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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
As filed with the Securities and Exchange Commission on April 29, 2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
Coronado Global Resources Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization) |
83-1780608
(I.R.S. Employer Identification No.) |
100 Bill Baker Way
Beckley, West Virginia 25801
(Address of principal executive offices) (Zip Code)
(681) 207-7263
(Registrant's telephone number, including area code)
Securities
to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $0.01 per share
(Title of class)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer ý |
Smaller reporting company
o
Emerging growth company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act o
i
Pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are filing this General Form for Registration of Securities on Form 10, or this registration statement, to register our common stock, par value $0.01 per share, or common stock. The common stock is publicly traded on the Australian Securities Exchange, or the ASX, under the ticker "CRN" in the form of CHESS Depositary Interests, or CDIs. CDIs are units of beneficial ownership in shares of our common stock held by CHESS Depositary Nominees Pty Limited, or CDN, a subsidiary of ASX Limited, the company that operates the ASX. The CDIs entitle holders to dividends, if any, and other rights economically equivalent to shares of our common stock on a 10-for-1 basis, including the right to attend stockholders' meetings. The CDIs are also convertible at the option of the holders into shares of our common stock on a 10-for-1 basis, such that for every ten CDIs converted, a holder will receive one share of common stock. CDN, as the stockholder of record, will vote the underlying shares in accordance with the directions of the CDI holders.
This registration statement will become effective automatically by lapse of time 60 days from the date of the original filing pursuant to Section 12(g)(1) of the Exchange Act or within such shorter period as the Securities and Exchange Commission, or the SEC, may direct. As of the effective date, we will be subject to the requirements of Regulation 13(a) under the Exchange Act and will be required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.
Unless otherwise noted, references in this registration statement to "we," "us," "our," "Company," or "Coronado" refer to the Coronado Group (as described below) prior to the Reorganization Transaction (as described below) and Coronado Global Resources Inc., a Delaware corporation, and its consolidated subsidiaries after the Reorganization Transaction.
All production and reserves amounts contained in this registration statement are expressed in metric tons, or Mt, millions of metric tons, or MMt, or millions of metric tons per annum, or MMtpa, except where otherwise stated. One Mt (1,000 kilograms) is equal to 2,204.62 pounds and is equivalent to 1.10231 short tons. In addition, all dollar amounts contained herein are expressed in United States dollars, or US$, except where otherwise stated. References to "A$" are references to Australian dollars, the lawful currency of the Commonwealth of Australia. Some numerical figures included in this registration statement have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not equal the sum of the figures that precede them.
This registration statement contains statistics, data and other information (including forecasts and projections) relating to the industries, segments and end markets in which we operate. Such information includes, but is not limited to, statements, statistics and data relating to product segment and market share, estimated historical and forecast market growth, market sizes and trends, and our estimated market share and our industry position. We have obtained significant portions of such information from databases and research prepared by third parties. Investors should note that market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Although we are responsible for all of the disclosure contained in this registration statement, and we believe the industry and market data to be reliable as of the date of this registration statement, this information could prove to be inaccurate.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This registration statement contains "forward-looking statements" concerning our business, operations, financial performance and condition, the coal, steel and other industries, as well as our
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plans, objectives and expectations for our business, operations, financial performance and condition. Forward-looking statements may be identified by words such as "may," "could," "believes," "estimates," "expects," "intends," "considers" and other similar words.
Any forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause actual results, performance, events or outcomes to differ materially from the results, performance, events or outcomes expressed or anticipated in these statements, many of which are beyond our control. Such forward-looking statements are based on an assessment of present economic and operating conditions on a number of best estimate assumptions regarding future events and actions. These factors are difficult to accurately predict and may be beyond our control. Factors that could affect our results or an investment in our securities include, but are not limited to:
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We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.
See Item 1A. "Risk Factors" and elsewhere in this registration statement for a more complete discussion of the risks and uncertainties mentioned above and for discussion of other risks and uncertainties we face that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements, as well as others made in this registration statement and hereafter in our other filings with the SEC and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.
We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this registration statement are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by applicable law.
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Overview
We are a global producer, marketer and exporter of a full range of metallurgical coals. We own a portfolio of operating mines and development projects in Queensland in Australia and Virginia, West Virginia and Pennsylvania in the United States.
Our operations in Australia, or our Australian Operations, consist of the 100%-owned Curragh producing mining property located in the Bowen Basin of Australia. Our operations in the United States, or our U.S. Operations, comprise three producing mining properties (Buchanan, Logan and Greenbrier), two development mining properties (Pangburn-Shaner-Fallowfield and Russell County) and one idle mining property (Amonate), primarily located in the Central Appalachian region of the United States, or CAPP, all of which are 100%-owned. Our U.S. Operations and Australian Operations include eleven actively producing mines that are strategically located for access to transportation infrastructure. In addition to metallurgical coal, our Australian Operations sell thermal coal, which is used to generate electricity, to Stanwell Corporation Limited, or Stanwell, a Queensland government-owned entity and the operator of the Stanwell Power Station located near Rockhampton, Queensland. Our U.S. Operations also produce and sell some thermal coal that is extracted in the process of mining metallurgical coal.
Our business profile primarily focuses on the production of metallurgical coal for the North American and seaborne export markets. Metallurgical coal and thermal coal sales represented approximately 79% and 21%, respectively, of our total volume of coal sold for the year ended December 31, 2018. In 2018, we were the fifth largest metallurgical coal producer globally by export volume and the largest metallurgical coal producer in the United States by production volume. In addition, export sales as a percentage of our total sales for the year ended December 31, 2018 were approximately 69%.
To support our operations, we have proven and probable coal reserves totaling 710.5 MMt as of December 31, 2018. For more information regarding our coal reserves, see Item 3. "Properties."
History and Australian IPO
We were founded in 2011 by Garold Spindler, James Campbell and a fund affiliated with The Energy & Minerals Group, or EMG, with the intention of evaluating, acquiring and developing metallurgical coal properties. EMG was founded in 2006 by John T. Raymond (co-founding partner and chief executive officer) and John Calvert (co-founding partner and president). EMG focuses on investing across various facets of the global natural resource industry.
Since 2011, Coronado Coal LLC, a Delaware limited liability company, and other affiliated entities, including Coronado Group LLC, a Delaware limited liability company, which we refer to, collectively, as Coronado Group, have grown the scale and platform of our current operations principally from four acquisitions:
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Prior to a corporate reorganization in August 2018, or the Reorganization Transaction, Coronado Group HoldCo LLC, a Delaware limited liability company and the holding company of our Australian Operations, was a wholly-owned subsidiary of Coronado Group LLC. In connection with the Reorganization Transaction, (i) Coronado Group HoldCo LLC was converted into Coronado Global Resources Inc., a Delaware corporation, in August 2018 and (ii) Coronado Group LLC contributed all of the equity ownership in the U.S. Operations to Coronado Coal Corporation, a wholly-owned subsidiary of Coronado Global Resources Inc. Immediately following the Reorganization Transaction, Coronado Global Resources Inc. remained a wholly-owned subsidiary of Coronado Group LLC, which is currently owned by funds managed by EMG, which we refer to, collectively, as the EMG Group, and certain members of our management.
On October 23, 2018, we completed an initial public offering on the ASX, which we refer to as the Australian IPO, pursuant to which the Company issued and sold the equivalent of 16,651,692 shares of common stock in the form of CDIs and the EMG Group, through Coronado Group LLC, sold the equivalent of 2,691,896.4 shares of common stock in the form of CDIs.
Following the Australian IPO, the EMG Group and management beneficially own approximately 80% of the issued and outstanding shares of our common stock through their ownership of Coronado Group LLC, our controlling shareholder. The remaining 20% is owned by public investors in the form of CDIs traded on the ASX. In addition, Coronado Group LLC holds one share of preferred stock Series A, par value $0.01 per share, of the Company, or the Series A Share, which is the only share of preferred stock issued and outstanding. The holder of the Series A Share is permitted to nominate and elect members of our Board of Directors in relation to the level of the holder's aggregate beneficial ownership of shares of our common stock. In connection with the Australian IPO, Coronado Group LLC entered into a voluntary escrow agreement under which it agreed, among other things, to certain restrictions and prohibitions from engaging in transactions involving the shares of our common stock that it holds for a restricted period ending on the first business day after the release of our results for the year ending December 31, 2019, subject to certain exceptions.
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Organizational Structure
The following chart shows our current organizational structure:
Overview of Operations
Metallurgical coal
Sales of metallurgical coal represented approximately 91% of our revenues in 2018. Most of the metallurgical coal that we produce is sold, directly or indirectly, to steel producers. The steel industry's demand for metallurgical coal is affected by several factors, including the cyclical nature of that industry's business, general economic conditions and demand for steel, tariffs on steel and steel products, technological developments in the steelmaking process and the availability and cost of substitutes for steel, such as aluminum, composites and plastics. We compete based on coal quality and characteristics, price, customer service and support and reliability of supply. Seaborne metallurgical coal import demand can be significantly impacted by the availability of indigenous coal production, particularly in the leading metallurgical coal import countries of China, India and Brazil, among others, and the competitiveness of seaborne metallurgical coal supply, including from the leading metallurgical coal exporting countries of Australia, the United States, Russia, Canada and Mongolia, among others.
Thermal Coal
Sales of thermal coal represented approximately 6% of our revenues in 2018. The thermal coal that we produce is sold, directly or indirectly, to power stations, including Stanwell, as an energy source in the generation of electricity. Demand for our thermal coal products is impacted by economic conditions, environmental regulation, demand for electricity, including the impact of energy efficient
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products, and the cost of electricity generation from alternative fuels. Our thermal coal products primarily compete with producers of other forms of electric generation, including natural gas, oil, nuclear, hydro, wind, solar and biomass, that provide an alternative to coal use.
Segments
In accordance with Accounting Standards Codification, or ASC, Topic 280, Segment Reporting , we have adopted the following reporting segments:
In addition, "Corporate and other" is not a reporting segment but is disclosed for the purposes of reconciliation to our consolidated financials.
These segments are grouped based on geography and reflect how we currently monitor and report the results of the business to the Chief Executive Officer who is our chief operating decision maker, or CODM, the Chief Operating Officer and the Chief Financial Officer. Factors affecting and differentiating the financial performance of each of these four reportable segments generally include coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues. We believe this method of segment reporting reflects the way our business segments are currently managed and the way the performance of each segment is evaluated. The four segments consist of similar operating activities as each segment produces similar products.
Overview of Australian OperationsCurragh
Curragh is located in Queensland's Bowen Basin, one of the world's premier metallurgical coal regions. Curragh has been operating since 1983, and in 2018 was the sixth largest metallurgical coal mining property in Australia by production. Curragh produces a variety of high-quality, low-ash metallurgical coal products. Metallurgical coals are primarily used in the manufacture of coke, which is used in the steel-making process, as well as direct injection into a blast furnace as a replacement for coke. These metallurgical coal products are exported globally to a diverse customer base located primarily in Asia. Curragh also produces thermal coal. Thermal coal is used primarily as an energy source in the generation of electricity. The thermal coal produced at Curragh is primarily sold domestically under a long-term contract to Stanwell, with a limited amount being exported. For the year ended December 31, 2018, 74.3% of the total volume of coal sold by our Australian Operations was metallurgical coal and 25.7% of the total volume of coal sold by our Australian Operations was thermal coal. See Item 3. "Properties" for more information regarding Curragh.
Overview of U.S. OperationsBuchanan, Logan and Greenbrier
Our producing mining properties in the United States are located in the CAPP in Virginia and West Virginia, which is a highly-developed, active, coal-producing region. Our three producing mining properties in the United States are Buchanan, Logan and Greenbrier. Coal produced by our U.S. Operations is consumed regionally by North American steel producers or exported by seaborne transportation to steel producers (primarily in Europe, South America and Asia). For the year ended December 31, 2018, 90.0% of the total coal produced by our U.S. Operations was metallurgical coal and 10.0% was thermal coal. See Item 3. "Properties" for more information regarding Buchanan, Logan, Greenbrier and the other material mining properties that compose our U.S. Operations.
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Customers
We sell most of our coal to steel producers, either directly or through intermediaries, such as brokers. We also sell thermal coal to electricity generators. Major consumers of our seaborne metallurgical coal in 2018 were located in India, Japan, South Korea, Taiwan, Brazil, China and the European Union. These consumers are all major global steel producers. The majority of our sales are made on a spot basis or under contracts with terms of typically one year. For the year ended December 31, 2018, our top ten customers comprised 70% of our total revenue and our top five customers comprised 51% of our total revenue. For the year ended December 31, 2018, sales to Xcoal Energy & Resources, LLC, or Xcoal, and Tata Steel Limited, or Tata Steel, represented approximately 23% and 12%, respectively, of our total revenue.
Australia Sales and Marketing
Revenues from our Australian Operations represented approximately 59% of our total revenue for the year ended December 31, 2018. Revenues from metallurgical and thermal coal sales represented approximately 91% and 6%, respectively, of total revenues from our Australian Operations for the year ended December 31, 2018.
Curragh metallurgical coal sales are typically made directly to international steel producers. Our Australian Operations sold 6.8 MMt of export metallurgical coal (being 74% of our Australian Operations' total produced coal) into the seaborne coal markets in the period from our acquisition of Curragh on March 29, 2018 to December 31, 2018. The majority of customers purchase multiple grades or products and have purchased Curragh coal continuously through all stages of the coal/commodity pricing cycle. Curragh metallurgical coal sales have typically been entered into on annual contracts negotiated by our Australian Operations' sales managers, with pricing negotiated on a quarterly basis with reference to benchmark indices or bilaterally negotiated term prices and spot indices. Our Australian Operations have maintained a high level of contract coverage against planned production. In 2018, approximately 89% of Curragh's metallurgical coal export sales were made under term contracts (with the balance sold on framework contracts that do not involve a binding commitment to supply, or in the spot market).
Stanwell
We are party to contractual arrangements with Stanwell, including a coal supply agreement, or the CSA, and the Curragh Mine New Coal Supply Deed, dated August 14, 2018, or the Supply Deed.
Under the CSA, we deliver thermal coal from Curragh to Stanwell at an agreed price and quantity. Stanwell may vary its intake of thermal coal each year, and the total quantity to be delivered to Stanwell cannot be precisely forecast. The coal that we supply to Stanwell constitutes the majority of the thermal coal production from Curragh. Our cost of supplying coal to Stanwell was greater than the price paid by Stanwell for the period following our acquisition of Curragh through December 31, 2018. See Item 1A. "Risk FactorsTake-or-pay arrangements within the coal industry could unfavorably affect our profitability."
Under the CSA, we also share part of the revenue earned from export metallurgical coal sales (from particular Tenements (as defined below)) with Stanwell through various rebates. The most material rebate is the export price rebate, which is linked to the realized export coal price for a defined metallurgical coal product, as follows:
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The CSA also provides for:
The total Stanwell rebate for the year ended December 31, 2018 was $127.7 million and has been included in the consolidated statements of operations included elsewhere in this registration statement.
The Supply Deed grants us the right to mine the coal reserves in the Stanwell Reserved Area, or the SRA. In exchange, we agreed to certain amendments to the CSA and to enter into a new coal supply agreement, or the NCSA, upon the expiration of the CSA (which is expected to occur in 2027). The consideration for the access to the SRA will be deferred and payable as a discount to the market value of thermal coal over the term of the NCSA. The net present value of the deferred consideration was approximately A$210 million as of December 31, 2018. Further, export rebates on sales of metallurgical coal will no longer be payable on commencement of the NCSA. The other specific terms and conditions are currently being negotiated with Stanwell. These negotiations notwithstanding, we have full access to the SRA.
If the parties do not agree to the full terms of the NCSA documentation by June 30, 2019, the terms will be determined by an expert, based on the terms of a binding terms sheet contained in the Supply Deed, or the Binding Terms Sheet, and the CSA, which is currently in place. See Item 1A. "Risk FactorsRisks related to the Supply Deed with Stanwell may adversely affect our financial condition and results of operations."
U.S. Sales and Marketing
Revenues from our U.S. Operations, in the aggregate, represented approximately 41% of our total revenue for the year ended December 31, 2018. Revenues from metallurgical and thermal coal sales represented approximately 93% and 6%, respectively, of total revenues from our U.S. Operations for the year ended December 31, 2018.
We sell metallurgical coal products from our U.S. Operations primarily to export markets, as well as to North American steel producers and coke producers. We sold approximately 59%, 58% and 58% of total produced coal from our U.S. Operations into the seaborne metallurgical coal markets for the years ended December 31, 2018, 2017 and 2016, respectively. Logan and Greenbrier also produce thermal coal, which is sold predominantly to global export markets, as well as within North America.
Sales from our U.S. Operations to export markets are typically priced with reference to a benchmark index. Our U.S. Operations predominantly access the export metallurgical coal market through Xcoal as the intermediary. In 2018, sales to Xcoal represented approximately 52% of revenue from our U.S. Operations. Sales contracts with Xcoal are entered into on a shipment-by-shipment basis or under an annual agreement. Xcoal, as well as other customers, typically take ownership of coal upon loading into the rail car and are responsible for handling transportation logistics to the port and beyond.
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Sales made by our U.S. Operations' sales team to North American steel producers are primarily pursuant to annual contracts. These annual contracts reflect fixed prices set for the entire year with reference to several factors, including benchmark export prices and forward curves. The fixed-price nature of these annual contracts provides us with visibility on our future revenues, as compared to spot sales or sales priced with reference to a benchmark index. For 2019, we have entered into annual contracts to sell approximately 1.8 MMt metallurgical coal with North American steel producers. Several legacy contracts were assumed in connection with the Buchanan acquisition, of which two remain and expire in 2019 and 2020, respectively. During periods of stable and rising prices, we strive to take advantage of the spot market. Spot export contracts are negotiated throughout the year. Market sales are pursued depending on available supply and market demand.
Transportation
Coal produced at our mining properties is transported to customers by a combination of road, rail, barge and ship. See Item 3. "Properties" for descriptions of the transportation infrastructure available to each of our mining properties. Rail and port services are typically contracted on a long-term, take-or-pay basis in Australia, while these contracts are typically negotiated on a quarterly basis in the United States. See Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources" for additional information on our take-or-pay obligations.
Australian Operations
For sales of thermal coal to Stanwell, Stanwell is responsible for the transport of coal to the Stanwell Power Station. Export thermal coal represents less than 7% of total thermal coal sold by our Australian Operations. Our Australian Operations typically sell export metallurgical coal Free on Board (Incoterms 2010), or F.O.B., with the customer paying for transportation from the outbound shipping port.
The majority of Curragh's export metallurgical coal is railed approximately 300 kilometers to the Port of Gladstone for export via two main port terminals, RG Tanna Coal Terminal, or RGTCT, and Wiggins Island Coal Export Terminal, or WICET. Curragh also has 0.7 MMt of capacity available in the stockpile area at the Port of Gladstone.
Rail Services
Curragh is linked to the Blackwater rail link of the Central Queensland Coal Network, or CQCN, an integrated coal haulage rail system owned and operated by Aurizon Network Pty Ltd., or Aurizon Network. Curragh has secured annual rail haulage capacity of up to 10.0 MMtpa (plus surge capacity) under two long-term rail haulage agreements with Aurizon Operations Limited, or Aurizon Operations.
The RGTCT Coal Transport Services Agreement with Aurizon Operations is for 8.5 MMtpa of haulage capacity to RGTCT. Curragh pays a minimum monthly charge (components of which are payable on a take-or-pay basis), which is calculated with reference to the below-rail access charges, haulage/freight charges, a minimum annual tonnage charge and other charges. The RGTCT Coal Transport Services Agreement terminates on June 30, 2025, unless extended at our option.
The Wiggins Island Rail Project, or WIRP, Transport Services Agreement with Aurizon Operations is for 1.5 MMtpa of capacity to WICET. This contract is effectively 100% take-or-pay (for both rail haulage and capacity access charges). This agreement expires on June 30, 2025.
The CQCN has recently experienced some disruption and capacity restraints as a result of conduct related to maintenance practices by the network operator, Aurizon Network. See Item 8. "Legal Proceedings."
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Port Services
Curragh exports coal through two terminals at the Port of Gladstone, RGTCT and WICET. At RGTCT, we and Gladstone Port Corporation Limited, or GPC, are parties to a coal handling agreement that expires on June 30, 2030. The agreement may be renewed at our request and, subject to certain conditions, GPC is required to agree to the extension if there is capacity at RGTCT to allow the extension. We currently have the right to export between 7.67 MMtpa and 8.67 MMtpa at our nomination on a take-or-pay basis.
We have a minority interest in WICET Holdings Pty Ltd, whose wholly-owned subsidiary, Wiggins Island Coal Export Terminal Pty Ltd, or WICET Pty Ltd, owns WICET. Other coal producers who export coal through WICET also hold shares in WICET Holdings Pty Ltd. In addition, we and the other coal producers (or shippers) have take-or-pay agreements with WICET Pty Ltd and pay a terminal handling charge to export coal through WICET, which is calculated by reference to WICET's annual operating costs, as well as finance costs associated with WICET Pty Ltd's external debt facilities. Our take-or-pay agreement with WICET Pty Ltd, or the WICET Take-or-Pay Agreement, provides Curragh with export capacity of 1.5 MMtpa. The WICET Take-or-Pay Agreement is an "evergreen" agreement, with rolling 10-year terms. If we inform WICET Pty Ltd that we do not wish to continue to roll the term of the WICET Take-or-Pay Agreement, the term would be set at nine years and the terminal handling charge payable by us would be increased so that our proportion of WICET Pty Ltd's debt is amortized to nil by the end of that nine-year term.
Under the WICET Take-or-Pay Agreement, we are obligated to pay for that capacity via terminal handling charges, whether utilized or not. The terminal handling charge payable by us can be adjusted by WICET Pty Ltd if our share of WICET Pty Ltd's operational and finance costs increases, including because of increased operational costs or because another shipper defaults and has its capacity reduced to nil. The terminal handling charge is subject to a financing cap set out in the terminal handling charge methodology and has already been reached and is in force. If another shipper defaults under its take-or-pay agreement, each remaining shipper is effectively proportionately liable to pay that defaulting shipper's share of WICET Pty Ltd's costs going forward, in the form of increased terminal handling charges.
If we default under the WICET Take-or-Pay Agreement we would be obligated to pay a termination payment to WICET Pty Ltd. The termination payment effectively represents our proportion of WICET Pty Ltd's total debt outstanding, based on the proportion of our contracted tonnage to the total contracted tonnage of shippers at WICET at the time the payment is triggered. Shippers can also become liable to pay the termination payment where there is a permanent cessation of operations at WICET. Since WICET began shipping export tonnages in April 2015, three WICET Holdings Pty Ltd shareholders have entered into administration, resulting in the aggregate contracted tonnage of shippers decreasing from 27 MMtpa to 16 MMtpa.
Under the WICET Take-or-Pay Agreement, we are required to provide security (which is provided in the form of a bank guarantee). The amount of the security must cover our estimated liabilities as a shipper under the WICET Take-or-Pay Agreement for the following 12-month period. If we are in default under the WICET Take-or-Pay Agreement and are subject to a termination payment, WICET Pty Ltd can draw on the security and apply it to amounts owing by us. See Item 1A. "Risk FactorsRisks related to our investment in Wiggins Island Coal Export Terminal may adversely affect our financial condition and results of operations" and Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources" for additional information on our take-or-pay obligations.
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U.S. Operations
Our U.S. Operations' domestic contracts are generally priced Free on Rail (Incoterms 2010), or F.O.R., at the mine with customers bearing the transportation costs from the mine to the applicable end user. For direct sales to export customers, we hold the transportation contract and are responsible for the cost to the export facility, and the export customer is responsible for the transportation/freight cost from the export facility to the destination. A large portion of our U.S. export sales are made through Xcoal and other intermediaries. For these sales, Xcoal or the intermediary typically take ownership of the coal as it is loaded into the railcar. The intermediary is responsible for the rail transportation and port costs.
Rail Services
Rail shipments were involved in approximately 99% of total shipments from our U.S. mining properties in 2018.
Transportation of coal from Buchanan is primarily via Norfolk Southern railway to Lamberts Point Coal Terminal Pier 6 and to CNX Marine Terminal for export customers. In the case of domestic customers, coal is primarily shipped via Norfolk Southern railway either directly to the customers or to barge loading docks.
Coal from Logan and Greenbrier is transported via CSX Transportation Railroad, or CSX, using barge and truck. CSX provides transportation to domestic steel customers and to the CNX Marine Terminal, Kinder Morgan Pier IX Terminal or Dominion Terminal Associates, or DTA, Terminal.
Port Services
Norfolk Southern's Pier 6 is the main terminal at the Lamberts Point Terminal located in Norfolk, Virginia. Pier IX is a coal terminal operated by Kinder Morgan Energy Partners in Newport News, Virginia.
Our U.S. Operations have dedicated inventory capacity at the Kinder Morgan Pier IX Terminal and through-put capacity at Lambert's Point Coal Terminal Pier 6. Our U.S. Operations also have alternate port access through CNX Marine Terminal which is a transshipping terminal at the Port of Baltimore owned by CONSOL Energy.
DTA Terminal is a coal export terminal in the Port of Hampton Roads in Newport News, Virginia. DTA Terminal is 65% owned by Contura Energy and 35% by Arch Coal, and has annual export capacity of 22 MMt.
Kanawha River Terminal is a Norfolk Southern/CSX-served coal terminal located on the Ohio River at mile marker 314.5, Ceredo, West Virginia.
Suppliers
The principal goods we purchase in support of our mining activities are mining equipment and replacement parts, diesel fuel, natural gas, ammonium-nitrate and emulsion-based explosives, off-road tires, steel-related products (including roof control materials), lubricants and electricity. As a general matter, we have many well-established, strategic relationships with our key suppliers of goods and do not believe that we are particularly dependent on any of our individual suppliers.
We also depend on several major pieces of mining equipment and facilities to produce and transport coal, including, but not limited to, longwall mining systems, continuous miners, draglines, dozers, excavators, shovels, haul trucks, conveyors, coal preparation plants, or CPPs, and rail loading and blending facilities. Obtaining and repairing these major pieces of equipment and facilities often involves long lead times. We strive to extend the lives of existing equipment and facilities through
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maintenance practices and equipment rebuilds in order to defer the requirement for larger capital purchases. We continue to use our global leverage with major suppliers to ensure security of supply to meet the requirements of our active mines. See Item 3. "Properties" for more information about operations at our mining properties.
We use contractors and other third parties for exploration, mining and other services, generally, and are reliant on a number of third parties for the success of our current operations and the advancement of our development projects.
Thiess Mining Services Contract
We currently use Thiess Pty Ltd, or Thiess, as our primary mining contractor for our Australian Operations. We are party to a long-term mining contract, dated February 15, 2010, with Thiess under which Thiess is engaged to provide services for the Australian Operations relating to: overburden removal, general fleet and maintenance services until June 30, 2019, or Part A Services; and fleet relocation, fleet and tire maintenance services and the provision of ultra-class truck services until March 31, 2021, or Part B Services.
Although the parties have agreed to extend the provision of the Part A Services until June 30, 2019, certain terms and conditions remain under discussion between the parties. The Part B Services can be terminated for convenience, which would trigger the requirement for us to pay a lump-sum termination payment.
At the end of the term of the Part B Services, we must purchase the ultra-class trucks from Thiess at a price determined in accordance with the contract.
We are currently in the process of evaluating bids for a new mining contract to replace our mining contract with Thiess. See Item 1A. "Risk FactorsOur profitability could be affected adversely by the failure of suppliers and/or outside contractors to perform."
Competition
We generate revenue from the sale of coal. In developing our business plan and operating budget, we make certain assumptions regarding future coal prices, coal demand and coal supply. The prices we receive for our coal depend on numerous market factors beyond our control. Accordingly, some underlying coal price assumptions relied on by us may materially change and actual coal prices and demand may differ materially from those expected. Our business, operating and financial performance, including cash flows and asset values, may be materially and adversely affected by short- or long-term volatility in the prevailing prices of our products. Demand for coal and the prices that we will be able to obtain for our coal are highly competitive and are determined predominantly by world markets, which are affected by numerous factors, including: general global, regional and local economic activity; changes in demand for steel and energy; industrial production levels; short-term constraints, including weather incidents; changes in the supply of seaborne coal; technological changes; changes in international freight or other transportation infrastructure rates and costs; the costs of other commodities and substitutes for coal; market changes in coal quality requirements; government regulations which restrict, or increase the cost of, using coal; tariffs imposed by countries, including the United States, on the import of certain steel products and any retaliatory tariffs by other countries; and tax impositions on the resources industry, all of which are outside of our control. In addition, coal prices are highly dependent on the outlook for coal consumption in large Asian economies, such as China, Japan, South Korea and India, as well as any changes in government policy regarding coal or energy in those countries.
Competition in the coal industry is based on many factors, including, among others, world supply price, production capacity, coal quality and characteristics, transportation capability and costs, blending
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capability, brand name and diversified operations. We are subject to competition from producers in Australia, the United States, Canada, Russia, Mongolia and other coal producing countries. See Item 1A. "Risk FactorsWe face significant competition, which could adversely affect profitability."
Working Capital
We generally fund our working capital requirements through a combination of existing cash and cash equivalents and proceeds from the sale of our coal production to customers. Our secured multi-currency revolving syndicated facility agreement, dated September 15, 2018, or the Syndicated Facility Agreement, is also available to fund our working capital requirements to the extent we have remaining availability. As of December 31, 2018, we had $124.7 million of cash available and no borrowings under our Syndicated Facility Agreement. To date, we have used cash flow from operations and borrowings under our Syndicated Facility Agreement to fund our activities and to pay dividends. We expect to fund future dividend payments from cash on hand or borrowings. See Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources" for additional information regarding working capital.
Employees
We had approximately 1,700 employees as of December 31, 2018. In addition, as of December 31, 2018, there were approximately 1,200 contractors supplementing the permanent workforce, primarily at Curragh.
As of December 31, 2018, approximately 12% of our total employees, all at our Australian Operations, were covered by a single, federally-certified collective enterprise bargaining agreement, or the EBA, for mining and maintenance employees. The EBA links us; the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; the Construction, Forestry, Maritime, Mining and Energy Union; the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; and our employees performing mining and operational functions. The current EBA was entered into in January 2016 and passed its nominal expiration date in July 2018. In March 2019, a new EBA agreement was approved by vote by the union employees and is pending approval by the Fair Work Commission. Once approved by the Fair Work Commissions, the EBA will remain in place until replaced or terminated by the Fair Work Commission. Our U.S. Operations employ a 100% non-union labor force.
Regulatory MattersAustralia
Our Australian Operations are regulated by the laws and regulations of the Commonwealth of Australia, or Cth, the State of Queensland, or Qld, and local jurisdictions. Most environmental laws are promulgated at the state level, but the Australian federal government has a role in approval of actions which have national environmental significance. In Queensland, the environmental laws relevant to coal mining include development legislation, pollution, waste, ecosystem protection, land contamination and rehabilitation legislation. In addition, the Australian federal government regulates foreign investment and export approvals.
Tenements
We control the coal mining rights at Curragh under 14 coal and infrastructure mining leases, or MLs, and three mineral development licenses, or MDLs, granted pursuant to the Mineral Resources Act 1989 (Qld). We refer to the MLs and MDLs at Curragh, collectively, as the Tenements. Renewal of certain Tenements will be required during the mine life of Curragh and the Queensland government can vary the terms and conditions on renewal. There are a number of existing mining and petroleum tenements which overlap with the Tenements. The priority, consent and coordination requirements
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under the Mineral Resources Act 1989 (Qld), the Petroleum and Gas (Production and Safety) Act 2004 (Qld) and Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) (as relevant) may apply with respect to those overlaps. Extensive statutory protocols govern the relationships between co-existing mining and exploration rights and these protocols are largely focused on encouraging the overlapping tenement holders to negotiate and formulate arrangements that enable the co-existence of their respective interests. See Item 3. "Properties" for more information regarding the Tenements.
Mineral Resources Act 1989 (Qld)
The Mineral Resources Act 1989 (Qld) and the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld), together, provide for the assessment, development and utilization of mineral resources in Queensland to the maximum extent practicable, consistent with sound economic and land use management. The Mineral Resources Act 1989 (Qld) vests ownership of minerals, with limited exceptions, in the Crown (i.e., the state government). A royalty is payable to the Crown for the right to extract minerals. The Mineral Resources Act 1989 (Qld) creates different tenures for different mining activities, such as prospecting, exploring and mining. A ML is the most important tenure, as it permits the extraction of minerals in conjunction with other required authorities. The Mineral Resources Act 1989 (Qld) imposes general conditions on a ML.
A person who is the holder of a ML must keep the records necessary to enable the royalty payable by the person to be ascertained. The royalty payable on the value of coal sold, disposed of or used (post October 1, 2012) is as set out below:
The royalty payable for coal sold, disposed of or used in a return period is then calculated by multiplying the royalty rate by the value of the coal. Queensland Office of State Revenue Royalty Ruling MRA001.1 contains details on the costs that can (and cannot) be deducted when calculating the applicable royalty and the method for determining the value of the coal. Where there is a change in legislation or case law that affects the content of a royalty ruling, the change in the law overrides the royalty rulingi.e., the Commissioner will determine the royalty liability in accordance with the changed law. See Item 3. "Properties" for a discussion of the royalties currently applicable to Curragh.
Environmental Protection Act 1994 (Qld)
The primary legislation regulating environmental management of mining activities in Queensland is the Environmental Protection Act 1994 (Qld). Its object is to protect Queensland's environment while allowing for development that improves the total quality of life, both now and in the future, in a way that maintains ecologically sustainable development. Under the Environmental Protection Act 1994 (Qld), it is an offense to carry out a mining activity unless the person holds or is acting under an environmental authority for the activity. The environmental authority imposes conditions on a project. It is an offense to contravene a condition of an environmental authority. In addition to the requirements found in the conditions of an environmental authority, the holder must also meet its general environmental duty and duty to notify of environmental harm and otherwise comply with the provisions of the Environmental Protection Act 1994 (Qld) and the regulations promulgated thereunder. For example, the following are offenses under the Environmental Protection Act 1994 (Qld):
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The environmental authority holder must also be a registered suitable operator under the Environmental Protection Act 1994 (Qld). We are a registered suitable operator.
We hold environmental authority EPML00643713, which authorizes the mining of black coal, mineral processing, chemical storage, waste disposal and sewage treatment over the 14 MLs at Curragh on certain conditions. Those conditions include requirements in relation to air and water quality, regulated structures (e.g., dams), noise and vibration, waste, land use, rehabilitation and watercourse diversion.
We also hold a range of subsidiary environmental approvals for our Australian Operations.
Queensland environmental legislation is currently subject to legislative reform and changein particular, with respect to security for environmental performance, rehabilitation and closure. The Environmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld), which became effective on April 27, 2016, gives the Queensland Department of Environment and Science, or the DES, the power to compel related bodies corporate, executive officers, financiers and shareholders and a select category of "related persons," to satisfy the environmental obligations of holders of an environmental authority in Queensland. Additionally, the Mineral and Energy Resources (Financial Provisioning) Act 2018 (Qld), or the Financial Provisioning Act, which was enacted on November 15, 2018, became effective on April 1, 2019. The purpose of the Financial Provisioning Act is to amend the existing financial assurance provisions of the Environmental Protection Act 1994 (Qld) by creating a financial provisioning fund, or the Scheme Fund, from which the DES will source funds to rehabilitate and remediate land subject to mining.
Under the Financial Provisioning Act, all mine operators will be required to make a submission to the DES in respect of an estimated rehabilitation cost, or ERC, for the mine site. The ERC must be determined using the DES-approved ERC calculator. ERCs could be about 10% higher than current financial assurances, as the DES's new calculator could incorporate a 10% project management cost. Using this information, the DES will set the ERC for the mine. The DES will provide the ERC to the manager of the new financial provisioning scheme, or the Scheme Manager. The Scheme Manager will undertake a risk assessment of the mine, which will be based upon independent advice from a scheme risk advisor. It will include detail on the mine operator's financial soundness and credit rating, characteristics of the mining operation (e.g., life of mine, or LOM, and off-take agreements), rehabilitation history, environmental compliance history and the submission made by the company. Risk categories will include high, moderate, low and very low. If the ERC and risk categories are set at moderate, low or very low for a mine, then there will be a need to pay an annual contribution based on a small percentage of the ERC to the Scheme Fund. If the category is high, then the operation will provide a surety for the whole ERC and possibly a contribution to the Scheme Fund. The risk assessment of the mine and, therefore, the amount of the contribution to the fund will be assessed and paid annually in perpetuity, or until a clearance certificate is obtained. The transitional arrangements provide that a mine's existing financial assurance will be deemed to be the ERC. Within three years from the commencement of the scheme, the Scheme Manager will be required to make an initial risk category allocation decision to determine whether the mine will continue to give surety or pay a contribution to the Scheme Fund.
The Financial Provisioning Act also introduces a new requirement for a Progressive Rehabilitation and Closure Plan, or a PRC plan, with respect to mined land. This requirement will be integrated into the existing environmental authority processes for new mines, minimizing the regulatory burden on government and industry. All mining projects carried out under a ML that make a site-specific
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environmental authority application will be required to provide a PRC plan. If approved by the administering authority, a stand-alone PRC plan schedule will be given to the applicant together with the environmental authority. The PRC plan schedule will contain milestones with completion dates for achieving progressive rehabilitation of the mine site. The Financial Provisioning Act provides transitional arrangements for the application of the PRC plan requirement to existing mines. The effective date of the PRC plan requirement has not yet been prescribed by regulation, but it is likely to be in the latter half of 2019.
Aboriginal Cultural Heritage Act 2003 (Qld)
The Aboriginal Cultural Heritage Act 2003 (Qld) imposes a duty of care on all persons to take all reasonable and practicable measures to ensure that any activity conducted does not harm Aboriginal cultural heritage. Its object is to provide effective recognition, protection and conservation of Aboriginal cultural heritage.
We have obligations relating to Aboriginal cultural heritage with respect to a number of cultural heritage objects and areas located within the area of the Tenements. We work closely with the Aboriginal people to manage the cultural heritage objects, areas or evidence of archaeological significance, within our mining operations. We are party to a Cultural Heritage Management Plan (and associated Cultural Services Agreement) with the Gaangalu Nation People that applies to all of the Tenements. The plan establishes a coordinating committee and sets out the steps to be followed to manage activities that may impact Aboriginal cultural heritage.
Native Title Act 1993 (Cth)
The Native Title Act 1993 (Cth), or NTA, sets out procedures under which native title claims may be lodged and determined and compensation claimed for the extinguishment or impairment of the native title rights or interests of Aboriginal peoples. Its object is to provide for the recognition and protection of native title, to establish ways in which future dealings affecting native title may proceed and to set standards for those dealings, to establish a mechanism for determining claims to native title and to provide for, or permit, the validation of past acts, and intermediate period acts, invalidated because of the existence of native title.
With respect to MLs and MDLs granted under the Mineral Resources Act 1989 (Qld) on state land where native title has not been extinguished, a principle known as the non-extinguishment principle governs. Broadly, under this principle, native title rights are suspended while the mining tenure, as renewed from time to time, is in force. The grant (or renewal) of a mining tenure in respect of land where native title may exist must comply with the NTA to ensure the validity of the tenure. Registered native title claimants have certain notification, consultation and negotiation rights relating to mining tenures. Where native title is extinguished (i.e., freehold land), the NTA does not apply.
Regional Planning Interests
In June 2014, the Strategic Cropping Land Act 2011 (Qld) was repealed by the Regional Planning Interests Act 2014 (Qld), or the RPI Act. The RPI Act manages the impact of resource activities and other regulated activities in areas of the state that contribute, or are likely to contribute, to Queensland's economic, social and environmental prosperity (e.g., competing land use activities on prime farming land). The RPI Act identifies areas of Queensland that are of regional interest, including strategic cropping areas and strategic environmental areas. Under the RPI Act, conducting a resource activity in an area of regional interest requires a regional interest development approval, unless operating under an exemption. Importantly, pre-existing mining activities being undertaken at the date of the introduction of the legislation are exempt.
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We applied for and were granted a regional interest development approval for the "Curragh Extension Project" (for MDL 162), which is subject to regional interest conditions, such as mitigation. Certain protection conditions were also imposed on us with respect to our application for ML 80171 (which has since been granted). These include an obligation to provide mitigation in the event that strategic cropping land is impacted by future operations.
Environmental Protection and Biodiversity Conservation Act 1999 (Cth)
The Environment Protection and Biodiversity Conservation Act 1999 (Cth), or the EPBC Act, provides a federal framework to protect and manage matters of national environmental significance, such as listed threatened species and ecological communities and water resources. In addition, the EPBC Act confers jurisdiction over actions that have a significant impact on the environment where the actions affect, or are taken on, Commonwealth land, or are carried out by a Commonwealth agency.
Under the EPBC Act, "controlled actions" that have or are likely to have a significant impact on a matter of national environmental significance are subject to a rigorous assessment and approval process. A person must not take a "controlled action" unless approval is granted under the EPBC Act. Any person proposing to carry out an "action" that may be a "controlled action" must refer the matter to the Commonwealth Minister for a determination as to whether the proposed action is a controlled action.
On November 2, 2016, the Commonwealth Minister for the Department of the Environment and Energy administering the EPBC Act approved the extension of the existing Curragh mining area to include mining four additional TenementsML 700006, ML 700007, ML 700008 and ML 700009 (EPBC Act referral 2015/7508)as a "controlled action," on certain conditions. The conditions include requirements in relation to air quality, noise and vibration, land use, watercourse diversions, offsets and water quality.
Mine Health and Safety
The primary health and safety legislation that applies to Curragh are the Coal Mining Safety and Health Act 1999 (Qld) and the Coal Mining Safety and Health Regulation 2001 (Qld), which we refer to, together, as the Coal Mining Safety Legislation.
Additional legislative requirements apply to operations that are carried on off-site or which are not principally related to coal mining (e.g., transport, rail operations, etc.). The Coal Mining Safety Legislation imposes safety and health obligations on persons who operate coal mines or who may affect the safety or health of others at coal mines. Under the Coal Mining Safety Legislation, the operator of a coal mine must, among other things:
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We recognize that health and safety are imperative to the ongoing success of our Australian Operations. As the operator at Curragh, we have in place a comprehensive safety and health management system, which includes an emergency response team, to address these legislative requirements. Following recent amendments to the Coal Mining Safety Legislation to address new cases of or coal workers' pneumoconiosis, or black lung disease, in Queensland, we have also established an occupational hygiene baseline for dust exposure at Curragh.
