<PAGE>
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
APPALACHIAN POWER COMPANY
40 Franklin Road, Roanoke, Virginia 24022
SOUTHERN APPALACHIAN COAL COMPANY
40 Franklin Road, Roanoke, Virginia 24022
(Name of companies filing this statement and
addresses of principal executive offices)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
G. P. Maloney, Executive Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
John F. DiLorenzo, Jr., Associate General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
<PAGE>
Item 1. Description of Proposed Transaction
Appalachian Power Company ("Appalachian"), an electric utility
subsidiary of American Electric Power Company, Inc., a registered
holding company, and its subsidiary, Southern Appalachian Coal
Company (SACCo") (collectively, the "Sellers"), have filed this
joint application-declaration under the Public Utility Holding
Company Act of 1935 for approval of the following transactions:
(a) the acquisition by the Sellers of a promissory note to be
delivered by the purchaser of certain: (i) real property
interests, including coal lands and docking facilities located in
Boone and Kanawha Counties, West Virginia; (ii) raw coal and clean
coal handling and preparation plant facilities; and (iii) certain
reclamation, pollutant discharge, pollution control and facilities
permits applicable to coal mining, preparation and transportation
and (b) a proposal by the Sellers to indemnify and hold harmless
the purchasers of mining properties owned by the Sellers with
respect to certain liabilities or claims that may be asserted
against such purchasers by employees or former employees of SACCo
or by federal, state or local agencies asserting non-compliance by
SACCo with laws relating to mining operations.
A. Background
In the 1970's, Appalachian undertook an expansion of its
affiliated coal mining operations in order to better assure
that its generating units would be in compliance with existing
air quality standards through use of complying coals and to
secure a reliable and economic source of coal to insulate
Appalachian and its customers from anticipated shortages of
such coal and sharply escalating prices. Pursuant to
Commission order dated March 23, 1972 (HCAR No. 17507), the
Commission authorized Appalachian to enter into coal purchase
agreements with SACCo. Subsequently, the Commission approved
various financing applications filed by Appalachian and SACCo
which enabled SACCo to expand its mining operations.
In part due to the fact that coal of a quality sufficient
to enable Appalachian's generating plants to comply with air
quality standards had not been in as short a supply or as
costly as may have been expected in the early 1970's, the
prices paid by Appalachian for the coal produced by its coal
subsidiaries have historically on average exceeded the average
price paid by Appalachian for coal produced by non-affiliates.
Accordingly, Appalachian in the 1980's reached the conclusion
that its best course of action was to sell its affiliated
mining properties. By order of this Commission dated June 6,
1984 (HCAR No. 23322), the Commission approved the sale of a
significant portion of Appalachian's and its subsidiaries'
coal mining assets.
B. Proposed Transaction
The Sellers have entered into an Agreement of Purchase
and Sale dated March 22, 1995 (the "Agreement") with Whites
Creek Limited Liability Company, a West Virginia limited
liability company, with respect to most of its remaining West
Virginia mining assets. Appalachian owns certain real
property interests, including coal lands and docking
facilities, located in Boone and Kanawha Counties, West
Virginia. SACCo owns the Bull Creek Preparation Plant and
equipment consisting of certain raw coal and clean coal
handling and preparation plant facility together with fixed
assets and improvements and other coal mining equipment.
SACCo is the permittee under various reclamation, pollutant
discharge, pollution control and facilities permits applicable
to coal mining, preparation and transportation. Pursuant to
the Agreement, Buyer will acquire the real property interests,
the coal preparation facility, the equipment and the permits
(the "Assets") from the Sellers. Sellers shall assign and
delegate (to the extent such rights and obligations are
assignable and delegable) to Buyer all rights and obligations
under various oil and gas leases, farming leases, timber
leases, residential leases, licenses, franchises, contracts,
concessions and recorded and unrecorded occupancy agreements
applicable to or for the use or occupancy of the real estate
to be sold. A copy of the Agreement is attached hereto as
Exhibit B.
The total purchase price under the Agreement for the
Assets is Six Million Fifty Thousand Dollars ($6,050,000).
One Million Two Hundred and Fifty Thousand Dollars
($1,250,000) shall be paid at closing to be held no later than
June 30, 1995. Buyer shall deliver a Promissory Note in the
amount of Four Million Eight Hundred Thousand Dollars
($4,800,000), bearing interest at the rate of 8.004213% per
annum, payable in 40 equal quarterly installments of principal
and interest of One Hundred Seventy-Five Thousand Five Hundred
Dollars ($175,500) beginning on September 30, 1995 and ending
on June 30, 2005.
To secure its obligations, Buyer will furnish to Sellers
at Closing an irrevocable standby letter of credit issued by
a bank reasonably acceptable to Sellers. Buyer must extend
the letter of credit until the promissory note is paid in full
or it can furnish alternate security to Sellers equivalent to
the benefits provided by the letter of credit and issued by a
financial institution reasonably acceptable to Sellers.
Buyer has the right under the Agreement to elect not to
deliver the promissory note and letter of credit and to pay
the purchase price in cash at closing. The obligations of
Buyer under the Agreement shall be guaranteed by August
Enterprises, Ltd., a West Virginia corporation.
Under the Agreement, the Sellers have agreed to
indemnify, defend and save harmless the Buyer against certain
liabilities and contingencies that may be asserted by
employees or former employees of SACCo against Buyer or by
federal, state or local agencies as a result of non-compliance
with laws relating to mining operations. These indemnities
include claims under the West Virginia Workers Compensation
Act, the federal Black Lung Benefits Act and the National
Bituminous Coal Wage Agreement of 1993.
Item 2. Fees, Commissions and Expenses
Estimates of fees, commissions and expenses paid or incurred,
or to be paid or incurred, directly or indirectly, in connection
with the proposed transaction by the applicant or declarant or any
associates thereof are as follows:
Commission Filing Fee $ 2,000
Legal Fees of Counsel to APCo and SACCo 77,000
Independent Engineer Fees 2,000
Miscellaneous Fees 5,000
Total $86,000
No other fees, commissions or expenses, other than expenses
billed at cost by American Electric Power Service Corporation (not
to exceed $10,000), have been or are to be paid or incurred by
Appalachian, SACCo or any associate company in connection with this
transaction.
Item 3. Applicable Statutory Provisions
Sections 9 and 10 of the Public Utility Holding Company Act of
1935 (the "1935 Act") may be regarded as applicable to the proposed
sale of utility assets and the acquisition by the Sellers of the
promissory note of Buyer. Section 12(b) of the 1935 Act may be
regarded as applicable to the indemnification by Appalachian of
liabilities and claims that may be asserted against the Buyer by
employees or former employees of SACCo.
Item 4. Regulatory Approval
Applications have, or will be, filed by Appalachian with the
Public Service Commission of the State of West Virginia and the
State Corporation Commission of the Commonwealth of Virginia
relating to the transaction. No other state commission and no
other federal commission other than the Securities and Exchange
Commission has jurisdiction over this transaction.
Item 5. Procedure
It is requested, pursuant to Rule 23(c) of the Rules and
Regulations of the Commission, that the Commission's order granting
and permitting to become effective this Joint Application or
Declaration be issued on or before June 1, 1995. Appalachian and
SACCo waive any recommended decision by a hearing officer or by any
other responsible officer of the Commission and waive the 30-day
waiting period between the issuance of the Commission's order and
the date it is to become effective, since it is desired that the
Commission's order, when issued, become effective forthwith.
Appalachian and SACCo consent to the Division of Investment
Management assisting in the preparation of the Commission's
decision and/or order in this matter, unless the Division opposes
the matter covered by this joint Application-Declaration.
Item 6. Exhibits and Financial Statements
The following exhibits and financial statement are filed as
part of this filing:
(a) Exhibits
A Form of promissory note of Buyer to Sellers.
B Agreement of Sale dated March 22, 1995 and First
Addendum to Agreement of Purchase and Sale.
C None
D-1 Application to West Virginia Public Service
Commission [to be filed by Amendment].
D-2 Application to the Virginia State Corporation
Commission.
D-3 Order of the West Virginia Public Service Commission
[to be filed by Amendment].
D-4 Order of the Virginia State Corporation Commission
[to be filed by amendment].
E None.
F Opinion of counsel [to be filed by amendment].
(b) Financial Statements:
No financial statements for Appalachian or SACCo are
submitted herewith since such financial statements would
not appear to be necessary or relevant in connection with
the proposed transaction.
Item 7. Information as to Environmental Effects
It is believed that the granting and permitting to become
effective of this joint Application or Declaration will not
constitute a major Federal action significantly affecting the
quality of the human environment. No other Federal agency has
prepared or is preparing an environmental impact statement with
respect to the proposed transaction.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
APPALACHIAN POWER COMPANY
SOUTHERN APPALACHIAN COAL COMPANY
By:___/s/ G. P. Maloney_________
G. P. Maloney, Vice President
Date: April 12, 1995
[95FN0033.APC]
</PAGE>
<PAGE>
Exhibit A
TO AGREEMENT OF PURCHASE AND SALE AMONG
SOUTHERN APPALACHIAN COAL COMPANY,
APPALACHIAN POWER COMPANY
AND
WHITES CREEK LIMITED LIABILITY COMPANY
PROMISSORY NOTE
$4,800,000 Date:_____________
Columbus, Ohio
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay
to the order of Appalachian Power Company and Southern Appalachian
Coal Company ("Payees"), at One Riverside Plaza, Columbus, Ohio
43215, or at such other address as the holder hereof may designate
in writing, the principal sum of $4,800,000 together with interest
on the unpaid principal sum at the rate of 8.004213% per annum, in
40 equal successive quarterly installments of principal and
interest of $175,500, commencing on the 30th day of September, 1995
and continuing on the last day of each December, March, June, and
September thereafter, through June 30, 2006. The entire amount of
unpaid principal and interest shall be paid in full on or before
June 30, 2006.
1. Application of Payments. All payments made under this
Note to the holder hereof will be applied first to the payment of
accrued interest, and the balance, if any, to the reduction of the
unpaid principal sum.
2. Prepayment. The principal sum may be prepaid at any
time and from time to time in whole or in part. All prepayments
of principal made in accordance with this Note will be applied to
the principal installments due hereunder in the inverse order of
their maturity.
3. Default. Maker shall be in default of this Note upon the
occurrence of any one or more of the following events of default:
i. The failure of Maker to make any payment due
hereunder in the amount and at the time stated
herein due hereunder within ten calendar days
following written notice given to Maker by either
Payee;
ii. A default by Maker of its obligations under the
Agreement of Purchase and Sale dated _________,
1995, among Appalachian Power Company, Southern
Appalachian Coal Company and Maker ("Agreement of
Purchase and Sale"), and such default remains
uncured for any applicable cure period thereunder.
iii. The failure of Maker to obtain and deliver to
Payees no later than 10 business days prior to the
expiration date of the Letter of Credit (issued
pursuant to such Agreement of Purchase and Sale),
or the expiration date of any re-extension of the
Letter of Credit or extension or re-extension of
Alternate Security (as defined in such Agreement
of Purchase and Sale), either the extension or re-
extension of the Letter of Credit or the extension
or re-extension of such Alternate Security.
