SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
ADDINGTON RESOURCES, INC.
(Name of Issuer)
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
006516 108
(CUSIP Number)
Bruce Addington
1500 North Big Run Road
Ashland, Kentucky 41102
(606) 928-3433
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 22, 1995
(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. /__/
Check the following box if a fee is being paid with this
statement. / /
<PAGE>
CUSIP NO. - 006516 10 8
(1) Name of reporting person. . . . . . . Bruce Addington
S.S. or I.R.S. No. of
above person. . . . . . . . . . . . .
(2) Check the appropriate box
if a member of a group
(see instructions). . . . . . . . . . (a)
(b) X
(3) SEC use only. . . . . . . . . . . . .
(4) Source of funds (see instructions). . 00
(5) Check box if disclosure
of legal proceedings is
required pursuant to
Items 2(d) or 2(e). . . . . . . . . .
(6) Citizenship or place
of organization. . . . . . . . . . . . U.S.
Number of shares beneficially
owned by each reporting person
with:
(7) Sole voting power. . . . . . . . 1,078,006 <F1>
(8) Shared voting power. . . . . . . 0
(9) Sole dispositive power . . . . . 1,078,006 <F1>
(10) Shared dispositive power . . . . 0
(11) Aggregate amount beneficially
owned by each reporting person . . . . 1,078,006 <F1>
(12) Check box if the aggregate amount
in Row (11) excludes certain
shares (see instructions). . . . . . .
(13) Percent of class represented
by amount in Row (11) . . . . . . . . . 6.8% <F1>
(14) Type of reporting person . . . . . . . IN
<F1> See responses to Items 4, 5 and 6 concerning (a) a Stock
Purchase Agreement, dated August 4, 1995, that contains contractual
restrictions on voting and dispositive power and (b) an Agreement
and Plan of Corporate Separation, dated September 22, 1995, that
contains an agreement by the reporting person and Larry Addington
to dispose of shares. Collectively, Bruce Addington and Larry
Addington own 4,191,330 shares (26.3% of those outstanding).
<PAGE>
Reference is hereby made to that certain Schedule 13D dated
January 29, 1988, as amended, (the "Schedule"), filed by Bruce
Addington with respect to the common stock, $1.00 par value (the
"Common Stock"), of Addington Resources, Inc., a Delaware corporation
(the "Issuer"). The purpose of this amendment is to amend and
restate, in its entirety, the Schedule to reflect the plans,
proposals and agreements of the reporting person to acquire assets
from the Issuer and to dispose of shares of Common Stock. The
Schedule is amended and restated in its entirety as follows.
Item 1. Security and Issuer.
The class of equity securities to which this statement relates
is the common stock, $1.00 par value (the "Common Stock"), of
Addington Resources, Inc., a Delaware corporation (the "Issuer").
The Issuer's principal executive office is located at 1500
North Big Run Road, Ashland, Kentucky 41102.
Item 2. Identity and Background.
(a) The person filing this statement is Bruce Addington.
Bruce Addington and Larry Addington are parties to an agreement to
dispose of shares of Common Stock, which may give rise to their
status as a "group". Membership in a group is not affirmed.
(b) The business address of each of Bruce Addington and
Larry Addington is: Addington Resources, Inc., 1500 North Big Run
Road, Ashland, Kentucky 41102.
(c) Bruce Addington's Principal Occupation:
Entreprenuer. Larry Addington's Principal Occupation: Chief Executive
Officer and Director of Issuer.
(d) During the last five years, neither Bruce Addington
nor Larry Addington has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither Bruce Addington
nor Larry Addington has been a party to a civil proceeding of a
judicial or administrative body resulting in 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.
(f) Bruce Addington and Larry Addington are United
States citizens.
Item 3. Sources and Amount of Funds or Other Consideration.
The Issuer was incorporated on September 29, 1986, to be a
holding company for various corporate entities owned or controlled
by Larry, Robert, and Bruce Addington, who are brothers (collectively,
the "Addington Brothers"). Before June 23, 1987, the
Addington Brothers owned 100% of the issued and outstanding shares
of Addington, Inc., and Addwest Mining, Inc., and 95% of the issued
and outstanding shares of Ironton Coal Company.
On June 23, 1987, the Issuer, through a series of exchanges of
stock, acquired all of the issued and outstanding shares of
Addington, Inc., and Addwest Mining, Inc. In addition, Addington,
Inc., acquired the Addington Brothers' interest in Ironton Coal
Company.
During January 1988, the Issuer registered its Common Stock
pursuant to Section 12(g) of the Securities Exchange Act of 1934.
On or about February 23, 1995, the Addington Brothers, as a
group, may be deemed to have acquired beneficial ownership of the
shares of Common Stock owned by each of them, individually, as a
result of the agreement or understanding they reached to dispose of
their shares of Common Stock as a part of a spin-off proposal they
submitted to the Issuer on or about March 1, 1995 (see Item 4).
On or about September 22, 1995, Bruce Addington and Larry
Addington may be deemed to have acquired beneficial ownership of
the shares of Common Stock owned by each of them, individually, as
a result of their agreement to dispose of shares of Common Stock
pursuant to the Agreement and Plan of Corporate Separation
discussed in response to Item 4.
Item 4. Purpose of Transaction.
The June 23, 1987, reorganization discussed in response to
Item 3 was effected in preparation of an initial public offering of
the Issuer's Common Stock. Before the reorganization, the
Addington Brothers owned all or substantially all of the stock of
the Issuer's predecessors. As a result of the reorganization and
initial public offering, the Addington Brothers initially controlled
66.7% of the Issuer's common stock.
On or about March 1, 1995, the Addington Brothers formulated
and presented to the Issuer a proposal to spin-off the Issuer's
environmental and non-environmental businesses, which spin-off
proposal was withdrawn on July 11, 1995.
The Stock Purchase Agreement (the "Stock Purchase Agreement"),
dated August 4, 1995, among Bruce Addington, Larry Addington,
Robert Addington and HPB Associates, L.P. ("HPB") is filed as
Exhibit 17 to this Schedule and incorporated herein by reference.
The sales of Commmon Stock by Bruce Addington, Larry Addington and
Robert Addington to HPB, as provided for in the Stock Purchase
Agreement, were consummated on August 4, 1995 and August 24, 1995.
The Stock Purchase Agreement contains agreements by the
Addington Brothers relating to the composition of the board of
directors of the Issuer and the voting of shares of Common Stock in
all elections of directors during the term of the Stock Purchase
Agreement. Bruce Addington and, to his knowledge, Larry Addington,
intend to appoint and/or elect directors of the Issuer in accordance
with their respective obligations under the Stock Purchase
Agreement during the term of that agreement.
In the Stock Purchase Agreement, each of the Addington
Brothers also agreed not to dispose or transfer shares of Common
Stock except as permitted by Section 6.02(d) of the agreement.
Bruce Addington and, to his knowledge, Larry Addington, may in the
future sell shares of Common Stock, subject to the restrictions
imposed under Section 6.02(d) of the Stock Purchase Agreement
during the term of that agreement.
The obligations of Bruce Addington and Larry Addington under
the Stock Purchase Agreement with respect to the voting and
disposition of shares of Common Stock will automatically terminate
on August 31, 1997, if not sooner terminated to the extent
permitted by Section 7.01 thereof.
By letter dated August 4, 1995, a copy of which is filed as
Exhibit 18 to this Schedule and incorporated herein by reference,
the Addington Brothers granted the Issuer and its subsidiaries the
right, exercisable on or before September 29, 1995, to either (i)
transfer all of their right, title and interest in and to the
Tennessee Mining Company, Inc. (which at such time shall own the
Tennessee coal properties currently owned by it plus the contract
with Tennessee Valley Authority (the "TVA")) to the Addington
Brothers or (ii) to assign to a corporation formed by the Addington
Brothers (and such corporation shall assume the liabilities with
respect to) the Tennessee coal properties and the TVA contract.
The consideration for such transfer or assignment would consist of
the payment to the Issuer, by Tennessee Mining Company, Inc. or the
corporation formed by the Addington Brothers, of $1.00 for each ton
of coal delivered to the TVA under the TVA contract; provided that
the maximum royalty payable to the Issuer shall not exceed $12
million. The Issuer has exercised its right under the letter dated
August 4, 1995.
The Addington Brothers, through one or more corporations to be
controlled by them, propose to acquire certain assets and indirect
subsidiaries of the Issuer pursuant to the terms and conditions
contained in the Stock Purchase Agreement, dated September 22, 1995
(the "Acquisition Agreement"), among the Issuer, Addington Holding
Company, Inc., Addington Acquisition Company, Inc., Larry Addington,
Robert Addington and Bruce Addington, a copy of which is filed
as Exhibit 19 to this Schedule and incorporated herein by reference.
The Addington Brothers propose to acquire, indirectly, all
of the outstanding shares of Tennessee Mining, Inc. pursuant to the
Acquisition Agreement. If the transactions contemplated by the
Acquisition Agreement are not consummated, the Addington Brothers
intend to acquire the outstanding shares of Tennessee Mining, Inc.
pursuant to the letter, dated August 4, 1995, described above.
Under the Acquisition Agreement, the Addington Brothers will
acquire the Issuer's coal mining subsidiaries and its mining
equipment manufacturing and licensing subsidiary for an aggregate
of $30 million cash and the assumption of certain liabilities
related to these operations. As additional consideration, the
Issuer will retain the right to receive certain cash payments
(anticipated to be $7,000,000) from BHP Australia Coal Pty., Ltd.
under the Issuer's previously announced technology sale. The
Issuer will also receive a $1.00 per ton royalty for coal delivered
by Tennessee Mining, Inc., one of the subsidiaries being sold,
under its contract with the Tennessee Valley Authority, with a $12
million maximum royalty. The Issuer will also retain the net
working capital (if any) of the subsidiaries to be transferred
after certain adjustments.
Bruce Addington and Larry Addington intend to exchange, in the
aggregate, 1,000,000 shares of Common Stock owned by them for all
of the outstanding shares of Barton Creek Farm Limited and Belize
River Fruit Co., which are owned by the Issuer, indirectly, through
Addington Holding Company, Inc., pursuant to the terms and
conditions contained in the Agreement and Plan of Corporate
Separation (herein so called), dated September 22, 1995, among the
Issuer, Addington Holding Company, Inc., Bruce Addington and Larry
Addington, a copy of which is filed as Exhibit 20 to this Schedule
and incorporated herein by reference. See the response to Item 5.
Completion of the transactions is conditioned upon several
items, including the receipt of the Issuer of a favorable fairness
opinion, the receipt of financing by the Addington Brothers and
receipt of governmental, regulatory and third-party consents and
releases. Closing is anticipated to occur within 45 days.
The transactions with the Addington Brothers, if consummated,
will enable the Company to promptly sell substantially all of the
Company's non-environmental operations (excluding gold, lime and
Wind Mountain), enabling the Company to focus on its key
environmental operations.
Except as stated above, neither Bruce Addington nor, to his
knowledge, Larry Addington has any present plans or proposals which
relate to or would result in: (i) the acquisition by any person of
additional securities of the Issuer, or the disposition of
securities of the Issuer, (ii) an extraordinary corporate transaction,
such as a merger, reorganization or liquidation involving the
Issuer or any of its subsidiaries, (iii) a sale or transfer of a
material amount of assets of the Issuer or any of its subsidiaries,
(iv) 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 or to fill any existing vacancies on the
board, (v) any material change in the present capitalization or
dividend policy of the Issuer, (vi) any other material change in
the Issuer's business or corporate structure, (vii) 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, (viii) causing a class of securities of the
Issuer to be delisted from a national securities exchange or cease
to be authorized to be quoted in an inter-dealer quotation system
of a registered national securities association, (ix) a class of
equity securities of the Issuer becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, or (x) any action similar to any of those
enumerated above.
Item 5. Interest in Securities of the Issuer.
(a), (b) The following table shows the beneficial ownership
of shares of the Issuer's Common Stock by Bruce Addington and Larry
Addington as of the close of business on September 22, 1995. Each
of Bruce Addington and Larry Addington has sole voting and
dispositive power over the shares beneficially owned by him subject
to (i) the agreement to dispose of shares of Common Stock contained
in the Agreement and Plan of Corporate Separation, dated September
22, 1995, a copy of which is filed as Exhibit 20 to this Schedule,
and the restrictions on voting and dispositive power contained in
the Stock Purchase Agreement, dated August 4, 1995, between HPB and
the Addington Brothers, a copy of which is attached as Exhibit 17
to this Schedule and is incorporated herein by reference. See the
response to Items 4 and 6 concerning voting and dispositive power
and shares pledged by Bruce Addington.
<TABLE>
<CAPTION>
Name Number (and %) of shares of Common Stock
<S> <C>
Bruce Addington 1,078,006 shares (6.8%) <F1>
Larry Addington 3,113,324 shares (19.6%) <F2>
TOTAL 4,191,330 shares (26.3%)
<F1> Of which 150,000 shares (0.9% of those outstanding) are to be
disposed pursuant to the terms and conditions of the Agreement
and Plan of Corporate Separation. The transfer of such shares
to the Issuer will reduce the number of shares of Common Stock
outstanding.
<F2> Of which 850,000 shares (5.3% of those outstanding) are to be
disposed pursuant to the terms and conditions of the Agreement
and Plan of Corporate Separation. The transfer of such shares
to the Issuer will reduce the number of shares of Common Stock
outstanding.
</TABLE>
(c) Neither Bruce Addington nor, to his knowledge, Larry
Addington, has effected transactions in the Issuer's Common Stock
since August 24, 1995, the date of the most recent filing of an
amendment to this Schedule.
(d) Bruce Addington has pledged a total of 400,000 shares of
Common Stock. He has not pledged 5% or more of the Issuer's Common
Stock to any one person. See the response to Item 6 of this
Schedule.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
(i) The Stock Purchase Agreement, dated August 4, 1995, among
the Addington Brothers and HPB contains agreements concerning the
disposition of shares of Common Stock owned by the Addington
Brothers and the voting of shares of Common Stock in the election
of directors of the Issuer during the term of that agreement. The
Stock Purchase Agreement is attached hereto as Exhibit 17 and is
incorporated by reference herein.
(ii) The Agreement and Plan of Corporate Separation, which is
filed as Exhibit 20 and incorporated herein by reference, contains
agreements relating to the disposition of shares of Common Stock
owned by Larry Addington and Bruce Addington.
(iii) The following describes the currently outstanding
pledges of shares by Bruce Addington. Bruce Addington pledged
200,000 shares of Common Stock to a broker pursuant to a pledge
agreement dated June 26, 1995; 100,000 shares of Common Stock to a
broker pursuant to a pledge agreement; and 100,000 shares of Common
Stock to a broker.
Item 7. Material to be filed as Exhibits.
The following lists exhibits to this Schedule which have been
previously filed:
Exhibit 1 -- Letter dated March 1, 1995 to the Issuer from
Larry Addington, Robert Addington and Bruce Addington (previously
filed)
Exhibit 2 -- Letter dated February 23, 1995, addressed to
Larry Addington from The CIT Group/Capital Equipment Financing,
Inc. (previously filed)
Exhibit 15 -- Pledge Agreement, dated June 26, 1995, between
Bruce Addington and Prudential Securities (previously filed)
Exhibit 16 -- Control, Restricted, or Shelf Registered Loan
Application between Bruce Addington and Prudential Securities
(previously filed)
Exhibit 17 -- Stock Purchase Agreement, dated August 4, 1995,
among HPB Associates, L.P. and Larry Addington, Robert Addington
and Bruce Addington (previously filed)
Exhibit 18 -- Letter agreement, dated August 4, 1995, between
Addington Resources, Inc. and Larry Addington, Robert Addington and
Bruce Addington (previously filed)
Exhibit 19 -- Stock Purchase Agreement, dated September 22,
1995, among the Issuer, Addington Holding Company, Inc., Addington
Acquisition Company, Inc., Larry Addington, Robert Addington and
Bruce Addington
Exhibit 20 -- Agreement and Plan of Corporate Separation,
dated September 22, 1995, among the Issuer, Addington Holding
Company, Inc., Larry Addington and Bruce Addington
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
/S/ BRUCE ADDINGTON
Bruce Addington
Date: September 26, 1995
EXHIBIT 19
STOCK PURCHASE AGREEMENT
between
ADDINGTON HOLDING COMPANY, INC.
and
ADDINGTON ACQUISITION COMPANY, INC.
________________________________________
Dated as of September 22, 1995
________________________________________
SALE OF STOCK OF
ADDINGTON MINING, INC.
MINING TECHNOLOGIES, INC.
ADDWEST MINING, INC.
ADDINGTON COAL HOLDING, INC.
258K166.4
TABLE OF CONTENTS
SECTION PAGE
1.Purchase and Sale of the Shares; Interim 1
Conduct of ARI and the Companies ............. 1
(a) Purchase Price........................... 1
(b) Interim Control.......................... 1
(c) Pre-Closing Distributions................ 2
(d) Working Capital Statement................ 2
(e) Excess Working Capital................... 2
(f) Disputes................................. 3
(g) Access................................... 3
(h) Tennessee Mining, Inc.................... 3
2.Closing......................................... 4
3.Conditions to Closing........................... 4
(a) Buyer's Obligation....................... 4
(b) Seller's Obligation...................... 6
(c) Pre-Closing and Post-Closing Actions..... 8
(d) Rescission............................... 12
4.Representations and Warranties of Seller......... 12
(a) Authority................................ 12
(b) The Shares............................... 13
(c) Organization and Standing of Each
Company.................................. 13
(d) Capital Stock of Each Company............ 14
(e) Equity Interests......................... 14
(f) Financial Statements; Undisclosed
Liabilities ............................. 14
(g) Taxes ................................... 15
(h) Tangible Personal Property .............. 16
(i) Real Property ........................... 16
(j) Contracts ............................... 17
(k) Litigation; Decrees ..................... 20
(l) Benefit Plans ........................... 20
(m) Absence of Changes or Events ............ 22
(n) Compliance with Applicable Laws ......... 23
(o) Employee and Labor Relations ............ 24
(p) Licenses; Permits ....................... 25
(q) Bank Accounts and Powers of Attorney .... 25
(r) Transactions with Affiliates ............ 25
(s) Patents and Trademarks .................. 26
(t) Insurance ............................... 26
(u) AS IS ................................... 26
5.A. Covenants of Seller.......................... 27
(a) Access .................................. 27
(b) Pro Forma Balance Sheet ................. 27
(c) Supplemental Disclosure ................. 27
(d) No Solicitation ......................... 28
(e) Fees and Expenses ....................... 29
5. B. Covenants of Buyer ........................ 29
(a) Buyer's Actions ......................... 29
(b) Supplemental Disclosure ................. 30
(c) Planned Closing of Any Company
Employment Site ......................... 30
(d) Ordinary Conduct ........................ 30
6. Representations and Warranties of Buyer....... 32
(a) Authority ............................... 32
(b) Actions and Proceedings, etc. ........... 33
(c) Consents ................................ 33
(d) Qualification ........................... 34
(e) No Broker ............................... 34
(f) Investment Intent ....................... 34
(g) Contracts; Commitments................... 34
7. Mutual Covenants.............................. 34
(a) Cooperation ............................. 34
(b) Best Efforts ............................ 35
(c) Antitrust Notification .................. 36
(d) Records ................................. 36
(e) Non Disclosure........................... 37
(f) Litigation Support....................... 37
(g) Release.................................. 37
8. Further Assurances............................ 37
9. Indemnification............................... 38
(a) Tax Indemnification ..................... 38
(b) Other Indemnification by Seller ......... 39
(c) Indemnification by Buyer ................ 40
(d) Losses Net of Insurance, etc. ........... 41
(e) Termination of Indemnification .......... 41
(f) Procedures Relating to Indemnification
(Other than Under Sections 9(a))......... 41
(g) Procedures Relating to Indemnification
of Tax Claims ........................... 43
10. Tax Matters................................... 44
11. Assignment.................................... 47
12. No Third-Party Beneficiaries.................. 47
13. Survival of Representations................... 47
14. Expenses...................................... 47
15. Attorney Fees................................. 47
16. Amendments.................................... 47
17. Notices....................................... 48
18. Interpretation................................ 48
19. Counterparts.................................. 48
20. Entire Agreement.............................. 48
21. Fees.......................................... 49
22. Severability.................................. 50
23. Consent to Jurisdiction....................... 50
24. Non-solicitation of Personnel ................ 50
25. Governing Law................................. 51
26. Affiliate Defined ............................ 51
27. Termination .................................. 51
28. Publicity .................................... 51
Exhibit A Form of Opinion of Counsel to Seller
Exhibit B Form of Opinion of Counsel to Buyer
Exhibit C Form of Indemnity Agreement (Bonds and Guarantees)
Exhibit D Form of Deed
Exhibit E Form of Release
<PAGE>
SCHEDULES
1 Shares of Each Company and State of
Incorporation
1(h)(ii) TMI Balance Sheet
3(a)(vi) Financing Terms
3(a)(vii) Certain Buyer Consents
3(b)(vii) ARI Bonds and Guarantees
3(b)(x) Certain Seller Consents
3(c)(i) Excluded Assets
3(c)(iii) Included Assets
3(c)(iv) Assumed Liabilities
4(a) Consents
4(b) Liens on Shares
4(e) Equity Interests
4(f)(i) Financial Statements
4(g)(ii) Exceptions to Tax Returns; Tax Examinations
4(g)(iii) Tax <section><section>341, 168(h) and 168(f)(8)
Exceptions
4(g)(iv) Tax Statute of Limitations
4(h) Tangible Personal Property
4(i) Real Property
4(j) Contracts
4(k) Litigation
4(l)(i) Welfare and Company Plans
4(l)(ii) Company Plans Noncompliance
4(l)(v) Multiemployer Plans
4(l)(vi) Agreements with Present or Former Officers
4(l)(viii) Enhanced Benefits
4(m) Material Adverse Changes
4(n) Notice of Non-Compliance with Applicable Laws
4(n)(iii) Permit Blocking
4(o) Collective Bargaining Agreements
4(p) Licenses, Permits and Authorizations
4(q) Bank Accounts and Powers of Attorney
4(s) Patents and Trademarks
4(t) Policies of Insurance
5A(b) Pro Forma Balance Sheet
5B(a) Parties to be Removed from Bonds and Guarantees
5B(d) Exceptions to Ordinary Conduct
6(g) Contracts; Commitments
10(a) Allocation of Purchase Price
24 Non Solicitation of Company Employees
258K166.4
STOCK PURCHASE AGREEMENT dated as of September 22, 1995, among
ADDINGTON HOLDING COMPANY, INC., a Delaware corporation ("Seller"),
ADDINGTON RESOURCES, INC., a Delaware corporation ("ARI"), ADDINGTON
ACQUISITION COMPANY, INC., a Kentucky corporation ("Buyer"), and LARRY
ADDINGTON, ROBERT ADDINGTON and BRUCE ADDINGTON (collectively, the
"Addington Group").
Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, all the issued and outstanding shares of common stock (the
"Shares"), of Addington Mining, Inc., Mining Technologies, Inc.,Addwest
Mining, Inc. and Addington Coal Holding, Inc. (hereinafter each,including
their subsidiaries, referred to as a "Company" and collectively, as the
"Companies"), such Shares and the shares of each subsidiary being more
fully described on Schedule 1 attached hereto.
The Addington Group are parties to this Agreement for the purposes of
(i) making certain representations and warranties to Seller, and (ii)
guaranteeing the Buyer's indemnification obligations under Section 9
hereof.
ARI is a party to this Agreement for purposes of guaranteeing Seller's
indemnification obligations under Section 9 hereof.
Accordingly, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF THE SHARES; INTERIM CONDUCT OF ARI AND
THE COMPANIES.
(a) PURCHASE PRICE. On the terms and subject to the
conditions of this Agreement, Seller will sell, transfer and deliver or
cause to be sold, transferred and delivered to Buyer, and Buyer will
purchase from Seller, free and clear of all liens, claims and encumbrances
of any kind, the Shares for an aggregate purchase price (the "Purchase
Price") (subject to any adjustments as set forth in Section 1(e) below) of
THIRTY MILLION DOLLARS ($30,000,000.00) cash, plus the Royalty as defined
in Section 1(h)(ii).
(b) INTERIM CONTROL. Upon the execution of this Agreement,
and continuing throughout the interim period until Closing (the "Interim"),
the Buyer shall enter into immediate possession of the Companies, and
Seller shall cause Larry Addington, Robert Addington and Bruce Addington to
be elected and they shall remain directors (the "Directors") of each of the
Companies during the Interim. The Directors shall have the authority and
the responsibility to manage the day-to-day operations and activities of
the Companies, but only in the ordinary course of business and in a manner
not inconsistent with this Agreement, including, but not limited to Section
5B(d). It is understood and agreed that in no event shall the Companies
make contributions (capital or otherwise) to Tennessee Mining, Inc. ("TMI")
that would cause the TMI Contribution (as defined below) limits to be
exceeded.
(c) PRE-CLOSING DISTRIBUTIONS. It is understood and agreed
that from September 7, 1995, and continuing thereafter, no Company shall be
required to contribute funds, directly or indirectly, whether by dividend,
loan or otherwise, to Seller or any affiliate of Seller (other than another
Company). In the event that the Companies make any such distributions to
Seller or any affiliate of Seller, such funds will be reimbursed to the
respective Companies at the Closing.
(d) WORKING CAPITAL STATEMENT. Within sixty (60) days
after the Closing Date, Seller will prepare and deliver to Buyer a
statement of working capital for the Companies (the "Working Capital
Statement") showing the Companies' Combined Net Working Capital as of the
close of business on the Closing Date. "Companies' Combined Net Working
Capital" means current assets minus current liabilities of the Companies on
a combined basis determined after giving effect to the transactions to
be consummated prior to or at the Closing ((i) eliminating the working capital
effect of any Excluded Assets and Excluded Liabilities to be distributed
out of the Companies prior to the Closing and the current portion of any
liability for which the Companies shall not be responsible, and (ii)
including the working capital effect of any Included Assets and Assumed
Liabilities to be transferred to the Companies prior to the Closing)), with
current assets and current liabilities accounts calculated in accordance
with generally accepted accounting principles ("GAAP"), and on a basis
consistent with the past accounting practices of the Companies, except that
(x) deferred overburden shall be excluded from current assets and (y) the
accrued reclamation liabilities shall remain as stated on the July 31, 1995
Pro Forma Balance Sheet attached as Schedule 5A(b). Notwithstanding the
above, for purposes of this Agreement, excluded from the Companies Combined
Net Working Capital shall be the following items: (1) except for the
effect of the Owed Contribution as described in Section 1(h)(ii), TMI, (2)
the Equipment Payment, as defined in Section 3(c), (3) any state and
federal income tax liability, and (4) the Consumers Power Liability and the
Pittston Liability, both as defined in Section 3(c)(iv)(B).
(e) EXCESS WORKING CAPITAL. Subject to Section 1(h)(ii)
below, within 10 days after the final determination of the Companies
Combined Net Working Capital (as provided in Section 1(d) above), if the
Companies Combined Net Working Capital exceeds Zero Dollars ($0.00), the
parties shall adjust the Purchase Price by increasing the Purchase Price by
an amount equal to the difference between the Companies Combined Net
Working Capital and $0.00. Any such adjustment in the Purchase Price
pursuant to this Section shall be paid in cash by Buyer within 10 days
after determination of the Companies Combined Net Working Capital, by wire
transfer of immediately available funds to a bank account designated in
writing by Seller.
(f) DISPUTES. The Working Capital Statement will become
final for all purposes 30 days after receipt by Buyer unless Buyer has
delivered a detailed statement describing its objections thereto. Buyer
and Seller will use reasonable efforts to resolve any such objections. If
the parties do not achieve a final resolution within 15 days after Seller
has received the statement of objections, Buyer and Seller will within 10
days select a mutually acceptable accounting firm to resolve any remaining
objections. If Buyer and Seller are unable to agree on the choice of an
accounting firm, they will select a nationally recognized accounting firm
by lot (after excluding their respective regular outside auditors). The
selected accounting firm shall be retained jointly by the parties on the
condition, among other things, that it shall notify the parties of its
determination within 30 days after its selection. The determination of the
accounting firm so selected regarding the matters in dispute will be set
forth in writing and will be conclusive and binding upon the parties and
the Working Capital Statement shall thereupon become final. The parties
shall each pay one-half of the fees and expenses of such accounting firm.
(g) ACCESS. Buyer will make the books, records and
financial staff of the Companies available to Seller, its accountants and
other representatives at reasonable times and upon reasonable notice during
the preparation by Seller of the Working Capital Statement and the
resolution by the parties of any objections thereto. Buyer shall have
reasonable access to the working papers that Seller's accountants use or
produce in the preparation and calculation of the Working Capital
Statement.
(h) TENNESSEE MINING, INC.
(i) Reference is made to that certain letter agreement
(the "Put Agreement") dated August 4, 1995, by and among ARI and Buyer,
pursuant to which ARI obtained the right to transfer TMI to Buyer. It is
understood and agreed that the Put Agreement, which has been exercised by
letter dated September 6, 1995, remains effective, although it has been
incorporated in the terms of this Agreement. Should the transactions
contemplated by this Agreement not close for any reason, the parties will
still close the transactions contemplated by the Put Agreement, though any
time limits therein relating to the Closing of the transaction contemplated
thereby shall be tolled from September 5, 1995 to the date of expiration or
termination of this Agreement.
(ii) Schedule 1(h)(ii) sets forth a pro forma balance
sheet of TMI (the "TMI Balance Sheet") reflecting the assets, liabilities
and working capital which TMI would have had if the Closing had occurred on
July 31, 1995. Schedule 1(h)(ii) shows TMI's shareholder equity equal to
approximately $1,534,329.00. Since July 31, 1995 to the Closing, the
Seller and the Companies shall have caused to be contributed to TMI an
additional $2,500,000.00 (the "TMI Contribution"). TMI shall not be
entitled to receive more than the TMI Contribution from the Seller and the
Companies. Between July 31, 1995 and September 7, 1995, ARI has
contributed to TMI $1,160,610.00, leaving $1,339,390.00 to be contributed
to TMI after September 7, 1995 (the "Owed Contribution"). Buyer shall pay,
or cause to be paid, to the Seller an overriding royalty equal to $1.00 per
ton, up to a maximum $12,000,000.00 (the "Royalty"), on all coal delivered
to the Tennessee Valley Authority ("TVA") under that certain coal supply
contract between TMI and the TVA dated August 7, 1995 (the "TVA Contract"),
on the terms and conditions set forth in the Put Agreement. The Companies
Combined Net Working Capital shall be adjusted downward to reflect the Owed
Contribution, and if the Companies Combined Net Working Capital is
negative, the Royalty shall be suspended and the Buyer shall receive a
credit and recoupment for the Royalty during such period of suspension
until the amount of the credit and recoupment is equal to the lesser of the
negative working capital or the Owed Contribution.
2. CLOSING. (a) The closing (the "Closing") of the purchase
and sale of the Shares shall be held at the offices of Brown, Todd &
Heyburn, 2700 Lexington Financial Center, Lexington, Kentucky at 10:00 a.m.
within three business days of the satisfaction or waiver of the conditions
to the Closing set forth in Section 3 of this Agreement; PROVIDED, HOWEVER,
that if the Closing shall not have occurred on or before November 6, 1995,
either party shall have the right to terminate all its rights and
obligations hereunder, subject to the provisions of Sections 1(h), 3(d),
7(e), 15, 27 and 28, which shall survive termination of this Agreement.
The date on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) At the Closing, (i) Buyer shall deliver to Seller, by wire
transfer to a bank account designated in writing by Seller immediately
available funds in an amount equal to the sum of (A) the Purchase Price,
plus (B) the Closing Tax Adjustment Amount (as defined in Section 9(a)),
and (ii) Seller shall deliver or cause to be delivered to Buyer
certificates representing the Shares, duly endorsed in blank or accompanied
by stock powers duly endorsed in blank in proper form for transfer, with
appropriate transfer stamps, if any, affixed.
3. CONDITIONS TO CLOSING. (a) BUYER'S OBLIGATION. The
obligation of Buyer to purchase and pay for the Shares is subject to the
satisfaction (or waiver by Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of Seller and ARI made in
this Agreement shall be true and correct in all material respects as of the
date hereof and on and as of the Closing, as though made on and as of the
Closing Date, and Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to
be performed or complied with by Seller by the time of the Closing; and
Seller shall have delivered to Buyer a certificate dated the Closing Date
and signed by an authorized officer of Seller confirming the foregoing.
(ii) Buyer shall have received an opinion dated the Closing Date
of Brown, Todd & Heyburn PLLC, counsel to Seller, substantially in the form
of Exhibit A. Buyer also shall have received a copy of an opinion
addressed to ARI dated the Closing Date from special Delaware counsel to
ARI to the effect that the transactions contemplated in this Agreement do
not require the approval of the stockholders of ARI under Delaware General
Corporation Law.
(iii) No injunction or order of any court or administrative agency of
competent jurisdiction shall be in effect, and no statute, rule or regulation
of any governmental authority or instrumentality shall have been promulgated
or enacted, as of the Closing which restrains or prohibits the purchase and
sale of the Shares.
(iv) No action, suit or other proceeding by any person to
restrain or prohibit the purchase and sale of the Shares or seeking
material damages in connection therewith shall be pending which in the
written opinion of Buyer's counsel is reasonably likely to succeed.
(v) The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated.
(vi) Financing shall be available to the Buyer from the CIT
Group under the terms and conditions set forth in Schedule 3(a)(vi).
(vii) Any consents required under the documents described on
Schedule 3(a)(vii) shall have been obtained.
(viii) The conditions to the ARI Shareholders' obligations under
that Agreement and Plan of Corporate Separation among Seller, ARI, Larry
Addington and Bruce Addington shall have been satisfied or waived.
(b) SELLER'S OBLIGATION. The obligation of Seller to sell and
deliver the Shares to Buyer is subject to the satisfaction (or waiver by
Seller) as of the Closing of the following conditions:
(i) The representations and warranties of Buyer and the
Addington Group made in this Agreement shall be true and correct in all
material respects as of the date hereof and on and as of the Closing, as
though made on and as of the Closing Date, and Buyer and the Addington
Group shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Buyer and the Addington Group by the time of the Closing;
and Buyer and the Addington Group shall have delivered to Seller a
certificate dated the Closing Date and signed by an authorized officer of
Buyer and by the Addington Group confirming the foregoing.
(ii) Seller shall have received an opinion dated the Closing Date
of Wyatt, Tarrant & Combs, counsel to Buyer and the Addington Group,
substantially in the form of Exhibit B.
(iii) No injunction or order of any court or administrative agency
or instrumentality shall be in effect, and no statute, rule or regulation
of any governmental authority of competent jurisdiction shall have been
promulgated or enacted, as of the Closing which restrains or prohibits the
purchase and sale of the Shares.
(iv) No action, suit or other proceeding by any person to
restrain or prohibit the purchase and sale of the Shares or seeking
material damages in connection therewith shall be pending which in the
written opinion of Seller's counsel is reasonably likely to succeed.
(v) The waiting period under the HSR Act shall have expired or
been terminated.
(vi) Documentation from (A) PNC Bank ("PNC Bank", the Companies'
primary lender), individually and as agent for itself and Pittsburgh
National Bank, evidencing the release of each of ARI and Seller and their
respective assets under existing credit agreements, and (B) Provident Bank
evidencing the release of ARI under its guaranty of capitalized lease
obligations of TMI and the other Companies, satisfactory to ARI and Seller
in their sole discretion shall have been obtained.
(vii) At or prior to Closing, ARI and principals, directors,
officers and agents of ARI and its subsidiaries (excluding each Company),
shall have been removed and released from any liability or obligation under
all bonds and guarantees made for the benefit of the Companies, including,
but not limited to, the bonds and guarantees specified on Schedule
3(b)(vii); or in the alternative, at Seller's option, shall have been
provided an Indemnity Agreement substantially in the form of the Indemnity
Agreement attached hereto as Exhibit C. The Buyer and the Addington Group
will use their best efforts to obtain the above-described releases under
the bonds and guarantees in an expeditious manner.
(viii) Seller shall have received all necessary approvals of the
transactions contemplated by this Agreement from the Boards of Directors of
ARI and Seller, and where applicable, the Companies.
(ix) ARI shall have received a fairness opinion from a nationally
recognized investment banking firm to the effect that the sale of the
Shares and the transactions contemplated by this Agreement and the
Agreement of Split-Off and Reorganization are fair from a financial point
of view to the stockholders of ARI other than the Addington Group.
(x) Any consents required under the documents described on
Schedule 3(b)(x) shall have been obtained.
(xi) Seller shall have received an opinion from special Delaware
counsel to the effect that the transactions contemplated in this Agreement
do not require the approval of the stockholders of ARI under Delaware
General Corporation Law.
(xii) A certificate of the Chief Executive Officer and the Chief
Financial Officer of the Buyer to the effect that after giving effect to
the transactions contemplated hereby and by any financing of Buyer to
consummate said transactions, the Buyer and the Companies are Solvent.
"Solvent" shall mean that after giving effect to the transactions
contemplated hereby and the financing (a) the sum of the assets, at a fair
valuation, of the Companies (taken as a whole) will exceed their debts; (b)
the Companies (taken as a whole) have not incurred and do not intend to
incur, and do not believe that they will incur, debts beyond their ability
to pay such debts as such debts mature; and (c) the Companies (taken as a
whole) will have sufficient capital with which to conduct their business.
For their purposes "debt" means any liability on a claim, and "claim" means
(i) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured. In lieu of the foregoing, Buyer may furnish a copy
of any solvency certificate furnished to Buyer's financing source,
addressed to Seller.
(xiii) The conditions to Seller's obligations under that
Agreement and Plan of Corporate Separation among Seller, ARI, Larry
Addington and Bruce Addington shall have been satisfied or waived.
(c) PRE-CLOSING AND POST-CLOSING ACTIONS.
(i) EXCLUDED ASSETS. Seller shall, before the Closing, use
commercially reasonable efforts to obtain all consents and permits, and to
take all other steps necessary for the conveyance, assignment and transfer
subject to existing liens, claims, encumbrances, defects in title and other
liabilities (contingent or otherwise) existing as of the date of this
Agreement, of certain personal and real property and other items from the
Companies to Seller or its affiliates ("Excluded Assets"). "Excluded
Assets" shall mean the personal and real property and other items described
on Schedule 3(c)(i), including, but not limited to, the right to receive
(including the right to enforce the right to receive) cash payments
scheduled to be received under that certain Technology Exchange Agreement
between Mining Technologies, Inc. and BHP Australia Coal Pty. Ltd. dated
July 5, 1995 (the "BHP Agreement")(three separate payments totaling
$7,000,000.00 and specifically referred to in Sections 6(b),(c) and (d) of
the BHP Agreement). The $1,000,000.00 payment from BHP for mobile
equipment (the "Equipment Payment") under Section 6(e) of the BHP Agreement
shall remain with Mining Technologies, Inc.. With respect to any Excluded
Assets which are unable to be fully conveyed, assigned or transferred out
of the Companies prior to the Closing or in connection with the taking of
any action with respect to those Excluded Assets, Seller shall use
commercially reasonable efforts to obtain all consents and permits, and to
take all other steps necessary for the conveyance, assignment or transfer
of such Excluded Assets to Seller or its affiliates as soon as practicable
after the Closing, and Buyer shall cooperate, and shall cause the Companies
to cooperate, with Seller and its affiliates, in all such efforts,
including requesting third parties to consent to such conveyances and
assignments, filing applications for the transfer of regulatory permits
pertaining to the Excluded Assets and executing and delivering such further
instruments and documents as Seller may reasonably request. As soon as all
necessary consents, permits and transfers of permits have been obtained and
all other steps necessary for the conveyance, assignment and transfer of
the Excluded Assets have been taken, Buyer shall cause the Companies or
other successor in interest to the Excluded Assets to execute and deliver
such agreements and instruments as may be necessary or appropriate to
convey, assign or transfer each such Excluded Asset to the designated
affiliate of Seller free and clear of any liens or encumbrances created or
permitted by Buyer other than liens in existence prior to the Closing. All
costs and expenses except Taxes, which are to be paid in accordance with
Section 10(i) below, associated with the transfer of Excluded Assets shall
be the sole responsibility of Seller.
(ii) EXCLUDED LIABILITIES. As of the Closing Date, Seller
shall assume and shall be solely responsible for, and Buyer and the
Companies shall have no responsibility for, and shall indemnify and hold
Buyer harmless against any liabilities or obligations of any Company of any
nature, kind or description whatsoever, known or unknown, absolute,
contingent or otherwise, which arise or accrue or are attributable to
operations, activities, events or occurrences with respect to the following
(the "Excluded Liabilities"):
(A) The ownership, operation and maintenance of the
Excluded Assets, whether before or after the Closing Date.
(B) Income taxes for periods up to the Closing Date,
including (i) accrued state and federal income taxes, as of the Closing
Date, and (ii) state and federal income taxes resulting from the
transaction, except to the extent provided otherwise in Section 10(i).
(C) The assets, businesses and liabilities (contingent or
otherwise) of ARI and its subsidiaries (other than those relating to the
Companies).
(iii) INCLUDED ASSETS. Seller shall, before the Closing, use
commercially reasonable efforts to take all steps necessary for the
conveyance, assignment and transfer for no additional consideration and
on an "as-is, where-is" basis, subject to existing liens, claims,
encumbrances, defects in title and other liabilities (contingent or
otherwise) existing as of the date of this Agreement of the Included Assets
from Seller or its affiliates to the Companies. "Included Assets" shall
mean the personal and real property and other items described on Schedule
3(c)(iii), including, but not limited to, miscellaneous real property
located near or adjoining the Green Valley landfill, which will be
transferred pursuant to a Deed substantially in the form of Exhibit D,
excepting and reserving such easements, rights, licenses, rights of ingress
and egress as necessary to operate and maintain said landfill. With
respect to any Included Assets which are unable to be fully conveyed,
assigned or transferred to the Companies prior to the Closing or in
connection with the taking of any action with respect to those Included
Assets, Seller shall use commercially reasonable efforts to take all other
steps necessary for the conveyance, assignment or transfer of such Included
Assets to Seller or its affiliates as soon as practicable after the
Closing, and Buyer shall cooperate, and shall cause the Companies to
cooperate, with Seller and its affiliates, in all such efforts, including
requesting third parties to consent to such conveyances and assignments,
filing applications for the transfer of regulatory permits pertaining to
the Included Assets and executing and delivering such further instruments
and documents as Seller may reasonably request. As soon as all other steps
necessary for the conveyance, assignment and transfer of the Included
Assets have been taken, Seller shall cause its affiliates or other
successor in interest to the Included Assets to execute and deliver such
agreements and instruments as may be necessary or appropriate to convey,
assign or transfer each such Included Asset to the designated Company free
and clear of any liens or encumbrances created or permitted by Seller other
than liens in existence prior to the date of this Agreement. All costs and
expenses except Taxes, which are to be paid in accordance with Section
10(i), associated with the transfer of Included Assets shall be the sole
responsibility of Buyer.
(iv) ASSUMED LIABILITIES. As of the Closing Date, Buyer
shall assume and shall be solely responsible for, and Seller and ARI and
its affiliates shall have no responsibility for, and shall hold Seller, ARI
and its affiliates harmless against any liabilities or obligations of
any nature, kind or description whatsoever, known or unknown, absolute,
contingent or otherwise, which arise or accrue or are attributable to
operations, activities, events or occurrences with respect to the following
(the "Assumed Liabilities"):
(A) The ownership, operation and maintenance of the
Included Assets, after the Closing Date and their transfer to Buyer.