Water Act 2000 (Qld)
In Queensland, all entitlements to the use, control and flow of water are vested in the state and regulated by the Water Act 2000 (Qld). Allocations under the Water Act 2000 (Qld) can be managed by a water supply scheme operator, such as SunWater Ltd., which is a Government-owned corporation regulated by the Queensland Competition Authority. We have purchased the required water allocations for Curragh and entered into a suite of related channel and pipeline infrastructure agreements and river supply agreements with SunWater Ltd. to regulate the supply of water pursuant to these allocations. See Item 1A. "Risk FactorsIn times of drought and/or shortage of available water, our operations and production, particularly at Curragh, could be negatively impacted if the regulators impose restrictions on our water offtake licenses that are required for water used in the CPPs."
National Greenhouse and Energy Reporting Act 2007 (Cth).
The National Greenhouse and Energy Reporting Act 2007 (Cth) imposes requirements for both foreign and local corporations whose carbon dioxide production, greenhouse gas, or GHG, emissions and/or energy consumption meets a certain threshold to register and report GHG emissions and abatement actions, as well as energy production and consumption as part of a single, national reporting system. The Clean Energy Regulator administers the National Greenhouse and Energy Reporting Act 2007 (Cth), and the Department of Environment and Energy is responsible for related policy developments and review.
On July 1, 2016, amendments to the National Greenhouse and Energy Reporting Act 2007 (Cth) implemented the Emissions Reduction Fund Safeguard Mechanism. From that date, large designated facilities such as coal mines are assigned a baseline for their covered emissions and must take steps to keep their emissions at or below the baseline or face penalties.
Mining Rehabilitation (Reclamation)
Mine closure and rehabilitation risks and costs are regulated by Queensland state legislation. One of the conditions of the Curragh environmental authority is the provision by us of financial assurance in the form of bank guarantees of A$279.7 million as of December 31, 2018 and was revised to A$202.6 million as of March 1, 2019 for the period through December 31, 2020. The purpose of this assurance is to provide security for compliance with the environmental authority generally and for the costs and expenses associated with preventing or minimizing environmental harm from rehabilitating or restoring the environment after mining operations are completed. Self-bonding is not permitted. The financial assurance is calculated in accordance with current regulatory requirements.
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The method of calculating the security for operational compliance and closure and rehabilitation costs for resource projects in Queensland is changing. See "Environmental Protection Act 1994 (Qld)" above.
The new financial assurance will be able to be funded using a combination of cash deposits, bank guarantees and insurance bonds. As the financial assurance amount is varied (for example by progressive rehabilitation of disturbed land) we will be entitled to request that existing financial assurances be released and replaced with different forms.
The proposed financial assurance framework has been coupled with the release of a 'mined land rehabilitation policy' which was developed in response to community concerns about the quantity and quality of mine site rehabilitation undertaken to date. This policy formalizes the Queensland government's commitment to ensuring land disturbed by mining activities is rehabilitated to a safe and stable landform that does not cause environmental harm and is able to sustain an approved post-mining land use.
Under the Financial Provisioning Act we will need to prepare a PRC plan for Curragh that will include binding, time-based milestones for actions that achieve progressive rehabilitation and will ultimately support the transition to the mine site's future use.
The specifics of the reforms and the transitional provisions for existing operators have yet to be finalized. Once finalized however they will be delivered through legislative amendments to the Environmental Protection Act 1994 (Qld).
Labor Relations
Minimum employment entitlements, embodied in the National Employment Standards, apply to all private-sector employees and employers in Australia under the federal Fair Work Act 2009 (Cth). These standards regulate employment conditions and paid leave.
Unfair dismissal, enterprise bargaining, bullying claims, industrial actions and resolution of workplace disputes are also regulated under state and federal legislation. Some of the workers at Curragh are covered by the EBA, which was approved by the Fair Work Commission, Australia's national workplace relations tribunal. See "Employees" above.
Regulatory MattersUnited States
Federal, state and local authorities regulate the U.S. coal mining industry with respect to matters such as employee health and safety, protection of the environment, permitting and licensing requirements, air quality standards, water pollution, plant and wildlife protection, the reclamation and restoration of mining properties after mining has been completed, the discharge of materials into the environment, surface subsidence from underground mining and the effects of mining on groundwater quality and availability. In addition, the industry is affected by significant requirements mandating certain benefits for current and retired coal miners. Numerous federal, state and local governmental permits and approvals are required for mining operations. Because of extensive and comprehensive regulatory requirements, violations during mining operations occur from time to time in the industry. The summary below is a non-exhaustive summary of material legislation that applies to our U.S. Operations. Although this summary focuses on federal laws, most states (including Virginia, West Virginia and Pennsylvania) have their own regulatory schemes that either mirror federal laws or create additional layers of regulation.
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Clean Air Act of 1970
The U.S. Clean Air Act of 1970, or the CAA, regulates airborne pollution that may be potentially detrimental to human health, the environment or natural resources. The CAA and comparable state laws that govern air emissions affect U.S. coal mining operations both directly and indirectly.
Direct impacts on coal mining and processing operations may occur through the CAA permitting requirements and/or emission control requirements relating to particulate matter, or PM, nitrogen dioxide, ozone and sulfur dioxide, or SO 2 . In recent years, the United States Environmental Protection Agency, or the EPA, has adopted more stringent national ambient air quality standards, or NAAQS, for PM, nitrogen oxide, ozone and SO 2 . It is possible that these modifications as well as future modifications to NAAQS could directly or indirectly impact our mining operations in a manner that includes, but is not limited to, designating new nonattainment areas or expanding existing nonattainment areas or prompting additional local control measures pursuant to state implementation plans required to address revised NAAQS. The CAA also indirectly, but significantly, affects the U.S. coal industry by extensively regulating the SO 2 , nitrogen oxides, mercury, PM and other substances emitted by steel manufacturers, coke ovens and coal-fired utilities.
In particular, in 2009, the EPA adopted revised rules to add more stringent PM emissions limits for coal preparation and processing plants constructed or modified after April 28, 2008. The PM NAAQS was thereafter revised and made more stringent in 2012. The EPA issued final designations for most areas of the country in 2012 and made some revisions in 2015. Individual states must now identify the sources of emissions and develop emission reduction plans. These plans may be state-specific or regional in scope. Under the Clean Air Act, individual states have up to 12 years from the date of designation to secure emissions reductions from sources contributing to the problem.
In 2015, the EPA issued a final rule setting the ozone NAAQS at 70 parts per billion. On November 17, 2016, the EPA issued a proposed implementation rule on non-attainment area classification and state implementation plans, or SIPs. The EPA published a final rule in November 2017 that issued area designations with respect to ground-level ozone for approximately 35% of the U.S. counties, designating them as either "attainment/unclassifiable" or "unclassifiable." In April 2018 and July 2018, the EPA issued ozone designations for all areas not addressed in the November 2017 rule. States with moderate or high nonattainment areas must submit SIPs by October 2021.
This final rule was challenged in the United States Court of Appeals for the D.C. Circuit; however, the case was held in abeyance pending the EPA's review of the final rule. On March 1, 2018, the EPA issued a final rule establishing the air quality thresholds that define classifications for areas designated nonattainment for the 2015 NAAQS for ozone and establishing the attainment deadline associated with each classification. In August 2018, EPA announced that it would not revise the 2015 Ozone NAAQS. As a result, the lawsuit was revived and arguments occurred in December 2018. On December 6, 2018, EPA issued a rule finalizing nonattainment area and ozone transport region implementation requirements for the 2015 Ozone NAAQS. More stringent ozone standards require new state implementation plans to be developed and filed with the EPA and may trigger additional control technology for mining equipment or result in additional challenges to permitting and expansion efforts. This could also be the case with respect to the implementation for other NAAQS for nitrogen oxide and SO2.
Clean Water Act of 1972
The U.S. Clean Water Act of 1972, or the CWA, and corresponding state law governs the discharge of toxic and non-toxic pollutants into the waters of the United States. CWA requirements may directly or indirectly affect U.S. coal mining operations.
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Water Discharge. The CWA and corresponding state laws affect coal mining operations by imposing restrictions on discharges of wastewater into waters of the United States through the National Pollutant Discharge Elimination System, or NPDES. These restrictions often require us to pre-treat the wastewater prior to discharging it. NPDES permits require regular monitoring, reporting and compliance with effluent limitations. New requirements under the CWA and corresponding state laws may cause us to incur significant additional costs that could adversely affect our operating results.
Dredge and Fill Permits. Many mining activities, such as the development of refuse impoundments, fresh water impoundments, refuse fills, and other similar structures, may result in impacts to waters of the United States, including wetlands, streams and, in certain instances, man-made conveyances that have a hydrologic connection to such streams or wetlands. Under the CWA, coal companies are also required to obtain a Section 404 permit from the U.S. Army Corps of Engineers, or USACE, prior to conducting mining activities, such as the development of refuse and slurry impoundments, fresh water impoundments, refuse fills and other similar structures that may affect waters of the United States, including wetlands, streams and, in certain instances, man-made conveyances that have a hydrologic connection to streams or wetlands. The USACE is authorized to issue general "nationwide" permits for specific categories of activities that are similar in nature and that are determined to have minimal adverse effects on the environment. Permits issued pursuant to Nationwide Permit 21 generally authorize the disposal of dredged and fill material from surface coal mining activities into waters of the United States, subject to certain restrictions. The USACE may also issue individual permits for mining activities that do not qualify for Nationwide Permit 21.
Clean Water Rule. Recent regulatory actions and court decisions have created some uncertainty over the scope of CWA jurisdiction. On June 29, 2015, the EPA and the USACE jointly promulgated final rules, collectively known as the Clean Water Rule, or the CWR, redefining the scope of waters protected under the CWA, revising regulations that had been in place for more than 25 years. These rules expanded the scope of CWA jurisdiction, making discharges into more bodies of water subject to the CWA's permitting and other requirements. Following the CWR's promulgation, numerous industry groups, states, and environmental groups challenged the CWR. On October 9, 2015, the U.S. Court of Appeals for the Sixth Circuit stayed the CWR's implementation nationwide, pending further action in court. Further, on February 28, 2017, President Trump signed an executive order directing the relevant executive agencies to review the CWR, and on July 27, 2017, the EPA and the USACE published a proposed rule to rescind the CWR. On January 22, 2018, the Supreme Court reversed the Sixth Circuit's decision, ruling that jurisdiction over challenges to the CWR rests with the federal district courts and not with the appellate courts, which was followed by the dissolution of the stay by the Sixth Circuit, and on February 6, 2018, in response to the January 2018 Supreme Court decision, the agencies published a final rule to postpone the adoption of CWR and maintain the status quo (the pre-2015 rule) through February 6, 2020 pending the agencies' review of the CWR. Multiple states and environmental groups have filed challenges to this delay. However, on August 16, 2018, the federal court in South Carolina enjoined the February 6, 2018 rule, effectively reinstating the CWR in Virginia and Pennsylvania (where we have operations) and in 24 other states. The injunction is being challenged on appeal. However, our West Virginia operations remain unaffected by the CWR, due to separate injunctions issued by federal courts in Georgia and North Dakota applicable to West Virginia and 23 other states. Most recently, on December 28, 2018, the EPA and the USACE published a proposed rule, or the 2018 Proposed Rule, to revise the definition of waters of the United States, which would replace the CWR and shrink the agencies' jurisdiction, particularly as it relates to tributaries and adjacent waters. It is anticipated that the 2018 Proposed Rule, if finalized, will face state and environmental group challenges. It remains unclear when, whether and how the CWR and/or 2018 Proposed Rule will be implemented, and what litigation may result or what impact they may have on our operations.
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Surface Mining Control and Reclamation Act of 1977
The Surface Mining Control and Reclamation Act of 1977, or the SMCRA, establishes operational, reclamation and closure standards for all aspects of surface mining and many aspects of underground mining in the United States. Unlike the CAA and the CWA, the SMCRA is primarily concerned with the holistic regulation of coal mining as an industry. Its general environmental standards require surface operations to mine in such a way as to "maximize the utilization and conservation" of coal while using the best technology currently available to minimize land disturbance and adverse impacts on wildlife, fish, and environmental values. The SMCRA requires operators to accomplish these goals by restoring the land to its approximate pre-mining condition and contour.
The SMCRA implements its environmental standards through "cooperative federalism." Under the SMCRA, a state may submit a qualifying surface mining regulatory scheme to the U.S. Office of Surface Mining, or the OSM, and request to exert exclusive jurisdiction over surface mining activities within its territory. If a state does not have a surface mining regulatory scheme that meets or exceeds the surface mining standards under the SMCRA and OSM regulations, or if mining on federal lands is involved, the OSM will impose federal regulations on surface mining in that state. Each of Virginia, West Virginia and Pennsylvania, where our Buchanan, Logan, Greenbrier and Pangburg-Shaner-Fallow Field operations are based, has adopted qualifying surface mining regulatory schemes and has primary jurisdiction over surface mining activities within their respective territories. However, even if a state gains approval for its surface mining regulatory program, the OSM retains significant federal oversight, including the ability to perform inspections of all surface mining sites to ensure state program and mine operator compliance with federal minimum standards. The OSM and its state counterparts also oversee and evaluate standards of:
Regulations under the SMCRA and its state analogues provide that a mining permit or modification can, under certain circumstances, be delayed, refused or revoked if we or any entity that owns or controls us or is under common ownership or control with us have unabated permit violations or have been the subject of permit or reclamation bond revocation or suspension.
Under SMCRA and its state law counterparts, all coal mining applications must include mandatory "ownership and control" information, which generally includes listing the names of the operator's officers and directors, and its principal stockholders owning 10% or more of its voting shares, among others. Ownership and control reporting requirements are designed to allow regulatory review of any entities or persons deemed to have ownership or control of a coal mine, and bar the granting of a coal mining permit to any such entity or person (including any "owner and controller") who has had a mining permit revoked or suspended, or a bond or similar security forfeited within the five-year period
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preceding a permit application or application for a permit revision. Similarly, regulatory agencies also block the issuance of permits to applicants, their owners or their controlling persons, who have outstanding permit violations that have not been timely abated.
These regulations define certain relationships, such as owning over 50% of stock in an entity or having the authority to determine the manner in which the entity conducts mining operations, as constituting ownership and control. Certain other relationships are presumed to constitute ownership or control, including among others, the following:
This presumption, in some cases, can be rebutted where the person or entity can demonstrate that it in fact does not or did not have authority directly or indirectly to determine the manner in which the relevant coal mining operation is conducted.
We must file an ownership and control notice each time an entity obtains a 10% or greater interest in us. If we or entities or persons deemed to have ownership of control of us have unabated violations of SMCRA or its state law counterparts, have a coal mining permit suspended or revoked, or forfeit a reclamation bond, we and our owners and controllers may be prohibited from obtaining new coal mining permits, or amendments to existing permits, until such violations or other matters are corrected. This is known as being "permit-blocked." Additionally, if an owner or controller of us is deemed an owner or controller of other mining companies, we could be permit-blocked based upon the violations of, or permit-blocked status of, an owner or controller of such other mining companies. If our owner or controller were to become permit blocked, this could adversely affect production from our properties.
In recent years, the permitting required for coal mining has been the subject of increasingly stringent regulatory and administrative requirements and extensive activism and litigation by environmental groups.
For our U.S. Operations, we meet our reclamation bonding requirements by posting surety bonds and participation in the state of Virginia bond pool. Our total amount of reclamation surety bonds outstanding was approximately $29 million as of December 31, 2018. The bond requirements for a mine represent the calculated cost to reclaim the current operations if it ceased to operate in the current period. The cost calculation for each bond must be completed according to the regulatory authority of each state.
The SMCRA Abandoned Mine Land Fund requires a fee on all coal produced in the United States. The proceeds are used to rehabilitate lands mined and left unreclaimed prior to August 3, 1977 and to pay health care benefit costs of orphan beneficiaries of the Combined Fund created by the Coal Industry Retiree Health Benefit Act of 1992. The fee amount can change periodically based on changes in federal legislation. Pursuant to the Tax Relief and Health Care Act of 2006, from October 1, 2012 through September 30, 2021, the fee is $0.28 and $0.12 per Mt of surface-mined and underground-mined coal, respectively. See Item 3. "Properties" for information regarding reclamation and other taxes applicable to our U.S. mining properties.
While SMCRA is a comprehensive statute, SMCRA does not supersede the need for compliance with other major environmental statutes, including the Endangered Species Act of 1973, or the ESA, CAA, CWA, the Resource Conservation and Recovery Act of 1976, or the RCRA, and the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA.
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National Environmental Policy Act of 1969
The National Environmental Policy Act of 1969, or NEPA, applies to mining operations or permitting requirements that require federal approvals and requires a lengthy environmental impact statement. NEPA also defines the processes for evaluating and communicating environmental consequences of federal decisions and actions, such as the permitting of new mine development on federal lands. U.S. coal mining companies must provide information to agencies with respect to proposed actions that will be under the authority of the federal government. The NEPA process involves public participation and can involve lengthy timeframes. The White House Council on Environmental Quality issued an Advance Notice of Proposed Rulemaking in June 2018 seeking comment on a number of ways to streamline and improve the NEPA process. The comment period closed in August 2018. It is unclear how far reaching the changes will be and if they will be able to withstand expected court challenges.
Resource Conservation and Recovery Act of 1976
The RCRA regulates the treatment, storage and disposal of solid and hazardous wastes. While many mining wastes such as overburden and coal cleaning wastes are exempt from RCRA hazardous waste regulations, certain wastes may be subject to RCRA's requirements. RCRA also governs underground storage tanks containing hazardous substances and petroleum products, which are used in some coal mining operations, although we do not have underground storage tanks associated with our U.S. Operations.
Comprehensive Environmental Response, Compensation and Liability Act of 1980
CERCLA authorizes the federal government and private parties to recover costs to address threatened or actual releases of hazardous substances (broadly defined) that may endanger public health or the environment. Strict joint and several and retroactive liability may be imposed on waste generators and facility owners and operators, regardless of fault or the legality of the original disposal activity. We could face liability under CERCLA and similar state laws for properties that (1) we currently own, lease or operate, (2) we, our predecessors, or former subsidiaries have previously owned, leased or operated, (3) sites to which we, our predecessors or former subsidiaries, sent waste materials, and (4) sites at which hazardous substances from our facilities' operations have otherwise come to be located.
Federal Mine Safety and Health Act of 1977
The Federal Mine Safety and Health Act of 1977, or the Mine Act, which was amended by the Mine Improvement and New Emergency Response Act of 2006, or the MINER Act, governs federal oversight of mine safety and authorizes the U.S. Department of Labor's Mine Safety and Health Administration, or MSHA, to regulate and enforce the same. The comprehensive scope of the Mine Act mandates four annual inspections of underground coal mines, two annual inspections of all surface coal mines, miner training, mine rescue teams for all underground mines, and involvement of miners and their representatives in health and safety activities. The MINER Act requires mine-specific emergency response plans in underground coal mines, implemented new regulations regarding mine rescue teams and sealing of abandoned areas, requires prompt notification of mine accidents, and enhanced civil penalties for violations. Since passage of the MINER Act enforcement scrutiny has increased, including more inspection hours at mine sites, increased numbers of inspections and increased issuance of the number and severity of enforcement actions and related penalties. Various states also have enacted their own new laws and regulations addressing many of these same subjects. MSHA continues to interpret and implement various provisions of the MINER Act, along with introducing new proposed regulations and standards. For example, the second phase of MSHA's respirable coal mine dust rule went into effect in February 2016 and requires increased sampling
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frequency and the use of continuous personal dust monitors. In August 2016, the third and final phase of the rule became effective, reducing the overall respirable dust standard in coal mines from 2.0 to 1.5 milligrams per cubic meter of air.
Black Lung (Coal Worker's Pneumoconiosis)
The Mine Act amended the Federal Coal Mine Health and Safety Act of 1969, which is the legislation that mandates compensation for miners who were totally and permanently disabled by the progressive respiratory disease caused by coal workers' pneumoconiosis, or black lung. Under current federal law, a U.S. coal mine operator must pay federal black lung benefits and medical expenses to claimants who are current employees, and to claimants who are former employees who last worked for the operator after July 1, 1973, and whose claims for benefits are allowed. Coal mine operators must also make payments to a trust fund for the payment of benefits and medical expenses to claimants who last worked in the coal industry prior to July 1, 1973. The trust fund is funded by an excise tax on sales of U.S. production, excluding export sales, of up to $1.10 per Mt for deep-mined coal and up to $0.55 per Mt for surface-mined coal, each limited to 4.4% of the gross sales price. Starting in 2019, under current law, these tax rates are scheduled to be $0.55 per Mt of underground-mined coal or $0.28 per Mt of surface-mined coal, limited to 2% of the sales price. Our total contributions to this trust fund in 2018 were $2.8 million. Historically, very few of the miners who sought federal black lung benefits were awarded these benefits; however, the approval rate has increased following implementation of black lung provisions contained in the Patient Protection and Affordable Care Act of 2010, or the Affordable Care Act. The Affordable Care Act introduced significant changes to the federal black lung program, including an automatic survivor benefit paid upon the death of a miner with an awarded black lung claim, and established a rebuttable presumption with regard to pneumoconiosis among miners with 15 or more years of coal mine employment that are totally disabled by a respiratory condition. These changes could have a material impact on our costs expended in association with the federal black lung program. In addition to possibly incurring liability under federal statutes, we may also be liable under state laws for black lung claims. See Note 18 to the accompanying consolidated financial statements for further information of applicable insurance coverage.
National Labor Relations Act of 1935
The National Labor Relations Act of 1935, or the NLRA, governs collective bargaining and private sector labor and management practices. While we do not have a unionized workforce in the United States, to the extent that miners want to seek representation or engage in other protected concerted activities, both us and our employees must follow the rules set out in the NLRA and the rules promulgated by the National Labor Relations Board.
Patient Protection and Affordable Care Act of 2010
In March 2010, the Affordable Care Act was enacted, impacting the coal mining industry's costs of providing healthcare benefits to its eligible active employees, with both short-term and long-term implications. In the short term, healthcare costs could increase due to, among other things, an increase in the maximum age for covered dependents to receive benefits, changes to benefits for occupational disease-related illnesses, the elimination of lifetime dollar limits per covered individual and restrictions on annual dollar limits per covered individual. In the long term, the industry's healthcare costs could increase for these same reasons, as well as due to an excise tax on "high-cost" plans, among other things. However, implementation of this excise tax, which would impose a 40% excise tax on employers to the extent that the value of their healthcare plan coverage exceeds certain dollar thresholds, has been delayed until 2022. It is anticipated that certain governmental agencies will provide additional regulations or interpretations concerning the application of this excise tax.
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Safe Drinking Water Act of 1974
The Safe Drinking Water Act of 1974, or SDWA, is the federal law that protects public drinking water supplies throughout the United States. Under the SDWA, the EPA sets standards for drinking water quality and implements technical and financial programs to ensure drinking water safety. The SDWA can impact coal mining operations in the United States to the extent that the operations could impact drinking water supplies.
Solid Waste Disposal Act of 1965
The Solid Waste Disposal Act of 1965, or SWDA, was the first federal act to target waste disposal technology. The SWDA governs disposal of both municipal and industrial waste, promotes advancement of waste management technology and sets waste management standards.
National Historic Preservation Act of 1966
The National Historic Preservation Act of 1966, or NHPA, governs the preservation of historical properties throughout the United States. The NHPA could create an additional level of scrutiny on a coal mining operation, particularly during the permitting process, to the extent that a mining operation could come within the scope of a historical site. The SMCRA also provides protection for historic resources that would be adversely affected by mining operations by requiring the OSM to comply with the NHPA.
Endangered Species Act of 1973
The ESA governs the protection of endangered species in the United States and requires the U.S. Fish and Wildlife Service to formally review any federally authorized, funded or administered action that could negatively affect endangered or threatened species. The Fish and Wildlife Service studies projects for possible effects to endangered species and then can recommend alternatives or mitigation measures. The OSM and state regulators require mining companies to hire a government-approved contractor to conduct surveys for potential endangered species, and the surveys require approval from state and federal biologists who provide guidance on how to minimize mines' potential effects on endangered species. Certain endangered species are more typically at issue under the ESA with respect to mining, including the long-eared bat and Guyandotte crayfish, which are found in the CAPP region, including parts of Virginia and West Virginia. Mitigation methods can cause increased costs to coal mining operators. Changes in listings or requirements under these regulations could have a material adverse effect on our costs or our ability to mine some of our properties in accordance with our current mining plans. The U.S. Department of the Interior issued three proposed rules in July 2018 aiming to streamline and update the ESA.
Migratory Bird Treaty Act of 1918
The Migratory Bird Treaty Act of 1918 makes it unlawful without a waiver to pursue, hunt, take, capture, kill or sell migratory birds. Since coal mining is seen as an industry that can threaten bird populations, coal operators are required to ensure that their operations do not negatively impact migratory birds, or to take mitigation measures.
Regulation of Explosives
Our surface mining operations are subject to numerous regulations relating to blasting activities. Pursuant to these regulations, we incur costs to design and implement blast schedules and to conduct pre-blast surveys and blast monitoring. Specifically, The Bureau of Alcohol, Tobacco and Firearms and Explosives, or ATF, regulates the sale, possession, storage and transportation of explosives in interstate commerce. In addition to ATF regulation, the U.S. Department of Homeland Security is expected to
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finalize an ammonium nitrate security program rule in 2019. The OSM has also proposed a rulemaking addressing nitrogen oxide clouds from blasting.
Global Climate
The physical and non-physical impacts of climate change may affect our assets, productivity or the markets in which coal is sold. Global climate issues continue to attract considerable public and scientific attention. There is widespread concern about the human contribution to such climate changes, including through the emission of GHGs. Emissions from coal consumption (both the use of thermal coal in power generation and through the end use of coal by customers in coke plants and in the steelmaking process), emissions from coal production and transportation (predominantly from the combustion of fuel) and emissions from coal mining itself (which can release methane directly into the atmosphere) are subject to pending and proposed regulation as part of initiatives to address global climate change. A number of national governments have already introduced, or are contemplating the introduction of, regulatory responses to GHG emissions, including from the extraction and combustion of fossil fuels, to address the impacts of climate change. This includes Australia and the United States, as well as customer markets such as China, India and Europe.
The Kyoto Protocol, adopted in December 1997 by the signatories to the 1992 United Nations Framework Convention on Climate Change, or UNFCCC, established a binding set of GHG emission targets for developed nations. The United States signed, but did not ratify, the Kyoto Protocol. Australia ratified the Kyoto Protocol in December 2007 and became a full member in March 2008. There were discussions to develop a treaty to replace the Kyoto Protocol after the expiration of its commitment period in 2012, including at the UNFCCC conferences in Cancun (2010), Durban (2011), Doha (2012) and Paris (2015). At the Durban conference, an ad hoc working group was established to develop a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC, applicable to all parties. At the Doha meeting, an amendment to the Kyoto Protocol was adopted, which included new commitments for certain parties in a second commitment period, from 2013 to 2020. In December 2012, Australia signed on to the second commitment period. During the UNFCCC conference in Paris, France, in late 2015, an agreement, or the Paris Agreement, was adopted calling for voluntary emissions reductions contributions after the second commitment period ends in 2020. The Paris Agreement was entered into force on November 4, 2016 after ratification and execution by more than 55 countries, including Australia, that account for at least 55% of global GHG emissions. On June 1, 2017, the Trump Administration announced that the United States will withdraw from the Paris Agreement. Nevertheless, numerous U.S. governors, mayors and businesses have pledged their commitments to the goals of the Paris Agreement. These commitments could further reduce demand and prices for our coal.
In the United States, Congress has considered legislation addressing global climate issues and GHG emissions, but to date nothing has been enacted. While it is possible that the United States Congress will adopt legislation in the future, the timing and specific requirements of any such legislation are uncertain. In the absence of new U.S. federal legislation, the EPA has undertaken steps to regulate GHG emissions pursuant to the CAA. In response to the 2007 U.S. Supreme Court ruling in Massachusetts v. EPA, the EPA commenced several rulemaking projects. In particular, in August 2015, the EPA issued final rules regulating carbon dioxide emissions from new fossil fuel-fired electricity utility generating units (also known as the Power Plant NSPS) and from existing fossil fuel-fired electricity generating units (also known as the Clean Power Plan). The Clean Power Plan set emission performance rates for existing plants to be phased in over the period from 2022 through 2030, and the Power Plant NSPS set standards applying to new, modified and reconstructed sources beginning in 2015. However, in response to legal challenges, on February 9, 2016, the U.S. Supreme Court granted a stay of the implementation of the Clean Power Plan pending the resolution of various
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legal challenges. The Supreme Court's stay applies only to the Clean Power Plan and does not affect the Power Plant NSPS.
Subsequently, President Trump issued a March 2017 Executive Order that directed the EPA to review the Power Plant NSPS and the Clean Power Plan and, if appropriate, take steps to suspend, revise or rescind the rules through. On April 4, 2017, the EPA announced in the Federal Register that it is initiating its review of the Power Plant NSPS and Clean Power Plan. On April 28, 2017, the United States Court of Appeals for the D.C. Circuit paused legal challenges to both the Clean Power Plan and the Power Plant NSPS for 60 days to allow parties in each of those cases to brief the court on whether the case should be remanded to the agency or kept on hold, and in a series of orders since, has continued to hold the cases in abeyance while EPA rulemaking regarding the Clean Power Plan continues. On August 31, 2018, the EPA published the Affordable Clean Energy Rule, a proposed replacement of the Clean Power Plan. In contrast to the Clean Power Plan, which called for the shifting of electricity generation away from coal-fired sources towards natural gas and renewables, the Affordable Clean Energy Rule would focus on reducing GHG emissions from existing coal-fired plants by requiring states to mandate the implementation of a range of technologies at power plants designed to improve their heat rate (i.e., decrease the amount of fuel necessary to generate the same amount of electricity). On December 6, 2018, the EPA proposed to revise the Power Plant NSPS to replace carbon capture, utilization and storage, or CCUS, with the most efficient demonstrated steam cycle in combination with best operating practices as the best system of emissions reduction for newly-constructed coal-fired units. The outcome of these rulemakings is uncertain and likely to be subject to extensive notice and comment and litigation. More stringent standards for carbon dioxide emissions as a result of these rulemakings could further reduce demand for coal, and our business would be adversely affected.
In the United States, many states and several regions have enacted legislation establishing GHG emissions reduction goals or requirements. In addition, many states have enacted legislation or have in effect regulations requiring electricity suppliers to use renewable energy sources to generate a certain percentage of power or that provide financial incentives to electricity suppliers for using renewable energy sources. In Virginia, the Department of Environmental Quality is set to review a final carbon trading regulation applicable to electric power generation in the second half of 2019. Some states have initiated public utility proceedings that may establish values for carbon emissions.
Enactment of laws or passage of regulations regarding emissions from the use of coal by the United States, some of its states and regions or Australia or other countries, or other actions to limit such emissions, could result in electricity generators switching from thermal coal to other fuel sources or reducing demand from customers for metallurgical coal for use in coke plants and in the steelmaking process. Further, policies limiting available financing for the development of new coal-fueled power stations or promoting alternative energy options could adversely impact the global demand for thermal coal in the future. The potential financial impact on us of future laws, technology, regulations or other policies will depend upon the degree to which any such laws or regulations force electricity generators, coke plants and steel production to diminish their reliance on coal. That, in turn, will depend on a number of factors, including the specific requirements imposed by any such laws, regulations or other policies, the time periods over which those laws, regulations or other policies would be phased in, the state of development and deployment of CCUS technologies as well as acceptance of CCUS technologies to meet regulations and the alternative uses for coal. Similarly, higher-efficiency coal-fired power plants may also be an option for meeting laws or regulations related to emissions from coal use. Several countries, including some major thermal coal users such as China, India and Japan, included using higher-efficiency coal-fueled power plants in their plans under the Paris Agreement. From time to time, we attempt to analyze the potential impact on the Company of as-yet-unadopted, potential laws, regulations and policies. Such analyses require that we make significant assumptions as to the specific provisions of such potential laws, regulations and policies.
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These analyses sometimes show that certain potential laws, regulations and policies, if implemented in the manner assumed by the analyses, could result in material adverse impacts on our operations, financial condition or cash flow, in view of the significant uncertainty surrounding each of these potential laws, regulations and policies.
Corporate Information
Our principal executive offices are located at 100 Bill Baker Way, Beckley, West Virginia 25801. Our telephone number is +1 (681) 207-7263. Our website address is www.coronadoglobal.com.au. We have included our website address in this registration statement as an inactive textual reference only. The information on, or that can be accessed through, our website is not part of this registration statement and should not be considered a part of this registration statement.
An investment in our securities is speculative and involves a number of risks. We believe the risks described below are the material risks that we face. However, the risks described below may not be the only risks that we face. Additional unknown risks or risks that we currently consider immaterial, may also impair our business operations. You should carefully consider the specific risk factors discussed below, together with the information contained in this registration statement, including Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes. If any of the events or circumstances described below actually occurs, our business, financial condition or results of operations could suffer, and the trading price of our securities could decline significantly.
Risks Associated with Our Operations
Our profitability depends upon the prices we receive for our coal. Prices for coal are volatile and can fluctuate widely based upon a number of factors beyond our control.
We generate revenue from the sale of coal and our financial results are significantly affected by the prices we receive for our coal. Prices and quantities under metallurgical coal sales contracts in North America are generally based on expectations of the next year's coal prices at the time the contract is entered into, renewed, extended or re-opened. Pricing in the global seaborne market is typically negotiated quarterly; however, increasingly the market is moving towards shorter-term pricing models.
Sales by our U.S. Operations to export markets are typically priced with reference to a benchmark index. Sales by our Australian Operations have typically been contracted on an annual basis and are priced quarterly with reference to benchmark indices or bilaterally negotiated term prices and spot indices. As a result, a significant portion of our revenue is exposed to movements in coal prices and any weakening in metallurgical or thermal coal prices would have an adverse impact on our financial condition and results of operations.
The expectation of future prices for coal depends upon many factors beyond our control, including the following:
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Metallurgical coal has been a volatile commodity over the past ten years. The metallurgical coal industry also faces concerns with oversupply from time to time. There are no assurances that supplies will remain low, that demand will not decrease or that overcapacity will not resume, which could cause declines in the prices of and demand for coal, which could have a material adverse effect on our financial condition and results of operations.
In addition, coal prices are highly dependent on the outlook for coal consumption in large Asian economies, such as China, India, South Korea and Japan, as well as any changes in government policy regarding coal or energy in those countries. Seaborne metallurgical coal import demand can also be significantly impacted by the availability of indigenous coal production, particularly in the leading metallurgical coal import countries of China, India and Brazil, among others, and the competitiveness of seaborne metallurgical coal supply, including from the leading metallurgical coal exporting countries of Australia, the United States, Russia, Canada and Mongolia, among others.
We face significant competition, which could adversely affect profitability.
Competition in the coal industry is based on many factors, including, among others, world supply, price, production capacity, coal quality and characteristics, transportation capability and costs, blending capability, brand name and diversified operations. We are subject to competition from metallurgical coal producers from Australia, the United States, Canada, Russia, Mongolia and other metallurgical coal producing countries. Should those competitors obtain a competitive advantage in comparison to us (whether by way of an increase in production capacity, higher realized prices, lower operating costs, or otherwise), such competitive advantage may have an adverse impact on our ability to sell, or the prices at which we are able to sell coal products. In addition, some of our competitors may have more production capacity as well as greater financial, marketing, distribution and other resources than we do.
The consolidation of the global metallurgical coal industry over the last several years has contributed to increased competition, and our competitive position may be adversely impacted by further consolidation among market participants or by further competitors entering into and exiting bankruptcy proceedings under a lower cost structure. Similarly, potential changes to international trade agreements, trade concessions or other political and economic arrangements may benefit coal producers operating in countries other than the United States and Australia. Other coal producers may also develop or acquire new projects to increase their coal production, which may adversely impact our competitiveness. Some of our global competitors have significantly greater financial resources, such that increases in their coal production may affect domestic and foreign metallurgical coal supply into the seaborne market and associated prices and impact our ability to retain or attract metallurgical coal customers. In addition, our ability to ship our metallurgical coal to non-U.S. and non-Australian customers depends on port and transportation capacity. Increased competition within the metallurgical coal industry for international sales could result in us not being able to obtain throughput capacity at port facilities, as well as transport capacity, could cause the rates for such services to increase to a point where it is not economically feasible to export our metallurgical coal.
Increased competition or a failure to compete effectively in the markets in which we participate may result in losses of market share and could adversely affect our financial condition and results of operations.
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Risks inherent to mining could impact the amount of coal produced, cause delay or suspend coal deliveries, or increase the cost of operating our business.
Our mining operations, including exploration, development, preparation, product handling and accessing transport infrastructure, may be affected by various operational difficulties that could impact the amount of coal produced at our coal mines, cause delay or suspend coal deliveries, or increase the cost of mining for a varying length of time. Our financial performance is dependent on our ability to sustain or increase coal production and maintain or increase operating margins. Our coal production and production costs are, in many respects, subject to conditions and events beyond our control, which could disrupt our operations and have a significant impact on our financial results. Adverse operating conditions and events that we may have experienced in the past or may experience in the future include:
In addition, if any of the foregoing conditions or events occurs and is not mitigated or excusable as a force majeure event under our coal sales contracts, any resulting failure on our part to deliver coal to the purchaser under such contracts could result in economic penalties, demurrage costs, suspension or cancellation of shipments or ultimately termination of such contracts, which could have a material adverse effect on our financial condition and results of operations.
Furthermore, our mining operations are concentrated in a small number of mines in the CAPP. As a result, the effects of any of these conditions or events may be exacerbated and may have a disproportionate impact on our results of operations and assets. Any such operational conditions or events could also result in disruption to key infrastructure (including infrastructure located at or serving our mining activities, as well as the infrastructure that supports freight and logistics). These conditions
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and events could also result in the partial or complete closure of particular railways, ports or significant inland waterways or sea passages, potentially resulting in higher costs, congestion, delays or cancellations on some transport routes. Any of these conditions or events could adversely impact our business and results of operations.
The loss of, or significant reduction in, purchases by our largest customers could adversely affect our revenues.
For the year ended December 31, 2018, our top ten customers comprised 70% of our total revenue and our top five customers comprised 51% of our total revenue. For the year ended December 31, 2018, sales to Xcoal and Tata Steel represented approximately 23% and 12%, respectively, of our total revenue. The majority of our sales are made on a spot basis or under contracts with terms of typically one year. The failure to obtain additional customers or the loss of all or a portion of the revenues attributable to any customer as a result of competition, creditworthiness, inability to negotiate extensions or replacement of contracts or otherwise, may adversely affect our financial condition and results of operations.
For the year ended December 31, 2018, sales to Xcoal represented approximately 52% of revenue from our U.S. Operations and represented our U.S. Operations' predominant means of access to the export metallurgical coal market. Sales contracts with Xcoal are entered into on a shipment-by-shipment basis or on an annual basis and there is a risk that, in the future, the number of contracts with Xcoal could decrease, which would require us to procure alternative brokers or market the coal directly to the export market. In addition, if our arrangements with Xcoal were to cease or materially decrease, we might also be required to procure additional infrastructure capacity to support some of our operations, as Xcoal typically takes ownership of coal upon landing into the rail car and handles transportation logistics to the port and beyond. As a result, the loss of, or deterioration of, the relationship with Xcoal could materially and adversely affect our financial condition and results of operations or cause a material disruption to our U.S. Operations.
Demand for our metallurgical coal is significantly dependent on the steel industry.
The majority of the coal that we produce is metallurgical coal that is sold, directly or indirectly, to steel producers and commands a significant price premium over the majority of other forms of coal because of its use in blast furnaces for steel production. Metallurgical coal, specifically our high-quality hard coking coal, or HCC, has specific physical and chemical properties, which are necessary for efficient blast furnace operation. Therefore, demand for our metallurgical coal is correlated to demands of the steel industry. The steel industry's demand for metallurgical coal is affected by a number of factors, including: the cyclical nature of that industry's business; general economic conditions and demand for steel; and the availability and cost of substitutes for steel, such as aluminum, composites and plastics, all of which may impact the demand for steel products. Similarly, if new steelmaking technologies or practices are developed that allow less expensive ingredients (lower quality coal or other sources of carbon) to be substituted for metallurgical coal in the integrated steel mill process, the demand for metallurgical coal would materially decrease.
Although conventional blast furnace technology has been the most economic large-scale steel production technology for a number of years, there can be no assurance that over the longer term, competitive technologies not reliant on metallurgical coal would not emerge, which could reduce the demand and price premiums for metallurgical coal. A significant reduction in the demand for steel products would reduce the demand for metallurgical coal, which could have a material adverse effect on our financial condition and results of operations.
Additionally, newly imposed tariffs by the United States on the import of certain steel products may impact foreign steel producers to the extent their production is imported into the United States. On March 8, 2018, the President of the United States, Donald Trump, signed an executive order
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establishing a 25% tariff on imports of steel into the United States, which could reduce imports of steel and increase U.S. metallurgical coal demand. This additional U.S. metallurgical coal demand could be met by reducing exports of metallurgical coal and redirecting that volume to domestic consumption.
Although the tariffs could be supportive of a stronger domestic metallurgical coal price environment, these tariffs have prompted retaliatory tariffs from key trading partners, notably Europe and China. Any retaliatory tariffs by these or other countries to these tariffs may limit international trade and adversely impact global economic conditions. We cannot ascertain the impact, if any, these tariffs may have on demand for our metallurgical coal.
Decreases in demand for coal-fired electricity and changes in coal consumption patterns of the United States and Australian electric power generators could adversely affect our business.
While demand for metallurgical coal is not closely linked to demand for electricity, incidental production of thermal coal by our U.S. Operations represented approximately 13% of tons sold by our U.S. Operations and 6% of our revenues during 2018.
In such case, any changes in coal consumption by electric power generators in the United States would likely impact our business over the long term. According to the United States Department of Energy's Energy Information Administration, or EIA, the domestic electric power sector is the largest consumer of coal and accounted for 82% of total U.S. coal consumption in 2017, down from 90% in 2015.
