<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BLUE DIAMOND COAL COMPANY
-------------------------
(Name of Issuer)
COMMON STOCK
($1.00 par value per share)
------------------------------
(Title of class of securities)
095383 10 5
----------------------------------------
(CUSIP NUMBER)
James River Coal Company
701 East Byrd Street, Suite 1100
Richmond, Virginia 23219
Attention: James B. Crawford
Telephone No. 804-780-3000
--------------------------
(Name, address and telephone number of person authorized to
receive notices and communications)
Copy to:
T. Justin Moore, III
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
December 15, 1997
-----------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4),
check the following box [ ].
Page 1 of 26 Pages
Exhibit Index appears on page 8
<PAGE>
CUSIP NO. 095383 10 5 13D PAGE 2 OF 28 PAGES
- ---------------------- ------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
James River Coal Company
54-1471697
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC; BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 470,420
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY N/A
EACH -------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 470,420
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
N/A
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
470,420
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
-2-
<PAGE>
Item 1. Security and Issuer.
-------------------
This statement relates to the common stock, $1.00 par value per share (the
"Common Stock"), of Blue Diamond Coal Company, a Delaware corporation (the
"Issuer"), having its principal offices at 341 E. Troy Circle, Knoxville,
Tennessee 37919.
Item 2. Identity and Background
-----------------------
This statement is filed by James River Coal Company ("JRCC"), a Virginia
corporation. JRCC was originally formed in 1988 and is engaged in the mining,
processing, purchasing and selling of coal, primarily to the utilities industry.
JRCC's principal place of business and principal executive offices are located
at 701 East Byrd Street, Suite 1100, Richmond, Virginia 23219.
Attached as Exhibit 1 and incorporated by reference herein is a list of (i)
each executive officer and director of JRCC, (ii) each person controlling any of
the foregoing and (iii) each executive officer and director of any corporation
or other person ultimately in control of any of the foregoing. Exhibit 1 also
sets forth the name, residence or business address and present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment is conducted for each
executive officer and director of JRCC as set forth on Exhibit 1 hereto. To the
best knowledge of JRCC, each such executive officer and director is a citizen of
the United States.
During the last five years, none of JRCC or any person listed on Exhibit 1
has (a) been convicted in any criminal proceeding (excluding traffic violations
or similar misdemeanors), or (b) been a party to any civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
which proceedings such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
JRCC acquired the Option (as defined in Item 4 below) for $1,000,000 and
funded such payment from its available working capital.
The aggregate amount of funds required to exercise the Option in full would
be approximately $28,408,609. If the Option is exercised, JRCC anticipates
making such purchase from funds to be provided by a loan facility to be arranged
by First Union National Bank and NationsBank, N.A. A copy of a commitment letter
from First Union National Bank dated December 23, 1997 is attached hereto as
Exhibit 2.
-3-
<PAGE>
Item 4. Purpose of Transaction.
----------------------
JRCC has entered into a Proxy and Option Agreement (the "Option Agreement")
dated as of December 15, 1997 between JRCC and Hamilton Holdings, Ltd.
("Hamilton") pursuant to which JRCC paid Hamilton $1,000,000, and Hamilton,
among other matters, granted JRCC an option to acquire the 470,420 shares of
Common Stock of the Issuer owned of record and beneficially by Hamilton (the
"Option"). A copy of the Option Agreement is filed herewith as Exhibit 3. The
Option will expire unless exercised on or before February 13, 1997. Upon
exercise of the Option, Hamilton will be entitled to receive $60.413 per share
of Common Stock of the Issuer plus a contingent right to receive additional
consideration if certain legislative changes occur that reduce the Issuer's
liability under the Coal Industry Retiree Health Benefit Act.
In addition to granting JRCC the Option, Hamilton has, subject to certain
conditions set forth in the Option Agreement, (i) agreed to vote its shares of
Issuer Common Stock in favor of a merger of the Company into the Issuer; (ii)
agreed to tender, sell and not withdraw its shares of Issuer Common Stock
pursuant to any tender offer by JRCC for all outstanding shares of Issuer Common
Stock provided such shares are purchased and paid for on or before February 13,
1997; and (iii) granted to JRCC a proxy to vote the Shares in favor of a merger
of the Issuer into JRCC. Pursuant to the terms of the Option Agreement, JRCC
currently owns the right to purchase approximately 50.3% of the Common Stock and
has the right to vote such shares in favor of a merger of the Issuer into JRCC.
JRCC currently owns the right to purchase approximately 50.3% of the
outstanding Common Stock of the Issuer. In the event JRCC exercises the Option,
it intends to enter into negotiations with the Issuer in an attempt to execute
and consummate an Agreement and Plan of Merger (the "Merger Agreement") pursuant
to which a subsidiary of JRCC would be merged with and into the Issuer. There
can be no assurance that a Merger Agreement will be executed or that a merger
ultimately will be consummated.