(B) The liabilities specified on Schedule 3(c)(iv),
including, but not limited to, (1) liabilities or obligations owed to
Pittston Acquisition Company under that certain Stock Purchase Agreement
dated as of September 24, 1993, including, but not limited to, workers'
compensation claims and unmined minerals taxes (collectively, the "Pittston
Liability"), (2) debt obligations and liabilities to PNC Bank, (3)
liabilities or obligations under the bonds and guarantees specified on
Schedule 3 (b)(vii), (4) obligations arising under the settlement agreement
with Consumers' Power dated June 28, 1994 (the "Consumers Power
Liability"), and (5) certain ongoing or threatened litigation ("Assumed
Litigation").
(C) The Companies and their assets, businesses or
liabilities, contingent or otherwise except as otherwise expressly provided
in this Agreement.
(v) ASSUMED LITIGATION. With respect to the Assumed
Litigation specified on Schedule 3(c)(iv) and which ARI, and/or any of its
subsidiaries (except any of the Companies) is or becomes a party, the
parties agree as follows:
(A) Buyer:
(1) shall assume control of and be responsible
for the Assumed Litigation,
(2) may contest and defend against the Assumed
Litigation at its sole expense in any manner it reasonably may deem
appropriate (including the choice of counsel and experts),
(3) may consent to the entry of any judgment or
enter into any settlement with respect to the Assumed Litigation with the
prior consent of Seller or any affiliates of Seller (which shall not be
unreasonably withheld) provided, however, that a release of ARI and its
subsidiaries is obtained,
(4) shall pay any final judgment or (provided
that Buyer has approved or consented thereto) settlement entered into with
respect to the claims of any party in the Assumed Litigation; provided,
however, the foregoing shall in no way limit the right of Buyer to exhaust
its rights of appeal at its own cost and expense prior to the payment of
any judgment.
(B) After the Closing Date, Seller will provide, and
will cause each of its affiliates, if applicable, to provide, Buyer with
full access, at any reasonable time and from time to time, to such
information and data relating to the Assumed Litigation as Buyer may
reasonably request, and Seller will furnish and request independent
accountants and outside legal counsel of Seller or any affiliate to furnish
to Buyer such additional information or documents relating to the Assumed
Litigation in the possession of such persons as Buyer may from time to time
reasonably request. In addition, Seller will cooperate, and will cause its
affiliates to cooperate, with Buyer and its legal counsel in the defense or
contest of the Assumed Litigation, including making available their
respective officers and other personnel to attend hearings, depositions and
trials, as Buyer may reasonably request in connection with the defense or
contest of the Assumed Litigation but Buyer shall reimburse Seller and each
of its affiliates for all costs and expenses incurred in connection
therewith.
(d) RESCISSION. In the event that either party elects to
terminate its rights and obligations hereunder in accordance with the terms
of this Agreement, the control of the Companies vested with the Buyer, and
the management authority vested in the Directors during the Interim
pursuant to Section 1(b) shall be automatically revoked and rescinded.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND ARI. For
purposes of Seller's and ARI's representations and warranties contained in
this Section 4, to the extent any representation or warranty is made to the
best of Seller's and ARI's knowledge, such representation or warranty is
limited to the actual knowledge, without investigation, of the individual
members of ARI's board of directors and ARI's executive officers, but
excluding the Management Group. Seller hereby represents and warrants, but
only to the extent that Larry Addington, Robert Addington, Bruce Addington,
Doug Moore, John Lynch, Jeff Sartaine, Norm Cornett and Bernie Mason (the
"Management Group") do not have actual knowledge to the contrary as of the
date hereof, to Buyer as follows:
(a) AUTHORITY. Seller and ARI are corporations duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Seller and ARI have all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. All corporate acts and other proceedings required to
be taken by Seller and ARI to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken. This Agreement has
been duly executed and delivered by Seller and ARI and constitutes a valid
and binding obligation of Seller and ARI, enforceable against Seller and
ARI in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any lien, claim or encumbrance of any kind
upon any of the properties or assets of any Company (including the Included
Assets) under, any provision of (i) the General Corporation Law of the
State of Delaware and the corporation laws of each state of incorporation
of each Company and each state where each Company is qualified or required
to be qualified to conduct business, (ii) the Certificate or Articles of
Incorporation or By-laws of each of Seller, ARI or any Company, (iii) any
material note, bond, mortgage, indenture, or deed of trust to which Seller,
ARI or any Company is a party or by which any of their respective
properties or assets are bound except as disclosed on Schedule 4(a) or
(iv) any judgment, order or decree, or material statute, law, ordinance,
rule or regulation applicable to Seller, ARI or any Company or the property
or assets of Seller, ARI or any Company. Except as disclosed on Schedule
4(a) and except in the ordinary course of business following the Closing,
no consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign, or any other third party is required to be obtained or made by
or with respect to Seller, ARI or any Company or any of their respective
affiliates in connection with (i) the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby or
(ii) the conduct by any Company of its business following the Closing as
conducted on the date hereof, other than (A) compliance with and filings
under the HSR Act, (B) compliance with and filings under Section 13(a) or
15(d), as the case may be, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (C) compliance with and filings under
various Federal and state environmental and/or mining laws.
(b) THE SHARES. The Shares and the shares of each Company are
duly authorized and validly issued and fully paid and non-assessable.
Except as described on Schedule 4(b), Seller and any Company that owns
capital stock of or other equity interests in any other Company have good
and valid title to the Shares, free and clear of any liens, claims and
encumbrances of any kind. Upon delivery to Buyer at the Closing of
certificates representing the Shares, duly endorsed by Seller for transfer
to Buyer, and upon Seller's receipt of the Purchase Price, good and valid
title to the Shares will pass to Buyer, free and clear of any liens,
claims, encumbrances, security interests, options, charges and restrictions
of any kind. Other than this Agreement, or credit agreements with any
financial institution that Buyer is assuming, the Shares and the shares of
each Company are not subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including
any such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the
Shares or the shares of any Company.
(c) ORGANIZATION AND STANDING OF EACH COMPANY. Each Company is
a corporation duly organized and validly existing under the laws of the
state identified on Schedule 1. Each Company is duly qualified and in good
standing to do business in each jurisdiction (shown on Schedule 1) in which
the nature of its business or the ownership, leasing or holding of its
properties makes such qualification necessary, except such jurisdictions
where the failure so to qualify would not have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company. Seller has made available to Buyer true and
complete copies of the Articles of Incorporation, as amended to date, and
the By-laws, as in effect on the date hereof, of each Company. The stock
certificate and transfer books of each Company (which have been made
available for inspection by Buyer) are true and complete.
(d) CAPITAL STOCK OF EACH COMPANY. The authorized capital
stock, par value per share, and the number of issued and outstanding shares
for each Company, is set forth on Schedule 1. The Shares and the shares of
each Company are duly authorized and validly issued and are fully paid and
nonassessable. Seller is the registered holder of the Shares. The Shares
and the shares of each Company have not been issued in violation of, and
none of the Shares and none of the shares of any Company is subject to, any
preemptive or subscription rights in favor of any third party. Except as
set forth above, there are no shares of capital stock or other equity
securities of any Company outstanding. There are no outstanding warrants,
options, agreements, convertible or exchangeable securities or other
commitments (other than this Agreement) pursuant to which Seller or any
Company is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of any Company, and
there are not any equity securities of any Company reserved for issuance
for any purpose.
(e) EQUITY INTERESTS. Except as described on Schedule 4(e), no
Company directly or indirectly owns any capital stock of or other equity
interests in any corporation, partnership or other entity.
(f) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(i) Attached is Schedule 4(f)(i), setting forth the unaudited
statement of assets, liabilities and parent investment of the combined
Companies as of December 31, 1994 (collectively, the "Balance Sheet"), and
the related statements of operating revenues and expenses and parent
investment of the combined Companies for each of the years in the three
year period ended December 31, 1994 and unaudited statement of assets,
liabilities and parent investment and such related statements for the year
to date periods ended June 30, 1994 and June 30, 1995 (the financial
statements described above, collectively, the "Financial Statements").
(ii) The Financial Statements for all periods presented
reflect, in accordance with GAAP and on a consistent basis which is
mutually agreeable to the Buyer and Seller, the accounting results for only
the assets and liabilities and related revenues and expenses of the
Companies and any other transactions contemplated by this Agreement which
should appropriately be included.
(iii) Seller agrees to promptly provide to Buyer upon request any
other financial statements, data or information reasonably requested by
Buyer.
(iv) To the best of Seller's and ARI's knowledge, there are no
liabilities, contingent or otherwise, except as set forth on the Financial
Statements or arising out of the ordinary course of business since the
dates of the Financial Statements.
(g) TAXES.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes" shall
mean all Federal, state, local and foreign taxes and assessments and any
other governmental impositions which may be imposed, no matter how measured
or applied, including all interest, penalties and additions imposed with
respect to such amounts; (B) Pre-Closing Tax Period" shall mean all
taxable periods ending on or before the Closing Date and the portion ending
on the Closing Date of any taxable period that includes (but does not end
on) such day; and (C) "Code" shall mean the Internal Revenue Code of 1986
and the Regulations thereunder, as amended.
(ii) Except as set forth on Schedule 4(g)(ii) or Schedule
4(l)(ii), (A) each Company and each affiliated group (within the meaning of
Section 1504 of the Code) or consolidated, combined or unitary group (under
any state or local Tax law) of which any such Company is or has been a
member and which ARI is the common parent within the meaning of Section
1504 of the Code or any analogous provision of state or local Tax law (each
such group, an "Affiliated Group") has filed or caused to be filed in a
timely manner (within any applicable extension periods) all Tax returns,
reports and forms required to be filed by any taxing authority or any tax
laws, including but not limited to the Code and any applicable state, local
or foreign tax laws, (B) all Taxes shown to be due on such returns, reports
and forms have been timely paid in full or will be timely paid in full by
the due date thereof, (C) no tax liens have been filed and no claims are
being asserted in writing with respect to any Taxes and (D) no examinations
or inquiries are currently being conducted by any taxing authority.
(iii) Except as set forth in Schedule 4(g)(iii), (A) neither
Seller nor any of its affiliates has made with respect to any Company, or
any property held by any Company, any consent under Section 341 of the
Code, (B) no property of any Company is "tax-exempt use property" within
the meaning of Section 168(h) of the Code and (C) no Company is a party to
any lease made pursuant to Section 168(f)(8) of the Internal Revenue Code
of 1954.
(iv) Except as set forth in Schedule 4(g)(iv), there are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax returns required to be filed with respect
to any Company, and neither any Company nor any Affiliated Group has
requested any extension of time within which to file any Tax return, which
return has not yet been filed.
(v) Reserves sufficient for the payment of all Taxes, other than
income Taxes, have been established.
(h) TANGIBLE PERSONAL PROPERTY. Schedule 4(h) is a list, which
has been prepared by the Management Group, of each item of tangible
personal property which will be owned or leased by any Company as of the
Closing. To the best of Seller's and ARI's knowledge, except as described
in Schedule 4(h), each Company owns all of its tangible personal property
listed on Schedule 4(h) and all other tangible personal property reflected
on each of its books and records as being owned by each of it, free and
clear of all liens and encumbrances, except for liens for ad valorem
property taxes not yet due and payable, purchase money security interests
arising in the ordinary course of their respective businesses, and each
Company is entitled to possession of its leased tangible personal property
listed on Schedule 4(h), with all such leases being valid and in full force
and effect.
(i) REAL PROPERTY. Schedule 4(i) is a list, which has been
prepared by the Management Group, of all real property which will be owned
by each Company as of the Closing. To the best of Seller's and ARI's
knowledge, Schedule 4(i) is (i) a true and complete description of all real
property which will be owned by each Company as of the Closing and all
buildings and other structures located thereon; (ii) an identification of
all leases, subleases, easements, licenses or other agreements, together
with all amendments thereto, under which each Company will be, as of the
Closing, a lessor, lessee, licensor, licensee, grantor, grantee or other
party with respect to any real property or any interest therein (except
where a Company acquired its interest in such real property subject to any
of the foregoing); and (iii) an identification of all options which will be
held by each Company as of the Closing or contractual obligations which
will exist on the Closing Date on the part of each Company to purchase or
acquire any interest in any real property. Except as indicated in Schedule
4(i), to the best of Seller's and ARI's knowledge, (i) each of Company owns
the real property described in Schedule 4(i) as owned by it in fee, free
and clear of all liens, encumbrances, equities, claims, covenants,
conditions, reservations, restrictions, easements, rights, rights of way
and other agreements arising by, through or under Seller or any Company or
any of its or their affiliates; (ii) each of the leases, subleases,
easements, licenses, agreements and options described in Schedule 4(i) is a
valid, binding, enforceable agreement of each of the parties thereto, and
is in full force and effect, and each Company has performed all covenants
and obligations in all material respects required to be performed by it
under such lease, sublease, easement, license, agreement and option and
there exists no material default or event which, with lapse of time or
notice to it, would constitute a material default by such Company; and
(iii) neither Seller nor any Company has received any notice that a lessor,
grantor, licensor or optionor under any of such leases, subleases,
easements, licenses, agreements or options intends to cancel or terminate
any of such leases, subleases, agreements, licenses or options or to
exercise or not to exercise any option of any of such leases, subleases,
easements, licenses or agreements. To the best of Seller's and ARI's
knowledge, there are no eminent domain or condemnation proceedings pending
or, threatened against any asset or property of any Company.
(j) CONTRACTS. Schedule 4(j) has been prepared by the
Management Group. To the best of Seller's and ARI's knowledge, Schedule
4(j) contains a list of agreements, contracts, personal property leases
(other than those listed on Schedule 4(i)) and commitments (whether written
or oral) to which, as of the Closing Date, any Company will be a party or
which, as of the Closing Date, will affect or bind any Company or any of
its property (including the Included Assets) (except those made in the
ordinary course of business and requiring aggregate future payments or
performance by any Company or receipts having a value of less than
$30,000), including without limitation, the following:
(a) notes, mortgages, indentures, loan or credit
agreements, equipment lease agreements, security agreements and other
agreements and instruments reflecting obligations for borrowed money or
other monetary indebtedness or otherwise relating to the borrowing of
money by, or the extension of credit to any Company or related to its
business and binding agreements or commitments to enter into any such
agreements or commitments;
(b) management consulting and employment agreements and
binding agreements or commitments to enter into same;
(c) coal sales agreements, purchase orders, contract bids or
other agreements and commitments to sell or offer to sell coal, or to
purchase or offer to purchase coal;
(d) coal sales agency agreements or commitments authorizing
any person to act as agent for the purchase or sale of coal or to otherwise
represent any Company in connection with the purchase or sale of coal;
(e) contract mining agreements, whether as contract miner or
owner/employer;
(f) processing, storage, loading or transloading agreements
or other agreements or commitments pursuant to which any Company utilizes
or is obligated to utilize any preparation plant, stockpile area, crushing
plant, screening plant, tipple, processing facility, rail car or unit train
loading facility, barge loading facility or other installation or facility
owned, leased or used by it to process, wash, crush, grade, screen, store,
load, transload or ship coal for persons other than a Company (a "Third
Party") or any agreement or contract pursuant to which any Third Party
utilizes or is obligated to utilize any preparation plant, stockpile area,
crushing plant, screening plant, tipple, processing facility, rail car or
unit train facility, barge loading facility or other installation or
facility owned, leased or used by such Third Party to process, wash, crush,
grade, screen, store, load, transload or ship coal for any Company;
(g) agreements relating to the transportation and movement of
coal mined or sold by any Company or agreements or commitments for any
rates, tariffs or other charges applicable to such transportation or
movement;
(h) agreements to pay any overriding royalty, finder's fee,
commission or other compensation or consideration or to pay any person in
connection with or related to the identification, purchase, sale, leasing
or other acquisition of any real property, equipment, machinery, personal
property, lease, contract, opportunity, permit, license, authorization or
other right or asset, tangible or intangible, of any Company;
(i) option, purchase and sale or lease agreements involving
any real property, equipment, machinery, personal property or other asset,
tangible or intangible;
(j) agreements and purchase orders entered into or issued in
the ordinary course of business for the purchase or sale of goods (other
than coal), services, supplies or capital assets;
(k) joint venture or other agreements involving the sharing
of profits or losses;
(1) contracts or agreements with ARI, Seller, or any
subsidiary or affiliate of either, or any director or officer of ARI,
Seller, or any subsidiary or affiliate of either, or any person who is an
immediate relative of any such person, or any combination of such persons;
(m) outstanding powers of attorney empowering any person,
company or other organization to act on behalf of any Company;
(n) outstanding guarantees, subordination agreements,
indemnity agreements and other similar types of agreements, whether or not
entered into in the ordinary course of business, which any Company is or
may become liable for or obligated to discharge, or any asset of any
Company is or may become subject to the satisfaction of, any indebtedness,
obligation, performance or undertaking of any other person, except for
indemnification agreements contained in any of the instruments listed in
the Schedules hereto;
(o) contracts, orders, decrees or judgments preventing or
restricting any Company from carrying on business in any location;
(p) agreements, contracts or commitments relating to the
acquisition of the outstanding capital stock or equity interest of any
business enterprise; and
(q) contracts, commitments or obligations not made in the
ordinary course of business and having unexpired terms in excess of one
year or requiring aggregate future payments or receipts in excess of
$30,000 or otherwise material to the business or operations of any Company.
Buyer has had access and has obtained for itself true and complete copies
of all such written leases, agreements, contracts, commitments and related
agreements listed on Schedule 4(j), including all amendments,
modifications, waivers and elections applicable thereto.
To the best of Seller's and ARI's knowledge, except as set forth
in Schedule 4(j), such leases, agreements, contracts, commitments and
related agreements are valid and binding, enforceable in accordance with
their respective terms (subject to any applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting generally the enforcement of creditors' rights) and are in full
force and effect. To the best of Seller's and ARI's knowledge, except as
disclosed in Schedule 4(j), there is not under any such lease, contract,
agreement, commitment or related agreement, any existing material breach or
material default (or event or condition, which after notice or lapse of
time, or both, would constitute a material breach or material default), by
Seller or any Company, or to the knowledge of Seller and ARI any other
party thereto.
(k) LITIGATION; DECREES. No Company is a party to any material
(i.e., amount in controversy in excess of $100,000) lawsuit, claim
(including without limitation claims for occupational pneumoconiosis,
occupational injury and occupational disease), proceeding or investigation,
and to the best of Seller's and ARI's knowledge, no such lawsuit, claim,
proceeding or investigation has been threatened in writing within the last
24 months, by or against or affecting any Company or any of its properties,
assets, operations or businesses other than as set forth on Schedule 4(k).
No Company is in default under any material judgment, order or decree of
any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, applicable to it or any
of its properties, assets, operations or businesses.
(l) BENEFIT PLANS. (i) To the best of Seller's and ARI's
knowledge, no Company has ever maintained or contributed to, or now
maintains or contributes to, any "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (referred to herein as a "Pension Plan") or
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA)
(referred to herein as a "Welfare Plan") except such Welfare Plans
disclosed on Schedule 4(l)(i). Schedule 4(l)(i) also discloses any
deferred compensation plan, bonus plan, incentive plan, disability or other
group insurance plan, stock option plan, employee stock purchase plan,
vacation plan, severance plan, sick leave plan or policy, holiday plan or
policy, maternity leave plan or policy or any other benefit plan, program,
agreement (including employment agreement or union contracts), arrangements
or commitments of any kind, maintained by any Company, that is not a
Pension Plan or Welfare Plan. Seller has delivered to Buyer true, complete
and correct copies of (A) each plan disclosed on Schedule 4(l)(i) (a
"Company Plan") (or, in the case of any unwritten Company Plans,
descriptions thereof), (B) the most recent annual report on Form 5500 filed
with the Internal Revenue Service with respect to each Company Plan (if any
such report was required by applicable law), (C) the most recent summary
plan description for each Company Plan for which a summary plan description
is required by applicable law and (4) each trust agreement and insurance or
annuity contract relating to any Company Plan.
(ii) To the best of Seller's and ARI's knowledge, each Company
Plan has been administered in all material respects in accordance with its
terms, except as disclosed in Schedule 4(l)(ii). To the best of Seller's
and ARI's knowledge, each Company, its subsidiaries and all Company Plans
are in compliance in all material respects with the applicable provisions
of ERISA and the Internal Revenue Code of 1986, as amended (the "Code"),
except as disclosed in Schedule 4(l)(ii). To the best of Seller's and
ARI's knowledge, except as disclosed in Schedule 4(l)(ii), all reports,
returns and similar documents with respect to the Company Plans required to
be filed with any governmental agency or distributed to any Company Plan
participant have been duly and timely filed or distributed. To the best of
Seller's and ARI's knowledge, except as disclosed in Schedule 4(l)(ii),
there are no investigations by any governmental agency, termination
proceedings or other claims (except claims for benefits payable in the
normal operation of the Company Plans), suits or proceedings against or
involving any Company Plan or asserting any rights or claims to benefits
under any Company Plan that could give rise to any material liability, and
there are not any facts that could give rise to any material liability in
the event of any such investigation, claim, suit or proceeding.
(iii) To the best of Seller's and ARI's knowledge, each Company
Plan that is a Welfare Plan (including any Welfare Plan covering retirees
or other former employees) may be amended or terminated without material
liability to any Company on or at any time after the Closing Date. To the
best of Seller's and ARI's knowledge, the Companies and its subsidiaries
comply with the applicable requirements of Section 4980B(f) of the Code
with respect to each Company Plan that is a group health plan, as such term
is defined in Section 5000(b)(1) of the Code.
(iv) To the best of Seller's and ARI's knowledge, neither Seller
nor any Commonly Controlled Entity (as defined below) maintains a Pension
Plan subject to Title IV of ERISA or Section 412 of the Code.
(v) To the best of Seller's and ARI's knowledge, except as
disclosed in Schedule 4(l)(v), at no time within the five years preceding
the Closing Date has Seller or any person or entity that, together with
Seller, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each a "Commonly Controlled Entity") been required to
contribute to any "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA), and neither Seller nor any Commonly Controlled Entity has incurred
any withdrawal liability, within the meaning of Section 4201 of ERISA,
which liability has not been fully paid as of the date hereof, or announced
an intention to withdraw, but not yet completed such withdrawal, from any
multiemployer plan. To the best of Seller's and ARI's knowledge, except as
disclosed on Schedule 4(l)(v), no action has been taken and no
circumstances exist that, alone or with the passage of time, could result
in either a partial or complete withdrawal from any multiemployer plan.
