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STOCK PURCHASE AND SALE AGREEMENT
BY AND AMONG
CYPRUS AMAX MINERALS COMPANY,
AMAX ENERGY INC.,
CYPRUS AMAX COAL COMPANY
AND
RAG INTERNATIONAL MINING GMBH
DATED AS OF MAY 12, 1999
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions............................................................................... 1
ARTICLE II
THE TRANSACTION
Section 2.1 Purchase and Sale......................................................................... 12
2.1.1 Estimated Adjustment......................................................... 12
2.1.2 Sale and Purchase of Shares.................................................. 12
Section 2.2 Equity Adjustment to Purchase Price....................................................... 12
2.2.1 Closing Statement............................................................ 12
2.2.2 Objection to Adjustment Computations......................................... 13
2.2.3 Adjustment Payments.......................................................... 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Buyer's Representations and Warranties.................................................... 14
3.1.1 Due Organization............................................................. 14
3.1.2 Due Authorization............................................................ 14
3.1.3 Enforceability............................................................... 15
3.1.4 No Conflict.................................................................. 15
3.1.5 No Contract Conflict......................................................... 15
3.1.6 No Litigation Conflict....................................................... 15
3.1.7 Regulatory Approvals......................................................... 15
3.1.8 Qualifications as Lessee; Coal Acreage Limitations........................... 15
3.1.9 Permit Blocking.............................................................. 16
3.1.10 Buyer's Financial Capacity................................................... 16
3.1.11 Investment Intent............................................................ 16
3.1.12 Legend....................................................................... 16
3.1.13 Access to Information........................................................ 17
3.1.14 Buyer's Knowledge............................................................ 17
3.1.15 No Commissions............................................................... 17
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Section 3.2 Cyprus Amax's Representations and Warranties.............................................. 17
3.2.1 Due Organization............................................................. 17
3.2.2 Due Authorization............................................................ 18
3.2.3 Enforceability............................................................... 18
3.2.4 No Conflict.................................................................. 18
3.2.5 No Contract Conflict......................................................... 18
3.2.6 Regulatory Approvals......................................................... 18
3.2.7 Title to Stock; Subsidiaries................................................. 19
3.2.8 Capitalization............................................................... 19
3.2.9 Articles of Incorporation; Bylaws............................................ 19
3.2.10 Financial Statements......................................................... 19
3.2.11 Property Interests........................................................... 20
3.2.12 Personal Property............................................................ 20
3.2.13 Intellectual Property........................................................ 21
3.2.14 Material Contracts........................................................... 21
3.2.15 Large Customers.............................................................. 23
3.2.16 Employee Relations........................................................... 23
3.2.17 Litigation................................................................... 24
3.2.18 Environmental Matters........................................................ 24
3.2.19 Absence of Changes or Events................................................. 25
3.2.20 Compliance with Laws......................................................... 26
3.2.21 Permits...................................................................... 26
3.2.22 Insurance.................................................................... 27
3.2.23 Transactions with Affiliates................................................. 27
3.2.24 Bonds and Guarantees......................................................... 27
3.2.25 Employee Benefit Plans....................................................... 28
3.2.26 Reserves..................................................................... 31
3.2.27 Year 2000.................................................................... 31
3.2.28 No Commissions............................................................... 31
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Covenants and Agreements of Buyer......................................................... 31
4.1.1 Confidentiality.............................................................. 31
4.1.2 No Solicitation by Buyer..................................................... 31
4.1.3 References to Cyprus Amax.................................................... 32
Section 4.2 Covenants and Agreements of Cyprus Amax and the Company................................... 32
4.2.1 Access to Information........................................................ 32
4.2.2 Environmental Investigation.................................................. 32
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4.2.3 Ordinary Course of Business.................................................. 33
4.2.4 Confidentiality.............................................................. 33
4.2.5 No Solicitation by Cyprus Amax............................................... 34
4.2.6 References to Buyer.......................................................... 34
4.2.7 Assignment of Agreements..................................................... 34
4.2.8 Exclusivity ................................................................. 34
4.2.9 Intercompany Accounts; Cash Accounts......................................... 35
Section 4.3 Continuing Joint Covenants and Agreements................................................. 35
4.3.1 No Acts or Omissions......................................................... 35
4.3.2 Consents of Others........................................................... 35
4.3.3 Antitrust Matters............................................................ 36
4.3.4 Financing.................................................................... 37
4.3.5 Publicity.................................................................... 37
4.3.6 Guarantees................................................................... 37
4.3.7 Notice of Breach; Cure of Breach............................................. 41
Section 4.4 Twentymile Permit......................................................................... 41
Section 4.5 Cyprus Plateau Mining Corporation......................................................... 42
Section 4.6 Non-Competition Agreement................................................................. 42
Section 4.7 Keepwell Agreements ...................................................................... 43
ARTICLE V
BENEFITS PROVISIONS
Section 5.1 Benefits Matters.......................................................................... 43
ARTICLE VI
CONDITIONS PRECEDENT TO THE CLOSING
Section 6.1 Conditions Precedent to Buyer's Obligations............................................... 50
6.1.1 Accuracy of Warranties and Performance of Covenants.......................... 50
6.1.2 Approvals, Absence of Litigation............................................. 50
6.1.3 No Injunction................................................................ 50
6.1.4 Buyer's Receipt of the Closing Documents..................................... 51
Section 6.2 Conditions Precedent to Cyprus Amax's, Energy's and the Company's Obligations............. 51
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6.2.1 Accuracy of Warranties and Performance of Covenants.......................... 51
6.2.2 Approvals; Absence of Litigation............................................. 51
6.2.3 No Injunction................................................................ 51
6.2.4 Cyprus Amax's Receipt of the Closing Documents............................... 51
6.2.5 Cyprus Amax's Receipt of Specified Consents.................................. 51
ARTICLE VII
THE CLOSING
Section 7.1 The Closing Date.......................................................................... 51
Section 7.2 Deliveries at the Closing................................................................. 52
7.2.1 Buyer's Execution and Delivery of Documents and Payment...................... 52
7.2.2 Cyprus Amax's Execution and Delivery of Documents and
Certificates................................................................. 52
Section 7.3 Simultaneous Closing...................................................................... 53
ARTICLE VIII
POST-CLOSING AGREEMENTS AND OTHER MATTERS
Section 8.1 Post-Closing Agreements................................................................... 53
Section 8.2 Inspection of Records..................................................................... 53
Section 8.3 Mutual Assistance......................................................................... 54
Section 8.4 Further Assurances........................................................................ 54
Section 8.5 Transfer of Non-Covered Assets............................................................ 54
Section 8.6 Exchange Act and Other Filings............................................................ 54
Section 8.7 Insurance................................................................................. 55
8.7.1 Insurance Coverage after Closing............................................. 55
8.7.2 Treatment of Certain Pre-Closing Claims...................................... 55
8.7.3 Treatment of Excluded Insurance Matters...................................... 57
8.7.4 Treatment of Deductibles and Related Matters................................. 57
Section 8.8 Administration of Accounts................................................................ 57
8.8.1 In Trust for Buyer........................................................... 57
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8.8.2 In Trust for Cyprus Amax..................................................... 57
8.8.3 Non Right of Set-Off......................................................... 58
Section 8.9 Notice Obligations of Buyer............................................................... 58
ARTICLE IX
INDEMNIFICATION
Section 9.1 Survival for Representations, Warranties, Covenants, Agreements and
Indemnifications.......................................................................... 58
Section 9.2 Indemnification by Cyprus Amax............................................................ 58
Section 9.3 Indemnification by Buyer and the Company.................................................. 59
Section 9.4 Procedure for Third Party Claims.......................................................... 59
9.4.1 Notice of a Third Party Claim................................................ 59
9.4.2 Right to Defend.............................................................. 60
9.4.3 Notice to Indemnifying Party................................................. 61
9.4.4 Duty to Mitigate............................................................. 61
Section 9.5 General Provisions Relating to Remedies and Indemnification............................... 61
Section 9.6 Exclusive Nature.......................................................................... 63
ARTICLE X
TERMINATION
Section 10.1 Termination............................................................................... 64
10.1.1 Mutual Consent............................................................... 64
10.1.2 Litigation................................................................... 64
10.1.3 Conditions to Buyer's Obligations not Met.................................... 64
10.1.4 Conditions to Cyprus Amax's, Energy's and the Company's
Obligations not Met.......................................................... 64
10.1.5 Failure of Adequate Financing................................................ 64
Section 10.2 Effect of Termination..................................................................... 64
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Company Name.............................................................................. 65
Section 11.2 Exclusivity of Representations and Warranties; Relationship Between the Parties........... 65
Section 11.3 Environmental Matters..................................................................... 67
Section 11.4 Tax Matters............................................................................... 67
Section 11.5 Entire Agreement.......................................................................... 67
Section 11.6 Amendments................................................................................ 67
Section 11.7 Severability.............................................................................. 68
Section 11.8 Counterparts.............................................................................. 68
Section 11.9 No Waiver................................................................................. 68
Section 11.10 Assignment................................................................................ 68
Section 11.11 Fees, Costs and Expenses.................................................................. 68
Section 11.12 Third Party Beneficiaries................................................................. 69
Section 11.13 Interpretation of Schedules............................................................... 69
Section 11.14 Construction.............................................................................. 69
Section 11.15 Consent to Jurisdiction and Related Matters............................................... 70
Section 11.16 Waiver of Jury Trial...................................................................... 70
Section 11.17 Notices................................................................................... 71
Section 11.18 Governing Law; Jurisdiction............................................................... 73
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STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT is made as of the 12th day
of May, 1999, by and among Cyprus Amax Minerals Company, a Delaware corporation
("Cyprus Amax"), Amax Energy Inc., a Delaware corporation ("Energy"), Cyprus
Amax Coal Company, a Delaware corporation (the "Company"), and RAG International
Mining GmbH, a German Gesellschaft mit beschraenkter Haftung ("Buyer") (Cyprus
Amax, Energy, the Company and Buyer are sometimes individually referred to
herein as a "party" and sometimes collectively as "parties").
WITNESSETH
WHEREAS, Energy owns 100 shares of the common stock, par value
$1.00 per share, of the Company (the "Company Shares"), which represent 100% of
the issued and outstanding shares of the capital stock of the Company;
WHEREAS, Cyprus Amax is the parent company of Energy;
WHEREAS, Buyer desires to purchase from Energy, and Energy
desires to sell to Buyer, all of the Company Shares upon the terms and
conditions set forth in this Agreement; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Guarantor (as defined herein) is delivering a guarantee, dated as of
the date hereof, to Cyprus Amax and Energy;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Cyprus Amax, the Company,
Energy and Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS
SETION 1.1 DEFINITIONS
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In this Agreement, the following terms shall have the following
meanings:
"Accountant" means Ernst & Young LLP or if such accounting firm
is unable or unwilling to accept such appointment, another "big-five" accounting
firm (other than PricewaterhouseCoopers LLP or KPMG LLP) mutually acceptable to
and agreed upon by Cyprus Amax and Buyer which shall not have, and which shall
not have had during the last three years, any material financial relationship
with any party to this Agreement or any of their respective Affiliates.
"Actuary" shall have the meaning set forth in Section 5.1.3(b).
"Adjusted Equity Value" means the Equity Value as of the Closing
adjusted by decreasing such amount by the amount (i) of any Cyprus Amax Asset
that is reflected on the Closing Statement but not the December Statement, (ii)
by which any Cyprus Amax Asset
increased from the December Statement to the Closing Statement, and (iii) by
which a Cyprus Amax Liability decreased from the December Statement to the
Closing Statement, and increasing such amount by the amount (i) of any Cyprus
Amax Liability that is reflected on the Closing Statement but not the December
Statement, (ii) by which a Cyprus Amax Liability increased from the December
Statement to the Closing Statement, and (iii) by which a Cyprus Amax Asset
decreased from the December Statement to the Closing Statement.
"Adjustment Computation Objection" shall have the meaning set
forth in Section 2.2.2.
"Adjustment Computations" shall have the meaning set forth in
Section 2.2.1.
"AEI Sublease" means that certain Sublease entered into and
effective the 29th day of May, 1998, by and between Amax Coal West, Inc., Cyprus
Miami Mining Corporation, Cyprus Coal Equipment Company, Cyprus Sierrita
Corporation, Cyprus Bagdad Copper Corporation, Cyprus Cumberland Resources
Corporation, Maple Meadow Mining Company, and Twentymile Coal Company, and
Cyprus Mountain Coals Corporation, ▇▇▇▇ Coal & Dock Company, Cannelton
Industries, Inc., and Amax Coal Company.
"Affiliate" of any Person means any other Person which Controls,
is Controlled by, or is under common Control with such Person.
"Affiliate Agreements" shall have the meaning set forth in
Section 3.2.23.
"Agreement" means this Agreement, the Annexes, Schedules,
Exhibits and other attachments hereto, and all amendments and supplements to any
of the foregoing, made in accordance with Section 11.6.
"Allowed Claim" means any actual final and nonappealable judgment
for punitive damages rendered against the Company or any of its Subsidiaries as
a result of a Third Party Claim to the extent the matters underlying such
judgment arose from any matter which constituted a breach of any representation
or warranty of Cyprus Amax hereunder.
"Antitrust Laws" means the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act, the HSR
Act, the Federal Trade Commission Act, and all other federal, state, local,
foreign and multinational (including European Community) statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
Laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Assignment Agreement" shall have the meaning set forth in
Section 4.2.7.
"Bond" means any deposit, trust funds, bid bonds, performance
bonds and surety bonds (and all such similar undertakings) posted by any Person
for the benefit of another Person to secure such other Person's reclamation,
self insurance or other obligations (or equivalent assurance).
"Buyer" shall have the meaning set forth in the preamble.
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"Buyer Adjusted Claim Amount" shall have the meaning set forth in
Section 8.7.2(b).
"Buyer Actuary" shall have the meaning set forth in Section
5.1.3(b).
"Buyer Debt Amount" means the excess, if any, of the Stated Price
over $985 million.
"Buyer Debt Facility" means a loan to the Company from a third
party to be arranged by Buyer prior to the Closing Date to be fully available on
the Closing Date, which shall have an aggregate principal amount equal to the
Estimated Buyer Debt Amount.
"Buyer Deduction" shall have the meaning set forth in Section
8.7.2(b).
"Buyer Guarantees" shall have the meaning set forth in Section
3.2.14(o).
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 9.2.
"Buyer Initial Claim Amount" shall have the meaning set forth in
Section 8.7.2(b).
"Buyer Savings Plan" shall have the meaning set forth in Section
5.1.7.
"Buyer Savings Trust" shall have the meaning set forth in Section
5.1.7.
"Buyer Surety Bond" shall have the meaning set forth in Section
4.3.6(g).
"Buyer's Bring Down Certificate" shall have the meaning set forth
in Section 6.2.1.
"Closing" shall have the meaning set forth in Section 7.1.
"Closing Date" shall have the meaning set forth in Section 7.1.
"Closing Statement" shall have the meaning set forth in Section
2.2.1.
"Coal Act" shall have the meaning set forth in Section 3.2.25(1).
"Coal Plans" means the following plans sponsored by the Company
or any of its Subsidiaries: (i) Retirement Plan for Hourly Employees of Cyprus
Amax Coal Company - Lost Mountain; (ii) Retirement Plan for Hourly Employees of
Cyprus Amax Coal Company - Plateau Mining; (iii) Retirement Plan for Non-
Represented Hourly Employees of Cyprus Amax Coal Company - Twentymile Coal
Company; (iv) Roaring Creek Coal Company Pension Plan for Hourly Employees; (v)
Cyprus Amax Coal Company, Belle Ayr and Eagle Butte Mines Classified Employees
Pension Plan; and (vi) Cyprus Empire Corporation United Mine Workers of America
Pension Plan.
"Coal Separation Plan" shall have the meaning set forth in
Section 5.1.16
"Coal Severance Plan" shall have the meaning set forth in Section
5.1.16.
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"COBRA" shall have the meaning set forth in Section 3.2.25(g).
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations issued thereunder.
"Collective Bargaining Agreements" shall have the meaning set
forth in Section 3.2.14(l).
"Company" shall have the meaning set forth in the preamble.
"Company Bonds" shall have the meaning set forth in Section
3.2.24(a).
"Company Disclosure Schedule" means the Disclosure Schedule
delivered in connection herewith, as amended or supplemented from time to time
in accordance herewith.
"Company Employees" shall have the meaning set forth in Section
5.1.1.
"Company Plan" shall have the meaning set forth in Section
3.2.25(a).
"Company Properties" means all properties, sites and facilities
currently owned or operated by the Company or any of its Subsidiaries and all
properties, sites and facilities which were owned or operated at any previous
time by the Company or any of its Subsidiaries and for which a Governmental
Authority or any other Person seeks to hold the Company or any of its
Subsidiaries responsible or liable in whole or in part.
"Company Shares" shall have the meaning set forth in the
preamble.
"Confidentiality Agreement" shall have the meaning set forth in
Section 4.1.1.
"Continuing Affiliates" means Cyprus Amax and each of its
Affiliates other than the Company and the Subsidiaries of the Company and other
than any other Affiliates of the Company that will be Controlled by the Company
as of the Closing.
"Control" means the direct or indirect power affirmatively to
direct the management and policies of a Person, whether through the ownership of
voting securities, by agreement or otherwise. "Controls," "Controlled" and
"Controlling" shall have corresponding meanings.
"Covered Debt Amount" as of any date means the aggregate
principal amount of long term debt and capital lease obligations (including in
each case the current portion thereof) as of such date, in each case computed in
accordance with Cyprus Amax's past policies and practices as reflected in the
Financial Statements.
"Cyprus Adjusted Claim Amount" shall have the meaning set forth
in Section 8.7.2(b).
"Cyprus Amax" shall have the meaning set forth in the preamble.
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"Cyprus Amax Asset" means an asset reflected on the Closing
Statement that is to be paid to Cyprus Amax or one of the Continuing Affiliates
in accordance with the terms of this Agreement or any Related Agreement.
"Cyprus Amax Bonds" shall have the meaning set forth in Section
3.2.24(b).
"Cyprus Amax's Bring Down Certificate" shall have the meaning set
forth in Section 6.1.1.
"Cyprus Amax Guarantees" shall have the meaning set forth in
Section 3.2.24(e).
"Cyprus Amax Indemnified Parties" shall have the meaning set
forth in Section 9.3.
"Cyprus Amax Liability" means a liability reflected on the
Closing Statement that is to be assumed by Cyprus Amax or one of the Continuing
Affiliates in accordance with the terms of this Agreement or any Related
Agreement.
"Cyprus Amax Plan" shall have the meaning set forth in Section
3.2.25(a).
"Cyprus Amax Savings Plan" shall have the meaning set forth in
Section 5.1.6.
"Cyprus Amax Savings Trust" shall have the meaning set forth in
Section 5.1.7.
"Cyprus Deduction" shall have the meaning set forth in Section
8.7.2(b).
"Cyprus Initial Claim Amount" shall have the meaning set forth in
Section 8.7.2(b).
"December Statement" means the combined statement of assets,
liabilities and parent investment of the Company as of December 31, 1998
included in the Financial Statements.
"Deferred Compensation Plan" shall have the meaning set forth in
Section 5.1.11.
"DMG" shall have the meaning set forth in Section 4.4.
"Employee Policies" shall have the meaning set forth in Section
3.2.16(a).
"Encumbrance" means any lien, security interest, mortgage or
encumbrance, other than a Permitted Encumbrance.
"Energy" shall have the meaning set forth in the preamble.
"Environment" means any surface water, ground water, drinking
water supply, surface or subsurface land strata, or ambient air, and includes
any natural resources (including fish, wildlife, and biota) therein or thereon.
"Environmental Conditions Associated with the Company Properties"
means the existence and condition of any waste materials or other substances on
the Company Properties, any release or threat of release of Hazardous Materials
into the Environment from or at the Company Properties or from materials which
the Company disposed of or arranged for the disposal of offsite,
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any adverse effect on humans or the Environment deriving from such releases or
threatened releases of Hazardous Materials, and any hazards or damage to health,
property, or the Environment posed or caused by the Company Properties or by
Hazardous Materials thereon or by Hazardous Materials released or threatened to
be released into the Environment from or at the Company Properties or from
materials which the Company disposed of or arranged for the disposal of offsite.
"Environmental Laws" means any Laws (including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.
9601 et seq.; the Superfund Amendments and Reauthorization Act of 1986, Pub. L.
99-499, 100 Stat. 1613; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. s. 6901; the Clean Air Act, 42 U.S.C. s. 7401; the Clean Water Act, 33
U.S.C. s. 1251 et seq.; SMCRA; the Safe Drinking Water Act, 42 U.S.C. ss.
300f et seq.; and the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq.), including any plan, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved by any Governmental Authority, now or hereafter
in effect relating to the generation, production, installation, use, storage,
treatment, handling, distribution, transportation, release, threatened release
or disposal of Hazardous Materials, noise control, the protection of human
health or the Environment, the injury or damage to, or restoration or
replacement of natural resources, or land reclamation.
"Environmental Permits" shall have the meaning set forth in
Section 3.2.18(a).
"Equipment Leases" shall have the meaning set forth in Section
4.3.6(e).
"Equity Value" as of any date means the parent investment in the
Company and its Subsidiaries as of such date, determined in a manner consistent
with Cyprus Amax's past policies and practices as reflected in the Financial
Statements.
"ERISA" means the Employee Retirement Income Security Act of 1974
and the rules and regulations issued thereunder.
"Estimated Buyer Debt Amount" shall have the meaning set forth in
Section 2.2.1.
"Excess DC Plan" shall have the meaning set forth in Section
5.1.10.
"Excluded Assets" means any and all rights and claims of the
Company and its Affiliates in respect of all shares of capital stock of Cyprus
Australia Coal Company and any and all rights and claims of the Company and its
Affiliates in respect of, and the rights and claims to all recovery in, the
following proceedings:
(a) Arch Mineral Corporation et al. v. ICI Explosives USA, Inc.
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al., in the United States District Court, Cause No. IP 96-0754 C, and any past,
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present or future related or similar litigation seeking recovery for antitrust
violations occurring on or prior to the Closing and related to the purchase of
commercial explosives;
(b) Cyprus Amax Coal Company, Amax, Inc. and Cyprus ▇▇▇▇▇
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Mineral Company v. Alliance Insurance Company et al., in the Superior Court of
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The State of California,
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For The County of Los Angeles, Case No. BC198946, and any past, present or
future related litigation seeking recovery for insurance proceeds under policies
in effect before Closing; and
(c) Cyprus Empire Corporation and Cyprus Amax Coal Company vs.
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Colorado Department of Revenue, District Court, Arapahoe County, Colorado, Case
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No. 99 CV 463, Division 4, and any past, present or future related or similar
litigation seeking recovery for tax refunds to which Cyprus Amax or one of the
Continuing Affiliates is entitled under the Tax Sharing and Indemnification
Agreement.
"Excluded Insurance Matters" shall have the meaning set forth in
Section 8.7.3.
"Excluded Liabilities" means any and all Liabilities arising out of or
relating to, directly or indirectly:
(a) the Company's former Subsidiary Amax Coal Company's prior
ownership of the capital stock of Amax Oil & Gas, Inc., including all
Liabilities arising out of that certain Stock Purchase Agreement, dated March 1,
1994, between Amax Coal Company and Union Pacific Resources;
(b) the Company's former Subsidiary Amax Coal Company's prior
ownership of the capital stock of Amax Gold, Inc.;
(c) that certain site in the State of Michigan which formerly had a
tannery situated thereon, which site was deeded on March 19, 1998 from Cannelton
Industries, Inc. to Cyprus Mines Corporation, said deed being recorded in Liber
728, Page 294, of the recorders office in Chippewa County, Michigan;
(d) the Excluded Assets; and
(e) the obligations of Cyprus Amax and Energy under Section 2 of the
Tax Sharing and Indemnification Agreement.
"Financial Statements" shall have the meaning set forth in Section
3.2.10.
"414(l) Amount" shall have the meaning set forth in Section 5.1.3(b).
"Governmental Authority" means any federal, state, local, foreign or
multinational (including the European Community) court, tribunal, legislative,
administrative or regulatory authority or agency, with competent jurisdiction.
"Guarantees" shall have the meaning set forth in Section 3.2.24(e).
"Guarantor" means RAG Beteiligungs-GmbH, a German Gesellschaft mit
beschraenkter Haftung.
"Hazardous Materials" means any wastes, substances, radiation or
materials (whether solids, liquids or gases) (a) which are hazardous, toxic,
infectious, explosive, radioactive, carcinogenic or mutagenic; (b) which are or
become defined as "pollutants", "contaminants",
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"hazardous materials", "hazardous wastes", "hazardous substances", "toxic
substances", "radioactive materials", "solid wastes" or other similar
designations in, or otherwise subject to regulation under, any Environmental
Laws; (c) which contain polychlorinated biphenyls (PCBs), asbestos and asbestos-
containing materials, lead-based paints, urea-formaldehyde foam insulation, and
petroleum or petroleum products (including crude oil or any fraction thereof);
or (d) which pose a hazard to natural resources, human health or safety or the
environment.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976 and the rules and regulations promulgated thereunder.
"HSR Termination Date" shall have the meaning set forth in Section
6.2.2.
"Imprest Checking Accounts" means local checking accounts in the
nature of ▇▇▇▇▇ cash funds used to pay for incidental expenditures that do not
warrant processing through the centralized disbursement account of Cyprus Amax.
"indemnified party" shall have the meaning set forth in Section 9.4.1.