Except as set forth above, neither JRCC, nor to the knowledge of JRCC, any
person listed on Exhibit 1 hereto, has any plans or proposals which relate to or
would result in:
(a) the acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(d) any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors to fill any existing vacancies on the board;
-4-
<PAGE>
(e) any material change in the present capitalization or dividend policy
of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure;
(g) changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national
securities association;
(i) a class of equity securities of the Issuer to become eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) any action similar to those enumerated above.
Notwithstanding the foregoing, JRCC may formulate plans or proposals with
respect to one or more of the foregoing in the future.
JRCC and the persons listed on Exhibit 1 hereto reserve the right to
purchase or sell additional shares of the Common Stock, at any time, without
further notice or prior amendment to this Schedule 13D. JRCC and the persons
listed on Exhibit 1 hereto also reserve the right to change their intentions
with respect to any or all of the foregoing and their right to act either alone
or together with any other person or group.
Item 5. Interest in Securities of the Issuer.
------------------------------------
JRCC currently owns an Option to acquire 470,420 shares of Common Stock of
the Issuer, representing approximately 50.3% of the shares of Common Stock of
the Issuer shown as outstanding in the Issuer's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
Except as described in Item 4 of this Schedule 13D, JRCC has not had any
transactions in the Common Stock within the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
Reference is made to the Option Agreement described in Item 4 of this
Statement, a copy of which is filed as Exhibit 3 hereto. Neither JRCC, nor, to
the best of its knowledge, any of the persons listed on Exhibit 1 hereto, is a
party to any contract, arrangement, understanding or relationship regarding the
transfer or voting of securities, finder's fees, joint ventures, loan or option
arrangements, put or calls, guarantees of profits, division of
-5-
<PAGE>
profits or losses, or the giving or withholding or proxies, with any person with
respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 1 Directors and Executive Officers of JRCC.
Exhibit 2 Commitment Letter dated December 23, 1997 from First Union
National Bank to James River Coal Company.
Exhibit 3 Proxy and Option Agreement Between Hamilton Holdings, Ltd. and
James River Coal Company dated as of December 15, 1997.
-6-
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of their knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
JAMES RIVER COAL COMPANY
Date: December 24, 1997 By: /s/ James B. Crawford
---------------------------
James B. Crawford
Chairman of the Board
and Chief Executive Officer
-7-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
1 Directors and Executive Officers of JRCC......................9
2 Commitment Letter dated December 23, 1997
from First Union National Bank to James River
Coal Company.................................................10
3 Proxy and Option Agreement Between Hamilton
Holdings, Ltd. and James River Coal Company
dated as of December 15, 1997................................18
-8-
<PAGE>
Exhibit 1
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JAMES RIVER COAL COMPANY
<TABLE>
<CAPTION>
Principal Occupation
Name Title if Different from Title
- ---- ----- -----------------------
<S> <C> <C>
James B. Crawford Chairman of the Board, President and
James River Coal Company Chief Executive Officer N/A
701 East Byrd Street
Richmond, Virginia 23219
James D. Dotson Senior Vice President, Director President, McCoy Elkhorn
McCoy Elkhorn Coal Corporation Coal Corporation
1148 Long Fork Road
Kimper, KY 41539
A. Hugh Ewing Director President, Ewing Monroe &
Ewing Monroe & Company Company
One James Center, Suite 1410
901 East Cary Street
Richmond, VA 23219
John A. Hill Director Chairman, First Reserve
First Reserve Corporation Corporation
475 Steamboat Road
Greenwich, CT 06830
William E. Macaulay Director President & Chief Executive
First Reserve Corporation Officer, First Reserve
475 Steamboat Road Corporation
Greenwich, CT 06830
George S. Slocum Director President, Slocum Enterprises
Slocum Enterprises
10776 Bridlewood
Houston, TX 77024
John C. Bumgarner, Jr. Director Senior Vice President
The Williams Companies Corporate Development
One Williams Center The Williams Companies
East 2nd Street
Tulsa, OK 74172
Patricia R. Ward Vice President N/A
James River Coal Company
701 East Byrd Street
Richmond, Virginia 23219
William T. Sullivan, Jr. Vice President & Treasurer N/A
James River Coal Company
701 East Byrd Street
Richmond, Virginia 23219
Elizabeth H. Murie Controller N/A
James River Coal Company
701 East Byrd Street
Richmond, Virginia 23219
Michelle S. Randolph Secretary N/A
James River Coal Company
701 East Byrd Street
Richmond, Virginia 23219
</TABLE>
<PAGE>
Exhibit 2
---------
COMMITMENT LETTER
-----------------
<PAGE>
[FIRST UNION letterhead]
December 23, 1997
James River Coal Company
701 East Byrd Street
Suite 1100
Richmond, Virginia 23219
Attention: Mr. James B. Crawford, President
Re: Commitment for Arrangement of Facility
--------------------------------------
Dear James:
You have advised us that James River Coal Company (the "Borrower") seeks
financing for the repayment of certain existing indebtedness, ongoing working
capital requirements and general corporate purposes.
