummation of the Merger of the
holders of at least 66.67% of the Company Stock held by the Investors (as such
term is defined in the Company Stockholders Agreement) (the “Company
Stockholder Approval”), have been duly authorized by all necessary
corporate action on the part of the Company and all necessary limited
partnership action on the part of the Stockholder Representative and no other
corporate, shareholder, partner or other similar proceedings on the part of the
Company or the Stockholder Representative are necessary to authorize this
Agreement or any other Transaction Document or to consummate the transactions
contemplated hereby or thereby. This Agreement and each of the other
Transaction Documents to which the Company or the Stockholder Representative is
or will be a party constitutes, or will when executed and delivered constitute,
a valid and binding agreement of the Company and the Stockholder Representative,
as applicable, enforceable against the Company and the Stockholder
Representative, as applicable, in accordance with its terms, except to the
extent that enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
from time to time in effect affecting generally the enforcement of creditors’
rights and remedies and (ii) general principles of equity, whether in a
proceeding at law or in equity.
24
(b) The
Company’s Board of Directors has (i) unanimously determined that this
Agreement and the other Transaction Documents to which the Company is a party,
and the transactions contemplated hereby and thereby (including the Merger), are
advisable, fair to and in the best interests of the Company’s stockholders, (ii)
unanimously approved and adopted this Agreement and the other Transaction
Documents to which the Company is a party, and the transactions contemplated
hereby and thereby (including the Merger), and (iii) unanimously recommended
adoption of this Agreement by its stockholders. The members of the
Company’s Board of Directors who are not Affiliates of the ArcLight Funds have
(although not a committee of the Company’s Board of Directors) (i) unanimously
determined that this Agreement and the other Transaction Documents to which the
Company is a party, and the transactions contemplated hereby and thereby
(including the Merger), are advisable, fair to and in the best interests of the
Company’s stockholders and (ii) unanimously approved this Agreement and the
other Transaction Documents to which the Company is a party, and the
transactions contemplated hereby and thereby (including the
Merger)
(c) The
Stockholder Consents will be executed and delivered by the Stockholders
identified on Section 4.02(c) of the Company Disclosure Schedule immediately
after the execution and delivery of this Agreement, and when so executed and
delivered will constitute a valid, effective and irrevocable Company Stockholder
Approval and no other vote or action of the holders of any class or series of
the capital stock of the Company will be necessary under Delaware Law, the
Company Stockholders Agreement or otherwise to consummate the Merger or the
transactions provided for herein.
Section
4.03. Governmental
Authorization. The execution, delivery and performance by each
of the Company and the Stockholder Representative of this Agreement and each
other Transaction Document to which the Company or the Stockholder
Representative is or will be a party and the consummation of the transactions
contemplated hereby and thereby require no action by or in respect of, or filing
with, any Governmental Authority other than (i) the filing of a certificate of
merger with respect to the Merger with the Delaware Secretary of State, (ii)
compliance with any applicable requirements of the HSR Act, (iii) compliance
with any applicable requirements of the 1933 Act, the 1934 Act and any other
U.S. state or federal securities laws and (iv) any other immaterial actions or
filings.
Section
4.04. Non-contravention. The
execution, delivery and performance by each of the Company and the Stockholder
Representative of this Agreement and each other Transaction Document to which
the Company or the Stockholder Representative is or will be a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not (i) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws (or similar
organizational documents) of the
25
Company or
any of its Subsidiaries, or the certificate of limited partnership or the
limited partnership agreement of either Stockholder Representative, (ii)
assuming compliance with the matters referred to in Section 4.03, contravene,
conflict with or result in a violation or breach of any provision of any
Applicable Law, (iii) require any consent or other action by any Person under,
constitute a default, or an event that, with or without notice or lapse of time
or both, would constitute a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which the Company or any of its Subsidiaries or the
Stockholder Representative is entitled under any provision of any agreement or
other instrument binding upon the Company, any of its Subsidiaries, the
Stockholder Representative or any of their respective properties or assets or
any license, franchise, permit, approval or other authorization of, or any
deposit, letter of credit, trust fund or bond posted by, the Company or any of
its Subsidiaries or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, with such
exceptions, in the case of (a) clause (ii) as would not, individually or in the
aggregate, reasonably be expected to be material or (b) clauses (iii) and (iv),
as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section
4.05. Capitalization;
Ownership of Shares. (a) The authorized capital stock of the
Company consists of 101,000,000 shares of capital stock par value $0.01 per
share, of which 100,000,000 shares are Company Stock (of which 3,000,000 shares
are Company Restricted Stock) and 1,000,000 are shares of the Company’s
undesignated preferred stock. As of the date hereof, there are issued
and outstanding: (i) 51,670,642 shares of Company Stock, of which
519,306 shares are vested Company Restricted Stock and 1,951,336 shares are
unvested Company Restricted Stock and (ii) no shares of the Company’s preferred
stock. All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable. No Subsidiary or Affiliate of the Company owns any
shares of capital stock of the Company.
(b) Except as
set forth in this Section 4.05, there are no outstanding (i) shares of capital
stock or voting securities of the Company, (ii) securities of the Company or any
of its Subsidiaries convertible into or exchangeable for shares of capital stock
or voting securities of the Company or Error! Bookmark not defined. options or
other rights to acquire from the Company or any of its Subsidiaries, or other
obligation of the Company or any of its Subsidiaries to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses (i),
(ii), and (iii) being referred to collectively as the “Company
Securities”). Other than pursuant to the Stock Plan, there are
no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company
Securities.
(c) Section
4.05(c) of the Company Disclosure Schedule contains a complete and correct list
of the Company’s Stockholders and specifies the number
26
of shares
of Company Stock (including Company Restricted Stock) owned by each such
Stockholder. Section 4.05(c) of the Company Disclosure Schedule sets
forth each shareholders agreement or similar agreement with or among any of the
Company’s Stockholders, including any agreement that provides for preemptive
rights or imposes any limitation or restriction on Company Stock, including any
restriction on the right of a holder to vote, sell or otherwise dispose of such
Company Stock. Other than the Stock Plan, neither the Company nor any
Subsidiary of the Company has adopted, maintains or has maintained any stock
option plan or other plan providing for equity compensation to any
Person. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or other similar rights with respect to the
Company or any of its Subsidiaries.
(d) The
information set forth in the Company Outstanding Stock Number Certificate
delivered pursuant to Section 9.02(j) will be true and correct in all
respects.
(e) No
interest will be paid in cash on the Company Convertible Debt at or prior to the
Closing. Immediately prior to the Effective Time, in accordance with
Section 7 of the Company Convertible Debt NPA, (i) the Company Convertible Debt
Notes (including any interest on the Company Convertible Debt Notes that has
been added to the principal thereof, and any accrued and unpaid interest on the
Company Convertible Debt Notes) will be converted into the right to receive a
number of shares of Company Stock in accordance with Section 7 of the Company
Convertible Debt NPA and will be cancelled and cease to be issued and
outstanding and (ii) the Company Convertible Debt Notes will be surrendered and
exchanged for Company Stock. From the date of the Company Convertible
Debt NPA through the date hereof, the Company has not taken any action that
would have violated Section 6.06 if it had been in effect at that
time.
(f) Prior to
the date hereof, the Company has issued $100,000,000 in aggregate principal
amount of Company Convertible Debt Notes pursuant to the Company Convertible
Debt NPA and has repaid $100,000,000 of existing indebtedness of the Company and
its Subsidiaries under the Company Credit Agreement without the payment of any
penalty or premium. The Company has not incurred, and will not incur,
any fees or expenses in respect of any underwriter, finder or broker (or any
similar fee or expense) in connection with the issuance of the Company
Convertible Debt Notes.
Section
4.06. Subsidiaries. Error!
Bookmark not defined. Each Subsidiary of the Company is a limited liability
company duly organized, validly existing and, as applicable in the relevant
jurisdiction, in good standing under the laws of its jurisdiction of
organization, and has all corporate (or other organizational) powers required to
carry on its business as currently conducted. In all material
respects, each such Subsidiary is duly qualified to do business as a foreign
company and, as applicable in the relevant jurisdiction, is in good standing in
all jurisdictions
27
where such
qualification is necessary. Section 4.06(a) of the Company Disclosure
Schedule sets forth a complete and correct list of all Subsidiaries of the
Company and their respective jurisdictions of
organization.
(b) All of the
outstanding capital stock of, or other voting securities or ownership interests
in, each Subsidiary of the Company, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). There are no outstanding (i) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of
its Subsidiaries, or other obligation of the Company or any of its Subsidiaries
to issue, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary of the Company
(the items in clauses (i) and (ii) being referred to collectively as the “Company
Subsidiary Securities”). There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the Company Subsidiary Securities.
(c) Other than
(i) the Subsidiaries set forth on Section 4.06(a) of the Company Disclosure
Schedule and (ii) investments (which, as of the date hereof, are as set forth on
Section 4.06(c) of the Company Disclosure Schedule) made with funds held in
escrow accounts established to support reclamation obligations of the Company or
any of its Subsidiaries, neither the Company nor any Subsidiary of the Company
owns, directly or indirectly, any shares of capital stock, securities, ownership
interests or investments in any other Person (collectively, “Third
Party Interests”). Neither the Company nor any Subsidiary of
the Company has any rights to, or is bound by any commitment or obligation to,
acquire by any means, directly or indirectly, any Third Party Interests or to
make any investment in, or contribution or (other than pursuant to commercial
transactions in the ordinary course of business or to employees in the ordinary
course of business) advance to, any Person.
Section
4.07 . Financial
Statements.
(a) The
audited consolidated balance sheets as of December 31, 2006 and December 31,2005 and the related audited consolidated statements of operations, statements
of shareholders’ equity and statements of cash flows for each of the years ended
December 31, 2006 and December 31, 2005 of the Company and its Subsidiaries
fairly present, in all material respects, the consolidated financial position
and shareholders’ equity of the Company and its Subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended and have been prepared in compliance
28
with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto)
and in accordance with the books and records of the Company and its
Subsidiaries.
(b) The
audited balance sheet as of December 31, 2007 and the related audited statement
of operations, statement of shareholders’ equity and statement of cash flows for
the year then ended of the Company and its Subsidiaries fairly present, in all
material respects, the consolidated financial position and shareholders’ equity
of the Company and its Subsidiaries as of the date thereof and their
consolidated results of operations and cash flows for the period then ended and
have been prepared in compliance with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto) and in accordance with the books and
records of the Company and its Subsidiaries.
Section
4.08. Absence
of Certain Changes. From the Company Balance Sheet Date to the
date hereof, the business of the Company and its Subsidiaries has been conducted
in the ordinary course consistent with past practices, and since the Company
Balance Sheet Date:
(a) there has
not been any event, occurrence, development or state of circumstances or facts
which, individually or in the aggregate, has had or would reasonably be expected
to have a Company Material Adverse Effect; and
(b) neither
the Company nor any of its Subsidiaries has taken any action that would have
been prohibited by Section 6.01 (other than Sections 6.01(c), 6.01(i) or
6.01(m)) if this Agreement had been in effect at the time
thereof.
Section
4.09. No
Undisclosed Material Liabilities. There are no liabilities or
obligations of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and to the knowledge of the Company, there is no existing condition, situation
or set of circumstances (other than as a result of conducting operations in the
coal industry generally, except to the extent disproportionately impacting the
Company or its Subsidiaries as compared to other entities operating in the coal
industry) that would reasonably be expected to result in such a liability or
obligation, other than:
(a) liabilities
or obligations to the extent disclosed, reflected or reserved against, in the
Company Balance Sheet or the notes thereto;
(b) liabilities
or obligations incurred in the ordinary course of business since the Company
Balance Sheet Date consistent with past practices;
(c) liabilities
that would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect;
(d) liabilities
incurred as a result of the performance of the Company’s obligations under this
Agreement; and
29
(e) liabilities
or obligations arising pursuant to the terms (and not as a result of breach or
default by the Company or any of its Subsidiaries) of contracts or agreements of
the Company or any of its Subsidiaries set forth in Section 4.21(a) of the
Company Disclosure Schedule.
Section
4.10. Compliance
with Laws; Mining Compliance Matters.
(a) The
Company and each of its Subsidiaries is, and (except as would not reasonably be
expected to result in a current or future liability on or adverse consequence to
the Company or any of its Subsidiaries) has been, in all material respects in
compliance with all Applicable Law, including the Identified Mining Laws but not
including any other Environmental Laws, and to the knowledge of the Company is
not under investigation with respect to and has not been threatened to be
charged with or given written notice from any Governmental Authority, and the
Company does not otherwise have knowledge of, any material violation of any
Applicable Law, including the Identified Mining Laws but not including any other
Environmental Laws. Neither the Company nor any of its Subsidiaries
is subject to any material order, writ, judgment, award, injunction or decree of
any arbitrator or Governmental Authority that the Company or any of its
Subsidiaries has received in writing or otherwise has knowledge
of.
(b) Section
4.10(b) of the Company Disclosure Schedule lists all material applications for
permits to be issued by mining authorities to the Company or any of its
Subsidiaries (the “Company
Material Mining Applications”). Neither the Company nor any of
its Subsidiaries has received any written communication from the applicable
permitting authority with respect to any Company Material Mining Application
that (i) indicates that such Company Material Mining Application has been denied
or (ii) requests the Company or any of its Subsidiaries to provide additional
information with respect to such Company Material Mining
Application.
(c) Except as
set forth on Section 4.10(c) of the Company Disclosure Schedule, the Company and
its Subsidiaries have posted all material deposits, letters of credit, trust
funds, bid bonds, performance bonds, reclamation bonds and surety bonds (and all
such similar undertakings) required to be posted in connection with their
operations (the deposits, letters of credit, trust funds, bid bonds, performance
bonds, reclamation bonds and surety bonds (and all such similar undertakings)
posted in connection with the operations of the Company and its Subsidiaries,
collectively, the “Company
Surety Bonds”). The Company Surety Bonds are sufficient to
conduct the business of the Company and its Subsidiaries as currently
conducted. The Company and its Subsidiaries are and have been in
compliance in all material respects with the Company Surety Bonds, and the
operation of the Company’s and its Subsidiaries’ coal mining and processing
operations and the state of reclamation with respect to the Company Surety Bonds
are “current” or in “deferred status” regarding reclamation obligations and
otherwise are and have been in compliance with all applicable
30
mining,
reclamation and other analogous Applicable Laws, except where noncompliance
would not (i) interfere in any material respect with the ability of the Company
and its Subsidiaries to continue to operate their assets and conduct their
business as currently conducted or otherwise be material or (ii) materially
adversely affect or delay the consummation of the transactions contemplated by
this Agreement.
(d) Neither
the Company nor any of its Subsidiaries (nor any Person “owned or controlled” by
any of them) has received written notice from the Federal Office of Surface
Mining or the agency of any state administering the Surface Mining Control and
Reclamation Act of 1977 (or any comparable state statute) or otherwise has
knowledge that it is (i) ineligible to receive additional surface mining permits
or other licenses or authorizations or (ii) under investigation to determine
whether its eligibility to receive such permits or other licenses or
authorizations should be revoked, i.e.,
“permit blocked.” As used in this Section 4.10(d), “owned or
controlled” shall be defined as set forth in 30 C.F.R. Section 773.5
(2000).
Section
4.11. Litigation.
There is no action, suit, investigation or proceeding pending against,
or, to the knowledge of the Company, threatened against or affecting, the
Company, any of its Subsidiaries, any present or former officer, director or
employee of the Company or any of its Subsidiaries or any Person for whom the
Company or any Subsidiary may be liable or any of their respective properties
before any court or arbitrator or before or by any Governmental Authority, (i)
that if determined adversely to the Company or any of its Subsidiaries, would
reasonably be expected to be, individually or in the aggregate, material or (ii)
that in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the Merger or any of the other transactions contemplated
hereby.
Section
4.12. Investment
Banker and Finders’ Fees. Except for Citigroup Global Markets
Inc., a copy of whose engagement agreement has been provided to Parent prior to
the date hereof, there is no investment banker, broker, finder or other
intermediary that has been retained by, or is authorized to act on behalf of,
the Company or any of its Subsidiaries who might be entitled to any fee or
commission from Parent, the Company or any of their respective Affiliates in
connection with the transactions contemplated by this
Agreement.
Section
4.13. Opinion
of Financial Advisor. The Board of Directors of the Company
has received the opinion of Citigroup Global Markets Inc., financial advisor to
the Company, to the effect that, as of the date of such opinion and subject to
the assumptions, limitations and qualifications reflected therein, the exchange
ratio (as defined in such opinion) is fair, from a financial point of view, to
the holders of Company Stock (other than the ArcLight Funds and their respective
Affiliates). The Company, solely for informational purposes, will
after receipt of such opinion and concurrently with the execution and delivery
of this
31
Agreement,
furnish Parent’s outside legal counsel with a correct and complete copy of such
opinion.
Section
4.14. Taxes. (a)
All material Tax Returns required by Applicable Law to be filed with any Taxing
Authority by, or on behalf of, the Company or any of its Subsidiaries have been
filed when due in accordance with all Applicable Law, and all such material Tax
Returns were at the time of filing, true and complete in all material
respects.
(b) The
Company and each of its Subsidiaries has paid (or has had paid on its behalf) or
has withheld and remitted to the appropriate Taxing Authority all Taxes due and
payable, or, where payment is not yet due or being contested in good faith, has
established (or has had established on its behalf and for its sole benefit and
recourse) in accordance with GAAP an adequate accrual for all Taxes through the
end of the last period for which the Company and its Subsidiaries ordinarily
record items on their respective books.
(c) Any income
and franchise Tax Returns of the Company or its Subsidiaries filed or required
to be filed with respect to the Tax years ended on or before December 31, 2003
have been examined and closed or are Tax Returns with respect to which the
applicable period for assessment under Applicable Law, after giving effect to
extensions or waivers, has expired.
(d) There is
no claim, audit, action, suit, proceeding or investigation now pending or, to
the Company’s knowledge, threatened against or with respect to the Company or
its Subsidiaries in respect of any Tax or Tax asset.
(e) During the
five-year period ending on the date hereof, neither the Company nor any of its
Subsidiaries was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the
Code.
(f) Neither
the Company nor any of its Subsidiaries owns an interest in real property in any
jurisdiction which taxes the transfer of an interest in an entity that owns an
interest in real property as a transfer of the interest in real
property.
(g) Section
4.14(g) of the Company Disclosure Schedule contains (i) a list of all
jurisdictions (whether foreign or domestic) in which the Company or any of its
Subsidiaries is qualified to do business and (ii) a list of all jurisdictions
(whether foreign or domestic) in which the Company or any of its Subsidiaries
currently files Tax Returns, showing in each case the type of Tax Return
filed. No jurisdiction in which the Company does not file Tax Returns
has asserted that the Company is or may be liable for Tax, or required to file a
Tax Return, in such jurisdiction.
(h) (i)
Neither the Company nor any of its Subsidiaries has been a member of an
affiliated, consolidated, combined or unitary group other than one of which the
Company was the common parent (provided that Apogee Coal
32
Company,
LLC, Catenary Coal Company, LLC and Hobet Mining, LLC were formerly C
corporations that were members of a consolidated group with Arch Coal, Inc., but
are not successors to such C corporations under Section 381(a) of the Code);
(ii) neither the Company nor any of its Subsidiaries is party to any Tax Sharing
Agreement or to any other agreement or arrangement referred to in clause (ii) or
(iii) of the definition of “Tax”; (iii) no amount of the type described in
clause (ii) or (iii) of the definition of “Tax” is currently payable by either
the Company or any of its Subsidiaries, regardless of whether such Tax is
imposed on the Company or any of its Subsidiaries; and (iv) neither the Company
nor any of its Subsidiaries has entered into any agreement or arrangement with
any Taxing Authority with regard to the Tax liability of the Company or any of
its Subsidiaries affecting any Tax period for which the applicable statute of
limitations, after giving effect to extensions or waivers, has not
expired.
(i) Prior to
the date hereof, the Company has provided Parent with copies of or access to (i)
all Tax Returns of the Company or any of its Subsidiaries that were filed or
became due on or after January 1, 2005 and (ii) all material agreements relating
to Taxes of the Company or any of its Subsidiaries, including any Tax Sharing
Agreements, effective during that period.
(j) “Tax”
means (i) any tax, governmental fee or other like assessment or charge of any
kind whatsoever (including withholding on amounts paid to or by any Person),
together with any interest, penalty, addition to tax or additional amount
imposed by any Governmental Authority (a “Taxing
Authority”) responsible for the imposition of any such tax (domestic or
foreign), and any liability for any of the foregoing as transferee, (ii) liability for the payment of any
amount of the type described in clause (i) as a result of being or having been
before the Effective Time a member of an affiliated, consolidated, combined or
unitary group, or a party to any agreement or arrangement, as a result of which
liability of the Company or any of its Subsidiaries, or Parent or any of its
Subsidiaries, as the case may be, to a Taxing Authority is determined or taken
into account with reference to the activities of any other Person, and (iii)
liability of the Company or any of its Subsidiaries, or Parent or any of its
Subsidiaries, as the case may be, for the payment of any amount as a result of
being party to any Tax Sharing Agreement or with respect to the payment of any
amount imposed on any person of the type described in (i) or (ii) as a result of
any existing express or implied agreement or arrangement (including an
indemnification agreement or arrangement). “Tax
Return” means any report, return, document, declaration or other
information or filing required to be supplied to any Taxing Authority with
respect to Taxes, including information returns, any documents with respect to
or accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information. “Tax
Sharing Agreements” means all existing agreements or arrangements
(whether or not written) binding the Company or any of its Subsidiaries, or
Parent or any of its Subsidiaries, as the case may be, that provide for the
allocation, apportionment, sharing or assignment
33
of any Tax
liability or benefit, or the transfer or assignment of income, revenues,
receipts, or gains for the purpose of determining any Person’s Tax liability
(including without limitation any tax sharing agreement currently in effect
among the Company and any of its Subsidiaries as well as any indemnification
agreement or arrangement pertaining to the sale or lease of assets or
subsidiaries).
Section
4.15. Tax
Treatment. Neither the Company nor any of its Affiliates has
taken or agreed to take any action, or is aware of any fact or circumstance,
that would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code (a “368
Reorganization”).
Section
4.16. Employee
Benefit Plans. (a) Except for items of a de minimis nature,
Section 4.16 of the Company Disclosure Schedule contains a correct and complete
list identifying each “employee benefit plan,” as defined in Section 3(3) of
ERISA, and, whether or not subject to ERISA, each employment, severance, change
in control, retention or similar contract, plan, arrangement or policy and each
other plan or arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other equity-based rights or other forms of
incentive or deferred compensation, vacation benefits, insurance (including any
self-insured arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits, post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) and any other plan, agreement, program or policy which is maintained,
sponsored or contributed to by the Company or any ERISA Affiliate of the Company
and covers any current or former director, officer, employee or independent
consultant of the Company or any of its Subsidiaries, or with respect to which
the Company or any of its Subsidiaries has any liability. Copies
(which copies are correct and complete in all material respects) of such plans
(and, if applicable, related trust or funding agreements or insurance policies)
and all amendments thereto, most recent summary plan descriptions and written
interpretations thereof have been furnished to or made available to Parent
together with the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto) and tax return (Form 990) prepared in connection with any
such plan or trust. Such plans (disregarding the exception for those
of a de minimis nature) are referred to collectively herein as the “Company
Employee Plans.”
(b) No Company
Employee Plan is subject to Title IV of ERISA (other than a “multiemployer
plan,” as defined below).