"indemnifying party" shall have the meaning set forth in Section
9.4.1.
"Keepwell Agreements" shall have the meaning set forth in Section
3.1.10.
"Knowledge", "known", "belief", "believe" or variances thereof
(whether or not capitalized) shall mean, except as otherwise stated herein, when
applied to Cyprus Amax or any of its Affiliates, the knowledge after due inquiry
of those persons listed on Annex A-1, and when used with respect to Buyer or any
of its Affiliates shall mean the knowledge after due inquiry of the persons
listed on Annex A-2.
"Large Customers" shall have the meaning set forth in Section 3.2.15.
"Laws" means any law, statute, code, treaty, rule, directive, plan,
regulation, promulgation, decree, ruling, injunction or order of any
Governmental Authority, or any common law principle, doctrine or judgment.
"Leased Property Interests" shall have the meaning set forth in
Section 3.2.11.
"Liability" means any liability, obligation, loss or contingency,
whether known or unknown, asserted or unasserted, absolute or conditional,
accrued or unaccrued, liquidated or unliquidated, and whether due or to become
due, regardless of when asserted or arising.
"Losses" shall have the meaning set forth in Section 9.2.
"Managerial Employee" means any full-time employee whose current base
compensation exceeds $65,000 per year and all officers and directors of the
relevant employer.
"Material Adverse Effect" with respect to any Person means an event,
condition or circumstance that is, as of the date hereof or as of the Closing
Date, materially adverse to the
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business, operations, assets, or financial condition of such Person and its
Subsidiaries, taken as a whole.
"Material Contracts" shall have the meaning set forth in Section
3.2.14.
"Material Restricted Contracts" shall have the meaning set forth in
Section 3.2.14.
"Minimum Equity Value" means $974.871 million plus (x) the aggregate
income of the Company and its Subsidiaries before federal and state income taxes
from December 31, 1998 through the Closing Date, less (y) the aggregate amount
of cash and cash equivalents paid to Energy as dividends or other distributions
from December 31, 1998 through the Closing Date (including dividends or
distributions paid in respect of amounts under the Buyer Debt Facility but
excluding $1.365 million in respect of cash and cash equivalents reflected on
the December Statement), in each case computed in accordance with Cyprus Amax's
past policies and practices.
"Multi-Employer Plan" shall have the meaning set forth in Section
3.2.25(k).
"Names" shall have the meaning set forth in Section 11.1.
"Net Pension Amount" shall have the meaning set forth in Section
5.1.3(d).
"New Plan" shall have the meaning set forth in Section 5.1.3(a).
"New Plan Trust" shall have the meaning set forth in Section 5.1.3(a).
"1992 Plan" shall have the meaning set forth in Section 3.2.25(m).
"Outstanding Guarantee Amount" shall have the meaning set forth in
Section 4.3.6(g).
"Owned Property Interests" shall have the meaning set forth in Section
3.2.11.
"party" or "parties" shall have the meaning set forth in the preamble.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PBO Amount" shall have the meaning set forth in Section 5.1.3(d).
"Permits" means all licenses, permits, waivers and other governmental
approvals and authorizations required by Law in order to own, lease, use, occupy
and operate the assets of the Company and its Subsidiaries (including the
Property Interests and all coal mining, preparation, load out and reclamation
operations) at the places and in the manner currently conducted and operated.
"Permitted Encumbrances," with respect to any particular property,
means (a) such of the following as to which no enforcement, collection,
execution, levy or foreclosure proceeding shall have been commenced or, if
commenced, as to which any such proceedings are being contested in good faith or
for which adequate reserves are set aside on the books and records of the
-9-
Company: (i) liens for taxes, assessments and governmental charges not yet due
and payable; (ii) encumbrances including materialmen's, mechanics', carriers',
workmen's and repairmen's liens and other similar liens arising in the ordinary
course of business; and (iii) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; (b) survey exceptions, easement agreements and other
encumbrances on or exceptions to title to real property that do not result from
the incurrence of any indebtedness other than indebtedness or Encumbrances
listed on Schedule 3.2.14; (c) zoning restrictions and other similar limitations
imposed by any authority having jurisdiction over real property, and (d)
reservations of record; and with respect to subsections (b), (c) and (d) in each
such case that do not materially affect the ability to use such property for its
current purposes.
"Person" means any individual, partnership, limited liability company,
firm, corporation, association, trust, unincorporated organization, Governmental
Authority or other entity.
"Personal Property" shall have the meaning set forth in Section
3.2.12.
"Plans" shall have the meaning set forth in Section 3.2.25(a).
"Proceeding" shall have the meaning set forth in Section 4.3.6(f).
"Property Interests" shall have the meaning set forth in Section
3.2.11.
"Purchase Price" shall have the meaning set forth in Section 2.1.2.
"Related Agreements" means the Tax Sharing and Indemnification
Agreement, Transitional Services Agreement, Buyer Surety Bond, Assignment
Agreement and all agreements, certificates and other documents delivered in
connection herewith or therewith.
"Release" means any emission, spill, seepage, leak, escape, leaching,
discharge, injection, pumping, pouring, emptying, dumping, disposal or release
of Hazardous Materials from any real property into or upon the Environment,
(including the air, soil, improvements, surface water, groundwater, the sewer,
septic system, storm drain, publicly owned treatment works, or waste treatment,
storage or disposal systems) at, on, from, above or under such parcel of real
property at which Hazardous Materials originating on or from such parcel of real
property have been generated, handled, stored, treated or disposed.
"Representatives" shall have the meaning set forth in Section 9.6.2.
"Salaried Plan" shall have the meaning set forth in Section 5.1.2.
"Salaried Plan Trust" shall have the meaning set forth in Section
5.1.3(a).
"Savings Plan Transfer Date" shall have the meaning set forth in
Section 5.1.7.
"Seller Bonds" shall have the meaning set forth in Section 3.2.24(c).
-10-
"SMCRA" means the Surface Mining Control and Reclamation Act, as
amended, 30 U.S.C. ss. 1201, et seq., any rule or regulation promulgated
thereunder, and any similar state law or regulation.
"Shared Guarantees" shall have the meaning set forth in Section
3.2.24(f).
"Stated Price" shall mean (a) $1,085 million less (b) the aggregate
Covered Debt Amount as of the Closing Date less (c) the aggregate amount of cash
and cash equivalents paid to Energy as dividends or other distributions after
December 31, 1998 through the Closing Date (other than dividends or other
distributions paid in respect of amounts under the Buyer Debt Facility and other
than dividends or other distributions of $1.365 million in respect of cash and
cash equivalents reflected on the December Statement) plus (d) the aggregate
amount of cash and cash equivalents contributed to the Company by Energy after
December 31, 1998 through the Closing Date.
"Subsidiary" of any Person means any corporation or other Person,
whether incorporated or unincorporated, of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or other similar governing
body of such corporation or other Person is directly or indirectly owned or
Controlled by such Person or by any one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries. Notwithstanding anything in this
Agreement to the contrary, no Person that is not Controlled by another Person
shall be deemed to be a Subsidiary of such other Person. For all purposes
herein, Cyprus Australia Coal Company and its Subsidiaries shall not be deemed
to be Subsidiaries of the Company, but shall instead be deemed to be Continuing
Affiliates.
"Supplemental Retirement Plans" shall have the meaning set forth in
Section 5.1.9.
"Tax Sharing and Indemnification Agreement" means the agreement
substantially in the form attached hereto as Exhibit A to be executed and
delivered by the parties hereto as of the Closing.
"Third Actuary" shall have the meaning set forth in Section 5.1.3(e).
"Third Party Claim" shall have the meaning set forth in Section 9.4.1.
"Third Party Rights" shall have the meaning set forth in Section
9.5.5.
"Transferred Accounts" shall have the meaning set forth in Section
5.1.7.
"Transferred Benefits" shall have the meaning set forth in Section
5.1.3(a).
"Transitional Services Agreement" means the agreement substantially in
the form attached hereto as Exhibit B to be executed and delivered by the
parties hereto as of the Closing.
"Twentymile AVF Permit" shall have the meaning set forth in Section
4.4.
"WARN Act" shall have the meaning set forth in Section 5.1.15.
-11-
"Willow Creek Mine" means the mine located near Helper, Utah and
known as the Willow Creek Mine.
"Year 2000" means any risk that computer hardware or software
used by or in connection with the business or operation of the Company or any of
its Subsidiaries will not, in the case of dates occurring or time periods ending
after December 31, 1999, function in all material respects at least as
effectively as in the case of dates and time periods occurring prior to December
31, 1999.
ARTICLE II
THE TRANSACTION
SECTION 2.1 PURCHASE AND SALE
-----------------
Section 2.1.1 Estimated Adjustment. No later than five (5) days
--------------------
prior to the Closing, Cyprus Amax shall deliver to Buyer an estimated unaudited
combined statement of assets, liabilities and parent investment, as of the
Closing Date and a reasonable estimate, as of the Closing Date, of the Buyer
Debt Amount (the "Estimated Buyer Debt Amount"). The Estimated Buyer Debt Amount
shall be for preliminary purposes only and, except for purposes of determining
the amount payable to Energy on the Closing Date, no party shall be bound
thereby.
Section 2.1.2 Sale and Purchase of Shares. Subject to the terms
---------------------------
and conditions of this Agreement, on the Closing Date, Energy hereby agrees to,
and Cyprus Amax hereby agrees to cause Energy to, sell, transfer, assign and
convey to Buyer all of the Company Shares, and Buyer hereby agrees (a) to
purchase all of the Company Shares from Energy, (b) to pay Energy an amount
equal to $985 million (the "Purchase Price"), (c) to have arranged prior to the
Closing Date the Buyer Debt Facility so as to enable the Company to draw
thereunder the Estimated Buyer Debt Amount at the Closing and so as to permit
the Company to pay the Estimated Buyer Debt Amount to Energy as dividends at the
Closing, (d) to permit the Company to declare and pay a dividend to Energy at
the Closing in an aggregate amount equal to the Estimated Buyer Debt Amount, and
(e) in the event that the Closing shall occur after July 31, 1999, to pay to
Energy interest on the sum of $985 million and the Estimated Buyer Debt Amount
from and including August 1, 1999 through the Closing Date, calculated at a rate
equal to 7% per annum. Buyer's obligation to arrange and cause to be fully
available for draw the Buyer Debt Facility shall be treated as part of its
obligation to finance the transactions contemplated hereby. For purposes of
clarification, none of Cyprus Amax or any of the Continuing Affiliates shall
have any Liability or other obligation whatsoever for the Buyer Debt Facility,
either prior to, at or after Closing and no costs associated with the Buyer Debt
Facility will be borne by or charged to any of Cyprus Amax, any of its
Continuing Affiliates, the Company or any of its Subsidiaries. All currency
amounts in this Agreement refer to United States of America Dollars, unless
specifically indicated otherwise.
SECTION 2.2 EQUITY ADJUSTMENT TO PURCHASE PRICE
-----------------------------------
Section 2.2.1 Closing Statement. Within sixty (60) days
-----------------
following the Closing, Cyprus Amax shall prepare and deliver to Buyer, an
unaudited combined statement of assets,
-12-
liabilities and parent investment, as of the Closing Date (the "Closing
Statement") prepared on the same basis as, and in a manner consistent with
Cyprus Amax's past policies and practices as reflected in, the Financial
Statements, together with a computation (collectively, the "Adjustment
Computations") as of the Closing Date of the Buyer Debt Amount, the Adjusted
Equity Value and the Minimum Equity Value. Buyer shall, and shall cause the
Company to, provide Cyprus Amax's Representatives reasonable access to the books
and records of the Company and Buyer shall cause the Company's Representatives
to provide reasonable assistance to Cyprus Amax, both in connection with the
preparation of the Closing Statement and the Adjustment Computations, as well as
any dispute with respect thereto.
Section 2.2.2 Objection to Adjustment Computations. Buyer shall have
------------------------------------
the right within forty five (45) days following the delivery of the Closing
Statement to object in writing to the Adjustment Computations, specifying with
particularity and in an itemized detailed list the basis for any such
objection(s) (the "Adjustment Computation Objection"). Cyprus Amax shall cause
to be made available to Buyer and Buyer's Representatives reasonable access in a
timely fashion to the books, records and working papers referenced, created or
otherwise used in connection with the preparation of the Closing Statement, the
statement of assets, liabilities and parent investment of the Company as of
December 31, 1998 included in the Financial Statements and the Adjustment
Computations. In the event Buyer and Buyer's Representatives give Cyprus Amax
written notice prior to the 30th day after delivery of the Closing Statement
that they have not been provided with such access in a timely fashion and
specify in reasonable detail the information needed, such 45-day period shall be
extended until 30 days after Cyprus Amax shall have provided to Buyer and
Buyer's Representatives any information reasonably requested in such written
notice. Buyer may not base any Adjustment Computation Objection on any of the
following: (a) the accounting treatment of any matter reflected on the Closing
Statement to the extent such matter was treated in accordance with the same
accounting treatment in the statement of assets, liabilities and parent
investment of the Company as of December 31, 1998 included in the Financial
Statements, (b) any individual claim relating to a specific transaction or set
of facts that involves a challenge of less than $100,000, (c) any claim with
respect to the book value of Willow Creek Mine or with respect to any reserves
relating to the Willow Creek Mine or its operations or activities, (d) any claim
that the book value of any asset should be decreased as a result of any asset
impairment or any similar matter, or any claim that the book value of any
liability or reserve should be increased, or that any reserve should be
established, as a result of any contingent liability or any similar matter,
except to the extent arising from or relating to any events occurring other than
in the ordinary course of business after December 31, 1998 (which ordinary
course of business shall be deemed to include the deterioration of the business,
loss of customers, increases in costs or any decline in prices for the business'
products), (e) any claim as to stewardship expenses or state or federal income
taxes, or (f) any change in pension minimum liability from December 31, 1998
through Closing. Buyer shall be deemed to have agreed with all items and amounts
contained in the Closing Statement and Adjustment Computations, except as so
objected to in such notice with particularity and in detail. If Buyer does so
object, Cyprus Amax and Buyer shall cooperate with each other to attempt to
reach a mutual agreement thereon, or, failing such agreement within thirty (30)
days following delivery of the Adjustment Computation Objection, the objection
shall be resolved by the Accountant, the cost of which shall be shared equally
by Cyprus Amax and Buyer. Cyprus Amax and Buyer shall deliver to the Accountant
copies of any schedules or documentation which may be reasonably required by the
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Accountant to make its determination. Cyprus Amax and Buyer shall be entitled to
make presentations to the Accountant in connection therewith. Cyprus Amax and
Buyer shall use all reasonable efforts to cause the Accountant to promptly
complete such determination. The determination of the Accountant shall be final
and binding on the parties.
Section 2.2.3 Adjustment Payments. In the event that (x) the
-------------------
Buyer Debt Amount as of the Closing Date is different from the Estimated Buyer
Debt Amount, or (y) the Adjusted Equity Value is less than the Minimum Equity
Value, then:
(a) if the Buyer Debt Amount is greater than the Estimated Buyer
Debt Amount, Buyer shall pay to Energy the amount of such excess plus, if the
Closing occurred after July 31, 1999, interest on such excess computed at the
rate of 7% per annum from and including August 1, 1999 through the Closing Date;
(b) if the Buyer Debt Amount is less than the Estimated Buyer
Debt Amount, Energy shall pay to Buyer the amount of such shortfall plus, if the
Closing occurred after July 31, 1999, interest on such shortfall computed at the
rate of 7% per annum from and including August 1, 1999 through the Closing Date;
(c) if the Adjusted Equity Value is less than the Minimum Equity
Value, Energy shall pay Buyer the amount of such shortfall; and
(d) if the Adjusted Equity Value is greater than the Minimum
Equity Value, no payment shall be due hereunder.
All such payments provided for in clause (a) through (c) shall be made by check
or wire transfer within five (5) days after expiration of the 45-day period set
forth in Section 2.2.2, or five (5) business days after the resolution of any
objection pursuant to Section 2.2.2, whichever is later, with such payment
accompanied by interest at the rate of seven percent (7%) per annum from the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 BUYER'S REPRESENTATIONS AND WARRANTIES
--------------------------------------
Buyer hereby represents and warrants to Cyprus Amax and Energy as
set forth below:
Section 3.1.1 Due Organization. Buyer is a Gesellschaft mit
----------------
beschraenkter Haftung, duly incorporated, validly existing and in good standing
under the laws of the Federal Republic of Germany.
Section 3.1.2 Due Authorization. Buyer has the full corporate
-----------------
power and authority to enter into and perform this Agreement and the Related
Agreements and to
-14-
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by Buyer, the consummation
of transactions contemplated hereby and thereby, and the performance by Buyer of
all of its obligations under this Agreement and the Related Agreements have been
duly authorized and approved by Buyer. This Agreement has been, and at Closing
each Related Agreement will be, duly executed and delivered by a duly authorized
officer of Buyer.
Section 3.1.3 Enforceability. This Agreement constitutes, and each
--------------
Related Agreement will constitute, the legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
Section 3.1.4 No Conflict. Neither the execution and delivery of this
-----------
Agreement or any Related Agreement by Buyer, nor the consummation by Buyer of
the transactions contemplated hereby or thereby, will conflict with or result in
a breach, violation or default in any material respect of any of the terms,
conditions or provisions of Buyer's or any of its Affiliate's certificates of
incorporation, as amended, by-laws, as amended, or other organizational
instruments, any Law applicable to it, any of its Affiliates or any of their
respective material properties or assets, or any order, writ, injunction,
judgment or decree of any Governmental Authority or any arbitration award
applicable to it, any of its Affiliates or any of their respective material
properties or assets.
Section 3.1.5 No Contract Conflict. Neither the execution and
--------------------
delivery of this Agreement or any Related Agreement by Buyer, nor the
consummation by Buyer of the transactions contemplated hereby or thereby will
conflict with or result in a breach or give rise to a default or violation in
any material respect on Buyer's or any of its Affiliate's part under any
material obligation, lease, license, agreement, contract, plan, or other
arrangement.
Section 3.1.6 No Litigation Conflict. There is no action, suit or
----------------------
proceeding pending or, to Buyer's knowledge, threatened in writing against or
affecting Buyer or any of its Affiliates or any of their respective properties
or assets, at law or in equity, or before any Governmental Authority, which
would be reasonably likely to have a Material Adverse Effect on Buyer or to
interfere with Buyer's ability to consummate this Agreement, any Related
Agreement or the transactions contemplated hereby or thereby.
Section 3.1.7 Regulatory Approvals. Except as required by the HSR
--------------------
Act, no material governmental notice, filing, authorization, approval, order or
consent is required to be given, filed or obtained by Buyer or any of its
Affiliates from any Governmental Authority in connection with the execution,
delivery and performance by Buyer of this Agreement, any Related Agreement or
the transactions contemplated hereby or thereby.
Section 3.1.8 Qualifications as Lessee; Coal Acreage Limitations.
--------------------------------------------------
(a) Buyer and its Affiliates are qualified in every respect,
including limitations and parameters imposed in 43 C.F.R. Part 3400, to take,
hold, own and control federal coal and mineral leases. The acquisition, directly
or indirectly, by Buyer of the Company and its Subsidiaries will not cause Buyer
or any of its Affiliates to violate any limitations or parameters imposed in 43
C.F.R. Part 3400.
-15-
(b) As of the execution and delivery hereof and after giving effect
to the purchase of the Company and its Subsidiaries, Buyer and its Affiliates
will not exceed the coal acreage lease or permit limit set forth in 30 U.S.C.
Section 184.
Section 3.1.9 Permit Blocking. Neither Buyer nor any of its
---------------
Affiliates has been notified (nor to the Knowledge of Buyer is there any pending
or threatened notification) by the Federal Office of Surface Mining or the
agency of any state administering SMCRA that Buyer or any of its Affiliates is
(i) ineligible to receive surface mining permits, or (ii) under investigation to
determine whether its eligibility to receive a SMCRA permit should be revoked
(i.e. "permit blocked"). To the Knowledge of Buyer there is no basis for any
matter set forth in clause (i) or (ii).
Section 3.1.10 Buyer's Financial Capacity. Buyer has, and will have at
--------------------------
all times prior to Closing, available to it adequate funds to consummate the
transactions contemplated hereby and by the Related Agreements and to perform
its obligations hereunder and thereunder. As of December 31, 1998, Buyer had a
net worth (calculated in accordance with German generally accepted accounting
principles) of approximately DM 133,000,000 and has a net worth (calculated in
accordance with German generally accepted accounting principles) of at least DM
133,000,000. Buyer's liabilities and other obligations are covered directly or
indirectly by profit and loss agreements with RAG Aktiengesellschaft, ("RAG AG")
pursuant to which RAG AG has agreed to satisfy all liabilities and obligations
of Buyer not satisfied by Buyer (the "Keepwell Agreements"). As of December 31,
1998, Guarantor had a net worth (calculated in accordance with German generally
accepted accounting principles) of approximately DM 2,237,000,000 and has a net
worth (calculated in accordance with German generally accepted accounting
principles) of at least DM 2,237,000,000. The Letter set forth in Schedule
3.1.10 sets forth certain arrangements relating to the terms of the Keepwell
Agreements. No bankruptcy proceedings are pending or contemplated by or, to
Buyer's knowledge, threatened against Buyer or any of its Affiliates. Buyer is
not insolvent and the execution of this Agreement, and the consummation of the
transactions contemplated hereunder, will not render Buyer insolvent.
Section 3.1.11 Investment Intent. Buyer is acquiring the Company
-----------------
Shares for its own account for investment purposes only and not with a view to,
or for sale or resale in connection with, any public distribution thereof or
with any present intention of selling, distributing, or otherwise disposing of
the Company Shares. Buyer is capable of evaluating the merits and risks of its
investment, has the capacity to protect its own interests, and has the financial
ability to bear the economic risks of the investment.
Section 3.1.12 Legend. Buyer understands that the Company Shares are
------
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from Energy in a transaction not involving a
public offering and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act of 1933,
as amended, only in certain limited circumstances. It is understood that the
certificates evidencing the Company Shares shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933
-16-
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION
THEREFROM."
Section 3.1.13 Access to Information. Buyer has had an opportunity to
---------------------
discuss the business, condition, management and financial affairs of the Company
and its Subsidiaries with its management, and the opportunity to review the
properties, operations, liabilities, obligations, books, accounts, records,
contracts and documents of the Company and its Subsidiaries.
Section 3.1.14 Buyer's Knowledge. None of Buyer, any of its Affiliates
-----------------
or any of their respective Representatives has any knowledge of any fact, event
or circumstance that it believes constitutes (or would be reasonably likely to
constitute) or indicates (or would be reasonably likely to indicate) a breach of
any representation, warranty or covenant made by Cyprus Amax or Energy in this
Agreement or any agreement entered into in connection herewith. Buyer agrees to
notify Cyprus Amax in writing promptly upon Buyer's, its Affiliates' or any of
their respective Representatives' discovery of any information on or prior to
the Closing Date relating to the operations (including the financial condition,
assets and properties) of the Company or any of its Subsidiaries which it
believes constitutes (or would be reasonably likely to constitute) or believes
indicates (or would be reasonably likely to indicate) a breach of any
representation, warranty or covenant of Cyprus Amax or Energy contained herein.
Section 3.1.15 No Commissions. Except for Chase Securities Inc., whose
--------------
fees and expenses are the obligation of Buyer, and for other Persons whose fees
and expenses will solely be the obligation of Buyer, Buyer has not retained any
broker, investment banker or other Person entitled to any commission or similar
compensation in connection with this Agreement or the transactions contemplated
by this Agreement.
SECTION 3.2 CYPRUS AMAX'S REPRESENTATIONS AND WARRANTIES
--------------------------------------------
Cyprus Amax hereby represents and warrants to Buyer as set forth
below. No representation or warranty is made by Cyprus Amax or Energy in this
Agreement either as of the date hereof or as of the Closing with respect to any
matter or development which may arise (a) in connection with any financing
arrangements undertaken or proposed to be undertaken by Buyer or any of its
Affiliates in order to consummate the transactions contemplated hereby, or in
connection with Buyer or any of its Affiliates' plans for the business and
operations of the Company and its Subsidiaries, (b) as a result of any specific
legal or regulatory status of Buyer or any of its Affiliates, or as a result of
the identity of Buyer or any of its Affiliates, or (c) as a result of the
announcement of this Agreement and the transactions contemplated hereby. Subject
to the foregoing, except as set forth on the Company Disclosure Schedule:
Section 3.2.1 Due Organization. Cyprus Amax, Energy and the Company
----------------
are corporations duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Each of the Subsidiaries of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Company and each of its
Subsidiaries has full corporate power and authority to own and lease its
respective properties, to operate its respective business and to carry on its
respective business in the places and in the manner as currently conducted. The
Company and each of its Subsidiaries
-17-
is qualified or licensed to do business in each jurisdiction in which the nature
of its business or the property owned, leased or operated by it requires such
qualification or license in order to conduct its business as currently
conducted.
Section 3.2.2 Due Authorization. Each of Cyprus Amax, Energy and the
-----------------
Company has the full corporate power and authority to enter into and perform
this Agreement, the Related Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements by Cyprus Amax, Energy and the Company, and the
performance by Cyprus Amax, Energy and the Company of all of their obligations
under this Agreement and the Related Agreements have been duly authorized and
approved by Cyprus Amax, Energy and the Company. This Agreement has been, and at
Closing each Related Agreement will be, duly executed and delivered by duly
authorized officers of Cyprus Amax, Energy and the Company.