First Union National Bank ("First Union") is pleased to advise you that
First Union is willing to act as Syndication Agent and Documentation Agent for a
facility (the "Facility") upon substantially the same terms and conditions as
set forth in the presentation given by First Union Capital Markets Corp.
("Capital Markets") to the Borrower on December 4, 1997 (the "Presentation").
Capital Markets is pleased to advise you that Capital Markets is willing to act
as Co-Arranger for the Facility. NationsBank, N.A. ("NationsBank") will be
named as Co-Arranger and Administrative Agent for the Facility, with its sole
responsibility being to administer the transfer of funds with respect to the
Facility after closing.
Capital Markets further agrees to use its reasonable best efforts to form a
syndicate of financial institutions (the "Lenders") to provide the Facility.
You acknowledge and understand that in agreeing to act as Co-Arranger, Capital
Markets does not guarantee that the Borrower will be able to obtain financing on
the terms and conditions set forth in the Presentation, and in no event shall
Capital Markets' agreement to act as Co-Arranger be construed as a commitment to
provide the Facility or as an express or implied representation or promise that
such financing can actually be obtained.
You, further acknowledge and agree that, (i) although NationsBank will have
the title of Co-Arranger, it will have no responsibilities as such, (ii) Capital
Markets' services as arranger of the Facility will be on an exclusive basis
during the term of this letter and (iii) during such term no other financial
institution will be engaged or otherwise consulted or contacted by you regarding
any other proposed senior bank facility for the Borrower or any of its
subsidiaries.
<PAGE>
It is understood and agreed that First Union and Capital Markets, with the
agreement and approval of the Borrower, will manage the syndication, including
decisions as to the selection of proposed Lenders and titles offered to proposed
Lenders (other than the titles given to NationsBank which are already set forth
herein), when commitments will be accepted and the final allocations of the
commitments among the Lenders. It is understood that the Borrower shall pay to
the Administrative Agent an annual administrative fee in an amount to be
determined. Furthermore, it is understood that the Borrower shall pay upfront
commitment fees to Capital Markets on the total amount of the Facility, to be
distributed by Capital Markets to each of the Lenders. No Lender participating
in the Facility will receive compensation from the Borrower in order to obtain
its commitment, except as approved by First Union and Capital Markets.
You agree to actively assist First Union and Capital Markets in achieving a
syndication of the Facility that is satisfactory to First Union and Capital
Markets and you. Such syndication may be accomplished by a variety of means,
including direct contact during the syndication between senior management and
advisors of the Borrower and its subsidiaries, and the proposed syndicate
members. To assist First Union and Capital Markets in the syndication efforts,
the Borrower hereby agrees (i) to provide and cause its advisors to provide
First Union and Capital Markets and the other syndicate members upon request
with all information deemed reasonably necessary by First Union and Capital
Markets to complete the syndication, including but not limited to information
and evaluations prepared by the Borrower and its subsidiaries and their
advisors, or on their behalf, relating to the transactions contemplated hereby,
(ii) to assist First Union and Capital Markets upon its reasonable request in
the preparation of an information Memorandum to be used in connection with the
syndication of the Facility and (iii) to otherwise assist First Union and
Capital Markets in its syndication efforts, including making officers and
advisors of the Borrower and its subsidiaries available from time to time to
attend and make presentations regarding the business and prospects of the
Borrower and its subsidiaries, as appropriate, at a meeting or meetings of
lenders or prospective lenders. You hereby acknowledge that the syndication of
the Facility shall be completed prior to the closing date thereof.
The agreements of First Union and Capital Markets hereunder are based upon
the financial and other information regarding the Borrower and its subsidiaries
previously provided to First Union and Capital Markets. Accordingly, the
agreements hereunder are subject to the condition, among others, that (i) there
shall not have occurred after the date of such financial and other information
any material adverse change in the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or prospects of the
Borrower or its subsidiaries (ii) First Union and Capital Markets continue to be
satisfied with the condition, assets, properties, business, operations and
prospects of the Borrower and its subsidiaries, (iii) the information concerning
the Borrower and its subsidiaries shall not differ in any material respect from
the information previously provided to First Union and Capital Markets by the
Borrower and (iv) First Union and Capital Markets have completed, to their
satisfaction, all legal, business and other due diligence review of the
business, assets, liabilities, operations and condition (financial or otherwise)
of the Borrower and its subsidiaries. Further, the agreements of First Union
and Capital Markets is subject to there not having occurred any material
disruption or adverse change in the financial, banking or capital markets that
could, in the
2
<PAGE>
reasonable judgment of First Union or Capital Markets, materially impair the
syndication of the Facility.
