<PAGE> 1
FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 15, 1996
WESTMORELAND COAL COMPANY
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-752 23-1128670
-------- ----- ----------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or organization) Number Identification No.)
2 North Cascade Avenue, 14th Floor Colorado Springs, Colorado 80903
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 719-442-2600
------------
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On May 15, 1996, Westmoreland Coal Company ("Westmoreland") completed
a transaction with Penn Virginia Corporation ("Penn Virginia") which provides
for the relinquishment of certain leases of Westmoreland coal reserves back to
Penn Virginia in exchange for a cash payment of $10,678,000 and other
consideration from Penn Virginia. In addition to cash, Westmoreland received an
18-month option to purchase Penn Virginia's 16% ownership interest in
Westmoreland Resources, Inc.
On May 17, 1996, Westmoreland completed non-cash transactions which
provide for sale of its idled Wentz Complex to Stonega Mining and Processing
Company (Stonega) and its idled Pine Branch Mining Inc. to Roaring Fork Mining
Company (Roaring Fork). Stonega and Roaring Fork will assume certain
reclamation and other liabilities associated with the idled operations as
consideration.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The following unaudited condensed pro forma consolidated balance sheet
assumes that the Penn Virginia transaction and the disposition of the Wentz
Complex and Pine Branch Mining Inc. occurred on March 31, 1996.
The following unaudited condensed pro forma consolidated statements of
operations for the three months ended March 31, 1996 and for the year ended
December 31, 1995 assume that the Penn Virginia transaction and the
dispositions of the Wentz Complex and Pine Branch Mining Inc. occurred as of
January 1, 1996 and January 1, 1995, respectively. The pro forma results of
operations are not necessarily indicative of the results of operations that
actually would have been attained if the transactions had occurred on these
dates.
The unaudited condensed pro forma consolidated financial statements
should be read in conjunction with the historical financial statements and
related notes of Westmoreland.
(c) Exhibits
No. Description
--- -----------
10(o) Agreement among Penn Virginia Corporation and Westmoreland Coal
Company
10(p) Amendment and Restatement of Virginia Lease
10(q) Assignment Agreement between Pine Branch Mining Inc. and Roaring
Fork Mining, Inc.
10(r) Assignment Agreement between Westmoreland Coal Company and
Stonega Mining and Processing Company
99.1 Press release dated May 15, 1996
99.2 Press release dated May 22, 1996
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTMORELAND COAL COMPANY
Date: May 29, 1996 By: /s/ ROBERT J. JAEGER
----------------------------------
Robert J. Jaeger
Senior Vice President - Finance
Treasurer, and Controller
3
<PAGE> 4
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
Three months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(in thousands)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,321 10,678(1) 16,999
Notes and accounts receivable (net) 6,701 6,701
Inventories 784 784
Other current assets 803 803
--------- --------- ---------
Total Current Assets 14,609 10,678 25,287
--------- --------- ---------
Property, plant and equipment (net) 59,445 59,445
Investment in Independent
Power Operations 49,489 49,489
Investment in DTA 19,131 19,131
Other assets 21,805 21,805
--------- --------- ---------
Total Assets $ 164,479 10,678 175,157
========= ========= =========
Total Current Liabilities 29,463 53(1) 29,516
--------- --------- ---------
Accrual for workers' compensation 26,795 26,795
Accrual for postretirement medical costs 75,941 75,941
Other liabilities 69,930 (3,001)(2) 66,929
Shareholders' (Deficit):
Preferred Stock
575 575
Common Stock 17,402 17,402
Other Paid in Capital 94,641 94,641
Accumulated (deficit) (150,268) 13,626 (136,642)
--------- --------- ---------
Total shareholders' deficit (37,650) 13,626 (24,024)
--------- --------- ---------
Total Liabilities and
Shareholders' (Deficit) $ 164,479 10,678 175,157
========= ========= =========
</TABLE>
4
<PAGE> 5
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(in thousands except per share data)
<S> <C> <C> <C>
Revenues:
Coal $ 10,552 (13)(3) 10,539
Independent power - equity in
earnings and fees 4,351 4,351
Services 1,457 1,457
-------- -------- --------
16,360 (13) 16,347
Costs and expenses:
Cost of coal sold 11,387 (217)(3) 11,170
Heritage costs 3,630 3,630
Other 4,371 4,371
-------- -------- --------
19,388 (217) 19,171
-------- -------- --------
Operating (loss) (3,028) (204) (2,824)
Gains on the sales of assets 2,441 -- (5) 2,441
Other income 1,671 143(4) 1,814
-------- -------- --------
Income before income tax expense
and minority interest 1,084 347 1,431
Income tax expense 317 317
Minority Interest 311 311
-------- -------- --------
Net income $ 456 347 803
======== ======== ========
Less preferred stock dividends
in arrears (1,222) (1,222)
-------- -------- --------
Net loss applicable to common
shareholders $ (766) 347 (419)
======== ======== ========
Net income (loss) per share applicable
to common shareholders $ (.11) (.06)
======== ========
Weighted average number of common
shares outstanding 6,965 6,965
======== ========
</TABLE>
5
<PAGE> 6
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(in thousands except per share data)
<S> <C> <C> <C>
Revenues:
Coal $ 111,303 (4,387)(3) 106,916
Independent power - equity in
earnings and fees 16,968 16,968
Services 2,637 2,637
--------- --------- ---------
130,908 (4,387) 126,521
Costs and expenses:
Cost of coal sold 129,353 (5,902)(3) 123,451
Depreciation, depletion and
amortization 14,903 (682)(3) 14,221
Selling and administrative 14,458 14,458
Unusual charges 66,623 (1,377)(3) 65,246
Other 1,131 1,131
--------- --------- ---------
226,468 (7,961) 218,507
--------- --------- ---------
Operating (loss) (95,560) 3,574 (91,986)
Gains on the sales of assets 9,088 -- (5) 9,088
Other income 2,942 632(4) 3,574
--------- --------- ---------
Income before income tax expense
and minority interest (83,530) 4,206 (79,324)
Income tax expense 1,488 1,488
Minority Interest 1,368 1,368
--------- --------- ---------
Net income $ (86,386) 4,206 (82,180)
========= ========= =========
Less preferred stock dividends
in arrears 4,888 4,888
--------- --------- ---------
Net loss applicable to common
shareholders $ (91,274) 4,206 (87,068)
========= ========= =========
Net income (loss) per share applicable
to common shareholders $ (13.11) (12.50)
========= =========
Weighted average number of common
shares outstanding 6,965 6,965
========= =========
</TABLE>
6
<PAGE> 7
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
A. BASIS OF PRESENTATION
On May 15, 1996, Westmoreland relinquished certain coal reserves held under
lease agreements with Penn Virginia, back to Penn Virginia. In consideration,
Westmoreland received a cash payment of $10,800,000, net of $122,000 owed for
related personal property and real estate taxes. In addition, Westmoreland
received an eighteen month option to purchase Penn Virginia's 16% ownership
interest in Westmoreland Resources, Inc. (WRI) for $3,000,000. Westmoreland
retained the right to use and maintain certain surface facilities, and received
assignable access rights to Westmoreland's Stone Mountain Reserves. The
original lease agreement between Westmoreland and Penn Virginia remains in
effect and certain subleases were terminated an/or assigned to third parties.
The accompanying condensed pro forma consolidated balance sheet includes pro
forma adjustments to give effect to the relinquishment of the coal reserves to
Penn Virginia and the proceeds received therefrom, as of March 31, 1996. The
condensed pro forma consolidated statements of operations include pro forma
adjustments to give effect to the use of proceeds for the Penn Virginia
transaction.
On May 15, 1996, Westmoreland entered into agreements to sell its idled Wentz
Complex to Stonega and to sell its idled Pine Branch Mining Inc. to Roaring
Fork, in exchange for the assumption of certain reclamation and other
liabilities. These non-cash transactions closed on May 17, 1996.
The Wentz Complex transaction assigns all of the reclamation and certain
environmental liabilities to Stonega. In addition, Stonega will be responsible
for all employee benefit costs for any former Westmoreland employees who
subsequently are hired by Stonega. Certain environmental liabilities, as well
as certain land leases have been retained by Westmoreland.
The Pine Branch Mining Inc. transaction assigns certain reclamation and
environmental liabilities and certain equipment leases to Roaring Fork. In
addition, Roaring Fork will be responsible for all employee benefit costs for
any former Westmoreland employees who subsequently are hired by Roaring Fork.
The accompanying condensed pro forma consolidated balance sheet includes pro
forma adjustments to give effect to the dispositions of the Wentz Complex and
Pine Branch Mining Inc. as of March 31, 1996. The condensed pro forma
consolidated statements of operations include pro forma adjustments to give
effect to the dispositions of these operations for the three months ended March
31, 1996 and the year ended December 31, 1995.
7
<PAGE> 8
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
B. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the historical balance
sheet of Westmoreland at March 31, 1996 and to the historical statements of
operations for the three months ended March 31, 1996 and the year ended
December 31, 1995.
1. To record the relinquishment of certain coal reserves to Penn
Virginia, for total proceeds of $10,800,000, net of related personal
property and real estate taxes of $122,000 and to record estimated
transactions costs of $175,000.
2. To record the Wentz Complex and Pine Branch Mining Inc. dispositions
and the assignment of $3,001,000 of reclamation and environmental
liabilities. As of March 31, 1996, all assets related to the Wentz
Complex and Pine Branch Mining Inc. had been impaired and therefore,
no adjustment for assets dispositions is required. In addition, no pro
forma adjustments have been made for employee benefit costs to be
transferred to Stonega and Roaring Fork as no Westmoreland employees
have been hired to date.
3. To eliminate the revenue and expenses attributable to the Wentz
Complex and Pine Branch Mining Inc., including the rent expense
related to the equipment leases.
4. To record the assumed interest income on the net proceeds of
$10,678,000, calculated at an assumed rate of 5.37% for the three
months ended March 31, 1996 and at an assumed rate of 5.86% for the
year ended December 31, 1995.
5. In May 1996, Westmoreland will record a gain of $13,626,000 related to
the disposition of these assets. Such gains have not been included in
these pro forma condensed consolidated financial statements.
8
<PAGE> 9
EXHIBIT INDEX
Exhibit
No. Description
--- -----------
10(o) Agreement among Penn Virginia Corporation and Westmoreland Coal
Company
10(p) Amendment and Restatement of Virginia Lease
10(q) Assignment Agreement between Pine Branch Mining Inc. and Roaring
Fork Mining, Inc.
10(r) Assignment Agreement between Westmoreland Coal Company and
Stonega Mining and Processing Company
99.1 Press release dated May 15, 1996
99.2 Press release dated May 22, 1996
<PAGE> 1
EXHIBIT 10(o)
AGREEMENT
AMONG
PENN VIRGINIA COAL COMPANY
PENN VIRGINIA EQUITIES CORPORATION
AND
WESTMORELAND COAL COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1. The Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.1. Partial Termination of Existing Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.2. Partial Transfer and Assumption of Existing Lease . . . . . . . . . . . . . . . . . . . . . . -3-
1.3. Amendment and Restatement of the Existing Lease . . . . . . . . . . . . . . . . . . . . . . . -3-
1.4. Termination of Subleases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.1. Representations and Warranties of WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.2. Representations and Warranties of PVCC and PVEC . . . . . . . . . . . . . . . . . . . . . . . -8-
3. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.1. Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.2. Consents to Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.3. Termination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.4. WRI Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.5. Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.6. Release Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.7. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4. Conditions Precedent to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
4.1. Conditions Precedent to PVCC's and PVEC's Obligations . . . . . . . . . . . . . . . . . . . -10-
4.2. Conditions Precedent to WCC's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . -11-
5. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
5.1. Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
5.2. Deliveries by WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
5.3. Deliveries by PVCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
5.4. Deliveries of PVEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
6. Operations Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
8. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9. Litigation Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
10.1. Indemnification by PVCC and PVEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
10.2. Indemnification by WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
10.3. Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
10.4. Representations, Warranties and Covenants of the Parties to be Continuing . . . . . . . . . -17-
11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
11.1. If to PVCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
11.2. If to PVEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
11.3. If to WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
12. Post-Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
12.1. Items to Be Prorated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
12.2 Procedure for Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
13.1. Retention of and Access to Records After Closing . . . . . . . . . . . . . . . . . . . . . -20-
13.2. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
13.3. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
13.4. Background Recitals; Exhibits; Schedules . . . . . . . . . . . . . . . . . . . . . . . . . -21-
13.5. Governing Law; Parties at Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
13.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
13.7. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
13.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
13.9. Effect of Permitted Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
13.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
13.11. Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
13.12. No Other Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
13.13. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
13.14. Joint Work Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
13.15. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
13.16. Completion of Reclamation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
13.17. Confidential Nature of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
</TABLE>
<PAGE> 4
LIST OF SCHEDULES
Schedule A: Lease Amendments
Schedule 2.1(d): Agreements and Consents
Schedule 2.1(f): Litigation
Schedule 2.1(g): Environmental Matters
Schedule 2.2(g): Certain Agreements Affecting WRI Stock
LIST OF EXHIBITS
A: Form of RFM Transfer and Assumption of Agreement
B: Form of Termination Agreement
C: RFM Leased Premises
D: Form of SMP Transfer and Assumption of Agreement
E: SMP Leased Premises
F: Premises Map
G: Form of WCC Amended and Restated Lease
H: Form of Matt Termination Agreement
I: Form of FI Termination Agreement
J: Form of Stock Option Agreement
K: Form of Acknowledgement
L: Form of Release Agreement
M: Form of Opinion of Winthrop, Stimson, Putnam & Roberts
N: Form of Opinion of WCC General Counsel
O: Form of Form of Certificate of Corporate Officer of WCC
P: Form of Opinion of Dechert Price & Rhoads
Q: Form of Certificate of Corporate Officer of PVCC
R: Form of Certificate of Corporate Officer of PVEC
S: Definitions
<PAGE> 5
AGREEMENT
THIS AGREEMENT (the "Agreement") is dated this 14th day of
May, 1996, among PENN VIRGINIA COAL COMPANY, INC., a Virginia corporation
("PVCC"), PENN VIRGINIA EQUITIES CORPORATION, a Delaware corporation ("PVEC"),
and WESTMORELAND COAL COMPANY, a Delaware corporation ("WCC").
BACKGROUND
1 PVCC (as successor-in-interest to Penn Virginia Resources
Corporation, a Virginia corporation) and WCC are parties to an Amendment and
Restatement of Lease, effective as of July 1, 1988, which lease was amended by
certain amendments set forth on Schedule A attached hereto (as so amended, the
"Existing Lease"), pursuant to which WCC leased, for coal mining purposes,
certain rights and interests in certain lands owned by PVCC and located in Lee
and Wise Counties, Virginia, and Harlan and Letcher Counties, Kentucky,
identified more particularly in the Existing Lease (collectively, the "Original
Leased Premises").
2
A. PVCC has alleged that WCC has defaulted under the Existing
Lease, and PVCC believes that it is entitled to forfeiture of the Existing
Lease based on lack of diligent mining of the coal located on the Original
Leased Premises.
B. WCC, which disputes and denies such assertion, has ceased
certain of its mining operations on portions of the Original Leased Premises
and has determined that there are areas of the Original Leased Premises which
cannot be mined efficiently and economically and which, therefore, WCC no
longer desires to mine. WCC has determined that it would be beneficial to WCC
to terminate its leasehold interest in the Existing Lease, insofar as the
Existing Lease relates to certain portions of the Original Leased Premises, and
to transfer to third parties its leasehold interest in the Existing Lease,
insofar as the Existing Lease relates to certain other portions of the Original
Leased Premises, in order to improve its cash flow position and in order to be
released from some of its burdensome reclamation obligations thereunder. Under
the Existing Lease, WCC is required to obtain the consent of PVCC in connection
with such transfers.
C. WCC also desires to acquire an option to purchase all of
PVEC's stock interest in Westmoreland Resources, Inc., a Delaware corporation
(the "WRI Stock"), which stock interest is currently approximately 16% of the
common stock thereof.
D. In resolution of the claimed defaults under the Existing
Lease, without any admission or determination thereof, and in consideration for
the other transactions contemplated by this Agreement, and subject to the terms
and conditions set forth herein, (a) PVCC desires to: (i) acknowledge the
continuing effectiveness of the Existing Lease, (ii) accept the partial
termination of the Existing Lease, (iii) provide its consent to WCC's partial
transfers of the Existing Lease, (iv) release WCC from certain obligations
under the Existing Lease, (v) pay to
<PAGE> 6
WCC cash consideration of $10,800,000, (vi) grant WCC access across and
additional reserves with respect to certain portions of the property of PVCC,
and (vii) grant the transferees of WCC certain other rights with respect to the
property of PVCC, and (b) PVEC desires to grant WCC an option to purchase the
WRI Stock.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. The Transaction. At the Closing (as defined hereunder) of
this Agreement:
1. Partial Termination of Existing Lease.
(a) WCC shall cause Pine Branch Mining Inc., a
Delaware corporation and its wholly owned subsidiary ("PBMI"), to transfer to
Roaring Fork Mining, Inc., a Virginia corporation ("RFM"), all of PBMI's right,
title and interest in and to the PBMI Sublease (as defined hereunder), which
transfer shall be evidenced by a Transfer and Assumption of Sublease Agreement
in the form attached hereto as Exhibit A (the "RFM Transfer and Assumption
Agreement"). WCC subleased to PBMI, a certain portion of the Original Leased
Premises cross-hatched in red on Exhibit C attached hereto and identified
thereon as "Area of Pine Branch Mining Incorporated 1991 Amended Sublease
reassigned to Roaring Fork Mining Inc." (the "RFM Leased Premises") pursuant to
a Sublease Agreement dated November 1, 1991, as amended (the "PBMI Sublease").
(b) WCC and PVCC shall terminate the Existing
Lease, and WCC's leasehold interest thereunder, insofar as the Existing Lease
relates to all of the Original Leased Premises (including the RFM Leased
Premises), except for that portion of the Original Leased Premises
cross-hatched in red on Exhibit F-1 through and including Exhibit F-7 attached
hereto and identified thereon as "Area Leased to Westmoreland Coal Company
pursuant to the 1996 Amended Lease" (such portion of the Original Leased
Premises cross-hatched in red on Exhibit F-1 through and including Exhibit F-7,
hereinafter referred to as the "WCC Leased Premises"; and such portion of the
Original Leased Premises not cross-hatched in red on Exhibit F-1 through and
including Exhibit F-7, excluding the RFM Leased Premises, hereinafter referred
to as the "PV Terminated Leased Premises"), which termination shall be
evidenced by a Termination Agreement in the form attached hereto as Exhibit B
(the "Termination Agreement").
2. Partial Transfer and Assumption of Existing Lease.
(a) WCC will transfer to Stonega Mining and
Processing Company, a Virginia corporation ("SMP"), all of its right, title and
interest in to the Existing Lease,
<PAGE> 7
insofar as the Existing Lease relates to a certain portion of the Original
Leased Premises in cross-hatched in red on Exhibit E attached hereto and
identified thereon as "Area of Westmoreland Coal Co. 1988 Amended Lease
Reassigned to Stonega Mining and Processing Company" (the "SMP Leased
Premises"), which transfer shall be evidenced by a Partial Transfer and
Assumption of Lease Agreement in the form attached hereto as Exhibit D (the
"SMP Transfer and Assumption Agreement").
(b) PVCC will consent to the transfers set forth
in each of the Transfer and Assumption Agreements (as defined hereunder), which
consents shall be evidenced by the PVCC Joinder and Consent attached to the
Transfer and Assumption Agreements (the "PVCC Consent to Transfer") and WCC
will consent to the RFM Transfer and Assumption Agreement, which consent shall
be evidenced by the WCC Joinder and Consent attached to the RFM Transfer and
Assumption Agreement (the "WCC Consent to Transfer").
(c) The RFM Transfer and Assumption Agreement and
the SMP Transfer and Assumption Agreement are sometimes referred to herein
together as the "Transfer and Assumption Agreements." The PV Terminated Leased
Premises and the RFM Leased Premises are sometimes referred to hereinafter
together as the "Terminated Leased Premises." The SMP Leased Premises and the
Terminated Leased Premises are sometimes referred to hereinafter together as
the "Released Premises."
3. Amendment and Restatement of the Existing Lease. WCC
and PVCC will amend and restate the Existing Lease insofar as the Existing
Lease relates to the WCC Leased Premises, which amendment and restatement shall
be in the form of the Amendment and Restatement of Virginia Lease attached
hereto as Exhibit G (the "WCC Amended and Restated Lease").
4. Termination of Subleases.
(a) WCC will terminate its sublease with Matt
Mining, Inc., dated May 31, 1988, which termination shall be evidenced by a
Sublease Termination Agreement in the form attached hereto as Exhibit H (the
"Matt Termination Agreement").
(b) WCC will terminate its sublease with Fraley's
Inc., dated April 7, 1986, which termination shall be evidenced by a Sublease
Termination Agreement in the form attached hereto as Exhibit I (the "FI
Termination Agreement").
2. Representations and Warranties.
1. Representations and Warranties of WCC. WCC
represents, warrants and covenants to PVCC and PVEC as follows:
<PAGE> 8
(a) Organization and Existence. WCC is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware. WCC is authorized to do business and is in good standing
under the laws of Virginia and Kentucky.
(b) Power and Authority. WCC has the corporate
power and authority to execute, deliver and perform this Agreement and each of
the other agreements, instruments and documents to be delivered by WCC to PVCC
and PVEC and all other third parties in connection with this Agreement
(collectively, the "WCC Ancillary Agreements"), and to consummate the
transactions contemplated by this Agreement and by the WCC Ancillary
Agreements.
(c) Authorization. The execution and delivery by
WCC of this Agreement and the WCC Ancillary Agreements and the performance by
WCC of its obligations hereunder and thereunder have been duly and validly
authorized as required by applicable law.
(d) Absence of Conflicting Agreement; Consents.
Except as set forth on Schedule 2.1(d), the execution and delivery by WCC of
this Agreement and of the WCC Ancillary Agreements, including without
limitation, the SMP APA (as defined hereunder) and the RFM APA (as defined
hereunder), and the performance by WCC of the transactions contemplated hereby
and thereby do not (x) violate, conflict with or constitute a breach of, or
default under (either immediately or upon notice, lapse of time or both), (i)
the Certificate of Incorporation or By-laws of WCC, (ii) any foreign, federal,
state or local laws, statutes, regulations, rules, codes or ordinances enacted,
adopted, issued or promulgated by any foreign, federal, state, local or other
governmental authority or regulatory body (collectively, "Governmental Body"),
including, without limitation, those pertaining to electrical, building,
zoning, environmental, mining, and occupational safety and health requirements
and all common law liabilities and obligations related thereto (collectively
"Requirements of Law"), or any judgment, order, writ, injunction, or decree of
any court in effect at the date of this Agreement or on the date of Closing (as
defined hereunder) or, (iii) any agreement, indenture, instrument, covenant,
contract, note, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which WCC is a party or any
of its assets is subject or by which WCC is bound, or (y) except for each
Consent to Transfer required under this Agreement, require the consent,
approval, qualification, order or authorization of, or filing with any
Governmental Body, or consent or approval of any Person (as defined hereunder).
(e) Binding Agreement. This Agreement and the
WCC Ancillary Agreements constitute the legal, valid and binding obligation of
WCC, enforceable against WCC in accordance with their respective terms.
(f) Litigation. Except as set forth on Schedule
2.1(f) attached hereto, there are no lawsuits, claims, suits, proceedings, or
investigations pending or, to the Knowledge of WCC, threatened against or
affecting WCC with respect to the Released Premises nor, to the Knowledge of
WCC, is there any basis for any of the same, and there are no lawsuits, claims,
<PAGE> 9
suits, proceedings, or investigations in which WCC is the plaintiff or claimant
which relate to the Released Premises. WCC is not in default with respect to
any order, writ, injunction or decree of any court or any Governmental Body to
which any or all of the Released Premises is or may be subject and which would
materially adversely affect any of the RFM Leased Premises, the SMP Leased
Premises or the PV Terminated Leased Premises.
(g) Environmental Matters. To the Knowledge of
WCC, and except as set forth on Schedule 2.1(g) attached hereto:
(i) The operations of WCC with respect to the
Released Premises comply in all material respects with all applicable
Requirements of Law derived from or relating to all federal, state, and local
laws or regulations relating to, regulating, imposing liability or standards of
conduct concerning, or addressing the environment, pollution, mining, human
health or safety, including, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Water Act of 1977
(the "Clean Water Act"), the Clean Air Act (the "Clean Air Act"), the Surface
Mining Control and Reclamation Act of 1977 ("SMCRA"), the Toxic Substances
Control Act ("TSCA"), the Federal Mine Safety and Health Act of 1977 ("MSHA"),
and the Resource Conservation and Recovery Act of 1976 ("RCRA") and any state
equivalent thereof and all common law liabilities and obligations related to
the environment, pollution, mining, health or safety (collectively,
"Environmental or Mining Law").
(ii) WCC has obtained all environmental, health
and safety, licenses, franchises, permits, privileges, immunities, approvals
and all other authorizations from any Governmental Body necessary for its
operation with respect to the Released Premises (collectively, "Governmental
Permits") and, regarding current operations with respect to, or the current
condition of, the Released Premises, all such Governmental Permits are in good
standing. WCC is in compliance in all material respects with all terms and
conditions of such Governmental Permits and, with respect to the PV Terminated
Leased Premises, all reclamation required under such Governmental Permits and
under all Environmental or Mining Law has been completed.
(iii) WCC is not, with respect to the Released
Premises, subject to any on-going proceeding or investigation by order from, or
agreement with any individual, corporation, limited liability corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated association or other organization, or Governmental Body (a
"Person") (including, without limitation, any prior owner or operator of the
Released Premises) respecting (a) any Environmental or Mining Law, (b) any
action required to: (1) cleanup, remove, treat or in any other way address any
waste, pollutant, hazardous or toxic substance, petroleum, petroleum-based
substance or waste, special waste or any constituent of any such substance or
waste (collectively, a "Contaminant") in the indoor or outdoor environment, (2)
prevent the release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration of a Contaminant into the
indoor or outdoor environment or into or out of the Original Leased Premises,
including the movement of Contaminants through or in the air, soil, surface
<PAGE> 10
water, ground water or the Original Leased Premises (a "Release") or threatened
Release or minimize the further Release of a Contaminant, or (3) investigate
and determine if a remedial response is needed to design such a response and
post- remedial investigation, monitoring, operation and maintenance and care (a
"Remedial Action"), or (c) any claim of loss, cost, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges ("Losses") arising from the Release or threatened
Release of a Contaminant into the environment.
(iv) Other than matters affecting the mining
industry generally, WCC, with respect to the Released Premises, is not subject
to any judicial or administrative proceeding, order, judgment, decree, or
settlement alleging or addressing a violation of, or liability under any
Environmental or Mining Law.
(v) WCC has not, with respect to the Released
Premises: (A) reported a Release of a hazardous substance pursuant to CERCLA
or any state equivalent; (B) filed a notice pursuant to Section 103(c) of
CERCLA; (C) filed a notice pursuant to Section 3010 of RCRA, indicating the
generation of any hazardous waste, as that term is defined under 40 CFR Part
261 or any state equivalent; or (D) filed any notice under any applicable
Environmental or Mining Law reporting a substantial violation of any applicable
Environmental or Mining Law; and with respect to the Released Premises, and
each of the matters set forth in this subsection, no event has occurred that
would have required WCC to have reported such Release or filed such notice
where WCC failed to do so.
(vi) There is not either on or in the Released
Premises: (A) any treatment, recycling, storage, or disposal of any hazardous
waste, as that term is defined under 40 CFR Part 261 or any state equivalent
that requires or required a Governmental Permit pursuant to Section 3005 of
RCRA, or any state equivalent; or (B) any underground storage tank or surface
impoundment.
(vii) There are not on or in the Released Premises
any polychlorinated biphenyls (PCB) used in pigments, hydraulic oils,
electrical transformers, or other equipment.
(viii) WCC has not received any notice or claim to
the effect that it is or may be liable to any Person as a result of the Release
or threatened Release of a Contaminant into the environment from or on the
Released Premises.
(ix) WCC has not, with respect to the Released
Premises, received any request for information in an enforcement context
pursuant to Section 114 of the Clean Air Act, Section 1267 of SMCRA, Sections
308 and 402 of the Clean Water Act, Sections 8 and 11 of the TSCA, Sections
3004(u), 3007, 3008, 3010 and 3013 of RCRA, Section 104(e) of CERCLA, Section
103 of MSHA and similar provisions of applicable state law that have not been
either responded to or abated.
<PAGE> 11
(x) Except for the Governmental Permits, no lien,
claim, charge, security interest, mortgage, pledge, easement, conditional sale
or other title retention agreement, defect in title, covenant or other
restriction of any kind (an "Encumbrance") in favor of any Person for: (a) any
liability under any Environmental or Mining Law or health or safety
Requirements of Law, or (b) damages arising from, or costs incurred by such
Person in response to, a Release or threatened Release of a Contaminant into
the environment (an "Environmental Encumbrance") has attached to the Released
Premises.
(h) Compliance with Existing Lease. The Released
Premises has been used by WCC only in compliance with the terms of the Existing
Lease. Except for the Governmental Permits and the Permitted Encumbrances (as
defined hereunder), WCC has not transferred, assigned, pledged, mortgaged, or
encumbered in any manner the Released Premises or any part thereof.
(i) Title. WCC has not created any Encumbrances
that are currently in effect with respect to any of the RFM Leased Premises,
the SMP Leased Premises or the PV Terminated Leased Premises except: (i) liens
for real property taxes and severance taxes with respect to the Released
Premises not yet due and payable, (ii) easements, rights of way, liens or
imperfections on property which are not material in amount or do not materially
detract from the value of or materially impair the existing use of the property
affected by such lien or imperfection, and (iii) liens of landlords, carriers,
warehousemen, mechanics and materialmen arising in the ordinary course of
business for sums not yet due and payable and (iv) matters which will not
materially adversely affect the value of any of the RFM Leased Premises, the
SMP Leased Premises or the PV Terminated Leased Premises or PVCC's ability to
lease any of the RFM Leased Premises, the SMP Leased Premises or the PV
Terminated Leased Premises for mining (collectively, the "Permitted
Encumbrances").
(j) Accuracy. No representation or warranty by
WCC in this Agreement and no information in any statement, certificate,
exhibit, or other document furnished or to be furnished to PVCC or PVEC
pursuant hereto or in connection with the transactions contemplated hereby
contains, or at Closing will contain, any untrue statement of a material fact
or omits to state a material fact necessary to make such disclosure not
misleading in the light of the circumstances under which it was made.
(k) WCC Board Committee Action. The Committee of
Independent Directors of the Board of Directors of WCC, at a meeting duly
called and held, determined that the transactions contemplated hereby are fair
and reasonable to WCC.
2. Representations and Warranties of PVCC and PVEC.
PVCC and PVEC each represent, warrant and covenant to WCC (with respect only to
itself) as follows:
(a) Organization and Existence. PVCC is a
corporation duly organized, validly existing and in good standing under the
laws of Virginia. PVCC is authorized
<PAGE> 12
to do business and is in good standing under the laws of Kentucky. PVEC is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware.
(b) Power and Authority. Each of PVCC and PVEC
has the corporate power and authority to execute, deliver and perform this
Agreement and each of the other agreements, instruments and documents to be
delivered by PVCC or PVEC to WCC in connection with this Agreement
(collectively, the "PV Ancillary Agreements"), and to consummate the
transactions contemplated by this Agreement and by the PV Ancillary Agreements.
(c) Authorization. The execution and delivery by
PVCC and PVEC of this Agreement and the PV Ancillary Agreements and the
performance by PVCC and PVEC of their respective obligations hereunder and
thereunder have been duly and validly authorized by PVCC and PVEC as required
by applicable law.
(d) Absence of Conflicting Agreement; Consents.