Section 3.2.3 Enforceability. This Agreement constitutes, and each
--------------
Related Agreement will constitute, the legal, valid and binding obligations of
Cyprus Amax, Energy and the Company enforceable against them in accordance with
their terms.
Section 3.2.4 No Conflict. Neither the execution and delivery of this
-----------
Agreement or any Related Agreement by Cyprus Amax, Energy and the Company, nor
the performance by Cyprus Amax, Energy and the Company of their respective
obligations hereunder or thereunder, will conflict with or result in a breach,
violation or default in any material respect of any of the terms, conditions or
provisions of Cyprus Amax's, Energy's or the Company's Certificate of
Incorporation or By-Laws or any comparable organizational document of any
Subsidiary of the Company, any Law applicable to Cyprus Amax, Energy, the
Company or any of its Subsidiaries or any of their respective material
properties or assets, or any order, writ, injunction, judgment or decree of any
Governmental Authority or any arbitration award applicable to Cyprus Amax,
Energy, the Company or any of its Subsidiaries or any of their respective
material properties or assets.
Section 3.2.5 No Contract Conflict. Subject to obtaining consents
--------------------
with respect to the Material Restricted Contracts, neither the execution and
delivery of this Agreement or any Related Agreement by Cyprus Amax, Energy and
the Company, nor the performance by Cyprus Amax, Energy and the Company of their
respective obligations hereunder or thereunder, will conflict with, result in a
breach of, or constitute a default in any material respect, on Cyprus Amax's,
Energy's, the Company's or any of the Company's Subsidiaries' part, under any
material obligation, lease, contract, plan, or other arrangement to which each
is a party or by which any of their respective properties or assets is bound.
Section 3.2.6 Regulatory Approvals. Except as required by the HSR Act
--------------------
or as set forth on Schedule 3.2.6, no material governmental notice, filing,
authorization, approval, order or consent is required to be given, filed or
obtained by Cyprus Amax, Energy or the Company from any Governmental Authority
in connection with the execution, delivery and performance by Cyprus Amax,
Energy or the Company of this Agreement, any Related Agreement or the
transactions contemplated hereby or thereby.
-18-
Section 3.2.7 Title to Stock; Subsidiaries. (a) Energy has good and
----------------------------
valid title to the Company Shares, free and clear of any Encumbrance, and has
the right, power, authority and capacity to sell, transfer and vest in Buyer
legal and beneficial title to the Company Shares in the manner provided herein,
free and clear of any Encumbrance.
(b) The Company's Subsidiaries are set forth on Schedule 3.2.7(b).
Except as set forth on Schedule 3.2.7(b), and except for Cyprus Australia Coal
Company and its Subsidiaries, the Company does not directly or indirectly own
any material equity interest in any Person. Except as set forth on Schedule
3.2.7(b), the Company has good and valid title to all of the issued and
outstanding shares of capital stock of each of its Subsidiaries free and clear
of any Encumbrances.
Section 3.2.8 Capitalization. The authorized capital stock of the
--------------
Company consists of 1000 shares of common stock, par value $1.00 per share, of
which 100 shares have been issued and are outstanding. The authorized capital
stock of each of the Company's Subsidiaries including the number and type of
shares of capital stock authorized, issued and outstanding and the per share par
value is as set forth on Schedule 3.2.8. All of the issued and outstanding
shares of capital stock of the Company and each of its Subsidiaries have been
duly authorized and validly issued, and are fully paid and nonassessable, were
not issued in violation of the terms of any agreement or other understanding
binding upon the Company or, to the knowledge of Cyprus Amax, any other Person,
and were issued in compliance with all applicable foreign, federal and state
securities or "blue-sky" Laws. Except as set forth on Schedule 3.2.8, there are
no securities convertible into or exchangeable for the stock of the Company or
any of its Subsidiaries; and there are no outstanding securities, options,
warrants, rights, agreements, calls, subscriptions, commitments, demands or
understandings of any character whatsoever, fixed or contingent, that directly
or indirectly (i) call for the issuance, sale or other disposition of any
capital stock of the Company or any of its Subsidiaries by Cyprus Amax, Energy,
the Company or any of their Affiliates, or to the Knowledge of Cyprus Amax, by
any other Person; (ii) obligate Cyprus Amax, Energy, the Company or any of their
Affiliates to grant, offer or enter into any of the foregoing; or (iii) relate
to the voting or control of any capital stock of the Company or any of its
Subsidiaries. No Person has any right to require the Company, Cyprus Amax,
Energy or any of their Affiliates to register any securities of the Company or
any of its Subsidiaries under the Securities Act of 1933.
Section 3.2.9 Articles of Incorporation; Bylaws. The Articles of
---------------------------------
Incorporation, the By-Laws, minute books, stock certificate books and stock
record books of the Company and its current Subsidiaries have been made
available to Buyer for its inspection and are complete and correct in all
material respects. The signatures thereon are the true signatures of the Persons
purporting to have signed such documents. Such Articles of Incorporation and By-
Laws of the Company and its Subsidiaries have not been amended further and are
in full force and effect.
Section 3.2.10 Financial Statements. Attached as Schedule 3.2.10 are
--------------------
the combined statements of assets, liabilities and parent investment of the
Company and its Subsidiaries, and the related combined statements of operating
revenue and direct expenses, of cash flows and of parent investment of the
Company as of and for the years ended December 31, 1996, 1997 and 1998, together
with the Report of Independent Accountants (collectively, the "Financial
Statements"). The Financial Statements present fairly, in all material respects,
the
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combined assets, liabilities and parent investment of the Cyprus Amax Coal
Company -Domestic Operations to be sold to Buyer, as described in the Notes to
the Financial Statements, at December 31, 1996, 1997 and 1998 and their combined
operating revenues and direct expenses and their cash flows for each of the
three years ended December 31, 1996, 1997 and 1998 in conformity with United
States generally accepted accounting principles except that the Financial
Statements are not intended to be a complete presentation of the Company's
financial position and results of operations in conformity with United States
generally accepted accounting principles due to the exclusion of certain
stewardship expenses, interest expense on Cyprus Amax long-term debt and income
tax expenses or benefits along with related income tax assets and liabilities
and as otherwise may be reflected in the Notes to the Financial Statements. The
Financial Statements present in all material respects the assets, liabilities,
revenues and direct expenses of the Company exclusive of its Australian coal
operations and certain Appalachian and Midwest coal properties sold in June
1998.
Section 3.2.11 Property Interests. Schedule 3.2.11 (a) lists all
------------------
material real property, coal and mineral interests owned, leased or otherwise
held by the Company or any of its Subsidiaries as of the date hereof (the
"Property Interests"), (b) indicates which Property Interests are owned by the
Company or any of its Subsidiaries (the "Owned Property Interests") and (c)
indicates which Property Interests are leased by the Company or any of its
Subsidiaries (the "Leased Property Interests"). The Company or one of its
Subsidiaries has such title or leasehold interest to the Property Interests as
is necessary to permit the operation of such properties, substantially in the
manner such properties are operated by the Company and its Subsidiaries as of
the date hereof, free and clear of any and all Encumbrances, except as may
result from the expiration of any leasehold interest. With respect to each of
the Owned Property Interests, the Company has such title as is reasonably
necessary to permit the operation of such properties, substantially in the
manner such properties are currently operated by the Company and its
Subsidiaries, free and clear of any and all Encumbrances. The coal estates
listed as Owned Property Interests are coal estates to which the Company or one
of its Subsidiaries has ownership rights by deed and the coal estates listed as
Leased Property Interests are coal estates to which the Company or one of its
Subsidiaries has leasehold interests pursuant to lease, in each such case, free
and clear of any and all Encumbrances. There has been no actual and Cyprus Amax
does not have Knowledge of any proposed condemnation, requisition or taking by
any public authority of any portion of the Property Interests.
Section 3.2.12 Personal Property. Schedule 3.2.12 includes a list as
-----------------
of September 30, 1998 of all equipment, machinery, motor vehicles and other
personal property owned or leased by the Company and any of its Subsidiaries,
with an original cost of more than $500,000 (the "Personal Property"). Any
material changes to the composition of Personal Property since September 30,
1998 have been in the ordinary course of business. Except as set forth in
Schedule 3.2.12, the Company or one of its Subsidiaries has good and marketable
title to any Personal Property owned by the Company or one of its Subsidiaries
that is necessary to operate the business of the Company and its Subsidiaries in
all material respects as currently conducted, and good and valid leasehold
interests in any Personal Property leased by such Company or one of its
Subsidiaries that is necessary to operate the business of the Company and its
Subsidiaries in all material respects as currently conducted, in each such case
free and clear of any and all Encumbrances. The Personal Property is maintained
in such operating condition and
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state of repair as is necessary to operate the business of the Company and its
Subsidiaries in all material respects as currently conducted, ordinary wear and
tear excepted.
Section 3.2.13 Intellectual Property. Schedule 3.2.13 lists all
---------------------
material patents, trademarks, service marks, trade names, copyrights and
applications therefor owned by or registered in the name of or licensed to the
Company or any of its Subsidiaries as of the date hereof, together with an
indication of the nature of the Company's or its Subsidiary's interest therein
and, if applicable, the date on which such right was issued or first applied for
if not yet issued. All material patents and trademarks of the Company and any
Subsidiary necessary to operate the business of the Company and its Subsidiaries
in all material respects as currently conducted have been duly registered in,
filed in or issued by the United States Patent and Trademark Office and have
been properly maintained and renewed in accordance with all applicable laws.
Except as set forth on Schedule 3.2.13, (i) none of the Company or any of its
Subsidiaries is infringing in any material respect on any valid patent right,
trademark, service ▇▇▇▇, trade name or copyright of others, (ii) to Cyprus
Amax's Knowledge, no claims of infringement have been threatened in writing
since January 1, 1997, (iii) to Cyprus Amax's Knowledge, no such rights are
being infringed upon in any material respect by any other party since January 1,
1997, and (iv) none of such rights is subject to any outstanding order, decree,
ruling, charge, injunction, judgment or stipulation.
Section 3.2.14 Material Contracts. Except as listed in Schedule
------------------
3.2.14, neither the Company nor any of its Subsidiaries is a party to or subject
to :
(a) any contract or agreement for the purchase or sale of real
property, coal rights or mineral rights involving individually in excess of $2
million;
(b) as of the date hereof, any contract or agreement for the purchase,
sale or lease of any personal property at a purchase price in excess of $2
million or with aggregate rental payment obligations in excess of $2 million per
annum;
(c) except as may arise in the ordinary course of business, any
contract or agreement for the lease or sublease of, or the right to use
otherwise, real property, coal rights or mineral rights or personal property by
the Company or any of its Subsidiaries, either as lessee, sublessee, lessor,
sublessor or otherwise, in any case involving individually in excess of $2
million per annum;
(d) as of the date hereof, except as may arise in the ordinary course
of business, any contract or agreement for the purchase of services by the
Company or any of its Subsidiaries, other than utility contracts, at an amount
in excess of $2 million per annum individually or for the sale of services by
the Company or any of its Subsidiaries involving individually in excess of $2
million per annum, in either case with an unexpired term as of the Closing Date
in excess of one (1) year;
(e) any contract or agreement for the employment of any Person, as an
officer, employee or consultant, (i) with annual compensation in excess of
$250,000, or (ii) pursuant to which annual compensation in excess of $250,000
was paid in respect of the 1998 calendar year, including any contract relating
to the management of the Company or any of its Subsidiaries;
-21-
(f) any contract or agreement for the borrowing of money in excess of
$2 million including any contract evidencing or related to indebtedness,
obligation or liability for borrowed money, or liability for the deferred
purchase price of property, in excess of $2 million (excluding trade payables
incurred in the ordinary course of business consistent with past practice and
indebtedness incurred in connection with the Willow Creek Mine in accordance
with past practices);
(g) as of the date hereof, any contract or agreement for the payment
or receipt of license fees, commissions or royalties to or from any Person
anticipated to be in excess of $2 million individually on an annual basis;
(h) any contract or agreement restricting the Company's or any of its
Subsidiary's rights to compete with any other Person or restricting any Person's
right to compete with the Company or any of its Subsidiaries;
(i) any contract or agreement for any partnership, joint venture or
other arrangement involving a sharing of profits that has revenue reasonably
likely to be in excess of $2 million for the year ending December 31, 1999;
(j) as of the date hereof, except as may arise in the ordinary course
of business, any contract or agreement for the purchase, sale or transport of
coal, involving individually more than $1 million on an annual basis;
(k) as of the date hereof, except as may arise in the ordinary course
of business, any contract or agreement for any coal brokerage, sales, agency or
similar services;
(l) any contract or agreement with any union or collective bargaining
organization (collectively, the "Collective Bargaining Agreements") or
containing any severance pay liabilities or obligations (other than general
corporate policies or practices);
(m) any bonus, deferred compensation, pension, profit-sharing, stock
option or stock purchase plans, retirement, retainer, welfare or incentive
plans, or other material company-wide employee benefit plans or arrangements;
(n) as of the date hereof, except as may arise in the ordinary course
of business, any contract or agreement relating to capital expenditures
involving future payments that, together with future payments under all other
agreements, contracts or commitments relating to the same capital project,
exceed $5,000,000;
(o) any Guarantee involving an underlying obligation in excess of
$500,000 issued by the Company or any of its Subsidiaries or by which the
Company or any of its Subsidiaries is bound which inure in whole or in part to
the benefit of a Person other than the Company or its Subsidiaries
(collectively, the "Buyer Guarantees");or
(p) as of the date hereof, except as may arise in the ordinary course
of business, any contract or agreement otherwise providing for the receipt or
expenditure by the
-22-
Company or any of its Subsidiaries of more than $2 million individually during
any 12-month period .
All such contracts, agreements and obligations are collectively referred to
herein as the "Material Contracts." Material Contracts shall include any group
of related contracts and agreements among the same or affiliated parties with
respect to the same subject matter and same location which in the aggregate meet
the dollar thresholds set forth above. Any contracts that are executed and
delivered after the date hereof and prior to the Closing that would be required
to be scheduled except for the presence of an "as of the date hereof" qualifier
in this Section shall nonetheless be deemed to be Material Contracts. Except as
otherwise set forth in Schedule 3.2.14, the Material Contracts are in all
material respects in full force and effect and valid, binding and enforceable
against the Company and/or its Subsidiaries and, to Cyprus Amax's Knowledge, the
other parties thereto, except as may arise as a result of defenses Cyprus Amax
or any of its Subsidiaries may have against any other party thereto and subject
to equitable remedies and to bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium or similar laws affecting creditor's rights generally. No
material default by the Company or any of its Subsidiaries or, to Cyprus Amax's
Knowledge, by the other contracting parties has occurred thereunder. To Cyprus
Amax's Knowledge, no event, occurrence or condition exists which, with the lapse
of time, or the giving of notice or both, would become a default by the Company,
any of its Subsidiaries or by the other contracting parties thereunder. No
Material Contract is terminable or subject, by its terms, to termination,
amendment or modification, in each case, as a result of the transactions
contemplated by this Agreement except as specified in the next succeeding
sentence. The Material Contracts to which a consent or approval to the
transactions provided for in this Agreement is required are referred to herein
as "Material Restricted Contracts" and are designated by an asterisk on such
Schedule.
Section 3.2.15 Large Customers. Schedule 3.2.15 sets forth a true and
---------------
complete list of the five (5) largest customers (the "Large Customers") of the
Company and its Subsidiaries determined on the basis of the aggregate tonnage of
coal sales during the 1998 calendar year. Since January 1, 1997 through the date
of this Agreement, neither Cyprus Amax nor any of its Affiliates has received
actual written notice that any Large Customer intends (a) to cancel or terminate
its relationship with the Company or any of its Subsidiaries, as the case may
be, or (b) materially to decrease its purchases, in either case whether by
reason of the within transaction or otherwise.
Section 3.2.16 Employee Relations.
------------------
(a) Schedule 3.2.16 lists all material company-wide written employee
policies, rules and regulations of the Company and all its Subsidiaries (the
"Employee Policies"). Except as disclosed on Schedule 3.2.16, the Company and
its Subsidiaries have applied and enforced the Employee Policies in a manner
consistent in all material respects with applicable Laws.
(b) Except for the Collective Bargaining Agreements, none of the
Company or any of its Subsidiaries is a party to any collective bargaining
agreement with a labor union which will remain in effect after the Closing or,
to Cyprus Amax's Knowledge, has any duty to recognize or bargain with any labor
organization under the National Labor Relations Act or any
-23-
other applicable Law. Neither the Company nor any of its Subsidiaries is engaged
in any material negotiations with respect to any collective bargaining
agreements.
(c) No labor strike or material organized work stoppage against the
Company or any of its Subsidiaries is pending or, to Cyprus Amax's Knowledge,
threatened in writing. Except as set forth on Schedule 3.2.16, none of the
Company or any of its Subsidiaries has engaged in and none is, to Cyprus Amax's
Knowledge, threatened in writing with any material (i) labor dispute, grievance,
or litigation relating to labor matters involving any of its employees for
purposes of bargaining or otherwise negotiating with the Company or any of its
Subsidiaries or (ii) charges of unfair labor practices. Schedule 3.2.16 also
sets forth all pending material discrimination complaints (whether on the basis
of sex, age, race, national origin, handicap, veteran status or otherwise)
submitted in writing to the Company, its Subsidiaries or Cyprus Amax as of the
date hereof. To Cyprus Amax's Knowledge, except as set forth on Schedule 3.2.16,
no efforts are currently being made and no petition is being circulated or filed
to organize any employees of the Company or any of its Subsidiaries for purposes
of bargaining or otherwise negotiating with the Company or any of its
Subsidiaries or to designate or certify any labor organization or other Person
as bargaining agent or to hold any election relating to the foregoing.
(d) The Company and its Subsidiaries (i) are in compliance in all
material respects with all Laws respecting employment, employment practices,
terms and conditions of employment, wages, hours and working conditions; (ii)
have withheld all amounts required by Law from the wages, salaries and other
payments to employees; (iii) are not liable for any arrears of wages or any
penalty for failure to comply with any of the foregoing; and (iv) except in the
ordinary course of business, are not liable for any material payment to any
trust or other fund or to any Governmental Authority, with respect to
unemployment compensation benefits, social security or other legally mandated
benefits for employees; provided, however, that the foregoing representation
-------- -------
does not cover matters addressed in Section 3.2.25.
(e) Except as disclosed on Schedule 3.2.16, there are no pending, or,
to Cyprus Amax's Knowledge, material investigations threatened in writing of the
Company or any of its Subsidiaries by the Equal Employment Opportunity
Commission, any state civil rights commission, or any other Governmental
Authority responsible for investigation of worker complaints of discrimination.
Further, there are no pending, or to Cyprus Amax's Knowledge, material
investigations threatened in writing of the Company or any of its Subsidiaries
by or involving the U.S. Department of Labor, any state department of labor, the
Mine Safety and Health Administration or the Occupational Safety and Health
Administration.
Section 3.2.17 Litigation. Except as set forth in Schedule 3.2.17, (i)
----------
there are no material actions, suits or proceedings pending or, to Cyprus Amax's
Knowledge, threatened in writing, against the Company or any of its Subsidiaries
and (ii) there are no outstanding judicial or administrative orders or decrees
or consent orders, in each case which have not been satisfied in all material
respects, to which the Company, any of its Subsidiaries or any of their assets
is subject, other than those applicable generally to the industry in which the
Company and its Subsidiaries operate.
Section 3.2.18 Environmental Matters. Except as described on Schedule
---------------------
3.2.18:
-24-
(a) The Company and each of its Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws and hold all material
Permits ("Environmental Permits") necessary for the operation of the business as
currently conducted. ▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Amax, with respect to
the Company and its Subsidiaries, nor the Company nor its Subsidiaries has
received any written notice of violation, cessation order, notice of fine or
penalty, notice of proposed assessment or other written notice from any
Governmental Authority that Cyprus Amax, with respect to the Company and its
Subsidiaries, or the Company or any of its Subsidiaries, is not in compliance in
any material respect with any Environmental Laws or Environmental Permits and
which relate to any matters or conditions that are not, or have not been,
resolved in all material respects.
b) There have been no material Releases of Hazardous Materials by any
of the Company or any of its Subsidiaries or, to Cyprus Amax's Knowledge, by any
other Person, on, in, under or over the real property owned or leased by the
Company or any of its Subsidiaries at any time since January 1, 1994, or, to the
Knowledge of Cyprus Amax, at any time prior thereto.
(c) No real property owned or leased by the Company or any of its
Subsidiaries since January 1, 1994, or, to the Knowledge of Cyprus Amax, at any
time prior thereto is or was used to produce, manufacture, process, generate,
store, use, handle, recycle, treat, dispose of, manage, ship or transport any
non-de minimis Hazardous Materials, other than as customary in the normal course
of coal mining operations of the type conducted or previously conducted on such
real property.
(d) None of the Company or any of its Subsidiaries has received notice
from any Governmental Authority or from any other Person that it is a
"potentially responsible party" under Section 107 of CERCLA for any material
matter that has not been or will not be resolved in all material respects as of
the Closing Date.
(e) All Hazardous Materials disposed of, treated or stored by Cyprus
Amax or any of its Affiliates on any real property owned or leased by the
Company or any of its Subsidiaries since January 1, 1994, or, to the Knowledge
of Cyprus Amax, at any time prior thereto have been disposed of, treated or
stored, as the case may be, in compliance in all material respects with all
applicable Laws.
Section 3.2.19 Absence of Changes or Events. Except as may be set
----------------------------
forth in Schedule 3.2.19, or as may be necessary to effect the transfer of the
Excluded Assets and the Excluded Liabilities to Cyprus Amax or the Continuing
Affiliates or otherwise to effect the transactions contemplated by this
Agreement, since December 31, 1998 through the date of this Agreement (or, in
the case of clause (e) only, through the Closing), none of the Company or any of
its Subsidiaries has:
(a) declared, set aside, or paid any dividend or distribution to its
stockholders, other than cash payments, other than any of the foregoing
declared, set aside or paid by any of the Company's Subsidiaries;
-25-
(b) except in the ordinary course of business (it being agreed that
the ordinary course of business may involve expenditures in excess of the
amounts set forth in this clause (b)) or in connection with the Willow Creek
Mine, incurred or committed to incur (i) any unbudgeted single capital
expenditures in an amount in excess of $1 million or (ii) any unbudgeted
aggregate capital expenditures in an amount in excess of $5 million;
(c) made any change in its authorized or actual capitalization;
(d) except in connection with the settlement of intercompany
transactions, sold or transferred any assets or properties for consideration
with a value in excess of $1 million individually or $5 million in the
aggregate, except in the ordinary course of business;
(e) except in connection with the Willow Creek Mine, suffered any
material damage, destruction or casualty loss not covered in all material
respects by insurance coverage which will be available to the Company and its
Subsidiaries after the Closing Date;
(f) materially increased the compensation, including salary, bonuses,
severance or termination pay payable to any employee or increased any benefit
plan obligations, other than in the ordinary course of business consistent with
past practice and other than increases for which the Buyer will not be
responsible;
(g) acquired or sold any material asset, except in the ordinary course
of business;
(h) except as may be necessary in connection with the transactions
contemplated by Section 4.2.9(b)(i), incurred or assumed, any indebtedness for
money borrowed (other than indebtedness incurred in connection with the Willow
Creek Mine in accordance with past practices), guaranteed any indebtedness,
liability or obligation of any Person other than the Company or its Subsidiaries
or subjected or permitted to be subjected any material assets to any
Encumbrance;
(i) except in the ordinary course of business, forgiven, compromised,
canceled, released, waived or permitted to lapse any material rights or claims;
(j) changed its accounting methods, practices or policies; or
(k) agreed or committed to do any of the foregoing.
Section 3.2.20 Compliance with Laws. Except as provided on Schedule
--------------------
3.2.20 hereto, the Company and its Subsidiaries are in compliance in all
material respects with all Laws applicable to its business, operations and
assets as currently conducted.
Section 3.2.21 Permits. The Company and its Subsidiaries possess all
-------
material Permits which are required in order to operate their business as
currently operated. Except as set forth on Schedule 3.2.21, all of the Permits
are, in all material respects, in full force and effect and the Company and its
Subsidiaries are not in violation in any material respect of any Permit. No
proceedings for the suspension or cancellation of any material Permits are
pending or, to Cyprus Amax's Knowledge, threatened in writing.
-26-
Section 3.2.22 Insurance. Schedule 3.2.22 lists all policies of fire,
---------
liability, or other forms of third party insurance issued in the name or for the
benefit of the Company or any of its Subsidiaries. Except as set forth in
Schedule 3.2.22, all such policies are in full force and effect and there is no
material default with respect to any provision contained in any such policy by
the Company or any of its Subsidiaries. Except as set forth on Schedule 3.2.22,
there are no outstanding due and unpaid premiums under such policies. Except as
described in Schedule 3.2.22, since January 1, 1998, no notice of cancellation
or non-renewal with respect to any such insurance has been delivered, nor has
the Company or any of its Subsidiaries been refused any insurance, nor has any
coverage with respect to the Company or any of its Subsidiaries been limited by
any insurance carrier to which an application for insurance was made or with
which insurance was carried. Buyer acknowledges that such insurance policies
shall not be available to the Company and its Subsidiaries after the Closing
except as provided in Section 8.7.