4. Acceleration. Upon default of Maker, at the option of
the holder hereof, the unpaid principal sum, together with
accrued interest thereon, shall be immediately due and payable.
From the date of such default, and at all times thereafter until
this Note is paid in full, the unpaid principal sum, together
with accrued interest at the time of such default, shall bear
interest at two points over the Prime Commercial Rate being
charged by the Huntington National Bank, Columbus, Ohio, at the
time the holder declares the unpaid principal sum to be due and
payable, but no less than 10%.
5. No Setoff. The obligations of Maker under this Note
shall not be subject to any right of setoff against obligations
owing to Maker by Appalachian Power Company, or Southern
Appalachian Coal Company under any other agreement.
6. Waivers. Maker and each endorser, surety and guarantor
hereof waive presentment, demand, notice, diligence and protest
in connection with the delivery, acceptance, performance,
default, or enforcement of this Note, assent to any extensions(s)
or postponement(s) of the time for payment, including an
extension greater than the original time in which payment was to
be made, and assent to the addition or release of any party or
person primarily or secondarily liable on this Note.
7. Notices. Any notice required hereunder shall be deemed
effectively given upon personal or courier delivery or three (3)
calendar days after deposited with the United States Post Office
by registered or certified mail, postage prepaid.
8. Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of Ohio without
reference to choice of law rules.
9. Consent of Jurisdiction. Maker and each surety,
guarantor, or endorser hereof jointly and severally agree that
this Note was executed in Columbus, Ohio, and that in any action
arising under this Note, or any guaranty, for the collection,
enforcement, or execution upon the same, the holder of the Note
or guaranty may commence action upon the Note or guaranty or
against any person in any capacity liable hereunder or thereunder
by service of process and a copy of such complaint to the
undersigned or to any surety, guarantor, or endorsee by certified
mail, return receipt requested, at the address for such person
set forth below, in a court of competent jurisdiction in Franklin
County, Ohio, and each such person or entity does hereby submit
to the jurisdiction of such court for actions arising out of this
Note or guaranty and its enforcement or collection and waives and
agrees not to assert the defense of lack of jurisdiction of the
person of the undersigned or of such surety, guarantor or
endorser.
WHITES CREEK LIMITED
LIABILITY COMPANY
Address:__________________________
__________________________________
By:_______________________________
Title:____________________________
</PAGE>
<PAGE>
Exhibit B
AGREEMENT OF PURCHASE AND SALE
DATED AS OF
MARCH 22, 1995
AMONG
SOUTHERN APPALACHIAN COAL COMPANY,
APPALACHIAN POWER COMPANY,
AND
WHITES CREEK LIMITED LIABILITY COMPANY
<PAGE>
AGREEMENT OF PURCHASE AND SALE
TABLE OF CONTENTS
RECITALS........................................................1
AGREEMENT.......................................................2
ARTICLE I. DEFINITIONS......................................2
ARTICLE II. PURCHASE AND SALE................................6
ARTICLE III. PURCHASE PRICE...................................7
ARTICLE IV. THE CLOSING......................................9
ARTICLE V. TITLE TO REAL PROPERTY AND TANGIBLE PERSONAL
PROPERTY; ENVIRONMENTAL MATTERS..................9
ARTICLE VI. INSPECTION AND CONDITION OF ASSETS..............17
ARTICLE VII TRANSFER OF PERMITS AND BONDS...................18
ARTICLE VIII. TAXES, ASSESSMENTS AND PRORATIONS...............20
ARTICLE IX. OBLIGATIONS UNDER NATIONAL BITUMINOUS COAL
WAGE AGREEMENT OF 1993..........................21
ARTICLE X. EXAMINATION OF BOOKS AND RECORDS................21
ARTICLE XI. EARNEST MONEY DEPOSIT...........................22
ARTICLE XII. MISCELLANEOUS LEASE AND CONTRACT OBLIGATIONS....22
ARTICLE XIII. APPALACHIAN'S REPRESENTATIONS AND WARRANTIES....23
ARTICLE XIV. SOUTHERN'S REPRESENTATIONS AND WARRANTIES.......24
ARTICLE XV. REPRESENTATIONS AND WARRANTIES OF BUYER.........25
ARTICLE XVI. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.....25
ARTICLE XVII. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS....29
ARTICLE XVIII. INDEMNIFICATION BY SELLERS......................33
ARTICLE XIX. INDEMNIFICATION BY BUYER........................36
ARTICLE XX. DESTRUCTION OR DAMAGE TO ASSETS.................39
ARTICLE XXI. BLACK LUNG BENEFITS.............................39
ARTICLE XXII. MISCELLANEOUS...................................40
A. Payment of Expenses........................40
B. Future Easements and Rights-of-Way.........40
C. Brokerage..................................41
D. Binding Effect.............................41
E. Notices....................................41
F. Entire Agreement...........................42
G. Confidentiality............................42
H. Section Headings...........................43
I. Assignability..............................43
J. Applicable Law.............................43
K. Counterparts...............................43
ARTICLE XXIII. NON-SURVIVAL OF SELLERS' REPRESENTATIONS
AND WARRANTIES..................................43
EXHIBITS
Exhibit A Fee Interests
Exhibit B Bull Creek Preparation Plant and Equipment
Exhibit C Permits
Exhibit D Reserved Easements and Bee Mountain Tower Site
Exhibit E Consents or Transfers by Sellers Prior to Closing
Exhibit F [Intentionally Omitted]
Exhibit G [Intentionally Omitted]
Exhibit H [Intentionally Omitted]
Exhibit I Special Warranty Deed
Exhibit J Davison Dock Facility
Exhibit K Letter of Credit
Exhibit L [Intentionally Omitted]
Exhibit M Guaranty Agreement
Exhibit N Promissory Note
Exhibit O Bill of Sale
Exhibit P Suits and Proceedings
Exhibit Q Liens and Encumbrances
Exhibit R Miscellaneous Leases and Contracts
<PAGE>
AGREEMENT OF PURCHASE AND SALE
This Agreement of Purchase and Sale made and entered into this
22nd day of March, 1995, among Southern Appalachian Coal Company,
a West Virginia corporation (hereinafter "Southern"), Appalachian
Power Company, a Virginia corporation (hereinafter "Appalachian")
(Southern and Appalachian are hereinafter sometimes collectively
referred to as "Sellers") and Whites Creek Limited Liability
Company, a West Virginia limited liability company (hereinafter
"Buyer").
RECITALS
A. Appalachian owns certain real property interests, including
coal lands and docking facilities, located in Boone and
Kanawha Counties, West Virginia.
B. Southern owns certain raw coal and clean coal handling and
preparation plant facilities, together with certain fixed
assets and improvements and other coal mining equipment
located on the real property interests owned by Appalachian.
C. Southern is the permittee under various reclamation, pollutant
discharge, pollution control and facilities permits applicable
to coal mining, preparation, and transportation.
D. Buyer desires to acquire from Sellers the real property
interests (including the Davison loading and docking
facilities) the coal preparation facility, the equipment, and
the permits, and Sellers desire to sell and transfer the same
to Buyer under the following terms and conditions.
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and the
covenants and agreements contained herein as well as for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I. DEFINITIONS.
For purposes of this Agreement, the following defined terms
shall have the meanings set forth below (terms defined in the
singular shall have the same meanings when used in the plural and
vice versa):
A. "Act" shall mean the Black Lung Benefits Act.
B. "Affiliate" with respect to any Person shall mean a Person (i)
which directly or indirectly through one or more
intermediaries controls or is controlled by or is under common
control with such Person; (ii) which beneficially owns or
holds 50% or more of any class of capital stock, other voting
securities or membership rights or interests of such Person;
or (iii) of which 50% or more of the capital stock, other
voting securities, or membership rights or interests is
beneficially owned or held by such Person. The term "control"
(including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person whether through the ownership of
capital stock, other voting securities, or membership rights
or interests, or by contract or otherwise.
C. "Agreement" shall mean this Agreement of Purchase and Sale.
D. "Alternate Security" shall have the meaning set forth in
Article III hereof.
E. "Appalachian" shall mean Appalachian Power Company, a Virginia
corporation.
F. "Assets" shall mean the Fee Interests, including the Davison
Dock Facility, the Bull Creek Preparation Plant and Equipment
and the Permits.
G. "August Enterprises" shall mean August Enterprises, Ltd., a
West Virginia corporation.
H. "Bee Mountain Tower Site" shall mean the premises described in
Exhibit A, Part 1, pages 8, 9 and 10, and delineated in
Exhibit D, Part 4-B.
I. "Bill of Sale" shall mean the Bill of Sale referred to in
Article V hereof, substantially in the form of Exhibit O.
J. "Bull Creek Preparation Plant and Equipment" shall mean that
certain raw coal and clean coal handling and preparation plant
facility together with all of the fixed assets and
improvements and other coal mining equipment, more
particularly described on Exhibit B, to the extent that any of
the items described thereon exist and are located on the Fee
Interests as of the Date of Closing. The real property on
which the Bull Creek Preparation Plant is located shall not,
for purposes of this definition, be considered part of the
Bull Creek Preparation Plant.
K. "Buyer" shall mean Whites Creek Limited Liability Company, a
West Virginia limited liability company.
L. "Closing" shall have the meaning set forth in Article IV
hereof.
M. "Date of Closing" shall have the meaning set forth in Article
IV hereof.
N. "Davison Dock Facility" shall mean that certain coal loading
facility located on a portion of the Fee Interests on the
Kanawha River at Marmet, West Virginia and more particularly
described on Exhibit J attached hereto.
O. "Division of Reclamation" shall mean the Office of Mining and
Reclamation of the West Virginia Division of Environmental
Protection.
P. "Earnest Money Deposit" shall have the meaning set forth in
Article XI hereof.
Q. "Environmental Condition" shall have the meaning set forth in
Article V hereof.
R. "Environmental Laws" shall have the meaning set forth in
Article V hereof.