While power generation from thermal coal remains a cost-effective form of energy, the increasing focus on renewable energy generation, competition from alternative fuel sources, such as natural gas, environmental regulations and the consequential decline in electricity generation from fossil fuels, is expected to result in the further decline of coal-fired electricity generation due to retirement of coal-fired capacity in favor of alternative energy. The low price of natural gas in recent years has resulted in some U.S. electric generators increasing natural gas consumption while decreasing coal consumption. Electricity generation from coal is now second to natural gas, which surpassed coal as the leading source of U.S. electricity generation in 2016. In 2018, natural gas provided 35% of total electricity generation while coal provided 27% of total electricity generated in the United States, a decline of 12% from 2013, when coal-fired electricity generation represented 39% of total electricity generation.
Sales of thermal coal represented approximately 27% of tons sold by our Australian Operations and approximately 6% of our revenues in 2018 since the date of our acquisition of Curragh. The majority of the thermal coal produced by our Australian Operations is sold on a long-term supply arrangement to Stanwell. Sales of thermal coal by our Australian Operations to domestic and export buyers are exposed to fluctuations in the global demand for thermal coal or electricity. However, coal sold to Stanwell is not directly exposed to fluctuations in the global demand for electricity or thermal coal. Under the Stanwell supply contract, Stanwell can set volumes and pricing has historically been set at significantly below-market rates. See "Risks related to the Supply Deed with Stanwell may adversely affect our financial condition and results of operations."
Further reductions in the demand for coal-fired electricity generation and the growth of alternative energy options, such as renewables, and alternate power generation technologies could materially reduce the demand for thermal coal, which may have a material adverse effect on our financial condition and results of operations.
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If a substantial number of our customers fail to perform under our contracts with them, our revenues and operating profits could suffer.
A significant portion of the sales of our metallurgical coal is to customers with whom we have had long-term relationships. The success of our business depends on our ability to retain our current customers, renew our existing customer contracts and solicit new customers. Our ability to do so generally depends on a variety of factors, including the quality and price of our products, our ability to market these products effectively, our ability to deliver on a timely basis and the level of competition that we face.
In addition, our sales contracts generally contain provisions that allow customers to suspend or terminate if we commit a material breach of the terms of the contract, a change in law restricts or prohibits a party from carrying out its material obligations under the contract or a material adverse change occurs in our financial standing or creditworthiness. If customers suspend or terminate existing contracts, or otherwise refuse to accept shipments of our metallurgical coal for which they have an existing contractual obligation, our revenues will decrease, and we may have to reduce production at our mines until our customers' contractual obligations are honored.
If our customers do not honor contract commitments, or if they terminate agreements or exercise force majeure provisions allowing for the temporary suspension of performance during specified events beyond the parties' control and we are unable to replace the contract, our financial condition and results of operations could be materially and adversely affected.
If our ability to collect payments from customers is impaired, our revenues and operating profits could suffer.
Our ability to receive payment for coal sold and delivered will depend on the continued contractual performance and creditworthiness of our customers and counterparties. For certain customers, we require the provision of a letter of credit as security for payment. The inability of key customers to procure letters of credit (due to general economic conditions or the specific circumstances of the customer) may restrict our ability to contract with such customers or result in fewer sales contracts being executed, which could materially adversely affect our financial condition and results of operations. For certain of our large customers in Australia who have not provided letters of credit or other form of security, we maintain an insurance policy to cover for any failure in payment.
If non-payment occurs, we may decide to sell the customer's metallurgical coal on the spot market, which may be at prices lower than the contracted price, or we may be unable to sell the coal at all. If our customers' and counterparties' creditworthiness deteriorates, our business could be adversely affected.
Our long-term success depends upon our ability to continue discovering, or acquiring and developing assets containing, coal reserves that are economically recoverable.
Our recoverable reserves decline as we produce coal. Our long-term outlook depends on our ability to maintain a commercially viable portfolio of coal reserves that are economically recoverable. Failure to acquire or discover new coal reserves or develop new assets could negatively affect our financial condition and results of operations. Exploration activity may occur adjacent to established assets and in new regions. These activities may increase land tenure, infrastructure and related political risks. Failure to discover or acquire new coal reserves, replace coal reserves or develop new assets or operations in sufficient quantities to maintain or grow the current level of reserves could negatively affect our financial condition and results of operations.
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Potential changes to our portfolio of assets through acquisitions and divestments may have an adverse effect on future results of operations and financial condition. From time to time, we may add assets to, or divest assets from, our portfolio. There are a number of risks associated with historical and future acquisitions or divestments, including, among others:
These factors could materially and adversely affect our financial condition and results of operations.
We may be unsuccessful in integrating the operations of our recent acquisitions with our existing operations and in realizing all or any part of the anticipated benefits of any such acquisitions.
From time to time, we may evaluate and acquire assets and businesses that we believe complement our existing assets and business. Acquisitions may require substantial capital or the incurrence of substantial indebtedness. Our capitalization and results of operations may change significantly as a result of future acquisitions. Acquisitions and business expansions involve numerous risks, including the following:
Further, unexpected costs and challenges may arise whenever businesses with different operations or management are combined, and we may experience unanticipated delays in realizing the benefits of an acquisition. Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, and may lead to increased litigation and regulatory risk. Also, following an acquisition, we may discover previously unknown liabilities associated with the acquired business or assets for which we have no recourse under applicable indemnification provisions. If a new business generates insufficient revenue or if we are unable to efficiently manage our expanded operations, our results of operations may be adversely affected.
We rely on estimates of our recoverable reserves, which is complex due to geological characteristics of the properties and the number of assumptions made.
We rely on estimates of our recoverable reserves. In this registration statement, we report our estimated proven (measured) and probable (indicated) reserves in accordance with SEC Industry Guide 7. As an ASX-listed company, however, our ASX disclosures follow the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012, or the JORC Code. One principal difference between the reporting regimes in the United States under SEC Industry Guide 7
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and in Australia under the JORC Code is the provision in the JORC Code for the reporting of estimates other than proven (measured) or probable (indicated) reserves. Specifically, our ASX disclosures include estimates of coal resources in addition to reserves. Accordingly, our estimates of proven and probable coal reserves in this registration statement and in other reports that we are required to file with the SEC may be different than our estimates of reserves as reported in our ASX disclosures.
Coal is economically recoverable when the price at which it can be sold exceeds the costs and expenses of mining and selling the coal. The costs and expenses of mining and selling the coal are determined on a mine-by-mine basis, and as a result, the price at which our coal is economically recoverable varies based on the mine. We base our reserve information on geologic data, coal ownership information and current and proposed mine plans. There are numerous uncertainties inherent in estimating quantities and qualities of coal and costs to mine recoverable reserves, including many factors beyond our control. There are inherent uncertainties and risks associated with such estimates, including:
In addition, coal reserve estimates are revised based on actual production experience, and/or new exploration information and therefore the coal reserve estimates are subject to change. Should we encounter geological conditions or qualities different from those predicted by past drilling, sampling and similar examinations, coal reserve estimates may have to be adjusted and mining plans, coal processing and infrastructure may have to be altered in a way that might adversely affect our operations. As a result, our estimates may not accurately reflect our actual future coal reserves.
As a result, the quantity and quality of the coal that we recover may be less than the reserve estimates included in this registration statement. If our actual coal reserves are less than current estimates, or the rate at which they are recovered is less than estimated or results in higher than estimated cost, our financial condition and results of operations may be materially adversely affected.
If transportation for our coal becomes unavailable or uneconomic for our customers, our ability to sell coal could suffer.
Our mining operations produce coal, which is transported to customers by a combination of road, rail, barge and ship. The delivery of coal produced by our mining operations is subject to potential disruption, which may affect our ability to deliver coal to our customers and may have an impact on productivity and profitability. For example, in the fiscal year ended December 31, 2018, sales volumes for our Australian Operations were impacted by rail network disruptions in Queensland caused by bush
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fires, track maintenance and industrial action. Such disruptions to transportation services may include, among others:
Any such disruptions, or any deterioration in the reliability of services provided by our transportation service providers, could impair our ability to supply coal to our customers, result in decreased shipments and revenue and adversely affect our results of operations.
Typically, we sell coal at the mine gate and/or loaded into vessels at the port. While ordinarily our coal customers arrange and pay for transportation of coal from the mine or port to the point of use, we have entered into arrangements with third parties to gain access to transportation infrastructure and services where required, including road transport organizations, rail carriers and port owners. Where coal is exported or sold other than at the mine gate, the costs associated with these arrangements represent a significant portion of both the total cost of supplying coal to customers and of our production costs. As a result, the cost of transportation is not only a key factor in our cost base, but also in the purchasing decision of customers. Transportation costs may increase and we may not be able to pass on the full extent of cost increases to our customers. For example, where transportation costs are connected to market demand, costs may increase if usage by us and other market participants increases. Significant increases in transport costs due to factors such as fluctuations in the price of diesel fuel, electricity and demurrage or environmental requirements could make our coal less competitive when compared to coal produced from other regions and countries. As the transportation capacity secured by our port and rail agreements is based on assumed production volumes, we may also have excess transportation capacity (which, in the case of take-or-pay agreements, we may have to pay for even if unused) if our actual production volumes are lower than our estimated production volumes. Conversely, we may not have sufficient transportation capacity if our actual production volumes exceed our estimated production volumes, if we are unable to transport the full capacity due to contractual limitations or if any deterioration in our relationship with brokers and intermediaries (including Xcoal) results in a reduction in the proportion of coal purchased F.O.R. from our U.S. Operations (and a corresponding increase in the proportion of coal purchased F.O.B.).
Take-or-pay arrangements within the coal industry could unfavorably affect our profitability.
Our Australian Operations generally contract port and rail capacity via long-term take-or-pay contracts for transport to and export from the Port of Gladstone via two main port terminals, RGTCT and WICET. At our U.S. Operations, we also have a take-or-pay agreement in connection with the Kinder Morgan Pier IX Terminal in Hampton Roads, Virginia. We may enter into other take-or-pay arrangements in the future.
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Where we have entered into take-or-pay contracts, we will generally be required to pay for our contracted port or rail capacity, even if it is not utilized by us or other shippers. Although the majority of our take-or-pay arrangements provide security over minimum port and rail infrastructure availability, unused port or rail capacity can arise as a result of varying unforeseen circumstances, including insufficient production from a given mine, a mismatch between the timing of required port and rail capacity for a mine, or an inability to transfer the used capacity due to contractual limitations, such as required consent of the provider of the port or rail services, or because the coal must emanate from specified source mines or be loaded onto trains at specified load points. Paying for unused transport capacity could materially and adversely affect our cost structures and financial performance. See Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of Operations" for a summary of our expected future obligations under take-or-pay arrangements as of December 31, 2018.
Our profitability could be affected adversely by the failure of suppliers and/or outside contractors to perform.
We use contractors and other third parties for exploration, mining and other services generally, and are reliant on several third parties for the success of our current operations and the development of our growth projects. While this is normal for the mining industry, problems caused by third parties may arise, which may have an impact on our performance and operations. The majority of workers at our Australian Operations are employed by contractors, including Thiess, Golding Contractors Pty Ltd, and Wolff Mining Pty Ltd.
Operations at our mines may be interrupted for an extended period in the event that we lose any of our key contractors (because their contract is terminated or expires) and are required to replace them. There can be no assurance that skilled third parties or contractors will continue to be available at reasonable rates. As we do not have the same control over contractors as we do over employees, we are also exposed to risks related to the quality or continuation of the services of, and the equipment and supplies used by, our contractors, as well as risks related to the compliance of our contractors with environmental and health and safety legislation and internal policies, standards and processes. Any failure by our key contractors to comply with their obligations under our operating agreements with them (whether as a result of financial or operational difficulties or otherwise), any termination or breach of our operating agreements by our contractors, any protracted dispute with a contractor, any material labor dispute between our contractors and their employees or any major labor action by those employees against our contractors, could have a material adverse effect on our financial condition and results of operations.
Further, in periods of high commodity prices, demand for contractors may exceed supply resulting in increased costs or lack of availability of key contractors. Disruptions of operations or increased costs also can occur as a result of disputes with contractors or a shortage of contractors with particular capabilities. To the extent that any of the foregoing risks were to materialize, our operating results and cash flows could be adversely affected.
Our inability to replace or repair damaged or destroyed equipment or facilities in a timely manner, could materially and adversely affect our financial condition and results of operations.
We depend on several major pieces of mining equipment and facilities to produce and transport coal, including, but not limited to, longwall mining systems, continuous miners, draglines, dozers, excavators, shovels, haul trucks, conveyors, CPPs and rail loading and blending facilities. Obtaining and repairing these major pieces of equipment often involves long lead times. If any of these pieces of equipment and facilities suffers major damage or is destroyed by fire, abnormal wear and tear, flooding, incorrect operation or otherwise, we may be unable to replace or repair them in a timely manner or at a reasonable cost, which would impact our ability to produce and transport coal and could materially and adversely affect our financial condition and results of operations.
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Additionally, regulatory agencies sometimes make changes with regard to requirements for pieces of equipment. For example, in 2015, the MSHA promulgated a new regulation requiring the implementation of proximity detection devices on all continuous miners. Such changes can impose costs on us and can cause delays if manufacturers and suppliers are unable to make the required changes in compliance with mandated deadlines.
A decrease in the availability or increase in costs of key supplies, capital equipment, commodities and purchased components, such as diesel fuel, steel, explosives and tires could materially and adversely affect our financial condition and results of operations.
Our mining operations require a reliable supply of large quantities of fuel, explosives, tires, steel-related products (including roof control materials), lubricants and electricity. The prices we pay for commodities are strongly impacted by the global market. In situations where we have chosen to concentrate a large portion of purchases with one supplier, it has been to take advantage of cost savings from larger volumes of purchases and to ensure security of supply. If the cost of any of these key supplies or commodities increased significantly, or if a source for these supplies or mining equipment were unavailable to meet our replacement demands, our profitability could be reduced or we could experience a delay or halt in our production.
Our coal production and production costs can be materially and adversely impacted by unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. For example, operation of the thermal dryer located at the CPP at Buchanan is dependent upon the delivery of natural gas and there is currently only one natural gas supplier in the area, an affiliate of CONSOL Energy. Although we have entered into a gas purchase agreement with CONSOL Energy, this agreement can be terminated by CONSOL Energy on 30 days' notice and any delay or inability to negotiate a replacement agreement would impact our costs of production as we would need to change our processing method at Buchanan.
Risks related to our investment in WICET may adversely affect our financial condition and results of operations.
We have a minority interest in WICET Holdings Pty Ltd, whose wholly-owned subsidiary, WICET Pty Ltd, owns WICET. Other coal producers who export coal through WICET also hold shares in WICET Holdings Pty Ltd. In addition, we and the other coal producers (or shippers) have evergreen, ten-year take-or-pay agreements with WICET Pty Ltd and pay a terminal handling charge to export coal through WICET, which is calculated by reference to WICET's annual operating costs, as well as finance costs associated with WICET Pty Ltd's external debt facilities.
Some of the other WICET shipper-shareholders have been liquidated since WICET became operational in 2015, and have defaulted under their take-or-pay agreements with WICET Pty Ltd. These defaults have resulted in increased terminal handling charges for the remaining shipper-shareholders (including us) as the charges must be redistributed to fund the minimum required charges due to WICET. If any of the five remaining shipper-shareholders becomes insolvent and/or defaults under its take-or-pay agreement, the terminal handling charges for the remaining shipper-shareholders, including us, will increase. In addition, if we default under our take-or-pay agreement with WICET Pty Ltd, we might be liable for a significant termination payment. The termination payment is approximately equal to our proportion of WICET Pty Ltd's total external debt (which is based on the proportion that our contracted tonnage bears to the total contracted tonnage at WICET when the payment obligation is triggered). We have provided security to WICET Pty Ltd in the form of a bank guarantee, the amount of which is required to cover our estimated liabilities as a shipper under the WICET Take-or-Pay Agreement for the following 12-month period. If we are in default under the WICET Take-or-Pay Agreement and are subject to a termination payment, WICET Pty Ltd can draw on the security and apply it to amounts owing by us.
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Any attempt by the senior lenders for WICET Pty Ltd's external debt, or a receiver appointed by them, to take steps to seek to recover against the shipper-shareholders (whether through increased terminal handling charges or otherwise) could materially and adversely impact our business and results of operations. If an insolvency or other event ultimately resulted in a permanent cessation of operations at WICET, we may also be required to procure additional port capacity, as well as be liable for a termination payment under our take-or-pay agreement.
Defects in title or loss of any leasehold interests in our properties could limit our ability to mine these properties or result in significant unanticipated costs.
In the United States, title to a leased property and mineral rights is generally secured prior to permitting and developing a property. In some cases, we rely on title information or representations and warranties provided by our lessors, grantors or other third parties. Our right to mine some of our reserves may be adversely affected if defects in title or boundaries exist or if a lease expires. Any challenge to our title or leasehold interests could delay the exploration and development of the property and could ultimately result in the loss of some or all of our interest in the property and, accordingly, require us to reduce our estimated coal reserves. In addition, if we mine on property that we do not own or lease, we could incur liability for such mining.
In the United States, we predominantly access our mining properties through leases with a range of private landholders. If a default under a lease for properties on which we have mining operations resulted in the termination of the applicable lease, we may have to suspend mining or significantly alter the sequence of such mining operations, which may adversely affect our future coal production and future revenues.
To obtain leases or mining contracts to conduct our U.S. Operations on properties where defects exist or to negotiate extensions or amendments to existing leases, we may in the future have to incur unanticipated costs. In addition, we may not be able to successfully negotiate new leases or mining contracts for properties containing additional reserves or maintain our leasehold interests in properties where we have not commenced mining operations during the term of the lease.
In Queensland, where all of our Australian Operations are carried out, exploring or mining for coal is unlawful without a tenement granted by the Queensland government. The grant and renewal of tenements are subject to a regulatory regime and each tenement is subject to certain conditions. There is no certainty that an application for the grant of a new tenement or renewal of one of the existing Tenements at Curragh will be granted at all or on satisfactory terms or within expected timeframes. Further, the conditions attached to the Tenements may change at the time they are renewed. There is a risk that we may lose title to any of our granted Tenements if we are unable to comply with conditions or if the land that is subject to the title is required for public purposes. The Tenements have expirations ranging from August 31, 2021 to July 31, 2044 and, where renewal is required, there is a risk that the Queensland government may change the terms and conditions of such Tenement upon renewal.
A defect in our title or the loss of any lease or Tenement upon expiration of its term, upon a default or otherwise, could adversely affect our ability to mine the associated reserves or process the coal we mine.
Our ability to operate effectively could be impaired if we lose key personnel or fail to attract qualified personnel.
The loss of key personnel and the failure to recruit sufficiently qualified staff could affect our future performance. We have entered into employment contracts with a number of key personnel in Australia and the United States, including our Managing Director and Chief Executive Officer, Garold Spindler, and our President and Chief Operating Officer, James Campbell. Mr. Spindler's and
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Mr. Campbell's expertise and experience in the mining industry are important to the continued development and operation of our mining interests. However, there is no assurance that such personnel will remain with us for the term of their employment contracts or beyond. In the United States, we have not entered into employment contracts with any of our key personnel (other than Mr. Spindler and his direct reports), meaning that we do not have the benefit of notice provisions or non-compete restraints with these employees. The loss of our senior executives could have a material adverse effect on our business. There may be a limited number of persons with the requisite experience and skills to serve in our senior management positions. We may not be able to locate or employ qualified executives on acceptable terms. In addition, as our business develops and expands, we believe that our future success will depend greatly on our continued ability to attract and retain highly skilled personnel with coal industry experience in Australia and the United States. We may not be able to continue to employ key personnel or attract and retain qualified personnel in the future. The loss of such key personnel or the failure to recruit sufficiently qualified employees may affect our business and future performance.
A shortage of skilled labor in the mining industry could pose a risk to achieving improved labor productivity.
Efficient coal mining using modern techniques and equipment requires skilled laborers, preferably with at least a year of experience and proficiency in multiple mining tasks. Any future shortage of skilled labor in the Australian and U.S. mining industries could result in our having insufficient personnel to operate our business, our ability to expand production in the event there is an increase in the demand for our coal, which could adversely affect our financial condition and results of operations.
We could be negatively affected if we fail to maintain satisfactory labor relations.
Relations with our employees and, where applicable, organized labor are important to our success. Enterprise bargaining and other disputes between us and our employees or disputes affecting our contractors may result in strikes or uncompetitive work practices.
As of December 31, 2018, we had approximately 1,700 employees, which included approximately 1,100 hourly employees. As of December 31, 2018, approximately 12% of our total employees, all at our Australian Operations, were represented by organized labor unions and covered by the EBA. The EBA passed its nominal expiration date in July 2018 but it will continue in force and effect until replaced or terminated by the Australian Fair Work Commission. In March 2019, a new EBA agreement was approved by the union employees and is pending approval by the Fair Work Commission. Our U.S. Operations employ a 100% non-union labor force.
Future industrial action by our employees or mining contractors' employees or involving trade unions could disrupt operations and negatively impact mine productivity, production and profitability.
We may be unable to obtain, renew or maintain permits necessary for our operations, which would reduce coal production, cash flows and profitability.
Our performance and operations depend on, among other things, being able to obtain on a timely basis, and maintain, all necessary regulatory approvals, including any approvals arising under applicable mining laws, environmental regulations and other laws, for our current operations, expansion and growth projects. Examples of regulatory approvals that we must obtain and maintain include mine planning approvals, environmental permits and, in Australia, land titles, land tenure and approvals relating to native title and indigenous cultural heritage. In addition, our operations depend on our ability to obtain and maintain consents from private land owners and good relations with local communities.
The requirement to obtain and maintain approvals and address potential and actual issues for former, existing and future mining projects is common to all companies in the coal sector. However, there is no assurance or guarantee that we will obtain, secure, or be able to maintain any or all of the
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required consents, approvals and rights necessary to maintain our current production profile from our existing operations or to develop our growth projects in a manner which will result in profitable mining operations and/or achieve our long-term production targets. The permitting rules, and the interpretations of these rules, are complex, change frequently and are often subject to the interpretation of the regulators that enforce them, all of which may make compliance more difficult or impractical, and may possibly preclude the continuance of ongoing operations or the development of future mining operations. Certain laws, such as the SMCRA, require that certain environmental standards be met before a permit is issued. The public, including non-governmental organizations, anti-mining groups and individuals, have certain statutory rights to comment upon and submit objections to requested permits and environmental impact statements. These comments are prepared in connection with applicable regulatory processes, and the public may otherwise engage in the permitting process, including bringing lawsuits to challenge the issuance of permits, the validity or adequacy of environmental impact statements or performance of mining activities. In states where we operate, applicable laws and regulations also provide that a mining permit or modification can, under certain circumstances, be delayed, refused or revoked if we or any entity that owns or controls or is under common ownership or control with us have unabated permit violations or have been the subject of permit or reclamation bond revocation or suspension. Thus, past or ongoing violations of federal and state mining laws by us or such entity could provide a basis to revoke existing permits and to deny the issuance of additional permits or modification or amendment of existing permits. In recent years, the permitting required for coal mining has been the subject of increasingly stringent regulatory and administrative requirements and extensive activism and litigation by environmental groups. If this trend continues, it could materially and adversely affect our mining operations, development and expansion and cost structures, the transport of coal and our customers' ability to use coal produced by our mines, which, in turn, could have a material adverse effect on our financial condition and results of operation.
In particular, certain of our activities require a dredge and fill permit from the USACE under Section 404 of the CWA. In recent years, the Section 404 permitting process has been subject to increasingly stringent regulatory and administrative requirements and a series of court challenges, which have resulted in increased costs and delays in the permitting process. In addition, in 2015, the EPA and the USACE issued the CWR, under the CWA that would further expand the circumstances when a Section 404 permit is needed. The CWR is the subject of extensive ongoing litigation and administrative proceedings, as a result of which the CWR has been enjoined in certain states (including West Virginia) and reinstated in others (including Virginia and Pennsylvania), and its current and future impact on our operations are the subject of significant uncertainty. In addition, on December 11, 2018, the EPA and the USACE issued a proposed rule replacing the CWR. In accordance with President Trump's executive order, the proposed rule would redefine "waters of the United States", which would have the effect of excluding from the definition certain wetlands and other water bodies that are covered by the definition pursuant to the CWR. The process to rescind or revise the CWR will likely be subject to extensive notice and comment and litigation. Additionally, we may rely on nationwide permits under the CWA Section 404 program for some of our operations. These nationwide permits are issued every five years, and the 2017 nationwide permit program was recently reissued in January 2017. If we are unable to use the nationwide permits and require an individual permit for certain work, that could delay operations.
If we are unable to obtain and maintain the approvals, consents and rights required for our current and future operations, or if we obtain approvals subject to conditions or limitations, the economic viability of the relevant projects may be adversely affected, which may in turn result in the value of the relevant assets being impaired, which could have a material adverse effect on our financial condition and results of operations.
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In times of drought and/or shortage of available water, our operations and production, particularly at Curragh, could be negatively impacted if the regulators impose restrictions on our water offtake licenses that are required for water used in the CPPs.
In Queensland, all entitlements to the use, control and flow of water are vested in the state and regulated by the Water Act 2000 (Qld). Allocations under the Water Act 2000 (Qld) can be managed by a water supply scheme operator, such as SunWater Ltd. We have purchased the required water allocations for Curragh and entered into a suite of related channel and pipeline infrastructure agreements and river supply agreements with SunWater Ltd. to regulate the supply of water pursuant to these allocations.
The amount of water that is available to be taken under a water entitlement will vary from year to year and is determined by water sharing rules of the relevant catchment area. These rules will, for example, state a procedure for water supply scheme holders to calculate the water available to an allocation holder, based on available and predicted supply. In situations of severely constrained supply (such as during a drought), supply contracts with the scheme operator generally provide for a reduced apportionment, with certain uses (e.g., domestic use) being given higher priority. It is possible that during times of drought our water offtake entitlements in Australia could be reduced. If our water offtake entitlement was reduced, the operations would have to recycle more of the water collected in on-site dams and former mining pits, from rainfall and dewatering activities, for use in the Curragh CPPs. This may impact our ability to maintain current production levels without incurring additional costs, which could adversely impact our operations and production.
Our operations may impact the environment or cause exposure to hazardous substances, which could result in material liabilities to us.
We are subject to extensive environmental laws and regulations, and our operations may substantially impact the environment or cause exposure to hazardous materials to our contractors, our employees or local communities. We use hazardous materials and generate hazardous or other regulated waste, which we store in our storage or disposal facilities. We may become subject to statutory or common law claims (including damages claims) as a result of our use of hazardous materials and generation of hazardous waste. A number of laws, including, in the United States, the CERCLA or Superfund, and the RCRA, and in Australia, the Environmental Protection Act 1994 (Qld), impose liability relating to contamination by hazardous substances. Furthermore, the use of hazardous materials and generation of hazardous and other waste may subject us to investigation and require the clean-up of soil, surface water, groundwater and other media.
The mining process, including blasting and processing ore bodies, can also generate environmental impacts, such as dust and noise, and requires the storage of waste materials (including in liquid form). Risk in the form of dust, noise or leakage of polluting substances from site operations or uncontrolled breaches of mine residue facilities have the potential to generate harm to our employees, our contractors and the communities and the environment. Employee or strict liability claims under common law or environmental statutes in relation to these matters may arise, for example, out of current or former activities at sites that we own, lease or operate and at properties to which hazardous substances have been sent for treatment, storage, disposal or other handling. Our liability for such claims may be strict, joint and several with other miners or parties or with our contractors, such that we may be held responsible for more than our share of the contamination or other damages, or even for the entire amount of damages assessed. Additionally, any violations of environmental laws by us could lead to, among other things, the imposition on us of substantial fines, penalties, other civil and criminal sanctions, the curtailment or cessation of operations, orders to pay compensation, orders to remedy the effects of violations and take preventative steps against possible future violations, increased compliance costs, or costs for environmental remediation, rehabilitation or rectification works.
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We maintain extensive metallurgical coal refuse areas and slurry impoundments at our mining properties. At Curragh, our slurry impoundments are below surrounding topography and the possibility of failure is negligible. At our U.S. Operations, refuse areas and impoundments are frequently inspected and subject to extensive governmental regulation. Slurry impoundments have been known to fail, releasing large volumes of coal slurry into the surrounding environment. Structural failure of an impoundment can result in extensive damage to the environment and natural resources, such as bodies of water that the coal slurry reaches, as well as create liability for related personal injuries, property damages and injuries to natural resources and plant and wildlife. Of the six refuse areas among our U.S. mining properties, only three impound slurry; the other facilities are combined refuse and do not impound slurry. Four of our impoundments in the U.S. overlie mined out areas, which can pose a heightened risk of failure and the assessment of damages arising out of such failure. If one of our impoundments were to fail, we could be subject to substantial claims for the resulting environmental contamination and associated liability, as well as for related fines and penalties.
We are subject to extensive health and safety laws and regulations that could have a material adverse effect on our reputation and financial condition and results of operations.
We are subject to extensive laws and regulations governing health and safety at coal mines in the United States and Australia. As a result of increased stakeholder focus on health and safety issues (such as black lung disease or coal workers' pneumoconiosis), there is a risk of legislation and regulatory change that may increase our exposure to claims arising out of current or former activities or result in increased compliance costs (e.g., through requiring improved monitoring standards or contribution to an industry-pooled fund). Regulatory agencies also have the authority, following significant health and safety incidents, such as fatalities, to order a facility be temporarily or permanently closed. If this were to occur at any of our mining facilities, we may be required to incur capital expenditures to re-open the facility, which could have a material adverse effect on our reputation and financial condition and results of operations.
For additional information about the various regulations affecting us, see Item 1. "BusinessRegulatory MattersAustralia" and "BusinessRegulatory MattersU.S."
We could be adversely affected if we fail to appropriately provide financial assurances for our obligations.
U.S. federal and state laws and Australian laws require us to provide financial assurances related to requirements to reclaim lands used for mining, to pay federal and state workers' compensation, to provide financial assurances for coal lease obligations and to satisfy other miscellaneous obligations. The primary methods we use to meet those obligations in the United States are to provide a third-party surety bond or provide a letter of credit. As of December 31, 2018, we provided approximately $37.1 million of third-party surety bonds in connection with our U.S. Operations. There are no cash collateral requirements to support any of the outstanding bonds. In addition, one of the conditions of the Queensland environmental authority is for us to provide financial assurance in the form of non-cash backed bank guarantees. As of December 31, 2018, we provided A$279.7 million of financial assurance to meet this condition. The purpose of this assurance is to provide security for compliance with the environmental authority generally and for the costs and expenses associated with the reclamation/rehabilitation after mining operations are complete should we fail to do so.
Our financial assurance obligations may increase due to a number of factors, including the size of our mining footprint and new government regulations, and we may experience difficulty procuring or renewing our surety bonds. In addition, our bond issuers may demand higher fees or additional collateral, including letters of credit or other terms less favorable to us upon those renewals. Because we are required by federal and state law to have these bonds or other acceptable security in place before mining can commence or continue, any failure to maintain surety bonds, letters of credit or other guarantees or security arrangements would adversely affect our ability to mine coal. That failure
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could result from a variety of factors, including lack of availability of surety bond or letters of credit, higher expense or unfavorable market terms, the exercise by third-party surety bond issuers of their right to refuse to renew the surety and the requirement to provide collateral for future third-party surety bond issuers under the terms of financing arrangements. If we fail to maintain adequate bonding, our mining permits could be invalidated, which would prevent mining operations from continuing, and future operating results could be materially adversely affected.
In Australia, the approval and passing in 2019 of the Financial Provisioning Act which amends or replaces certain provisions of the Environmental Protection Act 1994 (Qld), will impact the way that our Australian Operations must provision for and manage associated costs of providing financial assurances related to mine rehabilitation obligations.
The Financial Provisioning Act:
Since April 1, 2019, any financial assurance currently held for environmental approvals already held in Australia are treated as surety under the new Financial Provisioning Act. There will be a transition period of three years commencing in early 2019 during which all miners in Queensland will be assessed and receive an initial risk allocation decision based on a formulaic calculation of their ERC. Our ERC is the cost estimated by the government department of rehabilitating the land on which our operation is carried out. This allocation will put our resource activity at Curragh into a risk category under the Financial Provisioning Act based on the regulator's assessment of both the amount of our ERC and our financial capacity to carry out and discharge the rehabilitation liability and obligation at the time our mining operations cease. This risk assessment will be reviewed annually, and assessment fees are payable each time there is an allocation decision for our operations in Queensland.
The new financial provisioning scheme will be managed by the Scheme Manager and financial assurance will be provided by paying a contribution to the Scheme Fund and/or the giving of surety to the Scheme Manager. Our contribution is calculated as the prescribed percentage (dependent on risk allocation decision) of Curragh's ERC. The prescribed percentages for each category are: (1) Very low: 0.5%; (2) Low: 1.0%; and (3) Moderate: 2.75%. In the event Curragh's ERC is allocated a high risk allocation, we will be required to negotiate the percentage of surety to be provided with the Scheme Manager. The Scheme Manager is a statutory officer and will manage the Scheme Fund contributions and the sureties on behalf of the State. Commencement of the scheme is expected to be in the first half of 2019. We do not yet know the extent to which the Financial Provisioning Act will impact our financial condition and results of operations. For more information on the Financial Provisioning Act, see Item 1. "BusinessRegulatory MattersAustraliaEnvironmental Protection Act 1994 (Qld)."
Mine closures entail substantial costs. If we prematurely close one or more of our mines, our operations and financial performance would likely be affected adversely.
Federal and state regulatory agencies have the authority following significant health and safety incidents, such as fatalities, to order a facility to be temporarily or permanently closed. If we were to prematurely close one or more of our mines for any reason, we could be required to close or discontinue operations at particular mines before the end of their mine life due to environmental, geological, geotechnical, commercial, leasing or other issues. Such closure or discontinuance of operations could result in significant closure and rehabilitation expenses, employee redundancy costs, contractor demobilization costs and other costs or loss of revenues. If and when incurred, these closure
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and rehabilitation costs could exceed our current estimates. If one or more of our mines is closed earlier than anticipated, we would be required to fund the reclamation and closure costs on an expedited basis and potentially lose revenues and, for some of our operations, pay for take-or-pay arrangements that we no longer use, which would have an adverse impact on our operating and financial performance. Many of these costs could also be incurred if a mine was unexpectedly placed on care and maintenance before the end of its planned mine life.
If the assumptions underlying our provision for reclamation and mine closure obligations prove to be inaccurate, we could be required to expend greater amounts than anticipated.
The SMCRA and the Environmental Protection Act 1994 (Qld) establish operational, reclamation and closure standards for all aspects of surface mining as well as deep mining. We accrue for the costs of current mine disturbance and final mine closure, including the cost of treating mine water discharge where necessary. Estimates of our total reclamation and mine-closing liabilities total $125.8 million as of December 31, 2018, based upon permit requirements and the historical experience at our operations, and depend on a number of variables involving assumptions and estimation and therefore may be subject to change, including the estimated future asset retirement costs and the timing of such costs, estimated proven reserves, assumptions involving third-party contractors, inflation rates and discount rates. If these accruals are insufficient or our liability in a future year is greater than currently anticipated, our future operating results and financial position could be adversely affected. See Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of OperationsCritical Estimates."
Concerns about the environmental impacts of coal combustion, including perceived impacts on global climate issues, are resulting in increased regulation of coal combustion and coal mining in many jurisdictions, which could significantly affect demand for our products or our securities.
Global climate issues continue to attract considerable attention to the coal industry. Emissions from coal consumption, both directly and indirectly and emissions from coal mining itself are subject to pending and proposed regulation as part of initiatives to address global climate change. A number of countries, including Australia and the United States, have already introduced, or are contemplating the introduction of, regulatory responses to GHGs, including the extraction and combustion of fossil fuels, to address the impacts of climate change.
There are three primary sources of GHGs associated with the coal industry. First, the end use of our coal by our customers in electricity generation, coke plants, and steelmaking is a source of GHGs. Second, combustion of fuel by equipment used in coal production and to transport our coal to our customers is a source of GHGs. Third, coal mining itself can release methane, which is considered to be a more potent GHG than carbon dioxide, directly into the atmosphere. These emissions from coal consumption, transportation and production are subject to pending and proposed regulation as part of initiatives to address global climate change.
As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of GHGs. In addition, the growth of alternative energy options, such as renewables and disruptive power generation technologies, and changes in community or government attitudes to climate change and efforts to promote divestment of fossil fuel equities and pressure lenders to limit funding to fossil fuel companies could result in further development of alternative energy industries and broader mainstream acceptance of alternative energy options which could result in a material reduction in the demand for coal. The absence of regulatory certainty, global policy inconsistencies and direct regulatory impacts (such as carbon taxes or other charges) each have the potential to adversely affect our operationseither directly or indirectly, through suppliers and customers. Collectively, these initiatives and
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developments could result in higher electric costs to us or our customers or lower the demand for coal used in electric generation, which could in turn adversely impact our business.
At present, we are principally focused on metallurgical coal production, which is not used in connection with the production of coal-fired electricity generation. The market for our coal may be adversely impacted if comprehensive legislation or regulations focusing on GHG emission reductions are adopted, or if our customers are unable to obtain financing for their operations.
We and our customers may also have to invest in CCUS technologies in order to burn thermal coal and comply with future GHG emission standards. The potential direct and indirect financial impact on us of future laws, regulations, policies and technology developments may depend upon the degree to which any such laws, regulations and developments force reduced reliance on coal as a fuel source. Such developments could result in material adverse impacts on our financial condition or results of operations. See Item 1. "BusinessRegulatory MattersAustralia" and "BusinessRegulatory MattersU.S."
Changes in and compliance with government policy, regulation or legislation may adversely affect our financial condition and results of operations.
The coal mining industry is subject to regulation by federal, state and local authorities in each relevant jurisdiction with respect to matters such as:
Any future legislation and regulatory change imposing more constraints or more stringent requirements may affect the coal mining industry and may adversely affect our financial condition and results of operations. Examples of such changes are, future laws or regulations that may limit the emission of GHGs or the use of thermal coal in power generation, more stringent workplace health and safety laws, more rigorous environmental laws, and changes to existing taxation and royalty legislation.
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Compliance with applicable federal, state and local laws and regulations may become more costly and time-consuming and may delay commencement or interrupt continuation of exploration or production at our operations. We have incurred, and may in the future incur, significant expenditures to comply with such regulation and legislation. These laws are constantly evolving and may become increasingly stringent. The ultimate impact of complying with existing laws and regulations is not always clearly known or determinable due in part to the fact that certain implementation of the regulations for these laws have not yet been promulgated and in certain instances are undergoing revision. These laws and regulations, particularly new legislative or administrative proposals (or judicial interpretations of existing laws and regulations), could result in substantially increased capital, operating and compliance costs and could have a material adverse effect on our operations and our customers' ability to use our products. For example, the U.S. Congress has previously enacted and may in the future address "bail-out" programs for the underfunded United Mine Workers benefits and pension plans, which could in effect tax all coal companies for unfunded or underfunded union pension plans and add costs to union-free entities like us, with respect to our U.S. Operations, and potentially impact competitive positions in the market. Due in part to the extensive and comprehensive regulatory requirements, along with changing interpretations of these requirements, violations of applicable federal, state and local laws and regulations occur from time to time in the coal industry and minor violations have occurred at our Australian Operations and our U.S. Operations in the past.
Moreover, changes in the law may impose additional standards and a heightened degree of responsibility for us and our stockholders, directors and employees; may require unprecedented compliance efforts; could divert our management's attention; and may require significant expenditures. For example, we may also be subject to unforeseen environmental liabilities resulting from coal-related activities, which may be costly to remedy or adversely impact our operations. In particular, the acceptable level of pollution and the potential abandonment costs and obligations for which we may become liable as a result of our activities may be difficult to assess under the current legal framework. To the extent that required expenditures, as with all costs, are not ultimately reflected in the prices of coal, our operating results will be detrimentally impacted. The costs and operating restrictions necessary for compliance with safety and environmental laws and regulations, which is a major cost consideration for our Australian Operations and U.S. Operations, may have an adverse effect on our competitive position relative to foreign producers and operators in other countries which may not be required to incur equivalent costs in their operations.
We are also affected by various other international, federal, state, local and tribal or indigenous environmental laws and regulations that impact our customers. To the extent that such environmental laws and regulations reduce customer demand for or increase the price of coal, we will be detrimentally impacted. For additional information about the various regulations affecting us, see Item 1. "BusinessRegulatory MattersAustralia" and "BusinessRegulatory MattersU.S."
Failure to comply with applicable anti-corruption and trade laws, regulations and policies could result in fines and criminal penalties, causing a material adverse effect on our business, operating and financial prospects or performance.
Any fraud, bribery, misrepresentation, money laundering, violations of applicable trade sanctions, anti-competitive behavior or other misconduct by our employees, contractors, customers, service providers, business partners and other third parties could result in violations of relevant laws and regulations by us and subject us or relevant individuals to corresponding regulatory sanctions or other claims, and also result in an event of default under our Syndicated Facility Agreement. These unlawful activities and other misconduct may have occurred in the past and may occur in the future and may result in civil and criminal liability under increasingly stringent laws relating to fraud, bribery, sanctions, competition and misconduct or cause serious reputational or financial harm to us. In addition, failure to comply with environmental, health or safety laws and regulations, privacy laws and regulations, U.S.
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trade sanctions, the U.S. Foreign Corrupt Practices Act and other applicable laws or regulations could result in litigation, the assessment of damages, the imposition of penalties, suspension of production or distribution, costly changes to equipment or processes due to required corrective action, or a cessation or interruption of operations.
We have policies and procedures to identify, manage and mitigate legal risks and address regulatory requirements and other compliance obligations. However, there can be no assurance that such policies, procedures and established internal controls will adequately protect us against fraudulent or corrupt activity and such activity could have an adverse effect on our reputation, financial condition and results of operations.
Our mining operations are subject to extensive forms of taxation, which imposes significant costs on us, and future regulations and developments could increase those costs or limit our ability to produce coal competitively.
Federal, state or local governmental authorities in nearly all countries across the global coal mining industry impose various forms of taxation on coal producers, including production taxes, sales-related taxes, royalties, environmental taxes and income taxes. If new legislation or regulations related to various forms of coal taxation or income or other taxes generally, which increase our costs or limit our ability to compete in the areas in which we sell coal, or which adversely affect our key customers, are adopted, our business, financial condition or results of operations could be adversely affected.
Recently enacted tax reform legislation or future proposed legislation could have an adverse impact on us.
U.S. tax legislation enacted on December 22, 2017, generally known as the Tax Cuts and Jobs Act, has significantly changed the U.S. federal income taxation of U.S. corporations and their foreign subsidiaries. The Tax Cuts and Jobs Act has made substantial changes to U.S. tax law, including a reduction in the corporate income tax rate, a limitation on deductibility of interest expense, the allowance of immediate expensing of capital expenditures, and deemed repatriation of foreign earnings.
