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National Coal - Mineral Rights Purchase And Sale Agreement
MINERAL RIGHTS PURCHASE AND SALE AGREEMENT
THIS MINERAL RIGHTS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made as of the 6th day of December, 2004 (the "AGREEMENT DATE") by and among THE BRIMSTONE CO., formerly RSB Land Co. Huntsville, Tennessee, a Tennessee general partnership comprised of the Brimstone Trust, John W. Rollins, Jr., Patrick E. Rollins, Catherine R. Serby, Henry B. Tippie, the Estate of John W. Rollins, Sr., the W. H. Swain Irrevocable Trust, and Robert F. Worthington, Jr. ("SELLER"), and NATIONAL COAL CORPORATION, a Tennessee corporation, and its assigns ("BUYER").
WITNESSETH
WHEREAS, Seller is the owner in fee simple of certain mineral and related rights located on real property in Scott and Morgan Counties, Tennessee, consisting of approximately forty-four thousand four hundred sixty three (44,463) acres, more or less, as more particularly described on EXHIBIT A attached hereto and incorporated herein by reference (the "LAND"); said mineral, including but not limited to the coal mineral rights, and the oil and gas rights, and related rights (herein the "Mineral Rights") shall consist of all minerals located under the surface of the Land, including access thereto as provided and allowed under the Timber Deed hereafter specified, and all rights and interests of Seller in and to the Land not previously sold to Fund 7 Domestic, LLC, pursuant to a Special Warranty Deed ("Timber Deed") dated _______________, 2004, of record in Deed Book ______, Page ______, in the office of the Register of Deeds for Scott County, Tennessee; and
WHEREAS, Seller desires and agrees to sell the Mineral Rights to Buyer and Buyer desires and agrees to purchase the Mineral Rights from Seller, pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises of the parties, Seller and Buyer agree as follows:
AGREEMENT
1. PURCHASE PRICE. The purchase price for the Mineral Rights is Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) (the "PURCHASE PRICE"). The Purchase Price for the Mineral Rights shall be payable as follows:
(a) the sum of One Hundred Thousand and No/100 Dollars ($100,000.00) payable by Buyer's check or wire transfer as an earnest money deposit for the Mineral Rights (which, together with the earnest money deposit specified in subsection (b) below, is herein referred to as the "EARNEST MONEY") to be paid upon the full execution and delivery of this Agreement by Seller and Buyer, to be held by the Seller in an interest bearing account, as escrow agent (the "ESCROW AGENT"), in accordance with this Agreement.
(b) the sum of Fifty Thousand Dollars ($50,000.00) payable by Buyer's check or wire transfer as an additional earnest money deposit for the Mineral Rights to be paid on or before December 31, 2004, and to also be held by Escrow Agent in accordance with this Agreement.
(c) the Earnest Money shall be held pursuant to this Agreement by the Seller, as Escrow Agent, and agrees that the Earnest Money shall be invested in a manner acceptable to Buyer, and for all interest earned thereon to be applied to the
Purchase Price at closing. Buyer's federal tax identification number is 41-2077382.
(d) Subject to the provisions of this Agreement, the Earnest Money shall be applied to payment of the Purchase Price; and the balance of the Purchase Price shall be paid at the closing of the sale of the Mineral Rights and delivery of Seller's Deed, as defined below (the "CLOSING").
2. Seller's Deed and Assignment
A. SELLER'S DEED. Upon payment of the Purchase Price, Seller shall execute and deliver to Buyer a special warranty deed in form reasonably satisfactory to Buyer ("Deed"), conveying to Buyer or its nominee, good and marketable title to the Mineral Rights, including but not limited to any heretofore unpaid proceeds therefrom, in fee simple, free and clear of all liens, encumbrances, covenants, restrictions, easements, rights of way, claims, rights and other matters arising by, through or under Seller, except the following ("PERMITTED EXCEPTIONS"):
(a) all rights, interest, and conditions specified in the Timber Deed;
(b) public easements of record which will not materially impair the value of the Mineral Rights or the ability of Buyer to use the same for Buyer's intended use thereof ("Buyer's Intended Use");
(c) zoning and building laws, ordinances, resolutions and regulations;
(d) ad valorem real estate taxes and assessments for public improvements not then due and payable, which shall be pro-rated as of the Closing date, and adjusted when the actual taxes for the Mineral Rights have been allocated as between the Land and the mineral rights and assessed for the year 2005;
(e) any other matter relating to title and reflected on the Title Commitment (defined below) if not objected to by Buyer pursuant to the terms of Section 6 hereof; and
(f) any title exception created directly or indirectly by any act or omission of Buyer or its representatives, agents, employees or invitees.