(c) With
respect to any multiemployer plan, as defined in Section 3(37) of ERISA (a
“Multiemployer
Plan”), to which the Company, its Subsidiaries or any of their ERISA
Affiliates has any liability or contributes (or has at any time contributed or
had an obligation to contribute): (i) none of the Company, its
Subsidiaries or any of their ERISA Affiliates has incurred any withdrawal
liability under Title IV of ERISA that remains unsatisfied or would be subject
to such
34
liability
if, as of the Closing Date, the Company, its Subsidiaries or any of their ERISA
Affiliates were to engage in a complete withdrawal (as defined in Section 4203
of ERISA) or partial withdrawal (as defined in Section 4205 of ERISA) from any
such multiemployer plan; and (ii) to the knowledge of the Company, no such
multiemployer plan is in reorganization or insolvent (as those terms are defined
in Sections 4241 and 4245 of ERISA, respectively).
(d) Each
Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter,
or has pending or has time remaining in which to file under the applicable
remedial amendment period, an application for such determination from the
Internal Revenue Service, and the Company is not aware of any reason why any
such determination letter would not be issued. Each Company Employee
Plan has been maintained in material compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including ERISA and the Code, which are applicable to such Company Employee
Plan. No material events have occurred with respect to any Company
Employee Plan that would result in payment or assessment by or against the
Company of any material excise taxes under Sections 4972, 4975, 4976, 4977,
4979, 4980B, 4980D, 4980E or 5000 of the Code.
(e) The
consummation of the transactions contemplated by this Agreement will not (either
alone or together with any other event) entitle any employee or independent
contractor of the Company or any of its Subsidiaries to severance pay or
accelerate the time of payment or vesting (except as otherwise may be required
under Section 411(d)(3) of the Code) or trigger any payment of funding (through
a grantor trust or otherwise) of compensation or benefits under, increase the
amount payable or trigger any other material obligation pursuant to, any Company
Employee Plan. There is no contract, plan or arrangement (written or
otherwise) covering any current or former director, officer, employee or
independent contractor of the Company or any of its Subsidiaries that,
individually or collectively, would entitle any such individual to any severance
or other payment solely as a result of the transactions contemplated hereby, or
would give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G or 162(m) of the Code. Section
4.16(e) of the Company Disclosure Schedule lists (i) all the agreements,
arrangements and other instruments which give rise to an obligation to make or
set aside amounts payable to or on behalf of the officers of the Company and its
Subsidiaries as a result of the transactions contemplated by this Agreement
and/or any subsequent employment termination (whether by the Company or the
officer), true and complete copies of which have been previously provided to
Parent and (ii) the maximum aggregate amounts so payable to each such individual
as a result of the transactions contemplated by this Agreement and/or any
subsequent employment termination (whether by the Company or the
officer).
35
(f) Except to
the extent set forth in the Company Balance Sheet, neither the Company nor any
of its Subsidiaries has any liability in respect of post-retirement health,
medical, disability or life insurance benefits for retired, former or current
employees of the Company or its Subsidiaries except as required to avoid excise
tax under Section 4980B of the Code.
(g) There has
been no amendment to, written interpretation or announcement (whether or not
written) by the Company or any of its Affiliates relating to, or change in
employee participation or coverage under, any Company Employee Plan which would
increase materially the expense of maintaining such Company Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
December 31, 2007.
(h) Neither
the Company nor any of its Subsidiaries is a party to or subject to, or is
currently negotiating in connection with entering into, any collective
bargaining agreement or other contract or understanding with a labor union or
organization.
(i) All
contributions and payments accrued under each Company Employee Plan, determined
in accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending as of the date hereof, have been
discharged and paid on or prior to the date hereof except to the extent set
forth in the Company Balance Sheet.
(j) There is
no action, suit, investigation, audit or proceeding pending against or involving
or, to the knowledge of the Company, threatened against or involving, any
Company Employee Plan before any Governmental
Authority.
(k) No Company
Employee Plan is maintained outside the jurisdiction of the United States or
covers any employee residing or working outside the United
States.
(l) No current
or former director, officer, employee or independent contractor of the Company
or any of its Subsidiaries will become entitled to any bonus, retirement,
severance, job security or similar benefit or enhanced such benefit (including
acceleration of vesting or exercise of an incentive award) as a result of the
transactions contemplated hereby.
(m) The
Company Balance Sheet fairly and accurately reflects as of the date thereof all
liabilities and obligations related to any black lung disease claims and
benefits arising under any state or federal law, claims and benefits arising
under any state workers’ compensation laws, and post-retirement health or
pension claims and benefits.
Section
4.17. Employees. The
Company has provided or made available to Parent prior to the date hereof a true
and complete list, as of March 27, 2008, of (i) the names, titles and annual
salaries of all officers of the Company and its Subsidiaries and all other
employees of the Company and its
36
Subsidiaries
with base annual salaries equal to or in excess of $100,000 (such list to be
updated by the Company as of immediately prior to the Closing to reflect any
terminations and new hires) and (ii) the wage rates for non-salaried employees
of the Company and its Subsidiaries (by classification). The Company
has disclosed to Parent prior to the date hereof the name of any employee
referred to in clause (a) who, to the knowledge of the Company, has indicated to
the Company or any of its Subsidiaries that he or she intends to resign or
retire as a result of the transactions contemplated by this Agreement or
otherwise within one year after the Closing.
Section
4.18. Labor
Matters. The Company and its Subsidiaries are not engaged in
any material respect in any unfair labor practice which would reasonably be
expected to be, individually or in the aggregate, material. There is
no unfair labor practice charge or material grievance arising out of a
collective bargaining agreement, other current labor agreement with any labor
union or organization, or other material grievance proceeding against the
Company or any of its Subsidiaries pending, or, to the knowledge of the Company,
threatened. Since two years prior to the date of this Agreement there
has been no unfair labor practice charge or complaint filed against the Company
or any of its Subsidiaries, or to the knowledge of the Company, pending or
threatened, before (A) the National Labor Relations Board or any similar state
agency, or (B) the Equal Employment Opportunity Commission or any similar state
agency responsible for the prevention of unlawful employment
practices. There is no strike or lockout or material slowdown, work
stoppage or other labor dispute pending, or to the knowledge of the Company,
threatened against, involving or otherwise materially affecting the Company or
any of its Subsidiaries. Since two years prior to the date of this
Agreement, any and all reductions of workforce have been carried out in all
material respects in accordance with all Applicable
Law.
Section
4.19. Environmental
Matters. Except as does not and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect:
(a) The
Company and its Subsidiaries are and have been in compliance with all
Environmental Laws and all Environmental Permits; such Environmental Permits are
valid and in full force and effect and will not be terminated or impaired or
become terminable, in whole or in part, as a result of this Agreement and the
other Transaction Documents or the consummation of the transactions contemplated
herein or therein.
(b) None of
the Company nor any of its Subsidiaries has received any Environmental Claim or
written notice of any threatened Environmental Claim, or has any knowledge of
any threat of such an Environmental Claim, regarding or resulting from the
activities or business of the Company or any of its Subsidiaries, or any
property or assets currently or formerly owned, operated or used by the Company
or any of its Subsidiaries, in each case that (i) has been outstanding for
37
more than
30 days, (ii) would reasonably be expected to result in (A) an action by a
Governmental Authority, (B) a determination that there is a pattern of
violations or (C) the closure of any operations of the Company or any of its
Subsidiaries or (iii) results in or would reasonably be expected to result in
liability to the Company or any of its Subsidiaries.
(c) None of
the Company nor any of its Subsidiaries has entered into, has agreed to, has
been issued or to the knowledge of the Company is otherwise subject to, any
material order, writ, judgment, award, injunction or decree of any arbitrator or
Governmental Authority under any Environmental Law regarding the Company or any
of its Subsidiaries or any property or assets currently or formerly owned,
operated or used by the Company or any of its Subsidiaries, in any such case
that would interfere with the respective ability of the Company or any of its
Subsidiaries to continue to operate their respective assets and conduct their
respective businesses as currently conducted or would result in liability to the
Company or any of its Subsidiaries.
(d) None of
the Company nor any of its Subsidiaries has Released any Hazardous Materials in
violation of Environmental Law or in a manner that would reasonably be expected
to result in liability under Environmental Laws or Environmental Permits, and,
to the knowledge of the Company, no other Person has Released any Hazardous
Materials, and Hazardous Materials are not otherwise present, at any property
currently or formerly owned or operated by the Company or any of its
Subsidiaries in violation of any Environmental Law or Environmental Permits or
in a manner that would reasonably be expected to result in liability to the
Company or any of its Subsidiaries.
(e) No
property currently owned or operated by the Company or any of its Subsidiaries
(i) is listed or, to the knowledge of the Company or any of its Subsidiaries,
proposed for listing on the CERCLA National Priorities List or CERCLIS list or
any similar Governmental Authority’s list of sites at which remedial action is
or may be necessary or (ii) contains asbestos or asbestos-containing materials,
in either case in a condition constituting a violation of Environmental Law or
as would reasonably be expected to result in liability to the Company or any of
its Subsidiaries.
(f) None of
the Company nor any of its Subsidiaries has disposed of, transported or arranged
for the disposal or transportation of, any Hazardous Materials in a manner or to
a location that would reasonably be expected to result in liability to the
Company or any of its Subsidiaries under Environmental
Law.
(g) Neither
the Company nor any Subsidiary of the Company is in default under, and no
condition exists that with notice or lapse of time or both would constitute a
default under, any of the Environmental Permits. Neither
the Company nor any of its Subsidiaries has received written notice that the
Person
38
issuing
or authorizing any such Environmental Permit
intends to terminate or will refuse to renew or reissue any such
Environmental Permit upon its expiration.
(h) To the
knowledge of the Company, (A) there are no material applications for
Environmental Permits in the name of the Company or any of its Subsidiaries
other than those set forth on Section 4.19(h) of the Company Disclosure Schedule
(the “Company
Material
Environmental Applications”); and (B) the Company or one of its
Subsidiaries will, on any grant of any of such applications, hold legal or
beneficial title to the interest in each such application as set forth on
Section 4.19(h) of the Company Disclosure Schedule. Each of the
Company Material Environmental Applications has been made in accordance with
Applicable Laws. Neither the Company nor any of its Subsidiaries has
received any written communication from any Governmental Authority that
indicates that any of the Company Material Environmental Applications will not
be timely granted or will be subject to any material restrictions, limitations
or unusual requirements.
(i) There has
been no environmental investigation, study, audit, test, review or other
analysis conducted of which the Company has knowledge in relation to the current
or prior business of the Company or any of its Subsidiaries or any property or
facility now or previously owned or leased by the Company or any of its
Subsidiaries that has not been delivered or made available to Parent at least
five Business Days prior to the date hereof.
Section
4.20. Antitakeover
Statutes; Company Stockholders Agreement; Absence of Dissenters
Rights. (a) The
Company has taken all action necessary to exempt the Merger, this Agreement and
the transactions contemplated hereby from Section 203 of Delaware Law, and,
accordingly, neither such Section nor any other antitakeover or similar statute
or regulation applies or purports to apply to any such
transactions. No other “control share acquisition,”“fair price,”“moratorium” or other antitakeover laws enacted under U.S. state or federal laws
apply to this Agreement or any of the transactions contemplated
hereby.
(b) The
execution, delivery or performance of this Agreement and the other Transaction
Documents, and the consummation of the transactions contemplated hereby and
thereby, including the Merger, complies and will comply in all material respects
with any applicable provisions of the Company Stockholders
Agreement.
Section
4.21 . Material
Contracts.
(a) Except as
set forth on Section 4.21(a) of the Company Disclosure Schedule, as of the date
hereof, neither the Company nor any of its Subsidiaries is a party to or bound
by, whether in writing or not, any of the following (other than agreements
solely between or among the Company and its wholly-owned Subsidiaries and not
containing any rights of or obligations to any third party)
39
(any item
set forth in one sub-section of Section 4.21(a) of the Company Disclosure
Schedule need not be repeated in another sub-section of Section 4.21(a) if
applicability to such other sub-section is reasonably apparent from the
disclosure set forth in the first such sub-section):
(i) any
agreement or series of related agreements for the purchase, sale (other than
coal supply or coal product sales agreements), receipt, lease or use of
materials, supplies, goods, services, equipment or other assets providing for
either (A) annual payments by or to the Company or any of its Subsidiaries of
$500,000 or more or (B) aggregate payments by or to the Company or any of its
Subsidiaries of $2,500,000 or more;
(ii) any
partnership, joint venture, limited liability company, operating, shareholder,
investor rights or other similar agreement or arrangement with any
Person;
(iii) any
distributor, dealer, sales agency, sales representative, marketing or similar
contracts;
(iv) any
agreement or series of related agreements relating to, or entered into in
connection with, the acquisition or disposition of the equity securities of any
Person (other than in respect of the investments with funds held in escrow
accounts established to support reclamation obligations of the Company or any of
its Subsidiaries), any business or any material amount of assets outside the
ordinary course of business (in each case, whether by merger, sale of stock,
sale of assets or otherwise);
(v) any
agreement relating to indebtedness for borrowed money, the deferred purchase
price of property or the prepaid sale of goods or products (in any such case,
whether incurred, assumed, guaranteed or secured by any asset and, in the case
of agreements relating to the deferred purchase price of property, with a value
in excess of $100,000), including indentures, mortgages, loan agreements,
capital leases, security agreements or other agreements for the incurrence of
indebtedness, other than trade accounts payable incurred in the ordinary course
of business;
(vi) any
agreement relating to any interest rate, currency or commodity derivative or
hedging transaction (excluding any agreements for the purchase of diesel fuel
where physical delivery is intended);
(vii) any
agreement (including any keepwell agreement) under which (A) to the knowledge of
the Company any Person has directly or indirectly guaranteed any liabilities or
obligations of the Company or any of its Subsidiaries (other than any such
guarantees by the Company and its wholly-owned Subsidiaries), in case of each
such liability or obligation, in
40
an amount
in excess of $1,000,000 or (B) the Company or any of its Subsidiaries has,
directly or indirectly, guaranteed any liabilities or obligations of any other
Person (other than the Company or any wholly-owned
Subsidiary);
(viii) any
agreement that (A) limits the freedom of the Company or any of its Subsidiaries
to compete in any line of business or with any Person or in any area or which
would so limit the freedom of Parent, the Company or any of their respective
Affiliates after the Effective Time or (B) contains exclusivity or “most favored
nation” obligations or restrictions binding on the Company or any of its
Subsidiaries or that would be binding on Parent or its Affiliates after the
Effective Time;
(ix) any
employment, consultancy, deferred compensation, loan, retention, bonus,
severance, retirement or other similar agreement or arrangement (including any
amendment to any such existing agreement or arrangement) with any director,
officer or employee of the Company or any of its Subsidiaries (other than loans
to non-executive employees not in excess of $10,000 individually or $100,000 in
the aggregate);
(x) any
consulting agreement or similar arrangement with an independent contractor
providing for (i) annual payments by the Company or any of its Subsidiaries of
$100,000 or more, (ii) aggregate payments by the Company or any of its
Subsidiaries of $250,000 or more or (iii) a term in excess of three
years;
(xi) any
collective bargaining agreement;
(xii) any
contracts or agreements relating to the provision of contract mining (excluding
any agreement solely with respect to the provision of contract labor) by or to
the Company or any of its Subsidiaries;
(xiii) any lease
or sublease of or relating to (A) real property leased to others, (B) tangible
personal property leased to others or (C) mining or exploration rights leased to
others;
(xiv) any
contracts or agreements related to the Company’s or its Subsidiaries storage or
transportation of coal (including stock piling and loading agreements) providing
for either (i) annual payments by the Company or any of its Subsidiaries of
$250,000 or more or (ii) aggregate payments by the Company or any of its
Subsidiaries of $1,000,000 or more;
(xv) any coal
supply agreement or coal product sales agreement; or
41
(xvi) any other
agreement, commitment, arrangement or plan not of a type described above but
with a value in excess of $1,000,000.
(b) Each
agreement, contract, plan, lease, arrangement or commitment disclosed or
required to be disclosed pursuant to Section 4.21(a) (and, for purposes of (A)
the making of this representation and warranty as of the Effective Time solely
for purposes of Section 4.30 and (B) the satisfaction or failure of the
condition set forth in Section 9.02(a)(iv), each agreement, contract, plan,
lease, arrangement or commitment entered into between the date hereof and the
Closing Date that would have been required to be disclosed pursuant to Section
4.21(a) if it had been in effect as of the date hereof) is referred to as a
“Material
Contract”. Each Material Contract is, to the Company’s
knowledge, a valid and binding agreement of the parties thereto (other than the
Company and its Subsidiaries), and, to the Company’s knowledge, is in full force
and effect and in all material respects enforceable against such other parties,
in accordance with its terms (except to the extent that enforceability may be
limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect affecting
generally the enforcement of creditors’ rights and remedies and (ii) general
principles of equity, whether in a proceeding at law or in equity) and prior to
the date hereof the Company or any of its Subsidiaries has not received any
written notice to terminate, in whole or material part, any of the
same. None of the Company, any of its Subsidiaries or, to the
knowledge of the Company, any other party thereto is in default or breach in any
material respect under the material terms of any such Material Contract, and, to
the knowledge of the Company, no event or circumstance has occurred that, with
notice or lapse of time or both, is reasonably likely to constitute any event of
default thereunder that would be reasonably expected to result in the
termination of such Material Contract. True and complete copies of
each Material Contract (including all modifications and amendments thereto) in
effect as of the date hereof have been made available to Parent prior to the
date hereof.
Section
4.22 . Properties.
(a) “Company
Leased Tangible Property” means all items of machinery, equipment,
vehicles, and other tangible personal property leased or subleased by the
Company or any of its Subsidiaries. Section 4.22(a) of the Company
Disclosure Schedule sets forth a list that is accurate and complete in all
material respects of the leases and subleases to which the Company or any of its
Subsidiaries is a party or is bound, of or relating to Company Leased Tangible
Property (other than agreements solely between or among the Company and its
wholly-owned Subsidiaries and not containing any rights of or obligations to any
Third Party).
(b) “Company
Leased Real Property” means all real property and other interests in
land, including coal, mining, exploration and surface rights, easements, rights
of way, options, surface estates, coal and other mineral estates
42
leased or
subleased by the Company or any of its Subsidiaries. Section 4.22(b)
of the Company Disclosure Schedule sets forth a list that is accurate and
complete in all material respects of the leases and subleases to which the
Company or any of its Subsidiaries is a party or is bound, of or relating to
Company Leased Real Property (other than agreements solely between or among the
Company and its wholly-owned Subsidiaries and not containing any rights of or
obligations to any Third Party).
(c) The
Company has delivered or made available to Parent prior to the date hereof
copies (which copies are true and complete in all material respects) of the
leases and subleases set forth on Section 4.22(a) of the Company Disclosure
Schedule and Section 4.22(b) of the Company Disclosure Schedule (in each case as
amended to the date of this Agreement). With respect to each such
lease or sublease of Company Leased Tangible Property and Company Leased Real
Property, except where the failure of any of the following to be true and
correct would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect:
(i) such lease
or sublease is in full force and effect in all respects and enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally and general equitable principles whether in a proceeding at law or in
equity;
(ii) (A)
neither the Company nor any of its Subsidiaries is in default under any such
lease or sublease and, no event has occurred which, with the passage of time or
expiration of any grace period would constitute a default of the Company’s or
its Subsidiaries’ obligations under such lease or sublease, (B) to the knowledge
of the Company no other party to any such lease or sublease is in default
thereunder and (C) neither the Company nor any of its Subsidiaries has received
a written or other notice of default with respect to such lease or
sublease;
(iii) no such
lease or sublease has been mortgaged, deeded in trust or subjected to a Lien
(other than Permitted Liens) by the Company or any of its
Subsidiaries;
(iv) with
regard to the Company Leased Real Property, the Company or one of its
Subsidiaries has adequate rights of ingress and egress to such Company Leased
Property and all buildings, structures, facilities, fixtures and other
improvements thereon;
(v) with
regard to the Company Leased Real Property, neither the Company nor any of its
Subsidiaries owes any brokerage or other commissions with respect to any such
lease or sublease for which
43
adequate
reserves have not been established on the Company Balance Sheet;
(vi) neither
the Company nor any of its Subsidiaries has received written notice of or has
knowledge of a claim or dispute under any lease or sublease regarding any of the
Company Leased Real Property or the Company Leased Personal Property;
and
(vii) other than
Permitted Liens, there are no other matters that, to the knowledge of the
Company, would adversely affect the rights of the Company or any of its
Subsidiaries to the Company Leased Real Property or the Company Leased Tangible
Property.
(d) “Company
Owned Real Property” means all real property, and other interests in
land, including coal, mining, exploration and surface rights, easements, rights
of way, options, surface estates and other mineral estates owned by the Company
or any of its Subsidiaries. Section 4.22(d) of the Company Disclosure
Schedule sets forth a list of the Company Owned Real Property and the record
title owner of the Company Owned Real Property. Copies (which copies
are true and complete in all material respects) of all deeds, and all title
insurance policies, title insurance, abstracts and other evidence of title (if
any) in the possession of the Company or any of its Subsidiaries relating to the
Company Owned Real Property set forth on Section 4.22(d) of the Company
Disclosure Schedule have been delivered or made available to Parent prior to the
date hereof. With respect to each such parcel of the Company Owned
Real Property, except where the failure of any of the following to be true and
correct would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect: (i) the identified owner has
possession of, adequate rights of ingress and egress with respect to, and good
and marketable fee simple title to each Company Owned Real Property, free and
clear of any Liens, except for Permitted Liens; (ii) there are no pending or, to
the Company’s knowledge, threatened condemnation proceedings and no tenant or
other party in possession of any of the Company Owned Real Property has any
right to purchase, or holds any right of first refusal to purchase, any of such
properties; and (iii) other than Permitted Liens, there are no other matters
that would adversely affect the title of the Company or any of its
Subsidiaries.
(e) “Company
Owned Tangible Property” means all items of machinery, equipment,
vehicles, and other tangible personal property owned by the Company or any of
its Subsidiaries. Section 4.22(e) of the Company Disclosure Schedule
sets forth a list that is accurate and complete in all material respects of the
Company Owned Tangible Property. The Company or one of its
Subsidiaries is in possession of and, except for such spare parts as are held on
consignment, owns and has good title to all Company Owned Tangible Property as
operated as of the date hereof. All such Company Owned Tangible
Property is free and clear of all Liens, other than Permitted
Liens.
44
(f) The
Company has delivered or made available to Parent prior to the date hereof
copies (which copies are true and correct in all material respects) of all of
the following relating to the Company Leased Real Property, Company Owned Real
Property, Company Leased Tangible Property, Company Owned Tangible Property, or
any of the mining complexes or reserves of the Company or any of its
Subsidiaries, in each case to the extent material and in the possession of the
Company or any of its Subsidiaries: engineering, geological,
operational, coal measurement, feasibility and coal data and analyses, surveys,
aerial surveys, tract maps, parcel maps, plans, drawings, drilling logs, reserve
reports, permit applications, and tax appraisals.
(g) Section
4.22(g) of the Company Disclosure Schedule lists all of the Company’s and its
Subsidiaries’ owned or operated underground storage tanks, aboveground storage
tanks, dikes or impoundments in, on, under or about the Company Leased Real
Property or Company Owned Real Property.
(h) Except
with respect to real property leased to others, the plants, buildings,
structures, mines and equipment owned or leased by the Company or any of its
Subsidiaries are in all material respects in good operating condition and repair
and have been reasonably maintained consistent with past practice and are
adequate and suitable for the purpose for which they are currently being
used.
(i) The maps
listed on Section 4.22(i) of the Company Disclosure Schedule accurately reflect,
in all material respects, the Company Leased Real Property and the Company Owned
Real Property.
(j) The
Company Leased Real Property, Company Owned Real Property, Company Leased
Tangible Property, and Company Owned Tangible Property constitute all of the
property and assets (together with the Company Permits and the Environmental
Permits) used or held for use in connection with the businesses of the Company
and its Subsidiaries and are adequate to conduct such businesses as currently
conducted in all material respects.