The Tax Cuts and Jobs Act is subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury Department and Internal Revenue Service, or the IRS, any of which could lessen or increase certain adverse effects of the legislation. There may also be material adverse effects resulting from the legislation that we have not identified. In addition, there is uncertainty with respect to how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities.
Further, from time to time, legislation is proposed that could result in the reduction or elimination of certain U.S. federal tax preferences currently available to companies engaged in the exploration and development of coal. These proposals have included but are not limited to: (1) the elimination of current deductions, the 60-month amortization period and the 10-year amortization period for exploration and development costs relating to coal and other hard mineral fossil fuels; (2) the repeal of the percentage depletion allowance with respect to coal properties; and (3) the repeal of capital gains treatment of coal and lignite royalties. The passage of these or other similar proposals could increase our taxable income and negatively impact our cash flows and our results of operations.
We may not recover our investments in our mining, exploration and other assets, which may require us to recognize impairment charges related to those assets.
Our balance sheet includes a number of assets that are subject to impairment risk, particularly long-lived assets, including property, plant and equipment, mining tenements, exploration and evaluation assets and intangible assets (including goodwill). The values of these assets are generally derived from the fundamental valuation of the underlying mining operations and, as such, are subject
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to many of the same risks to which our operations are exposed, including decreases in coal prices, foreign currency exchange risks, operational and geological risks, changes in coal production and changes in estimates of proven and probable coal reserves. Adverse changes in these and other risk factors could lead to a reduction in the valuation of certain of our assets and result in an impairment charge being recognized.
Any failure to maintain effective internal control over financial reporting may adversely affect our financial condition and results of operations.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
Under standards established by the Public Company Accounting Oversight Board, or PCAOB, a deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or personnel, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. The PCAOB defines a significant deficiency as a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of a registrant's financial reporting. The PCAOB defines a material weakness as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis.
During the preparation of our financial statements for the year ended December 31, 2018, we and our auditors identified a material weakness in our internal control over financial reporting related to the recognition and presentation of the impact of the Reorganization Transaction, which occurred just prior to the Australian IPO. The presentation was corrected prior to the issuance of the financial statements and did not result in any material misstatement of our financial statements or disclosures.
We are not yet required to comply with the SEC's rules implementing Section 404(b) of the Sarbanes Oxley Act of 2002, or the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a registrant in the United States, we will be required to comply with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which, among other things, will require our management to certify financial and other information in our quarterly and annual reports to be filed with the SEC and provide an annual management report on the effectiveness of our internal control over financial reporting.
Material weaknesses or significant deficiencies may be identified in the future, which may result in errors in our financial statements leading to a restatement of those financial statements.
We may not have adequate insurance coverage for some business risks.
We have insurance coverage for certain operating risks that provide limited coverage for some potential liabilities associated with our business. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially, and in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. In addition, we may become subject to liability (including in relation to pollution, occupational illnesses or other hazards), or suffer loss resulting from business interruption, for which we are not insured (or are not sufficiently insured) or cannot insure, including liabilities in respect of past activities.
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Should we suffer a major uninsured loss, future financial performance could be materially adversely affected. In addition, insurance may not continue to be available at economically acceptable premiums or coverage may be reduced. As a result, the insurance coverage may not cover the full scope and extent of claims against us or losses we may incur. The occurrence of a significant adverse event not fully or partially covered by insurance could have a material adverse effect on our financial condition and results of operations.
Cybersecurity attacks, natural disasters, terrorist attacks and other similar crises or disruptions may negatively affect our business, financial condition and results of operations.
Our business may be impacted by disruptions such as cybersecurity attacks or failures, threats to physical security, and extreme weather conditions or other natural disasters. Strategic targets, such as energy-related assets, may be at greater risk of future terrorist or cybersecurity attacks than other targets in the United States or Australia. These disruptions or any significant increases in energy prices that follow could result in government-imposed price controls. Our insurance may not protect us against such occurrences. It is possible that any of these occurrences, or a combination of them, could have a material adverse effect on our business, financial condition and results of operations.
In addition, a disruption in, or failure of, our information technology systems could adversely affect our business operations and financial performance. We rely on the accuracy, capacity and security of our information technology, or IT, systems for the operations of many of our business processes and to comply with regulatory, legal and tax requirements. While we maintain some of our critical IT systems, we are also dependent on third parties to provide important IT services relating to, among other things, human resources, electronic communications and certain finance functions. Despite the security measures that we have implemented, including those related to cybersecurity, our systems could be breached or damaged by computer viruses, natural or man-made incidents or disasters or unauthorized physical or electronic access. Though we have controls in place, we cannot provide assurance that a cyber-attack will not occur. Furthermore, we may have little or no oversight with respect to security measures employed by third-party service providers, which may ultimately prove to be ineffective at countering threats. Failures of our IT systems, whether caused maliciously or inadvertently, may result in the disruption of our business processes, the unauthorized release of sensitive, confidential or otherwise protected information or the corruption of data, which could adversely affect our business operations and financial performance. We may be required to incur significant costs to protect against and remediate the damage caused by such disruptions or system failures in the future.
Mining in the CAPP is more complex and involves more regulatory constraints than mining in other areas of the U.S., which could affect our mining operations and cost structures in these areas.
The geological characteristics of coal reserves in the CAPP, such as depth of overburden and coal seam thickness, make them complex and costly to mine. As mines become depleted, replacement reserves may not be available or, if available, may not be able to be mined at costs comparable to those of the depleting mines. In addition, compared to mines in the other areas of the country, permitting, licensing and other environmental and regulatory requirements are more costly and time consuming to satisfy. These factors could materially adversely affect the mining operations and cost structures of, and our customers' ability to use coal produced by, our mining properties in the CAPP.
We may face restricted access to international markets in the future.
Access to international markets may be subject to ongoing interruptions and trade barriers due to policies and tariffs of individual countries, and the actions of certain interest groups to restrict the import or export of certain commodities. Although there are currently no significant trade barriers existing or impending of which we are aware that do, or could, materially affect our access to certain markets, there can be no assurance that our access to these markets will not be restricted in the future.
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An inability for metallurgical coal suppliers to access international markets would likely result in an oversupply of metallurgical coal in the domestic market, resulting in a decrease in prices.
We are subject to foreign exchange risks involving certain operations in multiple countries.
Foreign exchange risk is the risk of sustaining loss through adverse movements in currency exchange rates. Such losses can impact our financial performance and financial position and the level of additional funding required to support our businesses. Our financial results are reported in US$ and certain parts of our liabilities, earnings and cash flows are influenced by movements in exchange rates, especially movements in A$ to US$ exchange rate. For example, costs relating to our Australian Operations are generally denominated in A$. In addition, foreign currency exposures arise in relation to coal supply contracts, procurement of plant and equipment and debt, which may be priced in A$ or other foreign currencies other than US$.
The impact of currency exchange rate movements will vary depending on factors such as the nature, magnitude and duration of the movements, the extent to which currency risk is hedged under forward exchange contracts or other hedging instruments and the terms of these contracts. We currently do not hedge our non-US$ exposures against exchange rate fluctuations, and consequently it will be at the risk of any adverse movement in exchange rates, which may affect our operating results, cash flows and financial condition.
We may be subject to litigation, the disposition of which could negatively affect our profitability and cash flow in a particular period, or have a material adverse effect on our business, financial condition and results of operations.
Our profitability or cash flow in a particular period could be affected by an adverse ruling in any litigation that may be filed against us in the future. In addition, such litigation could have a material adverse effect on our business, financial condition and results of operations. See Item 8. "Legal Proceedings."
Risks related to the Supply Deed with Stanwell may adversely affect our financial condition and results of operations.
Curragh has a CSA with Stanwell to supply thermal coal to the Stanwell Power Station. The CSA also provides Curragh with certain mining rights, of which the SRA was reserved for the benefit of Stanwell and could not be mined without Stanwell's consent. Under the CSA, in addition to supplying thermal coal at a price below the cost to Curragh of mining and processing the coal, Curragh pays certain rebates to Stanwell on metallurgical coal exported from certain parts of Curragh, which represents the deferred purchase cost of the right to mine some areas at Curragh.
On August 14, 2018, Curragh entered into the Supply Deed with Stanwell. The Supply Deed grants Curragh the right to mine the coal reserves in the SRA. In exchange for these rights Curragh has agreed to certain amendments to the CSA and to enter into the NCSA, that will commence on or around the expiry of the CSA (currently expected to expire in 2027).
The consideration for the access to additional reserves and access to the SRA will be deferred and payable as a discount to the market value of thermal coal over the term of the NCSA. No export rebates are payable during the term of the NCSA. The net present value of the deferred consideration is approximately A$210 million.
Under the Supply Deed, if the parties do not agree to terms of the NCSA documentation by June 30, 2019, the terms of documentation will be determined by an expert, based on the terms of a binding terms sheet contained in the Supply Deed, or the Binding Terms Sheet, and the CSA. While the Binding Terms Sheet is relatively comprehensive, there is a risk that we and Stanwell will not be
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able to agree upon the terms of the NCSA and the terms of the NCSA may be determined by the expert in a form and manner that is less advantageous to us. In addition, the negotiation of the NCSA and any resultant dispute may be time consuming for our management. If any dispute regarding the form of the NCSA is ultimately referred to an expert, we will be exposed to our share of costs associated with the referral and potential further delays and will be bound to comply with the terms of the NCSA as determined by that expert. We are in the process of negotiating the NCSA and believe that agreement will be reached by June 30, 2019. If the final terms of the NCSA are less advantageous to us than our current arrangement, our operating results, cash flows and financial condition may be affected.
We have no registered trademarks for our Company name or other marks used by us in the United States or any other countries, and failure to obtain those registrations could adversely affect our business.
Although we have filed a trademark application for use of the stylized mark "CORONADO STEEL STARTS HERE" in the United States, our application is still pending and the corresponding mark has not been registered in the United States. We have not filed for this or other trademarks in any other country. During trademark registration proceedings, we may receive rejections. If so, we will have an opportunity to respond, but we may be unable to overcome such rejections. In addition, the United States Patent and Trademark Office and comparable agencies in many foreign jurisdictions may permit third parties to oppose pending trademark applications and to seek to cancel registered trademarks. If opposition or cancellation proceedings are filed against our trademark application, our trademark may not survive such proceedings, and/or we may be required to expend significant additional resources in an effort to defend ourselves in the proceedings or identify a suitable substitute mark for future use.
Risks Related to Our Indebtedness and Capital Structure
Our financial performance could be adversely affected by our indebtedness.
As of December 31, 2018, we had no borrowings under our Syndicated Facility Agreement. The degree to which we are leveraged in the future could have consequences, including, but not limited to:
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In addition, we are subject to certain restrictive covenants pursuant to the agreement governing our Syndicated Facility Agreement. Failure by us to comply with these covenants could result in an event of default that, if not cured or waived, could have a material adverse effect on us and result in amounts outstanding thereunder to be immediately due and payable.
Any downgrade in our credit ratings could result in, among other matters, a requirement to post collateral on derivative trading instruments that we may enter into, the loss of trading counterparties for corporate hedging and trading and brokerage activities or an increase in the cost of, or a limit on our access to, various forms of credit used in operating our business and the requirement by suppliers for us to provide financial assurance by way of letters of credit.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or raise new equity to reduce our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to sell material assets or operations in an attempt to meet our debt service and other obligations. We may not be able to complete those sales or obtain all of the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. In addition, the terms of the agreement governing our Syndicated Facility Agreement provide that if we cannot meet our debt service obligations, the lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
We may not be able to generate sufficient cash to service all of our debt and may be forced to take other actions to satisfy our debt obligations, which may not be successful.
We are subject to various financial covenants under the terms of both the agreement governing our Syndicated Facility Agreement. These covenants may, for example, require the maintenance of a maximum gearing or leverage ratio or prepayment of outstanding loan balances. Factors such as adverse movements in interest rates and coal prices, deterioration of our financial performance or changes in accounting standards could lead to a breach in financial covenants. If there is such a breach, the relevant lenders may accelerate our indebtedness to them or withdraw their commitments to make further loans to us. Some covenant breaches may not result in an immediate default but may restrict our ability to make distributions or otherwise limit expenditures. For details of the Syndicated Facility Agreement, see Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of Operations."
We adjust our capital structure from time to time and may need to increase our debt leverage, which would make us more sensitive to the effects of economic downturns.
It is possible that we may need to raise additional debt or equity funds in the future. Our Syndicated Facility Agreement and operating cash flows may not be adequate to fund our ongoing capital requirements, for any future acquisitions or projects or to refinance our debt. There is no guarantee that we will be able to refinance our existing debt, or if we do, there is no guarantee that such new funding will be on terms acceptable to us.
Global credit markets have been severely constrained in the past, and the ability to obtain new funding or refinance may in the future be significantly reduced. If we are unable to obtain sufficient funding, either due to banking and capital market conditions, generally, or due to factors specific to our business, we may not have sufficient cash to meet our ongoing capital requirements, which in turn could materially and adversely affect our financial condition. Failure to obtain sufficient financing could cause delays or abandonment of business development plans and have a material adverse effect on our business, operations and financial condition.
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Recently, certain financial institutions, investment managers and insurance companies globally have responded to pressure to take actions to limit or divest investments in, financing made available to, and insurance coverage provided for, the development of new coal-fired power plants and coal miners that derive revenues from thermal coal sales. For example, in 2017, some Australian and other banks publicly announced that they would stop funding new thermal coal projects or would otherwise reduce their overall lending to coal. These or similar policies may adversely impact the coal industry generally, our ability to access capital and financial markets in the future, our costs of capital and the future global demand for coal.
Our business may require substantial ongoing capital expenditures, and we may not have access to the capital required to reach full productive capacity at our mines.
Maintaining and expanding mines and related infrastructure is capital intensive. Specifically, the exploration, permitting and development of metallurgical coal reserves, mining costs, the maintenance of machinery, facilities and equipment and compliance with applicable laws and regulations require ongoing capital expenditures. While a significant amount of the capital expenditures required at our mines has been spent, we must continue to invest capital to maintain our production. In addition, any decisions to increase production at our existing mines or to develop the high-quality metallurgical coal recoverable reserves at our development properties in the future could also affect our capital needs or cause future capital expenditures to be higher than in the past and/or higher than our estimates. We cannot assure you that we will be able to maintain our production levels or generate sufficient cash flow, or that we will have access to sufficient financing to continue our production, exploration, permitting and development activities at or above our present levels and on our current or projected timelines, and we may be required to defer all or a portion of our capital expenditures. Our results of operations, business and financial condition may be materially adversely affected if we cannot make such capital expenditures.
To fund our capital expenditures, we will be required to use cash from our operations, incur debt or sell equity securities. Using cash from operations will reduce cash available for maintaining or increasing our operations activities. Our ability to obtain bank financing or our ability to access the capital markets for future equity or debt offerings, on the other hand, may be limited by our financial condition at the time of any such financing or offering and the covenants in our existing debt agreements, as well as by general economic conditions, contingencies and uncertainties that are beyond our control. If cash flow generated by our operations or available borrowings under our bank financing arrangements are insufficient to meet our capital requirements and we are unable to access the capital markets on acceptable terms or at all, we could be forced to curtail the expansion of our existing mines and the development of our properties, which, in turn, could lead to a decline in our production and could materially and adversely affect our business, financial condition and results of operations.
Interest rates could change substantially and have an adverse effect on our profitability.
We are exposed to interest rate risk in relation to variable-rate bank balances and variable-rate borrowings. Our interest rate risk primarily arises from fluctuations in the London Interbank Offered Rate, or LIBOR, and the Australian Bank Bill Swap Bid Rate in relation to US$and A$denominated borrowings. Our lending rates may increase in the future as a result of factors beyond our control and may result in an adverse effect on our financial condition and results of operations.
Coronado Global Resources Inc. is a holding company with no operations of its own and, as such, it depends on its subsidiaries for cash to fund its operations and expenses, including future dividend payments, if any.
As a holding company, our principal source of cash flow is distributions from our subsidiaries. Therefore, our ability to fund and conduct our business, service our debt, and pay dividends, if any, in the future will depend on the ability of our subsidiaries to generate sufficient cash flow to make
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upstream cash distributions to us. Our subsidiaries are separate legal entities, and although they are wholly-owned and controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends, or otherwise. The ability of our subsidiaries to distribute cash to us will also be subject to, among other things, restrictions that may be contained in our subsidiary agreements (as entered into from time to time), availability of sufficient funds in such subsidiaries and applicable laws and regulatory restrictions. Claims of any creditors of our subsidiaries generally will have priority as to the assets of such subsidiaries over our claims and claims of our creditors and stockholders. To the extent the ability of our subsidiaries to distribute dividends or other payments to us is limited in any way, our ability to fund and conduct our business, service our debt, and pay dividends, if any, could be harmed.
Risks Related to Ownership of Our Securities
We are subject to general market risks that are inherent to companies with publicly-traded securities and the price of our securities may be volatile.
We are subject to the general market risk that is inherent in all securities traded on a securities exchange. This may result in fluctuations in the trading price of our securities that are not explained by our fundamental operations and activities. There is no guarantee that the price of our securities will increase in the future, even if our earnings increase.
Our securities may trade at, above or below the price paid by an investor for those securities due to a number of factors, including, among others:
Other factors that may negatively affect investor sentiment and influence us, specifically, or the stock market, more generally, include acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labor strikes, civil wars, natural disasters, outbreaks of disease or other man-made or natural events.
Stock markets have experienced extreme price and volume fluctuations in the past that are often disproportionate or unrelated to the operating performance of companies. There can be no guarantee that trading prices and volumes of any securities will be sustained. These factors may materially affect
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the market price of our securities, regardless of our operational performance. No guarantee can be given by us in respect of the payment of dividends, any returns of capital or the market value of our securities. Such issues are dependent on our performance, the control of costs and the need for working capital and other funding requirements.
We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Our amended and restated certificate of incorporation, or certificate of incorporation, authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock with respect to dividends and distributions, as our Board of Directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we have granted to the holder of the Series A Share the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Granting of similar rights, other repurchase or redemption rights or liquidation preferences to future holders of preferred stock could affect the residual value of the common stock.
Insiders have substantial control over us and are able to influence corporate matters.
Coronado Group LLC and the EMG Group have significant influence over us, including control over decisions that require the approval of stockholders, which could limit the ability of other stockholders to influence the outcome of stockholders votes.
As of March 31, 2019, the EMG Group indirectly held approximately 80% of our outstanding shares of common stock. Therefore, the EMG Group will have effective control over the outcome of votes on all matters requiring approval by stockholders. The interests of the EMG Group could conflict with or differ from our interests or the interests of other stockholders. For example, the concentration of ownership held by the EMG Group could delay, deter or prevent a change in control of us or impede a merger, takeover or other business combination which may otherwise be favorable for us. In addition, pursuant to the terms of the Stockholder's Agreement that we and Coronado Group LLC have entered into, so long as it beneficially owns in the aggregate at least 25% of the outstanding shares of our common stock, the EMG Group will have the ability to exercise substantial control over certain of our transactions, including change of control transactions, such as mergers and capital and debt raising transactions. See Item 11. "Description of Registrant's Securities to be Registered" for a description of the Stockholder's Agreement.
Further, pursuant to the terms of the share of preferred stock Series A, par value $0.01 per share, of the Company that we issued to Coronado Group LLC, or the Series A Share, Coronado Group and the EMG Group or its successors or permitted assigns, as the beneficial owner of the Series A Share, at its option, will have the ability to elect a specified number of directors, or the Series A Directors, based on the EMG Group's aggregate level of beneficial ownership of shares of our common stock. For more details on the ability of Coronado Group and the EMG Group to elect Series A Directors, as well as the rights of stockholders to participate in the removal of any such Series A Directors, see Item 11. "Description of Registrant's Securities to be Registered."
Moreover, the EMG Group's beneficial ownership of shares of our common stock may also adversely affect the price of our common stock to the extent investors perceive disadvantages in owning common stock of a company with a controlling stockholder. In addition, the EMG Group is in the business of making investments in companies and may, from time to time, acquire interests in businesses that directly or indirectly compete with us, as well as businesses of our existing or potential significant customers. The EMG Group may acquire or seek to acquire assets that we seek to acquire
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and, as a result, those acquisition opportunities may not be available to us or may be more expensive for us to pursue, and as a result, the interests of the EMG Group may not align with the interests of our other stockholders.
Our non-employee directors and their respective affiliates, including the EMG Group, may be able to take advantage of a corporate opportunity that would otherwise be available to us.
The corporate opportunity and related party transactions provisions in our certificate of incorporation could enable any of our non-employee directors or their respective affiliates, including the EMG Group, to benefit from corporate opportunities that might otherwise be available to us. Subject to the limitations of applicable law, our certificate of incorporation, among other things, will:
These provisions enable a corporate opportunity that would otherwise be available to us to be taken by or used for the benefit of the non-employee directors or their respective affiliates, which include the EMG Group as a result of the rights granted to it under the Stockholder's Agreement.
The EMG Group has the right, subject to certain conditions, to require us to register the sale of its shares of our common stock (including in the form of CDIs) under the Securities Act of 1933, or to otherwise cause us to cooperate in a sell-down.
Pursuant to the Registration Rights and Sell-Down Agreement, dated as of September 24, 2018, between us and Coronado Group LLC, or the Registration Rights and Sell-Down Agreement, Coronado Group LLC (or its successors or permitted assigns or transferees) has the right, subject to certain conditions, to require us to register the sale of its shares of our common stock or CDIs under the Securities Act of 1933, or the Securities Act, or to cause us to cooperate in the sell-down of its shares of our common stock or CDIs. By exercising its registration rights and selling a large number of shares or CDIs, Coronado Group LLC could cause the prevailing market price of our common stock to decline. See Item 11. "Description of Registrant's Securities to be RegisteredRegistration Rights and Sell-Down Agreement."
The issuance of additional common stock or securities convertible into our common stock could result in dilution of the ownership interest in us held by existing stockholders.
We may issue more CDIs in the future in order to fund acquisitions or investments or to reduce our debt. While we will be subject to the constraints of the ASX Listing Rules regarding the percentage of our capital that we are able to issue within a 12-month period (subject to applicable exceptions), any such equity raisings may dilute the interests of investors.
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Other Business Risks
Provisions of our certificate of incorporation, bylaws and Delaware law could make a change of control of us more difficult.
Provisions of our certificate of incorporation, our amended and restated bylaws, or bylaws, and Delaware law may make it more difficult to effect a change in control of us, which could adversely affect the price of our common stock. The existence of such provisions of our certificate of incorporation and bylaws and Delaware law could delay or prevent a change in control of us, even if that change would be beneficial to stockholders. The provisions of our certificate of incorporation and bylaws that may make acquiring control of us difficult, include provisions:
We have elected not to be governed by Section 203 of the General Corporation Law of the State of Delaware, or the DGCL (or any successor provision thereto), until immediately following the time at which the EMG Group no longer beneficially owns in the aggregate shares of our common stock representing at least 10% of the Voting Stock, in which case we shall thereafter be governed by Section 203 if and for so long as Section 203 by its terms would apply to us. Section 203 provides that an interested stockholder, along with its affiliates and associates ( i.e. , a stockholder that has purchased greater than 15%, but less than 85%, of a company's outstanding voting stock (with some exclusions)), may not engage in a business combination transaction with the company for a period of three years after buying more than 15% of a company's outstanding voting stock unless certain criteria are met or certain other corporate actions are taken by the company.
These provisions also could discourage proxy contests and make it more difficult for our stockholders to elect directors, other than candidates nominated by the Board of Directors, and take other actions. As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would benefit stockholders, which may also limit the price that investors are willing to pay in the future for our common stock. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging a takeover attempt in the future.
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Our certificate of incorporation limits the personal liability of our directors for certain breaches of fiduciary duty.
Our certificate of incorporation and bylaws include provisions limiting the personal liability of our directors for breaches of fiduciary duty under the DGCL. Specifically, our certificate of incorporation contains provisions limiting a director's personal liability to us and our stockholders to the fullest extent permitted by the DGCL. Furthermore, our certificate of incorporation provides that no director shall be liable to us and our stockholders for monetary damages resulting from a breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the DGCL. The principal effect of this limitation on liability is that a stockholder will be unable to prosecute an action for monetary damages against a director unless the stockholder can demonstrate a basis for liability that cannot be eliminated under the DGCL. These provisions, however, should not limit or eliminate our right or any stockholder's right to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director's fiduciary duty. These provisions do not alter a director's liability under U.S. federal securities laws. The inclusion of these provisions in our certificate of incorporation may discourage or deter stockholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our stockholders.
A state or federal court in the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and stockholders.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, a state or federal court in the State of Delaware will be the sole and exclusive forum for:
The choice of forum provision may limit a stockholder's ability to bring a claim against us or our directors, officers or other employees in a forum that it finds favorable, which may discourage stockholders from bringing such claims at all. Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in another forum, which could materially adversely affect our business, financial condition and results of operations.
The historical and pro forma financial information that we have included in this registration statement may not be representative of the results we would have achieved as a stand-alone public company and may not be a reliable indicator of our future results.
Our financial statements as of and for the year ended December 31, 2018 and the pro forma financial information that we have included in this registration statement have been presented, in part, on a combined basis and include the historical accounts of the acquired assets and liabilities assumed in the Curragh acquisition. As a result, our historical and pro forma financial statements may not necessarily reflect what our financial condition, results of operations or cash flows would have been had the acquisition occurred prior to the periods presented or those that we will achieve in the future.
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We have made certain assumptions with respect to the preparation of the pro forma financial information. Such assumptions may not prove to be accurate and, accordingly, our pro forma financial information may not be indicative of what its results of operations or financial condition actually would have been as an independent public company nor be a reliable indicator of what its results of operations and financial condition actually may be in the future. We urge you to carefully consider the basis on which the historical and pro forma financial information included herein was prepared and presented. See Item 2. "Financial InformationSelected Consolidated and Combined Historical and Pro Forma Financial Data" and "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of Operations" and the audited financial statements and related notes thereto included elsewhere in this registration statement.
We may not have sufficient surplus or net profits in the future to pay dividends, and our subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us or our dividend policy may change. As a result, we can give no assurance that dividends will be paid in the future.
There is no guarantee with respect to the payment of dividends, returns of capital or the market value of our common stock. Investors should consider that their investment is speculative. We are a holding company and have no operations of our own. We hold interests in our various businesses through wholly-owned subsidiaries. Our ability to pay dividends depends on the ability of our subsidiaries to make cash available to us and our ability to fulfil requirements with respect to dividends under the DGCL. In addition, our dividend policy may change. See Item 9. "Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder MattersDividend Policy." If we do not have do not receive payments from our subsidiaries, we would be required to obtain funds from other sources to pay dividends. We cannot assure you that such funds will be available to us on favorable terms, or at all.
The requirements of being a public company in the United States and Australia may strain our resources, divert management's attention, and affect our ability to attract and retain executive management and qualified board members.
Our CDIs are currently listed on the ASX and we are registered as a foreign company in Australia. As such we need to ensure continuous compliance with relevant Australian laws and regulations, including the ASX Listing Rules and certain provisions of the Corporations Act. Upon the effectiveness of this registration statement, we will become subject to the periodic reporting requirements of the Exchange Act.
As a U.S. public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable securities laws, rules, and regulations. Compliance with these laws, rules, and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. In the absence of a waiver from the ASX Listing Rules, these SEC periodic reports will be in addition to our periodic filings required by the ASX Listing Rules. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures, and internal control over financial reporting to meet this standard, significant resources and management oversight will be required. As a result, management's attention may be diverted from other business concerns and our costs and expenses will increase, which could harm our business and results of operations. We will need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.
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In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from sales-generating activities to compliance activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal, administrative, or other proceedings against us and our business may be harmed.
We also expect that being a public company, and compliance with applicable rules and regulations, will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain the same level of coverage. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our Board of Directors, particularly to serve on our audit committee and compensation committee.
As a result of disclosure of information in this registration statement and in filings required of a public company, our business and financial condition will become more visible, which could be advantageous to, or harm our relationships with, our competitors, suppliers, manufacturers, retail partners, and customers. These disclosures may also make it more likely that we will experience an increase in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be harmed, and even if the claims are resolved in our favor the time and resources necessary to resolve them could divert the resources of our management and harm our business and results of operations.
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ITEM 2. FINANCIAL INFORMATION.
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present the selected consolidated financial and operating data as of and for each of the years ended December 31, 2018, 2017, 2016, 2015 and 2014 of the Company. The selected historical statements of operations data for the years ended December 31, 2018, 2017 and 2016 and balance sheet data as of December 31, 2018 and 2017 have been derived from the historical audited consolidated financial statements of the Company included elsewhere in this registration statement. The financial and operating data for the year ended December 31, 2018 incudes the data for Coronado Curragh Pty Ltd, or Coronado Curragh, since the date of the acquisition, March 29, 2018. The selected historical statements of operations data for the years ended December 31, 2015 and 2014, and balance sheet data as of December 31, 2016, 2015 and 2014 have been derived from historical consolidated financial statements of the Company not included in this registration statement.
The data should be read in conjunction with the consolidated financial statements, related notes, and other financial information included therein. The selected consolidated financial and operating data are not necessarily indicative of the results that may be expected for any future period and should be read in conjunction with Item 2. "Financial InformationManagement's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes included in this registration statement.
See accompanying historical financial statements of Coronado Curragh, as well as the pro forma financial statements included elsewhere in this registration statement, which are included to give effect to the Curragh acquisition as if it had occurred as of January 1, 2018 and January 1, 2017, respectively.
Statement of operations data:
|
Years ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
|
($ in thousands)
|
|||||||||||||||
Revenue |
1,980,504 | 768,244 | 437,251 | 227,685 | 60,072 | |||||||||||
Total costs and expenses |
1,647,424 | 616,479 | 401,197 | 283,324 | 90,079 | |||||||||||
| | | | | | | | | | | | | | | | |
Operating income (loss) |
333,080 | 151,765 | 36,054 | (55,639 | ) | (30,007 | ) | |||||||||
Interest income (expense), net |
(57,978 | ) | (9,955 | ) | (98 | ) | (57 | ) | 34 | |||||||
Other, net |
(27,216 | ) | 473 | 376 | 446 | (64 | ) | |||||||||
Loss on debt extinguishment |
(58,085 | ) | | | | | ||||||||||
| | | | | | | | | | | | | | | | |
Total other income, net |
(143,279 | ) | (9,482 | ) | 278 | 389 | (30 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Net income (loss) before tax |
189,801 | 142,283 | 36,332 | (55,250 | ) | (30,037 | ) | |||||||||
Income tax expense |
(75,212 | ) | | | | | ||||||||||
| | | | | | | | | | | | | | | | |
Net income |
114,589 | 142,283 | 36,332 | (55,250 | ) | (30,037 | ) | |||||||||
Less: Net loss attributable to noncontrolling interest |
(92 | ) | (70 | ) | (133 | ) | (8 | ) | (8 | ) | ||||||
| | | | | | | | | | | | | | | | |
Net income (loss) attributable to stockholders |
114,681 | 142,353 | 36,465 | (55,242 | ) | (30,029 | ) | |||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net income (loss) per sharebasic and diluted |
0.21 | | | | |
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Balance Sheet Data:
|
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
|
($ in thousands)
|
|||||||||||||||
Total assets |
2,209,564 | 951,792 | 1,050,292 | 439,819 | 481,307 | |||||||||||
Asset retirement obligations |
125,791 | 56,429 | 51,849 | 24,803 | 29,185 | |||||||||||
Long term obligations |
577,355 | 238,207 | 104,455 | 72,830 | 83,101 | |||||||||||
Total equity |
1,253,808 | 633,300 | 874,126 | 337,724 | 375,320 |
For the year ended December 31, 2018, earnings per share, or EPS, was calculated based on the 96,651,692 shares of common stock as if they had been outstanding from January 1, 2018 and is considered pro forma in nature.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements, including the historical financial statements for Coronado Curragh and our unaudited pro forma statement of operations, and the related notes to those statements included elsewhere in this registration statement. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under "Special Note Regarding Forward-Looking Statements" and "Risk Factors" and elsewhere in this registration statement. Some of the numbers included herein have been rounded for the convenience of presentation.
Overview
We are a global producer, marketer and exporter of a full range of metallurgical coals. We own a portfolio of operating mines and development projects in Queensland, Australia and in Virginia, West Virginia and Pennsylvania in the United States.
Our Australian Operations comprise the 100%-owned Curragh producing mine complex. Our U.S. Operations comprise three 100%-owned producing mine complexes (Buchanan, Logan and Greenbrier), two development properties (Pangburn-Shaner-Fallowfield and Russell County) and one idle property (Amonate). In addition to metallurgical coal, our Australian Operations sell thermal coal, which is used to generate electricity, to Stanwell. Our U.S. Operations also produce and sell some thermal coal that is extracted in the process of mining metallurgical coal.
Our business profile primarily focuses on the production of metallurgical coal for the North American and seaborne export markets. In 2018, we produced and sold 17.4 MMt of coal. Metallurgical coal and thermal coal sales represented approximately 79% and 21%, respectively, of our total volume of coal sold for the year ended December 31, 2018.
In accordance with ASC 280, Segment Reporting , we have adopted the following reporting segments: Curragh; Buchanan; Logan; and Greenbrier. In addition, "Corporate and other" is not a reporting segment but is disclosed for the purposes of reconciliation to our consolidated financials.
Factors Affecting Comparability of our Financial Statements
Due to several factors, our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief description of the key factors impacting the comparability of our results of operations.
Curragh Acquisition
On March 29, 2018, we acquired Curragh from Wesfarmers for aggregate consideration, on the date of the transaction, of $563.8 million. The operating results of Curragh have been included in our consolidated financial statements since March 29, 2018.
Corporate Reorganization Transaction
Prior to the Reorganization Transaction in August 2018, Coronado Group HoldCo LLC, the holding company of our Australian Operations, was a wholly-owned subsidiary of Coronado Group LLC. In connection with the Reorganization Transaction, (i) Coronado Group HoldCo LLC was converted into Coronado Global Resources Inc. in August 2018 and (ii) Coronado Group LLC contributed all of the equity ownership in our U.S. Operations to Coronado Coal Corporation, a wholly-owned subsidiary of Coronado Global Resources Inc. Immediately following the Reorganization
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Transaction, Coronado Global Resources Inc. remained a wholly-owned subsidiary of Coronado Group LLC, which is currently owned by the EMG Group and certain members of our management.
The Company is a corporation for U.S. federal and state income tax purposes. The Company's accounting predecessor, Coronado Group LLC, was and is treated as a flow-through entity for U.S. federal income tax purposes and as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, the historical results of operations and other financial information set forth in this registration statement for periods prior to the incorporation of the Company and the Reorganization Transaction do not include any provision for U.S. income taxes.
The Reorganization Transaction was treated as a combination of entities under common control in line with ASC 805, Business Combinations , whereby the receiving entity (the Company) recorded the contributed assets and liabilities at the carrying value of Coronado Group LLC. Prior to the Reorganization Transaction, the consolidated financial statements of the Company reflect the net assets and operations of Coronado Group LLC. The financial statements presented following the Reorganization Transaction are those of the receiving entity (the Company) and are retrospectively adjusted to present that entity as if it always held the net assets or equity interests previously held by the seller, Coronado Group LLC. As such, financial information (including comparatives) of the Company has been presented as a continuation of the pre-existing accounting values of assets and liabilities in Coronado Group LLC's financial statements.
Australian IPO
On October 23, 2018, we completed an initial public offering on the ASX, pursuant to which the Company issued and sold the equivalent of 16,651,692 shares of common stock in the form of CDIs and the EMG Group sold the equivalent of 2,691,896.4 shares of common stock in the form of CDIs.
How We Evaluate Our Operations
We evaluate our operations based on the volume of coal we can safely produce and sell in compliance with regulatory standards, and the prices we receive for our coal. Our sales volume and sales prices are largely dependent upon the terms of our coal sales contracts, for which prices generally are set based on daily index averages or on a quarterly basis.
Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability. These financial and operating metrics include: (i) safety and environmental metrics; (ii) sales volumes and average realized price per Mt, which we define as coal revenues divided by sales volume; and (iii) average cost per Mt, which we define as cost of coal revenues divided by sales volumes.
The following discussion of our results of operations includes references to and analysis of EBITDA, which is a financial measure not recognized in accordance with U.S. GAAP. Non-GAAP financial measures, including EBITDA, are used by investors to measure our operating performance and lenders to measure our ability to incur and service debt.
EBITDA is defined as earnings before interest, tax, depreciation, depletion and amortization, other foreign exchange losses and loss on debt extinguishment. EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies. A reconciliation of EBITDA to its most directly comparable measure under U.S. GAAP is included below. In addition, we present EBITDA on a supplemental pro forma basis. A reconciliation of EBITDA, on a pro forma basis, to its most directly comparable measure under U.S. GAAP is included below.
Segment EBITDA is defined as EBITDA by operating and reporting segment, adjusted for certain transactions, eliminations or adjustments that our CODM does not consider for making decisions to
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allocate resources among segments or assessing segment performance. Segment EBITDA is used as a supplemental financial measure by management and by external users of our financial statements such as investors, industry analysts and lenders to assess the operating performance of the business.
Also included in the following discussion of our results of operations, as well as liquidity and capital resources, are references to free cash flow, defined as net cash from operating activities less capital expenditures and debt servicing commitments, which is a non-GAAP financial measure. A reconciliation of free cash flow to the most comparable measure under U.S. GAAP is included below. We believe free cash flow is a useful measure to understand the cash available after capital expenditure and debt servicing. Free cash flow is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Summary
Our financial and operational highlights for the year ended December 31, 2018:
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|
For Year Ended December 31,
($ in thousands) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | Change | % | |||||||||
Revenues: |
|||||||||||||
Coal revenues |
1,945,600 | 756,385 | 1,189,215 | 157.2 | % | ||||||||
Other revenues |
34,904 | 11,859 | 23,045 | 194.3 | % | ||||||||
| | | | | | | | | | | | | |
Total revenues |
1,980,504 | 768,244 | 1,212,260 | 157.8 | % | ||||||||
| | | | | | | | | | | | | |
Costs and expenses: |
|||||||||||||
Cost of coal revenues (exclusive of items shown separately below) |
991,994 | 463,638 | 528,356 | 114.0 | % | ||||||||
Depreciation, depletion and amortization |
162,117 | 75,503 | 86,614 | 114.7 | % | ||||||||
Freight expenses |
117,699 | 15,880 | 101,819 | 641.2 | % | ||||||||
Stanwell rebate |
127,692 | | 127,692 | | |||||||||
Other royalties |
181,715 | 39,665 | 142,050 | 358.1 | % | ||||||||
Selling, general, and administrative expenses |
66,207 | 21,793 | 44,414 | 203.8 | % | ||||||||
| | | | | | | | | | | | | |
Total costs and expenses |
1,647,424 | 616,479 | 1,030,945 | 167.2 | % | ||||||||
| | | | | | | | | | | | | |
Operating income |
333,080 | 151,765 | 181,315 | 119.5 | % | ||||||||
| | | | | | | | | | | | | |
Other income (expenses): |
|||||||||||||
Interest income |
2,029 | 168 | 2,029 | 100.0 | % | ||||||||
Interest expense |
(60,007 | ) | (10,123 | ) | (50,052 | ) | 502.8 | % | |||||
Loss on debt extinguishment |
(58,085 | ) | | (58,085 | ) | | |||||||
Other, net |
(27,216 | ) | 473 | (27,689 | ) | (5853.9 | )% | ||||||
| | | | | | | | | | | | | |
Total other income (expense), net |
(143,279 | ) | (9,482 | ) | (133,797 | ) | 1411.1 | % | |||||
| | | | | | | | | | | | | |
Net income before tax |
189,801 | 142,283 | 47,518 | 33.4 | % | ||||||||
Income tax expense |
(75,212 | ) | | (75,212 | ) | 100.0 | % | ||||||
Net income |
114,589 | 142,283 | (27,694 | ) | (19.5 | )% | |||||||
Less: Net loss attributable to noncontrolling interest |
(92 | ) | (70 | ) | (22 | ) | 31.4 | % | |||||
| | | | | | | | | | | | | |
Net income attributable to Coronado Global Resources, Inc. |
114,681 | 142,353 | (27,672 | ) | (19.4 | )% | |||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Coal Revenues
Coal revenues were $1,945.6 million for the year ended December 31, 2018, an increase of $1,189.2 million, as compared to $756.4 million for the year ended December 31, 2017. The addition of Curragh contributed $1,136.1 million in coal revenues for the year ended December 31, 2018 that were not included within coal revenues for the year ended December 31, 2017. Coal revenues for our operating segments in the United States (Buchanan, Logan and Greenbrier) of $809.5 million for the year ended December 31, 2018, were $53.1 million higher than coal revenues of $756.4 million for the year ended December 31, 2017. The increase in sales for the operating segments in the United States was driven by higher average realized prices partially offset by a reduction in sales volumes due to reduced availability of third-party raw coal for purchase, processing and resale, and lower production related to lower clean coal yield resulting from changes in mining conditions.
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Other Revenues
Other revenues were $34.9 million for the year ended December 31, 2018, an increase of $23.0 million, as compared to $11.9 million for the year ended December 31, 2017. The increase is predominately related to the addition of Curragh, which recorded $28.3 million in other revenues relating to the amortization of the Stanwell non-market CSA liability recognized at the acquisition of Curragh for the year ended December 31, 2018. The increase related to the addition of Curragh was partially offset by $6.5 million lower other revenues for the operating segments in the United States for the year ended December 31, 2018 compared to 2017. In the United States, we generally sell coal on a F.O.R. basis where the freight is arranged and paid for directly by the customer. However, in 2017, we had several contracts with customers that had terms of F.O.B vessel rather than F.O.R. Due to the contract terms, rail revenue is recorded when the customer is billed for the cost to ship the coal to the vessel. We did not have similar contracts in 2018.
Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Cost of coal revenues are comprised of costs related to produced tons sold, along with changes in both the volumes and carrying values of coal inventory. Cost of coal revenues include items such as direct operating costs which includes employee-related costs, materials and supplies, contractor services, coal handling and preparation costs and production taxes. Total cost of coal revenues for the Company were $992.0 million for the year ended December 31, 2018, an increase of $528.4 million, as compared to $463.6 million for the year ended December 31, 2017. Approximately $491.8 million of the increase was attributable to the addition of Curragh. The remaining $36.6 million increase was primarily attributed to increases in the average cost per Mt sold. The increase in the average cost per Mt sold was predominately driven by lower overall production for our U.S. Operations during the year ended December 31, 2018 compared to the year ended December 31, 2017.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization was $162.1 million for the year ended December 31, 2018, an increase of $86.6 million, as compared to $75.5 million for the year ended December 31, 2017. The increase was primarily a result of the addition of Curragh, which contributed approximately $77.5 million in depreciation, depletion and amortization for the year ended December 31, 2018, and by higher depreciation expense associated with our operating segments in the United States (Buchanan, Logan and Greenbrier), predominately driven by a large credit adjustment relating to a change in estimate of the asset retirement obligation, or ARO, recorded for the year ended December 31, 2017 of $6.4 million compared to $0.2 million for the year ended December 31, 2018.
Freight Expenses
The amount of freight expenses was $117.7 million for the year ended December 31, 2018, an increase of $101.8 million, as compared to $15.9 million for the year ended December 31, 2017. The increase is primarily made up of $106.3 million of Curragh related freight costs, which the business incurs on its port and rail contracts in contrast to our operating segments in the United States, where coal is predominantly sold F.O.R. The freight amount for our operating segments in the United States (Buchanan, Logan and Greenbrier) of $11.4 million for the year ended December 31, 2018 decreased $4.7 million, as compared to $15.9 million for the year ended December 31, 2017. The decrease is primarily driven by lower sales in 2018 to customers that included freight arrangements where the Company paid the delivery costs.
70
Stanwell Rebate
The Stanwell rebate of $127.7 million for the year ended December 31, 2018 relates to a contractual arrangement entered into by Curragh and Stanwell, which requires rebate payments to Stanwell based on (i) export sales prices and tonnage from the Curragh North Mining Area and Curragh East Mining Area and (ii) Run-of-mine, or ROM, tons mined in the Curragh 'Pit U East Area.' The export-based rebate consists of a price rebate and a tonnage rebate that changes based on a tiered volume calculation, as described in Item 1. "Business." The Stanwell rebate is captured within EBITDA; however, it is presented in a separate line item in the statement of operations to cost of coal revenues.
Other Royalties
Other royalties was $181.7 million in the year ended December 31, 2018, an increase of $142.0 million, as compared to $39.7 million in the year ended December 31, 2017. The increase is partially attributed to the addition of Curragh, which contributed approximately $120.0 million in other royalty expense for the year ended December 31, 2018. The remaining increase was primarily attributable to our U.S. Operations royalties, which increased $22.1 million. This increase was predominately driven by increased prices with the largest individual royalty increase of $16.0 million relating to the CONSOL Energy contingent royalty.
Selling, General, and Administrative Expenses
Selling, general and administrative cost was $66.2 million for the year ended December 31, 2018, an increase of $44.4 million, as compared to $21.8 million for the year ended December 31, 2017. The increase is driven by cost incurred as a result of the Curragh acquisition, most significantly stamp duty cost of $33.0 million and $8.1 million in professional service and legal fees.
Interest Expense
Interest expense, net of interest income, was $58.0 million for the year ended December 31, 2018, an increase of $48.0 million, as compared to interest expense of $10.0 million for the year ended December 31, 2017. This increase in interest expense was primarily attributable to the interest expense recognized on the $700 million term loan facility which the Company entered into on March 29, 2018 for the Curragh acquisition and repaid on October 24, 2018. In addition, included within interest expense for the year ended December 31, 2018 is $7.3 million relating to the accretion of the deferred consideration liability recognized on the purchase of the SRA on August 14, 2018.
Loss on Debt Extinguishment
Loss on debt extinguishment was $58.1 million for the year ended December 31, 2018 and related to the write off of deferred financing costs incurred with an asset backed loan established in June 2017 and the $700 million term loan established for the Curragh acquisition. These debt facilities were repaid on October 23, 2018 and October 24, 2018, respectively, at which point the outstanding deferred financing cost were written off. No debt extinguishment cost was recorded for the year ended December 31, 2017.
Other, Net
Other, net expense was $27.2 million for the year ended December 31, 2018, an increase of $27.7 million, as compared to other, net income $0.5 million for the year ended December 31, 2017. This increase in expenses is primarily comprised of a $15.7 million loss on the settlement of a foreign exchange swap recognized at the time of the Curragh acquisition and $9.0 million of foreign exchange
71
losses with respect to A$ denominated monetary assets and liabilities, excluding assets relating to U.S. dollar coal sales for which foreign exchange gains or losses are recognized in coal sales revenue.
Pro Forma Year Ended December 31, 2018 Compared to Pro Forma Year Ended December 31, 2017
Basis of Presentation
To facilitate comparability, the section below sets forth our unaudited consolidated pro forma results for the year ended December 31, 2018, which have been derived from the unaudited consolidated pro forma statements of operations included elsewhere herein and give effect to each of the Curragh acquisition and the Reorganization Transaction as if they had occurred on January 1, 2018. The unaudited consolidated pro forma results for the year ended December 31, 2017 have been derived from the unaudited consolidated pro forma statements of operations included elsewhere herein and give effect to each of the Curragh acquisition and the Reorganization Transaction as if they had occurred on January 1, 2017.
The unaudited consolidated pro forma statements of operations do not reflect the costs of any integration activities or benefits. The unaudited pro forma adjustments are based upon current available information and assumptions that we believe to be reasonable and have been prepared in accordance with applicable SEC rules and regulations. Refer to the "Unaudited Pro Forma Combined Financial Information" included in this registration statement for further information regarding the presentation of pro forma financial information.
Summary
Our pro forma financial and operational highlights for the year ended December 31, 2018:
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|
For the year ended December 31
($ in thousands) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | Change | % | |||||||||
Revenues: |
|||||||||||||
Coal revenues |
2,259,094 | 2,130,209 | 128,885 | 6.1 | % | ||||||||
Other Revenues |
37,910 | 43,302 | (5,392 | ) | (12.5 | )% | |||||||
| | | | | | | | | | | | | |
Total Revenues |
2,297,004 | 2,173,511 | 123,493 | 5.7 | % | ||||||||
Cost and expenses: |
|
|
|
|
|||||||||
Cost of coal revenues (exclusive of items shown separately below) |
1,137,500 | 1,072,857 | 64,643 | 6.0 | % | ||||||||
Depreciation, depletion and amortization |
184,352 | 165,579 | 18,773 | 11.3 | % | ||||||||
Freight expense |
154,521 | 160,865 | (6,344 | ) | (3.9 | )% | |||||||
Stanwell rebate |
170,819 | 146,996 | 23,823 | 16.2 | % | ||||||||
Other royalty expenses |
210,958 | 171,607 | 39,351 | 22.9 | % | ||||||||
Selling, general, and administrative expenses |
29,901 | 24,676 | 5,225 | 21.2 | % | ||||||||
| | | | | | | | | | | | | |
Total costs and expenses |
1,888,051 | 1,742,580 | 145,471 | 8.3 | % | ||||||||
| | | | | | | | | | | | | |
Operating income |
408,953 | 430,931 | (21,978 | ) | (5.1 | )% | |||||||
| | | | | | | | | | | | | |
Other income (expenses): |
|||||||||||||
Interest income |
2,029 | 373 | 1,656 | 444.0 | % | ||||||||
Interest expense |
(65,652 | ) | (68,241 | ) | 2,589 | (3.8 | )% | ||||||
Loss on debt extinguishment |
(54,180 | ) | | (54,180 | ) | 100.0 | % | ||||||
Other, net |
(3,737 | ) | 2,291 | (6,028 | ) | (263.1 | )% | ||||||
| | | | | | | | | | | | | |
Total other income (loss), net |
(121,540 | ) | (65,577 | ) | (55,963 | ) | 85.3 | % | |||||
| | | | | | | | | | | | | |
Income before tax |
287,413 | 365,354 | (77,941 | ) | (21.3 | )% | |||||||
Income tax expense |
(118,488 | ) | (127,495 | ) | 9,007 | (7.1 | )% | ||||||
| | | | | | | | | | | | | |
Net income |
168,925 | 237,859 | (68,934 | ) | (29.0 | )% | |||||||
| | | | | | | | | | | | | |
Less: Net loss attributable to noncontrolling interest |
(92 | ) | (70 | ) | (22 | ) | 31.4 | % | |||||
| | | | | | | | | | | | | |
Net income (loss) attributable to Coronado Global Resources, Inc. |
169,017 | 237,929 | (68,912 | ) | (29.0 | )% | |||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Pro Forma Coal Revenues
Coal revenues were $2,259.1 million for the year ended December 31, 2018, an increase of $128.9 million, as compared to $2,130.2 million for the year ended December 31, 2017. Coal revenues for Curragh of $1,449.6 million for the year ended December 31, 2018 were $75.8 million higher than coal revenues of $1,373.8 million for the year ended December 31, 2017. Revenue for Curragh was higher, despite lower sales volumes, due to higher average realized prices. Coal revenues for our operating segments in the United States (Buchanan, Logan and Greenbrier) of $809.5 million for the year ended December 31, 2018 were $53.1 million higher than coal revenues of $756.4 million for the year ended December 31, 2017. The increase in coal revenues for our operating segments in the United States was driven by higher average realized prices partially offset by a reduction in sales volumes due to reduced availability of third-party raw coal for purchase, processing and resale, and lower production related to lower clean coal yield resulting from changes in mining conditions.
73
Pro Forma Other Revenues
Other revenues were $37.9 million for the year ended December 31, 2018, a decrease of $5.4 million, as compared to $43.3 million for the year ended December 31, 2017. The majority of the decrease, $5.1 million, is related to changing freight arrangements with customers as we were no longer required to pay rail freight for customers in 2018. In 2017, this rail freight charge was passed onto customers at a small mark-up and recorded in other revenues.
Pro Forma Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Cost of coal revenues are comprised of costs related to produced tons sold, along with changes in both the volumes and carrying values of coal inventory. Cost of coal revenues include items such as direct operating costs which includes employee-related costs, materials and supplies, contractor services, coal handling and preparation costs and production taxes. Cost of coal revenues were $1,137.5 million for the year ended December 31, 2018, an increase of $64.6 million, as compared to $1,072.9 million for the year ended December 31, 2017. Approximately $28.2 million of the increase was primarily attributed to increases in the average cost per Mt sold. The increase in the average cost per Mt sold was predominately driven by lower overall production for our U.S. Operations, predominately Buchanan, during the year ended December 31, 2018 compared to the year ended December 31, 2017. Mining conditions at Buchanan were more difficult in 2018 due to geological conditions in the northern area of the mine which resulted in lower production and higher per Mt costs.
Pro Forma Depreciation, Depletion and amortization
Depreciation, depletion and amortization was $184.4 million for the year ended December 31, 2018, an increase of $18.8 million, as compared to $165.6 million for the year ended December 31, 2017. The increase was primarily a result of additional capital expenditure over the periods shown, resulting in increased depreciation, and by higher depreciation expense associated with our U.S. Operations, predominately driven by a large credit adjustment relating to a change in estimate of the ARO recorded for the year ended December 31, 2017 of $6.4 million compared to $0.2 million for the year ended December 31, 2018.
Pro Forma Freight Expenses
The amount of Freight expenses was $154.5 million for the year ended December 31, 2018, a decrease of $6.3 million, as compared to $160.9 million for the year ended December 31, 2017. The decrease is primarily driven by changing freight arrangements with customers for our U.S. Operations as we were no longer required to pay rail freight for customers.
Pro Forma Stanwell Rebate
The Stanwell rebate was $170.8 million for the year ended December 31, 2018, an increase of $23.8 million, as compared to $147.0 million for the year ended December 31, 2017. The increase is driven primarily from higher realized pricing for Curragh's export sales in 2018 versus 2017. In accordance with the export rebate arrangements governed by the CSA, a percentage of realized export prices above an agreed reference price as well as certain other tonnage rebates are required to be passed on to Stanwell.
Pro Forma Other Royalties
Other royalties were $211.0 million in the year ended December 31, 2018, an increase of $39.4 million, as compared to $171.6 million in the year ended December 31, 2017. The increase is partially attributable to our operating segments in the United States (Buchanan, Logan and Greenbrier) royalties, which increased $22.1 million. This increase was predominately driven by
74
increased realized prices with the largest individual royalty increase of $16.0 million relating to the CONSOL Energy contingent royalty. The remaining increase of $17.3 million relates to Curragh royalties, which also increased due to higher realized prices.
Pro Forma Selling, General, and Administrative Expenses
Selling, general and administrative cost was $29.9 million for the year ended December 31, 2018, an increase of $5.2 million, compared to $24.7 million for the year ended December 31, 2017. The increase is primarily driven by increased costs at Curragh, mainly relating to professional service fees, including legal fees, incurred during the year.
Pro Forma Interest Expense
Interest expense, net of interest income, was $63.6 million for the year ended December 31, 2018, a decrease of $4.2 million, as compared to interest expense of $67.9 million for the year ended December 31, 2017. This decrease in interest expense was primarily attributable to the repayment of the $700 million term loan on October 24, 2018. For pro forma purposes, this loan was outstanding from January 1, 2017. The decrease in interest expense was partially offset by a $7.3 million charge in 2018 relating to the accretion of the deferred consideration liability recognized on the purchase of the SRA on August 14, 2018.
Pro Forma Loss on Debt Extinguishment
Loss on debt extinguishment was $58.1 million for the year ended December 31, 2018 and related to the write off of deferred financing costs incurred with a senior debt facility established in June 2017, which we repaid in March 2018, and the $700 million term loan established in March 2018 for the Curragh acquisition, which we repaid on October 24, 2018, at which point the outstanding deferred financing cost was expensed. No debt extinguishment cost was recorded for the year ended December 31, 2017.
Pro Forma Other, net
Other, net expense was $3.7 million for the year ended December 31, 2018, an increase of $6.0 million, as compared to other, net income $2.3 million for the year ended December 31, 2017. This increase in expenses is primarily comprised of $9.0 million of foreign exchange losses with respect to A$ denominated monetary assets and liabilities in 2018.
75
Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
|
For Year Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2017 | 2016 | Change | % | |||||||||
|
($ in thousands)
|
||||||||||||
Revenues: |
|||||||||||||
Coal revenues |
756,385 | 433,966 | 322,419 | 74.3 | % | ||||||||
Other revenues |
11,859 | 3,285 | 8,574 | 261.0 | % | ||||||||
| | | | | | | | | | | | | |
Total revenues |
768,244 | 437,251 | 330,993 | 75.7 | % | ||||||||
| | | | | | | | | | | | | |
Costs and expenses: |
|||||||||||||
Cost of coal revenues (exclusive of items shown separately below) |
463,638 | 290,725 | 172,913 | 59.5 | % | ||||||||
Depreciation, depletion and amortization |
75,503 | 59,737 | 15,766 | 26.4 | % | ||||||||
Freight expenses |
15,880 | 5,447 | 10,433 | 191.5 | % | ||||||||
Stanwell rebate |
| | | | |||||||||
Other royalties |
39,665 | 32,344 | 7,321 | 22.6 | % | ||||||||
Selling, general, and administrative expenses |
21,793 | 12,944 | 8,849 | 68.4 | % | ||||||||
| | | | | | | | | | | | | |
Total costs and expenses |
616,479 | 401,197 | 215,282 | 53.7 | % | ||||||||
| | | | | | | | | | | | | |
Operating income |
151,765 | 36,054 | 115,711 | 320.9 | % | ||||||||
| | | | | | | | | | | | | |
Other income (expenses): |
|||||||||||||
Interest income |
168 | 94 | (94 | ) | (100.0 | )% | |||||||
Interest expense |
(10,123 | ) | (192 | ) | (9,763 | ) | 5084.9 | % | |||||
Loss on debt extinguishment |
| | | | |||||||||
Other, net |
473 | 376 | 97 | 25.8 | % | ||||||||
| | | | | | | | | | | | | |
Total other income (expense), net |
(9,482 | ) | 278 | (9,760 | ) | (3510.8 | )% | ||||||
| | | | | | | | | | | | | |
Net income before tax |
142,283 | 36,332 | 105,951 | 291.6 | % | ||||||||
Income tax expense |
| | |||||||||||
Net income |
142,283 | 36,332 | 105,951 | 291.6 | % | ||||||||
Less: Net loss attributable to noncontrolling interest |
(70 | ) | (133 | ) | 63 | (47.4 | )% | ||||||
| | | | | | | | | | | | | |
Net income attributable to Coronado Global Resources, Inc. |
142,353 | 36,465 | 105,888 | 290.4 | % | ||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Coal Revenues
Coal revenues were $756.4 million for the year ended December 31, 2017, compared to $434.0 million for the year ended December 31, 2016. The $322.4 million increase was attributable to a 2.8 million tons increase in sales volumes and a $13.7 per Mt higher average sales price. The increase in tons sold was primarily driven by the March 31, 2016 Buchanan acquisition, providing an additional quarter of coal revenues at our Buchanan segment in 2017 compared to 2016. The higher average sales price per Mt sold in the 2017 period was primarily the result of a tighter supply-demand balance in the domestic and international metallurgical coal markets that we serve. The global metallurgical coal benchmark prices for coking coal increased by more than 200% period-to-period.
Other Revenues
Other revenues increased $8.6 million to $11.9 million for the year ended December 31, 2017, compared to $3.3 million for the year ended December 31, 2016, primarily as a result of an increase in rail revenues. Several contracts with customers have terms of F.O.B. vessel rather than F.O.R. Due to the contract terms, rail revenue is recorded when the customer is billed for the cost to ship the coal to the vessel. These terms were not in place during 2016. Additionally, freight revenues increased
76
compared to the prior year as the Company has subleased throughput capacity under a terminal services agreement to third parties. The Company did not sublease throughput capacity under this agreement in the year ending December 31, 2017.
Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Cost of coal revenues are comprised of costs related to produced tons sold, along with changes in both the volumes and carrying values of coal inventory. Cost of coal revenues include items such as direct operating costs which includes employee-related costs, materials and supplies, contractor services, coal handling and preparation costs and production taxes. Total cost of coal revenues for the Company were $463.6 million for the year ended December 31, 2017, or $172.9 million higher than the $290.7 million for the year ended December 31, 2016. Total costs of coal revenues per Mt sold were $54.5 per Mt for the year ended December 31, 2017, compared to $51.0 per Mt for the year ended December 31, 2016. The increase in the cost of coal sold was driven by higher production volumes and a change in production mix as the year ended December 31, 2017 reflects twelve months' production from Buchanan versus nine months' production in the year ended December 31, 2016.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization increased $15.8 million in the year ended December 31, 2017 compared to the year ended December 31, 2016. The increase is primarily driven by increased depreciation, depletion and amortization expenses incurred at the Buchanan segment. Because the Buchanan acquisition closed on March 31, 2016, only nine months of expenses were incurred in the year ended December 31, 2016. This resulted in an increase in production as well as overall fixed assets on the balance sheet. Additionally, as a result of the stronger benchmark pricing, the Company increase capital expenditures for production expansion. Depreciation, depletion and amortization for the year ended December 31, 2017 also included a large credit adjustment relating to a change in estimate of the ARO.
Selling, General, and Administrative Expenses
The amount of selling, general and administrative costs was $21.8 million for the year ended December 31, 2017, compared to $8.8 million for the year ended December 31, 2016. The increase is primarily driven by increased selling, general and administration expenses incurred at the Buchanan segment. Because the Buchanan acquisition closed on March 31, 2016, only nine months of expense were incurred in the year ended December 31, 2016. In addition, the increased costs included professional services fees relating to consulting services to prepare for future growth, expansion of staffing, SAP implementation, and fees related to the term loan.
Interest Expense
Interest expense, net of interest income, of $10.0 million for the year ended December 31, 2017 is an increase of $9.8 million from the amount incurred during the year ended December 31, 2016. This increase in interest expense is primarily comprised of interest on the asset-backed loan.
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Supplemental Segment Financial Data
The following table presents supplemental financial data by operating segment (other than Curragh, provided separately below):
|
For Year Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | $ Change | % Change | |||||||||
|
($ in thousands, except per Mt amounts)
|
||||||||||||
Revenue by segment: |
|||||||||||||
Buchanan |
510,430 | 465,036 | 45,394 | 9.8 | % | ||||||||
Logan |
234,967 | 241,994 | (7,027 | ) | (2.9 | )% | |||||||
Greenbrier |
69,527 | 60,105 | 9,422 | 15.7 | % | ||||||||
EBITDA by segment: |
|
|
|
|
|||||||||
Buchanan |
212,485 | 211,240 | 1,245 | 0.6 | % | ||||||||
Logan |
31,939 | 34,897 | (2,958 | ) | (8.5 | )% | |||||||
Greenbrier |
(1,402 | ) | 3,270 | (4,672 | ) | (142.9 | )% | ||||||
Other and Corporate |
(80,264 | ) | (21,666 | ) | (58,598 | ) | 270.5 | % | |||||
Sales volumes by segment (MMt) |
|
|
|
|
|||||||||
Buchanan |
4.8 | 5.0 | (0.2 | ) | (4.0 | )% | |||||||
Logan |
2.6 | 2.9 | (0.3 | ) | (10.3 | )% | |||||||
Greenbrier |
0.7 | 0.6 | 0.1 | 16.7 | % | ||||||||
Average realized price per Mt sold |
|
|
|
|
|||||||||
Buchanan |
106.3 | 93.0 | 13.3 | 14.3 | % | ||||||||
Logan |
89.3 | 83.4 | 5.9 | 7.1 | % | ||||||||
Greenbrier |
95.8 | 100.2 | (4.4 | ) | (4.4 | )% | |||||||
Cost per Mt sold |
|
|
|
|
|||||||||
Buchanan |
52.8 | 46.3 | 6.5 | 14.0 | % | ||||||||
Logan |
70.3 | 62.9 | 7.4 | 11.7 | % | ||||||||
Greenbrier |
91.5 | 92.4 | (0.9 | ) | (1.0 | )% |
Segment Revenue
Buchanan
Revenue increased by $45.3 million, or 9.8%, to $510.4 million for the year ended December 31, 2018 as compared to $465.0 million for the year ended December 31, 2017. This increase was driven by higher average realized price due to strong market demand and certain contract repricing. This was partially offset by a reduction in sales volumes of 0.2 MMt, or 4%, related to lower production resulting from lower clean coal yields due to a change in mining conditions.
Logan
Revenue decreased by $8.1 million, or 2.9%, to $235.0 million for the year ended December 31, 2018 as compared to $241.9 million for the year ended December 31, 2017. This decrease was driven by a reduction in sales volumes due to reduced availability of third-party raw coal for purchase, processing and resale. This was partially offset by higher average realized price due to strong market demand and annual contract repricing.
78
Greenbrier
Revenue increased by $9.4 million, or 15.7%, to $69.5 million for the year ended December 31, 2018 as compared to $60.1 million for the year ended December 31, 2017. This increase was driven by higher sales volumes of 0.1 MMt, or 16.7%, partially offset by lower average realized price due to a change in product mix.
Segment EBITDA
Buchanan
EBITDA increased by $1.2 million, or 8.9%, to $212.5 million for the year ended December 31, 2018 as compared to $211.2 million for the year ended December 31, 2017. The increase in EBITDA was a result of higher realized pricing for coal sales almost entirely offset by higher cost of coal revenues and lower sales volume and an increase in other royalty expense attributed to higher realization of per Mt and a mark-to-market adjustment to Buchanan's contingent price royalty consideration (royalty obligation), partially offset by increase in coal revenues.
Logan
EBITDA decreased by $3.0 million, or 8.5%, to $31.9 million for the year ended December 31, 2018 as compared to $34.9 million for the year ended December 31, 2017. The decrease in EBITDA was a reduction in coal sales volumes and slightly higher average cost per Mt sold, partially offset by higher realized pricing.
Greenbrier
EBITDA decreased by $4.5 million, to a loss of $1.4 million for the year ended December 31, 2018 as compared to earnings of $3.3 million for the year ended December 31, 2017. The decrease in EBITDA was a higher cost of coal revenues resulting from operational issues experienced at the mine partially offset by an increase in coal sales revenues.
Corporate and Other EBITDA
The following table presents a summary of the components of Corporate and Other EBITDA:
|
For Year Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | $ Change | % Change | |||||||||
|
($ in thousands)
|
||||||||||||
Salaries |
(9,396 | ) | (9,172 | ) | (224 | ) | 2.4 | % | |||||
Professional and consultancy fees |
(12,966 | ) | (10,317 | ) | (2,649 | ) | 25.7 | % | |||||
Office and operational fees |
(7,240 | ) | (1,536 | ) | (5,704 | ) | * | ||||||
Dues, registration fees and licences |
(33,693 | ) | (339 | ) | (33,354 | ) | * | ||||||
Loss on foreign exchange swap |
(15,695 | ) | | (15,695 | ) | * | |||||||
Other |
(1,274 | ) | (302 | ) | (972 | ) | * | ||||||
Total Corporate and Other EBITDA |
(80,264 | ) | (21,666 | ) | (58,598 | ) | 270.5 | % |
EBITDA loss of $80.3 million for the year ended December 31, 2018 includes one-time costs in relation to professional and consultancy fees and stamp duty ($33.0 million) and a loss on foreign exchange ($15.7 million) incurred in relation to the Curragh acquisition, the Reorganization Transaction and the Australian IPO.
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Cost per Mt sold
Buchanan
Cost of coal per Mt sold increased by $6.5 per Mt, or 14%, primarily driven by an increase in labor and production costs and lower sales volumes. Costs of coal increased due to the following:
Logan
Cost of coal sold remained relatively stable for the year ended December 31, 2018 compared to December 31, 2018 however sales volumes declined resulting in increased cost of coal sold per Mt by $7.4 per Mt to $70.3 per Mt for the year ended December 31, 2018 compared to $62.9 ton for the year ended December 31, 2017.
Greenbrier
Cost of coal revenues increased by $12.4 million for the year ended December 31, 2018 to $64.1 million, as compared to $51.7 million for the year ended December 31, 2017 primarily driven by an increase in total coal sales volume of 0.6 MMt in 2017 to 0.7 MMt in 2018.
Curragh
The unaudited pro forma supplemental financial data of Curragh for the year ended December 31, 2018, presented in the table below, has been derived from the unaudited consolidated pro forma statements of operations included in this registration statement and give effect to each of the Curragh acquisition as if it had occurred on January 1, 2018. The unaudited pro forma supplemental financial data of Curragh for the year ended December 31, 2017, presented in the table below, has been derived from the unaudited consolidated pro forma statements of operations included in this registration statement and give effect to each of the Curragh acquisition as if it had occurred on January 1, 2017.
|
For Year Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | $ Change | % Change | |||||||||
|
($ in thousands, except per Mt amounts)
|
||||||||||||
Revenue |
1,479,070 | 1,373,824 | 105,246 | 7.7 | % | ||||||||
Cost of Coal Revenue |
637,270 | 609,219 | 28,051 | 4.6 | % | ||||||||
EBITDA |
379,012 | 339,617 | 39,395 | 11.6 | % | ||||||||
Sales volumes (MMt) |
12.0 | 12.3 | (0.3 | ) | (1.9 | )% | |||||||
Average realised price |
120.5 | 114.3 | 6.2 | 5.4 | % | ||||||||
Cost per Mt sold |
53.1 | 49.8 | 3.3 | 6.6 | % |
Revenues
Pro forma revenue increased by $105.2 million, or 7.7%, to $1,479.1 million for the year ended December 31, 2018 as compared to $1,373.8 million for the year ended December 31, 2017. This increase was primarily a result of higher average realized price and favorable sales mix. Overall sales volumes were lower on prior year due to lower production as a result of adverse mining conditions.
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EBITDA
Pro forma EBITDA increased by $39.4 million, or 11.6%, to $379.0 million for the year ended December 31, 2018 as compared to $339.6 million for the year ended December 31, 2017. The favorable increase in EBITDA was a result of increased revenues from coal sales, partially offset by higher cost of coal revenues (unplanned outages, maintenance and adverse weather), higher export royalties on increased sales revenues and increased Stanwell rebate cost, which represent variable costs payable to Stanwell on increased realized export sales price.
Cost per Mt sold
Pro forma cost of coal revenues increased by $28.1 million to $637.3 million for the year ended December 31, 2018 as compared to $609.2 million for the year ended December 31, 2017. This was $3.3 per Mt higher for the year ended December 31, 2018 compared to $49.8 per Mt for the year ended December 31, 2017. The higher cost per Mt sold was a result of a combination of lower production, due to unplanned outages at the wash plant as a result of inclement weather conditions experience in the fourth quarter of 2018, and higher fuel cost.
Reconciliation of Non-GAAP Financial Measures
EBITDA
|
For Year Ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | |||||||
|
($ in thousands)
|
|||||||||
Reconciliation to EBITDA: |
||||||||||
Net Income |
114,589 | 142,283 | 36,332 | |||||||
| | | | | | | | | | |
Add: Income tax expense |
75,212 | | | |||||||
Add: Interest expense (net of income) |
57,978 | 9,955 | 98 | |||||||
Add: Loss on debt extinguishment |
58,085 | | | |||||||
Add: Other foreign exchange losses |
(9,004 | ) | | | ||||||
Add: Depreciation, depletion and amortization |
162,117 | 75,503 | 59,737 | |||||||
| | | | | | | | | | |
EBITDA |
476,985 | 227,741 | 96,167 | |||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Reconciliation of Pro forma Non-GAAP Financial Measures
Pro forma EBITDA
|
For Year Ended
December 31, |
||||||
---|---|---|---|---|---|---|---|
|
2018 | 2017 | |||||
|
($ in thousands)
|
||||||
Reconciliation to EBITDA: |
|||||||
Net Income |
168,925 | 237,859 | |||||
| | | | | | | |
Add: Income tax expense |
118,488 | 127,495 | |||||
Add: Interest expense (net of income) |
63,623 | 67,868 | |||||
Add: Loss on debt extinguishment |
54,180 | | |||||
Add: Other foreign exchange losses |
9,004 | | |||||
Add: Depreciation, depletion and amortization |
184,352 | 165,579 | |||||
EBITDA |
598,572 | 598,801 |
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Liquidity and Capital Resources
Overview
Our objective is to maintain a prudent capital structure and gearing level and to have access to undrawn committed debt facilities to mitigate the risk of volatile external factors and financial risks in our business. Our principal sources of funds are cash flow from operations and borrowings under the Syndicated Facility Agreement.
Our main uses of cash have historically been and are expected to continue to be the funding of our operations, working capital and capital expenditure, debt service obligations and payment of dividends. Based on our outlook for the next 12 months, which is subject to continued changing demand from our customers and volatility in coal prices, we expect to generate cash from operations sufficient to meet the needs of our existing operations, service our debt obligations and fund our dividends.
Our ability to generate sufficient cash depends on our future performance which may be subject to a number of factors beyond our control, including general economic, financial and competitive conditions and other risks described in Item 1A. "Risk Factors." Over time, we may seek additional funding from a range of sources to diversify our funding sources in order to reduce our reliance on the bank finance market and to manage our exposure to interest rate risk on any long-term borrowings.
Liquidity as at December 31, 2018 and December 31, 2017 was as follows:
|
For Year Ended
December 31, |
||||||
---|---|---|---|---|---|---|---|
|
2018 | 2017 | |||||
|
($ in thousands)
|
||||||
Cash, excluding restricted cash |
$ | 124,656 | 28,069 | ||||
Availability under Revolving Syndicate Facility Agreement |
350,000 | 100,000 | |||||
| | | | | | | |
Total |
$ | 474,656 | 128,069 | ||||
| | | | | | | |
Total Indebtedness. Our total indebtedness as of December 31, 2018 and 2017 consisted of the following:
|
As of December 31, | ||||||
---|---|---|---|---|---|---|---|
|
2018 | 2017 | |||||
|
($ in thousands)
|
||||||
Current instalments of interest-bearing liabilities |
$ | 9,035 | 7,107 | ||||
Current instalments of other financial liabilities and capital lease obligations |
| 1,750 | |||||
Interest bearing liabilities, excluding current instalments |
| 128,516 | |||||
Other financial liabilities, excluding current instalments |
4,073 | 7,150 | |||||
| | | | | | | |
Total |
$ | 13,108 | 144,523 | ||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Liquidity
As at December 31, 2018, available liquidity was $474.7 million comprising cash and cash equivalents of $124.7 million and $350 million of available borrowing facilities.
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Cash
Cash is held in multicurrency interest bearing bank accounts available to be used to service the working capital needs of the Company. Cash balances surplus to immediate working capital requirements are invested in short-term interest-bearing deposit accounts.
Secured Credit Facilities
To assist in managing the potential volatility in economic and operational changes, which may influence the generation of free cash flow, the Company entered into a the Syndicated Facility Agreement on September 15, 2018 providing two borrowing facilities:
The right to draw upon on these facilities is conditional upon a number of provisions being satisfied at the time that each drawdown request is issued. These conditions include, among other things, that;
At December 31, 2018, Facility A had no borrowings outstanding, leaving $350 million of undrawn availability.
Bank Guarantees
We are required to provide financial assurances and securities to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are provided to comply with state or other government agencies' statutes and regulations. Facility B is available for this purpose and as at December 31, 2018, we had issued Bank Guarantees totaling A$343 million to satisfy these requirements, leaving A$27 million available under Facility B. 50% of the value of issued bank guarantees is included in Net Debt for the purposes of calculating the financial covenants.
Secured Credit Facilities Terms
Interest Rate
Borrowings under our Syndicated Facility Agreement bear interest at a floating rate which is either (i) LIBOR plus an applicable margin for US$ loans and (ii) Bank Bill Swap Bid Rate, or BBSY, bid plus an applicable margin for the A$ loan. The applicable margin for Facility A depends on the Net Debt to EBITDA ratio (as defined in the Syndicated Facility Agreement). The below table summarizes the margin for Facility A.
Net Debt to EBITDA in most recent Compliance Certificate | Facility A Margin | |
> 2.00 times | 3.25% per annum | |
> 1.50 times and £ 2.00 times | 3.00% per annum | |
£ 1.50 times | 2. 85% per annum |
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Undertakings and Representations
The Syndicated Facility Agreement contains a number of undertakings including:
Financial Covenants
The following financial covenants must be satisfied at all times:
Each financial covenant is calculated with reference to the definitions contained in the Syndicated Facility Agreement.
Events of Default
The Syndicated Facility Agreement contains a number of customary events of default provisions, including (amongst other things) breaching the financial covenants, failing to make payments when due, cross-default, certain bankruptcy and insolvency events, cessation of business and any event that may have a material adverse effect.
The consequences of an event of default occurring and continuing may lead to the agent (on instruction from the majority of lenders) doing the following:
Any unpaid amount due and payable from an event of default will incur default interest.
Dividend
We paid an aggregate dividend of $299.7 million on March 29, 2019 in A$ to holders of CDIs on the ASX as of March 5, 2019, based on the exchange rate on March 5, 2019.
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Intercreditor Deed
The intercreditor deed regulates the priority of security interests and provides that our security interests granted in connection with the intercompany loans are subordinate in priority to the Syndicated Facility Agreement lenders and to Stanwell. The intercreditor deed also provides that the security interest granted to Wesfarmers under a value share mechanism deed ranks after the security interests of the Syndicated Facility Agreement lenders, Stanwell and us.
Capital Requirements
Our main uses of cash have historically been and are expected to continue to be the funding of our operations, working capital and capital expenditure and the payment of interest and dividends.
Historical Cash Flows and Free Cash Flow
The following table summarizes our cash flows for the years ended December 31, 2018, 2017 and 2016, as reported in the accompanying consolidated financial statements:
Cash Flow
|
Year Ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | |||||||
|
($ in thousands)
|
|||||||||
Net cash provided by operating activities |
364,753 | 255,578 | 20,176 | |||||||
Net cash (used in) investing activities |
(666,417 | ) | (59,323 | ) | (464,350 | ) | ||||
Net cash (used in) provided by financing activities |
407,275 | (258,117 | ) | 498,547 | ||||||
| | | | | | | | | | |
Net change in cash and cash equivalents |
105,611 | (61,862 | ) | 54,373 | ||||||
Effect of exchange rate changes on cash and restricted cash |
(8,799 | ) | | | ||||||
Cash and restricted cash at beginning of period |
28,069 | 89,931 | 35,558 | |||||||
| | | | | | | | | | |
Cash and restricted cash at end of period |
124,881 | 28,069 | 89,931 | |||||||
| | | | | | | | | | |
Net cash provided by operating activities |
364,753 | 255,578 | 20,176 | |||||||
Capital expenditure |
(114,302 | ) | (63,923 | ) | (37,599 | ) | ||||
| | | | | | | | | | |
Operating Cash Flow |
250,451 | 191,655 | (17,423 | ) | ||||||
Net Repayment of Borrowings |
(100,715 | ) | 130,744 | (1,523 | ) | |||||
| | | | | | | | | | |
Free Cash Flow |
149,736 | 322,399 | (18,946 | ) | ||||||
| | | | | | | | | | |
Operating activities
Net cash provided by operating activities was $364.8 million and $255.6 million for the years ended December 31, 2018 and December 31, 2017, respectively. The increase in cash provided by operating activities during 2018 was primarily due to the additional cash contributed by Curragh business since it was acquired on March 29, 2018, offset partially by a decline in operating performance of the U.S. Operations and cash outflows for working capital.
Net cash provided by operating activities increased to $255.6 million for the year ended December 31, 2017 compared to net cash provided by operating activities of $20.2 million for 2016. The increase in 2017 was primarily due to the improved operating results of the U.S. Operations, including a full year of operating results for Buchanan compared to nine months in 2016.
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Investing activities
Net cash used in investing activities was $666.4 million for the year ended December 31, 2018, compared to $59.3 million for the year ended December 31, 2017. During 2018, Coronado expended $537.2 million as cash consideration for the acquisition of Curragh, which was the largest acquisition in our history. Capital expenditure for the year ended December 31, 2018 was $114.3 million of which $47.2 million related to Curragh with the remainder relating to the U.S. Operations. Capital expenditure for our U.S. Operations of $67.0 million for the year ended December 31, 2018 remained relatively consistent to 2017. Capital expenditure for year ended December 31, 2018 focused on stay in business and wash plant improvements to assist with throughput in future periods.
Net cash used in investing activities was $59.3 million for the year ended December 31, 2017, compared to $464.4 million for the year ended December 31, 2016. Cash spent on capital expenditure was $63.9 million and $37.6 million for the years ended December 31, 2017 and December 31, 2016, respectively. During 2016, we expended $425.9 million as cash consideration for the acquisition of Buchanan, one of the largest metallurgical coal mines in the United States.
Financing activities
Net cash provided by financing activities was $407.3 million for the year ended December 31, 2018 compared to $258.1 million of net cash used in financing activities for the year ended December 31, 2017. Cash provided by financing activities during 2018 included proceeds from the Australian IPO of $442.3 million (net of share issuance costs of $30.6). These proceeds, together with a significant portion of our free cash flow, were used to repay all outstanding borrowing, including the $700 million borrowed for the acquisition of Curragh, as at October 24, 2018.
Net cash used in financing activities was $258.1 million for the year ended December 31, 2017 compared to $498.5 million of net cash provided by financing activities for the year ended December 31, 2016. Uses of cash from financing activities during 2017 included $383.1 million of distributions to former members of Coronado Group LLC, $44.9 million of principal payment on interest bearing liabilities and capital leases, and $5.8 million relating to debt issuance costs. Sources of cash from financing activities during 2017 included $175.6 million in borrowings, comprised mainly by the $175 million asset backed loan entered into on June 6, 2017 and repaid on March 29, 2018, and the remainder relating to financing of property, plant and equipment purchases.
Contractual Obligations
The following is a summary of our contractual obligations at December 31, 2018:
|
Payments Due By Year | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Total |
Less than
1 Year |
1 - 3
Years |
3 - 5
Years |
More than
5 Years |
|||||||||||
|
($ in thousands)
|
|||||||||||||||
Long-term debt obligations(1) |
11,801 | 7,728 | 4,073 | | | |||||||||||
Operating and mineral lease commitments(2) |
93,107 | 19,917 | 31,861 | 24,468 | 16,861 | |||||||||||
Capital lease commitments |
4,074 | 1,505 | 2,569 | | | |||||||||||
Unconditional purchase obligations(3) |
19,737 | 19,737 | | | | |||||||||||
Take-or-pay contracts(4) |
1,130,819 | 111,315 | 222,630 | 222,630 | 574,224 | |||||||||||
| | | | | | | | | | | | | | | | |
Total contractual cash obligations |
1,259,538 | 160,202 | 261,133 | 247,098 | 591,085 | |||||||||||
| | | | | | | | | | | | | | | | |
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This table does not include our estimated AROs. As discussed in "Critical Accounting Policies and EstimatesCarrying Value of Asset Retirement Obligations" below, the current and non-current carrying amount of our AROs involves several estimates, including the amount and timing of the payments required to satisfy these obligations. The timing of payments is based on numerous factors, including projected mine closure dates. Based on our assumptions, the carrying amount of our AROs as determined in accordance with U.S. GAAP was $125.8 million as of December 31, 2018.
Off-Balance Sheet Arrangements
In the normal course of business, we are a party to certain off-balance sheet arrangements. These arrangements include guarantees, operating leases, indemnifications and financial instruments with off-balance sheet risk, such as bank letters of credit, bank guarantees and performance or surety bonds (including reclamation bonds). Obligations related to these arrangements are not reflected in our balance sheet. However, the underlying liabilities that they secure, such as asset retirement obligations, workers' compensation liabilities, and royalty obligations, are reflected in our balance sheet.
We are required to provide financial assurance in order to perform the post-mining reclamation required by our mining permits, pay our federal production royalties, pay workers' compensation claims under workers' compensation laws in various states, pay federal black lung benefits, and perform certain other obligations.
For our U.S. Operations in order to provide the required financial assurance, we generally use surety bonds for post-mining reclamation and workers' compensation obligations. We can also use bank letters of credit to collateralize certain obligations.
As of December 31, 2018, at our U.S. Operations, we had outstanding surety bonds with a total face amount of $37.1 million to secure various obligations and commitments. There are no cash collateral requirements to secure these surety bond obligations.
We meet frequently with our surety providers and have discussions with certain providers regarding the extent of and the terms of their participation in the program. These discussions may cause us to shift surety bonds between providers or to alter the terms of their participation in our program. To the extent that surety bonds become unavailable or our surety bond providers require additional collateral, we would seek to secure our obligations with letters of credit, cash deposits or other suitable forms of collateral. Our failure to maintain, or inability to acquire, surety bonds or to provide a suitable alternative would have a material adverse effect on our liquidity as letters of credit may be more costly and may reduce the amounts that we can borrow under our credit facility for other purposes. These failures could result from a variety of factors including lack of availability, higher cost or unfavorable market terms of new surety bonds, and the exercise by third-party surety bond issuers of their right to refuse to renew the surety.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
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financial statements and the reported amounts of revenue and expenses during the reporting period. Listed below are the accounting estimates that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported. All of these accounting estimates and assumptions, as well as the resulting impact to our financial statements, have been discussed with the audit committee of our board of directors.