You hereby represent and covenant that to the best of your knowledge (i)
all information, other than Projections (as defined below), which has been or is
hereafter made available to First Union, Capital Markets or the Lenders by you
or any of your representatives in connection with the transactions contemplated
hereby ("Information") is and will be complete and correct in all material
-----------
respects and does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein not materially misleading and (ii) all financial projections concerning
the Borrower and its subsidiaries that have been or are hereafter made available
to First Union, Capital Markets or the Lenders by you (the "Projections") have
-----------
been or will be prepared in good faith based upon reasonable assumptions. You
agree to supplement the Information and the Projections from time to time until
the closing date so that the representation and warranty in the preceding
sentence is correct on the closing date. In arranging and syndicating the
Facility, First Union and Capital Markets will be using and relying on the
Information and the Projections.
By executing this letter agreement, you agree to reimburse, First Union
and Capital Markets from time to time on demand for all reasonable out-of-pocket
fees, reasonable syndication expenses and other reasonable expenses (including,
but not limited to, the reasonable fees, disbursements and other charges of
professional fees of consultants and other experts, and Kennedy Covington
Lobdell & Hickman, L.L.P. & Mays and Valentine L.L.P., as counsel to First
Union and Capital Markets) incurred in connection with the Facility including
the preparation of definitive documentation for the Facility and the other
transactions contemplated hereby.
By executing this letter agreement, you further agree to indemnify and hold
harmless First Union and Capital Markets and each director, officer, employee,
attorney and affiliate of First Union and Capital Markets (each such person or
entity referred to hereafter in this paragraph as an "Indemnified Person") from
------------------
any losses, claims, costs, damages, expenses or liabilities (or actions, suits
or proceedings, including any inquiry or investigation, with respect thereto) to
which any Indemnified Person may become subject, insofar as such losses, claims,
costs, damages, expenses or liabilities (or actions, suits, or proceedings,
including any inquiry or investigation, with respect thereto) arise out of, in
any way relate to, or result from, this letter, the Facility or the other
transactions contemplated hereby and thereby and to reimburse upon demand each
Indemnified Person for any and all legal and other expenses incurred in
connection with investigating, preparing to defend or defending any such loss,
claim, cost, damage, expense or inquiry or investigation, with respect thereto;
provided that the Borrower shall have no obligation under this indemnity
- --------
provision for liabilities resulting from gross negligence or willful misconduct
of any Indemnified Person. The foregoing provisions of this paragraph shall be
in addition to any right that an Indemnified Person shall have at common law or
otherwise. No Indemnified Person shall be responsible or liable for
consequential damages which may be alleged as a result of this letter.
The provisions of the immediately preceding two paragraphs shall remain in
full force and effect regardless of whether definitive financing documentation
shall be executed and
3
<PAGE>
delivered and notwithstanding the termination of this letter agreement or the
agreement of First Union or Capital Markets hereunder.
Except as required by applicable law, this letter and the contents hereof
shall not be disclosed by you to any third party without the prior consent of
First Union and Capital Markets, other than to your attorneys, financial
advisors, equity underwriters and accountants, in each case to the extent
necessary in your reasonable judgment. You acknowledge and agree that First
Union may share with any of its affiliates (including specifically Capital
Markets) any information relating to the Facility, the Borrower and its
subsidiaries. You further acknowledge and agree to the disclosure by First
Union and Capital Markets of information relating to the Facility to Gold Sheets
-----------
and other similar bank trade publications, with such information to consist of
deal terms and other information customarily found in such publications.
This letter may be executed in counterparts which, taken together, shall
constitute an original. This letter, together with the Fee Letter, embodies the
entire agreement and understanding between Capital Markets, First Union and the
Borrower with respect to the specific matters set forth above and supersedes all
prior agreements and understandings relating to the subject matter hereof. No
party has been authorized by First Union or Capital Markets to make any oral or
written statements inconsistent with this letter.
THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW.
This letter may not be assigned by the Borrower without the prior written
consent of First Union and Capital Markets.
[Signature page follows]
4
<PAGE>
If you are in agreement with the foregoing, please execute and return the
enclosed copy of this Arrangement Letter and the Fee Letter no later than the
close of business on December 24, 1997. This letter will become effective upon
your delivery to us of executed counterparts of this Arrangement Letter and the
Fee Letter. This agreement shall terminate if not so accepted by you prior to
that time. Following acceptance by you, this agreement will terminate on
February 6, 1998 (or such earlier date as may be mutually agreed to by the
parties hereto) unless the Facility is closed by such time.
