INDEMNIFICATION AGREEMENT among ALPHA NATURAL RESOURCES, LLC, ALPHA NATURAL RESOURCES, INC., PREMIUM ENERGY, LLC, MATE CREEK ENERGY OF W. VA., INC. AND VIRGINIA ENERGY COMPANY, THE UNITHOLDERS OF POWERS SHOP, LLC, CERTAIN OF THE UNITHOLDERS OF...
EXHIBIT 2.4
THIS
AGREEMENT CONTAINS REPRESENTATIONS AND WARRANTIES THE PARTIES HERETO
MADE TO AND SOLELY FOR THE BENEFIT OF EACH OTHER. THE ASSERTIONS
EMBODIED IN THOSE REPRESENTATIONS AND WARRANTIES ARE QUALIFIED BY
INFORMATION IN CONFIDENTIAL DISCLOSURE SCHEDULES THAT THE PARTIES
HAVE EXCHANGED IN CONNECTION WITH SIGNING THE AGREEMENT. WHILE THE
REGISTRANT BELIEVES THAT THE SECURITIES LAWS DO NOT REQUIRE THE
INFORMATION CONTAINED IN THE DISCLOSURE SCHEDULES TO BE PUBLICLY
DISCLOSED, THE DISCLOSURE SCHEDULES DO CONTAIN INFORMATION THAT
MODIFIES, QUALIFIES AND CREATES EXCEPTIONS TO THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN THIS AGREEMENT. ACCORDINGLY, INVESTORS AND
SECURITY HOLDERS SHOULD NOT RELY ON THE REPRESENTATIONS AND
WARRANTIES AS CHARACTERIZATIONS OF THE ACTUAL STATE OF FACTS.
MOREOVER, INFORMATION CONCERNING THE SUBJECT MATTER OF THE
REPRESENTATIONS AND WARRANTIES MAY CHANGE AFTER THE DATE OF THE
AGREEMENT, WHICH SUBSEQUENT INFORMATION MAY OR MAY NOT BE FULLY
REFLECTED IN THE REGISTRANT’S PUBLIC DISCLOSURES.
EXCEPT FOR THE ESCROW AGREEMENT ATTACHED AS EXHIBIT A, THE ATTACHMENTS TO THIS
EXHIBIT LISTED IN THE TABLE OF CONTENTS HEREOF ARE NOT FILED HEREWITH, AS PROVIDED
IN ITEM 601(b)(2) OF REGULATION S-K PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE REGISTRANT AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY SUCH
OMITTED ATTACHMENT TO THE SECURITIES AND EXCHANGE COMMISSION UPON
REQUEST.
Execution Copy
INDEMNIFICATION AGREEMENT
among
ALPHA NATURAL RESOURCES, LLC,
ALPHA NATURAL RESOURCES, INC.,
PREMIUM ENERGY, LLC,
MATE CREEK ENERGY OF W. VA., INC. AND VIRGINIA ENERGY COMPANY,
THE UNITHOLDERS OF POWERS SHOP, LLC,
CERTAIN OF THE UNITHOLDERS OF XXXXXXXX ENERGY COMPANY, LLC
and
THE SHAREHOLDERS OF WHITE FLAME ENERGY, INC.,
PREMIUM ENERGY, INC.,
TWIN STAR MINING, INC. AND XXXXXXXXXX CONTRACTING, INC.
PREMIUM ENERGY, INC.,
TWIN STAR MINING, INC. AND XXXXXXXXXX CONTRACTING, INC.
Dated as of
September 23, 2005
September 23, 2005
Table of Contents
ARTICLE I — DEFINITIONS |
2 | |||
ARTICLE II
— ESCROW DEPOSIT |
5 | |||
2.1 Deposit |
6 | |||
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE XXXXXXXXXX PARTIES |
6 | |||
3.1 Authorization of Transaction |
6 | |||
3.2 Noncontravention |
6 | |||
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE ALPHA PARTIES |
6 | |||
4.1 Authorization of Transaction |
7 | |||
4.2 Noncontravention |
7 | |||
ARTICLE V — REMEDIES FOR BREACHES OF THE PURCHASE AGREEMENT |
8 | |||
5.1 Survival of Representations, Warranties and Covenants |
8 | |||
5.2 Indemnification Provisions for Benefit of the Alpha Parties |
8 | |||
5.3 Indemnification Provisions for Benefit of the Xxxxxxxxxx Parties |
11 | |||
5.4 Matters Involving Third Parties |
11 | |||
5.5 Matters not Involving Third Party Claims |
13 | |||
5.6 Determination of Adverse Consequences |
13 | |||
5.7 Other Indemnification Provisions |
13 | |||
5.8 Claims Against Escrow Amount |
13 | |||
5.9 Payment of Claims |
14 | |||
ARTICLE VI — MISCELLANEOUS |
14 | |||
6.1 Nature of Certain Obligations |
14 | |||
6.2 Press Releases and Public Announcements |
15 | |||
6.3 No Third-Party Beneficiaries |
15 | |||
6.4 Entire Agreement |
15 | |||
6.5 Succession and Assignment |
16 | |||
6.6 Counterparts |
16 | |||
6.7 Headings |
16 | |||
6.8 Notices |
16 | |||
6.9 Sellers Representative |
18 | |||
6.10 Governing Law |
18 | |||
6.11 Amendments and Waivers |
19 | |||
6.12 Severability |
19 | |||
6.13 Expenses |
19 | |||
6.14 Construction |
19 | |||
6.15 Incorporation of Exhibits, Annexes, and Schedules |
19 | |||
6.16 Specific Performance |
20 | |||
6.17 Arbitration |
20 |
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EXHIBITS, ANNEXES AND SCHEDULES
Exhibit A Escrow Agreement
Annex I
|
— | Exceptions to the Xxxxxxxxxx Parties Representations and Warranties | ||
Annex II
|
— | Exceptions to the Alpha Parties Representations and Warranties |
ii
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of September 23, 2005, between
(i) Alpha Natural Resources, LLC, a Delaware limited liability company, Alpha Natural Resources,
Inc., a Delaware corporation, and Premium Energy, LLC, a Delaware limited liability company,
(together, the “Alpha Parties”), and (ii) Mate Creek Energy of W. Va., Inc., a West Virginia
corporation (“Mate Creek”), and Virginia Energy Company, a Virginia corporation (“Virginia
Energy”), the unitholders of Powers Shop, LLC, a Virginia limited liability company (“Powers
Shop”), certain of the unitholders (the “Majority Xxxxxxxx Unitholders”) of Xxxxxxxx Energy
Company, LLC, a Virginia limited liability company, listed on the signature page of this Agreement
and the shareholders of each of Premium Energy, Inc., a West Virginia corporation (“Premium
Energy”), Twin Star Mining, Inc., a West Virginia corporation (“Twin Star”), Xxxxxxxxxx
Contracting, Inc., a West Virginia corporation, (“Xxxxxxxxxx Contracting”) and White Flame Energy,
Inc., a West Virginia Corporation (“White Flame”). Collectively, Mate Creek, Virginia Energy, the
unit holders of Powers Shop, the Majority Xxxxxxxx Unitholders, the shareholders of Premium Energy,
Twin Star, Xxxxxxxxxx Contracting and White Flame shall be referred to in this Agreement as the
“Xxxxxxxxxx Parties.” Collectively, the Alpha Parties and the Xxxxxxxxxx Parties shall be referred
to in this Agreement as the “Parties.” Capitalized terms not otherwise defined in this Agreement
have the meaning given such terms in Article I.
RECITALS
WHEREAS, various of the Alpha Parties and various of the Xxxxxxxxxx Parties are entering into
(a) that certain Acquisition Agreement dated as of September 23, 2005 (the “Xxxxxxxxxx Acquisition
Agreement”), (b) that certain Agreement and Plan of Merger dated as of September 23, 2005 (the “PE
Merger Agreement”) and (c) that certain Membership Unit Purchase Agreement dated as of September
23, 2005 (the “BE Purchase Agreement”) and together with the Xxxxxxxxxx Acquisition Agreement and
the PE Merger Agreement, collectively, the “Acquisition Agreements”) pursuant to which the Alpha
Parties will acquire from the Xxxxxxxxxx Parties (i) the mining, processing, transportation and
sale of coal produced by them in the State of West Virginia and the Commonwealths of Kentucky and
Virginia, (ii) the domestic trading of coal, including the purchase and resale of coal produced by
others and (iii) activities related to the foregoing conducted by the Xxxxxxxxxx Parties
(collectively, the “Business”);
WHEREAS, the Alpha Parties and the Xxxxxxxxxx Parties desire to provide for the terms upon
which they will indemnify each other with respect to certain matters relating to the transactions
contemplated by the Acquisition Agreements;
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
Unless otherwise expressly provided in this Agreement, the following terms, as used in this
Agreement, have the following meanings:
“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, Decrees, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court
costs and reasonable attorneys’ fees and expenses but shall not include punitive, exemplary or
consequential damages (except to the extent any such damages are included in a third party claim
for which an Alpha Indemnitee is entitled to indemnification under this Agreement).
“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person and, in the case of an
individual, includes the individual’s immediate family, and the trustees of a trust the
beneficiaries of which include any one or more of the foregoing.
“Alleghany Land Sublease” means that certain Lease dated July 15, 1970 from Island Creek Coal
Company to Pine Rock Coals, Inc. subsequently partially assigned to White Flame Energy.
“Alpha Indemnitees” means, collectively, the Alpha Parties and their respective Affiliates and
the officers, directors, and employees of the Alpha Parties and the respective Affiliates.
“Alpha Parties” has the meaning set forth in the preamble.
“Alpha Shares” has the meaning set forth in the Recitals to the PE Merger Agreement.
“Assumed Liabilities” means all of the “Assumed Liabilities” as defined in Article I of each
of the Xxxxxxxxxx Acquisition Agreement.
“Basket” has the meaning set forth in Section 5.2(c).
“Business” has the meaning set forth in the recitals.
“Business Day” means any day other than a Saturday, a Sunday or a United States federal or New
York State banking holiday.
“Cap” has the meaning set forth in Section 5.2(c).
“Claim for Indemnification” means a written notice by any of the Alpha Parties or the
Xxxxxxxxxx Parties to the other asserting a claim under Article V delivered in accordance with the
Escrow Agreement or Section 6.8, as the case may be; provided, however, that such notice shall be
sufficient if it provides a general description of the Adverse Consequences that the Indemnified
Party
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may suffer, with an estimate of the extent of the dollar amount of Adverse Consequences, but
only if such information can reasonably be determined at the time notice is given.
“Closing” means each “Closing” as defined in Section 2.7 of the Xxxxxxxxxx Acquisition
Agreement and the BE Purchase Agreement and Section 2.1(b) of the PE Merger Agreement.
“Closing Date” means the date of the Closing.
“Closing Price” shall mean the Weighted Average Daily Trading Price of Alpha Shares on the
principal exchange or automated quotation system on which Alpha Shares are listed during the 20
days on which Alpha Shares are traded prior to the date of the determination in question.
“Code” means the Internal Revenue Code of 1986, as amended.
“Crown Property” has the meaning set forth in Article I of the Xxxxxxxxxx Acquisition
Agreement.
“Decree” means any injunction, judgment, order, decree, charge or ruling of any applicable
Governmental Authority.
“Dispute” has the meaning set forth in Section 6.17.
“Entity” means a partnership, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a Governmental Authority.
“Environmental or Response Action” has the meaning set forth in Article I of the Xxxxxxxxxx
Acquisition Agreement.
“Escrow Agent” means XX Xxxxxx Chase Bank, N.A., as escrow agent pursuant to the Escrow
Agreement.
“Escrow Agreement” means the Escrow Agreement, in the form of Exhibit A to this Agreement, to
be entered into by the Xxxxxxxxxx Parties, the Alpha Parties and Escrow Agent at the Closing.
“Escrow Amount” means that number of Alpha Shares rounded to the nearest whole share equal to
the quotient obtained by dividing (x) $50,000,000 by (y) the Closing Price as of the Closing Date.
“Final Allocation” means each “Final Allocation” as defined in Section 10.13 of the Xxxxxxxxxx
Acquisition Agreement and the BE Purchase Agreement.
“Final Determination” has the meaning set forth in Section 5.9.
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“Governmental Authority” means any agency, authority, board, bureau, commission, court,
tribunal, department, office or instrumentality of any nature whatsoever or any governmental unit,
whether federal, state, county, district, city, other political subdivision, or taxing district,
foreign or otherwise, and whether now or hereafter in existence, or any officer or official thereof
acting in an official capacity.
“Indemnified Party” has the meaning set forth in Section 5.4.
“Indemnifying Party” has the meaning set forth in Section 5.4.
“Law” means any constitution, statute, code, ordinance, rule or regulation of any applicable
Governmental Authority.
“Liability” means any liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.
“Merger” had the meaning set forth in Section 2.1(a) of the PE Merger Agreement.