(k) The
Company has provided to Parent on February 29, 2008 a list of each general
reserve area of the Company and its Subsidiaries, and with respect to each such
area the following information (which information, to the knowledge of the
Company, is accurate and complete in all material respects): (i) whether such
mining area is mineable by underground, surface or both methods; (ii) the proven
and probable reserves as of January 1, 2008; (iii) a categorization of reserves
by heat value as of January 1, 2008; and (iv) a categorization of reserves by
sulfur content as of January 1, 2008. Subject to the terms of any
applicable lease and Applicable Law, the Company has the right to extract and
sell the coal reserves referred to above and such reserves are not subject to
any mining rights of any other Person. Set forth in Section 4.22(k)
of the Company Disclosure Schedule is a list, which list is accurate and
complete in all material respects, of each mining complex of the Company and its
Subsidiaries and the 2006 and 2007 production
45
for each
such mining complex. Prior to the date hereof, the Company has
provided to Parent a list of the quantity of reserves currently assigned to each
mining area of the Company and its Subsidiaries.
(l) Neither
the Company nor any of its Subsidiaries has received written notice or has
knowledge of any disputes with any adjoining landowners that would reasonably be
expected to result in, individually or in the aggregate, a Company Material
Adverse Effect.
Section
4.23. Intellectual
Property.
(a) Section
4.23(a)(i) of the Company Disclosure Schedule contains a true and complete list
of all material registrations and applications for registration of any
Intellectual Property Right owned by the Company or any of its
Subsidiaries. Section 4.23(a)(ii) of the Company Disclosure Schedule
contains a true and complete list of all material agreements (excluding licenses
for commercial off the shelf computer software that are generally available on
nondiscriminatory pricing terms) to which the Company or any of its Subsidiaries
is a party or otherwise bound and pursuant to which the Company or any of its
Subsidiaries (A) obtains the right to use, or a covenant not to be sued
under, any Intellectual Property Right or (B) grants the right to use, or a
covenant not to be sued under, any Intellectual Property
Right.
(b) Except as,
individually or in the aggregate, would not reasonably be expected to be
material: (i) the Company and each of its Subsidiaries owns, or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property Rights used in or necessary for the conduct of its business as
currently conducted; (ii) neither the Company nor its Subsidiaries has
infringed, misappropriated or otherwise violated the Intellectual Property
Rights of any Person; (iii) to the knowledge of the Company, no Person has
challenged, infringed, misappropriated or otherwise violated any Intellectual
Property Right owned by and/or licensed to the Company or its Subsidiaries; (iv)
neither the Company nor any of its Subsidiaries has received any written notice
or otherwise has knowledge of any pending claim, action, suit, order or
proceeding with respect to any Intellectual Property Right used by the Company
or any of its Subsidiaries or alleging that the any services provided, processes
used or products manufactured, used, imported, offered for sale or sold by the
Company or any of its Subsidiaries infringes, misappropriates or otherwise
violates any Intellectual Property Rights of any Person; (v) the consummation of
the transactions contemplated by this Agreement will not alter, encumber, impair
or extinguish any Intellectual
Property Right of the Company or any of its Subsidiaries or impair the right of
Parent and its Subsidiaries to develop, use, sell, license or dispose of, or to
bring any action for the infringement of, any Intellectual Property Right of the
Company or any of its Subsidiaries; and (vi)
the Company and its Subsidiaries have taken reasonable steps to maintain
the confidentiality of all material Trade Secrets owned, used or held for use by
the Company or any of its Subsidiaries and no such Trade Secrets
46
have been
disclosed other than to employees, representatives and agents of the Company or
any of its Subsidiaries all of whom are bound by written confidentiality
agreements.
Section
4.24. Insurance
Coverage. Section 4.24 of the Company Disclosure Schedule sets
forth a list (which list is true and complete in all material respects) of, and
the Company has furnished or made available to Parent prior to the date hereof
copies (which copies are true and complete in all material respects) of, all
insurance policies and bonds (other than surety bonds) relating to the assets,
business, operations, employees, officers or directors of the Company and its
Subsidiaries. There is no claim by the Company or any of its
Subsidiaries pending under any of such policies or bonds as to which, to the
knowledge of the Company, coverage has been questioned, denied or disputed by
the underwriters of such policies or bonds or in respect of which such
underwriters have reserved their rights. All premiums payable under
all such policies and bonds have been timely paid and the Company and its
Subsidiaries have otherwise complied in all material respects with the terms and
conditions of all such policies and bonds. All material policies of
insurance and bonds (or other policies and bonds providing substantially similar
insurance coverage) have been in effect since January 1, 2006 and remain in full
force and effect. To the knowledge of the Company, the underwriters
of such policies and bonds have not threatened any termination of, material
premium increase with respect to, or material alteration of coverage under, any
of such policies or bonds. The Company and its Subsidiaries shall
immediately after the Effective Time continue to have coverage under such
policies and bonds with respect to events occurring prior to the Effective
Time.
Section
4.25. Licenses
and Permits.
(a) “Company
Permits” means all licenses, mining leases, mining authorities,
franchises, permits, certificates, approvals or other similar authorizations
issued to the Company or any of its Subsidiaries by any Governmental Authority,
including those relating to the Identified Mining Laws but not including any
other Environmental Permits. Section 4.25(a) of the Company
Disclosure Schedule sets forth a list that is accurate and complete in all
material respects of the Company Permits and the Environmental
Permits.
(b) The
Company Permits are in all material respects sufficient permits to conduct the
business of the Company and its Subsidiaries as currently
conducted. The Company Permits are in all material respects valid and
in full force and effect, neither the Company nor any Subsidiary of the Company
is in material default under, and no condition exists that with notice or lapse
of time or both would constitute a material default under, any of the Company
Permits. Neither the Company nor any of its Subsidiaries has received
written notice that the Person issuing or authorizing any such Permit intends to
terminate or will refuse to renew or reissue any such Permit upon its
expiration. The Company and
47
its
Subsidiaries have complied with the terms and conditions of the Company Permits
in all material respects.
Section
4.26. Affiliate
Transactions. No Stockholder holding more than one percent of
the outstanding Company Stock (or member of a group of Affiliated Stockholders
holding in the aggregate in excess of one percent of the outstanding Company
Stock), director or officer of the Company or any of its Subsidiaries, and none
of their respective (a) controlled Affiliates (or in the case of the Stockholder
Representative, any Affiliates of the Stockholder Representative) or (b) to the
Company’s knowledge, Affiliates of Stockholders (other than the Stockholder
Representative) that are not controlled Affiliates or (c) to the Company’s
knowledge, “associates” (or, with respect to any of the foregoing, members of
any of their “immediate families”) (as such terms are respectively defined in
Rule 12b-2 and Rule 16a-1 of the 1934 Act) (each of the foregoing Persons in
this sentence, a “Related
Person”), (i) is, or has in the past two years been, party to or
involved, directly or indirectly, in any material contract, material agreement,
material business arrangement or other material relationship with the Company or
any of its Subsidiaries (whether written or oral) (other than (A) Stockholder,
director, officer or employment relationships, (B) the ownership of Company
Stock or (C) any purchase or sale of the Company’s products in the Company’s
ordinary course of business and on arms’ length terms), (ii) directly or
indirectly owns, or otherwise has any right, title or interest in, to or under,
any material property or right, tangible or intangible, that is used by the
Company or any of its Subsidiaries (other than (A) in its capacity as a
stockholder of the Company or (B) any indirect ownership interest that a Related
Person may have as a result of any investment in any Person that is not an
Affiliate of such Related Person) or (iii) is, or has in the past two years
been, engaged, directly or indirectly, in the conduct of the business of the
Company or its Subsidiaries (other than (A) in its capacity as a stockholder or
as a director, officer or employee of the Company or any of its Subsidiaries or
(B) relating to any indirect ownership interest that a Related Person may have
as a result of any investment in any Person that is not an Affiliate of such
Related Person).
Section
4.27. Customers
and Suppliers. Section 4.27 of the Company Disclosure Schedule
contains (i) a list of the top ten customers of the Company and its Subsidiaries
(determined on the basis of revenues) for each of the last two fiscal years and
(ii) a list of the top ten suppliers of the Company and its Subsidiaries
(determined on the basis of cost of items purchased) for the last fiscal
year. No customer set forth on Section 4.27 of the Company Disclosure
Schedule has ceased or materially reduced its purchases from or use of the
services of the Company and its Subsidiaries since the Company Balance Sheet
Date, or to the knowledge of the Company, has threatened to cease or materially
reduce such purchases or use after the date hereof. No supplier set
forth on Section 4.27 of the Company Disclosure Schedule has ceased or
materially reduced its supply of materials or goods or provision of services to
the Company and its Subsidiaries since the Company Balance Sheet Date, or to the
knowledge of the Company, has
48
threatened
to cease or materially reduce such supply or provision after the date
hereof. To the knowledge of the Company, no such customer or supplier
is currently in, or threatened with, bankruptcy or
insolvency.
Section
4.28. Absence
of Certain Business Practices. Neither the Company nor any of
its Subsidiaries, nor any of their respective officers, directors, employees or
agents, nor any Person acting on behalf of the Company or any of its
Subsidiaries, has, directly or indirectly, within the past two years given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other Person who is or may be in a position to help or
hinder the respective business of the Company or any of its Subsidiaries (or
assist the Company or any of its Subsidiaries in connection with any actual or
proposed transaction) that (a) might subject the Company or any of its
Subsidiaries to any material damage or material penalty assessed by any
Governmental Authority, (b) if not given in the past might have had a material
adverse effect, (c) if not continued in the future, might have a material
adverse effect or (d) might subject the Company or any of its Subsidiaries to
suit by any Governmental Authority.
Section
4.29. Disclosure. There
is no fact or circumstance known to Company that has not been disclosed to
Parent, the existence of which would, individually or in the aggregate with
other such facts or circumstances, have a Company Material Adverse
Effect. Subject to such exceptions as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect,
no representation or warranty made by the Company in this Agreement (as modified
by statements contained in the Company Disclosure Schedule) or in any
certificate furnished to Parent pursuant to any provision of this Agreement by
or on behalf of the Company, contains any untrue statement of a fact or omits to
state a fact required to be stated therein or necessary in order to make the
statements made herein or therein, in the light of the circumstances in which
they were made, not misleading; provided
that to the extent a representation or warranty of the Company in this Agreement
is qualified by the knowledge of the Company, the representation and warranty
set forth in this sentence shall to such extent be deemed to be similarly
qualified by the knowledge of the Company.
Section
4.30. No
Company Material Adverse Effect. The representations and
warranties contained in this Article 4, disregarding any qualification contained
therein as to materiality or Company Material Adverse Effect, are true and
correct, with such exceptions as have not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section
4.31. No
Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement or any other
Transaction Document, neither the Company nor any other Person makes any other
express or implied representation or warranty on behalf of the Company and
49
its
Subsidiaries (and its and their business operations, financial condition, assets
and properties) and Parent shall be entitled to rely only on such
representations and warranties. The Company disclaims any
representation or warranty, whether made by the Company or any of its
Affiliates, officers, directors, employees, agents or representatives, that is
not contained in this Agreement, any other Transaction Document or in any
certificate delivered pursuant to this Agreement or any other Transaction
Document.
ARTICLE
5
Representations
and Warranties of Parent
Except as expressly disclosed, and reasonably apparent on the face of
the disclosure contained, in the Parent SEC Documents filed before the date of
this Agreement, and only as and to the extent so disclosed and apparent
(excluding any disclosures included therein (x) under the “Risk Factors” or
similar caption, (y) to the extent that such disclosures do not relate to
historical or existing facts, events, changes, effects, developments, conditions
or occurrences, and (z) to the extent that they are forward-looking in nature)
(provided
that in no event shall any disclosure in the Parent SEC Documents qualify or
limit the representations and warranties of Parent set forth in Sections 5.02,
5.05 and 5.07), and, subject to Section
12.04,
except as set forth in the Parent Disclosure Schedule, Parent represents and
warrants to the Company on and as of the date of this Agreement and, solely with
respect to the representations and warranties in Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.06, 5.13, 5.14, 5.20 (such
representations and warranties, the “Parent
Core Representations”) and Section
5.27,
as of the Effective Time, that:
Section
5.01. Corporate
Existence and Power. Each of Parent and Merger Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers required to carry on
its business as currently conducted. In all material respects, each
of Parent and Merger Subsidiary is duly qualified to do business as a foreign
corporation and, as applicable in the relevant jurisdiction, is in good standing
in all jurisdictions where such qualification is necessary. True and
complete copies of the certificate of incorporation and bylaws of the Parent as
currently in effect have been made available to the Company prior to the date
hereof. Since the date of its incorporation, Merger Subsidiary has
not engaged in any activities other than in connection with or as contemplated
by this Agreement.
Section
5.02. Corporate
Authorization. (a) The execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement and each other Transaction
Document to which Parent or Merger Subsidiary is or will be a party and the
consummation of the transactions contemplated hereby and thereby are within its
corporate powers, and, except for the approval of the issuance of the shares of
Parent Stock to be issued pursuant to Article 2 (the “Parent
Stock
50
Issuance”)
by a majority of the votes cast at a meeting of stockholders of Parent where the
total vote cast with respect to such issuance represents over fifty percent in
interest of the Parent Stock entitled to vote on such issuance (the “Parent
Stockholder Approval”), have been duly authorized by all necessary
corporate action on the part of Parent and Merger Subsidiary and no other
corporate, shareholder or other similar proceedings on the part of Parent or
Merger Subsidiary are necessary to authorize this Agreement or any other
Transaction Document or to consummate the transactions contemplated hereby or
thereby. This Agreement and each of the other Transaction Documents
to which Parent or Merger Subsidiary is or will be a party constitutes, or will
when executed and delivered constitute, a valid and binding agreement of Parent
and Merger Subsidiary, as applicable, enforceable against Parent and Merger
Subsidiary, as applicable, in accordance with its terms, except to the extent
that enforceability may be limited by (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws from time to
time in effect affecting generally the enforcement of creditors’ rights and
remedies and (ii) general principles of equity, whether in a proceeding at law
or in equity.
(b) Parent’s
Board of Directors has (i). unanimously determined that this
Agreement and the other Transaction Documents to which Parent is a party, and
the transactions contemplated hereby and thereby (including the Merger), are
advisable, fair to and in the best interests of Parent’s stockholders, (ii). unanimously approved and adopted
this Agreement and the other Transaction Documents to which Parent is a party,
and the transactions contemplated hereby and thereby (including the Merger), and
(iii). unanimously resolved to
recommend approval of the Parent Stock Issuance by Parent’s
stockholders.
Section
5.03. Governmental
Authorization. The execution, delivery and performance by each
of Parent or Merger Subsidiary of this Agreement and each other Transaction
Document to which Parent or Merger Subsidiary is or will be a party and the
consummation of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing with, any Governmental Authority other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State, (ii) compliance with any applicable
requirements of the HSR Act, (iii) compliance with any applicable requirements
of the 1933 Act, the 1934 Act and any other U.S. state or federal securities
laws and (iv) any other immaterial actions or
filings.
Section
5.04. Non-contravention. The
execution, delivery and performance by each of Parent and Merger Subsidiary of
this Agreement and each other Transaction Document to which Parent or Merger
Subsidiary is or will be a party and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or bylaws (or similar organizational documents) of Parent or
any of its Subsidiaries, (ii) assuming compliance with the matters referred to
in Section 5.03, contravene, conflict with
51
or result
in a violation or breach of any provision of any Applicable Law, (iii) require
any consent or other action by any Person under, constitute a default, or an
event that, with or without notice or lapse of time or both, would constitute a
default, under, or cause or permit the termination, cancellation, acceleration
or other change of any right or obligation or the loss of any benefit to which
Parent or any of its Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon the Parent or any of its Subsidiaries
or any of their respective properties or assets or any license, franchise,
permit, approval or other authorization of, or any deposit, letter of credit,
trust fund or bond posted by, Parent or any of its Subsidiaries or (iv) result
in the creation or imposition of any Lien on any asset of the Parent or any of
its Subsidiaries, with such exceptions, in the case of (a) clause (ii) as would
not, individually or in the aggregate, reasonably be expected to be material or
(b) clauses (iii) and (iv), as would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse
Effect.
Section
5.05. Capitalization. (a)
The authorized capital stock of the Parent consists of 110,000,000 shares
consisting of (i) 100,000,000 shares of Parent Stock and (ii) 10,000,000 shares
of Preferred Stock, par value $0.01 per share (“Preferred
Stock”), of which 1,000,000 shares have been designated as Series A
Junior Participating Preferred Stock, par value $0.01 per share. As
of March 31, 2008, there were outstanding (i) 26,760,377 shares of Parent Stock
(including 189,437 shares of restricted Parent Stock), (ii) no shares of
Preferred Stock, (iii) employee stock options to purchase an aggregate of
554,673 shares of Parent Stock (none of which were exercisable), (iv) 590,131
restricted stock units and (v) 18,670 deferred stock units. All
outstanding shares of capital stock of Parent have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) Except as
set forth in this Section 5.05 and for changes since March 31, 2008 resulting
from the exercise of stock options or the grant of stock based compensation to
directors or employees, as of the date hereof, there are no outstanding (i)
shares of capital stock or voting securities of Parent, (ii) securities of the
Parent or any of its Subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of Parent or (iii) options or other rights to
acquire from Parent or any of its Subsidiaries, or other obligation of Parent or
any of its Subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Parent (the items in clauses (i), (ii), and (iii) being
referred to collectively as the “Parent
Securities”). There are no outstanding obligations of Parent
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Parent Securities.
(c) The shares
of Parent Stock to be issued as Merger Consideration have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement,
subject to receipt of the Parent Stockholder Approval,
52
will have
been validly issued and will be fully paid and nonassessable and the issuance
thereof is not subject to any preemptive or other similar right. The
Parent Stockholder Approval is the only vote of the holders of any class or
series of Parent Securities or any Parent Subsidiary Securities necessary to
approve and adopt this Agreement and the other Transaction Documents and approve
the Merger and the other transactions contemplated hereby and
thereby.
Section
5.06. Subsidiaries. (a)
Each Subsidiary of Parent is a corporation or other organization duly organized,
validly existing and, as applicable in the relevant jurisdiction, in good
standing under the laws of its jurisdiction of organization, and has all
corporate (or other organizational) powers required to carry on its business as
currently conducted. In all material respects, each such Subsidiary
is duly qualified to do business as a foreign corporation and, as applicable in
the relevant jurisdiction, is in good standing in all jurisdictions where such
qualification is necessary.
(b) As of the
date hereof, all of the outstanding capital stock of, or other voting securities
or ownership interests in, each Subsidiary of the Parent, is owned by the
Parent, directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other voting securities or
ownership interests). As of the date hereof, there are no
outstanding (i) securities of the Parent or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary of the Parent or (ii)
options or other rights to acquire from the Parent or any of its Subsidiaries,
or other obligation of the Parent or any of its Subsidiaries to issue, any
capital stock or other voting securities or ownership interests in, or any
securities convertible into or exchangeable for any capital stock or other
voting securities or ownership interests in, any Subsidiary of the Parent (the
items in clauses (i) and (ii) being referred to collectively as the “Parent
Subsidiary Securities”). As of the date hereof, there are no
outstanding obligations of the Parent or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any of the Parent Subsidiary
Securities.
Section
5.07. SEC
Filings. (a) Parent has delivered or made available (for
purposes of this Agreement, filings that are publicly available prior to the
date hereof on the EDGAR system of the SEC are deemed to have been made
available to the Company) to the Company (i) Amendment No. 4 to the Form 10
Registration Statement of Parent filed on October 11, 2007, (ii) its annual
report on Form 10-K for the year ended December 31, 2007, (iii) the Form S-8
Registration Statement of Parent filed on October 30, 2007 and (iv) each report
on Form 8-K filed by Parent from January 1, 2008 and prior to the date hereof
(the documents referred to in clauses (i), (ii), (iii) and (iv), collectively,
the “Parent
SEC Documents”).
53
(b) As of its
filing date, each Parent SEC Document complied as to form in all material
respects with the applicable requirements of the 1933 Act and 1934
Act.
(c) As of its
filing date, each Parent SEC Document did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading; provided
that, to the extent a Parent SEC Document addresses a matter that is the same as
a matter addressed in a representation or warranty in Article 4 that is
qualified by the knowledge of the Company and/or a Company Material Adverse
Effect standard, the representation and warranty set forth in this Section
5.07(c) (and only this Section 5.07(c)) shall to such extent be deemed to be
similarly qualified by the knowledge of Parent and/or Parent Material Adverse
Effect, as applicable.
Section
5.08. Financial
Statements.
(a) The
audited combined balance sheets of Parent and its Subsidiaries as of December31, 2006 and December 31, 2005, and the related audited combined statements of
operations, changes to invested capital (deficit), and cash flows for each of
the years ended December 31, 2006 and December 31, 2005, of Parent and its
Subsidiaries fairly present, in all material respects, the combined financial
position of Parent and its Subsidiaries as of the dates thereof and their
combined results of operations, changes to invested capital (deficit), and cash
flows for the periods then ended and have been prepared in compliance with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto)
and in accordance with the books and records of Parent and its
Subsidiaries.
(b) The
audited consolidated balance sheet as of December 31, 2007 and the related
audited consolidated statements of operations, changes in stockholders’ equity
(deficit), and cash flows for the year then ended of Parent and its Subsidiaries
fairly present, in all material respects, the consolidated financial position of
Parent and its Subsidiaries as of the date thereof and their consolidated
results of operations, changes in stockholders’ equity (deficit), and cash flows
for the year then ended and have been prepared in compliance with GAAP applied
on a consistent basis (except as may be indicated in the notes thereto) and in
accordance with the books and records of Parent and its
Subsidiaries.
Section
5.09. Absence
of Certain Changes. From the Parent Balance Sheet Date to the
date hereof, the business of the Parent and its Subsidiaries has been conducted
in the ordinary course consistent with past practices, and since the Parent
Balance Sheet Date:
54
(a) there has
not been any event, occurrence, development or state of circumstances or facts
which, individually or in the aggregate, has had or would reasonably be expected
to have a Parent Material Adverse Effect; and
(b) neither
Parent nor any of its Subsidiaries has taken any action that would have been
prohibited by Section 7.01(a) or Section 7.01(b) if this Agreement had been in
effect at the time thereof.
Section
5.10. No
Undisclosed Material Liabilities. There are no liabilities or
obligations of the Parent or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and to the knowledge of Parent, there is no existing condition, situation or set
of circumstances (other than as a result of conducting operations in the coal
industry generally, except to the extent disproportionately impacting Parent or
its Subsidiaries as compared to other entities operating in the coal industry)
that would reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities
or obligations to the extent disclosed, reflected or reserved against in the
Parent Balance Sheet or the notes thereto;
(b) liabilities
or obligations incurred in the ordinary course of business since the Parent
Balance Sheet Date consistent with past practices;
(c) liabilities
that would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect;
(d) liabilities
incurred as a result of the performance of Parent’s obligations under this
Agreement; and
(e) liabilities
or obligations arising pursuant to the terms (and not as a result of breach or
default by Parent or any of its Subsidiaries) of contracts or agreements of
Parent or any of its Subsidiaries.
Section
5.11 . Compliance
with Laws; Mining Compliance Matters.