Very truly yours,
FIRST UNION NATIONAL BANK
By:
------------------------------
Name: Laurence M. Levy
Title: Vice President
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Andrew J. Gamble
------------------------------
Name: Andrew J. Gamble
----------------------------
Title: MD
---------------------------
ACCEPTED AND AGREED TO
THIS 26 DAY OF DECEMBER 1997.
JAMES RIVER COAL COMPANY
By: /s/ William T. Sullivan, Jr.
---------------------------------------
Name: William T. Sullivan, Jr.
-------------------------------
Title: Vice President and Treasurer
------------------------------
5
<PAGE>
Exhibit 3
---------
PROXY AND OPTION AGREEMENT
--------------------------
<PAGE>
================================================================================
PROXY AND OPTION AGREEMENT
AMONG
HAMILTON HOLDINGS, LTD.
AND
JAMES RIVER COAL COMPANY
-----------------------------
DATED AS OF DECEMBER 15, 1997
-----------------------------
================================================================================
<PAGE>
PROXY AND OPTION AGREEMENT
--------------------------
THIS PROXY AND OPTION AGREEMENT, dated as of December 15, 1997 (this
"Agreement"), by and between Hamilton Holdings, Ltd., a Kentucky limited
partnership ("Stockholder"), and James River Coal Company, a Virginia
corporation ("JRCC"), recites and provides as follows.
WHEREAS, the Stockholder collectively owns of record and beneficially
470,240 shares of common stock, par value $.01 per share (the "Company Common
Stock"), of Blue Diamond Coal Company, a Delaware corporation (the "Company")
(such Stockholder's shares, together with any other voting or equity securities
of the Company hereafter acquired by Stockholder prior to the termination of
this Agreement, being referred to collectively as the "Shares");
WHEREAS, JRCC and Stockholder have discussed the desire of JRCC to (a)
negotiate, execute and consummate an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which the Company will merge with and into JRCC or one
of its subsidiaries or (b) make a cash tender offer pursuant to a Merger
Agreement, or otherwise, for all outstanding shares of Company Common Stock (the
"Tender Offer") followed by a merger of the Company with and into JRCC or one of
its subsidiaries, in either such case for a price per share of Company Common
Stock equal to the Purchase Price, as defined herein (in either such case, the
"Merger"); and
WHEREAS, as a condition to the willingness of JRCC to pursue the Merger,
JRCC has requested that Stockholder agree, and in order to induce JRCC to take
certain actions and incur substantial expenses in pursuit thereof, Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. VOTING OF SHARES; IRREVOCABLE PROXY.
(a) During the term of this Agreement, Stockholder in its capacity as
such, hereby agrees to vote all of its Shares at any annual, special or
adjourned meeting of the stockholders of the Company (1) in favor of the Merger,
the execution and delivery by the Company of the Merger Agreement and the
approval and adoption of the terms thereof and hereof; and (2) except as
otherwise agreed to in writing in advance by JRCC, against the following actions
(other than the Merger and the other transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries with any person, other than JRCC; (ii) a sale, lease or transfer of
a material amount of assets of the Company or one of its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; or (iii) (A) any change in a majority of the persons who
constitute the Board of Directors of the Company as of the date hereof; (B) any
change in the present capitalization of the Company or any amendment of the
Company's certificate of incorporation or bylaws, as amended to date; (C)
<PAGE>
any other material change in the Company's corporate structure or business; or
(D) any action that is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or adversely affect the Merger and the other
transactions contemplated by this Agreement and the Merger Agreement.
(b) Stockholder hereby irrevocably constitutes and appoints JRCC as its
sole and exclusive and true and lawful agent and attorney-in-fact, with full
power of substitution, to vote all Company Common Stock that the holder is
entitled to vote as indicated in Paragraph 1(a) above in favor of the Merger, to
the same extent and with the same effect as the Stockholder might or could do
under any applicable laws or regulations governing the rights and powers of
stockholders of a Delaware corporation. This proxy shall become effective as of
the date hereof and shall expire upon termination of this Agreement. This proxy
is coupled with an interest and shall be irrevocable and binding upon any and
all transferees of the Shares so long as it remains in effect pursuant to the
terms hereof. Stockholder will take such further action as may be necessary to
effect the foregoing and hereby revokes any proxy previously granted by
Stockholder with respect to the Shares.