S. "Fee Interests" shall mean Appalachian's fee interests, of
whatever nature, in those tracts or parcels of land in Boone
and Kanawha Counties, West Virginia, and described or
referred to on Part 1 or Part 4 of Exhibit A attached hereto
and made a part hereof (excluding, however, the premises known
as the Bee Mountain Tower Site and the premises known as
Mike's Run Substation Site), and all coal, oil and gas and
other mineral interests owned by Appalachian therein or
thereunder, including the timber thereon, but excepting and
subject to the following:
1. Rights, interests and easements heretofore conveyed by
Appalachian to others;
2. The easements specified on Exhibit D attached hereto and
made a part hereof (representing easements deemed
necessary by Appalachian for power transmission and
distribution purposes and access to the Bee Mountain
Tower Site which easement for access to the Bee Mountain
Tower Site is subject to relocation as provided in
Exhibit I);
3. All zoning laws, ordinances and rules and regulations of
governmental authorities;
4. All covenants, conditions, agreements, reservations,
restrictions, easements and rights-of-way affecting the
property to be conveyed which are of record;
5. All existing public highways;
6. Boundary line disputes, overlaps, shortages in area,
encroachments and any matters not of record which would
be disclosed by an accurate survey and physical
inspection of the property to be conveyed, including by
way of illustration but not limitation, easements and
claims of easements not shown by the public records, and
claims of title obtained by rights of adverse possession;
7. All current and future real estate taxes and assessments;
8. All right, title and interest of all tenants and
occupants under all leases, licenses, franchises,
concessions and other occupancy agreements, for the use
or occupancy of any portion of the property conveyed;
9. All leases which are of record or which are referred to
in any instrument of record;
10. All recorded conveyances or reservations of minerals or
timber;
11. Such additional outconveyances, exceptions, and
limitations, if any, as may be disclosed by any evidence
of title provided to Buyer prior to Closing; and
12. The agreements, deeds, easements, interests, leases, and
other interests identified on Part 3 of Exhibit A
attached hereto and incorporated herein by reference.
T. "Guaranty Agreement" shall mean the guaranty agreement in
substantially the form of Exhibit M attached hereto, to be
executed at Closing by August Enterprises.
U. "Letter of Credit" shall mean the letter of credit described
in Article III hereof and substantially in the form of Exhibit
K attached hereto.
V. "Letter of Credit Bank" shall have the meaning set forth in
Article III hereof.
W. "Mike's Run Substation Site" shall mean the premises described
in Exhibit A, Part 1, pages 23 and 24, and delineated in
Exhibit A, Part 2-A.
X. "Permits" shall mean the permits listed on Exhibit C.
Y. "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, trust,
unincorporated organization, limited liability company, or
government or any agency or political subdivision thereof, or
equivalent legal entities under foreign law.
Z. "Promissory Note" shall mean the Promissory Note from Buyer to
Sellers substantially in the form of Exhibit N.
AA. "Purchase Price" shall have the meaning set forth in Article
III hereof.
BB. "Sellers" shall mean collectively Appalachian Power Company,
a Virginia corporation and Southern Appalachian Coal Company,
a West Virginia corporation.
CC. "Southern" shall mean Southern Appalachian Coal Company, a
West Virginia corporation.
DD. "Special Warranty Deed" shall have the meaning set forth in
Article V hereof and shall be in substantially the form of
Exhibit I attached hereto.
EE. "Title Review Period" shall have the meaning set forth in
Article V hereof.
FF. "Wage Agreement" shall have the meaning set forth in Article
IX hereof.
GG. "West Virginia Workers' Compensation Act" shall mean Chapter
23 of the West Virginia Code.
ARTICLE II. PURCHASE AND SALE.
A. At Closing, Appalachian or Southern, as appropriate, shall:
1. sell, transfer, and convey to Buyer the Fee Interests,
and the Bull Creek Preparation Plant and the Equipment;
2. transfer to Buyer, to the extent permitted by applicable
law, the permitting authority and this Agreement,
Southern's interests in the Permits;
3. assign and delegate to Buyer, to the extent such rights
and obligations are assignable and delegable, Sellers'
rights and obligations under the miscellaneous lease and
other contract rights referred to in Article XII hereof.
B. At Closing, Buyer shall:
1. pay the Purchase Price for the Assets as described in
Article III hereof;
2. receive and accept the Fee Interests, the Bull Creek
Preparation Plant and Equipment, and the Permits;
3. accept and assume, to the extent such rights and
obligations are assigned and delegable, all of Sellers'
rights and obligations under the miscellaneous lease and
other contract rights referred to in Article XII hereof;
and
4. deliver to Sellers the Letter of Credit.
C. At Closing, August Enterprises shall execute the Guaranty
Agreement.
D. This Agreement is for the purchase, sale, or assignment of the
Assets and does not include any other assets not specifically
listed or described in this Agreement or the exhibits hereto.
ARTICLE III. PURCHASE PRICE.
A. The total purchase price for the Assets shall be Six Million
Fifty Thousand Dollars ($6,050,000) (the "Purchase Price"),
subject to adjustment on account of closing prorations and/or
credits as provided in Article IX below, payable by Buyer to
Sellers as follows:
1. At Closing, One Million Two Hundred and Fifty Thousand
Dollars ($1,250,000) in immediately available funds.
2. At Closing, delivery of a Promissory Note in the amount
of Four Million Eight Hundred Thousand Dollars
($4,800,000), bearing interest at the rate of 8.004213%
per annum, payable in 40 equal quarterly installments of
principal and interest of One Hundred Seventy Five
Thousand Five Hundred Dollars ($175,500) beginning on
September 30, 1995, and ending on June 30, 2005. The
Promissory Note shall be substantially in the form
attached hereto as Exhibit N.
B. To secure its obligations to Sellers under the Promissory
Note, Buyer agrees to furnish to Sellers at Closing an
irrevocable standby letter of credit in substantially the form
of Exhibit K attached hereto (the "Letter of Credit") issued
by a bank reasonably acceptable to Sellers ("Letter of Credit
Bank") constituting an irrevocable obligation of the Letter of
Credit Bank to make payment to Sellers of the outstanding
principal amount and interest of the Promissory Note, whether
upon acceleration or otherwise.
Buyer further agrees that it shall cause the Letter of
Credit to be extended or re-extended until the Promissory Note
is paid in full or shall furnish Alternate Security having an
effective date not later than ten days prior to the expiration
date of the Letter of Credit.
"Alternate Security" shall mean any one or a combination
of insurance, surety bonds, letters of credit, lines of credit
or other credit or liquidity support devices providing
benefits to Sellers equivalent to the benefits provided by the
Letter of Credit and issued by a financial institution
reasonably acceptable to Sellers.
Failure of Buyer to obtain extension of the Letter of
Credit or to provide Alternate Security, as provided in
paragraph B of this Article III, shall constitute a default
under the Promissory Note and, upon such default, the entire
unpaid principal and interest of the Promissory Note shall
become immediately due and payable, and Sellers shall have the
immediate right to draw the amount of the unpaid principal and
interest under the Letter of Credit.
ARTICLE IV. THE CLOSING.
The closing of the transactions described in this Agreement
("Closing") shall take place in Columbus, Ohio, at such time and
place as the parties may hereafter agree in writing, but in no
event later than 10:00 a.m. on June 30, 1995. The date on which
the closing of this transaction actually occurs is referred to in
this Agreement as the "Date of Closing."
ARTICLE V. TITLE TO REAL PROPERTY AND TANGIBLE PERSONAL
PROPERTY; ENVIRONMENTAL MATTERS.
A. With respect to all Fee Interests to be conveyed to Buyer
pursuant to this Agreement, Appalachian shall execute and
deliver to Buyer at Closing Special Warranty Deeds. The
special warranties in such deeds shall apply to all Fee
Interests except the Fee Interests specified in Part 4 of
Exhibit A, which Fee Interests shall be quitclaimed only. The
Special Warranty Deeds and the other documents of title shall
be satisfactory in form and substance for recording in the
appropriate office in the counties in which the Fee Interests
are located.
Buyer agrees to accept at Closing Special Warranty Deeds
as the instruments of conveyance for all Fee Interests.
Except as set forth in the Special Warranty Deeds, Appalachian
makes no express warranties regarding the Fee Interests and
expressly disclaims any implied warranties, including
warranties as to the marketability of Appalachian's title or
that the Fee Interests are free from any encumbrances or
claims or demands from any persons not claiming by, through
or under Appalachian. Buyer hereby waives any claim for any
breach of warranty of title except those special warranties
set forth in the instruments of conveyance. Sellers
represent, warrant, covenant and agree that they will make no
material sale, transfer, conveyance, lease or other agreement
affecting any of the Fee Interests prior to Closing without
the prior written consent of Buyer, which consent shall not be
unreasonably withheld, and Buyer acknowledges its prior
written consent to the transfers and other agreements listed
on Exhibit E attached hereto.
B. With respect to all tangible personal property included among
the Assets, Sellers shall deliver to Buyer at Closing a Bill
of Sale in substantially the form of Exhibit O attached
hereto. Sellers make no warranty or representation that the
items of fixed assets and equipment listed on Exhibit B as the
Bull Creek Preparation Plant and Equipment currently exist or
are located or will be located on the Fee Interests at the
Date of Closing; provided, however, Sellers represent,
warrant, covenant and agree that they will make no transfer,
conveyance, or other disposition of any material item of
tangible personal property included among the Assets prior to
Closing without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. Sellers agree
only that to the extent any or all of the items enumerated and
identified on Exhibit B exist and are located on the Fee
Interests as of the Date of Closing, Sellers will convey and
transfer Sellers' title and interest in those items free and
clear of all liens and encumbrances except as disclosed on
Exhibit Q.
C. Buyer acknowledges that prior to execution of this Agreement
Buyer has received copies from Sellers of all of the documents
listed on Part 5 of Exhibit A attached hereto. Sellers
delivered the above documents, and will deliver any additional
documents as hereinafter described, without warranty as to the
accuracy thereof, and without warranty that the documents
present a comprehensive evaluation of title to the Fee
Interests. During the 60 (day) calendar day period commencing
on the date of this Agreement (the "Title Review Period"),
Sellers shall deliver to Buyer, promptly after the date of
this Agreement, copies of all such additional deeds, leases,
easements, licenses, permits, abstracts of title, affidavits,
and other documents, which relate to or disclose the present
state of title to the Fee Interests and any claims against
such title, which have not previously been delivered to Buyer,
which are contained in the records of Appalachian's Real
Estate and Right of Way Department and Land Management
Department in Roanoke, Virginia (the central repository of
Appalachian's and Southern's land records), or which may be
contained in the Land Management Department and/or Legal
Department files of the Sellers' Fuel Supply Department in
Lancaster, Ohio, and Buyer shall make such additional
independent investigation of title as it deems appropriate.
Sellers represent, warrant, and covenant that Sellers will,
within the Title Review Period, deliver to Buyer all of the
documents, in the possession of Sellers, in the records at the
locations described in the immediately prior sentence, of
which Sellers (or either of them) have "Title Knowledge" (as
hereinafter defined) which disclose any material matters
relating to the present state of title of the Fee Interests,
or contain written agreements materially affecting the Fee
Interests, except such documents, as listed on Exhibit A -
Part 5, which have been delivered to Buyer on or before the
date of this Agreement. "Title Knowledge" for purposes of
this Article V(C) shall mean actual, not constructive,
knowledge possessed by corporate officers of Sellers
responsible for land management matters, in-house counsel and
managers of land and land management departments.