(a) Parent and
each of its Subsidiaries is, and (except as would not reasonably be expected to
result in a current or future liability on or adverse consequence to Parent or
any of its Subsidiaries) has been, in all material respects, in compliance with,
all Applicable Law, including the Identified Mining Laws but not including any
other Environmental Laws, and to the knowledge of Parent is not under
investigation with respect to and has not been threatened to be charged with or
given written notice from any Governmental Authority, and Parent does not
otherwise have knowledge of, any material violation of any Applicable Law,
including the Identified Mining Laws but not including any other Environmental
Laws. Neither Parent nor any of its Subsidiaries is subject to any
material order, writ, judgment, award, injunction or decree of any arbitrator or
Governmental
55
Authority
that Parent or any of its Subsidiaries has received in writing or otherwise has
knowledge of.
(b) Neither
Parent nor any of its Subsidiaries has received any written communication from
the applicable permitting authority with respect to any material applications
for permits to be issued by mining authorities to Parent or any of its
Subsidiaries as of the date hereof (the “Parent
Material Mining Applications”) that (i) indicates that such Parent
Material Mining Application has been denied or (ii) requests Parent or any of
its Subsidiaries to provide additional information with respect to such Parent
Material Mining Application.
(c) Parent and
its Subsidiaries have posted all material deposits, letters of credit, trust
funds, bid bonds, performance bonds, reclamation bonds and surety bonds (and all
such similar undertakings) required to be posted in connection with their
operations (the deposits, letters of credit, trust funds, bid bonds, performance
bonds, reclamation bonds and surety bonds (and all such similar undertakings)
posted in connection with the operations of Parent and its Subsidiaries,
collectively, the “Parent
Surety Bonds”). The Parent Surety Bonds are sufficient to
conduct the business of the Parent and its Subsidiaries as currently
conducted. Parent and its Subsidiaries are and have been in
compliance in all material respects with the Parent Surety Bonds, and the
operation of Parent’s and its Subsidiaries’ coal mining and processing
operations and the state of reclamation with respect to the Parent Surety Bonds
are “current” or in “deferred status” regarding reclamation obligations and
otherwise are and have been in compliance with all applicable mining,
reclamation and other analogous Applicable Laws, except where noncompliance
would not (i) interfere in any material respect with the ability of Parent and
its Subsidiaries to continue to operate their assets and conduct their business
as currently conducted or otherwise be material or (ii) materially adversely
affect or delay the consummation of the transactions contemplated by this
Agreement.
(d) Neither
Parent nor any of its Subsidiaries (nor any Person “owned or controlled” by any
of them) has received written notice from the Federal Office of Surface Mining
or the agency of any state administering the Surface Mining Control and
Reclamation Act of 1977 (or any comparable state statute) or otherwise has
knowledge that it is (i) ineligible to receive additional surface mining permits
or other licenses or authorizations or (ii) under investigation to determine
whether its eligibility to receive such permits or other licenses or
authorizations should be revoked, i.e.,
“permit blocked.” As used in this Section 5.11(d) “owned or
controlled” shall be defined as set forth in 30 C.F.R. Section 773.5
(2000).
Section
5.12. Litigation. There
is no action, suit, investigation or proceeding pending against, or, to the
knowledge of Parent, threatened against or affecting, Parent, any of its
Subsidiaries, any present or former officer, director or employee of Parent or
any of its Subsidiaries or any Person for whom Parent or
56
any
Subsidiary may be liable or any of their respective properties before any court
or arbitrator or before or by any Governmental Authority, (i) that if determined
adversely to Parent or any of its Subsidiaries, would reasonably be expected to
be, individually or in the aggregate, material or (ii) that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the Merger or
any of the other transactions contemplated hereby.
Section
5.13. Investment
Banker and Finders’ Fees. There is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of Parent who might be entitled to any fee or commission from
any Person other than Parent or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
Section
5.14. Opinion
of Financial Advisor. Parent has received the opinion of
Lehman Brothers, financial advisor to Parent, to the effect that, as of the date
of such opinion and subject to the procedures followed and the qualifications
and limitations set forth therein, from a financial point of view, the Merger
Consideration to be paid by Parent in the Merger is fair to
Parent. Parent, solely for informational purposes, will after receipt
of such opinion and concurrently with the execution and delivery of this
Agreement, furnish the Company’s outside legal counsel with a correct and
complete copy of such opinion. Parent has received the opinion of
Duff & Phelps, LLC, financial advisor to Parent, to the effect that, as of
the date of such opinion, the Merger Consideration is fair to Parent from a
financial point of view. Parent, solely for informational purposes,
will after receipt of such opinion and concurrently with the execution and
delivery of this Agreement, furnish the Company’s outside legal counsel with a
correct and complete copy of such opinion.
Section
5.15. Taxes. (a)
All material Tax Returns required by Applicable Law to be filed with any Taxing
Authority by, or on behalf of, Parent or any of its Subsidiaries have been filed
when due in accordance with all Applicable Law, and all such material Tax
Returns were at the time of filing, true and complete in all material
respects.
(b) Parent and
each of its Subsidiaries has paid (or has had paid on its behalf) or has
withheld and remitted to the appropriate Taxing Authority all Taxes due and
payable, or, where payment is not yet due or being contested in good faith, has
established (or has had established on its behalf and for its sole benefit and
recourse) in accordance with GAAP an adequate accrual for all Taxes through the
end of the last period for which Parent and its Subsidiaries ordinarily record
items on their respective books.
(c) Any income
and franchise Tax Returns of Parent or its Subsidiaries filed or required to be
filed with respect to the Tax years ended on or before December 31, 2003 have
been examined and closed or are Tax Returns with
57
respect to
which the applicable period for assessment under Applicable Law, after giving
effect to extensions or waivers, has expired.
(d) There is
no claim, audit, action, suit, proceeding or investigation now pending or, to
Parent’s knowledge, threatened against or with respect to Parent or its
Subsidiaries in respect of any Tax or Tax asset.
(e) (i) No
amount of the type described in clause (ii) or (iii) of the definition of “Tax”
is currently payable by either Parent or any of its Subsidiaries, regardless of
whether such Tax is imposed on Parent or any of its Subsidiaries or will become
payable as a consequence of consummating the Merger and the other transactions
contemplated by this Agreement; and (ii) neither Parent nor any of its
Subsidiaries has entered into any agreement or arrangement with any Taxing
Authority with regard to the Tax liability of Parent or any of its Subsidiaries
affecting any Tax period for which the applicable statute of limitations, after
giving effect to extensions or waivers, has not
expired.
(f) Prior to
the date hereof, Parent has provided the Company with copies of or access to (i)
all Tax Returns of Parent or any of its Subsidiaries that were filed or became
due on or after January 1, 2005, and (ii) all material agreements relating to
Taxes of Parent or any of its Subsidiaries, including any Tax Sharing
Agreements, effective during that period.
Section
5.16. Tax
Treatment. Neither Parent nor any of its Affiliates has taken
or agreed to take any action or is aware of any fact or circumstance that would
prevent the Merger from qualifying as a 368 Reorganization. None of
this Agreement or the other Transaction Documents, or the consummation of the
transactions contemplated hereby or thereby (including the Merger) will fail to
be in compliance with, and none of the foregoing will violate any of the terms
and conditions, or other provisions, of the Tax Separation Agreement (the “TSA”),
dated as of October 22, 2007, by and between Parent and Peabody Energy
Corporation and will not give rise to any indemnity obligation on the part of
Parent or the Surviving Corporation under Section 4.3 of the
TSA.
Section
5.17. Employee
Benefit Plans.
(a) No Parent
Employee Plan is subject to Title IV of ERISA (other than a Multiemployer
Plan).
(b) With
respect to any Multiemployer Plan to which Parent, its Subsidiaries or any of
their ERISA Affiliates has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) none of Parent,
its Subsidiaries or any of their ERISA Affiliates has incurred any withdrawal
liability under Title IV of ERISA that remains unsatisfied or would be subject
to such liability if, as of the Closing Date, Parent, its Subsidiaries or any of
their ERISA Affiliates were to engage in a complete withdrawal (as defined in
Section 4203 of ERISA) or partial withdrawal (as defined in Section 4205 of
ERISA)
58
from any
such multiemployer plan; and (ii) to the knowledge of Parent, no such
multiemployer plan is in reorganization or insolvent (as those terms are defined
in Sections 4241 and 4245 of ERISA, respectively).
(c) Each
Parent Employee Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter, or has pending or has
time remaining in which to file under the applicable remedial amendment period,
an application for such determination from the Internal Revenue Service, and
Parent is not aware of any reason why any such determination letter would not be
issued. Each Parent Employee Plan has been maintained in material
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including ERISA and the Code, which are
applicable to such Parent Employee Plan. No material events have
occurred with respect to any Parent Employee Plan that would result in payment
or assessment by or against Parent of any material excise taxes under Sections
4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the
Code.
(d) All
contributions and payments accrued under each Parent Employee Plan, determined
in accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending as of the date hereof, have been
discharged and paid on or prior to the date hereof except to the extent set
forth in the Parent Balance Sheet.
(e) There is
no action, suit, investigation, audit or proceeding pending against or involving
or, to the knowledge of Parent, threatened against or involving, any Parent
Employee Plan before any Governmental Authority.
(f) The
consummation of the transactions contemplated by this Agreement will not (either
alone or together with any other event) entitle any employee or independent
contractor of Parent or any of its Subsidiaries to severance pay or accelerate
the time of payment or vesting (except as otherwise may be required under
Section 411(d)(3) of the Code) or trigger any payment of funding (through a
grantor trust or otherwise) of compensation or benefits under, increase the
amount payable or trigger any other material obligation pursuant to, any Parent
Employee Plan. There is no contract, plan or arrangement (written or
otherwise) covering any current or former director, officer, employee or
independent contractor of Parent or any of its Subsidiaries that, individually
or collectively, would entitle any such individual to any severance or other
payment solely as a result of the transactions contemplated hereby, or would
give rise to the payment of any amount that would not be deductible pursuant to
the terms of Section 280G or 162(m) of the Code.
Section
5.18. Labor
Matters. Parent and its Subsidiaries are not engaged in any
material respect in any unfair labor practice which would reasonably be expected
to be, individually or in the aggregate, material. There is no unfair
labor
59
practice
charge or material grievance arising out of a collective bargaining agreement,
other current labor agreement with any labor union or organization, or other
material grievance proceeding against Parent or any of its Subsidiaries pending,
or, to the knowledge of Parent, threatened. Since two years prior to
the date of this Agreement there has been no unfair labor practice charge or
complaint filed against Parent or any of its Subsidiaries, or to the knowledge
of Parent, pending or threatened, before (A) the National Labor Relations Board
or any similar state agency, or (B) the Equal Employment Opportunity Commission
or any similar state agency responsible for the prevention of unlawful
employment practices. There is no strike or lockout or material
slowdown, work stoppage or other labor dispute pending, or to the knowledge of
Parent, threatened against, involving or otherwise materially affecting Parent
or any of its Subsidiaries. Since two years prior to the date of this
Agreement, any and all reductions of workforce have been carried out in all
material respects in accordance with all Applicable
Law.
Section
5.19. Environmental
Matters. Except
as does not and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect:
(a) Parent and
its Subsidiaries are and have been in compliance with all Environmental Laws and
all Environmental Permits; such Environmental Permits are valid and in full
force and effect and will not be terminated or impaired or become terminable, in
whole or in part, as a result of this Agreement and the other Transaction
Documents or the consummation of the transactions contemplated herein or
therein.
(b) None of
Parent nor any of its Subsidiaries has received any Environmental Claim or
written notice of any threatened Environmental Claim, or has any knowledge of
any threat of such an Environmental Claim, regarding or resulting from the
activities or business of Parent or any of its Subsidiaries, or any property or
assets currently or formerly owned, operated or used by Parent or any of its
Subsidiaries, in each case that (i) has been outstanding for more than 30 days,
(ii) would reasonably be expected to result in (A) an action by a Governmental
Authority, (B) a determination that there is a pattern of violations or (C) the
closure of any operations of Parent or any of its Subsidiaries or (iii) results
in or would reasonably be expected to result in liability to Parent or any of
its Subsidiaries.
(c) None of
Parent nor any of its Subsidiaries has entered into, has agreed to, has been
issued or, to the knowledge of Parent is otherwise subject to, any material
order, writ, judgment, award, injunction or decree of any arbitrator or
Governmental Authority under any Environmental Law regarding Parent or any of
its Subsidiaries or any property or assets currently or formerly owned, operated
or used by Parent or any of its Subsidiaries, in any such case that would
interfere with the respective ability of Parent or any of its Subsidiaries to
continue to
60
operate
their respective assets and conduct their respective businesses as currently
conducted or would result in liability to Parent or any of its
Subsidiaries.
(d) None of
Parent nor any of its Subsidiaries has Released any Hazardous Materials in
violation of Environmental Law or in a manner that would reasonably be expected
to result in liability under Environmental Laws or Environmental Permits, and,
to the knowledge of Parent, no other Person has Released any Hazardous
Materials, and Hazardous Materials are not otherwise present, at any property
currently or formerly owned or operated by Parent or any of its Subsidiaries in
violation of any Environmental Law or Environmental Permits or in a manner that
would reasonably be expected to result in liability to Parent or any of its
Subsidiaries.
(e) No
property currently owned or operated by Parent or any of its Subsidiaries (i) is
listed or, to the knowledge of the Parent or any of its Subsidiaries, proposed
for listing on the CERCLA National Priorities List or CERCLIS list or any
similar Governmental Authority's list of sites at which remedial action is or
may be necessary or (ii) contains asbestos or asbestos-containing materials, in
either case in a condition constituting a violation of Environmental Law or as
would reasonably be expected to result in liability to Parent or any of its
Subsidiaries.
(f) None of
Parent nor any of its Subsidiaries has disposed of, transported or arranged for
the disposal or transportation of, any Hazardous Materials in a manner or to a
location that would reasonably be expected to result in liability to Parent or
any of its Subsidiaries under Environmental Law.
(g) Neither
Parent nor
any Subsidiary of Parent is
in default under, and no condition exists that with notice or lapse of time or
both would constitute a default under, any of the Environmental Permits. Neither
Parent nor
any of its Subsidiaries has received written notice that the Person issuing or
authorizing any such Environmental Permit
intends to terminate or will refuse to renew or reissue any such
Environmental Permit upon its expiration.
(h) Each of
the material applications for Environmental Permits in the name of Parent or any
of its Subsidiaries has been made in accordance with Applicable
Laws. Parent or one of its Subsidiaries will, on any grant of any of
such applications, hold legal or beneficial title to the interest in each such
application. Neither Parent nor any of its Subsidiaries has received
any written communication from any Governmental Authority that indicates that
any of such applications for Environmental Permits will not be timely granted or
will be subject to any material restrictions, limitations or unusual
requirements.
Section
5.20 . Antitakeover
Statutes and Rights Agreement.
(a) Parent has
taken all action necessary to exempt the Merger, this Agreement and the
transactions contemplated hereby from Section 203 of
61
Delaware
Law, and, accordingly, neither such Section nor any other antitakeover or
similar statute or regulation applies or purports to apply to any such
transactions. No other “control share acquisition,”“fair price,”“moratorium” or other antitakeover laws enacted under U.S. state or federal laws
apply to this Agreement or any of the transactions contemplated
hereby.
(b) By
amendment in the form attached as Exhibit 5.20(b), Parent has taken all action
necessary to render the rights issued pursuant to the terms of the Rights
Agreement (the “Rights
Agreement”) dated as of October 22, 2007 by and between Parent and
American Stock Transfer & Trust Company, as rights agent, inapplicable to
this Agreement and the transactions contemplated hereby, including the Merger
and the Parent Stock Issuance.
Section
5.21. Material
Contracts; Affiliate Transactions. Neither Parent nor any of
its Subsidiaries is a party to or bound by any contract, arrangement, commitment
or understanding as of the date hereof that is a “material contract” (as such
term is defined in Item 601(b)(10) of Regulation S-K of the 1933 Act) or other
instrument that is required to filed as an exhibit to the Parent SEC Documents
pursuant to Item 601(b)(2), (4) or (9) of Regulation S-K of the 1933 Act, that,
in any such case, has not been filed or incorporated by reference in the Parent
SEC Documents (each, a “Parent
Material Contract”). Each Parent Material Contract is, to
Parent’s knowledge, a valid and binding agreement of the parties thereto (other
than Parent and its Subsidiaries), and, to Parent’s knowledge, is in full force
and effect and in all material respects enforceable against such other parties,
in accordance with its terms (except to the extent that enforceability may be
limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect affecting
generally the enforcement of creditors’ rights and remedies and (ii) general
principles of equity, whether in a proceeding at law or in equity) and prior to
the date hereof neither Parent nor any of its Subsidiaries has received any
written notice to terminate, in whole or material part, any of the
same. None of Parent, any of its Subsidiaries or, to the knowledge of
Parent, any other party thereto is in default or breach in any material respect
under the material terms of any such Parent Material Contract, and, to the
knowledge of Parent, no event or circumstance has occurred that, with notice or
lapse of time or both, is reasonably likely to constitute any event of default
thereunder that would be reasonably expected to result in the termination of
such Parent Material Contract. True and complete copies of each
Parent Material Contract (including all modifications and amendments thereto)
have been made available to the Company prior to the date
hereof. Parent has no knowledge that any current officer, director or
Affiliate of Parent is a party to any material agreement, contract, commitment
or transaction with Parent or its Subsidiaries or has any material interest in
any material property used by Parent or its Subsidiaries that would be required
to be disclosed in a Parent SEC Document under Item 404 of Regulation S-K under
the 1933 Act that has not been so disclosed.
62
Section
5.22. Properties.
(a) “Parent
Leased Tangible Property” means all items of machinery, equipment,
vehicles, and other tangible personal property leased or subleased by Parent or
any of its Subsidiaries.
(b) “Parent
Leased Real Property” means all real property and other interests in
land, including coal, mining, exploration and surface rights, easements, rights
of way, options, surface estates, coal and other mineral estates leased or
subleased by Parent or any of its Subsidiaries.
(c) With
respect to each lease or sublease of Parent Leased Tangible Property and Parent
Leased Real Property, except where the failure of any of the following to be
true and correct would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect:
(i) such lease
or sublease is in full force and effect in all respects and enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally and general equitable principles whether in a proceeding at law or in
equity;
(ii) (A)
neither Parent nor any of its Subsidiaries is in default under any such lease or
sublease and, no event has occurred which, with the passage of time or
expiration of any grace period would constitute a default of Parent’s or its
Subsidiaries’ obligations under such lease or sublease, (B) to the knowledge of
Parent no other party to any such lease or sublease is in default thereunder and
(C) neither Parent nor any of its Subsidiaries has received a written or other
notice of default with respect to such lease or
sublease;
(iii) no such
lease or sublease has been mortgaged, deeded in trust or subjected to a Lien
(other than Permitted Liens) by Parent or any of its
Subsidiaries;
(iv) with
regard to Parent Leased Real Property, Parent or one of its Subsidiaries has
adequate rights of ingress and egress to such Parent Leased Property and all
buildings, structures, facilities, fixtures and other improvements
thereon;
(v) with
regard to Parent Leased Real Property neither Parent nor any of its Subsidiaries
owes any brokerage or other commissions with respect to any such lease or
sublease for which adequate reserves have not been established on the Parent
Balance Sheet;
63
(vi) neither
Parent nor any of its Subsidiaries has received written notice of or has
knowledge of a claim or dispute under any lease or sublease regarding any of
Parent Leased Real Property or Parent Leased Personal Property;
and
(vii) other than
Permitted Liens, there are no other matters that, to the knowledge of Parent,
would adversely affect the rights of Parent or any of its Subsidiaries to Parent
Leased Real Property or Parent Leased Tangible
Property.
(d) “Parent
Owned Real Property” means all real property, and other interests in
land, including coal, mining, exploration and surface rights, easements, rights
of way, options, surface estates and other mineral estates owned by Parent or
any of its Subsidiaries. With respect to each such parcel of Parent
Owned Real Property, except where the failure of any of the following to be true
and correct would not, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect: (i) the owner has
possession of, adequate rights of ingress and egress with respect to, and good
and marketable fee simple title to each Parent Owned Real Property, free and
clear of any Liens, except for Permitted Liens; (ii) there are no pending or, to
Parent’s knowledge, threatened condemnation proceedings and no tenant or other
party in possession of any of the Parent Owned Real Property has any right to
purchase, or holds any right of first refusal to purchase, any of such
properties; and (iii) other than Permitted Liens, there are no other matters
that would adversely affect the title of Parent or any of its
Subsidiaries.
(e) “Parent
Owned Tangible Property” means all items of machinery, equipment,
vehicles, and other tangible personal property owned by Parent or any of its
Subsidiaries. Parent or one of its Subsidiaries is in possession of,
and except for such spare parts as are held on consignment, owns and has good
title to all Parent Owned Tangible Property as operated as of the date
hereof. All such Parent Owned Tangible Property is free and clear of
all Liens, other than Permitted Liens.
(f) Except
with respect to real property leased to others, the plants, buildings,
structures, mines and equipment owned or leased by Parent or any of its
Subsidiaries are in all material respects in good operating condition and repair
and have been reasonably maintained consistent with past practice and are
adequate and suitable for the purpose for which they are currently being
used.
(g) The Parent
Leased Real Property, Parent Owned Real Property, Parent Leased Tangible
Property, and Parent Owned Tangible Property constitute all of the property and
assets (together with the Parent Permits and the Environmental Permits) used or
held for use in connection with the businesses of Parent and its Subsidiaries
and are adequate to conduct such businesses as currently conducted in all
material respects.
64
(h) Neither
Parent nor any of its Subsidiaries has received written notice or has knowledge
of any disputes with any adjoining landowners that would reasonably be expected
to result in, individually or in the aggregate, a Parent Material Adverse
Effect.
Section
5.23. Intellectual
Property. Except as, individually or in the aggregate, would
not reasonably be expected to be material: (i) Parent and each of its
Subsidiaries owns, or is licensed to use (in each case, free and clear of any
Liens), all Intellectual Property Rights used in or necessary for the conduct of
its business as currently conducted; (ii) neither Parent nor its Subsidiaries
has infringed, misappropriated or otherwise violated the Intellectual Property
Rights of any Person; (iii) to the knowledge of Parent, no Person has
challenged, infringed, misappropriated or otherwise violated any Intellectual
Property Right owned by and/or licensed to Parent or its Subsidiaries; (iv)
neither Parent nor any of its Subsidiaries has received any written notice or
otherwise has knowledge of any pending claim, action, suit, order or proceeding
with respect to any Intellectual Property Right used by Parent or any of its
Subsidiaries or alleging that the any services provided, processes used or
products manufactured, used, imported, offered for sale or sold by Parent or any
of its Subsidiaries infringes, misappropriates or otherwise violates any
Intellectual Property Rights of any Person; (v) the consummation of the
transactions contemplated by this Agreement will not alter, encumber, impair or
extinguish any Intellectual
Property Right of Parent or any of its Subsidiaries; and (vi) Parent and
its Subsidiaries have taken reasonable steps to maintain the confidentiality of
all material Trade Secrets owned, used or held for use by Parent or any of its
Subsidiaries and no such Trade Secrets have been disclosed other than to
employees, representatives and agents of Parent or any of its Subsidiaries all
of whom are bound by written confidentiality agreements.
Section
5.24. Licenses
and Permits. “Parent
Permits” means all licenses, mining leases, mining authorities,
franchises, permits, certificates, approvals or other similar authorizations
issued to Parent and its Subsidiaries by any Governmental Authority, including
those relating to the Identified Mining Laws but not including any other
Environmental Permits. The Parent Permits are in all material
respects sufficient permits to conduct the business of Parent and its
Subsidiaries as currently conducted. The Parent Permits are in all
material respects valid and in full force and effect, neither Parent nor any
Subsidiary of Parent is in material default under, and no condition exists that
with notice or lapse of time or both would constitute a material default under,
any of the Parent Permits. Neither Parent nor any of its Subsidiaries
has received written notice that the Person issuing or authorizing any such
Permit intends to terminate or will refuse to renew or reissue any such Permit
upon its expiration. Parent and its Subsidiaries have complied with
the terms and conditions of the Parent Permits in all material
respects.