2. TENDER OF SHARES.
(a) During the term of this Agreement, and in the event JRCC commences a
Tender Offer pursuant to a Merger Agreement or otherwise, Stockholder hereby
agrees to validly tender and sell (and not withdraw) pursuant to and in
accordance with the terms of the Tender Offer all of such Stockholder's Shares,
provided such Shares are purchased and paid for on or before the Option
Expiration Date (as defined below). Notwithstanding the provisions of this
Section 2(a), in the event Stockholder withdraws its Shares from the Tender
Offer for any reason or any such Shares are not purchased pursuant to the Tender
Offer, such Shares shall remain subject to the terms of this Agreement.
Stockholder acknowledges that JRCC's obligation to accept for payment and pay
for the Shares in the Tender Offer is subject to all the terms and conditions of
the Tender Offer.
(b) Stockholder hereby agrees to permit JRCC to publish and disclose in
the Offer to Purchase and all other related offering materials filed by JRCC
with the Securities and Exchange Commission (the "SEC") or otherwise by JRCC in
connection with the Tender Offer and, if approval of the stockholders of the
Company is required under applicable law in connection with the Merger, in the
proxy statement sent to the stockholders of the Company, including all documents
and schedules filed with the SEC, its identity and ownership of Company Common
Stock and the nature of its commitments, arrangements and understandings under
this Agreement.
(c) The terms of this Agreement shall apply to all Shares issued pursuant
to the exercise of stock options issued by the Company to Stockholder, and
Stockholder agrees to tender all Shares issued upon the exercise of such stock
options. Notwithstanding anything in this Agreement to the contrary, (i) until
the exercise of any such stock options, the term "Shares" as used herein shall
be deemed not to include any such stock options, and (ii) nothing contained
herein shall be deemed to require Stockholder to exercise such stock options in
order to tender the Shares issued upon such exercise.
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3. NONREFUNDABLE PAYMENT.
(a) In consideration for Stockholder (i) agreeing to vote its shares and
granting to JRCC the irrevocable proxy provided for in Paragraph 1 above; (ii)
agreeing to tender its Shares as provided in Paragraph 2 above; and (iii)
granting the Option provided for in Paragraph 4, JRCC shall pay to Stockholder
$1,000,000 on the date hereof. Such amount shall, subject to Paragraphs 3(b) and
(c) below, be nonrefundable, but shall be credited in full against the amount
Stockholder would otherwise be entitled to receive upon conversion of its Shares
in the Merger, pursuant to any Tender Offer or pursuant to the exercise of the
Option provided in Paragraph 4 below.
(b) If the Shares, on a fully diluted basis, do not represent a majority
of the issued and outstanding shares of Company Common Stock on the date
established for the purchase of the Shares by JRCC, whether in accordance with
the Merger or upon exercise of the Option, the $1,000,000 to be paid by JRCC
pursuant to Paragraph 3(a) above shall be fully refundable to JRCC.
(c) If Stockholder's representations and warranties set forth in paragraph
10 are not true and correct, if Stockholder breaches any covenant or agreement
set forth herein or if the Company is not exempt from Section 203 of the
Delaware General Corporation Laws, the $1,000,000 to be paid by JRCC pursuant to
Paragraph 3(a) above shall be fully refundable to JRCC.
4. OPTION TO PURCHASE SHARES.
(a) Stockholder hereby grants to JRCC an option (the "Option") to purchase
on or before February 13, 1998 (the "Option Expiration Date") all of the Shares
at a purchase price per Share (the "Purchase Price") equal to the sum of (i)
$60.413 in cash plus (ii) the right to receive after the Closing Date (as
defined below) the Contingency Amount, if any, as defined below, divided by the
number of shares of Common Stock issued and outstanding on the date the Shares
are purchased pursuant to the Option or the Merger, as applicable. JRCC may give
Stockholder written notice (the "Notice") of its intent to exercise the Option
at any time during the term of this Agreement. The Notice shall specify the date
(the "Closing Date") established for purchasing the Shares which shall be no
later than 2 business days following the date of the Notice. On the Closing
Date, JRCC shall wire transfer to an account designated by Stockholder an amount
equal to the difference between (i) the product of the Purchase Price multiplied
by the number of Shares and (ii) $1,000,000. Upon receipt of payment Stockholder
shall deliver to JRCC stock certificates evidencing the Shares endorsed in blank
or accompanied by applicable stock powers, plus such other documents of
conveyance as JRCC may reasonably request.
(b) The Contingency Amount shall mean an amount equal to 50% of any
reduction (net of any applicable federal and state income taxes) between the
date hereof and the fifth anniversary of the date hereof in the Company's
liability under the Coal Industry Retiree Health Benefit Act of 1992 (the
"Act"), such reduction arising solely as a result of federal legislation enacted
after the date hereof or a non-appealable judicial determination which in either
case reduces the amount required to be paid by the Company to retirees or their
beneficiaries or reduces the number of retirees that the Company is required to
compensate. Such amount shall
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be determined by William M. Mercer, Inc., or another firm mutually acceptable to
JRCC and Stockholder, with the expenses of engaging such firm borne by JRCC.