“Merger Consideration” has the meaning set forth in Section 2.2(b) of the PE Merger Agreement.
“Xxxxxxxxxx Indemnitees” means, collectively, the Xxxxxxxxxx Parties and their respective
Affiliates (which, after the Closing, shall exclude Xxxxxxxx Energy Company, LLC, Premium Energy,
LLC, Power Shop, Premium Energy, Twin Star, White Flame, and Xxxxxxxxxx Contracting), and the
officers, directors, employees, of the Xxxxxxxxxx Parties and their respective Affiliates.
“Xxxxxxxxxx Parties” has the meaning set forth in the preamble.
“Organizational Documents” means the articles of incorporation, certificate of incorporation,
charter, bylaws, articles or certificate of formation, regulations, operating agreement,
certificate of limited partnership, partnership agreement, and all other similar documents,
instruments or certificates executed, adopted, or filed in connection with the creation, formation,
or organization of a Person, including any amendments thereto.
“Person” means an individual or an Entity.
“Proceeding” means any action, litigation, suit, claim, dispute, demand, investigation,
review, hearing, charge, complaint or other judicial or administrative proceeding, at law or in
equity, before or by any Governmental Authority or arbitration or other dispute resolution
proceeding.
“Retained Assets” means each and all of the “Retained Assets” as defined in Article I of each
of the Acquisition Agreements.
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“Retained Debt” means each and all of the “Retained Debt” as defined in Article I of each of
the Acquisition Agreements.
“Retained Liabilities” means each and all of the “Retained Liabilities” as defined in Article
I of each of the Acquisition Agreements.
“Sellers Representative” means Xxxxx Xxxxxx.
“Share Consideration” has the meaning set forth in Section 2.2(b) of the PE Merger Agreement.
“Straddle Period” means a Tax period or year commencing before and ending after the Closing
Date.
“Straddle Return” means a Tax Return for a Straddle Period.
“Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, premium, windfall profits, environmental (including
taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.
“Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any required tax shelter disclosures and reporting, any
schedule or attachment thereto, and any amendment thereof.
“Third Party Claim” means any Proceeding by or before any Governmental Authority or any
arbitration or other alternative dispute resolution proceeding made or brought by any Person who is
not a Party or an Affiliate of a Party.
“Weighted Average Daily Trading Price” for a stated number of trading days shall mean the
product of (x) the average of the high and low sales prices for each of such days times (y) the
number of shares traded on each such day, all as would be reported in the official compilation of
trading information on the principal exchange or automated quotation system on which Alpha Shares
are listed, divided by (z) the total number of shares traded during all such days, as reported in
the official compilation of trading information on the principal exchange or automated quotation
system on which Alpha Shares are listed.
“White Flame IP” means the Department of the Army Permit under the provisions of Section 404
of the Clean Water Act in Public Notice No. 200001274-2 related to Surface Mine No. 10 and
associated Amendment No. 1.
ARTICLE II
ESCROW DESPOSIT
ESCROW DESPOSIT
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2.1 Deposit. Upon the terms and subject to the conditions of this Agreement, the
Xxxxxxxxxx Parties agree that, pursuant to Section 2.3(a)(v) of the PE Merger Agreement, at the
direction of the Xxxxxxxxxx Parties, Alpha Natural Resources, Inc. shall deposit the Escrow Amount,
when issued, into escrow at the Closing to be held by the Escrow Agent on the terms and subject to
the conditions of the Escrow Agreement. Each of the Xxxxxxxxxx Parties who are “Shareholders” as
defined in the PE Merger Agreement waive any right to or claim against the Share Consideration
except for the right to receive such Share Consideration pursuant to the operation of the Escrow
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE XXXXXXXXXX PARTIES
REPRESENTATIONS AND WARRANTIES OF THE XXXXXXXXXX PARTIES
Each of the Xxxxxxxxxx Parties represents and warrants to the Alpha Parties that the
statements contained in this Article III are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this Article III) with
respect to itself, except as set forth in Annex I attached hereto.
3.1 Authorization of Transaction. Such Xxxxxxxxxx Party has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations under this
Agreement. This Agreement has been duly executed by such Xxxxxxxxxx Party and constitutes the valid
and legally binding obligation of such Xxxxxxxxxx Party, as the case may be, enforceable against it
in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar Laws affecting creditor’s rights generally and general
principals of equity. Such Xxxxxxxxxx Party, as the case may be, need not give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in
order to consummate the transactions contemplated by this Agreement.
3.2 Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (a) violate any Law, Decree, or
other restriction of any Governmental Authority to which such Xxxxxxxxxx Party is subject or, if
such Xxxxxxxxxx Party is an Entity, any provision of its Organizational Documents or (b) conflict
with, result in a material breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement to which such
Xxxxxxxxxx Party, as the case may be, is a party or by which it is bound or to which any of its
assets are subject.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ALPHA PARTIES
Each of the Alpha Parties represents and warrants to the Xxxxxxxxxx Parties that the
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statements contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement throughout this Article IV)
with respect to itself, except as set forth in Annex II attached hereto.
4.1 Authorization of Transaction. Such Alpha Party has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations under this
Agreement. This Agreement has been duly executed by such Alpha Party and constitutes the valid and
legally binding obligation of such Alpha Party, enforceable against it in accordance with its terms
and conditions, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other
similar Laws affecting creditor’s rights generally and general principals of equity. Such Alpha
Party need not give any notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Authority in order to consummate the transactions contemplated by this
Agreement.
4.2 Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (a) violate any Law, Decree, or
other restriction of any Government Authority to which such Alpha Party is subject or any provision
of its Organizational Documents or (b) conflict with, result in a material breach of, constitute a
default under, result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which such Alpha Party is a party or by which it is bound or to
which any of its assets is subject.
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ARTICLE V
REMEDIES FOR BREACHES OF THE ACQUISITION AGREEMENTS
REMEDIES FOR BREACHES OF THE ACQUISITION AGREEMENTS
5.1 Survival of Representations, Warranties and Covenants. All of the representations
and warranties of any of the Xxxxxxxxxx Parties contained in Article V in each of the Acquisition
Agreements and in any certificate delivered at any Closing by any of them or by Sellers
Representative on their individual or collective behalf, shall survive such Closing (except for
misrepresentations or breaches of warranty which are disclosed pursuant to Section 6.6 of each of
the Acquisition Agreements) and continue in full force and effect for a period of two years
thereafter; provided, however, that: (a) the representations and warranties of the relevant
Xxxxxxxxxx Parties contained in Sections 5.13 and 5.24 in each of the Acquisition Agreements shall
survive the Closing (even if the Alpha Parties to whom the representations and warranties were made
knew or had reason to know of the misrepresentation or breach of warranty at the time of the
relevant Closing) and continue in full force and effect until sixty (60) days after the expiration
of the applicable statute of limitations; and (b) the other representations and warranties of the
Parties contained in the Acquisition Agreements and this Agreement (including the representations
and warranties of the Parties contained in Articles III and IV of each of such Agreements) shall
survive the respective Closings (even if the damaged Person to whom the representations and
warranties were made knew or had reason to know of the misrepresentation or breach of warranty at
the time of the relevant Closing) and continue in full force and effect for a period of ten years
thereafter. Except as otherwise provided in the Acquisition Agreements, all covenants contained in
the Acquisition Agreements to be performed before the relevant Closing shall not survive the
Closing (unless not performed) and all covenants contained in this Agreement and each of the
Acquisition Agreements to be performed at or after the relevant Closing (including without
limitation the covenants contained in this Article V) shall survive such Closing for a period of
ten years.
5.2 Indemnification Provisions for Benefit of the Alpha Parties.
(a) In the event any of the Xxxxxxxxxx Parties breaches (or in the event any third party
alleges facts that, if true, would mean any of Xxxxxxxxxx Parties has breached) any of their
representations, warranties, or covenants contained in this Agreement or any of the Acquisition
Agreements, and, if there is then in effect an applicable survival period pursuant to Section 5.1
above (provided that the Alpha Parties makes a written claim for indemnification against any of the
Xxxxxxxxxx Parties pursuant to Section 6.8 or as provided in the notice provisions of the Escrow
Agreement, as applicable, within such survival period), then, subject to the limitations of Section
5.2(c), the Xxxxxxxxxx Parties agree to indemnify the Alpha Indemnitees from and against the
entirety of any Adverse Consequences any of them may suffer through and after the date of the Claim
for Indemnification (including any Adverse Consequences any of them may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the nature of, or
caused by, the breach (or the alleged breach). Notwithstanding the preceding sentence, Adverse
Consequences that individually total less than $100,000 shall be excluded in their entirety and the
Xxxxxxxxxx Parties shall have no Liability under this Section 5.2(a) to the Alpha Indemnitees for
such Adverse Consequences; provided that for purposes of this sentence, the Adverse Consequences
from any events or actions resulting from the same or substantially similar occurrences shall be
aggregated.
8
(b) Without regard to the limitations of Section 5.2(c), the Xxxxxxxxxx Parties agree to
indemnify the Alpha Indemnitees from and against the entirety of any Adverse Consequences any of
them may suffer resulting from, arising out of, relating to, in the nature of, or caused by any
Liability in respect of (i) any failure by any of the Xxxxxxxxxx Parties to either assume, or
satisfy any of the Liabilities associated with, the Retained Assets, Retained Liabilities or
Retained Debt, (ii) the inability to assign or otherwise transfer any “Acquired Interests” (as
defined in the Xxxxxxxxxx Acquisition Agreement) to the designated Alpha Party as discussed in
Section 2.5 of the Xxxxxxxxxx Acquisition Agreement, the inability to assign or otherwise transfer
any “Units” (as defined in the BE Purchase Agreement) to Premium Energy, LLC as discussed in
Section 2.5 of the BE Purchase Agreement, the failure to vest in Premium Energy, LLC as a result of
the Merger of any of the rights, privileges, powers and franchises or the restrictions,
disabilities and duties of Premium Energy as discussed in Section 2.6 of PE Merger Agreement, or
the inability to satisfy and discharge all intercompany transactions or arrangements (as
contemplated in Section 2.6 of the Xxxxxxxxxx Acquisition Agreement and the BE Purchase Agreement
and Section 2.7 of the PE Merger Agreement), (iii) any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by and of the Acquisition Agreements for
which any Alpha Party or their respective Affiliates (which after Closing shall include Xxxxxxxx
Energy Company, LLC, Power Shop, Premium Energy, Twin Star, and Xxxxxxxxxx Contracting) could
become liable or obligated, (iv) the Xxxxxxxxxx Parties’ obligations to pay any Taxes due with
respect to “Pre-Closing Tax Returns” (as defined in Section 10.2 of each of the Xxxxxxxxxx
Acquisition Agreement, BE Purchase Agreement and the PE Merger Agreement) and Straddle Returns
pursuant to Article X of each of the Xxxxxxxxxx Acquisition Agreement, BE Purchase Agreement and
the PE Merger Agreement, (v) fraud, intentional misrepresentation or similar cause of action, (vi)
subject to Section 5.2(d), the disposition of that certain legal action styled The Affiliated
Construction Trades Foundation v. West Virginia Department of Transportation and Xxxxxxxxxx
Contracting Inc., (SDWV CA No. 2:04-1344), (vii) the acquisition by White Flame of the Crown
Property (which for the avoidance of doubt shall include the acquisition cost of the Crown Property
and the Adverse Consequences of owning and leasing the Crown Property (which shall include but not
be limited to Environmental or Response Actions)); and (viii) White Flame’s failure to receive as
of the Closing Date the consent of the lessor under the Alleghany Land Sublease to the transactions
contemplated by the Xxxxxxxxxx Acquisition Agreement at no additional cost or expense to the Alpha
Parties.