65
Section
5.25. Absence
of Certain Business Practices. Neither Parent nor any of its
Subsidiaries, nor any of their respective officers, directors, employees or
agents, nor any Person acting on behalf of Parent or any of its Subsidiaries,
has, directly or indirectly, within the past two years given or agreed to give
any gift or similar benefit to any customer, supplier, governmental employee or
other Person who is or may be in a position to help or hinder the respective
business of Parent or any of its Subsidiaries (or assist Parent or any of its
Subsidiaries in connection with any actual or proposed transaction) that (a)
might subject Parent or any of its Subsidiaries to any material damage or
material penalty assessed by any Governmental Authority, (b) if not given in the
past might have had a material adverse effect, (c) if not continued in the
future, might have a material adverse effect or (d) might subject Parent or any
of its Subsidiaries to suit by any Governmental
Authority.
Section
5.26. Financing. Parent
has provided the Company with a true and complete copy of an executed commitment
letter, including the attachments thereto (such commitment letter, with all such
attachments and the fee letter related thereto entered into concurrently
therewith, the “Parent
Financing Commitment Letter”) from the ArcLight Funds confirming such
parties’ commitment to provide Parent with financing of up to $150,000,000 to be
used by Parent for the purposes set forth in the Parent Financing Commitment
Letter (the “Parent
Financing”). The commitments and obligations to consummate the
Parent Financing set forth in the Parent Financing Commitment Letter are subject
to no conditions or other contingencies other than those set forth in the Parent
Financing Commitment Letter. Assuming the Parent Financing Commitment
Letter is a legal, valid and binding obligation of the ArcLight Funds, the
Parent Financing Commitment Letter is in full force and effect and is the legal,
valid and binding obligation of Parent. To the knowledge of Parent,
the Parent Financing Commitment Letter is the legal, valid and binding
obligation of the other parties thereto. As of the date hereof, the
Parent Financing Commitment Letter has not been amended or modified in any
respect. No event has occurred which, with or without notice, lapse
of time or both, would constitute a default or material breach on the part of
Parent under any term or condition of the Parent Financing Commitment Letter,
and to the knowledge of Parent, no facts or circumstances exist as of the date
hereof that would reasonably be expected to result in Parent being unable to
satisfy on a timely basis any term or condition of closing to be satisfied by it
pursuant to the Parent Financing Commitment Letter. As of the date
hereof, Parent has paid in full all commitment or other fees required by the
Parent Financing Commitment Letter to be paid by it as of the date
hereof. The Parent Financing, if funded in accordance with the Parent
Financing Commitment Letter, will not be in contravention of the terms and
conditions of the Credit
Agreement dated as of October 31, 2007,
as amended,
among Parent,
as borrower,
each lender from time to time party
thereto,
and Bank
of America,
N.A., as Administrative Agent, Swing Line Lender and L/C Issuer
(the “Parent
Credit Agreement”).
66
Section
5.27. No
Parent Material Adverse Effect. The representations and
warranties contained in this Article 5, disregarding any qualification contained
therein as to materiality or Parent Material Adverse Effect, are true and
correct, with such exceptions as have not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section
5.28. No
Other Representations and Warranties. Except for the
representations and warranties contained in this Agreement or any other
Transaction Document, neither Parent nor any other Person makes any other
express or implied representation or warranty on behalf of Parent and its
Subsidiaries (and its and their business operations, financial condition, assets
and properties) and the Company shall be entitled to rely only on such
representations and warranties. Parent disclaims any representation
or warranty, whether made by Parent or any of its Affiliates, officers,
directors, employees, agents or representatives, that is not contained in this
Agreement, any other Transaction Document or in any certificate delivered
pursuant to this Agreement or any other Transaction
Document.
ARTICLE
6
Covenants
of the Company
The
Company agrees that:
Section
6.01. Conduct
of the Company. From the date hereof until the Effective Time
or the earlier termination of this Agreement in accordance with the terms of
Article 10, the Company shall, and shall cause each of its Subsidiaries to,
conduct its business in the ordinary course consistent with past practice and in
compliance with Applicable Law and use all commercially reasonable efforts to
(i) preserve intact its present business organization, (ii) maintain in effect
all of its material foreign, federal, state and local licenses, permits,
consents, franchises, approvals and authorizations, (iii) maintain satisfactory
relationships with its significant customers, lenders, suppliers and others
having significant business relationships with it and (iv) subject to Section
6.01(d) and to the availability of necessary capital, continue to make capital
expenditures with respect to the projects set forth on Section 6.01(iv) of the
Company Disclosure Schedule. Without limiting the generality of the
foregoing, except as expressly contemplated by this Agreement or as set forth in
the applicable subsection of Section 6.01 of the Company Disclosure Schedule,
the Company shall not, nor shall it permit any of its Subsidiaries to, without
the prior written consent of Parent (such consent not to be unreasonably
withheld, delayed or conditioned):
(a) amend its
articles of incorporation, bylaws or other similar organizational documents
(whether by merger, consolidation or otherwise);
67
(b) split,
combine or reclassify any shares of capital stock of the Company or any of its
Subsidiaries or declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the capital stock of the Company or its Subsidiaries, or redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any
Company Securities or any Company Subsidiary Securities (other than the
repurchase by the Company of any Company Securities as required by the terms of
the Stock Plan);
(c) (i) other
than the issuance of Company Stock upon conversion of the Company Convertible
Debt Notes immediately prior to the Effective Time pursuant to Section 7 of the
Company Convertible Debt NPA, issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of any Company Securities or Company Subsidiary
Securities, or (ii) amend any term of any Company Security or any Company
Subsidiary Security (in each case, whether by merger, consolidation or
otherwise);
(d) incur any
capital expenditures or any obligations or liabilities in respect thereof,
except for any capital expenditures as identified on Section 6.01(d) of the
Company Disclosure Schedule, which shall not exceed $10,000,000 for any
individual project or the amount set forth on Section 6.01(d) of the Company
Disclosure Schedule in the aggregate;
(e) acquire
(by merger, consolidation, acquisition of stock or assets or otherwise),
directly or indirectly, any assets, securities, properties, interests or
businesses, other than (i) supplies in the ordinary course of business of the
Company and its Subsidiaries in a manner that is consistent with past practice,
(ii) acquisitions of coal reserves with a purchase price (including assumed
indebtedness) that does not exceed $5,000,000 individually or $25,000,000 in the
aggregate (iii) capital expenditures permitted under Section 6.01(d) above and
(iv) acquisitions of securities that do not exceed $2,000,000 in the aggregate
made with funds held in escrow accounts (and the reinvestment of amounts and
investments held as of the date hereof in escrow accounts) established to
support reclamation obligations of the Company or any of its
Subsidiaries;
(f) sell,
lease or otherwise transfer, or create or incur any Lien (other than Permitted
Liens) on, any of the Company’s or its Subsidiaries’ assets, securities,
properties, interests or businesses, other than (i) sales of inventory in the
ordinary course of business consistent with past practices and (ii) sales of
assets, securities, properties, interests or businesses with a sale price
(including any related assumed indebtedness) that does not exceed $5,000,000
individually or $25,000,000 in the aggregate;
(g) make any
loans, advances (other than advances pursuant to commercial transactions in the
ordinary course of business and advances to employees in the ordinary course of
business) or capital contributions to, or
68
investments
in, any other Person, other than to wholly owned Subsidiaries in the ordinary
course of business consistent with past practice;
(h) create,
incur, assume, suffer to exist or otherwise be liable (including pursuant to a
guarantee) with respect to any indebtedness for borrowed money (which, for the
avoidance of doubt, shall not be deemed to include capital leases or
indebtedness up to an aggregate principal amount of $50,000,000 arising under
the Funded Letter of Credit Facility or in respect of the Funded Letters of
Credit (each, as defined in the Company Credit Agreement) issued pursuant
thereto) if, after such creation, incurrence, assumption, sufferance or
liability, the aggregate principal amount of indebtedness for borrowed money of
the Company and its Subsidiaries (or in respect of which the Company or any of
its Subsidiaries is otherwise liable) would exceed $250,000,000 (after deducting
up to $25,000,000 of unrestricted cash or cash equivalents owned and held by the
Company and its Subsidiaries at such time);
(i) (i) enter
into any agreement or arrangement that limits or otherwise restricts in any
material respect the Company, any of its Subsidiaries or any of their respective
Affiliates or any successor thereto or that would, after the Effective Time,
limit or restrict in any material respect the Company, any of its Subsidiaries,
the Surviving Corporation, Parent or any of their respective Affiliates, from
engaging or competing in any line of business, in any location or with any
Person or (ii) (A) enter into any Covered Contract or, if consent is granted to
enter into a Covered Contract and such Covered Contract is entered into, amend
or modify in any material respect or terminate any such Covered Contract entered
into after the date hereof, (B) amend or modify in any material respect or
terminate any Material Contract or (C) otherwise waive, release or assign any
material rights, claims or benefits of the Company or any of its
Subsidiaries;
(j) except (A)
for actions described on Section 6.01(j)(A) of the Company Disclosure Schedule,
(B) to the extent required by Applicable Law, (C) to the extent required
pursuant to the terms of any outstanding agreement or instrument that the
Company or any of its Subsidiaries is a party (including pursuant to the Stock
Plan) to and that is set forth on Section 4.21(a)(ix) of the Company Disclosure
Schedule and (D) for action required by the Company’s existing severance and
retention plan in effect as of the date hereof: (i) grant or increase
any severance or termination pay to (or amend any existing arrangement with) any
director, officer or employee of the Company or any of its Subsidiaries, (ii)
increase benefits payable under any existing severance or termination pay
policies or employment agreements, (iii) enter into any employment, retention,
change in control, deferred compensation or other similar agreement or
arrangement (or amend any such existing agreement or arrangement) with any
director, officer, employee or independent contractor of the Company or any of
its Subsidiaries, (iv) establish, adopt or amend (except as required by
Applicable Law) any collective bargaining, bonus, profit-sharing, thrift,
pension, retirement,
69
equity-based
or other benefit plan or arrangement covering any director, officer, employee or
independent contractor of the Company or any of its Subsidiaries or (v) increase
compensation, bonus or other benefits payable to any director, officer, employee
or independent contractor of the Company or any of its
Subsidiaries;
(k) change the
Company’s methods of accounting, except as required by concurrent changes in
GAAP, as agreed to by its independent public
accountants;
(l) except as
set forth on Section 6.01(l) of the Company Disclosure Schedule, settle, or
offer or propose to settle, (i) any litigation, investigation, arbitration,
proceeding or other claim involving or against the Company or any of its
Subsidiaries unless such settlement would not result in (A) the imposition of a
consent order, injunction, decree or obligation that would restrict the future
activity or conduct of the Company or any of its Affiliates, (B) a finding or
admission of a violation of law or violation of the rights of any Person by the
Company or any of its Affiliates, (C) a finding or admission that would have an
adverse effect on other claims made or threatened against the Company or any of
its Affiliates, or (D) any monetary liability on the part of the Company or any
of its Subsidiaries in excess of $500,000 for any given matter or $1,000,000 in
the aggregate for all matters, (ii) any stockholder litigation or dispute
against the Company or any of its officers or directors or (iii) any litigation,
arbitration, proceeding or dispute that relates to the transactions contemplated
hereby;
(m) take any
action that would intentionally make any representation or warranty of the
Company hereunder inaccurate in any material respect at, or as of any time
before, the Effective Time as if made as of the Effective Time;
(n) permit its
existing lessees, licensees and assignees or agents to conduct exploration,
development, drilling or mining operations for oil, gas, coal bed methane or any
reserved minerals in a manner that will adversely affect any active coal mining
operations on any Company Leased Real Property or any Company Owned Real
Property in any material respect; or
(o) agree,
resolve or commit to do any of the foregoing.
Section
6.02 . Notice
of Stockholder Consents; Company Information
Statement.
(a) As
promptly as practicable after the execution and delivery of this Agreement by
each of the parties hereto, but in no event later than ten Business Days after
the date hereof, the Company shall prepare and mail a notice complying with the
requirements of Section 228 of Delaware Law to all Stockholders who have not
executed and delivered a Stockholder Consent. Such notice shall be
reasonably acceptable to Parent.
70
(b) As
promptly as practicable after the execution and delivery of this Agreement by
each of the parties hereto, the Company shall prepare, with the cooperation and
assistance of Parent, an information statement (the “Information
Statement”), which shall include information about this Agreement, the
other Transaction Documents, the Merger and the other transactions contemplated
hereby and thereby. The Information Statement shall be reasonably
acceptable to Parent. The Company shall cause the Information
Statement to be mailed to the Stockholders as promptly as practicable (but in no
event earlier than two Business Days after the initial filing of the
Registration Statement with the SEC). The Company shall comply with
the requirements of Section 262 of Delaware Law. The Information
Statement and any amendments or supplements thereto, when first mailed to
holders of Company Stock, will comply as to form in all material respects with
the applicable requirements of Delaware Law, and will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (other than information which is
contained in the Information Statement and is supplied by Parent); provided
that to the extent the Information Statement or any amendment or supplement
thereto contains information of the same nature as the matters referenced in the
first sentence of Section 4.22(k) (as such matters relate to the Company and its
Subsidiaries), such information shall be true (and not fail to omit necessary
facts) based only upon the knowledge of the Company.
Section
6.03. No
Solicitation. (a) Neither the Company nor any of
its Subsidiaries shall, nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their stockholders, officers, directors,
employees, investment bankers, attorneys, accountants, consultants,
representatives, agents or advisors (collectively, “Representatives”)
to, directly or indirectly, (i) solicit, initiate or take any action to
facilitate or encourage the submission of any Acquisition Proposal, (ii) enter
into or participate in any discussions or negotiations with, furnish any
information relating to the Company or any of its Subsidiaries or afford access
to the business, properties, assets, books or records of the Company or any of
its Subsidiaries to, otherwise knowingly cooperate in any way with, or knowingly
assist, participate in, facilitate or encourage any effort by any Third Party
that is seeking to make, or has made, an Acquisition Proposal, or (iii) enter
into any agreement in principle, letter of intent, term sheet or other similar
instrument relating to an Acquisition Proposal.
(b) The
Company shall, and shall cause its Subsidiaries and its and their respective
Representatives to, cease immediately and cause to be terminated any and all
existing activities, discussions or negotiations, if any, with any Third Party
or any Third Party’s Representatives with respect to any Acquisition
Proposal. The Company shall promptly, after the date hereof, request
that each Third Party (other than the Company’s Representatives), if any, that
has executed a currently binding confidentiality agreement within the 24-month
period prior to the date hereof in connection with its consideration of any
Acquisition Proposal return or
71
destroy
all confidential information heretofore furnished to such Person by or on behalf
of the Company or any of its Subsidiaries (and all analyses and other materials
prepared by or on behalf of such Person that contains, reflects or analyzes that
information). The Company shall take all commercially reasonable
actions necessary to secure its rights and ensure the performance of such other
party’s obligations under such confidentiality agreements as promptly as
practicable; provided
that except as set forth in the preceding sentence (relating to the request of
the Company) the Company shall not be required to take action to cause a Third
Party to return or destroy information unless the Company has knowledge of a
breach of the confidentiality or use provisions of the applicable
confidentiality agreement.
(c) Notwithstanding
anything to the contrary contained in this Section 6.03, if at any time
following the date of this Agreement and prior to obtaining the Company
Stockholder Approval, the Company has received a written Acquisition Proposal
from a third party that the Company’s Board of Directors believes in good faith
to be bona fide and the Company’s Board of Directors determines in good faith,
after consultation with an independent financial advisor and an outside counsel,
that such Acquisition Proposal constitutes or could reasonably be expected to
result in a Superior Proposal, then the Company may: (A) furnish
information with respect to the Company and its Subsidiaries to the person
making such Acquisition Proposal, (B) participate in discussions or negotiations
with the person making such Acquisition Proposal regarding such Acquisition
Proposal and (C) terminate this Agreement pursuant to Section 10.01(e) to
concurrently enter into a definitive agreement with respect to such Superior
Proposal, if the Board determines in good faith that the failure to take such
action would violate its fiduciary duties under Applicable
Law. During the time period contemplated by the first sentence of
this clause (c), the Company shall promptly notify Parent if it receives an
Acquisition Proposal from a person or group of related persons (including the
material terms and conditions thereof but not the identity of the person making
such Acquisition Proposal) and shall keep Parent apprised of any material
developments, discussions and negotiations concerning such Acquisition
Proposal. As used herein, the term “Superior
Proposal”
means any bona fide binding written Acquisition Proposal not obtained in
violation of this Section 6.03 that the Company’s Board of Directors determines
in its good faith judgment provides for terms and conditions that are more
favorable to the Company’s stockholders from a financial point of view than this
Agreement; provided
that for purposes of the definition of “Superior
Proposal”, the references to “20% or more” in the definition of
Acquisition Proposal shall be deemed to be references to “a majority” and the
definition of Acquisition Proposal shall only refer to a transaction or series
of transactions (x) directly involving the Company (and not exclusively its
Subsidiaries) or (y) involving a sale or transfer of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a
whole.
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Section
6.04. Tax
Matters. (a) From the date hereof until the Effective Time,
neither the Company nor any of its Subsidiaries shall make or change any
material Tax election, change any annual tax accounting period, adopt or change
any method of tax accounting, file any material amended Tax Returns or claims
for material Tax refunds, enter into any material closing agreement, surrender
any material Tax claim, audit or assessment, surrender any right to claim a
material Tax refund, offset or other reduction in Tax liability, consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any such action or
omission would have the effect of increasing the Tax liability or reducing any
Tax asset of the Company or any of its Subsidiaries.
(b) The
Company and each of its Subsidiaries shall establish or cause to be established
in accordance with GAAP on or before the Effective Time an adequate accrual for
all Taxes due with respect to any period or portion thereof ending prior to or
as of the Effective Time.
(c) All
transfer, documentary, sales, use, stamp, registration, value added and other
such Taxes and fees (including any penalties and interest) incurred in
connection with the Merger (including any real property transfer tax and any
similar Tax) shall be paid by the Company when due, and the Company shall, at
its own expense, file all necessary Tax returns and other documentation with
respect to all such Taxes and fees for which Applicable Law imposes a filing
obligation on the Company, and, if required by Applicable Law, the Company
shall, and shall cause its Subsidiaries to, join in the execution of any such
Tax returns and other documentation.
(d) From the
date hereof until the Effective Time, the Company shall cooperate fully, as and
to the extent reasonably requested by Parent and its authorized representatives,
in connection with Tax matters relating to the Company and its
Subsidiaries, including providing reasonable access to the offices, books
and records, and employees and any third-party tax consultants of the Company
and its Subsidiaries, providing records and information that are reasonably
relevant to the preparation and filing of any Tax Return, statement, report
or form, providing records and information relevant to any audit,
litigation or other proceeding, providing copies of any Tax Sharing
Agreements and making employees and any third-party tax consultants
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
Section
6.05. Transaction
Expenses. Prior to Closing, the Company will use its
reasonable best efforts to obtain customary “pay-off” letters from each of the
Persons in respect of whom Transaction Expenses are, will be or were payable,
acknowledging that each of such Persons has been paid in full, or will as of the
Closing, be paid in full, all Transaction Expenses owed to it. All
Transaction Expenses that are in excess of the Transaction Expenses Cap and that
73
are not
included in the Excess Transaction Expenses Deduction Amount shall be the sole
responsibility of the Designated Stockholders in accordance with Section
11.02(a) (and, if any claim is made upon the Company or any of its Subsidiaries
after the Closing with respect to any such Transaction Expenses, Parent may, in
its discretion, elect to have such expenses paid from the Escrow Property in
accordance with Section 11.02(a) and the Escrow
Agreement).
Section
6.06. Company
Convertible Debt. Prior to the Closing, the Company will not
(i) amend or waive any term (including the transfer restrictions contained
therein) of any of the Company Convertible Debt Notes or any related agreement
(including the Company Convertible Debt NPA), in either case, in a manner
adverse to Parent (it being agreed and understood that any amendment or waiver
of any term having an effect that applies only in the event this Agreement is
terminated shall not, for purposes hereof, be “in a manner adverse to Parent”)
or (ii) repay or prepay any of the Company Convertible Debt
Notes.
Section
6.07. 280G
Approval. Prior to the Closing, the Company will use its
commercially reasonable efforts to satisfy the approval requirements of Section
280G(b)(5)(B) of the Code with respect to all payments to be made to
disqualified individuals (within the meaning of Section 280G of the Code) in
connection with the transactions contemplated hereby, including pursuant to the
Stock Plan.
ARTICLE
7
Covenants
of Parent
Parent
agrees that:
Section
7.01. Conduct
of Parent. From the date hereof until the Effective Time or
the earlier termination of this Agreement in accordance with the terms of
Article 10, without the prior written consent of the Company (such consent not
to be unreasonably withheld, delayed or conditioned):
(a) Parent
shall not adopt or propose any change in its certificate of incorporation or
bylaws;
(b) Parent
shall not declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock; and
(c) Parent
shall not, and shall not permit any of its Subsidiaries to, take any action that
would intentionally make any representation and warranty of Parent hereunder
inaccurate in any material respect at, or as of any time prior to, the Effective
Time as if made as of the Effective Time.
74
Section
7.02. Obligations
of Merger Subsidiary. Parent shall take all action necessary
to cause Merger Subsidiary to perform its obligations under this Agreement and
to consummate the Merger on the terms and conditions set forth in this
Agreement.
Section
7.03. Stock
Exchange Listing. Parent shall use its commercially reasonable
efforts to cause the shares of Parent Stock to be issued pursuant to the Parent
Stock Issuance to be listed on the New York Stock Exchange, subject to official
notice of issuance.
Section
7.04 . Employee
Matters.
(a) As used
herein, the term “Company
Employees” means the individuals who are employed by the Company or any
Subsidiary of the Company immediately prior to the Effective Time and the term
“Continuing
Employees” means the Company Employees who continue to be employed with
Parent or one of its Subsidiaries or the Surviving Corporation or one of its
Subsidiaries upon the Effective Time. Parent shall, and shall cause
the Surviving Corporation and its Subsidiaries to, provide any Company Employee
whose employment is involuntarily terminated within six months following the
Closing Date (other than for cause) who is covered by a severance plan listed on
Section 7.04(a) of the Parent Disclosure Schedule with severance benefits as
provided under such severance plan; provided
that such Company Employee or Continuing Employee, as the case may be, satisfies
any conditions for the receipt of severance benefits under such applicable
severance plan.
(b) Subject to
Applicable Law, Parent shall and shall cause the Surviving Corporation and its
Subsidiaries to, for six months following the Closing, provide to each
Continuing Employee while such Continuing Employee continues to be employed by
Parent or one of its Subsidiaries or the Surviving Corporation or one of its
Subsidiaries, employee benefits that are, at the election of Parent,
substantially comparable in the aggregate to either (i) those provided to
similarly situated employees of Parent or (ii) those provided by the Company and
its Subsidiaries immediately prior to the Closing.
(c) Nothing
contained herein shall be construed as requiring Parent, its Affiliates, the
Company or its Subsidiaries to continue any specific Company Employee Plan, or
to continue the employment of any specific person. The provisions of
this Section 7.04 are solely for the benefit of the parties to this Agreement,
and no Company Employee or Continuing Employee shall have any third-party
beneficiary rights or rights to any specific levels of compensation or benefits
as a result of the application of this Section 7.04.