The execution and delivery by PVCC and PVEC of this Agreement and the PV
Ancillary Agreements and the performance by PVCC and PVEC of the transactions
contemplated hereby and thereby, do not (x) violate, conflict with, or
constitute a breach of, or default under (either immediately or upon notice,
lapse of time or both), (i) the Certificate of Incorporation or By-laws of PVCC
or PVEC, (ii) any Requirement of Law or any judgment, order, writ, injunction
or decree of any court in effect at the date of this Agreement or on the date
of Closing, or (iii) any agreement, indenture, instrument, covenant, contract,
note, mortgage, lease, license, franchise, permit or other authorization,
right, restriction or obligation to which PVCC or PVEC is a party or any of its
assets is subject or by which it is bound or (y) require the consent, approval,
qualification, order or authorization of, or filing with any Governmental Body,
or consent or approval of any Person.
(e) Binding Agreement. This Agreement and the PV
Ancillary Agreements constitute legal, valid and binding obligations of PVCC
and PVEC, enforceable against each in accordance with their respective terms.
(f) Litigation. There is no pending or, to the
Knowledge of PVCC or PVEC, threatened suit, claim, action, litigation, or
administrative, arbitration or other proceeding or governmental inquiry or
investigation to which PVCC or PVEC is, or may be made a party questioning the
validity of this Agreement, any of the PV Ancillary Documents or the
transactions contemplated hereby or thereby.
(g) Ownership of Stock. PVEC owns the WRI Stock
free and clear of all Encumbrances other than those imposed by Requirements of
Law and by the agreements set forth on Schedule 2.2(g) attached hereto.
3. Consideration. For and in consideration of the transactions
contemplated by this Agreement, at Closing:
<PAGE> 13
1. Cash Purchase Price. PVCC shall pay to WCC the sum
of Ten Million Eight Hundred Thousand Dollars ($10,800,000) (the "Cash
Purchase Price") by wire transfer of immediately available federal funds as
follows: Westmoreland Coal Company, PNC Bank, Philadelphia, Pennsylvania, ABA
No. 031000053, Account No. 85-5835-4373.
2. Consents to Transfer. PVCC shall deliver a Consent
to Transfer in connection with each Transfer and Assumption Agreement.
3. Termination Agreement. PVCC shall deliver its
counterpart of the Termination Agreement.
4. WRI Stock Option. PVEC shall grant to WCC an option
to purchase the WRI Stock, which option shall be in the form of the Stock
Option Agreement attached hereto as Exhibit J (the "Stock Option Agreement").
5. Acknowledgement. PVCC shall acknowledge that the
Existing Lease is in full force and effect, which acknowledgement shall be in
the form of the Acknowledgement attached hereto as Exhibit K (the
"Acknowledgement").
6. Release Agreement. PVCC shall each release WCC from
certain obligations and liabilities, which release shall be in the form of the
Release Agreement attached hereto as Exhibit L (the "Release Agreement").
7. Access.
(a) PVCC shall grant to WCC certain additional
access and mining rights with respect to Stone Mountain Reserve as set forth in
and as evidenced by the WCC Amended and Restated Lease.
(b) PVCC shall grant to RFM and SMP certain
additional access and mining rights as set forth in and as evidenced by
separate lease agreements between PVCC and RFM, and PVCC and SMP, respectively.
4. Conditions Precedent to Closing.
1. Conditions Precedent to PVCC's and PVEC's
Obligations. All of PVCC's and PVEC's obligations under this Agreement are
expressly conditioned upon the satisfaction at or before the time of Closing
hereunder of each of the following conditions (any one or more of which may be
waived in writing in full or in part by PVCC or PVEC at their option):
<PAGE> 14
(a) Asset Purchase Agreements.
(i) PBMI and RFM shall have entered into an asset
purchase agreement in form and substance satisfactory to PVCC in its sole
discretion (the "RFM APA").
(ii) WCC and SMP shall have entered into an asset purchase
agreement in form and substance satisfactory to PVCC in its sole discretion
(the "SMP APA").
(iii) Closings under each of the RFM APA and the SMP APA
shall have occurred, without waivers of any conditions thereto, except as
agreed to in writing by PVCC in its sole discretion.
(b) Amendment of Existing Lease.
(i) RFM and PVCC shall have entered into an Amendment and
Restatement of Lease Agreement in form and substance satisfactory to PVCC in
its sole discretion (the "RFM Amended and Restated Lease").
(ii) SMP and PVCC shall have entered into an Amendment and
Restatement of Lease Agreement in form and substance satisfactory to PVCC in
its sole discretion (the "SMP Amended and Restated Lease").
(c) No Changes or Destruction of Released
Premises. Between the date hereof and the Closing Date, there shall have been
(i) no material adverse change in any of the RFM Leased Premises, the SMP
Leased Premises or the PV Terminated Leased Premises; (ii) no material adverse
federal or state legislative or regulatory change affecting any of the RFM
Leased Premises, the SMP Leased Premises or the PV Terminated Leased Premises;
and (iii) no material damage to any of the RFM Leased Premises, the SMP Leased
Premises or the PV Terminated Leased Premises by fire, flood, casualty, act of
God or the public enemy, or other cause, regardless of insurance coverage for
such damage.
(d) No Litigation. No action, claim, suit, or
proceeding shall have been instituted or threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
(e) Representations and Warranties. Each of the
representations and warranties of WCC contained or referred to in this
Agreement shall be true and correct on the Closing Date as though made on and
as of the Closing Date, except for changes therein specifically permitted in
this Agreement or resulting from any transaction expressly consented to in
writing by PVCC and PVEC.
<PAGE> 15
(f) Performance. WCC shall have performed,
observed and complied with all covenants, agreements and conditions required by
this Agreement to be performed, observed and complied with on its part prior to
or as of the Closing Date.
(g) Documents and Deliveries. All instruments
and documents required on WCC's part to effect this Agreement and the
transactions contemplated hereby shall be delivered to PVCC and PVEC and shall
be in form and substance consistent with the requirements of this Agreement and
otherwise reasonably satisfactory to PVCC, PVEC and its counsel.
2. Conditions Precedent to WCC's Obligations. All of
WCC's obligations under this Agreement are expressly conditioned on the
satisfaction at or before the time of Closing hereunder of each of the
following conditions (any one or more of which may be waived in writing in
whole or in part by WCC, at WCC's option):
(a) Asset Purchase Agreement.
(i) WCC and RFM shall have entered into the RFM APA.
(ii) WCC and SMP shall have entered into the SMP APA.
(iii) Closings under each of the RFM APA and the SMP APA
shall have occurred, without waivers of any conditions thereto, except as
agreed to in writing by PVCC, in its sole discretion.
(b) No Litigation. No action, claim, suit or
proceeding shall have been instituted or threatened to restrain, prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
(c) Representations and Warranties. Each of the
representations and warranties of PVCC and PVEC contained or referred to in
this Agreement shall be true and correct on the Closing Date as though made on
and as of the Closing Date, except for changes therein specifically permitted
in this Agreement or resulting from any transaction expressly consented to in
writing by WCC.
(d) Performance. PVCC and PVEC shall have
performed, observed and complied with all covenants, agreements and conditions
required by this Agreement to be performed, observed and complied with on its
part prior to or as of the Closing Date.
(e) Documents and Deliveries. All instruments
and documents required on PVCC's and PVEC's part to effect this Agreement and
the transactions contemplated hereby shall be delivered to WCC and shall be in
form and substance consistent with the requirements of this Agreement and
otherwise reasonably satisfactory to WCC and its counsel.
<PAGE> 16
5. Closing.
1. Time and Place. The closing of the transactions
contemplated by this Agreement (the "Closing") shall occur at 9:00 a.m. on May
14, 1996, or on such date and at such time as may be mutually agreed to by the
parties hereto (the "Closing Date"), at the offices of Winthrop, Stimson,
Putnam & Roberts, 1133 Connecticut Avenue, N.W., Washington, D.C. 20036. Any
party hereto may terminate this Agreement by written notice to the other
parties hereto if the Closing shall not have occurred on or before May 14,
1996.
2. Deliveries by WCC. Subject to the satisfaction or
waiver of the conditions precedent set forth in Section 4.2 hereinabove, at
Closing, WCC shall deliver, or cause to be delivered, to PVCC and PVEC the
following (all in form and substance reasonably satisfactory to WCC and WCC's
counsel):
(a) Fully executed originals of each Transfer and
Assumption Agreement.
(b) An original executed WCC Consent to Transfer
for the RFM Transfer and Assumption Agreement.
(c) An original executed counterpart of the
Termination Agreement.
(d) An original executed counterpart of the WCC
Amended and Restated Lease.
(e) An original executed counterpart of the
Release Agreement.
(f) An original executed counterpart of the Stock
Option Agreement.
(g) Fully executed copies of each of the RFM APA
and the SMP APA, certified by a duly authorized officer of WCC to be true,
complete and correct.
(h) A fully executed copy of the Matt Termination
Agreement.
(i) A fully executed copy of the FI Termination
Agreement.
(j) An opinion of counsel from Winthrop, Stimson,
Putnam & Roberts, which opinion shall be to the effect set forth on Exhibit M
attached hereto.
(k) An opinion of the general counsel of WCC,
which opinion shall be to the effect set forth on Exhibit N attached hereto.
<PAGE> 17
(l) A fully executed original certificate of a
corporate officer of WCC, which certificate shall be in the form of the
Certificate of Corporate Officer attached hereto as Exhibit O.
(m) Any monies due and owing to PVCC under the
terms of the Existing Lease which are ascertainable or subject to good-faith
estimation as of the date of Closing. WCC may, at its election, pay such sums
to PVCC at Closing in immediately available federal funds or cause such amount
to be deducted from the Cash Purchase to be delivered by PVCC to WCC pursuant
to Section 3.1 of this Agreement.
(n) Such other documents, instruments and
writings as PVCC or PVEC may reasonably request in order to consummate the
transactions contemplated by this Agreement.
3. Deliveries by PVCC. Subject to the satisfaction or
waiver of the conditions set forth in Section 4.1 hereinabove, at Closing, PVCC
shall deliver, or cause to be delivered, to WCC the following (all in form and
substance reasonably satisfactory to PVCC and PVCC's counsel):
(a) Payment of the Cash Purchase Price.
(b) An original executed counterpart of the
Termination Agreement.
(c) An original executed PVCC Consent to Transfer
for each Transfer and Assumption Agreement.
(d) An original executed counterpart of the WCC
Amended and Restated Lease.
(e) A fully executed original of the
Acknowledgement.
(f) An original executed counterpart of the
Release Agreement.
(g) An opinion of counsel from Dechert Price &
Rhoads, which opinion shall be to the effect set forth on Exhibit P attached
hereto.
(h) A fully executed original certificate of a
corporate officer of PVCC, which certificate shall be in the form of the
Certificate of Corporate Officer attached hereto as Exhibit Q.
4. Deliveries of PVEC. Subject to the satisfaction or
waiver of the conditions set forth in Section 4.1 hereinabove, at Closing, PVEC
shall deliver, or cause to be
<PAGE> 18
delivered, to WCC the following (all in form and substance reasonably
satisfactory to PVEC and PVEC's counsel):
(a) An original executed counterpart of the Stock
Option Agreement.
(b) An opinion of counsel from Dechert Price &
Rhoads, which opinion shall be to the effect set forth on Exhibit P attached
hereto.
(c) A fully executed original certificate of a
corporate officer of PVEC, which certificate shall be in the form of the
Certificate of Corporate Officer attached hereto as Exhibit R.
6. Operations Pending Closing. Except as contemplated by this
Agreement, or except with the express written approval of PVCC, between the
date of this Agreement and the date of Closing, WCC: (a) shall perform all of
its obligations under the Existing Lease (including but not limited to the
payment of any royalties and amounts at least due thereunder); and (b) shall
use its best efforts to maintain the Released Premises in at least its present
condition; and (c) shall not enter into any contract for the sale, lease, or
contract mining of any of the Released Premises or exercise any option to
extend any lease for any portion thereof; and (d) shall not sell, lease (as
lessor), transfer, or otherwise dispose of (including, without limitation, any
transfers from WCC to any Person that directly or indirectly controls, is
controlled by, or is under common control with (an "Affiliate"), WCC), or
mortgage or pledge, or impose or suffer to be imposed, any Encumbrance on all
or any portion of the Released Premises, except for the Permitted Encumbrances.
7. Expenses. Each of the parties shall be responsible for and
shall pay all costs and expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, all fees, expenses, and disbursements of the counsel, accountants,
investment advisors, valuation firms, and others it has retained and any other
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with.
8. Further Assurances. In addition to the obligations required
to be performed hereunder by WCC, PVCC and PVEC at Closing, each party hereto
will perform such other acts, and execute, acknowledge and deliver, subsequent
to Closing, such other instruments, documents and other materials as any of the
parties may reasonably request and as shall be necessary in order to more fully
effect the consummation of the transactions contemplated hereby. Each party
will use its best efforts to cause the conditions under its control to its
obligations hereunder to be satisfied.
9. Litigation Assistance. Following the Closing, PVCC shall
provide to WCC, and WCC shall provide to PVC, such information and documents,
from any time prior to the date of
<PAGE> 19
Closing, as may be reasonably requested in connection with any suit, claim,
investigation, or proceeding, pending or threatened, that relates to the
Released Premises and in connection therewith each party shall, without
limitation, make available to the other party during normal business hours (i)
all books and records relating thereto in its possession, and (ii) all
employees of such party or its Affiliates having knowledge of the matters in
controversy. Such access shall be afforded upon receipt of reasonable advance
notice and shall not unreasonably interfere with the operations of the party
being requested to furnish the information. The party requesting the
information shall be responsible for all costs or expenses incurred by the
party furnishing the information pursuant to this Section 9.
10. Indemnification.
1. Indemnification by PVCC and PVEC. PVCC and PVEC
(individually and not jointly and severally) each agree to indemnify and hold
harmless WCC and its Affiliates, and their respective successors and assigns
(each, a "WCC Indemnified Party"), from and against, and reimburse any WCC
Indemnified Party with respect to, any and all claims, suits, demands, Losses,
damages, costs, expenses and deficiencies, judgments and liabilities,
(including reasonable legal fees and other costs and expenses related thereto)
(collectively, a "Liability") incurred by any WCC Indemnified Party by reason
of, or arising out of, or in connection with a breach of any representation,
warranty or covenant made by PVCC or PVEC in, or PVCC's or PVEC's failure to
perform any obligation required by, this Agreement or the PV Ancillary
Agreements. PVCC's and PVEC's indemnity obligations under this Section 10.1
shall terminate on the day prior to the third (3rd) anniversary of the date of
Closing with respect to all of the representations and warranties set forth in
Section 2.2 of this Agreement, except for such indemnity obligations related to
those representations and warranties set forth in Sections 2.2(a), (b), (c),
(d) and (e), as to which no time limitation shall apply. Notwithstanding the
foregoing, PVCC's and PVEC's indemnification obligations under this Section
10.1 shall continue as to any Liability of which any WCC Indemnified Party has
notified PVCC and PVEC in accordance with the requirements of Section 10.3
hereunder on or prior to the date such indemnification would otherwise
terminate in accordance with this Section 10.1, as to which the obligation of
PVCC and PVEC shall continue until the liability of PVCC and PVEC shall have
been determined pursuant to this Section 10.1, and PVCC and PVEC shall have
reimbursed all WCC Indemnified Parties for the full amount of such Liability in
accordance with this Section 10.1.
2. Indemnification by WCC. WCC agrees to indemnify and
hold harmless PVCC, PVEC and their respective Affiliates and each of their
respective successors and assigns (each, a "PV Indemnified Party") from and
against, and reimburse any PV Indemnified Party with respect to any Liability
incurred by any PV Indemnified Party by reason of, or arising out of, or in
connection with, a breach of any representation, warranty or covenant made by
WCC in, or WCC's failure to perform any obligation required by, this Agreement
or the WCC Ancillary Agreements or any failure of WCC to obtain any Required
Consents prior to Closing. WCC's indemnity obligations under this Section 10.2
shall terminate on the day prior to the third (3rd) anniversary of the date of
Closing with respect to all of the representations and warranties
<PAGE> 20
set forth in Section 2.1 of this Agreement, except for such indemnity
obligations related to those representations and warranties set forth in
Sections 2.1(a), (b), (c), (d) and (e), as to which no time limitation shall
apply. Notwithstanding the foregoing, WCC's indemnification obligations under
this Section 10.2 shall continue as to any Liability of which any PV
Indemnified Party has notified WCC in accordance with the requirements of
Section 10.3 hereunder on or prior to the date such indemnification would
otherwise terminate in accordance with this Section 10.2, as to which the
obligation of WCC shall continue until the liability of WCC shall have been
determined pursuant to this Section 10.2, and WCC shall have reimbursed all PV
Indemnified Parties for the full amount of such Liability in accordance with
this Section 10.2.
3. Indemnification Procedure.
(a) Any PV Indemnified Party or WCC Indemnified
Party (the "Indemnified Party") seeking indemnification hereunder shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Liability Notice") describing in reasonable detail
the facts giving rise to any Liability for indemnification hereunder and shall
include in such Liability Notice (if then known) the amount or the method of
computation of the amount of such Liability and a reference to the provision of
this Agreement or any other agreement, document or instrument executed
hereunder or in connection herewith upon which such Liability is based;
provided that a Liability Notice in respect of any action at law or suit in
equity by or against a third Person as to which indemnification will be sought
shall be given promptly after the action or suit is commenced; and provided,
further, that failure to give such notice shall not relieve the Indemnitor of
its obligations hereunder except to the extent it shall have been prejudiced by
such failure.
(b) After the giving of any Liability Notice
pursuant hereto, the amount of indemnification to which an Indemnified Party
shall be entitled under this Section 10 shall be determined: (i) by the
written agreement between the Indemnified Party and the Indemnitor; (ii) by a
final judgment or decree of any court of competent jurisdiction; or (iii) by
any other means to which the Indemnified Party and the Indemnitor shall agree.
The judgment or decree of a court shall be deemed final when the time for
appeal, if any, shall have expired and no appeal shall have been taken or when
all appeals taken shall have been finally determined. The Indemnified Party
shall have the burden of proof in establishing the amount of Liability suffered
by it.
(c) The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense, compromise,
or settlement of any third Person Liability, action, or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder, and in any such case the Indemnitor shall
cooperate in connection therewith and shall furnish such records, information
and testimony, and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnified Party in
connection therewith; provided, that the Indemnitor may participate, through
counsel chosen by it and at its own expense, in the
<PAGE> 21
defense of any such Liability as to which the Indemnified Party has so elected
to conduct and control the defense thereof; and provided, further, that the
Indemnified Party shall not, without the written consent of the Indemnitor
(which written consent shall not be unreasonably withheld), pay, compromise or
settle any such Liability except that no such consent shall be required if,
following a written request from the Indemnified Party, the Indemnitor shall
fail, within fourteen (14) days after the making of such request, to
acknowledge and agree in writing that, if such Liability shall be adversely
determined, such Indemnitor has an obligation to provide indemnification
hereunder to such Indemnified Party. The rights of indemnification conferred
in this Section are not intended to modify, diminish or supersede in any
respect any other indemnification rights to which any of the parties hereto may
be entitled.
4. Representations, Warranties and Covenants of the
Parties to be Continuing. All representations, warranties, agreements,
covenants and indemnification of the parties contained in this Agreement shall
survive the execution and delivery of this Agreement, except as may be
specifically provided in this Section 10.
11. Notices. All notices and other communications hereunder shall
be in writing (whether or not a writing is expressly required hereby), and
shall be deemed to have been given (i) if hand delivered or sent by an express
mail service or by courier, then if and when delivered to and received by the
respective parties at the below addresses (or at such other address as a party
may hereafter designate for itself by notice to the other party as required
hereby), (ii) if mailed, then on the third business day following the date on
which such communication is deposited in the United States Mail, by first class
certified mail, return receipt requested, postage prepaid, and addressed to the
respective parties at the below addresses (or at such other address as a party
may hereafter designate for itself by notice to the other party as required
hereby), or (iii) if sent by telecopy, on the date shown on the confirmation of
receipt received by the transmitting party:
1. If to PVCC:
U.S. Highway 58 & 421 West
P.O. Box 386
Duffield Industrial Park
Duffield, VA 24244
Attention: Keith D. Horton
Telecopy Number: (540) 431-4132
<PAGE> 22
1. If to PVEC:
Hand Delivery/Express Mail/Telecopy:
1105 North Market Street
Suite 1300
Wilmington, DE 19801
Attention: A. James Dearlove
Telecopy Number: (302) 427-7388
U.S. Mail:
P.O. Box 8985
Wilmington, DE 19899
1. If to WCC:
14th Floor
2 North Cascade Avenue
Colorado Springs, CO 80803
Attention: President
Telecopy Number: (719) 448-5825
1. Post-Closing Adjustments.
1. Items to Be Prorated. WCC shall have the benefit of
any income from the PV Terminated Leased Premises which accrued prior to the
date of Closing (the "Valuation Date"). WCC shall be responsible for and shall
pay for all of the expenses and liabilities which accrued with respect to the
Released Premises prior to the Valuation Date. Without limiting the generality
of the foregoing, WCC shall be responsible for all real property taxes,
including all assessments ("Property Taxes"), attributable to the Released
Premises for the period prior to the Valuation Date. PVCC shall be responsible
for all Property Taxes attributable to the PV Terminated Leased Premises for
the period from and after the Valuation Date. WCC and PVCC shall each pay half
of any recording, transfer, sales, and similar taxes required to be paid in
connection with the termination of the Existing Lease, insofar as the Existing
Lease relates to the PV Terminated Leased Premises set forth herein.
2. Procedure for Post-Closing Adjustment. WCC shall,
within thirty (30) days after Closing, prepare and deliver to PVCC a notice
(the "Notice") setting forth its calculation of all monies due and owing to
PVCC under the terms of the Existing Lease but which were not ascertainable as
of the date of Closing and pursuant to Section 12.1 above (the "Revenues") and
specifying, in reasonable detail, the basis for such calculation, including any
set-offs or credits which WCC may claim (the Revenues with such deductions
being the "Post-Closing Adjustment"). PVCC shall, within thirty (30) days
after its receipt of the Notice,
<PAGE> 23
respond in writing to WCC either to accept WCC's calculation of the
Post-Closing Adjustment or, if its disagrees with such calculation, specify in
reasonable detail those items or amounts in the Notice with which its disagrees
(the "Disagreement Notice"). PVCC and WCC shall use their best efforts to
reach agreement on the disputed items or amounts in order to determine the
Post-Closing Adjustment. If the parties do not resolve all disputed items
within ten (10) business days after delivery of the Disagreement Notice, this
Agreement and the disputed items and amounts will be submitted to binding
arbitration in Philadelphia, Pennsylvania under the Commercial Arbitration
Rules of the American Arbitration Association (the "Rules"), to be arbitrated
by a single arbitrator selected in accordance with the Rules, the time periods
for all proceedings in the arbitration shall be shortened if necessary so that
a decision shall be rendered within forty-five (45) days after the submission
of the matter to arbitration, and judgment on the arbitral award may be entered
and enforced in any court of competent jurisdiction. Within ten (10) business
days after the final determination of the Post-Closing Adjustment, WCC will pay
to PVCC in immediately available federal funds to an account designated by
PVCC, a sum of money equal to the Post-Closing Adjustment, plus interest
compounded annually at the prime rate announced from time to time by Citibank,
N.A., as in effect on the first day of each applicable month, from the Closing
Date to the date the payment is made. Interest payable under the provisions of
this Section 12.2 shall be computed on the basis of a 360-day year and actual
days elapsed. With respect to Property Taxes attributable to the period prior
to the Valuation Date, but for which a bill has not been issued by the
applicable taxing authorities, at Closing hereunder, WCC shall pay to PVCC (or
at WCC's election, WCC may cause such amount to be deducted from the Cash
Purchase Price) its proportionate share of such Property Taxes based on all
such Property Taxes assessed in the immediately preceding tax year. PVCC shall
notify WCC in writing after its receipt of the actual bill for such Property
Taxes, and WCC shall, within thirty (30) days after its receipt of such notice,
pay PVCC any additional Property Tax due under the terms of this Section 12.
2. Miscellaneous.
1. Retention of and Access to Records After Closing.
(a) For a period of seven (7) years after the
Closing Date, WCC and its representatives shall have reasonable access to all
of the books and records of PVCC relating to the Released Premises prior to the
date of Closing to the extent that such access may reasonably be required by
WCC in connection with matters relating to or affected by the Released Premises
prior to the Closing Date (including for the preparation of tax returns and
financial statements and other reasonable purposes). Such access shall be
afforded by PVCC upon receipt of reasonable advance written notice and during
normal business hours. WCC shall be solely responsible for any costs or
expenses incurred by it pursuant to this Section 13.1(a). If PVCC shall desire
to dispose of any of such books and records prior to the expiration of such
seven-year period, PVCC shall, prior to such disposition, give WCC a reasonable
opportunity, at WCC's expense, to segregate and remove such books and records
as WCC may select as permitted in accordance with this Section 13.1(a).
<PAGE> 24
(b) For a period of seven (7) years after the
Closing Date, PVCC and its representatives shall have reasonable access to all
of the books and records of WCC relating to the Released Premises prior to the
date of Closing. Such access shall be afforded by WCC and its Affiliates upon
receipt of reasonable, advance written notice and during normal business hours.
PVCC shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 13.1(b). If WCC or any of its Affiliates shall desire
to dispose of any of such books and records prior to the expiration of such
seven-year period, WCC shall, prior to such disposition, give PVCC a reasonable
opportunity, at PVCC's expense, to segregate and remove such books and records
as PVCC may select as permitted in accordance with this Section 13.1(b).
2. Brokers. Each party represents to the other that
neither has made any agreement or taken any action which may cause any broker,
agent or Person to become entitled to a brokerage or other fee or commission
from such other party as a result of the transactions contemplated by this
Agreement. PVCC and WCC each hereby indemnifies and shall defend the other
from any and all claims, actual or threatened, for compensation by any third
Person by reason of such party's breach of its representation or warranty
contained in this Section 13.2.
3. Interpretation.
(a) The headings preceding the text of the
sections hereof (and in the Exhibits and Schedules hereto) are inserted solely
for convenience of reference and shall not constitute a part of this Agreement,
nor shall they affect its meaning, construction or effect.
(b) Words importing the singular include the
plural and words importing the plural include the singular and words importing
gender include the masculine, feminine and neuter genders.
(c) A reference to any law includes any amendment
or modification thereto and any successor statute, all rules and regulations
promulgated under such law, and all administrative and judicial authority
exercisable thereunder.
(d) A reference to any Person includes its
successors and permitted assigns.
(e) All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
(f) The words "hereof," "herein," and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole, including all Exhibits and Schedules hereto, and not to
any particular provisions of this Agreement, and
<PAGE> 25
references to Sections, Schedules, and Exhibits are to Sections, Schedules, and
Exhibits to this Agreement unless the context clearly requires otherwise.
4. Background Recitals; Exhibits; Schedules. The
recitals contained in the portion of this Agreement entitled "Background" and
the Exhibits and Schedules referenced herein are hereby incorporated into this
Agreement and made a part hereof.
5. Governing Law; Parties at Interest. This Agreement
shall be governed by Delaware law and (subject to Section 13.6 hereunder) will
bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
6. Assignment. WCC may not assign all or any part of
its interest under this Agreement without the prior written consent of PVCC and
PVEC. PVCC may assign all or any portion of its interest under this Agreement
to a transferee of all or any portion of the Original Leased Premises and in
such event, WCC shall render performance of its obligations hereunder to the
applicable owner or owners of all or any portion of the Original Leased
Premises.
7. Recording. Neither this Agreement nor any of the PV
Ancillary Agreements or the WCC Ancillary Agreements shall be recorded in any
place of public record (except as the parties hereto shall be required in
connection with applicable securities laws and except only the Memorandum), and
if PVCC, PVEC or WCC shall record this Agreement or cause or permit the same to
be recorded without the prior written consent of the other party, such other
party may, at its option, elect to treat such act as a breach of this Agreement
and cause the same to be removed from record at the expense of the party
responsible for such recording.
8. Severability. Any provision in this Agreement or the
PV Ancillary Agreements or the WCC Ancillary Agreements that is unenforceable
or invalid in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability or invalidity without affecting the
remaining provisions hereof or thereof or affecting the operation,
enforceability or validity of such provision in any other jurisdiction.
9. Effect of Permitted Termination. In the event that
this Agreement shall be terminated pursuant to any provision hereof permitting
such termination, all further obligations of the parties under this Agreement
(other than those set forth in Sections 7 and 13.17) shall be terminated
without further liability of any party to the other; provided that nothing
herein shall relieve any party from liability for its willful breach of this
Agreement.
10. Counterparts. This Agreement may be executed in
counterparts, which when assembled with the signatures of all parties hereto,
shall constitute an executed original of this Agreement.
11. Entire Agreement; Amendments. This Agreement and
the Exhibits and Schedules hereto set forth all of the promises, covenants,
agreements, conditions and
<PAGE> 26
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as contained herein, unless otherwise provided therein. This Agreement
may not be changed orally but only by an agreement in writing, duly executed by
or on behalf of the party or parties against whom enforcement of any waiver,
change, modification, consent or discharge is sought. Any term or provision of
this Agreement may be waived, or the time for its performance may be extended,
by the party or parties entitled to the benefit thereof. Any such waiver shall
be validly and sufficiently authorized for the purposes of this Agreement if,
as to any party, it is authorized in writing by an authorized representative of
such party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
12. No Other Beneficiaries. This Agreement is being
made and entered into solely for the benefit of WCC, PVCC and PVEC, and none of
WCC, PVCC or PVEC intends hereby to create any rights in favor of any other
person, as a third party beneficiary of this Agreement, or otherwise.
13. Definitions. For reference purposes, each of the
defined terms used throughout this Agreement has been listed in alphabetical
order, along with the section in which such term is defined, on Exhibit S
attached hereto and made a part hereof.
14. Joint Work Product. This Agreement is the joint
work product of the duly authorized representatives of the parties hereto and,
accordingly, in the event of ambiguity, no inferences shall be drawn against
any party.
15. Knowledge. The "Knowledge of WCC" shall mean the
actual knowledge of any officer of WCC and the "Knowledge of PVCC or PVEC"
shall mean the actual knowledge of any officer of PVCC or PVEC, respectively.
16. Completion of Reclamation. WCC covenants that, with
respect to unfinished reclamation on the PV Terminated Leased Premises as set
forth on Schedule 2.1(g), it shall diligently complete all reclamation required
under all Governmental Permits and under all Environmental or Mining Law.
17. Confidential Nature of Information. Each party
agrees that it will treat in confidence all documents, materials, and other
information that it shall have obtained regarding the other party during the
course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein, and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated,
<PAGE> 27
each party will return to the other party all copies of non-public documents
and materials that have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of PVCC and PVEC, to their respective counsel,
accountants, financial advisors, lenders and, in the case of WCC, to its
counsel, accountants or financial advisors). No party hereto shall use any
confidential information in any manner whatsoever except solely for the purpose
of evaluating the transactions contemplated hereby and no party hereto shall
issue a press release regarding the transactions contemplated under this
Agreement unless and until Closing occurs; provided, however, that after the
Closing, PVCC may use or disclose any confidential information related to the
Released Premises and either party may issue a press release regarding the
transactions which occurred as a result of Closing as long as it has sent to
the other parties hereto a copy of any such press release prior to its public
release. The obligation of each party to treat such documents, materials, and
other information in confidence and to refrain from issuing a press release as
aforesaid shall not apply to any information that (i) is or becomes available
to a person from a source other than such party, (ii) is or becomes available
to the public other than as a result of disclosure by such party or its agents,
(iii) is required to be disclosed under applicable law or judicial process, but
only to the extent it must be disclosed, as determined by the disclosing party
in its reasonable discretion, or (iv) such party reasonably deems necessary to
consummate the transactions contemplated hereby. Notwithstanding the
foregoing, such confidential information may be disclosed by WCC or PVCC and
PVEC to RFM, SMP and Morrison-Knudsen Company, Inc. ("MK") to the extent
necessary in order to carry out the transactions contemplated hereby and by the
WCC Ancillary Agreements and the PV Ancillary Agreements.
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the date first above written.