(c) The Xxxxxxxxxx Parties’ aggregate liability under the indemnification provisions of
Section 5.2(a) shall not exceed the value of the Alpha Shares held by the Escrow Agent as
determined by this Section 5.2(c) (the “Cap”); provided, however, that (i) there shall be no Cap on
indemnification for the Adverse Consequences Alpha Indemnitees may suffer resulting from, arising
out of, or relating to, the breach or alleged breach of the representations contained in Article
III of this Agreement and each of the Acquisition Agreements, Section 5.13 of each of the
Acquisition Agreements or the covenants contained in Article X in each of the Xxxxxxxxxx
Acquisition Agreement, the BE Purchase Agreement and the PE Merger Agreement, and no such Adverse
Consequences shall be taken into account to determine whether the Cap has been exceeded with
respect to Claims for Indemnification not referred to in this clause (i), and (ii) the amount of
the Cap shall not exceed $75,000,000 at the time of any Final Determination (which shall be
determined by multiplying the number of Alpha Shares held by the Escrow Agent pursuant to the
Escrow Agreement by the Closing Price). Notwithstanding clause (ii) of the foregoing proviso, the
Xxxxxxxxxx Parties’ aggregate liability under the indemnification provisions of Section 5.2(a)
shall
9
not exceed $75,000,000. The Xxxxxxxxxx Parties shall not have any obligation to indemnify
Alpha Indemnitees pursuant to Section 5.2(a) until Alpha Indemnitees have suffered Adverse
Consequences in excess of an aggregate threshold of $3,000,000 (the “Basket”), at which point the
Xxxxxxxxxx Parties will be obligated to indemnify Alpha Indemnitees from and against all such
Adverse Consequences relating back to the first dollar; provided, however, that (A) the Basket
shall not apply to indemnification for the Adverse Consequences Alpha Indemnitees may suffer
resulting from, arising out of, or relating to, the breach or alleged breach of the representations
contained in Article III of this Agreement and each of the Acquisition Agreements, Section 5.13 of
each of the Acquisition Agreements or the covenants contained in Article X in each of the
Xxxxxxxxxx Acquisition Agreement, the BE Purchase Agreement and the PE Merger Agreement and (B) the
amounts excluded from the Xxxxxxxxxx Parties’ indemnification obligation by the final sentence of
Section 5.2(a) shall be counted in full for purposes of determining whether the Alpha Indemnitees
have suffered Adverse Consequences in excess of the Basket only if such amounts individually exceed
$5,000.00 provided that for purposes of this sentence, the Adverse Consequences from any events or
actions resulting from the same or substantially similar occurrences shall be aggregated. The
Xxxxxxxxxx Parties’ liability under the indemnification provisions of Section 5.2(b) shall be
unlimited and not subject to the Cap or the Basket, and no such Adverse Consequences shall be taken
into account to determine whether the Cap has been exceeded with respect to Claims for
Indemnification not referred to in this sentence. The Alpha Parties may make Claims for
Indemnification against the Escrow Amount for any Adverse Consequences under the indemnification
provisions of Section 5.2(b), in the Alpha Parties discretion, provided however, that the Alpha
Parties right to make such Claims for Indemnification under the indemnification provisions of
Section 5.2(b) shall not be limited to the Escrow Amount. Notwithstanding any other provision of
this Agreement, the Escrow Amount shall be the sole and exclusive consideration available to the
Alpha Parties with respect to any Claim for Indemnification made after the Closing arising pursuant
to Section 5.2(a), and after distribution to the Alpha Parties of the entire Escrow Amount, the
Xxxxxxxxxx Parties will have no obligation to further indemnify the Alpha Parties from and against
such Adverse Consequences arising pursuant to Section 5.2(a), provided, however, that between the
second anniversary of the Closing and the expiration of the applicable survival period, the Alpha
Parties may make a Claim for Indemnification against the Xxxxxxxxxx Parties pursuant to Section
5.2(a) for the breach of any representation, warranty or covenant of the Xxxxxxxxxx Parties
contained in the Acquisition Agreements or this Agreement that survives longer than two years after
the Closing, and the Escrow Amount shall not be the sole and exclusive consideration available to
the Alpha Parties for any such Claim for Indemnification during such period.
(d) Notwithstanding Section 5.2(b) to the contrary, the Adverse Consequences to the Alpha
Parties for which the Xxxxxxxxxx Parties are obligated to indemnify the Alpha Parties pursuant to
Section 5.2(b)(vi) shall be decreased by (i) the net revenues of Xxxxxxxxxx Contracting from all
sales of coal from and after the Closing of the Xxxxxxxxxx Acquisition Agreement to the tenth
Business Day preceding the date of the Final Determination, (ii) the value of the reserves in place
to be purchased from Xxxxx Coal & Timber Association, the value of the surface property held by
Xxxxxxxxxx Contracting, and the value of the mining equipment owned by Xxxxxxxxxx Contracting, in
each such case as determined by a mutually acceptable independent third party. In order to effect
clause (i) of the foregoing, from and after the Closing Date until the date of the resolution of
such litigation, the Alpha Parties agree to maintain the books and records of Xxxxxxxxxx
Contracting in a manner that will facilitate the foregoing computation.
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(e) Notwithstanding Section 5.2(b) to the contrary, the Adverse Consequences to the Alpha
Parties for which the Xxxxxxxxxx Parties are obligated to indemnify the Alpha Parties pursuant to
Section 5.2(b)(vii) shall be limited to $.50 of every dollar arising out of the acquisition by
White Flame of the Crown Property (which for the avoidance of doubt shall include the acquisition
cost of the Crown Property and the Adverse Consequences of owning and leasing the Crown Property
(which shall include but not be limited to Environmental or Response Actions, if any)).
5.3 Indemnification Provisions for Benefit of the Xxxxxxxxxx Parties. In the event
any of the Alpha Parties breaches (or in the event any third party alleges facts that, if true,
would mean the Alpha Parties has breached) any of its representations, warranties, or covenants
contained in this Agreement or any of the Acquisition Agreements, and, if there is then in effect
an applicable survival period pursuant to Section 5.1 above (provided that any Xxxxxxxxxx Party
makes a written claim for indemnification against the Alpha Parties pursuant to Section 6.8 within
such survival period), then Alpha Natural Resources, LLC agrees to indemnify Xxxxxxxxxx Indemnitees
from and against the entirety of any Adverse Consequences any of them may suffer through and after
the date of the claim for indemnification (including any Adverse Consequences such Xxxxxxxxxx Party
may suffer after the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach); provided, however,
that the Alpha Parties’ liability under the indemnification provisions of this Section 5.3 shall
not exceed the Cap; provided, however, that there shall be no Cap on indemnification for the
Adverse Consequences Xxxxxxxxxx Indemnitees may suffer resulting from, arising out of, or relating
to, (x) the breach or alleged breach of the representations contained in Article IV of this
Agreement or any of the Acquisition Agreements or the covenants contained in Article X of the
Xxxxxxxxxx Acquisition Agreement, the BE Purchase Agreement or the PE Merger Agreement, and (y) any
failure by the Alpha Parties to either assume or satisfy any of the Liabilities associated with,
the Assumed Liabilities (if not otherwise indemnifiable by the Xxxxxxxxxx Parties under this
Article V), and no such Adverse Consequences shall be taken into account to determine whether the
Cap has been exceeded with respect to Claims for Indemnification not referred to in this proviso.
The Alpha Parties shall not have any obligation to indemnify Xxxxxxxxxx Indemnitees pursuant to
Section 5.3 until Xxxxxxxxxx Indemnitees have suffered Adverse Consequences in excess of the
Basket, at which point Alpha Natural Resources, LLC will be obligated to indemnify Xxxxxxxxxx
Indemnitees from and against all such Adverse Consequences relating back to the first dollar;
provided, however, that the Basket shall not apply to indemnification for the Adverse Consequences
Xxxxxxxxxx Indemnitees may suffer resulting from, arising out of, or relating to, (x) the breach or
alleged breach of the representations contained in Article IV of this Agreement or any of the
Acquisition Agreements or the covenants contained in Article X of the Xxxxxxxxxx Acquisition
Agreement, the BE Purchase Agreement or the PE Merger Agreement, and (y) any failure by the Alpha
Parties to either assume or satisfy any of the Liabilities associated with, the Assumed Liabilities
(if not otherwise indemnifiable by the Xxxxxxxxxx Parties under this Article V).
5.4 Matters Involving Third Party Claims.
(a) If any third party shall notify any Party (the “Indemnified Party”) with respect to a
Third Party Claim which may give rise to a claim for indemnification against any other Party
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(the “Indemnifying Party”) under this Article V, then the Indemnified Party shall promptly
provide a Claim for Indemnification to the Indemnifying Party; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the Indemnified Party against the
Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so
long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 15 Business
Days after the Indemnified Party has made a Claim for Indemnification that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief and, in respect of Third Party Claims in which the Alpha
Parties or its Affiliates is the Indemnified Party, in the Alpha Parties’ reasonable judgment could
not result in money damages in excess of any remaining Escrow Amount, (iv) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently; provided, however, that the Indemnifying
Party shall have the right to participate in the defense of an action that involves both claimed
money damages and injunctive or other equitable relief to the extent, but only to the extent, of
the claim for money damages. Failure to timely respond shall constitute a final and binding
acceptance of the Claim for Indemnification by the Indemnifying Party, and the Claim for
Indemnification shall be paid in accordance with Section 5.8.
(c) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in
accordance with Section 5.4(b), (i) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 5.4(b) is or becomes unsatisfied, however,
(i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys’ fees and expenses), and (iii) the Indemnifying Parties will
remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from,
arising
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out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Article V.
5.5 Matters not Involving Third Party Claims. The Alpha Indemnitees or the Xxxxxxxxxx
Indemnitees may make a claim for any matter that does not involve a Third Party Claim in any amount
to which they may be entitled under this Article V by providing a Claim for Indemnification against
the other promptly after such Indemnified Party has notice of any Adverse Consequence which may
give rise to a Claim for Indemnification; provided, however, that no delay on the part of the Alpha
Indemnitees or Xxxxxxxxxx Indemnitees in notifying the other shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is
actually prejudiced by such delay. The Indemnifying Party shall have 30 Business Days to object to
the Claim for Indemnification by delivery of a written notice of such objection to the Indemnified
Party specifying in reasonable detail the basis for such objection. Failure to timely respond
shall constitute a final and binding acceptance of the Claim for Indemnification by the
Indemnifying Party, and the Claim for Indemnification shall be paid in accordance with Section 5.8.
If an objection is timely interposed by the Indemnifying Party, then the Indemnified Party and the
Indemnifying Party shall negotiate in good faith for a period of 20 Business Days from the date the
Indemnified Party receives such objection prior to commencing any Proceeding with respect to such
Claim for Indemnification.
5.6 Determination of Adverse Consequences. All indemnification payments under this
Article V shall be deemed adjustments to the aggregate of the “Purchase Price” under the Xxxxxxxxxx
Acquisition Agreement and the BE Purchase Agreement plus the “Merger Consideration” under the PE
Merger Agreement (each as defined therein), allocated in a manner consistent with the Final
Allocation.
5.7 Other Indemnification Provisions. Each Xxxxxxxxxx Party hereby agrees that he, she
or it will not make any Claim for Indemnification against any of the Acquired Interests by reason
of the fact that he, she or it was a director, officer, employee, or agent of any Subject Company
or was serving at the request of any Subject Company as a partner, trustee, director, officer,
employee, or agent of another Entity (whether such claim is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any Law, charter document, bylaw, agreement, or otherwise) with respect to any
Proceeding brought by the Alpha Parties against such Xxxxxxxxxx Party (whether such Proceeding is
pursuant to this Agreement, applicable Law, or otherwise). Nothing in this Section 5.7 shall limit
the right of recovery by a Xxxxxxxxxx Party against an insurance carrier of any Entity other than a
Subject Company.
5.8 Claims Against Escrow Amount. Subject to this Article V, any Claim for
Indemnification by the Alpha Parties against the Xxxxxxxxxx Parties pursuant to Section 5.2(a)
shall be made solely with respect to the Escrow Amount (except as otherwise provided by the last
sentence of Section 5.2(c)), and any Claim for Indemnification by the Alpha Parties against the
Xxxxxxxxxx Parties pursuant to Section 5.2(b) may, in the Alpha Parties’ discretion, be made with
respect to the Escrow Amount, and in any case may be made at any time within the applicable
survival period. Upon any Final Determination of a Claim for Indemnification against the Xxxxxxxxxx
Parties, the Xxxxxxxxxx Parties shall have the option, for a period of 10 Business Days
13
following such Final Determination, to pay the full amount of such Claim for Indemnification
in cash to the Alpha Parties. If the Xxxxxxxxxx Parties have not paid such Claim for
Indemnification in cash within such period, then the Xxxxxxxxxx Parties and the Alpha Parties shall
provide joint written instructions to the Escrow Agent to pay to Alpha Natural Resources, Inc. the
amount of such Claim for Indemnification as determined by such Final Determination by returning to
Alpha Natural Resources, Inc. a whole number of Alpha Shares (rounded up or down to the nearest
whole Alpha Share), which when multiplied by the Closing Price as of the date of the Final
Determination, equals the amount of such Claim for Indemnification as determined by such Final
Determination. If there are no pending claims after the second anniversary of the Closing, the
remaining balance of the Escrow Amount will be disbursed by the Escrow Agent (pursuant to joint
written instructions by the Xxxxxxxxxx Parties and the Alpha Parties) to the Xxxxxxxxxx Parties in
accordance with the Escrow Agreement; provided, however, that in the event that there are any
pending Claims for Indemnification after the second anniversary of the Closing: (i) there shall be
retained in escrow a whole number of Alpha Shares (rounded up or down to the nearest whole Alpha
Share), which when multiplied by the Closing Price as of such date, equals the amount of such
pending Claims for Indemnification; (ii) the remaining balance of the Escrow Amount after such
retention will be so disbursed by Escrow Agent (pursuant to joint written instructions by the
Xxxxxxxxxx Parties and the Alpha Parties) to the Xxxxxxxxxx Parties in accordance with the Escrow
Agreement; and (iii) as each such Claim for Indemnification is resolved by a Final Determination,
any amount retained with respect thereto that remains in escrow after such resolution will be
disbursed by Escrow Agent (pursuant to joint written instructions by the Xxxxxxxxxx Parties and the
Alpha Parties) to the Xxxxxxxxxx Parties in accordance with the Escrow Agreement.