(vi) Schedule 4(l)(vi) sets forth and identifies all agreements
to which any Company is a party, whether oral or in writing, with present
or former officers, directors or employees of, or consultants to, any
Company which (A) obligate any Company to pay, on any date or dates during
the remaining term of such agreement, an aggregate amount in excess of
$100,000, or (B) cannot be terminated on 60 days' notice.
(vii) To the best of Seller's and ARI's knowledge, neither any
Company nor any related person (within the meaning of section 9701(c)(2) of
the Code) has any liability under subtitle J of the Code (Coal Industry
Health Benefits).
(viii) To the best of Seller's and ARI's knowledge, except as
set forth in Schedule 4(l)(viii), no employee or former employee with any
Company or any beneficiary thereof will become entitled to any bonus,
severance, job security or similar benefits or any enhanced benefits as a
result of the transactions contemplated hereby.
(m) ABSENCE OF CHANGES OR EVENTS. Except as disclosed on
Schedule 4(m) or otherwise expressly permitted by the terms of this
Agreement (including without limitation the distribution of Excluded Assets
and excess working capital as contemplated by this Agreement), to the best
of Seller's and ARI's knowledge, there has not been any material adverse
change in the business, assets, financial condition or results of
operations of the Companies taken as a whole since June 30, 1995 to the
date hereof; and to the best of Seller's and ARI's knowledge, Seller has
caused the business of each Company, since June 30, 1995 to the date
hereof, to be conducted in the ordinary course and has made all reasonable
efforts consistent with past practices to preserve each such Company's
relationships with customers, suppliers and others with whom such Company
deals.
(n) COMPLIANCE WITH APPLICABLE LAWS. (i) Except as set forth
in Schedule 4(n), which has been prepared by the Management Group, to the
best of Seller's and ARI's knowledge, each Company is in compliance with
all applicable statutes, laws, ordinances, rules, orders and regulations of
any governmental authority or instrumentality, domestic or foreign
(including, without limitation, the Surface Mining Control and Reclamation
Act of 1977, as amended ("SMCRA"), the Federal Mine Safety and Health Act
of 1977, as amended, and the Black Lung Benefits Reform Act of 1977, as
amended), except where noncompliance (individually or in the aggregate)
would not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of such Company. In
addition, each of the Companies is in material compliance with, and in good
standing under, applicable workers' compensation and black lung laws.
Except as set forth in Schedule 4(n), to the best of Seller's and ARI's
knowledge, Seller has not received any written communication from a
governmental authority that alleges that any Company is not in compliance,
in all material respects, with all material Federal, state, local or
foreign laws, ordinances, rules and regulations.
(ii) Except as set forth in Schedule 4(n), to the best of
Seller's and ARI's knowledge without investigation none of the operations
or properties of any Company is the subject of any Federal, state or
foreign investigation evaluating whether any remedial action is needed to
respond to a release of any Hazardous Substance (as hereinafter defined)
into the environment, and neither Seller nor any Company has received any
written communication from a governmental authority that alleges that any
Company is not in compliance, and each Company is in compliance, in all
respects, except where noncompliance (individually or in the aggregate)
would not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of such Company, with all
Federal, state, local or foreign laws, ordinances, codes, rules and
regulations relating to the environment ("Environmental Laws"). To the
best of Seller's and ARI's knowledge, except as set forth in Schedule 4(n),
Seller (in respect of the business of each Company) and each Company have
filed all notices and compliance reports required to be filed under any
Environmental Law indicating past or present treatment, storage or disposal
of a Hazardous Substance or reporting a spill or release of a Hazardous
Substance into the environment. Except as set forth in Schedule 4(n), to
the best of Seller's and ARI's knowledge without investigation no Company
has any material contingent liabilities in respect of its business in
connection with any Hazardous Substance that individually or in the
aggregate would have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of its operations.
"Hazardous Substance" shall mean: (i) any hazardous, toxic or dangerous
waste, substance or material defined as such in (or for the purposes of)
the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, Super Fund Amendments and Reauthorization Act and any so-called
superfund or superlien law, or any other Environmental Law, including
Environmental Laws relating to or imposing liability or standards of
conduct concerning any hazardous, toxic or dangerous waste, substance or
material in effect on the date of this Agreement, (ii) petroleum, asbestos
or PCBs and (iii) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any Federal, state, foreign or
local governmental authority pursuant to any Environmental Law or any
health and safety or similar law, code, ordinance, rule or regulation,
order or decree, and which may or could pose a hazard to the health and
safety of workers at or users of any properties of any Company or cause
offsite damage to adjacent property owner or cause damage to the
environment.
(iii) To the best of Seller's and ARI's knowledge, neither
Seller nor any person or entity "owned or controlled" by Seller nor any
person or entity which "owns or controls" Seller has been notified by the
Federal Office of Surface Mining or the agency of any state administering
the SMCRA (or any comparable state statute), that it is (A) ineligible to
receive additional surface mining permits or (B) under investigation to
determine whether its eligibility to receive such permits should be
revoked, I.E., "permit blocked", except as set forth on Schedule 4(n)(iii).
As used herein, the terms "owned or controlled" and "owns or controls"
shall be defined as set for in 30 C.F.R. <section> 773.5 (1991).
(o) EMPLOYEE AND LABOR RELATIONS. Except as set forth on
Schedule 4(o), no Company is a party to, bound by, or negotiating any
collective bargaining agreement or any other agreement with any labor
union, association or other employee group, nor is any employee of any
Company represented by any labor union or similar association. No labor
union or employee organization has been certified or recognized as the
collective bargaining representative of any employees of any Company.
There are no formal union organizational campaigns or representation
proceedings underway or to the best of Seller's and ARI's knowledge pending
or planned with respect to any employees of any Company nor to the best of
Seller's and ARI's knowledge are there any existing or pending or planned
labor strikes, work stoppages, slowdowns, disputes, grievances, unfair
labor practice charges, labor arbitration proceedings or other disturbances
affecting any employee of any Company, or affecting operations at or
deliveries to any mine or other facility of any Company. To the best of
Seller's and ARI's knowledge, except as described on Schedule 4(o) or
Schedule 4(l)(i), each Company has at all times complied in all material
respects with all applicable provisions of the National Labor Relations
Act, as amended, the Fair Labor Standards Act, as amended, and all other
Federal and state laws, regulations, and executive orders pertaining to
employment, including without limitation all provisions thereof relating to
wages, hours and conditions, collective bargaining, and the payment of
unemployment benefits and taxes therefor, FICA taxes and all similar taxes,
and worker's compensation and occupational disease benefits. Except as
described on Schedule 4(o) or Schedule 4(l)(i), to the best of Seller's and
ARI's knowledge, no Company has any liability for any arrearages of wages
or for any delinquent unemployment, FICA or other employee taxes or for any
penalties or interest for failure to timely pay any such taxes due. To the
best of Seller's and ARI's knowledge, no Company has pending against it any
unfair labor practice charges, other administrative charges, claims,
grievances or lawsuits before any court, governmental agency, regulatory
body or arbitrator arising under any Federal or state law, regulation or
executive order governing employment.
(p) LICENSES; PERMITS. Schedule 4(p) has been prepared by the
Management Group. To the best of Seller's and ARI's knowledge,
Schedule 4(p) sets forth a true and complete list of all material licenses,
permits, certificates, bonds, approvals and other such authorizations
issued or granted to each Company by local, state or Federal governmental
authorities or agencies. To the best of Seller's and ARI's knowledge,
except as disclosed on Schedule 4(p), all material licenses, permits,
certificates, bonds, approvals or other such authorizations of each Company
are validly held by it, each Company has complied with all material
requirements in connection therewith and the same will not be subject to
suspension, modification or revocation as a result of this Agreement or the
consummation of the transactions contemplated hereby. To the best of
Seller's and ARI's knowledge, each Company has all material licenses,
permits, certificates, bonds, approvals and other such authorizations from
local, state or Federal government authorities or agencies which are
necessary for the conduct of each Company's business.
(q) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 4(q)
contains a complete and correct list and summary description showing (i)
the name of each bank in which any Company has an account or safe deposit
box and the names of all persons authorized to draw thereon or to have
access thereto, and (ii) the names of all persons, if any, holding powers
of attorney from any Company.
(r) TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Schedules hereto, no Company has any outstanding contract, agreement or
other arrangement with Seller, ARI or any of its subsidiaries which will
continue in effect subsequent to the Closing.
(s) PATENTS AND TRADEMARKS. To the best of Seller's and ARI's
knowledge, no Company has any patents, trademarks, tradenames, service
marks, copyrights or patent applications pending, and are not subject to
any license agreements with third parties or agreements requiring royalty
or other payments in respect of such matters except as set forth on
Schedule 4(s). To the best of Seller's and ARI's knowledge, there are no
claims pending or threatened against any Company with regard to the
infringement of any patents, trademarks, tradenames, service marks,
copyrights or patent applications pending.
(t) INSURANCE. Schedule 4(t) contains a complete and correct
list and summary description of all policies of insurance which are in
effect, including amounts thereof, in which any Company is named as the
insured party, has a beneficial interest or for which it has paid any
premiums. Such policies are in full force and effect and insure all assets
and property of each Company against loss or damage in amounts as set forth
in such policies. Until the Closing Date, Seller will cause each Company
to maintain in full force and effect its presently existing insurance
coverage, or insurance comparable to such existing coverage.
(u) AS IS. BUYER AND THE ADDINGTON GROUP ACKNOWLEDGE THAT THE
ADDINGTON GROUP HAS BEEN INVOLVED IN THE OPERATIONS OF THE COMPANIES FROM
THEIR INCEPTION, AND THAT THE ADDINGTON GROUP IS WELL FAMILIAR WITH THE
COMPANIES AND THEIR OPERATIONS, ASSETS AND LIABILITIES. THE
REPRESENTATIONS AND WARRANTIES OF SELLER ARE A MATERIAL PART OF THIS
AGREEMENT. THE LIMITATIONS AND QUALIFICATIONS OF SELLER'S REPRESENTATIONS
AND WARRANTIES ARE ALSO A MATERIAL PART OF THIS AGREEMENT. EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN DOCUMENTS OR INSTRUMENTS
EXECUTED PURSUANT TO THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLER HAS
MADE NO REPRESENTATIONS REGARDING THE VALUE OR CONDITION OF THE ASSETS OF
THE COMPANIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE ASSETS
OF THE COMPANIES WILL BE HELD BY THE COMPANIES AT CLOSING "AS IS, WHERE IS"
WITH NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO TITLE,
OWNERSHIP, USE, POSSESSION, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, QUANTITY OR QUALITY OF RESERVES, MINING COSTS OR RATIOS, GRADE,
RECOVERABILITY, VALUE, MINEABILITY, CONDITION, OPERATION, DESIGN, CAPACITY,
TAX TREATMENT OR OTHERWISE, AND ALL SUCH REPRESENTATIONS AND WARRANTIES ARE
EXPRESSLY DISCLAIMED. NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO
DIMINISH OR LIMIT THE EXPRESS REPRESENTATIONS, WARRANTIES OR COVENANTS
CONTAINED IN THIS AGREEMENT, AS THE SAME MAY BE LIMITED OR QUALIFIED
HEREIN.
5. COVENANTS.
5A. COVENANTS OF SELLER. Seller covenants and agrees as
follows:
(a) ACCESS. Seller shall, and shall cause each Company, and its
or their officers, directors, employees and agents to, afford the officers,
employees and agents of Buyer complete access at all reasonable times, from
the date hereof to the Closing, to its or their officers, employees,
agents, properties, books and records, and shall furnish Buyer all
financial, operating and other data and information as Buyer, through its
officers, employees or agents, may reasonably request, but only to the
extent that any of the foregoing relates to any Company. Subject to
applicable law or court orders, Buyer shall cause all such information of a
non-public nature to be retained confidentially. If this Agreement is
terminated, Buyer shall promptly return all such information of a non-
public nature provided by Seller, and shall promptly destroy all analyses,
compilations, studies or other documents of or prepared by the Buyer from
such non-public information. If this Agreement is terminated, Buyer shall
not use or disclose any confidential information obtained from Seller or
the Companies, or other information concerning the business or properties
of the Seller or the Companies. Buyer shall be responsible for maintaining
the confidentiality of such confidential and trade secret information and
ensuring that such information is not used or disclosed by its employees,
affiliates and agents, and Buyer shall be responsible for the acts of its
agents, employees and affiliates in that regard.
(b) PRO FORMA BALANCE SHEET. Schedule 5A(b) sets forth a pro
forma balance sheet (the "Pro Forma Balance Sheet") reflecting the assets,
liabilities and working capital which each Company would have had if the
Closing had occurred on July 31, 1995 after the distribution of the
Excluded Assets and the Excluded Liabilities.
(c) SUPPLEMENTAL DISCLOSURE. Seller shall have the continuing
obligation until the Closing to supplement or amend the Schedules hereto
with respect to any matter hereafter arising or discovered which, if
existing or known to Seller at the date of this Agreement, would have been
required to be set forth or described in such Schedules; PROVIDED,
HOWEVER, that, (i) for the purpose of the rights and obligations of the
parties hereunder, any such supplemental or amended disclosure shall not be
deemed to have been disclosed as of the date of this Agreement unless so
agreed in writing by Buyer, and (ii) no such supplemental disclosure shall
be required as a result of any act or omissions of the Companies taken or
permitted to be taken by the Directors (or any of them) pursuant to Section
1(b) or otherwise.
(d) NO SOLICITATION. (i) Seller shall not, nor shall it permit
any of its affiliates to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other
advisor or representative of, Seller or any of its affiliates to, (A)
solicit or initiate, or encourage the submission of, any Alternative
Proposal (as hereinafter defined), (B) participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any Alternative Proposal; PROVIDED, HOWEVER, that to the extent
required by the fiduciary obligations of the Board of Directors of Seller
or ARI, as determined in good faith by such Board of Directors, Seller may
(1) in response to an unsolicited request therefor, furnish information
with respect to any of the Companies to any person pursuant to a customary
confidentiality agreement (as determined by Seller's independent counsel)
and discuss such information with such person, and (2) upon receipt by the
Company of an Alternative Proposal, participate in negotiations regarding
such Alternative Proposal. For purposes of this Agreement, "Alternative
Proposal" means any proposal for a merger or other business combination
involving any of the Companies or any proposal or offer to acquire in any
manner, directly or indirectly, an equity interest in, any voting
securities of, or a substantial portion of the assets of any of the
Companies, other than the transactions contemplated by this Agreement.
(ii) If the Board of Directors of Seller or ARI receives an
Alternative Proposal that, in the exercise of its fiduciary duties, it
determines to be a Superior Proposal (as hereinafter defined), the Board of
Directors may (subject to the following sentences) enter into an agreement
with respect to such Superior Proposal or terminate this Agreement, in each
case at any time after the second business day following Buyer's receipt of
written notice (a "Notice of Superior Proposal") advising Buyer that the
Board of Directors has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. In addition, if Seller proposes to
enter into an agreement with respect to any Superior Proposal, it shall
pay, or cause to be paid, to Buyer the Expense Reimbursement (as defined in
Section 5A(e)). For purposes of this Agreement, a "Superior Proposal"
means any bona fide Alternative Proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or readily marketable
securities or royalties, any of the Companies or all or substantially all
the assets of any of the Companies, and otherwise on terms that the Board
of Directors of Seller determines in its good faith reasonable judgment to
be more favorable to ARI's stockholders other than the Addington Group than
the transactions contemplated by this Agreement.
(iii) In addition to the obligations of Seller set forth in
Section 5A(d)(ii), Seller shall promptly advise Buyer orally and in writing
of any request for information or of any Alternative Proposal, or any
inquiry with respect to or that could lead to any Alternative Proposal, the
material terms and conditions of such request, Alternative Proposal or
inquiry, and the identity of the person making any such Alternative
Proposal or inquiry. The Seller will keep Buyer reasonably informed of the
status and details of any such Alternative Proposal or inquiry.
(e) FEES AND EXPENSES. (i) Except as provided below, all fees
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not such transactions are consummated.
(ii) The Seller shall reimburse, or cause to be reimbursed, to
the Buyer its documented out-of-pocket expenses, including attorney fees,
reasonably incurred by the Buyer in connection with the transactions
contemplated hereby (the "Expense Reimbursement"), concurrently with the
Seller entering into any agreement with respect to any Superior Proposal in
accordance with Section 5A(d); unless Buyer or the Addington Group shall
have failed to perform in any material respect any of their obligations
under this Agreement, provided that Seller shall in no event be obligated
to reimburse Buyer and the Addington Group more than $350,000.00 of out-of-
pocket expenses, plus any reasonable commitment fee paid to Buyer's
financing source.
5B. COVENANTS OF BUYER. Buyer covenants and agrees as follows:
(a) BUYER'S ACTIONS. Buyer shall not take, nor permit the
Directors to take, any action that would, or that could reasonably be
expected to, result in (i) any of its representations and warranties set
forth in this Agreement becoming untrue in any material respect, or (ii)
any of the conditions to the purchase and sale of the Shares not being
satisfied in any material respect; and Buyer shall cooperate with Seller in
the removal of liability and obligations under bonds and guarantees as
contemplated in Section 3(b)(vii) hereof, including replacement of
guarantees with those of Buyer, subject to the provisions of Section
3(b)(vii). Buyer also agrees to provide such financial and other
information of Buyer as is necessary to accomplish such replacement or
substitution. If the removal of liabilities and obligations are unable to
be obtained as of the Closing Date with respect to each of those bonds and
guarantees described on Schedule 5B(a), or with respect to those bonds and
guarantees described on Schedule 3(b)(vii) if any such bonds or guarantees
are waived as a condition to Seller's obligation to close, then Buyer shall
indemnify the applicable guarantor or obligor from and against such
liability, obligation, loss or expenses arising out of or with respect to
such bonds and guarantees and shall execute an indemnity agreement to that
effect in a form reasonably satisfactory to Seller. After the Closing
Date, Buyer shall also continue to also use its best efforts to remove the
parties listed on Schedule 5B(a) from such liabilities or obligations.
These foregoing provisions are supplementary to, and do not waive or
supersede, the provisions of the letter agreement, dated August 14, 1995,
between ARI and Larry Addington, relating to ARI's guaranty of the capital
lease financing provided by Provident Bank to TMI.
(b) SUPPLEMENTAL DISCLOSURE. Buyer shall have the continuing
obligation until the Closing to supplement, or amend its Schedules with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set
forth or described in such Schedules; provided, however, that for the
purpose of the rights and obligations of the parties hereunder, any such
supplemental or amended disclosure shall not be deemed to have been
disclosed as of the date of this Agreement unless so agreed in writing by
Seller.
(c) PLANNED CLOSING OF ANY COMPANY EMPLOYMENT SITE. Prior to
the Closing, Buyer shall have the continuing obligation to immediately
advise Seller of any planned or intended closing of any Company's
employment sites existing immediately prior to the Closing, or layoff of
any Company's employees employed immediately prior to Closing, where such
closing or layoff may or will be sufficient to invoke coverage of the
Worker Adjustment and Retraining Notification Act of 1989 for such Company.
(d) ORDINARY CONDUCT. Except as set forth on Schedule 5B(d) or
otherwise expressly permitted by the terms of this Agreement, or as
necessary in connection with taking such actions with regard to the assets
and liabilities of the Companies as are contemplated by this Agreement
(including without limitation the distribution of Excluded Assets as
contemplated by this Agreement), from the date hereof to the Closing, Buyer
in exercising its management responsibility under this Agreement will cause
the business of each Company to be conducted in the ordinary course in
substantially the same manner as presently conducted and will make all
reasonable efforts consistent with past practices to preserve its
relationships with customers, employees, suppliers and others with whom
such Company deals. In addition, except as set forth on Schedule 5B(d) or
otherwise expressly permitted by the terms of this Agreement (including
without limitation the distribution of Excluded Assets as contemplated by
this Agreement), neither Buyer nor Seller will permit any Company to do any
of the following without the prior written consent of Seller or Buyer
respectively:
(i) amend its Articles of Incorporation or By-laws;
(ii) declare or pay any dividend or make any other distributions
to its shareholders whether or not upon or in respect of any shares of its
capital stock;
(iii) redeem or otherwise acquire any shares of its capital stock
or issue any capital stock or any option, warrant or right relting thereto
or any securities convertible into or exchangeable for any shares of
capital stock;
(iv) grant to any employee, officer or director any increase in
compensation or benefits, or enter into any employment contract or adopt,
amend or terminate any profit sharing, compensation, bonus, deferred
compensation, pension, retirement or other employee benefit plan,
agreement, fund, trust or arrangement, for the benefit or welfare of any
employee;
(v) incur or assume any liabilities, capitalized leases,
operating leases, bonds (without the prior written consent of the Seller,
which will not be unreasonably withheld or delayed), obligations or
indebtedness for borrowed money or guarantee any such liabilities,
obligations or indebtedness;
(vi) permit, allow or suffer any of its assets to be subjected to
any mortgage, pledge, lien, encumbrance, restriction or charge of any kind;
(vii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(viii) except as contemplated by this Agreement, loan or advance
any amount to, or sell, transfer or lease any of its assets to, or enter
into any agreement or arrangement with Buyer or any of its affiliates;
(ix) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted
accounting principles;
(x) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets (other than inventory) which are material individually,
or in the aggregate, to such Company;
(xi) make or incur any capital expenditure or expenditures which,
individually, is in excess of $5,000 or, in the aggregate, are in excess of
$25,000;
(xii) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, except in the ordinary
course of business consistent with past practice;
(xiii) enter into any lease of real property;
(xiv) enter into any new commitments for the sale or purchase of
coal or the purchase or disposition of coal properties or amend any
existing coal sales agreements;
(xv) hire or terminate any employee of the Companies without
cause, or pay or agree to pay any severance or termination pay with respect
thereto;
(xvi) engage in any transaction with the Addington Group or any
of its affiliates (except as permitted by this Agreement); or
(xvii) agree, whether in writing or otherwise, to do any of the
foregoing.