5. TRANSFER OF THE SHARES.
During the term of this Agreement, except as otherwise provided herein,
Stockholder shall not (a) offer to sell, pledge or otherwise dispose of or
transfer any interest in or encumber with any lien, any of the Shares, (b)
deposit the Shares into a voting trust, enter into a voting agreement or
arrangement with respect to such Shares or grant any proxy or power of attorney
with respect to such Shares, or (c) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition or
sale, assignment or other disposition of or transfer of any interest in or the
voting of any shares of Company Common Stock or any other securities of the
Company.
6. NO SOLICITATION.
During the term of this Agreement, neither Stockholder nor any partner,
director, officer, employee, affiliate or representative of Stockholder or any
representative of such person or entity, shall institute, pursue, encourage or
continue any discussions, negotiations or agreements (whether preliminary or
definitive), including providing any information, with any person or entity
other than JRCC contemplating or providing for any public or private offering of
equity, merger, share exchange, acquisition, purchase or sale of a significant
amount of shares or assets or other business combination or change in control of
the Company. Stockholder shall not furnish any non-public information to any
party other than JRCC with respect to such a proposed transaction. Stockholder
shall promptly notify JRCC to the extent that it receives any inquiry relating
to any such transaction.
Notwithstanding the foregoing, any partner of the Stockholder who is also a
director of the Company may furnish information to, and participate in
discussions or negotiations with, any third party if he determines in good
faith, based upon the written advice of outside legal counsel, that the failure
to take such action would be reasonably likely to constitute a breach of his
fiduciary duties under applicable law as a director of the Company.
7. AGREEMENT TO SUPPORT MERGER.
Stockholder, in its capacity as such, hereby agrees to support the efforts
of JRCC to consummate the Merger.
8. WAIVER OF APPRAISAL RIGHTS.
Stockholder hereby irrevocably waives any rights of appraisal or rights to
dissent from the Merger that Stockholder may have.
9. AGREEMENT TO EXTEND NALLY & HAMILTON AGREEMENTS
In the event the Company has not previously extended the Coal Supply
Agreement and the Indenture of Sublease, each dated March 31, 1993 between Nally
& Hamilton Enterprises, Inc. and the Company (the "Nally & Hamilton Agreements")
prior to the effective time of the
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Merger, JRCC and Stockholder agree to cause the parties to the Nally & Hamilton
Agreements to extend such agreements on terms identical to those currently in
effect for a period beginning on the date of the effective time of the Merger
and ending on the date three years thereafter.
10. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.
Stockholder represents and warrants to JRCC, as to the Company, itself and
with respect to its Shares, as follows:
(a) Stockholder's Shares constitute all of the shares of Company Common
Stock beneficially owned (as defined in Section 13(d)(3) of the Securities Act
of 1934, as amended), directly or indirectly, by Stockholder, other than 2,200
shares of Common Stock owned by Leo Hamilton.
(b) The execution and delivery of this Agreement by Stockholder does not,
and the performance by Stockholder of its obligations hereunder will not,
constitute a violation of, conflict with, result in a default (or an event
which, with notice or lapse of time or both, would result in a default) under,
or result in the creation of any lien on any of Stockholder's Shares under (i)
any contract, commitment, agreement, understanding, arrangement or restriction
of any kind to which Stockholder is a party or by which Stockholder is bound,
(ii) any judgment, writ, decree, order or ruling applicable to Stockholder, or
(iii) the organizational documents of such Stockholder, if applicable.
(c) Stockholder has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized
and except for the notices and filings referenced in paragraph (d) below, no
other actions on the part of Stockholder are required in order to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Stockholder and, assuming due authorization, execution
and delivery by JRCC, constitutes a valid and binding agreement of Stockholder,
enforceable against Stockholder in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
organization, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(d) Neither the execution and delivery of this Agreement nor the
performance by Stockholder of its obligations hereunder will (i) violate any
order, writ, injunction or judgment applicable to Stockholder or (ii) violate
any law, decree, statute, rule or regulation applicable to Stockholder or
require any consent, authorization or approval of, filing with or notice to, any
court, administrative agency or other governmental body or authority, other than
any required notices or filings pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") or the federal securities laws.
11. REPRESENTATIONS AND WARRANTIES OF JRCC.
JRCC represents and warrants to Stockholder as follows:
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(a) JRCC is (i) duly organized and validly existing and in good standing
under the laws of Virginia, (ii) has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and (iii) has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and validly executed and delivered by JRCC and
constitutes the legal, valid and binding obligation of JRCC, enforceable against
JRCC in accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy, organization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by JRCC does not, and the
performance by JRCC of its obligations hereunder will not, constitute a
violation of, conflict with, or result in a default (or an event which, with
notice or lapse of time or both, would result in a default) under, its charter
or bylaws or any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which JRCC is a party or by which JRCC is bound or
any judgment, writ, decree, order or ruling applicable to JRCC.