5.9 Payment of Claims. Upon Final Determination of the amount of a Claim for
Indemnification, the Indemnifying Party (or the Escrow Agent, if applicable) shall pay the amount
of such claim within 10 Business Days of the date of such Final Determination. A “Final
Determination” of a claim shall be (i) a judgment of any court determining the validity of a
disputed claim, if no appeal is pending from such judgment or if the time to appeal therefrom has
elapsed (it being understood that the Indemnified Party shall have no obligation to appeal); or
(ii) an award of any arbitrator or arbitration panel determining the validity of such disputed
claim, if there is not pending any motion to set aside such award or if the time within which to
move to set such award aside has elapsed; or (iii) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys; or (iv) a written
acknowledgment of the Indemnifying Party that it no longer disputes the validity of such claim; or
(v) the date on which an Indemnifying Party fails to respond to a Claim for Indemnification as
specified in Section 5.4(b) or Section 5.5; or (vi) such other evidence of final determination of a
disputed claim as shall be reasonably acceptable to the Parties.
ARTICLE VI
MISCELLANEOUS
MISCELLANEOUS
6.1 Nature of Certain Obligations.
(a) The representations and warranties of each Xxxxxxxxxx Party in Article III and of each
Alpha Party in Article IV are several. This means that the particular Xxxxxxxxxx Party or
14
Alpha Party making the representation or warranty will be solely responsible to the extent
provided in Article V above for any Adverse Consequences the Alpha Parties or the Xxxxxxxxxx
Parties, respectively, may suffer as a result of any breach thereof.
(b) Except as provided in Section 6.1(c), the remainder of the representations, warranties,
and covenants in this Agreement are joint and several obligations. This means that with respect to
any such representations, warranties and covenants of the Xxxxxxxxxx Parties or the Alpha Parties,
each Xxxxxxxxxx Party or Alpha Party will be responsible to the extent provided in Article V above
for the entirety of any Adverse Consequences the Alpha Parties or the Xxxxxxxxxx Parties,
respectively, may suffer as a result of any breach thereof.
(c) (i) As to Claims for Indemnification arising in respect of the BE Purchase Agreement, (A)
each of the Majority Xxxxxxxx Unitholders (to the exclusion of the other Xxxxxxxxxx Parties) will
be responsible to the extent provided in Article V above for the entirety of any Adverse
Consequences the Alpha Parties may suffer and (B) each of the Alpha Parties will be responsible to
the extent provided in Article V above for the entirety of any Adverse Consequences the Majority
Xxxxxxxx Unitholders (to the exclusion of the other Xxxxxxxxxx Parties) may suffer.
(ii) As to Claims for Indemnification arising in respect of the Acquisition Agreements other
than the BE Purchase Agreement, (A) each of the Xxxxxxxxxx Parties other than the Majority Xxxxxxxx
Unitholders will be responsible to the extent provided in Article V above for the entirety of any
Adverse Consequences the Alpha Parties may suffer and (B) each of the Alpha Parties will be
responsible to the extent provided in Article V above for the entirety of any Adverse Consequences
the Xxxxxxxxxx Parties other than Majority Xxxxxxxx Unitholders may suffer.
6.2 Press Releases and Public Announcements. No Party shall issue any press release or
make any public announcement relating to the subject matter of this Agreement or the existence of
the subject matter of this Agreement prior to the Closing without the prior written approval of
Alpha Natural Resources, Inc. and Sellers Representative; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable Law, agreements
related to such Party’s indebtedness or requirements of the New York Stock Exchange or any other
exchange on which such Party’s securities may be traded (in which case the disclosing Party will
make only such disclosures that are so required, will not disclose to any Persons other than as so
required and will use its commercially reasonable efforts to advise the other Parties prior to
making the disclosure).
6.3 No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties, the Alpha Indemnitees, the Xxxxxxxxxx Indemnitees
and their respective successors and permitted assigns.
6.4 Entire Agreement. This Agreement (including the Escrow Agreement and the other
documents referred to in this Agreement), the Confidentiality Agreement dated July 6, 2004 by and
between Alpha and Affiliates of the Xxxxxxxxxx Parties, and the supplement thereto dated April 18,
2005, and any other agreement entered into contemporaneously with this Agreement among the Alpha
Parties, the Xxxxxxxxxx Parties or the Affiliates of any of them, constitute the entire agreement
among the Parties and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
15
subject matter of this Agreement.
6.5 Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named in this Agreement and their respective successors and permitted
assigns. No Party may assign either this Agreement or any of his, her or its rights, interests, or
obligations hereunder without the prior written consent of the Alpha Parties and Sellers
Representative; provided, however, that the Alpha Parties may (i) assign any or all of its rights
and interests hereunder to one or more of their Affiliates, (ii) assign, pledge or mortgage all of
its rights and interests under this Agreement to any provider of financing, and any trustee or
agent acting on their behalf, as security for the Alpha Parties’ or their Affiliates’ obligations
under all documents and instruments evidencing, guaranteeing or executed by them in connection with
any such financing and (iii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases the Alpha Parties nonetheless shall remain responsible for
the performance of all of its obligations hereunder). A material change in the ownership of (a)
Alpha Natural Resources, Inc. (other than as the result of trading of its common stock on the New
York Stock Exchange, Inc. or an underwritten offering of its common stock) or (b) an Alpha Parties
Affiliate designated to perform the Alpha Parties’ obligations hereunder or hold any portion of
the Business (other than the transfer to a direct or indirect wholly owned Subsidiary of the Alpha
Parties) shall be deemed an assignment for purposes of this Agreement.
6.6 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together will constitute one and the same
instrument.
6.7 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
6.8 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given when (i) delivered by hand (with written confirmation of receipt) or by
facsimile transmission (with confirmation received by the sender), (ii) five Business Days after
sent by registered or certified mail, return receipt requested, postage prepaid, or (iii) when
received by the addressee, if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses set forth below:
If to the Nicewonder Parties or Sellers Representative:
Xxx Xxxxxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Facsimile: (000) 000-0000
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Xxxxxx
16
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
X.X. Xxxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: X.X. Xxxxxxxxx
Facsimilie: (000) 000-0000
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: X.X. Xxxxxxxxx
Facsimilie: (000) 000-0000
With a copy to:
Xxxxx & Associates
X.X. Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: E. Xxxxxxx Xxxxx, Jr., Esq.
Facsimile No.: (000) 000-0000
X.X. Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: E. Xxxxxxx Xxxxx, Jr., Esq.
Facsimile No.: (000) 000-0000
If to the Alpha Parties:
Alpha Natural Resources, LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
With copies to:
Alpha Natural Resources, LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail),
17
but no such notice, request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Parties notice in the manner set forth in this Agreement.
6.9 Sellers Representative. Each Xxxxxxxxxx Party constitutes and appoints Xxxxx
Xxxxxx as his true and lawful attorney-in-fact to act for and on behalf of such Xxxxxxxxxx Party in
all matters relating to or arising out of this Agreement, including specifically, but without
limitation, receiving all demands and notices on or with respect to the Xxxxxxxxxx Parties under
this Agreement, taking any action or refraining from taking any action as he may deem appropriate
and executing and delivering all instruments and documents of every kind incident to or otherwise
relating to this Agreement, such Xxxxxxxxxx Party agreeing to be fully bound by the acts, decisions
and agreements of Sellers Representative taken and done pursuant to the authority granted in this
Agreement and the Xxxxxxxxxx Parties hereby confirm all that Sellers Representative shall do or
cause to be done by virtue of his appointment as Sellers Representative. Each Xxxxxxxxxx Party
hereby agrees to indemnify and to save and hold harmless Sellers Representative from any Liability
incurred by Sellers Representative based upon or arising out of any act, whether of omission or
commission, of Sellers Representative pursuant to the authority granted in this Agreement, other
than acts, whether of omission or commission, of Sellers Representative that constitute gross
negligence or willful misconduct in the exercise by Sellers Representative of the authority granted
in this Agreement. Sellers Representative, or any successor hereafter appointed, may resign and
shall be discharged of his duties hereunder upon the appointment of a successor Sellers
Representative, as hereinafter provided. In case of such resignation, or in the event of the death
or inability to act of Sellers Representative, a successor shall be named from among the Xxxxxxxxxx
Parties by a majority of the Xxxxxxxxxx Parties. Each such successor Sellers Representative shall
have all the power, authority, rights and privileges hereby conferred upon the original Sellers
Representative, and the term “Sellers Representative” as used in this Agreement shall be deemed to
include such successor Sellers Representative. The appointment of Sellers Representative shall be
deemed coupled with an interest and shall be irrevocable, and the Alpha Parties and any other
Person may conclusively and absolutely rely, without inquiry, upon any action of Sellers
Representative in all matters referred to in this Agreement. All notices required to be made or
delivered by the Alpha Parties to the Xxxxxxxxxx Parties shall be made to Sellers Representative
for the benefit of the Xxxxxxxxxx Parties and shall discharge in full all notice requirements of
the Alpha Parties to the Xxxxxxxxxx Parties with respect thereto. Each Xxxxxxxxxx Party agrees that
(a) Sellers Representative shall be adequately compensated for all services performed after the
closing on a reasonable basis considering said Sellers Representative’s professional education and
experience, (b) that each Xxxxxxxxxx Party shall pay its proportionate share of the compensation to
Sellers Representative approved by a majority of the Xxxxxxxxxx Parties and (c) none of the Alpha
Parties, its Affiliates or any of the Subject Companies shall have any responsibility therefor.
6.10 Governing Law. This Agreement shall be governed by and construed in accordance
with the Laws of the Commonwealth of Virginia without giving effect to any choice or conflict of
law provision or rule (whether of the Commonwealth of Virginia or any other jurisdiction) that
would cause the application of the Laws of any jurisdiction other than the Commonwealth of
18
Virginia.
6.11 Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in a writing referring to this Agreement signed by the Alpha Parties
and the Sellers Representative. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
6.12 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions of this Agreement or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
6.13 Expenses. Except as otherwise provided in this Agreement, each of the Parties
will bear his, her or its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated by this Agreement.
6.14 Construction. Any reference to any federal, state, local, or foreign Law shall
be deemed also to refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word “including” shall mean including without limitation. All accounting
terms used in this Agreement shall have the meanings given to them in accordance with GAAP. The
singular shall mean the plural, the plural shall mean the singular, and the use of any gender shall
include all genders; and all references to any particular party defined in this Agreement shall be
deemed to refer to each and every Person defined in this Agreement as such party individually, and
to all of them, collectively, jointly and severally, as though each were named wherever the
applicable defined term is used. All references to “Section” shall be deemed to refer to the
provisions of this Agreement unless otherwise expressly provided. All references to time shall
mean Eastern Standard Time or Eastern Daylight Time, as then in effect. The words “this Agreement,”
“hereof,” “hereunder,” “herein,” “hereby,” or words of similar import shall refer to this Agreement
as a whole and not to a particular section, subsection, clause or other subdivision of this
Agreement, unless the context otherwise requires. The Parties intend that each representation,
warranty, and covenant contained in this Agreement shall have independent significance. If any
Party has breached any representation, warranty, or covenant contained in this Agreement in any
respect, the fact that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
6.15 Incorporation of Exhibits, Annexes, and Schedules. The Exhibits and Annexes
identified in this Agreement are incorporated into this Agreement by reference and made a part of
this Agreement.
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6.16 Specific Performance. Each of the Parties acknowledges and agrees that the other
Parties would be damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached. Accordingly, each of
the Parties agrees that the other Parties shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions of this Agreement in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter, in addition to any
other remedy to which they may be entitled, at law or in equity.
6.17 Arbitration. Any dispute, controversy or claim arising out of or relating to
this Agreement (a “Dispute”) shall be settled by binding arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association (“AAA”) except as otherwise
provided in this Section 6.17. Any such Dispute shall be arbitrated on an individual basis, and
shall not be consolidated in any arbitration with any dispute, claim or controversy of any other
party. The arbitration shall be conducted in Abingdon, Virginia, and any court having jurisdiction
thereof may immediately issue judgment on the arbitration award. All costs of the Dispute
resolution process contemplated by this Section 6.17 (including, without limitation, the fees
arbitrator, but exclusive of attorneys’ fees) shall be borne by the Party who is the least
successful in such process, which shall be determined by comparing (x) the position asserted by
each Party on all disputed matters taken together to (y) the final decision of the arbitrator on
all disputed matters taken together. The Parties agree that the arbitration provided for in this
Section 6.17 shall be the exclusive means to resolve all Disputes.
* * * * *
20
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date
first above written.