PENN VIRGINIA COAL COMPANY
By:
-----------------------------------
Name: Keith D. Horton
Title: President
PENN VIRGINIA EQUITIES CORPORATION
By:
-----------------------------------
Name: A. James Dearlove
Title: President
WESTMORELAND COAL COMPANY
By:
-----------------------------------
Name:
Title:
<PAGE> 29
EXHIBIT S
DEFINITIONS
<TABLE>
<CAPTION>
SECTION
TERM DEFINED
<S> <C>
Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6..(d)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Clean Air Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Clean Water Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Contaminant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(iii)
Disagreement Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(x)
Environmental Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(x)
Environmental or Mining Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Existing Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background
FI Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.(b)
FI Termination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.(b)
Governmental Body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(d)
Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(ii)
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.(a)
Indemnitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.(a)
Knowledge of PVCC or PVEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.15
Knowledge of WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.15
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
Liability Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.(a)
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(iii)
Matt Termination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.(a)
MK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.17
MSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Original Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background
PBMI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
PBMI Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(a)
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(i)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(iii)
Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
PV Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.(b)
PV Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
SECTION
TERM DEFINED
- ---- -------
<S> <C>
PV Terminated Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(b)
PVCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
PVCC Consent to Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(b)
PVEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
RCRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(iii)
Release Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Released Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(c)
Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(iii)
Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(e)
Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(d)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
RFM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(a)
RFM Amended and Restated Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.(b)..(i)
RFM APA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.(a)..(i)
RFM Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(a)
RFM Termination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.(b)
RFM Transfer and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(a)
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
SMCRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
SMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(a)
SMP Amended and Restated Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.(b)..(ii)
SMP APA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.(a)..(ii)
SMP Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(a)
SMP Transfer and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(a)
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
Terminated Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(c)
Termination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(b)
Transfer and Assumption Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(c)
TSCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(g)..(i)
Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
WCC Amended and Restated Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
WCC Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.(b)
WCC Consent to Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.(b)
WCC Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
WCC Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.(b)
WRI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background
</TABLE>
<PAGE> 1
EXHIBIT 10(p)
AMENDMENT AND RESTATEMENT
OF
VIRGINIA LEASE
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
<S><C> <C>
1. PREMISES LEASED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. LESSEE'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. LESSOR'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Minerals, Oil and Gas Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Timber Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Railroad Rights-of-Way Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Coal Bed Methane Extraction Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) Other Lessees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. TERM OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Ton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Workable and Merchantable Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Auger Method of Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Highwall Method of Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Royalty Computation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Terms for Royalty Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Coal Excepted from Royalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. MINIMUM MONTHLY RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10. MINING OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Coal Left Standing for Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Coal Left Standing Upon Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
Table of Contents (cont'd)
<TABLE>
<CAPTION>
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<S> <C> <C>
(d) Settlement of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Maps of Existing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Proposed Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11. DISPUTE SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12. INSPECTIONS AND TRESPASS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13. TERMINATION OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Date of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Condition of the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Valuation of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. COKE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
15. TRANSPORTATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Lessee's Rights Without Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Lessor's Rights Without Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Lessee's Rights Subject to Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Lessor's Rights Subject to Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Reports and Payments by Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Reports and Payments by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
16. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
17. BLACK LUNG BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
18. ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19. FORFEITURE CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20. RIGHTS OF SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
22. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 4
Table of Contents (cont'd)
<TABLE>
<CAPTION>
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<S> <C> <C>
23. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
24. FIRE DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
25. DAMAGE TO OTHER COAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
26. PRE-1924 AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE> 5
AMENDMENT AND RESTATEMENT OF
VIRGINIA LEASE
THIS IS AN AMENDMENT AND RESTATEMENT OF VIRGINIA LEASE (the "Lease")
dated May __, 1996, between PENN VIRGINIA COAL COMPANY, a Virginia corporation
("Lessor"), and WESTMORELAND COAL COMPANY, a Delaware corporation ("Lessee").
BACKGROUND
A. Lessee and Lessor (as successor-in-interest to Penn Virginia
Resources Corporation, a Virginia corporation) are parties to a certain
Amendment and Restatement of Lease, effective as of July 1, 1988, as amended
(collectively, the "Original Lease"), pursuant to which Lessee leased, for coal
mining purposes, certain parcels of land situated in Lee and Wise Counties,
Virginia and Harlan and Letcher Counties, Kentucky, as more particularly
described in the Original Lease.
B. Lessee and Lessor now wish to amend and restate the Original
Lease pursuant to the terms and conditions hereunder.
For good and valuable consideration and intending to be legally bound,
Lessor and Lessee hereby agree that the Original Lease is amended and restated
in its entirety to read as follows:
<PAGE> 6
A2. PREMISES LEASED.
Lessor, in consideration of the rent to be paid and the other promises
of Lessee, as set forth below, agrees to lease to Lessee, commencing January 1,
1924, the tracts or parcels of land situated in Lee County and Wise County,
Virginia and in Harlan County and Letcher County, Kentucky as cross-hatched in
red on seven (7) maps set forth as Exhibit F 1 through and including F 7
attached hereto and shaded in magenta on Exhibit F-7, all bearing the legend
"Agreement Among Penn Virginia Coal Company, Penn Virginia Equities Corporation
and Westmoreland Coal Company, dated May ___, 1996" (collectively, the "Lease
Map"), which tracts or parcels of land are identified on the Lease Map as "Area
Leased by Westmoreland Coal Company pursuant to the 1996 Amended Restated
Lease" (sometimes hereinafter referred to as "premises" or "leased premises").
Lessor also leases to Lessee all structures on the leased premises,
not specifically excepted in this Lease, including coke ovens, tipples,
buildings and other improvements. Should Lessor subsequently acquire any other
interest in the premises, those interests will also come under this Lease and
be transferred to Lessee.
A1. LESSEE'S RIGHTS.
This Lease is for coal mining purposes. Lessee shall have the
exclusive right to mine, prepare and take away the coal from the seams
identified within the leased premises shown on the Lease Map, by any deep
method of mining, surface method of mining, auger method of mining, highwall
method of mining or any other method of mining. Lessee agrees that it will
always exhibit due regard for the value of the remaining and adjacent areas as
mineral bearing properties.
<PAGE> 7
The Lessee is granted the right to use the surface of the leased
premises necessary for mining or processing including the right to deposit
refuse, mud, slack, dirt, coke, sawdust and other such materials in such
locations as Lessee and Lessor may agree upon; together with the necessary or
convenient ingress and egress to the leased premises and to other property and
reserves owned or controlled by Lessee as of the date hereof over and through
Lessor's property including underground reserves at locations mutually
acceptable to both Lessor and Lessee.
The Lessee is granted the right to cut, clear and dispose of all
timber, brush, vegetation, etc. on the leased premises necessary or convenient
for Lessee's coal mining purposes hereunder (and not for commercial timbering
purposes) but only after having given Lessor reasonable notice of the areas to
be cut or cleared;
The Lessee is granted the right to use stone, sand and loam from the
leased premises and the right to use any water for mining or processing
purposes originating on or flowing over, through or under the leased premises,
except as reserved to Lessor hereinafter so long as Lessee's use does not
unreasonably interfere with the Lessor's operations. Lessee and Lessor shall
conduct their operations and use of the surface to the mutual benefit of both
Lessee and Lessor, and shall endeavor to cooperate in a manner so as to
minimize, to the extent possible, the effects of mining and surface use upon
the operations above, below and adjacent to the leased premises.
Lessee and Lessor recognize there will be multiple coal lessees
operating on Lessor's property, as well as timber, oil and gas operations.
Recognizing there will be increased demand for surface areas and roads on the
Lessor's property, Lessee and Lessor agree to cooperate with each
<PAGE> 8
other and their permitted assigns to coordinate and plan the development and
use of the coal, surface and roads, and oil and gas pipelines so the
interference to the operations of each is minimized. Nothing in this Lease
shall be deemed or interpreted to abrogate or diminish Lessee's rights under
State or Federal law with respect to oil and gas regulations, to consent to or
approval of any use of the premises.
Lessee shall have the right to use the surface of certain property of
Lessor identified below (which property has not heretofore been identified as
the "leased premises" in this Lease), and the right of ingress and egress in
connection with such property for the purposes described below:
1. for the purposes of reclamation and maintenance in
connection with work required to be performed by Lessee under the
permits listed on Exhibit A attached hereto, the property subject to
such permits for the respective time periods set forth thereon;
2. for the purpose of transportation of coal in
connection with Lessee's operations on the leased premises, each
existing rail line of Lessee on Lessor's properties adjacent to the
leased premises until such time as Lessee no longer reasonably
requires such rail lines for its operations on the leased premises;
3. for the purpose of obtaining power in connection with
Lessee's operations on the leased premises and in connection with
Lessee's obligations to maintain certain power lines, such power lines
of Lessee as presently exist on Lessor's properties adjacent to the
leased premises until termination of the Lease; and
<PAGE> 9
4. for the purpose of continuing Lessee's use of certain
facilities in connection with Lessee's operations on the leased
premises, such buildings and improvements as set forth on Exhibit B
attached hereto for the respective time periods set forth thereon.
All of the above-described surface areas shall be deemed to be
part of the "premises" or "leased premises" for purposes of Articles 3, 5,
10(g), 11, 12, 13, 16, 17, 18, 19, 20, 21, 22, 23 and 24 of this Lease.
Subject to the provisions of Article 18 hereunder, including
without limitation the provisions requiring Lessor's reasonable consent, Lessee
may assign its rights under this Lease independently from its other rights
under this Lease, insofar as this Lease relates to the following two portions
of the leased premises: (1) that portion shaded in magenta on Exhibit F-7
attached hereto and identified thereon as "Addition to 1996 Amended Restated
Lease"; and (2) that portion cross-hatched in red on Exhibit F-7 attached
hereto and identified thereon as "Upper Parsons Seam - 16.0 Acres."
<PAGE> 10
A1. LESSOR'S RIGHTS.
(a) MINERALS, OIL AND GAS RIGHTS. Lessor reserves the exclusive
right to all minerals (except the coal leased hereunder), oil and gas in, under
or upon the leased premises. This includes the full right of ingress and
egress and all other rights necessary for the efficient discovery, production,
removal, processing, preparation and transportation of such minerals, oil and
gas. Lessor may use as much of the surface of the premises as is necessary to
carry out its operations involving such minerals, oil and gas. Lessor may
assign all or any part of these mineral, oil and gas rights, or any interest
therein, to any other person or entity. Lessor reserves, for itself or for
anyone to whom it assigns its rights, the right-of-way for power lines and
telephone lines and the right to set up or install buildings or machinery on
the premises for its mineral, oil and gas operations. Lessor agrees to consult
with Lessee before placing or locating any such right-of-way and/or buildings
or machinery on the premises.
(b) WATER RIGHTS. Lessor reserves the right to use as much of the
water originating on or flowing through or under the leased premises as may be
required for Lessor's timber, mineral, oil or gas operations on the premises.
However, Lessee shall have the exclusive right to use water from any wells that
it drills on the premises.
(c) TIMBER RIGHTS. Lessor reserves the right to go onto the
premises and to use as much thereof as is necessary for the cutting, processing
and transportation of the timber on the leased premises. This shall include
the right to erect sawmills and other buildings and to store timber and logs on
the premises for the purpose of exercising such rights. Lessor also reserves
the right to construct and operate roads and railways of any kind on the
premises for the purpose of
<PAGE> 11
exercising such rights. Lessor may assign to any person or entity these rights
relating to the surface of the premises. Lessor agrees to give Lessee
reasonable notice of its or any assignee's intentions to exercise any right
reserved under this Article and agrees to cooperate in good faith with Lessee
in the exercise of any such rights to the mutual benefit of both Lessor and
Lessee.
(d) RAILROAD RIGHTS-OF-WAY RIGHTS. Lessor reserves the right to
grant to any railroad rights-of-way to as much of the surface of the premises
as may be required for the railroad to reach points on or beyond the premises.
Lessor may also grant rights-of-way to such railroad for yards, stations,
sidings and similar purposes. These rights, however, may only be exercised
after consultation with Lessee.
(e) COAL BED METHANE EXTRACTION RIGHTS. Lessor reserves the right
to extract methane for commercial purposes from the leased premises; however,
such right shall not in any manner limit or restrict Lessee from venting and
releasing methane as a part of its mining operations and activities.
(f) OTHER LESSEES. Lessee and Lessor have acknowledged the
probability that multiple lessees will have leasehold rights on Lessor's
property above, below and adjacent to the leased premises. Lessor agrees that
in connection with such other current or future leasehold estates, Lessor shall
not grant to any other lessee a dominant estate in connection with such other
lessee's leasehold interest. Lessee acknowledges and agrees that its leasehold
interest and estate created hereby is neither dominant nor subservient to the
interest or estate of any such other current or future lessee of Lessor's
property above, below and adjacent to the leased premises and shall be subject
to and benefit from the cooperation provisions of Article 2 above.
<PAGE> 12
A2. TERM OF LEASE.
Lessee's rights to the leased premises, as set forth in this Lease,
shall continue until all the workable and merchantable coal (as defined in
Article 6) on or under the premises has been exhausted, unless either party's
failure to comply with any of the terms and conditions of this Lease leads to
an earlier termination.
A3. QUIET ENJOYMENT.
Lessor promises that as long as the rental is paid and the other terms
of this Lease are fulfilled, Lessee, or anyone who lawfully succeeds to
Lessee's interest, shall be able peacefully to enjoy, possess and use the
premises without interruption or disturbance from any other persons.
A4. DEFINITIONS.
(a) YEAR. A year, as used in this Lease, will begin on the 1st
day of January and end on the 31st day of December, unless the context
indicates otherwise.
(b) TON. A ton of coal or coke, as referred to in this Lease,
contains two thousand pounds, avoirdupois weight.
(c) WORKABLE AND MERCHANTABLE COAL. Workable and merchantable
coal means coal which, when reached in the prosecution of Lessee's operations
hereunder, can be ordinarily mined and sold at a profit by the use of such then
current modern mining methods and cleaning machinery and equipment as are
reasonably adapted to practical, efficient and economical mining under the
<PAGE> 13
conditions found and in conformity with prudent mining practices and diligent
and skillful management.
(d) AUGER METHOD OF MINING. A method of mining used in
conjunction with strip mining which utilizes a machine on the surface which
mechanically powers a fixed cutter head which bores into the exposed coal seam
and conveys the coal to the surface by means of spiraled steel (auger). A
Salem auger with single, double or triple heads is an example (as of July 1,
1988) of a machine utilized in the auger method of mining.
(e) HIGHWALL METHOD OF MINING. A method of mining which utilizes
a machine placed on and operated from the surface with an independent cutting
device (generally similar to a continuous miner head) which is electrically or
hydraulically powered from the surface. The machine is used to excavate into a
coal seam which has been exposed (usually by strip mining) and to recover coal
without further removal of overburden. The Thin Seam Miner, Video Miner,
Vacuum Miner and Satellite Miner are examples (as of July 1, 1988) of machines
utilized in the highwall method of mining.
<PAGE> 14
A5. ROYALTIES.
(a) SCHEDULES. On or before the 25th day of each calendar month,
Lessee shall pay to Lessor at its office in Duffield, Virginia (or any other
place that Lessor may designate in writing), a royalty on the coal mined from
the leased premises that was either shipped from the premises or sold for
consumption on the premises during the preceding calendar month. The royalty
shall be determined by multiplying the gross sales proceeds, as adjusted under
Section (b) of this Article, by the applicable percentage from the following
schedules:
SCHEDULE 1. On coal mined by strip and auger methods:
July 1, 1988 through 9.0%
June 30, 1998
SCHEDULE 2. On coal mined by the deep method, except from
the seams described in
Schedule 3 below:
July 1, 1988 through 7.0%
June 30, 1998
SCHEDULE 3. On coal mined by the deep method from the
Marker Seam (which involves
high mining costs):
July 1, 1988 through 6.0%
June 30, 1993
SCHEDULE 4. On coal mined by the highwall method:
July 1, 1988 through 8.0%
June 30, 1998
Notwithstanding the foregoing percentages or the royalty computation
calculated pursuant to Article 7, Section (b), the minimum royalty to be paid
to Lessor shall be $1.50 per ton.
<PAGE> 15
However, this per ton minimum shall not apply to the royalty computation on
coal mined by the deep method from the Marker Seam from July 1, 1988 through
June 30, 1993.
With respect to that portion of the leased premises shown in red on
Exhibit E attached hereto and identified as Drawing Number BULSE-AB.Dwg, dated
August, 1994, in lieu of the royalties set forth in this Article 7(a), Lessee
shall pay to Lessor a flat royalty rate of $1.75 per clean ton of coal sold for
all coal mined from such portion of the leased premises and either shipped from
the premises or sold for consumption on the premises during the preceding
calendar month, and such payments shall otherwise be made in the manner set
forth in this Lease.
(a) ROYALTY COMPUTATION. The royalty payment shall be calculated
monthly on a mine-by-mine basis by applying the applicable percentage royalty
rate for the seam and method of mining to the remainder of the gross sales
proceeds (i.e., amount billed to the purchaser) for the month after deduction
of the following items:
1. The total cost of railroad transportation for the month from
the mines to Lessee's Appalachia Transloader facility. This deduction applies
only to coal shipped from the Transloader and applies whether or not the
selling price of such coal expressly includes such cost. If the selling price
of any other coal from the premises includes any freight or transportation
charges, those charges shall be deducted from the price of that coal.
2. The total fee charged for use of Lessee's Appalachia
Transloader facility. This deduction applies only to coal shipped from the
Transloader and applies whether or not the selling price of such coal expressly
excludes such cost.
<PAGE> 16
3. The total amount of those federal, state and local taxes paid
by Lessee with respect to the coal, which are either measured directly by such
coal or by the gross proceeds of such coal (such as severance taxes,
reclamation taxes and fees, and black lung assessments) or which are
substantially unique to the energy industry. These deductions shall not
include general, real or personal property taxes; general taxes on income,
earnings or net proceeds; general business or license taxes (except those
license taxes which are in lieu of severance taxes); general sales taxes; or
social security, employment or similar taxes. Deductions for taxes shall be
made under this subsection whether or not the selling price of such coal
expressly includes such taxes.
4. A royalty deduction component calculated by multiplying the
gross sales proceeds by the applicable royalty percentage rate for the seam and
method of mining.
If any at any time during the term in which these royalty rates are in
effect, the structure of taxes applicable to Lessee becomes significantly
different than it was on July 1, 1988, so that the ratio of taxes deductible
from the selling price (Item 3 above) to the taxes not so deductible is
significantly changed, the parties will attempt in good faith to renegotiate
the provisions of that subsection. If they are unable to do so within thirty
(30) days after notice to one party by the other, either party may refer the
matter to arbitration as provided in Article 21. The arbitrators may be asked
to determine whether or not a renegotiation is justified or what the change in
the deduction should be or both.
(b) TERMS FOR ROYALTY RATES. The royalty rate schedules and the
per ton minimum in Section (a) above will be effective for ten (10) years (that
is, until June 30, 1998), with the exception of the rate in Schedule 3 above
("high cost" coal) which will remain effective until
<PAGE> 17
June 30, 1993. Lessee may request Lessor to extend the term of any of the
schedules in Section (a) above as to a specific tonnage of coal where such
extension is reasonably necessary to effectuate a mutually beneficial,
advantageous long-term sales agreement with a third party for such coal.
Lessee may make such request to Lessor's President in Duffield, Virginia (or
such other representative as Lessor may hereafter designate), and accompany it
with sufficient detail so that it can be properly analyzed. Lessor's President
(or other representative as the case may be) shall approve, disapprove or
modify the request within ten (10) working days. If he disapproves it, or
modifies it in a way that is unacceptable to Lessee, Lessee may refer the
request to the chief executive officers of Lessee and Penn Virginia
Corporation, the parent company of Lessor, who shall consider the request in
good faith for an additional five (5) working days. If they cannot agree, the
request shall be deemed disapproved.
At any time within one (1) year prior to the final dates in the
royalty rate schedules (that is, after June 30, 1997 for all but the high cost
coal and after June 30, 1992 for the high cost coal) either party to this Lease
may call for negotiation to set new rate schedules to take effect at the
conclusion of the present rate schedules.
If the royalty rate schedules in this Lease terminate before the
parties can reach agreement on subsequent rates, the rates in effect at that
time shall continue in effect until the parties can agree on new royalty rates.
If the parties are unable to agree on new royalty provisions within ninety (90)
days after a call for negotiations, the dispute shall be submitted to
arbitrators as provided in Article 21, who shall fix such royalty rates at what
in their judgment would be fair and reasonable
<PAGE> 18
provisions in a lease then made of the leased premises, without reference to
the royalty provisions previously in effect. New royalty rates agreed to by
the parties or fixed by the arbitrators shall apply retroactively to all coal
shipped since the termination date of the old rates, and suitable adjustments
in the royalty payments shall be made.
(c) COAL EXCEPTED FROM ROYALTY. Lessee may use a reasonable
quantity of coal on the premises in order to carry out its operations without
paying any royalty on that coal. Also, there shall be no royalty on any coal
disposed of as a waste product of Lessee's operations unless and until it is
later reclaimed and sold. Regular royalties shall be paid on any coal mined
from the premises that is consumed or shipped by anyone other than Lessee.
(d) INTEREST. Lessee shall pay interest to Lessor at the rate of
six percent (6%) per year compounded quarterly on all amounts not paid when
due.
A2. MINIMUM MONTHLY RENTAL.
(a) Lessee shall pay to Lessor at its office in Duffield,
Virginia, or at any other place that Lessor may designate in writing, each
calendar month the sum of FIFTEEN THOUSAND THREE HUNDRED FIFTY DOLLARS
($15,350.00) in cash as a minimum monthly fixed rent for the leased premises.
This sum shall be due each month regardless of whether or not Lessee mines any
coal from the premises during the month, subject to the suspension provisions
in Sections (c) and (d) below. Payment for each calendar month shall be made
on or before the 25th day of the succeeding month. Interest shall accrue at
the rate of six percent (6%) per year compounded quarterly on any sum not paid
when due.
<PAGE> 19
(b) Each month production royalties for that month shall be
credited against this minimum rental so that no minimum rental payment shall be
due in any month where production royalties equal or exceed the minimum rental.
In any month where the production royalties fall short of the minimum rental,
the difference between the minimum rental paid and the production royalties for
that month shall be credited to Lessee's account for subsequent months. Lessee
shall then have the right to produce and ship, without paying any royalty, such
quantities of coal as would produce, at the royalty rates prevailing at that
time, a royalty amount equal to that credit. This right must be exercised in
the same calendar year as the credit accrues or within two (2) calendar years
thereafter. However, this right shall be limited by the termination of this
Lease, by expiration or otherwise.
(c) If Lessee, at any time, claims that the merchantable and
workable coal in the leased premises has been exhausted or that there remains
an insufficient amount of such coal that can be mined, using the methods
contemplated in this Lease, to produce at the prevailing royalty rate the
minimum monthly rental, then, upon verification of that claim, the minimum
monthly rental shall be reduced to an amount which can be produced by the
diligent mining efforts of Lessee, or this Lease shall be terminated. If
Lessor and Lessee cannot agree on these matters, the dispute will be settled by
arbitrators as provided in Article 21, in which event the arbitrators shall
decide what reduction, if any, should be made in the minimum monthly rental, or
whether the Lease should be terminated.
<PAGE> 20
(d) If, because of force majeure, Lessee's coal operations on the
leased premises are at any time, for a period exceeding ninety (90) consecutive
days, suspended or reduced to a tonnage insufficient to pay the minimum rental,
the minimum monthly rental provisions described above shall thereafter be
suspended until the force majeure ends. If there is a dispute between Lessee
and Lessor as to whether or not a force majeure has occurred or is continuing,
or as to whether or not Lessee has used all reasonable possible means to avoid,
end or mitigate the force majeure, the dispute shall be referred to arbitration
as provided in Article 21 of this Lease. As used in this Section, "force
majeure" means any act or occurrence, beyond Lessee's control, that reasonably
prevents the mining, processing, transportation or delivery of coal, including,
but not limited to, the following: acts of God, legislation or regulations of
any governmental body, court orders or judgments, fire, flood, explosion or
other casualty, strikes, labor disputes or shortages, sabotage, acts of the
public enemy, riots, civil commotion, acts of any civil or military authority,
wars, major mine, plant, facility or equipment damage or failure, including
such failures caused by negligence of employees, materials shortages, embargoes
or unavailability of transportation facilities, faults in coal seams or acts on
the part of Lessor.
A3. REPORTS.
(a) Lessee shall accompany each payment of royalties or rentals
under Articles 7 and 8 with a detailed report showing all sales of coal,
calculation of selling prices, calculation of deductions to determine the
royalty base, calculation of royalties and such other information as Lessor may
reasonably request to verify the accuracy of the payments.
<PAGE> 21
(b) On or before the 25th day of each month, Lessee shall deliver
to Lessor accurate reports showing the total tonnage and source of all coal
shipped from or sold for consumption on the property of Lessee's Virginia
Division during the preceding calendar month. Such reports shall also show the
tonnage of highwall mined coal, the tonnage of surface-mined and auger-mined
coal and the tonnage of deep-mined coal produced from each mine on the leased
premises for which a tonnage royalty is payable to Lessor that has been so
shipped or sold during the preceding calendar month. These reports shall be in
a form satisfactory to the Lessor and shall be delivered to Lessor's office at
Duffield, Virginia (or any other place that Lessor may designate in writing).
(c) Upon Lessor's written request, Lessee shall furnish monthly
railroad certificates which accurately show the quantity of coal and coke
shipped from the leased premises during the preceding calendar month. These
certificates will be signed by the weightmaster, or other appropriate officer
of any railroad company transporting coal or coke from the leased premises, and
will be delivered to Lessor's office on or before the 15th day of each month.
Lessee agrees to conform to any other reasonable requirements of Lessor to
assure the accurate ascertainment of the weight of any coal shipped from or
sold for consumption on the premises.
(d) Lessee's books and records pertaining to the mining and
disposition of coal from the leased premises shall be available for inspection
and copying by Lessor at all reasonable times, and shall be kept in a manner
satisfactory to Lessor.
<PAGE> 22
A4. MINING OPERATIONS.
(a) METHODS. Henceforth the parties will communicate and
cooperate in all respects so that the viewpoints and interests of both are
taken into account.
Lessee shall continue to develop the leased premises in an orderly
manner to remove and process the coal as completely and as efficiently as
possible. Lessee will mine the workable and merchantable coal in the leased
premises in the most diligent and workmanlike manner consistent with
established mining practices and methods for conditions encountered, taking
into account available capital; the advisability of utilization of the
particular method, considering access to labor, necessary expertise, and sound
management practices; operating risks and safety and environmental
considerations; and the projected profitability of the particular method.
Lessee will not neglect or abandon any workable and merchantable coal that
could be removed in such a manner.
Lessee shall mine through portions of the coal seams that are faulty
or would yield unmerchantable coal, if the amount and quality of coal lying
beyond the fault appear economically justifiable. Any disputes with regard to
the placement of headings or airways shall be resolved in the manner described
in Article 11. Lessee will leave adequate pillars and supports of coal to
provide full security for all mine openings and workings, but it will not leave
any more workable and merchantable coal in those pillars and supports than is
necessary for such security.
The suitable, approved methods of mining include the deep method of
mining, surface method of mining, auger method of mining and highwall method of
mining. Lessor expressly approves the use of these methods. If Lessee
proposes to mine any area or areas by either the auger
<PAGE> 23
method of mining or the highwall method of mining, Lessee must first obtain
Lessor's written consent; however, Lessor shall not unreasonably withhold such
consent. Lessee shall be responsible for all costs, charges or assessments
resulting from the use of these methods, including those imposed by any
existing or future legislation requiring the restoration of the surface.
Lessee shall reimburse and otherwise protect Lessor from any such costs that
might be assessed against Lessor.
(a) COAL LEFT STANDING FOR SUPPORT. Lessee shall have the
privilege of leaving unmined pillars of coal which are necessary to support
existing or planned surface features such as roads, railroads, streams,
pipelines, buildings or other structures on the leased premises. There shall
be no royalty payment on coal left for these support pillars.
(b) COAL LEFT STANDING UPON ABANDONMENT. If Lessee, in abandoning
any portion of a mine, leaves standing any coal which is workable and
merchantable according to those criteria enumerated in Section (a) above which
Lessor believes is not necessary for the security of the mine, Lessor may give
Lessee a written notice requesting Lessee to remove that coal. If Lessee has
not notified Lessor of its intent to remove or has not commenced such removal
within thirty (30) days after having received notice, the question of the
necessity of leaving the coal standing shall be resolved under the procedures
described in Article 11. If it is determined that Lessee could safely remove
any of the coal left standing, then within a period determined by the parties
or the arbitrators, as the case may be, Lessee shall either mine that coal or
pay Lessor the royalty that would have been due had the coal been mined and
shipped.
<PAGE> 24
(c) SETTLEMENT OF DISPUTES. If Lessor at any time believes that
any mine on the leased premises is not being worked in a proper manner, or is
being worked in a manner that would be harmful to the future production from it
or any other seam on the leased premises, or if there are any disputes as to
what coal is workable and merchantable, all such questions shall be resolved in
the manner provided for in Article 11 of this Lease.
(d) MAPS OF EXISTING OPERATIONS. Lessee shall furnish to Lessor
maps and/or drawings which accurately show the workings and extensions of
Lessee's mining operations on the leased premises through June 30 and December
31 of each year. In addition, they shall include any other reasonable
information requested by Lessor. The maps and/or drawings shall be on an
acceptable scale and shall be certified by a registered engineer. The maps
and/or drawings shall be delivered to Lessor at its office in Duffield,
Virginia (or such place as it may designate in writing) at the time such
material is submitted to the Mine Safety and Health Administration of the U.S.
Department of Labor but in no event later than March 15 and September 15 of
each year. Lessor shall also have the right to examine at reasonable times all
other maps of Lessee pertaining to the leased premises and to make copies of
them.
(e) PROPOSED PLANS. Upon request by Lessor at any time, Lessee
shall prepare and make available for inspection and copying by Lessor, at the
appropriate office of Lessee, plans it may have for the projection of its
mining and other operations including reclamation and conservation plans during
the next six (6) months, and such other long-range plans that shall have been
completed, and all similar plans of its contractors and sublessees. These
plans shall show, in the case of mining operations, the proposed methods of
haulage, ventilation, drainage and roof
<PAGE> 25
support in the areas proposed to be mined, including entries, haulways, airways
and rooms, with specifications and dimensions. Such plans shall also include
any other reasonable information or explanation requested by Lessor, and they
shall be certified by a registered engineer.
Lessee shall promptly notify Lessor of any proposed material changes
in its mining, reclamation or conservation plans or practices, or those of its
contractors and sublessees, and Lessee shall consult with Lessor before any
plan or change is adopted.
Lessor may at any time request that any plans or changes proposed by
Lessee or any of its contractors or sublessees be modified in order to conform
to any law, regulation or sound principle of mining, to increase coal
production and recovery or otherwise to conform to any provision of this Lease.
Lessee shall consider any such request and shall promptly communicate its
response to Lessor. If the parties are unable to agree on such modifications,
the dispute shall be settled in accordance with the procedures set forth in
Article 11.
Lessee agrees to give Lessor reasonable notice of its or any
contractor or sublessee's intentions to permit (under applicable state law) any
area on or in the leased premises and agrees to cooperate in good faith with
Lessor in this regard to the mutual benefit of both Lessor and Lessee.
(a) MAINTENANCE OF PROPERTY. Lessee will maintain the leased
premises in an orderly and safe condition and will maintain all improvements on
the premises in good working order and condition at all times. Lessee will
make all repairs, renovations, additions and improvements necessary or
desirable to maintain the proper condition of the premises and to assure that
Lessee's coal operations will always be carried out in an efficient, safe and
businesslike manner and in
<PAGE> 26
substantial compliance with all applicable laws. Lessee will either remove all
unused structures or maintain them (or any area from which they are removed) in
a safe, orderly condition.
A2. DISPUTE SETTLEMENT.
Any dispute which is to be settled under this Article shall in the
first instance be reviewed by the respective chief mining engineers of the
parties. If the chief mining engineers cannot resolve the dispute within
thirty (30) days after one party notifies the other party of the dispute, the
matter will be referred to Lessee's Senior Vice President- Coal Mining and
Lessor's President (or to the persons succeeding to the responsibilities of
such persons). If those officers cannot agree within a further period of
thirty (30) days, the matter will be referred to a committee consisting of
representatives from the Boards of Directors of Lessee and Lessor for
resolution. If the dispute remains unresolved for sixty (60) days after
referral to that committee, it shall be settled by arbitration as provided in
Article 21 of this Lease.