If, as a result of information discovered by Buyer or
delivered by Sellers during the Title Review Period, Buyer
discovers that there are substantial and material deficiencies
in the state of title to any of the Fee Interests, Buyer shall
have the right to give notice of such deficiencies to Sellers
no later than ten (10) calendar days after expiration of the
Title Review Period, or to take title subject to such
deficiencies. If Buyer gives notice to Sellers, Sellers shall
within 15 business days following receipt of such notice elect
by notice to Buyer (i) to cure the alleged deficiency prior to
Closing, (ii) not to cure the alleged deficiency but to
indemnify Buyer and save Buyer harmless against any loss to
Buyer caused by any failure of title based upon the alleged
deficiency, or (iii) not to cure the alleged deficiency or
indemnify Buyer, but to make it a condition to Sellers'
obligation to proceed with Closing that Buyer accept such
deficiencies; provided, however, that if Sellers elect neither
to cure the alleged deficiency nor to indemnify Buyer against
the alleged deficiency, then Buyer shall have the right to
terminate this Agreement within fifteen (15) calendar days
after receipt of Sellers' notice by giving Sellers notice of
such termination. If Sellers elect to cure the alleged
deficiency prior to Closing, Sellers' cure shall be a
condition precedent to Buyer's obligations at Closing;
provided, however, that if Sellers fail to effect such cure,
and if as a result of Sellers' failure, Buyer elects not to
close this Agreement, Sellers shall reimburse Buyer for all
out-of-pocket expenses reasonably incurred by Buyer (up to an
amount not in excess of Forty Thousand Dollars ($40,000)) as
a result of Buyer's efforts to complete its performance
pursuant to this Agreement which efforts are undertaken
between the date of Sellers' notice of election to cure and
the date upon which Sellers give notice to Buyer that Sellers
will take no further action to effect the cure.
If Buyer fails to give notice of the alleged deficiency
to Sellers or if Buyer gives notice of such deficiency but
accepts such deficiency, then (i) Buyer shall be deemed to
have agreed to accept the Fee Interests subject to such
deficiency, (ii) any such deficiency shall be an exception to
the special warranties contained in the Special Warranty Deed,
and (iii) Buyer shall be deemed to have waived any right not
to close this Agreement by reason of such deficiency.
Upon acceptance of the Special Warranty Deeds, Buyer
shall be deemed to have waived any claims against Sellers on
account of any defect in title disclosed by any of the
documentation listed on Part 5 of Exhibit A or hereafter
provided to Buyer prior to the Closing, and any recourse of
Buyer with regard to title matters shall be limited to a claim
for breach of the special warranties in the applicable Special
Warranty Deed.
D. During the Title Review Period, Sellers shall make available
for Buyer's inspection, to the extent such documents are
currently in the possession of Sellers and have not previously
been made available to Buyer, copies of the Permits and
applications for Permits as well as copies of all compliance
monitoring reports submitted by Sellers during the period from
September 1993 through the date hereof in connection with the
Permits and copies of all notices of noncompliance, if any,
received by Sellers from any permitting authority in
connection with any Permit during the period from September
1993 through the date hereof. Sellers will also make
available for Buyer's inspection during the Title Review
Period the "Environmental Evaluation Report for Bull Creek and
for Marmet, Davison and Lens Creek" prepared by Sellers in
1994. Sellers represent, warrant and covenant that Sellers
will, during the Title Review Period, deliver to Buyer all of
the above-described types of documents as well as any other
types of documents in the possession of Sellers of which
Sellers, or either of them, has Environmental Knowledge (as
hereinafter defined) and which disclose any Environmental
Conditions (as hereinafter defined) on and affecting the Fee
Interests, except such documents, as listed on Exhibit A -
Part 5, which were delivered to Buyer by Sellers on or prior
to the date of this Agreement. All of the aforesaid
documentation will be provided to Buyer for disclosure
purposes only, and without warranty whatsoever as to the
accuracy or reliability of the information contained therein.
In addition, during the Title Review Period, Buyer shall have
the right, at its sole cost and expense, to cause such
investigations and tests to be made as it deems necessary to
determine whether there has been any soil, surface water,
ground water or building space contamination on or under the
Fee Interests. Sellers hereby grant to Buyer, its employees
and agents, the right of ingress and egress to, from and over
the Fee Interests for the purpose of conducting such
investigations and tests. Sellers also represent, warrant and
covenant that Sellers will, during the Title Review Period
disclose to Buyer in writing any Environmental Condition (or
facts and circumstances from which one would reasonably
conclude that the existence of an Environmental Condition on
the Fee Interests is a probability), not otherwise described
or referred to in any of the documents listed on Exhibit A-5
or delivered to Buyer during the Title Review Period, of which
Sellers have Environmental Knowledge; provided, however, that
Sellers shall not be in breach of this representation,
warranty and covenant if Sellers fail to disclose any
Environmental Condition of which Buyer is otherwise aware
through actual knowledge (obtained either through independent
investigation or from former employees of Southern
subsequently employed by Buyer) of facts and circumstances
from which one would reasonably conclude that the existence of
such Environmental Condition on the Fee Interests is a
probability.
"Environmental Knowledge" for purposes of this Article
V(D) means actual, not constructive, knowledge possessed by
employees of Southern currently holding the following offices
in the Fuel Supply Department of American Electric Power
Services Corporation: Vice President, Mining, Planning and
Engineering; Manager, Environmental Engineering; Environmental
Engineers.
If as a result of information delivered by Sellers or of
the investigation conducted by Buyer during the Title Review
Period, Buyer discovers facts and circumstances constituting
material noncompliance, on or under the Fee Interests, with
any "Environmental Law" (as hereinafter defined), Buyer shall
have the right to give notice of such noncompliance
("Environmental Condition") to Sellers no later than ten (10)
calendar days after expiration of the Title Review Period, or
to take title subject to such Environmental Condition. If
Buyer gives notice to Sellers, Sellers shall, within 15
business days following receipt of such notice, elect by
notice to Buyer (i) to correct the alleged Environmental
Condition prior to Closing, (ii) not to correct the alleged
Environmental Condition but to indemnify Buyer and save Buyer
harmless against any loss caused by any successful claim
against Buyer based upon the alleged Environmental Condition,
or (iii) not to correct the alleged Environmental Condition or
indemnify Buyer, but to make it a condition to Sellers'
obligation to proceed with Closing that Buyer accept such
Environmental Condition; provided, however, that if Sellers
elect neither to correct the alleged Environmental Condition
nor to indemnify Buyer against the alleged Environmental
Condition, then Buyer shall have the right to terminate this
Agreement within fifteen (15) calendar days after receipt of
Sellers' notice by giving Sellers notice of such termination.
If Sellers elect to correct the alleged Environmental
Condition prior to Closing, Sellers' correction shall be a
condition precedent to Buyer's obligations at Closing;
provided, however, that if Sellers fail to effect such
correction and if as a result of Sellers' failure, Buyer
elects not to close the transaction, Sellers shall reimburse
Buyer for all out-of-pocket expenses reasonably incurred by
Buyer as a result of Buyer's efforts to complete its
performance pursuant to this Agreement undertaken in
connection with this transaction between the date of Sellers'
election to correct and Buyer's election not to close by
reason of Sellers' failure to correct; provided further that
any reimbursement required by this Article V(D) when
aggregated with any reimbursement required under Article V(C)
shall not exceed in the aggregate $40,000.
If Buyer fails to give notice of any alleged
Environmental Condition to Sellers, or if Buyer gives notice
of any alleged Environmental Condition but accepts such
Environmental Condition, then (i) Buyer shall be deemed to
have agreed to accept the Fee Interests subject to such
Environmental Condition, and (ii) Buyer shall be deemed to
have waived any right not to close this Agreement by reason of
any Environmental Condition.
Sellers shall be deemed to have "Corrected" for purposes
of this Article V(D), (a) when Sellers have corrected or
eliminated the Environmental Condition sufficiently to obtain
a release from the applicable federal or state authority with
jurisdiction over the Environmental Condition, or (b) if
Sellers elect not to apply to the applicable authority for
such release, when Sellers have corrected or eliminated the
Environmental Condition to the reasonable satisfaction of
Buyer, exercised in good faith.
Upon acceptance of the Special Warranty Deeds, Buyer
shall be deemed to have released Sellers from any and all
claims or liability of any kind on account of any
environmental contamination on, in, or under the Fee Interests
or noncompliance with Environmental Laws on, in, or under the
Fee Interests.
E. For purposes of this Article V(C) "Environmental Laws" shall
mean the Surface Mining Control and Reclamation Act of 1977
(30 U.S.C., Section 1201, et seq.), as amended, and its
similar state counterpart; the Federal Water Pollution Control
Act (33 U.S.C., Section 1251, et seq.) as amended, and its
similar state counterpart; the Safe Drinking Water Act (42
U.S.C. Section 3001, et seq., as amended and its similar state
counterpart; the Clean Air Act (42 U.S.C., Section 7401, et
seq.), as amended, and its similar state counterpart; the
Federal Mine Safety and Health Act of 1977 (30 U.S.C. Section
801 et seq.) as amended, and its similar state counterpart;
The Toxic Substances Control Act (14 U.S.C. Section 2601,
et seq.) as amended, and its similar state counterpart; the
Resource Conservation and Recovery Act of 1976 (42 U.S.C.,
Section 6901, et seq.) as amended, and its similar state
counterpart, and the Comprehensive Environmental Response,
Compensation and Liability Act (92 U.S.C. Section 9601, et
seq.) as amended by the Superfund Amendments and
Reauthorization Act, and its similar state counterpart.
ARTICLE VI. INSPECTION AND CONDITION OF ASSETS.
Buyer acknowledges and represents that, except for any
additional investigation which Buyer may elect to undertake
pursuant to Article V(D), hereof, Buyer has examined and inspected
the physical condition of all the Assets; that no representations
or warranties have been made by Appalachian or Southern or anyone
acting on their behalf as to the condition or quality of any of the
Assets and that all of the Assets are being purchased and sold "AS
IS, WHERE IS," at Closing. SOUTHERN AND APPALACHIAN MAKE NO
EXPRESS WARRANTIES WITH RESPECT TO THE CONDITION, QUALITY,
LOCATION, SAFETY, WORKING ORDER, COMPLIANCE WITH LAW OR
REGULATIONS, OR STATE OF REPAIR OF ANY OF THE ASSETS, OR THE
QUANTITY OR QUALITY OF THE COAL RESERVES, TIMBER RESERVES, OIL AND
GAS RESERVES, OR ANY OTHER MINERAL INTEREST INCLUDED WITHIN THE
ASSETS, AND DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED. SELLERS EXPRESSLY
DISCLAIM ANY REPRESENTATION AS TO THE EXISTENCE OR LOCATION OF
SPECIFIC ITEMS OF FIXED ASSETS, OR EQUIPMENT LOCATED ON THE FEE
INTERESTS INCLUDING THE FIXED ASSETS AND THE EQUIPMENT IDENTIFIED
AND ENUMERATED ON EXHIBIT B AS COMPRISING THE BULL CREEK
PREPARATION PLANT AND EQUIPMENT.
