SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT No. 4)
Ashland Coal, Inc.
(Name of issuer)
Common Stock
(Title of class of securities)
043906 10 6
(CUSIP number)
Thomas L. Feazell
Senior Vice President,
General Counsel and Secretary
Ashland Inc.
1000 Ashland Drive
Russell, KY 41169
(606) 329-3333
(Name, address and telephone number of person
authorized to receive notices and communications)
April 4, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box ____.
Check the following box if a fee is being paid with the statement.
____ (A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more than five
percent of the class of securities described in Item 1; and (2) has filed
no amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Page 2 of 7 pages
CUSIP No. 043906 10 6 13D
1 NAME OF REPORTING PERSONS Ashland Inc.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
61-0122250
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
N/A (b)
3 SEC USE ONLY
4 SOURCE OF FUNDS 00 (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Kentucky
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH 10,281,586
REPORTING (See Items 1 and 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
10,281,586
(See Items 1 and 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,281,586 shares of Common Stock* (See Items 1 and 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.8% of the shares of Common Stock* (See Items 1 and 5)
Page 3 of 7 pages
14 TYPE OF REPORTING PERSON
CO
* Includes shares of Common Stock obtainable through the conversion of the
Class B Preferred Stock into Common Stock before August 18, 1998.
Page 4 of 7 pages
Securities and Exchange Commission
Washington, D.C. 20549
Schedule 13D
ITEM 1. SECURITY AND ISSUER
Ashland Inc. ("Ashland") currently owns 7,529,686 shares of Common
Stock ("Common Stock"), par value $.01 per share, of Ashland Coal, Inc.
("Ashland Coal"), an increase of 48,396 shares of Common Stock since
Amendment No. 3 to Form 13-D was filed. Ashland also owns 150 shares of
Class B Preferred Stock of Ashland Coal. Each share of Class B Preferred is
presently convertible into 18,346 shares of Common Stock. This conversion
rate increases to 19,596 shares of Common Stock on August 18, 1998 and to
20,846 shares of Common Stock on August 18, 2003. Carboex International,
Inc. ("Carboex") owns 100 shares of Class C Preferred Stock which has the
same conversion rights as Class B Preferred Stock.
Ashland Coal is a Delaware corporation with its principal
executive offices located at 2205 Fifth Street Road, Huntington, West
Virginia 25771.
ITEM 2. IDENTITY AND BACKGROUND
(a), (b) and (c) Ashland is a Kentucky corporation with its
principal executive offices located at 1000 Ashland Drive, Russell, KY
41169. Ashland is a large U.S. independent refiner and independent crude
oil gatherer and marketer; a regional retail marketer of gasoline and
merchandise; and a motor oil and automotive chemical marketer in the U.S.
and other countries. In addition, Ashland is a large distributor of
chemicals and plastics in North America; a supplier of specialty chemicals
worldwide; a large U.S. highway contractor; and a producer of natural gas
and crude oil. Ashland also has equity positions in Ashland Coal and Arch
Mineral Corporation ("Arch Mineral"), both U.S. coal producers.
The executive officers and directors of Ashland and their
principal occupations are shown on the attached Schedule I. The business
address of each executive officer is shown on Schedule I. Each director's
business address is Ashland Inc., c/o Office of the Secretary,1000 Ashland
Drive, Russell, KY 41169.
Page 5 of 7 pages
(d-e) During the last five years, neither Ashland nor any of the
persons listed in Schedule I hereto, has been (i) convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or (ii)
a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or state securities
laws or finding any violation with respect to such laws.
(f) Each executive officer and director is a U.S. citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Ashland has its shares of Common Stock and Class B Preferred Stock
enrolled in Ashland Coal's Dividend Reinvestment Plan ("DRIP"). Under the
DRIP, the dividends Ashland receives on its Ashland Coal Common Stock and
Class B Preferred are used to purchase additional shares of Ashland Coal
Common Stock in open market purchases. Since Amendment No. 3 to Form 13-D
was filed, Ashland has acquired 48,396 shares of Ashland Coal Common Stock
through the DRIP.
ITEM 4. PURPOSE OF TRANSACTION
Ashland acquired the additional Common Stock for investment
purposes. Currently, Ashland has elected five of its executive officers to
Ashland Coal's Board of Directors and has sufficient voting power to elect
at least one additional director to Ashland Coal's Board.
This statement is being filed in connection with the Agreement and
Plan of Merger, dated as of April 4, 1997 (the "Merger Agreement"), among
Arch Mineral Corporation ("Arch Mineral"), AMC Merger Corporation, a
Delaware corporation and wholly owned subsidiary of Arch Mineral ("Merger
Sub") and Ashland Coal, pursuant to which, among other things, Ashland Coal
will become a wholly owned subsidiary of Arch Mineral (the "Merger"). A
copy of the Merger Agreement is filed as Exhibit 7.1 to this Statement and
incorporated herein by reference.
Page 6 of 7 pages
In connection with the execution of the Merger Agreement, Ashland
has entered into a Voting Agreement dated as of April 4, 1997 with Arch
Mineral (the "Voting Agreement"), pursuant to which Ashland has agreed,
until the earlier of the Effective Time of the Merger (as defined in the
Merger Agreement) or the date on which the Merger Agreement is terminated,
to vote its shares of Ashland Coal Common Stock and its shares of Class B
Preferred Stock, par value $100 per share, for the approval and adoption of
the Merger Agreement and in favor of the Merger and to grant to Arch
Mineral, upon Arch Mineral's request, its irrevocable proxy to vote such
shares in such manner. A copy of the Voting Agreement is filed as Exhibit
7.2 to this Statement and incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
By virtue of the Voting Agreement, pursuant to which Ashland has
agreed with Arch Mineral that it will vote, or grant to Arch Mineral at
Arch Mineral's request, a proxy with respect to 7,529,686 shares of Ashland
Coal Common Stock and 150 shares of Ashland Coal Class B Preferred Stock
owned by Ashland, Ashland and Arch Mineral may be deemed to have shared
power to vote such shares. Included within the 10,281,586 shares of Ashland
Coal Common Stock reported as beneficially owned by Ashland are the
7,529,686 shares reported above and an additional 2,751,900 shares of
Ashland Coal Common Stock that would be issuable upon the conversion of 150
shares of Ashland Coal Class B Preferred Stock. Each share of Ashland Coal
Class B Preferred Stock and Class C Preferred Stock, par value $100 per
share, of Ashland Coal ("Ashland Coal Class C Preferred Stock") is
convertible into 18,346 shares of Ashland Coal Common Stock and the holder
thereof is entitled to cast 18,346 votes on matters submitted to a vote of
Ashland Coal stockholders.
By virtue of the Voting Agreement, pursuant to which Ashland has
agreed with Arch Mineral that it will not, until the earlier of the
Effective Time of the Merger (as defined in the Merger Agreement) or the
date on which the Merger Agreement is terminated, dispose of such shares,
Ashland and Arch Mineral may be deemed to have shared power to dispose of
such shares. Such power represents approximately 56.8% of the combined
voting power of Ashland Coal Common Stock outstanding on April 4, 1997.
Page 7 of 7 pages
Other than Ashland Coal Common Stock acquired pursuant to Ashland
Coal's DRIP, neither Ashland nor any of the persons listed in Item 2 hereof
has effected any transactions relating to Ashland Coal Common Stock or
Class B Preferred Stock within the past 60 days. Except as reported herein
with respect to voting and dispositive authority over the Ashland Coal
Common Stock and Class B Preferred Stock shared with Arch Mineral, no
person has the right to receive or the power to direct the dividends from,
or the proceeds from the sale of, the shares described in the preceding
paragraph.
ITEM 6. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO
SECURITIES OF THE ISSUER
Other than as set forth in this statement, neither ashland nor
any of the persons named in item 2 hereof has any contracts, arrangements,
understandings or relationships (legal or otherwise) with respect to any
securities of Ashland Coal, including but not limited to, transfer or
voting of any of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding or proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
7.1 Merger Agreement
7.2 Voting Agreement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
April 15, 1997
--------------------------------
(Date)
/s/ Thomas L. Feazell
--------------------------------
Thomas L. Feazell
Senior Vice President, General Counsel
and Secretary
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF
ASHLAND INC.
PRINCIPAL OCCUPATIONS AND BUSINESS ADDRESSES
DIRECTORS PRINCIPAL OCCUPATION*
- -------------------- ----------------------------------------------------
Jack S. Blanton Chairman of the Board of Houston
Endowment, Inc. and President of Eddy Refining
Company, Houston, Texas
Thomas E. Bolger Chairman of the Executive Committee of
the Board of Bell Atlantic Corporation,
Philadelphia, Pennsylvania
Samuel C. Butler Partner of Cravath, Swaine & Moore,
Attorneys, New York, New York
Frank C. Carlucci Chairman of the Board of the Carlyle
Group, Washington, D.C.
Paul W. Chellgren Chairman of the Board and Chief
Executive Office of Ashland Inc., Ashland,
Kentucky
James B. Farley Retired Chairman and Current Trustee of Mutual of
New York, New York
Ralph E. Gomory President of the Alfred P. Sloan Foundation,
New York, New York
Mannie L. Jackson Majority owner and Chairman of the Harlem
Globetrotters, International
Patrick F. Noonan Chairman of the Board of The Conservation Fund,
Arlington, Virginia
Jane C. Pfeiffer Management Consultant, Greenwich, Connecticut
Michael D. Rose Chairman of the Board of Promus Hotel Corporation,
Memphis, Tennessee
DIRECTORS PRINCIPAL OCCUPATION*
- -------------------- ----------------------------------------------------
William L. Rouse, Jr. Investments, Naples, Florida
Dr. Robert B. Stobaugh Professor, Emeritus Harvard Business School, Boston,
Massachusetts
* For business addresses, see Item 2.
EXECUTIVE OFFICERS BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------ ---------------- --------------------
Paul W. Chellgren P. O. Box 391 Chairman of the Board and
Ashland, KY 41114 Chief Executive Officer
John A. Brothers Ashland Chemical Company, Executive Vice President
a Division of Ashland Inc.
P.O. Box 2219
Columbus, OH 43216
James R. Boyd P. O. Box 391 Senior Vice President and
Ashland, KY 41114 Group Operating Officer
J. Marvin Quin P. O. Box 391 Senior Vice President and
Ashland, KY 41114 Chief Financial Officer
Thomas L. Feazell P. O. Box 391 Senior Vice President,
Ashland, KY 41114 General Counsel and
Secretary
Robert E. Yancey, Jr. P. O. Box 391 Senior Vice President and
Ashland, KY 41114 President, Ashland
Petroleum Company, a
Division of Ashland Inc.
Harry M. Zachem P. O. Box 391 Senior Vice President,
Ashland, KY 41114 External Affairs
David J. D'Antoni Ashland Chemical Company, Senior Vice President;
a Division of Ashland Inc. President, Ashland
P. O. Box 2219 Chemical Company, a
Columbus, OH 43216 Division of Ashland Inc.
John F. Pettus P. O. Box 14000 Senior Vice President;
Lexington, KY 40512 President, SuperAmerica
Group, a Division of
Ashland Inc.
Charles F. Potts APAC, Inc. Senior Vice President;
3340 Peachtree Rd., NE President, APAC, Inc.
Tower Place
Atlanta, GA 30326
EXECUTIVE OFFICERS BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------ ---------------- --------------------
Paul T. Tiefel 14701 St. Mary's Lane Vice President; President
Houston, TX 77079 Blazer Energy Corp.
James J. O'Brien P.O. Box 1400 Senior Vice President; President,
Lexington, KY 40512 The Valvoline Company, a
Division of Ashland Inc.
John W. Dansby P. O. Box 391 Administrative Vice
Ashland, KY 41114 President; Treasurer
Kenneth L. Aulen P. O. Box 391 Administrative Vice
Ashland, KY 41114 President; Controller
Philip W. Block P. O. Box 391 Administrative Vice
Ashland, KY 41114 President
Fred E. Lutzeier P. O. Box 391 Auditor
Ashland, KY 41114
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
7.1 Agreement and Plan of Merger, dated as of
April 4, 1997 among Arch Mineral Corporation,
AMC Merger Corporation and Ashland Coal, Inc.
(Filed herewith.)
7.2 Voting Agreement, dated as of April 4, 1997,
by and between Arch Mineral Corporation and
Ashland Inc. (Filed herewith.)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of April 4, 1997
among
ARCH MINERAL CORPORATION,
AMC MERGER CORPORATION
and
ASHLAND COAL, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER................................... 2
Section 1.1 Effective Time of the Merger................. 2
Section 1.2 Closing...................................... 2
Section 1.3 Effects of the Merger........................ 2
Section 1.4 Headquarters................................. 2
ARTICLE II CONVERSION OF SECURITIES..................... 3
Section 2.1 Conversion of Capital Stock.................. 3
Section 2.2 Exchange of Certificates..................... 4
Section 2.3 No Further Transfers......................... 6
Section 2.4 Dissenting Shares............................ 6
Section 2.5 Withholding.................................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES............... 7
Section 3.1 Representations and Warranties of the
Company and ACI.............................. 7
ARTICLE IV COVENANTS.................................... 22
Section 4.1 Stockholder Approval......................... 22
Section 4.2 Conduct of Business.......................... 22
Section 4.3 Access to Information........................ 24
Section 4.4 Legal Conditions to the Merger............... 25
Section 4.5 Public Announcements......................... 25
Section 4.6 Tax-Free Reorganization...................... 25
Section 4.7 Affiliate Agreements......................... 25
Section 4.8 Representations, Covenants and
Conditions; Further Assurances............... 26
Section 4.9 Certain Benefit Matters...................... 26
Section 4.10 Indemnification; Insurance................... 28
Section 4.11 Notification of Certain Matters.............. 29
Section 4.12 NYSE Listing................................. 29
ARTICLE V CONDITIONS TO MERGER......................... 30
Section 5.1 Conditions to Each Party's Obligation To
Effect the Merger............................ 30
Section 5.2 Additional Conditions to Obligations of
ACI.......................................... 31
Section 5.3 Additional Conditions to Obligation of
the Company.................................. 32
ARTICLE VI TERMINATION AND AMENDMENT.................... 33
Section 6.1 Termination.................................. 33
Section 6.2 Effect of Termination........................ 33
Section 6.3 Fees and Expenses............................ 33
Section 6.4 Amendment.................................... 34
Section 6.5 Extension; Waiver............................ 34
i
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE VII MISCELLANEOUS................................ 34
Section 7.1 Nonsurvival of Representations and
Warranties................................... 34
Section 7.2 Notices...................................... 34
Section 7.3 Interpretation............................... 36
Section 7.4 Knowledge.................................... 36
Section 7.5 Counterparts................................. 36
Section 7.6 Entire Agreement; No Third Party
Beneficiaries................................ 36
Section 7.7 Governing Law................................ 36
Section 7.8 Assignment................................... 36
Section 7.9 Severability................................. 37
Section 7.10 Failure or Indulgence Not Waiver;
Remedies Cumulative.......................... 37
Annex A - Form of Restated Certificate of Incorporation
of Arch Coal, Inc.
Annex B - Form of Restated and Amended Bylaws of
Arch Coal, Inc.
Annex C - Directors of Arch Coal, Inc. as of the Effective
Time
Annex D - Form of Affiliate Agreement
Annex E - Form of Arch Coal, Inc. 1997 Stock Incentive Plan
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("AGREEMENT"), dated as of April 4, 1997, by
and among Arch Mineral Corporation, a Delaware corporation (the "COMPANY"), AMC
Merger Corporation, a Delaware corporation ("MERGER SUB") and wholly owned
subsidiary of the Company, and Ashland Coal, Inc., a Delaware corporation
("ACI").
WHEREAS, the Boards of Directors of the parties hereto have approved this
Agreement and deem it advisable and in the best interests of their respective
corporations and stockholders that the Company and ACI enter into a strategic
business combination in order to advance the long-term business interests of the
Company and ACI and enhance stockholder value; and
WHEREAS, such strategic business combination of the Company and ACI will
be effected pursuant to the terms of this Agreement by means of a transaction in
which Merger Sub will merge with and into ACI (the "MERGER"), whereupon ACI will
become a wholly owned subsidiary of the Company, and the stockholders of ACI
will become stockholders of the Company; and
WHEREAS, prior to the execution and delivery of this Agreement, all
corporate action necessary to amend and restate, effective immediately prior to
the Effective Time (as herein defined), the Certificate of Incorporation and
Bylaws of the Company in their entireties to read as set forth in Annexes A and
B attached hereto, respectively (the "COMPANY AMENDED AND RESTATED CHARTER AND
BYLAWS"), has been taken by the Board of Directors and the stockholders of the
Company; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the Company's willingness to enter into
this Agreement, Ashland Inc., a stockholder of ACI, has entered into a Voting
Agreement (the "VOTING AGREEMENT") with the Company pursuant to which such
stockholder has agreed, among other things, to vote its shares of Common Stock,
par value $.01 per share, of ACI ("ACI COMMON STOCK") and Class B Preferred
Stock, par value $100 per share, of ACI ("ACI CLASS B PREFERRED STOCK") in favor
of this Agreement and otherwise in favor of the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify either as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), or as a
non-recognition exchange of stock under Section 351 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, a certificate of merger (the "CERTIFICATE OF MERGER") in such
form (including, if required, an agreement of merger) as required in order to
effect the Merger under the relevant provisions of the Delaware General
Corporation Law (the "DGCL") shall be duly prepared, executed and acknowledged
by the appropriate party or parties and thereafter delivered to the Secretary of
State of the State of Delaware for filing as provided in the DGCL as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware or at such time thereafter as is provided in the Certificate of
Merger (the "EFFECTIVE TIME").
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING") will take
place at a time and on a date to be specified by the Company and ACI, which
shall be as soon as practicable after all of the conditions to the Merger set
forth in Article V have been satisfied or waived, subject to the rights of
termination and abandonment hereinafter set forth (the "CLOSING DATE"), at a
location mutually agreeable to the parties.
Section 1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) Merger Sub shall be merged with and into ACI
and the separate existence of Merger Sub will cease, (ii) the Certificate of
Incorporation and Bylaws of Merger Sub as in effect immediately prior to the
Merger shall become the Certificate of Incorporation and Bylaws of ACI as the
surviving corporation of the Merger, and (iii) the directors of Merger Sub at
the Effective Time shall be the directors of ACI as the surviving corporation of
the Merger and hold office as provided in the Bylaws of ACI as in effect
beginning at the Effective Time.
(b) The Merger shall otherwise have the effects specified in applicable
provisions of the DGCL.
(c) At the Effective Time, the directors of the Company shall be as set
forth in Annex C attached hereto.
Section 1.4 HEADQUARTERS. The executive staff of the Company will be
located in St. Louis, Missouri at least until the earlier of (i) two years from
the date of the Effective Time or (ii) such time as various trusts for the
benefit of descendants of H.L. and Lyda Hunt, the beneficiaries of those trusts,
and various corporations owned by trusts for the benefit of descendants of H.L.
and Lyda Hunt (collectively, the "Hunt Entities") own less than 50% of the
Company Common Stock that the Hunt Entities owned at the
2
Effective Time. The operational personnel of the Company will initially be
located in Huntington, West Virginia. Following the Effective Time, the Board of
Directors of the Company will engage a recognized expert in office location to
compile and present to the Board of Directors of the Company detailed
recommendations regarding the location of the principal executive offices of the
Company.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, ACI or Merger Sub:
(a) The issued and outstanding shares of the capital stock of Merger Sub
shall be converted into and become 1,000 fully paid and nonassessable shares of
Common Stock, par value $1.00 per share, of ACI, as the surviving corporation of
the Merger.
(b) Each issued and outstanding share of ACI Common Stock other than
shares of ACI Common Stock issued and held in the treasury of ACI or owned of
record by the Company or any direct or indirect subsidiary of the Company shall
be converted into and shall become one share of Common Stock, par value $.01 per
share, of the Company ("COMPANY COMMON STOCK").
(c) Each issued and outstanding share of ACI Class B Preferred Stock other
than shares of ACI Class B Preferred Stock issued and held in the treasury of
ACI or owned of record by the Company or any direct or indirect subsidiary of
the Company and other than shares of ACI Class B Preferred Stock held by a
holder who has properly exercised and perfected appraisal rights under Section
262 of the DGCL ("ACI CLASS B DISSENTING SHARES") shall be converted into and
become 20,500 shares of Company Common Stock.
(d) Each issued and outstanding share of Class C Preferred Stock, par
value $100 per share, of ACI ("ACI CLASS C PREFERRED STOCK") other than shares
of ACI Class C Preferred Stock issued and held in the treasury of ACI or owned
of record by the Company or any direct or indirect subsidiary of the Company and
other than shares of ACI Class C Preferred Stock held by a holder who has
properly exercised and perfected appraisal rights under Section 262 of the DGCL
("ACI CLASS C DISSENTING SHARES" and, together with ACI Class B Dissenting
Shares, "ACI DISSENTING SHARES") shall be converted into and become 20,500
shares of Company Common Stock.
(e) Each share of ACI Common Stock, ACI Class B Preferred Stock and ACI
Class C Preferred Stock issued and held in the treasury of ACI or owned of
record by the Company or any direct or
3
indirect subsidiary thereof immediately prior to the Effective Time shall
automatically be canceled and retired without any conversion thereof, and no
consideration shall be exchangeable therefor.
(f) All shares of ACI Common Stock, ACI Class B Preferred Stock and ACI
Class C Preferred Stock, when converted into shares of Company Common Stock as
provided in this Section 2.1, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Company Common
Stock to be issued in consideration therefor upon the surrender of such
certificate in accordance with Section 2.2, without interest.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) After the Effective Time, each holder of a certificate formerly
evidencing shares of ACI Common Stock which have been converted pursuant to
Section 2.1(b), each holder of a certificate formerly evidencing shares of ACI
Class B Preferred Stock which have been converted pursuant to Section 2.1(c),
each holder of a certificate formerly evidencing shares of ACI Class C Preferred
Stock which have been converted pursuant to Section 2.1(d), upon surrender of
the same to First Chicago Trust Company of New York or another exchange agent
selected by the Company (the "EXCHANGE AGENT") as provided in Section 2.2(b)
hereof, shall be entitled to receive in exchange therefor (i) a certificate or
certificates representing the number of shares of Company Common Stock into
which such shares of ACI Common Stock, ACI Class B Preferred Stock or ACI Class
C Preferred Stock shall have been so converted. Until so surrendered, each
certificate formerly evidencing shares of ACI Common Stock, ACI Class B
Preferred Stock or ACI Class C Preferred Stock which have been so converted will
be deemed for all corporate purposes of the Company to evidence ownership of the
number of shares of Company Common Stock for which the shares of ACI Common
Stock, ACI Class B Preferred Stock or ACI Class C Preferred Stock formerly
represented thereby were exchanged; provided, however, that until such
certificate is so surrendered, no dividend payable to holders of record of
Company Common Stock as of any date subsequent to the Effective Time shall be
paid to the holder of such certificate in respect of the shares of Company
Common Stock evidenced thereby and such holder shall not be entitled to vote
such shares of Company Common Stock. Upon surrender of a certificate formerly
evidencing shares of ACI Common Stock , ACI Class B Preferred Stock or ACI Class
C Preferred Stock which have been so converted, there shall be paid to the
record holder of the certificates of Company Common Stock issued in exchange
therefor (i) at the time of such surrender, the amount of dividends and any
other distributions theretofore paid with respect to such shares of Company
Common Stock as of any date subsequent to the Effective Time to the extent the
same has not yet been paid to a public
4
official pursuant to abandoned property, escheat or similar laws and (ii) at the
appropriate payment date, the amount of dividends and any other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such shares. No interest
shall be payable with respect to the payment of such dividends.