A3. INSPECTIONS AND TRESPASS.
(a) Lessor, or any persons acting on its behalf, shall have the
right to enter at all reasonable times the leased premises, including the mines
and buildings of Lessee and all areas on or below the surface, for the purpose
of inspecting, surveying or examining any aspect of Lessee's operations on the
premises. Lessee will furnish Lessor with all convenient means of access to
inspect the premises, without cost to Lessor.
<PAGE> 27
(b) Lessor, or any person acting on its behalf, shall also have
the right to enter the premises at all reasonable times to inspect for or
prevent any trespass. Lessee will use its best efforts to keep trespassers off
the premises, and will take, when appropriate, legal action to prosecute any
trespassers.
A4. TERMINATION OF LEASE.
(a) DATE OF TERMINATION. Unless terminated at an earlier date
because of forfeiture, breach or other reason, this Lease shall terminate when
all the workable and merchantable coal has been mined from the leased premises.
This fact may be determined either by agreement between Lessor and Lessee, or
if they cannot agree, by arbitration as provided in Article 21 of this Lease.
(b) CONDITION OF THE PREMISES. At the termination of this Lease
for any reason other than the exhaustion of coal, Lessee shall leave the
drifts, shafts, slopes and all other openings, headings and chambers in a
secure and proper state, consistent with good mining practice. However, Lessee
shall have the right, in the course of its mining operations, to rob pillars in
accordance with the methods of mining contemplated by this Lease. Any disputes
as to whether the mines have been left in the proper condition shall be settled
by arbitration as provided by Article 21.
(c) VALUATION OF IMPROVEMENTS. Within thirty (30) days after the
termination of this Lease (except in the case of termination by forfeiture,
when these provisions shall not apply), Lessor may give Lessee written notice
of its desire to have all the improvements on the premises
<PAGE> 28
appraised. Lessee shall not remove any improvements from the premises until
Lessor has had the opportunity to exercise its rights of appraisal and
retention, as provided in this Section.
When Lessor gives notice of its desire for appraisal, three competent
appraisers shall be appointed in the manner provided for appointing arbitrators
in Article 21 of this Lease. These appraisers shall, as soon as possible,
furnish Lessor and Lessee with a detailed report showing the appraised value of
each article appraised and the total appraised value of all such articles.
Except as provided in the following paragraph, the valuation by the appraisers,
or by a majority of them, shall be conclusive of the value of the property.
Lessor shall have the right to retain the appraised property, or any
article of it, if within thirty (30) days after the receipt of the appraisers
report, Lessor gives written notice to Lessee of its intention to retain the
items. Lessor shall pay to Lessee the appraised value of any items so
retained, less any rents, royalties or other sums due from Lessee at that time.
However, if Lessee believes that Lessor's retention of certain improvements
would reduce the value of any articles not retained, Lessee may object to
Lessor's selection of improvements to be retained. If the parties cannot
resolve the dispute, it shall be submitted to arbitration, as provided in
Article 21, to determine whether additional compensation is due to Lessee.
Lessor shall also have the right, if it notifies Lessee in writing at
least one (1) month before the expiration of this Lease, to use any or all of
the property and improvements on the premises, for a period of up to four (4)
months after the expiration of the Lease, provided Lessor compensates
<PAGE> 29
Lessee for the fair value of such use as agreed upon by the parties or as fixed
by the arbitrators as provided in Article 21.
If Lessor declines to retain or use any of Lessee's property, Lessee
may remove that property from the premises at any time within eight (8) months
after the expiration of this Lease, provided that Lessee has paid all
royalties, rents and other sums due Lessor. If Lessor has exercised its rights
to use any of Lessee's property for up to four (4) months, as described above,
Lessee may remove that property from the premises at any time within (8) months
after Lessor has ceased using it, again provided that Lessee has paid all sums
due Lessor under this Lease.
A1. COKE.
Nothing contained in this Lease shall prevent Lessee from engaging in
coking operations on the leased premises, but before engaging in any coking
operations, Lessee shall notify Lessor of its intention to do so. The parties
shall then determine a reasonable royalty to be paid for the coal used in coke
manufacturing on the leased premises. If the parties cannot agree on such a
royalty within ninety (90) days after Lessee's notification to Lessor, the
royalty shall be fixed at such fair and reasonable level as shall be determined
by arbitration as provided in Article 21 of this Lease. Once set, either by
agreement or arbitration, the royalty on coke shall remain in effect until the
termination of the coal royalty rate schedules in Schedules 1, 2, 3 or 4
(depending on the source of the coal coked) of Section (a) of Article 7 are
renegotiated, and it shall then be renegotiated under the same conditions that
apply to the renegotiation of such coal royalties under Section (c) of that
Article.
<PAGE> 30
Nothing in this Lease shall prevent Lessee from removing coal mined on
the leased premises to be coked elsewhere. When coal mined on the leased
premises is shipped elsewhere for coking, the coal royalties provided in
Article 7 shall apply to that coal and no coke royalty shall be payable.
Lessee shall conform to the reasonable requirements of Lessor to
assure the accurate ascertainment of the weight of coal used in coke
manufacturing on the leased premises.
A1. TRANSPORTATION RIGHTS.
(a) LESSEE'S RIGHTS WITHOUT CHARGE. Lessor, to the extent it has
the power to do so and subject to the cooperation provisions of Article 2
above, grants to Lessee (i) the right to transport coal and coke mined, removed
or produced from any lands, wherever located, which are owned or controlled by
either Lessor or Lessee (even if such lands may be leased to others) as of the
date hereof, onto, across and/or through the leased premises and (ii) the right
to transport coal and coke from the leased premises onto, across and/or through
any lands, wherever located, owned or controlled by Lessor as of the date
hereof. There shall be no charge for any such transportation of coal and coke.
(b) LESSOR'S RIGHTS WITHOUT CHARGE. Lessee, to the extent it has
the power to do so, grants to Lessor the right to transport coal and coke
mined, removed or produced for any lands, wherever located, which are owned or
controlled by either Lessor or Lessee (even if such lands may be leased to
others) as of the date hereof, onto, across and/or through any lands owned or
controlled
<PAGE> 31
by Lessee as of the date hereof. There shall be no charge for any such
transportation of coal and coke.
(c) LESSEE'S RIGHTS SUBJECT TO CHARGE. Lessor, to the extent it
has the power to do so and subject to the cooperation provisions of Article 2
above, grants to Lessee the right to transport coal and coke mined, removed or
produced from any lands, wherever located, which are not owned or controlled by
either Lessor or Lessee onto, across and/or through the leased premises and/or
any lands, wherever located, owned or controlled by Lessor as of the date
hereof. Lessor also grants Lessee the right to prepare this coal and coke on
the leased premises and/or such lands and to ship it from such premises and/or
lands.
There may be a charge for the transportation of coal and coke covered
by this Section (c) effective as of January 1, 1990. This charge shall be one
percent (1%) of the purchase price of such coal or coke or Twenty-Five Cents
($0.25) for each ton of such coal or coke, whichever is higher, unless the
Lessor and Lessee otherwise agree. These provisions notwithstanding, no such
charge shall be imposed on any coal mined or removed by Lessee from lands being
sublet by Lessee from Blue Diamond Coal Company under an agreement dated March
28, 1969.
(d) LESSOR'S RIGHTS SUBJECT TO CHARGE. Lessee, to the extent it
has the power to do so, grants to Lessor the right to transport coal and coke
mined, removed or produced from any lands, wherever located, which are not
owned or controlled by either Lessor or Lessee onto, across and/or through any
lands, wherever located, owned or controlled by Lessee as of the date hereof.
Lessee also grants Lessor the right to prepare this coal and coke on such lands
and to ship it from such lands.
<PAGE> 32
There may be a charge for the transportation of coal and coke covered
by this Section (d) effective as of January 1, 1990. This charge shall be one
percent (1%) of the purchase price of such coal or coke or Twenty-Five Cents
($0.25) for each ton of such coal or coke, whichever is higher, unless the
Lessor and Lessee otherwise agree.
(e) REPORTS AND PAYMENTS BY LESSEE. On or before the 25th day of
each calendar month, Lessee shall deliver to Lessor at its office in Duffield,
Virginia (or any other place that Lessor may designate in writing) a statement
of the tonnage of all coal and coke transported onto, across and/or through
either the leased premises or any of the applicable lands specified in Sections
(a) and (c) of this Article during the preceding calendar month, whether or not
subject to charge, indicating the origin and the destination of such coal and
coke. This statement shall be in a form that Lessor finds satisfactory, and
Lessor shall have the right to examine Lessee's books for the purpose of
verifying the statement. Lessee agrees to conform to any other reasonable
requirements of Lessor for assuring the accurate ascertainment of the weight of
this coal and coke.
On or before the 25th day of each calendar month, Lessee shall pay to
Lessor at its office in Duffield, Virginia (or any other place that Lessor may
designate in writing) the appropriate charges, if any, on coal or coke
transported onto, across and/or through either the leased premises or any of
the applicable lands during the preceding calendar month under the provisions
of Section (c) of this Article.
(f) REPORTS AND PAYMENTS BY LESSOR. On or before the 25th day of
each calendar month, Lessor shall deliver to Lessee at its appropriate office a
statement of the tonnage of all coal and coke transported onto, across and/or
through any of the applicable lands specified in Sections
<PAGE> 33
(b) and (d) of this Article during the preceding calendar month, whether or not
subject to charge, indicating the origin and the destination of such coal and
coke. This statement shall be in a form that Lessee finds satisfactory, and
Lessee shall have the right to examine Lessor's books for the purpose of
verifying the statement. Lessor agrees to conform to any other reasonable
requirements of Lessee for assuring the accurate ascertainment of the weight of
this coal and coke.
On or before the 25th day of each calendar month, Lessor shall pay to
Lessee at its appropriate office the appropriate charges, if any, on coal or
coke transported onto, across and/or through any of the applicable lands during
the preceding calendar month under the provisions of Section (d) of this
Article.
A2. TAXES.
While this Lease is in force, Lessee shall pay all severance and
personal property taxes and assessments imposed by any governmental body with
respect to improvements or personal property placed or erected on the leased
premises or with respect to the coal mined therefrom. Lessee shall reimburse
Lessor for real property taxes and assessments imposed on the premises, which
taxes shall be payable in the first instance by Lessor. However, Lessor, not
Lessee, shall pay all taxes or assessments on any timber, mineral, oil and gas
rights reserved by Lessor.
If Lessee is delinquent in paying any of the taxes or assessments for
which it is responsible, Lessor may make the required payments. In that event
Lessee shall promptly reimburse Lessor for such payments, including any fines
or extra expenses incurred by Lessor with respect to the payments, together
with interest at the rate of six percent (6%) per year compounded quarterly.
<PAGE> 34
A1. BLACK LUNG BENEFITS.
Lessee agrees that it shall comply with all of the valid terms and
provisions of the Black Lung Benefits Act; Title IV of the Federal Mine Safety
and Health Act of 1977; the Internal Revenue Code, 26 U.S.C. 1 et seq.; Black
Lung Benefits Reform Act of 1977; Black Lung Benefits Revenue Act of 1981; and
Black Lung Benefits Amendments of 1981, as now or hereafter amended, and all
valid rules and regulations adopted pursuant thereto.
Upon Lessor's request, Lessee shall provide appropriate but reasonable
certification that it has provided security in compliance with all applicable
laws, rules and regulations for the payment of those benefits for which it is
lawfully obligated to provide under such laws, rules and regulations.
Lessee agrees that it will indemnify and hold Lessor harmless for
liability or expenses, including reasonable attorneys fees and expenses, which
Lessor may suffer as a result of or with respect to any claim for black lung
benefits for which Lessee is liable under the applicable laws, rules and
regulations.
<PAGE> 35
A1. ASSIGNMENTS.
(a) Lessee shall not transfer, assign, mortgage or encumber with
any type of lien its rights, or any portion of them, in the leased premises or
any of the improvements on the premises, without the prior written consent of
Lessor. Lessee shall not sublet the premises, or any portion of the premises
(except dwelling houses, stores, farm buildings and farm lands), to anyone
without the prior written consent of Lessor. Lessee shall, however, have the
right to contract for the mining of coal from the leased premises without
obtaining the prior approval of Lessor. No judgment, judicial sale, or other
legal or equitable proceeding or operation of any law shall have the effect of
transferring any interest Lessee has in the premises, or in any portion of it ,
or in any of the improvements on the premises, to another person or entity, for
any period, without the prior written consent of Lessor. In any case where
Lessor's prior written consent is required, such consent will not be
unreasonably withheld.
It is recognized that prior to the effective date of this Lease,
Lessee had subleased or contracted certain portions of the premises with the
oral consent of Lessor. These earlier actions are ratified by this Lease.
(b) Should any of Lessee's rights or interests under this Lease be
transferred, assigned or sublet in any way, without Lessor's prior written
consent, Lessor shall have all remedies available to it for breach of this
Lease by Lessee, and shall have the option to affirm the attempted transfer and
to require the person or entity acquiring those interests or rights to be
subject to all the terms and conditions of this Lease.
<PAGE> 36
(c) Any transferee from Lessee with Lessor's prior written consent
shall take and hold its interest subject to all of the terms of this Lease.
A2. FORFEITURE CLAUSE.
(a) The commission of any of the following acts by Lessee shall be
considered an act of forfeiture under this Lease: executing any mortgage or
making any assignments for the benefit of creditors involving or affecting this
Lease, entering a composition with creditors involving or affecting this Lease,
or any other act of bankruptcy without the written consent of Lessor. If any
of these acts of forfeiture takes place, Lessor may give notice to Lessee, by
registered letter addressed to Lessee's office in Big Stone Gap, Virginia (or
to such other address as Lessee may designate in writing), that it forthwith
cancels this Lease.
(b) If Lessee fails to make any rent or royalty payment for sixty
(60) days after it comes due, or if Lessee violates any other term or condition
of this Lease, Lessor may notify Lessee, by registered mail as specified in
Section (a) of this Article that Lessee has breached this Lease (specifying the
breach) and that if the breach is not rectified within thirty (30) days, the
Lease will be cancelled and terminated. If it is determined that more than
thirty (30) days is reasonably necessary to rectify the breach, a reasonable
period for rectifying it shall be set, either by agreement between the parties
or by arbitration. If at the end of thirty (30) days, or whatever longer
period is set, after the mailing of the notice, the breach has not been
remedied, this Lease shall immediately terminate without further notice.
<PAGE> 37
(c) In any case where Lessor terminates this Lease because of
Lessee's forfeiture or breach, Lessor may enter the premises covered by this
Lease and seize for its own use the premises and all improvements and other
personal property on the premises, notwithstanding any provisions of this Lease
to the contrary.
(d) It is understood that termination of this Lease or recovery of
possession of the premises will not deprive Lessor of its right to sue Lessee
for any damages for breach of any of the provisions of this Lease or for any
royalties, rent or other sums due Lessor. The remedies in this Article shall
not be construed to be exclusive of any other remedies Lessor may have at law
or equity. Any delay or omission by Lessor in exercising any of its rights
under this Lease shall not be construed to be a waiver of those rights or any
other rights in respect to existing or subsequent defaults by Lessee. However,
in the case of any matter subject to arbitration under the provisions of this
Lease, Lessor's right to give notice of termination of the Lease shall not take
effect until ten (10) days after the time fixed by the Board of Arbitrators for
the performance of its award.
A3. RIGHTS OF SUCCESSORS.
All the rights and obligations given or imposed by this Lease shall
extend to and bind the successors and assigns of either Lessor or Lessee.
However, in the case of any transfer by Lessee, Lessor must have given its
written consent to the assignment pursuant to Article 18.
<PAGE> 38
A4. ARBITRATION.
If at any time during the continuance of this Lease, a dispute shall
arise between Lessor and Lessee over any matter which cannot be resolved by the
parties, the dispute shall be referred to a Board of Arbitrators (subject to
the provisions in Article 11 for procedures prior to arbitration in certain
cases). This Board shall be composed of a representative of Lessor and a
representative of Lessee, to be selected by them respectively, and a third
person to be chosen by these first two arbitrators. If the two arbitrators are
unable to agree upon a third arbitrator within ten (10) days, the American
Arbitration Association shall designate a disinterested person to act as the
third arbitrator. Should either of the parties fail to select its
representative and to identify its selection in writing to the other party
within ten (10) days after receipt of the first notice calling for arbitration
(as described below), then the American Arbitration Association shall designate
two disinterested persons, who will join the representative of the party which
did select its representative to form the Board.
Either party may at any time deliver to the other a notice setting
forth the point or points on which arbitration is desired. The other party may
then, within ten (10) days after receiving the notice, deliver a counter-
notice specifying any additional point, eligible for arbitration, on which it
desires a decision. Once formed, the Board shall give the parties ten (10)
days' written notice of the time and place of its hearing.
The Board shall consider the questions submitted to it for
arbitration, and shall make its decision and award in writing. The decision of
a majority of the arbitrators shall be final and
<PAGE> 39
binding on the parties and their successors and assigns, and there shall be no
appeal. Lessor and Lessee hereby agree to abide by and promptly comply with
each decision and award.
If the arbitrators' award declares that there has been a violation or
default under this Lease, it shall also state the time within which the
defaulting party must perform the award and rectify the default.
The costs of arbitration proceedings shall initially be paid by the
party requesting the arbitration, but if that party substantially prevails in
the proceeding, it shall be reimbursed by the other party. Any question of
costs shall be determined by the arbitrators in the course of their decision
and award. Notwithstanding these provisions, the cost of arbitration with
regard to the setting of royalties, minimum rentals and valuation upon
termination shall be shared equally by the parties.
<PAGE> 40
A1. INDEMNIFICATION.
Lessee agrees to indemnify and protect Lessor against all claims
arising from operation of the leased premises or otherwise related to the
leased premises. This shall include, but not be limited to, indemnification
against claims arising from any of the following: the working or management of
the premises; any condition of the land or the improvements on it; any breach
or default by Lessee under this Lease; any act of negligence by Lessee,
Lessee's subtenant, contractor or other occupant, or any of their agents,
contractors or the like; and any accident, injury or damages from any cause
(except where caused by Lessor's negligence). This indemnification shall also
cover all costs and other liabilities incurred in connection with any of these
claims. Lessee agrees that upon request from Lessor it will defend any claim
or action and will employ counsel which is reasonably satisfactory to Lessor.
This indemnification shall apply only to claims asserted during the
term of this Lease or within two (2) years after the termination of this Lease,
except for claims arising from the condition of the premises or improvements on
it. In the case of claims arising from the condition of the premises or
improvements, the indemnification shall apply to claims asserted within five
(5) years after termination if such claims are asserted within two (2) years of
the time Lessor became aware, or reasonably should have become aware, of such
condition.
<PAGE> 41
A1. COMPLIANCE WITH LAWS.
Lessee promises that throughout the term of this Lease it will
substantially comply with all laws, regulations, ordinances, orders or other
requirements (including those relating to mine safety and environmental
quality) of all branches of federal, state and local governments which may be
applicable to the leased premises or any of the operations carried out on the
premises. This compliance will be solely at Lessee's expense. Lessee may
contest by appropriate means, in its own name or in Lessor's name or both, the
validity or application of any of these governmental requirements, but such
contesting action shall be solely at Lessee's expense. If Lessee challenges a
governmental requirement, and if compliance with the requirement may be legally
postponed while the challenge is pending without incurring a lien or charge on
the leased premises or any other injury or expense to Lessor, Lessee may
postpone its compliance until the final determination of the disputed issues.
Lessor agrees to furnish any papers which may be necessary or proper to permit
Lessee to contest the government requirement. If Lessee fails to comply in a
timely fashion with any law, regulation or other requirement, as required under
this Article, Lessor shall have the option to perform such compliance itself
and to collect from Lessee the cost of the compliance.
<PAGE> 42
A2. FIRE DAMAGE.
If any of the buildings or structures on the leased premises is
damaged by fire or other casualty, and if Lessor decides that it is necessary
or desirable for continued operations that the damage should be repaired, it
will be repaired by Lessee at its own expense. If a building repaired by
Lessee was covered by fire insurance, Lessee shall receive the proceeds of the
insurance to apply to the repairs. If Lessee disputes the necessity or
desirability of rebuilding any damaged structure, and Lessor and Lessee cannot
resolve the matter, it shall be settled by arbitration as provided by Article
21 of this Lease.
A3. DAMAGE TO OTHER COAL.
If Lessee mines any coal from directly underneath any workable and
merchantable portion of the Imboden or Taggart Seams and, by doing so, damages
or renders unworkable the coal in those overlying Seams, Lessee shall
compensate Lessor for any such damage. Notwithstanding the previous sentence,
Lessee shall not have to compensate Lessor and shall not be liable for damages
to either of the following: (1) the portions of the Imboden or Taggart Seams
above the areas in which Lessee mines coal if those portions of the Imboden or
Taggart Seams are being or have already been mined or (2) that portion of the
Taggart Seam above the Imboden Seam leased by Lessor to Blue Diamond Coal
Company. If Lessee mines any coal from underneath any other overlying seam or
seams and such other seam or seams are damaged or rendered unworkable by
Lessee's mining operations, carried out in the usual and proper manner, Lessee
shall not be required to pay any compensation to Lessor.
<PAGE> 43
A4. PRE-1924 AGREEMENTS.
(a) This Lease supersedes the following agreements concerning the
leasing by Lessor to Lessee of certain lands in Lee County and Wise County,
Virginia, and Harlan County and Letcher County, Kentucky:
1. Agreement dated June 10, 1910, leasing what are known as the
Callahan Block, the Imboden Block and the Keokee Block;
2. Agreement dated October 5, 1912, leasing various small parcels
of land lying in Harlan County, Kentucky;
3. Agreement dated June 1, 1917, leasing what is known as the
Exeter Block;
4. Agreement dated September 2, 1919, by which two tracts of
land, known as Parcel A and Parcel B, were added to the Stonega Reservation,
and leased to the Lessee;
5. Agreement dated September 2, 1919, leasing what is known as
the Dunbar Reservation;
6. Agreement dated September 20, 1923, leasing what is known as
the Two Hundred Eighteen (218) Acre Tract.
Those agreements have been cancelled as of January 1, 1924. However,
all obligations incurred by either party under any of those agreements have
continued and shall continue in force and shall be discharged according to
their terms.
(b) This Lease does not affect any previous agreements between the
parties by which Lessor sold to Lessee timber from lands in Wise County or Lee
County, Virginia. It does not affect
<PAGE> 44
any contracts between the parties to this Lease or between the parties and any
third party relating to railroad rights- of-way or railroad operations. It
also does not affect any other contracts involving third parties.
(c) This Lease does not affect a certain agreement between its
parties, dated October 1, 1910, by which it was agreed, among other things,
that Lessee in certain cases might sue trespassers in its own name, in Lessor's
name or both. That agreement remains in full force and effect and its terms
shall apply to the lands covered by this Lease, as well as the lands referred
to in that agreement.
(d) Except as described in the following sentence, this Lease does
not affect an agreement between the parties dated January 2, 1923, by which
Lessor, among other things, sold Lessee all the improvements connected with the
mining, coking and manufacturing operations on the Stonega Reservation and all
the personal property on the Stonega and Dunbar Reservations. Lessee's holding
of the Stonega and Dunbar Reservations will no longer be governed by the terms
and conditions set out in paragraph seventh of that January 2, 1923 agreement,
but instead will be governed by the terms and conditions of this Lease.
<PAGE> 45
IN THE PRESENCE of the persons whose signatures appear below, this
Amendment and Restatement of Lease has been properly executed by the respective
parties on the date first above written.
PENN VIRGINIA COAL COMPANY
By:
----------------------------------
President
WESTMORELAND COAL COMPANY
By:
----------------------------------
President
Virginia Division
<PAGE> 1
EXHIBIT 10(q)
ASSIGNMENT AGREEMENT
DATED AS OF MAY 13, 1996
BETWEEN
PINE BRANCH MINING INCORPORATED
AND
ROARING FORK MINING, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Transactions to be Effected at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Assignment of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Sale of Equipment; Transfer of Equipment Leases . . . . . . . . . . . . . . . . . . . . . 2
1.3. Transfer of PBM Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Assignment of Reclamation Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Deliveries by PBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Deliveries by Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Effect of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1. Representations and Warranties of PBM . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1.1. Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1.2. Authority; Approval; No Violations; Consents . . . . . . . . . . . . . . . . . . 7
3.1.3. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1.4. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.5. PBM Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.6. Reclamation and Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.7. Title to Equipment; Condition of Equipment . . . . . . . . . . . . . . . . . . . 12
3.1.8. Equipment Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.9. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.10. Subsequent Events or Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2. Representations and Warranties of Assignee . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.1. Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.2. Authority; Approval; No Violations; Consents . . . . . . . . . . . . . . . . . . 14
3.2.3. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2.4. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2.5. Subsequent Events or Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3. Disclaimers of PBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Action Prior to the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1. Investigation by Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2. Preserve Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . 19
4.3. Consents of Third Parties; Governmental Approvals . . . . . . . . . . . . . . . . . . . . 19
4.4. Operations Prior to the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5. Antitrust Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1. Discharge of PBM's Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.3. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5. Litigation Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7. Permits and Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8. PBM-UMWA Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.10. Pine Branch Low Splint Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.11. Pine Branch Complex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1. Indemnification by PBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2. Indemnification by Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3. Notice of Indemnity Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4. Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.1. Conditions Precedent to Performance by PBM . . . . . . . . . . . . . . . . . . . . . . . . 37
7.1.1. Performance of Agreement; Accuracy of Representations and Warranties . . . . . . 37
7.1.2. No Restraint or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1.3. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1.4. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1.5. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1.6. Documents Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1.7. Corporate Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1.8. Permit and Bond Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1.9. Simultaneous Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2. Conditions Precedent to Performance by Assignee . . . . . . . . . . . . . . . . . . . . . 40
7.2.1. Performance of Agreement; Accuracy of Representations and Warranties . . . . . . 40
7.2.2. No Changes or Destruction of Transferred Assets . . . . . . . . . . . . . . . . 41
7.2.3. No Restraint or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2.4. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2.5. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2.6. Documents Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2.7. Simultaneous Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.2. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9. Miscellaneous Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.1. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.2. Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.3. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.4. Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.9. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.10. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
9.11. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.12. Entire Agreement; Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.13. Confidential Nature of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.14. Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.15. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Schedule 1.1 - Assigned Property
Schedule 1.2 - Equipment and Equipment Leases
Schedule 3.1.2 - PBM -- Authority; Approval; No Violations; Consents
Schedule 3.1.3 - Litigation
Schedule 3.1.4 - Environmental Matters
Schedule 3.1.5 - PBM Permits; Bonds
Schedule 3.2.2 - Assignee -- Authority; Approval; No Violations; Consents
Schedule 5.10 - PB Low Splint Permits
Schedule 5.11 - Pine Branch Complex Permits
Schedule 7.1.4 - Necessary Consents
Schedule 7.1.5 - Releases
Exhibit A - Definitions
Exhibit B - [Reserved]
Exhibit C - [Reserved]
Exhibit D - Instrument of Assignment
Exhibit E - Instrument of Assumption
Exhibit F - Letter from Assignee to PBM -- PBM-UMWA Agreement
</TABLE>
<PAGE> 5
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of May 13, 1996, is made
by and between PINE BRANCH MINING INCORPORATED, a Delaware corporation ("PBM"),
and ROARING FORK MINING, INC., a Virginia corporation ("Assignee").
W I T N E S S E T H:
WHEREAS, PBM desires to assign to Assignee, and Assignee
desires to assume from PBM, a portion of the PVC Lease; and
WHEREAS, Assignee, in consideration for such assignment,
desires to assume certain liabilities of PBM; and
WHEREAS, certain terms used herein are used as defined in
Exhibit A hereto; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
TRANSACTIONS TO BE EFFECTED AT THE CLOSING. Upon the terms
and subject to the conditions set forth in this Agreement, at the Closing on
the Closing Date:
1. ASSIGNMENT OF REAL PROPERTY. PBM shall transfer, convey,
and assign to Assignee the PVC Lease in so far as it relates to the real
property described on the maps attached as Schedule 1.1 (the "Assigned
Property"), and Assignee shall accept such transfer, conveyance, and
assignment. The PVC Lease, as it relates to the Assigned Property, is referred
to hereinafter as the "Assigned Lease."
2. SALE OF EQUIPMENT; TRANSFER OF EQUIPMENT LEASES.
PBM shall sell, transfer, convey, and assign to Assignee, and Assignee shall
purchase and acquire from PBM, the equipment specified in Schedule
<PAGE> 6
1.2 (the "Equipment") and all right, title, and interest of PBM under, in, and
to the personal property leases specified in Schedule 1.2 (the "Equipment
Leases"). 1.3. TRANSFER OF PBM PERMITS. PBM shall transfer, convey, and
assign to Assignee the PBM Permits, and Assignee shall accept such transfer,
conveyance, and assignment.
3. ASSIGNMENT OF RECLAMATION CONTRACT. PBM shall transfer,
convey, and assign to Assignee the reclamation agreement dated as of November
1, 1995 (the "Reclamation Contract"), pursuant to which PBM agreed to perform
all environmental reclamation, remediation, abatement, and associated
activities for the Pine Branch Low Splint Mine site that are necessary for the
release of CSMO permit number 1201544, NPDES permit number 0081544, and bond
64S100958687BCA, and Assignee shall accept such transfer, conveyance, and
assignment.
4. ASSUMPTION OF LIABILITIES. Assignee shall assume and
agree to discharge, in accordance with their respective terms and subject to
the respective conditions thereof (all of the following liabilities and
obligations to be assumed by Assignee hereunder being referred to herein as the
"Assumed Liabilities"):
1. all liabilities and obligations to be paid or performed on
or after the Closing Date with respect to the Transferred Assets;
2. all liabilities and obligations under (x) all
Environmental or Mining Laws and (y) all PBM Permits issued under Environmental
or Mining Laws, to the extent that such liabilities and obligations relate to
or arise in connection with the Transferred Assets or the operations of PBM on
the Assigned Property prior to the Closing Date;
3. all obligations of PBM to the UMWA under the PBM-UMWA
Agreement that relate to or arise from or in connection with the operations of
PBM on the Assigned Property prior to the Closing Date;
4. all liabilities of PBM to the 1950 Benefit Plan, the 1974
Benefit Plan, or the Combined Fund with respect any Person who was employed by
PBM prior to the Closing Date who is employed by Assignee after the Closing
Date; and
5. all liabilities and obligations under the Reclamation
Contract.
<PAGE> 7
2. THE CLOSING
1. TIME AND PLACE. The closing of the transactions
contemplated in this Agreement (the "Closing") shall be at 9:00 A.M. on May 13,
1996 or such later date as the parties may determine (the "Closing Date"), at
the offices of Winthrop, Stimson, Putnam & Roberts, 1133 Connecticut Avenue,
N.W., Washington, D.C. 20036.
2. DELIVERIES BY PBM. Subject to fulfillment or waiver of
the conditions set forth in paragraph 7.1, at the Closing and against the
deliveries to be made by Assignee pursuant to paragraph 2.3, PBM shall deliver
or cause to be delivered to Assignee the following:
1. a copy of the resolutions of the Board of Directors of PBM
authorizing the execution, delivery, and performance of this Agreement and each
of the agreements and instruments executed in connection herewith or delivered
pursuant hereto and the transactions contemplated hereby, certified by the
Secretary or an Assistant Secretary of PBM as of the Closing Date;
2. [reserved];
3. copies of all consents, waivers, or approvals obtained by
PBM with respect to the Transferred Assets or the consummation of the
transactions contemplated by this Agreement;
4. the Instrument of Assignment duly executed by PBM;
5. the certificates contemplated by paragraphs 7.2.1 and
7.2.2, duly executed by an authorized officer of PBM;
6. certificates of title or origin (or like documents) with
respect to any vehicles included in the Equipment for which a certificate of
title or origin is required in order to transfer title;
7. a copy of the PVC Lease, certified by the Secretary or an
Assistant Secretary of PBM, as in effect immediately prior to the consummation
of the transactions contemplated by the WCC-PVC Agreement (provided, however,
that the economic terms thereof may be redacted); and
8. such other documents, instruments, and writings as
Assignee may reasonably request in connection with the consummation of the
transactions contemplated hereby.