THE ALPHA PARTIES: | ||||
Alpha Natural Resources, LLC | ||||
By: /s/ Xxxxx X. Xxxxxxxxxxx | ||||
Name: Xxxxx X. Xxxxxxxxxxx Title: Executive Vice President |
||||
Alpha Natural Resources, Inc. | ||||
By: /s/ Xxxxx X. Xxxxxxxxxxx | ||||
Name: Xxxxx X. Xxxxxxxxxxx Title: Executive Vice President |
||||
Premium Energy, LLC | ||||
By: /s/ Xxxxx X. Xxxxxxxxxxx | ||||
Name: Xxxxx X. Xxxxxxxxxxx Title: President |
||||
THE XXXXXXXXXX PARTIES: | ||||
Mate Creek Energy of W. Va., Inc. | ||||
By: /s/ Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx | ||||
Name: Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx Title: Vice President |
||||
Virginia Energy Company | ||||
By: /s/ Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx | ||||
Name: Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx Title: President |
||||
/s/ Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx |
21
/s/ Xxxxxxx X. Xxxxxxxxxx | ||||
Xxxxxxx X. Xxxxxxxxxx |
||||
/s/ Xxxx Xxxxx Xxxxxxxxxx Xxxx Xxxxx Xxxxxxxxxx |
||||
/s/ Xxx Xxxxxxxxxx Xxxxxxx Xxx Xxxxxxxxxx Xxxxxxx |
||||
/s/ Xxxxx Xxxxxx | ||||
Xxxxx Xxxxxx |
||||
/s/ Xxxxx Xxxxxxxx Xxxxx Xxxxxxxx |
||||
The Majority Xxxxxxxx Unitholders: | ||||
/s/ Xxxx Xxxxxx | ||||
Xxxx Xxxxxx | ||||
/s/ X.X. Xxxxxx | ||||
X.X. Xxxxxx |
||||
X. X. Xxxxxx Charitable Income Trust II |
||||
By: /s/ Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx |
||||
Title: Attorney-in-Fact under power
of attorney dated February 4, 1998, for Xxxxx X. Xxxxxx, Trustee |
||||
Tri-Cities Investments, a Virginia general partnership By: Tri-Cities Investments, Inc., its general partner |
||||
By: /s/ Xxxxx Xxxxxx | ||||
Name: Xxxxx Xxxxxx |
22
Title: President | ||||
/s/ X.X. Xxxxxxxxx | ||||
X.X. Xxxxxxxxx | ||||
/s/ X.X. Xxxxxxxxxx | ||||
X.X. Xxxxxxxxxx |
23
EXHIBIT A
ESCROW AGREEMENT
among
ALPHA NATURAL RESOURCES, LLC,
ALPHA NATURAL RESOURCES, INC.,
PREMIUM ENERGY, LLC
MATE CREEK ENERGY OF W. VA., INC. AND VIRGINIA ENERGY COMPANY,
THE UNITHOLDERS OF POWERS SHOP, LLC,
CERTAIN OF THE UNITHOLDERS OF XXXXXXXX ENERGY COMPANY, LLC
THE SHAREHOLDERS OF WHITE FLAME ENERGY, INC.,
PREMIUM ENERGY, INC.,
TWIN STAR MINING, INC. AND XXXXXXXXXX CONTRACTING, INC.
PREMIUM ENERGY, INC.,
TWIN STAR MINING, INC. AND XXXXXXXXXX CONTRACTING, INC.
and
XX XXXXXX XXXXX BANK, N.A., as Escrow Agent
Dated as of
_________________, 2005
_________________, 2005
Table of Contents
§1. |
Appointment of Escrow Agent | 3 | ||||
§2. |
Deposit | 3 | ||||
§3. |
Investment of the Escrow Amount | 3 | ||||
§4. |
Deposits and Disbursements | 4 | ||||
(a) Claims for Indemnification | 4 | |||||
(b) Amendments | 5 | |||||
(c) Notices | 5 | |||||
(d) Blank Stock Powers; Transfer Agent | 6 | |||||
(e) Disbursements to the Xxxxxxxxxx Partie | 6 | |||||
(f) Confirmation | 6 | |||||
(g) Substitution | 6 | |||||
§5. |
Automatic Release | 7 | ||||
(a) Scheduled Release | 7 | |||||
(b) Pending Disputes | 8 | |||||
(c) Termination | 8 | |||||
§6. |
Termination of Escrow | 8 | ||||
§7. |
Account Opening Information/Tax Matters | 9 | ||||
(a) Account Opening | 9 | |||||
(b) Withholding | 9 | |||||
(c) Responsibility | 9 | |||||
(d) Taxable Distributions | 9 | |||||
§8. |
Scope of Undertaking. | 10 | ||||
§9. |
Reliance; Liability | 10 | ||||
§10. |
Indemnification | 11 | ||||
§11. |
Compensation and Xxxxxxxxxxxxx xx Xxxxxxxx | 00 | ||||
§00. |
Wire Transfers | 11 | ||||
§13. |
Consultation with Legal Counsel | 12 | ||||
§14. |
Resignation; Removal | 12 | ||||
(a) Resignation | 12 | |||||
(b) Removal | 12 | |||||
§15. |
General | 13 | ||||
(a) Entire Agreement | 13 | |||||
(b) Succession and Assignment | 13 | |||||
(c) Counterparts | 13 | |||||
(d) Headings | 13 | |||||
(e) Notices | 13 | |||||
(f) Governing Law | 15 | |||||
(g) Arbitration | 15 | |||||
(h) Amendments and Waivers | 16 | |||||
(i) No Third-Party Beneficiaries | 16 | |||||
(j) Severability | 16 | |||||
(k) Expenses | 16 | |||||
(l) Construction | 16 | |||||
(m) Incorporation of Exhibits and Schedules | 16 | |||||
(n) Compliance with Court Orders | 16 |
ESCROW AGREEMENT
This Agreement (as the same may be amended or modified from time to time and including any and
all written instructions given to Escrow Agent (as defined below) pursuant hereto, this
“Agreement”) is entered into effective as of ___, 2005 by and among (i) Alpha Natural
Resources, LLC, a Delaware limited liability company, Alpha Natural Resources, Inc., a Delaware
corporation, and Premium Energy, LLC, a Delaware limited liability company (together, the “Alpha
Parties”), (ii) Mate Creek Energy of W. Va., Inc., a West Virginia corporation (“Mate Creek”), and
Virginia Energy Company, a Virginia corporation (“Virginia Energy”), the unitholders of Powers
Shop, LLC, a Virginia limited liability company (“Powers Shop”), certain of the unitholders (the
“Majority Xxxxxxxx Unitholders”) of Xxxxxxxx Energy Company, LLC, a Virginia limited liability
company, listed on the signature page of this Agreement and the shareholders of each of Premium
Energy, Inc., a West Virginia corporation (“Premium Energy”), Twin Star Mining, Inc., a West
Virginia corporation (“Twin Star”), Xxxxxxxxxx Contracting, Inc., a West Virginia corporation,
(“Xxxxxxxxxx Contracting”) and White Flame Energy, Inc., a West Virginia Corporation (“White
Flame”) and (iii) JPMorgan Chase Bank, N.A., a national association (“Escrow Agent”).
Collectively, Mate Creek, Virginia Energy, the unit holders of Powers Shop, the Majority Xxxxxxxx
Unitholders, and the shareholders of Premium Energy, Twin Star, Xxxxxxxxxx Contracting and White
Flame shall be referred to in this Agreement as the “Xxxxxxxxxx Parties.” Collectively, the Alpha
Parties and the Xxxxxxxxxx Parties shall be referred to in this Agreement as the “Parties.”
Capitalized terms used and not otherwise defined in this Agreement have the meanings given to such
terms in the Indemnification Agreement dated September 23, 2005 by and among the Xxxxxxxxxx Parties
and the Alpha Parties (the “Indemnification Agreement”).
R E C I T A L S
A. Various of the Alpha Parties and various of the Xxxxxxxxxx Parties have entered into the
Acquisition Agreements pursuant to which the Alpha Parties will acquire from the Xxxxxxxxxx Parties
certain of the assets and equity interests of the Xxxxxxxxxx Parties.
B. The Alpha Parties and the Xxxxxxxxxx Parties have entered into the Indemnification
Agreement, pursuant to which the Parties have provided for the terms upon which they will indemnify
each other with respect to certain matters relating to the transactions contemplated by the
Acquisition Agreements.
C. Pursuant to Section 2.1 of the Indemnification Agreement, Alpha Natural Resources, Inc.
(“Alpha Inc.”) is required to deposit ___validly issued, fully paid and non-assessable
shares of Common Stock, $0.01 par value, of Alpha Inc. (“Alpha Shares”) into escrow at the Closing
on the terms and subject to the conditions of this Agreement to satisfy certain indemnification and
other obligations of the Xxxxxxxxxx Parties arising under the Indemnification Agreement.
2
D. The Alpha Parties and the Xxxxxxxxxx Parties have requested Escrow Agent to act in the
capacity of escrow agent under this Agreement, and Escrow Agent, subject to the terms and
conditions of this Agreement, has agreed so to do.
Now, therefore, in consideration of the premises and the mutual promises made in this
Agreement, and in consideration of the representations, warranties, and covenants contained in this
Agreement, the Parties agree as follows:
§1. Appointment of Escrow Agent.
Each Party hereby appoints Escrow Agent as the escrow agent under this Agreement and Escrow
Agent hereby accepts such appointment, on the terms and subject to the conditions set forth in this
Agreement.
§2. Deposit.
Simultaneously with the execution of this Agreement and in accordance with Section 2.1 of the
Indemnification Agreement, at the direction of the Xxxxxxxxxx Parties, the Alpha Parties have
deposited with Escrow Agent ___validly issued, fully paid and non-assessable shares of
Common Stock, $0.01 par value, of Alpha Inc. (the “Original Share Deposit”). Upon receipt of the
Original Share Deposit, Escrow Agent will acknowledge receipt and agrees to receive, hold in
escrow, invest and reinvest the Escrow Amount, as defined below, in a separate escrow account (the
“Escrow Account”) in accordance with the terms of this Agreement. Escrow Agent will acknowledge
receipt, and agrees to receive, hold in escrow, invest and reinvest any Cash Deposit (as defined
below) received by the Escrow Agent in accordance with the terms of this Agreement and such Cash
Deposit, if any, shall be held in the Escrow Account. All cash and stock dividends on the Original
Share Deposit (“Dividends”) and all interest and other earnings on the Cash Deposit, if any
(“Interest”) shall become a part of the Escrow Amount and shall be held by the Escrow Agent on the
terms and subject to the conditions of this Agreement; provided that such Interest (but not the
Cash Deposit) shall be distributed to the Xxxxxxxxxx Parties, at such time, and from time to time,
as Sellers Representative shall request in writing. The Original Share Deposit, any Cash Deposit,
Dividends and Interest shall be collectively referred to in this Agreement as the “Escrow Amount”.
§3. Investment of the Escrow Amount.
During the term of this Agreement, that portion of the Escrow Amount represented by Alpha
Shares shall be held in the Escrow Account with JPMorgan Chase Bank, N.A., and such Alpha Shares
shall not be sold, transferred, pledged or otherwise disposed of unless Escrow Agent is otherwise
instructed in writing by the Alpha Parties and Xxxxxxxxxx Parties; provided, however, that any Cash
Deposit or other cash held in the Escrow Amount shall be held in an interest bearing account with
JPMorgan Chase Bank, N.A. (“JPMorgan Money Market Account”), unless otherwise instructed in writing
by the Alpha Parties and Xxxxxxxxxx Parties. Such written instructions, if any, referred to in the
foregoing sentence shall specify the type and identity of the
investments to be purchased and/or sold, any particular settlement procedures required, if any (which settlement
3
procedures shall be consistent with industry standards and practices), and such other information
as Escrow Agent may require. Escrow Agent shall not be liable for failure to invest or reinvest
funds absent sufficient written direction. Escrow Agent may use a broker-dealer of its own
selection, including a broker-dealer owned by or affiliated with Escrow Agent or any of its
affiliates. Escrow Agent or any of its affiliates may receive compensation with respect to any
investment directed under this Agreement. It is expressly agreed and understood by the Parties
that Escrow Agent shall not in any way whatsoever be liable (except, subject to §9 of this
Agreement, for its own gross negligence, willful misconduct or bad faith) for any diminution or
losses on any investments or reinvestments, including losses from market risks due to premature
liquidation or resulting from other actions taken pursuant to this Agreement.
§4. Deposits and Disbursements.
(a) Claims for Indemnification.
(i) Written Claim. At any time and from time to time prior to 5:00 p.m. Eastern Time on
___, 2007, the Alpha Parties may in good faith give a written Claim for Indemnification to
the Xxxxxxxxxx Parties and to Escrow Agent. The Claim for Indemnification must assert a claim
under Section 5.2(a) or Section 5.2(b) of the Indemnification Agreement and provide a general
description of the Adverse Consequences that the Indemnified Party may suffer, with an estimate of
the extent of the dollar amount of Adverse Consequences, but only if such information can
reasonably be determined at the time notice is given.