(b) As soon as practicable after the Effective Time, the Exchange Agent
shall send a notice and a transmittal form to each holder of certificates
formerly evidencing shares of ACI Common Stock, each holder of certificates
formerly evidencing shares of ACI Class B Preferred Stock and each holder of
certificates formerly evidencing shares of ACI Class C Preferred Stock (other
than certificates formerly representing shares to be canceled pursuant to
Section 2.1(e) and certificates representing ACI Dissenting Shares) advising
such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent (who may appoint forwarding agents with the
approval of the Company) such certificates for exchange into certificates
evidencing Company Common Stock. Each holder of certificates theretofore
evidencing shares of ACI Common Stock, ACI Class B Preferred Stock or ACI Class
C Preferred Stock, upon proper surrender thereof to the Exchange Agent together
and in accordance with such transmittal form, shall be entitled to receive in
exchange therefor certificates evidencing Company Common Stock deliverable in
respect of the shares of ACI Common Stock, ACI Class B Preferred Stock or ACI
Class C Preferred Stock theretofore evidenced by the certificates so
surrendered. At any time following one year after the Effective Time, the
Company shall be entitled to require the Exchange Agent to deliver to the
Company any consideration issuable or payable in the Merger which had been made
available to the Exchange Agent by or on behalf of the Company and which has not
been provided or disbursed to holders of certificates representing ACI Common
Stock, ACI Class B Preferred Stock or ACI Class C Preferred Stock, and
thereafter such holders shall be entitled to look to the Company as general
creditors thereof with respect to the consideration issuable or payable in the
Merger upon the due surrender of their certificates. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of certificates theretofore representing shares of ACI Common Stock, ACI
Class B Preferred Stock or ACI Class C Preferred Stock for any amount which may
be required to be paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(c) If any certificate evidencing shares of Company Common Stock is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
issuance of such certificate evidencing shares of Company Common Stock that the
certificates so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper
5
form for transfer, that such transfer otherwise be proper and that the person
requesting such transfer pay to the Exchange Agent any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of the
Exchange Agent that such taxes have been paid or are not required to be paid.
(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Company will issue in
exchange for such lost, stolen or destroyed certificate the certificate
evidencing shares of Company Common Stock deliverable in respect thereof, as
determined in accordance with this Article II. When authorizing such issue of
the certificate for shares of Company Common Stock in exchange therefor, the
Company may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate to give
the Company a bond in such sum as it may direct as indemnity against any claim
that may be made against the Company with respect to the certificate alleged to
have been lost, stolen or destroyed.
(e) Approval and adoption of this Agreement by the stockholders of ACI
shall constitute, as an integral part of the Merger, ratification of the
appointment of, and the reappointment of, said Exchange Agent.
Section 2.3 NO FURTHER TRANSFERS. After the Effective Time, there shall be
no registration of transfers of shares on the stock transfer books of ACI of the
shares of ACI Common Stock, ACI Class B Preferred Stock and ACI Class C
Preferred Stock that were outstanding immediately prior to the Effective Time.
Section 2.4 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, no ACI Dissenting Share shall be converted into or be
exchangeable for the right to receive the consideration therefor provided in
Section 2.1, but the holder thereof shall be entitled to receive such
consideration as shall be determined pursuant to Section 262 of the DGCL with
respect to such share; PROVIDED, HOWEVER, that if any such holder shall have
failed to perfect or shall have effectively withdrawn or otherwise lost such
holder's rights to appraisal under the DGCL, such holder's ACI Dissenting Shares
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the
consideration therefor provided in Section 2.1 without any interest thereon, and
such shares shall no longer be ACI Dissenting Shares.
Section 2.5 WITHHOLDING. The Company or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable or
issuable pursuant to this Agreement to any holder of ACI Common Stock, ACI Class
B Preferred Stock or ACI Class C Preferred Stock such amounts as the Company or
the Exchange
6
Agent is required to deduct and withhold with respect to the making of such
payment or issuance under the Code, or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by the Company or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of ACI Common Stock,
ACI Class B Preferred Stock or ACI Class C Preferred Stock in respect of which
such deduction and withholding was made by the Company or the Exchange Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ACI. When
used in connection with the Company or any of its respective Subsidiaries (as
hereinafter defined) or ACI or any of its respective Subsidiaries, as the case
may be, the term "MATERIAL ADVERSE EFFECT" for all purposes of this Agreement
means any change or effect that individually or when taken together with all
other such changes or effects that have occurred during any relevant time period
prior to the date of determination of the occurrence of the Material Adverse
Effect, (i) is materially adverse or is reasonably likely to be materially
adverse to the business, assets, financial condition or results of operations or
prospects of the Company and its respective Subsidiaries or ACI and its
respective Subsidiaries, respectively, in each case taken as a whole, or (ii)
does materially adversely affect or is reasonably likely to materially adversely
affect the ability of, in the case of the Company, the Company and its
Subsidiaries taken as a whole, or, in the case of ACI, ACI and its Subsidiaries
taken as a whole, as the case may be, to perform its respective obligations
under this Agreement or the Ancillary Documents (as hereinafter defined) or to
consummate the transactions contemplated hereby or thereby. When used herein,
the term "material" for all purposes of this Agreement means material to the
party referred to and its Subsidiaries taken as a whole. Except as set forth in
the disclosure letter (designated as such specifically for purposes of this
Agreement) delivered at or prior to the execution hereof to the Company or ACI,
as the case may be, by ACI and the Company, respectively (each, a "DISCLOSURE
LETTER"), and except (in the case of ACI) as disclosed in reports, proxy
statements or information statements filed by ACI with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Company (except for paragraphs (c), (n) and
(w) below) hereby represents and warrants to ACI, and ACI (except for paragraphs
(b) and (z) below), hereby represents and warrants to the Company, that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. It and each of its
Subsidiaries (both domestic and foreign), is an entity duly formed, validly
existing and in good standing under the laws of its
7
respective jurisdiction of formation and is in good standing as a foreign entity
in each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it or its Subsidiaries require such qualification, except
for such failure to so qualify or be in such good standing which does not
constitute a Material Adverse Effect. As used in this Agreement, the word
"SUBSIDIARY" means, with respect to any party, any corporation or other entity
or organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which are held by such party
or any Subsidiary of such party that do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. It and each of its Subsidiaries has
the requisite corporate power and authority to carry on its respective
businesses as they are now being conducted. It has made available to the Company
(in the case of ACI) and ACI (in the case of the Company) a complete and correct
copy of its Certificate of Incorporation and Bylaws, in each case as amended to
date. In each case, such Certificate of Incorporation and Bylaws so delivered
are in full force and effect.
(b) AUTHORIZED CAPITAL OF THE COMPANY. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock, of which
20,948,463 shares are outstanding. All of the outstanding shares of Company
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. No Company Common Stock has been reserved for issuance, except
for shares of Company Common Stock reserved for issuance pursuant to the Arch
Coal, Inc. 1997 Stock Incentive Plan. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or are convertible into or exercisable or exchangeable for
securities having the right to vote) either alone or with the stockholders of
the Company on any matter. Each of the outstanding shares of capital stock of
each of the Company's corporate Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and, except for shares held by officers and
directors of the Company and its Subsidiaries as nominees and for the benefit of
the Company or any of its Subsidiaries, is owned, either directly or indirectly,
by the Company free and clear of all liens, pledges, security interests, claims
or other encumbrances. Except as set forth above, there are no shares of capital
stock of the Company authorized, issued or outstanding, and there are no
preemptive rights or any outstanding subscriptions, options, warrants, rights,
convertible securities or other agreements or commitments of the Company or any
of its Subsidiaries of any
8
character relating to the issued or unissued capital stock or other securities
of the Company or any of its Subsidiaries.
(c) AUTHORIZED CAPITAL OF ACI. The authorized capital stock of ACI
consists of 44,000,000 shares of ACI Common Stock, of which 13,518,008 shares
were outstanding as of March 31, 1997, 500 shares of convertible Class A
Preferred Stock, of which no shares were outstanding on such date, 250 shares of
ACI Class B Preferred Stock, of which 150 shares were outstanding on such date,
and 250 shares of ACI Class C Preferred Stock, of which 100 shares were
outstanding on such date. Since such date, no additional shares of capital stock
of ACI have been issued except for shares of ACI Common Stock which have been
issued upon conversion of shares of ACI Class B Preferred Stock or ACI Class C
Preferred Stock, pursuant to the exercise of options outstanding as of such date
under the ACI Stock Plans (as defined below), or pursuant to the ACI Dividend
Reinvestment and Stock Purchase Plan (the "DRP"). As of such date, 519,035
shares of ACI Common Stock were issuable upon exercise of outstanding options
under the 1988 Stock Incentive Plan for Key Employees of Ashland Coal, Inc. and
Subsidiaries and 175,000 shares of ACI Common Stock were issuable upon exercise
of outstanding options under the ACI 1995 Stock Incentive Plan (together, the
"ACI STOCK PLANS"). All of the outstanding shares of ACI Common Stock, ACI Class
B Preferred Stock and ACI Class C Preferred Stock have been duly authorized and
are validly issued, fully paid and nonassessable. ACI has no shares of ACI
Common Stock, ACI Class B Preferred Stock or ACI Class C Preferred Stock
reserved for issuance, except that, as of such date, an aggregate of 1,519,035
shares of ACI Common Stock were reserved for issuance pursuant to the ACI Stock
Plans, an aggregate of 5,211,500 shares of ACI Common Stock were reserved for
issuance upon conversion of shares of ACI Class B Preferred Stock and ACI Class
C Preferred Stock, and an aggregate of 137,812.436 shares of ACI Common Stock
were reserved for issuance pursuant to the DRP. ACI has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable or exchangeable for securities
having the right to vote) either alone or with the stockholders of ACI on any
matter. Each of the outstanding shares of capital stock of each of ACI's
corporate Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and, except for shares held by officers and directors of ACI and
its Subsidiaries as nominees and for the benefit of ACI or any of its
Subsidiaries, is owned, either directly or indirectly, by ACI free and clear of
all liens, pledges, security interests, claims or other encumbrances. Except as
set forth above, as of the date hereof there are no shares of capital stock of
ACI authorized, issued and outstanding, and there are no preemptive rights or
any outstanding subscriptions, options, warrants, rights, convertible securities
or other agreements or commitments of ACI or any of its Subsidiaries of any
character relating to the issued or unissued capital stock or other securities
of ACI or any of its Subsidiaries.
9
(d) CORPORATE AUTHORITY. Subject (in the case of ACI) only to approval of
this Agreement and the Merger by the affirmative vote of the holders of at least
85% of the outstanding shares of capital stock of ACI voting thereon and voting
as one class, it has the requisite corporate power and authority and has taken
all corporate action necessary in order to execute and deliver this Agreement
and any other agreement, instrument or certificate (collectively, the "ANCILLARY
DOCUMENTS") to be executed or delivered by it pursuant hereto, and to consummate
the transactions contemplated hereby and thereby. Its Board of Directors,
including the Special Committee thereof formed to consider (among other things)
the Merger (each a "SPECIAL COMMITTEE"), has approved this Agreement and the
Merger and (in the case of the Board of Directors of ACI) has directed that this
Agreement and the Merger be submitted to its stockholders for approval and
adoption in accordance with applicable law and its Certificate of Incorporation
and Bylaws, and, subject to its fiduciary duties under applicable law, has
recommended that its stockholders approve this Agreement and the Merger. This
Agreement and each Ancillary Document to be executed and delivered by it
pursuant hereto is a valid and binding agreement, certificate or instrument, as
the case may be, of it enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and to applicable limitations on the
availability of equitable remedies, including considerations of public policy.
(e) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the filings
provided for in Section 1.1, such filings as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), filings required under the Exchange Act, filings required under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), filings required
under state securities and "Blue Sky" laws, and any filings required to be made
under the laws of any foreign jurisdiction, no notices, reports or other filings
are required to be made by it or its Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
it or its Subsidiaries from, any governmental or regulatory authority, agency,
court, commission or other entity, domestic or foreign ("GOVERNMENTAL ENTITY"),
in connection with the execution and delivery of this Agreement or any of the
Ancillary Documents by it and the consummation by it of the transactions
contemplated hereby and thereby, the failure of which to make or obtain would
constitute a Material Adverse Effect.
(ii) Neither the execution and delivery of this Agreement or any of
the Ancillary Documents by it, nor the consummation by it of any of the
transactions contemplated hereby or thereby, or any action required by
applicable law as a result thereof, will constitute or result in (A) subject (in
the case of ACI only) to receipt of requisite stockholder approval, a breach or
10
violation of, or a default under, its Certificate of Incorporation or Bylaws or
the comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, a default (with or without the giving of notice or the passage of
time) under or the triggering of any payment or other obligations, or the right
of any third party to require a payment or performance of an obligation not
otherwise due, pursuant to, or accelerate vesting under, any existing collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, employee stock ownership, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any current or former
directors, officers or employees of it or any of its Subsidiaries ("BENEFIT
PLANS") or any grant or award made under any of the foregoing, (C) a breach or
violation of, a default under, a change in the rights of any party under, or the
acceleration of or the creation of a lien, pledge, security interest or other
encumbrance on assets (with or without the giving of notice or the lapse of
time) pursuant to, any provision of any note, bond, mortgage, indenture,
agreement, lease, contract, instrument, arrangement or other obligation of it or
any of its Subsidiaries or (D) a breach or violation of any law, rule, ordinance
or regulation or judgment, decree, order, award or governmental or
non-governmental permit, license, franchise or other similar right or
authorization to which it or any of its Subsidiaries is subject except, in the
case of clauses (B), (C) or (D) above, for such breaches, violations, defaults,
accelerations or changes that would not constitute a Material Adverse Effect.
Its Disclosure Letter sets forth, to its knowledge, a list of any consents,
approvals or waivers required under or pursuant to any of the foregoing to be
obtained prior to consummation of the transactions contemplated by this
Agreement. It will use all reasonable efforts to obtain the consents, approvals
or waivers referred to in its Disclosure Letter.
(f) FINANCIAL STATEMENTS. Each of the Company and ACI has delivered to the
other a copy of its consolidated balance sheets at December 31, 1996 and 1995
and its consolidated statements of income, of stockholders' equity and of cash
flows for each of the three years in the period ended December 31, 1996,
together with the related notes thereto and the audit report thereon of Arthur
Andersen LLP (in the case of the Company) and of Ernst & Young LLP (in the case
of ACI). Each of such consolidated balance sheets (including the related notes)
fairly presents the consolidated financial position of the delivering party and
its Subsidiaries as of its date and each of such consolidated statements of
income, of stockholders' equity and of cash flows (including the related notes),
fairly presents the results of operations, stockholders' equity and cash flows
of the delivering party and its Subsidiaries for the periods covered thereby, in
each case in accordance with United States generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein. Each of the Company and ACI will deliver to the other a
11
copy of each of its consolidated balance sheets prepared as of any date
subsequent to December 31, 1996 and its consolidated statements of income, of
stockholders' equity and of cash flows for any period then ended, together with
the related notes thereto, if any. Such consolidated balance sheets will fairly
present the consolidated financial portion of the delivering party and its
Subsidiaries as of their respective dates and such consolidated statements of
income, of stockholders' equity and of cash flows will fairly present the
results of operations, stockholders' equity and cash flows of the delivering
party and its Subsidiaries for the respective periods covered thereby (subject,
in the case of consolidated financial statements for interim periods to normal
year-end audit adjustments which would not be material in amount or effect), in
each case in accordance with United States generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. It and its Subsidiaries do not
have any liabilities, whether accrued or contingent and whether or not required
to be reflected in financial statements in accordance with United States
generally accepted accounting principles, that are material to the financial
condition of it and its Subsidiaries taken as a whole, other than (i)
liabilities (or reserves therefor) reflected in its consolidated balance sheet
as of December 31, 1996 and (ii) normal or recurring liabilities incurred since
December 31, 1996 in the ordinary course of business consistent with past
practices.
(h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, except as
contemplated by this Agreement, it and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than in, the ordinary and usual course of such businesses and there has
not been (i) any change in it or any development or combination of developments
which constitutes a Material Adverse Effect; (ii) any declaration, setting aside
or payment of any dividend or other distribution with respect to its capital
stock except for, in the case of ACI, regular cash dividends per share of ACI
Common Stock of not more than $0.115 per quarter and regular cash dividends on
shares of ACI Class B Preferred Stock and ACI Class C Preferred Stock and, in
the case of the Company, cash dividends on AMC Common Stock in an aggregate
amount not exceeding 108.33% of the aggregate cash dividends paid on ACI Common
Stock, ACI Class B Preferred Stock and ACI Class C Preferred Stock for the same
period; or (iii) any change by it in accounting principles, practices or methods
that is not required by United States generally accepted accounting principles
or by Regulation S-X under the Exchange Act. Since December 31, 1996, except as
provided for herein and other than in the ordinary course consistent with past
practice, there has not been (A) any increase in the compensation payable or
which could become payable by it or its Subsidiaries to their officers or key
employees, or (B) any amendment of any of its or any of its
12
Subsidiary's Benefit Plans which, when taken together with all other such
amendments, would result in an aggregate increase in annual funding liability of
more than $250,000.
(i) LITIGATION. There are no civil, criminal or administrative actions,
suits, claims, hearings, investigations or proceedings pending or, to its
knowledge, threatened, against it or any of its Subsidiaries that have resulted
or are reasonably likely to result in any claims against, or obligations or
liabilities of, it or any of its Subsidiaries, that constitute a Material
Adverse Effect.
(j) TAXES. All federal, state, local and foreign tax returns required to
be filed by or on behalf of it or any of its Subsidiaries have been timely filed
or requests for extension have been timely filed and any such extension shall
have been granted and not have expired other than those returns with respect to
which the failure to timely file or the failure to request an extension of the
time for filing would not have a Material Adverse Effect, and all such filed
returns are complete and accurate in all material respects. Except as currently
being contested in good faith or with respect to which adequate reserves have
been made in its financial statements, all taxes required to be shown on returns
or to be paid with respect to returns for which extensions have been filed by it
have been paid in full or have been recorded on its consolidated balance sheet
and consolidated statement of earnings or income in accordance with United
States generally accepted accounting principles. There is no outstanding audit
examination, deficiency, or refund litigation with respect to any taxes of it or
any of its Subsidiaries that might reasonably be expected to result in a
determination that would constitute a Material Adverse Effect, except for any
such examination, deficiency or litigation as to which adequate reserves are
reflected in its financial statements. All taxes, interest, additions and
penalties due with respect to completed and settled examinations or concluded
litigation relating to it or any of its Subsidiaries have been paid in full or
have been recorded on its balance sheet and consolidated statement of earnings
or income (in accordance with United States generally accepted accounting
principles). Neither it nor any of its Subsidiaries has executed an extension or
waiver of any statute of limitations on the assessment or collection of any tax
due that is currently in effect, the failure to pay which would constitute a
Material Adverse Effect.
(k) EMPLOYEE BENEFITS. (i) True and correct copies of all documents
evidencing its Benefit Plans, including any "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), have been delivered to the Company (in the case of ACI) and
ACI (in the case of the Company).
13
(ii) Except for such incidents of actual or possible noncompliance
which would not constitute a Material Adverse Effect, (A) all of its Benefit
Plans, to the extent subject to ERISA, are in substantial compliance with ERISA,
(B) each Benefit Plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("PENSION PLAN") and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter covering the Tax Reform Act of 1986 from the Internal
Revenue Service or application for such a favorable determination has been made
within the applicable remedial amendment period provided by the Code, and it is
not aware of any circumstances likely to result in either revocation of any such
favorable determination letter or denial of such request, (C) each Benefit Plan
which is a group health plan within the meaning of Section 4980B(g)(2) of the
Code is in substantial compliance with the requirements of Section 4980B of the
Code, and (D) there is no pending or, to its knowledge, threatened litigation,
investigation or audit relating to the Benefit Plans other than claims for
benefits made in the ordinary course. Neither it nor any Subsidiary has engaged
in a transaction with respect to any Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject it or
any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA in an amount which would constitute a
Material Adverse Effect. Neither it nor any of its Subsidiaries has completely
or partially withdrawn from a "multiemployer plan" within the meaning of Section
3(37) of ERISA or has suffered a 70% decline in "contribution base units" within
the meaning of Section 4205(b)(1)(A) of ERISA in any plan year beginning after
1979.
(iii) No material liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by it or any Subsidiary with
respect to any ongoing, frozen or terminated Benefit Plan currently or formerly
maintained by any of them, or any Benefit Plan of any entity which is considered
one employer with it or any of its Subsidiaries under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA AFFILIATE"). No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period ending on the
date hereof.
(iv) All material contributions required to be made by it or any of
its Subsidiaries under the terms of any Benefit Plan have been timely made or
have been accrued pending full and timely payment. No Benefit Plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA. None of it, its
Subsidiaries or its ERISA Affiliates has provided, or is required to provide,
security to any Benefit Plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
14
(v) For all Pension Plans that are "defined benefit plans" within
the meaning of Section 3(35) of ERISA, there has been no material adverse change
in the financial condition of any such Pension Plan since the last day of the
most recent plan year.
(vi) Except as set forth in the documents evidencing its Benefit
Plans, neither it nor its Subsidiaries have any obligations for retiree health
and life benefits.
(vii) The Board of Directors of ACI has taken action to terminate
the Ashland Coal, Inc. Salary Continuation Plan.