Section 3.2.23 Transactions with Affiliates. Except for transactions
----------------------------
between or among the Company and its Subsidiaries and except as disclosed on
Schedule 3.2.23, since January 1, 1998:
(a) none of Cyprus Amax or any of the Continuing Affiliates has sold,
licensed, leased or otherwise provided any material goods or services, except
goods and services of the categories listed on Schedule 3.2.23, to the Company
or any of its Subsidiaries; and
(b) none of the Company nor any of its Subsidiaries has sold,
licensed, leased or otherwise provided any material goods or services, except
goods and services of the categories listed on Schedule 3.2.23, to Cyprus Amax
or any of the Continuing Affiliates; or
(c) none of Cyprus Amax, any of the Continuing Affiliates, the Company
or any of its Subsidiaries has made any commitment to do any of the foregoing
that cannot be terminated on written notice without regard to time.
Any agreement or understanding regarding the foregoing between the
Company or any of its Subsidiaries on one hand, and Cyprus Amax or the
Continuing Affiliates on the other hand, shall be referred to an "Affiliate
Agreement."
Section 3.2.24 Bonds and Guarantees.
--------------------
(a) Schedule 3.2.24(a) contains a description as of the date hereof
(it being agreed that Cyprus Amax shall be entitled to update such Schedule as
of the Closing) of the obligor, the type of bond, the permit or license number
and the principal amount posted by the Company or any of its Subsidiaries to
secure an obligation of the Company or any of its Subsidiaries (the "Company
Bonds").
(b) Schedule 3.2.24(b) contains a description as of the date hereof
(it being agreed that Cyprus Amax shall be entitled to update such Schedule as
of the Closing) of the obligor, the type of bond, the permit or license number
and the principal amount posted by Cyprus Amax or any of the Continuing
Affiliates to secure an obligation of the Company or any of its Subsidiaries
(the "Cyprus Amax Bonds").
-27-
(c) Schedule 3.2.24(c) contains a description as of the date hereof
(it being agreed that Cyprus Amax shall be entitled to update such Schedule as
of the Closing) of the obligor, the type of bond, the permit or license number
and the principal amount posted by the Company or any of its Subsidiaries to
secure an obligation of any Person other than the Company and its Subsidiaries
(the "Seller Bonds").
(d) Except as set forth in Schedule 3.2.24(d), there are no
outstanding material obligations of the Company or any of its Subsidiaries
requiring the posting of a Bond for which a fully compliant Bond has not been
posted and is not currently maintained.
(e) Schedule 3.2.24(e) lists as of the date hereof (it being agreed
that Cyprus Amax shall be entitled to update such Schedule as of the Closing)
certain Bonds, guarantees, equipment leases, indemnities, letters of credit,
letters of comfort and similar credit obligations (collectively, including
Bonds, "Guarantees") issued by Cyprus Amax or any of the Continuing Affiliates
or by which Cyprus Amax or any of the Continuing Affiliates is bound which inure
in whole or in part to the benefit of the Company or any of its Subsidiaries
(collectively, the "Cyprus Amax Guarantees").
(f) Schedule 3.2.24(f) lists as of the date hereof (it being agreed
that Cyprus Amax shall be entitled to update such Schedule as of the Closing)
all Cyprus Amax Guarantees which do not inure exclusively to the benefit of the
Company and its Subsidiaries (the "Shared Guarantees") .
Section 3.2.25 Employee Benefit Plans.
----------------------
(a) Schedule 3.2.25 lists all material employee benefit plans (as
defined in Section 3(3) of ERISA) and all material deferred compensation, bonus,
incentive compensation, equity-based, compensation, employment, retention,
severance, change in control, disability, workers compensation, occupational
disease and fringe benefit plans, policies, arrangements or agreements (other
than any multi-employer plans, as defined in Section 4001(a)(3) of the Code and
arrangements mandated by law), with respect to which contributions, premiums or
other payments are made or required to be made by Cyprus Amax or the Company or
any of its Subsidiaries with respect to any current or former employees of the
Company or any of its Subsidiaries (together with the Coal Plans and any
arrangements mandated by law, the "Plans"). Schedule 3.2.25 identifies each Plan
that is (i) a Plan maintained by the Company or one of its Subsidiaries solely
for the benefit of Company Employees ("Company Plan") or (ii) a Plan maintained
by Cyprus Amax, but under which the Company or any of its Subsidiaries is a
participating employer ("Cyprus Amax Plan"). For all purposes of this Agreement,
an employee is a "current" employee if such individual is then actively at work,
on long or short-term disability leave, workers' compensation leave or approved
leave of absence or is otherwise entitled to return to active employment with
the Company or its Subsidiaries pursuant to any applicable Law or regulation or
pursuant to the terms of any contract or collective bargaining or similar
agreement.
(b) With respect to each of the Plans (other than as indicated with
two asterisks on Schedule 3.2.25(a)), Cyprus Amax has provided or made available
to Buyer a true and complete copy of each of the following documents: (i) the
most recent plan document or
-28-
agreement, all amendments thereto, and all related trust documents or insurance
contracts; (ii) the most recent summary plan description for each Plan for which
a summary plan description is required or has otherwise been prepared; and (iii)
the most recent audited financial statements and actuarial valuation reports for
each Plan for which such statements and reports are required or have otherwise
been prepared.
(c) Each Plan has been operated in material compliance with its terms
and applicable Laws.
(d) Each Plan, which is intended to be "qualified" within the meaning
of Section 401(a) of the Code, has received a favorable determination letter
from the Internal Revenue Service and no event has occurred and no condition
exists which would reasonably be expected to adversely effect such qualified
status. All voluntary employee benefit associations which provide benefits to
current or former employees of the Company or any of its Subsidiaries, or any
such employees' beneficiaries, are qualified under Section 501(c)(9) of the
Code. All trusts established to satisfy claims relating to disability or death
due to pneumoconiosis are and have been qualified under Section 501(c)(21) of
the Code.
(e) All contributions which are owing from Cyprus Amax or the Company
or any of its Subsidiaries under any Plan have been paid to each such Plan or,
if payable but not yet due, have been properly accrued in accordance with
accepted practice. All premiums have been paid when due with respect to each
Plan that is an employee welfare benefit plan (as defined in Section 3(1) of
ERISA).
(f) None of the Company, Cyprus Amax or any of their Subsidiaries,
nor, to the Knowledge of Cyprus Amax, any other "disqualified person" or "party
in interest" as defined in Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively, has engaged in any transaction in connection with any Plan
that would reasonably be expected to result in the imposition of a material
penalty pursuant to Section 502(i) of ERISA, material damages pursuant to
Section 409 of ERISA, or a material tax pursuant to Section 4975(a) of the Code.
(g) Except as set forth on Schedule 3.2.25(g), no material action,
suit or proceeding with respect to the administration of any Plan (other than
routine claims for benefits) is pending or, to Cyprus Amax's Knowledge,
threatened in writing that would reasonably be expected to result in a material
liability to the Company or any of its Subsidiaries. Each Plan that is a "group
health plan" (as defined in Section 607(l) of ERISA and Section 5000(b)(1) of
the Code) has complied with the requirements of Part 6 of Subtitle B of Title I
of ERISA and of Section 4980B of the Code ("COBRA"), except where non-compliance
would not reasonably be expected to result in a material liability to the
Company or any of its Subsidiaries.
(h) Neither Cyprus Amax nor any of its Subsidiaries nor, to the
Knowledge of Cyprus Amax, any fiduciary (as that term is defined in Section
3(21) of ERISA) of any Plan subject to ERISA that the Company or any of its
Subsidiaries is required to indemnify or has any liability for any breach of
fiduciary duties under ERISA, which could reasonably be expected to result in a
material liability to the Company or any of its Subsidiaries .
-29-
(i) In the six years prior to the date hereof, (i) no Plan that is
subject to Title IV of ERISA nor any of the related trusts has been the subject
of termination proceedings by the PBGC pursuant to Title IV of ERISA, (ii) no
Plan that is subject to Part 3 of Subtitle B of Title I of ERISA has incurred an
accumulated funding deficiency (as that term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, and (iii) no reportable
event (as that term is defined in Section 4043(c) of ERISA) has occurred with
respect to any Plan for which the notice requirement has not been waived by the
PBGC. For each Plan subject to Title IV of ERISA, all material premiums payable
to the PBGC have been paid in full and there are no outstanding material penalty
or interest assessments.
(j) The present value of all accrued benefits of each Plan subject to
Title IV of ERISA, as calculated for funding purposes in the actuarial
statements of such Plans dated December 1998, did not exceed the value of the
assets of such Plans allocable to such accrued benefits.
(k) Each multi-employer plan (as defined in Section 4001(a)(3) of the
Code) to which the Company or any of its Subsidiaries is obligated to contribute
(each a "Multi-Employer Plan") is listed on Schedule 3.2.25(k). Except as set
forth on Schedule 3.2.25(k), all material contributions required to have been
made by the Company or such Subsidiaries to any Multi-Employer Plan have been
made on a timely basis. Neither the Company nor its Subsidiaries has, or has
been advised that it has, incurred any withdrawal liability under Sections 4201
or 4204 of ERISA with respect to any Multi-Employer Plan.
(l) Schedule 3.2.25(l) contains a list, current as of December 31,
1998, of the retirees and dependents that have been definitively assigned to the
Company or any of its Subsidiaries pursuant to Section 9706 of the Coal Act and
for whom yearly premiums were being paid (as of the date of such list) to the
UMWA Combined Benefit Fund pursuant to Section 9704 of the Coal Industry Retiree
Health Benefit Act of 1992 (the "Coal Act") and sets forth the annual amount of
such yearly premiums.
(m) Schedule 3.2.25(m) contains a list, current as of December 31,
1998, of the retirees and dependents for whom the Company or any of its
Subsidiaries was paying (as of the date of such list) premiums to the UMWA 1992
Benefit Plan (the "1992 Plan") pursuant to Section 9712(d)(1)(A) of the Coal Act
and sets forth the annual amount of such premiums.
(n) Schedule 3.2.25(n) contains a list, current as of December 31,
1998, of the retirees and dependents for whom the Company or any of its
Subsidiaries was paying (as of the date of such list) premiums to the 1992 Plan
pursuant to Section 9712(d)(1)(B) of the Coal Act and sets forth the annual
amount of such premiums.
(o) Except as set forth in this Agreement or as disclosed in Schedule
3.2.25(o), neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) result in any
payment becoming due to any current or former employee of the Company or any of
its Subsidiaries, (ii) increase any benefits or compensation under any Plan or
(iii) result in the acceleration of the time of payment, vesting or other rights
with respect to such benefits or compensation.
-30-
Section 3.2.26 Reserves. No facts have come to the attention of any
--------
of the individuals listed in Annex A-1 that would cause such individual to
believe that the information with respect to coal reserves set forth in Cyprus
Amax's Annual Report on Form 10-K for the year ending December 31, 1998 as filed
with the Securities and Exchange Commission, subject to the assumptions and
qualifications described therein, did not comply as of such date in all material
respects with the applicable rules and regulations of the Securities and
Exchange Commission.
Section 3.2.27 Year 2000. The Company and Cyprus Amax have taken
---------
steps to investigate the Year 2000 compliance of the Company and its
Subsidiaries and have commenced projects to identify, evaluate, and address Year
2000 compliance issues, it being agreed that nothing herein shall be deemed to
constitute a representation or warranty as to the Year 2000 compliance status of
the Company or any of its Subsidiaries or of any third parties with which the
Company or any of its Subsidiaries does business.
Section 3.2.28 No Commissions. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, whose
--------------
fees and expenses are the obligation of Cyprus Amax, and for other Persons whose
fees and expenses will solely be the obligation of Cyprus Amax, none of Cyprus
Amax, Energy or the Company has retained any broker, investment banker or other
Person entitled to any commission or similar compensation in connection with
this Agreement or the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 COVENANTS AND AGREEMENTS OF BUYER
---------------------------------
Buyer further covenants and agrees that:
Section 4.1.1 Confidentiality. The provisions of the
---------------
Confidentiality Agreement, dated as of November 23, 1998, between Buyer and
Cyprus Amax (the "Confidentiality Agreement") shall survive the execution and
delivery of this Agreement and shall apply to any information regarding the
Company or any of its Subsidiaries disclosed to or obtained by Buyer, any of its
Affiliates or any of their respective Representatives in connection with the
transactions contemplated hereby. Without limiting the obligations of any party
pursuant to the Confidentiality Agreement, in the event that the contemplated
transactions under this Agreement are not consummated for any reason, Buyer will
promptly, upon the request of Cyprus Amax or the Company, deliver to Cyprus Amax
a certification that all such confidential information disclosed to or obtained
by Buyer, its Affiliates or their respective Representatives has been destroyed
or returned to Cyprus Amax. After the Closing, except as otherwise provided
herein, including in Section 4.2.2, Buyer and its Affiliates shall be free to
disclose any Evaluation Material (as defined in the Confidentiality Agreement)
to the extent such Evaluation Material does not relate to Cyprus Amax or any of
the Continuing Affiliates.
Section 4.1.2 No Solicitation by Buyer. In addition to, and not in
------------------------
limitation of any other agreements pertaining to the Company's, Energy's or
Cyprus Amax's employees
-31-
previously entered into by Buyer, including pursuant to the Confidentiality
Agreement, commencing on the date of this Agreement and ending eighteen months
after the termination or consummation of this Agreement, Buyer, on behalf of
itself and its Affiliates, agrees not to hire or attempt to hire any Managerial
Employees of Cyprus Amax, Energy or the Continuing Affiliates, other than (i)
those Persons responding to advertisements of general solicitation which are not
directed specifically at the employees of Cyprus Amax or the Continuing
Affiliates, and (ii) those Persons who have been terminated by Cyprus Amax or
any of its Affiliates. Nothing contained herein shall prevent Buyer from
conducting interviews of employees of the Company prior to Closing with the
consent of Cyprus Amax, which consent shall not be unreasonably withheld.
Section 4.1.3 References to Cyprus Amax. Buyer agrees, on behalf of
-------------------------
itself and its Affiliates, to consult in advance with, and obtain the prior
consent of Cyprus Amax, with respect to all references to Cyprus Amax, any of
the Continuing Affiliates, any of their respective assets, liabilities,
businesses or operations, or any of their respective Representatives or to any
of the transactions contemplated by this Agreement that are to be contained in
any publicly filed documents, any documents filed with any Governmental
Authority or in any financing or other offering memorandum (whether or not
publicly filed). The provisions of this Section 4.1.3 shall not survive the
Closing or the termination of this Agreement.
SECTION 4.2 COVENANTS AND AGREEMENTS OF CYPRUS AMAX AND THE COMPANY
-------------------------------------------------------
Cyprus Amax and the Company further covenant and agree that:
Section 4.2.1 Access to Information. Until the Closing, the Company
----------------------
shall afford Buyer and its Representatives access, during normal business hours
and upon reasonable notice, to the Property Interests and to all of the books,
records and agreements of the Company and its Subsidiaries, and shall furnish to
Buyer and its Representatives such information regarding the Company and its
Subsidiaries as Buyer may reasonably request; provided, however, that any such
-------- -------
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Company and its
Subsidiaries or of Cyprus Amax; provided, further, however, that except as
-------- ------- -------
contemplated by Article IX, no investigation made by Buyer in accordance with
this Section or otherwise shall affect any representation or warranty of Cyprus
Amax or the conditions to the obligations of or the obligations of Cyprus Amax
or Energy hereunder.
Section 4.2.2 Environmental Investigation. Until the Closing, the
---------------------------
Company will afford access to Buyer and to ▇▇▇▇ ▇. ▇▇▇▇ Company, Dames & ▇▇▇▇▇,
Norwest Services and/or ▇▇▇▇▇ & Associates, its environmental consultants,
during normal business hours and upon reasonable request and notice, to the
Property Interests for the purpose of performing Phase I environmental
investigations and Phase II environmental investigations with respect to any
underground storage tanks in place prior to any applicable reporting
requirements; provided, however, that any such assessments and investigations
-------- -------
shall be conducted in such a manner so as not to interfere unreasonably with the
operation of the business of the Company and its Subsidiaries or of Cyprus Amax
and the Continuing Affiliates. Buyer shall indemnify and hold harmless the
Cyprus Amax Indemnified Parties with respect to any Losses arising out of or
-32-
resulting from any of such activities. Any information obtained in connection
with the foregoing shall be subject to the confidentiality provisions of the
Confidentiality Agreement and to Section 4.1.1 hereof. The confidentiality and
indemnification provisions of this Section shall survive the Closing or any
termination of this Agreement. Except as required by Law or pursuant to court
order, Buyer agrees not to, and not to permit any of its Affiliates or
Representatives to, contact any Governmental Authority in connection with the
investigation contemplated hereby without the prior written consent of Cyprus
Amax, which consent shall not be unreasonably withheld or delayed. Buyer agrees
that in no event shall it permit the investigations contemplated by this Section
4.2.2 to delay the Closing.
Section 4.2.3 Ordinary Course of Business. Except as otherwise
---------------------------
contemplated by this Agreement, as may be necessary to effect the transactions
contemplated by this Agreement or as set forth on Schedule 4.2.3, until the
Closing, the Company shall, and shall ensure that each of its Subsidiaries
shall, conduct its respective business in the ordinary course in a manner
consistent with past practice and without the prior written consent of Buyer
shall not (a) undertake any of the actions set forth in clauses (a), (b), (c),
(d), (f), (g), (h) or (j) of Section 3.2.19 and (b) enter into any transaction
or agreement for or with respect to (i) the sale, issuance or transfer of any of
its capital stock or other equity interest, (ii) the merger or consolidation
with any Person, (iii) the sale, transfer or other disposition of any material
assets other than in the ordinary course of business consistent with past
practice or (iv) the taking of any action in furtherance of the foregoing. The
Company shall, and shall ensure that each of its Subsidiaries shall use
commercially reasonable efforts consistent with past practice to preserve and
maintain intact its respective business, operations, assets and relationships
with customers, suppliers and employees. Except to the extent required by any
applicable Laws or by agreements in effect on the date hereof and set forth on
Schedule 4.2.3 and except as may be necessary or advisable to renew or replace
annual Plans in the ordinary course of business or to effect the transactions
contemplated by this Agreement, the Company shall not, and shall ensure that
none of its Subsidiaries shall, enter into any binding agreement to create any
additional Plan, contract, agreement or arrangement concerning any current or
former employee, or otherwise amend or modify in any material respect or
terminate any Plan. Cyprus Amax agrees that it will not permit the Company or
any of its Subsidiaries to make any principal repayments in respect of any long
term debt and capital lease obligations (including in each case the current
portion thereof) except as required by the terms of the applicable agreements.
Schedule 4.2.3 sets forth the schedule of such required debt repayments.
Section 4.2.4 Confidentiality. Cyprus Amax and the Continuing
---------------
Affiliates shall, and shall cause their respective Representatives to (and prior
to the Closing the Company shall, and shall cause its Subsidiaries to), not
disclose to any third party, not use for any purpose (except as may be
contemplated hereby) and to hold in confidence any confidential information
regarding the Buyer or any of its Affiliates disclosed to or obtained by Cyprus
Amax, any of its Affiliates of any of their respective Representatives in
connection with the transactions contemplated hereby. The preceding sentence
shall not apply to information which (i) was or becomes generally available to
the public other than as a result of disclosure by Cyprus Amax or its
Affiliates, or (ii) is compelled to be disclosed pursuant to any requirement of
Law, court order, subpoena, or similar legal authority; provided, however, that
-------- -------
Cyprus Amax shall give Buyer prompt notice thereof and ▇▇▇▇ all information so
disclosed as confidential business
-33-
information of Buyer. Cyprus Amax shall advise the Company of any such
requirement to disclose any confidential information, so that the Company may
seek appropriate legal relief. In the event that the contemplated transactions
under this Agreement are not consummated for any reason, Cyprus Amax will
promptly, upon the request of Buyer, deliver to Buyer a certification that all
such confidential information regarding Buyer or any of its Affiliates disclosed
to or obtained by Cyprus Amax, its Affiliates or their respective
Representatives has been destroyed or returned to Buyer. After the Closing,
subject to applicable Law (including public reporting requirements), Cyprus Amax
will, and will cause the Continuing Affiliates to, afford any confidential
information regarding the Company and its Subsidiaries with the same degree of
confidentiality as Cyprus Amax affords confidential information regarding its
own business and operations, it being agreed that Cyprus Amax or such Continuing
Affiliates may disclose such information for bona fide business purposes to the
---- ----
extent it would be reasonably likely to make disclosure of its own confidential
information in such circumstances.
Section 4.2.5 No Solicitation by Cyprus Amax. In addition to, and not
------------------------------
in limitation of any other agreements pertaining to the Buyer's employees
previously entered into by Cyprus Amax, commencing on the date of this Agreement
and ending eighteen months after the termination or consummation of this
Agreement, Cyprus Amax, on behalf of itself and the Continuing Affiliates,
agrees not to hire or attempt to hire any Managerial Employees of Buyer or any
of its Affiliates, other than (i) those Persons responding to advertisements of
general solicitation which are not directed specifically at the employees of
Buyer or any of its Affiliates and (ii) those Persons who have been terminated
by Buyer or any of its Affiliates.
Section 4.2.6 References to Buyer. Each of Cyprus Amax, Energy and the
-------------------
Company agrees to consult in advance with, and obtain the prior consent of,
Buyer with respect to all references to Buyer, any of its Affiliates, any of
their respective assets, liabilities, businesses or operations, or any of their
respective Representatives or to any of the transactions contemplated by this
Agreement that are to be contained in any publicly filed documents or any
documents filed with any Governmental Authority (whether or not publicly filed).
The provisions of this Section 4.2.6 shall not survive the Closing or the
termination of this Agreement.
Section 4.2.7 Assignment of Agreements. On the Closing Date, each of
------------------------
Cyprus Amax and the Company will execute and deliver the assignment and
assumption agreement (the "Assignment Agreement"), substantially in the form
attached hereto as Exhibit C.
Section 4.2.8 Exclusivity. From and following execution of this
-----------
Agreement until the Closing or the termination hereof or earlier material breach
by Buyer of any provision hereof that would be reasonably likely to result in
the failure to be satisfied of any condition to the obligation of Cyprus Amax to
consummate the transactions contemplated hereby, Cyprus Amax, Energy and the
Company shall refrain, and shall cause the Company's Subsidiaries and the
Continuing Affiliates to refrain, from any activities directly or indirectly
involving the further solicitation of acquisition offers with respect to the
Company or any of its Subsidiaries, including participation in any negotiations
or formal or informal communications of any kind or nature with any party
concerning a potential disposition of all or substantially all of the stock or
assets of the Company or any of its Subsidiaries other than Cyprus Australia
Coal Company and its Subsidiaries (whether conducted by them or on their
behalf), in all such cases with anyone other
-34-
than Buyer or any of its Affiliates; provided, however, that nothing in this
-------- -------
Agreement shall apply to any activities taken by Cyprus Amax with respect to
business combinations or other transactions involving Cyprus Amax or its
Subsidiaries that do not conflict with the consummation of the transactions
contemplated hereby and that are not reasonably likely to prevent the
consummation of the transactions contemplated hereby. In connection therewith
and during such period, but without limiting the generality of the foregoing,
(a) Cyprus Amax shall indicate to any Person expressing any interest in such a
disposition of the restrictions imposed by this Section and shall ensure that no
further discussions or communications take place with such Person with respect
thereto; (b) Cyprus Amax shall ensure that all current discussions with any
other Persons respecting such a disposition are terminated; (c) Cyprus Amax
shall notify Buyer of any direct or indirect approaches made to Cyprus Amax or
any of its Affiliates or Representatives relating to any such possible or
proposed disposition; (d) Cyprus Amax shall ensure that no confidential
information concerning the Company or any of its Affiliates is provided by any
of its Affiliates or Representatives to another Person regarding or in
furtherance of such a disposition.
Section 4.2.9 Intercompany Accounts; Cash Accounts.
------------------------------------
(a) On a daily basis until the Closing, all cash and cash equivalents
of the Company and its Subsidiaries will be transferred to Cyprus Amax or the
Continuing Affiliates except for Imprest Checking Accounts.
(b) All intercompany accounts providing for the payment of any amounts
between the Company and its Subsidiaries, on the one hand, and Cyprus Amax and
the Continuing Affiliates, on the other hand, shall at the election of Cyprus
Amax, either (i) be settled in cash or (ii) be settled by way of dividend to the
extent of retained earnings and then a return of capital if the amount is a
receivable on the Company's or applicable Subsidiary's books, or as an increase
of paid-in capital if the amount is a payable on the Company's or applicable
Subsidiary's books as of the Closing Date, with no cash payments being made.
(c) Except as otherwise expressly contemplated by this Agreement and
except for the Cyprus Plateau Tax Sharing Agreement (as such term is defined in
the Tax Sharing and Indemnification Agreement), all Affiliate Agreements shall
automatically be terminated and of no further force and effect, as of the
Closing Date (notwithstanding any contrary provision therein), and no Person
shall have any rights or claims under or in connection with any of the
foregoing, including as a result of any actions or inactions or alleged actions
or inactions prior to the Closing Date.
SECTION 4.3 CONTINUING JOINT COVENANTS AND AGREEMENTS
-----------------------------------------
Section 4.3.1 No Acts or Omissions. No party hereto shall
--------------------
intentionally and in bad faith perform any act which, if performed, or
intentionally and in bad faith omit to perform any act which, if omitted to be
performed, would prevent or excuse the performance of this Agreement by any
party hereto.