<PAGE> 8
3. DELIVERIES BY ASSIGNEE. Subject to fulfillment or waiver
of the conditions set forth in paragraph 7.2, at the Closing and against the
deliveries to be made by PBM pursuant to paragraph 2.2, Assignee shall deliver
or cause to be delivered to PBM the following:
1. a copy of resolutions of the Board of Directors of
Assignee authorizing the execution, delivery, and performance of this Agreement
and each of the agreements and instruments executed in connection herewith or
delivered pursuant hereto and the consummation of the transactions contemplated
hereby, certified by the Secretary or an Assistant Secretary of Assignee as of
the Closing Date;
2. [reserved];
3. the Instrument of Assumption duly executed by Assignee;
4. the certificate contemplated by paragraph 7.1.1, duly
executed by the President or any Vice President of Assignee;
5. the letters and appendices contemplated by paragraph 5.8,
duly executed by the President or any Vice President of Assignee;
6. the financing statement contemplated by paragraph 5.10;
7. copies of (a) all substitute operator applications, permit
transfer applications, substitute or replacement bonds, and other certificates,
applications, and documents filed with the Commonwealth of Virginia and (b) all
substitute operator applications, permit transfer applications, substitute or
replacement bonds, and other certificates, applications, and documents
completed and ready to be filed with the Commonwealth of Kentucky, as
contemplated by paragraph 7.1.8;
8. a copy of the PVC-Assignee Agreement, certified by the
Secretary or an Assistant Secretary of Assignee and the Secretary or an
Assistant Secretary of PVC; and
9. such other documents, instruments, and writings as PBM may
reasonably request in connection with the consummation of the transactions
contemplated hereby.
4. EFFECT OF CLOSING. By its election to close, each of the
parties hereto shall be deemed to have acknowledged the full performance by the
other party of every agreement and obligation of the other party contained
herein which is to be performed on or before the Closing.
<PAGE> 9
3. REPRESENTATIONS AND WARRANTIES.
1. REPRESENTATIONS AND WARRANTIES OF PBM. PBM hereby
represents and warrants to Assignee and agrees that, to the Knowledge of PBM:
1. ORGANIZATION AND EXISTENCE. PBM is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.
2. AUTHORITY; APPROVAL; NO VIOLATIONS; CONSENTS.
1. PBM has corporate power and authority to execute, deliver,
and perform this Agreement and all of the PBM Ancillary Agreements to which it
is a party and to consummate the transactions contemplated hereby and thereby.
2. The execution of this Agreement by PBM does not require
the consent of the Board of Directors of PBM. PBM's performance of this
Agreement and its execution, delivery, and performance of the PBM Ancillary
Agreements to which it is a party require approval by PBM's Board of Directors
and stockholder. Except as set forth above and in Schedule 3.1.2, neither the
execution and delivery of this Agreement or any of the PBM Ancillary Agreements
or the consummation of any of the transactions contemplated hereby or thereby
nor compliance with or fulfillment of the terms, conditions, and provisions
hereof or thereof will: (a) conflict with, result in a breach of the terms,
conditions, or provisions of, or constitute a default, an event of default, or
an event creating rights of acceleration, termination, or cancellation, or a
loss of rights under, or result in the creation or imposition of any
Encumbrance upon any of the Transferred Assets, under (1) the Certificate of
Incorporation or By-laws of PBM, (2) any material contract, note, instrument,
agreement, mortgage, lease, license, franchise, permit, or other authorization,
right, restriction, or obligation to which PBM is a party or any of the
Assigned Property or the Equipment is subject or by which PBM is bound, (3) any
Court Order to which PBM is a party or any of the Assigned Property or the
Equipment is subject or by which PBM is bound, or (4) any Requirements of Laws
affecting PBM or the Assigned Property or the Equipment, or (b) require the
approval, consent, authorization, or act of, or the making by PBM of any
declaration, filing, or registration with, any Person, except as may be
required under the HSR Act. This Agreement has been duly executed by PBM.
Upon the receipt of approval from the Board
<PAGE> 10
of Directors and stockholder of PBM, this Agreement will have been duly
authorized, executed, and delivered by PBM and will be the legal, valid, and
binding obligation of PBM enforceable in accordance with its terms, and each of
the PBM Ancillary Agreements, upon execution and delivery by PBM, will be a
legal, valid, and binding obligation of PBM enforceable in accordance with its
terms, in each case subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, and other similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity.
3. LITIGATION. Except as described on Schedule 3.1.3:
1. there are no lawsuits, claims, suits, proceedings, or
investigations pending or, to the Knowledge of PBM, threatened against or
affecting PBM with respect to the Assigned Property or the Equipment nor, to
the Knowledge of PBM, is there any basis for any of the same;
2. there are no lawsuits, claims, suits, proceedings, or
investigations in which PBM is the plaintiff or claimant which relate to the
Assigned Property or the Equipment; and
3. PBM is not in default with respect to any order, writ,
injunction, or decree of any court or any Governmental Body to which any or all
of the Assigned Property or the Equipment is or may be subject and which would
materially adversely affect Assignee's use of the Assigned Property or the
Equipment.
4. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.1.4, to the Knowledge of PBM and as of the date of this Agreement:
1. the operations of PBM on the Assigned Property on the date
of this Agreement comply in all material respects with all applicable
Environmental or Mining Laws;
2. PBM has obtained all environmental, health, and safety
Governmental Permits necessary for its operations on the date of this Agreement
with respect to the Assigned Property, and all such Governmental Permits are in
good standing and PBM is in compliance in all material respects with all terms
and conditions of such permits;
3. PBM is not, with respect to the Assigned Property, subject
to any on-going proceeding or investigation by, order from, or agreement with
any Person (including any prior owner or operator of the Assigned
<PAGE> 11
Property) respecting (A) any Environmental or Mining Law, (B) any Remedial
Action, or (C) any claim of Loss or Expense arising from the Release or
threatened Release of a Contaminant into the environment;
4. other than matters affecting the mining industry generally
or the Governmental Permits specifically, PBM is not, with respect to the
Assigned Property, subject to any judicial or administrative proceeding, order,
judgment, decree, or settlement alleging or addressing a violation of or
liability under any Environmental or Mining Law;
5. PBM has not, in the six months prior to the date of this
Agreement, with respect to the Assigned Property: (A) reported a Release of a
hazardous substance pursuant to CERCLA or any State equivalent; (B) filed a
notice pursuant to Section 103(c) of CERCLA; (C) filed a notice pursuant to
Section 3010 of RCRA, indicating the generation of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any State equivalent; or (D) filed any
notice under any applicable Environmental or Mining Law reporting a substantial
violation of any applicable Environmental or Mining Law; and with respect to
the Assigned Property and each of the matters set forth in paragraph 3.1.4.5,
no event has occurred in the six months prior to the date of this Agreement
that would have required PBM to have reported such Release or filed such notice
where PBM failed to do so;
6. there is not either on or in the Assigned Property: (A)
any treatment, recycling, storage, or disposal of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any State equivalent that requires or
required a Governmental Permit pursuant to Section 3005 of RCRA, or any State
equivalent or (B) any underground storage tank or surface impoundment;
7. there is not on or in the Assigned Property any
polychlorinated biphenyls (PCB) used in pigments, hydraulic oils, electrical
transformers, or other equipment;
8. PBM has not, in the six months prior to the date of this
Agreement, received any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened Release of a
Contaminant into the environment from or on the Assigned Property;
<PAGE> 12
9. PBM has not, in the six months prior to the date of this
Agreement, with respect to the Assigned Property, received any request for
information in an enforcement context pursuant to Section 114 of the Clean Air
Act, Section 1267 of SMCRA, Sections 308 and 402 of the Clean Water Act,
Sections 8 and 11 of TSCA, Sections 3004(u), 3007, 3008, 3010 and 3013 of RCRA,
Section 104(e) of CERCLA, Section 103 of MSHA and similar provisions of
applicable State law that have not been either responded to or abated; and
10. except for the PBM Permits, no Environmental Encumbrances
have attached to the Assigned Property.
5. PBM PERMITS.
1. Except for the permits associated with the Reclamation
Contract and the Pine Branch Complex Permits, PBM owns, holds, or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body that are necessary to entitle it to own
or lease, operate, and use its assets in the manner in which they are being
owned or leased, operated, and used on the date of this Agreement (herein
collectively called "PBM Permits").
2. Schedule 3.1.5 sets forth a list and brief description of
each PBM Permit. Complete and correct copies of all of the PBM Permits have
heretofore been made available to Assignee.
6. RECLAMATION AND SURETY BONDS. Schedule 3.1.5 contains a
list of all reclamation and surety bonds posted by PBM with respect to the
Assigned Property and the Equipment (in each case specifying the surety, amount
of bond, and mining or other PBM Permit or other item to which such bond
pertains) and any claims pending against PBM thereunder. The bonds listed in
Schedule 3.1.5 are in full force and effect and all premiums billed with
respect thereto have been paid. To the Knowledge of PBM, the bonds listed in
such Schedule 3.1.5 satisfy all contractual requirements and Requirements of
Laws applicable to PBM with respect to the Assigned Property and the Equipment.
PBM has complied in all respects with each of such bonds. True and complete
copies of each such bond have been made available to Assignee.
7. TITLE TO EQUIPMENT; CONDITION OF EQUIPMENT. PBM has good
and marketable title to the Equipment (other than the Equipment subject to the
Equipment Leases, which is encumbered by those leases), free and clear of all
Encumbrances other than Permitted Encumbrances. EXCEPT FOR THE REPRESENTATIONS
<PAGE> 13
AND WARRANTIES SPECIFICALLY SET FORTH HEREIN, PBM MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE TRANSFERRED ASSETS, THE INTEREST
THEREIN BEING TRANSFERRED ON AN "AS IS" BASIS, WITHOUT ANY WARRANTY, EXPRESS OR
IMPLIED, OF MERCHANTABILITY, FITNESS FOR INTENDED USE, OR OTHERWISE.
8. EQUIPMENT LEASES. Schedule 1.2 sets forth a list and a
brief description (including in each case the lessor, the monthly rental, and a
brief description of the property covered) of each Equipment Lease.
9. BROKERS. Neither PBM nor any Person acting on its behalf
has engaged or used the services of any broker, finder, or similar Person for
or on account of the transactions contemplated by this Agreement and, based
upon the actions of PBM, its agents, or its Affiliates, no Person shall be
entitled to a brokerage commission, finder's fee, or like payment in connection
with this Agreement or in connection with the consummation of the transactions
contemplated hereby.
10. SUBSEQUENT EVENTS OR KNOWLEDGE. If any event shall occur
after the date of this Agreement but prior to the Closing Date that renders
materially incorrect any of the representations and warranties contained in
paragraph 3.1, or if PBM acquires knowledge after the date of this Agreement
that any of the representations and warranties contained in paragraph 3.1 is
materially incorrect, then PBM shall modify such representation and warranty by
giving written notice thereof in reasonable detail promptly after receiving
knowledge thereof to Assignee (the "PBM Additional Disclosure"). If the PBM
Additional Disclosure would have a material adverse effect on the Transferred
Assets or the transactions contemplated hereby, then Assignee may either (a)
terminate this Agreement pursuant to paragraph 8.1(c)(3) by giving PBM written
notice of such termination within 5 Business Days after receiving the PBM
Additional Disclosure or (b) waive any breach of representation or warranty by
PBM under paragraph 3.1, and any claim for indemnification under paragraph 6.1,
in respect of the PBM Additional Disclosure, which waiver shall be deemed to
have been made by Assignee unless Assignee elects to terminate this Agreement
as provided in clause (a) of this sentence. In determining whether any PBM
Additional Disclosure would have a material adverse effect on Assignee or the
transactions contemplated hereby, Assignee may consider any and all prior PBM
Additional Disclosure.
<PAGE> 14
2. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE. Assignee
represents and warrants to PBM and agrees that, to the Knowledge of Assignee:
1. ORGANIZATION AND EXISTENCE. Assignee is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Virginia.
2. AUTHORITY; APPROVAL; NO VIOLATIONS; CONSENTS.
1. Assignee has corporate power and authority to execute,
deliver, and perform this Agreement and all of the Assignee Ancillary
Agreements and to consummate the transactions contemplated hereby and thereby.
2. Assignee's execution of this Agreement does not require
the consent of its Board of Directors. Assignee's performance of this
Agreement and its execution, delivery, and performance of the Assignee
Ancillary Agreements require approval by Assignee's Board of Directors. Except
as set forth above and in Schedule 3.2.2, neither the execution and delivery of
this Agreement or any of the Assignee Ancillary Agreements or the consummation
of any of the transactions contemplated hereby or thereby nor compliance with
or fulfillment of the terms, conditions, and provisions hereof or thereof will:
(a) conflict with, result in a breach of the terms, conditions, or provisions
of, or constitute a default, an event of default, or an event creating rights
of acceleration, termination, or cancellation, or a loss of rights under (1)
the Certificate of Incorporation or By-laws of Assignee, (2) any material
contract, note, instrument, agreement, mortgage, lease, license, franchise,
permit, or other authorization, right, restriction, or obligation to which
Assignee is a party or any of its assets or properties is subject or by which
Assignee is bound, (3) any Court Order to which Assignee is a party or any of
its assets or properties is subject or by which Assignee is bound, or (4) any
Requirements of Laws affecting Assignee or its assets or properties, or (b)
require the approval, consent, authorization, or act of, or the making by
Assignee of any declaration, filing, or registration with, any Person, except
as may be required under the HSR Act. Upon the receipt of approval from the
Board of Directors of Assignee, this Agreement will have been duly authorized,
executed, and delivered by Assignee and will be the legal, valid, and binding
obligation of Assignee enforceable in accordance with its terms, and each of
the other Assignee Ancillary Agreements upon execution and delivery by Assignee
will be a legal, valid, and binding obligation of Assignee enforceable in
accordance with its terms, in each case subject to
<PAGE> 15
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, and
other similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity.
3. LITIGATION. There is no pending or, to the Knowledge of
Assignee, threatened suit, action, or litigation, or administrative arbitration
or other proceeding or governmental inquiry or investigation to which Assignee
is or may be made a party questioning the validity of this Agreement, any of
the Assignee Ancillary Agreements, or the transactions contemplated hereby or
thereby.
4. BROKERS. Neither Assignee nor any Person acting on its
behalf has engaged or used the services of any broker, finder, or similar
Person for or on account of the transactions contemplated by this Agreement
and, based upon the actions of Assignee, its agents, or its Affiliates, no
Person shall be entitled to a brokerage commission, finder's fee, or like
payment in connection with this Agreement or in connection with the
consummation of the transactions contemplated hereby.
5. SUBSEQUENT EVENTS OR KNOWLEDGE. If any event shall occur
after the date of this Agreement but prior to the Closing Date that renders
materially incorrect any of the representations and warranties contained in
paragraph 3.2, or if Assignee acquires knowledge after the date of this
Agreement that any of the representations and warranties contained in paragraph
3.2 is materially incorrect, then Assignee shall modify such representation and
warranty by giving written notice thereof in reasonable detail promptly after
receiving knowledge thereof to PBM (the "Assignee Additional Disclosure"). If
the Assignee Additional Disclosure would have a material adverse effect on
Assignee or the transactions contemplated hereby, then PBM may either (a)
terminate this Agreement pursuant to paragraph 8.1(d)(3) by giving Assignee
written notice of such termination within 5 Business Days after receiving the
Assignee Additional Disclosure or (b) waive any breach of representation or
warranty by Assignee under paragraph 3.2, and any claim for indemnification
under paragraph 6.2, in respect of the Assignee Additional Disclosure, which
waiver shall be deemed to have been made by PBM unless PBM elects to terminate
this Agreement as provided in clause (a) of this sentence. In determining
whether any Assignee Additional Disclosure would have a material adverse effect
on Assignee or the transactions contemplated hereby, PBM may consider any and
all prior Assignee Additional Disclosure.
<PAGE> 16
3. DISCLAIMERS OF PBM. Except as set forth in this
Agreement, PBM has not made and does not make hereby any representation or
warranty, express or implied, concerning the Transferred Assets. PBM does not
make any projection concerning the income to be derived by Assignee after the
Closing Date with respect to the Transferred Assets and makes no representation
or warranty concerning the quantity or quality of coal included in the Assigned
Property, except that, to the Knowledge of PBM, such information as has been
supplied to Assignee by PBM concerning the quality and quantity of coal located
upon the Assigned Property is not materially false.
4. ACTION PRIOR TO THE CLOSING DATE.
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
1. INVESTIGATION BY ASSIGNEE. PBM shall afford to the
officers, employees, and authorized representatives of Assignee (including
independent public accountants, engineering and environmental consulting firms,
and attorneys) complete access during normal business hours to the Transferred
Assets to the extent Assignee shall deem necessary or desirable and shall
furnish to Assignee or its authorized representatives such additional
information concerning the Transferred Assets as shall be reasonably requested,
including all such information as shall be reasonably necessary to enable
Assignee or its representatives to verify the accuracy of the representations
and warranties contained in this Agreement, to verify that the covenants of PBM
contained in this Agreement have been complied with, and to determine whether
the conditions set forth in paragraph 7.2 hereof have been satisfied. Assignee
agrees that such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operations of PBM. No investigation made by
Assignee or its representatives hereunder shall affect the representations and
warranties of PBM hereunder.
2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
of the parties hereto shall refrain from taking any action that would render
any representation or warranty contained in paragraph 3.1 or 3.2 of this
Agreement inaccurate as of the Closing Date. Each party shall promptly notify
the other of any action, suit, or proceeding that shall be instituted or
threatened against such party to restrain, prohibit, or otherwise challenge the
legality of any transaction contemplated by this Agreement. PBM shall promptly
notify Assignee of any lawsuit, claim, proceeding, or investigation that may be
threatened, brought, asserted, or commenced against PBM that
<PAGE> 17
would have been listed in Schedule 3.1.3 if such lawsuit, claim, proceeding, or
investigation had arisen prior to the date hereof.
3. CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS.
1. PBM will act diligently and reasonably to secure, before
the Closing Date, the consent, approval, or waiver, in form and substance
reasonably satisfactory to Assignee, required to be obtained for the
consummation of the transactions contemplated by this Agreement or otherwise to
satisfy the conditions set forth in paragraphs 7.1.4 and 7.2.5; provided that
PBM shall not have any obligation to offer or pay any consideration in order to
obtain any such consents, approvals, or waivers; and provided, further, that
PBM shall not make any agreement or understanding affecting the Transferred
Assets as a condition for obtaining any such consents, approvals, or waivers
except with the prior written consent of Assignee. During the period prior to
the Closing Date, Assignee shall act diligently and reasonably to cooperate
with PBM to obtain the consents, approvals, and waivers contemplated by this
paragraph 4.3.1.
2. During the period prior to the Closing Date, PBM and
Assignee shall act diligently and reasonably, and shall cooperate with each
other, to secure any consents and approvals of any Governmental Body required
to be obtained by them in order to permit the consummation of the transactions
contemplated by this Agreement or otherwise to satisfy the conditions set forth
in paragraphs 7.1.3 and 7.2.4; provided that PBM shall not make any agreement
or understanding affecting the Transferred Assets as a condition for obtaining
any such consents or approvals except with the prior written consent of
Assignee.
4. OPERATIONS PRIOR TO THE CLOSING DATE. Except as expressly
contemplated by this Agreement or except with the express written approval of
Assignee, between the date hereof and the Closing Date, PBM shall not:
(a) enter into any contract for the sale, lease, or contract
mining of any Assigned Property or exercise any option to extend any Equipment
Lease;
<PAGE> 18
(b) sell, lease (as lessor), transfer, or otherwise dispose
of (including any transfers from PBM to any of its Affiliates), or mortgage or
pledge, or impose or suffer to be imposed any Encumbrance on, any of the
Transferred Assets except for Permitted Encumbrances; and
(c) without the prior written consent of Assignee, terminate,
modify, or amend in any material respect any Equipment Lease, except as
contemplated by this Agreement.
1. ANTITRUST LAW COMPLIANCE. As promptly as practicable
after the date hereof, PBM and Assignee shall file or cause to be filed with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice the notifications and other information required to be filed under the
HSR Act, or any rules and regulations promulgated thereunder, with respect to
the transactions contemplated hereby, if such a filing is required. Each party
shall make its best efforts to assure that all such filings will be done in a
professional manner and in accordance with the HSR Act and any such rules and
regulations. Each of PBM and Assignee agrees to make available to the other
such information as each of them may reasonably request relative to the
business, assets, and property of PBM or Assignee, as the case may be, as may
be required of each of them to file any additional information requested by
such agencies under the HSR Act and any such rules and regulations. Each of
PBM and Assignee shall, and shall cause each of its Affiliates to, provide such
additional information and documentary materials and take all reasonable
actions necessary, and will cooperate with each other, to obtain approval of
the transactions contemplated hereunder by the Federal Trade Commission and the
Department of Justice.
2. ADDITIONAL AGREEMENTS.
1. DISCHARGE OF PBM'S LIABILITIES. PBM covenants and agrees
that it will pay and discharge, and hold Assignee harmless from, each and every
liability and obligation of PBM in respect of the Transferred Assets, arising
from events occurring on or prior to the Closing Date, excepting only those
liabilities and obligations expressly assumed by Assignee at the Closing, it
being understood and agreed that Assignee is assuming no liabilities or
obligations of PBM other than liabilities and obligations so expressly assumed
by Assignee.
2. EXPENSES. Each of the parties shall be responsible for
and shall pay all costs and expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, including all fees,
expenses, and disbursements of the counsel, accountants, investment advisors,
valuation firms, engineers, and others
<PAGE> 19
it has retained and any other expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with. Without limiting the generality of the foregoing, Assignee
shall be solely responsible for all costs and expenses incurred by Assignee in
any examination or investigation regarding PBM that Assignee elected to carry
out, including the cost of any examination of title to the Assigned Property.
3. FURTHER ASSURANCES. On the Closing Date PBM shall (a)
deliver to Assignee such other bills of sale, deeds, endorsements, assignments,
and other instruments of conveyance and transfer, in form reasonably
satisfactory to Assignee and its counsel, as Assignee may reasonably request or
as may be otherwise reasonably necessary to vest in Assignee all the right,
title, and interest of PBM in, to, or under any or all of the Transferred
Assets, and (b) take all steps as may be reasonably necessary to put Assignee
in actual possession and control of all the Transferred Assets. From time to
time following the Closing, PBM shall execute and deliver, or cause to be
executed and delivered, to Assignee such other instruments of conveyance and
transfer as Assignee may reasonably request or as may be otherwise necessary to
more effectively convey and transfer to, and vest in, Assignee and put Assignee
in possession of, any part of the Transferred Assets, and, in the case of
licenses, certificates, approvals, authorizations, leases, and other
commitments included in the Transferred Assets that cannot be transferred or
assigned effectively without the consent of third parties which consent has not
been obtained prior to the Closing, to cooperate with Assignee at its request
in endeavoring to obtain such consent promptly; provided, however, that nothing
herein shall relieve PBM of its obligations under paragraph 4.3.
Notwithstanding anything in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign any license, certificate, approval,
authorization, lease, or other commitment included in the Transferred Assets if
an attempted assignment thereof without the consent of a third party thereto
would constitute a breach thereof.
4. PRORATIONS.
1. The income and, except as provided elsewhere in this
Agreement, the expenses and liabilities attributable to the Transferred Assets
through the Valuation Date shall be for the account of PBM. The income,
<PAGE> 20
expenses, and liabilities attributable to the Transferred Assets after the
Valuation Date shall be for the account of Assignee. Taxes shall be
apportioned as set forth in paragraph 5.9.
2. PBM shall deliver to Assignee, within 75 days after the
Closing Date, a statement setting forth in reasonable detail the calculation of
amounts due PBM or Assignee under paragraph 5.4.1. Assignee shall have 60 days
after receipt thereof to review the details thereof. If Assignee does not
object thereto in writing during such review period, then such calculations
shall be final and binding. If Assignee objects thereto in writing within such
review period, then the parties shall use their reasonable efforts to resolve
their differences and, in the event PBM and Assignee so resolve any such
differences, the calculations, as adjusted by the adjustments agreed to by the
parties, shall be final and binding. If PBM and Assignee are unable to resolve
such differences within the next 30 days following such review period, then
Assignee and PBM shall submit the objections that are unresolved to the
Accounting Firm, which shall be instructed to resolve the unresolved objections
as promptly as reasonably practicable and to deliver written notice to Assignee
and PBM setting forth its resolution of the disputed matters. The
calculations, after giving effect to any adjustments agreed to by the parties
and to the resolution of disputed matters by the Accounting Firm, shall be
final and binding. Any payments required to be made by Assignee or PBM in
respect of such calculations shall be made promptly (but not later than five
days) after the determination of such calculations that is final and binding.
The Accounting Firm may employ legal counsel if necessary to its resolution and
all costs of such Accounting Firm shall be shared equally by PBM and Assignee.
5. LITIGATION ASSISTANCE. Following the Closing, Assignee
shall provide to PBM, and PBM shall provide to Assignee, such information and
documents as may be reasonably requested in connection with any suit, claim,
investigation, or proceeding, pending or threatened, that relates to the
Transferred Assets and in connection therewith each party shall, without
limitation, make available to the other party during normal business hours (i)
all books and records relating thereto in its possession, and (ii) all
employees of such party or its Affiliates having knowledge of the matters in
controversy. Such access shall be afforded upon receipt of reasonable advance
notice and shall not unreasonably interfere with the operations of the party
being requested to furnish the information. The party requesting the
information shall be responsible for any significant costs or expenses incurred
by the party furnishing the information pursuant to this paragraph 5.5.
<PAGE> 21
6. [Reserved].
7. PERMITS AND BONDS.
1. Assignee and PBM shall cooperate as necessary to effect
the transfer to Assignee of all of the PBM Permits and the release of each of
the bonds specified in Schedule 3.1.5. Without limitation, Assignee and PBM
shall, as promptly as practicable after the execution of this Agreement (in the
case of PBM Permits issued by the Commonwealth of Virginia and the bonds
associated therewith) and as promptly as practicable after the Closing Date (in
the case of PBM Permits issued by the Commonwealth of Kentucky and the bonds
associated therewith), file such applications with the appropriate Governmental
Body and provide such information and Assignee shall provide such assurances
(including substitute or replacement bonds) and shall take such further actions
as may be required to effect such transfer to Assignee and such release.
2. From and after the Closing Date Assignee shall conduct all
environmental maintenance and reclamation activities necessary to achieve or
maintain compliance with each of the PBM Permits and each of the bonds
specified on Schedule 3.1.5 and Assignee shall diligently prosecute such
activities and all other reclamation and abatement activities required by law.
On the Closing Date, Assignee shall assume all liabilities and obligations of
PBM under all Environmental or Mining Laws and PBM Permits relating to the
Transferred Assets.
3. Assignee shall indemnify PBM and hold PBM harmless from
and against any and all Loss and Expense incurred by PBM and (1) arising out of
any and all PBM Permits and the bonds related thereto after the Closing Date
and (2) relating to or arising from Environmental or Mining Laws and relating
to the Transferred Assets or the Assigned Property after the Closing Date.
8. PBM-UMWA AGREEMENT.
1. Assignee acknowledges that the operations that are to be
purchased by this Agreement are covered by the PBM-UMWA Agreement. Assignee
agrees that, as a condition of this Agreement, it shall assume the obligations
of PBM under the PBM-UMWA Agreement and execute the PBM-UMWA Agreement by
executing the letter in the form set forth in Exhibit F to this Agreement and
the appendix to such letter.
<PAGE> 22
2. Assignee shall indemnify PBM and hold PBM harmless from
and against any and all Loss and Expense incurred by PBM and arising from the
failure by Assignee to comply with and discharge in full the obligations under
the PBM-UMWA Agreement.
9. TAXES.
1. As between PBM and Assignee, (a) PBM shall be liable for
and shall pay all Taxes applicable to the Transferred Assets for which PBM
receives a bill or invoice on or prior to the Valuation Date, and (b) Assignee
shall be liable for and shall pay all other Taxes applicable to the Transferred
Assets, regardless of the period to which such Taxes are attributable.
2. Notwithstanding paragraph 5.9.1, any sales Tax, use Tax,
real property transfer or gains Tax, documentary stamp tax or similar Tax
attributable to the sale or transfer of the Transferred Assets shall be paid by
Assignee. Assignee and PBM agree to timely sign and deliver such certificates
or forms as may be necessary or appropriate to establish an exemption from (or
otherwise reduce), or make a report with respect to, such Taxes.
3. PBM or Assignee, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this
paragraph 5.9. Within a reasonable time prior to the payment of any said Tax,
the party paying such Tax shall give notice to the other party of the Tax
payable and the portion which is the liability of each party, although failure
to do so will not relieve the other party from its liability hereunder.
10. PINE BRANCH LOW SPLINT SITE. Schedule 5.10 sets forth a
list and brief description of each of the licenses from a Governmental Body
associated with the Pine Branch Low Splint site (the "PB Low Splint Permits").
Promptly after the Closing, proceedings shall be instituted to transfer the PB
Low Splint Permits to PBM. Promptly after the transfer of the PB Low Splint
Permits to PBM has been completed, PBM shall notify Assignee, and promptly
thereafter Assignee shall file or submit all substitute operator applications,
substitute or replacement bonds, permit transfer applications, and other
certificates, applications, and documents necessary to effect the transfer to
Assignee of the PB Low Splint Permits. PBM authorizes Assignee to operate on
the real property subject to the PB Low Splint Permits, such authorization to
be effective from the time that the application to transfer the PB Low Splint
Permits to PBM has been filed until such time as the transfer of the PB Low
Splint
<PAGE> 23
Permits to Assignee has been completed. Assignee agrees to indemnify and hold
PBM harmless from and against any and all Losses and Expenses (including Losses
and Expenses under Environmental Mining Laws) arising out of or relating to the
PB Low Splint Permits or Assignee's operations on the real property subject to
the PB Low Splint Permits. As security for its obligations under paragraph
1.5.5 and this paragraph 5.10, Assignee grants PBM a security interest in all
of the Equipment and all of the proceeds thereof. Assignee shall execute a
financing statement in form and substance satisfactory to PBM to enable PBM to
perfect its security interest. If Assignee shall default in any of its
obligations under paragraphs 1.5.5 and 5.10, PBM may exercise all the rights of
a secured party upon default under the Uniform Commercial Code; provided,
however, that PBM shall be entitled to realize no more than $160,000 plus
reasonable expenses of the type described in section 9-504(1)(a) of the Uniform
Commercial Code incurred by PBM. PBM shall release the collateral, terminate
its security interest, and file a termination statement in form and substance
satisfactory to Assignee promptly after (1) the PB Low Splint Permits have been
finally released or transferred to Assignee and (2) all of the bonds posted by
PBM or any Person that had an interest in the PB Low Splint Permits prior to
PBM have been finally released
11. PINE BRANCH COMPLEX. Schedule 5.11 sets forth a list and
brief description of each of the licenses from a Governmental Body associated
with the Pine Branch complex (the "Pine Branch Complex Permits"). Prior to the
Closing, proceedings shall have been instituted to transfer the Pine Branch
Complex Permits to PBM. Promptly after the transfer of the Pine Branch Complex
Permits to PBM has been completed, PBM shall notify Assignee, and promptly
thereafter Assignee shall file or submit all substitute operator applications,
substitute or replacement bonds, permit transfer applications, and other
certificates, applications, and documents necessary to effect the transfer to
Assignee of the Pine Branch Complex Permits. Until such time as the transfer
of the Pine Branch Complex Permits to Assignee has been completed, PBM
authorizes Assignee to operate on the real property subject to the Pine Branch
Complex Permits, and Assignee agrees to indemnify and hold PBM harmless from
and against any and all Losses and Expenses (including Losses and Expenses
under Environmental or Mining Laws) arising out of or relating to the Pine
Branch Complex Permits or Assignee's operations on the real property subject to
the Pine Branch Complex Permits.