(l) ENVIRONMENTAL MATTERS. (i) SURFACE MINING PERMITS. It and each of its
Subsidiaries is in compliance with all of the current permits ("SURFACE MINING
PERMITS") held by it or any such Subsidiary issued pursuant to the Surface
Mining Control and Reclamation Act of 1977, as amended, or pursuant to an
equivalent state regulatory program granted primacy under the provisions of 30
U.S.C. ss. 1253 (collectively, "SURFACE MINING LAWS"), including the mining
plans as respects reclamation, coal processing and related activities as
submitted to the Office of Surface Mining or any state equivalent agency having
jurisdiction over a state program granted primacy under the provisions of 30
U.S.C. ss. 1253 ("SURFACE MINING ENFORCEMENT AGENCY") to obtain the Surface
Mining Permits, the failure to be in compliance with which would constitute a
Material Adverse Effect. Neither it nor any of its Subsidiaries has been
subjected to or is as of the date hereof subject to any bond forfeiture, permit
suspension or revocation proceedings instituted by any Surface Mining
Enforcement Agency and neither it nor any of its Subsidiaries is presently
"permit-blocked" in any state or under the federal Applicant Violator System
which would constitute a Material Adverse Effect.
(ii) USE AND CONDITION OF REAL PROPERTY. Except for valid
grandfathered nonconforming uses, the operations on, conditions of and use of
all of the real property owned, leased, controlled or used by it and each of its
Subsidiaries in its business conform to all, and give rise to no liability
under, any federal, state and local laws, ordinances, requirements, regulations,
licenses, permits, judicial or administrative orders, injunctions, judgements
and decrees relating to zoning, land use, mining, health, safety or the
environment including, without limitation, those pertaining to Hazardous
Materials (as hereinafter defined), subsidence, water drainage, treatment or
impoundment, reclamation and all other restrictions and covenants regarding the
use of any real property owned, leased, controlled or used by it or any of its
Subsidiaries in its business, the failure to conform or to comply with which
would constitute a Material Adverse Effect. The term "HAZARDOUS MATERIALS" shall
mean (A) "hazardous wastes" as defined in the Resource Conservation and Recovery
Act ("RCRA"); (B) "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA");
15
(C) gasoline, petroleum or other hydrocarbon product, by-products, derivatives,
additives or fractions (including used or spent products); (D) "chemical
substances" as defined in the Toxic Substance Control Act ("TSCA"); (E)
asbestos; and (F) any radioactive materials or substances. The real property
owned, leased, controlled or used by it and each of its Subsidiaries in its
business is free of any waste or debris or Hazardous Materials, except as would
not constitute in a Material Adverse Effect.
(iii) RELEASES OF HAZARDOUS MATERIALS. There have been no releases
(as "release" is defined under CERCLA or under any applicable state or local law
or regulation) of Hazardous Materials (A) by it or any of its Subsidiaries, or
(B) by any other person or entity at, on, in, from, under, over or in any way
affecting any real property owned, leased, controlled or used by it or any of
its Subsidiaries in its business, an adjacent site or facility, or any other
real property which may have been owned, leased, controlled or used in the past
by it or any of its Subsidiaries, other than in each case such releases which
would not constitute a Material Adverse Effect.
(iv) PRODUCTION, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS. No
real property owned, leased, controlled or used by it or any of its Subsidiaries
in its business has been or is being used to produce, manufacture, process,
generate, store, treat, dispose of, manage, ship or transport Hazardous
Materials other than as would not constitute a Material Adverse Effect.
(v) SAFETY MATTERS. It and each of its Subsidiaries have complied
with the requirements of the Federal Mine Safety and Health Act of 1977, as
amended, and all applicable similar or related statutes of any state and have
complied with all applicable federal, state or local laws, ordinances,
requirements, rules, regulations, licenses, permits, orders, injunctions,
judgments, or decrees pertaining to mine safety and health, the failure to
comply with which would constitute a Material Adverse Effect.
(m) BROKERS AND FINDERS. Neither it nor any of its officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby, except that, in the case of ACI, ACI has retained Salomon
Brothers Inc as its financial advisor in connection with the transactions
contemplated hereby, the arrangements with which have been disclosed in writing
to the Company prior to the date hereof.
(n) TAKEOVER STATUTE. The Board of Directors of ACI has taken all actions
so that the restrictions contained in Section 203 of the DGCL applicable to a
"business combination" (as defined in Section 203) will not apply to the
execution, delivery or performance of this Agreement or the Voting Agreement or
the
16
consummation of the Merger or the other transactions contemplated by this
Agreement or the Voting Agreement.
(o) TAX MATTERS. Neither it nor any of its Subsidiaries or affiliates has
taken or agreed to take any action that would prevent the Merger from being
treated as either a reorganization within the meaning of Section 368(a) of the
Code or a non-recognition exchange of stock under Section 351 of the Code.
(p) LABOR MATTERS. It has previously furnished to the Company (in the case
of ACI) and ACI (in the case of the Company) true and complete copies of all
labor and collective bargaining agreements to which it or its Subsidiaries is a
party and that are currently in effect, together with all amendments thereto (if
any), other than the National Bituminous Coal Wage Agreement of 1993 and the
related Memorandum of Understanding. There are no strikes or other work
stoppages involving any employees of it or any of its Subsidiaries and there are
no material labor disputes by any labor organization in progress or pending or,
to its knowledge, threatened against it or any of its Subsidiaries that would
constitute a Material Adverse Effect. To its knowledge, it and its Subsidiaries
are in compliance with all applicable laws and regulations in respect of
employment and employment practices, terms and conditions of employment, wages
and hours, occupational safety, health or welfare conditions relating to
premises occupied, and civil rights, non-compliance with which would constitute
a Material Adverse Effect. There are no charges of unfair labor practices
pending before any governmental authority involving or affecting it or any of
its Subsidiaries that would constitute a Material Adverse Effect. It has not
been notified that any customer or supplier (including any supplier of
transportation services) of it or any Subsidiary is involved in or threatened
with or affected by any strike or other labor disturbance or dispute, litigation
or administrative proceeding or judgment, order, injunction, decree or award,
the consequences of which would constitute a Material Adverse Effect.
(q) PROPERTIES. (i) OWNED REAL PROPERTY. It and each of its Subsidiaries
has good and marketable title to all real property owned or purported to be
owned by it or its Subsidiaries which is used or projected to be used by it or
its Subsidiaries or any other person in connection with its mining activities
(hereinafter "FEE PROPERTY"). As used herein "good and marketable title" shall
mean title which is free from encumbrances and any reasonable doubt as to its
validity excepting only those imperfections of title and encumbrances, if any,
which do not constitute a Material Adverse Effect.
(ii) LEASED OR LICENSED REAL PROPERTY. It and each of its
Subsidiaries has good and marketable leasehold title to all the real property
leased or licensed by it in connection with its business (hereinafter "LEASED
PROPERTY") and the Leased Property is
17
not subject to any restrictions on transfer or use, except as created by the
lease or license pursuant to which it or its Subsidiaries holds the Leased
Property or as would not constitute a Material Adverse Effect. As used herein
"good and marketable leasehold title" shall mean a valid and subsisting
leasehold interest which is free from encumbrances and any reasonable doubt as
to its validity excepting only those imperfections of title and encumbrances, if
any, which do not constitute a Material Adverse Effect.
(iii) FACILITIES AND IMPROVEMENTS. It and each of its Subsidiaries
has good and marketable title (as defined in Section 3.1(q)(i)) to loadouts,
tipples, docks and other facilities material to its operations ("FACILITIES")
owned or purported to be owned by it or its Subsidiaries, and good and
marketable leasehold title (as defined in Section 3.1(q)(ii)) to the Facilities
which are leased by it or its Subsidiaries. All of the Facilities, and the use
presently being made of the Fee Property and the Leased Property, comply with
all applicable zoning and building code ordinances and all applicable fire,
environmental, occupational safety and health standards and similar requirements
established by law or regulation, except as would not constitute a Material
Adverse Effect.
(iv) RESERVE INFORMATION. The coal reserve information furnished by
it to the Company (in the case of ACI) and ACI (in the case of the Company), has
been prepared in accordance with prudent and accepted engineering practices and
it is not aware of any inaccuracies in such information as would constitute a
Material Adverse Effect.
(v) EQUIPMENT AND OTHER PERSONALTY. It and each of its Subsidiaries
has good and marketable title (as defined in Section 3.1(q)(i) to the equipment,
machinery, vehicles, rolling stock and other tangible personal property used by
it or its Subsidiaries in its business and material to its operations (the
"PERSONALTY") which is owned by it and good and marketable leasehold title (as
defined in Section 3.1(q)(ii)) to the Personalty used in its business which is
leased.
(r) INTELLECTUAL PROPERTY. It and its Subsidiaries either own, or to its
knowledge, have valid, binding and enforceable rights to use all patents,
trademarks, trade names, service marks, service names, copyrights, other
proprietary intellectual property rights, applications therefor and licenses or
other rights in respect thereof ("INTELLECTUAL PROPERTY") used or held for use
or necessary in connection with the business of it or its Subsidiaries, without
any conflict with the rights of others, except for such conflicts that would not
constitute a Material Adverse Effect. Neither it nor any of its Subsidiaries
has, as of the date hereof, received any notice from any other person pertaining
to or challenging the right of it or its Subsidiaries to
18
use any Intellectual Property or any trade secrets, proprietary information,
inventions, know-how, processes and procedures owned or used by or licensed to
it or any of its Subsidiaries, except with respect to rights the loss of which,
individually or in the aggregate, would not constitute a Material Adverse
Effect. To its knowledge, none of its or its Subsidiaries' personnel is in
violation of any term of any employment contract, patent disclosure agreement or
any other contract or agreement relating to the relationship of any such
employee with it or its Subsidiaries or any other party the result of which
would constitute a Material Adverse Effect.
(s) INSURANCE. It and each of its Subsidiaries has in effect valid and
effective policies of insurance, issued by companies believed by it to be sound
and reputable, insuring it or such Subsidiary (as the case may be) for losses
customarily insured against by others engaged in similar lines of business.
(t) EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS.
(i) Its Disclosure Letter sets forth a true and complete list of all
agreements between it or any of its Subsidiaries and any of its (or any of such
Subsidiary's) officers, directors or employees providing for the terms of his or
her employment with it or any of its Subsidiaries and the terms of his or her
severance or other payments upon termination of such employment (the "EMPLOYMENT
AGREEMENTS"). It has previously furnished to the Company (in the case of ACI)
and ACI (in the case of the Company) true and complete copies of all Employment
Agreements, together with all amendments thereto (if any).
(ii) Except as provided for in this Agreement, neither it nor any of
its Subsidiaries is a party to any oral or written (i) agreement with any
director, officer or employee of it or any of its Subsidiaries (A) the benefits
of which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving it of the nature contemplated by this
Agreement or (B) providing for compensation payments that would not be
deductible by it for federal income tax purposes, or (ii) agreement or Benefit
Plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
(u) CERTAIN TRANSACTIONS. None of the officers or directors of it or of
any of its Subsidiaries and, to its knowledge, none of its employees or the
employees of any of its Subsidiaries, is a party to any material transaction
with it or any of its Subsidiaries (other than for services as an employee,
officer or director), including, without limitation, any contract, agreement
19
or other arrangement (i) providing for the furnishing of services to or by, (ii)
providing for rental of real or personal property to or from, or (iii) otherwise
requiring payments to or from, any such officer, director, affiliate or
employee, any member of the family of any such officer, director or employee or
any corporation, partnership, trust or other entity in which any such officer,
director or employee has a substantial interest (excluding the ownership of not
more than two percent (2%) of the capital stock of a publicly traded
corporation) or which is an affiliate of such officer, director or employee.
(v) INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT. None
of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC in connection with the issuance of shares of Company Common
Stock in the Merger (the "S-4") will, at the time of the filing of the S-4 and
any amendments thereto and at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, and (ii) the proxy statement/prospectus relating to the meeting of
ACI's stockholders to be held in connection with the Merger and the offering of
shares of Company Common Stock to the holders of shares of ACI Common Stock, ACI
Class B Preferred Stock and ACI Class C Preferred Stock (the "PROXY STATEMENT")
will, at the date mailed to the stockholders and at the times of the meeting of
ACI stockholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(w) OPINION OF FINANCIAL ADVISOR. ACI has received the opinion of its
financial advisor referred to in Section 3.1(m), dated the date hereof, to the
effect that, as of such date, each of (i) the consideration to be received by
holders of ACI Common Stock in the Merger and (ii) the consideration to be
received by holders of ACI Preferred Stock in the Merger is fair, from a
financial point of view, to the holders of ACI Common Stock other than Ashland
Inc., a copy of which opinion has been delivered to the Company.
(x) RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment,
injunction, order or decree binding upon it or any of its Subsidiaries that has
or could reasonably be expected to have the effect of prohibiting or impairing
any material business practice of the Company, ACI and their respective
Subsidiaries (in each case, taken as a whole), the acquisition of any material
property by the Company, ACI and their respective Subsidiaries (in each case,
taken as a whole) or the conduct of the business by the
20
Company, ACI and their respective Subsidiaries (in each case, taken as a whole)
as such business is currently conducted by the Company and ACI and their
respective Subsidiaries.
(y) MATERIAL AGREEMENTS. All contracts, agreements, commitments or other
understandings of arrangements to which it or any of its Subsidiaries is a party
or by which it or any of its property is bound or affected, including, but not
limited to, contracts for the future purchase of mining supplies, equipment, or
any other materials or goods (except for contracts for purchases of materials or
goods to meet immediate operating needs), contracts for sales, agency or
brokerage services, contracts for future sale of coal or coal products to any
customer or person, contract mining agreements or other contracts providing for
the operation of facilities or properties, contracts for the washing, tippling
or other processing of coal by or for third parties, or contracts for the
trucking, transportation or transloading of coal, fire, theft, casualty,
liability, Workers' Compensation, black lung and other insurance policies
insuring it or any of its Subsidiaries, loan agreements, indentures, mortgages,
pledges, conditional sale or title retention agreements, security agreements,
equipment obligations, guaranties, leases or lease purchase agreements to which
it or any of its Subsidiaries is a party or by which it is bound, the loss of
rights of it or its Subsidiaries under any of which would result in a Material
Adverse Effect are valid, binding and enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and to applicable
limitations on the availability of equitable remedies, including considerations
of public policy, are in full force and effect, and there exists no default
which, after notice or lapse of time, or both, would result in a right to
accelerate or loss of rights of it or its Subsidiaries thereunder.
(z) CERTAIN COMPANY APPROVALS. The Company and its stockholders have taken
all corporate action necessary such that the Company's Amended and Restated
Charter and Bylaws will be in effect immediately prior to the Effective Time.
The Company, by requisite action of its Board of Directors, and the stockholders
of the Company, by requisite vote, have approved and adopted the Arch Coal, Inc.
1997 Stock Incentive Plan in the form attached hereto as Annex E, and the
Company has taken all corporate action necessary to reserve for issuance a
sufficient number of shares of Company Common Stock for issuance upon exercise
of stock options and other rights subject to grant under such Plan. The Company
has taken all corporate action necessary such that, at the Effective Time, the
Board of Directors of the Company will be comprised only of those persons
identified or referred to as directors of the Company in Annex C attached
hereto.
21
ARTICLE IV
COVENANTS
Section 4.1 STOCKHOLDER APPROVAL. As promptly as practicable following the
execution and delivery of this Agreement, unless this Agreement shall have been
previously terminated in accordance with Article VI, ACI shall submit this
Agreement and the Merger to its stockholders for approval and adoption at a
meeting of its stockholders called for such purpose (the "ACI STOCKHOLDERS
MEETING").
Section 4.2 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
in accordance with Article VI or the Effective Time, each of the Company and ACI
agrees as to itself and its Subsidiaries (except to the extent that the other
shall otherwise consent in writing), to carry on its business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, to the end that its goodwill and ongoing business be substantially
unimpaired at the Effective Time. Except as expressly contemplated by this
Agreement, and not in limitation of the foregoing, during the aforesaid period
each of the Company and ACI shall (and shall cause its Subsidiaries to), except
as approved in writing by the other:
(a) preserve and maintain its corporate existence and all of its rights,
privileges and franchises reasonably necessary or desirable in the normal
conduct of its business;
(b) not acquire any stock or other interest in, nor (except in the
ordinary course of business) purchase any assets of, any corporation,
partnership, association or other business organization or entity or any
division thereof (except any stock or assets distributed to it or any of its
Subsidiaries as part of any bankruptcy or other creditor settlement or pursuant
to a plan of reorganization), nor agree to do any of the foregoing;
(c) not sell, lease, assign, transfer or otherwise dispose of any of its
assets (including, without limitation, patents, trade secrets or licenses), nor
create any mortgage, security interest or other lien on any of its assets,
except as permitted by this Agreement or in the ordinary course of business and
except that it and each of its Subsidiaries may sell or otherwise dispose of any
assets which are held for disposition as of the date hereof or are obsolete;
(d) not incur any indebtedness for borrowed money or any obligation under
any guarantee or "make whole" or capital support agreement or arrangement, other
than as a result of borrowings or drawdowns, the issuance of letters of credit
for its account and the incurrence of interest, letter of credit reimbursement
22
obligations and other obligations incurred in the ordinary course of business
consistent with past practice;
(e) not (i) alter, amend or repeal any provision of its Certificate of
Incorporation or Bylaws, (ii) change the number of its directors (other than as
a result of the death, retirement or resignation of a director), (iii) except in
the ordinary course of its business, form or acquire any Subsidiaries not
existing as of the date of this Agreement, (iv) except in the ordinary course of
its business or as required to obtain any consent, enter into, modify or
terminate any material contracts or agreement to which it is a party or agree to
do so, (v) modify any Employment Agreement, or (vi) declare, pay, commit to or
incur any obligation of any kind for the payment of any bonus, additional salary
or compensation or retirement, termination, welfare or severance benefits
payable or to become payable to any of its employees or such other persons,
except in any such case for obligations incurred in the ordinary course of
business and consistent with past practice and such matters as are required
pursuant to the terms of any existing Employment Agreement or Benefit Plan;
(f) maintain its books, accounts and records in the usual, ordinary and
regular manner and in material compliance with all applicable laws and with its
methods and policies of accounting in effect on the date hereof;
(g) pay and discharge all material federal, state, local and foreign taxes
imposed upon it or upon its income or profits, or upon any property belonging to
it, prior to the date on which penalties attach thereto, except to the extent
that it is currently contesting, in good faith and by proper proceedings, the
payment of such taxes and it maintains appropriate reserves with respect
thereto;
(h) use all reasonable efforts to meet its obligations under all material
contracts, agreements and instruments to which it is a party;
(i) use all reasonable efforts to maintain its business and assets in good
repair, order and condition, reasonable wear and tear excepted, and to maintain
insurance upon such business and assets at least comparable in amount and kind
to that in effect on the date hereof;
(j) use all reasonable efforts to maintain its present relationships and
goodwill with suppliers, brokers, manufacturers, representatives, distributors,
customers and others having business relations with it (PROVIDED that it may
pursue overdue accounts and otherwise exercise lawful remedies in its customary
fashion);
(k) carry on and operate its business in, and only in, the usual, regular
and ordinary course in substantially the same manner
23
as heretofore conducted and use all reasonable efforts to cause its
representations and warranties set forth in this Agreement and in any Ancillary
Document to be true and correct, in all respects, on and as of the Effective
Time, subject only to changes in the ordinary course of business;
(l) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock except (in the case of ACI) for
regular cash dividends not to exceed $0.115 per share of ACI Common Stock per
quarter and regular cash dividends on shares of ACI Class B Preferred Stock and
shares of ACI Class C Common Stock and except (in the case of the Company) for
cash dividends on Company Common Stock in an aggregate amount not to exceed
108.33% of the aggregate cash dividends paid on ACI Common Stock, ACI Class B
Preferred Stock and ACI Class C Preferred Stock after December 31, 1996; or
purchase or redeem any shares of its capital stock or agree to take any such
action;
(m) not authorize or make any capital expenditure otherwise than in the
ordinary course of business;
(n) not increase the number of shares authorized or issued and outstanding
of its capital stock, nor grant or make any pledge, option, warrant, call,
commitment, right or agreement of any character relating to its capital stock,
nor issue or sell any shares of its capital stock or securities convertible into
such capital stock, or any bonds, promissory notes, debentures or other
corporate securities or become obligated so to sell or issue any such securities
or obligations, except, in any case, for the issuance of shares of ACI Common
Stock upon conversion of shares of ACI Class B Preferred Stock or ACI Class C
Preferred Stock and upon exercise of options outstanding under the ACI Stock
Plans.
Section 4.3 ACCESS TO INFORMATION. Upon reasonable notice, each of the
Company and ACI shall (and shall cause its Subsidiaries to) (i) afford to the
officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
earlier of the termination of this Agreement and the Effective Time, to all its
properties, books, contracts, commitments, records, officers, employees,
accountants, correspondence and affairs, and (ii) cause its and their officers
and employees to furnish to the other and its authorized representatives any and
all financial, technical and operating data and other information pertaining to
its businesses and those of its Subsidiaries as the other shall from time to
time reasonably request. Each party will hold any such information subject to
the Confidentiality Agreement, dated July 29, 1996, between the Company and ACI
(the "CONFIDENTIALITY AGREEMENT") in accordance with and subject to the
restrictions contained in the Confidentiality Agreement. No information or
knowledge obtained in any investigation pursuant to this Section 4.3 shall
affect or be deemed to modify any representation or warranty contained in this
24
Agreement or the conditions to the obligations of the parties to consummate the
Merger.
Section 4.4 LEGAL CONDITIONS TO THE MERGER. Each of the parties hereto
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger and will
promptly cooperate with and furnish information to the other in connection with
any such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Merger. Each of the parties hereto will, and will cause its
Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public third
party, required to be obtained or made by any of the parties hereto or any of
their Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
Section 4.5 PUBLIC ANNOUNCEMENTS. Neither the Company nor ACI shall make
any press release or other written public statement or publicly deliver any
formally prepared oral statement concerning the matters covered by this
Agreement without the approval of the other, except as required by law or
applicable regulation, and each shall in all events use its best efforts to
permit such other parties an opportunity to review and comment upon any such
release or statement prior to dissemination.
Section 4.6 TAX-FREE REORGANIZATION. The parties hereto shall each use its
best efforts to cause the Merger to be treated either as a reorganization within
the meaning of Section 368(a) of the Code or as a non-recognition exchange of
stock pursuant to Section 351 of the Code.