Fair Value of Non-Financial Instruments
Our non-financial instrument valuations are primarily comprised of our determination of the estimated fair value allocation of net tangible and identifiable intangible assets acquired in business combinations, our annual assessment of the recoverability of our goodwill, and our evaluation of the recoverability of our other long-lived assets upon certain triggering events.
Long-Lived Assets
We review the carrying value of intangible assets with definite lives and other long-lived assets to be used in operations annually or whenever events or changes in circumstances indicate that the carrying amount of the assets or asset groups might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset group, or a significant decline in the observable market value of an asset group, among others. If such facts indicate a potential impairment, the recoverability of the asset group is assessed by determining whether the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the asset group over the remaining economic life of the asset group. If the carrying amount of the asset group is greater than the expected undiscounted cash flows to be generated by such asset group, including its ultimate disposition, an impairment adjustment is recognized.
If the carrying value of our intangible or long-lived assets exceeds their estimated fair value, we are required to write the carrying value down to fair value. Any such write down is included in impairment expense in our consolidated statement of operations. A high degree of judgment is required to estimate the fair value of our intangible and long-lived assets. We may use quoted market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates. We may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the high degree of judgment involved in our estimation techniques, any value ultimately derived from our intangible or long-lived assets may differ from our estimate of fair value.
Business Combinations
We utilize the cost approach as the primary method used to establish fair value for our property and equipment in connection with business combinations. The cost approach considers the amount required to replace an asset by constructing or purchasing a new asset with similar utility, then adjusts the value in consideration of physical depreciation and functional and technological obsolescence as of the appraisal date. The cost approach relies on management's assumptions regarding current material and labor costs required to rebuild and repurchase significant components of our property and equipment along with assumptions regarding the age and estimated useful lives of our property and equipment.
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Goodwill Impairment
We have a balance of goodwill of $28 million recorded at December 31, 2018 which was generated upon the acquisition of Buchanan in 2016. We perform our annual assessment of the recoverability of our goodwill in the fourth quarter each year. We utilize a qualitative assessment for determining whether the quantitative goodwill impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. In evaluating goodwill on a qualitative basis, we review the business performance of the Buchanan segment (the only segment with a goodwill balance) and evaluate other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicator of impairment exists at Buchanan. We consider whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, legal environments and how these factors might impact company specific performance in future periods. As part of the analysis, we also consider fair value determinations for certain reporting units that have been made at various points throughout the current and prior year for other purposes to ensure there is no contrary evidence to our analysis. At December 31, 2018, we did not perform a quantitative impairment assessment as we determined based our qualitative assessment that no impairment indicators existed.
Fair Value of Contingent Consideration
As part of the acquisition of the Buchanan business on March 31, 2016, we agreed to additional contingent royalty consideration payable to the seller, CONSOL Energy. This payment is in the form of a share of the revenues on export coal sold out of Buchanan if it is above a certain floor price until March 2021. The valuation is updated quarterly using a Black-Scholes option pricing formula for call options in a risk-neutral framework with fluctuations recorded in the statement of operations. This model uses assumptions such as our gross sales price forecast, export volume forecast, volatility, the U.S. risk-free rate, and credit-spread.
As part of the acquisition of Curragh on March 29, 2018, we agreed to pay a 25% royalty to the sellers, Wesfarmers, on sales from metallurgical coal mined at Curragh over a two-year period ending in March 2020 in the form of a Value Share Mechanism, or VSM. The VSM only applies to realized prices on metallurgical coal sales above $145 per metric ton. We estimate fair value of the royalty on a quarterly basis using a Monte Carlo pricing simulation. The Monte Carlo simulation performs risk analysis by building scenarios of possible results by substituting a range of values for any factor that has inherent uncertainty (in this case the future coal prices). It then calculates results over and over, each time using a different set of random values from the probability functions. Key assumptions in the valuation include the risk-free rate, the tax rate, distribution, price volatility, and foreign exchange rate. Changes in estimates quarterly, the royalty due for the previous quarter is settled and paid, resulting in a decrease in the contingent consideration liability.
Carrying Value of Asset Retirement Obligations
The Company is required to maintain a liability (and associated asset) for the expected value of future retirement obligations on their mines, in line with ASC 410, Asset Retirement and Environmental Obligations .
Reclamation of areas disturbed by mining operations must be performed by us in accordance with approved reclamation plans and in compliance with state and federal laws. For areas disturbed, a significant amount of the reclamation will take place in the future, when operations cease. All mines are bonded for reclamation and mine plans are approved by the states of West Virginia and Virginia,
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United States and Queensland, Australia. In addition, state agencies monitor compliance with the mine plans, including reclamation.
We record the fair value of its asset retirement obligations using the present value of projected future cash flows discounted using a credit-adjusted risk-free rate, with an equivalent amount recorded as a long-lived asset. An accretion cost is recorded each period and the capitalized cost is depreciated over the useful life of the related asset. As reclamation work is performed or liabilities otherwise settled, the recorded amount of the liability is reduced.
A review of restoration and decommissioning provisions is carried out annually on a mine-by-mine basis, and adjustments made to reflect any changes in estimates, if necessary. On an interim basis, we may update the liability based on significant changes to the life of mine or significant increases in disturbances during the period.
Recoverable Coal Reserves
There are numerous uncertainties inherent in estimating quantities and values of economically recoverable coal reserves, including many factors beyond our control. As a result, estimates of economically recoverable coal reserves are by their nature uncertain. Information about our reserves consists of estimates based on engineering, economic and geological data assembled and analyzed by our staff and third-party qualified persons. Our reserves are periodically reviewed by an independent third party consultant. Some of the factors and assumptions which impact economically recoverable reserve estimates include:
Each of these factors may in fact vary considerably from the assumptions used in estimating reserves. For these reasons, estimates of the economically recoverable quantities of coal attributable to a particular group of properties, and classifications of these reserves based on risk of recovery and estimates of future net cash flows, may vary substantially. Actual production, revenues and expenditures with respect to our reserves will likely vary from estimates, and these variances may be material. See Item 1A. "Risk FactorsWe rely on estimates of our recoverable reserves, which is complex due to geological characteristics of the properties and the number of assumptions made" and Item 3. "Properties" for discussions of the uncertainties in estimating our proven and probable coal reserves.
Income Taxes
We are required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for the future tax consequences of events that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. This process requires our management to make judgments regarding the timing and probability of the ultimate tax impact of the various agreements and transactions that we enter into. Based on these judgments we may record tax reserves or adjustments to valuation allowances on deferred tax assets to reflect the expected realizability of future tax benefits. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which we operate, our inability to generate sufficient future taxable income or unpredicted results from the final
90
determination of each year's liability by taxing authorities. These changes could have a significant impact on our financial position.
Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented
See Note 2. "Summary of Significant Accounting Policies" to the accompanying consolidated financial statements for a discussion of newly adopted accounting standards and accounting standards not yet implemented.
Quantitative and Qualitative Disclosures About Market Risk
Our activities expose us to a variety of financial risks, including market risk such as commodity price risk, interest rate risk, foreign currency risk, liquidity risk and credit risk. Our overall risk management objective is to minimize potential adverse effects on our financial performance from those risks which are not coal price related.
We manage financial risk through policies and procedures approved by our Board of Directors. These specify the responsibility of the Board of Directors and management with regard to the management of financial risk. Financial risks are managed centrally by our finance team under the direction of the Group Chief Financial Officer. The finance team manages risk exposures primarily through delegated authority limits approved by the Board of Directors. The finance team regularly monitors our exposure to these financial risks and reports to management and the Board of Directors on a regular basis. Policies are reviewed at least annually and amended where appropriate.
We may use derivative financial instruments such as interest rate swaps and foreign exchange rate contracts to hedge certain risk exposures. Derivatives are exclusively used for economic hedging purposes and hedging for speculative instruments. We use different methods to measure the extent to which we are exposed to various financial risks. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and aging analysis for credit risk.
Commodity Price Risk
Coal Price Risk
We are exposed to domestic and global coal prices. Our principal philosophy is that our investors would not consider hedging of coal prices to be in the long-term interest of our stockholders. Therefore, any potential hedging of coal prices through long-term fixed price contracts is subject to the approval of our Board of Directors and would only be adopted in exceptional circumstances.
We manage our commodity price risk for our non-trading, thermal coal sales through the use of long-term coal supply agreements in our U.S. Operations. In Australia, thermal coal is sold to Stanwell on a supply contract. See Item 1A. "Risk FactorsRisks related to the Supply Deed with Stanwell may adversely affect our financial condition and results of operations."
Sales commitments in the metallurgical coal market are typically not long-term in nature, and we are therefore subject to fluctuations in market pricing. For example, a 10% decrease in the HCC benchmark price would have decreased reported pretax income for the year ended December 31, 2018 by approximately $55 million. See Item 1A. "Risk FactorsOur profitability depends upon the prices we receive for our coal. Prices for coal are volatile and can fluctuate widely based upon a number of factors beyond our control."
Diesel Fuel
We may be exposed to price risk in relation to other commodities from time to time arising from raw materials used in our operations (such as gas or diesel). These commodities may be hedged
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through financial instruments if the exposure is considered material and where the exposure cannot be mitigated through fixed price supply agreements.
As of December 31, 2018, we entered into fixed price contracts with our fuel suppliers to purchase fuel for our U.S. Operations with a total commitment of $11.3 million for 2019. Any additional fuel required will be purchased under fixed-price contracts or on a spot basis. In addition, we have entered into forward derivative contracts to purchase 93.4 million liters of diesel fuel in 2019 with respect to the fuel requirements for the Curragh operations in Australia. The fair value of the forward derivative contract as at December 31, 2018 was $5.4 million. We expect to consume approximately 123 to 136 million liters of diesel fuel in 2019. A 10% increase in the price of diesel fuel would increase our diesel fuel costs by approximately $8 million.
Interest Rate Risk
Interest rate risk is the risk that a change in interest rates on our borrowing facilities will have an adverse impact on financial performance, investment decisions and stockholder returns. Our objectives in managing our exposure to interest rates include minimizing interest costs in the long term, providing a reliable estimate of interest costs for the annual work program and budget and ensuring that changes in interest rates will not have a material impact on our financial performance.
As of December 31, 2018, we had $11.8 million of fixed-rate borrowings and nil variable-rate borrowings. As discussed in "Liquidity," as at December 31, 2018, we had undrawn debt facility of $350.0 million with a variable interest rate of LIBOR or BBSY bid plus a margin. We intend to draw these funds for working capital requirements and general corporate purposes. A significant increase in the market interest rate following a drawdown could result in a material increase in the interest expense dependent on the amount drawn.
Foreign Exchange Risk
A significant portion of our sales are denominated in US$. Foreign exchange risk is the risk that our earnings or cash flows are adversely impacted by movements in exchange rates of currencies that are not in US$.
Our main exposure is to the A$US$ exchange rate through our Australian Operations, which have predominantly A$ denominated costs. Greater than 90% of expenses incurred at Curragh are denominated in A$. Approximately 10% of Curragh's purchases are made with reference to US$, which provides a natural hedge against foreign exchange movements on these purchases (including fuel, the WICET Terminal Handling Charge, demurrage, purchased coal and some insurance premiums). Appreciation of the A$ against US$ will increase Curragh's US$ reported cost base and reduce US$ reported net income. Assuming we had no foreign currency hedging instruments in place, a 5% increase in the A$ to US$ exchange rate would increase reported expenses by approximately $31 million for the year ended December 31, 2018.
Under normal market conditions, we generally do not consider it necessary to hedge our exposure to this foreign exchange risk. However, there may be specific commercial circumstances, such as the hedging of significant capital expenditure, acquisitions, disposals and other financial transactions, where we may deem foreign exchange hedging as appropriate and where a US$ contract cannot be negotiated directly with suppliers and other third parties.
During 2018, we entered into a foreign exchange swap to hedge the exposure to fluctuations in the A$US$ in connection with the acquisition of Curragh. At December 31, 2018, we did not have any foreign exchange contracts outstanding.
For our Australian Operations, we translate all monetary assets and liabilities at the period-end exchange rate, all non-monetary assets and liabilities at historical rates and revenue and expenses at the
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average exchange rates in effect during the periods. The net effect of these translation adjustments is shown in the accompanying consolidated financial statements within components of net income.
We currently do not hedge our non-US$ exposures against exchange rate fluctuations.
Liquidity Risk
Liquidity risk is the risk that we will not have sufficient liquid funds to meet our financial commitments as and when they fall due. Liquidity risk is managed centrally through short-term cash forecasting and longer-term strategic planning. Our objective is to ensure that we have sufficient liquid assets and funding to meet both our anticipated and unexpected financial obligations.
Access to capital is also an important feature of liquidity risk management. We manage this risk through proactive management of our funding profile by ensuring that we have access to diverse sources of funds and that we do not have material refinancing risk in any single reporting period.
Credit Risk
Credit risk is the risk of sustaining a financial loss as a result of a counterparty not meeting its obligations under a financial instrument or customer contract.
We are exposed to credit risk when we have financial derivatives, cash deposits, lines of credit, letters of credit or bank guarantees in place with financial institutions. To mitigate against credit risk from financial counterparties, we have minimum credit rating requirements with financial institutions where we transact.
We are also exposed to counterparty credit risk arising from our operating activities, primarily from trade receivables. Customers who wish to trade on credit terms are subject to credit verification procedures, including an assessment of their independent credit rating, financial position, past experience and industry reputation. We monitor the financial performance of counterparties on a routine basis to ensure credit thresholds are achieved. Where required, we will request additional credit support, such as letters of credit, to mitigate against credit risk. Credit risk is monitored regularly, and performance reports are provided to our management.
Internal Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. As a result of becoming a public company, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, to furnish a report by our management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of the registration statement. This assessment will need to include disclosures of any material weaknesses identified by our management in our internal control over financial reporting.
We intend to complete our first assessment of our disclosure controls and procedures and our internal control over financial reporting during fiscal year 2019. With the oversight of senior management and our audit committee, we have begun taking steps to evaluate our control environment in order to allow us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control procedures.
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We had an estimated 710.5 MMt of proven and probable coal reserves as of December 31, 2018. An estimated 251.0 MMt and 459.5 MMt of our proven and probable coal reserves are in Australia and the United States, respectively. Approximately 75% of our Australian Operations' proven and probable coal reserves, or 187.0 MMt, are metallurgical coal, composed of HCC, semi-hard coking coal, or SHCC, and pulverized coal injection, or PCI, coal. The remainder of our Australian Operations' coal reserves are thermal coal. Approximately 83% of our U.S. Operations' proven and probable coal reserves, or 382.0 MMt, are metallurgical coal, composed of coal with high volatile content, or High-Vol (including sub-category A of High-Vol, or HVA, and sub-category B of High-Vol, or HVB), coal with medium volatile content, or Mid-Vol, and coal with low volatile content, or Low-Vol. The remainder of our U.S. Operations' coal reserves are thermal coal.
The following maps show the locations of our mining properties in Australia and the United States, respectively.
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95
The following is a summary of general characteristics about our mining properties as of December 31, 2018.
Mining Property
(Status) |
Location | Mine Type |
Mining
Method |
Coal
Type |
Coal Seams of
Economic Interest (Formation) |
Average
Coal Seam Thickness (Meters) |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Curragh
|
Queensland, Australia (14 km north of the town of Blackwater) | Surface | Open-pit | HCC, SHCC, PCI, Thermal | Various (Rangal Coal Measures) | 1.5 - 6.5 | ||||||
Buchanan
|
Buchanan County, VA (6.4 km southeast of Oakwood, VA) |
Underground |
Longwall |
Low-Vol |
Pocahontas #3 (Pocahontas Formation) |
1.9 |
||||||
Logan
|
Boone, Logan and Wyoming Counties, WV (encompasses towns of Lorado, Pardee, Cyclone and Lacoma, WV) |
Surface, Underground |
Contour, Highwall, Room-and-pillar |
HVA, HVB, Thermal |
Various (Kanawha Formation) |
0.3 - 1.8 |
||||||
Greenbrier
|
Greenbrier and Nicholas Counties, WV (27 km northwest of Lewisburg, WV) |
Surface, Underground |
Auger, Contour, Highwall, Room-and-pillar |
Mid-Vol, PCI, Thermal |
Pocahontas #6, #7, #8 (Pocahontas Formation); Various (New River Formation) |
0.3 - 1.8 |
||||||
Pangburn-Shaner-Fallowfield
|
Allegheny, Washington and Westmoreland Counties, PA (22.5 km southeast of Pittsburgh, PA) |
Underground(1) |
Room-and-pillar(1) |
High-Vol, Thermal |
Upper Freeport (Freeport Formation) |
1.9 |
||||||
Amonate
|
Tazewell County, VA and McDowell County, WV (16 km northwest of Tazewell, VA) |
Underground |
Room-and-pillar |
High-Vol, Mid-Vol, Low-Vol |
Pocahontas #11 (Middle Lee Formation); Pocahontas #3, #4, #5 and Squire Jim (Pocahontas Formation) |
0.8 - 1.8 |
||||||
Russell County
|
Russell and Tazewell Counties, VA (just north and west of Raven, VA) |
Underground(1) |
Room-and-pillar(1) |
High-Vol |
Lower Castle (Norton Formation); Upper Horsepen (Middle Lee Formation) |
0.8 - 1.8 |
We control the coal mining rights across Curragh under 14 MLs and three MDLs from the Queensland government. We refer to Curragh's MLs and MDLs, collectively, as the Tenements. The Tenements have expirations ranging from August 31, 2021 to July 31, 2044. With respect to certain of the Tenements, our rights to mine coal overlap with a petroleum tenure. Pursuant to the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld), we are required to share information and coordinate our operations with the petroleum tenement holder. We do not believe that the presence of the overlapping petroleum tenure will restrict our coal mining operations at Curragh.
Subject to the exercise of our renewal rights thereunder, most of the leases at our U.S. mining properties expire upon exhaustion of the relevant reserves, which is expected to occur in 2048 at Buchanan; 2050 at Logan; 2067 at Greenbrier; 2070 at Pangburn-Shaner-Fallowfield; and 2051 at both Amonate and Russell County. One lease at Logan expires in 2032, but we expect to have mined the
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relevant reserves prior thereto. One lease at Greenbrier, covering approximately 2.4% of the total estimated reserves at Greenbrier, expires in 2020.
Our right to commercially mine and recover coal reserves at Buchanan overlaps with the right of CNX Gas, LLC to commercially recover and develop coal gas interests from the mine area. We have entered into certain agreements with CNX Gas, LLC to regulate the interaction between, and coordinate, our respective operations.
We are not aware of any significant encumbrances or defects in title with respect to any of our mining properties. We believe we have secured all applicable environmental licenses and permits under applicable law and have all necessary permits and licenses regarding cultural heritage, native title and various other social issues. See Item 1. "BusinessRegulatory MattersAustralia" for a discussion of the permitting conditions applicable to Curragh. See Item 1. "BusinessRegulatory MattersUnited States" for a discussion of the permitting conditions applicable to our U.S. Operations' mining properties.
The following table provides information about the principal equipment and facilities at, and infrastructure available to, our mining properties as of December 31, 2018.
|
|
Coal
Preparation Plant Capacity (Raw Mt per Hour) |
Transportation | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mining Property
(Status) |
Mining
Equipment |
Source of
Power |
Primary | Other | Export Facilities | |||||||
Curragh
|
Draglines, Dozers, Excavators, Shovels, Trucks | 1,200 and 1,300 | On-site substation connected to main grid | Aurizon-operated Blackwater rail link | Pacific National rail line | RG Tanna Coal Terminal, WICET (Port of Gladstone) | ||||||
Buchanan
|
Longwall Mining System, Continuous Miners |
1,270 |
Electric utility company |
Norfolk Southern rail line |
Truck, Barge |
Lamberts Point Coal Terminal Pier 6 (Hampton Roads, VA); CNX Terminal (Port of Baltimore) |
||||||
Logan
|
Surface: Loaders, Shovel, Dozers, Trucks; Underground: Continuous Miners |
952 |
Electric utility company |
CSX rail line |
Truck, Barge |
Kinder Morgan Pier IX Terminal, DTA Terminal (Hampton Roads, VA); CNX Terminal (Port of Baltimore) |
||||||
Greenbrier
|
Surface: Loaders, Dozers, Excavators, Trucks; Underground: Continuous Miner |
544 |
Electric utility company |
CSX rail line |
Truck, Barge |
Kinder Morgan Pier IX Terminal, DTA Terminal (Hampton Roads, VA); CNX Terminal (Port of Baltimore) |
||||||
Pangburn-Shaner-Fallowfield
|
N/A |
N/A |
Electric utility company |
Barge |
CSX rail line, Truck |
Kinder Morgan Pier IX Terminal (Hampton Roads, VA) |
||||||
Amonate
|
Continuous Miners |
508 |
Electric utility company |
Norfolk Southern rail line |
Truck |
Lamberts Point Coal Terminal Pier 6 (Hampton Roads, VA); CNX Terminal (Port of Baltimore) |
||||||
Russell County
|
N/A |
N/A |
Electric utility company |
Norfolk Southern rail line |
Truck |
Lamberts Point Coal Terminal Pier 6 (Hampton Roads, VA); CNX Terminal (Port of Baltimore) |
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Generally, the mining equipment and facilities at our mining properties are in good condition. We focus on the long-term potential of each mining property and regularly monitor developments in the mining industry for technology improvements and new equipment that could help us increase efficiency and lower our costs. From time to time, we also update and improve other equipment and facilities to maintain their usefulness and optimize our competitiveness. We also partner with major vendors to replace equipment on a scheduled basis to maximize equipment productivity. As of December 31, 2018, the total book value for each of our operating mining properties and its associated plant and equipment was $401 million for Curragh; $404 million for Buchanan; $221 million for Logan; and $127 million for Greenbrier.
The following table shows total coal production at our operating mining properties for the years ended December 31, 2018, 2017 and 2016.
The following table provides a summary of our proven and probable coal reserves as of December 31, 2018.
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Reserves are defined by SEC Industry Guide 7 as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Proven and probable coal reserves are defined by SEC Industry Guide 7 as follows:
Proven (Measured) ReservesReserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Probable (Indicated) ReservesReserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
Barry Saunders, B. App. Sc. (App. Geol.); MAusIMM(CP); MAIG, a director of QGESS Pty Ltd., prepared a coal resource estimate for Curragh. From this, Paul Wood, B. Eng.; MAusIMM(CP), who is employed full-time as the Senior Life of Mine Planner of our subsidiary, Coronado Curragh, prepared the estimates of proven and probable coal reserves at Curragh. Together, we refer to them as the Australian QPs. K. Scott Keim, CPG, and Justin S. Douthat, PE, MBA, of Marshall Miller & Associates, Inc., whom we refer to as the U.S. QPs, prepared the estimates of proven and probable coal reserves at each of the U.S. Operations' mining properties. We refer to the Australian QPs and the U.S. QPs, collectively, as the QPs.
The QPs estimated our proven and probable coal reserves in accordance with SEC Industry Guide 7 considering "modifying factors," including mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. Estimates within the proven category have the highest degree of assurance, while estimates within the probable category have only a moderate degree of geologic assurance. Further exploration is necessary to place probable reserves into the proven reserve category.
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The QPs estimated coal reserves at each of our mining properties using historical geotechnical data available from numerous entities over time. Most of this information was obtained prior to our acquisition of the properties, using varying drilling and core-logging techniques, survey methods and testing procedures. As a result, in verifying such data, the QPs made certain assumptions about the adequacy of the processes performed and comparability of the data based on their professional experience and familiarity with the applicable property. The QPs then developed geological models for each of the properties using cut-off parameters for classifying reserves based on the geotechnical data they reviewed, their experience with coal mining in the applicable region and, for the production-stage properties, results of mining operations.
Our staff of geologists and engineers worked with the QPs throughout this process and provided data from our own exploration and operating activities at the properties. We have internal control procedures, including internal verification of input data and geological modelling, subject to multi-level review, to help ensure the validity of the data.
The pricing information used to estimate our proven and probable coal reserves at December 31, 2018 was based on prices under our existing contracts and price forecasts. Below is a description of some of the factors that could affect price forecasts for metallurgical and thermal coal products on a mine-by-mine and product-by-product basis. Differences between the assumptions and analyses included in the price forecasts and realized factors could cause actual pricing to differ from the forecasts.
Metallurgical. Several factors can influence metallurgical coal supply and demand and pricing. Demand is impacted by economic conditions and demand for steel, and is also impacted by competing technologies used to make steel, some of which do not use coal as a manufacturing input. Competition from other types of coal is also a key price consideration and can be impacted by coal quality and characteristics, delivered energy cost (including transportation costs), customer service and support and reliability of supply.
Seaborne metallurgical coal import demand can be significantly impacted by the availability of indigenous coal production, particularly in leading metallurgical coal import countries such as China and India, among others, as well as country-specific policies restricting or promoting domestic supply. The competitiveness of seaborne metallurgical coal supply from leading metallurgical coal exporting countries, such as Australia, the United States, Russia, Canada and Mongolia, among others, is also an important price consideration.
In addition to the factors noted above, the prices which may be obtained at each individual mine or future mine can be impacted by factors such as (i) the mine's location, which impacts the total delivered energy costs to its customers, (ii) quality characteristics, particularly if they are unique relative to competing mines, (iii) assumed transportation costs and (iv) other mine costs that are contractually passed on to customers in certain commercial relationships.
Thermal. Several factors can influence thermal coal supply and demand and pricing. Demand is sensitive to total electric power generation volumes, which are determined in part by the impact of weather on heating and cooling demand, inter-fuel competition in the electric power generation mix, changes in capacity (additions and retirements), inter-basin or inter-country coal competition, coal stockpiles and policy and regulations. Supply considerations impacting pricing include reserve positions, mining methods, strip ratios, production costs and capacity and the cost of new supply (new mine developments or extensions at existing mines).
The cost information that the QPs used to estimate our proven and probable reserves were generally internal projected future costs based on historical costs and expected future trends. The estimated costs normally include mining, processing, transportation, royalty, tax and other mining-related costs. Our estimated mining and processing costs reflect projected changes in prices of consumable commodities (mainly diesel fuel, natural gas, explosives and steel), labor costs, geological
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and mining conditions, targeted product qualities and other mining-related costs. Estimates for other sales-related costs (mainly transportation, royalty and tax) are based on contractual prices or fixed rates. Specific factors that may impact the cost at our various operations include:
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coal and a royalty of A$0.70 for every Mt of SHCC produced above 2.5 MMt per year. Royalty costs at our U.S. Operations are based upon contractual agreements for the coal leased from private owners and vary from property to property and by the type of mine (i.e., surface or underground). The royalty rates under leases at our U.S. Operations range between 3% - 9% of revenues from coal sales. Under some of the leases, we are required to pay minimum royalties, regardless of production, and/or "wheelage fees" (i.e., fees payable on coal mined and removed from properties other than the particular leasehold and hauled across the leasehold premises). Additionally, as part of the agreement we reached with CONSOL Energy to acquire Buchanan and certain other assets in 2016, we agreed to pay CONSOL Energy a royalty of 20% of the gross sales price on all coal mined from the Buchanan mine complex and sold or shipped to a location outside the United States and Canada, where the actual sales price that we receive exceeds certain agreed benchmarks. The royalty payments are triggered where the gross sales price per Mt of coal exceeds the following thresholds: from April 1, 2016 to March 30, 2017, $82.67; from March 31, 2017 to March 30, 2018, $86.81; from March 31, 2018 to March 30, 2019, $91.15; from March 31, 2019 to March 30, 2020, $95.70; and from March 31, 2020 to March 31, 2021, $100.49.
Based on their mine-by-mine and product-by-product evaluations of the estimated prices for our coal, and the costs and expenses of mining and selling our coal, the QPs concluded our reserves were economically recoverable as of December 31, 2018. We periodically update our coal reserve estimates to reflect production of coal from those reserves and new drilling or other data received. Accordingly, our coal reserve estimates will change from time to time to reflect the effects of our mining activities, analysis of new engineering and geological data, changes in coal reserve holdings, modification of mining methods and other factors.
During 2018, the SEC adopted amendments to modernize the property disclosure requirements for mining registrants and related guidance under the Securities Act and the Exchange Act. The final rules provide a three-year transition period, and we will be required to comply with the new rules for the fiscal year beginning on January 1, 2021. We are in the process of assessing the impact the new rules will have on our disclosures.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of March 31, 2019, information regarding beneficial ownership of shares of our common stock, including common stock held as CDIs, by the following:
Beneficial ownership is determined according to the rules of the SEC. Beneficial ownership generally includes voting or investment power of a security and includes shares underlying options that are currently exercisable or exercisable within 60 days of March 31, 2019. The officers, directors and principal stockholders supplied the information for this table. Except as otherwise indicated, we believe that the beneficial owners of the CDIs and common stock listed below, based on the information given to us by each of them, have sole investment and voting power with respect to their shares, except where community property laws may apply.
Percentage of ownership is based on 96,651,692 shares of our common stock, or common stock equivalent CDIs, outstanding on March 31, 2019. Unless otherwise indicated, we deem shares subject to options that are exercisable within 60 days of March 31, 2019 to be outstanding and beneficially owned by the person holding the options for the purpose of computing percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the ownership percentage of any other person.
Because CDIs represent one-tenth of a share of our common stock, converting the number of CDIs owned by the person holding them into the equivalent number of shares of our common stock may result in fractional shares of common stock. In the following table, the number of shares of our common stock owned by each beneficial owner is rounded down to the nearest whole share of common stock.
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Unless otherwise indicated in the table, the address of each of the individuals named below is: c/o 100 Bill Baker Way, Beckley, West Virginia 25801, U.S.A.
Name and Address of Beneficial Owner
|
Number of
Shares of Common Stock(1) |
Percentage of
Common Stock |
|||||
---|---|---|---|---|---|---|---|
5% Stockholder |
|||||||
Entities affiliated with EMG(2) |
77,308,103.6 | 79.99 | % | ||||
Directors and Named Executive Officers |
|||||||
Garold Spindler |
| | |||||
William (Bill) Koeck(3) |
2,275 | * | |||||
Philip Christensen |
| | |||||
Greg Pritchard(4) |
5,000 | * | |||||
Ernie Thrasher |
| | |||||
Laura Tyson |
| | |||||
James Campbell |
| | |||||
Ayten Saridas |
| | |||||
David Hegger |
| | |||||
Richard Rose |
| | |||||
Ellen Ewart |
| | |||||
Emma Pollard |
| | |||||
All current directors and executive officers (11) as a group |
7,275 | * |
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The names, ages and positions of our directors and executive officers as of March 31, 2019 are set forth below:
Name
|
Age | Position(s) | |||
---|---|---|---|---|---|
William (Bill) Koeck | 66 | Acting Chairman | |||
Garold Spindler | 71 | Managing Director and Chief Executive Officer | |||
Philip Christensen | 64 | Director | |||
Greg Pritchard | 56 | Director | |||
Ernie Thrasher | 63 | Director | |||
Laura Tyson | 47 | Director | |||
James Campbell | 66 | President and Chief Operating Officer | |||
Ayten Saridas | 52 | Group Chief Financial Officer | |||
Richard Rose | 57 | Vice President, Chief Legal Officer and Secretary | |||
Ellen Ewart | 56 | Vice President, Investor Relations | |||
Emma Pollard | 46 | Vice President, People and Culture |
Non-Employee Directors
William (Bill) Koeck, Acting Chairman
Mr. Koeck joined our Board of Directors on September 21, 2018 after the Reorganization Transaction. Mr. Koeck has over 40 years' experience in mergers and acquisitions, or M&A, equity capital markets, private equity, restructuring and workouts, company and securities law and corporate governance. Mr. Koeck retired as a partner of global law firm Ashurst in 2016 and continues as a part-time consultant to the firm. Since 2015, he has been a member of the Takeovers Panel, which is the primary forum for resolving disputes about Australian public company and fund takeovers, and which is an Australian government statutory appointment. Mr. Koeck has been a guest lecturer in post-graduate corporate and securities law in the Law Faculty at The University of Sydney for 20 years. Mr. Koeck has had extensive involvement as legal counsel in the coal industry in Australia and North America. Mr. Koeck earned a Bachelor of LawsLLB and a Master of LawsLLM (Hons) from The University of Sydney as well as a Diploma of Applied Corporate Finance (ASIA).
Mr. Koeck was selected to serve on our Board of Directors because of his extensive involvement as legal counsel in the coal industry in Australia and North America.
Philip Christensen, Director
Mr. Christensen joined our Board of Directors on September 21, 2018 after the Reorganization Transaction. Mr. Christensen is also currently a board member of EcoJoule Energy Pty Ltd., a manufacturer of power electronics products and technologies. In addition, Mr. Christensen prior board service includes ASX-listed Aston Resources, an Australian coal mining, exploration and development company, and Whitehaven Coal, an Australian coal mining company. Since 2013, Mr. Christensen has served as the sole partner of Christensen Legal Pty Ltd, or Christensen Legal, a Brisbane-based boutique law firm practicing general corporate law. Mr. Christensen's practice is focused on the coal mining sector. Mr. Christensen has more than 30 years' experience in the corporate/M&A area and was a partner at Herbert Smith Freehills, a law firm, for 23 years, predominantly advising companies within the resources sector. Prior to forming Christensen Legal, Mr. Christensen served in a number of roles, including as executive director of an Australian coal exploration company and Chairman of a non-listed base metals exploration company. Mr. Christensen earned both a Bachelor of Commerce and Bachelor of Laws from The University of New South Wales. He is a solicitor admitted to practice in Queensland.
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Mr. Christensen was selected to serve on our Board of Directors because of his experience on the board of directors of coal exploration and resource companies.
Greg Pritchard, Director
Mr. Pritchard joined our Board of Directors on September 21, 2018 after the Reorganization Transaction. Mr. Pritchard is also currently a board member of The Port of Newcastle, a seaport in Australia. Mr. Pritchard was managing director of Energy Developments Limited, a global producer of sustainable distributed energy, from December 2007 until October 2016, having joined the company as finance director in June 2001. Mr. Pritchard previously served as chief financial officer of QCT Resources Limited, a coal production and distribution company, and as chief financial officer QNI Limited, an Australian nickel and cobalt refinery. Mr. Pritchard previously held senior positions at KPMG London and Europe, or KPMG, a global audit, tax and advisory services provider and Wardley James Capel (now known as HSBC Securities Asia Limited), a stock brokerage services provider, in Australia, the United Kingdom and Europe. Mr. Pritchard is a Fellow of Chartered Accountants Australia & New Zealand and earned a Bachelor of Commerce from The University of Melbourne and a Master of Applied Finance from Macquarie University.
Mr. Pritchard was selected to serve on our Board of Directors because of his extensive experience in finance and service with companies in the energy sector.
Ernie Thrasher, Director
Mr. Thrasher joined our Board of Directors on September 21, 2018 after the Reorganization Transaction. Mr. Thrasher's prior board service includes Barrick Gold Corporation, a Canadian gold mining company. Mr. Thrasher has over 40 years' experience in the coal industry. Mr. Thrasher's coal experience began in 1974 working for a family-owned mining company with operations in Maryland. He is the founder, Chief Executive Officer and Chief Marketing Officer of Xcoal, a global coal products supplier and one of the largest exporters of U.S. origin coal to Asia, whose activities also include the financing and development of mining and related infrastructure projects in West Virginia and in the anthracite coalfield in Northeastern Pennsylvania. Prior to forming Xcoal in 2003, Mr. Thrasher spent 22 years in various global marketing positions at Primary Coal, Inc., a coal company, and AMCI, a natural resources special investment company. In 2015, Mr. Thrasher founded XLNG Energy & Resources, which plans to market natural gas from reserves in the Marcellus and Utica Shale basins in the United States to customers in Europe and Asia. Mr. Thrasher also serves on the President's Leadership Council-Boy Scouts of America, is a member of the Council on Foreign Relations, serves as a director on the National Committee on U.S.-China Relations and as a director on the U.S. India Strategic Partnership Forum.
Mr. Thrasher was selected to serve on our Board of Directors because of his extensive experience in the coal industry.
Laura Tyson, Director
Ms. Tyson joined our Board of Directors on August 13, 2018, the effective date of the Reorganization Transaction, as a designee of the EMG Group. Ms. Tyson is also currently a board member for number EMG portfolio companies including Ascent Resources LLC, White Star Petroleum, LLC, Heritage NonOp Holdings, LLC and Sable Permian Resources, LLC. Ms. Tyson serves as a managing director, the chief operating officer and the general counsel for EMG. She has over 20 years' experience working on corporate and securities transactions. Prior to joining EMG in February 2014, Ms. Tyson was a Partner at Baker Botts L.L.P., a law firm, and was a member of the Master Limited Partnership, Energy and Private Equity practice groups. While at Baker Botts L.L.P., Ms. Tyson's practice was focused on the energy sector and master limited partnerships, including those
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engaged in coal mining, pipeline transportation and gathering, storage, oil and gas exploration and production, compression, shipping and propane, and she served as outside counsel to EMG on both portfolio company investments and co-investment structuring beginning in 2008. Ms. Tyson earned a B.S. in Economics and Finance from McNeese State University and a J.D. from the University of Houston Law Center.
Ms. Tyson was selected to serve on our Board of Directors because of her extensive knowledge and understanding of our business and operations.
Executive Officers
Garold Spindler, Managing Director and Chief Executive Officer
Mr. Spindler served as the Chief Executive Officer of Coronado Group LLC from its formation in 2011 until October 2018. He served as the chief executive officer at Coronado Group HoldCo LLC from December 2017 until August 13, 2018, the effective date of the Reorganization Transaction. Mr. Spindler has served as our Managing Director and Chief Executive Officer since August 12, 2018, the effective date of the Reorganization Transaction. Mr. Spindler has more than 30 years' experience in the coal industry and has held several key executive positions at some of the world's largest coal companies, including chief executive officer of UK Coal, president and chief executive officer of Amax Coal Company (U.S.), and president and chief executive officer of Pittston Coal Company. Mr. Spindler is also the owner and chairman of St. Cloud Mining, a producer of natural zeolites in North America. Mr. Spindler earned both a B.S. and M.S. in Mining Engineering from West Virginia University, and a M.B.A. in Management from Stanford University.
Mr. Spindler was selected to serve on our Board of Directors because of his extensive knowledge and experience in the coal industry.
James Campbell, President and Chief Operating Officer
Mr. Campbell served as the President and Chief Operating Officer of Coronado Group LLC from 2011 until August 2018. Mr. Campbell has served as our President and Chief Operating Officer since August 13, 2018, the effective date of the Reorganization Transaction. Mr. Campbell has more than 40 years' experience in the coal industry including as owner and chief executive officer of Spring Creek Energy, a coal company, and Strata Fuels, a coal company, and as president and chief operating officer of Imagin Natural Resources, a natural resource company specializing in coal. Mr. Campbell also spent 22 years with Pittston Coal Company, where he held various roles including executive vice president of Pittston Coal Company and president of Pittston Coal Sales Company. Mr. Campbell earned a B.S. in Mining Engineering from West Virginia University, a B.S. in Civil Engineering from West Virginia Institute of Technology and an Executive M.B.A. from the University of Virginia, Darden School of Business.
Ayten Saridas, Group Chief Financial Officer
Ms. Saridas served as our Group Chief Financial Officer since June 2018. Ms. Saridas has nearly 30 years of international corporate finance experience across a broad range of ASX-listed companies in upstream oil and gas, infrastructure, retail, fast-moving consumer goods and property. Prior to joining the Company, Ms. Saridas was the Chief Financial Officer of ASX-listed AWE Limited, an Australian oil and gas producer, from 2011 to 2016, where she was responsible for corporate strategy, finance, strategic planning, tax, treasury, M&A and risk management. Ms. Saridas has held a number of senior executive finance roles including group executive & treasurer at Santos, chief financial officer at Babcock & Brown Japan Property Trust, a Japanese real estate trust, group treasurer at Woolworths Limited, a company with retail interests in Australia and New Zealand, and head of corporate finance
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at Ausgrid, an electricity distribution company. Ms. Saridas earned a Bachelor of Commerce from The Australian National University and a Master of Applied Finance from Macquarie University.
Richard Rose, Vice President, Chief Legal Officer & Secretary
Mr. Rose served as the Vice President, Chief Legal Officer & Secretary of Coronado Group LLC from June 2017 until October 2018. Mr. Rose has served as our Vice President, Chief Legal Officer & Secretary since August 13, 2018, the effective date of the Reorganization Transaction. Mr. Rose has been a practicing lawyer since 1988. Prior to joining the Company, Mr. Rose was interim senior vice president, general counsel and corporate secretary of Meritor, Inc., an American vehicle part manufacturer, from March 2016 to August 2016. Mr. Rose has also served as senior vice president, general counsel and secretary of Calgon Carbon Corporation from September 2009 to September 2015, a company in the activated carbon and reactivation industry, and was a shareholder in the Pittsburgh office of Buchanan Ingersoll & Rooney, PC, a law firm, where his practice included general corporate counseling, federal securities and M&A. Before becoming a lawyer, Mr. Rose was a certified public accountant and auditor with an international public accounting firm. Mr. Rose earned a B.S. in Accounting from The Pennsylvania State University and a J.D. from the University of Pittsburgh School of Law.
Ellen Ewart, Vice President, Investor Relations
Ms. Ewart served as the Vice President, Investor Relations of Coronado Group LLC from April 1, 2017 until August 2018. Ms. Ewart has served as our Vice President, Investor Relations since August 13, 2018. the effective date of the Reorganization Transaction. Prior to joining the Company, Ms. Ewart served as the Vice President, Research at Wood Mackenzie, a global energy, chemicals, renewables, metals and mining research and consultancy company, from July 2014 to January 2017 and head of Global Coal Market Research from July 2010 to June 2014. Prior to that, Ms. Ewart held the roles of Director, Market Research between 2003 and 2004 and then the Vice President, Investor and Media Relations between 2004 and 2007 with Foundation Coal, a large American coal company. Ms. Ewart has broad experience in investor and media relations, domestic and international coal market modeling and forecasting, energy economic and policy analysis, strategic planning and consulting and advisory services. Ms. Ewart earned a Bachelor of Science degree in geology from Duke University and a Master of Science degree in mineral economic from the Colorado School of Mines.