(ii) Counternotice; Notice Certification. If, prior to 5:00 p.m., Denver Time, 15 Business
Days following receipt by the Xxxxxxxxxx Parties and Escrow Agent of the Claim for Indemnification
(such 15 Business Day period, the “Claim Period”), the Xxxxxxxxxx Parties give written notice to
the Alpha Parties and Escrow Agent disputing such Claim for Indemnification (a “Counternotice”),
the Escrow Amount shall be distributed as provided in §4(a)(iii) and §4(a)(iv) of this Agreement.
If no such Counternotice is given to the Alpha Parties and Escrow Agent within the Claim Period and
Alpha Inc. has given Escrow Agent a certification in the form of Exhibit A attached to this
Agreement, signed by Alpha Inc., and certifying that the Claim for Indemnification was timely and
properly given to the Xxxxxxxxxx Parties (“Notice Certification”), then, within ten Business Days
after the expiration of the Claim Period, Escrow Agent shall pay to Alpha Inc. the amount set forth
in such Claim for Indemnification by returning to Alpha Inc. a whole number of Alpha Shares
(rounded up or down to the nearest whole Alpha Share) out of the Escrow Amount, which when
multiplied by the Closing Price (as defined below) as of the final day of such Claim Period, equals
the amount of such Claim for Indemnification.
For purposes of this Agreement:
(A) “Closing Price” means the Weighted Average Daily Trading Price of Alpha Shares on
the principal exchange or automated quotation system on which
4
Alpha Shares are listed during the 20 days on which Alpha Shares are traded prior to
the date of the determination in question; and
(B) “Weighted Average Daily Trading Price” for a stated number of trading days shall
mean the product of (x) the average of the high and low sales prices for each of such days
times (y) the number of shares traded on each such day, all as would be reported in the
official compilation of trading information on the principal exchange or automated quotation
system on which Alpha Shares are listed, divided by (z) the total number of shares traded
during all such days, as reported in the official compilation of trading information on the
principal exchange or automated quotation system on which Alpha Shares are listed.
(iii) Payment of Undisputed Portions. If within the Claim Period, the Xxxxxxxxxx Parties give
a Counternotice that also provides that portions of the Claim for Indemnification are not disputed
(“Undisputed Portions”), then, within ten Business Days after the date of such Counternotice,
Escrow Agent shall pay to Alpha Inc. the Undisputed Portions by returning to Alpha Inc. a whole
number of Alpha Shares (rounded up or down to the nearest whole Alpha Share) out of the Escrow
Amount, which when multiplied by the Closing Price as of the date of such Counternotice, equals the
amount of such Undisputed Portions.
(iv) Disputes. If a Counternotice is properly given with respect to a Claim for
Indemnification within the Claim Period, subject to §4(a)(iii) of this Agreement with respect to
Undisputed Portions, Escrow Agent shall refuse to comply with any demands made upon it with respect
to the underlying Claim for Indemnification until it receives joint written instructions of the
Alpha Parties and the Xxxxxxxxxx Parties pursuant to Section 5.8 of the Indemnification Agreement
in the form of Exhibit B attached to this Agreement, signed by Alpha Inc. on behalf of the
Alpha Parties and the Sellers Representative on behalf of the Xxxxxxxxxx Parties, instructing
Escrow Agent to pay Alpha Inc. the amount of such Claim for Indemnification as determined by a
Final Determination by returning to Alpha Inc. a whole number of Alpha Shares (rounded up or down
to the nearest whole Alpha Share) out of the Escrow Amount, which when multiplied by the Closing
Price as of the date of such Final Determination, equals the amount of such Claim for
Indemnification as determined by such Final Determination. In making such payment, Escrow Agent
shall not incur any liability to any Party. Escrow Agent may rely and continue to rely conclusively
upon such written instructions.
(b) Amendments. Within the Claim Period, the Alpha Parties may amend any Claim for
Indemnification and the Xxxxxxxxxx Parties may amend any Counternotice, in each case by giving
written notice to the other Party and Escrow Agent.
(c) Notices.
(i) Authorized Signers. All notices by either the Alpha Parties or the Xxxxxxxxxx Parties
will be signed by an authorized signer, as shown on Exhibit C to this Agreement.
5
(ii) Sellers Representative. Each Xxxxxxxxxx Party has constituted and appointed Xxxxx Xxxxxx
(“Sellers Representative”) as its authorized signer and true and lawful attorney-in-fact to act for
and on behalf of such Xxxxxxxxxx Party in all matters relating to or arising out of the
Indemnification Agreement and this Agreement, including specifically, but without limitation,
receiving all demands and notices on or with respect to the Xxxxxxxxxx Parties under this
Agreement, taking any action or refraining from taking any action as he may deem appropriate and
executing and delivering all instruments and documents of every kind incident to or otherwise
relating to this Agreement, such Xxxxxxxxxx Party agreeing to be fully bound by the acts, decisions
and agreements of Sellers Representative taken and done pursuant to the authority granted in this
Agreement and the Xxxxxxxxxx Parties hereby confirm all that Sellers Representative shall do or
cause to be done by virtue of his appointment as Sellers Representative. The Xxxxxxxxxx Parties
may designate a successor Sellers Representative to discharge the duties outlined above by delivery
to the Alpha Parties and the Escrow Agent of written notice in the manner set forth in §15(e) of
this Agreement (either signed by the then acting Sellers Representative or Xxx Xxxxxxxxxx) naming
such successor Sellers Representative. Each such successor Sellers Representative will have all the
power, authority, rights and privileges hereby conferred upon the original Sellers Representative,
and the term “Sellers Representative” as used in this Agreement shall be deemed to include such
successor Sellers Representative.
(d) Blank Stock Powers; Transfer Agent. Escrow Agent acknowledges receipt of five
stock powers duly executed in blank from each record holder of the Alpha Shares deposited into the
Escrow Account. Escrow Agent is authorized to use such blank stock powers to facilitate all
disbursements of the Escrow Amount pursuant to the terms of this Agreement. Alpha Inc. shall
provide all reasonable assistance to the Escrow Agent to complete such disbursements, including
furnishing Alpha Inc.’s transfer agent with all transfer opinions and other documents necessary to
effect such disbursements.
(e) Disbursements to the Xxxxxxxxxx Parties. Any disbursement made to the Xxxxxxxxxx
Parties from the Escrow Account pursuant to this Agreement shall be paid to each Xxxxxxxxxx Party
in accordance with the written instructions provided by Sellers Representative to the Escrow Agent.
(f) Confirmation. Receipt, investment and reinvestment of the Escrow Account shall be
confirmed by Escrow Agent as soon as practicable by account statement, and any discrepancies in any
such account statement shall be noted by the Parties to Escrow Agent within 30 calendar days after
receipt thereof. Failure to inform Escrow Agent in writing of any discrepancies in any such
account statement within said 30-day period shall conclusively be deemed confirmation of such
account statement in its entirety.
(g) Substitution.
(i) Cash Deposit. Pursuant to the terms of this §4(g), the Xxxxxxxxxx Parties may substitute
cash (the “Cash Deposit”) for Alpha Shares held in the Escrow Account. The Xxxxxxxxxx Parties
shall deliver such Cash Deposit by wire transfer to an account designated by
6
Escrow Agent. Escrow
Agent will hold the Cash Deposit in the Escrow Account upon receipt by Escrow Agent of joint
written instructions from the Alpha Parties and the Xxxxxxxxxx Parties (signed by Alpha Inc. on
behalf of the Alpha Parties and the Sellers Representative on behalf of the Xxxxxxxxxx Parties)
directing Escrow Agent to (A) hold the Cash Deposit in the Escrow Account pursuant to the terms of
this Agreement and (B) disburse a specified portion of the Alpha Shares from the Escrow Account to
the Xxxxxxxxxx Parties. The number of Alpha Shares to be disbursed by Escrow Agent upon such Cash
Deposit shall equal that whole number of Alpha Shares (rounded up or down to the nearest whole
Alpha Share), which when multiplied by the Closing Price as of the date of receipt of such joint
written instructions, equals the amount of such Cash Deposit.
(ii) Form of Disbursement. Except as provided in §5(a) of this Agreement, if cash is held in
the Escrow Account, a Party entitled to a disbursement may elect to receive the disbursement either
in the form of (x) Alpha Shares (valued in the manner set forth in the applicable section of this
Agreement) or (y) cash equal to the number of Alpha Shares required to be disbursed multiplied by
the Closing Price as of the applicable date of determination, assuming in either case that there
are sufficient Alpha Shares or cash in the Escrow Account to facilitate such request. If cash is
disbursed from the Escrow Account with respect to a Claim for Indemnification of an Alpha Party,
such cash shall be disbursed to the Alpha Party suffering such Adverse Consequences as may be
specified by the Alpha Parties in writing to the Escrow Agent.
§5. Automatic Release.
(a) Scheduled Release. Subject to the provisions of this §5:
(i) on ___, 2007 [15 months after Closing Date], Escrow Agent shall disburse
to the Xxxxxxxxxx Parties out of the Escrow Amount (A) 1/3 of the difference between the
Original Share Deposit and any Alpha Shares disbursed pursuant to §4(g) plus (B) 1/3 of the
total Cash Deposits, if any; and
(ii) on ___, 2007 [18 months after Closing Date], Escrow Agent shall disburse
to the Xxxxxxxxxx Parties out of the Escrow Amount an additional (A) 1/3 of the difference
between the Original Share Deposit and any Alpha Shares disbursed pursuant to §4(g) plus (B)
1/3 of the total Cash Deposits, if any (each of clause (i) and (ii), a “Scheduled Release
Date”);
provided, however, that in no event shall Escrow Agent disburse any Alpha Shares or Cash
Deposit out of the Escrow Amount on a Scheduled Release Date unless Escrow Agent has, prior to the
Scheduled Release Date, received joint written instructions of the Alpha Parties and the Xxxxxxxxxx
Parties in the form of Exhibit D attached to this Agreement (signed by Alpha Inc. and the
Sellers Representative on behalf of the Xxxxxxxxxx Parties), certifying that each of the matters
described in Section 5.2(b)(vi), (vii) and (viii) of the Indemnification Agreement has
been resolved to the satisfaction of the Alpha Parties (the “Release Instructions”). If the
Escrow Agent does not receive the Release Instructions until after a Scheduled Release Date has
occurred, the Escrow Agent shall disburse from the Escrow Amount (within 3 Business Days
7
after receipt of the Release Instructions) that number of Alpha Shares and Cash Deposit, if any, that
would have been released on any prior Scheduled Release Date.
(b) Pending Disputes. Notwithstanding anything in §5(a) to the contrary, if the
Escrow Agent has received the Release Instructions and any Claims for Indemnification are pending
as of any Scheduled Release Date, then (i) the number of Alpha Shares and Cash Deposit, if any,
scheduled to be disbursed to the Xxxxxxxxxx Parties under §5(a) shall be reduced (in the proportion
that each bears to the total Escrow Amount) by an amount necessary to retain in the Escrow Account
a whole number of Alpha Shares (rounded up or down to the nearest whole Alpha Share), which when
multiplied by the Closing Price as of the Scheduled Release Date, and added to the remaining Cash
Deposit, if any, equals the amount of such pending Claims for Indemnification; (ii) the remaining
balance of the Alpha Shares and Cash Deposit, if any, scheduled to be disbursed to the Xxxxxxxxxx
Parties after such retention, if any, will be so disbursed by Escrow Agent (pursuant to joint
written instructions in the form of Exhibit B attached to this Agreement); and (iii) as
each such Claim for Indemnification is resolved by a Final Determination, any amount of Alpha
Shares and Cash Deposit, if any, scheduled to be disbursed that was retained in the Escrow Account
with respect to such Claim for Indemnification shall, after such resolution, be disbursed by Escrow
Agent to the Xxxxxxxxxx Parties, after any disbursement to the Alpha Parties resulting from the
Final Determination (pursuant to joint written instructions in the form of Exhibit B
attached to this Agreement). The Alpha Parties and the Xxxxxxxxxx Parties shall furnish to Escrow
Agent the joint written instructions required by this §5 within five Business Days of the date of
such Final Determination and Escrow Agent shall disburse any amounts required under this §5 within
five Business Days of receipt of such joint written instructions.
(c) Termination. Notwithstanding anything in this §5 to the contrary, on the
Termination Date (as defined below), all further disbursements out of the Escrow Amount shall be
determined in accordance with §6 below.
§6. Termination of Escrow.