Section 4.3.2 Consents of Others. Each party shall use its reasonable
------------------
efforts prior to the Closing to take, or cause to be taken, all actions and to
do, or cause to be done, all
-35-
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated hereby, and to cooperate
with the other in connection with the foregoing, to obtain all authorizations,
consents and permits required of it to permit it to consummate the transactions
contemplated by this Agreement; provided that as to consents, Cyprus Amax's,
Energy's and the Company's obligations shall be limited to the Material
Restricted Contracts and Permits, and Cyprus Amax, Energy and the Company shall
not be required to, and shall not without the consent of Buyer, such consent not
to be unreasonably withheld, file any lawsuit or take other legal action as
against any third party, make any amendment to any agreement or Permit or waive
any rights thereunder, or pay any amount, agree to any restriction or assume any
obligation in connection therewith and Cyprus Amax, Energy and the Company shall
have no liability from any failure to obtain any consent with respect to any
Material Restricted Contract or Permit.
Section 4.3.3 Antitrust Matters. (a) Each party shall promptly file
-----------------
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice a pre-merger notification in accordance with the
HSR Act with respect to the sale of the Company Shares. The parties shall
reasonably cooperate to expedite the termination of the waiting period under the
HSR Act. Each party hereto shall promptly inform the other of any material
communication from the Federal Trade Commission, the United States Department of
Justice or any other Governmental Authority regarding any of the transactions
contemplated hereby and each shall keep the others apprised of the status
thereof. If either party or any Affiliate thereof receives a request for
additional information or documentary material from any such Governmental
Authority with respect to the transactions contemplated hereby, then such party
will endeavor in good faith to make, or cause to be made, as soon as practicable
and after consultation with the other party, an appropriate response in
compliance with such request. Buyer will advise Cyprus Amax promptly in respect
of any understandings, undertakings or agreements (oral or written) which Buyer
proposes to make or enter into with the Federal Trade Commission, the United
States Department of Justice or any other Governmental Authority in connection
with the transactions contemplated hereby. Each of Cyprus Amax and Buyer shall,
and each shall cause its Affiliates to, furnish to the other such information
and assistance as the other may reasonably request in connection with its
preparation of any filing or submission which is necessary under the HSR Act or
such other Laws or which is otherwise requested by any Governmental Authority in
the course of any review of the transactions contemplated by this Agreement.
(b) Without limiting the generality of the foregoing, Buyer shall
take all action necessary to resolve as promptly as possible and in any event
prior to October 12, 1999 such objections, if any, as may be asserted with
respect to the transactions contemplated hereby under any Antitrust Law and to
obtain any clearance or approvals required under any Antitrust Law for the
consummation of the transactions contemplated by the Agreement. For purposes of
clarification, such obligation of Buyer shall include a requirement to proffer
sufficiently in advance of such date its willingness to accept an order to
divest any assets, line of business or properties of the Company or any of its
Subsidiaries or of the Buyer or any of its Affiliates and to hold separate any
such assets, line of business or properties pending such divestiture (and the
execution of a consent decree or other agreement giving effect thereto).
-36-
Section 4.3.4 Financing. Buyer shall take all steps necessary to
---------
obtain the financing (including with respect to the Buyer Debt Facility)
necessary to consummate the Closing and the transactions contemplated hereby in
accordance with the terms of this Agreement.
Section 4.3.5 Publicity. During the period prior to the Closing,
---------
except as required by Law, the parties shall consult in advance of all public
announcements in respect of the subject matter of this Agreement. The content of
any such announcements shall require the agreement of the parties prior to
publication, such agreement not to be unreasonably withheld or delayed in the
context of announcements that are required to be made in order to comply with
any applicable Law or any listing agreement with, or the rules or regulations
of, any securities exchange on which securities of a party or any of its
Affiliates are listed or traded or any other regulatory requirements.
Section 4.3.6 Guarantees.
----------
(a) Cyprus Amax Guarantees. Prior to Closing, Buyer shall cooperate
----------------------
with Cyprus Amax and its Affiliates, and shall use commercially reasonable
efforts, which shall include preparation and submission of documents, provision
of information and response to requests, to cause itself, its Affiliates, the
Company and/or one or more of the Company's Subsidiaries to be substituted in
all respects for Cyprus Amax or any Continuing Affiliate, in respect of all
Liabilities under the Cyprus Amax Guarantees and to cause Cyprus Amax and the
Continuing Affiliates to be fully released and discharged with respect thereto,
in each case, as of the Closing Date. Notwithstanding the foregoing, Buyer will
not contact any party to any Cyprus Amax Guaranty or any underlying obligation
prior to the Closing without the prior consent of Cyprus Amax, which consent
shall not be unreasonably withheld or delayed. With respect to any Cyprus Amax
Guarantees which are not fully released and discharged as of the Closing Date,
Buyer shall continue to use commercially reasonable efforts to replace such
Guarantees and/or to cause Cyprus Amax and the Continuing Affiliates to be fully
released and discharged therefrom.
(b) Shared Guarantees. Notwithstanding anything to the contrary set
-----------------
forth in subsection (a), Buyer and Cyprus Amax shall cooperate to cause the
replacement of the Shared Guarantees with one or more Guarantees which reflect a
proper allocation of the obligations secured thereby and to cause a
corresponding release and discharge of Cyprus Amax and the Continuing
Affiliates. In no event shall Buyer thereby assume responsibility in connection
with any Shared Guarantee on its behalf or on behalf of its Affiliates for
obligations which do not inure to the benefit of the Company and its
Subsidiaries, except as may arise in connection with the AEI Sublease. Buyer
will not contact any party to any Shared Guaranty or any underlying obligation
prior to the Closing without the prior consent of Cyprus Amax, which consent
shall not be unreasonably withheld or delayed. With respect to any Shared
Guarantees which, to the extent applicable, are not fully released and
discharged as of the Closing Date, the parties shall continue to use
commercially reasonable efforts to replace such Guarantees, to cause Cyprus Amax
and the Continuing Affiliates to be fully released and discharged therefrom and
to effect the allocation of the obligations thereunder as contemplated hereby,
in each case to the extent contemplated by this Section 4.3.6(b).
-37-
(c) Buyer Guarantees. In the event that the Company is not fully
----------------
discharged and released from the Buyer Guarantees listed on Schedule 4.3.6(c) as
of the Closing, at the Closing, Cyprus Amax will post a letter of credit, surety
bond or comparable collateral for the benefit of the Company in the aggregate
principal amount outstanding under the underlying obligations as of the Closing
in form and substance reasonably satisfactory to Buyer. Cyprus Amax will be
entitled to reduce the face amount of such letter of credit, surety bond or
comparable collateral (or such letter of credit, surety bond or comparable
collateral shall provide by its terms for such reduction) on a dollar for dollar
basis when and as the underlying obligations are reduced. With respect to any
Buyer Guarantees not listed on Schedule 4.3.6C which are not fully released and
discharged as of the Closing Date, Cyprus Amax shall continue to use
commercially reasonable efforts to replace such Guarantees and/or to cause the
Company and its Subsidiaries to be fully released and discharged therefrom.
(d) Bonds. Without limiting the generality of the foregoing, at or
-----
prior to the Closing, with respect to any of the Cyprus Amax Guarantees that is
a Bond, Buyer shall post a replacement surety bond for the benefit of the
beneficiaries thereof in form and substance and issued by a surety company that
is A-rated or better by A.M. Best and that is acceptable to the Federal
Government in accordance with the Federal Register (T Listed) and that is
satisfactory to such beneficiaries and to Cyprus Amax. Each such replacement
surety bond so provided by the Buyer shall provide on its face that it
"supersedes and replaces" the applicable Cyprus Amax Guarantee. At the Closing,
Buyer shall deliver, or cause to be delivered, to Cyprus Amax, such other
documents as may reasonably be requested by Cyprus Amax in order to permit
Cyprus Amax to effect the full release and discharge of Cyprus Amax and the
Continuing Affiliates as contemplated hereby. Buyer shall reimburse Cyprus Amax
on a monthly basis for all reasonable costs and expenses incurred by Cyprus Amax
or the Continuing Affiliates with respect to all such Bonds that remain
outstanding following the Closing Date.
(e) Treatment of Equipment Leases. Schedule 4.3.6(e) sets forth a list
-----------------------------
of all agreements relating to equipment located as of the date hereof on the
premises of the Company or one of its Subsidiaries for which Cyprus Amax or any
of the Continuing Affiliates have any liability (collectively with the AEI
Sublease, the "Equipment Leases"). Prior to Closing, Buyer shall cooperate with
Cyprus Amax and its Affiliates, and shall use commercially reasonable efforts,
which shall include preparation and submission of documents, provision of
information and response to requests, to cause itself, its Affiliates, the
Company and/or one or more of the Company's Subsidiaries to be substituted in
all respects for Cyprus Amax or any Continuing Affiliate, in respect of all
Liabilities under the Equipment Leases to the extent not relating to equipment
used by Cyprus Amax or the Continuing Affiliates and to cause Cyprus Amax and
the Continuing Affiliates to be fully released and discharged to such extent, in
each case, as of the Closing Date. Notwithstanding the foregoing, Buyer will not
contact any party to any Equipment Lease or any underlying obligation prior to
the Closing without the prior consent of Cyprus Amax, which consent shall not be
unreasonably withheld or delayed. With respect to any Equipment Leases which are
not fully released and discharged as of the Closing Date to such extent, Buyer
shall continue to use commercially reasonable efforts to replace such Equipment
Leases and/or to cause Cyprus Amax and the Continuing Affiliates to be fully
released and discharged, in either case to the extent not relating to equipment
used by Cyprus Amax or the Continuing Affiliates. In the event that Buyer is not
able to effect the substitution of Buyer, the
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Company or any of their respective Affiliates for Cyprus Amax or any of the
Continuing Affiliates, and the full release and discharge of Cyprus Amax and its
Continuing Affiliates to such extent with respect to the Equipment Leases as of
the Closing, Buyer and the Company shall assume and be jointly and severally
liable for all obligations and other Liabilities under such Equipment Leases and
the parties shall enter into an agreement in form and substance mutually
acceptable to Buyer and Cyprus Amax (whether structured as a sublease or
otherwise) that allocates the risks and benefits of the Equipment Leases to the
extent relating to equipment used by Cyprus Amax or the Continuing Affiliates to
Cyprus Amax and the Continuing Affiliates and otherwise to Buyer and the
Company. Cyprus Amax and the Continuing Affiliates shall have no obligation to
make any payment or to satisfy any other obligation under any Equipment Lease to
the extent not relating to equipment used by Cyprus Amax or the Continuing
Affiliates unless Cyprus Amax shall have received funds therefor. Buyer shall,
and shall cause the Company and its Subsidiaries to, provide Cyprus Amax with
information regarding any material communications with any obligee under any
Equipment Lease, including any communications relating to the condition or
disposition of any equipment and the obligations of any party upon termination
of any Equipment Lease, and shall permit Cyprus Amax to participate in any of
the foregoing if reasonably practicable.
(f) Indemnification After Closing. (1) Buyer and the Company shall
-----------------------------
jointly and severally indemnify and defend Cyprus Amax and the Continuing
Affiliates for and hold Cyprus Amax and the Continuing Affiliates harmless from
and against, and pay and reimburse Cyprus Amax and the Continuing Affiliates
for, any and all Losses of Cyprus Amax or the Continuing Affiliates, as the case
may be, in respect of any Cyprus Amax Guarantee, Equipment Lease or Shared
Guarantee to the extent not for the benefit of Cyprus Amax or the Continuing
Affiliates or any other any Guarantee or other obligation obtained or issued by
Cyprus Amax or any of the Continuing Affiliates or by which Cyprus Amax or any
of the Continuing Affiliates is bound for the benefit of the Company or any of
its Subsidiaries (whether or not scheduled or required to be scheduled),
including any of the foregoing arising out of or relating to (i) a payment by,
or any other Liability of, Cyprus Amax or any of the Continuing Affiliates under
any of the foregoing, including any draw made by any beneficiary of any letter
of credit or surety bond after the Closing Date and for the benefit of the
Company or any of its Subsidiaries or (ii) any action, suit, claim,
investigation or proceeding, whether involving a court of law, administrative
body, Governmental Authority, arbitrator, or alternative dispute resolution
mechanism ("Proceeding") arising out of or relating to any of the foregoing. Any
payment required to be made by Buyer or the Company under this clause (f)(1)
shall be made within ten (10) business days after Buyer's receipt of written
notice from Cyprus Amax or any Continuing Affiliate describing in reasonable
detail the amount owing hereunder; provided however that if any notice cannot be
-------- -------
given under applicable Law, such amount shall be immediately due and payable and
no notice need be given hereunder. Amounts shall accrue interest at the rate of
7% per annum from the date of payment by Cyprus Amax or any Continuing Affiliate
until the date of repayment.
(2) Cyprus Amax shall indemnify and defend Buyer, the Company and its
Subsidiaries for and hold Buyer, the Company and its Subsidiaries harmless from
and against, and pay and reimburse the Company and its Subsidiaries for, any and
all Losses of the Company or any of its Subsidiaries, as the case may be, in
respect of any Equipment Lease, Shared
-39-
Guarantee or any Buyer Guarantee, in each case to the extent for the benefit of
Cyprus Amax or the Continuing Affiliates including any of the foregoing arising
out of or relating to (i) a payment by, or any other Liability of, the Company
or any of its Subsidiaries under any of the foregoing, including any draw made
by any beneficiary of any letter of credit or surety bond, after the Closing
Date and for the benefit of Cyprus Amax or the Continuing Affiliates; and (ii)
any Proceeding arising out of or relating to any of the foregoing. Any payment
required to be made by Cyprus Amax under this clause (f)(2) shall be made within
ten (10) business days of Cyprus Amax's receipt of written notice from Buyer
describing in reasonable detail the amount owing hereunder; provided however
-------- -------
that if any notice cannot be given under applicable Law, such amount shall be
immediately due and payable and no notice need be given hereunder. Amounts shall
accrue interest at the rate of 7% per annum from the date of payment by the
Company or any of its Subsidiaries until the date of repayment.
(g) Buyer Surety Bond. On the Closing Date, Buyer shall deliver to
-----------------
Cyprus Amax, for the benefit of Cyprus Amax and the Continuing Affiliates,
either a surety bond, substantially in the form attached hereto as Exhibit D
issued by a surety or financial institution reasonably acceptable to Cyprus
Amax, as collateral security for Buyer's obligations under this Section 4.3.6
and shall permit Cyprus Amax on behalf of itself and the Continuing Affiliates
to make draws thereunder from time to time in accordance herewith or, except to
the extent relating to Bonds, a letter of credit issued by a financial
institution reasonably acceptable to Cyprus Amax that shall permit Cyprus Amax
on behalf of itself and the Continuing Affiliates to make draws thereunder from
time to time in accordance herewith, otherwise having terms and conditions
comparable to those of the surety bond attached as Exhibit D and otherwise
reasonably acceptable to Cyprus Amax (as applicable, whether a surety bond or a
letter of credit, the "Buyer Surety Bond"). The Buyer Surety Bond shall be
issued on the Closing Date in an aggregate amount equal to all amounts
outstanding on the Closing Date under any Cyprus Amax Guarantee, any Shared
Guarantee or any Equipment Lease for which Cyprus Amax and the Continuing
Affiliates have not been fully released and discharged as of the Closing, in
each case to the extent not inuring to the benefit of Cyprus Amax or any of the
Continuing Affiliates (the "Outstanding Guarantee Amount") on such date (it
being understood for purposes of clarification that as of the date hereof such
aggregate amount is approximately $459.4 million). Schedule 4.3.6(g) details
such aggregate amount outstanding as of the date hereof. Buyer shall have the
right at its option, at any time and from time to time but no more than once in
any seven (7) day period, to deliver to Cyprus Amax a replacement Buyer Surety
Bond with a face amount equal to, or to reduce the face amount of the Buyer
Surety Bond to, the then-current Outstanding Guarantee Amount (if Cyprus Amax is
reasonably satisfied that it and the Continuing Affiliates have been fully
released and discharged with respect to any Liability giving rise to such
reduction), but otherwise containing the same terms and issued by the same party
or a party reasonably acceptable to Cyprus Amax as the initial Buyer Surety
Bond. Each such replacement Buyer Surety Bond shall be accompanied by such
documentation as Cyprus Amax shall reasonably request with respect to the
validity and enforceability thereof. Upon delivery of such replacement Bond and
such additional documentation, Cyprus Amax shall deliver to Buyer for
cancellation the Buyer Surety Bond so replaced. In the event that Buyer, the
Company or any of their respective Affiliates shall have failed from time to
time to make any payment required to be made to Cyprus Amax or any of the
Continuing Affiliates under this Section 4.3.6, Buyer hereby irrevocably
authorizes Cyprus Amax, on behalf of Cyprus Amax or any of the Continuing
Affiliates, as the case may be, without any requirement of notice or demand, to
draw down under
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the Buyer Surety Bond in the amount of the payment required to have been so paid
pursuant to this Section 4.3.6. In the event that the Buyer Surety Bond is
inadequate to satisfy the obligations of Buyer and the Company under this
Section 4.3.6, Buyer and the Company shall remain fully liable for all
obligations under this Section 4.3.6.
(h) Refund of Premiums. All funds in respect of premiums that are
------------------
refunded in respect of Cyprus Amax Guarantees, Shared Guarantees or Equipment
Leases on account of the replacement thereof by Buyer pursuant to this Section
4.3.6 shall be for the account of Cyprus Amax and the Continuing Affiliates,
except to the extent it is included as a current asset of the Company or any of
its Subsidiaries in the Financial Statements or the Closing Statement. In
accordance with Section 8.8, Buyer shall pay over or cause the Company and its
Subsidiaries to pay over to Cyprus Amax any such refunds received by the Company
or any of its Subsidiaries after the Closing promptly upon receipt of such
refunds by the Company or such Subsidiary.
(i) Third Party Beneficiaries. The Company, its Subsidiaries, Cyprus
-------------------------
Amax and the Continuing Affiliates are intended third party beneficiaries of
this Section 4.3.6 and shall have the right to enforce the benefits intended to
be conferred upon each of them under this Section 4.3.6 as though they were
parties to this Agreement.
(j) Required Efforts. Notwithstanding the foregoing, in no event shall
----------------
any party hereto be required to or shall file any lawsuit or to take other legal
action, make any amendment to any Guarantee or waive any rights thereunder or
pay any amount, in order to cause the replacement and/or release and discharge
of any Guarantee without the prior written consent of the parties hereto.
Furthermore, after the Closing, Buyer will not, and will not permit the Company
or any of the Subsidiaries to, renew, extend, amend or supplement any loan,
contract, lease or other obligation underlying any Guarantee with respect to
which Cyprus Amax and the Continuing Affiliates are not fully released and
discharged as of the Closing Date in any manner that would extend or increase
the Liability of Cyprus Amax or any Continuing Affiliate without providing
Cyprus Amax with evidence satisfactory to Cyprus Amax that Cyprus Amax and the
Continuing Affiliates have been fully released and discharged.
Section 4.3.7 Notice of Breach; Cure of Breach. Prior to the Closing,
--------------------------------
each party hereto shall promptly notify any other party if the notifying party
has actual knowledge of a breach of this Agreement by any other party. If a
breach is cured (whether or not the subject of a notice) without cost to the
other parties hereto prior to the time established for the Closing, such breach
shall be deemed not to have occurred for all purposes of this Agreement.
SECTION 4.4 TWENTYMILE PERMIT
-----------------
Cyprus Amax shall use its commercially reasonable efforts to procure
(a) the renewal of mining activity permit C-82-056 issued by the Colorado
Division of Minerals and Geology ("DMG") in accordance with the application for
renewal submitted to DMG on November 21, 1997, and (b) a permit or a revision to
an existing permit in order to allow the Company or one or more of its
Subsidiaries to engage in longwall mining substantially in accordance with the
application for the fifth permit revision to mining activity permit 82-056
submitted to the DMG on February 26, 1999 (the "Twentymile AVF Permit") and to
respond expeditiously to all requests for
-41-
information from the DMG. Between the date hereof and the Closing, Cyprus Amax
shall provide Buyer with an opportunity to review and comment on all written
communications with the DMG concerning the above applications. If requested by
Buyer and at Buyer's expense, Cyprus Amax shall provide after the Closing such
assistance to Buyer as may be reasonably requested from time to time to procure
such permit or revision, including by making available its books, records,
personnel and Representatives for such purposes. Notwithstanding this Section
4.4, in no event shall Cyprus Amax be required to file any lawsuit or to take
other legal action, relinquish any right, incur any obligation or pay any non-de
minimis amount in order to effect the transactions contemplated by this Section
4.4.
SECTION 4.5 CYPRUS PLATEAU MINING CORPORATION
---------------------------------
Buyer shall cause to be paid by either Cyprus Plateau Mining
Corporation or by any other corporation organized under the laws of one of the
states of the United States or the District of Columbia that is an Affiliate of
Buyer to Cyprus Amax a payment in respect of the Willow Creek Mine equal (a) in
the case of each year commencing January 1, 2000 through the year commencing
January 1, 2004, $1.00 per ton of coal sold from the Willow Creek Mine in the
applicable year in excess of 3.5 million tons and (b) in the case of each year
commencing January 1, 2005 through the year commencing January 1, 2014, $1.25
per ton of coal sold from the Willow Creek Mine in the applicable year in excess
of 3.5 million tons. Each such amount shall be paid no later than January 15 of
each subsequent respective year commencing January 15, 2001 and shall contain
documentation specifying the basis of the calculation, certified by the Chief
Executive Officer of the Company. This obligation shall remain regardless of
whether Buyer owns the Company and/or the Willow Creek Mine and shall survive
any sale, assignment, conveyance, transfer, Encumbrance or disposition of all or
any portion of the Willow Creek Mine or of all or any portion of the assets or
securities of the Company, any of its Subsidiaries or Buyer or any of their
respective Affiliates and any merger, consolidation, reorganization,
restructuring or other business combination involving any of the foregoing. Any
amounts not timely paid shall accrue interest at the rate of 7% per annum from
January 15 of the applicable year until the payment is made.
SECTION 4.6 NON-COMPETITION AGREEMENT
-------------------------
Cyprus Amax agrees, as additional consideration for Buyer's agreements
and payments hereunder, on behalf of itself and its direct or indirect wholly
owned Subsidiaries (to the extent they remain direct or indirect wholly owned
Subsidiaries), for the two year period following the Closing Date, not to engage
in, or to have any material ownership interest, directly or indirectly, in a
business that engages in, or otherwise, directly or indirectly, manages,
operates or controls a business engaged in, the mining, processing, sale or
marketing of coal in the United States of America unless such ownership interest
or engagement in such business is the result of a merger, consolidation,
business combination or similar transaction involving Cyprus Amax or any of such
Subsidiaries, or an acquisition by Cyprus Amax or any such Subsidiary of another
Person; provided however that in the case of any acquisition by Cyprus Amax or
-------- -------
any such Subsidiary of any other Person no more than 25% of the aggregate annual
revenue of such other Person during the full fiscal year of such Person
immediately preceding such acquisition shall have been derived from such coal
activities in the United States of America.
-42-
SECTION 4.7 KEEPWELL AGREEMENTS
-------------------
Buyer will not terminate or waive (by amendment or otherwise)
any material rights under any of the Keepwell Agreements unless Cyprus Amax
shall be reasonably satisfied that Buyer is concurrently therewith providing the
Cyprus Amax Indemnified Parties with collateral adequate in Cyprus Amax's
reasonable judgment to secure Buyer's obligations (contingent or otherwise)
under this Agreement and any Related Agreement.
ARTICLE V
BENEFITS PROVISIONS
SECTION 5.1 BENEFITS MATTERS
----------------
Section 5.1.1 Continued Employees. For purposes of this Agreement, the
-------------------
term "Company Employees" shall include all current and former employees of the
Company and its Subsidiaries and former Subsidiaries. The parties hereto intend
that there shall be continuity of employment following the Closing with respect
to all Company Employees who are current employees of the Company and its
Subsidiaries; provided, however, that all employment which was at will as of the
-------- -------
Closing Date will continue to be at will employment following the Closing Date.
Effective as of the Closing, Buyer shall, or shall cause the Company to, employ
each such Company Employee at a base salary or base wages at least equivalent to
the rate of base salary or wages paid to such Company Employee as of the close
of business on the day prior to the Closing. Until the end of the calendar year
in which the Closing occurs, Buyer shall, or shall cause the Company to, provide
compensation and bonus opportunity and employee benefits (other than equity-
based benefit plans) to the Company Employees, which are substantially
comparable in the aggregate to those provided to the Company Employees
immediately prior to the Closing. For all purposes under all compensation and
benefit plans applicable to Company Employees after the Closing, Buyer shall, or
shall cause the Company to, treat all service by Company Employees with the
Company or any of its Subsidiaries or Affiliates (including Cyprus Amax) before
the Closing as service with the Buyer or its Subsidiaries or Affiliates.
Section 5.1.2 Salaried Retirement Plan. Effective as of the Closing,
------------------------
Company Employees (whether current or former) shall cease to participate in and
to accrue additional benefits under the Retirement Plan for Salaried Employees
of Cyprus Amax Minerals Company (the "Salaried Plan"), and the Company and its
Subsidiaries and Affiliates (other than the Continuing Affiliates) shall cease
to be participating employers thereunder. Buyer has no present intention to
cause the Salaried Plan to be terminated or to be amended to reduce the benefit
accrual thereunder after the Closing.
Section 5.1.3 Company Retirement Plan.