Section 4.7 AFFILIATE AGREEMENTS. Within two weeks following the date of
this Agreement, ACI will provide the Company with a list of those persons who
are, in its reasonable judgment after review by its independent counsel,
"affiliates" of ACI within the meaning of Rule 145 promulgated under the
Securities Act ("RULE 145") (each such person who is an "affiliate" within the
meaning of Rule 145 is referred to herein as a "RULE 145 AFFILIATE"). ACI shall
provide the Company with such information and documents as the Company shall
reasonably request for purposes of reviewing such list and shall notify the
Company in writing regarding any change in the identity of its Rule 145
Affiliates prior to the Closing Date. ACI shall use all reasonable efforts to
deliver or cause to be delivered to the Company prior to the Effective Time from
each of its Rule 145 Affiliates, an executed Affiliate Agreement, in
substantially the form attached hereto as Annex D (each an "AFFILIATE
AGREEMENT"). The Company shall be entitled to place appropriate legends on the
certificates evidencing any Company Common Stock to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer
25
instructions to the transfer agent for Company Common Stock, consistent with the
terms of the Affiliate Agreements.
Section 4.8 REPRESENTATIONS, COVENANTS AND CONDITIONS; FURTHER ASSURANCES.
(a) The parties hereto will each use all reasonable efforts (i) to take,
and to cause their respective Subsidiaries to take, all actions necessary to
render accurate as of the Effective Time their respective representations and
warranties contained herein, (ii) to refrain, and to cause their respective
Subsidiaries to refrain, from taking any action which would render any such
representation or warranty inaccurate in any material respect as of such time
and (iii) to perform or cause to be satisfied, and to cause their respective
Subsidiaries to perform or cause to be satisfied, each covenant or condition to
be performed or satisfied by them.
(b) In addition to the provisions of Section 4.4 hereof and in furtherance
thereof, upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement.
Section 4.9 CERTAIN BENEFIT MATTERS. (a) Prior to the Effective Time, ACI
and the Company shall take such actions as may be necessary such that at the
Effective Time there shall be substituted for each option (an "ACI OPTION") to
purchase a share of ACI Common Stock outstanding pursuant to the ACI Stock
Plans, whether or not then exercisable, a fully vested option ("SUBSTITUTE
OPTION") issued pursuant to the Arch Coal, Inc. 1997 Stock Incentive Plan (the
"COMPANY INCENTIVE PLAN") to purchase on the same terms and conditions
(including per share exercise price) a number of shares of Company Common Stock
equal to the number of shares of ACI Common Stock subject to such ACI Option;
provided that Substitute Options held by employees who accept benefits under the
1997 Enhanced Early Retirement Plan referred to in Section 4.9(e), who receive
benefits under the 1997 Enhanced Severance Plan referred to in Section 4.9(f) or
who otherwise retire as provided in the ACI Stock Plans shall be exercisable
throughout the full term thereof and shall not expire or otherwise become
subject to termination or forfeiture. At or prior to the Effective Time, ACI
shall make all necessary arrangements with respect to the applicable ACI Stock
Plans to permit the substitution of Substitute Options for the unexercised ACI
Options by the Company pursuant to this Section 4.9.
26
(b) Effective at the Effective Time, the Company shall issue a Substitute
Option under the Company Incentive Plan in substitution for each ACI Option in
accordance with this Section 4.9. At or prior to the Effective Time, the Company
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of Company Common Stock for delivery upon exercise of the
Substitute Options. As of the Effective Time, the Company shall have filed a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), or another appropriate form with respect
to the shares of Company Common Stock subject to such Substitute Options, and
shall use all reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Substitute Options remain
outstanding.
(c) Prior to the Effective Time, the Company and ACI shall take such
actions as may be necessary such that at the Effective Time the Company shall
assume liability for and shall pay when due all benefits accrued under ACI's
Deferred Compensation Plan for Directors Fees (the "DIRECTORS DC PLAN") and each
phantom stock unit under the Directors DC Plan shall be converted into a phantom
stock unit relating to Company Common Stock pursuant to the Arch Coal, Inc.
Deferred Compensation Plan for Directors Fees, which Plan shall by its terms
provide that each director participating therein shall have a fully
nonforfeitable right to such director's entire account balance, if any,
thereunder.
(d) Prior to the Effective Time, the Company and ACI shall take such
actions as may be necessary such that at the Effective Time each share of ACI
Common Stock converted into Company Common Stock pursuant to Section 2.1 that at
the time of its conversion is held in safekeeping in the DRP will be transferred
at the Effective Time to safekeeping in the Arch Coal, Inc. Dividend
Reinvestment and Stock Purchase Plan (the "COMPANY DRP"). As of the Effective
Time, the Company shall have filed a registration statement on Form S-3 (or any
successor or other appropriate forms) with respect to the Company DRP, and shall
use all reasonable efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) so long as the Company DRP shall remain in effect.
(e) After the Effective Time, the Company shall cause enhanced early
retirement benefits to be offered to (i) the salaried employees at ACI's
Huntington office and (ii) as the Company shall deem appropriate, the salaried
employees of certain ACI Subsidiaries, in any case under the 1997 Enhanced Early
Retirement Plan adopted by the Company's Board of Directors by resolution dated
April 1, 1997.
(f) Any salaried employee of ACI or its Subsidiaries who is
involuntary terminated without cause during the one-year period
27
following the Effective Time, shall receive severance benefits from the Company
pursuant to the 1997 Enhanced Severance Plan adopted by the Company's Board of
Directors by resolution dated April 1, 1997. This amount shall not apply to any
ACI employees covered under the agreements contemplated by Section 4.9(g) of
this Agreement or to employees who elect to participate in the 1997 Enhanced
Early Retirement Plan contemplated by Section 4.9(e) of this Agreement.
(g) As soon as practicable following the execution of this Agreement, ACI
shall offer, and use all reasonable efforts to enter into, At-Will Employee
Retention/Severance Agreements, substantially in the form of agreement approved
by the Board of Directors of the Company by resolution dated April 1, 1997, with
those current ACI employees as set forth in such resolution. At the Effective
Time, the Company shall assume the obligations of ACI under such At-Will
Employee Retention/Severance Agreements.
Section 4.10 INDEMNIFICATION; INSURANCE. (a) ACI shall, and from and after
the Effective Time the Company shall, indemnify, defend and hold harmless each
person who is now, or has been at any time through the date of this Agreement or
who becomes prior to the Effective Time, an officer, director or employee of ACI
or any of its Subsidiaries (the "ACI INDEMNIFIED PARTIES") against (i) all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of ACI or any of its Subsidiaries or is or was a
plan fiduciary serving at the request of ACI or any of its Subsidiaries, whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, or at or after the Effective Time
("ACI INDEMNIFIED LIABILITIES") and (ii) all ACI Indemnified Liabilities based
in whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby to the full extent a
corporation is permitted under the DGCL to indemnify its own directors, officers
and employees (and the Company will pay expenses in advance of the final
disposition of any such action or proceeding to each ACI Indemnified Party to
the full extent permitted by law upon receipt of any undertaking contemplated by
Section 145(e) of the DGCL). Without limiting the foregoing, in the event that
any such claim, action, suit, proceeding or investigation is brought against any
ACI Indemnified Party (whether arising before or after the Effective Time), (i)
the ACI Indemnified Parties may retain counsel satisfactory to them and ACI (or
them and the Company after the Effective Time), (ii) ACI (or after the Effective
Time, the Company) shall pay all reasonable fees and expenses of such counsel
for the ACI Indemnified Parties promptly as statements therefor are received,
and (iii) ACI (or after the Effective Time, the Company)
28
will use all reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither ACI nor the Company shall be liable for any
settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any ACI Indemnified Party wishing
to claim indemnification under this Section 4.10(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify ACI or, after the
Effective Time, the Company (but the failure so to notify shall not relieve ACI
or the Company from any liability which it may have under this Section 4.10(a)
except to the extent such failure prejudices such party), and shall deliver to
ACI (or after the Effective Time, the Company) the undertaking contemplated by
Section 145(e) of the DGCL. The ACI Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more ACI Indemnified
Parties.
(b) For a period of at least five years after the Effective Time, the
Company shall cause to be maintained in effect policies of directors' and
officers' liability insurance of the type maintained by ACI as of the date
hereof in an aggregate coverage amount not less than $20,000,000 and including
coverage with respect to claims arising from facts or events which occurred
before the Effective Time to the extent available; provided, that in no event
shall the Company be required to expend, in order to maintain or procure
insurance coverage pursuant to this Section 4.10(b), any amount per annum in
excess of 200% of the annual amount expended by ACI as of the date hereof.
(c) The provisions of this Section 4.10 are intended to be for the benefit
of, and shall be enforceable by, each ACI Indemnified Party and his or her heirs
and representatives.
Section 4.11 NOTIFICATION OF CERTAIN MATTERS. Each of the Company and ACI
shall give prompt notice to the other, of (i) the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which would be reasonably
likely to cause any representation or warranty of it contained in this Agreement
to be untrue or inaccurate and (ii) any failure of it to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice and FURTHER PROVIDED that failure to give such
notice shall not be treated as a breach of covenant for the purposes of Section
6.1(e)(ii) unless the failure to give such notice results in material prejudice
to the other party.
Section 4.12 NYSE LISTING. The Company shall use its best efforts to cause
the outstanding shares of Company Common Stock, shares of Company Common Stock
issued in the Merger, shares of
29
Company Common Stock issuable upon the exercise of stock options or other rights
under the Company Incentive Plan or pursuant to the Company DRP to be approved
for listing on the New York Stock Exchange (subject, in the case of then
unissued shares to official notice of issuance) not later than the Effective
Time.
ARTICLE V
CONDITIONS TO MERGER
Section 5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved and adopted by the requisite affirmative vote of holders of ACI Common
Stock, ACI Class B Preferred Stock and ACI Class C Preferred Stock entitled to
vote thereon.
(b) GOVERNMENTAL AND REGULATORY CONSENTS. Any waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filings provided for in Section 1.1, all filings
required to be made prior to the Effective Time by the Company, ACI or any of
their respective Subsidiaries with, and all consents, approvals and
authorizations required to be obtained prior to the Effective Time by the
Company, ACI or any of their respective Subsidiaries from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been made or
obtained, except failures in the foregoing that do not have a Material Adverse
Effect as applied to the Company and its Subsidiaries taken as a whole from and
after the Effective Time (a "COMPANY MATERIAL ADVERSE EFFECT").
(c) S-4. The S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger or limiting or restricting in any
material respect the conduct or operation of the businesses of the Company or
ACI after the Merger shall have been issued, nor shall there be any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger which makes the consummation of the Merger illegal.
30
(e) BLUE SKY LAWS. The Company shall have received all state securities or
"Blue Sky" permits and other authorizations, if any, necessary to issue shares
of Company Common Stock pursuant to the Merger.
(f) CONSENTS. Each of the Company and ACI shall have obtained all consents
required to consummate the transactions contemplated by this Agreement,
including the Merger, and all other consents in connection with the Merger and
the other transactions contemplated hereby, the failure to obtain which would
constitute a Company Material Adverse Effect.
Section 5.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACI. The obligation of
ACI to effect the Merger is subject to the satisfaction of each of the following
additional conditions, any of which may be waived in writing exclusively by ACI:
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such date) as of the Closing Date as though made on and as
of the Closing Date, in each case except for changes contemplated by this
Agreement, and ACI shall have received a certificate signed on behalf of the
Company by a duly authorized executive officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and ACI shall have
received a certificate signed on behalf of the Company by a duly authorized
executive officer of the Company to such effect.
(c) TAX OPINION. ACI shall have received a written opinion from
Kirkpatrick & Lockhart LLP, counsel to ACI, to the effect that the Merger will
be treated for federal income tax purposes either as a tax-free reorganization
within the meaning of Section 368(a) of the Code or as a non-recognition
exchange of stock under Section 351 of the Code. In rendering such opinion,
counsel may rely upon representations and certificates of the Company, ACI and
Merger Sub.
(d) NYSE LISTING. The shares of Company Common Stock to be issued in the
Merger, to be issued upon the exercise of Substitute Options and to be issued
pursuant to the Company DRP shall have been approved for listing on the New York
Stock Exchange upon official notice of issuance.
31
(e) COMPANY AMENDED AND RESTATED CHARTER AND BYLAWS. The Company Amended
and Restated Charter and Bylaws shall be in full force and effect.
(f) COMPANY BOARD OF DIRECTORS. The Board of Directors of the Company
shall be comprised only of those persons identified or referred to as directors
of the Company in Annex C attached hereto.
(g) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there shall
have been no changes, occurrences or circumstances involving the business,
results of operations or financial condition or prospects of the Company and any
of its Subsidiaries that constitute a Material Adverse Effect.
Section 5.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES OF ACI. The representations and
warranties of ACI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such date) as of the Closing Date as though made on and as
of the Closing Date, in each case except for changes contemplated by this
Agreement, and the Company shall have received a certificate signed on behalf of
ACI by a duly authorized executive officer of ACI to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF ACI. ACI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of ACI by a duly authorized executive officer of
ACI to such effect.
(c) TAX OPINION. The Company shall have received the opinion of Kelly,
Hart & Hallman, P.C., counsel to the Company, to the effect that the Merger will
be treated for federal income tax purposes either as a tax-free reorganization
within the meaning of Section 368(a) of the Code or as a non-recognition
exchange of stock under Section 351 of the Code. In rendering such opinion,
counsel may rely upon representations and certificates of the Company, ACI and
Merger Sub.
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there shall
have been no changes, occurrences or circumstances involving the business,
results of operations or
32
financial condition or prospects of ACI and any of its Subsidiaries that
constitute a Material Adverse Effect.
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 TERMINATION. This Agreement may be terminated (i) by mutual
consent of the Company and ACI or (ii) at any time prior to the Effective Time
by written notice by the terminating party to the other parties under the
circumstances set forth below:
(a) by either the Company or ACI if the Merger shall not have been
consummated by September 30, 1997 (provided that the right to terminate this
Agreement under this Section 6.1(a) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been a cause
of or has resulted in the failure of the Merger to occur on or before such
date); or
(b) by either the Company or ACI if a court of competent jurisdiction or
other Governmental Entity shall have issued a nonappealable final order, decree
or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger; or
(c) by either the Company or ACI if, at the ACI Stockholders' Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of ACI in favor of this Agreement and the Merger shall not have
been obtained; or
(d) by the Company or ACI, if (i) the other has breached any
representation or warranty contained in this Agreement, and such breach shall
not have been cured prior to the Effective Time (except where such breach would
not have a Material Adverse Effect on the party having made such representation
or warranty and its Subsidiaries taken as a whole and would not constitute a
Company Material Adverse Effect after giving effect to the transactions
contemplated by this Agreement), or (ii) if there has been a material breach of
a material covenant or agreement set forth in this Agreement on the part of the
other, which shall not have been cured within two business days following
receipt by the breaching party of written notice of such breach from the other
party.
Section 6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 6.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of any party
hereto or its officers, directors, stockholders or affiliates arising from the
execution and delivery of this Agreement or its termination.
Section 6.3 FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the transactions
33
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated; provided, however, that the Company shall bear
52% and ACI shall bear 48% of all reasonable fees and expenses incurred in
relation to the preparation and filings of Pre-Merger Notification and Report
forms by stockholders of ACI under the HSR Act with respect to the Merger, and
the printing and filing of the Proxy Statement (including any related
preliminary materials) and the S-4 (including financial statements and exhibits)
and any amendments or supplements thereto.
Section 6.4 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of ACI but, after any such approval, no amendment
shall be made which by law requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto.
Section 6.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto by the other parties hereto
and (iii) waive compliance with any of the agreements or conditions contained
herein for their benefit. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. Except for
agreements set forth herein or therein to be performed, in whole or in part,
after the Effective Time, no agreements set forth herein or therein shall
survive the Effective Time.
Section 7.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered certified mail (return receipt
requested) to the parties
34
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to the Company, to:
Arch Mineral Corporation
Suite 300
CityPlace One
St. Louis, Missouri 63141
Attention: Chief Executive Officer
with a copy to:
Jeffry N. Quinn, Esquire
Arch Mineral Corporation
Suite 300
CityPlace One
St. Louis, Missouri 63141
and to:
F. Richard Bernasek, Esquire
Kelly, Hart & Hallman, P.C.
Suite 2500
201 Main Street
Fort Worth, Texas 76012
(b) if to ACI, to:
Ashland Coal, Inc.
2205 Fifth Street Road
Huntington, West Virginia 25701
Attention: Chief Executive Officer
with a copy to:
Roy F. Layman, Administrative Vice President-
Law and Human Resources and Secretary
Ashland Coal, Inc.
2205 Fifth Street Road
Huntington, West Virginia 25701
and to:
Ronald D. West
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
35
Section 7.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "INCLUDE,"
"INCLUDES" or "INCLUDING" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrases "THE DATE OF THIS
AGREEMENT," "THE DATE HEREOF," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to April 4, 1997.
Section 7.4 KNOWLEDGE. All references in this Agreement or any certificate
to knowledge of the Company or ACI shall mean the knowledge of any executive
officer or executive officers of such party referred to in the S-4 (but only the
executive officer executing any such certificate, in the case of a certificate)
and shall reflect reasonable inquiry by such executive officer or executive
officers in connection specifically with respect to the statement made to such
knowledge.
Section 7.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 7.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
and the documents and instruments referred to herein, including the
Confidentiality Agreement, constitute the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and, except for the provisions of
Sections 4.9 and 4.10, are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 7.7 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
Section 7.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or otherwise transferred in
whole or in part by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
permissible assigns and transferees.
36
Section 7.9 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
Section 7.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part or any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
37
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers, thereunto duly authorized, as of the date first set
forth above.
ARCH MINERAL CORPORATION
By: /S/ STEVEN F. LEER
---------------------
Title: President and Chief
Executive Officer
AMC MERGER CORPORATION
By: /S/ JEFFRY N. QUINN
----------------------
Title: President
ASHLAND COAL, INC.
By: /S/WILLIAM C. PAYNE
----------------------
Title: President
38
ANNEX A
RESTATED CERTIFICATE OF INCORPORATION
OF
ARCH COAL, INC.
FIRST: The name of the Corporation is Arch Coal, Inc. (hereinafter
referred to as the "Corporation").
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
and the name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a Corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is One Hundred Ten Million
(110,000,000), which shall be divided into two classes as follows:
A. One Hundred Million (100,000,000) shares of Common Stock,
the par value of which shares is One Cent ($.01) per share;
and
B. Ten Million (10,000,000) shares of Preferred Stock, the par
value of which shares is One Cent ($.01) per share. The
Corporation's Board of Directors is hereby expressly
authorized to provide by resolution or resolutions from time
to time for the issuance of the Preferred Stock in one or more
series, the shares of each of which series to have such voting
rights and the terms and conditions for the exercise thereof,
provided that the holders of shares of Preferred Stock (1)
will not be entitled to more than the lesser of (x) one vote
per $100 of liquidation value or (y) one vote per share, when
voting as a class with the holders of shares of other capital
stock, and (2) will not be entitled to vote on any matter
separately as a class, except to the extent required by law or
as specified with respect to each series with respect to (x)
any amendment or alteration of the provisions of this
Certificate of Incorporation that would adversely affect the
powers, preferences, or special rights of the applicable
series of Preferred Stock or (y) the failure of the
Corporation to pay dividends on
A-1
any series of Preferred Stock in full for any six quarterly
dividend payment periods, whether or not consecutive, in which
event the number of directors may be increased by two and the
holders of outstanding shares of Preferred Stock then
similarly entitled shall be entitled to elect the two
additional directors until full accumulated dividends on all
such shares of Preferred Stock shall have been paid; and such
designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be permitted
under the General Corporation Law of the State of Delaware and
as shall be stated in the resolution or resolutions providing
for the issuance of such stock adopted by the Board of
Directors pursuant to the authority expressly vested in the
Board of Directors in the Bylaws.
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of such number of
directors as is determined from time to time by resolution adopted by the
affirmative vote of not less than two-thirds of the members of the entire Board
of Directors; provided, however, that in no event shall the number of directors
be less than three (3).
SIXTH: Except as otherwise fixed pursuant to the provisions of Article
FOURTH hereof relating to the voting rights of the holders of any class or
series of Preferred Stock:
1. In the election of directors, a holder of Common Stock who
elects to cumulate votes shall be entitled to as many votes as
equals the number of votes which (absent this provision as to
cumulative voting) such holder would be entitled to cast for the
election of directors with respect to such holder's shares of stock
multiplied by the number of directors to be elected by such holder
in such election, and such holder may cast all of such votes for a
single director or may distribute them among the number to be voted
for, or for any two or more of them, as such holder may see fit.
2. The affirmative vote of the holders of not less than
two-thirds of the shares of Common Stock voting thereon, in the
manner and to the extent permitted in the Bylaws, shall be required
to:
(i) Adopt an agreement or plan of merger or
consolidation;
A-2
(ii) Authorize the sale, lease or exchange of all or
substantially all of the property and assets of the
Corporation;
(iii) Authorize the dissolution of the Corporation or
the distribution of all or substantially all of the assets of
the Corporation to its stockholders; or
(iv) Amend, alter, supplement, repeal or adopt any
provision inconsistent with Article FOURTH, Article FIFTH,
this Article SIXTH or Article EIGHTH.
3. On all other matters, the affirmative vote of a majority of
the shares of Common Stock voting thereon will be required unless a
greater vote is required by law.
4. Voting by the stockholders for the election of
directors or on any other matter need not be by written
ballot.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the Bylaws of the Corporation as therein provided.
EIGHTH: The Corporation hereby expressly elects not to be
governed by Section 203 of the General Corporation Law of the State
of Delaware.
NINTH: No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of such director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the General Corporation Law of the State
of Delaware or (iv) for any transaction from which such director derived an
improper personal benefit. No repeal of or amendment to this Article NINTH shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such repeal or amendment. If the General Corporation
Law of the State of Delaware is amended to authorize corporate action further
eliminating the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as amended.
A-3
TENTH: The Corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation in the manner from time to time
prescribed herein and by the laws of the State of Delaware. All rights herein
conferred are granted subject to this reservation.
A-4
ANNEX B
RESTATED AND AMENDED BYLAWS
OF
ARCH COAL, INC.
ADOPTED: ___________, 1997
B-1
RESTATED AND AMENDED BYLAWS
OF
ARCH COAL, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I - MEETINGS OF STOCKHOLDERS..............................
SECTION 1. Annual Meeting........................................
SECTION 2. Special Meeting.......................................
SECTION 3. Notice of Meetings....................................
SECTION 4. Quorum................................................
SECTION 5. Conduct of Business...................................
SECTION 6. Proxies and Voting....................................