Emma Pollard, Vice President People and Culture
Ms. Pollard has served our Vice President People and Culture since October 1, 2018 and was previously our General Manager of Human Resources in Australia since January 2018. Ms. Pollard has more than 22 years' experience in human resources. Prior to joining us, Ms. Pollard served as the general manager people and sustainability of Wesfarmers, prior to its acquisition by us. Prior to that, Ms. Pollard served as head of human resources of European Operations at Mylan NV, a global generic and specialty pharmaceutical company, from January 2015 to September 2017 and senior director talent acquisition and development, Europe from August 2013 to January 2015. Ms. Pollard also served as a Director, Human Relations, Australia and New Zealand at Alphapharm Pty Limited, a subsidiary of Mylan NV, from 2011 until 2013 and as Executive General Manager, Human Resources at Capral Aluminum from 2005 until 2011. Ms. Pollard earned a B.A. in Human Resources from the University of Sunderland and a post-graduate diploma in human resource management from the University of Northumbria.
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Board of Directors
Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors currently consists of six directors, comprised of our Chief Executive Officer, three independent directors, and two non-executive directors.
The number of directors is fixed by our Board of Directors, subject to the terms of our certificate of incorporation and bylaws. Pursuant to our certificate of incorporation, we have issued one Series A Share, which is beneficially owned by the EMG Group, through its ownership of Coronado Group LLC. Ownership of our Series A Share provides the EMG Group (or a permitted transferee thereof) with Board designation rights tied to the level of the EMG Group's aggregate beneficial ownership of shares of our common stock.
If the EMG Group elects, by written notice to us, the EMG Group will have the sole and exclusive right to nominate and elect, voting as a separate class and to the exclusion of all other series or classes of capital stock, a number of directors representing:
In October 2018, the EMG Group exercised its right to designate Ms. Laura Tyson to our Board of Directors pursuant to the terms of our Series A Share. We will redeem our Series A Share to the fullest extent permitted by law (at a price of $1.00) if, at any time, the EMG Group no longer beneficially owns, in the aggregate, 10% or more of the outstanding shares of our common stock.
On September 24, 2018, we entered into a Stockholder's Agreement with Coronado Group LLC, which governs the relationship between the EMG Group and us while the EMG Group retains an interest in our ownership, including certain governance matters relating us. Pursuant to the Stockholder's Agreement, for so long as the EMG Group has the right to nominate and elect directors as a holder of our Series A Share and any such director has been elected, the EMG will have the right to designate one of such directors to be included in the membership of any Board Committee, except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules.
Each of our current directors will continue to serve as a director until the election and qualification of his successor, or until his earlier death, resignation, or removal.
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ITEM 6. EXECUTIVE COMPENSATION.
Compensation Discussion and Analysis
This compensation and discussion analysis section discusses our principles underlying the policies and decisions with respect to the compensation of the following officers, or our Named Executive Officers, for the fiscal year ended December 31, 2018:
NAME
|
POSITION | |
---|---|---|
Garold Spindler | Managing Director and Chief Executive Officer | |
Ayten Saridas | Group Chief Financial Officer | |
David Hegger | Chief Financial OfficerU.S. Operations (Former Chief Financial Officer of Coronado Group LLC) | |
James Campbell | President and Chief Operating Officer | |
Richard Rose | Vice President, Chief Legal Officer and Secretary | |
Ellen Ewart | Vice President, Investor Relations | |
Emma Pollard | Vice President, People and Culture |
Compensation Philosophy and Objectives
Prior to our Australian IPO, the compensation arrangements for our Named Executive Officers were based on individually negotiated agreements. Following the Australian IPO, we established our compensation and nominating committee, discussed in more detail below, which set forth the following overall objectives of our executive compensation framework:
Executive compensation structures are designed to align the interest of stockholders with compensation outcomes by taking into account the performance of the company, the capability and experience of senior executives, and current economic and industry circumstances. Further, four aspirational principles generally guide our decisions about executive compensation:
Accordingly, we have designed our executive compensation program to reward our executives for achieving annual and long-term (three-year) financial and business goals that relate to the aforementioned principles. Specifically, the amount of incentive compensation received by our Named Executive Officers is directly related to performance against goals such as safety, production, EBITDA metrics, growth, share price performance and cash costs per metric ton as described in more detail below.
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Elements of executive compensation
Base Salary
Our executives are offered a base salary that comprises the fixed component of their compensation. Base salary is paid in order to attract and retain high-quality and experienced individuals, meet competitive salary norms and reward performance on an annual basis. Base pay for executives is reviewed annually and may be increased if we deem it is in our best interest. There are no guaranteed base salary increases included in any of our senior executives' contracts. In setting base salaries, consideration is given to each executive's position, prior experience and qualifications, and competitive compensation data we review for similar positions within our industry. We also consider competitive industry norms when determining how to allocate between cash and non-cash compensation for our Named Executive Officers. The industry comparisons are used for guidance purposes only. It is the intention of the compensation and nominating committee to pay base salaries to our executive officers that are commensurate with their qualifications and demonstrated performance.
Short-term Performance Incentives
Prior to the Australian IPO, bonus arrangements for our US-based Named Executive Officers were individually negotiated and were approved by EMG and Mr. Spindler, our Managing Director and Chief Executive Officer. Bonuses for Ms. Saridas and Ms. Pollard were paid pursuant to their respective employment contracts.
Following the Australian IPO, we created our Short-Term Incentive Plan, or the STI Plan, to provide our executive key management personnel with rewards for outstanding performance against short-term goals. The initial performance period under our STI Plan is from October 1, 2018 until December 31, 2019 and will correspond with our 12-month fiscal year thereafter. Under our STI Plan, bonus arrangements are based on both the achievement of Company performance goals, including safety, production and EBITDA metrics, and individual performance goals, which have been agreed on an individual basis based on the individual's defined roles and responsibilities within our Company. We believe that paying such cash bonuses will:
The amount of short-term incentive, or STI, award that each participant becomes entitled to each year (if any) will be determined by our Board of Directors and the compensation and nominating committee based on the achievement of set financial and non-financial performance targets. Executives will have at least 50% of their performance measured against predetermined targets and the other 50% will be based on operational and individual goals. The percentage mix between operational and individual performance targets will vary from individual to individual, but in most cases will be split evenly. The proposed STI targets for fiscal year ending December 31, 2019 will be based on safety, production and EBITDA.
Any award of STI to Mr. Spindler, Mr. Campbell and Ms. Saridas, if earned, will be delivered as follows:
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ending December 31, 2019 STI deferred component will be granted following the release of the Company's audited full-year financial results for fiscal year ending December 31, 2019 and will vest following release of our audited full-year financial results for fiscal year ending December 31, 2020).
Any award of STI to Mr. Rose, Mr. Hegger, Ms. Ewart and Ms. Pollard will be delivered in cash without any deferral.
As an employee, Mr. Spindler is the only director who is entitled to participate in the STI Plan, including with respect to the grant of RSUs under deferral arrangements. The compensation and nominating committee and our Board of Directors retain the right to exercise discretion not to award an STI where the participant has ceased employment with us or one of our entities during the performance period, or in limited other cases, including if a financial restatement is required or in cases of employee misconduct.
Long-term Performance Incentives
Prior to the Australian IPO, we did not have a formalized long-term performance incentive plan.
In connection with the Australian IPO, we established the Coronado Global Resources Inc. 2018 Equity Incentive Plan, or the Employee Plan, which allows us to grant equity awards to our consultants and employees. The objective of our Employee Plan is to foster sustained long-term performance and longer-term growth in stockholder value, while maintaining a total compensation opportunity that enables us to retain, attract and motivate qualified and high-performing executives. The Employee Plan was approved by our Board of Directors on September 21, 2018. The total number of shares that are available for awards under the Employee Plan is such maximum amount permitted by law and the ASX Listing Rules. As an employee director, Mr. Spindler is the only director who is entitled to participate in the grant of securities under the Employee Plan.
The initial grants made to certain of our Named Executive Officers under our Employee Plan in 2018 consisted of performance stock units, or PSUs, and option awards. The portions of these awards that are eligible to vest are determined by our Board of Directors and the compensation and nominating committee based on a scorecard, or the LTI Scorecard, set by our Board of Directors and our compensation and nominating committee.
The LTI Scorecard goals are determined and approved by our Board of Directors at the beginning of the performance period, taking into account budgeted cost forecasts, business plans and strategy. For the initial grants made to certain of our Named Executive Officers in 2018, our LTI Scorecard consisted of four equally-weighted performance measures based on the following categories:
The performance metrics are measured over a predetermined performance period, which is from January 1, 2019 to December 31, 2021.
With the assistance of compensation consultants, as identified below, we determined that our peer group for the relative TSR metric would consist of the following companies: New Hope Corporation Limited, Peabody Energy Corporation, ArchCoal, Warrior Met Coal, Inc., Contura Energy, Inc., BHP Group Limited (formerly BHP Billiton), South32 Limited, Yancoal Australia Ltd, Whitehaven Coal Ltd, Fortescue Metals Group Limited, Oz Minerals Limited, Evolution Mining Ltd, Rio Tinto Limited,
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Mineral Resources Limited, Newcrest Mining Limited, Saracen Mineral Holdings Limited, Sandfire Resources NL, Independence Group NL, Syrah Resources Ltd, Western Areas Ltd, Northern Star Resources Ltd, Teck Resources Limited, Anglo American Capital Plc and Vale S.A.
Management Incentive Units
In order to generate positive returns for Coronado Group LLC, prior to the Australian IPO, certain of our Named Executive Officers were granted management incentive units, or MIUs, in Coronado Group LLC. Some MIUs were granted as part of the employee's hiring arrangements (for example, in the case of Mr. Rose), while others were granted based on performance. Each MIU entitles the holder to a right to receive a portion of the distributions made by Coronado Group LLC. We currently do not intend to grant further MIUs to our management team in the future. For more information regarding the MIUs, see "Coronado Group LLC Management Incentive Units."
Post-employment Compensation
Prior to the Australian IPO, the post-employment compensation arrangements for our Named Executive Officers were individually negotiated agreements.
In connection with our Australian IPO, we entered into employment agreements with our Named Executive Officers (with the exception of Mr. Hegger). Under these agreements, we formalized the post-employment compensation arrangements for our continuing Named Executive Officers. Upon termination of employment without cause or a resignation for good reason, our continuing Named Executive Officers are entitled to receive certain severance payments and other benefits. In determining whether to approve, and in setting the terms of such severance arrangements, our compensation and nominating committee and our Board of Directors recognize that executives, especially highly-ranked executives, often face challenges securing new employment following termination. Severance amounts for termination without cause or a resignation for good reason is as follows: for our Chief Executive Officer, Chief Operating Officer, Chief Legal Officer and Vice President, Investor Relations, base annual salary over the prior 12 months paid in a lump sum six months following the date of termination; and for our Group Chief Financial Officer, six months continuance of her fixed annual salary. Our Vice President, People and Culture and former Chief Financial Officer are not contractually entitled to post-employment compensation, however, it would be customary to pay our former Chief Financial Officer six months of his base annual salary in the event of termination without cause or a resignation for good reason. In the event of a termination as a result of redundancy, our Vice President, People and Culture is entitled to three weeks of her fixed annual salary for every year of service.
In addition to these amounts, certain of our Named Executive Officers will also receive post-employment payments in connection with complying with the non-compete and non-solicitation covenants contained in their employment agreements. Payment will be made, in exchange for the provision of consultation services by such Named Executive Officers, to our Chief Executive Officer, Chief Operating Officer, Chief Legal Officer and Vice President, Investor Relations, in the amount of each officer's base annual salary in 12 monthly payments, for a one-year period following termination of such officer's employment.
Change in Control Compensation
A portion of certain of our equity-based awards for our Named Executive Officers may vest in connection with a change in control, as determined by our compensation and nominating committee in its sole discretion. For more information regarding change in control compensation, see "Potential Payments upon a Change in Control" and the accompanying table.
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Other Compensation
As required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all Australian employees (including Ms. Saridas and Ms. Pollard). Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee's compensation to an approved superannuation fund that the employee is typically not able to access until they are retired. Superannuation is contributed up to a maximum amount of the lesser of 9.5% of each such employee's salary or the quarterly maximum contribution required under the Superannuation Guarantee (Administration) Act 1992 (Cth), currently $3,622.75 (A$5,132.85) per quarter. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid.
Our employees located in the United States receive matching 401(k) contributions. We aim to match contributions at a market-appropriate level, which was a rate of 4% for fiscal year ended December 31, 2018.
Our executives in the United States and Australia participate in our 401(k) plan and superannuation plan on the same statutory basis as all other employees.
For certain of our Named Executive Officers, we also paid for insurance premiums, relocation expenses and parking expenses. Additionally, we paid for temporary housing costs for our Chief Legal Officer and our Chief Financial Officer, and housing costs for our Chief Executive Officer in Australia. We pay such perquisites in order to be competitive with industry norms.
Compensation Consultants
We hired two consulting companies in connection with developing our compensation arrangements. The first, Guerdon Associates, was used by us to develop compensation arrangements, such as our long-term and short-term incentive compensation plans. The second, Egan and Associates, was used by our Board of Directors to determine the appropriateness of the potential compensation programs.
No formal benchmarking of pay levels was performed; instead, our consultants utilized their general knowledge of the marketplace and made recommendations based on that knowledge.
Clawback Policy
All awards granted under the Employee Plan will be subject to recoupment under our clawback policy in the event our Board of Directors determines that (A) a participant has (i) acted fraudulently or dishonestly, (ii) engaged in gross misconduct, (iii) engaged in an act which has brought us into disrepute, (iv) breached his or her duties or obligations to us, or (v) been convicted of an offense or has a judgment entered against them in connection with our affairs; (B) there is a material misstatement or omission in our financial statements or any other circumstance which would affect our financial soundness or require a restatement of our financial accounts; (C) a participant's awards vest or may vest as a result of the fraud, dishonesty or breach of duties or obligations of any other person and, in the opinion of our Board of Directors, the awards would not have otherwise vested; or (D) we are required by or entitled under law or Company policy to reclaim remuneration from a participant.
In the event of a recoupment, our Board of Directors may determine that any of the following held by or on behalf of the participant will lapse or deem to be forfeited: (i) unvested awards, (ii) vested but unexercised awards, (iii) restricted stock units, (iv) restricted shares, and/or (v) CDIs or shares allocated under the Employee Plan.
Additionally, our Board of Directors may determine that a participant must pay or repay us as a debt: (i) all or part of the net proceeds of sale where CDIs or shares allocated under the Employee Plan have been sold; (ii) any cash payment received on vesting of awards or in lieu of an allocation of
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CDIs or shares; and/or (iii) any dividends received in respect of CDIs or shares allocated under the Employee Plan.
Our Board of Directors may specify in an award agreement additional circumstances in which a participant's entitlement to awards may be reduced or extinguished.
With respect to awards granted pursuant to the STI Plan, only those awards granted to the following Named Executive Officers are subject to the clawback policy: Mr. Spindler, Mr. Campbell, and Ms. Saridas.
Hedging Policy
We maintain a hedging policy, as part of our Securities Dealing Policy, that applies to our non-employee directors, executives, officers, employees, contractors and consultants. Under our policy, hedging includes entering into any arrangements that operate to limit the economic risk associated with holding our securities. We prohibit the practice of hedging any of our securities acquired under any employee, executive or director equity plan operated by us prior to vesting. Under our policy, our securities must never be hedged while they are subject to a holding lock or restriction on dealing under the terms of an employee, executive or director equity plan operated by us.
Overview of the Compensation Process
As described above, the composition of compensation for our executive officers includes: base salary, short-term performance incentives, long-term performance incentives, post-employment or change in control based compensation and contributions to superannuation or 401(k) funds. The elements of executive compensation are discussed at the meetings of our compensation and nominating committee. The compensation and nominating committee meets as often as the members deem necessary, with the intent to meet approximately once each quarter. Responsibilities of the compensation and nominating committee include:
Under its charter, the compensation and nominating committee must consist of a minimum of three non-executive directors, a majority of independent directors and an independent director as chair of the compensation and nominating committee. Non-committee members, including members of management, may attend the compensation and nominating committee meetings at the invitation of the compensation and nominating committee chair.
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Summary Compensation Table
The following table sets forth information regarding the compensation of our Named Executive Officers for the fiscal year ended December 31, 2018. Our current Group Chief Financial Officer, Ms. Ayten Saridas, and Vice President, People and Culture, Ms. Emma Pollard, are employed through Coronado Curragh. As a result, their compensation is earned and paid in Australian dollars ("A$"). The salaries, bonuses and amounts disclosed as "all other compensation" set out below for the fiscal year ended December 31, 2018 for each of Ms. Saridas and Ms. Pollard is presented in U.S. dollars using the average exchange rate for the fiscal year ended December 31, 2018, which was approximately A$1.00 to US$0.75. PSUs and options issued with a grant date fair value in A$ have been translated into US$ using the spot exchange rate as at the date of grant (October 23, 2018), which was approximately A$1.00 to US$0.71.
Name and Principal Position
|
Year |
Salary
($)(1) |
Bonus
($)(2) |
Stock
Awards ($)(3) |
Option
Awards ($)(4) |
Non-Equity
Incentive Compensation ($) |
All Other
Compensation ($)(5) |
Total ($) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Garold Spindler |
2018 | 921,347 | | 189,033 | 97,197 | | 50,182 | 1,257,759 | |||||||||||||||||
Chief Executive Officer |
|||||||||||||||||||||||||
Ayten Saridas |
2018 |
269,080 |
187,018 |
67,499 |
34,963 |
|
18,155 |
576,715 |
|||||||||||||||||
Group Chief Financial Officer |
|||||||||||||||||||||||||
David Hegger |
2018 |
341,895 |
50,000 |
39,697 |
|
|
26,114 |
457,706 |
|||||||||||||||||
Former Chief Financial Officer of Coronado Group LLC |
|||||||||||||||||||||||||
James Campbell |
2018 |
626,763 |
350,000 |
122,872 |
63,646 |
|
39,915 |
1,203,196 |
|||||||||||||||||
President and Chief Operating Officer |
|||||||||||||||||||||||||
Richard Rose |
2018 |
318,019 |
155,000 |
21,952 |
11,371 |
|
40,726 |
547,068 |
|||||||||||||||||
Vice President, Chief Legal Officer & Secretary |
|||||||||||||||||||||||||
Ellen Ewart, |
2018 |
246,265 |
125,000 |
14,177 |
7,344 |
|
26,114 |
418,900 |
|||||||||||||||||
Vice President, Investor Relations |
|||||||||||||||||||||||||
Emma Pollard |
2018 |
267,072 |
39,342 |
15,313 |
7,932 |
|
7,335 |
336,994 |
|||||||||||||||||
Vice President, People and Culture |
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The performance period for the PSUs is from January 1, 2019 to December 31, 2021. A discussion of the assumptions used in determining grant date fair value may be found in Note 20 "Share-Based Compensation" in the notes to our consolidated financial statements. The achievement of performance metrics will be assessed following the release of our audited full year financial results for the financial year ended December 31, 2021 (generally no later than March 31, 2022). The number of earned PSUs is calculated based on the achievement of the performance conditions and will vest one year from such date (and no later than March 31, 2023, or the Vesting Date). PSUs will be settled no later than 30 days following the Vesting Date. While dividends will not be earned on PSUs over the performance period, the final number of PSUs will be increased to reflect distributions that would have been paid on any earned PSUs between the end of the performance period and the date the shares are settled. The PSUs will only vest if the grantee is, and has been, continuously employed by us through the Vesting Date.
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2018 Grants of Plan-Based Awards Table
The following table provides information regarding the plan-based awards that were made to the Named Executive Officers during the fiscal year ended December 31, 2018.
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards ($)(2) |
Estimated Future Payouts
Under Equity Incentive Plan Awards(3) |
|
Grant Date
Fair Value of Stock and Option Awards ($)(7) |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
Exercise or
Base Price of Option Awards ($/Sh)(4) |
|||||||||||||||||||||||||||
Name
|
Type of
Award(1) |
Grant
Date |
Threshold
($) |
Target
($) |
Maximum
($) |
Threshold
(#) |
Target
(#) |
Maximum
(#) |
||||||||||||||||||||||
Garold Spindler |
SO(4) | 10/23/2018 | | 29,318 | 58,636 | 28.42 | 97,917 | |||||||||||||||||||||||
|
PSU(5) | 10/23/2018 | | 8,795 | 17,591 | 189,033 | ||||||||||||||||||||||||
|
FY19 STI(6) | | 500,000 | 1,000,000 | ||||||||||||||||||||||||||
Ayten Saridas |
SO(4) |
10/23/2018 |
|
10,468 |
20,937 |
28.42 |
34,963 |
|||||||||||||||||||||||
|
PSU(5) | 10/23/2018 | | 3,140 | 6,281 | 67,499 | ||||||||||||||||||||||||
|
FY19 STI(6) | | 125,273 | 250,547 | ||||||||||||||||||||||||||
David Hegger |
PSU(5) |
10/23/2018 |
|
1,847 |
3,694 |
39,697 |
||||||||||||||||||||||||
|
FY19 STI(6) | | 70,000 | 140,000 | ||||||||||||||||||||||||||
James Campbell |
SO(4) |
10/23/2018 |
|
19,057 |
38,113 |
28.42 |
63,646 |
|||||||||||||||||||||||
|
PSU(5) | 10/23/2018 | | 5,717 | 11,434 | 122,872 | ||||||||||||||||||||||||
|
FY19 STI(6) | | 162,500 | 325,000 | ||||||||||||||||||||||||||
Richard Rose |
SO(4) |
10/23/2018 |
|
3,404 |
6,809 |
28.42 |
11,371 |
|||||||||||||||||||||||
|
PSU(5) | 10/23/2018 | | 1,021 | 2,042 | 21,952 | ||||||||||||||||||||||||
|
FY19 STI(6) | | 82,950 | 165,900 | ||||||||||||||||||||||||||
Ellen Ewart |
SO(4) |
10/23/2018 |
|
2,198 |
4,397 |
28.42 |
7,344 |
|||||||||||||||||||||||
|
PSU(5) | 10/23/2018 | | 659 | 1,319 | 14,177 | ||||||||||||||||||||||||
|
FY19 STI(6) | | 62,500 | 125,000 | ||||||||||||||||||||||||||
Emma Pollard |
SO(4) |
10/23/2018 |
|
2,375 |
4,750 |
28.42 |
7,932 |
|||||||||||||||||||||||
|
PSU(5) | 10/23/2018 | | 712 | 1,425 | 15,313 | ||||||||||||||||||||||||
|
FY19 STI(6) | | 71,051 | 142,101 |
SO Stock Option
PSU Performance Stock Unit
FY19 STI Award granted pursuant to the STI Plan
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Depending on the achievement of certain performance conditions outlined above, the Named Executive Officers have a maximum STI opportunity in the following amounts: Mr. Spindler is entitled to a maximum award equal to 100% of his $1,000,000 base salary; Ms. Saridas is entitled to a maximum award equal to 50% of her $501,093 fixed annual salary; Mr. Hegger is entitled to a maximum award equal to 40% of his $350,000 base salary; Mr. Campbell is entitled to a maximum award equal to 50% of his $650,000 base salary; Mr. Rose is entitled to a maximum award equal to 50% of his $331,800 base salary; Ms. Ewart is entitled to a maximum award equal to 50% of her $250,000 base salary; and Ms. Pollard is entitled to a maximum award equal to 50% of her $284,202 fixed annual salary. Meeting the target conditions will result in an STI opportunity for the Named Executive Officers in the following amounts: for Mr. Spindler, 50% of his base salary; for Ms. Saridas, Mr. Rose, Mr. Campbell, Ms. Ewart and Ms. Pollard, 25% of the applicable Named Executive Officer's base salary; and for Mr. Hegger, 20% of his base salary. There are no threshold performance levels or payout amounts under the STI Plan. STI awards are presented in U.S. dollars using the average exchange rate for the fiscal year ended December 31, 2018, which was approximately A$1.00 to US$0.75.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment agreements
Garold Spindler. Prior to the Australian IPO, we did not have a formal employment agreement with Mr. Spindler. On September 21, 2018, we entered into an employment agreement with Mr. Spindler to govern his continued employment as our Chief Executive Officer. Under Mr. Spindler's employment agreement, his annual base salary is $1,000,000. The agreement also provides that Mr. Spindler is entitled to participate in all short-term incentive and long-term incentive plans offered by us. Mr. Spindler's employment will terminate automatically on December 31, 2019. However, each year the automatic end date will automatically extend to December 31 of the following year, if neither party gives notice of termination on or before September 30 of the year in which the automatic end date is scheduled to occur. Mr. Spindler's employment agreement provides for post-employment non-compete and non-solicitation covenants for a period of one year following termination of his employment, except in the case of a termination for "good reason" (as defined in Mr. Spindler's employment agreement). In order to enforce the restrictive covenants included in his employment agreement, we are required to pay Mr. Spindler 50% of his then-current base salary in equal installments for the duration of the non-competition period. See "Potential Payments Upon Termination" for severance and other termination payment provisions applicable to Mr. Spindler.
David Hegger. Effective as of June 18, 2018, Mr. Hegger transitioned from the role of Chief Financial Officer of Coronado Group LLC to Chief Financial Officer of Coronado Coal Corporation,
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which is the ultimate parent of our US Operations. We did not enter into a formal employment agreement with Mr. Hegger.
Ayten Saridas. We hired Ms. Saridas to fill the role of Group Chief Financial Officer on June 18, 2018. Ms. Saridas' initial employment agreement with Coronado Curragh provided her with a salary of $501,093 (A$670,000) and a bonus opportunity with a maximum of 50% of her salary and a target of 25% of her salary. On August 31, 2018, Coronado Curragh entered into a revised employment agreement with Ms. Saridas to govern her continued employment as the Group Chief Financial Officer. Under this current employment agreement, her annual base salary is $501,093 (A$670,000). The agreement also provides that Coronado Curragh will contribute to standard defined contribution superannuation funds on Ms. Saridas' behalf, as required by Australian law, up to a maximum amount of the lesser of 9.5% of her earnings or the quarterly maximum contribution required under the Superannuation Guarantee (Administration) Act 1992 (Cth), currently $3,622.75 (A$5,132.85) per quarter. The agreement also provides that Ms. Saridas may be eligible to participate in incentive arrangements offered by Coronado Curragh or us. Ms. Saridas' employment can be terminated by either her or Coronado Curragh by giving the other party three months written notice (or by Coronado Curragh making payment in lieu of part or all of her notice period). Ms. Saridas' employment agreement provides for post-employment non-compete and non-solicitation covenants for a period of 12 months following termination of her employment. See "Potential Payments Upon Termination" for the severance provisions applicable to Ms. Saridas.
Ms. Saridas' employment agreement also provides that she is entitled to receive certain relocation benefits, including a pre-relocation visit to the new location, moving costs, travel arrangements and temporary rental accommodations. If necessary, Coronado Curragh will also provide a hired car for up to one week pending the relocation of Ms. Saridas' personal vehicle. If Ms. Saridas leaves Coronado Curragh within 12 months of commencement of the relocated position, Coronado Curragh retains the right to recover all or part of all relocation costs covered by Coronado Curragh.
James Campbell. Prior to the Australian IPO, we did not have a formal employment agreement with Mr. Campbell. On September 21, 2018, we entered into an employment agreement with Mr. Campbell to govern his continued employment with us as our President and Chief Operating Officer. Under Mr. Campbell's employment agreement, his annual base salary is $650,000. Mr. Campbell's employment agreement provides that he is entitled to participate in all short-term incentive and long-term incentive plans offered by us. Mr. Campbell's employment will terminate automatically on December 31, 2019. However, each year the automatic end date will automatically extend to December 31 of the following year, if neither party gives notice of termination on or before September 30 of the year in which the automatic end date is scheduled to occur. Mr. Campbell's employment agreement provides for post-employment non-compete and non-solicitation covenants for a period of one year following termination of his employment except in the case of a termination for "good reason" (as defined in Mr. Campbell's employment agreement). In order to enforce the restrictive covenants included in his employment agreement, we are required to pay Mr. Campbell 50% of his then-current base salary in equal installments for the duration of the non-competition period in addition to any severance payments to which he may be entitled. See "Potential Payments Upon Termination" for the severance and other termination payment provisions applicable to Mr. Campbell.
Richard Rose. Prior to the Australian IPO, Mr. Rose's employment was governed by an offer letter with Coronado Group LLC, dated May 24, 2017, which provided that his annual base salary was $300,000 and that he was eligible for an incentive bonus in a maximum amount of 50% of his base salary. On December 20, 2018, we entered into an employment agreement with Mr. Rose to govern his continued employment with us as Vice President, Chief Legal Officer, and Secretary. Under Mr. Rose's employment agreement, his annual base salary is $331,800. The agreement also provides that Mr. Rose is entitled to participate in all short-term incentive and long-term incentive plans offered by us.
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Mr. Rose's employment will terminate automatically on December 31, 2019. However, each year the automatic end date will automatically extend to December 31 of the following year, if neither party gives notice of termination on or before September 30 of the year in which the automatic end date is scheduled to occur. Mr. Rose's employment agreement provides for post-employment non-compete and non-solicitation covenants for a period of one year following termination of his employment, except in the case of termination for "good reason" (as defined in Mr. Rose's employment agreement). In order to enforce the restrictive covenants included in his employment agreement, we are required to pay Mr. Rose 50% of his then-current base salary in equal installments for the duration of the non-competition period. See "Potential Payments Upon Termination" for the severance and other termination payment provisions applicable to Mr. Rose.
Ellen Ewart. Prior to the Australian IPO, Ms. Ewart's employment was governed by an offer letter with Coronado Group LLC, dated April 7, 2017, which provided that her annual base salary was $235,000 and that she was eligible for an incentive bonus in a maximum amount of 50% of her base salary. On December 25, 2018, we entered into an employment agreement with Ms. Ewart to govern her continued employment with us as Vice President, Investor Relations. Under Ms. Ewart's employment agreement, her annual base salary is $250,000. The agreement also provides that Ms. Ewart is entitled to participate in all short-term incentive and long-term incentive plans offered by us. Ms. Ewart's employment will terminate automatically on December 31, 2019. However, each year the automatic end date will automatically extend to December 31 of the following year, if neither party gives notice of termination on or before September 30 of the year in which the automatic end date is scheduled to occur. Ms. Ewart's employment agreement provides for post-employment non-compete and non-solicitation covenants for a period of one year following termination of her employment, except in the case of termination for "good reason" (as defined in Ms. Ewart's employment agreement). In order to enforce the restrictive covenants included in her employment agreement, we are required to pay Ms. Ewart 50% of her then-current base salary in equal installments for the duration of the non-competition period. See "Potential Payments Upon Termination" for the severance and other termination payment provisions applicable to Ms. Ewart.
Emma Pollard. Ms. Pollard was initially hired by Coronado Curragh to fill the role of General Manager, People and Sustainability, effective as of January 22, 2018. In October 2018, we asked Ms. Pollard to transition into the role of Vice President, People and Culture for Coronado Group LLC, though she remained employed by Coronado Curragh. In connection with this, on October 18, 2018, Coronado Curragh entered into an employment agreement with Ms. Pollard to govern her continued employment with us. Ms. Pollard's prior employment agreement provided that her base salary was $224,370 (A$300,000) and that she had a bonus opportunity with a maximum of 40% of her salary and target of 20% of her salary. Under Ms. Pollard's current employment agreement with Coronado Curragh, her annual base salary is $284,202 (A$380,000). The agreement also provides that we will contribute to standard defined contribution superannuation funds on Ms. Pollard's behalf, as required by Australian law, up to a maximum amount of the lesser of 9.5% of her earnings or the quarterly maximum contribution required under the Superannuation Guarantee (Administration) Act 1993 (Cth), currently $3,622.75 (A$5,132.85) per quarter. Pursuant to her employment agreement, Ms. Pollard may be eligible to participate in incentive arrangements offered by Coronado Curragh or the Group. Ms. Pollard's employment agreement provides for post-employment non-compete and non-solicitation covenants for a period of 12 months following termination.
Ms. Pollard's employment can be terminated by either Ms. Pollard or Coronado Curragh giving the other party four weeks written notice (or if we make a payment in lieu of part or all of her notice period). In the event Ms. Pollard terminates employment without required notice, she must pay us an amount equal to her compensation for the balance of the notice period not served. Coronado Curragh is entitled to terminate Ms. Pollard's employment immediately without notice in certain circumstances, including if she engages in serious or willful misconduct, engages in any other conduct which in our reasonable opinion is likely to adversely affect Coronado Curragh's reputation and/or her ability to effectively perform her duties, or is unwilling or unable to properly and effectively perform her duties.
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Equity Incentive Plan (for Employees and Consultants)
We maintain the Employee Plan, which was adopted by our Board of Directors on September 21, 2018.
Purpose. The purpose of the Employee Plan is to attract, retain and motivate key employees and consultants; to align the interests of such persons with our stockholders; and to promote ownership of our equity.
Persons Eligible for Awards. Employees and consultants are eligible for awards under the Employee Plan.
Administration; Effectiveness. The Employee Plan will generally be administered by the compensation and nominating committee. The compensation and nominating committee has the authority to construe, interpret and implement the Employee Plan and all award agreements under the Employee Plan. Any determination by the compensation and nominating committee under the Employee Plan will be final, binding and conclusive. The Employee Plan is effective as of September 21, 2018.
Shares Available for Awards under the Employee Plan. The total number of shares that are available for awards under the Employee Plan is such maximum amount permitted by law and the ASX Listing Rules.
Repricing. Subject to the ASX Listing Rules and certain adjustments that the compensation and nominating committee may make under the Employee Plan, reducing the exercise price of stock options issued and outstanding under the Employee Plan, including through amendment, cancellation in exchange for the grant of a substitute award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval of our stockholders.
Types of Awards Under the Plan. Pursuant to the Employee Plan, we may grant stock options (including "incentive stock options" as defined in Section 422 of the Code), stock appreciation rights, restricted shares or CDIs, restricted stock units, dividend equivalent rights, and performance-based awards or other equity-based or equity-related awards (including PSUs), that the compensation and nominating committee determines to be consistent with the purposes of the Employee Plan and our interests.
Each grant of an award under the Employee Plan will be evidenced by an award agreement or agreements, which will contain such provisions and conditions as the compensation and nominating committee may determine, consistent with the Employee Plan. Those provisions and conditions include the number of shares of our common stock subject to each award and vesting terms that apply upon events such as retirement, death, or disability of the participant, or in the event of a change in control. A brief description of the types of awards that may be granted under the Employee Plan is set forth below.
Stock Options. Stock options granted under the Employee Plan may be either incentive stock options or non-qualified stock options. Incentive stock options may be granted only to employees. Except with respect to substitute awards, incentive stock options and non-qualified stock options must have an exercise price per share that is not less than the fair market value of a share of our common stock on the date of grant. The term of a stock option may not extend more than ten years after the date of grant.
Stock Appreciation Rights. The Employee Plan provides for the grant of appreciation rights. An appreciation right is a right to receive from us an amount equal to the spread between the base price and the value of shares of our common stock on the date of exercise.
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Except in the case of an adjustment award, the base price of an appreciation right may not be less than the fair market value of a share of common stock on the date of grant. The term of an appreciation right may not extend more than ten years from the date of grant.
Restricted Shares or Restricted CDIs: Restricted shares or restricted CDIs constitute an immediate transfer of the ownership of shares of our common stock to the participant in consideration of the performance of services, entitling such participant to dividends, voting and other ownership rights, subject to any restrictions and conditions as determined by the compensation and nominating committee. During the restricted period applicable to the restricted shares or restricted CDIs, any ordinary cash dividends or other ordinary distributions paid upon any restricted share or restricted CDI will be paid to the relevant participant.
Restricted Stock Units. RSUs awarded under the Employee Plan constitute an unfunded and unsecured promise by us to deliver CDIs, shares, cash, or other securities, or a combination thereof, in the future to the participant in the future in consideration of the performance of services, subject to such conditions as specified by the compensation and nominating committee.
Dividend Equivalent Rights. The compensation and nominating committee may include in any award rights to dividend equivalents. In the event dividend equivalent rights are included in an award agreement, the compensation and nominating committee will determine: (i) whether payments will be in cash, CDIs, shares of common stock, or in another form; (ii) whether the rights are conditioned upon the exercise of the award to which they relate; (iii) the time or times at which they will be made; and (iv) other terms and conditions as the compensation and nominating committee deems appropriate.
Performance-Based Awards and Other Stock-Based or Cash-Based Awards. The compensation and nominating committee may, as it sees fit, grant such other types of equity-based, equity-related or cash-based awards including the grant or sale of unrestricted CDIs, shares of common stock, performance share awards and performance units settled in cash. The compensation and nominating committee may tie the receipt of these awards to the achievement of certain performance goals.
Adjustments; Corporate Transactions. The compensation and nominating committee will make or provide for such adjustments in the: (1) number of shares of our common stock that can be issued through incentive stock options under the Employee Plan and (2) award terms, as the compensation and nominating committee determines to be appropriate in order to prevent dilution or enlargement of the rights of participants that otherwise would result from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of CDIs or shares, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure, CDIs or shares of common stock, including any extraordinary dividend or extraordinary distribution.
In the event of any such transaction or event, or in the event of a change in control (as defined in the Employee Plan), the compensation and nominating committee may in its sole discretion: (i) settle such awards for an amount of cash or securities, where in the case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards; (iii) modify the terms of such awards to add events, conditions or circumstances upon which the vesting of such awards or lapse of restrictions thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue after closing; (v) accelerate the vesting of awards in full or on a pro-rata basis as determined by the compensation and nominating committee; or (vi) provide that for a period of at least 20 days prior to the change in control, all stock options or stock appreciation rights will be exercisable as to all CDIs and shares of common stock subject thereto.
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Transferability of Awards. Except as otherwise determined by the compensation and nominating committee in its discretion, no award may be transferred other than by will or by the laws of descent and distribution.
Amendment and Termination of the Plan. Our Board of Directors generally may suspend, discontinue, revise or amend the Employee Plan from time to time. However, no such amendment shall materially adversely impair the rights of the participants without the participant's consent. Stockholder approval will be obtained only to the extent necessary to comply with applicable laws, regulations or rules of securities exchange or self-regulatory agency. However, no amendment that would require stockholder approval under Section 422 of the Code will be effective without stockholder approval.
The Employee Plan will terminate on September 20, 2028. Additionally, our Board of Directors may, in its discretion, terminate the Employee Plan at any time. In either case, all awards will remain in effect until they have been satisfied or terminated in accordance with the terms and provisions of the Employee Plan and the applicable award agreement.
Coronado Group LLC Management Incentive Units
Under the Coronado Group LLC agreement (as amended, effective October 23, 2018), 2,900 MIUs were designated and authorized for issuance to certain members of management to motivate and retain senior management. The plan is designated to allow key members of management to share in the profits of the Company after certain returns are achieved by the equity investors. The MIUs constitute "profit interests" for the benefit of senior management in consideration of services rendered and to be rendered. At December 31, 2018, 2,900 MIUs were outstanding.
Coronado Coal LLC and Coronado II LLC merged to form Coronado Group LLC in July 2015. Coronado IV LLC was merged into Coronado Group LLC on June 30, 2016. Under the updated formation agreement dated June 30, 2016, the 2,500 designated and authorized units under the initial formation of Coronado Group LLC were replaced by these new units.
The new incentive units are comprised of three tiers, which entitle the holders to receive distributions from Coronado Group LLC subordinate to the distributions to be received by Members. As of December 31, 2018, a portion of the authorized units had been allocated to various members of Coronado management including Mr. Spindler, Mr. Campbell, Mr. Hegger, Ms. Ewart and Mr. Rose. Mr. Spindler holds 41% of MIUs on issue and also holds 1.0386% of class A units, reflecting his capital contribution. Mr. Campbell holds 35% of MIUs on issue and also holds 0.2464% of class A units, reflecting his capital contribution. Mr. Rose holds 2% of MIUs on issue, Ms. Ewart holds 1% of MIUs on issue and Mr. Hegger holds 3% of MIUs on issue.
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Outstanding Equity Awards at 2018 Fiscal Year-End Table
The following table provides information as of December 31, 2018 regarding equity awards, including unexercised stock options that had not vested, for each of the Named Executive Officers, using the December 31, 2018 spot exchange rate, which was approximately A$1.00 to US$0.71.
|
Option Awards | Stock Awards | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name
|
Number of
Securities Underlying Unexercised Options (#) Exercisable |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(1) |
Option
Exercise Price ($)(2) |
Option
Expiration Date |
Number
of Shares or Units of Stock That Have Not Vested (#) |
Market
Value of Shares or Units of Stock That Have Not Vested ($) |
Equity
Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#)(3) |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(4) |
||||||||||||||||||
Garold Spindler |
| | 58,636 | 28.42 | 10/23/28 | | | 17,591 | 340,439 | ||||||||||||||||||
Ayten Saridas |
| | 20,937 | 28.42 | 10/23/28 | | | 6,281 | 121,562 | ||||||||||||||||||
David Hegger |
| | | | | | | 3,694 | 71,492 | ||||||||||||||||||
James Campbell |
| | 38,113 | 28.42 | 10/23/28 | | | 11,434 | 221,286 | ||||||||||||||||||
Richard Rose |
| | 6,809 | 28.42 | 10/23/28 | | | 2,042 | 39,534 | ||||||||||||||||||
Ellen Ewart |
| | 4,397 | 28.42 | 10/23/28 | | | 1,319 | 25,532 | ||||||||||||||||||
Emma Pollard |
| | 4,750 | 28.42 | 10/23/28 | | | 1,425 | 27,578 |
Pension Benefits
Superannuation Payment
We do not provide pension benefits to our Named Executive Officers. Instead, as required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all Australian employees (including Ms. Saridas and Ms. Pollard) at an amount that is the lesser of 9.5% of each such employee's salary or the maximum yearly contribution amount designated by law, which was $14,491 (A$20,531.40) in 2018. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee's remuneration to an approved superannuation fund that employees are typically not able to access until they are retired. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid.
401(k) Matching
Certain of our Named Executive Officers located in the United States, including Mr. Spindler, Mr. Hegger, Mr. Campbell, Ms. Ewart and Mr. Rose, receive matching 401(k) contributions. We aim to match contributions at a market-appropriate level, which was a rate of 4% for the fiscal year ended December 31, 2018.