(c) Neither the execution and delivery of this Agreement nor the
performance by JRCC of its obligations hereunder will violate any order, writ,
injunction, judgment, law, decree, statute, rule or regulation applicable to
JRCC or require any consent, authorization or approval of, filing with, or
notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the HSR Act or
the federal securities laws.
12. ENFORCEMENT OF THE AGREEMENT.
Stockholder acknowledges that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that JRCC will be entitled (i) to an injunction or injunctions to prevent
breaches of this Agreement and (ii) to specifically enforce the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which it is entitled
at law or in equity.
13. ADJUSTMENTS.
The number and type of securities subject to this Agreement will be
appropriately adjusted in the event of any stock dividends, stock splits,
recapitalizations, combinations, exchanges of shares or the like or any other
action that would have the effect of changing Stockholder's ownership of the
Company's capital stock or other securities.
14. TERMINATION.
(a) This Agreement will automatically terminate on the earlier of (a) the
effective time of the Merger and (b) 60 days following the date hereof.
(b) Upon termination of this Agreement, all obligations of the parties
hereto shall terminate except to the extent that any such party has committed a
material breach of this
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Agreement prior to such termination and except that the right to the Contingency
Amount and JRCC's obligations under Paragraph 9 shall survive the termination of
this Agreement.
15. EXPENSES.
All fees and expenses incurred by any of the parties hereto shall be borne
by the party incurring such fees and expenses.
16. MISCELLANEOUS.
(a) All representations and warranties contained herein shall survive the
termination hereof, but shall not survive the effective time of the Merger.
(b) Any provision of this Agreement may be waived at any time by the party
that is entitled to the benefits thereof. No such waiver, amendment or
supplement shall be effective unless in writing signed by the party or parties
sought to be bound thereby. Any waiver by any party of a breach of any provision
of this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement or one or more sections hereof shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(c) This Agreement contains the entire agreement among JRCC and
Stockholder with respect to the subject matter hereof, and supersedes all prior
agreements among JRCC and Stockholder with respect to such matters. This
Agreement may not be amended, changed, supplemented, waived or otherwise
modified, except upon the delivery of a written agreement executed by the
parties hereto.
(d) The descriptive headings contained herein are for convenience and
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
(e) Any notice provided for in this Agreement will be in writing and will
be either personally delivered, sent by reliable overnight courier, telecopied
or mailed by first class mail, return receipt requested, to the recipient at the
address below indicated.
Notices to JRCC:
- ----------------
James River Coal Company
701 East Byrd Street, Suite 1100
Richmond, Virginia 23219
Attention: James B. Crawford, Chairman and Chief Executive Officer
Telephone Number: (804) 780-3000
Telecopy Number: (804) 780-0643
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With a copy (which will not constitute notice to JRCC) to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: T. Justin Moore, III Esq.
Telephone Number: (804) 788-8464
Telecopy Number: (804) 788-8218
Notices to Stockholder:
- -----------------------
Hamilton Holdings, Ltd.
P. O. Box 157
Bardstown, Kentucky 40004
Attention: Mr. Thomas Hamilton
Telephone Number: (502) 348-0084
Telecopy Number: (502) 348-2552
With a copy (which will not constitute notice to Stockholder) to:
David W. Harper, Esq.
2450 Meidinger Tower
Louisville, Kentucky 40202
Telephone Number: (502) 583-3081
Telecopy Number: (502) 583-2418
or to such other address or to the attention of such other party as any party
may have furnished to the other parties in writing in accordance herewith.
(f) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one agreement.
(g) This Agreement is binding upon and is solely for the benefit of the
parties hereto and their respective successors, legal representatives and
assigns. Except as provided herein, neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that JRCC shall have the right to assign to any direct or indirect wholly
owned subsidiary of JRCC any and all rights and obligations of JRCC under this
Agreement, provided that any such assignment shall not relieve JRCC from any of
its obligations hereunder.
(h) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by either party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
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(i) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(j) All questions concerning the construction, validity and interpretation
of this Agreement will be governed by and construed in accordance with the
domestic laws of the State of Delaware, without giving effect to any choice of
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date first written above.
HAMILTON HOLDINGS, LTD.
By: TYE FORK COAL COMPANY,
General Partner
By: /s/ Thomas R. Hamilton
---------------------------------
Thomas R. Hamilton, President
JAMES RIVER COAL COMPANY
By: /s/ James B. Crawford
---------------------------------
Name: James B. Crawford
Title: Chairman of the Board
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