SECTION 7. Waiver of Notice......................................
SECTION 8. Consent of Stockholders in Lieu
of Meeting..................................
SECTION 9. Adjournments..........................................
SECTION 10. Record Date...........................................
SECTION 11. Inspectors of Election................................
SECTION 12. List of Stockholders Entitled to Vote.................
SECTION 13. Advisory Stockholder Votes............................
ARTICLE II - BOARD OF DIRECTORS....................................
SECTION 1. Power of the Directors................................
SECTION 2. Number and Term of Office; Election...................
SECTION 3. Notice of Stockholder Business and
Nominations.................................
SECTION 4. Election..............................................
SECTION 5. Vacancies.............................................
SECTION 6. Resignation...........................................
SECTION 7. Removal...............................................
SECTION 8. Regular Meetings......................................
SECTION 9. Special Meetings......................................
SECTION 10. Notice of Meeting.....................................
SECTION 11. Quorum................................................
SECTION 12. Manner of Acting......................................
SECTION 13. Participation in Meetings by Conference
Telephone...................................
SECTION 14. Action by Consent.....................................
SECTION 15. Organization..........................................
SECTION 16. Executive Committee...................................
SECTION 17. Audit Committee.......................................
SECTION 18. Other Committees......................................
SECTION 19. Waiver of Notices.....................................
SECTION 20. Compensation of Directors.............................
ARTICLE III - OFFICERS..............................................
SECTION 1. Election and Appointment; Term of Office..............
B-2
SECTION 2. Resignation; Removal; Vacancies.......................
SECTION 3. Duties and Functions..................................
ARTICLE IV - NOTES, LOAN AGREEMENTS, CHECKS,
BANK ACCOUNTS, ETC..........................
SECTION 1. Execution of Documents................................
SECTION 2. Deposits..............................................
ARTICLE V - INDEMNIFICATION.......................................
SECTION 1. Indemnification of Directors and
Officers....................................
SECTION 2. Right to Indemnification..............................
SECTION 3. Expenses..............................................
SECTION 4. Other Rights..........................................
ARTICLE VI - SHARES AND THEIR TRANSFER.............................
SECTION 1. Certificates for Shares...............................
SECTION 2. Transfer..............................................
SECTION 3. Record................................................
ARTICLE VII - THIRD PARTIES.........................................
ARTICLE VIII - SEAL..................................................
ARTICLE IX - FISCAL YEAR...........................................
ARTICLE X - AMENDMENTS............................................
ARTICLE XI - NOTICES...............................................
ARTICLE XII - COMPUTATION OF TIME PERIODS...........................
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RESTATED AND AMENDED BYLAWS
OF
ARCH COAL, INC.
ARTICLE I - MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING.
The annual meeting of the stockholders of the Corporation shall be held at
such date, time and place as shall be designated by the Board of Directors and
stated in the notice of the meeting.
SECTION 2. SPECIAL MEETING.
Special meetings of the stockholders may be called at any time by the
President, the Chief Executive Officer, any two or more members of the Board of
Directors or holders of 10% or more of the outstanding capital stock of the
Corporation entitled generally to vote for the election of Directors to be held
at such date, time and place within the United States as shall be designated in
the notice thereof.
SECTION 3. NOTICE OF MEETINGS.
Written notice of the place, date and time of each meeting of the
stockholders shall be given in the manner provided in Article XI, not less than
ten nor more than sixty days before the date on which the meeting is to be held,
to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the General Corporation Law of Delaware). The notice of any
special meeting shall state the purpose or purposes for which the special
meeting is called and shall indicate that such notice is being issued upon the
request of the person or persons calling the meeting.
Upon the written request of the person or persons calling any special
meeting, notice of such meeting shall be given by the Secretary of the
Corporation on behalf of such person or persons. Every request to the Secretary
of the Corporation for the giving of notice of a special meeting of stockholders
shall state the purpose or purposes of such meeting.
If mailed, such notice shall be deemed to be given when deposited in the
United States mail, postage prepaid, directed to the stockholder at such
stockholder's address as it appears on the records of the Corporation.
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SECTION 4. QUORUM.
Subject to the provisions required by law, the Restated Certificate of
Incorporation, as amended from time to time (hereafter the "Certificate of
Incorporation") and these Bylaws in respect of the vote required for a specified
action, at any meeting of the stockholders, the holders of a majority of the
outstanding shares of stock entitled to vote, present in person or by proxy,
shall constitute a quorum for the transaction of business.
Notwithstanding the foregoing, if a quorum shall fail to attend any
meeting, the presiding person of the meeting or the holders of a majority of the
stock, present in person or by proxy, may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. If the adjournment is for more
than 30 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 5. CONDUCT OF BUSINESS.
The Board of Directors of the Corporation may adopt by resolution such
rules and regulations for the conduct of the meeting of stockholders as it shall
deem appropriate. Except to the extent inconsistent with such rules and
regulations as adopted by the Board of Directors, the chairman of any meeting of
stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the Board of Directors or
prescribed by the chairman of the meeting, may include, without limitation, the
following: (i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the meeting and the
safety of those present; (iii) limitations on attendance at or participation in
the meeting to stockholders of record of the Corporation, their duly authorized
and constituted proxies or such other persons as the chairman of the meeting
shall determine; (iv) restrictions on entry to the meeting after the time fixed
for the commencement thereof; and (v) limitations on the time allotted to
questions or comments by participants. Unless and to the extent determined by
the Board of Directors or the chairman of the meeting, meetings of stockholders
shall not be required to be held in accordance with the rules of parliamentary
procedure.
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SECTION 6. PROXIES AND VOTING.
Except as may be otherwise provided by law, the Certificate of
Incorporation or these Bylaws, (i) each stockholder of record present in person
or by proxy shall be entitled, at every stockholders' meeting, to one vote for
each share of capital stock having voting power standing in the name of such
stockholder on the books of the Corporation, and (ii) the affirmative vote of a
majority of the shares voting thereon at a duly organized meeting and entitled
to vote on the subject matter shall be the act of the stockholders.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent to corporate action in writing without a meeting may authorize
another person or persons to act for such person by proxy. Every proxy must be
in writing and signed by the stockholder or such stockholder's attorney-in-fact.
No proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. A duly executed proxy shall be
irrevocable for the period stated therein if the proxy states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power.
SECTION 7. WAIVER OF NOTICE.
Notices of meetings need not be given to any stockholder who submits a
written waiver of notice, signed in person or by proxy, whether before or after
the meeting. The purpose or purposes of any meeting of stockholders shall be
specified in any such waiver of notice. Attendance of a stockholder at a
meeting, in person or by proxy, shall constitute a waiver of notice of such
meeting, except when the stockholder attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made
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to the Corporation's registered office shall be made by hand or by certified or
registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the date the
earliest dated consent is delivered to the Corporation, a written consent or
consents signed by a sufficient number of holders to take action are delivered
to the Corporation in the manner prescribed in this Section 8.
SECTION 9. ADJOURNMENTS.
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
SECTION 10. RECORD DATE.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty nor less than ten days before the date of any meeting of stockholders, nor
more than sixty days prior to the time for such other action as hereinbefore
described; provided, however, that if no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held, and, for determining stockholders entitled to receive payment of any
dividend or other distribution or allotment of rights or to exercise any rights
of change, conversion or exchange of stock or for any other purpose, the record
date shall be at the close of business on the day on which the Board of
Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any
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adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall be not more than ten days after the date upon which the
resolution fixing the record date is adopted. If no record date has been fixed
by the Board of Directors and no prior action by the Board of Directors is
required by law, the record date shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in the manner prescribed by Article I, Section 8
hereof. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by law with respect to the proposed
action by written consent of the stockholders, the record date for determining
stockholders entitled to consent to corporate action in writing shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
SECTION 11. INSPECTORS OF ELECTION.
The Corporation may, and shall if required by law, in advance of any
meeting of stockholders, appoint one or more inspectors of election, who may be
employees of the Corporation, to act at the meeting or any adjournment thereof
and to make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. In
the event that no inspector so appointed or designated is able to act at a
meeting of stockholders, the person presiding at the meeting shall appoint one
or more inspectors to act at the meeting. Each inspector, before entering upon
the discharge of such inspector's duties, shall take and sign an oath to execute
faithfully the duties of inspector with strict impartiality and according to the
best of such inspector's ability. The inspector or inspectors so appointed or
designated shall (i) ascertain the number of shares of capital stock of the
Corporation outstanding and the voting power of each such share, (ii) determine
the shares of capital stock of the Corporation represented at the meeting and
the validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares of capital stock of the Corporation
represented at the meeting and such inspectors' count of all votes and ballots.
Such certification and report shall specify such other information as may be
required by law. In determining the validity and counting of proxies and ballots
cast at any meeting of stockholders of the Corporation, the inspectors may
consider such information as is
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permitted by applicable law. No person who is a candidate for an office at an
election may serve as an inspector at such election.
SECTION 12. LIST OF STOCKHOLDERS ENTITLED TO VOTE.
The Secretary of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof and may be inspected by any
stockholder who is present. Upon the willful neglect or refusal of the Directors
to produce such a list at any meeting for the election of Directors, they shall
be ineligible for election to any office at such meeting. Except as otherwise
provided by law, the stock ledger shall be the only evidence as to who are the
stockholders entitled to vote in person or by proxy at any meeting of
stockholders or to examine the stock ledger, the list of stockholders or the
books of the Corporation.
SECTION 13. ADVISORY STOCKHOLDER VOTES.
In order for stockholders to adopt or approve any precatory proposal
submitted to them for the purpose of requesting the Board of Directors to take
certain actions, the affirmative vote of the holders of shares of capital stock
having at least a majority of the vote which could be cast by the holders of all
shares of capital stock entitled to vote thereupon, voting as a single class,
must be voted in favor of the proposal.
ARTICLE II - BOARD OF DIRECTORS
SECTION 1. POWER OF THE DIRECTORS.
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors, which may exercise all the powers of
the Corporation and do all lawful acts and things which are not conferred upon
or reserved to the stockholders by law or by the Certificate of Incorporation.
SECTION 2. NUMBER AND TERM OF OFFICE; ELECTION.
Subject to the provisions of the Certificate of Incorporation
and the restriction that the number of Directors shall not be less
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than the number required by the laws of the State of Delaware, the number of
Directors shall be fixed, from time to time, by a resolution adopted by the
affirmative vote of not less than two-thirds of the members of the entire Board
of Directors.
Each Director, including any Director elected to fill a vacancy as set
forth in Section 5 of this Article II, shall hold office until the earlier of
such Director's death, resignation, removal in the manner hereinafter provided,
or the election and qualification of such Director's successor.
SECTION 3. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
A. Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting delivered pursuant to Section 3 of Article I
of these Bylaws, (b) by or at the direction of the Chairman or the Board of
Directors, (c) with respect to those persons to be elected by any class or
classes of Preferred Stock of the Corporation, by any holder of such class or
classes of Preferred Stock, or (d) other than with respect to those persons to
be elected by any class or classes of Preferred Stock of the Corporation, by any
stockholder of the Corporation who is entitled to vote at the meeting who
complied with the procedures set forth in this Section 3 and who was a
stockholder of record at the time such notice is delivered to the Secretary of
the Corporation.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (d) of subparagraph (A)
(1) of this Section 3, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary of the Corporation at its principal
executive offices not less than seventy days nor more than ninety days prior to
the first anniversary of the preceding year's Annual Meeting; provided, however,
that in the event that the date of the Annual Meeting is advanced by more than
twenty days, or delayed by more than seventy days, from such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier than the
ninetieth day prior to such Annual Meeting and not later than the close of
business on the later of the seventieth day prior to such Annual Meeting or the
tenth day following the day on which public announcement of the date of such
meeting is first made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
Director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or is otherwise
required, in each case
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pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including such person's written consent to being named in
the proxy statement as a nominee and to serving as a Director if elected; (b) as
to any other business that the stockholder proposes to bring before the meeting,
a brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial owner, if any,
on whose behalf the proposal is made; (c) as to the stockholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner and (ii) the class and
number of shares of the Corporation which are owned beneficially and of record
by such stockholder and such beneficial owner; and (d) a statement as to whether
or not the stockholder will solicit proxies in support of such stockholder's
nominee or proposal.
(3) Notwithstanding anything in the second sentence of subparagraph
(A) (2) of this Section 3 to the contrary, in the event that the number of
Directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
Director or specifying the size of the increased Board of Directors made by the
Corporation at least eighty days prior to the first anniversary of the preceding
year's Annual Meeting, a stockholder's notice required by this Section 3 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary of
the Corporation at its principal executive offices not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
B. Special Meetings of Stockholders. Only such business shall be conducted
at a Special Meeting of stockholders as shall have been brought before the
meeting pursuant to the Corporation's notice of meeting pursuant to Section 3 of
Article I of these Bylaws. Nominations of persons for election to the Board of
Directors may be made at a Special Meeting of stockholders at which Directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Section 3 and who is a stockholder of record at the
time such notice is delivered to the Secretary of the Corporation. Nominations
by stockholders of persons for election to the Board of Directors may be made at
such a Special Meeting of stockholders if the stockholder's notice as required
by subparagraph (A) (2) of this Section 3 shall be delivered to the Secretary of
the Corporation at its principal executive offices not earlier than the
ninetieth day prior to such Special Meeting and not later than the
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close of business on the later of the seventieth day prior to such Special
Meeting or the tenth day following the day on which public announcement is first
made of the date of the Special Meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting.
C. General.
(1) Only persons who are nominated in accordance with the procedures
set forth in this Section 3 shall be eligible to serve as Directors and only
such business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 3. Except as otherwise provided by law, the Certificate of Incorporation
or these Bylaws, the Chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this Section 3
and, if any proposed nomination or business is not in compliance with this
Section 3, to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this Section 3, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 3, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 3. Nothing in this Section 3 shall be deemed to affect any
rights of stockholders to request inclusion of or the obligation of the
Corporation to include proposals in the Corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act.
SECTION 4. ELECTION.
Except as otherwise provided in the Certificate of Incorporation, at each
meeting of the stockholders for the election of Directors at which a quorum is
present, the persons receiving the greatest number of votes, up to the number of
Directors to be elected, shall be the Directors.
SECTION 5. VACANCIES.
Any vacancy on the Board of Directors (other than a vacancy caused by the
death, resignation or removal of any Director elected by the holders of any
class or classes of Preferred Stock, voting separately as a class or classes, as
the case may be) or newly
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created directorship shall be filled by a majority of the Directors then in
office, though less than a quorum, or by the sole remaining Director.
SECTION 6. RESIGNATION.
Any Director may resign at any time by giving written notice of
resignation to the Board of Directors, the Chairman of the Board, the President
or the Secretary of the Corporation. Any such resignation shall take effect at
the time specified therein, or, if the time when it shall become effective shall
not be specified therein, then it shall take effect when accepted by action of
the Board of Directors. Except as aforesaid, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 7. REMOVAL.
Any or all of the Directors (other than the Directors elected by the
holders of any class or classes of Preferred Stock of the Corporation, voting
separately as a class or classes, as the case may be) may be removed by the
stockholders, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote at an election of Directors, provided that if
less than all the Directors are to be removed, no one of the Directors may be
removed without cause if the votes cast against such Director's removal would be
sufficient to elect such Director if then cumulatively voted at an election of
the entire Board.
SECTION 8. REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall be established
by the Board of Directors and publicized among all Directors.
SECTION 9. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by any two of the
Directors, the Chairman of the Board, the President or Chief Executive Officer
and shall be held at such place within the United States, on such date and at
such time as the person or persons calling the meeting shall fix.
SECTION 10. NOTICE OF MEETING.
Notice of the date, place, time and purpose or purposes of each meeting of
the Directors shall be given to each Director in the manner provided in Article
XI at such Director's usual place of business at least three business days
before the day on which the meeting is to be held. Upon written request of the
person or persons calling any special meeting, notice of such meeting shall be
given by the Secretary of the Corporation on behalf of such
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person or persons and shall indicate the person or persons calling
the meeting.
SECTION 11. QUORUM.
At all meetings of the Board of Directors, the presence of a majority of
the whole Board of Directors fixed by or in the manner provided in these Bylaws
shall constitute a quorum for the transaction of business.
SECTION 12. MANNER OF ACTING.
A. Except as otherwise provided in subsection B of this Section 12, the
vote of a majority of the Directors present at a meeting at which a quorum is
present shall be necessary for the passage of any resolution or act of the Board
of Directors.
B. The vote of not less than two-thirds of the entire Board of Directors
shall be necessary for the passage of any resolution or act of the Board of
Directors in respect of the following:
(i) the declaration of a dividend or distribution on any capital
stock of the Corporation not otherwise entitled to such dividend or distribution
pursuant to the terms thereof;
(ii) the approval of the Corporation's annual budget or operating
plan and any material modification thereof, including any capital expenditure in
excess of Ten Million Dollars ($10,000,000) not provided for in the annual
budget;
(iii) the election or removal of the Chief Executive Officer,
President, Chief Financial Officer (if any) or Chief Operating Officer (if any)
of the Corporation;
(iv) except for the issuance of Common Stock pursuant to a
compensation plan approved by the Board of Directors, the issuance of more than
One Million (1,000,000) shares of Common Stock or any shares of Preferred Stock
in any one transaction or a series of related transactions;
(v) the adoption of a share purchase rights plan of a nature
commonly referred to as a "poison pill";
(vi) the repurchase or redemption of any capital stock of the
Corporation;
(vii) an establishment or change in the number of Directors of the
Corporation;
(viii) the appointment of members to or dissolution of the Executive
Committee; or
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(ix) the amendment of this Section 12 of these Bylaws.
SECTION 13. PARTICIPATION IN MEETINGS BY CONFERENCE
TELEPHONE.
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear and speak to each other, and such
participation shall constitute the presence in person at such meeting.
SECTION 14. ACTION BY CONSENT.
Any action required or permitted to be taken at any meeting of the Board
of Directors, or of any committee thereof, may be taken without a meeting, prior
notice, or vote if a consent in writing, which writing may be in counterparts
which may bear telecommunicated facsimile signatures, setting forth the action
so taken, is signed by all members of the Board or committee, and such writing
is filed with the minutes of the proceedings of the Board or committee.
SECTION 15. ORGANIZATION.
Meetings of the Board of Directors shall be presided over by the Chairman
of the Board or in the Chairman's absence by the Chief Executive Officer, or in
their absence by a chairman chosen at the meeting. The Secretary of the
Corporation shall act as secretary of the meeting, but in the Secretary's
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
SECTION 16. EXECUTIVE COMMITTEE.
The Board of Directors may establish an Executive Committee to consist of
such Directors as the Board shall from time to time designate. The Executive
Committee shall to the extent permitted by law have and may exercise such powers
and authority as the Board shall from time to time determine. The Executive
Committee shall record minutes of each of its meetings and shall submit the same
to the Board at the first meeting of the Board held subsequent to such meeting
of the Executive Committee. At all meetings of the Executive Committee, a
majority of the total number of the members thereof shall constitute a quorum
for the transaction of business. A majority vote of the members of the Executive
Committee who are present shall be the act of the Executive Committee.
SECTION 17. AUDIT COMMITTEE.
The Board may by resolution designate an Audit Committee consisting of
three or more Directors. Vacancies on the Audit Committee may be filled by the
Board at any time and any member of
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the Audit Committee shall be subject to removal, with or without cause, at any
time by resolution passed by the Board.
The Audit Committee shall review with the independent public accountants
for the Corporation the scope of their examination, receive copies of the
reports of such accountants, meet with representatives of such accountants for
the purpose of reviewing and considering questions relating to such accountants'
examination and such reports, review, either directly or through such
accountants, the internal accounting and auditing procedures of the Corporation,
report the results of the foregoing to the Board and act upon such other matters
as may be referred to it by the Board.
At each meeting of the Board the Audit Committee shall make a report of
all action taken by it since its last report to the Board.
The Audit Committee shall meet as often as may be deemed necessary and
expedient at such times and places as shall be determined by the members of the
Audit Committee. A majority of the members of the Audit Committee shall
constitute a quorum. In the absence of the Chairman of the Audit Committee, the
Audit Committee may appoint any member to preside at meetings thereof.
SECTION 18. OTHER COMMITTEES.
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more other committees, each of which shall consist
of one or more Directors. The Board may designate one or more Directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Each such committee shall have and may
exercise such powers and authority of the Board of Directors in the management
of the business and affairs of the Corporation as the Board shall provide in the
resolution designating such committee, except as otherwise provided by statute.
SECTION 19. WAIVER OF NOTICES.
Notice of a meeting need not be given to any Director who submits a
written waiver of notice signed by such Director, including a telecommunicated
facsimile waiver, whether before or after the meeting. The purpose or purposes
of any meeting of the Directors must be specified in any such waiver of notice.
Attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except when the Director attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
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SECTION 20. COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, the Board of Directors shall have the authority to fix the compensation
of Directors. The Directors may be paid their expenses, if any, for attendance
at each meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
Director, or both. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE III - OFFICERS
SECTION 1. ELECTION AND APPOINTMENT; TERM OF OFFICE.
The officers of the Corporation shall be a Chairman of the Board, a
President, one or more Vice Presidents as determined from time to time by the
Board, a Treasurer, a Secretary and a Controller. Subject to Article II, Section
12 of these Bylaws, the Board shall designate either the Chairman of the Board
or the President as the Chief Executive Officer of the Corporation. Subject to
Article II, Section 12 of these Bylaws, each such officer shall be elected by
the Board at its annual meeting to serve at the will and pleasure of the Board
and shall hold office until the next annual meeting of the Board and until such
officer's successor is elected or until such officer's earlier death,
resignation or removal in the manner hereinafter provided. The Board may elect
or appoint such other officers (including one or more Assistant Treasurers and
one or more Assistant Secretaries), and subject to the provisions of Article II,
Section 12 of these Bylaws, a Chief Financial Officer or Chief Operating
Officer, as it deems necessary, who shall have such authority and shall perform
such duties as the Board may prescribe. If additional officers are elected or
appointed during the year, each of them shall hold office until the next annual
meeting of the Board at which officers are regularly elected or appointed and
until such officer's successor is elected or appointed or until such officer's
earlier death, resignation or removal in the manner hereinafter provided. To the
extent the Board shall deem appropriate, more than one of the offices authorized
herein may be held by the same person.
SECTION 2. RESIGNATION; REMOVAL; VACANCIES.
A. Any officer may resign at any time by giving written notice to the
Chief Executive Officer or the Secretary of the Corporation, and such
resignation shall take effect upon receipt unless specified therein to be
effective at some other time
B-17
(subject always to the provisions of Section 2.B). No acceptance of any such
resignation shall be necessary to make it effective.