-----------------------
(a) Effective as of the Closing, Buyer shall cause the Company to
establish a defined benefit pension plan that qualifies under Section 401(a) of
the Code and a trust under Section 501(a) of the Code. Such plan (the "New
Plan") shall cover each Company Employee (whether current or former) who was a
participant in the Salaried Plan prior to the Closing and
-43-
shall credit, contingent upon the transfer of assets described below, Company
Employees for purposes of eligibility, vesting and benefit accruals with years
of service for employment with the Company or any Subsidiary or Affiliate of
Cyprus Amax or the Company prior to the Closing as reflected in the records of
Cyprus Amax's Salaried Plan. As soon as practicable after the Closing, but
subject to completion of the asset transfer contemplated by Section 5.1.3(c),
Cyprus Amax shall cause to be transferred from the trust for the Salaried Plan
(the "Salaried Plan Trust") to the trust for the New Plan (the "New Plan Trust")
all accrued benefits thereunder of each Company Employee (whether current or
former) who was a participant in the Salaried Plan and their beneficiaries (the
"Transferred Benefits").
(b) Cyprus Amax shall cause Towers ▇▇▇▇▇▇ (the "Actuary") to
determine the amount of assets required by Section 414(l) of the Code to be
transferred from the Salaried Plan Trust to the New Plan Trust with respect to
the Transferred Benefits (the "414(l) Amount"). The 414(l) Amount shall be
determined as of the Closing Date by the Actuary based on the assumptions and in
accordance with the methodology set forth in Schedule 5.1.3 attached hereto. In
connection with the determination of the 414(l) Amount, Cyprus Amax shall cause
the Actuary to determine the amounts of charges and credits to the funding
standard account under Section 412 of the Code, the funding standard account
credit balance and the annual amortization charges and credits (such amounts
determined under the provisions of the Internal Revenue Service Revenue Ruling
81-212 and other applicable guidance, including other revenue rulings) to be
allocated between the Salaried Plan and the New Plan as a result of the transfer
of assets and liabilities anticipated under this Section 5.1.3. Such amounts of
charges and credits shall be determined without regard to use of the de minimis
option contained in the applicable revenue rulings and the regulations
promulgated under Section 414(l) of the Code. The actuarial calculation of the
liabilities by PBGC priority categories underlying the 414(l) Amount, as
determined by the Actuary, shall be reviewed for accuracy by, and subject to the
appraisal of, an actuary at the firm of KPMG Peat Marwick designated by the
Buyer (the "Buyer Actuary").
(c) As soon as practicable following the Closing, Cyprus Amax shall
cause to be transferred from the Salaried Plan Trust to the New Plan Trust, the
414(l) Amount, increased or decreased, based upon the Actuary's best estimate of
the actual rate of return on assets held in the Salaried Plan Trust, as applied
solely to the 414(l) Amount, from the Closing through the date immediately prior
to the date of transfer, and minus any distributions that have been made to
Salaried Plan participants and their beneficiaries from the Closing through the
date of transfer. In the event that an amount in addition to the 414(l) Amount
is required to be contributed or transferred to the New Plan Trust, Buyer shall
be solely responsible for paying directly, or reimbursing Cyprus Amax for, such
amount. The assets transferred pursuant to the preceding sentence of this
Section 5.1.3(c) shall consist of a pro rata share of each asset class, to the
extent reasonably practicable and not detrimental to the value thereof held in
the Salaried Plan Trust, and a pro rata share of each investment of each such
asset class. Cyprus Amax or a fiduciary designated by Cyprus Amax shall select
the assets to be transferred to the New Plan Trust, but shall provide the
Company or a fiduciary selected by the Company with the opportunity to comment
on such asset selection and shall take such comments into consideration in good
faith. The Company shall assume, and the Company and Buyer shall indemnify and
hold harmless Cyprus Amax, the Continuing Affiliates and the other Cyprus Amax
Indemnified Parties against,
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all Liabilities and obligations in respect of Company Employees (whether current
or former) under, arising out of or related to the Salaried Plan.
(d) At the time the asset transfer provided for in Section 5.1.3(c)
is made in accordance with that Section, Cyprus Amax shall pay to the Company an
amount (the "Net Pension Amount") in cash equal to (A) the "PBO Amount" (as
defined below) less (B) the 414(l) Amount. The "PBO Amount" shall mean the
projected benefit obligation for the Transferred Benefits, as of the Closing
Date, determined in accordance with SFAS No. 87, using a discount rate equal to
the ▇▇▇▇▇'▇ ▇▇ corporate bond yield as published for the day preceding the
Closing Date, and otherwise using all the economic and demographic assumptions
listed on page SI-10 of the Salaried Plan's Actuarial Report dated December
1998. The Net Pension Amount shall be determined by the Actuary, subject to the
review and approval of the Buyer Actuary.
(e) If the Actuary and the Buyer Actuary cannot reach agreement as to
the proper determination of the 414(l) Amount or the Net Pension Amount, Cyprus
Amax and Buyer shall refer such matter to an actuary at the firm of ▇▇▇▇▇▇
(which actuary shall be mutually agreeable to Cyprus Amax and Buyer) (the "Third
Actuary") for resolution. Promptly, but in no event later than 30 days after
such referral, the Third Actuary shall review the Actuary's calculation of the
414(l) Amount and/or the Net Pension Amount, as applicable, and the Buyer
Actuary's objections and calculations with respect thereto, and shall provide
each of Buyer and Cyprus Amax with a written statement of its decision as to the
issues in dispute and the determination of the 414(l) Amount and/or Net Pension
Amount, as applicable. Such determination shall be final and binding for all
purposes.
(f) The fees and expenses of the Actuary shall be borne by Cyprus
Amax. The fees and expenses of the Buyer Actuary shall be borne by Buyer. The
fees and expenses of the Third Actuary shall be borne equally by Cyprus Amax and
Buyer.
Section 5.1.4 Coal Plans. The Company shall assume, and the Company
----------
and Buyer shall indemnify and hold harmless Cyprus Amax, the Continuing
Affiliates and the other Cyprus Amax Indemnified Parties against all Liabilities
and obligations under, arising out of or related to the Coal Plans.
Section 5.1.5 Cost of Living Plan. Cyprus Amax shall retain, and
-------------------
shall indemnify and hold harmless Buyer and the Company against, all Liabilities
to Company Employees who are entitled to receive benefits under the Amax, Inc.
1990 Cost of Living Adjustment for Certain Salaried Employees Plan.
Section 5.1.6 Cyprus Amax Savings Plan. Effective as of the Closing,
------------------------
Company Employees shall cease further accrual of benefits under and
participation in the Cyprus Amax Mineral's Company Savings Plan and Trust (the
"Cyprus Amax Savings Plan") and the Company and its Subsidiaries and Affiliates
(other than the Continuing Affiliates) shall cease to be participating employers
thereunder. Cyprus Amax shall make any required contributions to the Cyprus Amax
Savings Plan for periods prior to the Closing, and no further employer
contributions shall be credited to the accounts of the Company Employees for
periods on or following the Closing.
-45-
Section 5.1.7 Company Savings Plan. Effective as of the Closing,
--------------------
Buyer shall have established a defined contribution plan (the "Buyer Savings
Plan") and related trust under Section 501(a) of the Code (the "Buyer Savings
Trust") to accept a transfer of assets and corresponding liabilities from the
Cyprus Amax Savings Plan and the related trust of the Cyprus Amax Savings Plan
(the "Cyprus Amax Savings Trust"), in accordance with this Section 5.1.7. As
soon as practicable after the Closing, but in no event later than 180
consecutive calendar days after the Closing, and following receipt by Cyprus
Amax of a copy of a favorable determination letter or Buyer's certification,
which certification is reasonably acceptable to Cyprus Amax, that the Buyer
Savings Plan satisfies Sections 401(a) and 401(k) of the Code and the Buyer
Savings Trust is qualified under Section 501(a) of the Code (the "Savings Plan
Transfer Date"), Cyprus Amax shall direct the trustee of the Cyprus Amax Savings
Trust to transfer to the trustee of the Buyer Savings Trust the account balances
in the Cyprus Amax Savings Plan of all Company Employees (whether current or
former) (the "Transferred Accounts"). Except as specified in the last sentence
of this Section 5.1.7, such transfer shall be made in cash and/or as freely
transferable securities that are reasonably acceptable to Buyer, transfers of
outstanding participant loans to Company Employees, and/or at the sole election
of Cyprus Amax, as shares of Cyprus Amax Common Stock. For a period of not less
than two years after the Closing, the Buyer Savings Plan shall maintain the
Cyprus Amax Common Stock fund as an investment option with respect to the
portion of the Transferred Accounts invested in such fund as of the Savings Plan
Transfer Date, except to the extent that responsible fiduciaries for the Buyer
Savings Plan determine that it is imprudent to do so. In carrying out any
transfer in cash, Buyer shall cause the Transferred Accounts to be reinvested in
investment options in the Buyer Savings Plan to the extent that such options are
substantially the same as the investment options elected by the Company
Employees (whether current or former) for such portion of the account balances
in the Cyprus Amax Savings Plan. If, with respect to a specific investment
option in the Cyprus Amax Savings Plan, there is no investment option in the
Buyer Savings Plan that is substantially the same, the portion of a Transferred
Account that is invested in such investment option shall be transferred to the
most conservative investment option in the Buyer Savings Plan until such time as
the participant reallocates his or her account investment under the Buyer
Savings Plan. All outstanding participant loans to Company Employees (whether
current or former) shall be transferred to the Buyer Savings Plan in kind. The
Company shall assume, and Buyer and the Company shall indemnify and hold
harmless Cyprus Amax, the Continuing Affiliates and the other Cyprus Amax
Indemnified Parties against, all obligations and Liabilities to Company
Employees (whether current or former) under, arising out of related to the
Cyprus Amax Savings Plan.
Section 5.1.8 Filings and Records. Cyprus Amax, Buyer and the Company
-------------------
shall cooperate in making all appropriate filings required under the Code or
ERISA and any applicable securities laws, implementing all appropriate
communications with participants, maintaining and transferring appropriate
records and taking all such other actions as may be necessary and appropriate to
implement the provisions of Sections 5.1.3, 5.1.4 and 5.1.7.
Section 5.1.9 Supplemental Retirement Plans. As of the Closing, the
-----------------------------
Company Employees who are participants in the Cyprus Amax Minerals Company
Supplemental Executive Retirement Plan and the Cyprus Minerals Company Full
Retirement Benefits Plan for Certain Salaried Employees (the "Supplemental
Retirement Plans") shall be fully vested in their
-46-
accrued benefits thereunder, and shall cease to accrue any additional benefits
thereunder. Prior to the Closing and effective no later than the Closing, Cyprus
Amax shall cause the Company to establish one or more non-qualified supplemental
retirement plans to provide the benefits accrued prior to the Closing by Company
Employees (whether current or former) under the Supplemental Retirement Plans.
Cyprus Amax shall not transfer any assets in respect of the accrued benefits
under the Supplemental Retirement Plans, and the Company shall assume, and Buyer
and the Company shall indemnify and hold harmless Cyprus Amax, the Continuing
Affiliates and the other Cyprus Amax Indemnified Parties against, all
obligations and Liabilities to Company Employees (whether current or former)
under, arising out of or relating to the Supplemental Retirement Plans.
Notwithstanding the foregoing, the provisions of this Section shall not apply to
the Company Employee identified in Schedule 5.1.9 if he is not employed by the
Company on the day after the Closing Date.
Section 5.1.10 Excess DC Plan. As of the Closing, the Company
--------------
Employees who are participants in the Cyprus Amax Minerals Company Excess
Defined Contribution Plan (the "Excess DC Plan") shall cease to accrue any
additional benefits thereunder, and Cyprus Amax shall cause the Excess DC Plan
to be amended to prevent the balances therein from becoming payable upon the
consummation of the transaction contemplated hereby. Prior to the Closing and
effective no later than the Closing, Cyprus Amax shall cause the Company to
establish a non-qualified defined contribution plan to provide the benefits
accrued prior to the Closing by Company Employees (whether current or former)
under the Excess DC Plan. Effective as of the Closing, Cyprus Amax shall cause
the account balances of Company Employees (whether current or former) under the
Excess DC Plan to be transferred in kind to accounts maintained by the Company
for such employees. The Company shall assume, and Buyer and the Company shall
indemnify and hold harmless Cyprus Amax, the Continuing Affiliates and the other
Cyprus Amax Indemnified Parties against, all obligations and Liabilities to
Company Employees (whether current or former) under, arising out of or relating
to the Excess DC Plan. Notwithstanding the foregoing, the provisions of this
Section shall not apply to the Company Employee identified in Schedule 5.1.9 if
he is not employed by the Company on the day after the Closing Date.
Section 5.1.11 Deferred Compensation Plan. Prior to the Closing and
--------------------------
effective no later than the Closing, Cyprus Amax shall cause the Company to
establish a deferred compensation plan to provide for the payment of the
compensation deferred prior to the Closing by Company Employees (whether current
or former) under the Cyprus Amax Minerals Company Deferred Compensation Plan
(the "Deferred Compensation Plan"). Cyprus Amax shall not transfer any assets in
respect of the Liabilities to Company Employees under the Deferred Compensation
Plan, and the Company shall assume, and Buyer and the Company shall indemnify
and hold harmless Cyprus Amax, the Continuing Affiliates and the other Cyprus
Amax Indemnified Parties against, all obligations and Liabilities to Company
Employees (whether current or former) under, arising out of or related to the
Deferred Compensation Plan. Notwithstanding the foregoing, the provisions of
this Section shall not apply to the Company Employee identified in Schedule
5.1.9 if he is not employed by the Company on the day after the Closing Date.
-47-
Section 5.1.12 Welfare Plans. Prior to the Closing and effective no
-------------
later than the Closing, Cyprus Amax shall cause the Company to establish welfare
benefit plans (including plans providing medical, dental, COBRA coverage, vision
care, legal services, financial counseling, educational assistance, adoption
assistance, employee assistance, long-term disability, short-term disability,
group term life and accidental death and dismemberment insurance, group variable
universal life, dependent life insurance, business travel accident insurance and
a cafeteria plan under Section 125 of the Code with a healthcare spending
account and a dependent care spending account) that provide benefits to (and
assume Liabilities and cafeteria plan spending account balances with respect to)
Company Employees (whether current or former) and their dependents. The plans so
established by the Company shall be the Company Plans and the Company shall
assume, and Buyer and the Company shall indemnify and hold harmless Cyprus Amax,
the Continuing Affiliates and the other Cyprus Amax Indemnified Parties against,
all obligations and Liabilities under, arising out of or relating to such plans.
Buyer shall cause the Company to continue to maintain such plans on and after
the Closing, subject to the right to amend or terminate such plans and Section
5.1.1 hereof. Without limiting the generality of the foregoing, effective as of
the Closing, the Company shall be responsible and liable for providing the
appropriate COBRA notices to Company Employees who experience a "qualifying
event" on or after the Closing and for providing (or continuing to provide)
coverage required under COBRA with respect to Company Employees (whether current
or former) who experience a "qualifying event" before, on or after the Closing.
If Company Employees participate in the welfare benefit plans of Buyer or its
Affiliates after the Closing, Buyer shall, or shall cause the Company to, (a)
cause any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Buyer or its Affiliates to be waived with
respect to the Company Employees and their eligible dependents and (b) give each
Company Employee credit for the plan year in which the transition from the
Company Plans to Buyer's or its Affiliate's plans occurs towards applicable
deductibles and annual out-of-pocket limits for expenses incurred prior to the
transition date.
Section 5.1.13 Retiree Medical and Life. Buyer shall establish as of
------------------------
the Closing retiree medical and retiree life plans and the Company shall assume,
and Buyer and the Company shall indemnify and hold harmless Cyprus Amax, the
Continuing Affiliates and the other Cyprus Amax Indemnified Parties against, all
obligations and Liabilities for all retiree medical and life insurance benefits
to Company Employees (whether current or former).
Section 5.1.14 Workers Compensation. The Company shall assume, and
--------------------
Buyer and the Company shall indemnify and hold harmless Cyprus Amax, the
Continuing Affiliates and the other Cyprus Amax Indemnified Parties against, all
obligations and Liabilities for all workers' compensation benefits and claims of
any Company Employee (whether current or former).
Section 5.1.15 WARN. Buyer and the Company agree to provide any
----
required notice under the Workers Adjustment and Retraining Notification Act, as
amended ("WARN Act"), and any similar statute. The Company shall assume, and
Buyer and the Company shall indemnify and hold harmless Cyprus Amax, the
Continuing Affiliates and the other Cyprus Amax Indemnified Parties against, all
obligations and Liabilities under, arising out of or related to the WARN Act or
any similar statute.
-48-
Section 5.1.16 Severance. Prior to the Closing, Cyprus Amax shall
---------
cause the Company to adopt a severance pay plan (the "Coal Severance Plan") with
terms and conditions substantially similar to those of the Cyprus Amax Minerals
Company Salaried and Non-Represented Hourly Severance Plan as it applies to
Company Employees. The Coal Severance Plan so established by the Company shall
be a Company Plan. Buyer shall cause the Company not to amend or terminate (a)
the Coal Severance Plan for at least twelve (12) months after the Closing and
(b) the Cyprus Amax Coal Company and its Subsidiaries Separation Plan for
Certain Employees (the "Coal Separation Plan") for at least eighteen (18) months
after the Closing. The Company shall assume, and Buyer and the Company shall
indemnify and hold harmless Cyprus Amax, the Continuing Affiliates and the other
Cyprus Amax Indemnified Parties against, all obligations and Liabilities under,
arising out of or related to the Coal Severance Plan and the Coal Separation
Plan.
Section 5.1.17 Black Lung. Prior to, or as promptly as practicable
----------
following, the Closing, Cyprus Amax shall transfer the sponsorship of the Cyprus
Amax Minerals Company Black Lung Benefit Trust to the Company or one of its
Subsidiaries. As of the Closing, the Company shall assume, and Buyer and the
Company shall indemnify and hold harmless Cyprus Amax, the Continuing Affiliates
and the other Cyprus Amax Indemnified Parties against, all obligations and
Liabilities for all state and federal black lung liabilities.
Section 5.1.18 Vacation. As of the Closing, Buyer shall credit, or
--------
shall cause to be credited, each Company Employee (and, to the extent any such
amount is owing to any former Company Employee, each such former employee) with
unused vacation days and any personal and sickness days accrued in accordance
with the vacation and personnel policies and labor agreements applicable to any
such Company Employee.
Section 5.1.19 Collective Bargaining. Buyer shall cause the
---------------------
appropriate Subsidiaries of the Company to recognize each union which at the
Closing represents any of the Company Employees (and, to the extent applicable,
any former employee) as the collective bargaining representatives of such
employees.
Section 5.1.20 General Plan and Employment Claims. Except as provided
----------------------------------
in Section 5.1.5 hereof, the Company shall assume, and Buyer and the Company
shall indemnify and hold harmless Cyprus Amax, the Continuing Affiliates and the
other Cyprus Amax Indemnified Parties against, all Liabilities and obligations
relating to, or arising out of or in connection with the employment or
termination of employment of, including without limitation the benefit
obligations to, any Company Employee (whether current of former). Without
limiting the generality of the foregoing, as of the Closing, the Company shall
assume, and Buyer and the Company shall indemnify and hold harmless Cyprus Amax,
the Continuing Affiliates and the other Cyprus Amax Indemnified Parties against,
all obligations and Liabilities, and become the successor entity, with respect
to the Company Plans, including without limitation any individual employment or
severance agreements with Company Employees, and all obligations and Liabilities
thereunder. Cyprus Amax shall assume or retain and satisfy all obligations and
Liabilities under the Plans that are not Company Plans, except as provided in
this Article V.
-49-
Section 5.1.21 No Third-Party Beneficiaries. Nothing in this
----------------------------
Article is intended to create, nor shall anything in this Article be deemed to
have created, any third party beneficiary rights to any Company Employees or any
other current or former employees of Cyprus Amax, any of the Continuing
Affiliates, the Company or any of its Subsidiaries. Section 5.1.22 Updated
Schedules. Within 10 business days after the Closing Date, Cyprus Amax shall
deliver to Buyer updated versions of Schedules 3.2.25(l), (m) and (n) that are
current as of the Closing Date.
Section 5.1.22 Updated Schedules. Within 10 business days after the
-----------------
Closing Date, Cyprus Amax shall deliver to Buyer updated versions of Schedules
3.2.25(l), (m) and (n) that are current as of the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO THE CLOSING
Section 6.1 Conditions Precedent to Buyer's Obligations
-------------------------------------------
The obligations of Buyer to consummate the transactions
contemplated hereby are subject to the fulfillment of all of the following
conditions on or prior to the Closing Date (unless waived in writing in the sole
discretion of Buyer):
Section 6.1.1 Accuracy of Warranties and Performance of Covenants.
---------------------------------------------------
Each of the representations and warranties of Cyprus Amax contained herein shall
be accurate when made and as of the Closing Date (except for representations and
warranties which speak as of a specified date which shall be accurate as of such
date) except as otherwise contemplated by this Agreement and except for such
failures to be accurate which would not reasonably be expected to result in a
Material Adverse Effect on the Company. Cyprus Amax and the Company shall have
performed all of its obligations and complied with each and all of the covenants
and agreements required to be performed or complied with on or prior to the
Closing Date, except for such instances which would not reasonably be expected
to result in a Material Adverse Effect on the Company. Cyprus Amax shall have
delivered a certificate executed by a duly authorized officer of Cyprus Amax as
of the Closing Date confirming the matters in each of the foregoing sentences
("Cyprus Amax's Bring Down Certificate"); provided, however, that such
certificate may disclose any facts or circumstances which would cause any
representations and warranties to be breached or inaccurate (it being agreed
that except in the case of the supplemental disclosure contemplated by Section
3.2.24 which shall modify the Company Disclosure Schedule in all respects,
disclosure of any such matter shall not release Cyprus Amax from any liability
it would otherwise have had absent such supplemental disclosure except as set
forth in Article IX).
Section 6.1.2 Approvals, Absence of Litigation. Any applicable
--------------------------------
waiting period (and any extensions thereof) under the HSR Act shall have expired
or otherwise been terminated. No suit or proceeding by any Governmental
Authority to restrain, enjoin or hinder, or to seek material damages on account
of the consummation of the transactions herein contemplated shall be pending.
Section 6.1.3 No Injunction. No preliminary or permanent
-------------
injunction or other order by any federal or state court in the United States, or
any court in any other country, of
-50-
competent jurisdiction which prevents the consummation of the transactions
contemplated by this Agreement or any Related Agreement shall have been issued
and remain in effect.
Section 6.1.4 Buyer's Receipt of the Closing Documents. Buyer shall
----------------------------------------
have received from Cyprus Amax the documents referred to in Section 7.2.2.
Section 6.2 Conditions Precedent to Cyprus Amax's, Energy's and the
-------------------------------------------------------
Company's Obligations
---------------------
The obligations of Cyprus Amax, Energy and the Company to consummate
the transactions contemplated hereby are subject to fulfillment of all of the
following conditions on or prior to the Closing Date (unless waived in writing
in the sole discretion of Cyprus Amax):
Section 6.2.1 Accuracy of Warranties and Performance of Covenants.
---------------------------------------------------
Each of the representations and warranties of Buyer contained herein shall be
accurate in all material respects when made and as if made on and as of the
Closing Date. Buyer shall have performed in all material respects all of its
obligations and complied in all material respects with each and all of the
covenants and agreements required to be performed or complied with on or prior
to the Closing Date. Buyer shall have delivered a certificate executed by a duly
authorized officer of Buyer as of the Closing Date confirming the matters in
each of the foregoing sentences (the "Buyer's Bring Down Certificate").
Section 6.2.2 Approvals; Absence of Litigation. Any applicable
--------------------------------
waiting period (and any extensions thereof) under the HSR Act shall have expired
or otherwise been terminated (such date being the "HSR Termination Date"). No
suit or proceeding by any Governmental Authority to restrain, enjoin or hinder,
or to seek material damages on account of, the consummation of the transactions
herein contemplated shall be pending.
Section 6.2.3 No Injunction. No preliminary or permanent injunction
-------------
or other order by any federal or state court in the United States, or any court
in any other country, of competent jurisdiction which prevents the consummation
of the transactions contemplated by this Agreement or any Related Agreement
shall have been issued and remain in effect.
Section 6.2.4 Cyprus Amax's Receipt of the Closing Documents. Cyprus
----------------------------------------------
Amax shall have received from Buyer the documents referred to in Section 7.2.1.
Section 6.2.5 Cyprus Amax's Receipt of Specified Consents. The
-------------------------------------------
consents and approvals listed on Schedule 6.2.5 shall have been obtained and
shall be in full force and effect.
ARTICLE VII
THE CLOSING
Section 7.1 The Closing Date
----------------
Subject to the terms of this Agreement, consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place on
the last day of the month in which the HSR Termination Date occurs unless such
date is fewer than 3 business days prior to the
-51-
end of the month in which event the Closing shall occur on the last day of the
month following the month in which the HSR Termination Date occurs (or if the
conditions to Closing shall not be satisfied on such date, as promptly as
practicable following the satisfaction or waiver thereof) (the "Closing Date")
or at such other time as the parties hereto shall mutually agree. The Closing
shall be consummated at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ such other place as the parties hereto shall
mutually agree.