Sellers shall have no obligation whatsoever to Buyer whether
in contract, tort or otherwise, with respect to the physical
condition, quality, location, safety, working order, compliance
with law or regulations, or state of repair of any of the Assets
except as expressly set forth in Southern's obligations of
indemnity under Article XVIII hereof.
ARTICLE VII. TRANSFER OF PERMITS AND BONDS.
A. Sellers expressly disclaim any representation as to the
transferability of any of the Permits, and Sellers shall have
no liability if transfer of a Permit is refused by any third
party or governmental agency. Sellers also disclaim any
representation or warranty that the Permits constitute all of
the permits or licenses required by any governmental authority
for the operation by Buyer of the coal mining operation, coal
preparation[, or loading and docking operations on any of the
Fee Interests]. Buyer (a) acknowledges the ordinance passed
by the City of Marmet in June of 1990 prohibiting
coal-loading, unloading and storage facilities, and coal
handling, coal crushing and coal-cleaning operations within
the limits of the City of Marmet, and (b) agrees to purchase
the Assets in accordance with the terms of this Agreement
irrespective of Buyer's ability or inability to obtain the
necessary licenses and/or permits to engage in coal loading or
other coal operations on the Davison Dock Facility.
B. For each Permit, Buyer agrees:
1. To assume all obligations and duties, including, without
limitation, all reclamation obligations, under such
Permit from and after Closing; and
2. To apply for, within thirty (30) calendar days following
the date of this Agreement, and to procure prior to
Closing, written approval from the West Virginia Division
of Environmental Protection or the Army Corps of
Engineers, as applicable, for the transfer to Buyer of
each Permit, the full release of Southern from all
obligations and duties under each Permit, and the release
of Southern's bonds, if any, and a substitution of
Buyer's bonds therefor.
C. Buyer shall prepare all applications for Permits and bonds and
Permit transfers, as well as any maps and mining plans, where
applicable. Southern shall provide Buyer reasonable
assistance in procuring the transfer of the Permits to Buyer
and the substitution, transfer, or release of any bonds which
Southern has executed to secure its performance in accordance
with the Permits. Southern's reasonable assistance shall be
limited to:
1. appropriate notification of the permitting authority of
the contemplated change in ownership and execution of
any necessary consents to the transfer of any Permit; and
2. execution of the written agreement required for transfer
of National Pollution Discharge Elimination System
permits.
D. The Closing shall operate as a waiver by Buyer of any claim
which Buyer might have based on Southern's failure to transfer
or assist in procuring the transfer of any Permit.
ARTICLE VIII. TAXES, ASSESSMENTS AND PRORATIONS.
Buyer shall pay all of the transfer, documentary, filing,
recording, sales, and other taxes, fees and costs associated with
the conveyance, assignment, transfer or delivery to Buyer of the
Assets. All real estate taxes and assessments which are a lien on
the real estate, all personal property taxes on the Assets, all ad
valorem taxes on the coal included in the Fee Interests, and any
special municipal assessments or charges shall be prorated
effective the Date of Closing based upon the actual number of days
involved in the appropriate period for which the proration is
computed. Buyer shall be entitled to a credit against the Purchase
Price in an amount equal to the total amount received or receivable
by Sellers from the sale of timber, during the period from the date
of this Agreement through the Date of Closing, from the Fee
Interests.
ARTICLE IX. OBLIGATIONS UNDER NATIONAL BITUMINOUS
COAL WAGE AGREEMENT OF 1993.
Buyer recognizes that any operations, if any, located on the
lands being sold pursuant to this Agreement are covered by the
National Bituminous Coal Wage Agreement of 1993 ("Wage Agreement"),
and Buyer agrees to assume, from and after Closing, Southern's
rights and obligations under the Wage Agreement with respect to any
such operations that may exist.
ARTICLE X. EXAMINATION OF BOOKS AND RECORDS.
From the execution of this Agreement until the Closing,
Sellers shall make available or cause to be made available to
Buyer, its counsel and/or accountants, for examination, at any
reasonable time, all books, records, operating data, engineering
data, contracts, leases, studies, and all other similar
information, and representatives of Sellers shall cooperate with
representatives of Buyer to provide such other information as Buyer
may reasonably request with respect to the Assets and the
transaction contemplated by this Agreement, except for information
required by Sellers' corporate policies or agreements with third
parties to be kept confidential, the identity of which information
shall be made known to Buyer along with the reason for withholding
such information. Sellers shall afford representatives of Buyer
free and full access to the Assets and the right to conduct
engineering and other tests thereon, provided that Buyer shall not
damage any of the Assets. Buyer acknowledges that all information
disclosed to Buyer pursuant to this Agreement shall have been
disclosed in confidence and that if the transactions contemplated
herein are not completed, neither Buyer, nor anyone acting on
behalf of Buyer, shall disclose to any third party, or use for its
own behalf or on behalf of any third person, any of the information
or data to be revealed or disclosed to Buyer pursuant to this
Agreement. If this Agreement is terminated or abandoned prior to
Closing, all documents or other information in any tangible form
delivered by Sellers to Buyer shall be returned to the possession
of Sellers.
ARTICLE XI. EARNEST MONEY DEPOSIT.
In conjunction with the execution of this Agreement, Buyer has
paid to Sellers Forty Thousand Dollars ($40,000) as earnest money
pending the Closing (the "Earnest Money Deposit"). The Earnest
Money Deposit shall be held by Sellers pending Closing, when it
shall be paid to Sellers as part of, and as a credit against, the
total Purchase Price. Sellers shall not be responsible for loss or
impairment of the Earnest Money Deposit, plus any interest thereon,
due to bank failure, insolvency or suspension. If Buyer fails to
close hereunder, for any reason permissible under the terms of this
Agreement, the Earnest Money Deposit shall be returned to Buyer.
If the Closing is not held by reason of any breach by Buyer of any
of the terms of this Agreement, then the Earnest Money Deposit
shall be retained by Sellers. The provisions of this Article XI
shall not in any way limit Buyer's liability for damages for breach
of any obligation under this Agreement, and shall not in any way
prejudice Sellers in any action for damages or specific
performance.
ARTICLE XII. MISCELLANEOUS LEASE AND CONTRACT OBLIGATIONS.
At Closing, Sellers shall assign and delegate (to the extent
that such rights and obligations are assignable and delegable) to
Buyer, and Buyer shall accept and assume, all rights and
obligations of Sellers under the various oil and gas leases,
farming leases, timber leases, residential leases, licenses,
franchises, contracts, concessions and recorded or unrecorded
occupancy agreements applicable to or for the use or occupancy of
any portion of the Fee Interests including, without limitation,
those identified on Exhibit R attached hereto. Any payments due
from third parties under such leases and agreements for periods
prior to Closing shall be allocated to Sellers, and any such
payments for periods after Closing shall be allocated to Buyer.
ARTICLE XIII. APPALACHIAN'S REPRESENTATIONS AND WARRANTIES.
Appalachian represents and warrants to Buyer as follows:
A. Appalachian is a corporation duly organized, validly existing
and in good standing under the laws of the State of Virginia,
and Appalachian is authorized to do business in the State of
West Virginia as a foreign corporation.
B. Appalachian is the owner of all of the issued and outstanding
stock of Southern.
C. The execution and delivery of this Agreement by Appalachian,
the sale, assignment and transfer of the Fee Interests by
Appalachian pursuant to this Agreement, the closing of the
transactions contemplated herein, as appropriate, and this
Agreement, and the Special Warranty Deeds, when executed and
delivered by Appalachian, will be valid, binding and fully
enforceable against Appalachian, except to the extent that
enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium, or
similar laws affecting creditors' rights generally.
D. The sale of the Fee Interests pursuant to this Agreement and
the execution and delivery of this Agreement, the Special
Warranty Deed, and any other documents required or permitted
by this Agreement do not contravene, or constitute a default
under, the certificate of incorporation or bylaws of
Appalachian.
E. Except as disclosed or listed on Exhibit P hereto, Appalachian
is not a party to any actions, suits or proceedings pending,
or to the knowledge of Appalachian, threatened, before any
court, arbitrator or governmental body, which might (i)
materially impair or affect the ability of Appalachian to
perform its obligations under this Agreement, or (ii)
materially affect the Fee Interests.
ARTICLE XIV. SOUTHERN'S REPRESENTATIONS AND WARRANTIES.
Southern represents and warrants to Buyer as follows:
A. Southern is a corporation duly organized, validly existing and
in good standing under the laws of the State of West Virginia.
B. The execution and delivery of this Agreement by Southern, the
sale, assignment and transfer of the Bull Creek Preparation
Plant and Equipment and the Permits by Southern pursuant to
this Agreement, the closing of the transactions contemplated
herein, as appropriate, and this Agreement, when executed and
delivered by Southern, will be valid, binding and fully
enforceable against Southern, except to the extent that
enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium, or
similar laws affecting creditors' rights generally.
C. The sale of the Bull Creek Preparation Plant and the Equipment
pursuant to this Agreement and any other documents required or
permitted by this Agreement do not contravene, or constitute
a default under, the certificate of incorporation or bylaws of
Southern.
D. Except as disclosed or listed on Exhibit P hereto, Southern is
not a party to any actions, suits or proceedings pending, or
to the knowledge of Southern, threatened, before any court,
arbitrator or governmental body, which might (i) materially
impair or affect the ability of Southern to perform its
obligations under this Agreement, or (ii) materially affect
the Bull Creek Preparation Plant and Equipment.
ARTICLE XV. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers as follows:
A. Buyer is a limited liability company organized, validly
existing and in good standing under the laws of the State of
West Virginia.
B. Buyer is not subject to any charter, by-law, mortgage,
agreement, instrument, or other restriction of any kind or
character which would prevent the execution and delivery of
this Agreement, the Promissory Note, or the Letter of Credit
or consummation of the transactions contemplated hereby.
C. The execution and delivery by Buyer of this Agreement, the
Promissory Note, and the Letter of Credit and the closing of
the transactions contemplated hereby have been, or prior to
the Closing will have been, duly authorized by the Members of
Buyer, and this Agreement, the Promissory Note, and the Letter
of Credit when executed and delivered by Buyer will be valid,
binding and fully enforceable against Buyer except to the
extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation,
moratorium, or similar laws affecting creditors' rights
generally.
ARTICLE XVI. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
The obligations of Buyer under this Agreement are, at the option of
Buyer, subject to the conditions that on or before the Closing:
A. Southern shall have executed and delivered to Buyer at Closing
a Bill of Sale or Bills of Sale pursuant to which Southern's
rights and interests in and to the Bull Creek Preparation
Plant and Equipment is transferred to Buyer.
B. Appalachian shall have delivered to Buyer Special Warranty
Deeds, pursuant to which Appalachian will convey and transfer
to Buyer all of Appalachian's right, title and interest in and
to all Fee Interests.