B. Subject to the provisions of Article II, Section 12 of these Bylaws,
all officers and agents elected or appointed by the Board shall be subject to
removal at any time by the Board with or without cause.
C. A vacancy in any office may be filled for the unexpired
portion of the term in the same manner as provided for election or
appointment to such office.
SECTION 3. DUTIES AND FUNCTIONS.
A. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and directors and shall
perform such other duties as the Board may prescribe.
B. CHIEF EXECUTIVE OFFICER. In the case of absence, refusal to serve or
incapacity of the Chairman of the Board (if the Chief Executive Officer shall
not be designated as such), the Chief Executive Officer shall perform the duties
of such office. The Chief Executive Officer may assign such duties to other
officers of the Corporation as the Chief Executive Officer deems appropriate.
C. PRESIDENT. In the case of absence, refusal to serve or incapacity of
the Chief Executive Officer (if the President shall not be designated as such),
the President shall perform the duties of such office. If the President shall
not be designated as the Chief Executive Officer by the Board pursuant to
Section 1 of this Article III, the President shall act under the control of the
Chief Executive Officer.
D. CHIEF OPERATING OFFICER. In the event the President is not designated
as Chief Executive Officer pursuant to Section 1, the President may, in the
Board's discretion, be designated as the Chief Operating Officer of the
Corporation and shall have such powers and duties as the Board, or Chief
Executive Officer, may prescribe.
E. VICE PRESIDENTS. The Vice Presidents shall have such powers and perform
such duties as the Board or the Chief Executive Officer may prescribe. One or
more Vice Presidents may be given and shall use as part of the title such other
designations, including, without limitation, the designations "Executive Vice
President" and "Senior Vice President," as the Board or the Chief Executive
Officer may designate from time to time. One of the Vice Presidents may also be
given and shall use as part of the title such other designations as may be
descriptive of their responsibilities, including, without limitation,
designations such as "Chief Financial Officer" or "General Counsel," as the
Board or the Chief Executive Officer may designate from time to time. In
B-18
the case of absence, refusal to serve or incapacity of the Chairman of the Board
and the President, the powers and duties of the Chief Executive Officer shall be
vested in and performed by such Vice Presidents as have the designation
"Executive Vice President," in the order of their seniority or as otherwise
established by action of the Board from time to time, or by such other officer
as the Board or the Chief Executive Officer shall have most recently designated
for that purpose in a writing filed with the Secretary of the Corporation.
F. TREASURER. The Treasurer shall act under the direction of the Chief
Financial Officer of the Corporation, or, if none, the Chief Executive Officer.
The Treasurer shall have charge and custody of and be responsible for all funds
and securities of the Corporation and the deposit thereof in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
or by the Treasurer pursuant hereto. The Treasurer shall be authorized at any
time, and from time to time, by a writing countersigned by such officer or
officers as may be authorized by the Board: (i) to open bank accounts in the
name of the Corporation in any bank or trust company for the deposit therein of
any funds, drafts, checks or other orders for the payment of money to the
Corporation; (ii) to authorize and empower any representative or agent of the
Corporation to draw upon or sign for the Corporation either manually or by the
use of facsimile signature, any and all checks, drafts or other orders for the
payment of money against such bank accounts which any such bank or trust company
may pay without further inquiry; and (iii) to sign, in the name of the
Corporation, certificates representing the stock of the Corporation.
G. SECRETARY. The Secretary shall act under the direction and control of
the Board. The Secretary shall attend all meetings of the Board, the Executive
Committee and the stockholders and record the proceedings in a book to be kept
for that purpose and shall perform like duties for committees designated by the
Board. The Secretary shall duly give or cause to be given, in accordance with
the provisions of these Bylaws or as required by law, notice of all meetings of
the stockholders and special meetings of the Board. The Secretary shall be the
custodian of the records and the corporate seal or seals of the Corporation and
shall cause the corporate seal to be affixed to all documents, the execution of
which, on behalf of the Corporation, under its seal, is duly authorized and when
so affixed may attest to same. The Secretary may sign, with the Chief Executive
Officer, the President or a Vice President, certificates of stock of the
Corporation.
H. CONTROLLER. The Controller shall act under the direction of the Chief
Financial Officer of the Corporation, or, if none, the Chief Executive Officer.
Subject to the direction of the Chief Financial Officer of the Corporation or,
if none, the Chief Executive Officer, the Controller shall have charge of the
B-19
accounting records of the Corporation, shall keep full and accurate accounts of
all receipts and disbursements in books belonging to the Corporation, shall
maintain adequate internal control of the Corporation's accounts, and may
perform such other duties as may be prescribed by the Chief Financial Officer of
the Corporation or, if none, the Chief Executive Officer, and by the Board.
ARTICLE IV - NOTES, LOAN AGREEMENTS,
CHECKS, BANK ACCOUNTS, ETC.
SECTION 1. EXECUTION OF DOCUMENTS.
The Board shall from time to time by resolution authorize the officers,
employees and agents of the Corporation to execute and deliver checks and other
orders for the payment of money and notes, bonds and other securities, together
with mortgages, loan agreements and other instruments securing or relating
thereto and other contracts and commitments for and in the name of the
Corporation and may authorize such officers, employees and agents to delegate
such power (including authority to redelegate) by written instrument to other
officers, employees or agents of the Corporation.
SECTION 2. DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation or otherwise as the Board or
any officer of the Corporation to whom power in that respect shall have been
delegated by the Board shall select.
ARTICLE V - INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A. Every person who is or was a Director or officer of the Corporation, or
of any other corporation or entity which such person served as such at the
request of the Corporation shall in accordance with Section 2 of this Article V
be indemnified by the corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with any claim, action, suit or proceeding (other
than any claim, action, suit or proceeding brought by or in the right of the
Corporation), civil or criminal, administrative or investigative, or in
connection with an appeal relating thereto, in which such person may be
involved, as a party or otherwise, by reason of such person being or having been
a Director or officer of the Corporation or such other corporation or entity, or
by reason of any action taken or not taken in such capacity as such Director or
officer, whether or not such person
B-20
continues to be such at the time such liability or expense shall have been
incurred, provided that such person acted, in good faith, and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such conduct was unlawful. The termination of
any claim, action, suit or proceeding, civil or criminal, by judgment, order,
settlement (whether with or without court approval), conviction or upon a plea
of guilty or nolo contendere, or its equivalent shall not create a presumption
that a Director or officer did not meet the standards of conduct set forth in
this Section l.A.
B. Every person who is or was a Director or officer of the Corporation, or
of any other corporation or entity which such person served as such at the
request of the Corporation, shall in accordance with Section 2 of Article V be
indemnified by the Corporation against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of any claim, action, suit or proceeding brought by or in the
right of the Corporation, or in connection with an appeal or otherwise, by
reason of such person being or having been a Director or officer of the
Corporation or such other corporation or entity, or by reason of any action
taken or not taken in such person's capacity as such Director or officer,
whether or not such person continues to be such at the time such expense shall
have been incurred, provided that such person acted in good faith, and in a
manner such person reasonably believed to be the best interests of the
Corporation, and provided further, that no indemnification shall be made in
respect of any claim, action, suit or proceeding as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the extent
that the court in which such claim, action, suit or proceeding was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
SECTION 2. RIGHT TO INDEMNIFICATION.
Every person referred to in Section 1 or Section 2 of this Article V who
has been wholly successful, on the merits or otherwise, with respect to any
claim, action, suit or proceeding of the character described in said Sections
shall be entitled to indemnification as of right. Except as provided in the
preceding sentence, any indemnification under Section 1 or Section 2 of this
Article V may be made by the Board of Directors, in its discretion, but only if
(a) the Board of Directors, acting by a quorum consisting of Directors who are
not parties to such claim, action, suit or proceeding, shall have found that the
Director or officer has met the applicable standard of conduct set forth in
Section 1
B-21
or Section 2, as the case may be, of this Article V or (b) there be no such
disinterested quorum, independent legal counsel (who may be the regular outside
counsel of the Corporation) shall have delivered to the Corporation written
advice to the effect that in their judgment such applicable standard has been
met, or (c) by the stockholders of the Corporation.
SECTION 3. EXPENSES.
Expenses incurred with respect to any claim, action, suit or proceeding of
the character described in Section 1 of this Article V may be paid by the
Corporation prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of the Director or officer to repay such amount
unless it shall ultimately be determined that such person is entitled to
indemnification by the Corporation.
SECTION 4. OTHER RIGHTS.
The rights of indemnification provided in this Article V shall be in
addition to any other rights to which a Director or officer of the Corporation
or such other corporation or entity may otherwise be entitled by contract, vote
of disinterested stockholders or Directors or otherwise or as a matter of law;
and in the event of such person's death, such rights shall extend to such
person's heirs and legal representatives.
ARTICLE VI - SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES.
The stock of the Corporation shall be represented by certificates signed
in the name of the Corporation by (a) the Chief Executive Officer or the
President or a Vice President and (b) either the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, or
in any act amending, supplementing or substituted for such Section, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock, a statement that the Corporation will furnish without charge to
B-22
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Any of or all the signatures on a certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed.
SECTION 2. TRANSFER.
Upon surrender to the Corporation or its transfer agent of a certificate
for shares duly endorsed or accompanied by proper evidence of succession,
assignation or authority to transfer, it shall be the duty of the Corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
SECTION 3. RECORD.
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and shall not be bound to recognize any equitable or
other claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII - THIRD PARTIES
Any party dealing with the Corporation shall be entitled to rely
conclusively as to the due authorization of any act of the Corporation upon a
certificate provided to it and signed by (a) the President or any Vice President
and (b) the Secretary or any Assistant Secretary of the Corporation to the
effect that such act was duly authorized by all necessary action of the
Corporation.
B-23
ARTICLE VIII - SEAL
The Board of Directors may by resolution provide for a suitable seal,
containing the name of the Corporation, which seal shall be in the charge of the
Secretary of the Corporation.
ARTICLE IX - FISCAL YEAR
The fiscal year of the Corporation shall end on the last calendar day of
each year.
ARTICLE X - AMENDMENTS
Subject to the provisions of Article II, these Bylaws may be adopted,
repealed, altered or amended by the Board of Directors at any regular or special
meeting thereof. Except as otherwise fixed pursuant to the provisions of the
Certificate of Incorporation hereof relating to the voting rights of the holders
of any class or series of Preferred Stock, the stockholders of the Corporation
shall have the power to adopt, repeal, alter or amend Article II of these Bylaws
by the affirmative vote of not less than two-thirds of the shares of the Common
Stock voting thereon.
ARTICLE XI - NOTICES
All notices and other communications hereunder shall be in writing and
delivered personally or sent, if in the United States by first class mail return
receipt requested, or if outside the United States by air mail, return receipt
requested, or in either case by telex, telecopy, or other facsimile
telecommunications. Any notice or other communication so transmitted shall be
deemed to have been given at the time of delivery, in the case of a
communication delivered personally, on the business day following receipt of
answer back, telecopy, or facsimile confirmation, in the case of a communication
sent by telex, telecopy or other facsimile telecommunication, respectively, or
as provided in Section 3 of Article I of these Bylaws in the case of a
communication sent by mail.
ARTICLE XII - COMPUTATION OF TIME PERIODS
The words "day" or "days" as used in these Bylaws with respect to the
computation of periods of time shall mean calendar days and the words "business
day" or "business days" as used in these Bylaws with respect to the computation
of periods of time shall mean any day that is not a Saturday, Sunday or other
holiday in New York, New York; provided, however, that if the last day of any
period of time shall fall on a day other than a business day, such period
B-24
shall be extended to include the next succeeding business day in each such
location. All computations of time shall be based on New York, New York time.
B-25
ANNEX C
DIRECTORS OF ARCH COAL, INC.
AS OF THE EFFECTIVE TIME
James R. Boyd
Robert A. Charpie
Paul W. Chellgren
Thomas L. Feazell
Juan Antonio Ferrando
John R. Hall
Robert L. Hintz
Douglas H. Hunt
Steven F. Leer
Thomas Marshall
James L. Parker
J. Marvin Quin
Ronald Eugene Samples
If, prior to the Effective Time, (i) any of Messrs. Boyd, Chellgren, Feazell,
Hall and Quin; (ii) any of Messrs. Hunt, Parker and Samples; or (iii) Mr.
Ferrando, should die or otherwise be unable or unwilling to serve as a director
of the Company, then a substitute for such person shall be designated by (i)
Ashland Inc.; (ii) Hunt Coal Corporation, Petro-Hunt Corporation, the Lyda
Hunt-Margaret Trusts and the Lyda Hunt-Herbert Trusts; or (iii) Carboex,
respectively. If, prior to the Effective Time, any of Messrs. Charpie, Hintz or
Marshall should die or otherwise be unable or unwilling to serve as a director
of the Company, then a substitute for such person shall be designated by a
majority of the remainder of the persons listed above.
C - 1
ANNEX D
[Form of Affiliate Agreement]
____________, 1997
Arch Coal, Inc.
Suite 300
CityPlace One
Creve Coeur, Missouri 63141
Gentlemen:
The undersigned has been advised that as of the date hereof the
undersigned may be deemed to be an "affiliate" of Ashland Coal, Inc., a Delaware
corporation ("ACI"), as the term "affiliate" is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger, dated as of April 4, 1997 (the "Agreement"), among
Arch Mineral Corporation, a Delaware corporation (the "Company"), AMC Merger
Corporation and ACI, at the Effective Time (as defined in the Agreement) ACI
will become a wholly owned subsidiary of the Company.
As a result of the Merger (as defined in the Agreement), the
undersigned may receive shares of Common Stock, par value $.01 per share
("Company Common Stock"), of the Company. The undersigned would receive such
shares in exchange for shares of Common Stock, par value $.01 per share, of ACI,
shares of Class B Preferred Stock, par value $100 per share, of ACI, or shares
of Class C Preferred Stock, par value $100 per share, of ACI owned by the
undersigned.
The undersigned hereby represents and warrants to, and covenants
with, the Company that in the event the undersigned receives any Company Common
Stock in the Merger:
(A) The undersigned shall not make any sale, transfer or other
disposition of Company Common Stock in violation of the Act or the Rules
and Regulations.
(B) The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's
ability to sell, transfer or otherwise dispose of the Company Common
Stock, to the extent
D - 1
Arch Coal, Inc.
__________, 1997
Page 2
the undersigned has felt it necessary, with the
undersigned's counsel.
(C) The undersigned has been advised that the issuance of shares of
Company Common Stock to the undersigned in the Merger has been registered
under the Act by a Registration Statement on Form S-4. However, the
undersigned has also been advised that because (i) at the time of the
submission of the Merger for a vote of the stockholders of ACI the
undersigned may be deemed an affiliate of ACI, and (ii) the distribution
by the undersigned of the Company Common Stock has not been registered
under the Act, the undersigned may not sell, transfer or otherwise dispose
of Company Common Stock issued to the undersigned in the Merger unless (a)
such sale, transfer or other disposition has been registered under the
Act, (b) such sale, transfer or other disposition is made in conformity
with the volume and other applicable limitations imposed by Rule 145 under
the Act, or (c) in the opinion of counsel reasonably acceptable to the
Company delivered in writing to the Company prior to such sale, transfer
or other disposition, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
(D) The undersigned understands that, except to the extent set forth
in an agreement to which the Company is a party, the Company will be under
no obligation to register the sale, transfer or other disposition of the
Company Common Stock by the undersigned or on the undersigned's behalf
under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
(E) The undersigned understands that stop transfer instructions may
be given to the Company's transfer agent with respect to the Company
Common Stock owned by the undersigned and that there may be placed on the
certificates for the Company Common Stock issued to the undersigned, or
any substitutions for all or part of such Company Common Stock, a legend
stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933
applies. The shares represented by this certificate may only be
transferred in accordance with the terms of a letter agreement dated
__________, 1997, a copy of
D - 2
which agreement is on file at the principal offices of Arch Coal,
Inc.
(F) The undersigned also understands that unless the transfer by the
undersigned of the undersigned's Company Common Stock has been registered
under the Act or is a sale made in conformity with the provisions of this
letter, the Company reserves the right, in its sole discretion, to place
the following legend on the certificates issued to any transferee of
shares from the undersigned and to obtain an agreement from the proposed
transferee to effect hereof as a condition to issuance of certificates to
such transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such shares in a transaction to which Rule 145
under the Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933 and may not be offered, sold, pledged or
otherwise transferred except in accordance with an exemption from
the registration requirements of the Securities Act of 1933."
It is understood and agreed that the legend set forth in paragraph E
or F above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to the Company (i) a copy of a
letter from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to the Company to the effect that such legend
is not required for purposes of the Act or (ii) reasonably satisfactory evidence
or representations that the shares represented by such certificates are being or
have been transferred in a transaction made in conformity with the provisions of
Rule 145.
Very truly yours,
D - 3
ANNEX E
ARCH COAL, INC.
1997 STOCK INCENTIVE PLAN
SECTION 1
STATEMENT OF PURPOSE
1.1. The Arch Coal, Inc. 1997 Stock Incentive Plan (the "Plan") has been
established by Arch Mineral Corporation, which pursuant to the Agreement and
Plan of Merger by and between the Company and Ashland Coal, Inc., et. al, will
change its name to Arch Coal, Inc., to become effective at the Effective Time as
defined herein in order to:
(a) attract and retain executive, managerial and other salaried employees;
(b) motivate participating employees, by means of appropriate incentives,
to achieve long-range goals;
(c) provide incentive compensation opportunities that are competitive with
those of other major corporations; and
(d) further identify a Participant's interests with those of the Company's
other stockholders through compensation based on the Company's common stock;
thereby promoting the long-term financial interest of the Company and its
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term stockholder return.
SECTION 2
DEFINITIONS
2.1. Unless the context indicates otherwise, the following terms shall have the
meaning set forth below:
(a) ACQUIRING CORPORATION. The term "Acquiring Corporation" shall mean the
surviving, continuing successor or purchasing corporation in an acquisition or
merger with the Company in which the Company is not the surviving corporation.
(b) AWARD. The term "Award" shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
E - 1
Stock, Performance Units, Merit Awards, Phantom Stock Awards and Stock acquired
through purchase under Section 12.
(c) BOARD. The term "Board" shall mean the Board of Directors of the
Company acting as such but shall not include the Committee or other committees
of the Board acting on behalf of the Board.
(d) CAUSE. The term "Cause" shall mean (a) the continued failure by the
Participant to substantially perform his or her duties with the Company (other
than any such failure resulting from his or her incapacity due to physical or
mental illness), or (b) the engaging by the Participant in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
(e) CHANGE IN CONTROL. A "Change in Control" shall mean a change in
control of the Company of a nature that would be required to be reported
(assuming such event has not been "previously reported") in response to Item
1(a) of a Current Report on Form 8-K pursuant to Section 13 or 15(d) of the
Exchange Act as in effect on the date this Plan is approved by the shareholders
of the Company; provided that, without limitation, such a Change in Control
shall be deemed to have occurred (1) upon the approval of the Board (or if
approval of the Board is not required as a matter of law, the shareholders of
the Company) of (A) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of Stock would be converted into cash, securities or other property,
other than a merger in which the holders of the Stock immediately prior to the
merger will have more than 50% of the ownership of common stock of the surviving
corporation immediately after the merger, (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company, or (C) adoption of any plan or
proposal for the liquidation or dissolution of the Company, or (2) when any
"person" (as defined in Section 13(d) of the Exchange Act), other than a
Significant Stockholder, or any subsidiary of the Company or employee benefit
plan or trust maintained by the Company or any of its subsidiaries, shall become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 20% of the Stock outstanding at the time,
without the prior approval of the Board.
(f) CODE. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
(g) COMMITTEE. The term "Committee" means the committee of the Board
selected in accordance with the provisions of Subsection 4.2.
E - 2
(h) COMPANY. The term "Company" means Arch Coal, Inc., a Delaware
corporation, which prior to the Effective Date was known as Arch Mineral
Corporation.
(i) DATE OF TERMINATION. A Participant's "Date of Termination" shall be
the date on which his or her employment with all Employers and Related Companies
terminates for any reason; provided that for purposes of this Plan only, a
Participant's employment shall not be deemed to be terminated by reason of a
transfer of the Participant between the Company and a Related Company (including
Employers) or between two Related Companies (including Employers); and further
provided that a Participant's employment shall not be considered terminated by
reason of the Participant's leave of absence from an Employer or a Related
Company that is approved in advance by the Participant's Employer.
(j) DISABILITY. Except as otherwise provided by the Committee, a
Participant shall be considered to have a "Disability" during the period in
which he or she is unable, by reason of a medically determined physical or
mental impairment, to carry out his or her duties with an Employer, which
condition, in the discretion of the Committee, shall generally be an event which
qualifies as a "long term disability" under applicable long term disability
benefit programs of the Company.
(k) EFFECTIVE DATE. The term "Effective Date" shall mean the "Effective
Time" of the "Merger" under the Agreement and Plan of Merger dated as of April
4, 1997, among the Company, Ashland Coal, Inc., and AMC Merger Corporation.
(l) EMPLOYEE. The term "Employee" shall mean a person with an employment
relationship with an Employer.
(m) EMPLOYER. The Company and each Subsidiary which, with the consent of
the Company, participates in the Plan for the benefit of its eligible Employees
are referred to collectively as the "Employers" and individually as an
"Employer".
(n) EXCHANGE ACT. The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(o) EXERCISE PRICE. The term "Exercise Price" means, with respect to each
share of Stock subject to an Option, the price fixed by the Committee at which
such share may be purchased from the Company pursuant to the exercise of such
Option, which price at no time may be less than 100% of the Fair Market Value of
the Stock on the date the Option is granted, except as permitted and
contemplated by Section 21 of the Plan.
(p) FAIR MARKET VALUE. The "Fair Market Value" of the Stock on any given
date shall be the last sale price, regular
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way, or, in case no such sale takes place on such date, the average of the
closing bid and asked prices, regular way, of the Stock, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE or, if the Stock is not
listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Stock is listed or
admitted to trading or, if the Stock is not listed or admitted to trading on any
national securities exchange, the last quoted sale price on such date or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such date, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System or such other system then
in use, or, if on any such date the Stock is not quoted by any such
organization, the average of the closing bid and asked prices on such date as
furnished by a professional market maker making a market in the Stock. If the
Stock is not publicly held or so listed or publicly traded, "Fair Market Value"
per share of Stock shall mean the Fair Market Value per share as reasonably
determined by the Committee.