Section 7.2 Deliveries at the Closing
-------------------------
Section 7.2.1 Buyer's Execution and Delivery of Documents and
-----------------------------------------------
Payment. Buyer shall deliver or execute and deliver, as the case may be, to
-------
Cyprus Amax or Energy, as the case may be, all of the following:
(a) a certificate of valid existence and good standing of Buyer
issued not earlier than five (5) days prior to the Closing;
(b) Buyer's Bring Down Certificate;
(c) a certificate certifying to Cyprus Amax the incumbency of Buyer's
officers and bearing the authentic signatures of all such officers who have
executed this Agreement or any other agreement executed and delivered in
connection herewith;
(d) payment to Energy of the amounts provided in Article II to be
paid as of the Closing, by wire transfer of immediately available funds to a
bank account designated by Energy, including as a result of dividends under the
Buyer Debt Facility;
(e) a receipt, duly executed by Buyer, acknowledging receipt of the
certificates representing the Company Shares and establishing the time of the
Closing;
(f) the Buyer Surety Bond and the replacement letter of credit or
surety bonds contemplated by Section 4.3.6;
(g) the Tax Sharing and Indemnification Agreement, duly executed by
the parties thereto;
(h) the Assignment Agreement, duly executed by the parties thereto;
and
(i) the Transitional Services Agreement, duly executed by the parties
thereto.
Section 7.2.2 Cyprus Amax's Execution and Delivery of Documents and
-----------------------------------------------------
Certificates. Cyprus Amax shall deliver or execute and deliver, as the case may
------------
be, or cause to be delivered or executed and delivered to Buyer all of the
following:
(a) certificates of valid existence and good standing of Cyprus Amax,
Energy, the Company and each of the Company's Subsidiaries issued not earlier
than five (5) days prior to the Closing;
(b) Cyprus Amax's Bring Down Certificate;
-52-
(c) a certificate certifying to Buyer the incumbency of Cyprus Amax's
and Energy's officers and bearing the authentic signatures of all such officers
who have executed this Agreement or any other agreement executed and delivered
in connection herewith;
(d) the resignations of all of the Company's directors and officers,
to the extent requested by Buyer;
(e) the Company's By-Laws, minute books, stock record books, all
similar corporate records and all the Company seals, if any, unless in the
possession of the Company;
(f) one or more certificates duly endorsed by Energy and in proper
form for transfer to Buyer, or accompanied by duly executed stock powers,
evidencing all of the Company Shares;
(g) a receipt, duly executed by Energy, acknowledging receipt of
payment for the Company Shares;
(h) the Tax Sharing and Indemnification Agreement, duly executed by
the parties thereto;
(i) the Assignment Agreement duly executed by the parties thereto;
and
(j) the Transitional Services Agreement duly executed by the parties
thereto.
Section 7.3 Simultaneous Closing
--------------------
All actions taken at the Closing are to be part of a simultaneous
transaction, and no action is to be considered completed until all actions
necessary to be completed at the Closing have been completed.
ARTICLE VIII
POST-CLOSING AGREEMENTS AND OTHER MATTERS
Section 8.1 Post-Closing Agreements
-----------------------
From and after the Closing, the parties shall have the respective
rights and obligations which are set forth in the remainder of this Article and
set forth elsewhere herein.
Section 8.2 Inspection of Records
---------------------
The Company shall maintain and make its books and records available
for inspection by Cyprus Amax, or by its duly authorized representatives, for
reasonable business purposes, at all reasonable times during normal business
hours, for a period equal to any statutorily determined record retention period
(but in no event less than eight (8) years after the Closing) with respect to
all matters related to the period prior to the Closing; provided, however, if at
-------- -------
any time the Company intends to destroy such information, it shall first notify
Cyprus Amax and Cyprus Amax may instead take possession thereof. Cyprus Amax and
the Continuing Affiliates shall maintain
-53-
and make its books and records, to the extent they relate to the period prior to
Closing and to the Company and its Subsidiaries, available for inspection by
Buyer or by its duly authorized representatives, in order to permit Buyer to
comply with audits, to complete federal and state tax returns and to satisfy
other reasonable business purposes at reasonable times during normal business
hours, for a period equal to any statutorily determined record retention period
or as otherwise reasonably requested by Buyer with respect to all matters
related to the period prior to the Closing; provided, however, if at any time
-------- -------
Cyprus Amax intends to destroy such information, it shall first notify Buyer and
Buyer may instead take possession thereof. As used in this Section, the right of
inspection includes the right to make extracts or copies at the expense of the
party requesting such extracts or copies. Each party agrees that it will hold
any and all information learned as a result of such access in strictest
confidence in accordance with Sections 4.1.1 and 4.2.4.
SECTION 8.3 MUTUAL ASSISTANCE
-----------------
The parties shall cooperate with each other, and make available the
reasonable assistance of their employees to each other at reasonable out-of-
pocket cost (including reasonable allocated costs of in-house counsel and other
personnel), with respect to the defense or prosecution of any claims or
litigation made or commenced by or against third parties subsequent to the
Closing, including insurance and other cost recovery claims, rights, causes of
action and choses in action.
SECTION 8.4 FURTHER ASSURANCES
------------------
The parties shall execute such further documents, and perform such
further acts, as may be necessary to effect the transactions contemplated
hereby, on the terms herein contained and otherwise to comply with the terms of
this Agreement; provided, that, except as contemplated by this Agreement, no
--------
party shall be required to waive any right or incur any obligation in connection
therewith.
SECTION 8.5 TRANSFER OF NON-COVERED ASSETS
------------------------------
In the event that the transfer of any of the Excluded Assets is not
completed prior to the Closing, at the request of Cyprus Amax, Buyer shall cause
the Company to complete such transfer as soon as reasonably possible after the
Closing, and Buyer and the Company shall take all actions reasonably requested
by Cyprus Amax in connection therewith. Prior to any such transfer, the Excluded
Assets shall be held in trust for the benefit of Cyprus Amax in accordance with
the provisions of Section 8.8.2. Cyprus Amax shall bear all costs and expenses
in connection with this Section 8.5 including, without limitation, any transfer
or other taxes, and shall promptly reimburse Buyer for any reasonable costs or
expenses it incurs in this regard.
SECTION 8.6 EXCHANGE ACT AND OTHER FILINGS
------------------------------
In order to assist Cyprus Amax in the preparation of all documents and
reports required to be filed by Cyprus Amax or the Continuing Affiliates under
the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended
(i) with respect to any period ending on or prior to the Closing Date, or (ii)
any period that would include but not end on the Closing Date, Buyer shall cause
the Company and its Subsidiaries to prepare, at Cyprus Amax's reasonable
-54-
expense, Cyprus Amax's "standard C - packages" and other related data gathering
packages and to deliver such packages to Cyprus Amax within the time frames
required by Cyprus Amax in accordance with past practices. Buyer will promptly
provide or cause to be provided to Cyprus Amax, at Cyprus Amax's reasonable
expense, such other information as Cyprus Amax may request (including access to
books, records and personnel) in order for the operations of the Company and its
Subsidiaries to be properly reported in such filings.
SECTION 8.7 INSURANCE
---------
Section 8.7.1 Insurance Coverage after Closing. The parties hereto
--------------------------------
agree and acknowledge that, except as set forth in this Section 8.7, no
insurance policy maintained by Cyprus Amax and its Affiliates (including the
Company and its Subsidiaries) shall be available to or cover the Company or any
of its Subsidiaries or their respective assets, properties, operations and
liabilities after the Closing Date (including in respect of any pre-Closing
periods), all benefits and coverage under each such insurance policy shall
terminate following the Closing Date and none of the Company or any of its
Affiliates will seek any recoveries thereunder. As of the Closing Date, Buyer
shall be responsible for obtaining and maintaining any and all insurance
policies and coverages in respect of the Company and its Subsidiaries and their
respective assets, properties, operations and liabilities. The parties hereto
further agree that any and all refunds of premiums paid by Cyprus Amax and its
Affiliates (including the Company and its Subsidiaries) prior to the Closing
Date under any insurance maintained by Cyprus Amax and its Affiliates on behalf
of the Company or any of its Subsidiaries shall be for the account of and
retained by or paid to Cyprus Amax.
Section 8.7.2 Treatment of Certain Pre-Closing Claims. (a) To the
---------------------------------------
extent permitted under the terms of any applicable insurance policy, after the
Closing, the Company and its Subsidiaries shall be entitled to receive or
retain, as the case may be, any recoveries to the extent that none of Cyprus
Amax or any of the Continuing Affiliates either incurred any costs or has any
liability or other obligation with respect thereto and to the extent no accrual
for any related underlying liability was reflected in the Financial Statements
or given effect to (including as a charge to earnings prior to Closing) in the
calculation of the Equity Value, Adjusted Equity Value or the Buyer Debt Amount
(a) relating to claims for property damage to the extent relating to pre-Closing
occurrences and (b) relating to claims under general liability insurance
policies to the extent relating to pre-Closing occurrences.
(b) In the case of business interruption insurance, to the extent
permitted under the terms of any applicable insurance policy, after the Closing,
Cyprus Amax and the Continuing Affiliates, on the one hand, and the Company and
its Subsidiaries, on the other hand shall be entitled to receive or retain, as
the case may be, a portion of any recoveries relating to claims for business
interruption in accordance with the provisions of this Section. Cyprus Amax
shall be entitled to an amount equal to the Cyprus Adjusted Claim Amount plus
the Buyer's allocated portion of the sum of the amount of any deductible applied
in respect of any business interruption insurance and an amount equal to the
insurance that would have been paid in respect of the 15 day exclusion period
less the Cyprus Deduction, and Buyer shall be entitled to any amount equal to
the Buyer Adjusted Claim Amount less the Buyer Deduction. "Cyprus Initial Claim
Amount" means the amount paid in respect of any insurance claims relating to
business interruption insurance filed in respect of periods ending on or prior
to the Closing Date. "Buyer
-55-
Initial Claim Amount" means the amount paid in respect of any insurance claims
relating to business interruption insurance filed in respect of periods
commencing after the Closing Date. "Cyprus Adjusted Claim Amount" means the
Cyprus Initial Claim Amount increased or decreased, as the case may be, by any
adjustments made to the Cyprus Initial Claim Amount in the course of settling
the claim for business interruption insurance, including any adjustments made to
the overall amount of the insurance payment that specifically relate to a change
or correction in the underlying claim calculation. "Buyer Adjusted Claim Amount"
means the Buyer Initial Claim Amount increased or decreased, as the case may be,
by any adjustments made to the Buyer Initial Claim Amount in the course of
settling the claim for business interruption insurance, including any
adjustments made to the overall amount of the insurance payment that
specifically relate to a change or correction in the underlying claim
calculation. "Cyprus Deduction" means an amount equal to any "off the top"
adjustment made by the insurer in settlement of the business interruption claims
multiplied by a fraction the numerator of which is the Cyprus Adjusted Claim
Amount and the denominator of which is the sum of the Cyprus Adjusted Claim
Amount and the Buyer Adjusted Claim Amount. "Buyer Deduction" means the sum of
the amount of any deductible applied in respect of any business interruption
insurance, an amount equal to the insurance that would have been paid in respect
of the 15 day exclusion period and an amount equal to any "off the top"
adjustment made by the insurer in settlement of the business interruption claims
multiplied by a fraction the numerator of which is the Buyer Adjusted Claim
Amount and the denominator of which is the sum of the Cyprus Adjusted Claim
Amount and the Buyer Adjusted Claim Amount. After the date hereof, whether prior
to or after the Closing, Cyprus Amax and the Buyer shall cooperate and consult
with each other with respect to claims under business insurance policies and
neither shall make any submission or consent to any settlement without the
consent of the other, and Buyer shall be entitled to participate in the business
interruption claim submission process to the extent reasonably practicable;
provided, however, that if either Buyer or Cyprus Amax reasonably determines
-------- -------
that the other is not pursuing such claim in good faith, then after 30 days
notice to the other party, the party giving such notice shall be entitled to
control and settle claims filed with respect to the period prior to Closing (in
the case of Cyprus Amax) or after Closing (in the case of Buyer) so long as such
party does not take any action or agree to any settlement that directly or
indirectly impairs the other party's claims. The allocations set forth in this
clause (b) shall apply regardless of the manner of any such settlement or
resolution of a claim.
(c) All other recoveries not specifically allocated in Section
8.7.2(a) or (b) in respect of matters occurring on or prior to the Closing shall
be for the account of Cyprus Amax or the other beneficiaries thereof other than
the Company and its Subsidiaries. Each party agrees to hold in trust for the
benefit of the other in accordance with Section 8.8 any insurance recoveries it
obtains that it is not entitled to retain hereunder. Cyprus Amax shall be
entitled to control all claims under any insurance policies in effect on or
prior to the Closing and the Company shall cooperate with Cyprus Amax in
connection therewith.
(d) To the extent that any of the amounts to which Buyer or the
Company is entitled to pursuant to this Section 8.7.2 are received by Cyprus
Amax or one of the Continuing Affiliates, Cyprus Amax agrees to pay, or cause to
be paid, such amount over to the Company. To the extent that any of the amounts
to which Cyprus Amax or one of the Continuing Affiliates
-56-
is entitled to pursuant to this Section 8.7.2 are received by Buyer, the Company
or one of its Subsidiaries, Buyer agrees to pay, or cause to be paid, such
amount over to the Company.
Section 8.7.3 Treatment of Excluded Insurance Matters. Buyer, on
---------------------------------------
behalf of itself, the Company and their respective Affiliates, hereby confirms
that none of Buyer, the Company nor any of their respective Affiliates will have
any right or claim whatsoever in respect of any matters set forth within clause
(b) of the definition of Excluded Assets (the "Excluded Insurance Matters").
Buyer, on behalf of itself, the Company and their respective Affiliates, agrees
that Cyprus Amax and the Continuing Affiliates shall have complete discretion in
all matters relating to the pursuit of the Excluded Insurance Matters, including
in connection with any settlement thereof; provided however that no such
-------- -------
settlement shall impose any material obligations on or waive any material right
of the Company or any of its Subsidiaries. Buyer and the Company agree after the
Closing to cooperate, and to cause their respective Affiliates to cooperate with
Cyprus Amax and the Continuing Affiliates in connection with the Excluded
Insurance Matters (it being agreed that Cyprus Amax will be responsible for any
out of pocket expenses incurred in connection therewith).
Section 8.7.4 Treatment of Deductibles and Related Matters. After the
--------------------------------------------
Closing, Cyprus Amax and the Continuing Affiliates, on the one hand, and the
Company and its Subsidiaries, on the other hand, will allocate deductibles in
respect of the insurance policies in effect prior to or as of the Closing in
accordance with Cyprus Amax's past practices. In addition, Buyer agrees to pay
to Cyprus Amax promptly upon request after receipt of reasonable documentation
therefore all amounts that Cyprus Amax or any of the Continuing Affiliates are
required to pay in respect of any retrospective, audit or similar adjustments
under any workers compensation, automotive or general liability policies to the
extent relating to the Company or any of its Subsidiaries.
SECTION 8.8 ADMINISTRATION OF ACCOUNTS
--------------------------
Section 8.8.1 In Trust for Buyer. All payments and reimbursements by
------------------
any third party after the Closing Date in the name of or to Cyprus Amax or any
of the Continuing Affiliates to which Buyer, the Company or any of its
Subsidiaries is entitled in accordance with the provisions of this Agreement and
the transactions contemplated hereby shall be held by Cyprus Amax or such
Affiliate in trust for the benefit of the Company and, within five (5) business
days of receipt by Cyprus Amax or such Affiliate of any such payment or
reimbursement, Cyprus Amax or such Affiliate shall pay over to the Company the
amount of such payment or reimbursement without right of set off or
counterclaim.
Section 8.8.2 In Trust for Cyprus Amax. All payments and
------------------------
reimbursements by any third party after the Closing Date in the name of or to
the Company or any of its Affiliates to which Cyprus Amax or any of the
Continuing Affiliates is entitled in accordance with the provisions of this
Agreement and the transactions contemplated hereby shall be held by the Company
or such Affiliate in trust for the benefit of Cyprus Amax and, within five (5)
business days of receipt by the Company or such Affiliate of any such payment or
reimbursement, Buyer or such Affiliate shall pay over to Cyprus Amax the amount
of such payment or reimbursement without right of set off or counterclaim.
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Section 8.8.3 No Right of Set-Off. Without limiting Section 8.8.1 or
-------------------
Section 8.8.2, no party or any of its Affiliates shall be entitled to any right
of set off or counterclaim against any amount due under or pursuant to this
Agreement or any Related Agreement.
SECTION 8.9 NOTICE OBLIGATIONS OF BUYER
---------------------------
Contemporaneously with the Closing, to the extent required by law,
Buyer shall take such actions as shall be necessary or appropriate to cause each
officer or director of the Company or any Subsidiary removed by Cyprus Amax or
who resigned contemporaneously with the Closing to be replaced by an officer or
director of the Company or any Subsidiary elected by Buyer. As soon as
practicable following the Closing (but in any event not later than five (5)
business days following the Closing), Buyer shall take such actions and file
such documents as shall be necessary or appropriate for the purpose of giving
notice to all Governmental Authorities of the names of each officer, director
and shareholder of the Company and its Subsidiaries (including each officer and
director elected by Buyer as provided herein) and such other information with
respect to the transactions contemplated by this Agreement as shall be necessary
or appropriate, including all information required by any Governmental Authority
with respect to such Governmental Authority's "ownership and control" reporting
requirements of the "applicant violator system."
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 SURVIVAL FOR REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS
---------------------------------------------------------------
AND INDEMNIFICATIONS
--------------------
Subject to the remaining provisions of this Article IX and this
Agreement, the representations and warranties contained in this Agreement shall
survive the Closing and be enforceable for a period of twenty-four (24) months
(provided, however, that the representations and warranties contained in Section
-------- -------
3.2.7 and 3.2.8 shall survive the Closing for a period of three (3) years), but
shall thereafter be of no force or effect, except as they relate to claims for
which written notice, specifying the facts underlying the claim has been
provided prior to the expiration of the applicable survival date of the
representation or warranty; provided further that no Buyer Indemnified Party
-------- -------
shall be entitled to indemnification or any other recovery or to make any claim
after the three month anniversary of the Closing (and no Buyer Indemnified Party
shall bring any claim after such date) for any Losses arising from or relating
to any matter of which at or before the Closing Buyer, its Affiliates or any of
their respective Representatives believed constituted (or would be reasonably
likely to constitute) or believed indicated (or would be reasonably likely to
indicate) a breach of a representation or warranty by Cyprus Amax or Energy. All
covenants and agreements contained in this Agreement shall survive the Closing
in accordance with their terms.
SECTION 9.2 INDEMNIFICATION BY CYPRUS AMAX
------------------------------
Subject to the remaining provisions of Article IX and this Agreement,
from and after the Closing, Cyprus Amax shall indemnify and hold harmless Buyer,
the Company, the Company's Subsidiaries, their respective Affiliates and
directors, officers, employees and agents
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and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Buyer Indemnified Parties") from and against any and all
actual out-of-pocket damages, liabilities, losses, costs of investigation,
claims, suits, causes of action, judgments, penalties, costs and expenses
(including reasonable attorneys' fees and expenses in connection with any third
party proceeding relating thereto to the extent hereafter provided)
(collectively, "Losses") to the extent arising out of or resulting from (a) the
breach or inaccuracy of any representations or warranties in this Agreement
(including the Schedules hereto) or any certificates delivered in connection
herewith, (b) any failure to comply, in whole or in part, with the covenants or
agreements made by Cyprus Amax or Energy in this Agreement, (c) any fraudulent
acts of Cyprus Amax or Energy in connection herewith and (d) the Excluded
Liabilities.
SECTION 9.3 INDEMNIFICATION BY BUYER AND THE COMPANY
----------------------------------------
Subject to the remaining provisions of Article IX and this Agreement,
Buyer and the Company shall jointly and severally indemnify and hold harmless
Cyprus Amax, Energy, each other Continuing Affiliate and each of their
respective directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Cyprus Amax Indemnified Parties") from and after the Closing, from and against
any and all Losses incurred by or asserted against any of the Cyprus Amax
Indemnified Parties to the extent arising out of or resulting from (a) the
current, former or future businesses, assets, liabilities, operations, other
activities or employees (whether current or former) of the Company or any of its
Subsidiaries, whether arising prior to, at or after the Closing, including any
of the foregoing relating to the Environment (including any claim asserting the
responsibility or liability of Cyprus Amax, its Affiliates, and their respective
Representatives, as an owner or operator, either derivatively or directly, by
way of Cyprus Amax', its Affiliates', and their respective Representatives'
previous ownership or control over the Company or any of its Subsidiaries, or
their participation in the operations or activities of the Company, any of its
Subsidiaries or the properties or assets thereof), except to the extent the
Liability was expressly retained or assumed by Cyprus Amax or one or more of the
Continuing Affiliates pursuant to this Agreement or any Related Agreement (which
for purposes of clarification shall not include the making of any representation
or warranty that has then expired), (b) any of the discontinued operations of
the Company or any of its current or former Subsidiaries, (c) any Liability
reflected on the Financial Statements (or the notes thereto) or the Closing
Statements or given effect to (including as a charge to earnings prior to
Closing) in determining the Equity Value, Adjusted Equity Value or Buyer Debt
Amount, (d) the breach or inaccuracy of any representations or warranties in
this Agreement (including the Schedules hereto) or any certificates delivered in
connection herewith or any failure to comply, in whole or in part, with the
covenants or agreements made by Buyer in this Agreement, (e) any financing
activities undertaken by Buyer or any of its Affiliates in connection with the
transactions contemplated hereby, or (f) any fraudulent acts of Buyer in
connection herewith.
SECTION 9.4 PROCEDURE FOR THIRD PARTY CLAIMS
--------------------------------
Section 9.4.1 Notice of a Third Party Claim. In order for a Person
-----------------------------
(the "indemnified party") to be entitled to any indemnification pursuant to this
Article IX in respect of, arising out of, or involving a claim or demand made by
any Person against or upon the indemnified party (a "Third Party Claim"), such
indemnified party must notify the party responsible for indemnification
hereunder (the "indemnifying party") in writing of (and in
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reasonable detail to the extent then known regarding) the Third Party Claim
promptly, and in any event within 10 business days, after receipt by such
indemnified party of notice of the Third Party Claim; provided, however, that
-------- -------
failure to give such notification shall not affect the indemnification otherwise
provided under this Agreement except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure (except that the
indemnifying party shall not be liable for any expenses incurred prior to the
day on which the indemnified party gives such notice) and except to the extent
the notice is not delivered timely pursuant to Section 9.1. Thereafter, the
indemnified party shall deliver to the indemnifying party promptly, and in any
event within five (5) business days, after the indemnified party's receipt
thereof, copies of all notices and documents (including court papers) received
by the indemnified party relating to the Third Party Claim; provided, however,
-------- -------
that the failure to so deliver shall not affect the indemnification otherwise
provided hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure.
Section 9.4.2 Right to Defend. If a Third Party Claim is made, the
---------------
indemnifying party shall be entitled at its expense to participate in the
defense thereof and, if it so chooses, to assume and control the defense thereof
with counsel selected by the indemnifying party and reasonably acceptable to the
indemnified party provided further, however, that if an order, injunction or
-------- ------- -------
other non-monetary relief against the indemnified person is being sought, then
the indemnified person may at its expense employ separate counsel and
participate in and direct the defense of such matter to the extent necessary to
protect its interest with respect to such relief. Should the indemnifying party
so elect to assume the defense of a Third Party Claim, the indemnifying party
shall not be liable to the indemnified party for legal expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than such expenses incurred to the extent necessary to protect the interest of
the indemnified party with respect to non-monetary relief. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ at its own expense counsel not
reasonably objected to by the indemnifying party separate from the counsel
employed by the indemnifying party, it being understood that under such
circumstances the indemnifying party shall (except with respect to non-monetary
relief sought against the indemnified party) control such defense and shall be
empowered to make any settlement with respect to such Third Party Claim, subject
to the remaining terms of this Section 9.4.2. The indemnifying party shall be
liable for the reasonable fees and expenses of counsel employed by the
indemnified party for any period during which the indemnifying party has not so
assumed the defense thereof (other than the period prior to the day on which the
indemnified party gives notice of the Third Party Claim as provided above). All
the parties hereto shall cooperate and shall cause their Affiliates to cooperate
in the defense or prosecution of any Third Party Claim and shall keep the other
parties hereto reasonably informed of the status thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information that are reasonably
relevant to such Third Party Claim, and making employees available on any basis
reasonably requested by the indemnifying party to provide additional information
and explanation of any material provided hereunder or otherwise relating to the
Third Party Claim. Whether or not the indemnifying party assumes the defense of
a Third Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party's prior written consent, such consent not to be
unreasonably withheld or
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delayed. If the indemnifying party assumes the defense of a Third Party Claim,
the indemnified party shall agree to any settlement, compromise or discharge of
such Third Party Claim that the indemnifying party may recommend if such
settlement, compromise or discharge would only result in the entry of a monetary
judgment for which the indemnified party is fully indemnified hereunder; any
other settlement, compromise or discharge shall require the prior written
consent of the indemnified party.
Section 9.4.3 Notice to Indemnifying Party. In the event any
----------------------------
indemnified party should have an indemnification claim against any indemnifying
party under this Agreement that does not involve a Third Party Claim being
asserted against or sought to be collected from such indemnified party, the
indemnified party shall deliver notice of such claim stating the nature and
basis of such claim to the extent known with reasonable promptness to the
indemnifying party. The failure by any indemnified party so to notify the
indemnifying party shall not relieve the indemnifying party from liability that
it may have to such indemnified party, except to the extent that the
indemnifying party has been actually prejudiced by such failure and except to
the extent the notice is not delivered prior to the expiration of any applicable
survival periods set forth in Section 9.1. If the indemnifying party disputes
its liability with respect to such claim, the indemnifying party and the
indemnified party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction.