3. INDEMNIFICATION.
<PAGE> 24
1. INDEMNIFICATION BY PBM. PBM agrees to indemnify and hold
harmless each Assignee Group Member from and against any and all Loss and
Expense imposed upon or incurred by such Assignee Group Member as a result of,
in connection with, or arising from:
(i) any breach by PBM, or default in the performance
by PBM, of any covenant, agreement, or obligation to be performed by
PBM pursuant to this Agreement or any PBM Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of PBM contained or referred to in this Agreement or
any certificate delivered by or on behalf of PBM pursuant hereto;
(iii) any failure of PBM to obtain prior to the Closing
any consent required for the consummation of the transactions
contemplated hereby or by the PBM Ancillary Agreements, including
those set forth in Schedule 3.1.2; and
(iv) the failure of PBM to satisfy or perform any of the
liabilities or obligations not assumed by Assignee pursuant to this
Agreement;
provided, however, that PBM shall be required to indemnify and hold harmless
with respect to Loss and Expense incurred by Assignee Group Members under
clauses (i), (ii), and (iii) of this paragraph 6.1 (other than Loss and Expense
incurred as a result of inaccuracies of the representations and warranties
contained in paragraphs 3.1.1, 3.1.2, and 3.1.9, as to which this proviso shall
have no effect) only to the extent that the aggregate amount of such Loss and
Expense exceeds $250,000 and is no greater than $4,000,000. The
indemnification provided for in this paragraph 6.1 shall terminate two years
after the Closing Date (and no claims shall be made by any Assignee Group
Member under this paragraph 6.1 thereafter), except that the indemnification by
PBM shall continue as to:
(A) the obligations and representations of PBM or
PBM under the Instrument of Assignment, as to which no time limitation
shall apply;
(B) the representations and warranties set forth
in paragraphs 3.1.1 and 3.1.2, as to which no time limitation shall
apply; and
<PAGE> 25
(C) any Loss or Expense of which any Assignee
Group Member has notified PBM in accordance with the requirements of
paragraph 6.3 hereof on or prior to the date such indemnification
would otherwise terminate in accordance with this paragraph 6.1, as to
which the obligation of PBM shall continue until the liability of PBM
shall have been determined pursuant to this paragraph 6.1, and PBM
shall have reimbursed all Assignee Group Members for the full amount
of such Loss and Expense in accordance with this paragraph 6.1.
1. INDEMNIFICATION BY ASSIGNEE. Assignee agrees to indemnify
and hold harmless each PBM Group Member from and against any and all Loss and
Expense imposed upon or incurred by such PBM Group Member as a result of, in
connection with, or arising from:
(i) any breach by Assignee, or default in the performance by
Assignee, of any covenant, agreement, or obligation to be performed by
Assignee pursuant to this Agreement or any Assignee Ancillary
Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Assignee contained or referred to in this Agreement
or in any certificate delivered by or on behalf of Assignee pursuant
hereto;
(iii) any and all claims by any third Person arising from the
failure to pay, perform, or discharge any of the Assumed Liabilities
after the Closing Date, including any lease, sublease, or agreement
expressly assumed by Assignee pursuant to the terms of this Agreement,
or any act or omission by Assignee occurring on or after the Closing
Date with respect to any of the Assumed Liabilities; and
(iv) any and all debts, obligations, and liabilities resulting
from or in connection with Assignee's ownership of the Transferred
Assets arising or occurring after the Closing;
provided, however, that Assignee shall be required to indemnify and hold
harmless under clauses (i) and (ii) of this paragraph 6.2 (except with respect
to Loss or Expense under paragraphs 3.2.1, 3.2.2, and 3.2.4, as to which this
limitation shall have no effect) with respect to Loss and Expense incurred by
PBM Group Members only to the extent that the aggregate amount of such Loss and
Expense exceeds $250,000 but is not greater than $4,000,000. The
indemnification provided for in this paragraph 6.2 shall terminate two years
after the Closing Date (and no
<PAGE> 26
claims shall be made by any PBM Group Member under this paragraph 6.2
thereafter), except that the indemnification by Assignee shall continue as to:
(A) the obligations and representations of Assignee
under the Instrument of Assumption, as to which no time limitation
shall apply; and
(B) any Loss or Expense of which PBM has notified
Assignee in accordance with the requirements of paragraph 6.3 hereof
on or prior to the date such indemnification would otherwise terminate
in accordance with this paragraph 6.2, as to which the obligation of
Assignee shall continue until the liability of Assignee shall have
been determined pursuant to this paragraph 6.2, and Assignee shall
have reimbursed all PBM Group Members for the full amount of such Loss
and Expense in accordance with this paragraph 6.2.
The indemnification provided in this paragraph 6.2 is in addition to any other
provision of this Agreement providing for indemnification, including paragraphs
5.7 and 5.8.
1. NOTICE OF INDEMNITY CLAIMS. (a) Any Assignee Group Member
or PBM Group Member (the "Indemnified Party") seeking indemnification hereunder
shall give to the party obligated to provide indemnification to such
Indemnified Party (the "Indemnitor") a notice (a "Claim Notice") describing in
reasonable detail the facts giving rise to any claim for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or
the method of computation of the amount of such claim and a reference to the
provision of this Agreement or any other agreement, document, or instrument
executed hereunder or in connection herewith upon which such claim is based;
provided, that a Claim Notice in respect of any action at law or suit in equity
by or against a third Person as to which indemnification will be sought shall
be given promptly after the action or suit is commenced; and provided, further,
that failure to give such notice shall not relieve the Indemnitor of its
obligations hereunder except to the extent it shall have been prejudiced by
such failure.
(b) After the giving of any Claim Notice pursuant hereto,
the amount of indemnification to which an Indemnified Party shall be entitled
under this paragraph 6 shall be determined: (i) by the written agreement
between the Indemnified Party and the Indemnitor; (ii) by a final judgment or
decree of any court of
<PAGE> 27
competent jurisdiction; or (iii) by any other means to which the Indemnified
Party and the Indemnitor shall agree. The judgment or decree of a court shall
be deemed final when the time for appeal, if any, shall have expired and no
appeal shall have been taken or when all appeals taken shall have been finally
determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Loss and Expense suffered by it.
2. THIRD PERSON CLAIMS. (a) Subject to paragraph 6.4(b),
the Indemnified Party shall have the right to conduct and control, through
counsel of its choosing, the defense, compromise, or settlement of any third
Person claim, action, or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnitor
hereunder, and in any such case the Indemnitor shall cooperate in connection
therewith and shall furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may
be reasonably requested by the Indemnified Party in connection therewith;
provided, that the Indemnitor may participate, through counsel chosen by it and
at its own expense, in the defense of any such claim, action, or suit as to
which the Indemnified Party has so elected to conduct and control the defense
thereof; and provided, further, that the Indemnified Party shall not, without
the written consent of the Indemnitor (which written consent shall not be
unreasonably withheld), pay, compromise, or settle any such claim, action, or
suit, except that no such consent shall be required if, following a written
request from the Indemnified Party, the Indemnitor shall fail, within 14 days
after the making of such request, to acknowledge and agree in writing that, if
such claim, action, or suit shall be adversely determined, such Indemnitor has
an obligation to provide indemnification hereunder to such Indemnified Party.
(b) If any third Person claim, action, or suit against
any Indemnified Party is solely for money damages or, where PBM is the
Indemnitor, will have no continuing effect in any material respects on the
Transferred Assets, then the Indemnitor shall have the right to conduct and
control, through counsel of its choosing, the defense, compromise, or
settlement of any such third Person claim, action, or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnitor has
an obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the
<PAGE> 28
Indemnified Party shall cooperate in connection therewith and shall furnish
such records, information, and testimony and attend such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably requested by
the Indemnitor in connection therewith; provided, that the Indemnified Party
may participate, through counsel chosen by it and at its own expense, in the
defense of any such claim, action, or suit as to which the Indemnitor has so
elected to conduct and control the defense thereof. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle, or
compromise any such claim, action, or suit; provided, that in such event the
Indemnified Party shall waive any right to indemnity therefor hereunder.
2. CONDITIONS PRECEDENT.
1. CONDITIONS PRECEDENT TO PERFORMANCE BY PBM. The
performance of the obligations of PBM hereunder is subject to the satisfaction,
on or before the Closing Date, of each of the following conditions, any of
which may be waived by PBM, in whole or in part, without prior notice:
1. PERFORMANCE OF AGREEMENT; ACCURACY OF REPRESENTATIONS AND
WARRANTIES. Assignee shall have performed, satisfied, and complied with all
covenants, agreements, and obligations required by this Agreement to be
performed or complied with by Assignee on or prior to the Closing Date; each of
the representations and warranties of Assignee contained or referred to in this
Agreement shall be true and correct on the Closing Date in all material
respects as though made on and as of the Closing Date, except for changes
therein specifically permitted by any such agreement or resulting from any
transaction expressly consented to in writing by PBM or any transaction
contemplated by any such agreement; and there shall have been delivered to PBM
a certificate to such effect, dated the Closing Date and signed on behalf of
Assignee by the President or any Vice President thereof.
2. NO RESTRAINT OR LITIGATION. The waiting period under the
HSR Act shall have expired or been terminated (if a filing under the HSR Act is
required in connection with the transactions contemplated hereby), and no
action, suit, or proceeding by any Governmental Body shall have been instituted
or threatened to restrain, prohibit, or otherwise challenge the legality or
validity of the transactions contemplated hereby.
3. NECESSARY GOVERNMENTAL APPROVALS. PBM shall have received
all approvals and actions of or by all Governmental Bodies necessary to
consummate the transactions contemplated hereby that are required to be
obtained prior to the Closing by applicable Requirements of Laws.
<PAGE> 29
4. NECESSARY CONSENTS. PBM shall have received, on or before
the Closing Date, the material consents from third parties to complete the
transactions contemplated by this Agreement set forth in Schedule 7.1.4.
5. RELEASES. PBM shall have been released from each of the
leases, surety bonds, performance and reclamation bonds, and other obligations
set forth in Schedule 7.1.5. Each of Matt Mining, Inc. and Fraley's, Inc.
shall have executed and delivered a sublease termination agreement
substantially in the form of the sublease termination agreement included as an
exhibit to the WCC-PVC Agreement.
6. DOCUMENTS DELIVERED. The form and substance of all
documents to be delivered by or relating to Assignee under this Agreement shall
be satisfactory in all reasonable respects to PBM.
7. CORPORATE APPROVALS. The Board of Directors and the
stockholder of PBM shall have approved the performance of this Agreement and
the transactions contemplated hereby.
8. PERMIT AND BOND TRANSFERS. PBM shall have received
satisfactory evidence that Assignee has filed or submitted all substitute
operator applications, substitute or replacement bonds, permit transfer
applications, and other certificates, applications, and documents necessary to
effect (a) the transfer to Assignee of the PBM Permits issued by the
Commonwealth of Virginia and (b) the release of the bonds posted by PBM with
respect to such PBM Permits. Assignee shall have prepared all substitute
operator applications and permit transfer applications, and all other
certificates, applications, and documents, and secured substitute or
replacement bonds, in form and substance satisfactory to PBM, that may be
necessary to effect (x) the transfer to Assignee of the PBM Permits issued by
the Commonwealth of Kentucky and (y) the release of the bonds posted by PBM
with respect to such PBM Permits.
9. SIMULTANEOUS TRANSACTIONS. PVC shall have performed,
observed, and complied with all covenants, agreements, and conditions required
by the WCC-PVC Agreement, the PVC-Assignee Agreement, and the PVC-SMP Agreement
and the documents ancillary thereto to be performed, observed, and complied
with on its part prior to or as of the Closing. SMP shall have performed,
observed, and complied with all covenants, agreements, and conditions required
by the PBM-SMP Agreement and the PVC-SMP Agreement and the documents ancillary
thereto to be performed, observed, and complied with on its part prior to or as
of the Closing. The Closing hereunder will not occur unless the respective
closings under each of the PVC-Assignee Agreement,
<PAGE> 30
the PVC-SMP Agreement, the WCC-PVC Agreement, and the WCC-SMP Agreement occur
prior to or simultaneously with the Closing.
2. CONDITIONS PRECEDENT TO PERFORMANCE BY ASSIGNEE. The
performance of the obligations of Assignee hereunder is subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions, any of which may be waived by Assignee, in whole or in part,
without prior notice:
1. PERFORMANCE OF AGREEMENT; ACCURACY OF REPRESENTATIONS AND
WARRANTIES. PBM shall have performed, satisfied, and complied with all
covenants, agreements, and obligations required by this Agreement to be
performed or complied with by PBM on or prior to the Closing Date; each of the
representations and warranties of PBM contained or referred to in this
Agreement shall be true and correct on the Closing Date in all material
respects as though made on and as of the Closing Date, except for changes
therein specifically permitted by any such agreement or resulting from any
transaction expressly consented to in writing by Assignee or any transaction
contemplated by any such agreement; and there shall have been delivered to
Assignee certificates to such effect, dated the Closing Date and signed on
behalf of PBM by the President or any Vice President thereof.
2. NO CHANGES OR DESTRUCTION OF TRANSFERRED ASSETS. Between
the date hereof and the Closing Date, there shall have been (a) no material
adverse change in the Transferred Assets; (b) no material adverse federal or
state legislative or regulatory change affecting the Transferred Assets; and
(c) no material damage to the Transferred Assets by fire, flood, casualty, act
of God or the public enemy, or other cause, regardless of insurance coverage
for such damage; and there shall have been delivered to Assignee a certificate
to such effect, dated the Closing Date and signed on behalf of PBM by the
President or any Vice President thereof.
3. NO RESTRAINT OR LITIGATION. The waiting period under the
HSR Act shall have expired or been terminated (if a filing under the HSR Act is
required in connection with the transactions contemplated hereby), and no
action, suit, or proceeding shall have been instituted or threatened to
restrain or prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby.
4. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have
received all approvals and actions of or by all Governmental Bodies that are
necessary to consummate the transactions contemplated hereby,
<PAGE> 31
that are either specified in Schedule 3.1.5 or otherwise required to be
obtained prior to the Closing by applicable Requirements of Laws, or that are
necessary to prevent a material adverse change in the Transferred Assets.
5. NECESSARY CONSENTS. PBM shall have received consents, in
form and substance reasonably satisfactory to Assignee, to the transactions
contemplated hereby that are specified in Schedule 7.1.4.
6. DOCUMENTS DELIVERED. The form and substance of all
documents to be delivered by or relating to PBM under this Agreement shall be
satisfactory in all reasonable respects to Assignee.
7. SIMULTANEOUS TRANSACTIONS. PVC shall have performed,
observed, and complied with all covenants, agreements, and conditions required
by the WCC-PVC Agreement, the PVC-Assignee Agreement, and the PVC-SMP Agreement
and the documents ancillary thereto to be performed, observed, and complied
with on its part prior to or as of the Closing. SMP shall have performed,
observed, and complied with all covenants, agreements, and conditions required
by the WCC-SMP Agreement and the PVC-SMP Agreement and the documents ancillary
thereto to be performed, observed, and complied with on its part prior to or as
of the Closing. PBM shall have performed, observed, and complied with all
covenants, agreements, and conditions required by the WCC-PVC Agreement and the
WCC-SMP Agreement and the documents ancillary thereto to be performed,
observed, and complied with on its part prior to or as of the Closing. The
Closing hereunder will not occur unless the respective closings under each of
the PVC-Assignee Agreement, the PVC-SMP Agreement, the WCC- PVC Agreement, and
the WCC-SMP Agreement occur prior to or simultaneously with the Closing.
3. TERMINATION.
1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of the Board of Directors of
Assignee and the Board of Directors of PBM;
(b) by Assignee or PBM if the Closing shall not have occurred
on or before May 15, 1996 (or such later date as may be mutually agreed to by
Assignee and PBM) (the "Termination Date");
<PAGE> 32
(c) by Assignee (1) in the event all conditions precedent set
forth in paragraph 7.2 have not been satisfied by the Termination Date or (2)
in the event of any material breach of any agreements, representations, or
warranties of PBM contained herein and the failure of PBM to cure such breach
within thirty Business Days after receipt of notice from Assignee requesting
such breach to be cured or (3) if between the date hereof and the Closing Date,
Assignee has received PBM Additional Disclosure and such PBM Additional
Disclosure would have a material adverse effect on the Transferred Assets or
the transactions contemplated hereby, by giving written notice of termination
within 5 Business Days after receiving such PBM Additional Disclosure; or
(d) by PBM (1) in the event all conditions precedent set
forth in paragraph 7.1 have not been satisfied by the Termination Date or (2)
in the event of any material breach by Assignee of any agreements,
representations, or warranties of Assignee contained herein and the failure of
Assignee to cure such breach within ten Business Days after receipt of notice
from PBM requesting such breach to be cured or (3) if between the date hereof
and the Closing Date, PBM has received Assignee Additional Disclosure and such
Assignee Additional Disclosure would have a material adverse effect on Assignee
or the transactions contemplated hereby, by giving written notice of
termination within 5 Business Days after receiving such Assignee Additional
Disclosure.
1. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to paragraph 8.1 hereof shall give notice of such
termination to the other party.
2. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this paragraph 8, all further obligations of
the parties under this Agreement (other than paragraphs 5.2 and 9.13) shall be
terminated without further liability of any party to the other, provided that
nothing herein shall relieve any party from liability for its willful breach of
this Agreement.
2. MISCELLANEOUS AGREEMENTS.
1. EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referred to in this Agreement shall be deemed to be incorporated herein by
reference and made a part hereof as if set out in full herein.
2. TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
3. ASSIGNMENT. The rights of Assignee and PBM under this
Agreement shall not be assignable by such party hereto, except to an Affiliate,
prior to the Closing without the written consent of the other, which
<PAGE> 33
consent may be withheld for any reason. Following the Closing, either party
may assign any of its rights hereunder, but no such assignment shall relieve it
of its obligations hereunder.
4. SURVIVAL OF PROVISIONS. The representations and
warranties contained in paragraph 3 of this Agreement shall survive the
consummation of the transactions contemplated by this Agreement but solely for
the purpose of creating rights under paragraph 6 of this Agreement.
5. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws (as opposed to the conflicts of
law provisions) of the State of New York.
6. NOTICES. All notices, requests, demands, and other
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been given on the date of
delivery personally or of deposit in the United States mail, postage prepaid,
by registered or certified mail, return receipt requested, addressed as follows
or to such other person or address as either party shall designate by notice to
the other party in accordance herewith:
To PBM: Pine Branch Mining Incorporated
2 North Cascade Avenue, 14th Floor
Colorado Springs, Colorado 80903
Attn: General Counsel
To Assignee: Roaring Fork Mining, Inc.
P.O. Box 720
Big Stone Gap, VA 24219
Attn: Jerry L. Fraley, President
1. COUNTERPARTS. This Agreement may be executed by the
parties in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to each of PBM and
Assignee.
2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of each of the parties hereto and their
respective successors and permitted assigns.
3. SUBROGATION. Nothing in this Agreement, express or
implied, including the indemnities of paragraph 6, shall be deemed to create in
any Person other than the parties signatory hereto and successors and assigns
permitted by paragraph 9 hereof (i) any right, remedy, or claim under or by
reason of this Agreement or (ii)
<PAGE> 34
any rights of subrogation from, through, or under any indemnified party because
of any claim paid or defense provided or otherwise.
4. RECORDING. This Agreement shall not be filed or recorded
in any office for the recording of deeds or documents.
5. SEVERABILITY OF PROVISIONS. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement or the
application thereof to any Person or circumstances shall, to any extent and for
any reason, be held in any proceeding to be invalid, illegal, or unenforceable,
such provision, or the application thereof to any Person or circumstance, shall
be ineffective to the extent, but only to the extent, of such invalidity,
illegality, or unenforceability without invalidating the remainder of such
invalid, illegal, or unenforceable provision or any other provisions hereof or
the application of such provision to persons or circumstances other than those
to which it was held to be invalid, illegal, or unenforceable, but only if and
to the extent such construction would not materially and adversely frustrate
the parties' essential objectives as expressed herein.
6. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement
(including the Exhibits and Schedules referred to herein and the documents
delivered pursuant hereto) constitutes the entire agreement of the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements, representations, understandings, or letters of intent of the
parties hereto, including the Confidentiality Agreement. This Agreement shall
not be amended, modified, or supplemented except by a written instrument signed
by an authorized representative of each of the parties hereto. Any term or
provision of this Agreement may be waived, or the time for its performance may
be extended, by the party or parties entitled to the benefit thereof. Any such
waiver shall be validly and sufficiently authorized for the purposes of this
Agreement if, as to any party, it is authorized in writing by an authorized
representative of such party. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
<PAGE> 35
7. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials, and other
information that it shall have obtained regarding the other party during the
course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein, and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated, each party will return to the
other party all copies of non-public documents and materials that have been
furnished in connection therewith. Such documents, materials, and information
shall not be communicated to any third Person (other than, in the case of
Assignee, to its counsel, accountants, financial advisors, or lenders, and in
the case of PBM, to its counsel, accountants, or financial advisors). No other
party shall use any confidential information in any manner whatsoever except
solely for the purpose of evaluating the proposed purchase and sale of the
Transferred Assets; provided, however, that after the Closing Assignee may use
or disclose any confidential information related to the Transferred Assets.
The obligation of each party to treat such documents, materials, and other
information in confidence shall not apply to any information that (i) is or
becomes available to such party from a source other than such party, (ii) is or
becomes available to the public other than as a result of disclosure by such
party or its agents, (iii) is required to be disclosed under applicable law or
judicial process, but only to the extent it must be disclosed, or (iv) such
party reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby.
8. INCORPORATION BY REFERENCE. Any fact, information,
matter, item, or condition set forth on any Schedule to this Agreement shall be
incorporated by reference and deemed to have been fully set forth on each other
Schedule to this Agreement.
9. RULES OF INTERPRETATION. The following rules shall govern
the interpretation of this Agreement and the exhibits hereto:
1. The titles and headings contained in this Agreement
(including in the Exhibits and Schedules hereto) are included for purposes of
convenience only and shall not be considered in construing or interpreting any
provision of this Agreement.
<PAGE> 36
2. Words importing the singular include the plural and words
importing the plural include the singular and words importing gender include
the masculine, feminine, and neuter genders.
3. A reference to any agreement means the agreement as
amended, modified, or supplemented from time to time. A reference to any
schedule to this Agreement means the schedule as amended, modified, or
supplemented from time to time.
4. A reference to any law includes any amendment or
modification thereto and any successor statute, all rules and regulations
promulgated under such law, and all administrative and judicial authority
exercisable thereunder.
5. A reference to any Person includes its permitted
successors and assigns.
6. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles.
7. The rule of contra proferentum shall not be applied in
interpreting this Agreement.
8. The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole, including all exhibits and schedules hereto, and not to any particular
provisions of this Agreement, and references to paragraphs, schedules, and
exhibits are to paragraphs, schedules, and exhibits to this Agreement unless
the context clearly requires otherwise.
9. The words "includes" or "including" shall mean "includes,
without limitation" and "including, without limitation."
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PINE BRANCH MINING INCORPORATED
Witness:
By:
- ------------------ ----------------------------------
Name:
Title:
ROARING FORK MINING, INC.
Witness:
By:
- ------------------ ----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10(r)
[EXECUTION COPY]
ASSIGNMENT AGREEMENT
Dated as of May 13, 1996
between
WESTMORELAND COAL COMPANY
and
STONEGA MINING AND PROCESSING COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Transactions to be Effected at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Assignment of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Sale of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Authorization of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Deliveries by WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Deliveries by SMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Effect of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1. Representations and Warranties of WCC . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1.1. Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1.2. Authority; Approval; No Violations; Consents . . . . . . . . . . . . . . . . . . 6
3.1.3. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1.4. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.5. Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.6. Reclamation and Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.7. Condition of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.8. Lease Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.9. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.10. Title to Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.11. Subsequent Events or Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2. Representations and Warranties of SMP . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.1. Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.2. Authority; Approval; No Violations; Consents . . . . . . . . . . . . . . . . . . 14
3.2.3. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2.4. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2.5. Subsequent Events or Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3. Disclaimers of WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Action Prior to the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1. Investigation by SMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2. Preserve Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . 19
4.3. Consents of Third Parties; Governmental Approvals . . . . . . . . . . . . . . . . . . . . 19
4.4. Operations Prior to the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5. Antitrust Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1. Discharge of WCC's Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5. Litigation Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6. Re-Permitting of Property; Security; Payment of Costs. . . . . . . . . . . . . . . . . . . 25
5.7. Permits and Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8. UMWA Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
5.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.10. Use of Power Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.11. Discharge from Wentz No. 1 and No. 2 and West Fork No. 1 Mines . . . . . . . . . . . . . . 35
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1. Indemnification by WCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.2. Indemnification by SMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3. Notice of Indemnity Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.4. Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.1. Conditions Precedent to Performance by WCC . . . . . . . . . . . . . . . . . . . . . . . 42
7.1.1. Performance of Agreement; Accuracy of Representations and Warranties . . . . . . 42
7.1.2. No Restraint or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.3. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.4. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.5. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.6. Documents Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.7. Corporate Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.1.8. Simultaneous Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.2. Conditions Precedent to Performance by SMP . . . . . . . . . . . . . . . . . . . . . . . . 44
7.2.1. Performance of Agreement; Accuracy of Representations and Warranties . . . . . . 44
7.2.2. No Changes or Destruction of Transferred Assets . . . . . . . . . . . . . . . . 45
7.2.3. No Restraint or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.2.4. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2.5. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2.6. Documents Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2.7. Simultaneous Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9. Miscellaneous Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.1. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2. Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.3. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.4. Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.9. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.10. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.11. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.12. Entire Agreement; Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.13. Confidential Nature of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.14. Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.15. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Schedule 1.1 - Assigned Property
Schedule 1.2 - Equipment Schedule
Schedule 3.1.2 - WCC -- Authority; Approval; No Violations; Consents
Schedule 3.1.3 - Litigation
Schedule 3.1.4 - Environmental Matters
Schedule 3.1.5 - Governmental Permits; Bonds
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Schedule 3.2.2 - SMP -- Authority; Approval; No Violations; Consents
Schedule 7.1.4 - Necessary Consents
Schedule 7.1.5 - Releases
Exhibit A - Definitions
Exhibit B - Opinion Letter of Counsel to WCC
Exhibit C - Opinion Letter of Counsel to SMP
Exhibit D - Instrument of Assignment
Exhibit E - Instrument of Assumption
Exhibit F - Letter from SMP to WCC -- UMWA Successor Agreement
</TABLE>
<PAGE> 5
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of May 13, 1996, is made
by and between WESTMORELAND COAL COMPANY, a Delaware corporation ("WCC") and
STONEGA MINING AND PROCESSING COMPANY, a Virginia corporation ("SMP" or
"Assignee").
W I T N E S S E T H:
WHEREAS, WCC desires to assign to SMP, and SMP desires to
assume from WCC, a portion of the PVC Lease; and
WHEREAS, Assignee, in consideration for such assignment,
desires to assume certain liabilities of WCC; and
WHEREAS, certain terms used herein are used as defined in
Exhibit A hereto; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
TRANSACTIONS TO BE EFFECTED AT THE CLOSING. Upon the terms
and subject to the conditions set forth in this Agreement, at the Closing on
the Closing Date:
1. ASSIGNMENT OF REAL PROPERTY. WCC shall transfer, convey,
and assign to SMP the PVC Lease in so far as it relates to the real property
described on the maps attached as Schedule 1.1 (the "Assigned Property"),
including WCC's interest in the power line which serves the Wentz coal
preparation plant (the "Existing
<PAGE> 6
Power Line"), and SMP shall accept such transfer, conveyance, and assignment.
The PVC Lease, as it relates to the Assigned Property, is referred to
hereinafter as the "Assigned Lease."
2. SALE OF EQUIPMENT. WCC shall sell, transfer, and
convey to SMP, and SMP shall purchase and acquire from WCC, the equipment
specified in Schedule 1.2 (the "Equipment").
3. AUTHORIZATION OF OPERATIONS. WCC shall authorize SMP to
operate on the Governmental Permits.
4. ASSUMPTION OF LIABILITIES. SMP shall assume and agree to
discharge, in accordance with their respective terms and subject to the
respective conditions thereof (all of the following liabilities and obligations
to be assumed by SMP hereunder being referred to herein as the "Assumed
Liabilities"):
1. all liabilities and obligations arising on or after the
Closing Date under the Assigned Lease;
2. all liabilities and obligations under (x) all
Environmental or Mining Laws and (y) all Governmental Permits issued under
Environmental or Mining Laws, to the extent that such liabilities and
obligations relate to or arise in connection with the Transferred Assets or the
operations of WCC on the Assigned Property prior to the Closing Date, except
(i) fines, fees, penalties, or interest assessed, incurred or due prior to the
Closing Date, (ii) fees, penalties, or interest incurred or assessed subsequent
to the Closing Date that relate solely to violations of law or other action
that occurred prior to the Closing Date, and (iii) fines, fees, or penalties
resulting from any governmental audits conducted after the Closing Date that
relate solely to periods prior to the Closing Date; and
3. all obligations of WCC to the UMWA under the UMWA
Agreement, that relate to or arise from or in connection with operations on the
Assigned Property after the Closing Date provided that such obligations are not
in addition to or greater than the obligations required of SMP in the Successor
UMWA Agreement, and further provided that SMP shall not assume any obligation
to pay any benefit to (a) any WCC employee not employed by SMP at the Assigned
Property on or after the Closing Date or (b) any dependent of any such
employee.
<PAGE> 7
2. THE CLOSING.
1. TIME AND PLACE. The closing of the transactions
contemplated in this Agreement (the "Closing") shall be at 9:00 A.M. on the
third day after the conditions precedent specified in paragraph 7 shall have
been satisfied or waived, or on such earlier date as may be mutually agreed to
by the parties hereto (the "Closing Date"), at the offices of Winthrop,
Stimson, Putnam & Roberts, 1133 Connecticut Avenue, N.W., Washington, D.C.
20036.
2. DELIVERIES BY WCC. Subject to fulfillment or waiver of
the conditions set forth in paragraph 7.1, at the Closing and against the
deliveries to be made by SMP pursuant to paragraph 2.3, WCC shall deliver or
cause to be delivered to SMP the following:
1. a copy of the resolutions of the Board of Directors of WCC
authorizing the performance of this Agreement and the execution, delivery, and
performance of each of the agreements and instruments executed in connection
herewith or delivered pursuant hereto and the transactions contemplated hereby,
certified by the Secretary or an Assistant Secretary of WCC as of the Closing
Date;
2. the opinion of Theodore E. Worcester, Senior Vice
President of Law and Administration, General Counsel and Corporate Secretary of
WCC, substantially in the form set forth in Exhibit B;
3. copies of all consents, waivers, or approvals obtained by
WCC with respect to the Transferred Assets or the consummation of the
transactions contemplated by this Agreement;
4. the Instrument of Assignment duly executed by WCC;
5. the certificates contemplated by paragraphs 7.2.1 and
7.2.2, duly executed by the President or any authorized Vice President of WCC;
6. certificates of title or origin (or like documents) with
respect to any vehicles included in the Equipment for which a certificate of
title or origin is required in order to transfer title;
7. a copy of the PVC Lease, certified by the Secretary or an
Assistant Secretary of WCC and the Secretary or an Assistant Secretary of PVC,
as in effect immediately prior to the closing of the transaction by the WCC-
PVC Agreement (provided, however, that the economic terms thereof may be
redacted); and
<PAGE> 8
8. such other documents, instruments, and writings as SMP may
reasonably request in connection with the consummation of the transactions
contemplated hereby.
3. DELIVERIES BY SMP. Subject to fulfillment or waiver of
the conditions set forth in paragraph 7.2, at the Closing and against the
deliveries to be made by WCC pursuant to paragraph 2.2, SMP shall deliver or
cause to be delivered to WCC (in the case of the items specified in paragraphs
2.3.1 through 2.3.5, 2.3.7, and 2.3.8) and to Penn Virginia Coal Company (in
the case of the item specified in paragraph 2.3.6) the following:
1. a copy of the resolutions of the Board of Directors of SMP
authorizing the performance of this Agreement and the execution, delivery and
performance of each of the agreements and instruments executed in connection
herewith or delivered pursuant hereto and the consummation of the transactions
contemplated hereby, certified by the Secretary or an Assistant Secretary of
SMP as of the Closing Date;
2. an opinion of counsel (which may be in-house counsel)
substantially in the form set forth in Exhibit C;
3. the Instrument of Assumption duly executed by SMP;
4. the certificate contemplated by paragraph 7.1.1, duly
executed by the President or any authorized Vice President of SMP;
5. the Successorship Acknowledgment contemplated by paragraph
5.8, duly executed by an authorized official of the United Mine Workers of
America - International Union ("UMWA");
6. the letter of credit contemplated by paragraph 5.6.3;
7. a copy of the PVC-SMP Agreement, certified by the
Secretary or an Assistant Secretary of SMP and the Secretary or an Assistant
Secretary of PVC; and
8. such other documents, instruments, and writings as WCC may
reasonably request in connection with the consummation of the transactions
contemplated hereby.