(q) IMMEDIATE FAMILY. With respect to a particular Participant, the term
"Immediate Family" shall mean, whether through consanguinity or adoptive
relationships, the Participant's spouse, children, stepchildren, siblings and
grandchildren.
(r) INCENTIVE STOCK OPTION. The term "Incentive Stock Option" shall mean
any Incentive Stock Option granted under the Plan.
(s) MERIT AWARD. The term "Merit Award" shall mean any Merit Award granted
under the Plan.
(t) NON-EMPLOYEE DIRECTOR. The term "Non-Employee Director " shall mean a
person who qualifies as such under Rule 16b-3(b)(3) under the Exchange Act or
any successor provision, and who also qualifies as an "outside director" under
Section 162(m) of the Code.
(u) NON-QUALIFIED STOCK OPTION. The term "Non-qualified Stock Option"
shall mean any Non-Qualified Stock Option granted under the Plan.
(v) NYSE. The term "NYSE" refers to the New York Stock Exchange, Inc.
(w) OPTION. The term "Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.
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(x) PARTICIPANT. The term "Participant" means an Employee who has been
granted an award under the Plan.
(y) PERFORMANCE-BASED COMPENSATION. The term "Performance- Based
Compensation" shall have the meaning ascribed to it in Section 162(m)(4)(C) of
the Code.
(z) PERFORMANCE GOALS. The term "Performance Goals" means the goals
established by the Committee under an Award which, if met, will entitle the
Participant to payment under such Award and will qualify such payment as
"Performance-Based Compensation" as that term is used in Code Section
162(m)(4)(C). Such goals will be based upon one or more of the following
business criteria: net income; earnings per share; earnings before interest and
taxes ("EBIT"); earnings before interest, taxes, depreciation, and amortization
("EBITDA"); debt reduction; safety; return on investment; operating income;
operating ratio; cash flow; return on assets; stockholders' return; revenue;
return on equity; economic value added (EVAr); operating costs; sales; or
compliance with Company policies.
(aa) PERFORMANCE PERIOD. The term "Performance Period" shall mean the
period over which applicable performance is to be measured.
(bb) PERFORMANCE STOCK. The term "Performance Stock" shall have the
meaning ascribed to it in Section 10 of the Plan.
(cc) PERFORMANCE UNITS. The term "Performance Units" shall have the
meaning ascribed to it in Section 11 of the Plan.
(dd) PHANTOM STOCK AWARD. The term "Phantom Stock Award" shall mean any
Phantom Stock Award granted under the Plan.
(ee) PLAN. The term "Plan" shall mean this Arch Coal, Inc. 1997 Stock
Incentive Plan as the same may be from time to time amended or revised.
(ff) QUALIFIED RETIREMENT PLAN. The term "Qualified Retirement Plan" means
any plan of an Employer or a Related Company that is intended to be qualified
under Section 401(a) of the Code.
(gg) RELATED COMPANIES. The term "Related Companies' means any Significant
Stockholder and their subsidiaries; and any other company during any period in
which it is a Subsidiary or a division of the Company, including any entity
acquired by, or merged with or into, the Company or a Subsidiary.
(hh) RESTRICTED PERIOD. The term "Restricted Period" shall mean the period
of time for which shares of Restricted Stock or Restricted Stock Units are
subject to forfeiture pursuant to the
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Plan or during which Options and Stock Appreciation Rights are not exercisable.
(ii) RESTRICTED STOCK. The term "Restricted Stock" shall have the meaning
ascribed to it in Section 8 of the Plan.
(jj) RESTRICTED STOCK UNITS. The term "Restricted Stock Units" shall have
the meaning ascribed to it in Section 9 of the Plan.
(kk) RETIREMENT. "Retirement" of a Participant shall mean the occurrence
of a Participant's Date of Termination under circumstances that constitute such
Participant's retirement at normal or early retirement age under the terms of
the Qualified Retirement Plan of Participant's Employer that is extended to the
Participant immediately prior to the Participant's Date of Termination or, if no
such plan is extended to the Participant on his or her Date of Termination,
under the terms of any applicable retirement policy of the Participant's
Employer.
(ll) SEC. "SEC" means the Securities and Exchange Commission.
(mm) SIGNIFICANT STOCKHOLDER. The term "Significant Stockholder" shall
mean any shareholder of the Company who, immediately prior to the Effective
Date, owned more than 5% of the common stock of the Company.
(nn) STOCK. The term "Stock" shall mean shares of common stock, $.01 par
value per share, of the Company.
(oo) STOCK APPRECIATION RIGHTS. The term "Stock Appreciation Rights" shall
mean any Stock Appreciation Right granted under the Plan.
(pp) SUBSIDIARY. The term "Subsidiary" shall mean any present or future
subsidiary corporation of the Company within the meaning of Code Section
424((f).
(qq) TAX DATE. The term "Tax Date" shall mean the date a withholding tax
obligation arises with respect to an Award.
SECTION 3
ELIGIBILITY
3.1. Subject to the discretion of the Committee and the terms and conditions of
the Plan, the Committee shall determine and designate from time to time, the
Employees or other persons as contemplated by Section 21 of the Plan who will be
granted one or more Awards under the Plan.
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SECTION 4
OPERATION AND ADMINISTRATION
4.1. The Plan has been adopted by the Board on __________, 1997, effective as of
the Effective Date, subject to the further approval of the shareholders of the
Company. In addition, if the Plan is approved by the shareholders, to the extent
required pursuant to Section 162(m) of the Code, it or any part thereof shall be
resubmitted to shareholders for reapproval at the first shareholders' meeting
that occurs during the fifth year following the year of the initial approval and
thereafter at five year intervals, in each case, as may be required to qualify
any Award hereunder as Performance-Based Compensation. The Plan shall be
unlimited in duration and remain in effect until termination by the Board;
provided however, that no Incentive Stock Option may be granted under the Plan
after __________, 2007.
4.2. The Plan shall be administered by the Committee which shall consist of two
or more members of the Board who are Non-Employee Directors. Plenary authority
to manage and control the operation and administration of the Plan shall be
vested in the Committee, which authority shall include, but shall not be limited
to:
(a) Subject to the provisions of the Plan, the authority and discretion to
select Employees to receive Awards, to determine the time or times of receipt,
to determine the types of Awards and the number of shares covered by the Awards,
to establish the terms, conditions, performance criteria, restrictions, and
other provisions of such Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by the
respective Employee, his or her present and potential contribution to the
Company's success and such other factors as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the authority and discretion to
determine the extent to which Awards under the Plan will be structured to
conform to the requirements applicable to Performance-Based Compensation as
described in Code Section 162(m), and to take such action, establish such
procedures, and impose such restrictions at the time such awards are granted as
the Committee determines to be necessary or appropriate to conform to such
requirements.
(c) The authority and discretion to interpret the Plan and the Awards
granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, to make all other determinations that it
deems necessary or advisable for the administration of the Plan and to correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Award, in each case, in the
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manner and to the extent the Committee deems necessary or advisable to carry it
into effect.
4.3. Any interpretation of the Plan by the Committee and any decision made by it
under the Plan shall be final and binding on all persons. The express grant in
the Plan of any specific power to the Committee shall not be construed as
limiting any power or authority of the Committee. Provided, however, that except
as otherwise permitted under Treasury Regulation 1.162- 27(e)(2)(iii)(C), the
Committee may not increase any Award once made if payment under such Award is
intended to constitute Performance-Based Compensation.
4.4. The Committee may only act at a meeting by unanimous consent if comprised
of two members, and otherwise by a majority of its members. Any determination of
the Committee may be made without a meeting by the unanimous written consent of
its members. In addition, the Committee may authorize one or more of its members
or any officer of an Employer to execute and deliver documents and perform other
administrative acts pursuant to the Plan.
4.5. No member or authorized delegate of the Committee shall be liable to any
person for any action taken or omitted in connection with the administration of
the Plan unless attributable to his or her own fraud or gross misconduct. The
Committee, the individual members thereof, and persons acting as the authorized
delegates of the Committee under the Plan, shall be indemnified by the Employers
against any and all liabilities, losses, costs and expenses (including legal
fees and expenses) of whatsoever kind and nature which may be imposed on,
incurred by, or asserted against, the Committee or its members or authorized
delegates by reason of the performance of any action pursuant to the Plan if the
Committee or its members or authorized delegates did not act in willful
violation of the law or regulation under which such liability, loss, cost or
expense arises. This indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance policy, contract with the
indemnitee or the Company's By-laws.
4.6. Notwithstanding any other provision of the Plan to the contrary, but
without giving effect to Awards made pursuant to Section 21, the maximum number
of shares of Stock with respect to which any Participant may receive any Award
of an Option or a Stock Appreciation Right under the Plan during any calendar
year is [ ]; the maximum number of shares with respect to which any Participant
may receive Awards of Restricted Stock during any calendar year is [ ]; the
maximum number of shares with respect to which any Participant may receive Merit
Awards during any calendar year is [ ]; and the maximum number of shares with
respect to which any Participant may receive other Awards during any calendar
year is [ ].
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4.7. To the extent that the Committee determines that it is necessary or
desirable to conform any Awards under the Plan with the requirements applicable
to "Performance-Based Compensation", as that term is used in Code Section
162(m)(4)(C), it may, at or prior to the time an Award is granted, establish
Performance Goals for a particular Performance Period. If the Committee
establishes Performance Goals for a Performance Period, it may approve a payment
from that particular Performance Period upon attainment of the Performance Goal.
SECTION 5
SHARES AVAILABLE UNDER THE PLAN
5.1. The shares of Stock with respect to which Awards may be made under the Plan
shall be shares of currently authorized but unissued or treasury shares acquired
by the Company, including shares purchased in the open market or in private
transactions. Subject to the provisions of Section 16, the total number of
shares of Stock available for grant of Awards shall not exceed six million
(6,000,000) shares of Stock. Except as otherwise provided herein, if any Award
shall expire or terminate for any reason without having been exercised in full,
the unissued shares of Stock subject thereto (whether or not cash or other
consideration is paid in respect of such Award) shall again be available for the
purposes of the Plan. Any shares of Stock which are used as full or partial
payment to the Company upon exercise of an Award shall be available for purposes
of the Plan.
SECTION 6
OPTIONS
6.1. The grant of an "Option" under this Section 6 entitles the Participant to
purchase shares of Stock at a price fixed at the time the Option is granted, or
at a price determined under a method established at the time the Option is
granted, subject to the terms of this Section 6. Options granted under this
Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options,
and subject to Subsection 6.6 and Sections 15 and 20, shall not be exercisable
for at least six months from the date of grant, as determined in the discretion
of the Committee. An "Incentive Stock Option" is an Option that is intended to
satisfy the requirements applicable to an "incentive stock option" described in
Section 422(b) of the Code. A "Non-Qualified Option" is an Option that is not
intended to be an "incentive stock option" as that term is described in Section
422(b) of the Code.
6.2. The Committee shall designate the Employees to whom Options are to be
granted under this Section 6 and shall determine the number of shares of Stock
to be subject to each such Option. To
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the extent that the aggregate Fair Market Value of Stock with respect to which
Incentive Stock Options are exercisable for the first time by any individual
during any calendar year (under all plans of the Company and all Related
Companies) exceeds $100,000, such Options shall be treated as Non-Qualified
Stock Options, but only to the extent required by Section 422 of the Code.
6.3. The determination and payment of the purchase price of a share of Stock
under each Option granted under this Section shall be subject to the following
terms of this Subsection 6.3:
(a) The purchase price shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option is
granted; provided, however, that in no event shall the price per share be less
than the Fair Market Value per share on the date of the grant except as
otherwise permitted by Section 21 of the Plan;
(b) The full purchase price of each share of Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise and, as soon
as practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto; and
(c) The purchase price shall be paid either in cash, in shares of Stock
(valued at Fair Market Value as of the day of exercise), through a combination
of cash and Stock (so valued) or through such cashless exercise arrangement as
may be approved by the Committee and established by the Company, provided that
any shares of Stock used for payment shall have been owned by the Participant
for at least six (6) months.
6.4. Except as otherwise expressly provided in the Plan, an Option granted under
this Section 6 shall be exercisable in accordance with the following terms of
this Subsection 6.4.
(a) The terms and conditions relating to exercise of an Option shall be
established by the Committee, and may include, without limitation, conditions
relating to completion of a specified period of service, achievement of
performance standards prior to exercise of the Option, or achievement of Stock
ownership objectives by the Participant. No Option may be exercised by a
Participant after the expiration date applicable to that Option.
(b) The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right, if any.
6.5. The exercise period of any Option shall be determined by the Committee but
the term of any Option shall not extend more than ten years after the date of
grant.
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SECTION 7
STOCK APPRECIATION RIGHTS
7.1. Subject to the terms of this Section 7, a Stock Appreciation Right granted
under the Plan entitles the Participant to receive, in cash or Stock (as
determined in accordance with Subsection 7.4), value equal to all or a portion
of the excess of: (a) the Fair Market Value of a specified number of shares of
Stock at the time of exercise; over (b) a specified price which shall not be
less than 100% of the Fair Market Value of the Stock at the time the Stock
Appreciation Right is granted, or, if granted in tandem with an Option, the
exercise price with respect to shares under the tandem Option.
7.2. Subject to the provisions of the Plan, the Committee shall designate the
Employees to whom Stock Appreciation Rights are to be granted under the Plan,
shall determine the exercise price or a method by which the price shall be
established with respect to each such Stock Appreciation Right, and shall
determine the number of shares of Stock on which each Stock Appreciation Right
is based. A Stock Appreciation Right may be granted in connection with all or
any portion of a previously or contemporaneously granted Option or not in
connection with an Option. If a Stock Appreciation Right is granted in
connection with an Option then, in the discretion of the Committee, the Stock
Appreciation Right may, but need not, be granted in tandem with the Option.
7.3. The exercise of Stock Appreciation Rights shall be subject
to the following:
(a) If a Stock Appreciation Right is not in tandem with an Option, then
the Stock Appreciation Right shall be exercisable in accordance with the terms
established by the Committee in connection with such rights but, subject to
Sections 15 and 20, shall not be exercisable for six months from the date of
grant and the term of any Stock Appreciation Right shall not extend more than
ten years from the date of grant; and may include, without limitation,
conditions relating to completion of a specified period of service, achievement
of performance standards prior to exercise of the Stock Appreciation Rights, or
achievement of objectives relating to Stock ownership by the Participant; and
(b) If a Stock Appreciation Right is in tandem with an Option, then the
Stock Appreciation Right shall be exercisable only at the time the tandem Option
is exercisable and the exercise of the Stock Appreciation Right will result in
the surrender of the corresponding rights under the tandem Option.
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7.4. Upon the exercise of a Stock Appreciation Right, the value to be
distributed to the Participant, in accordance with Subsection 7.1, shall be
distributed in shares of Stock (valued at their Fair Market Value at the time of
exercise), in cash, or in a combination of Stock or cash, in the discretion of
the Committee.
SECTION 8
RESTRICTED STOCK
8.1. Subject to the terms of this Section 8, Restricted Stock Awards under the
Plan are grants of Stock to Participants, the vesting of which is subject to
certain conditions established by the Committee, with some or all of those
conditions relating to events (such as continued employment or satisfaction of
performance criteria) occurring after the date of the grant of the Award,
provided, however, that to the extent that vesting of a Restricted Stock Award
is contingent on continued employment, the required employment period shall
generally (unless otherwise determined by the Committee) not be less than one
year following the grant of the Award unless such grant is in substitution for
an Award under this Plan or a predecessor plan of the Company or a Related
Company. To the extent, if any, required by the General Corporation Law of the
State of Delaware, a Participant's receipt of an Award of newly issued shares of
Restricted Stock shall be made subject to payment by the Participant of an
amount equal to the aggregate par value of such newly issued shares of Stock.
8.2. The Committee shall designate the Employees to whom Restricted Stock is to
be granted, and the number of shares of Stock that are subject to each such
Award. The Award of shares under this Section 8 may, but need not, be made in
conjunction with a cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.
8.3. Shares of Restricted Stock granted to Participants under the Plan shall be
subject to the following terms and conditions:
(a) Restricted Stock granted to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Restricted Period;
(b) The Participant as owner of such shares shall have all the rights of a
stockholder, including but not limited to the right to vote such shares and,
except as otherwise provided by the Committee or as otherwise provided by the
Plan, the right to receive all dividends and other distributions paid on such
shares;
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(c) Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the Participant but,
at the discretion of the Committee, each such certificate may be deposited with
the Company with a stock power endorsed in blank or in a bank designated by the
Committee;
(d) The Committee may award Restricted Stock as Performance-Based
Compensation, which shall be Restricted Stock that will be earned (or for which
earning is accelerated) upon the achievement of Performance Goals established by
the Committee and the Committee may specify the number of shares that will be
earned upon achievement of different levels of performance; except as otherwise
provided by the Committee, achievement of maximum targets during the Performance
Period shall result in the Participant's earning of the full amount of
Restricted Stock comprising such Performance-Based Compensation and, in the
discretion of the Committee, achievement of the minimum target but less than the
maximum target, the Committee may result in the Participant's earning of a
portion of the Award; and
(e) Except as otherwise provided by the Committee, any Restricted Stock
which is not earned by the end of a Restricted Period or Performance Period, as
the case may be, shall be forfeited. If a Participant's Date of Termination
occurs prior to the end of a Restricted Period or Performance Period, as the
case may be, the Committee may determine, in its sole discretion, that the
Participant will be entitled to settlement of all or any portion of the
Restricted Stock as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Restricted
Stock or make such other adjustments as the Committee, in its sole discretion,
deems desirable. Subject to the limitations of the Plan and the Award of
Restricted Stock, upon the vesting of Restricted Stock, such Restricted Stock
will be transferred free of all restrictions to the Participant (or his or her
legal representative, beneficiary or heir).
SECTION 9
RESTRICTED STOCK UNITS
9.1. Subject to the terms of this Section 9, a Restricted Stock Unit entitles a
Participant to receive shares for the units at the end of a Restricted Period to
the extent provided by the Award with the vesting of such units to be contingent
upon such conditions as may be established by the Committee (such as continued
employment or satisfaction of performance criteria) occurring after the date of
grant of the Award, provided, however, that to the extent that the vesting of a
Restricted Stock Unit is contingent on continued employment, the required
employment period shall generally not be less than one year
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following the date of grant of the Award unless such grant is in substitution
for an Award under this Plan or a predecessor plan of the Company or a Related
Company. The Award of Restricted Stock Units under this Section 9 may, but need
not, be made in conjunction with a cash-based incentive compensation program
maintained by the Company, and may, but need not, be in lieu of cash otherwise
awardable under such program.
9.2. The Committee shall designate the Employees to whom Restricted Stock Units
shall be granted and the number of units that are subject to each such Award.
During any period in which Restricted Stock Units are outstanding and have not
been settled in Stock, the Participant shall not have the rights of a
stockholder, but, in the discretion of the Committee, may be granted the right
to receive a payment from the Company in lieu of a dividend in an amount equal
to any cash dividends that might be paid during the Restricted Period.
9.3 Except as otherwise provided by the Committee, any Restricted Stock Unit
which is not earned by the end of a Restricted Period shall be forfeited. If a
Participant's Date of Termination occurs prior to the end of a Restricted
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all, any portion, or none of the
Restricted Stock Units as to which he or she would otherwise be eligible, and
may accelerate the determination of the value and settlement of such Restricted
Stock Units or make such other adjustments as the Committee, in its sole
discretion, deems desirable.
SECTION 10
PERFORMANCE STOCK
10.1. Subject to the terms of this Section 10, an Award of Performance Stock
provides for the distribution of Stock to a Participant upon the achievement of
performance objectives, which may include Performance Goals, established by the
Committee.
10.2. The Committee shall designate the Employees to whom Awards of Performance
Stock are to be granted, and the number of shares of Stock that are subject to
each such Award. The Award of shares of Performance Stock under this Section 10
may, but need not, be made in conjunction with a cash-based incentive
compensation program maintained by the Company, and may, but need not, be in
lieu of cash otherwise awardable under such program.
10.3. Except as otherwise provided by the Committee, any Award of Performance
Stock which is not earned by the end of the Performance Period shall be
forfeited. If a Participant's Date of Termination occurs prior to the end of a
Performance Period, the Committee, in its sole discretion, may determine that
the
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Participant will be entitled to settlement of all, any portion, or none of the
Performance Stock as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Performance
Stock or make such other adjustments as the Committee, in its sole discretion,
deems desirable.
SECTION 11
PERFORMANCE UNITS
11.1. Subject to the terms of this Section 11, the Award of Performance Units
under the Plan entitles the Participant to receive value for the units at the
end of a Performance Period to the extent provided under the Award. The number
of Performance Units earned, and value received from them, will be contingent on
the degree to which the performance measures established at the time of grant of
the Award are met.
11.2. The Committee shall designate the Employees to whom Performance Units are
to be granted, and the number of Performance Units to be subject to each such
Award.
11.3. For each Participant, the Committee will determine the value of
Performance Units, which may be stated either in cash or in units representing
shares of Stock; the performance measures used for determining whether the
Performance Units are earned; the Performance Period during which the
performance measures will apply; the relationship between the level of
achievement of the performance measures and the degree to which Performance
Units are earned; whether, during or after the Performance Period, any revision
to the performance measures or Performance Period should be made to reflect
significant events or changes that occur during the Performance Period; and the
number of earned Performance Units that will be settled in cash and/or shares of
Stock.
11.4. Settlement of Performance Units shall be subject to the following:
(a) The Committee will compare the actual performance to the performance
measures established for the Performance Period and determine the number of
Performance Units as to which settlement is to be made;
(b) Settlement of Performance Units earned shall be wholly in cash, wholly
in Stock or in a combination of the two, to be distributed in a lump sum or
installments, as determined by the Committee; and
(c) Shares of Stock distributed in settlement of Performance Units shall
be subject to such vesting requirements
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and other conditions, if any, as the Committee shall determine, including,
without limitation, restrictions of the type that may be imposed with respect to
Restricted Stock under Section 8.
11.5. Except as otherwise provided by the Committee, any Award of Performance
Units which is not earned by the end of the Performance Period shall be
forfeited. If a Participant's Date of Termination occurs prior to the end of a
Performance Period, the Committee, in its sole discretion, may determine that
the Participant will be entitled to settlement of all, any portion, or none of
the Performance Units as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Performance
Units or make such other adjustments as the Committee, in its sole discretion,
deems desirable.