Buyer shall not, and shall not permit any Company to, take any
action that would, or that could reasonably be expected to, result in
(i) any of its representations and warranties set forth in this Agreement
becoming untrue, (ii) any of the representations and warranties of Seller
set forth in this Agreement becoming untrue, or (iii) any of the conditions
to the purchase and sale of the Shares not being satisfied.
6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer and the
Addington Group, jointly and severally, hereby represent and warrant to
Seller as follows:
(a) AUTHORITY. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Kentucky. Buyer has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
All corporate acts and other proceedings required to be taken by Buyer to
authorize the consummation of the transactions contemplated hereby have
been duly and properly taken. This Agreement has been duly executed and
delivered by Buyer and the Addington Group and constitutes a valid and
binding obligation of Buyer and the Addington Group, enforceable against
Buyer and the Addington Group in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give right to a right
of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind
upon any of the properties or assets of the Buyer under, any provision of
(i) the Business Corporation Act of Kentucky, (ii) the Articles of
Incorporation or bylaws of Buyer, (iii) any material note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement
or arrangement to which Buyer and the Addington Group is a party or by
which any of its properties are bound or (iv) any judgment, order, or
decree, or material statute, law, ordinance, rule or regulation applicable
to Buyer and the Addington Group or its property or assets. No consent,
approval, license, permit order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made by or with respect to Buyer or the
Addington Group in connection with the execution and delivery of this
Agreement or the consummation by Buyer and the Addington Group of the
transactions contemplated hereby, other than (A) compliance with and
filings under the HSR Act and (B) compliance with and filings under
Section 13(d) or 16, as the case may be, of the Exchange Act.
(b) ACTIONS AND PROCEEDINGS, ETC. There are no (i) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or the Addington Group which
have an adverse effect on the ability of Buyer and the Addington Group to
consummate the transactions contemplated hereby or (ii) actions, suits,
claims or legal, administrative or arbitration proceedings or
investigations pending or, to the best knowledge of Buyer, threatened
against Buyer or the Addington Group, which are likely to have a material
adverse effect on the ability of Buyer and the Addington Group to
consummate the transactions contemplated hereby.
(c) CONSENTS. Subject to Section 6(a), no consent of any party
and no consent, license, approval or authorization of, or exemption by, or
filing, restriction or declaration with, any governmental authority,
bureau, agency or regulatory authority is required in connection with the
execution, delivery, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby and thereby.
(d) QUALIFICATION. Buyer is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure so to
qualify would not have a material adverse effect on the business, assets,
conditions (financial or otherwise) or results of operations of Buyer.
Buyer has made available to Seller true and complete copies of its Articles
of Incorporation, as amended to date, and its bylaws, as in effect on the
date hereof.
(e) NO BROKER. Buyer has not retained any broker or finder nor
has any finder or broker acted on behalf of Buyer in connection with this
Agreement or the transactions contemplated hereby.
(f) INVESTMENT INTENT. Buyer and the Addington Group are
acquiring the Shares solely for their own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and have no present intention or plan to effect any
resale, assignment or distribution of the Shares. Buyer and the Addington
Group acknowledge that the Shares have not been registered or qualified
under the Securities Act of 1933 or any state securities laws and may be
sold, assigned, pledge or otherwise disposed of in the absence of such
registration only pursuant to an exemption from such registration. Buyer
and the Addington Group acknowledge that the certificates evidencing the
Shares shall each bear a restrictive legend to the foregoing effect. Buyer
and the Addington Group have received such information from Seller and the
Companies as they have requested and acknowledge that there are no
representations or warranties, express or implied, except as expressly set
forth in this Agreement.
(g) CONTRACTS; COMMITMENTS. Except as set forth on Schedule
6(g), to the best of Buyer's and the Addington Group's knowledge, there are
no contracts, commitments or agreements (whether written or oral) to which
the Seller or any affiliate of the Seller (other than the Companies) is a
party pertaining to management consulting and employment agreements,
finder's fees, broker's or commission agreements, bonuses, or any binding
agreements or commitments to enter into same.
7. MUTUAL COVENANTS. Each of Seller and Buyer covenants and
agrees as follows:
(a) COOPERATION. Buyer and Seller shall cooperate with each
other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to ensure
the orderly transition of each Company from Seller to Buyer and to minimize
any disruption to the respective businesses of Seller, Buyer or any Company
that might result from the transactions contemplated hereby. Neither party
shall be required by this Section 7(a) to take any action that would
unreasonably interfere with the conduct of its business.
(b) BEST EFFORTS. (i) Subject to the terms and conditions of
this Agreement, each party will use its best efforts to cause the consents
of or releases set forth in Section 3 to be obtained and the satisfaction
of all other conditions to the Closing to occur.
(ii) Seller shall use its best efforts to take, and cause to be
taken, all actions and to do, and cause to be done, all things necessary,
proper or advisable under applicable laws and regulations and otherwise, to
obtain prior to Closing all authorizations, consents and waivers
("Consents") required from third parties to consummate and make effective
the transactions contemplated by this Agreement (which Consents shall
include without limitation those set forth on Schedule 4(a)), provided,
however, that nothing contained herein shall require Seller, Buyer or any
Company to assume any additional obligation or incur any additional
liability in order to obtain Consents. Buyer shall reasonably cooperate in
such efforts. Each party agrees to keep the other fully informed with
respect to such efforts. In the event any Consent is not obtained prior to
Closing despite the best efforts of Seller and Buyer, Buyer and Seller
shall negotiate in good faith a mutually acceptable solution to the failure
to obtain any required Consent, but if a mutually acceptable solution is
not reached and the failure to obtain such Consent would have material
adverse consequences to the transactions contemplated by this Agreement,
then in such event the party or parties disadvantaged by failure to obtain
such Consent shall have the right to terminate this Agreement without any
further liability to the other party.
(iii) Notwithstanding the foregoing provisions of Section
7(b)(ii), with respect to consents required with respect to the documents
specified on Schedule 3(b)(x) (the "Early Consents"), within 30 days of
execution of this Agreement, Seller shall advise Buyer of any Early
Consents Seller reasonably determines that it will not be able to obtain
prior to Closing. Buyer shall thereupon have the right for an additional
15 days to pursue the obtaining of such Early Consents which Seller has
determined are not obtainable. At the expiration of the aforesaid 45 day
period, if Buyer and Seller have not been able to agree on a mutually
acceptable solution to the failure to obtain any required Early Consent,
then Seller shall have the right for a period of five days following
expiration of such 45 day period to terminate this Agreement without any
further liability to Buyer.
(iv) Buyer will use its best efforts to obtain the financing
required hereunder, and shall make diligent applications for said
financing, and shall keep Seller reasonably informed of its progress in
that regard.
(c) ANTITRUST NOTIFICATION. Each of ARI and Buyer will as
promptly as practicable, but in no event later than five business days
following the execution and delivery of this Agreement, file with the
United States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form required
for the transactions contemplated hereby and any supplemental information
requested in connection therewith pursuant to the HSR Act. Any such
notification and report form and supplemental information will be in
substantial compliance with the requirements of the HSR Act. Each of Buyer
and Seller shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR
Act. Seller and Buyer shall keep each other apprised of the status of any
communications with, and inquiries or requests for additional information
from, the FTC and the DOJ and shall comply promptly with any such inquiry
or request. Each of Seller and Buyer will use its best efforts to obtain
any clearance required under the HSR Act for the purchase and sale of the
Shares. Each party shall be responsible for its filing fees relating to
the filing of HSR Act notification and report form.
(d) RECORDS. (i) On the Closing Date, Seller shall deliver or
cause to be delivered to Buyer all original agreements, documents, books,
records and files (collectively, "Records"), in the possession of Seller
relating to the business and operations of each Company to the extent not
then in the possession of such Company, subject to the following
exceptions:
(A) Buyer recognizes that certain Records may contain incidental
information relating to a Company or may relate primarily to subsidiaries
or divisions of Seller other than such Company, and that Seller may retain
such Records and shall provide copies of the relevant portions thereof to
Buyer; and
(B) Seller may retain any Tax returns, reports or forms, and
Buyer shall be provided with copies of such returns, reports or forms only
to the extent that they relate to any Company's separate returns or
separate Tax liability (including any successor liability under Treas. Reg.
1.1502-6 or otherwise).
(C) Seller shall be entitled to retain copies of such Records as
it may desire for financial reporting, tax, employee benefits, liability
and other business purposes.
(ii) After the Closing, upon reasonable written notice, Buyer
and Seller agree to furnish or cause to be furnished to each other and
their representatives, employees, counsel and accountants access, during
normal business hours, such information (including Records pertinent to
each Company) and assistance relating to any Company as is reasonably
necessary for financial reporting and accounting matters, the preparation
and filing of any Tax returns, reports or forms or the defense of any Tax
claim or assessment; PROVIDED, HOWEVER, that such access does not
unreasonably disrupt the normal operations of Seller, Buyer or such
Company.
(e) NON DISCLOSURE. Subject to applicable law or court order,
each party shall cause all such information of a non-public nature obtained
by it pursuant to this Agreement to be retained confidentially. If this
Agreement is terminated, each party shall promptly return all such
information of a non-public nature provided by the other party, shall
promptly destroy all analyses, compilations, studies or other documents of
or prepared by it from such non-public information, shall not use or
disclose any such non-public information to third parties and shall take
reasonable step to cause its agents and employees to comply with this
provision.
(f) LITIGATION SUPPORT. The parties shall cooperate with each
other in the defense or contest, make available their personnel, and
provide such testimony and reasonable access to their books and records as
shall be necessary in connection with the defense or contest of any action,
suit, proceeding, hearing, investigation, charge, complaint or claim which
questions the validity of this Agreement or seeks to enjoin, retrain or
prohibit the transactions contemplated by this Agreement.
(g) RELEASE. Each of the parties shall execute and deliver at
Closing a release substantially in the form of Exhibit E, mutually
releasing each other from any claims or liabilities except those arising
under the representations, warranties and covenants contained in this
Agreement.
8. FURTHER ASSURANCES. From time to time, as and when requested
by either party hereto, the other party shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions, as such
other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement.
9. INDEMNIFICATION. (a) TAX INDEMNIFICATION.
(i) Seller shall indemnify Buyer and its affiliates (including
each Company) and each of their respective officers, directors, employees
and agents and hold them harmless from (A) all liability for Taxes of any
Company for the Pre-Closing Tax Period, (B) all liability (as a result of
Treasury Regulation <section> 1.1502-6 or otherwise) for Taxes of Seller,
any Affiliated Group or any member of any Affiliated Group, (C) all
liability for federal, state, and local income taxes resulting from the
Section 338(h)(10) election (or any comparable election under state or
local Tax law) contemplated by Section 10(a) of this Agreement (other than
state and local income taxes arising out of a failure of any state or local
jurisdiction to treat a Section 338(h)(10) election in the same manner as
such election is treated for federal purposes), (D) Seller's share of the
Taxes for which it is responsible under Section 10(i) hereof, and (E) all
liability for reasonable legal fees and expenses attributable to any item
in clause (A), (B), (C) or (D) above.
(ii) Buyer shall, and shall cause each Company to, indemnify
Seller and its affiliates and each of their respective officers, directors,
employees and agents and hold them harmless from (A) all liability for
Taxes of each such Company (other than Taxes described in clauses (i)(A),
(i)(B), (i)(C) or (i)(D) of this Section 9(a)) (B) Buyer's share of the
Taxes for which it is responsible under Section 10(i) hereof, and (C) all
liability for reasonable legal fees and expenses attributable to any item
in clause (A) or (B) above.
(iii) In the case of any taxable period that includes (but does
not end on) the Closing Date (each a "Straddle Period"):
(A) real, personal and intangible property Taxes not reflected in
the Companies Combined Net Working Capital as adjusted pursuant to Section
1(d)("Property Taxes") of any Company attributable to the Pre-Closing Tax
Period shall be equal to the amount of such Property Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the
number of days during the Straddle Period that are in the Pre-Closing Tax
Period and the denominator of which is the number of days in the Straddle
Period; and
(B) the Taxes of any Company (other than Property Taxes and
severance Tax) not reflected in the Companies Combined Net Working Capital
as adjusted pursuant to Section 1(d) attributable to the Pre-Closing Tax
Period shall be computed as if such taxable period ended as of the close of
business on the Closing Date.
Seller's indemnity obligation in respect of Taxes for a Straddle Period not
reflected in the Companies Combined Net Working Capital as adjusted
pursuant to Section 1(d) shall initially be effected by its payment to
Buyer of the excess of (x) such Taxes for the Pre-Closing Tax Period over
(y) the amount of such Taxes paid by Seller or any of its affiliates (other
than any Company) at any time plus the amount of such Taxes paid or accrued
by any Company on or prior to the Closing Date. Seller shall initially pay
such excess to Buyer within five days prior to the due date of any return,
report or form with respect to Straddle Period Taxes. If the amount of
such Taxes paid by Seller or any of its affiliates (other than any Company)
at any time plus the amount of such Taxes paid or accrued by any Company on
or prior to the Closing Date exceeds the amount payable by Seller pursuant
to the preceding sentence, Buyer shall pay to Seller the amount of such
excess (a) in the case of Property Taxes, at the Closing (the "Closing Tax
Adjustment Amount") and (b) in all other cases, within five days prior to
the due date of the return, report or form with respect to the final
liability for such Taxes is required to be filed. The payments to be made
pursuant to this paragraph by Seller or Buyer with respect to a Straddle
Period shall be appropriately adjusted to reflect any final determination
(which shall include the execution of Form 870-AD or successor form) with
respect to Straddle Period Taxes.
(b) OTHER INDEMNIFICATION BY SELLER. Seller shall indemnify
Buyer, its affiliates (including each Company) and each of their respective
officers, directors, employees and agents and hold them harmless from any
loss, liability, claim, damage or expense (including reasonable legal fees
and expenses) suffered or incurred by any such indemnified party (other
than any relating to Taxes, for which indemnification provisions are set
forth in paragraphs (a) and (g) of this Section 9) to the extent arising
from (i) any breach of any representation or warranty of Seller contained
in this Agreement or in any Schedule, certificate, instrument or other
document delivered by it pursuant hereto (ii) any breach of any covenant of
Seller contained in this Agreement, or (iii) any Excluded Liabilities,
including any liability arising out of the assets, business or liabilities
(contingent or otherwise) of ARI and its subsidiaries (other than those
relating to the Companies). Seller's obligation to indemnify Buyer under
this Section 9(b) shall be subject to the following:
(A) There shall be no limitation on the amount of liability for
breach of representations contained in Sections 4(a), (b), (c), (d), (e),
(g) and (s);
(B) There shall be no limitation on the amount of liability for
the Excluded Liabilities or the Excluded Assets;
(C) For all other obligations to indemnify under Section 9(b),
Seller shall be responsible only for claims or losses (i) exceeding
$300,000.00 and only to the extent exceeding $300,000.00, (ii) of which
Seller is notified pursuant to Section 17 within one year of the Closing.
(c) INDEMNIFICATION BY BUYER. Buyer shall indemnify Seller, its
affiliates, and each of their respective officers, directors, employees and
agents and hold them harmless from any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or incurred
by any such indemnified party to the extent arising from (i) any breach of
any representation or warranty of Buyer contained in this Agreement or in
any Schedule, certificate, instrument or other document delivered by it
pursuant hereto, (ii) any breach of any covenant of Buyer contained in this
Agreement, (iii) any breach of the covenant of Buyer contained in this
Agreement obligating Buyer to immediately notify Seller of any planned or
intended closing of employment sites or layoff of employees, involving any
Company's employment sites or employees existing immediately prior to the
Closing, where such closing or layoff may or will be sufficient to invoke
coverage of the Worker Adjustment and Retraining Notification Act of 1989
for such Company, (iv) any Assumed Liabilities, (v) any liabilities or
obligations of any Company arising from violations of the covenants
contained in Section 5B(d) and for which Seller did not give its consent,
or (vi) any liabilities or obligations of any Company whether arising from
events which occur prior to, on or after the Closing Date except to the
extent Seller has breached any representation or warranty with respect
thereto and except for any Excluded Liabilities. Buyer's obligation to
indemnify under this Section 9(c) shall be subject to the following:
(A) There shall be no limitation on the amount of liability for
breach of representations contained in Section 6(a);
(B) There shall be no limitation on the amount of liability for
the Assumed Liabilities or for any liabilities or obligations of any
Company (whether arising from events which occur prior to, on or after the
Closing Date) except to the extent Seller has breached any representation
or warranty with respect thereto and except for Excluded Liabilities; and
(C) For all other obligations to indemnify under Section 9(c),
Buyer shall be responsible only for claims or losses (i) exceeding
$300,000.00 and only to the extent exceeding of $300,000.00, (ii) of which
Buyer is notified pursuant to Section 17 within one year of the Closing.
(d) LOSSES NET OF INSURANCE, ETC. The amount of any loss,
liability, claim, damage, expense or Tax for which indemnification is
provided under this Section 9 shall be net of any amounts recovered or
recoverable by the indemnified party under insurance policies with respect
to such loss, liability, claim, damage, expense or Tax and shall be
(i) increased to take account of any net Tax cost incurred by the
indemnified party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (ii) reduced to take account of any net
Tax benefit available to and/or realized by the indemnified party arising
from the incurrence or payment of any such loss, liability, claim, damage,
expense or Tax. In computing the amount of any such Tax cost or Tax
benefit, the indemnified party shall be deemed to recognize all other items
of income, gain, loss, deduction or credit before any item arising from the
receipt of any indemnity recognizing payment hereunder or the incurrence or
payment of any indemnified loss, liability, claim, damage, expense or Tax.
(e) TERMINATION OF INDEMNIFICATION. The obligations to
indemnify and hold harmless a party hereto (i) pursuant to Section 9(a)
shall terminate 120 days after the time the applicable statute of
limitations with respect to the Tax liability in question expires (giving
effect to any extension thereof), (ii) pursuant to Section 9(b)(i) shall
terminate when the applicable representation or warranty terminates
pursuant to Section 13, (iii) pursuant to Section 9(h)(i) shall not
terminate, (iv) with respect to any Excluded Liability including any
liability arising out of the assets, business or liabilities (contingent or
otherwise) of ARI and its subsidiaries (other than those relating to the
Companies) shall not terminate, (v) with respect to the Assumed
Liabilities, and any liabilities or obligations of the Companies (whether
arising from events which occur prior to, on or after the Closing Date to
the extent that Seller has breached any representation or warranty with
respect thereto) shall not terminate, and (vi) pursuant to any other
provision to indemnify and hold harmless hereunder shall terminate at the
close of business one year following the Closing Date; PROVIDED, HOWEVER,
that as to clauses (i) and (ii) above such obligations to indemnify and
hold harmless shall not terminate with respect to any item as to which the
person to be indemnified or the related party hereto shall have, before the
expiration of the applicable period, previously made a claim by delivering
a notice (stating in reasonable detail the basis of such claim) to the
indemnifying party.
(f) PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN UNDER
SECTIONS 9(A)). In order for a party (the "indemnified party") to be
entitled to any indemnification provided for under this Agreement (other
than under Sections 9(a) or (h)(i)) in respect of, arising out of or
involving a claim or demand made by any person, firm, governmental
authority or corporation against the indemnified party (a "Third Party
Claim"), such indemnified party must notify the indemnifying party in
writing, and in reasonable detail, of the Third Party Claim within
10 business days after receipt by such indemnified party of written notice
of the Third Party Claim; PROVIDED, HOWEVER, that failure to give such
notification shall not affect the indemnification provided hereunder except
and unless to the extent the indemnifying party shall have been materially
prejudiced as a result of such failure (the indemnifying party shall not be
liable for any expenses incurred during the period in which the indemnified
party failed to give such notice). Thereafter, the indemnified party shall
deliver to the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Third Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected
by the indemnifying party and reasonably satisfactory to the indemnified
party. Should the indemnifying party so elect to assume the defense of a
Third Party Claim, the indemnifying party will not be liable to the
indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall have
the right to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the indemnifying
party, it being understood that the indemnifying party shall control such
defense. The indemnifying party shall be liable for the fees and expenses
of counsel employed by the indemnified party for any period during which
the indemnifying party has not assumed the defense thereof (other than
during any period in which the indemnified party shall have failed to give
notice of the Third Party Claim as provided above). If the indemnifying
party chooses to defend or prosecute any Third Party Claim, all of the
parties hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information
which are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient and reasonable basis to
provide additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party shall have assumed the
defense of a Third Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld or delayed).
(g) PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS. If
either Seller or Buyer receives a written claim from any taxing authority
that, if successful, would result in an indemnity payment to Buyer, Seller
or one of their respective affiliates (a "Tax Claim"), the party receiving
such Tax Claim shall promptly notify the other party in writing of such Tax
Claim.
With respect to any Tax Claim (other than those relating solely
to Taxes of any Company for a Straddle Period), the indemnifying party
shall control all proceedings taken in connection with such Tax Claim
(including, without limitation, selection of counsel) and, without limiting
the foregoing, may in its sole discretion forgo any and all administrative
appeals, proceedings, hearings and conferences with any taxing authority
with respect thereto, and may, in its sole discretion, either pay the Tax
claimed and sue for a refund where applicable law permits such refund suits
or contest such Tax Claim in any permissible manner. The indemnifying
party shall, however, consider in good faith the advice of the indemnified
party concerning the most appropriate forum in which to proceed and other
related matters (it being understood, however, that all such decisions
shall be left to the sole discretion of the indemnifying party). Buyer and
Seller shall jointly control all proceedings taken in connection with any
Tax Claim relating solely to Taxes of any Company for a Straddle Period
except for proceedings relating to Taxes of an Affiliated Group, which
shall be controlled by Seller. Buyer, Seller, any Company and each of
their respective affiliates shall cooperate with each other in contesting
any Tax Claim, which cooperation shall include, without limitation, the
retention and (upon request) the provision of records and information to
the other party that are reasonably relevant to such Tax Claim.