C. Sellers shall, to the extent required by law, have made all
premerger notification filings, if any, required under the
Hart-Scott-Rodino Act, the thirty (30) day waiting period
required thereby shall have expired without a request from any
appropriate governmental agency for additional information or,
if additional information has been requested, the twenty (20)
day extended waiting period shall have expired and no party
shall have received any notice from the Federal Trade
Commission or the Department of Justice that the transaction
contemplated by this Agreement violates Section 5 of the
Federal Trade Commission Act or Section 7 of the Clayton Act.
D. Buyer shall have received a Certificate of Good Standing from
the Office of the Secretary of State of the State of Virginia
showing that Appalachian is in good standing in the State of
Virginia and Certificates of Good Standing from the Office of
the Secretary of State of the State of West Virginia showing
that Southern and Appalachian are each in good standing in the
State of West Virginia.
E. All instruments of transfer of the Assets required by this
Agreement shall have been approved by counsel to Buyer.
F. Buyer shall have received an opinion, or opinions, dated as of
Closing, from Porter, Wright, Morris and Arthur, counsel for
the Sellers, at Sellers' expense, in form and substance
satisfactory to Buyer and its counsel and to the following
effect. As to matters governed by West Virginia law, such
counsel shall be entitled to rely on the opinion of West
Virginia counsel satisfactory to Porter, Wright, Morris, and
Arthur.
1. Southern is a corporation duly organized, validly
existing and in good standing under the laws of the State
of West Virginia.
2. Southern has the corporate power to own the Bull Creek
Preparation Plant and Equipment, and Appalachian has the
corporate power to own the Fee Interests.
3. Appalachian is the owner of all of the issued and
outstanding capital stock of Southern, and is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Virginia and is
authorized to do business as a foreign corporation in the
State of West Virginia.
4. The execution and delivery by Southern and Appalachian of
this Agreement, the Special Warranty Deed, the Bill of
Sale and other transfer documents have been duly
authorized by all requisite corporate action on the part
of Southern and Appalachian, and none thereof requires
the consent or approval of any other party, including but
not limited to approval by the shareholders of
Appalachian, which consent or approval has not been
obtained, and does not contravene or constitute a default
under the certificate of incorporation or bylaws of
Southern or Appalachian, or of any agreement, indenture,
judgment, injunction, order, decree, or other instrument
to which either of Sellers is a party and which
materially affects the Assets.
5. This Agreement, assuming due authorization, execution and
delivery hereof by Buyer, constitutes a valid, binding
and enforceable obligation on Sellers, except to the
extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation,
moratorium, or similar laws affecting creditors' rights
generally.
6. Except as listed on Exhibit P or otherwise previously
disclosed to Buyer, Sellers are not parties to any
actions, suits or proceedings pending, or to the
knowledge of such counsel, threatened before any court,
arbitrator, or governmental body which might impair the
ability of Sellers to perform their respective
obligations under this Agreement.
7. Nothing has come to the attention of such counsel which
would lead it to believe that any representation set
forth in this Agreement or in any exhibit attached hereto
is false or inaccurate in any respect.
G. Buyer shall have received certificates signed by duly
authorized officers of Appalachian and Southern, respectively,
certifying as to the resolutions adopted by Appalachian and
Southern, respectively, approving and authorizing the
execution and delivery of this Agreement, by Appalachian and
Southern.
H. The representations and warranties made by Sellers herein
shall be true and correct in all material respects at Closing
with the same force and effect as though such representations
had been made on and as of the Closing, and each of Sellers
shall have delivered to Buyer a certificate to that effect
signed by its respective duly authorized officer.
I. Each of Sellers shall have substantially performed and
complied with all material conditions and all agreements
required by this Agreement to be performed or complied with by
each of them prior to or at the Closing, and each of Sellers
shall have delivered to Buyer a certificate to that effect
signed by its respective duly authorized officer.
J. Buyer shall not have discovered any material error,
misstatement or omission in the representations and warranties
made by Sellers herein.
K. As of the date of Closing there shall be no suit, action or
other proceeding pending or to the knowledge of either of
Sellers threatened before any court or before or by any
governmental agency (i) in which it is sought to restrain,
prohibit, invalidate or set aside in whole or in part the
consummation of this Agreement or the transactions
contemplated hereby or (ii) in which it is sought to obtain
substantial damages in connection with the consummation of
this Agreement or the transactions contemplated hereby.
L. Any defect of title of which Buyer shall have given notice to
Sellers pursuant to Article V(C) hereof and which defect
Sellers shall have elected (pursuant to Article V(C) hereof)
to cure shall have been cured to the reasonable satisfaction
of Buyer.
M. Any Environmental Condition of which Buyer shall have given
notice to Sellers pursuant to Article V(D) and which
Environmental Condition Sellers shall have elected to Correct
(pursuant to Article V(D)), shall have been Corrected.
ARTICLE XVII. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.
The obligations of Sellers under this Agreement are, at the option
of Sellers, subject to the conditions that on or before the
Closing:
A. All actions, proceedings, instruments and documents required
to carry out this Agreement or incidental thereto and all
other related legal matters shall have been approved by
counsel to Sellers.
B. The representations and warranties made by Buyer herein shall
be true and correct in all material respects at the Closing
with the same force and effect as though such representations
and warranties had been made at and as of the Closing, and
Buyer shall have delivered to Sellers at Closing a certificate
to that effect signed by a duly authorized officer.
C. Sellers shall have received a certificate signed by a duly
authorized officer of Buyer certifying as to the resolutions
adopted by Buyer approving and authorizing the execution
and/or delivery by Buyer of this Agreement, the Promissory
Note, and the Letter of Credit.
D. Buyer shall have performed and complied with all conditions
and all agreements required by this Agreement to be performed
or complied with by Buyer prior to or at the Closing, and
Buyer shall have delivered to Sellers at the Closing a
certificate to that effect signed by a duly authorized
officer.
E. As of the Date of Closing there shall be no suit, action or
other proceeding pending or threatened before any court or
before or by any governmental agency (i) in which it is sought
to restrain, prohibit, invalidate or set aside in whole or in
part the consummation of this Agreement or the transactions
contemplated hereby, or (ii) in which it is sought to obtain
substantial damages in connection with the consummation of
this Agreement or the transactions contemplated hereby.
F. Buyer shall, to the extent required by law, have made all
premerger notification filings required under the
Hart-Scott-Rodino Act, the thirty (30) day waiting period
required thereby shall have expired without a request from any
appropriate governmental agency for additional information or,
if additional information has been requested, the twenty (20)
day extended waiting period shall have expired and no party
shall have received any notice from the Federal Trade
Commission or the Department of Justice that the transaction
contemplated by this Agreement violates Section 5 of the
Federal Trade Commission Act or Section 7 of the Clayton Act.
G. Any approval requested by Sellers from the Virginia
Corporations Commission, the West Virginia Public Service
Commission or from the Securities and Exchange Commission
under the Public Utility Holding Company Act of 1935 shall
have been obtained in form and substance satisfactory to
Sellers.
H. Sellers shall not have discovered any material error,
misstatement or omission in the representations made by Buyer
herein.
I. Sellers shall have received a Certificate of Good Standing
from the Office of the Secretary of State of the State of West
Virginia showing that Buyer is in good standing in the State
of West Virginia.
J. Buyer shall have delivered to Sellers One Million Two Hundred
Fifty Thousand Dollars ($1,250,000) of the Purchase Price in
immediately available funds.
K. Buyer shall have delivered the Promissory Note to Sellers.
L. Buyer shall have delivered the Letter of Credit.
M. August Enterprises shall have executed and delivered the
Guaranty Agreement, and Sellers shall have received a
certificate signed by a duly authorized officer of August
Enterprises certifying as to the resolutions adopted by August
Enterprises approving and authorizing the execution and
delivery by August Enterprises of the Guaranty Agreement.
N. Appalachian shall have obtained and delivered to Buyer a
release in properly recordable form with respect to the Assets
owned by Appalachian of that certain Mortgage and Deed of
Trust, dated as of December 1, 1940, between Appalachian and
Bankers Trust Company and R. Gregory Page, as Trustees,
providing for the issuance of First Mortgage Bonds in series
and for $70,000,000 principal amount of First Mortgage Bonds,
3-1/4 Series due 1970, as supplemented and amended.
O. Sellers shall have received an opinion, or opinions, dated as
of the Date of Closing, from Dodson, Riccardi & Lutz, counsel
for Buyer, at Buyer's expense, in form and substance
satisfactory to Sellers and their counsel and to the following
effect.
1. Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of
the State of West Virginia.
2. The execution and delivery by Buyer of this Agreement,
the Promissory Note, and the Letter of Credit have been
duly authorized by the Members of Buyer, and none thereof
requires the consent of or approval by any other party,
which consent or approval has not been obtained, and does
not contravene or constitute a default under the articles
of incorporation or bylaws of Buyer or of any agreement,
indenture, judgment, injunction, order, decree or other
instrument binding upon Buyer.
3. This Agreement, the Promissory Note, and the Letter of
Credit, assuming due authorization, execution and
delivery thereof by the Sellers, constitute valid,
binding and enforceable obligations on Buyer, except to
the extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation,
moratorium, or similar laws affecting creditors' rights
generally.
4. Buyer is not a party to any actions, suits, or
proceedings pending or, to the knowledge of such counsel,
threatened before any court, arbitrator or governmental
body which might impair the ability of Buyer to perform
its obligations under this Agreement, the Promissory
Note, or the Letter of Credit.
5. Nothing has come to the attention of such counsel which
would lead it to believe that any representation set
forth in this Agreement or in any Exhibit hereto is false
or inaccurate in any respect.
ARTICLE XVIII. INDEMNIFICATION BY SELLERS.
A. Sellers shall indemnify, defend and save harmless Buyer, its
officers, directors, employees and agents from and against any
loss, damages, liability, obligation, claim, fine, expense
(including without limitation court costs and attorneys fees),
or penalty arising out of or relating to any of the following
whether now in existence or hereafter arising:
1. Any claims under the provisions of the West Virginia
Workers' Compensation Act, other than the occupational
pneumoconiosis provisions thereof, by employees or former
employees of Southern (including dependents and heirs of
such employee or former employee or by any person or
entity who asserts a claim derived from such employee or
former employee) based solely upon injury occurring
during the employment relationship with Southern;
provided that if any such claim is filed by an employee
or former employee of Southern which claim is based in
part upon injury occurring during the employment
relationship with Southern and in part upon injury
occurring during subsequent employment with Buyer, any
Affiliate of Buyer, or any operator engaged in mining
activities on all or any of the Fee Interests, Sellers'
indemnity obligation hereunder shall apply only to that
portion of the claim allocable to employment with
Southern.