SECTION 12
STOCK PURCHASE PROGRAM
12.1. The Committee may, from time to time, establish one or more programs under
which Employees will be permitted to purchase shares of Stock under the Plan,
and shall designate the Employees eligible to participate under such Stock
purchase programs. The purchase price for shares of Stock available under such
programs, and other terms and conditions of such programs, shall be established
by the Committee. The purchase price may not be less than 75% of the Fair Market
Value of the Stock at the time of purchase (or, in the Committee's discretion,
the average Stock value over a period determined by the Committee), and further
provided that if newly issued shares of Stock are sold, the purchase price may
not be less than the aggregate par value of such newly issued shares of Stock.
12.2. The Committee may impose such restrictions with respect to shares
purchased under this Section 12, as the Committee, in its sole discretion,
determines to be appropriate. Such restrictions may include, without limitation,
restrictions of the type that may be imposed with respect to Restricted Stock
under Section 8.
SECTION 13
MERIT AWARDS
13.1. The Committee may from time to time make an Award of Stock under the Plan
to selected Employees for such reasons and in such amounts as the Committee, in
its sole discretion, may determine. The consideration to be paid by an Employee
for any such Merit Award, if any, shall be fixed by the Committee from time to
time, but, if required by the General Corporation Law of the State of Delaware,
it shall not be less than the aggregate par value of the shares of Stock awarded
to him or her.
E - 16
SECTION 14
PHANTOM STOCK AWARDS
14.1. The Committee may make Phantom Stock Awards to selected Employees which
may be based solely on the value of the underlying shares of Stock, solely on
any earnings or appreciation thereon, or both. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority to determine the
number of hypothetical or target shares as to which each such Phantom Stock
Award is subject and to determine the terms and conditions of each such Phantom
Stock Award. There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected Employee, and the terms and conditions of
each such Phantom Stock Award may differ from each other.
14.2. The Committee shall establish vesting or performance measures for each
Phantom Stock Award on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time, in its sole discretion,
determine. Such measures may be based on years of service or periods of
employment, or the achievement of individual or corporate performance
objectives, but shall, in each instance, be based upon one or more of the
business criteria as determined pursuant to Section 4.7. The vesting and
performance measures determined by the Committee shall be established at the
time a Phantom Stock Award is made. Phantom Stock Awards may not be sold,
assigned, transferred, pledged, or otherwise encumbered, except as provided in
Section 17, during the Performance Period.
14.3. The Committee shall determine, in its sole discretion, the manner of
payment, which may include cash or shares of Stock in such proportions as the
Committee shall determine.
14.4. Except as otherwise provided by the Committee, any Award of Phantom Stock
which is not earned by the end of the Performance Period shall be forfeited. If
a Participant's Date of Termination occurs prior to the end of a Performance
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all or a portion of the Phantom
Stock for which he or she would otherwise be eligible, and may accelerate the
determination of the value and settlement of Phantom Stock or make such other
adjustment as the Committee, in its sole discretion, deems desirable.
SECTION 15
TERMINATION OF EMPLOYMENT
15.1. If a Participant's employment is terminated by the Participant's Employer
for Cause or if the Participant's employment is terminated by the Participant
without the written
E - 17
consent and approval of the Participant's Employer, all of the Participant's
unvested Awards, including any unexercised Options, shall be forfeited.
15.2. If a Participant's Date of Termination occurs by reason of death,
Disability or Retirement, all Options and Stock Appreciation Rights outstanding
immediately prior to the Participant's Date of Termination shall immediately
become exercisable and shall be exercisable until one year from the
Participant's Date of Termination and thereafter shall be forfeited if not
exercised, and all restrictions on any Awards outstanding immediately prior to
the Participant's Date of Termination shall immediately lapse. Options and Stock
Appreciation Rights which are or become exercisable at the time of a
Participant's death may be exercised by the Participant's designated beneficiary
or, in the absence of such designation, by the person to whom the Participant's
rights will pass by will or the laws of descent and distribution.
15.3. If a Participant's Date of Termination occurs by reason of Participant's
employment being terminated by the Participant's Employer for any reason other
than Cause, or by the Participant with the written consent and approval of the
Participant's Employer, the Restricted Period shall lapse on a proportion of any
Awards outstanding immediately prior to the Participant's Date of Termination
(except that, to the extent that an Award of Restricted Stock, Restricted Stock
Units, Performance Units, Performance Stock and Phantom Stock is subject to a
Performance Period), such proportion of the Award shall remain subject to the
same terms and conditions for vesting as were in effect prior to the Date of
Termination and shall be determined at the end of the Performance Period. The
proportion of an Award upon which the Restricted Period shall lapse shall be a
fraction, the denominator of which is the total number of months of any
Restricted Period applicable to an Award and the numerator of which is the
number of months of such Restricted Period which elapsed prior to the Date of
Termination.
15.4. Options and Stock Appreciation Rights which are or become exercisable by
reason of the Participant's employment being terminated by the Participant's
Employer for reasons other than Cause or by the Participant with the consent and
approval of the Participant's Employer, shall be exercisable until 60 days from
the Participant's Termination Date and shall thereafter be forfeited if not
exercised.
15.5. Except to the extent the Company shall otherwise determine, if, as a
result of a sale or other transaction (other than a Change in Control), a
Participant's Employer ceases to be a Related Company (and the Participant's
Employer is or becomes an entity that is separate from the Company), the
occurrence of such transaction shall be treated as the Participant's Date of
E - 18
Termination caused by the Participant's employment being terminated by the
Participant's Employer for a reason other than Cause.
15.6. Notwithstanding the foregoing provisions of this Section 15, the Committee
may, with respect to any Awards of a Participant (or portion thereof) that are
outstanding immediately prior to the Participant's Date of Termination,
determine that a Participant's Date of Termination will not result in forfeiture
or other termination of the Award, or may extend the period during which any
Options or Stock Appreciation Rights may be exercised, but shall not extend such
period beyond the expiration date set forth in the Award.
SECTION 16
ADJUSTMENTS TO SHARES
16.1. If the Company shall effect a reorganization, merger, or consolidation, or
similar event or effect any subdivision or consolidation of shares of Stock or
other capital readjustment, payment of stock dividend, stock split, spin-off,
combination of shares or recapitalization or other increase or reduction of the
number of shares of Stock outstanding without receiving compensation therefor in
money, services or property, then the Committee shall appropriately adjust (i)
the number of shares of Stock available under the Plan, (ii) the number of
shares of Stock available under any individual or other limitations under the
Plan, (iii) the number of shares of Stock subject to outstanding Awards and (iv)
the per-share price under any outstanding Award to the extent that the
Participant is required to pay a purchase price per share with respect to the
Award.
16.2. If the Committee determines that an adjustment in accordance with the
provisions of Subsection 16.1 would not be fully consistent with the purposes of
the Plan or the purposes of the outstanding Awards under the Plan, the Committee
may make such other adjustments, if any, that the Committee reasonably
determines are consistent with the purposes of the Plan and/or the affected
Awards.
16.3. To the extent that any reorganization, merger, consolidation, or similar
event or any subdivision or consolidation of shares of Stock or other capital
readjustment, payment of stock dividend, stock split, spin-off, combination of
shares or recapitalization or other increase or reduction of the number of
shares of Stock hereunder is also accompanied by or related to a Change in
Control, the adjustment hereunder shall be made prior to the acceleration
contemplated by Section 20.
E - 19
SECTION 17
TRANSFERABILITY AND DEFERRAL OF AWARDS
17.1. Awards under the Plan are not transferable except by will or by the laws
of descent and distribution. To the extent that a Participant who receives an
Award under the Plan has the right to exercise such Award, the Award may be
exercised during the lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this Section 17, the Committee may,
subject to any restrictions under applicable securities laws, permit Awards
under the Plan (other than an Incentive Stock Option) to be transferred by a
Participant for no consideration to or for the benefit of the Participant's
Immediate Family (including, without limitation, to a trust for the benefit of a
Participant's Immediate Family or to a Partnership comprised solely of members
of the Participant's Immediate Family), subject to such limits as the Committee
may establish, provided the transferee shall remain subject to all of the terms
and conditions applicable to such Award prior to such transfer.
17.2. The Committee may permit a Participant to elect to defer payment under an
Award under such terms and conditions as the Committee, in its sole discretion,
may determine; provided that any such deferral election must be made prior to
the time the Participant has become entitled to payment under the Award.
SECTION 18
AWARD AGREEMENT
18.1. Each Participant granted an Award pursuant to the Plan shall sign an Award
Agreement which signifies the offer of the Award by the Company and the
acceptance of the Award by the Participant in accordance with the terms of the
Award and the provisions of the Plan. Each Award Agreement shall reflect the
terms and conditions of the Award. Participation in the Plan shall confer no
rights to continued employment with an Employer nor shall it restrict the right
of an Employer to terminate a Participant's employment at any time for any
reason, not withstanding the fact that the Participant's rights under this Plan
may be negatively affected by such action.
SECTION 19
TAX WITHHOLDING
19.1 All Awards and other payments under the Plan are subject to withholding of
all applicable taxes, which withholding obligations shall be satisfied (without
regard to whether the Participant has transferred an Award under the Plan) by a
cash
E - 20
remittance, or with the consent of the Committee, through the surrender of
shares of Stock which the Participant owns or to which the Participant is
otherwise entitled under the Plan pursuant to an irrevocable election submitted
by the Participant to the Company at the office designated for such purpose. The
number of shares of Stock needed to be submitted in payment of the taxes shall
be determined using the Fair Market Value as of the applicable tax date rounding
down to the nearest whole share.
SECTION 20
CHANGE IN CONTROL
20.1. After giving effect to the provisions of Section 16 (relating to the
adjustment of shares of Stock), and except as otherwise provided in the Plan or
the Agreement reflecting the applicable Award, upon the occurrence of a Change
in Control:
(a) All outstanding Options (regardless of whether in tandem with Stock
Appreciation Rights) shall become fully exercisable and may be exercised at any
time during the original term of the Option;
(b) All outstanding Stock Appreciation Rights (regardless of whether in
tandem with Options) shall become fully exercisable and may be exercised at any
time during the original term of the Option;
(c) All shares of Stock subject to Awards shall become fully vested and be
distributed to the Participant; and
(d) Performance Units may be paid out in such manner and amounts as may be
reasonably determined by the Committee.
SECTION 21
MERGERS/ACQUISITIONS
21.1. In the event of any merger or acquisition involving the Company and/or a
Subsidiary of the Company and another entity which results in the Company being
the survivor or the surviving direct or indirect parent corporation of the
merged or acquired entity, the Committee may grant Awards under the provisions
of the Plan in substitution for awards held by employees or former employees of
such other entity under any plan of such entity immediately prior to such merger
or acquisition upon such terms and conditions as the Committee, in its
discretion, shall determine and as otherwise may be required by the Code to
ensure such substitution is not treated as the grant of a new Award for tax or
accounting purposes.
E - 21
21.2. In the event of a merger or acquisition involving the Company in which the
Company is not the surviving corporation, the Acquiring Corporation shall either
assume the Company's rights and obligations under outstanding Awards or
substitute awards under the Acquiring Corporation's plans, or if none,
securities for such outstanding Awards. In the event the Acquiring Corporation
elects not to assume or substitute for such outstanding Awards, and without
limiting Section 20, the Board shall provide that any unexercisable and/or
unvested portion of the outstanding Awards shall be immediately exercisable and
vested as of a date prior to such merger or consolidation, as the Board so
determines. The exercise and/or vesting of any Award that was permissible solely
by reason of this Section 21.2 shall be conditioned upon the consummation of the
merger or consolidation. Unless otherwise provided in the Plan or the Award, any
Awards which are neither assumed by the Acquiring Corporation nor exercised on
or prior to the date of the transaction shall terminate effective as of the
effective date of the transaction.
SECTION 22
TERMINATION AND AMENDMENT
22.1. The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (a) increase the aggregate number of shares of Stock
which may be issued under the Plan, (b) would change the method of determining
the exercise price of Options, other than to change the method of determining
Fair Market Value of Stock as set forth in Section 2.1(o) of the Plan, or (c)
materially modify the requirements as to eligibility for participation in the
Plan, shall be subject to the approval of the Company's stockholders, except
that any such increase or modification that may result from adjustments
authorized by Section 16 does not require such approval. No suspension,
termination, modification or amendment of the Plan may terminate a Participant's
existing Award or materially and adversely affect a Participant's rights under
such Award without the Participant's consent.
E - 22
EXHIBIT 7.2
VOTING AGREEMENT
----------------
THIS VOTING AGREEMENT, dated as of April 4, 1997, by and between
Arch Mineral Corporation., a Delaware corporation ("AMC"), and the stockholder
identified on the signature page hereof (the "Stockholder");
WITNESSETH:
WHEREAS, the Stockholder, as of the date hereof, is the owner of or
has the sole right to vote the number of shares of Common Stock, par value $.01
per share ("Common Stock"), Class B Preferred Stock, par value $100 per share
("Class B Preferred Stock") and/or Class C Preferred Stock, par value $100 per
share ("Class C Preferred Stock" and, together with Common Stock and Class B
Preferred Stock, "Capital Stock") of Ashland Coal, Inc., a Delaware corporation
(the "Company"), set forth below the name of the Stockholder on the signature
page hereof (the "Shares"); and
WHEREAS, in reliance upon the execution and delivery of this
Agreement, AMC will enter into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), with the Company and AMC Merger
Corporation which provides, among other things, that upon the terms and subject
to the conditions thereof the Company will become a wholly owned subsidiary of
AMC (the "Merger"); and
WHEREAS, to induce AMC to enter into the Merger Agreement and to
incur the obligations set forth therein, the Stockholder is entering into this
Agreement pursuant to which the Stockholder agrees to vote in favor of the
Merger, and to make certain agreements with respect to the Shares upon the terms
and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. VOTING OF SHARES; PROXY. (a) The Stockholder agrees that
until the earlier of (i) the Effective Time (as defined in the Merger Agreement)
or (ii) the date on which the Merger Agreement is terminated (the earliest
thereof being hereinafter referred to as the "Expiration Date"), the Stockholder
shall vote all Shares owned by the Stockholder at any meeting of the Company's
stockholders (whether annual or special and whether or not an adjourned meeting)
for adoption and approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger as such Merger Agreement may be
modified or amended from time to time. Any such vote shall be cast in
accordance with such procedures relating thereto as shall ensure that it is duly
counted for purposes of determining that a quorum is present and for purposes of
recording the results of such vote or consent.
(b) At the request of AMC, the Stockholder, in furtherance of the
transactions contemplated hereby and by the Merger Agreement, and in order to
secure the performance by the Stockholder of its duties under this Agreement,
shall promptly execute, in accordance with the provisions of Section 212(e) of
the Delaware General Corporation Law, and deliver to AMC, an irrevocable proxy,
substantially in the form of Annex A hereto, and irrevocably appoint AMC or its
designees, with full power of substitution, its attorney and proxy to vote all
of the Shares owned by the Stockholder in respect of any of the matters set
forth in, and in accordance with the provisions of Section 1(a). The Stockholder
acknowledges that the proxy executed and delivered by it shall be coupled with
an interest, shall constitute, among other things, an inducement for AMC to
enter into the Merger Agreement, shall be irrevocable and shall not be
terminated by operation of law or upon the occurrence of any event.
Section 2. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants
and agrees for the benefit of AMC that, until the Expiration Date, it will:
(a) not sell, transfer, pledge, hypothecate, encumber, assign,
tender or otherwise dispose of, or other than as expressly contemplated by
the Merger Agreement, enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge,
hypothecation, encumbrance, assignment, tender or other disposition of,
any of the Shares owned by it or any interest therein; and
(b) other than as expressly contemplated by this Agreement, not
grant any powers of attorney or proxies or consents in respect of any of
the Shares owned by it, deposit any of the Shares owned by it into a
voting trust, enter into a voting agreement with respect to any of the
Shares owned by it or otherwise restrict the ability of the holder of any
of the Shares owned by it freely to exercise all voting rights with
respect thereto.
Section 3. COVENANTS OF AMC. AMC covenants and agrees for the
benefit of the Stockholder that (a) immediately upon execution of this
Agreement, it shall enter into the Merger Agreement, and (b) until the
Expiration Date, it shall use best efforts to take, or cause to be taken, all
action, and do, or cause to be done, all things necessary or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement, consistent with the terms and conditions of each such
Agreement; PROVIDED, HOWEVER, that nothing in this Section 3, Section 12 or any
other provision of
2
this Agreement is intended, nor shall it be construed, to limit or in any way
restrict AMC's right or ability to exercise any of its rights under the Merger
Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to AMC that: (a) the execution, delivery and
performance by the Stockholder of this Agreement will not conflict with, require
a consent, waiver or approval under, or result in a breach of or default under,
any of the terms of any contract, commitment or other obligation (written or
oral) to which the Stockholder is bound; (b) this Agreement has been duly
executed and delivered by the Stockholder and constitutes a legal, valid and
binding obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms; (c) the Stockholder is the sole owner of or has the
sole right to vote the Shares and the Shares represent all shares of Capital
Stock which the Stockholder is the sole owner of or has the sole right to vote
at the date hereof, and the Stockholder does not have any right to acquire, nor
is it the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of, any other shares of any class
of capital stock of the Company or any securities convertible into or
exchangeable or exercisable for any shares of any class of capital stock of the
Company; (d) the Stockholder has full right, power and authority to execute and
deliver this Agreement and to perform its obligations hereunder; and (e) the
Stockholder owns the Shares free and clear of all liens, claims, pledges,
charges, proxies, restrictions, encumbrances, proxies, voting trusts and voting
agreements of any nature whatsoever other than as provided by this Agreement and
other than the Restated Shareholders Agreement among Ashland Inc., Carboex
International, Ltd. and the Company dated December 12, 1991, as amended August
6, 1993. The representations and warranties contained herein shall be made as of
the date hereof and as of each day from the date hereof through and including
the Effective Time (as defined in the Merger Agreement).
Section 5. ADJUSTMENTS; ADDITIONAL SHARES. In the event (a) of any
stock dividend, stock split, merger (other than the Merger) recapitalization,
reclassification, conversion, combination, exchange of shares or the like of any
of the Capital Stock of the Company on, of or affecting the Shares or (b) that
the Stockholder shall become the beneficial owner of any additional shares of
Capital Stock or other securities entitling the holder thereof to vote or give
consent with respect to the matters set forth in Section 1, then the terms of
this Agreement shall apply to the shares of Capital Stock or other instruments
or documents held by the Stockholder immediately following the effectiveness of
the events described in clause (a) or the Stockholder becoming the beneficial
owner thereof as described in clause (b), as though, in either case, they were
Shares hereunder.
3
Section 6. SPECIFIC PERFORMANCE. The Stockholder acknowledges that
the agreements contained in this Agreement are an integral part of the
transactions contemplated by the Merger Agreement, and that, without these
agreements, AMC would not enter into the Merger Agreement, and acknowledges that
damages would be an inadequate remedy for any breach by it of the provisions of
this Agreement. Accordingly, the Stockholder and AMC each agree that the
obligations of the parties hereunder shall be specifically enforceable and
neither party shall take any action to impede the other from seeking to enforce
such right of specific performance.
Section 7. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be effective upon receipt (or refusal of
receipt), shall be in writing and shall be delivered in person, by telecopy or
telefacsimile, by telegram, by next-day courier service, or by mail (registered
or certified mail, postage prepaid, return receipt requested) to the Stockholder
at the address listed on the signature page hereof, and to AMC at Suite 300,
CityPlace One, St. Louis, Missouri 63141, Attention: Secretary, telecopy number
(314) 994-2734, or to such other address or telecopy number as any party may
have furnished to the other in writing in accordance herewith.
Section 8. BINDING EFFECT; SURVIVAL. Upon execution and delivery of
this Agreement by AMC, this Agreement shall become effective as to the
Stockholder at the time the Stockholder executes and delivers this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
Section 9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
Section 10. COUNTERPARTS. This Agreement may be executed in two
counterparts, both of which shall be an original and both of which together
shall constitute one and the same agreement.
Section 11. EFFECT OF HEADINGS. The Section headings herein are
for convenience of reference only and shall not affect the construction
hereof.
Section 12. ADDITIONAL AGREEMENTS; FURTHER ASSURANCE. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement. The Stockholder
will provide AMC with all documents which may reasonably be requested by AMC and
will take reasonable steps to
4
enable AMC to obtain fully all rights and benefits provided it hereunder.
Section 13. AMENDMENT; WAIVER. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be effective
unless in writing and signed by AMC and the Stockholder, in the case of an
amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
ARCH MINERAL CORPORATION
By: /s/ Jeffry N. Quinn
------------------------
Name: Jeffry N. Quinn
------------------------
Title: Senior Vice President
------------------------
Ashland Inc.
- ----------------------
Name of Stockholder
By: /s/ Thomas L. Feazell
---------------------
Senior Vice President,
General Counsel and Secretary
Address: Ashland Inc.
P.O. Box 391
Ashland, KY 41114
----------------------
Number of Shares:
7,529,686 (Common Stock)
---------
150 (Class B Preferred Stock)
---------
0 (Class C Preferred Stock)
---------
5
ANNEX A
[Form of Proxy]
IRREVOCABLE PROXY
-----------------
In order to secure the performance of the duties of the undersigned
pursuant to the Voting Agreement, dated as of , 1997 (the "Voting
Agreement"), between the undersigned and Arch Mineral Corporation, a Delaware
corporation, a copy of such agreement being attached hereto and incorporated by
reference herein, the undersigned hereby irrevocably appoints and , and each of
them, the attorneys, agents and proxies, with full power of substitution in each
of them, for the undersigned and in the name, place and stead of the
undersigned, in respect of any of the matters set forth in clauses (i) and (ii)
of Section 1 of the Voting Agreement, to vote or, if applicable, to give written
consent, in accordance with the provisions of said Section 1 and otherwise act
(consistent with the terms of the Voting Agreement) with respect to all shares
of Common Stock, par value $.01 per share, Class B Preferred Stock, par value
$100 per share, and Class C Preferred Stock, par value $100 per share (the
"Shares"), of Ashland Coal, Inc., a Delaware corporation (the "Company"),
whether now owned or hereafter acquired, which the undersigned is or may be
entitled to vote at any meeting of the Company held after the date hereof,
whether annual or special and whether or not an adjourned meeting, or, if
applicable, to give written consent with respect thereto. This Proxy is coupled
with an interest, shall be irrevocable and binding on any successor in interest
of the undersigned and shall not be terminated by operation of law or upon the
occurrence of any event. This Proxy shall operate to revoke any prior proxy as
to the Shares heretofore granted by the undersigned. This Proxy shall terminate
on , 1997. This Proxy has been executed in accordance with Section 212(e) of the
Delaware General Corporation Law.
Dated:
--------------