Section
7.05. Board
Appointments. Effective as of the Effective Time (or, if the
Effective Time shall occur before the date of Parent’s 2008 annual meeting of
stockholders, promptly after such meeting), the Board of Directors of Parent
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shall (i)
cause Parent’s Board of Directors to be expanded by such number of members as
the Stockholders are then entitled to nominate pursuant to the Voting Agreement
and (ii) appoint to the Board of Directors the individuals designated in
accordance with the Voting Agreement.
Section
7.06. Director
and Officer Indemnification. (a) Parent
agrees that prior to the sixth anniversary of the Closing Date, Parent will not,
and will not permit the Company to, amend (whether by merger, dissolution,
liquidation or otherwise) the certificate of incorporation or bylaws of the
Company in a manner that would diminish the indemnification rights of the
officers and directors of the Company thereunder with respect to acts or
omissions occurring prior to the Effective Time and Parent agrees to cause the
Surviving Corporation to indemnify (and advance expenses) to the maximum extent
provided therein except to the extent the Surviving Corporation would be limited
from doing so under Applicable Law. For the avoidance of doubt the
parties agree that any indemnification payment required to be made thereunder
with respect to any claim, action, suit or proceeding by any holder of shares of
capital stock of the Company will be subject to indemnification under Section
11.02(a) (in accordance with the terms thereof). The provisions of
this Section 7.06 will survive the Closing, shall be enforceable by each officer
and director of the Company and his or her successors and representatives, each
of whom shall be a third party beneficiary of the obligations set forth in this
Section 7.06, and shall be in addition to any rights such officer or director
may have under Applicable Law or any agreement set forth on Section 4.21(a)(ix)
of the Company Disclosure Schedule.
(b) At the
Closing, Parent shall cause the Surviving Corporation to use all commercially
reasonably efforts to obtain and maintain a “tail” extension of (i) the
Company’s existing directors’ and officers’ insurance policies and (ii) the
Company’s existing fiduciary liability insurance policies, in each case for acts
or omissions occurring prior to the Effective Time and for a claims reporting or
discovery period of at least six years from and after the Effective Time from an
insurance carrier with the same or better credit rating as the Company’s current
insurance carrier with respect to directors’ and officers’ liability insurance
and fiduciary liability insurance (collectively, “D&O
Insurance”) with terms, conditions, retentions and limits of liability
that are at least as favorable as the Company’s existing policies with respect
to any actual or alleged error, misstatement, misleading statement, act,
omission, neglect, breach of duty or any other matter claimed against a director
or officer of the Company or any of its Subsidiaries by reason of him or her
serving in such capacity that existed or occurred at or prior to the Effective
Time (including in connection with this Agreement or the other Transaction
Documents or the transactions or actions contemplated hereby or thereby); provided
that in no event shall the Surviving Corporation be required to expend for such
tail extension an aggregate amount in excess of $350,000; provided
further that if the cost of such insurance coverage exceeds such amount,
the Surviving Corporation shall obtain a policy with the
76
greatest
coverage available (in its reasonable judgment) for a cost not exceeding such
amount. In lieu of Parent’s and the Surviving Corporation’s
obligations in the preceding sentence, the Company is hereby expressly permitted
to, prior to Closing, purchase such tail extension; provided
that the terms and conditions thereof are as set forth in this Section 7.06(b)
and otherwise reasonably acceptable to Parent, with the aggregate payments made
(or to be made) by the Company in no event exceeding an aggregate amount of
$350,000.
(c) If the
Surviving Corporation or any of its respective successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section 7.06.
Section
7.07. Books
and Records. From and after the Closing, Parent and the
Surviving Corporation shall provide the Stockholder Representative (and its
representatives and advisors) with reasonable access, for (a) financial
reporting or disclosure purposes, or (b) defending any claim in respect of which
an indemnification claim has been made, to all of the Company’s and its
Subsidiaries’ accounting and tax books, records, notes and memoranda, whether
electronic or written (“Books
and Records”) in existence on or prior to the Effective Time, pertaining
or relating to the period on or prior to the Effective Time and reasonably
necessary for the relevant purpose; provided
that (A) the provision of access pursuant to this Section 7.07 shall be during
normal business hours, following a reasonable advance request for such access
and shall not interfere unreasonably with the conduct of the business of Parent
or any of its Subsidiaries (including the Company and its Subsidiaries) and (B)
the provision of access pursuant to this Section 7.07 shall be conditioned on
the Person receiving access entering into a confidentiality agreement in favor
of Parent that is reasonably acceptable to Parent. Unless otherwise
consented to in writing by the Stockholder Representative, neither Parent nor
the Surviving Corporation shall, for a period of five years following the
Closing Date or such longer period as retention thereof is required by
Applicable Law, destroy, alter or otherwise dispose of (or allow the
destruction, alteration or disposal of) any of the Books and Records without
first offering to surrender the same to the Stockholder Representative.
ARTICLE
8
Covenants
of Parent and the Company
The
parties hereto agree that:
Section
8.01. Commercially
Reasonable Efforts.
77
(a) Except to
the extent expressly provided elsewhere in this Agreement (including Section
8.09), the Company and Parent shall use their respective commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under Applicable Law to
consummate the transactions contemplated by this Agreement, including (i)
preparing and filing as promptly as practicable with any Governmental Authority
or other Third Party all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information, applications
and other documents and (ii) obtaining and maintaining all approvals, consents,
registrations, permits, authorizations and other confirmations required to be
obtained from any Governmental Authority or other Third Party that are
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement; provided
that the parties hereto understand and agree that neither the commercially
reasonable efforts of any party hereto nor any other obligation of a party under
this Agreement shall be deemed to include (i) entering into any settlement,
undertaking, consent decree, stipulation or agreement with any Governmental
Authority in connection with the transactions contemplated hereby or
(ii) divesting or otherwise holding separate (including by establishing a
trust or otherwise), or taking any other action (or otherwise agreeing to do any
of the foregoing) with respect to any of its or the Surviving Corporation’s
Subsidiaries or any of their respective Affiliates’ businesses, assets or
properties. No party shall pay any fee or make any payment to any
Person (other than customary filing fees), make any commitment or enter into any
amendment, consent or other agreement, in each case, with respect to obtaining
any such approval, consent, registration, permit, authorization or other
confirmation, except with the written consent of
Parent.
(b) In
furtherance and not in limitation of the foregoing, each of Parent and the
Company shall make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event within 20 Business Days of the date
hereof and shall use its commercially reasonable efforts to supply as promptly
as practicable any additional information and documentary material that may be
requested pursuant to the HSR Act. Parent shall pay the filing fee
under the HSR Act with respect to the acquisition of the Company by
Parent.
Section
8.02. Certain
Filings. The Company and Parent shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (ii) in taking
such actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers. Notwithstanding the foregoing, matters related
to the Registration Statement (and approval thereof by the SEC) shall be
governed by Section 8.09 and not this Section 8.02, and matters
78
relating
to filings under the HSR Act shall be governed by Section 8.01 and not this
Section 8.02.
Section
8.03. Public
Announcements. Parent and the Company shall consult with each
other before issuing any press release, making any other public statement or
scheduling any press conference or conference call with investors or analysts
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by Applicable Law or any listing agreement with or
rule of any national securities exchange (in which case reasonable efforts shall
be used to consult, including the sharing of a draft thereof prior to public
release), shall not issue any such press release, make any such other public
statement or schedule any such press conference or conference call before such
consultation; provided
(i) that Parent shall not be required to consult with the Company prior to
making any employee communications and (ii) neither party shall be required to
consult with the other party prior to making any communications substantially
similar to communications previously issued after consultation with such other
party.
Section
8.04. Further
Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the
Merger.
Section
8.05. Notices
of Certain Events.
(a) Each of
the Company and Parent shall promptly notify the other
of:
(i) any notice
or other communication from any Person alleging that the consent of such Person
is or may be required in connection with the transactions contemplated by this
Agreement;
(ii) any notice
or other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement;
(iii) any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
such party and any of its Subsidiaries, that relate to the consummation of the
transactions contemplated by this Agreement;
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(iv) any
inaccuracy of any representation or warranty of that party contained in this
Agreement at any time during the term hereof that could reasonably be expected
to cause the condition set forth in Section 9.02(a) or Section 9.03(a), as
applicable, not to be satisfied; and
(v) any
failure of that party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it
hereunder;
provided,
however, that the delivery of any notice pursuant to this Section
8.05 shall not limit or otherwise affect the remedies available
hereunder to the party receiving that notice.
(b) If the
condition set forth in Section 9.02(a)(iv) is not capable of being satisfied
prior to the End Date, then, at any time prior to the fifth Business Day before
the date on which the Closing would have been expected to occur absent the
failure of such condition to be satisfied, the Company may deliver a notice to
Parent stating that the condition will not be satisfied, explaining in
reasonable detail why such condition will not be satisfied and stating that
Parent has the right to terminate the Agreement pursuant to Section
10.01(c)(ii). In such an event, Parent shall, prior to Closing, elect
to either (A) waive the condition set forth in Section 9.02(a)(iv) or (B)
terminate this Agreement pursuant to Section 10.01(c)(ii). If Parent
elects to so waive the condition then Parent will be deemed to have waived all
claims for indemnification pursuant to Section 11.02(a) in respect of all
Damages that, based on the description in the notice provided to Parent pursuant
to the first sentence of this Section 8.05(b), would reasonably be expected to
arise from the matters described in such notice.
(c) If the
condition set forth in Section 9.03(a)(iii) is not capable of being satisfied
prior to the End Date, then, at any time prior to the fifth Business Day before
the date on which the Closing would have been expected to occur absent the
failure of such condition to be satisfied, Parent may deliver a notice to the
Company stating that the condition will not be satisfied, explaining in
reasonable detail why such condition will not be satisfied and stating that the
Company has the right to terminate the Agreement pursuant to Section
10.01(d)(iv). In such an event, the Company shall, prior to Closing,
elect to either (A) waive the condition set forth in Section 9.03(a)(iii) or (B)
terminate this Agreement pursuant to Section 10.01(d)(iv). If the
Company elects to so waive the condition then the Company and the Stockholders
will be deemed to have waived all claims for indemnification pursuant to Section
11.02(d) in respect of all Damages that, based on the description in the notice
provided to the Company pursuant to the first sentence of this Section 8.05(c),
would reasonably be expected to arise from the matters described in such
notice.
Section
8.06. Confidentiality. Prior
to the Effective Time and after any termination of this Agreement, each of
Parent and the Company shall hold, and
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shall
cause its shareholders, officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, all confidential
documents and information concerning the other party furnished to it or its
Affiliates in connection with the transactions contemplated by this Agreement in
accordance with, and subject to the provisions of, the Confidentiality
Agreements, including the provisions thereof limiting the use of such documents
and information. Except as provided in the preceding sentence and
except with respect to the “standstill” obligations set forth in the
Confidentiality Agreements (which obligations shall continue as set forth in
such Confidentiality Agreements except to the extent relating to the
transactions contemplated hereby), the Confidentiality Agreements are hereby
terminated.
Section
8.07. Tax-free
Reorganization. Prior to the Effective Time, each of Parent
and the Company shall (and shall cause its respective controlled Affiliates to)
use its commercially reasonable efforts to cause the Merger to qualify as a 368
Reorganization, and shall not take any action reasonably likely to cause the
Merger not so to qualify. Parent shall not take, or cause the Company
to take, any action after the Effective Time reasonably likely to cause the
Merger not to qualify as a 368 Reorganization.
Section
8.08. Access
to Information. From the date hereof until the Effective Time
and subject to Applicable Law and each Confidentiality Agreement, each party
hereto shall: (i) give the other party hereto and their respective
counsel, financial advisors, auditors and other authorized representatives
reasonable access to its and its Subsidiaries’ offices, properties, books and
records, (ii) furnish to the other party hereto, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Persons may reasonably request,
(iii) instruct its and its Subsidiaries’ employees, counsel, financial advisors,
auditors and other authorized representatives to cooperate with the other party
hereto in connection therewith and (iv) cooperate in good faith with the other
party hereto, its counsel, financial advisors, auditors and other authorized
representatives (including in connection with Parent’s transition planning
activities); provided
that (A) the provision of access pursuant to this Section 8.08 shall be during
normal business hours, following a reasonable advance request for such access
and shall not interfere unreasonably with the conduct of the business of any
Person; and (B) the provision of access pursuant to this Section 8.08 shall, in
the case of any Person other than a party or its employees, be conditioned on
(x) any such Person entering into an agreement in favor of the other party
hereto on terms no less favorable to such party than the applicable
Confidentiality Agreement or (y) as an alternative in the case of a
representative of a party, such representative having agreed to comply with the
terms of the Confidentiality Agreement protecting the other party’s
information. No information or knowledge obtained in any
investigation pursuant to this Section shall be deemed to modify or affect any
representation or warranty made by any party hereunder. It is
understood and agreed that because of the different circumstances involved the
scope of access
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and
information to be provided to Parent pursuant to the first sentence of this
Section 8.08 will be different from the scope of access and information to be
provided to the Company and that the scope of access and information to be
provided to Parent is based upon what is reasonable for the buyer of an entire
business or company and the scope or access and information to be provided to
the Company is based upon what is reasonable for the acquiror of a 31% interest
in a public company.
(a) As
promptly as practicable following the date of this Agreement, Parent shall
prepare and file with the SEC the Registration Statement (which shall include
the Parent Proxy Statement and all other proxy materials for the meeting of its
stockholders (the “Parent
Stockholder Meeting”) to be called for the purposes of seeking the Parent
Stockholder Approval). The Company shall cooperate in the preparation
of the Registration Statement (which shall include the Parent Proxy
Statement). The information in the Registration Statement (which
shall include the Parent Proxy Statement), as it may be amended or supplemented,
shall not, on the date such Registration Statement is declared effective by the
SEC, at the time the Parent Proxy Statement is first mailed to Parent’s
stockholders, at the time of the Parent Stockholder Meeting and at the Closing,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to either the Parent Stock
Issuance or the solicitation of proxies for the Parent Stockholder Meeting which
has become false or misleading;
provided that to the extent the Registration Statement or any amendment
or supplement thereto contains information of the same nature as the matters
referenced in the first sentence of Section 4.22(k) (as such matters relate to
Parent and its Subsidiaries), such information shall be true (and not fail to
omit necessary facts) based only upon the knowledge of Parent. The
Registration Statement (including the Parent Proxy Statement) will comply as to
form in all material respects with the applicable provisions of the 1933 Act and
the 1934 Act. If at any time prior to the Closing, any event or
information should be discovered by Parent which should be set forth in a
supplement to the Parent Proxy Statement or an amendment to the Registration
Statement, Parent shall promptly inform the Company. Notwithstanding
the foregoing, Parent makes no representation or warranty with respect to any
information which is contained in the Registration Statement and is supplied by
the Company.
(b) Parent
shall use all commercially reasonable efforts to have the Registration Statement
declared effective by the SEC (which shall include clearance by the SEC of the
Parent Proxy Statement), as promptly as practicable after such filing and Parent
shall cause the Parent Proxy Statement to be mailed to Parent’s stockholders as
promptly as practicable thereafter.
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(c) Parent
shall promptly notify the Company of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Registration Statement (including the Parent Proxy Statement
included therein) or for additional information and shall supply the Company
with copies of all correspondence between Parent or any of its representatives
and the SEC. Parent and the Company shall cooperate with each other
and provide to each other all information necessary in order to prepare all
amendments to the Registration Statement (including the Parent Proxy Statement)
as expeditiously as practicable.
(d) If at any
time prior to the Parent Stockholder Meeting there shall occur any event with
respect to Parent, or with respect to the information included in the
Registration Statement (including the Parent Proxy Statement), which event is
required to be described in an amendment or supplement to the Parent Proxy
Statement (or a post-effective amendment to the Registration Statement), such
event shall be so described, and such amendment or supplement shall as promptly
as practicable be filed with the SEC and, as required by Applicable Law,
disseminated to the Parent’s stockholders.
(e) Parent
shall, as soon as practicable following the date hereof, duly call, give notice
of, convene and hold the Parent Stockholder Meeting for the purpose of seeking
the Parent Stockholder Approval. Parent shall engage a nationally recognized
proxy solicitation firm for the purposes of seeking the Parent Stockholder
Approval and shall instruct such firm to solicit proxies in a manner that is
designed to obtain such approval within a timely solicitation period, taking
into account all relevant facts and circumstances. Except as required
by Applicable Law, Parent shall, through its Board of Directors, recommend to
its stockholders that they give the Parent Stockholder Approval, including
recommending the Parent Stock Issuance (the “Parent
Board Recommendation”), and neither Parent nor the Board of Directors of
Parent shall withhold, withdraw, qualify, modify or amend (or publicly propose
or resolve to withhold, withdraw, qualify or modify), the Parent Board
Recommendation (or approve or recommend, or publicly propose to approve or
recommend, any agreement or transaction, or cause or permit Parent to enter into
any agreement requiring Parent to abandon, terminate or fail to consummate the
transactions contemplated hereby or by the other Transaction Documents or breach
its obligations hereunder or thereunder, or resolve, propose or agree to do any
of the foregoing). Notwithstanding any withholding, withdrawal,
qualification, modification or amendment of the Parent Board Recommendation by
the Board of Directors of Parent (which, for the avoidance of doubt, shall only
be permitted in accordance with the third sentence of this Section 8.09(e)), the
Board of Directors shall submit, for Parent Stockholder Approval, the
transactions contemplated by this Agreement to Parent’s stockholders at the
Parent Stockholder Meeting.
(f) The
information supplied by the Company and included in Registration Statement shall
not, on the date the Registration Statement is
83
declared
effective by the SEC, the date the Parent Proxy Statement is first mailed to the
Parent’s stockholders, at the time of the Parent Stockholder Meeting and at the
Closing, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
false or misleading; provided
that to the extent the Registration Statement or any amendment or supplement
thereto contains information of the same nature as the matters referenced in the
first sentence of Section 4.22(k) (as such matters relate to the Company and its
Subsidiaries), such information shall be true (and not fail to omit necessary
facts) based only upon the knowledge of the Company. If at any time
prior to the Closing, any event or information should be discovered by the
Company which event is required to be described in an amendment or supplement to
the Parent Proxy Statement (or a post-effective amendment to the Registration
Statement), the Company shall promptly inform Parent of the
same. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information other than
information supplied by the Company.
(g) The
Company agrees that neither it nor any of its Representatives or any other
people acting on its behalf will engage in solicitation or offering activities
in connection with the Parent Stockholder Meeting or the offering of Parent
Stock in connection with the Merger in violation of the 1933 Act or the 1934
Act.
(h) Nothing in
this Section 8.09 shall prohibit Parent from combining the Parent Stockholder
Meeting with Parent’s 2008 annual meeting of stockholders (including combining
the Parent Proxy Statement with the proxy statement for such annual meeting) so
long as doing so would not reasonably be expected to materially delay obtaining
the Parent Stockholder Approval.
Section
8.10. Financing.
(a) Parent
shall (i) subject to the terms and conditions of the Parent Financing Commitment
Letter and subject to the remainder of this Section 8.10(a), use its
commercially reasonable efforts to complete the Parent Financing effective as of
the Effective Time on the terms and conditions described in the Parent Financing
Commitment Letter and such other terms and conditions as are necessary to give
effect to the terms and conditions described in the Parent Financing Commitment
Letter that are commercially reasonable, customary for bridge loans of a similar
size and type, and not less favorable to Parent than those set forth in the
Patriot Credit Agreement (collectively, “Acceptable
Parent Financing Terms”); provided
that the consummation of the Parent Financing on Acceptable Parent Financing
Terms would not reasonably be expected to result in any claim of default under
the Parent Credit Agreement relating to the terms of the Parent Financing and
(ii) commencing at such time as Parent deems appropriate but in any event no
later than 45 days after the date hereof, use its commercially reasonable
efforts to identify one or more alternate financings on
84
terms
satisfactory to Parent in its discretion and if so identified, to negotiate the
terms of and execute definitive documents with respect to such alternate
financing (such definitive documents, the “Alternate
Financing Documents”), and if so executed, to consummate the transactions
contemplated by the Alternate Financing Documents (it being agreed and
understood that the determination of Parent to cease negotiating any alternate
financing and to execute or not execute Alternate Financing Documents shall, in
each case, be in Parent’s discretion). Parent’s obligations pursuant
to the preceding sentence shall, subject to the remainder of this Section
8.10(a), include using such commercially reasonable efforts to (i) commencing at
such time as Parent deems appropriate but in any event no later than 30 days
after the date hereof, negotiate definitive agreements with respect to the
Parent Financing on Acceptable Parent Financing Terms and (ii) satisfy all
conditions to such Parent Financing or such alternate financing, to the extent
the satisfaction of such conditions is within the reasonable control of
Parent. Parent shall in all material respects comply with its
obligations under the Parent Financing Commitment Letter (or as applicable, any
Alternate Financing Documents). Notwithstanding the foregoing, Parent
may (i) amend or otherwise modify the Parent Financing Commitment Letter or
Alternate Financing Documents or (ii) terminate any Alternate Financing
Documents or terminate the Parent Financing Commitment Letter so long as (A)
such action would not reasonably be expected to delay or prevent the
consummation of the Merger (other than pursuant to the two Business Day delay
provision pursuant to Section 9.02(k)(ii)) or (B) in the case of a termination
of the Parent Financing Commitment Letter, Parent has previously entered into
binding Alternate Financing Documents (provided
that any termination of the Parent Financing Commitment Letter shall cause the
condition set forth in Section 9.02(k) to be (upon such termination) deemed
waived in all respects as set for therein).
(b) The
Company shall provide to Parent such cooperation and assistance as is reasonably
requested by Parent in connection with the Parent Financing or any alternate
financing, including (i) participation in meetings, (ii) furnishing Parent and
its financing sources with financial and other information regarding the Company
and its Subsidiaries as may be reasonably requested by Parent (subject to such
financing sources being bound by the terms of the Confidentiality Agreement with
respect to documents and information of the Company and its Subsidiaries), (iii)
executing and delivering, as of the Effective Time (and with effect from and
after the Effective Time), any pledge and security documents, other definitive
financing documents, or other certificates, legal opinions or documents, as may
be reasonably requested by Parent and (iv) taking all reasonably requested
corporate actions, subject to the occurrence of the Effective Time (and with
effect from and after the Effective Time), reasonably requested by Parent that
are necessary or customary to permit the consummation of the Parent Financing or
any alternate financing (provided
that such corporate action shall not include any determination with respect to
the merits of the Parent Financing or any alternate financing (or any other
arrangement to be in effect after the Effective Time)). Parent will
keep the Company informed on a
85
reasonably
current basis in reasonable detail of the status of the Parent Financing or any
alternate financing. If the Closing does not occur, Parent shall
reimburse the Company for any reasonable Third Party out of pocket costs
(including reasonable fees and expenses of legal, financial and other advisors)
incurred by the Company in connection with the foregoing matters in this Section
8.10(b).
(c) Parent
shall use its commercially reasonable efforts to enforce its rights against any
other party to the Parent Credit
Agreement with respect to the Parent Financing or any Alternate Financing
Documents and to cause the Administrative Agent or
any other authorized representative of the lenders party to the Parent
Credit
Agreement to provide written confirmation to Parent that the consummation of the
Parent Financing as referred to in Section 9.02(k)(i) or Section
9.02(k)(ii), as applicable,
would not result in any default under
the Parent Credit Agreement, which shall include, but shall not be limited to,
upon the request of the Company, promptly commencing a litigation proceeding
against the Administrative Agent or any such other party, in which Parent shall
use commercially reasonable efforts to either (A) compel the Administrative
Agent or such other person to provide such confirmation or (B) seek such other
remedies that may be appropriate.