On ___, 2007 (the “Termination Date”), Escrow Agent shall distribute all of the
remaining Escrow Amount to the Xxxxxxxxxx Parties, unless any Claims for Indemnification are then
pending, in which case (i) there shall be retained in the Escrow Account (in the proportion that
each form of Escrow Amount bears to the total Escrow Amount) a whole number of Alpha Shares
(rounded up or down to the nearest whole Alpha Share), which when multiplied by the Closing Price
as of the Termination Date, and added to the remaining Cash Deposit, if any, equals the amount of
such pending Claims for Indemnification; (ii) the remaining balance of the Escrow Amount after such
retention will be so disbursed by Escrow Agent to the Xxxxxxxxxx Parties (pursuant to joint written
instructions in the form of Exhibit B attached to this Agreement, signed by Alpha Inc. and
the Sellers Representative on behalf of the Xxxxxxxxxx Parties); and (iii) as each such Claim for
Indemnification is resolved by a Final Determination, any amount retained with respect thereto that remains in the Escrow Account after such resolution will be
disbursed by Escrow Agent to the Xxxxxxxxxx Parties, after any disbursement to the Alpha Parties
resulting from the Final Determination (pursuant to joint written instructions in the form
8
of Exhibit B attached to this Agreement, signed by Alpha Inc. and the Sellers Representative
on behalf of the Xxxxxxxxxx Parties). The Alpha Parties and the Xxxxxxxxxx Parties shall furnish
to Escrow Agent the joint written instructions required by this §6 within five Business Days of the
date of such Final Determination and Escrow Agent shall disburse any amounts required under this §6
within five Business Days of receipt of such joint written instructions. This Agreement shall in
any event terminate on the complete disbursement of the Escrow Amount, provided that the
provisions of §0, §00 and §11 shall survive the termination of this Agreement.
§7. Account Opening Information/Tax Matters.
(a) Account Opening.
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
For accounts opened in the US:
To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account. When an account is opened, the Escrow Agent will ask for information
that will allow us to identify relevant parties.
For non-US accounts:
To help in the fight against the funding of terrorism and money laundering activities we are
required along with all financial institutions to obtain, verify, and record information that
identifies each person who opens an account. When you open an account, the Escrow Agent will ask
for information that will allow us to identify you.
(b) Withholding. Any payments of income from the Escrow Amount shall be subject to
withholding regulations then in force with respect to United States taxes. The Parties each
represent that its correct Taxpayer Identification Number (“TIN”) assigned by the Internal Revenue
Service (“IRS”) or any other taxing authority is set forth on the signature page of this Agreement.
(c) Responsibility. In addition, Escrow Agent shall withhold any taxes it deems
appropriate and shall remit such taxes to the appropriate authorities. Any tax returns or reports
required to be prepared and filed on behalf of or by the Escrow Amount will be prepared and filed
by the Alpha Parties or the Xxxxxxxxxx Parties, as applicable, and the Escrow Agent shall have no
responsibility for the preparation and/or filing of any tax return with respect to income earned by
the Escrow Amount, if any. In addition, any tax or other payments required to be made pursuant to
such tax return or filing will be paid by the Alpha Parties or the Xxxxxxxxxx Parties, as appropriate. Escrow Agent shall have no responsibility
for such payment unless directed to do so by the appropriate authorized Party.
(d) Taxable Distributions. The Xxxxxxxxxx Parties and the Alpha Parties agrees that,
for purposes of federal and other taxes based on income, the Xxxxxxxxxx Parties will be treated as
9
the owners of the Escrow Amount, and that the Xxxxxxxxxx Parties will be responsible for reporting
all income, if any, that is earned on, or derived from, its portion of such Escrow Amount, in the
taxable year or years in which such income is properly includible and shall pay any taxes
attributable thereto (with such tax liability allocated to each Xxxxxxxxxx Party as the Xxxxxxxxxx
Parties may determine). The Alpha Parties and the Xxxxxxxxxx Parties agree not to take any
position for tax purposes that is inconsistent with the provisions of this §7(d).
§8. Scope of Undertaking.
Escrow Agent’s duties and responsibilities in connection with this Agreement shall be purely
ministerial and shall be limited to those expressly set forth in this Agreement. Escrow Agent is
not a principal, participant or beneficiary in any transaction underlying this Agreement and shall
have no duty to inquire beyond the terms and provisions of this Agreement. Escrow Agent is not
required to be familiar with the provisions of any other instrument or agreement, including the
Indemnification Agreement and the Acquisition Agreements, and shall not be charged with any
responsibility or liability in connection with the observance or non-observance, by any person, of
the provisions of any other such instrument or agreement, including the Indemnification Agreement
and the Acquisition Agreements. Escrow Agent shall have no responsibility or obligation of any
kind in connection with this Agreement or the Escrow Amount other than as provided in this
Agreement. Without limiting the generality of the foregoing, it is hereby expressly agreed and
stipulated by the Parties that Escrow Agent shall not be required to exercise any discretion under
this Agreement and, other than pursuant to §3, shall have no investment or management
responsibility and, accordingly, shall have no duty to, or liability for its failure to, provide
investment recommendations or investment advice to any Party. Escrow Agent shall not be liable for
any error in judgment, any act or omission, any mistake of law or fact, or for anything it may do
or refrain from doing in connection with this Agreement (except for, subject to §9, its own willful
misconduct, gross negligence or bad faith). It is the intention of the Parties that Escrow Agent
shall never be required to use, advance or risk its own funds or otherwise incur financial
liability in the performance of any of its duties or the exercise of any of its rights and powers
under this Agreement.
§9. Reliance; Liability.
Escrow Agent may rely on, and shall not be liable for acting or refraining from acting in
accordance with, any written notice, instruction or request or other paper furnished to it in the
form required by this Agreement and believed by it to have been signed or presented by the proper
Party or Parties. Escrow Agent shall be responsible for holding, investing, reinvesting and
disbursing the Escrow Amount pursuant to this Agreement; provided, however, anything in this
Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action and provided, further, that Escrow Agent shall have no liability
for any loss arising from any cause beyond its control, including the following: (a) acts of God,
force majeure, including war (whether or not declared or existing), revolution, insurrection, riot,
civil commotion, accident, fire, explosion, stoppage of labor, strikes and other differences with
employees; (b) the
10
act, failure or neglect of any Party (other than Escrow Agent); (c) any delay,
error, omission or default of any mail, courier, telegraph, cable or wireless agency or operator;
or (d) the acts or edicts of any Governmental Authorities. Escrow Agent is not responsible or
liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the
subject matter of this Agreement or any part of this Agreement or for the transaction or
transactions requiring or underlying the execution of this Agreement, the form or execution of this
Agreement or for the identity or authority of any person executing this Agreement or any part of
this Agreement or depositing the Escrow Amount. Escrow Agent shall have a lien, which shall be
paramount and prior in right of all other persons, upon all monies and other property that shall
have been received by it under this Agreement, to secure the payment to it of fees and expenses due
to Escrow Agent pursuant to this Agreement.
§10. Indemnification.
The Xxxxxxxxxx Parties collectively, on the one hand, and the Alpha Parties collectively, on
the other hand, hereby indemnify Escrow Agent, its officers, directors, partners, employees and
agents (each herein called an “Indemnified Party”) against, and hold each Indemnified Party
harmless from 50% of any and all expenses, including reasonable attorneys’ fees and court costs,
losses, costs, damages and claims, including costs of investigation, litigation and arbitration,
tax liability and loss on investments suffered or incurred by any Indemnified Party in connection
with or arising from or out of this Agreement (except, subject to §9, such acts or omissions as may
result from the willful misconduct, gross negligence or bad faith of an Indemnified Party), and
such indemnification shall survive the termination of this Agreement.
§11. Compensation and Reimbursement of Expenses.
The Alpha Parties and the Xxxxxxxxxx Parties hereby agree to pay Escrow Agent for its services
under this Agreement in accordance with Escrow Agent’s fee schedule attached as Schedule I
as in effect from time to time and to pay all reasonable expenses incurred by Escrow Agent in
connection with the performance of its duties and enforcement of its rights under this Agreement
and otherwise in connection with the preparation, operation, administration and enforcement of this
Agreement, including reasonable attorneys’ fees, brokerage costs and related expenses incurred by
Escrow Agent. Any such compensation and reimbursement to which Escrow Agent is entitled shall be
borne 50% by the Alpha Parties and 50% by the Xxxxxxxxxx Parties (allocated to each Xxxxxxxxxx
Party as the Xxxxxxxxxx Parties may determine). In the event such Parties for any reason fail to
pay any such fees and expenses as and when the same are due, such unpaid fees and expenses shall be
charged to and set-off and paid from the Escrow Amount by Escrow Agent without any further notice;
provided that the Alpha Parties or the Xxxxxxxxxx Parties, as the case may be, shall be entitled to immediate reimbursement from the other
Parties for such fees and expenses as are not paid by such other Parties and are set-off and paid
from the Escrow Xxxxxx.
§00. Wire Transfers.
11
In the event funds transfer instructions are given (other than in writing at the time of
execution of this Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back to the person or
persons designated on Schedule II to this Agreement, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be the person or persons so designated. The persons and
telephone numbers for call-backs may be changed only in a writing actually received and
acknowledged by the Escrow Agent. If the Escrow Agent is unable to contact any of the authorized
representatives identified in Schedule II, the Escrow Agent is hereby authorized to seek
confirmation of such instructions by telephone call-back to any one or more of the Parties’
executive officers, (“Executive Officers”), which shall include the titles of President, Executive
Vice President and Vice President, as the Escrow Agent may select. Such “Executive Officer” shall
deliver to the Escrow Agent a fully executed incumbency certificate, and the Escrow Agent may rely
upon the confirmation of anyone purporting to be any such Executive Officer. The Escrow Agent and
the beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by the Alpha Parties or the Xxxxxxxxxx Parties to identify (i) the
beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank. The Escrow Agent may
apply any of the Escrow Amount for any payment order it executes using any such identifying number,
even when its use may result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary’s bank or an intermediary bank designated. The parties
to this Agreement acknowledge that these security procedures are commercially reasonable.
§13. Consultation with Legal Counsel.
Escrow Agent may consult with its counsel or other counsel satisfactory to it concerning any
question relating to its duties or responsibilities under or otherwise in connection with this
Agreement and shall not be liable for any action taken, suffered or omitted by it in good faith
upon the advice of such counsel (except, subject to §9, for its own gross negligence, willful
misconduct or bad faith).
§14. Resignation; Removal.
(a) Resignation. Escrow Agent (and any successor escrow agent) may at any time resign
as such by delivering the Escrow Amount to any successor escrow agent jointly designated in writing
by the Parties other than the Escrow Agent, or to any court of competent jurisdiction, whereupon
Escrow Agent shall be discharged of and from any and all further obligations arising in connection
with this Agreement. The resignation of Escrow Agent will take effect on the earlier of the
appointment of a successor (including a court of competent jurisdiction) or the day which is 30
days after the date of delivery of its written notice of resignation to the other Parties. If at that time Escrow Agent has not received a designation
of a successor escrow agent, Escrow Agent’s sole responsibility after that time shall be to retain
and safeguard the Escrow Amount until receipt of a designation of successor escrow agent, a joint
written disposition instruction by the Alpha Parties and the Xxxxxxxxxx Parties, or termination of
this Agreement as provided.
(b) Removal. The Xxxxxxxxxx Parties and the Alpha Parties may jointly remove the
Escrow Agent and terminate this Agreement upon ten days prior notice. Upon such removal and
12
termination, the Escrow Amount (including any interest or other earnings thereon) shall be
transferred in accordance with the joint written instructions of the Xxxxxxxxxx Parties and the
Alpha Parties.
§15. General.
(a) Entire Agreement. This Agreement constitutes the entire agreement among the
Parties and Escrow Agent and supersedes any prior understandings, agreements, or representations by
or among the Parties and Escrow Agent, written or oral, to the extent they relate in any way to the
subject matter of this Agreement.
(b) Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and Escrow Agent named in this Agreement and their respective successors and
permitted assigns. No Party and Escrow Agent may assign either this Agreement or any of its
rights, interests, or obligations under this Agreement without the prior written approval of the
other Parties and Escrow Agent; provided, however, that the Alpha Parties may (i) assign any or all
of its rights and interests under this Agreement to one or more of their Affiliates, (ii) assign,
pledge or mortgage all of its rights and interests under this Agreement to any provider of
financing, and any trustee or agent acting on their behalf, as security for the Alpha Parties’ or
their Affiliates’ obligations under all documents and instruments evidencing, guaranteeing or
executed by them in connection with any such financing and (iii) designate one or more of their
Affiliates to perform their obligations under this Agreement (in any or all of which cases the
Alpha Parties nonetheless shall remain responsible for the performance of all of its obligations
under this Agreement). A material change in the ownership of (a) Alpha Natural Resources, Inc.
(other than as the result of trading of its common stock on the New York Stock Exchange, Inc. or an
underwritten offering of its common stock) or (b) an Affiliate of the Alpha Parties designated to
perform the Alpha Parties’ obligations under this Agreement or hold any portion of the Business
(other than the transfer to a direct or indirect wholly owned Subsidiary of Alpha Natural
Resources, LLC) shall be deemed an assignment for purposes of this Agreement. A reference to any
Party to this Agreement or another agreement or document or the Escrow Agent includes the Party’s
(or the Escrow Agent’s) successors and assigns.