(h) The aggregate liability of Seller under this Section 9 shall
not exceed the Purchase Price. The sole and exclusive remedy of Buyer for
damages exceeding such amount shall be a right of rescission.
(i) In no event shall either Buyer or Seller or any of their
respective affiliates, directors, officers, agents or attorneys be liable
for any indirect, special, extraordinary or consequential damages under
this Agreement or with respect to the transactions contemplated hereunder
or in the agreements attached as Exhibits hereto unless specifically and
expressly permitted by the terms and provisions thereof.
(j) The Addington Group hereby jointly and severally, guarantee
the Indemnification obligations of the Buyer to Seller specified under
Section 9(a)(ii) and Section 9(c).
(k) ARI hereby guarantees the Indemnification obligations of the
Seller to Buyer specified under Section 9(a)(i) and Section 9(b).
10. TAX MATTERS. (a) Buyer and Seller shall timely make a
joint election under Section 338(h)(10) of the Code (and any comparable
election under state or local Tax law) with respect to each eligible
Company, and cooperate with each other in the completion and timely filing
of such election in accordance with the provisions of Regulation
<section> 1.338(h)(10)-1 (or any comparable provisions of state or local
Tax law) or any successor provision. Prior to the Closing, Seller and
Buyer shall negotiate in good faith an agreement to allocate the Purchase
Price and such allocation shall be set forth on Schedule 10(a) to be
attached hereto. Neither Seller nor Buyer (nor any of their respective
affiliates) shall take any position on any Tax return or with any taxing
authority that is inconsistent with the purchase price allocation set forth
on Schedule 10(a).
(b) For any Straddle Period, Buyer shall timely prepare and file
with the appropriate authorities all Tax returns, reports and forms (other
than Tax returns, reports and forms of an Affiliated Group) required to be
filed and will pay all Taxes due with respect to such returns, reports and
forms; PROVIDED that Seller will reimburse Buyer (in accordance with the
procedures set forth in Section 9(a)) for any amount owed by Seller
pursuant to Section 9(a) with respect to the taxable periods covered by
such returns, reports or forms. For any Straddle Period, Seller shall
timely prepare and file all Tax returns, reports and forms of an Affiliated
Group and Buyer shall cause the eligible Companies to consent to be
included in such returns. For any taxable period of any Company that ends
on or before the Closing Date, other than for returns, reports and forms
which have been previously filed, Seller shall timely prepare at its own
expense and furnish to such Company (other than Tax returns, reports and
forms of an Affiliated Group) all Tax returns, reports and forms required
to be filed, and will pay all Taxes due with respect to such returns,
reports and forms in accordance with the provisions of Section 9(a). Buyer
and Seller agree to cause each Company to file all Tax returns, reports and
forms for the period including the Closing Date on the basis that the
relevant taxable period ended as of the close of business on the Closing
Date, unless the relevant taxing authority will not accept a return, report
or form filed on that basis.
(c) Seller, each Company and Buyer shall reasonably cooperate,
and shall cause their respective affiliates, officers, employees, agents,
auditors and representatives reasonably to cooperate, in preparing and
filing all returns, reports and forms relating to Taxes, including
maintaining and making available to each other all records necessary in
connection with Taxes and in resolving all disputes and audits with respect
to all taxable periods relating to Taxes. Buyer and Seller recognize that
each party and their respective affiliates will need access, from time to
time, after the Closing Date, to certain accounting and Tax records and
information held by any Company or Seller to the extent such records and
information pertain to events occurring prior to the Closing Date;
therefore, Buyer, Seller and their respective affiliates agree, and Buyer
agrees to cause each Company, (i) to use its reasonable efforts to properly
retain and maintain such records until such time as the other party agrees
that such retention and maintenance is no longer necessary, and (ii) to
allow Seller, Buyer and their respective agents and representatives (and
agents or representatives of any of their affiliates), at times and dates
mutually acceptable to the parties, to inspect, review and make copies of
such records as such party may deem necessary or appropriate from time to
time, such activities to be conducted during normal business hours and at
the expense of the party requesting such copies.
(d) Any refunds or credits of Taxes of any Company for any
taxable period ending on or before the Closing Date shall be for the
account of Seller. Any refunds or credits of Taxes of any Company for any
taxable period beginning after the Closing Date shall be for the account of
the Buyer. Any refunds or credits of Taxes of any Company for any Straddle
Period shall be apportioned between Seller and Buyer in accordance with the
formula in Section 9(a) as it relates to a Straddle Period. Other than for
refunds or credits of an Affiliated Group, Buyer shall, if Seller so
requests and at Seller's expense and if Buyer obtains, at Seller's expense,
an opinion from outside tax counsel that such action does not cause Buyer
material harm, cause any Company to file for and obtain any refunds or
credits to which Seller is entitled under this Section 10(d). Buyer and
Seller shall jointly control the presentation of any such refund claim made
on behalf of Seller. Buyer shall cause each Company to forward to Seller
any such refund due to Seller within 10 days after the refund is received
(or reimburse Seller for any such credit within 10 days after the credit is
allowed or applied against other Tax liability); PROVIDED, HOWEVER, that
any such amounts payable to Seller shall be net of any Tax cost to Buyer or
such Company, as the case may be, attributable to the receipt of such
refund. Notwithstanding the foregoing, the control of the prosecution of a
claim for refund of Taxes paid pursuant to a deficiency assessed subsequent
to the Closing Date as a result of an audit shall be governed by the
provisions of Section 9(g).
(e) Seller shall be responsible for filing at its own expense
any amended consolidated, combined or unitary Tax returns, reports or forms
for taxable years ending on or prior to the Closing Date which are required
as a result of examination adjustments made by the Internal Revenue Service
or by the applicable state, local or foreign taxing authorities for such
taxable years as finally determined. For those jurisdictions in which
separate Tax returns are filed by any Company, any required amended returns
resulting from such examination adjustments, as finally determined, shall
be prepared by Seller and furnished to such Company for approval (which
approval should not be unreasonably withheld), signature and filing at
least 30 days prior to the due date for filing such returns.
(f) Seller shall deliver to Buyer at the Closing a certificate
stating that Seller is not a "foreign person" within the meaning of United
States Treasury regulations Section 1.1445-2T(b)(2), in the form specified
by such regulation.
(g) On the Closing Date, Buyer will cause each Company to
conduct its business in the ordinary course in substantially the same
manner as presently conducted and on the Closing Date will not permit such
Company to effect any extraordinary transactions (other than any such
transactions expressly required by applicable law or by this Agreement)
that could result in Tax liability to such Company in excess of Tax
liability associated with the conduct of its business in the ordinary
course.
(h) Seller shall cause the provisions of any Tax sharing or
allocation agreement to which any Company is a party to be terminated on or
before the Closing Date, such that such Company shall not have any
obligation with respect to any such agreement after the Closing Date.
(i) Notwithstanding any other provision of this Agreement, the Buyer
and Seller shall each pay one half of the (i) expense for any
applicable sales, use or other transfer tax relating to the transfer of any
equipment, property or other assets conveyed pursuant to Section 3(c) of
this Agreement, (ii) income Taxes arising from the transfer of such
equipment, property or other assets, and (iii) liability for sales, use and
other state and local transfer and excise taxes arising from the Section
338(h)(10) election (or any comparable election under state or local Tax
law) contemplated by Section 10(a) of this Agreement.
(j) In the event of a delay in the making of any payment
relating to Taxes by Buyer, Seller, a Company or any other person required
pursuant to Sections 9 and 10 hereof beyond the period expressly provided
for herein, the payor shall, in addition, pay to the payee interest at the
prime rate of interest of as published in and quoted by THE WALL STREET
JOURNAL from time to time, which represents the base rate on corporate
loans posted by at least 75% of the nation's 30 largest banks.
11. ASSIGNMENT. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by Buyer or Seller
(including by operation of law in connection with a merger, or sale of
substantially all the assets, of Buyer or Seller) without the prior written
consent of the other party hereto; PROVIDED, HOWEVER, that Buyer may assign
its right to purchase the Shares hereunder to one or more subsidiaries or
affiliates of Buyer without the prior written consent of Seller; PROVIDED
FURTHER, HOWEVER, that no assignment shall limit or affect the assignor's
obligations hereunder.
12. NO THIRD-PARTY BENEFICIARIES. Except as may be provided in
Section 9, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give
or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
13. SURVIVAL OF REPRESENTATIONS. The representations and
warranties in this Agreement and in any other document delivered in
connection herewith shall survive the Closing solely for purposes of
Section 9 of this Agreement and (i) in the case of representations, other
than those contained in Sections 4(a), (b), (c), (d), (e), (g) and (s) and
in Sections 6(a)-(d) and (f), shall terminate at the close of business one
year following the Closing Date, (ii) in the case of the representations
contained in Sections 4(g) and (s) shall terminate upon the expiration of
the applicable statute of limitations and (iii) in the case of the
representations contained in Sections 4(a)-(e) and in Sections 6(a)-(d) and
(f) shall not terminate.
14. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
15. ATTORNEY FEES. Should any litigation be commenced
concerning this Agreement or the rights and duties of any party with
respect to it, the party prevailing shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum for such party's
attorney fees and expenses determined by the court in such litigation or in
a separate action brought for that purpose.
16. AMENDMENTS. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by both parties hereto.
Each party acknowledges that no officer, employee, agent or other
representative of the other party has authority, actual or apparent, to
bind such other party to any amendment or other modification of this
Agreement, except pursuant to a written document properly executed by an
authorized representative of such other party.
17. NOTICES. Notice and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telecopy by the sending party, as
follows:
(i) If to Buyer:
Addington Acquisition Company, Inc.
1500 North Big Run Road
Ashland, Kentucky 41102
(Telecopy No. (606) 928-9527)
Attention: Larry Addington
With copies to:
Kevin J. Hable, Esq.
Wyatt, Tarrant & Combs
2800 Citizens Plaza
Louisville, Kentucky 40202
(Telecopy No. (502) 589-0308)
(ii) If to Seller:
Addington Resources, Inc.
771 Corporate Drive
Suite 1000
Lexington, Kentucky 40503
(Telecopy No. (606) 223-4178)
Attention: R. Douglas Striebel,
Chief Financial Officer
With copies to:
Howard P. Berkowitz
Chairman of the Board
888 Seventh Avenue
New York, New York 10106
(Telecopy No. (212 757-0577)
and
Stuart D. Freedman, Esq.
Schulte, Roth & Zabel
900 Third Avenue
New York, New York 10022
(Telecopy No. (212) 593-5955)
and
Paul E. Sullivan, Esq.
Brown, Todd & Heyburn
2700 Lexington Financial Center
Lexington, Kentucky 40507
(Telecopy No. (606) 231-0011)
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy, or on the date five business days after
dispatch by certified or registered mail if mailed, in each case delivered,
sent or mailed (properly addressed) to such party as provided in this
Section 17 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 17.
18. INTERPRETATION. The headings contained in this Agreement,
in any Exhibit or Schedule hereto and in the table of contents to this
Agreement, are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been
signed by each of the parties and delivered to the other party. For
purposes of this Section 19, a counterpart shall be deemed delivered when
transmitted by facsimile and upon receipt of confirmation of such
transmission by the delivering party.
20. ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules attached hereto, constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to
such subject matter.
21. FEES. (a) Each party to this Agreement shall pay all
expenses incurred by it or on its behalf in connection with the
preparation, authorization, execution and performance of this Agreement,
including, but not limited to, all fees and expenses of agents,
representatives, counsel and accountants.
(b) Each party to this Agreement shall hold the other party
harmless with respect to any broker's, finder's or other similar agent's
fee with respect to the transactions contemplated hereby claimed by any
broker, finder or similar agent engaged or employed by the indemnifying
party.
22. SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be
held invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof.
23. CONSENT TO JURISDICTION. Each of Buyer and Seller
irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court
of Boyd County, Kentucky, and (b) the United States District Court for the
Eastern District of Kentucky, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of Buyer and Seller agrees to commence any action, suit or
proceeding relating hereto either in the United States District Court for
the Eastern District of Kentucky or, if, for jurisdictional reasons, such
suit, action or other proceeding may not be brought in such court, in the
Circuit Court of Boyd County, Kentucky. Each of Buyer and Seller further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in Kentucky
with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of Buyer and
Seller irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or
the transactions contemplated hereby in (a) the Circuit Court of Boyd
County, Kentucky, or (b) the United States District Court for the Eastern
District of Kentucky, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
24. NON-SOLICITATION OF PERSONNEL. Except for the employees
whose names are set forth on Schedule 24 or otherwise agreed to by Seller
and Buyer in writing, Seller hereby agrees that for a period of one year
following the Closing Date neither it nor any person affiliated with it
will, directly or indirectly, solicit or recruit any employee of any
Company or any employee of Buyer or its affiliates previously employed by
any Company or otherwise request or cause any such employee to terminate
his or her employment with any Company or Buyer or its affiliates. Seller
acknowledges that the covenant contained in this Section is reasonable and
necessary to protect the legitimate business interests of Buyer.
25. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
26. AFFILIATE DEFINED. As used in this Agreement, the term
"affiliate" shall mean any person or entity that directly or indirectly
controls, is controlled by or is under common control with, any other
person or entity.
27. TERMINATION.
(a) If a condition to Buyer's obligation to close in Section
3(a) is not satisfied on or before December 31, 1995, then Buyer shall have
the right to either waive the condition and acquire the Shares or terminate
the parties obligation to close the sale of the Shares under this
Agreement. If Buyer elects to acquire the Shares, then Buyer shall not
seek indemnification from Seller with respect to the event or facts giving
rise to the failure of the condition. If Buyer elects to terminate the
parties' obligations to consummate the transactions contemplated by this
Agreement by reason of such failure, then neither party shall have any
liability to the other party in connection with the failure to close (other
than a failure caused by a party's breach of its obligations under this
Agreement), subject however to the provisions of Sections 1(h), 3(d), 7(e),
15 and 28.
(b) If a condition to Seller's obligation to close in Section
3(b) is not satisfied on or before December 31, 1995, then Seller shall
have the right to either waive the condition and sell the Shares or
terminate the parties obligation to close the sale of the Shares under this
Agreement. If Seller elects to sell the Shares, then Seller shall not seek
indemnification from Buyer with respect to the event or facts giving rise
to the failure of the condition. If Seller elects to terminate the
parties' obligations to consummate the transactions contemplated by this
Agreement by reason of such failure, then neither party shall have any
liability to the other party in connection with the failure to close (other
than a failure caused by a party's breach of its obligations under this
Agreement), subject however to the provisions of Sections 1(h), 3(d), 7(e),
15 and 28.
28. PUBLICITY. Through the period 30 days following Closing,
neither Seller nor Buyer shall issue any public announcement regarding the
terms of this Agreement or the transactions contemplated hereby without the
prior consent of the other party, unless required by law in which event
each party shall provide the other party with prior opportunity to comment
on any such public announcement. After the Closing, neither Buyer nor
Seller, nor any of their affiliates, shall use or disclose, or permit to be
used or disclosed, any confidential information that is in their possession
and which relates to the other parties to this Agreement and the Companies.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
ADDINGTON HOLDING COMPANY, INC.
By /s/ Howard Berkowitz
Name: Howard Berkowitz
Title: Chairman
ADDINGTON RESOURCES, INC.
By /s/ Howard Berkowitz
Name: Howard Berkowitz
Title: Chairman
ADDINGTON ACQUISITION COMPANY, INC.
By /s/ Larry Addington
Name: Larry Addington
Title:
/s/ Larry Addington
LARRY ADDINGTON
/s/ Robert Addington
ROBERT ADDINGTON
/s/ Bruce Addington
BRUCE ADDINGTON
258K166.4
<PAGE>
EXHIBIT A
[FORM OF OPINION OF BROWN, TODD & HEYBURN PLLC]
__________________, 1995
Addington Acquisition Company
1500 North Big Run Road
Ashland, Kentucky 41102
Gentlemen:
We have acted as special counsel to Addington Holding Company,
Inc., a Delaware corporation ("Addington Holding") and the
Companies (defined below) in connection with a Stock Purchase
Agreement (the "Agreement") dated as of September ___, 1995 by and
between Addington Holding and Addington Acquisition Company (the
"Buyer") regarding the sale by Addington Holding of all of the
issued and outstanding shares of common stock of Addington Mining,
Inc., Mining Technologies, Inc., Addwest Mining, Inc., Addington
Coal Holding, Inc., (each as well as Tennessee Mining, Inc., Mining
Technologies, Inc. Australia Pty. Ltd., Addcar Contracting Pty.
Ltd., Energy, Inc., and Addington Coal Sales, Inc., all subsidiaries
of the above, hereinafter referred to as "Company" and
collectively as the "Companies"). For purposes of this opinion
letter, we have also acted as special counsel to Addington
Resources, Inc., a Delaware corporation ("ARI"), with respect to
the Transaction Documents (as defined below) to which it is a
party. ARI and Addington Holding are sometimes referred to herein
as the "Addington Group".
Terms used in this opinion letter which are defined in the
Agreement shall have the meaning given those terms in the Agreement.
In connection with our representation of the Addington Group
and the Companies, we have examined the Agreement and its Exhibits
(collectively, the "Transaction Documents").
As counsel to the Addington Group and the Companies, we have
examined the originals or copies, certified or otherwise authenticated
to our satisfaction, of the corporate records of the
Addington Group and the Companies, and such other agreements,
documents, certificates, records or other instruments as we have
deemed necessary or advisable for purposes of rendering the
opinions expressed in this letter.
As to matters of fact, we have, when relevant facts were not
independently established by us, relied to the extent we deemed
such reliance proper upon certificates of public officials and
certificates and written statements of officers of the Addington
Group and the Companies.
We call your attention to the fact that while this firm
represents the Addington Group and the Companies on a regular
basis, any engagement of this firm has been limited to specific
matters as to which we were consulted by the Addington Group or the
Companies and there may be matters of a legal nature which may
affect the Addington Group or the Companies of which we have no
knowledge.
In basing the opinions and other matters set forth in this
letter on "our knowledge," the words "our knowledge" signify that,
in the course of representation of the Addington Group and the
Companies with respect to this matter, no information has come to
our attention that would give us actual knowledge or actual notice
that any such opinions or other matters are not accurate or that
any of the foregoing documents, certificates and information on
which we have relied are not accurate and complete. Except as
otherwise stated in this letter, we have undertaken no independent
investigation or verification of such matters.
In reaching the opinions set forth below, we have assumed the
following matters to be true without investigation by us and
without any actual knowledge that the following assumptions are
correct, but without any actual knowledge that the assumptions are
false:
(a) Each of the parties thereto (other than the Addington
Group and the Companies) has duly and validly executed and
delivered each instrument, document and agreement, including
without limitation, the Agreement, executed in connection with the
subject transaction to which such party is a signatory, and such
party's obligations set forth therein are its legal, valid and
binding obligations, enforceable in accordance with their
respective terms. All of the proceedings and undertakings which are
necessary in order for the Buyer to execute and deliver the
Agreement and consummate the transactions described in the
Agreement have been properly carried out in accordance with
applicable law;
(b) Each person executing any such instrument, document, or
agreement, including without limitation, the Agreement, on behalf
of any such party (other than the Addington Group and the Companies)
is duly authorized to do so;
(c) Each natural person executing any instrument, document or
agreement is legally competent to do so;
(d) There are no oral or written modifications of or
amendments to the Transaction Documents and there has been no
waiver of any of the provisions of the Transaction Documents by
actions or conduct of the parties or otherwise; and
(e) All documents submitted to us as originals are authentic,
all documents submitted to us as certified or photostatic copies
conform to the original documents, all signatures on all documents
submitted to us for examination are genuine, and all public records
reviewed are accurate and complete.
Based on the foregoing and subject to the qualifications set
forth below, it is our opinion that:
1. Each member of the Addington Group is a corporation duly
incorporated and validly existing under the laws of its state of
incorporation identified above.
2. Each of the Companies is a corporation duly incorporated
and validly existing under the laws of the jurisdiction of its
incorporation specified on Schedule 1 to the Agreement. Each
Company has full corporate power and authority to enable it to use
its corporate name and to own, lease or otherwise hold its
properties and assets and to carry on its business as presently
conducted. Each Company is duly qualified and in good standing to
do business in each jurisdiction specified on Schedule 1.
3. Each member of the Addington Group and each of the
Companies has full corporate power and authority to enter into the
Transaction Documents to which each is a party and to consummate
the transactions contemplated thereby.
4. All corporate acts and other proceedings required to be
taken by each member of the Addington Group and each of the
Companies and to authorize the execution, delivery and performance
of the Transaction Documents to which each is a party and the
consummation of the transactions contemplated thereby have been
duly and properly taken.
5. The Transaction Documents have been duly executed and
delivered by each member of the Addington Group and each of the
Companies which is a party to such Transaction Documents and the
Transaction Documents are the legal, valid and binding obligation
of each member of the Addington Group and each of the Companies
which is a party to such Transaction Documents, enforceable against
such members of the Addington Group and the Companies in accordance
with their terms.
6. The execution and delivery by members of the Addington
Group and by the Companies of the Transaction Documents to which
each is a party does not, and the performance and observance of the
terms thereof will not, violate any term or provision of the
Articles or Certificate of Incorporation, Bylaws or, to our
knowledge and based solely on a review of the corporate minute
books of each member of the Addington Group and the Companies,
other corporate actions of such members of the Addington Group or
any of the Companies.
7. All corporate actions necessary or appropriate for the
execution and delivery of the Transaction Documents by the
Addington Group and each of the Companies have been taken.
Qualifications
We are licensed to practice law in the Commonwealth of
Kentucky. We express no opinion with regard to any matter which
may be governed by the laws of the state or jurisdiction other than
the Commonwealth of Kentucky or the United States of America. As
to certain matters we have relied, with your consent, upon the
opinions of ______________________ and ___________________ of even
date herewith addressed to you.