ARTICLE
9
Conditions
to the Merger
Section
9.01. Conditions
to the Obligations of Each Party. The obligations of the
Company, Parent and Merger Subsidiary to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) the Parent
Stockholder Approval shall have been obtained;
(b) there
shall not be in effect any order, decree or injunction of a court of competent
jurisdiction which enjoins or prohibits consummation of the Merger and there
shall be no Applicable Law that shall have been enacted or promulgated that
prohibits the consummation of the Merger;
(c) any
applicable waiting period under the HSR Act relating to the Merger (including
any such applicable waiting period relating to the Parent Stock Issuance in
respect of any filing by the ArcLight Funds, Caisse de Dépôt et Placement du
Québec and the ultimate parent entity (as such term is defined in 16 C.F.R.
Section 801.1) of Cascade Investment, L.L.C.) shall have expired or been
terminated;
(d) the
Registration Statement shall have been declared effective and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
SEC; and
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(e) the shares
of Parent Stock to be issued in the Merger shall have been approved for listing
on the New York Stock Exchange, subject to official notice of
issuance.
Section
9.02. Conditions
to the Obligations of Parent and Merger Subsidiary. The
obligations of Parent and Merger Subsidiary to consummate the Merger are subject
to the satisfaction of the following further
conditions:
(a) (i)
the
Company shall have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the Effective Time, (ii)
the representations and warranties of the Company contained Sections 4.02, 4.05,
4.12, 4.13, 4.20 and 4.26 shall be true in all material respects at and as of
the Effective Time as if made at and as of such time (except to the extent that
any such representation and warranty expressly speaks as of an earlier date, in
which case such representation and warranty shall be true in all material
respects as of such earlier date), (iii)
the representations and warranties of the Stockholders in the other
Transaction Documents shall be true at and as of the Effective Time as if made
at and as of such time (except to the extent that any such representation and
warranty expressly speaks as of an earlier date, in which case such
representation and warranty shall be true in all material respects as of such
earlier date), except where the failure of such representations and warranties
to be true and correct, in the aggregate, would not adversely affect in any
material respect (determined on an overall basis taking into account the rights
and obligations of all Stockholders under all such other Transaction Documents)
any material right of, benefit to or obligation of Parent contained in such
other Transaction Documents, (iv) the other representations and warranties of
the Company contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto (which representations and warranties
shall, for purposes of this Section 9.02(a) only, be read without any
qualification contained therein as to materiality or Company Material Adverse
Effect) shall be true at and as of the Effective Time as if made at and as of
such time (except to the extent that any such representation and warranty
expressly speaks as of an earlier date, in which case such representation and
warranty (as so read) shall be true as of such earlier date), except where the
failure of such representations and warranties to be true and correct, in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect and (v) Parent shall have received a certificate signed
by an executive officer of the Company to the foregoing
effect;
(b) there
shall not be instituted or pending any suit, action or proceeding initiated or
maintained by any Governmental Authority relating to the transactions
contemplated by this Agreement: (i) seeking to restrain, prohibit or
otherwise interfere with the ownership or operation by Parent or any of its
Affiliates of all or any material portion of the business or assets of the
Company or any of its Subsidiaries or of Parent or any of its Affiliates or to
compel Parent or any of its Affiliates to dispose of all or any material portion
of the business or assets of the
87
Company or
any of its Subsidiaries or of Parent or any of its Affiliates, (ii) seeking to
impose or confirm limitations on the ability of Parent or any of its Affiliates
effectively to exercise full rights of ownership of the Company or any of its
Subsidiaries or (iii) seeking to require divestiture by Parent or any of its
Affiliates of the Company, any of the Company’s Subsidiaries or any Subsidiary
of Parent or any of its Affiliates (or all or any material portion of their
respective business and assets);
(c) there
shall not be any action taken, or any Applicable Law, injunction, order or
decree proposed, enacted, enforced, promulgated, issued or deemed applicable to
the Merger, by any Governmental Authority, other than the matters described in
Sections 4.03 and 5.03, that could, directly or indirectly, reasonably be
expected to result in any of the consequences referred to in Section 9.02(b)(i)
through (iii);
(d) each of
the Escrow Agreement and Registration Rights Agreement shall have been executed
and delivered by each of the parties thereto (other than Parent), and each of
the foregoing shall be in full force and effect;
(e) each
Support Agreement shall be in full force and effect and no Stockholder party
thereto shall be challenging the effectiveness of any such Support
Agreement;
(f) the Voting
Agreement shall be in full force and effect and no Stockholder party thereto
shall be challenging the effectiveness of such Voting
Agreement;
(g) the
consents and approvals set forth on Exhibit 9.02(g) shall have been obtained or
received, shall be in full force and effect, and shall be in form and substance
reasonably satisfactory to Parent;
(h) the
Company shall have delivered to Parent a certificate signed by an executive
officer of the Company setting forth all Transaction Expenses (the excess, if
any, of the amount of Transaction Expenses set forth in such certificate over
the Transaction Expenses Cap, the “Excess
Transaction Expenses Deduction Amount”) and certifying that the Company’s
legal counsel, auditors, investment bankers and other consultants and advisors
have agreed to the amounts set forth in such certificate pursuant to “pay-off”
letters in the form described in Section 6.05;
(i) neither
the Company nor any of its Subsidiaries shall have suffered a mining catastrophe
that has involved, or would be reasonably likely to involve, a loss of
lives;
(j) the
Company shall have delivered a certificate (the “Company
Outstanding Stock Number Certificate”) in form and substance reasonably
satisfactory to Parent signed by an executive officer of the Company setting
forth
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(i) the
number of shares (the “Company
Outstanding Stock Number”) of Company Stock (including vested Company
Restricted Stock and unvested Company Restricted Stock) outstanding immediately
prior to the Effective Time (including, for the avoidance of doubt, shares of
Company Stock issued upon conversion of the Company Convertible Debt Notes),
(ii) the number of such shares of Company Stock held by each Designated
Stockholder immediately prior to the Effective Time and (iii) the Merger
Conversion Price (as defined in the Company Convertible Debt
NPA);
(k) either (i)
the Parent Financing shall have been consummated upon the Acceptable Parent
Financing Terms and the consummation of the Parent Financing on such terms would
not reasonably be expected to result in any claim of default under the Parent
Credit Agreement relating to the terms of the Parent Financing or (ii) in lieu
of the Parent Financing, Parent shall have consummated a financing from an
alternate source in an amount not less than the amount of the Parent Financing;
provided
that, if Parent is pursuing an alternate source of financing, the Closing is
delayed by more than two Business Days because of the failure to satisfy the
condition set forth in this Section 9.02(k), and during such period of delay
the
ArcLight Funds are ready, willing and able to consummate the Parent
Financing upon Acceptable Parent Financing Terms and the consummation of the
Parent Financing on such terms and conditions would not reasonably be expected
to result in any claim of default under the Parent Credit Agreement relating to
the terms of the Parent Financing), then at the end of such period of delay
Parent will be required either to so consummate the Parent Financing or to waive
the condition set forth in this Section 9.02(k); provided
further
that Parent will be deemed to have waived the condition in this Section 9.02(k)
if (A) the Parent Financing Commitment Letter has been terminated by Parent or
(B) the condition set forth in clause (e) under the heading “Conditions
Precedent to Drawdown” on Exhibit A to the Parent Financing Commitment Letter
fails to be satisfied as a result of the Parent Credit Agreement having been
waived, amended, supplemented or otherwise modified, in each case in any manner
materially adverse to the interests of the Lender (as defined on such Exhibit
A), without the Lender’s consent; and
(l) Parent
shall have received all documents it may reasonably request relating to the
existence of the Company and its Subsidiaries and the authority of the Company
for this Agreement, all in form and substance reasonably acceptable to
Parent.
Section
9.03. Conditions
to the Obligations of the Company. The obligations of the
Company to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i)
Parent
shall have performed in all material respects all of its obligations hereunder
required to be performed by it at or prior to the Effective Time, (ii) the
representations and warranties of Parent contained Sections 5.02,
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5.05,
5.13, 5.14 and 5.20 shall be true in all material respects at and as of the
Effective Time as if made at and as of such time (except to the extent that any
such representation and warranty expressly speaks as of an earlier date, in
which case such representation and warranty shall be true in all material
respects as of such earlier date), (iii) the other representations and
warranties of Parent contained in this Agreement and in any certificate or other
writing delivered by Parent pursuant hereto (which representations and
warranties shall, for purposes of this Section 9.03(a) only, be read without any
qualification contained therein as to materiality or Parent Material Adverse
Effect) shall be true at and as of the Effective Time as if made at and as of
such time (except to the extent that any such representation and warranty
expressly speaks as of an earlier date, in which case such representation and
warranty (as so read) shall be true as of such earlier date), except where the
failure of such representations and warranties to be true and correct, in the
aggregate, has not had and would not reasonably be expected to have a Parent
Material Adverse Effect and (iv) the Company shall have received a certificate
signed by an executive officer of Parent to the foregoing
effect;
(b) each of
the Escrow Agreement and the Registration Rights Agreement shall have been
executed and delivered by Parent, and the Rights Agreement shall have been
amended, and each of the foregoing shall be in full force and
effect;
(c) neither
Parent nor any of its Subsidiaries shall have suffered a mining catastrophe that
has involved, or would be reasonably likely to involve, a loss of lives;
and
(d) the
Company shall have received all documents it may reasonably request relating to
the existence of Parent and Merger Subsidiary and the authority of Parent and
Merger Subsidiary for this Agreement, all in form and substance reasonably
acceptable to the Company.
ARTICLE
10
Termination
Section
10.01. Termination. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of this Agreement by the
stockholders of Parent, except as provided in Section
10.01(d)(i)):
(a) by mutual
written agreement of the Company and Parent;
(b) by either
the Company or Parent, if:
(i) the Merger
has not been consummated on or before September 30, 2008 (the “End
Date”); provided
that the right to terminate
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this
Agreement pursuant to this Section 10.01(b)(i) shall not be available to any
party whose breach of any provision of this Agreement results in the failure of
the Merger to be consummated by such time;
(ii) there
shall be any Applicable Law that (A) makes consummation of the Merger illegal or
otherwise prohibited or (B) enjoins the Company or Parent from consummating the
Merger and such enjoinment shall have become final and nonappealable;
or
(iii) the Parent
Stockholder Meeting shall have been convened and the Parent Stockholder Approval
shall not (taking into account any proper adjournment or postponement of the
Parent Stockholder Meeting) have been obtained; or
(c) by Parent,
if:
(i) a breach
of any representation or warranty or failure to perform any covenant or
agreement on the part of the Company set forth in this Agreement shall have
occurred that would cause one or more of the conditions set forth in Section
9.02(a) not to be satisfied, and either (A) the Company is not using
commercially reasonable efforts to cure such breach or failure or (B) such
condition would not reasonably be expected to be satisfied by the End Date;
or
(ii) the
Company shall have delivered a notice to Parent pursuant to Section 8.05(b);
or
(d) by the
Company, if:
(i) the Board
of Directors of Parent fails to make, withdraws, or modifies in a manner adverse
to the Company, the Parent Recommendation (if permitted in accordance with the
third sentence of Section 8.09(e)); provided
that the Company shall not be permitted to terminate this Agreement pursuant to
this Section 10.01(d)(i) after the Parent Stockholder Approval is obtained;
(ii) a breach
of any representation or warranty or failure to perform any covenant or
agreement on the part of the Parent or Merger Subsidiary set forth in this
Agreement shall have occurred that would cause one or more of the conditions set
forth in Section 9.03(a) not to be satisfied, and either (A) Parent is not using
commercially reasonable efforts to cure such breach or failure or (B) such
condition would not reasonably be expected to be satisfied by the End
Date;
(iii) Parent
shall enter into any agreement with respect to (A) a merger, consolidation,
share exchange, business combination, reorganization, recapitalization, sale of
all or substantially all of its assets
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or other
similar transaction that, in any such case, requires the approval of the
stockholders of Parent under Delaware Law or (B) a transaction involving the
issuance of 20% or more of its stock, and, in either such case, the record date
for the stockholder vote to approve such transaction shall occur prior to the
Closing Date;
(iv) Parent
shall have delivered a notice to the Company pursuant to Section 8.05(c);
or
(e) by the
Company prior to obtaining the Company Stockholder Approval if, in accordance
with Section 6.03(c) the Company shall have concurrently entered into a
definitive agreement with respect to a Superior
Proposal.
The
party desiring to terminate this Agreement pursuant to this Section
10.01 (other than pursuant to Section
10.01(a)) shall give notice of such termination to the other
party.
Section
10.02. Effect
of Termination.
(a) Except as
set forth below, if this Agreement is terminated pursuant to Section 10.01, this
Agreement shall become void and of no effect without liability of any party (or
any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party hereto; provided
that, if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party or (ii) failure of either party to perform a covenant hereof, such party
shall be fully liable for any and all liabilities and damages incurred or
suffered by the other party as a result of such failure. The parties
further agree that if (and only if) the Company establishes pursuant to a final,
non-appealable judgment of the courts referred to in Section 12.07 that the
termination of this Agreement resulted from the willful breach by Parent of its
obligations hereunder, then (and only then) the Stockholders will be deemed to
be third party beneficiaries of this Agreement in accordance with Section
12.05(a) and may pursue claims for damages suffered by such stockholders in
their capacities as such as a result of such willful breach (but without
duplication of any damages suffered by the Company, it being agreed and
understood that in any such action contemplated by this sentence, the court may,
among other things, consider whether such damages suffered by such Stockholders
should include the benefit of the bargain of the Merger to the Stockholders (and
in that regard, it is expressly acknowledged and agreed that the Company shall
be permitted to bring such a claim on behalf of the Stockholders as set forth in
the following proviso)); provided
that any claim brought by the Stockholders pursuant to such third party
beneficiary right may only be brought by the Company on behalf of such
Stockholders. The provisions of this Section 10.02 and Sections 8.06,
12.03, 12.06, 12.07, 12.08 and 12.13 shall survive any termination hereof
pursuant to Section 10.01.
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(b) Notwithstanding
the foregoing, in the event this Agreement is terminated (i) in accordance with
Section 10.01(d)(i) or Section 10.01(b)(iii) (unless, in either case, at the
time of termination one or more of the conditions set forth in Sections 9.01(b),
9.01(c) or 9.02 had not been satisfied and was not capable of being satisfied
reasonably promptly) or (ii) in accordance with Section 10.01(b)(i), and in the
case of this clause (ii), at the time of termination (A) the condition set forth
in Section 9.02(k) shall not have been satisfied solely as a result of a
potential claim of default under the Parent Credit Agreement relating to the
terms of the Parent Financing and (B) all other conditions to Closing have been
satisfied (or are immediately capable of being satisfied) or waived, then, in
the case of clause (i) or (ii), as applicable, Parent shall reimburse the
Company (on demand) for all costs and expenses of the Company incurred since
January 1, 2008 in connection with the preparation and negotiation of this
Agreement, the other Transaction Documents, the Merger and the other
transactions contemplated hereby and thereby, including, without limitation, all
fees and expenses of the Company’s counsel (including specialist and local
counsel), financial advisors, auditors, other consultants (including but not
limited to Weir Mining Consultants Inc.) and agents and other lenders under the
Company’s and the Subsidiaries’ lending facilities; provided
that, in no event shall the amount Parent is required to reimburse pursuant to
this sentence exceed $5,000,000; provided,
further that if this Agreement is terminated pursuant to Section
10.01(d)(i), Section 10.01(b)(i) or Section 10.01(b)(iii), and the expense
reimbursement provided for in this sentence is payable, then such expense
reimbursement shall be the sole and exclusive remedy of the Company and its
Stockholders and Parent shall not be liable for any other Damages incurred or
suffered by the Company or its Stockholders and the second sentence of this
Section 10.02 shall be inapplicable. The parties acknowledge and
agree that the above expense reimbursement provisions are (i) an integral part
of the transactions contemplated hereby and constitute liquidated damages and
not a penalty in the event of the circumstances giving rise to the applicability
thereof and (ii) essential to the overall transaction contemplated hereby and
the Company has relied, and is relying, on Parent’s agreement to pay such
expenses as and when due hereunder.
Section
11.01. Survival.
The representations and warranties of the parties hereto contained in
this Agreement or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall survive the Effective Time until the Business
Day after the first anniversary of the Closing Date; provided
that (a) the Company Core Representations (other than the representations and
warranties contained in Sections 4.02, 4.05, 4.20 or 4.26) and the Parent Core
Representations (other than the representations and warranties contained in
Sections 5.02, 5.05 or 5.20) shall survive until the Business Day after the
third anniversary of the Closing Date and (b) the representations and warranties
in
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Sections
4.02, 4.05, 4.20, 4.26, 5.02, 5.05 and 5.20 shall survive until the latest date
permitted by law. The covenants and agreements of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing until the
earlier of full performance thereof or the shorter period explicitly specified
therein, except that breaches of covenants and agreements shall survive until
the latest date permitted by law. Notwithstanding the preceding
sentences, any breach of representation, warranty, covenant or agreement in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentences,
if notice of the inaccuracy or breach thereof giving rise to such right of
indemnity shall have been given to Parent (if the indemnity is sought against
Parent) or the Stockholder Representative (if the indemnity is sought against
the Stockholders), as applicable, prior to such time.
Section
11.02. Indemnification.
(a) Subject to
the last sentence of this Section 11.02(a) and to Sections 11.02(b) and
11.02(c), from and after the Effective Time, the Designated Stockholders hereby
severally (based on each Designated Stockholder’s Pro Rata Share of any
applicable Damages) but not jointly indemnify Parent and its Affiliates
(including, from and after the Effective Time, the Company and its Subsidiaries)
and their respective successors and assigns (collectively, the “Parent
Indemnified Parties”) against, and agree to hold each of them harmless
from, any and all Damages incurred or suffered by Parent, any Affiliate of
Parent, the Company or any of its Subsidiaries arising out of any (i)
misrepresentation or breach of warranty or alleged misrepresentation or breach
of warranty made by the Company pursuant to any Transaction Document (a “Company
Warranty Breach”), (ii) breach of covenant or agreement made or to be
performed by the Company pursuant to any Transaction Document on or before the
Effective Time (a “Company
Covenant Breach”), (iii) any demand for appraisal by a holder of shares
of capital stock of the Company in connection with the Merger, (iv) any claim,
suit, action or proceeding by (A) any holder of shares of capital stock of the
Company (including any suit on behalf of or in the name of the Company) in their
capacity as such, in connection with the Merger or the other transactions
contemplated by this Agreement or relating to its ownership of shares of capital
stock or the issuance of the Company Convertible Debt or (B) any holder of
Company Convertible Debt under or relating to such Company Convertible Debt
except any claim by any such holder of Company Convertible Debt Notes to enforce
the rights described in Section 7 of the Company Convertible Debt NPA or (v) any
Transaction Expenses that are in excess of the Transaction Expenses Cap (without
duplication for Transaction Expenses that are included in the Excess Transaction
Expenses Deduction Amount and are therefore taken into account in the
calculation of the Net Per Share Number), in each case regardless of whether
such Damages arise as a result of the negligence, strict liability or any other
liability under any theory of law or equity of, or violation of any law by, any
party
94
hereto or
any of its Affiliates (including the Company and its Subsidiaries); provided
that with respect to indemnification by the Designated Stockholders for any
Company Warranty Breach (other than a misrepresentation or breach of warranty of
any of the Company Core Representations and other than in cases of fraud or
willful misrepresentation) pursuant to this Section, (x) the Designated
Stockholders shall not be liable for any claim for indemnification where the
amount of Damages with respect to such claim (provided that all claims based on
substantially the same or similar acts, omissions or circumstances shall be
considered part of a single claim for purposes of calculating the amount of
Damages for purposes of this clause (x)) does not exceed $100,000 (the “Deminimis
Amount”) (and the amount of such Damages shall not be aggregated for
purposes of clause (y)), (y) the Designated Stockholders shall not be liable
unless the aggregate amount of Damages with respect to all such Company Warranty
Breaches exceeds $6,000,000 (the “Deductible
Amount”) (in which case the Designated Stockholders shall be liable only
for an amount equal to the excess of such Damages above such amount) and (z) the
Designated Stockholders’ maximum liability shall not exceed the Escrow Property
held in the Escrow Account. The Designated Stockholders hereby agree
that they will not be entitled to seek contribution from the Company, its
Subsidiaries or any of their respective officers, directors or employees in
respect of any liability of the Designated Stockholders under this Section
11.02(a).
(b) Parent
hereby agrees that after Closing its sole and exclusive remedy with respect to
any and all claims arising out of (i) any Company Warranty Breach (other than
any misrepresentation or breach of warranty of any of the Company Core
Representations and other than in cases of fraud or willful misrepresentation)
or (ii) a Company Covenant Breach (other than a willful breach) (the claims
referred to in clauses (i) and (ii) are hereinafter referred to as the “Escrow
Only Claims”) shall be pursuant to a claim for indemnification against
the then-available Escrow Property in accordance with this Section 11.02 and the
Escrow Agreement.
(c) With
respect to all claims for indemnification other than the Escrow Only Claims
(“Direct
Indemnification Claims”), the Parent Indemnified Parties may make a claim
(i) against the then available Escrow Property in accordance with this Section
11.02 and the Escrow Agreement, (ii) against the Designated Stockholders
directly (severally, based on each Designated Stockholder’s Pro Rata Share of
any applicable Damages, and not jointly) or (iii) a combination of the
foregoing; provided
that (A) the aggregate maximum liability of the Designated Stockholders in
respect of all Direct Indemnification Claims shall not exceed the proceeds (net
of any reasonable brokerage commissions and any underwriting fees) received by
the Designated Stockholders in the Merger (for the avoidance of doubt, the
maximum aggregate liability of each Designated Stockholder in respect of all
Direct Indemnification Claims shall not exceed the proceeds (net of any
reasonable brokerage commissions and any underwriting fees) received by such
Designated Stockholder in the Merger) and (B) except with
95
respect to
claims for misrepresentation or breach of warranty under Sections 4.02, 4.05,
4.20 or 4.26 and claims for indemnification under Section 11.02(a)(iv), the
Parent Indemnified Parties shall not be entitled to make a Direct
Indemnification Claim after the third anniversary of the Closing (it being
understood and agreed that following the expiration of such time limit the
Parent Indemnified Parties may continue to pursue any claim that was subject to
such time limit so long as such claim was made prior to the expiration of such
time limit). Any amounts finally determined to be due and payable by
a Designated Stockholder hereunder in respect of any Direct Indemnification
Claim (or other claim made directly against a Designated Stockholder), in each
case, to the extent permitted hereunder, may be satisfied by such Designated
Stockholder by payment in cash, delivery of shares of Parent Stock (valued in
accordance with the definition of “Market Value” hereunder) or in any
combination thereof, at the election of the Designated Stockholder so satisfying
such Direct Indemnification Claim or other claim; provided
that any election to pay in whole or in part in shares of Parent Stock must be
made prior to the commencement of the 10 consecutive trading day period referred
to in the definition of “Market Value”.