The Deed and any other documents delivered to Buyer at Closing shall convey the Mineral Rights "as is" and there shall be no warranties express or implied, as to the quality, quantity, and all other attributes of the Mineral Rights. Further, although the books, records and other documentation of Seller may be made available to Buyer, Seller does not make any warranties as to the correctness or accuracy thereof.
B. Assignment. Upon payment of the Purchase Price, the Seller shall execute an Assignment transferring to the Buyer all of the Seller's right, title and interest in all oil and gas, and other contracts related to the mineral rights on the Land.
3. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants to Buyer as of the Agreement Date, and hereby agrees with Buyer that with respect to the Mineral Rights:
(a) Seller represents and warrants that it is the owner of the Land and the related contracts.
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(b) Seller has not received written notice of any condemnation proceedings affecting the Mineral Rights which are currently threatened or pending.
(c) All leases or contracts affecting all or any part of the Mineral Rights and any other party concerning the sale, conveyance, lease, or occupancy of any interest in the Mineral Rights or any part thereof, shall be disclosed to Buyer by Seller on or before December 15, 2004, copies of which the Seller shall provide to the Buyer, and Buyer may terminate this Agreement within the Inspection Period if any such leases or contracts are objected to (the "CONTRACTS"). Seller shall assign the Contracts to Buyer at the Closing by appropriate assignment, but "as is," without any warranties, express or implied.
(d) Seller has not received written notice of any pending or threatened actions, suits or proceedings against or affecting the Mineral Rights or any portion thereof, or relating to or arising out of the ownership, operation, management, use or maintenance of the Mineral Rights, except as specified on EXHIBIT B attached hereto. Seller shall furnish Buyer with all information available with respect to the scheduled litigation on or before December 15, 2004, and Buyer may terminate this Agreement within the Inspection Period if any such litigation is unacceptable to Buyer.
(e) At Closing, Seller shall deliver to Buyer a satisfactory written certificate complying under the Foreign Investment in Real Property Act and the regulations thereunder ("FIRPTA"), certifying that Seller is neither a foreign person nor subject to withholding under FIRPTA, and containing Seller's tax identification or social security number and address. Seller shall also furnish any affidavit reasonably required by Buyer or the Title Company pursuant to the Patriot Act.
(f) Seller has not received written notice of any attachments, executions, assignments for the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or under any other debtor relief laws contemplated or pending or threatened against Seller or the Mineral Rights.
(g) All representations and warranties made by Seller in this Agreement are true and correct on the date made. At the Closing, Seller shall deliver to Buyer a certificate executed on behalf of each Seller reasonably acceptable to Buyer certifying that such representations and warranties are true and correct on and as of the Closing Date (as defined herein).
4. CONDITIONS PRECEDENT. Unless the following conditions are satisfied or waived by Buyer on or before the expiration of the Inspection Period (as defined herein), Buyer may elect to terminate this agreement, subject to the terms of the last paragraph of this Section 4:
(a) The record title to the Mineral Rights shall be satisfactory to Buyer.
(b) During the Inspection Period, Buyer shall have completed a Phase I Environmental Assessment of the Mineral Rights and such other site investigations, tests and other examinations as it shall deem necessary or appropriate and shall have determined in its sole discretion that no "Hazardous Substances" (as hereinafter defined) have been ever manufactured, treated, stored, released or disposed of on, in or under the Land or any part thereof and there are no underground storage tanks on the Land. The environmental assessments completed for the benefit of Buyer must otherwise be acceptable to Buyer in all respects. For the purposes of this provision "HAZARDOUS SUBSTANCE" means and includes: (i) any hazardous, toxic or dangerous
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waste, substance or material defined as such in (or for the purposes of) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, and any so-called superfund or superlien law, or any other federal, state or local statute, law, ordinance, code, rule or regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, (ii) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any federal, state or local governmental authority pursuant to any environmental, health and safety or similar law, code, ordinance, rule or regulation, order or decree in effect on the Agreement Date and which may or could pose a hazard to the health and safety of persons on or about the Land or any adjoining real property or cause damage to the environment, (iii) asbestos and pcbs, and (iv) petroleum in any form.