Insofar as this opinion relates to the enforceability of any
document or instrument, it is subject to (a) all applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws and court decisions affecting the rights
of creditors generally, (b) limitations imposed upon creditors
generally by the constitutions of the United States of America, the
Commonwealth of Kentucky and other jurisdictions in which any of
the Addington Group's or any of the Companies' real or personal
properties are located, (c) general principles of equity regardless
of whether enforceability is considered in a proceeding at law or
in equity, and (d) limitations imposed by applicable law and court
decisions on the enforcement of certain of the remedy, waiver and
similar provisions of the Transaction Documents. We express no
opinion as to the extent to which any provision of the Transaction
Documents may be specifically enforced.
We express no opinion as to (a) title to any real estate or
personal property, (b) the adequacy or accuracy of any descriptions
of the Addington Group's or any of the Companies' real or personal
properties, (c) the operation or effect of or compliance with any
laws, rules or regulations relating to environmental matters or the
occupancy and use of any real estate, (d) the validity or
enforceability of any provision for recovery of attorneys' fees, except to
the extent expressly authorized in KRS 411.195, (e) the
enforceability of any choice of law provisions, (f) the validity or
enforceability of any provision purporting to determine the
jurisdiction whose laws shall govern the interpretation,
construction and enforcement of the Transaction Documents,
(g) the validity
or enforceability of any provision waiving the right to a jury
trial, (h) the validity or enforceability of any provision of the
Transaction Documents purporting to limit the Buyer's liability for
or to indemnify the Buyer against the consequences of its own
negligent acts or omissions, (i) the validity or enforceability of
any provision purporting to preclude the modification of the
Transaction Documents through conduct, custom, course of
performance, or course of action or dealing or purporting to waive
equitable rights or remedies, or (j) the validity or enforceability
of any provision purporting to require the payment or reimbursement
of fees, costs, expenses or other amounts which are unreasonable in
nature or amount.
This opinion letter is limited to the matters stated herein
and no opinion is implied or may be inferred beyond the matters
expressly stated. We undertake no obligation to update this
opinion based on events, changes in the law or other matters
occurring after the date hereof or to provide any notice to the
Buyer of any subsequent events, facts or other matters which might
affect the opinions given herein. This opinion letter is provided
to you at your request and is to be limited in its use to reliance
by the Buyer in consummating the transactions described in the
Transaction Documents. Other than the Buyer, no other person or
entity may rely or claim reliance upon this opinion.
Sincerely,
BROWN, TODD & HEYBURN PLLC
______________________________
Member
258K188<PAGE>
EXHIBIT B
[OPINION OF WYATT, TARRANT & COMBS]
____________, 1995
Addington Holding Company, Inc.
771 Corporate Drive
Suite 1000
Lexington, Kentucky 40503
Gentlemen:
We have acted as special counsel to Addington Acquisition
Company, Inc., a Kentucky corporation ("Buyer"), in connection with
the Stock Purchase Agreement dated as of September ___, 1995 (the
"Agreement"), between Addington Holding Company, Inc. and Buyer,
relating to Buyer's purchase of all of the issued and outstanding
shares of common stock (the "Shares"), of Addington Mining, Inc.,
Mining Technologies, Inc., Addwest Mining, Inc., Addington Coal
Holding, Inc. (each as well as Tennessee Mining, Inc., Mining
Technologies, Inc. Australia Pty. Ltd., Addcar Contracting Pty.
Ltd., Energy, Inc. and Addington Coal Sales, Inc., all subsidiaries
of the above, hereinafter referred to as "Company" and collectively
as the "Companies"). Capitalized terms used herein but not
otherwise defined are used as defined in the Agreement. Buyer's
obligations under the Agreement are guaranteed by Larry Addington,
Robert Addington and Bruce Addington (collectively, the "Addington
Group"). For purposes of this opinion, we have also acted as
special counsel for the Addington Group with respect to the
Transaction Documents (defined below) to which each is a party.
Buyer and the Addington Group are sometimes referred to herein as
the "Buyer Group".
In that connection, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such
documents, corporate records and other instruments as we have
deemed necessary or appropriate for the purposes of this opinion,
including the following documents (collectively, the "Transaction
Documents"): (i) the Agreement; and (ii) its Exhibits.
As to matters of fact, we have, when relevant facts were not
independently established by us, relied to the extent we deemed
such reliance proper upon certificates of public officials and
certificates and written statements of officers of the Buyer Group.
We call your attention to the fact that while this firm
represents the Buyer Group on a regular basis, any engagement of
this firm has been limited to specific matters as to which we were
consulted by the Buyer Group and there may be matters of a legal
nature which may affect the Buyer Group of which we have no
knowledge.
In basing the opinions and other matters set forth in this
letter on "our knowledge," the words "our knowledge" signify that,
in the course of representation of the Buyer Group with respect to
this matter, no information has come to our attention that would
give us actual knowledge or actual notice that any such opinions or
other matters are not accurate or that any of the foregoing
documents, certificates and information on which we have relied are
not accurate and complete. Except as otherwise stated in this
letter, we have undertaken no independent investigation or
verification of such matters.
In reaching the opinions set forth below, we have assumed the
following matters to be true without investigation by us and
without any actual knowledge that the following assumptions are
correct, but without any actual knowledge that the assumptions are
false:
(a) Each of the parties thereto (other than the Buyer Group)
has duly and validly executed and delivered each instrument,
document and agreement, including without limitation the Agreement,
executed in connection with the subject transaction to which such
party is a signatory, and such party's obligations set forth
therein are its legal, valid and binding obligations, enforceable
in accordance with their respective terms. All of the proceedings
and undertakings which are necessary in order for the Seller to
execute and deliver the Agreement and consummate the transactions
described in the Agreement have been properly carried out in
accordance with applicable law;
(b) Each person executing any such instrument, document, or
agreement, including without limitation the Agreement, on behalf of
any such party (other than the Buyer Group) is duly authorized to
do so;
(c) Each natural person executing any instrument, document or
agreement is legally competent to do so;
(d) There are no oral or written modifications of or
amendments to the Transaction Documents and there has been no
waiver of any of the provisions of the Transaction Documents by
actions or conduct of the parties or otherwise; and
(e) All documents submitted to us as originals are authentic,
all documents submitted to us as certified or photostatic copies
conform to the original documents, all signatures on all documents
submitted to us for examination are genuine, and all public records
reviewed are accurate and complete.
Based upon the foregoing and subject to the qualifications set
forth below, it is our opinion that:
1. Buyer is a corporation duly incorporated and validly
existing under the laws of the state of its incorporation identified above.
2. Buyer has full corporate power and authority to enable it
to use its corporate name and to own, lease or otherwise hold its
properties and assets and to carry on its business as presently
conducted.
3. Buyer has full corporate power and authority to enter
into the Transaction Documents to which it is a party and to
consummate the transactions contemplated thereby.
4. All corporate acts and other proceedings required to be
taken by Buyer and to authorize the execution, delivery and
performance of the Transaction Documents to which it is a party and
the consummation of the transactions contemplated thereby have been
duly and properly taken.
5. The Transaction Documents to which it is a party have
been duly executed and delivered by Buyer and the Transaction
Documents to which it is a party are the legal, valid and binding
obligation of each member of Buyer, enforceable against Buyer in
accordance with their terms.
6. The execution and delivery by Buyer of the Transaction
Documents to which it is a party does not, and the performance and
observance of the terms thereof will not, violate any term or
provision of the Articles or Certificate of Incorporation, Bylaws
or, to our knowledge and based solely on a review of the corporate
minute books of Buyer, other corporate actions of Buyer.
7. All corporate actions necessary or appropriate for the
execution and delivery of the Transaction Documents by the Buyer
have been taken.
Qualifications
We are members of the Bar of the Commonwealth of Kentucky, and
we express no opinion as to any matters covered by any laws other
than the laws of the Commonwealth of Kentucky and the Federal laws
of the United States of America. As to matters governed by the
laws of the State of _______________, we have relied, with your
consent, upon the opinion of ____________________ of even date
herewith addressed to you.
Insofar as this opinion relates to the enforceability of any
document or instrument, it is subject to (a) all applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws and court decisions affecting the rights
of creditors generally, (b) limitations imposed upon creditors
generally by the constitutions of the United States of America, the
Commonwealth of Kentucky and other jurisdictions in which the
Buyer's real or personal properties are located, (c) general
principles of equity regardless of whether enforceability is
considered in a proceeding at law or in equity, and (d) limitations
imposed by applicable law and court decisions on the enforcement of
certain of the remedy, waiver and similar provisions of the
Transaction Documents. We express no opinion as to the extent to
which any provision of the Transaction Documents may be
specifically enforced.
We express no opinion as to (a) title to any real estate or
personal property, (b) the adequacy or accuracy of any descriptions
of the Buyer's real or personal properties, (c) the operation or
effect of or compliance with any laws, rules or regulations
relating to environmental matters or the occupancy and use of any
real estate, (d) the validity or enforceability of any provision
for recovery of attorneys' fees, except to the extent expressly
authorized in KRS 411.195, (e) the enforceability of any choice of
law provisions, (f) the validity or enforceability of any provision
purporting to determine the jurisdiction whose laws shall govern
the interpretation, construction and enforcement of the Transaction
Documents, (g) the validity or enforceability of any provision
waiving the right to a jury trial, (h) the validity or
enforceability of any provision of the Transaction Documents
purporting to
limit the Seller's liability for or to indemnify the Seller against
the consequences of its own negligent acts or omissions, (i) the
validity or enforceability of any provision purporting to preclude
the modification of the Transaction Documents through conduct,
custom, course of performance, or course of action or dealing or
purporting to waive equitable rights or remedies, or (j) the
validity or enforceability of any provision purporting to require
the payment or reimbursement of fees, costs, expenses or other
amounts which are unreasonable in nature or amount.
This opinion letter is limited to the matters stated herein
and no opinion is implied or may be inferred beyond the matters
expressly stated. We undertake no obligation to update this
opinion based on events, changes in the law or other matters
occurring after the date hereof or to provide any notice to the
Seller of any subsequent events, facts or other matters which might
affect the opinions given herein. This opinion letter is provided
to you at your request and is to be limited in its use to reliance
by the Seller in consummating the transactions described in the
Transaction Documents. Other than the Seller, no other person or
entity may rely or claim reliance upon this opinion.
Sincerely,
WYATT, TARRANT & COMBS
By____________________________
258K191
<PAGE>
EXHIBIT C
INDEMNITY AGREEMENT
THIS IS AN INDEMNITY AGREEMENT dated as of __________, 1995,
among ADDINGTON ACQUISITION COMPANY ("AAC"), LARRY ADDINGTON,
ROBERT ADDINGTON and BRUCE ADDINGTON (collectively, the "Addington
Group"), ADDINGTON RESOURCES, INC. ("ARI") and ADDINGTON HOLDING
COMPANY, INC. ("Addington Holding"), (Addington Holding, together
with ARI, collectively "Addington").
Recitals
Reference is made to that certain Stock Purchase Agreement
(the "Stock Purchase Agreement") dated September ___, 1995, between
AAC and Addington Holding pursuant to which Addington Holding sold
to AAC all of the issued and outstanding stock of certain
subsidiaries (together with their respective subsidiaries, collectively,
the "Companies").
Reference is hereby made to all guaranty obligations of ARI or
AHC for the benefit of the Companies, including, but not limited
to, the guaranty obligations referred to on Schedule A to this
Agreement, and all obligations of ARI under bonds for the benefit
of the Companies, including, but not limited to, the bonds
described on Schedule B to this Agreement (the guaranty and bond
obligations are collectively referred to as the "ARI Obligations").
In connection with the transactions contemplated by the Stock
Purchase Agreement, AAC and the Addington Group have agreed to
execute and deliver this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of
the parties to this Agreement, the parties agree as follows:
WITNESSETH:
1. Each of AAC and the Addington Group, jointly and
severally, (each an "Indemnitor", and collectively, the "Indemnitors")
hereby agrees to indemnify, defend and hold Addington and its or
their respective agents, directors, officers, attorneys and
affiliates (individually, an "Indemnified Party" and collectively,
the "Indemnified Parties") harmless from and against any loss,
liability, claim, damage and expense (including reasonable legal
fees and expenses) suffered or incurred by an Indemnified Party
under the ARI Obligations.
2. In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement arising out of or
involving a claim or demand made by any person, firm, governmental
authority or corporation against the Indemnified Party (a "Third
Party Claim"), such Indemnified Party must notify the Indemnitors
in writing, and in reasonable detail, of the Third Party Claim
within 10 business days after receipt by such Indemnified Party of
written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the
indemnification provided hereunder except and unless to the extent the
Indemnitors shall have been actually prejudiced as a result of such
failure (the Indemnitors shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to
give such notice). Thereafter, the Indemnified Party shall deliver
to the Indemnitors, within five business days after the Indemnified
Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating
to the Third Party Claim.
3. If a Third Party Claim is made against an Indemnified
Party, the Indemnitors will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnitors and reasonably
satisfactory to the Indemnified Party. Should the Indemnitors so
elect to assume the defense of a Third Party Claim, the Indemnitors
will not be liable to the Indemnified Party for legal expenses
subsequently incurred by the indemnified party in connection with
the defense thereof. If the Indemnitors assume such defense, the
Indemnified Party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate
from the counsel employed by the Indemnitors, it being understood
that the Indemnitors shall control such defense. The Indemnitors
shall be liable for the fees and expenses of counsel employed by
the Indemnified Party for any period during which the Indemnitors
have not assumed the defense thereof (other than during any period
in which the Indemnified Party shall have failed to give notice of
the Third Party Claim as provided above). If the Indemnitors
choose to defend or prosecute any Third Party Claim, all of the
parties hereto shall cooperate in the defense or prosecution
thereof. Such cooperation shall include the retention and (upon
the Indemnitors' request) the provision to the Indemnitors of
records and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually
convenient and reasonable basis to provide additional information and
explanation of any material provided hereunder. Whether or not the
Indemnitors shall have assumed the defense of a Third Party Claim,
the Indemnified Party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim
without the Indemnitors' prior written consent (which consent shall
not be unreasonably withheld).
4. Should any litigation be commenced concerning this
Agreement or the rights and duties of any party with respect to it,
the party prevailing shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for such party's
attorney fees and expenses determined by the court in such
litigation or in a separate action brought for that purpose.
5. No amendment to this Agreement shall be effective unless
it shall be in writing and signed by both parties hereto. Each
party acknowledges that no officer, employee, agent or other
representative of the other party has authority, actual or
apparent, to bind such other party to any amendment or other
modification of this Agreement, except pursuant to a written
document properly executed by an authorized representative of such
other party.
6. This Agreement constitutes the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. No representation,
promise or statement of intention has been made by either party
that is not embodied herein, and neither party shall be bound by or
liable for any alleged representation, promise or statement of
intention not so set forth.
7. If any provision of this Agreement or the application of
any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
9. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky, without
regard to its conflicts of law rules.
10. All notice or communications under this Agreement shall
be in writing and shall be (1) mailed by registered or certified
mail, return receipt requested, (2) hand delivered, or (3)
delivered by overnight carrier, to the parties at the addresses set
forth below their names on the signature page(s) to this Agreement,
and any notice so addressed and mailed or delivered to and/or
deposited with such carrier, freight prepaid, shall be deemed to
have been given when so mailed if mailed; or delivered if
hand-delivered; or delivered to such overnight courier if delivered by
overnight courier. The parties hereto may at any time, and from
time to time, change the address(es) to which notice shall be
mailed, transmitted or otherwise delivered by written notice
setting forth the changed address(es).
<PAGE>
IN WITNESS WHEREOF, the parties have executed this as of the
date set out on the preamble hereto, but actually on the date(s)
set forth below.
ADDINGTON ACQUISITION COMPANY
By________________________________
Title:____________________________
Date:_____________________________
Address:
1500 North Big Run Road
Ashland, Kentucky 41102
___________________________________
LARRY ADDINGTON
Date:_____________________________
Address:
1500 North Big Run Road
Ashland, Kentucky 41102
___________________________________
ROBERT ADDINGTON
Date:_____________________________
Address:
1500 North Big Run Road
Ashland, Kentucky 41102
___________________________________
BRUCE ADDINGTON
Date:_____________________________
Address:
1500 North Big Run Road
Ashland, Kentucky 41102
<PAGE>
ADDINGTON RESOURCES, INC.
By________________________________
Title:____________________________
Date:_____________________________
Address:
771 Corporate Drive
Suite 1000
Lexington, Kentucky 40503
Attn: President
ADDINGTON HOLDING COMPANY, INC.
By________________________________
Title:____________________________
Date:_____________________________
Address:
771 Corporate Drive
Suite 1000
Lexington, Kentucky 40503
Attn: President
297.14361
258K189
<PAGE>
EXHIBIT D
DEED
THIS DEED, made and entered into on this _____ day of
_____________, 1995, by GREEN VALLEY ENVIRONMENTAL CORP., a
Kentucky corporation, with a mailing address of P.O. Box 1545,
Ashland, Kentucky 41105-1545 ("Grantor") and ADDINGTON MINING,
INC., a Kentucky Corporation, with a mailing address of
_______________________, Ashland, Kentucky 41105-_____ ("Grantee").
W I T N E S S E T H :
That for and in consideration of the sum of ONE DOLLAR ($1.00)
cash in hand paid, and other good, valuable and sufficient
consideration, the receipt of which is hereby acknowledged, the
Grantor has granted, bargained, sold, and conveyed unto the
Grantee, its successors and assigns forever, all its right, title
and interest to the property described in Exhibit A hereto, which
is herein incorporated by reference as if set forth herein in its
entirety, SUBJECT TO the EXCEPTION and RESERVED EASEMENT set forth
therein.
The fair market value of the property being conveyed hereby is
$________________.
TO HAVE AND TO HOLD the same, together with all the rights,
privileges and appurtenances thereunto belonging or in anywise
appertaining unto the Grantee with covenants of Special Warranty.
IN WITNESS WHEREOF, the Grantor has hereunto set its hand on
the day and year first above written.
GRANTOR:
GREEN VALLEY ENVIRONMENTAL CORP.
By_________________________________
Its:_______________________________
STATE OF KENTUCKY )
)ss:
COUNTY OF BOYD )
The foregoing instrument was acknowledged before me by
___________________________, ____________________ of Green Valley
Environmental Corp., a Kentucky corporation, for and on behalf of
said corporation.
My Commission Expires:____________________________
___________________________________
NOTARY PUBLIC STATE AT LARGE
or county of ______________________
CONSIDERATION CERTIFICATE
Being first duly sworn, the undersigned Grantor and Grantee,
hereby certify that the consideration reflected in this Deed is the
full consideration paid for the subject property.
GRANTOR:
GREEN VALLEY ENVIRONMENTAL CORP.
By______________________________________
Its:____________________________________
GRANTEE:
ADDINGTON MINING, INC.
By:_____________________________________
Its:____________________________________
STATE OF KENTUCKY )
)SS:
COUNTY OF BOYD )
The foregoing Consideration Certificate was acknowledged and
sworn to before me this _____ day of ________________, 1995, by
___________________________, ________________ of Green Valley
Environmental Corp., a Kentucky corporation, Grantor.
_________________________________
NOTARY PUBLIC, STATE AT LARGE
OR COUNTY OF __________________
My commission expires: _________
STATE OF KENTUCKY )
)SS:
COUNTY OF BOYD )
The foregoing Consideration Certificate was acknowledged and
sworn to before me this _____ day of ________________, 1995, by
___________________________, _________________ of Addington Mining,
Inc., a Kentucky corporation, Grantee.
My commission expires: __________________________
_________________________________
NOTARY PUBLIC, STATE AT LARGE
OR COUNTY OF __________________
My commission expires: _________
THIS INSTRUMENT PREPARED BY:
______________________________
BROWN, TODD & HEYBURN PLLC
2700 Lexington Financial Center
250 West Main Street
Lexington, Kentucky 40507
(606) 231-0000
297.14361
258K143
<PAGE>
EXHIBIT "A"
[Insert Legal Description of Entire Approx. 1600 Acres]
EXCEPTING THEREFROM THE FOLLOWING PROPERTY:
EXCEPTION
[Insert Legal Description of Landfill Property not Being Conveyed]
RESERVED EASEMENT
Whereas, Green Valley Environmental Corp. and Addington
Mining, Inc. desire and intend for the following reserved easement
to be used and interpreted so that the designated areas will be
used by Green Valley Environmental Corp. only to the extent
reasonably necessary in connection with a landfill on the Excepted
Property and, further, Green Valley Environmental Corp. and
Addington Mining, Inc. agree to cooperate with one another in a
reasonable manner and in good faith in order to carry out the
foregoing stated desire and intent.
Now, therefore, there is excepted and reserved from this
conveyance in favor of Grantor, Green Valley Environmental Corp.,
its successors and assigns, and the above described property which
is excepted from this deed ("Excepted Property"), a permanent,
non-exclusive easement, over, across and through all of the property
being conveyed by this Deed to Grantee Addington Mining, Inc.
("Conveyed Property") for the following uses and purposes:
1. For ingress and egress to and from the Excepted Property;
2. For existing ground water monitoring wells and for the
construction and maintenance of additional wells in connection with
the use of the Excepted Property as a landfill, provided said wells
are required by federal, state or local laws or regulations;
3. For access to certain borrow areas as designated on a
certain map prepared by Kenvirons, Inc. and dated June 29, 1994, a
copy of which is attached hereto as Exhibit B, and the right to
take and remove earth, clay, rock or other natural materials from
such areas as is deemed reasonably necessary by Grantor, its
successors or assigns, for use in connection with the operation of
a landfill on the Excepted Property;
4. For the construction or maintenance of any roads deemed
reasonably necessary by Grantor or its successors or assigns in
connection with the operation of the landfill or subsequent uses of
the Excepted Property; and
5. For the use of any portion of the Conveyed Property
required by federal, state or local laws or regulations as a buffer
zone.
It is the intention of the parties that the use by the
Grantee, and its successors and assigns, of the Conveyed Property
shall at no time interfere with the use by the Grantor, and its
successors and assigns, of the Conveyed Property in connection with
the Excepted Property as a landfill; provided, however, that
Grantor agrees to make use of this Reserved Easement in such a
manner as reasonably necessary for its use of the Conveyed Property
as a landfill and, further, Grantor will make a good faith effort
to accommodate Grantee's desired use of the Conveyed Property.