Section 9.4.4 Duty to Mitigate. Each indemnified party shall
----------------
cooperate with each indemnifying party with respect to resolving any claim or
liability with respect to which any such party is obligated to indemnify such
other party hereunder or an Affiliate thereof, including by making commercially
reasonable efforts to mitigate the Losses arising as a result of any such claim
or liability. In the event that any indemnified party shall fail to make such
commercially reasonable efforts to mitigate the Losses arising as a result of
any claim or liability, then, notwithstanding anything else to the contrary
contained herein, the other party shall not be required to indemnify any Person
to the extent of any loss, liability, claim, damage or expense that could
reasonably be expected to have been avoided if the indemnified party made such
efforts.
SECTION 9.5 GENERAL PROVISIONS RELATING TO REMEDIES AND
-------------------------------------------
INDEMNIFICATION
---------------
Section 9.5.1 Cyprus Amax shall not be required to make any payments
pursuant to Section 9.2(a) unless and until the aggregate amount of all Losses
shall exceed $30 million, as to which Cyprus Amax shall thereafter be
responsible only for the excess of the aggregate of Losses over $30 million;
provided that the foregoing limitation shall not apply in respect of Losses
which arise from or relate to a breach of Section 3.2.7(a) and Section 3.2.8 (to
the extent relating to the Company). The maximum aggregate amount recoverable
hereunder pursuant to Section 9.2(a) from Cyprus Amax shall be 25% of the
Purchase Price and the aggregate maximum amount recoverable in respect of
consequential damages and in respect of Allowed Claims (each of which in any
event shall only be allowed if and to the extent such amounts are otherwise
recoverable hereunder and under applicable Law) shall be $75 million (which such
recoveries shall be included in determining whether the limit of 25% of the
Purchase Price on the maximum aggregate amount recoverable is met) provided that
none of the foregoing limitations shall apply in respect of Losses which arise
from or relate to a breach of Section
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3.2.7(a) and Section 3.2.8 (to the extent relating to the Company). Any
individual Loss relating to a specific transaction or set of facts pursuant to
Section 9.2(a) of $800,000 or less of the Buyer Indemnified Parties shall be
disregarded for all purposes of this Agreement, no claim for indemnification may
be made in respect thereof and such Loss shall not be aggregated with other
Losses for purposes of determining whether any claim may be made. For purposes
of this Section 9.5.1, all amounts payable by Cyprus Amax or any of the
Continuing Affiliates as a result of a breach of Section 18 of the Tax Sharing
and Indemnification Agreement shall be deemed to be payable pursuant to Section
9.2(a).
Section 9.5.2 Cyprus Amax shall have no obligation to indemnify the
Buyer Indemnified Parties for any Losses which represent the cost of repairs,
replacements or improvements to the extent they enhance the value of the
repaired, replaced or improved asset above its value on the Closing Date, or
which represent the cost of repair or replacement in excess of the lowest
reasonable cost of such repair or replacement.
Section 9.5.3 An indemnifying party shall have no obligation to
indemnify an indemnified party or otherwise have liability to an indemnified
party for any damages, including punitive damages, other than actual and direct
damages, Allowed Claims and consequential damages, each of which shall only be
recoverable to the extent otherwise provided hereunder and by applicable Law.
Section 9.5.4 Cyprus Amax shall have no obligation to indemnify any
Buyer Indemnified Party (and no Buyer Indemnified Party shall bring any claim)
for any Losses arising from or relating to (a) any matter reflected in the
Financial Statements or the Closing Statement (after giving effect to any
adjustments thereto) or (b) any matter which at or before the Closing Buyer, its
Affiliates or any of their respective Representatives believed constituted (or
would be reasonably likely to constitute) or believed indicated (or would be
reasonably likely to indicate) a breach of a representation or warranty by
Cyprus Amax or Energy, unless Buyer shall have given Cyprus Amax written notice
specifying the basis for such belief prior to Closing.
Section 9.5.5 Each party's Losses shall be reduced by any realizable
federal and state income Tax deductions or other Tax benefits realizable in
connection with the Losses, after giving effect to any Tax detriment to the
indemnified party arising from the receipt of the indemnification payment with
respect to such Losses. The parties agree to treat any indemnification payment
as an adjustment to the Purchase Price. If any Loss is covered by insurance or
subject to other recoveries from third parties (collectively, "Third Party
Rights"), the indemnified party shall use commercially reasonable efforts to
recover the amount of the Losses from the insurer or such third party, which
recovery (after deduction of applicable deductibles and costs of collection)
shall reduce the indemnifiable Losses hereunder. Each party hereto agrees to
assign (and to cause its respective Indemnified Parties to assign) all Third
Party Rights to the indemnifying party and to appoint the indemnifying party as
its limited agent and attorney-in-fact in order to seek such recovery only if
and to the extent the indemnified party fails to use reasonable efforts to seek
such recovery.
Section 9.5.6 To the extent that Cyprus Amax or Buyer discharges
any claim for indemnification hereunder, it shall be subrogated to all related
rights of the other party against third parties except as otherwise provided
herein.
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Section 9.5.7 In recognition of the thresholds set forth in Section
9.5.1, the indemnified party shall be entitled to full indemnification for all
Losses arising as a result of a breach of a representation or a warranty
notwithstanding that such representation or warranty is qualified by the term
"material" or "Material Adverse Effect," as such qualifications will be given no
effect for determining the amount of indemnification to which the indemnified
party shall be entitled to receive.
SECTION 9.6 EXCLUSIVE NATURE
----------------
Section 9.6.1 The indemnification provisions of Article IX and the
applicable provisions of the Tax Sharing and Indemnification Agreement shall be
the sole and exclusive remedy by any Buyer Indemnified Party, the Company or any
of its Subsidiaries, against Cyprus Amax, and the Continuing Affiliates and
their respective Representatives, following the Closing for any breaches or
alleged breaches of any representation, warranty or other provision of this
Agreement or otherwise with respect to the former, current or future business
and operations of the Company and its Subsidiaries, any and all claims relating
to this Agreement and the transactions contemplated hereby. Such remedies are
intended to be non-cumulative with respect to, and shall preclude the assertion
by any party or any of its Affiliates of, any other remedies which would
otherwise have been available in common law or by statute, except for any right
that may exist to seek redress for common law fraud. No party shall have any
right to set off any claims hereunder against any payments to be made by it
pursuant to this Agreement or otherwise.
Section 9.6.2 Each of the parties hereto, on behalf of itself, its
Affiliates and their respective officers, directors, employees, shareholders,
partners, members, agents, advisors and representatives and the heirs,
executors, successors or assigns of the foregoing (collectively, including such
party's Affiliates, such party's "Representatives") waives any and all rights,
claims and causes of action that they may have arising under or based upon any
statutory or common law or otherwise and agrees not to bring any actions or
proceedings, at law, in equity, in tort or otherwise, against any other party or
its Representatives, in respect of any breaches or alleged breaches of any
representation, warranty or other provision of this Agreement, or otherwise
relating to the former, current or future business and operations of the Company
and its Subsidiaries or the transactions contemplated by this Agreement, except
pursuant to and subject to the express provisions of Article IX.
Section 9.6.3 Nothing in this Section shall be deemed to waive any
rights any party may have to any non-monetary remedies to enforce its rights
under this Agreement or any Related Agreement.
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ARTICLE X
TERMINATION
SECTION 10.1 TERMINATION
-----------
This Agreement may be terminated prior to the Closing as follows:
Section 10.1.1 Mutual Consent. Upon the mutual written consent
--------------
of Cyprus Amax and Buyer;
Section 10.1.2 Litigation. By Cyprus Amax or Buyer if an
----------
injunction or other order shall have been issued by a Governmental Authority,
which restrains or otherwise makes unlawful the consummation of the transactions
contemplated by this Agreement and such injunction or other order shall have
become final and non-appealable; provided, however, that no party shall be
-------- -------
entitled to terminate this Agreement in reliance on this Section 10.1.2 if such
injunction or order shall have resulted from an intentional and material breach
by such party of this Agreement;
Section 10.1.3 Conditions to Buyer's Obligations not Met. By
-----------------------------------------
Buyer, if any of the conditions provided in Section 6.1 shall not have been
satisfied, complied with or performed on or before December 1, 1999, or if the
Cyprus Amax's Bring Down Certificate reflects such a failure at the time of
delivery, and Buyer has not waived in writing such failure of satisfaction,
noncompliance or nonperformance; provided, however, that Buyer shall not be
-------- -------
entitled to terminate this Agreement in reliance on this Section 10.1.3 if such
failure of such conditions to be satisfied, complied with or performed shall
have resulted from an intentional and material breach of this Agreement by
Buyer;
Section 10.1.4 Conditions to Cyprus Amax's, Energy's and the
---------------------------------------------
Company's Obligations not Met. By Cyprus Amax, Energy and the Company if any of
-----------------------------
the conditions provided in Section 6.2 shall not have been satisfied, complied
with or performed on or before December 1, 1999, or if the Buyer's Bring Down
Certificate reflects such a failure at the time of delivery, and Cyprus Amax,
Energy and the Company have not waived, in writing, such failure of
satisfaction, noncompliance or nonperformance; provided, however, that Cyprus
-------- -------
Amax, Energy and the Company shall not be entitled to terminate this Agreement
in reliance on this Section 10.1.4 if such failure of such conditions to be
satisfied, complied with or performed shall have resulted from an intentional
and material breach of this Agreement by Cyprus Amax, Energy or the Company; or
Section 10.1.5 Failure of Adequate Financing. By Cyprus Amax,
-----------------------------
in the event that at any time the representation and warranty set forth in
Section 3.1.10 shall fail to be true and correct.
SECTION 10.2 EFFECT OF TERMINATION
---------------------
In the event of termination of this Agreement, this Agreement and
the proposed transactions contemplated hereunder shall terminate and, except as
provided in the following
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sentence, each party hereto shall have no further obligation or liability
hereunder, except that the provisions of Sections 4.1.1, 4.1.2, 4.2.2, 4.2.4,
4.2.5, 9.3(e) and 11.11 shall survive such termination. Except as provided in
Section 6.1.1, nothing in this Section 10.2 shall relieve any party from any
liability for any breach of any covenant or agreement contained in this
Agreement or from any breach by Buyer of the representation and warranty set
forth in Section 3.1.10.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COMPANY NAME
------------
Each of Buyer and the Company acknowledges that, from and after
the Closing Date, Cyprus Amax and the Continuing Affiliates shall have the
absolute and exclusive proprietary right to all names, marks, trade names,
trademarks and identifications using either or both "Cyprus" or "Amax" and all
variations and derivatives thereof and logos relating thereto (including the
logo of "C" with two lions appearing therein) or any similar name or variant,
version or derivative thereof (collectively, the "Names") by themselves or in
combination with any other Name, and that except as may be necessary to permit
the Company and its Subsidiaries to utilize the Names for a six-month period in
accordance with this Section 11.1, none of the rights thereto or goodwill
represented thereby or pertaining thereto are being transferred hereby or in
connection herewith. Each of Buyer and the Company agrees that during such
six-month period the Company and, to the extent applicable, the Subsidiaries may
continue to use the Names in the same manner as such Names were used before the
Closing provided that Buyer will, and will cause the Company and the
--------
Subsidiaries to, phase out the use of such Names as soon as commercially
practicable following the Closing and provided further that Buyer will, and will
-------- -------
cause the Company and the Subsidiaries to, use reasonable commercial efforts to
clarify that none of the Company or any of its Subsidiaries is affiliated with
Cyprus Amax or any of the Continuing Affiliates. Each of Buyer and the Company
agrees that except for the six-month period immediately after the Closing Date
it will not, nor will it permit any of its Affiliates to, use any name, phrase
or logo incorporating any of the Names as its corporate or business name or in
or on any of its literature, sales materials or products or otherwise in
connection with the sale of any products or services or otherwise. As of the
six- month period immediately following the Closing, each of Buyer and the
Company shall, and shall cause its Affiliates to, cease to use any such
literature and sales materials, delete or cover (as by stickering) any such
name, phrase or logo from or on any of its or its Subsidiaries' respective
assets or properties (whether tangible or intangible, real or personal), and
take such other actions as may be necessary or advisable to eliminate any
implication that any of Buyer, the Company or any of their Affiliates is
affiliated with Cyprus Amax or any of the Continuing Affiliates. Buyer agrees to
indemnify and hold harmless the Cyprus Amax Indemnified Parties with respect any
Losses arising from or relating to the use by Buyer, the Company or any of their
respective Affiliates of any of the Names at any time.
SECTION 11.2 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
----------------------------------------------
RELATIONSHIP BETWEEN THE PARTIES
--------------------------------
Section 11.2.1 Notwithstanding anything in this Agreement or
any Related Agreement to the contrary, it is the explicit intent and
understanding of the parties hereto that
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none of the parties nor any of their respective Representatives is making any
representation or warranty whatsoever, oral or written, express or implied,
other than those set forth in this Agreement and that none of the parties is
relying on any statement, representation or warranty, oral or written, express
or implied, made by any other party or such other party's Representatives except
for the representations and warranties expressly set forth in such Agreements.
EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE PARTIES
EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION AS TO TITLE,
OWNERSHIP, USE, POSSESSION, QUANTITY, RESERVES, RECOVERABILITY, VALUE,
MINEABILITY, CONDITION, LIABILITIES, OPERATION, DESIGN, CAPACITY, FUTURE
RESULTS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY OR
OTHERWISE AS TO ANY OF THE ASSETS OR LIABILITIES OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES AND, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT
OR IN ANY RELATED AGREEMENT, IT IS UNDERSTOOD THAT BUYER TAKES THE ASSETS AND
LIABILITIES OF THE COMPANY AND ITS SUBSIDIARIES "AS IS" AND "WHERE IS."
Section 11.2.2 Without limiting the generality of, and in
furtherance of, Section 11.2.1, Buyer acknowledges that none of Cyprus Amax or
any of its Affiliates makes any representations or warranties to Buyer regarding
any forecasts, projections, estimates, business plans or budgets (whether
contained or referred to in the Schedules hereto or in any other written
materials or verbal information that has been or shall hereafter be provided or
made available to Buyer or any of its Representatives) and there are not and
shall not be deemed to be representations or warranties of Cyprus Amax or any of
its Affiliates in respect of future revenues, expenses or expenditures, future
results of operations (or any component thereof), future cash flows or future
financial condition (or any component thereof) of the Company or any of its
Subsidiaries.
Section 11.2.3 The parties hereto agree that this is an arm's length
transaction in which the parties' undertakings and obligations are limited to
the performance of their obligations under this Agreement. Buyer acknowledges
that it is a sophisticated investor, that it has undertaken, and that Cyprus
Amax has given Buyer opportunities to undertake an investigation of the business
and operations of the Company and its Subsidiaries (including their assets,
liabilities, contracts, permits, licenses, coal reserve data and information,
premises, properties, facilities, books and records), and that it has only a
contractual relationship with Cyprus Amax and Energy, based solely on the terms
of this Agreement, and that there is no special relationship of trust or
reliance between Buyer and Cyprus Amax or Energy. Buyer acknowledges that it and
its Representatives have been provided with (i) the access to the books and
records, facilities, equipment, contracts and other properties and assets of the
business and operations of the Company and its Subsidiaries and (ii) the
opportunity to meet with the officers and employees of Cyprus Amax and its
Subsidiaries to discuss the business and operations of the Company and its
Subsidiaries. Buyer further acknowledges that none of Cyprus Amax, its
Affiliates, their respective Representatives or any other Person has made any
representation or warranty, expressed or implied, as to the completeness of any
information regarding the business and operations of the Company and its
Subsidiaries furnished or made available to Buyer and its Representatives. None
of Cyprus Amax, its Affiliates, their respective Representatives or any other
Person shall have or be subject to any liability to Buyer or any other Person
resulting from
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the distribution to Buyer or any other Person, or Buyer's or any other Person's
use, whether prior to, on or after the date hereof, of, any such information,
including the Confidential Descriptive Memorandum prepared by the Company and
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. dated November 1998 and any information, documents or
material made available in any "data rooms" or formal or informal management
presentations or in any other form in expectation of the transactions
contemplated hereby.
SECTION 11.3 ENVIRONMENTAL MATTERS
---------------------
The parties' sole and exclusive representations, warranties,
covenants, agreements or other obligations (including indemnities or any
obligations) arising pursuant to this Agreement, by law or otherwise with
respect to the Environment (including Environmental Conditions Associated with
the Company Properties, environmental liabilities and obligations and compliance
with Environmental Laws) and any other subject matters referred to in Section
3.2.18 shall be as set forth in such Section (including the applicable portions
of Articles IV, IX and XI). No other representation, warranty, covenant,
agreement or obligation (including indemnities or any obligations) arising
pursuant to this Agreement, by law or otherwise by Cyprus Amax, any of its
Continuing Affiliates, the Company, Buyer or any of their respective
Representatives shall be deemed to apply to such matters.
SECTION 11.4 TAX MATTERS
-----------
The parties' sole and exclusive representations, warranties,
covenants, agreements or other obligations (including indemnities or any
obligations) arising pursuant to this Agreement, by Law or otherwise with
respect to tax matters (interpreted in its broadest sense) and any other subject
matters referred to in the Tax Sharing and Indemnification Agreement shall be as
set forth therein. No other representation, warranty, covenant, agreement or
obligation (including indemnities or any obligations) arising pursuant to this
Agreement, by Law or otherwise by Cyprus Amax, any of its Continuing Affiliates,
the Company, Buyer or any of their respective Representatives shall be deemed to
apply to such matters.
SECTION 11.5 ENTIRE AGREEMENT
----------------
This Agreement, the Related Agreements, and the agreements expressly
provided for herein and therein constitute the entire agreement among the
parties and supersede any and all other prior or contemporaneous understandings,
negotiations or agreements among the parties relating to the transactions
contemplated hereby, and shall be binding upon and inure to the benefit of the
parties hereto.
SECTION 11.6 AMENDMENTS
----------
Any amendment, supplement, variation, alteration or modification to
this Agreement must be made in writing and duly executed by an authorized
representative or agent of each of the parties hereto which shall be bound
thereby.
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SECTION 11.7 SEVERABILITY
------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any other
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable Law, each party hereby
waives the benefit of any Law which renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 11.8 COUNTERPARTS
------------
This Agreement may be executed in counterparts, each of which shall be deemed to
be an original, and all such counterparts shall be deemed to constitute one and
the same instrument. Facsimile signatures shall have the same force and effect
as originals.
SECTION 11.9 NO WAIVER
---------
The failure in any one or more instances of a party to insist upon
performance of any of the terms, covenants or conditions of this Agreement, to
exercise any right or privilege conferred in this Agreement, or to waive any
breach of any of the terms, covenants or conditions of this Agreement, shall not
be construed as a subsequent waiver of any such terms, covenants, conditions,
rights or privileges, but the same shall continue and remain in full force and
effect as if no such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized representative of
the waiving party.
SECTION 11.10 ASSIGNMENT
----------
This Agreement and all the rights and obligations granted hereby shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns, it being expressly agreed that this Agreement shall not
be assigned nor shall any rights or obligations arising hereunder be transferred
by one party without the prior written consent of the other party, except that
on or prior to Closing Buyer shall assign its rights under this Agreement to an
Affiliate of Buyer that is a corporation organized under the laws of one of the
states of the United States or the District of Columbia, and such Affiliate
assignee shall assume, and be jointly and severally liable for all of Buyer's
obligations hereunder and entitled to exercise any of Buyer's rights hereunder
in lieu of Buyer, and Buyer may assign its rights hereunder at any time as
collateral in connection with financial transactions or to any successor entity,
provided that, in any case, no such assignment shall release or discharge Buyer
--------
from any of its obligations hereunder or under any Related Agreement.
SECTION 11.11 FEES, COSTS AND EXPENSES
------------------------
Except as otherwise provided herein, each party shall be responsible
for its own fees, costs and expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby.
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SECTION 11.12 THIRD PARTY BENEFICIARIES
-------------------------
Except for the Persons entitled to indemnification pursuant to Section
4.2.2, Section 4.3.6 or Article IX or under the Tax Sharing and Indemnification
Agreement (who shall be third party beneficiaries), nothing in this Agreement is
intended to create, nor shall anything in this Agreement be deemed to create or
have created, any third party beneficiary rights.
SECTION 11.13 INTERPRETATION OF SCHEDULES
---------------------------
It is understood and agreed that neither the specification of any
dollar amount in the representations and warranties contained in this Agreement
nor the inclusion of any specific item in the Company Disclosure Schedule is
intended to imply that such amounts or higher or lower amounts, or the items so
included or other items, are or are not material or otherwise required to be
disclosed, and neither party shall use the fact of the setting of such amounts
or the fact of the inclusion of any such item in the Company Disclosure Schedule
in any dispute or controversy among the parties as to whether any obligation,
item or matter is or is not material or required to be disclosed for purposes of
this Agreement. Cyprus Amax has included items in the Company Disclosure
Schedule hereto only in order to provide certain information regarding the
Company to Buyer and inclusion of any item in any Company Disclosure Schedule
should not be deemed an admission as to the existence of any liability or
obligation, the validity or accuracy of any claim or as to the absence of any
defense or counterclaim with respect thereto. To the extent reasonably apparent
from the face thereof, the exceptions, modifications, descriptions and
disclosures in the Company Disclosure Schedule attached hereto are made for all
relevant purposes of this Agreement and are exceptions to all representations
and warranties set forth in this Agreement or in any agreement or instrument
delivered pursuant to or in connection with this Agreement, whether or not
explicit reference is made to the Company Disclosure Schedule to the extent
applicable thereto. To the extent reasonably apparent from the face thereof,
disclosure of the information contained in one section or part of the Company
Disclosure Schedule shall be deemed as proper disclosure for all sections or
parts of such Schedule. Matters reflected on the Company Disclosure Schedule
delivered hereunder are not necessarily limited to matters required by this
Agreement to be reflected in such Company Disclosure Schedule. Any such
additional matters are set forth for informational purposes and do not
necessarily include other matters of a similar nature.
SECTION 11.14 CONSTRUCTION
------------
Words importing the singular shall include the plural and vice versa,
and words importing a gender shall include other genders. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine or
neuter form. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." The phrases "currently
conducted" or "currently operated" and words of like import shall mean as
actually conducted or operated as the case may be at the time of determination.
The headings contained in this Agreement are inserted for convenience only and
shall not constitute a part hereof or affect any interpretation hereof. All
references herein to Articles, Sections, (other than references to Sections of
the Code or any other statute) and subsections shall be deemed to be references
to Articles, Sections and subsections of this Agreement unless the context shall
otherwise require. References in this Agreement to any Article shall
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include all Sections, subsections and paragraphs in such Article; references in
this Agreement to any Section shall include all subsections and paragraphs in
such Section; and references in this Agreement to any subsection shall include
all paragraphs in such subsection. The schedules, exhibits and attachments to
the Agreement form an integral part of the Agreement and are incorporated by
reference for all purposes as if set forth fully herein. Unless the context
shall otherwise require or provide, any reference to any agreement or other
instrument or statute, regulation or other Law is to such agreement, instrument,
statute, regulation or other Law as amended and supplemented from time to time
(and, in the case of a statute, regulation or other Law, to any successor
provision); provided, however, that no representation or warranty herein shall
-------- -------
be deemed to have been breached because of the adoption of any new statute,
regulation or other Law, any amendment of or change in any statute, regulation
or other Law or any change in interpretation of any statute, regulation or other
Law, in any event, issued or otherwise occurring subsequent to the date hereof.
This Agreement shall be construed in accordance with its fair meaning and shall
not be construed strictly against either party, without regard to which party
drafted this Agreement.
SECTION 11.15 CONSENT TO JURISDICTION AND RELATED MATTERS
-------------------------------------------
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any New
York State court or Federal court sitting in the State of New York and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby or for
recognition or enforcement of any judgment relating thereto, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment of in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in any New York State or Federal court. Each of
the parties hereto hereby irrevocably and unconditionally waives, to the fullest
extent permitted by law, the defense of any inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 11.16 WAIVER OF JURY TRIAL
--------------------
(a) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(b) EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (1) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
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REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVERS SET FORTH IN CLAUSE (A) OF THIS
SECTION 11.16, (2) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (3) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (4) IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
IN SUCH SECTION.
SECTION 11.17 NOTICES
-------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when personally delivered, five (5)
business days after mailing when mailed by certified mail, return receipt
requested, or one (1) business day after sending via Federal Express or similar
overnight courier service, or when receipt is confirmed when sent by facsimile.
Such notices or other communications shall be sent to the following addresses,
unless other addresses are subsequently specified in writing:
Buyer (and the Company after the Closing):
RAG International Mining GmbH
Roermander ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇) ▇▇▇▇-▇▇▇▇▇
Tel. No.: (▇▇) ▇▇▇▇-▇▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Cyprus Amax, Energy (and the Company prior to the Closing):
c/o Cyprus Amax Minerals Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President, Secretary
and General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
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SECTION 11.18 GOVERNING LAW; JURISDICTION
---------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONTROLLED AS TO ITS VALIDITY,
ENFORCEMENT, INTERPRETATION, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS BY
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THEREOF) APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED IN THAT STATE.
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CYPRUS AMAX MINERALS COMPANY
By:_______________________________
Name:_____________________________
Title:____________________________
CYPRUS AMAX COAL COMPANY
By:_______________________________
Name:_____________________________
Title:____________________________
AMAX ENERGY INC.
By:_______________________________
Name:_____________________________
Title:____________________________
RAG INTERNATIONAL MINING GMBH
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
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