(c) Buyer shall have determined that all governmental permits and approvals necessary for Buyer's intended use of the Mineral Rights and the construction and operation of the necessary improvements for its operations have or can be obtained and that the Mineral Rights are not subject to any governmental regulations which would limit or restrict the development of the Mineral Rights for Buyer's Intended Use in a manner satisfactory to Buyer in its sole discretion.
The conditions precedent set forth in this Section 4 are intended solely for the benefit of Buyer. If any of such condition(s) are not satisfied on or before expiration of the Inspection Period (as hereinafter defined), Buyer shall have the right, at its sole election, either to waive the condition(s) in question by written instrument of waiver, either in whole or in part, and proceed with the purchase or, in the alternative, terminate this Agreement by giving Seller written notice of such election by delivering written notice to Seller at any time on or before the expiration of the Inspection Period. If Buyer does not provide such written notice on or before the expiration of the Inspection Period, Buyer shall be deemed to have waived any such conditions. If this Agreement is terminated pursuant to this Section 4, the Earnest Money and all interest thereon shall be refunded to Buyer, and all parties shall be released from all further liabilities and obligations under this Agreement; provided, however that the indemnity obligations of the parties under this Agreement shall survive termination.
5. APPROVAL OF MINERAL RIGHTS. Commencing on the Agreement Date and continuing until January 31, 2005, (the "INSPECTION PERIOD"), Seller shall afford Buyer and its representatives a continuing right to inspect the Mineral Rights and to enter upon the Land and conduct engineering studies, and make surveys at reasonable hours. Buyer shall notify Seller within a reasonable time prior to accessing the Mineral Rights by providing the name of the person or entity who will enter the Land to conduct an inspection or test and the date of such inspection or test. Anyone entering the Land on behalf of Buyer shall leave all gates in the opened or closed position, as found at the time of entry. Buyer shall indemnify and hold Seller harmless from and against any loss, claim or liability arising or resulting from any physical damage to the Land or injuries to persons or property resulting from the inspections made by Buyer or Buyer's agents or representatives. If for any reason, in Buyer's sole and absolute discretion, Buyer is not satisfied with the Mineral Rights in any respect, then Buyer may terminate this Agreement by delivering written notice to Seller at any time on or before the expiration of the Inspection Period.
If Buyer terminates this Agreement pursuant to Section 4 or Section 5, the Earnest Money shall be refunded to the Buyer by the Escrow Agent. If Buyer closes on the purchase of the Mineral Rights, the Earnest Money together with any interest earned thereon shall be applied to payment of the Purchase Price at Closing. In the event the transaction contemplated by this Agreement is not consummated, Buyer, at its
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sole cost and expense, shall restore the Land and the Mineral Rights, as nearly as possible, to their condition prior to Buyer's tests and inspections if changed due to such tests and inspections.
6. TITLE INSURANCE. Buyer may obtain at Buyer's expense a commitment for an owner's policy of title insurance ("TITLE COMMITMENT") from a title company acceptable to Buyer (the "TITLE COMPANY") within the Inspection Period and shall provide a copy of the Title Commitment to Seller within a reasonable time thereafter. If the Title Commitment shows either that Seller does not have good and marketable fee simple title to the Mineral Rights, or that there are any defects, liens, or any encumbrances or any other matters that are not acceptable to Buyer, Buyer may notify Seller within the Inspection Period of same. By not later than February 20, 2005, (the "CURE PERIOD"), Seller shall have taken and completed all actions as are necessary to (A) render the title to the Mineral Rights marketable and in accordance with the foregoing requirements and/or (B) remove any such defects, liens and encumbrances, except for any monetary liens which Seller shall pay at Closing and provide Buyer satisfactory evidence of payment and release. If Seller fails within the Cure Period to (a) eliminate any such defects, liens and encumbrances, and (b) obtain an endorsement deleting such ...
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