In addition, Grantor agrees that as its need for the use of
various or designated areas located on the Conveyed Property is no
longer necessary, it will execute and deliver to Grantee partial
releases of the Reserved Easement as to those areas.
<PAGE>
EXHIBIT E
MUTUAL RELEASE
This Mutual Release is executed as of this ___ day of
_____________, 1995, by Addington Resources, Inc. (the "Company"),
on behalf of itself and its subsidiaries, successors and assigns
(collectively, the "ARI Companies"), and by Addington Mining, Inc.,
Mining Technologies, Inc., Addwest Mining Inc., Addington Coal
Holding Inc. and their respective subsidiaries (collectively, the
"Addington Companies"), their respective subsidiaries, successors
and assigns (collectively, "the Released Parties").
PREAMBLE: This Mutual Release is executed concurrently
with, and is contingent upon, the closing of the Stock Purchase
Agreement ("Agreement") dated _____________ among the Larry
Addington, Robert Addington, Bruce Addington, Addington Holding
Company and Addington Acquisition Company, Inc. The execution and
delivery of this Mutual Release is a material condition to the
closing of the transactions contemplated by the Agreement and
constitutes a part of the consideration for which the parties
bargained when entering into the Agreement.
A. Release by the Released Parties. Subject to
Section C below, the Released Parties hereby irrevocably and
unconditionally release all of the ARI Companies and their respective
successors and assigns from any and all claims, demands, suits, damages,
sums of money and/or judgments arising, in whole or in part, out of any
occurrence, state of facts, event, condition or happening that has
occurred at any time prior to and through the date of this Mutual
Release, whether past or present, known or unknown, matured or
unmatured, absolute or contingent, including, but not limited to,
any which has arisen out of their past or existing relationships
with any of the ARI Companies (individually, a "Claim" and
collectively, the "Claims"); and the Released Parties hereby agree
not to file a lawsuit to assert any such Claims.
B. Release by ARI Companies. Subject to Section C
below, the ARI Companies hereby irrevocably and unconditionally
release the Released Parties, and their respective successors and
assigns from any and all claims, causes of action, demands, suits,
damages, sums of money and/or judgments arising, in whole or in
part, out of any occurrence, state of facts, event, condition or
happening that has occurred at any time prior to and through the
date of this Mutual Release, whether past or present, known or
unknown, matured or unmatured, absolute or contingent, which have
arisen out of the Released Parties' past or existing relationships
with any of the ARI Companies (individually, a "Claim" and
collectively, the "Claims").
C. Scope of Release. Notwithstanding the provisions of
Section A and Section B above, the mutual releases by the Released
Parties and the ARI Companies do not, and shall not be construed
to, waive or release any of the provisions, rights, duties,
obligations or remedies under the Agreement.
ADDINGTON RESOURCES, INC.
On its own behalf and on behalf of
its subsidiaries
By: ______________________________
Title: ___________________________
ADDINGTON MINING, INC.
On its own behalf and on behalf of
its subsidiaries
By: ______________________________
Title: ___________________________
MINING TECHNOLOGIES, INC.
On its own behalf and on behalf of
its subsidiaries
By: ______________________________
Title: ___________________________
ADDWEST MINING INC.
On its own behalf and on behalf of
its subsidiaries
By: ______________________________
Title: ___________________________
ADDINGTON COAL HOLDING INC.
On its own behalf and on behalf of
its subsidiaries
By: ______________________________
Title: ___________________________
[Copies of the Schedules will be furnished supplementally to the Commission
upon request. See the Table of Contents for a list of the Schedules.]
EXHIBIT 20
Agreement and Plan of Corporate Separation
AGREEMENT made September 22, 1995, among Addington Resources, Inc., a
Delaware corporation ("ARI"), Addington Holding Company, Inc., a Delaware
corporation ("AHC"), and Larry Addington and Bruce Addington (collectively,
the "ARI Shareholders").
WHEREAS, ARI, through AHC, its wholly owned subsidiary, owns all of
the issued and outstanding shares of common stock of Belize River Fruit Co.
("Belize"), and AHC and Belize own all of the issued and outstanding shares
of common stock of Barton Creek Farm Limited ("Barton Creek") (such shares
of Belize and Barton Creek are collectively referred to as the "Company
Shares"). Belize and Barton Creek are each a "Company," and collectively,
the "Companies"; and
WHEREAS, in furtherance of its strategy to concentrate its resources
on its environmental businesses, ARI, and AHC, has determined that it is in
its best interests to divest certain of its subsidiaries engaged in
non-environmental businesses, including the Companies; and
WHEREAS, the ARI Shareholders are shareholders of ARI and are fully
informed of all matters relating to the Companies, having served as
directors and/or officers of the Companies; and
WHEREAS, ARI and AHC desire to split-off and distribute to the ARI
Shareholders, and the ARI Shareholders desire to acquire, all of the
Company Shares, in exchange for 1,000,000 shares of the issued and
outstanding common stock of ARI (the "ARI Shares") currently owned by the
ARI Shareholders; and
WHEREAS, the parties intend the exchange transaction to qualify, for
Federal income tax purposes, as a tax-free split-off under Section 355 of
the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the parties hereto hereby agree as follows:
1. TRANSFER OF COMPANY AND ARI SHARES. On the terms and subject to the
conditions of this Agreement, on the Closing Date (as hereafter defined),
ARI will distribute, transfer and deliver, or cause to be distributed,
transferred and delivered to the ARI Shareholders, free and clear of all
liens, claims and encumbrances of any kind, all of the Company Shares in
exchange for 1,000,000 ARI Shares owned by the ARI Shareholders, subject to
adjustment to account for any stock dividends, stock splits, or other
similar change in the number of ARI Shares outstanding as of the Closing
Date (the "Exchange"). Schedule 1 attached hereto sets out the number of
ARI Shares to be transferred and the number of Company Shares to be
received in exchange by each ARI Shareholder.
1. CLOSING. The closing of the transactions contemplated by this
Agreement shall occur on October 23, 1995 or as soon thereafter as all of
the conditions in Section 3 have been satisfied or waived, provided,
however, that if the Closing shall not have occurred on or before November
6, 1995, either party shall have the right to terminate all of its rights
and obligations hereunder (the "Closing Date").
3. CONDITIONS TO CLOSING.
(a) ARI SHAREHOLDERS' OBLIGATION. The obligation of the ARI
Shareholders to consummate the transactions contemplated by this Agreement
is subject to the satisfaction (or waiver by the ARI Shareholders) as of
the Closing of the following conditions:
(i) The representations and warranties of AHC and ARI made in
this Agreement shall be true and correct in all material respects as of the
date hereof and on and as of the Closing, as though made on and as of the
Closing Date, and AHC and ARI shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by AHC and ARI by the time of
the Closing.
(ii) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect, and no statute,
rule or regulation of any governmental authority or instrumentality shall
have been promulgated or enacted, as of the Closing which restrains or
prohibits the transaction contemplated herein.
(iii) No action, suit or other proceeding by any person to
restrain or prohibit the transaction contemplated herein or seeking
material damages in connection therewith shall be pending which in the
written opinion of the ARI Shareholders' counsel is reasonably likely to
succeed.
(iv) The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated.
(v) The conditions to the Buyer's obligations under that Stock
Purchase Agreement among AHC, ARI, Addington Acquisition Company, Inc., the
ARI Shareholders and Robert Addington shall have been satisfied or waived.
(b) ARI'S AND AHC'S OBLIGATION. The obligation of ARI and AHC
to consummate the transactions contemplated by this Agreement is subject to
the satisfaction (or waiver by ARI and AHC) as of the Closing of the
following conditions:
(i) The representations and warranties of the ARI Shareholders
made in this Agreement shall be true and correct in all material respects
as of the date hereof and on and as of the Closing, as though made on and
as of the Closing Date, and the ARI Shareholders shall have performed or
complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by the ARI
Shareholders by the time of the Closing;
(ii) No injunction or order of any court or administrative
agency or instrumentality shall be in effect, and no statute, rule or
regulation of any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which restrains or
prohibits the transaction contemplated herein.
(iii) No action, suit or other proceeding by any person to
restrain or prohibit the transaction contemplated herein or seeking
material damages in connection therewith shall be pending which in the
written opinion of ARI's and AHC's counsel is reasonably likely to succeed.
(iv) The waiting period under the HSR Act shall have expired or
been terminated.
(v) ARI and AHC shall have been released from all guarantees, if
any, given for the benefit of the Companies.
(vi) ARI and AHC shall have received all necessary approvals of
the transactions contemplated by this Agreement from the Boards of
Directors of ARI and AHC, and where applicable, the Companies.
(vii) ARI shall have received an opinion from special Delaware
counsel to the effect that the transactions contemplated in this Agreement
do not require the approval of the stockholders of ARI under Delaware
General Corporation Law.
(viii) The conditions to AHC's obligations under that Stock
Purchase Agreement among AHC, ARI, Addington Acquisition Company, Inc., the
ARI Shareholders and Robert Addington shall have been satisfied or waived.
4. REPRESENTATIONS AND WARRANTIES OF ARI AND AHC. ARI and AHC
jointly and severally represent and warrant that:
(a) Each of ARI and AHC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
full power and authority to enter into this Agreement and perform its
obligations hereunder.
(b) The execution, delivery and performance of this Agreement by ARI
and AHC have been duly authorized by all requisite corporate action and
will not conflict with or result in a violation of or default (with or
without notice or the lapse of time or both) under, or give rise to a lien,
encumbrance or right of termination, cancellation or acceleration of an
obligation under, the certificate or articles of incorporation or bylaws of
ARI, AHC or any Company, any material note, bond, mortgage, indenture or
deed of trust to which ARI, AHC or any Company is a party, or any judgment,
order or decree or material statute, law, ordinance, rule or regulation
applicable to ARI, AHC or any Company of any of their respective assets or
property. This Agreement has been duly executed and delivered by ARI and
AHC and constitutes a valid and binding obligation of ARI and AHC
enforceable against them in accordance with its terms. No consent or
approval of, or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign, or
any other third party is required to be obtained or made by or with respect
to ARI, AHC or either Company or any of their respective affiliates in
connection with the execution and delivery of this Agreement or the
performance of the transactions contemplated hereby other than compliance
with and filings under the HSR Act and the Securities and Exchange Act of
1934.
(c) Each Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation. Other than the Company Shares identified in Exhibit A,
neither Company is obligated to or bound by any agreement pursuant to which
it may become obligated to offer, issue or sell any of its security.
(d) The Company Shares to be transferred to the ARI Shareholders
under Section 1 hereof are, and on the Closing Date will be, all of the
issued and outstanding stock of the Companies, fully paid and
nonassessable, and free and clear of any liens, claims, charges,
encumbrances, security interests, options and restrictions of any kind.
Other than this Agreement, the Company Shares are not subject to any voting
trust agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend
rights or disposition of the Company Shares.
(e) To the knowledge of the directors and executive officers of ARI
and AHC (other than the ARI Shareholders), the Companies have conducted
business only in the ordinary course and have not made any payments to ARI
or AHC except in the ordinary course (whether in the form of
distributions, management fees, tax sharing payments or otherwise) since
June 30, 1995.
5. REPRESENTATIONS AND WARRANTIES OF THE ARI SHAREHOLDERS. The ARI
Shareholders jointly and severally represent and warrant that:
(a) This Agreement has been duly executed and delivered by the ARI
Shareholders and constitutes a valid and binding obligation of the ARI
Shareholders enforceable against them in accordance with its terms. No
consent or approval of, or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, or any other third party is required to be obtained or made by or
with respect to the ARI Shareholders in connection with the execution and
delivery of this Agreement or the performance of the transactions
contemplated hereby other than compliance with and filings under the HSR
Act and the Securities and Exchange Act of 1934.
(b) The 1,000,000 ARI Shares to be transferred by them to ARI under
Section 1 hereof are, and on the Closing Date will be, fully paid and
nonassessable and free and clear of any liens or encumbrances.
(c) The Company Shares are being acquired by the ARI Shareholders for
investment and not for the purpose of engaging in a distribution. The ARI
Shareholders acknowledge that the transferability of the Company Shares
will be restricted under the Securities Act of 1933 and applicable state
securities laws, and that the certificates representing the Company Shares
will be a legend to that effect.
6. COVENANTS OF ARI AND AHC. ARI and AHC covenant and agree as
follows:
Except as expressly permitted by the terms of this Agreement, from the
date hereof to the Closing, ARI and AHC will cause the business of each
Company to be conducted in the ordinary course in substantially the same
manner as presently conducted and will make all reasonable efforts
consistent with past practices to preserve its relationships with
customers, employees, suppliers and others with whom such Company deals.
In addition, except as otherwise expressly permitted by the terms of this
Agreement, ARI and AHC will not permit any Company to do any of the
following without the prior written consent of the ARI Shareholders
respectively:
(i) amend its Articles of Incorporation or By-laws;
(ii) declare or pay any dividend or make any other distributions
to its shareholders whether or not upon or in respect of any shares of its
capital stock except to the working extent that the capital of the
Companies on a combined basis as of the Closing Date shall not be greater
than zero;
(iii) redeem or otherwise acquire any shares of its capital stock
or issue any capital stock or any option, warrant or right relating thereto
or any securities convertible into or exchangeable for any shares of
capital stock;
(iv) grant to any employee, officer or director any increase in
compensation or benefits, or enter into any employment contract or adopt,
amend or terminate any profit sharing, compensation, bonus, deferred
compensation, pension, retirement or other employee benefit plan,
agreement, fund, trust or arrangement, for the benefit or welfare of any
employee;
(v) incur or assume any liabilities, capitalized leases,
operating leases, bonds, obligations or indebtedness for borrowed money or
guarantee any such liabilities, obligations or indebtedness;
(vi) permit, allow or suffer any of its assets to be subjected to
any mortgage, pledge, lien, encumbrance, restriction or charge of any kind;
(vii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(viii) except as contemplated by this Agreement, loan or advance
any amount to, or sell, transfer or lease any of its assets to, or enter
into any agreement or arrangement with either ARI or any of its affiliates;
(ix) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted
accounting principles;
(x) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof or otherwise acquire or
agree to acquire any assets (other than inventory) which are material
individually, or in the aggregate, to such Company;
(xi) make or incur any capital expenditure or expenditures which,
individually, is in excess of $5,000 or, in the aggregate, are in excess of
$25,000;
(xii) sell, lease or otherwise dispose of, or agree
to sell, lease or otherwise dispose of, any of its assets, except in the
ordinary course of business consistent with past practice;
(xiii) enter into any lease of real property;
(xiv) hire or terminate any employee of the Companies without
cause, or pay or agree to pay any severance or termination pay with respect
thereto; or
(xv) agree, whether in writing or otherwise, to do any of the
foregoing.
ARI and AHC shall not, and shall not permit any Company to, take
any action that would, or that could reasonably be expected to, result in
(i) any of its representations and warranties set forth in this Agreement
becoming untrue, or (ii) any of the conditions to the obligations of the
parties not being satisfied.
6. COVENANTS OF THE ARI SHAREHOLDERS. The ARI Shareholders shall
not take any action that would, or that could reasonably be expected to,
result in (i) any of their representations and warranties set forth in this
Agreement becoming untrue in any material respect, or (ii) any of the
conditions to their obligations under this Agreement not being satisfied in
any material respect;
7. TAX INDEMNIFICATION.
(a) ARI shall indemnify the ARI Shareholders and their affiliates
(including each Company) and each of their respective officers, directors,
employees and agents and hold them harmless from (i) all liability for
Taxes of any Company for the Pre-Closing Tax Period and (ii) all liability
(as a result of Treasury Regulation 1.1502-6 or otherwise) for Taxes of any
Affiliated Group or any member of any Affiliated Group and (iii) all
liability for reasonable legal fees and expenses attributable to any item
in clause (i) and (ii) above.
(b) The ARI Shareholders shall, and shall cause each Company to,
indemnify ARI and its affiliates and each of their respective officers,
directors, employees and agents and hold them harmless from (i) all
liability for Taxes of each such Company (other than Taxes described in
clauses (a)(i) or (a)(ii) of this Section 7) and (ii) all liability for
reasonable legal fees and expenses attributable to any item in clause (i)
above.
(c) In the case of any taxable period that includes (but does not end
on) the Closing Date (each a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property
Taxes") of any Company attributable to the Pre-Closing Tax Period shall be
equal to the amount of such Property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that are in the Pre-Closing Tax Period and the
denominator of which is the number of days in the Straddle Period; and
(ii) the Taxes of any Company (other than Property Taxes and
severance Tax) attributable to the Pre-Closing Tax Period shall be computed
as if such taxable period ended as of the close of business on the Closing
Date.
ARI's indemnity obligation in respect of Taxes for a Straddle Period that
are ARI's responsibility under this Section 7 shall initially be effected
by its payment to the relevant Company of the excess of (x) such Taxes for
the Pre-Closing Tax Period over (y) the amount of such Taxes paid by ARI or
any of its affiliates (other than any Company) at any time plus the amount
of such Taxes paid or accrued by any Company on or prior to the Closing
Date. ARI shall initially pay such excess to the relevant Company within
five days prior to the due date of any return, report or form with respect
to Straddle Period Taxes. If the amount of such Taxes paid by ARI or any
of its affiliates (other than any Company) at any time plus the amount of
such Taxes paid or accrued by any Company on or prior to the Closing Date
exceeds the amount payable by ARI pursuant to the preceding sentence, such
Company shall pay to ARI the amount of such excess (a) in the case of
Property Taxes, at the Closing and (b) in all other cases, within five days
prior to the due date of the return, report or form with respect
to the final liability for such Taxes is required to be filed.
(d) The payments to be made pursuant to this Section 7 by any person
with respect to Taxes shall be appropriately adjusted to reflect any final
determination with respect to such Taxes.
(e) For purposes of this Section 7, (A) "Tax" or "Taxes" shall mean
all Federal, state, local and foreign taxes, charges, fees, levies and
assessments, and any other governmental impositions of any kind whatsoever,
which may be imposed, no matter how measured or applied, including all
interest, penalties and additions imposed with respect to such amounts; (B)
"Pre-Closing Tax Period" shall mean all taxable periods ending on or before
the Closing Date and the portion ending on the Closing Date of any taxable
period that includes (but does not end on) such day; and (C) "Affiliated
Group" shall mean each affiliated group (within the meaning of Section 1504
of the Code) or consolidated, combined or unitary group (under any state or
local Tax law) of which any such Company is or has been a member and which
ARI is the common parent within the meaning of Section 1504 of the Code or
any analogous provision of state or local Tax law.
8. INDEMNIFICATION BY ARI. ARI shall indemnify the ARI Shareholders
and hold them harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or incurred by any
such indemnified party (other than any relating to Taxes, for which
indemnification provisions are set forth in Section 7) to the extent
arising from (i) any breach of any representation or warranty of ARI and
AHC contained in this Agreement, certificate, instrument or other document
delivered by it pursuant hereto, or (ii) any breach of any covenant of ARI
and AHC contained in this Agreement.
9. INDEMNIFICATION BY THE ARI SHAREHOLDERS. The ARI Shareholders
shall indemnify ARI, its affiliates, and each of their respective officers,
directors, employees and agents and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by any such indemnified party (other than
any relating to Taxes, for which indemnification provisions are set forth
in Section 7) to the extent arising from (i) any breach of any
representation or warranty of the ARI Shareholders contained in this
Agreement, certificate, instrument or other document delivered by it
pursuant hereto, or (ii) any breach of any covenant of the ARI shareholders
contained in this Agreement.
10. SURVIVAL OF REPRESENTATIONS. The representations and warranties
in this Agreement and in any other document delivered in connection
herewith shall survive the Closing solely for purposes of Sections 8 and 9
of this Agreement and (i) in the case of representations, other than those
contained in Sections 4(a), (b), (c) and (d) and in Sections 5(a)-(c),
shall terminate at the close of business one year following the Closing
Date, (ii) in the case of the representations contained in Sections 4(a)-
(d) and Sections 5(a)-(c) shall not terminate.
11. FURTHER AGREEMENTS.
(a) AMENDMENTS. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by both parties hereto. Each
party acknowledges that no officer, employee, agent or other representative
of the other party has authority, actual or apparent, to bind such other
party to any amendment or other modification of this Agreement, except
pursuant to a written document properly executed by an authorized
representative of such other party.
(b) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been
signed by each of the parties and delivered to the other party. For
purposes of this Section 11, a counterpart shall be deemed delivered when
transmitted by facsimile and upon receipt of confirmation of such
transmission by the delivering party.
(c) ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules attached hereto, constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to
such subject matter.
(d) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Kentucky.
(e) TAX RETURNS. ARI shall file any Tax returns in a manner
consistent with the stated intent of this Agreement to effect a tax-free
split-off under Section 355 of the Code.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
ADDINGTON HOLDING COMPANY, INC.
By /s/ Howard Berkowitz
Name Howard Berkowitz
Title Chairman
ADDINGTON RESOURCES, INC.
By /s/ Howard Berkowitz
Name Howard Berkowitz
Title Chairman
/s/ Larry Addington
LARRY ADDINGTON
/s/ Bruce Addington
BRUCE ADDINGTON
297.14361
258K142.2
SCHEDULE 1
(a) Title to Shares of Each Company. Seller is the record and
beneficial owner of a number of shares of each Company set forth opposite
its name below. Each company is duly organized in the state listed and
qualified as a foreign corporation, if any, in the state(s) listed.
<TABLE>
<CAPTION>
State of Incorporation
Company (Qualification)
<S> <C>
Barton Creek Farm Limited Belize
Belize River Fruit Co. Kentucky
(b) The authorized capital stock of each Company consists solely of
the following:
<CAPTION>
Company
<S> <C>
Barton Creek Farm Limited 49,999 shares issued to Belize River
Fruit Co.
1 share issued to AHC
Belize River Fruit Co. 1000 shares of stock authorized
No par value
100 shares issued and outstanding
<CAPTION>
ARI Shareholders' ARI Shares
<S> <C>
Larry Addington 850,000
Bruce Addington 150,000
</TABLE>