2. Any claim against Buyer under the federal Black Lung
Benefits Act, as heretofore and hereafter amended, or
under the occupational pneumoconiosis provisions of the
West Virginia Workers' Compensation Act, as heretofore
and hereafter amended, by any employee or former employee
of Southern (including dependents and heirs of such
employee or former employee or by any person or entity
who asserts a claim derived from such employee or former
employee), for which claim Southern is responsible under
law, except where any such person is hired after the date
of Closing by Buyer, by any Affiliate of Buyer, or by any
operator engaged in mining activities on any or all of
the Fee Interests, and Buyer, any such Affiliate of
Buyer, or any such operator becomes responsible under law
for such claim in its own right.
3. Any claims, other than those described in (1) and (2)
above, by any employee or former employee of Southern
(including dependents and heirs of such employee or
former employee or by any person or entity who asserts a
claim derived from such employee or former employee)
arising out of and based solely upon the employment
relationship with Southern, including without limitation
any claim based upon the Wage Agreement. If any such
claim is filed by an employee or former employee of
Southern (including dependents and heirs of such
employee or former employee or by any person or entity
who asserts a claim derived from such employee or former
employee) which claim is based in part upon causes
occurring during the employment relationship with
Southern and in part upon causes occurring during
subsequent employment with any Affiliate of Buyer or any
operator engaged in mining operations on any or all of
the Fee Interests, Southern's indemnity obligation
hereunder shall apply only to that portion of the claim
allocable to employment with Southern.
4. Any claim by any third party, based upon death, personal
injury or property damage occurring on the Fee Interests
prior to the Closing;
5. Any claim by a third party based upon a material title
defect disclosed in a document of which Sellers or either
of them had Title Knowledge (as defined in Article V(C))
but which document Sellers, in breach of their warranties
as to delivery of documents set forth in Article V(C),
failed to deliver to Buyer during the Title Review
Period.
6. Any claim by any third party based upon an Environmental
Condition of which Sellers had Environmental Knowledge
(as defined in Article V(D)) or which is disclosed in a
document of which Sellers had Environmental Knowledge (as
defined in Article V(D)) but which Sellers, in breach of
their warranties as to disclosure or as to delivery of
documents set forth in Article V(D), failed to disclose
or deliver, as applicable, to Buyer during the Title
Review Period.
7. Any claim by a third party based upon a defect of title
or Environmental Condition of which Buyer shall have
given notice to Sellers pursuant to Article V(C) or (D),
as applicable, and which Sellers shall have elected
(pursuant to Article V(C) or (D), as applicable) not to
cure or Correct but against which to indemnify Buyer
pursuant to Article V(C) or (D), as applicable.
B. If a third party shall commence an action to which Sellers are
not parties in any court of competent jurisdiction or before
any governmental body empowered to decide such claim and which
claim might reasonably be expected to require indemnification
under this Article, Buyer shall give immediate notice thereof
to Sellers, describing in reasonable detail the nature of the
claim, the name of the claimant, and such other information as
Sellers may reasonably request. Thirty days after giving such
notice, Buyer may, at its option, resist, settle, or otherwise
compromise or pay such claim unless it has received notice
from Sellers that Sellers intend, at Sellers' sole cost and
expense, to assume the defense of the claim, in which case
Buyer shall have the right, at no cost or expense to Sellers,
to participate in such defense.
C. Sellers shall have no liability for indemnity with respect to
any claim or proceeding of which notice is not given to
Sellers pursuant to and in the manner set forth in this
Article XIX.
ARTICLE XIX. INDEMNIFICATION BY BUYER.
A. Buyer shall indemnify, defend, and save harmless Sellers,
their Affiliates and officers, directors, employees, and
agents from and against any loss, liability, damages,
obligation, claim, fines, expense (including without
limitation, court costs and attorney's fees) or penalty
arising out of or relating to any of the following, whether
now in existence or hereafter occurring:
1. Any claim based upon noncompliance with any obligation or
other provision contained in the Permits or any
additional permits acquired after the Date of Closing
with respect to operations on the Fee Interests, which is
asserted on or after the close of business on the Date of
Closing.
(including dependents and heirs of such employee or
former employee or any person or entity who asserts a
claim derived from such employee or former employee)
which employee or former employee shall have commenced
active employment on or after the Date of Closing with
Buyer, any Affiliate of Buyer or any operator engaged by
Buyer, and which claim arises after the Date of Closing;
including, without being limited to, claims based upon
the Wage Agreement, employment contracts, employment
security benefit liabilities, other employee pension
benefits, health and other non-pension benefits, the
Employee Retirement Security Act or otherwise, but
excepting any claims against which Buyer is indemnified
by Southern pursuant to Article XVIII.
3. Any claim arising out of death, injury, or property
damage occurring on the Fee Interests on or after the
Date of Closing.
4. Any claim arising out of the Wage Agreement assumed by
Buyer pursuant to Article IX hereof.
5. Any action arising after the Date of Closing to enforce
any bond or obligation of Southern under any Permit.
6. Any claim by any third party based upon failure of Buyer
to perform obligations under any of the miscellaneous
contracts or other agreements referred to in Article XII
hereof and assumed by Buyer at Closing.
7. Any other claim based upon Buyer's operations or conduct
(or the operation or conduct of any Affiliate of Buyer or
of any operator engaged in mining operations) arising
after the Date of Closing.
8. Any other claim by any third party based upon a liability
of Buyer, any Affiliate of Buyer, or any operator engaged
by Buyer and arising after the Date of Closing.
B. If a third party shall commence an action to which Buyer is
not a party in any court of competent jurisdiction or before
any governmental body empowered to decide such claim and which
claim might reasonably be expected to require indemnification
under this Article, Appalachian or Southern shall give
immediate notice thereof to Buyer, describing in reasonable
detail the nature of the claim, the name of the claimant, and
such other information as Buyer may reasonably request.
Thirty days after giving such notice, Appalachian or Southern,
or both, as applicable, may, at its option, resist, settle, or
otherwise compromise or pay such claim unless Sellers have
received notice from Buyer that Buyer intends, at Buyer's sole
cost and expense, to assume the defense of the claim, in
which case Sellers shall have the right, at no cost or expense
to Buyer, to participate in such defense.
C. Buyer shall have no liability for indemnity with respect to
any claim or proceeding of which notice is not given to Buyer
pursuant to and in the manner set forth in this Article XIX.
ARTICLE XX. DESTRUCTION OR DAMAGE TO ASSETS.
Prior to Closing, Buyer shall bear the risk of loss or damage
to the Assets, and, except as hereinafter set forth, shall not be
relieved of any obligation under this Agreement by reason of such
loss or damage; provided, however, that if twenty percent (20%) or
more of the merchantable timber on the Fee Interests shall be
destroyed by fire, Buyer shall have the option to refuse to close
this Agreement, exercisable by giving written notice to Sellers no
later than 15 business days following Buyer's notice of the fire.
If Buyer does not elect to refuse to close and the Closing takes
place, Sellers shall, at Closing, assign to Buyer any insurance
proceeds received in connection with the destruction or damage. In
the event of damage to the Bull Creek Preparation Plant and
Equipment, or the Davison Dock Facility, Sellers shall assign to
Buyer the right to receive all insurance proceeds, if any, payable
as a result of such loss and shall pay to Buyer all such proceeds,
if any, paid to Sellers as a result of such damage or loss.
ARTICLE XXI. BLACK LUNG BENEFITS.
Any operator conducting mining operations on the Fee Interests
after the Date of Closing shall be considered the responsible
operator with respect to any claim for benefits filed by any one of
Buyer's employees or former employees or members of the families of
either under the Black Lung Benefits Act (the "Act"). Buyer shall
require any person who operates, controls or supervises a coal mine
or performs services or construction at any time on the Fee
Interests or who otherwise may be liable for the payment of black
lung benefits to secure the payment of such benefits to its
employees under the Act in accordance with applicable laws and
regulations and shall provide Sellers with the appropriate
certification that each of them has provided security for the
payment of such benefits. Buyer shall notify Sellers immediately
in writing of any change or alteration in the status of that
security. Without limiting the generality of the indemnification
provision of Article XIX, Buyer agrees to indemnify and hold
Sellers harmless for any liability they may incur for the payment
of such benefits because of an individual's employment with any
operator conducting mining operations on the Fee Interests pursuant
to a contract with Buyer. This Agreement does not empower Sellers
to make any decisions, and Sellers hereby expressly waive and
disclaim any right to make any decisions, with respect to the terms
and conditions under which the coal is to be extracted or
prepared, such as, but not limited to, the manner of extraction or
preparation or the amount of such coal to be produced, all within
the meaning of the Act, and, therefore, Sellers are not and will
not be considered an operator, as defined in the Act with respect
to the employees of any operator conducting mining operations on
the Fee Interests.
ARTICLE XXII. MISCELLANEOUS.
A. Payment of Expenses. Sellers and Buyer shall pay their own
respective expenses incident to this Agreement and the
transactions contemplated hereby whether or not such
transactions shall be consummated.
B. Future Easements and Rights-of-Way. In addition to the
easements reserved by Appalachian as of the Date of Closing as
specified on Exhibit D attached hereto, from time to time
after Closing, Appalachian may request, and Buyer shall not
unreasonably withhold consent to, the granting to Appalachian
of future easements or rights-of-way on or over the Fee
Interests for location of power transmission and distribution
lines. The consideration payable by Appalachian for such
future easement(s) shall be $500.00 per acre. In no event
shall Appalachian be required to make any payment for such
future easements based on the value of any mineral rights
underlying the surface of the requested easement.
C. Brokerage. Sellers represent and warrant to Buyer that no
broker or finder has acted for them in connection with this
Agreement or the transactions contemplated by this Agreement
and that no broker or finder is entitled to any brokerage or
finder's fee or other commission in respect thereof based in
any way on agreements, arrangements, or understandings made by
Sellers.
Buyer represents and warrants to Sellers that no broker
or finder has acted for Buyer in connection with this
Agreement or the transactions contemplated by this Agreement
and that no broker or finder is entitled to any brokerage or
finder's fee or other commission in respect thereof based in
any way on agreements, arrangements or understandings made by
Buyer.
D. Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their permitted
respective successors and assigns. Nothing herein expressed
or implied is intended to confer upon any person, other than
the Sellers or Buyer, as the context requires, or their
respective successors, assigns and legal representatives, any
rights, remedies, obligations or liabilities under or by
reason of this Agreement.
E. Notices. Any notice, request, instruction or other document
to be given hereunder by any party to another shall be in
writing and shall be deemed effectively given upon personal or
courier delivery or three (3) calendar days after deposited
with the United States Post Office by registered or certified
mail, postage prepaid, if to Buyer addressed to it, attention
Carl F. Frischkorn, Whites Creek Limited Liability Company,
1000 River East Drive, Belle, West Virginia 25015; if to
Southern, addressed to it, Attention Lynn Draper, President,
American Electric Power Service Corporation, 1 Riverside
Plaza, Columbus, Ohio 43215; and if to Appalachian, addressed
to it, Attention Lynn Draper, President, American Electric
Power Service Corporation, 1 Riverside Plaza, Columbus, Ohio
43215, or to such other address as any party may hereafter
advise the other parties in writing.