4. EFFECT OF CLOSING. By its election to close, each of the
parties hereto shall be deemed to have acknowledged the full performance by the
other party of every agreement and obligation of the other party contained
herein which is to be performed on or before the Closing.
3. REPRESENTATIONS AND WARRANTIES.
<PAGE> 9
1. REPRESENTATIONS AND WARRANTIES OF WCC. WCC hereby
represents and warrants to SMP and agrees that, to the Knowledge of WCC:
1. ORGANIZATION AND EXISTENCE. WCC is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.
2. AUTHORITY; APPROVAL; NO VIOLATIONS; CONSENTS.
1. WCC has corporate power and authority to execute, deliver,
and perform this Agreement and all of the WCC Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby.
2. The execution of this Agreement by WCC does not require
the consent of the Board of Directors of WCC. WCC's performance of this
Agreement and its execution, delivery, and performance of the WCC Ancillary
Agreements require approval by its Board of Directors. Neither the execution
and delivery of this Agreement or any of the WCC Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof
or thereof conflict with, result in a breach of the terms, conditions, or
provisions of, or constitute a default, an event of default, or an event
creating rights of acceleration, termination, or cancellation, or a loss of
rights under, or result in the creation or imposition of any Encumbrance upon
any of the Transferred Assets, under (1) the Certificate of Incorporation or
By-laws of WCC, (2) any material contract, note, instrument, agreement,
mortgage, lease, license, franchise, permit, or other authorization, right,
restriction, or obligation to which WCC is a party or any of the Assigned
Property or the Equipment is subject or by which WCC is bound, (3) any Court
Order to which WCC is a party or any of the Assigned Property or the Equipment
is subject or by which WCC is bound, or (4) any Requirements of Laws affecting
WCC or the Assigned Property or the Equipment. Except as set forth above and
in Schedule 3.1.2, neither the execution of this Agreement or any of the WCC
Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereby will require the approval, consent,
authorization, or act of, or the making by WCC of any declaration, filing, or
registration with, any Person, except as may be required under the HSR Act.
This Agreement has been duly executed by WCC. Upon the receipt of approval
from the Board of Directors of WCC, this Agreement will have been duly
authorized, executed, and delivered by WCC and will be the
<PAGE> 10
legal, valid, and binding obligation of WCC enforceable in accordance with its
terms, and each of the WCC Ancillary Agreements to which WCC is a party, upon
execution and delivery by WCC will be a legal, valid, and binding obligation of
WCC enforceable in accordance with its terms, in each case subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, and
other similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity.
3. LITIGATION. Except as described on Schedule 3.1.3:
1. there are no lawsuits, administrative proceedings, claims,
suits, arbitrations or other proceedings, or investigations pending or, to the
Knowledge of WCC, threatened against or affecting WCC (or a WCC Group Member)
with respect to the Assigned Property or the Equipment nor, to the Knowledge of
WCC, is there any basis for any of the same;
2. there are no pending lawsuits, claims, suits, bankruptcy
petitions, proceedings, or investigations in which WCC (or a WCC Group Member)
is the plaintiff, claimant, or petitioner, which relate to the Assigned
Property or the Equipment; and
3. WCC is not in default with respect to any order, writ,
injunction, or decree of any court or any Governmental Body to which any or all
of the Assigned Property or the Equipment is or may be subject and which would
materially adversely affect Assignee's use of the Assigned Property or the
Equipment.
4. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.1.4, to the Knowledge of WCC and as of the date of this Agreement:
1. the operations of WCC, including any contractor, licensee
or other Person on the Assigned Property on the date of this Agreement, are in
compliance with all applicable Environmental or Mining Laws;
2. WCC has obtained all environmental, health, and safety
Governmental Permits necessary for its operations on the date of this Agreement
with respect to the Assigned Property, and all such Governmental Permits are in
good standing and WCC is in compliance with all terms and conditions of such
permits; 3.1.4.3. WCC is not, with respect to the Assigned Property, subject
to any on-going proceeding or investigation by, order from, or agreement with
any Person (including any prior owner or operator of the Assigned Property)
respecting (A) any Environmental or Mining Law, (B) any Remedial Action, or (C)
any claim of Loss or Expense arising from the Release or threatened Release of
a Contaminant into the environment;
<PAGE> 11
3. WCC is not, with respect to the Assigned Property, subject
to any judicial or administrative proceeding, order, judgment, decree, or
settlement alleging or addressing a violation of or liability under any
Environmental or Mining Law or Governmental Permit;
4. WCC has not, in the six months prior to the date of this
Agreement, with respect to the Assigned Property: (A) reported a Release of a
hazardous substance pursuant to CERCLA or any State equivalent; (B) filed a
notice pursuant to Section 103(c) of CERCLA; (C) filed a notice pursuant to
Section 3010 of RCRA, indicating the generation of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any State equivalent; or (D) filed any
notice under any applicable Environmental or Mining Law reporting a violation
of any applicable Environmental or Mining Law; and with respect to the Assigned
Property and each of the matters set forth in paragraph 3.1.4.5, no event has
occurred that would have required WCC to have reported such Release or filed
such notice where WCC failed to do so;
5. there is not either on or in the Assigned Property: (A)
any treatment, recycling, storage, or disposal of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any State equivalent that requires or
required a Governmental Permit pursuant to Section 3005 of RCRA, or any State
equivalent or (B) any underground storage tank or surface impoundment except
for the currently-permitted Wentz Refuse Area;
6. there is not on or in the Assigned Property any
polychlorinated biphenyls (PCB) used in pigments, hydraulic oils, electrical
transformers, or other equipment;
7. WCC has not received any notice or claim to the effect
that it is or may be liable to any Person as a result of the Release or
threatened Release of a Contaminant into the environment from or on the
Assigned Property;
8. WCC has not, in the six months prior to the date of this
Agreement, with respect to the Assigned Property, received any request for
information in an enforcement context pursuant to Section 114 of the Clean Air
Act, Section 1267 of SMCRA, Sections 308 and 402 of the Clean Water Act,
Sections 8 and 11 of TSCA, Sections 3004(u), 3007, 3008, 3010 and 3013 of RCRA,
Section 104(e) of CERCLA, Section 103 of MSHA and similar provisions of
applicable State law that have not been either responded to or abated;
<PAGE> 12
9. except for the Governmental Permits, no Environmental
Encumbrances have attached to the Assigned Property; and
10. WCC has not received any notice of violation with respect
to the Assigned Property that has not been abated.
5. GOVERNMENTAL PERMITS.
1. WCC owns, holds, or possesses all licenses, franchises,
permits, privileges, immunities, approvals, and other authorizations from a
Governmental Body that are necessary to entitle it to own or lease, operate,
and use the Assigned Property and the Equipment in the manner in which the
Assigned Property and the Equipment were operated by WCC immediately prior to
WCC's cessation of active operations on the Assigned Property (herein
collectively called "Governmental Permits").
2. Schedule 3.1.5 sets forth a list and brief description of
each Governmental Permit. Complete and correct copies of all of the
Governmental Permits have heretofore been made available to SMP.
6. RECLAMATION AND SURETY BONDS. Schedule 3.1.5 contains a
list of all reclamation and surety bonds posted by WCC with respect to the
Assigned Property and the Equipment (in each case specifying the surety, amount
of bond, and mining or other Governmental Permit or other item to which such
bond pertains) and any claims pending against WCC thereunder. The bonds listed
in Schedule 3.1.5 are in full force and effect and all premiums billed with
respect thereto have been paid. To the Knowledge of WCC, the bonds listed in
such Schedule 3.1.5 satisfy all contractual requirements and Requirements of
Laws applicable to WCC with respect to the Assigned Property and the
Equipment. WCC has complied in all respects with each of such bonds. True
and complete copies of each such bond have been made available to SMP.
7. CONDITION OF EQUIPMENT. EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES SPECIFICALLY SET FORTH HEREIN, WCC MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE TRANSFERRED ASSETS, THE INTEREST
THEREIN BEING TRANSFERRED ON AN "AS IS" BASIS, WITHOUT ANY WARRANTY, EXPRESS OR
IMPLIED, OF MERCHANTABILITY, FITNESS FOR INTENDED USE, OR OTHERWISE.
<PAGE> 13
8. LEASE WARRANTY. WCC has corporate power and authority to
execute, deliver, and perform the PVC Lease.
9. BROKERS. Neither WCC nor any Person acting on its behalf
has engaged or used the services of any broker, finder, or similar Person for
or on account of the transactions contemplated by this Agreement and, based
upon the actions of WCC, its agents, or its Affiliates, no Person shall be
entitled to a brokerage commission, finder's fee, or like payment in connection
with this Agreement or in connection with the consummation of the transactions
contemplated hereby.
10. TITLE TO EQUIPMENT. WCC has good and marketable title to
the Equipment, free and clear of all Encumbrances other than Permitted
Encumbrances.
11. SUBSEQUENT EVENTS OR KNOWLEDGE. If any event shall occur
after the date of this Agreement but prior to the Closing Date that renders
incorrect any of the representations and warranties contained in paragraph 3.1,
or if WCC acquires actual knowledge after the date of this Agreement that any
of the representations and warranties contained in paragraph 3.1 is incorrect,
then WCC shall modify such representation and warranty by giving written notice
thereof in reasonable detail promptly after receiving actual knowledge thereof
to SMP (the "WCC Additional Disclosure"). If the WCC Additional Disclosure
would have an adverse effect on the Transferred Assets or the transactions
contemplated hereby, then SMP may either (a) terminate this Agreement pursuant
to paragraph 8.1(c)(3) by giving WCC written notice of such termination within
5 Business Days after receiving the WCC Additional Disclosure or (b) waive any
breach of representation or warranty by WCC under paragraph 3.1, and any claim
for indemnification under paragraph 6.1, in respect of the WCC Additional
Disclosure, which waiver shall be deemed to have been made by SMP unless SMP
elects to terminate this Agreement as provided in clause (a) of this sentence.
In determining whether any WCC Additional Disclosure would have an adverse
effect on SMP or the transactions contemplated hereby, SMP may consider any and
all prior WCC Additional Disclosures.
2. REPRESENTATIONS AND WARRANTIES OF SMP. SMP represents and
warrants to WCC and agrees that, to the Knowledge of SMP:
1. ORGANIZATION AND EXISTENCE. SMP is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Virginia.
<PAGE> 14
2. AUTHORITY; APPROVAL; NO VIOLATIONS; CONSENTS.
1. SMP has corporate power and authority to execute, deliver,
and perform this Agreement and all of the SMP Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby.
2. SMP's execution of this Agreement does not require the
consent of its Board of Directors. SMP's performance of this Agreement and its
execution, delivery, and performance of the SMP Ancillary Agreements require
approval by SPM's Board of Directors. Neither the execution and delivery of
this Agreement or any of the SMP Ancillary Agreements or the consummation of
any of the transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof conflict
with, result in a breach of the terms, conditions, or provisions of, or
constitute a default, an event of default, or an event creating rights of
acceleration, termination, or cancellation, or a loss of rights under (1) the
Certificate of Incorporation or By-laws of SMP, (2) any material contract,
note, instrument, agreement, mortgage, lease, license, franchise, permit, or
other authorization, right, restriction, or obligation to which SMP is a party
or any of its assets or properties is subject or by which SMP is bound, (3) any
Court Order to which SMP is a party or any of its assets or properties is
subject or by which SMP is bound, or (4) any Requirements of Laws affecting
SPM or its assets or properties, or (b) require the approval, consent,
authorization, or act of, or the making by SMP of any declaration, filing, or
registration with, any Person, except as may be required under the HSR Act.
Upon the receipt of approval from the Board of Directors of SMP, this Agreement
will have been duly authorized, executed, and delivered by SMP and will be the
legal, valid, and binding obligation of SMP enforceable in accordance with its
terms, and each of the other SMP Ancillary Agreements upon execution and
delivery by SMP will be a legal, valid, and binding obligation of SMP
enforceable in accordance with its terms, in each case subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, and other
similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity.
3. LITIGATION. There is no pending or, to the Knowledge of
SMP, threatened suit, action, or litigation, or administrative arbitration or
other proceeding or governmental inquiry or investigation to which SMP is or
may be made a party questioning the validity of this Agreement, any of the SMP
Ancillary Agreements, or the transactions contemplated hereby or thereby.
<PAGE> 15
4. BROKERS. Neither SMP nor any Person acting on its behalf
has engaged or used the services of any broker, finder, or similar Person for
or on account of the transactions contemplated by this Agreement and, based
upon the actions of SMP, its agents, or its Affiliates, no Person shall be
entitled to a brokerage commission, finder's fee, or like payment in connection
with this Agreement or in connection with the consummation of the transactions
contemplated hereby.
5. SUBSEQUENT EVENTS OR KNOWLEDGE. If any event shall occur
after the date of this Agreement but prior to the Closing Date that renders
incorrect any of the representations and warranties contained in paragraph 3.2,
or if SMP acquires actual knowledge after the date of this Agreement that any
of the representations and warranties contained in paragraph 3.2 is incorrect,
then SMP shall modify such representation and warranty by giving written notice
thereof in reasonable detail promptly after receiving actual knowledge thereof
to WCC (the "SMP Additional Disclosure"). If the SMP Additional Disclosure
would have an adverse effect on WCC or the transactions contemplated hereby,
then WCC may either (a) terminate this Agreement pursuant to paragraph
8.1(d)(3) by giving SMP written notice of such termination within 5 Business
Days after receiving the SMP Additional Disclosure or (b) waive any breach of
representation or warranty by SMP under paragraph 3.2, and any claim for
indemnification under paragraph 6.2, in respect of the SMP Additional
Disclosure, which waiver shall be deemed to have been made by WCC unless WCC
elects to terminate this Agreement as provided in clause (a) of this sentence.
In determining whether any SMP Additional Disclosure would have an adverse
effect on SMP or the transactions contemplated hereby, WCC may consider any and
all prior SMP Additional Disclosures.
3. DISCLAIMERS OF WCC. Except as set forth in this
Agreement, WCC has not made and does not make hereby any representation or
warranty, express or implied, concerning the Transferred Assets. WCC does not
make any projection concerning the income to be derived by SMP after the
Closing Date with respect to the Transferred Assets and makes no representation
or warranty concerning the quantity or quality of coal included in the Assigned
Property, except that, to the Knowledge of WCC, such information as has been
supplied to SMP by WCC concerning the quality and quantity of coal located upon
the Assigned Property is materially correct.
<PAGE> 16
4. ACTION PRIOR TO THE CLOSING DATE.
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
1. INVESTIGATION BY SMP. WCC shall afford to the officers,
employees, and authorized representatives of SMP (including independent public
accountants, engineering and environmental consulting firms, and attorneys)
complete access during normal business hours to the Transferred Assets to the
extent SMP shall deem necessary or desirable and shall furnish to SMP or its
authorized representatives such additional information concerning the
Transferred Assets as shall be reasonably requested, including all such
information as shall be reasonably necessary to enable SMP or its
representatives to verify the accuracy of the representations and warranties
contained in this Agreement, to verify that the covenants of WCC contained in
this Agreement have been complied with, and to determine whether the conditions
set forth in paragraph 7.2 hereof have been satisfied. SMP agrees that such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of WCC. No investigation made by SMP or its
representatives hereunder shall affect the representations and warranties of
WCC hereunder. As part of SMP's investigation, WCC will make available to SMP
copies of all portions of environmental audits relating to the Assigned
Property conducted by or for WCC in the past 5 years.
2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
of the parties hereto shall refrain from taking any action that would render
any representation or warranty contained in paragraph 3.1 or 3.2 of this
Agreement inaccurate as of the Closing Date. Each party shall promptly notify
the other of any action, suit, or proceeding that shall be instituted or
threatened against such party to restrain, prohibit, or otherwise challenge the
legality of any transaction contemplated by this Agreement or which may relate
to the Transferred Assets. WCC shall promptly notify SMP of any lawsuit,
claim, proceeding, bankruptcy petition, or investigation that may be
threatened, brought, asserted, or commenced against WCC that would have been
listed in Schedule 3.1.3 if such lawsuit, claim, proceeding, or investigation
had arisen prior to the date hereof or is brought by WCC.
3. CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS.
1. WCC will act diligently and reasonably to secure, before
the Closing Date, the consent, approval, or waiver, in form and substance
reasonably satisfactory to SMP, required to be obtained for the
<PAGE> 17
consummation of the transactions contemplated by this Agreement or otherwise to
satisfy the conditions set forth in paragraphs 7.1.4 and 7.2.5; provided that
WCC shall not have any obligation to offer or pay any consideration in order to
obtain any such consents, approvals, or waivers; and provided, further, that
WCC shall not make any agreement or understanding affecting the Transferred
Assets as a condition for obtaining any such consents, approvals, or waivers
except with the prior written consent of SMP. During the period prior to the
Closing Date, SMP shall act diligently and reasonably to cooperate with WCC to
obtain the consents, approvals, and waivers contemplated by this paragraph
4.3.1.
2. During the period prior to the Closing Date, WCC and SMP
shall act diligently and reasonably, and shall cooperate with each other, to
secure any consents and approvals of any Governmental Body required to be
obtained by them in order to permit the consummation of the transactions
contemplated by this Agreement or otherwise to satisfy the conditions set forth
in paragraphs 7.1.3 and 7.2.4; provided that WCC shall not make any agreement
or understanding affecting the Transferred Assets as a condition for obtaining
any such consents or approvals except with the prior written consent of SMP.
4. OPERATIONS PRIOR TO THE CLOSING DATE. Except as expressly
contemplated by this Agreement or except with the express written approval of
SMP, between the date hereof and the Closing Date, WCC shall not:
(a) enter into any contract for the sale, lease, or contract
mining of any Assigned Property; or
(b) sell, lease (as lessor), transfer, or otherwise dispose
of (including any transfers from WCC to any of its Affiliates), or mortgage or
pledge, or impose or suffer to be imposed any Encumbrance on, any of the
Transferred Assets except for Permitted Encumbrances.
5. ANTITRUST LAW COMPLIANCE. As promptly as practicable
after the date hereof, WCC and SMP shall file or cause to be filed with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice the notifications and other information required to be filed under the
HSR Act, or any rules and regulations promulgated thereunder, with respect to
the transactions contemplated hereby, if such a filing is required. Each party
shall make its best efforts to assure that all such filings will be done in a
professional manner and in accordance with the HSR Act and any such rules and
regulations. Each of WCC and SMP agrees to make available to the other such
information as each of them may reasonably request relative to the business,
assets, and property
<PAGE> 18
of WCC or SMP, as the case may be, as may be required of each of them to file
any additional information requested by such agencies under the HSR Act and any
such rules and regulations. Each of WCC and SMP shall, and shall cause each of
its Affiliates to, provide such additional information and documentary
materials and take all reasonable actions necessary, and will cooperate with
each other, to obtain approval of the transactions contemplated hereunder by
the Federal Trade Commission and the Department of Justice.
5. ADDITIONAL AGREEMENTS.
1. DISCHARGE OF WCC'S LIABILITIES. WCC covenants and agrees
that it will pay and discharge, and hold SMP harmless from, each and every
liability and obligation of WCC in respect of the Transferred Assets, arising
from events occurring on or prior to the Closing Date, excepting only those
liabilities and obligations expressly assumed by SMP at the Closing, it being
understood and agreed that SMP is assuming no liabilities or obligations of WCC
other than liabilities and obligations so expressly assumed by SMP.
2. EXPENSES. Each of the parties shall be responsible for
and shall pay all costs and expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, including all fees,
expenses, and disbursements of the counsel, accountants, investment advisors,
valuation firms, engineers, and others it has retained and any other expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with. Without limiting the generality
of the foregoing, SMP shall be solely responsible for all costs and expenses
incurred by SMP in any examination or investigation regarding WCC that SMP
elects to carry out.
3. FURTHER ASSURANCES. On the Closing Date WCC shall (a)
deliver to SMP bills of sale, deeds, endorsements, assignments, and other
instruments of conveyance and transfer, in form reasonably satisfactory to SMP,
as SMP may reasonably request or as may be otherwise reasonably necessary to
vest in SMP all the right, title, and interest of WCC in, to, or under any or
all of the Transferred Assets, and (b) take all steps as may be reasonably
necessary to put SMP in actual possession and control of all the Transferred
Assets. From time to time following the Closing, each party hereto shall
execute and deliver, or cause to be executed and delivered, such other
instruments of conveyance and transfer as may be reasonably requested or as may
be otherwise necessary to give effect to the transactions contemplated hereby.
Notwithstanding anything in this Agreement to the contrary, this
<PAGE> 19
Agreement shall not constitute an agreement to assign any license, certificate,
approval, authorization, lease, or other commitment included in the Transferred
Assets if an attempted assignment thereof without the consent of a third party
thereto would constitute a breach thereof.
4. PRORATIONS.
1. The income and, except as provided elsewhere in this
Agreement, the expenses and liabilities attributable to the Transferred Assets
through the Valuation Date shall be for the account of WCC. The income,
expenses, and liabilities attributable to the Transferred Assets after the
Valuation Date shall be for the account of SMP. Taxes shall be apportioned as
set forth in paragraph 5.9.
2. WCC shall deliver to SMP, within 75 days after the Closing
Date, a statement setting forth in reasonable detail the calculation of amounts
due WCC or SMP under paragraph 5.4.1. SMP shall have 60 days after receipt
thereof to review the details thereof. If SMP does not object thereto in
writing during such review period, then such calculations shall be final and
binding. If SMP objects thereto in writing within such review period, then the
parties shall use their reasonable efforts to resolve their differences and, in
the event WCC and SMP so resolve any such differences, the calculations, as
adjusted by the adjustments agreed to by the parties, shall be final and
binding. If WCC and SMP are unable to resolve such differences within the next
30 days following such review period, then SMP and WCC shall submit the
objections that are unresolved to the Accounting Firm, which shall be
instructed to resolve the unresolved objections as promptly as reasonably
practicable and to deliver written notice to SMP and WCC setting forth its
resolution of the disputed matters. The calculations, after giving effect to
any adjustments agreed to by the parties and to the resolution of disputed
matters by the Accounting Firm, shall be final and binding. Any payments
required to be made by SMP or WCC in respect of such calculations shall be made
promptly (but not later than five days) after the determination of such
calculations that is final and binding. The Accounting Firm may employ legal
counsel if necessary to its resolution and all costs of such Accounting Firm
shall be shared equally by WCC and SMP.
5. LITIGATION ASSISTANCE. Following the Closing, SMP shall
provide to WCC, and WCC shall provide to SMP, such information and documents as
may be reasonably requested in connection with any suit, claim, investigation,
or proceeding, pending or threatened, that relates to the Transferred Assets
and in connection
<PAGE> 20
therewith each party shall, without limitation, make available to the other
party during normal business hours (i) all books and records relating thereto
in its possession, and (ii) all employees of such party or its Affiliates
having knowledge of the matters in controversy. Such access shall be afforded
upon receipt of reasonable advance notice and shall not unreasonably interfere
with the operations of the party being requested to furnish the information.
The party requesting the information shall be responsible for any significant
costs or expenses incurred by the party furnishing the information pursuant to
this paragraph 5.5.
6. RE-PERMITTING OF PROPERTY; SECURITY; PAYMENT OF COSTS.
1. Promptly after the Closing, SMP shall commence its efforts
to have the Assigned Property re- permitted.
2. On August 14, 1996, and on the 14th day of each month
thereafter (each such date, a "Payment Date"), until the Release Date, SMP
shall pay WCC $22,000. If the Release Date does not fall on the 13th day of a
month, WCC shall refund to SMP an amount equal to $22,000 multiplied by a
fraction, the numerator of which is the actual number of days from and
including the immediately preceding Payment Date to and including the Release
Date and the denominator of which is the actual number of days from and
including the immediately preceding Payment Date to but excluding the
immediately following 14th day of the month. If the 14th day of any month is
not a Business Day, the payment referred to in the first sentence of this
paragraph shall be made on the immediately following Business Day.
3. As security for its obligations under paragraphs 5.6 and
5.7, SMP shall provide at the Closing an irrevocable letter of credit from a
financial institution acceptable to WCC in an amount not less than $906,000,
specifying WCC as the beneficiary and no conditions to draft thereunder, and
otherwise in form and substance satisfactory to WCC. Such letter of credit
shall be delivered to Penn Virginia Coal Company ("PVCC"). PVCC shall deliver
the letter of credit to WCC only after substantial compliance with the
following procedures: (1) WCC shall give notice to PVCC and SMP requesting
that PVCC actually deliver the letter of credit to WCC; (2) no later than the
second Business Day after PVCC actually receives WCC's request, PVCC shall give
notice to SMP informing SMP of WCC's request; and (3) on or about, but in any
case no sooner than, the fifth Business Day after giving notice to SMP, PVCC
shall deliver the letter of credit to WCC; provided, however, that PVCC shall
not
<PAGE> 21
deliver the letter of credit to WCC if, in the reasonable opinion of PVCC and
to its actual knowledge, such delivery is prohibited by any court or other
Governmental Body. PVCC shall return the letter of credit to SMP (x) upon
written notice from WCC and SMP specifying a date on which such return is to
occur, and on that date the return shall occur simultaneously with the
establishment of the escrow account described in paragraph 5.6.9 or (y) upon
written notice by SMP to WCC and PVCC that SMP cannot satisfy the conditions to
Closing set forth in paragraph 7.1. If the escrow account contemplated by
paragraph 5.6.9 has not been established by October 1, 1996, PVCC shall deliver
the letter of credit to WCC on October 2, 1996, and WCC shall be entitled to
draw the full amount under the letter of credit and hold such amount in escrow
pending establishment of such escrow account; while WCC is holding the proceeds
of such draw it shall be deemed to be the "Escrow Agent" under paragraph 5.6.9
and may disburse funds from such escrow in the circumstances contemplated by
paragraph 5.6.4. The parties agree that PVCC shall be entitled to conclude
that the escrow account contemplated by paragraph 5.6.9 has not been
established by October 1, 1996 if, on such date, PVCC is still holding such
letter of credit. PVCC shall have no liability for any act or omission under
this paragraph, other than for gross negligence or willful misconduct. PVCC
may interplead the letter of credit in the event of any dispute concerning its
delivery.
4. WCC shall be entitled to draw under the letter of credit
or receive funds from the escrow account established pursuant to paragraph
5.6.9 in an amount equal to $22,000 if WCC has not received the payment
required by paragraph 5.6.2 by the third Business Day after any Payment Date or
in the amount of any Losses actually sustained or incurred by WCC in connection
with or under or related to the Governmental Permits or the bonds associated
therewith. WCC shall be entitled to draw under the letter of credit or receive
funds from the escrow account established pursuant to paragraph 5.6.9, in an
amount equal to the amount of any of the bonds associated with the Governmental
Permits against which forfeiture proceedings are instituted. WCC shall be
entitled to draw under the letter of credit in an amount equal to the entire
undrawn amount thereof or receive all of the funds then in the escrow accounts
established pursuant to paragraphs 5.6.5 and 5.6.9 if, at any time, (1) the
amount undrawn under the letter of credit or the amount remaining in the escrow
account is less than $700,000, or (2) any action or failure to act by SMP
causes any Governmental Body to assert a permit block against WCC. If WCC
shall be entitled to draw the full amount then un-drawn under the letter of
credit or receive all of the funds
<PAGE> 22
then in the escrow accounts established pursuant to paragraphs 5.6.5 and 5.6.9,
WCC shall use the proceeds only to conduct environmental maintenance,
reclamation, and abatement activities related to the Governmental Permits and
the bonds associated therewith and to compensate itself for Losses and Expenses
incurred in connection with such permits, bonds, and environmental maintenance,
reclamation, and abatement activities.
5. SMP shall not sell, transfer, or otherwise dispose of any
of the Equipment without the prior written consent of WCC, which consent shall
not be unreasonably withheld. Prior to any proposed sale, transfer, or other
disposition, SMP shall inform WCC of the identity of the buyer and the amount
of the consideration. SMP shall deposit such consideration in an escrow
account with a financial institution acceptable to WCC pursuant to an escrow
agreement, in form and substance satisfactory to WCC, for the benefit of WCC as
additional security for SMP's obligations under paragraphs 5.6 and 5.7. The
escrow agent shall return to SMP the funds in the escrow account on the Release
Date. The escrow account established pursuant to this paragraph 5.6.5 shall be
separate and distinct from the escrow account established pursuant to paragraph
5.6.9.
6. The term "Release Date" means the first date on which (1)
SMP has in place governmental permits covering all of the Assigned Property and
(2) SMP has posted all of the bonds that are required in connection with the
governmental permits described in clause (1) of this paragraph 5.6.6.
7. At any time, if SMP elects not to re-permit the Assigned
Property, SMP shall so inform WCC, and thereafter SMP and WCC shall cooperate
as necessary to effect the transfer to SMP of all of the Governmental Permits
and the release of each of the bonds specified in Schedule 3.1.5 in so far as
each of the foregoing relates to the Assigned Property; without limitation, SMP
and WCC shall file such applications with the appropriate Governmental Body and
provide such information and SMP shall provide such assurances (including
substitute or replacement bonds) and shall take such further actions as may be
required to effect such transfer to SMP and such release.
8. Until the Release Date, WCC shall have a right of entry
onto the Assigned Property for the purpose of monitoring SMP's compliance with
paragraphs 5.6 and 5.7 and conducting environmental maintenance, reclamation,
and abatement activities. If WCC has drawn the full undrawn amount under the
letter of credit or has the right to receive all of the funds then in the
escrow account established pursuant to paragraph 5.6.9, WCC (1)
<PAGE> 23
may, but shall not be obligated to, eject SMP from the premises and conduct any
environmental maintenance and reclamation and other activities WCC deems
appropriate and/or (2) may, at its option, direct SMP to re-convey all of the
Assigned Property to WCC, in which case SMP shall promptly do so.
9. Promptly after the Closing and in any event no later than
May 22, 1996, SMP shall establish an escrow account with a financial
institution acceptable to WCC (the "Escrow Agent") pursuant to an escrow
agreement satisfactory in form and substance to WCC, and SMP shall deposit
$906,000 into such escrow account. The escrow agreement shall provide that the
Escrow Agent shall disburse funds from the Escrow Account to WCC only after
strict compliance with the following procedures: (1) WCC shall give notice to
the Escrow Agent and SMP requesting that the Escrow Agent disburse funds to WCC
and the notice shall specify the amount requested to be disbursed and the
actual invoices or other evidence of WCC's Losses and Expenses; (2) no later
than the Business Day after the Escrow Agent receives WCC's request, the Escrow
Agent shall give notice to SMP by facsimile and overnight courier service
informing SMP of WCC's request, and the Escrow Agent's notice shall include
copies of the documentation provided by WCC; and (3) on the third Business Day
after giving notice to SMP, the Escrow Agent shall disburse the requested funds
to WCC; provided, however, that the Escrow Agent shall not disburse such funds
to WCC if such disbursement is prohibited by any court or other Governmental
Body. The Escrow Agent shall return any funds in the escrow account to SMP,
and the escrow shall be dissolved, on the Release Date. SMP may withdraw funds
from the escrow account if and to the extent that such funds are used to secure
bonds that replace the bonds identified on Schedule 3.1.5. SMP shall pay the
Escrow Agent's fees and expenses.
10. WCC shall provide SMP with copies of any notices
(including notices of violation), cessation orders, communications, or other
written materials relating to the Governments Permits or the bonds associated
therewith that WCC receives the same. WCC may consult with SMP concerning
environmental maintenance and reclamation activities at the request of SMP.