(c) Counterparts. This Agreement and any certificate, instructions, instrument,
agreement or other document required to be provided under this Agreement may be executed in one or
more counterparts (including by means of facsimile), each of which shall be deemed an original but
all of which together will constitute one and the same instrument.
(d) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
(e) Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given when (i) delivered by hand (with written confirmation of receipt) or by
facsimile transmission (with confirmation received by the sender), (ii) two Business Days (as
defined below) after sent by registered or certified mail, return receipt requested, postage
prepaid, or (iii) when received by the addressee, if sent by a nationally
13
recognized overnight delivery service (receipt requested), in each case to the appropriate addresses set forth below:
If to Nicewonder Parties:
Xxx Xxxxxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Facsimile: (000) 000-0000
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Xxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxx & Associates
X.X. Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: E. Xxxxxxx Xxxxx, Jr., Esq.
Facsimile No.: (000) 000-0000
X.X. Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: E. Xxxxxxx Xxxxx, Jr., Esq.
Facsimile No.: (000) 000-0000
If to the Alpha Parties:
Alpha Natural Resources, LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
With copies to:
Alpha Natural Resources, LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 000
0000 Xxxxxxx Xxxxxx, Xxxxx 000
00
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Escrow Agent:
JPMorgan Chase Bank, N.A.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Any Party or the Escrow Agent may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any other means (including
personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received by the intended recipient.
Any Party or the Escrow Agent may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Parties and Escrow Agent
notice in the manner set forth in this Agreement. “Business Day” shall mean any day other than a
Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth
above is authorized or required by law or executive order to remain closed.
(f) Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the [Commonwealth of Virginia] without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the [Commonwealth of
Virginia].
(g) Arbitration. Any dispute, controversy or claim arising out of or relating to this
Agreement (a “Dispute”) shall be settled by binding arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association (“AAA”) except as otherwise provided in
this §15(g). Any such Dispute shall be arbitrated on an individual basis, and shall not be
consolidated in any arbitration with any dispute, claim or controversy of any other party. The
arbitration shall be conducted in Abingdon, Virginia, and any court having jurisdiction thereof may
immediately issue judgment on the arbitration award. All costs of the Dispute resolution process
contemplated by this §15(g) (including, without limitation, the fees arbitrator, but exclusive of
attorneys’ fees) shall be borne by the Person who is the least successful in such process, which
shall be determined by comparing (x) the position asserted by each Person on all disputed matters
taken together to (y) the final decision of the arbitrator on all disputed matters taken together.
The Parties and Escrow Agent agree that the arbitration provided for in this §15(g) shall be the
exclusive means to resolve all Disputes.
15
(h) Amendments and Waivers. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) with the written consent of Escrow Agent, the Alpha Parties and the
Sellers Representative. No waiver by any Party or Escrow Agent of any provision of this Agreement
of any default, misrepresentation, or breach of warranty or covenant under this Agreement, whether
intentional or not, shall be valid unless the same shall be in writing and signed by the Party or
Escrow Agent making such waiver, nor shall such waiver be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or
affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
(i) No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties, Escrow Agent and their respective successors and
permitted assigns. This Agreement shall be binding upon and inure to the benefit of the Parties
and Escrow Agent, their respective successors in interest and assignees and no third party shall
have any interest in the Escrow Amount.
(j) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions of this Agreement or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
(k) Expenses. Except as otherwise provided in this Agreement, each Party will bear
its own costs and expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated by this Agreement.
(l) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the
Parties and Escrow Agent and no presumption or burden of proof shall arise favoring or
disfavoring any Party and Escrow Agent by virtue of the authorship of any of the provisions of this
Agreement. All references in this Agreement to articles, sections or subdivisions thereof shall
refer to the corresponding article, section or subdivision thereof of this Agreement unless
specific reference is made to such articles, sections, or subdivisions of another document or
instrument. Any reference to any federal, state, local, or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the context requires
otherwise. The word “including” means including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in
this Agreement are incorporated in this Agreement by reference and made a part of this Agreement.
(n) Compliance with Court Orders. In the event that any portion of the
Escrow Amount shall be attached, garnished or levied upon by any court order, or the delivery
thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall
be made or entered by any court order affecting the property deposited under this Agreement, the
Escrow
16
Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all
writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own
choosing is binding upon it, whether with or without jurisdiction, and in the event that the Escrow
Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the
parties hereto or to any other person, firm or corporation, by reason of such compliance
notwithstanding such writ, order or decree be subsequently reversed, modified, annulled, set aside
or vacated.
[Signature Page Follows]
17
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the date
first above written.
Tax Certification: Taxpayer ID#:
Customer is a (check one):
___ Corporation ___ Municipality ___ Partnership ___ Non-profit or Charitable Org
___ Individual ___ REMIC ___ Trust ___ Other _________________
Under the penalties of perjury, the undersigned certifies that:
(1) | the entity is organized under the laws of the United States |
(2) | the number shown above is its correct Taxpayer Identification Number (or it is waiting for a number to be issued to it); and |
(3) | it is not subject to backup withholding because: (a) it is exempt from backup withholding or (b) it has not been notified by the Internal Revenue Service (IRS) that it is subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified it that it is no longer subject to backup withholding. |
(If the entity is subject to backup withholding, cross out the words after the (3) above.)
Investors who do not supply a tax identification number will be subject to backup withholding in
accordance with IRS regulations.
Note: The IRS does not require your consent to any provision of this document other than the
certifications required to avoid backup withholding .
[Each Party will need to complete this certification on a separate signature page]
XXXXXXXXXX PARTIES: | ||||||
MATE CREEK ENERGY OF W. VA., INC. | ||||||
By: | ||||||
Title: | ||||||
VIRGINIA ENERGY COMPANY | ||||||
By: | ||||||
Title: | ||||||
Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx | ||||||
Xxxxxxx X. Xxxxxxxxxx |
18
Xxxx Xxxxx Xxxxxxxxxx | ||||||
Xxx Xxxxxxxxxx Xxxxxxx | ||||||
Xxxxx Xxxxxx | ||||||
Xxxxx Xxxxxxxx | ||||||
Majority Xxxxxxxx Unitholders: | ||||||
X.X. Xxxxxxxxxx | ||||||
Xxxx Xxxxxx | ||||||
X.X. Xxxxxx | ||||||
X. X. Xxxxxx Charitable Income Trust II | ||||||
By: | ||||||
Title: | ||||||
19
Tri-Cities Investments, a Virginia general partnership |
||||||
By: | Tri-Cities Investments, Inc., its general partner | |||||
By: | ||||||
Title: | President | |||||
X.X. Xxxxxxxxx | ||||||
ALPHA PARTIES: | ||||||
ALPHA NATURAL RESOURCES, LLC | ||||||
By: | ||||||
Title: | ||||||
ALPHA NATURAL RESOURCES, INC. | ||||||
By: | ||||||
Title: | ||||||
PREMIUM ENERGY, LLC | ||||||
By: | ||||||
Title: | ||||||
20
ESCROW AGENT: | ||||||
JPMORGAN CHASE BANK, N.A. | ||||||
By: | ||||||
Title: | ||||||
21
Schedule I
Escrow Agent Fees
22
Schedule II
Telephone Number(s) for Call-backs and Person(s)
Designated to Confirm Funds Transfer Instructions
(Need at least two individuals for each Party.)
Designated to Confirm Funds Transfer Instructions
(Need at least two individuals for each Party.)
If to the Alpha Parties:
Name | Telephone Number | |
1. |
||
2. |
If to the Xxxxxxxxxx Parties:
Name | Telephone Number | |
1.Xxxxx Xxxxxx, as Sellers Representative
|
(000)000-0000 | |
2.Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx
|
(000)000-0000 |
Telephone call-backs shall be made to either Alpha Parties or Xxxxxxxxxx Parties if joint
instructions are required pursuant to the Agreement.
23
EXHIBIT A
CERTIFICATE OF THE ALPHA PARTIES
The following certificate is delivered pursuant to §4(a)(ii) of that certain Escrow Agreement
made and entered into , 2005 by and among Alpha Natural Resources, LLC, Alpha Natural
Resources, Inc., Premium Energy, LLC, Mate Creek Energy of W. Va., Inc., Virginia Energy Company,
the unitholders of Powers Shop, LLC, certain unitholders of Xxxxxxxx Energy Company, LLC, the
shareholders of each of Premium Energy, Inc., Twin Star Mining, Inc., Xxxxxxxxxx Contracting, Inc.
and White Flame Energy, Inc., and JPMorgan Chase Bank, N.A., (the “Escrow Agreement”).
Capitalized terms not otherwise defined in this certificate have the meanings given to such terms
in the Escrow Agreement.
Alpha Inc. hereby certifies that the Alpha Parties have properly and timely given a Claim for
Indemnification to the Xxxxxxxxxx Parties specifying in reasonable detail the nature and dollar
amount of a Claim for Indemnification under [Section 5.2(a)/Section 5.2(b)] of the Indemnification
Agreement and no Counternotice has been given to the Alpha Parties and Escrow Agent during the
Claim Period.
Dated this day of , 200_
ALPHA NATURAL RESOURCES, INC. | ||||||
By: | ||||||
Title: | ||||||
24
EXHIBIT B
JOINT WRITTEN INSTRUCTIONS
REGARDING FINAL DETERMINATION/RELEASE FROM ESCROW ACCOUNT
REGARDING FINAL DETERMINATION/RELEASE FROM ESCROW ACCOUNT
The following joint written instructions are delivered pursuant to [§4(a)(iv)][§5][§6] of that
certain Escrow Agreement made and entered into , 2005 by and among Alpha Natural
Resources, LLC, Alpha Natural Resources, Inc., Premium Energy, LLC, Mate Creek Energy of W. Va.,
Inc., Virginia Energy Company, the unitholders of Powers Shop, LLC, certain unitholders of Xxxxxxxx
Energy Company, LLC, the shareholders of each of Premium Energy, Inc., Twin Star Mining, Inc.,
Xxxxxxxxxx Contracting, Inc. and White Flame Energy, Inc., and JPMorgan Chase Bank, N.A., (the
“Escrow Agreement”). Capitalized terms not otherwise defined in these joint written
instructions have the meanings given to such terms in the Escrow Agreement.
The Sellers Representative and Alpha Inc. hereby certify that a Final Determination of the
Claim for Indemnification described on Annex 1 to these joint written instructions has been
reached. The Sellers Representative and Alpha Inc. hereby instruct Escrow Agent to pay Alpha Inc.
the amount of Alpha Shares [and $ in cash] from the Escrow Account, which is the
amount of such Claim for Indemnification as determined by the Final Determination. [The Sellers
Representative and Alpha Inc. further instruct Escrow Agent to release to the Xxxxxxxxxx Parties
the amount of Alpha Shares and $ in cash from the Escrow Account pursuant to
[§5][§6] of the Agreement.]
Dated this _______ day of _______, 200_
SELLERS REPRESENTATIVE: | ||||||
Xxxxx Xxxxxx | ||||||
ALPHA NATURAL RESOURCES, INC. | ||||||
By: | ||||||
Title: | ||||||
25
Exhibit C
AUTHORIZED SIGNERS LIST
The Xxxxxxxxxx Parties:
Name | Signature | |
1. Xxxxx Xxxxxx
|
||
as Sellers Representative |
||
2. Xxxxxxx Xxxxxx “Don” Xxxxxxxxxx
|
The Alpha Parties:
Name | Signature | |
1.
|
||
2.
|
||
3.
|
26
EXHIBIT D
JOINT WRITTEN INSTRUCTIONS
REGARDING SCHEDULED RELEASES
REGARDING SCHEDULED RELEASES
The following joint written instructions are delivered pursuant to §5 of that certain Escrow
Agreement made and entered into , 2005 by and among Alpha Natural Resources, LLC,
Alpha Natural Resources, Inc., Premium Energy, LLC, Mate Creek Energy of W. Va., Inc., Virginia
Energy Company, the unitholders of Powers Shop, LLC, certain unitholders of Xxxxxxxx Energy
Company, LLC, the shareholders of each of Premium Energy, Inc., Twin Star Mining, Inc., Xxxxxxxxxx
Contracting, Inc. and White Flame Energy, Inc., and JPMorgan Chase Bank, N.A., (the “Escrow
Agreement”). Capitalized terms not otherwise defined in these joint written instructions have
the meanings given to such terms in the Escrow Agreement.
The Sellers Representative and Alpha Inc. hereby certify that each of the matters described in
Section 5.2(b)(vi), (vii) and (viii) of the Indemnification Agreement has been resolved to the
satisfaction of the Alpha Parties. The Sellers Representative and Alpha Inc. hereby instruct the
Escrow Agent to release to the Xxxxxxxxxx Parties the amount of Alpha Shares and
$ in cash from the Escrow Account on , 2007.
Dated this day of , 200_
SELLERS REPRESENTATIVE: | ||||||
Xxxxx Xxxxxx | ||||||
ALPHA NATURAL RESOURCES, INC. | ||||||
By: | ||||||
Title: | ||||||
27