F. Entire Agreement. This Agreement and exhibits attached hereto
or referred to herein, set forth the entire agreement and
understanding of the parties with respect to the transactions
contemplated hereby and supersede all prior agreements,
arrangements, undertakings, and representations, oral or
otherwise, relating to the subject matter hereof. This
Agreement may not be changed, modified, altered or amended
except by an agreement in writing signed by the party against
whom enforcement of any change, modification, alteration or
amendment is sought. The failure of any party at any time or
times to require performance of any provision hereof shall in
no manner affect the right to later enforce such rights. No
waiver by any party of any condition, or of the breach of any
term, provision, covenant, representation or warranty
contained in this Agreement or in the exhibits hereto or in
connection with the transactions contemplated hereby, whether
by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver
of any such condition or of the breach of any other term,
provision, covenant, representation or warranty.
G. Confidentiality. Except as required by law or by any
financing institution with respect to financing made or to be
made available by it, the parties hereto agree that they shall
each keep confidential the terms and provisions of this
Agreement, and no party shall release any publicity with
respect to this Agreement except following consultation with
and obtaining the prior written approval of the other party,
which shall not be unreasonably withheld.
H. Section Headings. The section headings in this Agreement are
for convenience of reference only and shall not affect the
interpretation or construction hereof.
I. Assignability. This Agreement shall not be assignable by any
party hereto.
J. Applicable Law. This Agreement has been executed and
delivered in the State of Ohio and shall be construed under
and governed by Ohio law.
K. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the
same instrument.
ARTICLE XXIII. NON-SURVIVAL OF SELLERS' REPRESENTATIONS
AND WARRANTIES.
The Closing of the transactions which are the subject of this
Agreement and the delivery and acceptance of the instruments of
conveyance pursuant to this Agreement shall operate to extinguish
any warranty or representation made by Sellers herein or in any
certificate delivered at Closing except the warranties or
representations (a) as contained within and limited to any
obligation of Sellers under the provisions of Article XVIII hereof,
(b) as contained in the Special Warranty Deed, the Bill of Sale or
any assignment executed and delivered in accordance with this
Agreement, or (c) set forth in Article V(C) and (D) regarding
Sellers' disclosure of information or delivery of all documents
relating to title and environmental matters of which Sellers have
"Title Knowledge" or Environmental Knowledge as defined in Article
V(C) and V(D), respectively. All other rights and obligations
under this Agreement of any party hereto which by their terms
extend to periods after Closing, including, without being limited
to, the obligations of indemnity contained in Articles XVIII, XIX
and XXI, shall survive the Closing.
IN WITNESS WHEREOF, Southern, Appalachian, and Buyer have
caused their respective corporate names to be hereunto subscribed
by their respective duly authorized officers and their respective
corporate seals to be hereunto affixed, all as of the day and year
first above written.
WHITES CREEK LIMITED LIABILITY SOUTHERN APPALACHIAN COAL
COMPANY COMPANY
By:____/s/ C. F. Frischkorn___ By:__/s/ P. J. DeMaria______
C.F. Frischkorn P.J. DeMaria
Its: Manager/Member Its: Vice President
APPALACHIAN POWER COMPANY
By:___/s/ P. J. DeMaria_____
P.J. DeMaria
Its: Vice President
</PAGE>
<PAGE>
FIRST ADDENDUM TO
AGREEMENT OF PURCHASE AND SALE
Dated March 22, 1995
Among
SOUTHERN APPALACHIAN COAL COMPANY
APPALACHIAN POWER COMPANY
and
WHITES CREEK LIMITED LIABILITY COMPANY
Addendum made this 22nd day of March, 1995, among Southern
Appalachian Coal Company and Appalachian Coal Company
(hereinafter collectively "Sellers") and Whites Creek Limited
Liability Company (hereinafter "Buyer"). All terms in this
Addendum not otherwise defined in this Addendum shall have the
meanings given to them in the Agreement of Purchase and Sale
dated March 22, 1995 ("the Agreement").
ADDENDUM RECITALS
A. Sellers and Buyer are all the parties ("Parties") to the
Agreement.
B. Article III of the Agreement provides that, at Closing,
Buyer will deliver to Sellers, as partial payment of the
Purchase Price, the Promissory Note in substantially the
form of Exhibit N attached to the Agreement and the Letter
of Credit in the form of Exhibit K attached to the
Agreement. Article 11 of the Agreement provides that, at
Closing, Buyer will deliver to Sellers the Guaranty
Agreement executed by August Enterprises, Inc. in a maximum
amount of $2,000,000 substantially in the form of Exhibit M
attached to the Agreement.
C. The Parties have agreed that (1) Buyer shall have the right
to elect not to deliver the Promissory Note and Letter of
Credit and to pay the Purchase Price in cash at Closing, and
(2) if Buyer so elects and at Closing pays the entire
Purchase Price in cash, the maximum amount of the Guaranty
Agreement to be executed by August Enterprises, Inc. and
delivered by Buyer shall be $500,000.
D. To provide for the election described above, the Parties
have agreed to add the following addendum to the Agreement.
ADDENDUM
1. ELECTION. If Buyer elects, in its sole discretion, to
pay the Purchase Price entirely in cash at Closing, Buyer shall
give written notice to Sellers of such election on or before June
1, 1995. If Buyer shall have given such written notice to Sellers:
(1) Buyer shall be obligated at Closing to pay the entire Purchase
Price in cash at Closing; (2) Buyer shall not be obligated to
execute and deliver the Promissory Note at Closing, (3) Buyer shall
not be obligated to deliver the Letter of Credit, and (4) Buyer
shall be obligated to deliver a Guaranty Agreement in substantially
the form of Addendum Exhibit A attached hereto, executed by August
Enterprises, Inc.
2. EFFECT. If the election described in Paragraph 1 above
shall take place at Closing: (1) all references to the Promissory
Note and the Letter of Credit shall be deemed to have been deleted
from the Agreement, and (2) any references to the Guaranty
Agreement contained in the Agreement shall be deemed to apply to
the Guaranty Agreement in the form attached hereto as Addendum
Exhibit A.
3. In all other particulars the Agreement remains unchanged.
IN WITNESS WHEREOF, the Parties have executed this First
Addendum to Agreement of Purchase and Sale as of the day and year
first above written.
WHITES CREEK LIMITED SOUTHERN APPALACHIAN COAL
LIABILITY COMPANY COMPANY
By:___/s/ Carl Frischkorn_____ By:___/s/ P. J. DeMaria_
Carl Frischkorn P. J. DeMaria
Its: Manager/Member Its: Vice President
APPALACHIAN POWER COMPANY
By:___/s/ P. J. DeMaria_
P. J. DeMaria
Its: Vice President
</PAGE>
<PAGE>
Exhibit D-2
COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
)
)
APPLICATION OF )
) CASE NO. PUA
APPALACHIAN POWER COMPANY )
)
)
APPLICATION UNDER CHAPTER 4 OF TITLE 56
OF THE CODE OF VIRGINIA
APPALACHIAN POWER COMPANY, a corporation duly organized
and existing under the laws of Virginia (hereinafter called
"Appalachian") and SOUTHERN APPALACHIAN COAL COMPANY, a corporation
duly organized and existing under the laws of West Virginia
(hereinafter called "Southern") respectfully show:
1. Appalachian is a public service company operating in
Virginia as a public utility and subject to regulation as to rates,
service and security issues by this Commission. Appalachian is
also subject, in certain respects, to the jurisdiction of the
Federal Energy Regulatory Commission ("FERC"). The financial
condition of Appalachian is shown on the financial statements of
Appalachian which are on file with the Commission.
2. Southern, a corporation organized and doing business
under the laws of the State of West Virginia, is a wholly-owned
subsidiary of Appalachian. Appalachian owns all outstanding shares
of common stock of Southern; no other classes of stock are
outstanding. Southern is engaged in the development and mining of
certain coal lands and reserves located in the State of West
Virginia.
3. By order of this Commission dated May 29, 1984 in
Case No. PUA 840010, Appalachian was granted authority to enter
into various affiliate transactions in connection with the sale of
a large part of the coal mining properties owned or controlled by
it.
4. Subject to applicable regulatory approvals,
Appalachian and Southern (together, the "Sellers") have entered
into an Agreement of Purchase and Sale dated March 22, 1995 (the
"Agreement"), a copy of which is attached as Exhibit A, with Whites
Creek Limited Liability Company, a West Virginia limited liability
company (the "Buyer"), with respect to most of its remaining West
Virginia mining assets.
5. Under the Agreement, the Sellers have agreed to
indemnify, defend and save harmless the Buyer against certain
liabilities and contingencies that may be asserted by employees or
former employees of SACCo against Buyer or by federal, state or
local agencies as a result of non-compliance with laws relating to
mining operations. The indemnities include claims under the West
Virginia Workers Compensation Act, the federal Black Lung Benefits
Act and the National Bituminous Coal Wage Agreement of 1993.
6. Pursuant to Chapter 4 of Title 56 of the Code of
Virginia, Appalachian seeks this Commission's approval of its
agreement to indemnify the Buyer against certain liabilities and
contingencies that may be asserted by employees or former employees
of its affiliate.
7. The proposed transaction will not adversely affect
the service of Appalachian to the public in Virginia. In addition,
Appalachian believes that the service of no other Virginia utility
subject to the Commission's jurisdiction will be affected.
WHEREFORE, Appalachian respectfully requests that the
Commission enter an order giving its consent and approval to the
proposed transaction, to the extent necessary, and granting all
requisite approvals under the applicable laws of the Commonwealth
of Virginia.
Respectfully submitted this _____ day of _______________,
1995.
APPALACHIAN POWER COMPANY
By: _________________________
Vice President
Of Counsel:
H. Allen Glover, Jr., Esq.
Woods, Rogers & Hazlegrove
Dominion Tower, Suite 1400
10 South Jefferson Street
Roanoke, VA 24011
Ann B. Graf, Esq.
American Electric Power
Service Corporation
1 Riverside Plaza, 29th Floor
Columbus, OH 43215
[95FN0033.APC]<PAGE>
STATE OF OHIO )
)
COUNTY OF FRANKLIN )
Before me, the undersigned, a Notary Public in and for
the State and County aforesaid, this _____ day of _______________,
1995, personally appeared G. P. Maloney, a Vice President of
Appalachian Power Company, the applicant in the foregoing
Application, who being by me first duly sworn, did depose and say:
that the facts and allegations contained in the foregoing
Application are true except so far as they are therein stated to be
upon information and belief, and as to such facts and allegations
he believes them to be true.
_____________________________
Notary Public
[95FN0036.APC]<PAGE>
Exhibit A -- The Agreement of Purchase and Sale
</PAGE>