7. PERMITS AND BONDS.
1. From and after the Closing Date SMP shall conduct all
environmental maintenance and reclamation activities necessary to achieve or
maintain compliance with each of the Governmental Permits and each of the bonds
specified on Schedule 3.1.5 and SMP shall diligently prosecute such activities
and all other reclamation
<PAGE> 24
and abatement activities required by law. On the Closing Date, SMP shall
assume all liabilities and obligations of WCC under all Environmental or Mining
Laws and Governmental Permits relating to the Assigned Property and the
Equipment, except those referred to in Paragraph 1.4.2.
2. SMP shall indemnify WCC and hold WCC harmless from and
against any and all Loss and Expense incurred by WCC and (1) arising out of
any and all Governmental Permits relating to the Assigned Property and the
bonds related thereto after the Closing Date and (2) relating to or arising
from Environmental or Mining Laws and relating to the Assigned Property and the
Equipment after the Closing Date, except as noted in paragraph 1.4.2.
8. UMWA AGREEMENT.
1. SMP acknowledges that the operations that are to be
purchased by this Agreement are covered by the UMWA Agreement. SMP agrees
that, as a condition of this Agreement, it shall execute the Successor UMWA
Agreement and provide to WCC a letter in the form set forth in Exhibit F to
this Agreement and the appendix to such letter.
2. SMP shall indemnify WCC and hold WCC harmless from and
against any and all Loss and Expense incurred by WCC and arising from the
failure by SMP to execute, comply with and discharge in full SMP's obligations
under the Successor UMWA Agreement, provided that SMP shall have no obligation
to pay any benefit to (a) any WCC employee not employed by SMP at the Assigned
Property on or after the Closing Date or (b) any dependent of any such
employee.
9. TAXES.
1. As between WCC and SMP, (a) WCC shall be liable for and
shall pay all Taxes (whether assessed or unassessed) applicable to the
Transferred Assets, in each case attributable to taxable periods (or portions
thereof) ending on or prior to the Valuation Date, and (b) SMP shall be liable
for and shall pay all Taxes (whether assessed or unassessed) applicable to the
Transferred Assets that are attributable to taxable periods (or portions
thereof) beginning after the Valuation Date. For purposes of this paragraph
5.9, any taxable period beginning before and ending after the Valuation Date
shall be treated as two partial periods, one ending on the Valuation Date
<PAGE> 25
and the second beginning after the Valuation Date, except that Taxes (such as
property Taxes) imposed on a periodic basis shall be allocated on a daily
basis.
2. Notwithstanding paragraph 5.9.1, any sales Tax, use Tax,
real property transfer or gains Tax, documentary stamp tax or similar Tax
attributable to the sale or transfer of the Transferred Assets shall be paid by
SMP. SMP and WCC agree to timely sign and deliver such certificates or forms
as may be necessary or appropriate to establish an exemption from (or otherwise
reduce), or make a report with respect to, such Taxes.
3. WCC or SMP, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this
paragraph 5.9. Within a reasonable time prior to the payment of any said Tax,
the party paying such Tax shall give notice to the other party of the Tax
payable and the portion which is the liability of each party, although failure
to do so will not relieve the other party from its liability hereunder.
4. SMP shall promptly notify WCC in writing upon receipt by
SMP of notice of any pending or threatened federal, state, local or foreign Tax
audits, examinations or assessments which may materially affect the Tax
liabilities for which WCC would be required to indemnify SMP pursuant to
paragraph 5.9.1, provided, that failure to comply with this provision shall not
affect SMP's right to indemnification hereunder.
5. WCC shall have the sole right to represent the interests
of itself and its Affiliates in any Tax audit or administrative or court
proceeding relating to taxable periods ending on or before the Valuation Date,
and to employ counsel of its choice at its expense. SMP reserves the right to
represent its interests in any Tax audit or administrative or court proceeding
relating to taxable periods ending on or before the Valuation Date, and to
employ counsel of its choice at its expense. In the case of a taxable year or
period beginning before and ending after the Valuation Date, WCC shall be
entitled to participate at its expense in any Tax audit or administrative or
court proceeding relating in whole or in part to Taxes attributable to the
portion of such taxable year or period ending on the Valuation Date and, with
the written consent of SMP and at its sole expense, may assume the entire
control of such audit or proceeding. SMP shall not agree to settle any Tax
claim for the portion of any taxable year or period ending on or before the
Valuation Date which may be the subject of indemnification by WCC under
paragraph 5.9.1 without the prior written consent of WCC.
<PAGE> 26
10. USE OF POWER LINE. SMP shall promptly arrange with Old
Dominion Power to switch the meter on the Existing Power Line into SMP's name
or otherwise to arrange with Old Dominion Power for SMP to be billed directly
for the power transmitted along the Existing Power Line. From and after June
1, 1996, and on the first Business Day of each calendar month thereafter until
WCC has been completely released from all obligations to Old Dominion Power
relating to the Existing Power Line (the "Power Release"), SMP shall pay WCC a
maintenance fee of $10,000 per month for June and July and $15,000 per month
thereafter, pro-rated for the month in which the Power Release occurs.
11. DISCHARGE FROM WENTZ NO. 1 AND NO. 2 AND WEST FORK NO. 1
MINES. If PCB contamination is detected in the water discharged from the Wentz
No. 1 and No. 2 and the West Fork No. 1 mines, WCC shall bear the financial
cost of bringing the discharge into compliance with all Requirements of Laws
concerning PCB's. WCC shall have the option to select the means, manner, and
method of bringing about such compliance, and in particular WCC shall have the
option to perform such work itself or have such work performed by a contractor
selected by WCC. If WCC elects to bring about such compliance itself or
through a contractor it retains, SMP shall cooperate with WCC or such
contractor as necessary to permit WCC or such contractor to bring about such
compliance in an efficient manner. If, within 5 Business Days after WCC
receives a Discharge Notice, WCC has not either itself commenced work to bring
about such compliance or caused a contractor to commence work to bring about
such compliance, SMP may, but shall have no obligation to, commence such work,
and WCC shall indemnify and hold SMP harmless from and against any Losses
actually sustained or incurred by SMP in connection with bringing the discharge
into compliance.
6. INDEMNIFICATION.
1. INDEMNIFICATION BY WCC. WCC agrees to indemnify and hold
harmless each SMP Group Member from and against any and all Loss and Expense
imposed upon or incurred by such SMP Group Member as a result of, in connection
with, or arising from:
(i) any breach by WCC, or default in the performance
by WCC, of any covenant, agreement, or obligation to be performed by
WCC pursuant to this Agreement or any WCC Ancillary Agreement;
<PAGE> 27
(ii) any breach of any warranty or the inaccuracy of any
representation of WCC contained or referred to in this Agreement or
any certificate delivered by or on behalf of WCC pursuant hereto;
(iii) any failure of WCC to obtain prior to the Closing
any consent required for the consummation of the transactions
contemplated hereby or by the WCC Ancillary Agreements, including
those set forth in Schedule 3.1.2; and
(iv) the failure of WCC to satisfy or perform any of the
liabilities or obligations not assumed by SMP pursuant to this
Agreement;
provided, however, that WCC shall be required to indemnify and hold harmless
with respect to Loss and Expense incurred by SMP Group Members under clauses
(i), (ii), and (iii) of this paragraph 6.1 (other than Loss and Expense
incurred as a result of inaccuracies of the representations and warranties
contained in paragraphs 3.1.1, 3.1.2, and 3.1.9, as to which this proviso shall
have no effect) only to the extent that the aggregate amount of such Loss and
Expense exceeds $250,000 and is no greater than $4,000,000. The
indemnification provided for in this paragraph 6.1 shall terminate two years
after the Closing Date (and no claims shall be made by any SMP Group Member
under this paragraph 6.1 thereafter), except that the indemnification by WCC
shall continue as to:
(A) the obligations and representations of WCC
under the Instrument of Assignment, as to which no time limitation
shall apply;
(B) the representations and warranties set forth
in paragraphs 3.1.1 and 3.1.2, as to which no time limitation shall
apply; and
(C) any Loss or Expense of which any SMP Group
Member has notified WCC in accordance with the requirements of
paragraph 6.3 hereof on or prior to the date such indemnification
would otherwise terminate in accordance with this paragraph 6.1, as to
which the obligation of WCC shall continue until the liability of WCC
shall have been determined pursuant to this paragraph 6.1, and WCC
shall have reimbursed all SMP Group Members for the full amount of
such Loss and Expense in accordance with this paragraph 6.1.
<PAGE> 28
1. INDEMNIFICATION BY SMP. SMP agrees to indemnify and hold
harmless each WCC Group Member from and against any and all Loss and Expense
imposed upon or incurred by such WCC Group Member as a result of, in connection
with, or arising from:
(i) any breach by SMP, or default in the performance by SMP,
of any covenant, agreement, or obligation to be performed by SMP
pursuant to this Agreement or any SMP Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of SMP contained or referred to in this Agreement or in
any certificate delivered by or on behalf of SMP pursuant hereto;
(iii) any and all claims by any third Person arising from the
failure to pay, perform, or discharge any of the Assumed Liabilities
after the Closing Date, including any lease, sublease, or agreement
expressly assumed by SMP pursuant to the terms of this Agreement, or
any act or omission by SMP occurring on or after the Closing Date with
respect to any of the Assumed Liabilities; and
(iv) any and all debts, obligations, and liabilities resulting
from or in connection with SMP's ownership of the Transferred Assets
arising or occurring after the Closing;
provided, however, that SMP shall be required to indemnify and hold harmless
under clauses (i) and (ii) of this paragraph 6.2 (except with respect to Loss
or Expense under paragraphs 3.2.1, 3.2.2, and 3.2.4, as to which this
limitation shall have no effect) with respect to Loss and Expense incurred by
WCC Group Members only to the extent that the aggregate amount of such Loss and
Expense exceeds $250,000 but is not greater than $4,000,000. The
indemnification provided for in this paragraph 6.2 shall terminate two years
after the Closing Date (and no claims shall be made by any WCC Group Member
under this paragraph 6.2 thereafter), except that the indemnification by SMP
shall continue as to:
(A) the obligations and representations of SMP under
the Instrument of Assumption, as to which no time limitation shall
apply; and
(B) any Loss or Expense of which WCC has notified
SMP in accordance with the requirements of paragraph 6.3 hereof on or
prior to the date such indemnification would otherwise terminate in
accordance with this paragraph 6.2, as to which the obligation of SMP
shall continue until the liability of SMP shall have been determined
pursuant to this paragraph 6.2, and SMP shall have reimbursed
<PAGE> 29
all WCC Group Members for the full amount of such Loss and Expense in
accordance with this paragraph 6.2.
The indemnification provided in this paragraph 6.2 is in addition to any other
provision of this Agreement providing for indemnification, including paragraphs
5.6, 5.7, and 5.8.
1. NOTICE OF INDEMNITY CLAIMS. (a) Any SMP Group Member or
WCC Group Member (the "Indemnified Party") seeking indemnification hereunder
shall give to the party obligated to provide indemnification to such
Indemnified Party (the "Indemnitor") a notice (a "Claim Notice") describing in
reasonable detail the facts giving rise to any claim for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or
the method of computation of the amount of such claim and a reference to the
provision of this Agreement or any other agreement, document, or instrument
executed hereunder or in connection herewith upon which such claim is based;
provided, that a Claim Notice in respect of any action at law or suit in equity
by or against a third Person as to which indemnification will be sought shall
be given promptly after the action or suit is commenced; and provided, further,
that failure to give such notice shall not relieve the Indemnitor of its
obligations hereunder except to the extent it shall have been prejudiced by
such failure.
(b) After the giving of any Claim Notice pursuant hereto,
the amount of indemnification to which an Indemnified Party shall be entitled
under this paragraph 6 shall be determined: (i) by the written agreement
between the Indemnified Party and the Indemnitor; (ii) by a final judgment or
decree of any court of competent jurisdiction; or (iii) by any other means to
which the Indemnified Party and the Indemnitor shall agree. The judgment or
decree of a court shall be deemed final when the time for appeal, if any, shall
have expired and no appeal shall have been taken or when all appeals taken
shall have been finally determined. The Indemnified Party shall have the
burden of proof in establishing the amount of Loss and Expense suffered by it.
2. THIRD PERSON CLAIMS. (a) Subject to paragraph 6.4(b), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise, or settlement of any third Person
claim, action, or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnitor
hereunder, and in any such case the Indemnitor shall cooperate in connection
therewith and shall furnish such records, information, and testimony and attend
such conferences,
<PAGE> 30
discovery proceedings, hearings, trials, and appeals as may be reasonably
requested by the Indemnified Party in connection therewith; provided, that the
Indemnitor may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action, or suit as to which the
Indemnified Party has so elected to conduct and control the defense thereof;
and provided, further, that the Indemnified Party shall not, without the
written consent of the Indemnitor (which written consent shall not be
unreasonably withheld), pay, compromise, or settle any such claim, action, or
suit, except that no such consent shall be required if, following a written
request from the Indemnified Party, the Indemnitor shall fail, within 14 days
after the making of such request, to acknowledge and agree in writing that, if
such claim, action, or suit shall be adversely determined, such Indemnitor has
an obligation to provide indemnification hereunder to such Indemnified Party.
(b) If any third Person claim, action, or suit against
any Indemnified Party is solely for money damages or, where WCC is the
Indemnitor, will have no continuing effect in any material respects on the
Transferred Assets, then the Indemnitor shall have the right to conduct and
control, through counsel of its choosing, the defense, compromise, or
settlement of any such third Person claim, action, or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnitor has
an obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the Indemnified Party shall cooperate in
connection therewith and shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested by the Indemnitor in connection
therewith; provided, that the Indemnified Party may participate, through
counsel chosen by it and at its own expense, in the defense of any such claim,
action, or suit as to which the Indemnitor has so elected to conduct and
control the defense thereof. Notwithstanding the foregoing, the Indemnified
Party shall have the right to pay, settle, or compromise any such claim,
action, or suit; provided, that in such event the Indemnified Party shall waive
any right to indemnity therefor hereunder.
2. CONDITIONS PRECEDENT.
<PAGE> 31
1. CONDITIONS PRECEDENT TO PERFORMANCE BY WCC . The
performance of the obligations of WCC hereunder is subject to the satisfaction,
on or before the Closing Date, of each of the following conditions, any of
which may be waived by WCC, in whole or in part, without prior notice:
1. PERFORMANCE OF AGREEMENT; ACCURACY OF REPRESENTATIONS AND
WARRANTIES. SMP shall have performed, satisfied, and complied with all
covenants, agreements, and obligations required by this Agreement to be
performed or complied with by SMP on or prior to the Closing Date; each of the
representations and warranties of SMP contained or referred to in this
Agreement shall be true and correct on the Closing Date in all material
respects as though made on and as of the Closing Date, except for changes
therein specifically permitted by any such agreement or resulting from any
transaction expressly consented to in writing by WCC or any transaction
contemplated by any such agreement; and there shall have been delivered to WCC
a certificate to such effect, dated the Closing Date and signed on behalf of
SMP by the President or any Vice President thereof.
2. NO RESTRAINT OR LITIGATION. The waiting period under the
HSR Act shall have expired or been terminated (if a filing under the HSR Act is
required in connection with the transactions contemplated hereby), and no
action, suit, or proceeding by any Governmental Body shall have been instituted
or threatened to restrain, prohibit, or otherwise challenge the legality or
validity of the transactions contemplated hereby.
3. NECESSARY GOVERNMENTAL APPROVALS. WCC shall have received
all approvals and actions of or by all Governmental Bodies necessary to
consummate the transactions contemplated hereby that are required to be
obtained prior to the Closing by applicable Requirements of Laws.
4. NECESSARY CONSENTS. WCC shall have received, on or before
the Closing Date, the material consents from third parties to complete the
transactions contemplated by this Agreement set forth in Schedule 7.1.4.
5. RELEASES. WCC shall have been released from each of the
obligations set forth in Schedule 7.1.5.
6. DOCUMENTS DELIVERED. The form and substance of all
documents to be delivered by or relating to SMP under this Agreement shall be
satisfactory in all reasonable respects to WCC.
7. CORPORATE APPROVALS. The Board of Directors of WCC shall
have approved the performance of this Agreement and the transactions
contemplated hereby.
<PAGE> 32
8. SIMULTANEOUS TRANSACTIONS. PVC shall have performed,
observed, and complied with all covenants, agreements, and conditions required
by the WCC-PVC Agreement and the PVC-SMP Agreement and the documents ancillary
thereto to be performed, observed, and complied with on its part prior to or as
of the Closing. SMP shall have performed, observed, and complied with all
covenants, agreements, and conditions required by the WCC-SMP Agreement and the
PVC-SMP Agreement and the documents ancillary thereto to be performed,
observed, and complied with on its part prior to or as of the Closing. The
Closing hereunder will not occur unless the respective closings under each of
the PVC-SMP Agreement, the WCC-PVC Agreement, and the WCC-SMP Agreement occur
prior to or simultaneously with the Closing.
2. CONDITIONS PRECEDENT TO PERFORMANCE BY SMP. The
performance of the obligations of SMP hereunder is subject to the satisfaction,
on or before the Closing Date, of each of the following conditions, any of
which may be waived by SMP, in whole or in part, without prior notice:
1. PERFORMANCE OF AGREEMENT; ACCURACY OF REPRESENTATIONS AND
WARRANTIES. WCC shall have performed, satisfied, and complied with all
covenants, agreements, and obligations required by this Agreement to be
performed or complied with by WCC on or prior to the Closing Date; each of the
representations and warranties of WCC contained or referred to in this
Agreement shall be true and correct on the Closing Date in all material
respects as though made on and as of the Closing Date, except for changes
therein specifically permitted by any such agreement or resulting from any
transaction expressly consented to in writing by SMP or any transaction
contemplated by any such agreement; and there shall have been delivered to SMP
a certificate to such effect, dated the Closing Date and signed on behalf of
WCC by the President or any Vice President thereof.
2. NO CHANGES OR DESTRUCTION OF TRANSFERRED ASSETS. Between
the date hereof and the Closing Date, there shall have been (a) no material
adverse change in the Transferred Assets; (b) no material adverse federal or
state legislative or regulatory change affecting the Transferred Assets; and
(c) no material damage to the Transferred Assets by fire, flood, casualty, act
of God or the public enemy, or other cause, regardless of insurance coverage
for such damage; and there shall have been delivered to SMP a certificate to
such effect, dated the Closing Date and signed on behalf of WCC by the
President or any Vice President thereof.
<PAGE> 33
3. NO RESTRAINT OR LITIGATION. The waiting period under the
HSR Act shall have expired or been terminated (if a filing under the HSR Act is
required in connection with the transactions contemplated hereby), and no
action, suit, or proceeding shall have been instituted or threatened to
restrain or prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby.
4. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have
received all approvals and actions of or by all Governmental Bodies that are
necessary to consummate the transactions contemplated hereby, that are either
specified in Schedule 3.1.5 or otherwise required to be obtained prior to the
Closing by applicable Requirements of Laws, or that are necessary to prevent a
material adverse change in the Transferred Assets.
5. NECESSARY CONSENTS. WCC shall have received consents, in
form and substance reasonably satisfactory to SMP, to the transactions
contemplated hereby that are specified in Schedule 7.1.4.
6. DOCUMENTS DELIVERED. The form and substance of all
documents to be delivered by or relating to WCC under this Agreement shall be
satisfactory in all reasonable respects to SMP.
7. SIMULTANEOUS TRANSACTIONS. PVC shall have performed,
observed, and complied with all covenants, agreements, and conditions required
by the WCC-PVC Agreement and the PVC-SMP Agreement and the documents ancillary
thereto to be performed, observed, and complied with on its part prior to or as
of the Closing. SMP shall have performed, observed, and complied with all
covenants, agreements, and conditions required by the WCC-SMP Agreement and
the PVC-SMP Agreement and the documents ancillary thereto to be performed,
observed, and complied with on its part prior to or as of the Closing. WCC
shall have performed, observed, and complied with all covenants, agreements,
and conditions required by the WCC-PVC Agreement and the WCC-SMP Agreement and
the documents ancillary thereto to be performed, observed, and complied with on
its part prior to or as of the Closing. The Closing hereunder will not occur
unless the respective closings under each of the PVC-SMP Agreement, the WCC-PVC
Agreement, and the WCC-SMP Agreement occur prior to or simultaneously with the
Closing.
3. TERMINATION.
1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
<PAGE> 34
(a) by the mutual consent of the Board of Directors of SMP
and the Board of Directors of WCC;
(b) by SMP or WCC if the Closing shall not have occurred on
or before May 20, 1996 (or such later date as may be mutually agreed to by SMP
and WCC) (the "Termination Date");
(c) by SMP (1) in the event all conditions precedent set
forth in paragraph 7.2 have not been satisfied by the Termination Date or (2)
in the event of any material breach of any agreements, representations, or
warranties of WCC contained herein and the failure of WCC to cure such breach
within thirty Business Days after receipt of notice from Assignee requesting
such breach to be cured or (3) if between the date hereof and the Closing Date,
SMP has received WCC Additional Disclosure and such WCC Additional Disclosure
would have an adverse effect on the Transferred Assets or the transactions
contemplated hereby, by giving written notice of termination within 5 Business
Days after receiving such WCC Additional Disclosure; or
(d) by WCC (1) in the event all conditions precedent set
forth in paragraph 7.1 have not been satisfied by the Termination Date or (2)
in the event of any material breach by SMP of any agreements, representations,
or warranties of SMP contained herein and the failure of SMP to cure such
breach within ten Business Days after receipt of notice from WCC requesting
such breach to be cured or (3) if between the date hereof and the Closing Date,
WCC has received SMP Additional Disclosure and such SMP Additional Disclosure
would have an adverse effect on SMP or the transactions contemplated hereby,
by giving written notice of termination within 5 Business Days after receiving
such SMP Additional Disclosure.
1. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to paragraph 8.1 hereof shall give notice of such
termination to the other party.
2. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this paragraph 8, all further obligations of
the parties under this Agreement (other than paragraphs 5.2 and 9.13) shall be
terminated without further liability of any party to the other, provided that
nothing herein shall relieve any party from liability for its willful breach of
this Agreement.
2. MISCELLANEOUS AGREEMENTS.
1. EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referred to in this Agreement shall be deemed to be incorporated herein by
reference and made a part hereof as if set out in full herein.
<PAGE> 35
2. TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
3. ASSIGNMENT. The rights of SMP and WCC under this
Agreement shall not be assignable by such party hereto, except to an Affiliate,
prior to the Closing without the written consent of the other, which consent
may be withheld for any reason. Following the Closing, either party may assign
any of its rights hereunder, but no such assignment shall relieve it of its
obligations hereunder.
4. SURVIVAL OF PROVISIONS. The representations and
warranties contained in paragraph 3 of this Agreement shall survive the
consummation of the transactions contemplated by this Agreement but solely for
the purpose of creating rights under paragraph 6 of this Agreement.
5. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws (as opposed to the conflicts of
law provisions) of the Commonwealth of Virginia.
6. NOTICES. All notices, requests, demands, and other
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been given on the date of
delivery personally or of deposit in the United States mail, postage prepaid,
by registered or certified mail, return receipt requested, addressed as follows
or to such other person or address as either party shall designate by notice to
the other party in accordance herewith:
To WCC: Westmoreland Coal Company
2 North Cascade Avenue, 14th Floor
Colorado Springs, Colorado 80903
Attn: General Counsel
To SMP: Stonega Mining and Processing Company
P.O. Box 469
Appalachia, Virginia 24219
Attn: Harry Meador
1. COUNTERPARTS. This Agreement may be executed by the
parties in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to each of WCC and SMP.
2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of each of the parties hereto and their
respective successors and permitted assigns.
<PAGE> 36
3. SUBROGATION. Nothing in this Agreement, express or
implied, including the indemnities of paragraph 6, shall be deemed to create in
any Person other than the parties signatory hereto and successors and assigns
permitted by paragraph 9 hereof (i) any right, remedy, or claim under or by
reason of this Agreement or (ii) any rights of subrogation from, through, or
under any indemnified party because of any claim paid or defense provided or
otherwise.
4. RECORDING. This Agreement shall not be filed or recorded
in any office for the recording of deeds or documents.
5. SEVERABILITY OF PROVISIONS. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement or the
application thereof to any Person or circumstances shall, to any extent and for
any reason, be held in any proceeding to be invalid, illegal, or unenforceable,
such provision, or the application thereof to any Person or circumstance, shall
be ineffective to the extent, but only to the extent, of such invalidity,
illegality, or unenforceability without invalidating the remainder of such
invalid, illegal, or unenforceable provision or any other provisions hereof or
the application of such provision to persons or circumstances other than those
to which it was held to be invalid, illegal, or unenforceable, but only if and
to the extent such construction would not materially and adversely frustrate
the parties' essential objectives as expressed herein.
6. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement
(including the Exhibits and Schedules referred to herein and the documents
delivered pursuant hereto) constitutes the entire agreement of the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements, representations, understandings, or letters of intent of the
parties hereto, including the Confidentiality Agreement. This Agreement shall
not be amended, modified, or supplemented except by a written instrument signed
by an authorized representative of each of the parties hereto. Any term or
provision of this Agreement may be waived, or the time for its performance may
be extended, by the party or parties entitled to the benefit thereof. Any such
waiver shall be validly and sufficiently authorized for the purposes of this
Agreement if, as to any party, it is authorized in writing by an authorized
representative of such party. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision nor in any way to affect the
<PAGE> 37
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach
of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
7. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials, and other
information that it shall have obtained regarding the other party during the
course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein, and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated, each party will return to the
other party all copies of non-public documents and materials that have been
furnished in connection therewith. Such documents, materials, and information
shall not be communicated to any third Person (other than, in the case of SMP,
to its counsel, accountants, advisors, or lenders, and in the case of WCC, to
its counsel, accountants, or advisors). No other party shall use any
confidential information in any manner whatsoever except solely for the purpose
of evaluating the proposed purchase and sale of the Transferred Assets;
provided, however, that after the Closing SMP may use or disclose any
confidential information related to the Transferred Assets. The obligation of
each party to treat such documents, materials, and other information in
confidence shall not apply to any information that (i) is or becomes available
to such party from a source other than such party, (ii) is or becomes available
to the public other than as a result of disclosure by such party or its agents,
(iii) is required to be disclosed under applicable law or judicial process, but
only to the extent it must be disclosed, or (iv) such party reasonably deems
necessary to disclose to obtain any of the consents or approvals contemplated
hereby.
8. INCORPORATION BY REFERENCE. Any fact, information,
matter, item, or condition set forth on any Schedule to this Agreement shall be
incorporated by reference and deemed to have been fully set forth on each other
Schedule to this Agreement.
9. RULES OF INTERPRETATION. The following rules shall govern
the interpretation of this Agreement and the exhibits hereto:
<PAGE> 38
1. The titles and headings contained in this Agreement
(including in the Exhibits and Schedules hereto) are included for purposes of
convenience only and shall not be considered in construing or interpreting any
provision of this Agreement.
2. Words importing the singular include the plural and words
importing the plural include the singular and words importing gender include
the masculine, feminine, and neuter genders.
3. A reference to any agreement means the agreement as
amended, modified, or supplemented from time to time. A reference to any
schedule to this Agreement means the schedule as amended, modified, or
supplemented from time to time.
4. A reference to any law includes any amendment or
modification thereto and any successor statute. Such reference does not
encompass post-closing enactments creating new statutory liabilities.
5. A reference to any Person includes its permitted
successors and assigns.
6. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles.
7. The rule of contra proferentum shall not be applied in
interpreting this Agreement.
8. The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole, including all exhibits and schedules hereto, and not to any particular
provisions of this Agreement, and references to paragraphs, schedules, and
exhibits are to paragraphs, schedules, and exhibits to this Agreement unless
the context clearly requires otherwise.
9. The words "includes" or "including" shall mean "includes,
without limitation" and "including, without limitation."
10. The parties understand that fees, penalties, or interest
incurred or assessed subsequent to the Closing Date will "relate solely to
violations of law or other action that occurred prior to the Closing Date" if
and only if all acts or events that gave rise to the incurrence or assessment
of the fees, penalties, or interest -- other than administrative or other
proceedings by a Governmental Body involved with such assessment -- occurred
prior to the Closing Date. The parties understand that fines, fees, or
penalties resulting from a governmental audit conducted after the Closing Date
will "relate solely to periods prior to the Closing Date" if and only if all
acts or events that
<PAGE> 39
gave rise to the incurrence or assessment of the fines, fees, or penalties --
other than administrative or other proceedings by a Governmental Body and the
audit itself -- occurred prior to the Closing Date.
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WESTMORELAND COAL COMPANY
Witness:
By:
- ------------------ ----------------------------------
Name:
Title:
STONEGA MINING AND PROCESSING COMPANY
Witness:
By:
- ------------------ ----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 99.1
--------------------------------------
WESTMORELAND AND PENN VIRGINIA
COMPLETE TRANSACTION
--------------------------------------
COLORADO SPRINGS, CO -- May 15, 1996 -- Westmoreland Coal Company (NYSE:WCX)
today announced that it has completed a transaction with Penn Virginia
Corporation (NASDAQ: PVIR) involving the relinquishment of certain coal
reserves back to Penn Virginia. Westmoreland received a cash payment of $10.7
million and other consideration in exchange for the relinquishment of the
reserves.
In addition to cash, the transaction grants Westmoreland an 18 month option to
purchase Penn Virginia's 16% ownership interest in Westmoreland Resources, Inc.
("WRI") for $3.0 million. WRI is a profitable Powder River Basin mining
operation located near Hardin, Montana which is jointly owned by the two
companies and Morrison Knudsen Corporation. Westmoreland currently owns 60% of
the operation and Morrison Knudsen 24%. Westmoreland is seeking to increase its
position there to at least 80% for tax consolidation purposes. Westmoreland is
seeking to utilize over $174 million in net operating loss (NOL) tax
carryforwards.
The deal includes assignable access rights from Penn Virginia to Westmoreland
to Westmoreland's Stone Mountain reserves, a large adjacent tract of high
quality underground reserves owned in fee by the Company.
The Company also announced that it had agreed to sell its idled Wentz Complex
to Stonega Mining and Processing Company and its idled Pine Branch Mining Inc.
to Roaring Fork Mining Company in non-cash transactions expected to close at a
later date. Each purchaser will assume certain reclamation and other
liabilities.
Westmoreland retains the remainder of its idled Virginia Division operations
and related coal reserves and continues to explore alternatives for these
assets which include possible contract operations or sale. The Company also
retains two profitable independent contract mining operations.
Westmoreland's President and Chief Executive Officer, Christopher K. Seglem
said, "The Penn Virginia transaction represents the culmination of many months
of difficult negotiations. We are pleased with the final outcome because it
provides us with an attractive cash price and gives us strategic opportunities
to enhance the value of other assets such as Westmoreland Resources and the
Stone Mountain reserves. With this important step behind us we must now
finalize plans for our remaining Virginia Division assets and continue to
aggressively implement our acquisition strategy in order to secure the
Company's future."
#
For further information contact Diane Jones (719) 448-5814.
<PAGE> 1
EXHIBIT 99.2
--------------------------------------
WESTMORELAND COMPLETES SALE OF
WENTZ COMPLEX AND PINE BRANCH MINE
--------------------------------------
COLORADO SPRINGS, CO -- May 22, 1996 -- Westmoreland Coal Company (NYSE: WCX)
today announced that it has completed non-cash transactions for the sale of its
idled Wentz Complex to Stonega Mining and Processing Company and its idled Pine
Branch Mine to Roaring Fork Mining Company. Both operations were assets of the
Company's Virginia Division which was idled in August of 1995. The purchasers
will assume reclamation liabilities, related equipment leases, certain
environmental liabilities, and postretirement medical benefits for any former
Westmoreland employees hired by them. The purchasers also take the operations
subject to the Company's union successorship obligation, which the United Mine
Workers of America have acknowledged Westmoreland has fullfilled under the
terms of these sale agreements.
The Company's remaining assets at the idled Division include the Bullitt Mine,
preparation plant and transloader, Pierrepont Mine and coal handling facility,
Holton Mine and loadout facility, Mission Hollow and Stone Mountain reserves,
and certain properties which continue to be operated by contractors. Plans for
these assets, including additional contract operations or possible sale, are
under consideration by the Company.
#
For further information contact Diane Jones (719) 448-5814.