(d) Subject to
Sections 11.02(e) and Section 11.02(f), from and after the Effective Time,
Parent hereby indemnifies each Stockholder (in its capacity as such) and its
Affiliates (“Stockholder
Indemnified Parties”) against, and agrees to hold each of them harmless
from, any and all Damages incurred or suffered by the Company or such
Stockholder or any of its Affiliates arising out of any (A) misrepresentation or
breach of warranty or alleged misrepresentation or breach of warranty made by
Parent or Merger Subsidiary pursuant to any Transaction Document (a “Parent
Warranty
Breach”) or (B) breach of covenant or agreement made or to be performed
by Parent or Merger Subsidiary pursuant to any Transaction Document (a “Parent
Covenant Breach”), in each case regardless of whether such Damages arise
as a result of the negligence, strict liability or any other liability under any
theory of law or equity of, or violation of any law by, any party hereto or any
Stockholder or any of its Affiliates; provided
that with respect to indemnification by Parent for any Parent Warranty Breach
(other than a misrepresentation or breach of warranty of any of the Parent Core
Representations and other than in cases of fraud or willful misrepresentation)
pursuant to this Section, (x) Parent shall not be liable for any claim for
indemnification where the amount of Damages with respect to such claim (provided
that all claims based on substantially the same or similar acts, omissions or
circumstances shall be considered part of a single claim for purposes of
calculating the amount of Damages for purposes of this clause (x)) does not
exceed the Deminimis Amount (and the amount of such Damages shall not be
aggregated for purposes of clause (y)), (y) Parent shall not be liable unless
the aggregate amount of Damages with respect to such Parent Warranty Breaches
exceeds the Deductible Amount (in which case Parent shall be liable only for an
amount equal to the excess of such Damages above such amount), and (z) Parent’s
maximum liability shall not exceed $54,000,000 (the “Parent
Cap”). In consideration for the indemnification rights
provided in this Section 11.02(d),
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each
Stockholder hereby waives, to the fullest extent permitted by law, any claim
under any Applicable Law relating to the sale or distribution of securities that
it might otherwise have by virtue of the transactions contemplated hereby (and
in the event any such claim under Applicable Law is brought by a Stockholder,
such Stockholder hereby waives the indemnification rights provided in this
Section 11.02(d) and shall promptly refund to Parent the amount of any Damages
previously paid by Parent to such Stockholder in respect of any indemnification
claim hereunder). The parties further agree that if (and only if) the
Stockholder Representative establishes pursuant to a final, non-appealable
judgment of the courts referred to in Section 12.07 that Parent has breached
this Agreement in a manner giving rise to a right of indemnification hereunder,
then (and only then) the Stockholder Indemnified Parties will be deemed to be
third party beneficiaries of this Agreement for purposes of this Section
11.02(d); provided
that any claim brought by a Stockholder Indemnified Party pursuant to such third
party beneficiary right may only be brought by the Stockholder Representative on
behalf of such Stockholder Indemnified Party.
(e) After
Closing, the sole and exclusive remedy of the Stockholder Indemnified Parties
with respect to any and all claims arising out of (i) any Parent Warranty Breach
(other than any misrepresentation or breach of warranty of any of the Parent
Core Representations and other than in cases of fraud or willful
misrepresentation) or (ii) a Parent Covenant Breach (other than a willful
breach) (the claims referred to in clauses (i) and (ii) are hereinafter referred
to as the “Parent
Non-Core Claims”; and all other claims for indemnification under Section
11.02(d) are hereinafter referred to “Parent
Core Claims”) shall be pursuant to a claim for indemnification against
Parent in accordance with and subject to this Section
11.02.
(f) Except
with respect to indemnification claims for misrepresentation or breach of
warranty under Section 5.02, 5.05 or 5.20, the Stockholder Indemnified Parties
shall not be entitled to make a Parent Core Claim after the third anniversary of
the Closing (it being understood and agreed that following the expiration of
such time limit the Stockholder Indemnified Parties may continue to pursue any
claim that was subject to such time limit so long as such claim was made prior
to the expiration of such time limit). The aggregate maximum
liability of Parent in respect of all Parent Core Claims shall not exceed
$534,000,000.
(g) Amounts
finally determined to be due and payable under this Section 11.02 in respect of
any Damages that are subject to the indemnification obligations will be payable
within five days of receipt of written notice to the Indemnifying Party (or the
Stockholder Representative, in the case of an indemnification claim pursuant to
Section 11.02(a)) of such Damages, and will bear interest beginning on the sixth
day after receipt of such notice through the date of payment at a rate per annum
equal to the Prime Rate as published in the Wall
Street Journal, Eastern Edition in effect from time to time during such
period plus 2%.
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(h) After
Closing, each Indemnified Party will take all reasonable efforts to mitigate any
Damages upon becoming aware of any event that would reasonably be expected to
give rise thereto (provided that the costs and expenses of such mitigation shall
be included as Damages arising from such event) and Damages incurred in
violation thereof shall not be recoverable hereunder by the relevant Indemnified
Party.
(i) The amount
of Damages incurred by an Indemnified Party will be reduced by the amount
recovered from any third party (after deducting attorneys’ fees, expenses and
other costs of recoveries and any increase in insurance premiums), including
from insurance policies and pursuant to other indemnification
agreements.
(j) The amount
of any Damages for which indemnification is provided under this Article 11 shall
be decreased to take into account any net Tax benefit received by the applicable
Indemnified Party.
(k) No
Indemnified Party shall be entitled to recover Damages or otherwise be
indemnified hereunder (or receive other payment, reimbursement or restitution)
more than once in respect of any one given liability, loss, cost or shortfall,
regardless of whether more than one claim for Damages arises in respect of
it.
(l) Notwithstanding
anything to the contrary herein, if Parent waives the condition set forth in
Section 9.02(a)(iv) as set forth in Section 8.05(b), then Parent will be deemed
to have waived its rights to indemnification to the extent set forth in Section
8.05(b).
(m) Notwithstanding
anything to the contrary herein, if the Company waives the condition set forth
in Section 9.03(a)(iii) as set forth in Section 8.05(c), then the Company and
the Stockholders will be deemed to have waived their rights to indemnification
to the extent set forth in Section 8.05(c).
Section
11.03 . Procedures.
(a) The party
seeking indemnification under this Article 11 (the “Indemnified
Party”) agrees to give prompt notice (but no later than ten Business Days
after receipt by an Indemnified Party of a notification of such Third Party
claim) to the party against whom indemnity is sought (or the Stockholder
Representative, in the case of an indemnification claim pursuant to Section
11.02(a)) (the “Indemnifying
Party”) of the assertion of any Third Party claim against the Indemnified
Party, or the commencement of any Third Party suit, action or proceeding against
the Indemnified Party in respect of which indemnity may be sought under such
Article. The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder, except to the
extent such failure shall have materially and adversely prejudiced the
Indemnifying Party. Thereafter, the Indemnified Party shall
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deliver to
the Indemnifying Party, as promptly as reasonably practicable following the
Indemnified Party’s receipt thereof, copies of all written notices and documents
(including any court papers) received by the Indemnified Party relating to the
Third Party claim. The Indemnifying Party shall be entitled to
participate in the defense thereof and, if it so chooses within 10 Business Days
of receipt of notice from the Indemnified Party (or such lesser number of days
set forth in the notice as may be required by court proceeding in the event of a
litigated matter), to, subject to Section 11.03(b), assume the defense thereof
with counsel selected by the Indemnifying Party and reasonably acceptable to the
Indemnified Party; provided,
however,
that the Indemnifying Party shall not be entitled to assume or maintain control
of the defense of any Third Party claim and shall pay the fees and expenses of
counsel retained by the Indemnified Party if (i) the Third Party claim relates
to or arises in connection with any criminal proceeding, action, indictment,
allegation or investigation, (ii) the Third Party claim seeks injunctive or
equitable relief against the Indemnified Party, (iii) the Indemnifying Party has
failed to defend or is failing to defend in good faith the Third Party claim,
(iv) the Indemnifying Party and the Indemnified Party are both named parties to
the proceedings and the Indemnified Party shall have reasonably concluded that
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them, (v) in the case of a
Parent Indemnified Party as the Indemnified Party, it would reasonably be
expected that the Damages arising from such Third Party claim will exceed 110%
of the Escrow Availability Amount at such time or (vi) in the case of a
Stockholder Indemnified Party as the Indemnified Party, it would reasonably be
expected that the Damages arising from such Third Party claim will exceed 110%
of the Non-Core Cap Availability Amount at such time and Parent does not waive
the limitations in Section 11.03(b) with respect to such claim; provided,
further, that prior to assuming control of any such defense, the
Indemnifying Party must acknowledge that, subject to Section 11.03(b), it has an
indemnity obligation for all Damages resulting from such Third Party claim
notwithstanding anything in Section 11.02 to the contrary. As used
herein, the term “Escrow
Availability Amount” means, with respect to any given claim at any given
time, the amount then remaining in the Escrow Account at such time after
deducting the aggregate amount of all Damages that would reasonably be expected
to arise from other then pending claims against the Escrow
Account. As used herein, the term “Non-Core
Cap Availability Amount” means, with respect to any given claim at any
given time, the excess of the Parent Cap over the sum of (A) the aggregate
amount of Damages previously paid by Parent at such time in respect of claims
subject to the Parent Cap and (B) the aggregate amount of all Damages that would
reasonably be expected to arise from other then pending claims against Parent
that are subject to the Parent Cap. If the Indemnifying Party assumes
such defense, the Indemnified Party shall nonetheless have the right to
participate at its own expense in the defense thereof and to employ counsel
separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. If
the Indemnifying Party chooses to defend a Third Party claim, all Indemnified
Parties shall provide reasonable cooperation in
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the
defense thereof. The Indemnifying Party shall not be liable under
this Article 11 for any settlement, admission of liability, compromise or other
discharge of liability, effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder, which consent
shall not be unreasonably withheld. The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle, compromise
or offer to settle or compromise any Third Party claim unless (i) such
settlement or compromise shall include as an unconditional term thereof the
giving by the claimant of a release of the Indemnified Party, reasonably
satisfactory to the Indemnified Party, from all liability with respect to such
Third Party claim and (ii) such settlement or compromise would not result in (A)
the imposition of a consent order, injunction, decree or obligation that would
restrict the future activity or conduct of the Indemnified Party or any of its
Affiliates, (B) a finding or admission of a violation of law or violation of the
rights of any Person by the Indemnified Party or any of its Affiliates, (C) a
finding or admission that would have an adverse effect on other claims made or
threatened against the Indemnified Party or any of its Affiliates, or (D) any
monetary liability of the Indemnified Party that will not be paid or reimbursed
by the Indemnifying Party concurrently with such
settlement. Notwithstanding the foregoing, no consent of the
Stockholders or the Stockholder Representative shall be required for the filing
of any Tax Return required to be filed by Parent or the Company after the
Effective Time, and no such consent shall be required in connection with the
conclusion of any tax audit or similar proceeding after the Effective
Time.
(b) If the
Indemnifying Party assumes control of the defense of a Third Party claim in
respect of which (i) an Escrow Only Claim has been made, the Indemnifying Party
shall be responsible for (A) 100% of the Damages arising therefrom up to the
Escrow Availability Amount at the time the Indemnifying Party assumed the
defense, (B) 50% of the Damages arising therefrom to the extent such Damages
exceed such Escrow Availability Amount but do not exceed 200% of such Escrow
Availability Amount and (C) 100% of the Damages arising therefrom to the extent
such Damages exceed 200% of such Escrow Availability Amount or (ii) a Parent
Non-Core Claim has been made, the Indemnifying Party shall be responsible for
(x) 100% of the Damages arising therefrom up to the Non-Core Cap Availability
Amount at the time the Indemnifying Party assumed the defense, (B) 50% of the
Damages arising therefrom to the extent such Damages exceed such Non-Core Cap
Availability Amount but do not exceed 200% of such Non-Core Cap Availability
Amount and (C) 100% of the Damages arising therefrom to the extent such Damages
exceed 200% of such Non-Core Cap Availability Amount.
Section
11.04. Adjustment
to Consideration for Tax Purposes. Any amount paid under
Article 11 will be treated as an adjustment to the Merger Consideration except
to the extent a final determination that is not subject to further appeal,
review or modification through proceedings or otherwise or Applicable Law
(including a revenue ruling or other similar pronouncement)
100
causes or
requires any such amount not to constitute an adjustment to the Merger
Consideration for United States federal income Tax
purposes.
Section
11.05. Stockholder
Representative.
(a) Effective
upon and by virtue of the consent of the holders of the Company Stock approving
and adopting this Agreement and the Merger, and without any further act of any
of the holders of the Company Stock, the Stockholder Representative shall be
hereby appointed as the representative of the Designated Stockholders and as the
attorney-in-fact and agent for and on behalf of each Designated Stockholder with
respect to any claims by any Indemnified Party pursuant to Section 11.02(a) and
any amendments to or waivers of the Escrow Agreement or this Article 11; provided,
however,
that any amendment or waiver of the Escrow Agreement or this Article 11 that
shall adversely affect the rights or obligations of any Designated Stockholder
under the Escrow Agreement or this Article 11 shall require the prior written
consent of such adversely affected Designated Stockholder (other than any change
affecting all Designated Stockholders similarly). The Stockholder
Representative hereby accepts such appointment. The Stockholder
Representative will take any and all actions and make any decisions required or
permitted to be taken by the Stockholder Representative under the Escrow
Agreement and this Agreement, including the exercise of the power to (i) agree
to, negotiate, enter into settlements and compromises of, commence any suit,
action or proceeding, and comply with orders of courts with respect to, claims
for Damages, (ii) litigate, resolve, settle or compromise any Contested Claim
(as defined in the Escrow Agreement) made pursuant to this Agreement, and (iii)
take all actions necessary in the judgment of the Stockholder Representative for
the accomplishment of the foregoing or as contemplated by this Agreement or the
Escrow Agreement. The Stockholder Representative will have authority
and power to act on behalf of each Stockholder with respect to the disposition,
settlement or other handling of all claims against the Escrow Property under
this Article 11 and all related rights or obligations of the Designated
Stockholders arising under this Article 11. The Stockholder
Representative shall use commercially reasonable efforts based on contact
information available to the Stockholder Representative to keep the Designated
Stockholders reasonably informed with respect to actions of the Stockholder
Representative pursuant to the authority granted the Stockholder Representative
under this Agreement which actions have a material impact on the amounts payable
to the Designated Stockholders. Each Designated Stockholder shall
promptly provide written notice to the Stockholder Representative of any change
of address of such Designated Stockholder.
(b) A
decision, act, consent or instruction of the Stockholder Representative (which
decision, act, consent or instruction shall be jointly made by each entity
constituting the Stockholder Representative) hereunder shall constitute a
decision, act, consent or instruction of all Designated Stockholders and, as
between Parent and its Affiliates (on the one hand) and the Designated
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Stockholders
(on the other hand), shall be final, binding and conclusive upon each of such
Designated Stockholders, and the Escrow Agent and Parent may rely upon any such
decision, act, consent or instruction of the Stockholder Representative as being
the decision, act, consent or instruction of each and every such Designated
Stockholder. The Escrow Agent and Parent shall be relieved from any
liability to any Person for any acts done by them in accordance with such
decision, act, consent or instruction of the Stockholder
Representative.
(c) The
Stockholder Representative will incur no liability with respect to any action
taken or suffered by any party in reliance upon any notice, direction,
instruction, consent, statement or other document believed by such Stockholder
Representative to be genuine and to have been signed by the proper person (and
shall have no responsibility to determine the authenticity thereof), nor for any
other action or inaction, except for gross negligence, bad faith or willful
misconduct on the part of the Stockholder Representative. In all
questions arising under this Agreement or the Escrow Agreement, the Stockholder
Representative may rely on the advice of outside counsel, and the Stockholder
Representative will not be liable to anyone for anything done, omitted or
suffered in good faith by the Stockholder Representative based on such
advice.
(d) The
Designated Stockholders shall severally (each based on its Pro Rata Share) but
not jointly indemnify the Stockholder Representative and hold the Stockholder
Representative harmless against any loss, liability or expense incurred without
gross negligence, bad faith or willful misconduct, on the part of the
Stockholder Representative and arising out of or in connection with the
acceptance or administration of the Stockholder Representative’s duties
hereunder, including the reasonable fees and expenses of any legal counsel
retained by the Stockholder Representative.
(e) At any
time during the term of the Escrow Agreement, a majority-in-interest of
Designated Stockholders may, by written consent, appoint a new representative as
the Stockholder Representative. Notice together with a copy of the
written consent appointing such new representative and bearing the signatures of
Designated Stockholders of a majority-in-interest of those Designated
Stockholders must be delivered to Parent and the Escrow Agent not less than ten
days prior to such appointment. Such appointment will be effective
upon the later of the date indicated in the consent or ten days after such
notice is received by Parent and the Escrow Agent. For the purposes
of this Section 11.05, a “majority-in-interest of the Designated Stockholders”
shall mean Designated Stockholders representing in the aggregate over 50% of the
percentage interests in the Escrow Shares.
(f) In the
event that the Stockholder Representative becomes unable or unwilling to
continue in his or its capacity as Stockholder Representative, or if the
Stockholder Representative resigns as a Stockholder Representative, a
majority-in-interest of the Designated Stockholders shall, by written consent,
appoint a new
102
representative
as the Stockholder Representative. Notice and a copy of the written
consent appointing such new representative and bearing the signatures of the
holders of a majority-in-interest of the Designated Stockholders must be
delivered to Parent and the Escrow Agent. Such appointment will be
effective upon the later of the date indicated in the consent or the date such
consent is received by Parent and the Escrow Agent.
(g) As amongst
the Stockholders, and subject to Section 11.05(b), any instruction given to the
Stockholder Representative by a majority-in-interest of Designated Stockholders,
in connection with the matters set forth in Article 11 or any other matter,
shall be final and binding on all Stockholders.
ARTICLE
12
Miscellaneous
Section
12.01. Notices. All
notices, requests and other communications to any party hereunder shall be in
writing (including facsimile transmission and electronic mail (“e-mail”)
transmission, so long as a receipt of such e-mail is requested and received) and
shall be given,
or to such
other address or facsimile number as such party may hereafter specify for the
purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. on a Business
Day in the place of
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receipt. Otherwise,
any such notice, request or communication shall be deemed to have been received
on the next succeeding Business Day in the place of receipt.
Section
12.02. Amendments
and Waivers. (a) Any provision of this Agreement may be
amended or waived prior to the Effective Time if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement or, in the case of a waiver, by each party against whom the
waiver is to be effective.
(b) No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. Except as expressly set forth
herein, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Applicable
Law.
Section
12.03. Expenses. Except
as otherwise provided herein, all costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or
expense.
Section
12.04 . Disclosure
Schedule References. The parties hereto agree that any
reference in a particular Section of either the Company Disclosure Schedule or
the Parent Disclosure Schedule shall only be deemed to be an exception to (or,
as applicable, a disclosure for purposes of) (a) the representations and
warranties (or covenants, as applicable) of the relevant party that are
contained in the corresponding Section or subsection of this Agreement; (b) any
other representation and warranty (or covenant, as applicable) of such party
that is contained in this Agreement, but only if the relevance of that reference
as an exception to (or a disclosure for purposes of) such representation and
warranty (or covenant, as applicable) would be readily apparent to a reasonable
person who has read only this Agreement and the Company Disclosure Schedule and
the Parent Disclosure Schedule; and (c) any other representation and warranty
(or covenant, as applicable) of a relevant party that is cross-referenced in
such Section. Except as the context requires, any items or matters
reflected in either the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be, are not necessarily limited to matters required by
this Agreement to be therein reflected, and such items or matters are set forth
for informational purposes only and do not necessarily include items of a
similar nature. In no event shall the inclusion or reference of any
such item or matter be deemed or interpreted to broaden or otherwise modify any
of the provisions of this Agreement. The fact that any item or matter
is reflected in either the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be, shall not be construed as an admission of
liability under Applicable Law, nor shall either the Company Disclosure Schedule
or the Parent Disclosure Schedule, as the case may be, be used as a basis for
interpreting the terms “material,”
105
“materially,”“materiality” or “Company Material Adverse Effect” or “Parent Material Adverse
Effect” (as the case may be), or similar qualifications
herein.
Section
12.05. Binding
Effect; Benefit; Assignment. (a) The provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as
provided in, and subject to, Section 7.06, Section 10.02 and Article 11
(including the provisions that limit the circumstances in which a non-party may
make a claim), no provision of this Agreement is intended to confer any rights,
benefits, remedies, obligations or liabilities hereunder upon any Person other
than the parties hereto and their respective successors and
assigns. For the avoidance of doubt, nothing in Section 7.04 is
intended to create any third party rights, benefits, remedies, obligations or
liabilities under any of the provisions referred to in the preceding
sentence.
(b) No party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of each other party hereto, except that
Parent or Merger Subsidiary may transfer or assign its rights and obligations
under this Agreement, in whole or from time to time in part, to (i) one or more
of their Affiliates at any time and (ii) after the Effective Time, to any
Person; provided
that such transfer or assignment shall not relieve Parent or Merger Subsidiary
of its obligations hereunder or enlarge, alter or change any obligation of any
other party hereto or due to Parent or Merger Subsidiary; provided
further, that no such assignment shall adversely affect the Company
(prior to the Effective Time) or the Stockholders.
Section
12.06. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to
the conflicts of law rules of such state.
Section
12.07. Jurisdiction. The
parties hereto agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in any
Delaware state court, and each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by Applicable Law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 12.01 shall be deemed effective service of process on
such party.
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Section
12.08. WAIVER
OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section
12.09. Counterparts;
Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by the other party hereto,
this Agreement shall have no effect and no party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication). Any such counterpart may be delivered by
facsimile or other electronic format (including
“.pdf”).
Section
12.10. Entire
Agreement. This Agreement, the other Transaction Documents
and, to the extent set forth in Section 8.06, the Confidentiality Agreements
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement and the other Transaction Documents.
Section
12.11. Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other Governmental Authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent
possible.
Section
12.12. Specific
Performance. The parties hereto agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled (without the
requirement to post bond) to an injunction or injunctions to prevent breaches of
this Agreement or to enforce specifically the performance of the terms and
provisions hereof in the courts provided for in Section 12.07, in addition to
any other remedy to which they are entitled at law or in
equity.
Section
12.13. Representation
of the Company and its Stockholders. Each of the parties to
this Agreement hereby agrees, on its own behalf and on behalf of
107
its
directors, officers, employees and Affiliates, that Freshfields Bruckhaus
Deringer LLP may serve as counsel to each and any of the Company’s stockholders,
the Stockholder Representative and their respective Affiliates (individually and
collectively, “Seller
Group”), on the one hand, and the Company, on the other hand, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the Merger
and the other transactions contemplated hereby and by the other Transaction
Documents, and that, both prior to and following consummation of the Merger (or
in the event of the termination of this Agreement), Freshfields Bruckhaus
Deringer LLP may serve as counsel to any member of the Seller Group or any
director, member, partner, officer, employee or Affiliate of Seller Group, in
connection with any litigation, claim or obligation arising out of or relating
to this Agreement or the other Transaction Documents, or the Merger or the other
transactions contemplated hereby and by the other Transaction Documents
notwithstanding such representation, and each of the parties hereto hereby
consents thereto and waives any conflict of interest arising therefrom, and each
of such parties shall cause any Affiliate thereof to consent to waive any
conflict of interest arising from such
representation.
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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above
written.
MAGNUM
COAL COMPANY
By:
/s/
Paul Vining
Name:
Paul
Vining
Title:
President
and Chief Executive Officer
PATRIOT
COAL CORPORATION
By:
/s/
Richard M. Whiting
Name:
Richard
M. Whiting
Title:
President
and Chief Executive Officer
COLT
MERGER CORPORATION
By:
/s/
Mark N. Schroeder
Name:
Mark
N. Schroeder
Title:
President
ARCLIGHT
ENERGY PARTNERS FUND I, L.P. and
ARCLIGHT
ENERGY PARTNERS FUND II, L.P., acting jointly,
as
Stockholder Representative
ARCLIGHT
ENERGY PARTNERS FUND I, L.P.
By:
ArcLight PEF GP, LLC, its General Partner
By:
ArcLight Capital Holdings, LLC, its Manager
By:
/s/
Daniel R. Revers
Name:
Daniel R. Revers
Title:
Manager
ARCLIGHT
ENERGY PARTNERS FUND II, L.P.
By:
ArcLight PEF GP II, LLC, its General Partner
By:
ArcLight Capital Holdings, LLC, its Manager
By:
/s/
Daniel R. Revers
Name:
Daniel R. Revers
Title:
Manager
Dates Referenced Herein and Documents Incorporated by Reference