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Potential Payments Upon Change in Control
Mr. Spindler's, Mr. Rose's, Mr. Campbell's, Ms. Saridas', Ms. Ewart's and Ms. Pollard's option award agreements provide that if a change in control (as defined in the Employee Plan) occurs between January 1, 2019 to December 31, 2021, a number of each grantee's options prorated from January 1, 2019 through the date of the change in control will vest subject to satisfaction of the performance metrics (as specified in the award agreement) measured at the time of the change in control, as determined by our compensation and nominating committee in its sole discretion. Any of the executives' options that do not vest as a result of the above will be forfeited for no consideration upon the change in control. Any vested but unexercised options will automatically be settled on a change in control, unless our Board of Directors determines otherwise.
Mr. Spindler's, Mr. Rose's, Mr. Campbell's, Ms. Saridas', Mr. Hegger's, Ms. Ewart's and Ms. Pollard's PSU award agreements provide that if a change in control (as defined in the Employee Plan) occurs between January 1, 2019 to December 31, 2021, a number of each grantee's PSUs prorated from January 1, 2019 through the date of the change in control will vest subject to satisfaction of the performance metrics (as specified in the award agreement) measured at the time of the change in control, as determined by the compensation and nominating committee in its sole discretion. Any of the executives' PSUs that do not vest as a result of the above will be forfeited for no consideration upon the change in control. Any vested PSUs will automatically be settled on a change in control, unless our Board of Directors determines otherwise.
Our Board of Directors has the discretion to make STI payments in the event of specific circumstances relating to a change in control.
Potential Payments Upon Termination
Garold Spindler. If Mr. Spindler's employment is terminated without cause (as such term is defined in Mr. Spindler's employment agreement), or he resigns with good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, any deferred compensation or vested benefits, and a termination payment of 12 months base salary, payable six months after the date his employment terminates.
In addition to any other severance payments owed, as mentioned above, unless we waive the non-compete and non-solicitation covenants of Mr. Spindler's employment agreement, we agree to pay Mr. Spindler 50% of his annual salary, in 12 monthly payments, for a one-year period following termination of Mr. Spindler's employment. In return for this payment, Mr. Spindler is required to provide us with consultation services upon request, up to a maximum amount of 20 hours per week.
If Mr. Spindler's employment is terminated for cause, or he resigns without good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, and any deferred compensation or vested benefits.
Ayten Saridas. As mentioned above, Ms. Saridas' employment can be terminated by either her or Coronado Curragh by giving the other party three months written notice (or by Coronado Curragh making payment in lieu of part or all of her notice period). In the event Ms. Saridas terminates her employment without the required notice, she must pay Coronado Curragh an amount equal to her compensation for the balance of the notice period not served. Coronado Curragh is entitled to terminate Ms. Saridas' employment immediately without notice or payment in certain circumstances, including if she engages in serious or willful misconduct, engages in any other conduct which in the reasonable opinion of Coronado Curragh is likely to adversely affect the reputation of Coronado Curragh and/or her ability to effectively perform her duties, or is unwilling or unable to properly and effectively perform her duties. Ms. Saridas is entitled to a termination payment of six months of her
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fixed annual salary in addition to the above-mentioned three months' notice, if her employment is terminated for any reason, other than those reasons listed in the preceding sentence.
David Hegger. If Mr. Hegger's employment is terminated for cause, or he resigns without good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, and any deferred compensation or vested benefits.
While Mr. Hegger is not legally entitled to post-employment compensation, if he is terminated without cause, or if he resigns for good reason, based on past practice, it would be customary to pay him a severance payment of six months fixed annual salary and provide him with continued health benefits.
James Campbell. If Mr. Campbell's employment is terminated without cause (as such term is defined in Mr. Campbell's employment agreement), or he resigns with good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, any deferred compensation or vested benefits, and a severance payment of 12 months base salary, payable six months after the date his employment terminates.
In addition to any other severance payments owed, as mentioned above, unless we waive the non-compete and non-solicitation covenants of Mr. Campbell's employment agreement, we agree to pay Mr. Campbell 50% of his annual salary, in 12 monthly payments, for a one-year period following termination of Mr. Campbell's employment. In return for this payment, Mr. Campbell is required to provide us with consultation services upon request, up to a maximum amount of 20 hours per week.
If Mr. Campbell's employment is terminated for cause, or he resigns without good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, and any deferred compensation or vested benefits.
Richard Rose. If Mr. Rose's employment is terminated without cause (as such term is defined in Mr. Rose's employment agreement), or he resigns with good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, any deferred compensation or vested benefits, and a severance payment of 12 months base salary, payable six months after the date his employment terminates.
In addition to any other severance payments owed, as mentioned above, unless we waive the non-compete and non-solicitation covenants of Mr. Rose's employment agreement, we agree to pay Mr. Rose 50% of his annual salary, in 12 monthly payments, for a one-year period following termination of Mr. Rose's employment. In return for this payment, Mr. Rose is required to provide us with consultation services upon request, up to a maximum amount of 20 hours per week.
If Mr. Rose's employment is terminated for cause, or he resigns without good reason, he will be entitled to receive his base salary through the date of termination and other entitlements, such as leave or cash entitlements, and any deferred compensation or vested benefits.
Ellen Ewart. If Ms. Ewart's employment is terminated without cause (as such term is defined in Ms. Ewart's employment agreement), or she resigns with good reason, she will be entitled to receive her base salary through the date of termination and other entitlements, such as leave or cash entitlements, any deferred compensation or vested benefits, and a severance payment of 12 months base salary, payable six months after the date her employment terminates.
In addition to any other severance payments owed, as mentioned above, unless we waive the non-compete and non-solicitation covenants of Ms. Ewart's employment agreement, we agree to pay Ms. Ewart 50% of her annual salary, in 12 monthly payments, for a one-year period following termination of Ms. Ewart's employment. In return for this payment, Ms. Ewart is required to provide us with consultation services upon request, up to a maximum amount of 20 hours per week.
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If Ms. Ewart's employment is terminated for cause, or she resigns without good reason, she will be entitled to receive her base salary through the date of termination and other entitlements, such as leave or cash entitlements, and any deferred compensation or vested benefits.
Emma Pollard. As mentioned above, Ms. Pollard's employment can be terminated by either her or Coronado Curragh by giving the other party four weeks written notice (or by Coronado Curragh making payment in lieu of part or all of her notice period). In the event Ms. Pollard terminates her employment without required notice, she must pay Coronado Curragh an amount equal to her compensation for the balance of the notice period not served. Coronado Curragh is entitled to terminate Ms. Pollard's employment immediately without notice or payment in certain circumstances, including if she engages in serious or willful misconduct, engages in any other conduct which in the reasonable opinion of Coronado Curragh is likely to adversely affect the reputation of Coronado Curragh and/or her ability to effectively perform her duties, or is unwilling or unable to properly and effectively perform her duties.
If Ms. Pollard is terminated without cause by reason of redundancy, under Coronado Curragh policy she is entitled to receive three weeks pay for every year of service.
The following table sets forth the estimated incremental compensation payable in the form of severance benefits to each of the Named Executive Officers in the event of termination of the officer's employment without cause or resignation for good reason, assuming such event occurred on December 31, 2018. The compensation set out below for Ms. Saridas and Ms. Pollard is presented in U.S. dollars using the spot exchange rate as at December 31, 2018, which was approximately A$1.00 to US$0.71.
Name and Benefits
|
Severance
Benefits(1) |
|||
---|---|---|---|---|
Garold Spindler |
||||
Cash severance |
$ | 1,000,000 | ||
Consultation Services |
$ | 500,000 | ||
Ayten Saridas |
|
|||
Cash severance |
$ | 236,443 | ||
David Hegger |
|
|||
Cash severance |
$ | 175,000 | ||
James Campbell |
|
|||
Cash severance |
$ | 650,000 | ||
Consultation Services |
$ | 325,000 | ||
Richard Rose |
|
|||
Cash severance |
$ | 331,800 | ||
Consultation Services |
$ | 165,900 | ||
Ellen Ewart |
|
|||
Cash severance |
$ | 250,000 | ||
Consultation Services |
$ | 125,000 | ||
Emma Pollard(2) |
|
|||
Cash severance |
$ | 15,528 |
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Upon termination of employment due to death, disability or retirement, or in the event of a change in control, each Named Executive Officer would be entitled to, at the end of the applicable performance period and subject to performance, pro-rata vesting of their outstanding performance-based stock options and PSUs based on their during the performance period. Because the performance period for currently outstanding awards began on January 1, 2019, there would be no pro rata payments due under these awards if such events had occurred on December 31, 2018.
Compensation Risk Considerations
We have reviewed our compensation policies as generally applicable to our employees and believe that our compensation programs are designed with an appropriate balance of risk and reward in relation to our overall business strategy and do not encourage excessive or unnecessary risk-taking behavior. In making this determination, we considered our pay mix, our base salaries and the attributes of our variable compensation programs, including our long-term and short-term incentive plans, and our alignment with market pay levels and compensation program designs. Our compensation and nominating committee believes that the design of our executive compensation programs as outlined in "Compensation Discussion and Analysis" above places emphasis on long-term and short-term incentives and competitive base salaries. Our compensation and nominating committee believe that this mix of incentives appropriately balances risk and aligns our executive officers' motivations for our long-term success.
Director Compensation
The table below sets forth the compensation earned by each of the non-employee directors for the fiscal year ended December 31, 2018. The directors are paid in Australian dollars. The directors' fees set out below are presented in U.S. dollars using the average exchange rate for the fiscal quarter ended December 31, 2018, which was approximately A$1.00 to US$0.72. The additional payments made to the directors in the "all other compensation" column is presented in U.S. dollars using the spot exchange rate as at October 23, 2018, which was approximately A$1.00 to US$0.71.
Name
|
Fees Earned
or Paid in Cash ($)(1) |
Stock
Awards ($) |
Option
Awards ($) |
Non-Equity
Incentive Plan Compensation ($) |
Change in
Pension Value and Nonqualified Deferred Compensation Earnings |
All Other
Compensation ($)(2) |
Total
($) |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Greg Martin(3) |
65,726 | | | | | 35,290 | 101,016 | |||||||||||||||
Philip Christensen |
37,842 | | | | | 35,290 | 73,312 | |||||||||||||||
Bill Koeck |
37,842 | | | | | 35,290 | 73,312 | |||||||||||||||
Greg Pritchard |
37,842 | | | | | 35,290 | 73,312 | |||||||||||||||
Ernie Thrasher(4) |
34,855 | | | | | 35,290 | 70,145 | |||||||||||||||
Laura Tyson(5) |
48,313 | | | | | | 48,313 |
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Narrative Disclosure to Director Compensation Table
Director Compensation
Under our bylaws, our Board of Directors may decide the total amount paid by us to each director as compensation for their services as a director, subject to the ASX Listing Rules. Under the ASX Listing Rules, the total amount of fees paid to all non-employee directors in any financial year must not exceed the aggregate amount of non-employee directors' fees approved by stockholders at our general meeting. This amount has been fixed by us at $1,346,220 (A$1,800,000) per annum.
Mr. Martin, Mr. Christensen, Mr. Koeck, Mr. Pritchard and Mr. Thrasher each entered into fee arrangements effective as of September 21, 2018 in connection with their appointment as non-employee directors. These fee arrangements provide for each non-employee director's annual base compensation, which includes any statutory superannuation required. The fee arrangements also provide that the non-employee directors may elect to receive some, or all, of their annual base fees as RSUs. A summary of these fee arrangements follows:
Position
|
Fee* | |
---|---|---|
Board Member (other than Chairman of the Board) |
$130,883 (A$175,000) | |
Chairman of the Board |
$246,807 (A$330,000) | |
Chairman of the Audit, Governance & Risk Committee (Additional Fee) |
$11,219 (A$15,000) | |
Chairman of the Compensation and Nominating Committee (Additional Fee) |
$11,219 (A$15,000) | |
Chairman of the Health Safety, Environment and Community Committee (Additional Fee) |
$11,219 (A$15,000) |
If a non-employee director elects to receive some of their compensation in the form of RSUs, the number of RSUs granted is calculated by dividing the value of base fees each non-employee director elects to receive as RSUs by:
The RSUs will be settled no later than 30 days after the earliest of: (i) five years from the date the RSU is granted; (ii) the director ceasing to be a director on our Board of Directors; or (iii) a change in control (as defined in the Non-Executive Director Plan). Each RSU is an entitlement to receive one CDI (or if our Board of Directors determines, the equivalent value in cash or shares) plus additional CDIs (or the equivalent value in cash or shares) equal to any distributions made (assuming such
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distributions are reinvested in CDIs at the ex-distribution date), until the RSU is settled. RSUs will be granted in installments over a 15-month period. At this time, Mr. Thrasher is the only non-employee director who has elected to receive a portion of his compensation in the form of RSUs.
In addition to the fees outlined above, the fee arrangement provides that we will pay our non-executive directors for travel and other expenses incurred in attending to our affairs, including attending and returning from our general meetings or meetings of our Board of Directors or committees thereof.
We entered into a similar fee arrangement with Ms. Tyson in connection with her appointment as a non-executive director. However, Ms. Tyson is not directly paid a fee and is not entitled to receive fees in the form of RSUs. Rather, we pay EMG a standard director's fee of $130,883 (A$175,000) annually in return for EMG making Ms. Tyson available to us. Ms. Tyson's fee arrangement also provides that we will pay for her travel and other expenses incurred in attending to our affairs, including attending and returning from our general meetings or meetings of our Board of Directors or committees thereof.
Non-Executive Director Plan
We maintain the Coronado Global Resources Inc. 2018 Non-Executive Director Plan, or the Non-Executive Director Plan, which was adopted by our Board on September 21, 2018.
Purpose. The purpose of the Non-Executive Director Plan is to attract, retain, and motivate non-employee directors of our Board of Directors; to align the interests of such directors with our stockholders; and to promote ownership of our equity.
Administration; Effectiveness. The Non-Executive Director Plan will generally be administered by the compensation and nominating committee. The compensation and nominating committee has the authority to construe, interpret and implement the Non-Executive Director Plan and all award agreements under the Non-Executive Director Plan. Any determination by the compensation and nominating committee under the Non-Executive Director Plan will be final, binding, and conclusive. The compensation and nominating committee may allocate among its members and delegate to any person who is not a member of the compensation and nominating committee, or to any of our administrative groups, any of its powers, responsibilities, or duties. The Non-Executive Director Plan is effective as of September 21, 2018.
Awards Available Under the Non-Executive Director Plan. The total number of shares that are available for awards under the Non-Executive Director Plan is such maximum amount permitted by law and the ASX Listing Rules. The total amount of fees paid to all non-executive directors in any financial year must not exceed the aggregate amount of non-executive directors' fees approved by our shareholders. This amount has been fixed at $1,346,220 (A$1,800,000) per year.
Types of Awards Under the Non-Executive Director Plan. Pursuant to the Non-Executive Director Plan, we may grant stock options, stock appreciation rights, restricted shares or CDIs, restricted stock units, dividend equivalent rights, and other equity-based or equity-related awards, that the compensation and nominating committee determines to be consistent with the purposes of the Non-Executive Director Plan and our interests.
Each grant of an award under the Non-Executive Director Plan will be evidenced by an award agreement or agreements, which will contain such provisions and conditions as the compensation and nominating committee may determine, consistent with the Non-Executive Director Plan. Those provisions and conditions include the number of shares of our common stock subject to each award and vesting terms that apply upon events such as retirement, death or disability of the participant or in the event of a change in control. A brief description of the types of awards that may be granted under the Non-Executive Director Plan is set forth below.
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Stock Options. Stock options granted under the Non-Executive Director Plan represent a right to purchase a CDI or share at a specified price for a specified period of time. Except with respect to substitute awards, stock options must have an exercise price per share that is not less than the fair market value of a share of our common stock on the date of grant. The term of a stock option may not extend more than ten years after the date of grant.
Stock Appreciation Rights. The Non-Executive Director Plan provides for the grant of appreciation rights. An appreciation right is a right to receive from us an amount equal to the spread between the base price and the value of shares of our common stock on the date of exercise.
Except in the case of an adjustment award, the base price of an appreciation right may not be less than the fair market value of a share of common stock on the date of grant. The term of an appreciation right may not extend more than ten years from the date of grant.
Restricted Shares or Restricted CDIs. Restricted shares or restricted CDIs constitute an immediate transfer of the ownership of shares of our common stock to the participant in consideration of the performance of services, entitling such participant to dividends, voting, and other ownership rights, subject to any restrictions and conditions as determined by the compensation and nominating committee. During the restricted period applicable to the restricted shares or restricted CDIs, any ordinary cash dividends or other ordinary distributions paid upon any restricted share or restricted CDI will be paid to the relevant participant.
Restricted Stock Units. RSUs awarded under the Non-Executive Director Plan constitute an unfunded and unsecured promise by us to deliver CDIs, shares, cash, or other securities, or a combination thereof, in the future to the participant in consideration of the performance of services, subject to such conditions as specified by the compensation and nominating committee. If a participant ceases to be our director, each vested restricted stock unit then held by the participant as of the date of such cessation of services shall be settled as of such date.
Dividend Equivalent Rights. The compensation and nominating committee may include in any award rights to dividend equivalents. In the event dividend equivalent rights are included in an award agreement, the compensation and nominating committee will determine: (i) whether payments will be in cash, CDIs, shares of common stock, or in another form; (ii) whether the rights are conditioned upon the exercise of the award to which they relate; (iii) the time or times at which they will be made; and (iv) other terms and conditions as the compensation and nominating committee deems appropriate.
Other Stock-Based or Cash-Based Awards. The compensation and nominating committee may grant such other types of equity-based, equity-related, or cash-based awards including the retainers and meeting-based fees and the grant or sale of shares of common stock.
Adjustments; Corporate Transactions. Aggregate awards made to any one participant during a fiscal year may not exceed the "stockholder approval limit" in effect based on the aggregate value of cash awards and fair market value of stock-based awards, determined as of the date of grant. The compensation and nominating committee will make or provide for such adjustments in the award terms, as the compensation and nominating committee determines to be appropriate in order to prevent dilution or enlargement of the rights of participants that otherwise would result from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of CDIs or shares, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure, CDIs or shares of common stock, including any extraordinary dividend or extraordinary distribution.
In the event of any such transaction or event, or in the event of a change in control (as defined in the Non-Executive Director Plan), the compensation and nominating committee may in its sole discretion: (i) settle such awards for an amount of cash or securities, where in the case of stock options
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and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards; (iii) modify the terms of such awards to add events, conditions, or circumstances upon which the vesting of such awards or lapse of restrictions thereon will accelerate; or (iv) provide that for a period of at least 20 days prior to the change in control, all stock options or stock appreciation rights will be exercisable as to all CDIs and shares of common stock subject thereto.
Transferability of Awards. Except as otherwise determined by the compensation and nominating committee in its discretion, no award may be transferred other than by will or by the laws of descent and distribution.
Amendment and Termination of the Plan. Our Board of Directors generally may suspend, discontinue, revise or amend the Non-Executive Director Plan from time to time. However, no such amendment shall materially adversely impair the rights of the participants without the participant's consent. Stockholder approval will be obtained only to the extent necessary to comply with applicable laws, regulations, or rules of securities exchange or self-regulatory agency.
The Non-Executive Director Plan will terminate on September 20, 2028. Additionally, our Board of Directors may, in its discretion, terminate the Non-Executive Director Plan at any time. In either case, all awards will remain in effect until they have been satisfied or terminated in accordance with the terms and provisions of the Non-Executive Director Plan and the applicable award agreement.
Director Shareholding Policy
We have established a minimum shareholding policy for our non-executive directors, other than directors appointed by the holder of the Series A Preferred Share (which includes Ms. Tyson), or any other directors determined by our Board. Non-employee directors are required to hold CDIs, RSUs, or shares that are at least equal in value to the director's annual gross board fees in their first year of appointment to our Board of Directors. The minimum shareholding requirement will be enforced in the fifth and subsequent years of the director's tenure so that the minimum shareholding can be progressively acquired over the five years from the time the director is appointed.
As at October 24, 2018, Mr. Spindler, Mr. Thrasher, and Ms. Tyson each held an indirect economic interest in Coronado Group LLC's shareholding, arising from holdings of:
Those non-employee directors who hold indirect economic interests in us through investments in Coronado Group LLC or the EMG Group have an indirect interest in proceeds received by Coronado Group LLC for sale of certain CDIs under the Australian IPO. Garold Spindler's interest in class A units in Coronado Group LLC is subject to a voluntary escrow deed.
Compensation Committee Interlocks and Insider Participation
Our compensation and nominating committee consisted of three (3) non-executive directors during 2018: Mr. Koeck, Mr. Martin, and Ms. Tyson. Mr. Koeck is the Chairman. None of the members of our compensation and nominating committee is or has been an officer or employee of our company. None of our executive officers currently serves, or in 2018 served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of any other company that has one or more of its executive officers serving on our Board of Directors or compensation and nominating committee.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Certain Relationships and Related Transactions
The following is a summary of transactions that occurred on or after January 1, 2016 to which we were a party, in which the amount involved exceeded $120,000 and in which any of our executive officers, directors, or beneficial holders of more than 5% of our capital stock had or will have a direct or indirect material interest.
Stockholder's Agreement
On September 24, 2018, we entered into a Stockholder's Agreement with Coronado Group LLC, which governs the relationship between the EMG Group and us while the EMG Group beneficially owns in the aggregate at least 50% of our outstanding shares of common stock (including shares of common stock underlying CDIs). Pursuant to the Stockholder's Agreement, we will provide the EMG Group with financial and other information, and we will cooperate with and have assistance from the EMG Group in connection with any financing or refinancing we undertake. While the EMG Group beneficially owns in the aggregate at least 10% of our outstanding shares of common stock, any issuances of equity securities must have been offered to Coronado Group LLC in respect of its pro rata shares. Additionally, for as long as the EMG Group beneficially owns in the aggregate at least 25% of the outstanding shares of our common stock, Coronado Group LLC will have consent rights to certain actions, including, but not limited to, amending or restating our bylaws or certificate of incorporation, issuing any equity securities, or terminating the employment of the Chief Executive Officer or hiring a new Chief Executive Officer. Under the Stockholder's Agreement, the EMG Group has certain rights regarding our Board of Directors as described in Item 5. "Directors and Executive Officers."
Registration Rights and Sell-Down Agreement
On September 24, 2018 we entered into a Registration Rights and Sell-Down Agreement with Coronado Group LLC, which governs Coronado Group LLC's ability to require us to register shares of our common stock under the Securities Act and to assist Coronado Group LLC in selling some or all of its shares of common stock (including in the form of CDIs).
Coronado Group LLC has the right, by delivering written notice, or Demand Notice, to require us to register the requested number of registerable securities under the Securities Act, or Demand Registration, provided that an individual stockholder may not deliver more than one Demand Notice within 180 calendar days.
We may postpone a Demand Registration (but not more than twice in any 12-month period), for a reasonable period not to exceed 90 days, provided that the Chief Executive Officer and Chief Financial Officer provide a signed certification that they reasonably expect such registration and offering to materially adversely affect or materially interfere with any bona fide material financing, or any material transaction under consideration, or require disclosure of nonpublic information, which could materially adversely affect us.
Except with respect to a Demand Registration, if we propose to file a registration statement under the Securities Act, we will give prompt notice of such filing within 10 days prior to the filing date, or Piggyback Notice, to all of the holders of registerable securities. The Piggyback Notice shall offer such holders the opportunity to include in such registration statement the number of registerable securities as each holder may request.
Coronado Group may sell some or all of their shares of common stock without triggering registration rights under the terms of the Registration Rights and Sell-Down Agreement.
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Relationship Deed
On September 24, 2018, we entered into a Relationship Deed with Coronado Group LLC and EMG Group. Pursuant to the Relationship Deed, we agreed to indemnify Coronado Group LLC for liabilities related to guarantees made by Coronado Group LLC in past transactions by the Company, any liability incurred by any person appointed by Coronado Group LLC as an observer on the board of directors under the Stockholder's Agreement, and liabilities incurred by certain affiliates of the EMG Group under a New South Wales-law governed bank guarantee facility. Under the Relationship Deed, we also agreed to reimburse Coronado Group LLC for reasonable costs of and incidental to the Australian IPO and travel costs for attending meetings of the board of directors for any person appointed by Coronado Group LLC as an observer.
Escrow Agreements
In connection with our Australian IPO, Coronado Group LLC, as our holding company, entered into a voluntary escrow agreement under which it agreed, among other things, to certain restrictions and prohibitions from engaging in transactions involving shares of our common stock for a restricted period. All of the shares of common stock held by Coronado Group LLC, including any shares held as CDIs, and interests in Coronado Group LLC held by the EMG Group, are subject to voluntary escrow arrangements which prevent Coronado Group LLC and the EMG Group from disposing of the escrowed shares and interests in Coronado Group LLC until the first business day after the release of our results for the year ending December 31, 2019, subject to certain exceptions.
Coal Sales Arrangements with Xcoal
We sold coal for an aggregate purchase price of $444.9 million, $371.1 million and $216.0 million to Xcoal for the years ended December 31, 2018, 2017 and 2016, respectively. Ernie Thrasher, one of our directors, is the founder, chief executive officer and chief marketing officer of Xcoal. We have entered into, and intend to enter into, coal sales with Xcoal on an ad hoc basis pursuant to individual purchase orders or under annual agreements. Our management, within delegated limits of authority, must approve any such transaction. The Directors do not participate in the decision to enter into such transactions. If the decision to enter into those transactions should require the approval of our Board of Directors, the directors will follow the procedure for dealing with conflicts (or potential conflicts) of interest contained in our board charter and corporate governance guidelines, and as described under "Policies and Procedures for Review and Approval of Related Party Transactions."
Office Sharing Arrangement with Imagin Minerals, Inc.
We have entered into an office sharing arrangement with Imagin Minerals, Inc., or Imagin, whereby we have the right to utilize Imagin's premises and to jointly utilize office resources including office personnel. Imagin is wholly-owned by Mr. Garold Spindler, our Managing Director and Chief Executive Officer. Half of the expenses incurred by Imagin under this arrangement are expensed to us. Such expenses in the amount of $0.1 million, $0.1 million and $0.0 million, respectively, are recorded as selling, general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016. Accrued expenses due to Imagin of $0.02 million and $0.03 million, respectively, are recorded on the December 31, 2018 and 2017 consolidated balance sheets.
Limitation on Liability and Indemnification of Officers and Directors
Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with specified actions, suits,
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and proceedings, other than a derivative action by or in the right of the corporation, if they acted in good faith and in a manner they 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 their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification extends only to expenses, including attorneys' fees, actually and reasonably incurred in connection with the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement, or otherwise.
Our certificate of incorporation limits the liability of our directors for monetary damages for a breach of fiduciary duty as a director to the fullest extent permitted by the DGCL. Consequently, our directors are not personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: (i) any breach of their duty of loyalty to us or our stockholders; (ii) any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; (iii) unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or (iv) any transaction from which they derived an improper personal benefit. In addition, our bylaws provide that we (i) will indemnify any person made, or threatened to be made, a party to any action, suit, or proceeding by reason of the fact that he or she is or was one of our directors or officers or, while a director or officer, is or was serving at our request as a director, officer, employee, or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, or other enterprise and (ii) must advance expenses paid or incurred by a director, or that such director determines are reasonably likely to be paid or incurred by him or her, in advance of the final disposition of any action, suit, or proceeding upon request by him or her.
Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission, or claim that occurred or arose prior to that amendment or repeal. If the DGCL is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the DGCL.
We have entered into Agreements of Indemnity, Insurance and Access, or the Director Agreements, with our directors, executive officers, and certain other officers and agents pursuant to which they are provided indemnification rights that are broader than the specific indemnification provisions contained in the DGCL. These Director Agreements generally require us, among other things, to indemnify our directors, executive officers, and certain other officers and agents against liabilities that may arise by reason of their status or service. The Director Agreements also require us to advance all expenses incurred by the directors, executive officers, and certain other officers, and agents in investigating or defending any such action, suit, or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve on our behalf.
The limitation of liability and indemnification provisions that are included in our certificate of incorporation, bylaws, and the Director Agreements that we enter into with our directors, executive officers, and certain other officers, and agents may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, executive officers, and certain other officers and agents or is or was serving at our request as a director, officer, employee, or agent of
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another corporation, partnership, joint venture, trust, or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made for breach of fiduciary duty or other wrongful acts as a director or executive officer and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law. We intend to enter into additional and enhanced insurance arrangements to provide coverage to our directors and executive officers against loss arising from claims relating to public securities matters.
Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our Board of Directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Policies and Procedures for Review and Approval of Related Party Transactions
Section 9.1 of our certificate of incorporation incorporates by reference the DGCL in regards to related party transactions, pursuant to which no contract or transaction with any other firm, corporation or entity in which we have an interest, shall be affected or invalidated by the fact that one or more related persons may be a party to or may be interested in the contract or transaction, provided that the contract or transaction is approved by our Board of Directors. Pursuant to our audit committee charter, our audit committee will be responsible for reviewing and approving or disapproving "related party transactions."
Director Independence
Our Board currently consists of six members: William (Bill) Koeck; Garold Spindler; Philip Christensen; Greg Pritchard; Ernie Thrasher and Laura Tyson. Our Board of Directors has determined that each of William (Bill) Koeck, Philip Christensen and Greg Pritchard are "independent." We consider that a director is an "independent" director where that director is free from any business or other relationship that could materially interfere, or be perceived to interfere with, the independent exercise of the director's judgment. While we are not currently seeking a listing on the New York Stock Exchange, or NYSE, or any other U.S. securities exchange, we have assessed the independence of our directors with respect to the definition of independence prescribed by NYSE and the SEC.
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We are involved in various legal proceedings from time to time in the normal course of business including proceedings related to employment matters. At December 31, 2018, our balance sheet include liabilities for these legal proceedings in the aggregate of $0.2 million. These liabilities do not include costs associated with legal representation, which are expensed as they are incurred. In management's opinion, except for what is described below, we are not currently involved in any legal proceedings which, individually or in the aggregate and if determined adversely, could have a material effect on our financial condition, results of operations and/or liquidity.
Coronado Curragh is a co-defendant to proceedings in the Queensland Supreme Court brought by Aurizon Network. Aurizon Network's claim relates to costs relating to the co-defendants' use of the WICET rail linksin particular, whether the "First Milestone Target Date," which triggers certain "WIRP Fee" payments under the WIRP Deed has been achieved. We intend to continue to strongly contest the matter together with the other WICET users who are joint defendants in the proceedings. The proceedings include a claim for damages for breach of contract against Coronado Curragh. While it is not possible to precisely quantify our potential exposure as a result of this litigation, it is currently expected that, were Aurizon successful in proving the relevant elements of its claim, Coronado Curragh would be required to pay approximately $2.25 million per annum for the term of the WIRP Deed (which is 233 months) beginning from the "First Milestone Target Date," or "Commencement Date." Resolution of this dispute would also result in our below-rail access to WICET (of 1.5 MMt per annum) becoming a guaranteed capacity entitlement (and the subject of a 20-year take-or-pay access agreement) instead of an ad hoc entitlement.
In February 2019, the Queensland Competition Authority, or QCA, issued its final decision in respect of Access Undertaking 5, or UT5. The final decision, consistent with the draft decision issued in December 2017, reduces the rate of return that can be charged by Aurizon on its network routes. The Queensland coal producers experienced material rail haulage underperformance because soon after the draft UT5 decision was handed down by the QCA, the rail track network was severely restricted due to Aurizon's modification of its maintenance practices in order to lower costs. It is possible that Aurizon will modify its maintenance practices in the future to lower costs should similar decisions be issued by the QCA, resulting in constrained access to the rail network, making it more difficult for customers (including us) to arrange for the transportation of coal in excess of their contracted capacity entitlement and having the potential to increase demurrage costs.
In a constrained rail capacity and high-demand environment, there is a risk that we and other users of the network will not be allocated additional access to rail above annual contracted entitlements. Should this occur, the potential impact on us is higher in the short term as our contracted access entitlement for 1.5 MMt per annum of below-rail capacity to WICET is currently treated as an ad hoc entitlement. This means that, in the event of a scheduling contest with a contracted user (which could arise because of changes by Aurizon to maintenance practices or because of increased usage of the line by other customers), a path we request may not be able to be scheduled. This capacity is expected to become the subject of a long-term access agreement once the judgment from the litigation concluded in September 2018 is handed down and the dispute between Wiggins Island Rail Project customers and Aurizon regarding the "First Milestone Target Date" under the WIRP Deed is finally resolved, which, based on the current advice, is expected to occur mid-2019.
In June 2018, two holders of preference equity issued by WICET Holdings commenced legal proceedings in the Supreme Court of New South Wales against WICET Pty Ltd and WICET Holdings alleging unpaid dividends in respect of the shares held by them. Although we are not exposed directly to this litigation, an adverse finding may detrimentally impact the financial position of WICET Holdings and WICET Pty Ltd and could result in the senior lenders or a receiver appointed by them taking steps to seek to recover against the shippers (including us) whether through increased terminal handling charges or otherwise.
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ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
Our CDIs, each representing one-tenth of one share of our common stock, have been listed on the ASX under the trading symbol "CRN" since October 23, 2018. Prior to such time, there was no public market for our securities. There is no principal market in the United States for our CDIs or shares of our common stock.
Rule 144
In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale, (2) we have been subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale, and (3) we are current in our Exchange Act reporting at the time of sale. Additionally, a person who has beneficially owned restricted shares for at least one year and who is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days before the sale, would be entitled to sell those securities at any time.
Persons who have beneficially owned shares of our common stock for at least six months, but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, including volume limitations, and such sales by affiliates must also comply with the manner of sale, current public information, and notice provisions of Rule 144.
We believe that 77,308,103.6 shares of our common stock outstanding were eligible for resale under Rule 144 as of March 31, 2019, subject to the volume and manner of sale restrictions thereof.
Escrow
As of March 31, 2019, the following securities were subject to ASX-mandated or voluntary escrow (or both) until the first business day after the release of our results for the year ending December 31, 2019:
Security Description
|
ASX-mandated
Escrow |
Voluntary
Escrow |
|||||
---|---|---|---|---|---|---|---|
Shares of common stock |
| 77,308,103.6 | |||||
CDIs representing shares of common stock |
6 | ||||||
Options to purchase common stock |
| |
Holders
As of March 31, 2019 we had 96,651,692 shares of our common stock issued and outstanding with 3,498 holders of record. The holders included CHESS Depositary Nominees Pty Limited, which held 19,343,588.4 shares of our common stock in the form of CDIs on behalf of the CDI holders; there were 3,497 registered owners of our CDIs on March 31, 2019.
Dividends
We paid an aggregate dividend of $299.7 million on March 29, 2019 in A$ to holders of CDIs on the ASX as of March 5, 2019, based on the exchange rate on March 5, 2019.
The payment of dividends is at the discretion of the Board of Directors. The decision as to whether or not a dividend will be paid will be subject to a number of considerations including the
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general business environment, operating results, cash flows, future capital requirements, regulatory restrictions and any other factors the Board of Directors may consider relevant.
Our objective in setting our dividend policy is to deliver stockholder returns while maintaining flexibility to pursue our strategic initiatives within a prudent capital structure. Our dividend policy is to distribute between 60% and 100% of free cash flow. However, we intend to pay out 100% of free cash flow relating to the period from October 23, 2018 to December 31, 2019. Free cash flow is defined as net cash from operating activities less capital expenditure, acquisition expenditure, amounts reserved for capital expenditure and acquisition expenditure and amounts required for debt servicing. In circumstances where there is surplus free cash flow, at the discretion of our Board of Directors and in light of business and market conditions, we may consider the potential for additional stockholder returns through special dividends and share buy-backs as part of its broader capital management strategy.
Equity Compensation Plan Information
The following table provides certain aggregate information with respect to all of the Company's equity compensation plans in effect as of December 31, 2018.
Plan Category
|
Number of Securities
to Be Issued upon Exercise of Outstanding Rights or Options |
Weighted Average
Exercise Price per CDI |
Options and
Rights Available for Grant |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders(1) |
2,393,055 | $ | 2.84 | (2) | ||||||
Equity compensation plans not approved by security holders |
| | | |||||||
Total |
2,393,055 | $ | 2.84 | (2) |
Summary Description of the Company's Non-Stockholder Approved Equity Compensation Plans
The Company does not have any non-stockholder approved equity compensation plans.
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ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years preceding the filing of this registration statement, we have not issued any securities in a transaction that was not registered under the Securities Act, other than the following.
Stock Plan-Related Issuances
From March 31, 2016 to March 31, 2019, we granted to our directors and employees options to purchase an aggregate of 1,336,454 CDIs under the Employee Plan at an exercise price of $2.84 per CDI, for an aggregate exercise price of approximately $3.8 million. No options have been exercised for cash consideration, cancelled or forfeited without being exercised and options to purchase 1,336,454 CDIs remain outstanding.
In addition, during the period from March 31, 2016 to March 31, 2019, we granted to our directors and employees an aggregate of 1,001,914 PSUs under the Employee Plan at aggregate grant date fair value of approximately $1.8 million. No PSUs have been cancelled, forfeited or vested and 1,001,914 PSUs remain outstanding as of March 31, 2019.
In addition, during the period from March 31, 2016 to March 31, 2019, we granted to one director, an aggregate of 54,687 RSUs under the Non-Executive Director Plan, of which 54,687 remain outstanding (unexercised) as of March 31, 2019. At March 31, 2019, there were 21,874.8 RSUs vested and 32,812.2 RSUs unvested.
The offers, sales and issuances of the securities described above were deemed to be exempt from registration under the Securities Act under Rule 701 promulgated under the Securities Act as offers and sale of securities pursuant to certain compensatory benefit plans and contracts relating to compensation in compliance with Rule 701.
Australian IPO
On October 23, 2018, we issued 16,651,692 shares of our common stock in the form of CDIs in connection with an initial public offering on the Australian Securities Exchange, combined with a sale of 2,691,896.4 shares of our common stock by the EMG Group as CDIs at a price of A$4.00 per CDI. We raised a total of approximately $442.8 million, net of issuance costs of approximately $30.6 million. We used a majority of this amount to repay our existing indebtedness. The sole global coordinator and joint lead manager for the offering was Goldman Sachs Australia Pty Ltd.
The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering or Regulation S as an offering made outside the United States. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
Series A Share
On September 20, 2018, we issued the Series A Share to Coronado Group LLC, at par value. The offers, sales, and issuances of the Series A Share was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipient of the Series A Share acquired the Series A Share for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the Series A Share.
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ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The following description summarizes certain important terms of our common stock and preferred stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description of the matters set forth in this section, you should refer to our certificate of incorporation, bylaws, Stockholder's Agreement and Registration Rights and Sell-Down Agreement, which are included as exhibits to this registration statement, and to the applicable provisions of Delaware law.
Authorized Capital Stock
Our authorized stock consists of 1,100,000,000 shares, par value $0.01 per share, of which:
Outstanding Capital Stock
As of March 31, 2019, there were 96,651,692 shares of our common stock outstanding, held by 3,498 stockholders of record, one Series A Share held by Coronado Group LLC and 193,435,884 CDIs (representing 19,343,588.4 of shares of common stock) held by CHESS Depositary Nominees Pty Limited on behalf of 3,497 holders. Our Board of Directors has authority to issue additional shares of our common stock without stockholder approval.
Common Stock
Voting Rights. The holders of our common stock have a right to one vote per share on any matter to be voted upon by stockholders. Our certificate of incorporation and bylaws do not provide for cumulative voting in connection with the election of directors and, accordingly, holders of more than 50% of the shares voting may elect all of the directors. The holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of stockholders for the transaction of business.
Dividends. The holders of our common stock have a right to dividends if, as, and when declared by our Board of Directors, from funds legally available therefor, subject to certain contractual limitations on our ability to declare and pay dividends. See Item 9. "Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder MattersDividends."
Other Rights. As long as the EMG Group beneficially owns in the aggregate at least 10% of the outstanding shares of our common stock, unless Coronado Group LLC (or its successors or permitted assigns) agrees otherwise, we must first offer any issuance of equity securities to Coronado Group LLC in respect of its pro rata shares and we must source any equity securities to be allocated under a share incentive plan from the market rather than by an issuance.
Upon any voluntary or involuntary liquidation, dissolution, or winding up of our affairs, the holders of our common stock may share ratably in all assets remaining after payment of creditors and subject to prior distribution rights of our preferred stock, if any.
Except as otherwise required, the holders of our common stock may not vote on any amendment or alteration of our certificate of incorporation that alters, amends or changes the powers, preferences, rights or other terms of one or more outstanding series of preferred stock if the holders of such affected series are may vote thereon pursuant to our certificate of incorporation.
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CDIs
In order for shares of our common stock in the form of CDIs to trade electronically on the ASX, we participate in the electronic transfer system known as the Clearing House Electronic Subregister System, or CHESS, operated by ASX Settlement Pty Limited, or ASX Settlement. ASX Settlement provides settlement services for ASX markets to assist participants and issuers to understand the operation of the rules and procedures governing settlement facilities. The ASX Settlement Operating Rules form part of the overall listing and market rules which we are required to comply with as an entity listed on ASX.
CHESS is an electronic system which manages the settlement of transactions executed on ASX and facilitates the paperless transfer of legal title to ASX quoted securities. CHESS cannot be used directly for the transfer of securities of companies domiciled in certain jurisdictions outside of Australia, such as the United States. Accordingly, to enable shares of our common stock to be cleared and settled electronically through CHESS, we have issued and will continue to issue depositary interests called CDIs.
CDIs confer on the CDI holder the beneficial ownership in the shares of common stock, with ten CDIs representing an interest in one share. The legal title to such shares is held by CHESS Depositary Nominees Pty Limited, a subsidiary of ASX Limited, which acts as our Australian depositary and issues the CDIs.
All CDIs bear a FOR-U.S. designation with the ASX that is intended to preclude transfers to residents of the United States. This designation is intended to similarly preclude purchases of CDIs by residents of the United States.
A holder of CDIs who does not wish to have their trades settled in CDIs may request that their CDIs be converted into shares of common stock, in which case legal title to the shares of common stock will be transferred to the holder of CDIs.
The transfer agent and registrar for our CDIs (known in Australia as a 'securities registry') is Computershare Investor Services Pty Limited.
Preferred Stock
Ownership of the Series A Share provides Coronado Group LLC with Board designation rights tied to the level of the aggregate beneficial ownership of shares of our common stock (including shares of common stock underlying CDIs). In October 2018, the EMG Group exercised its right to designate Ms. Laura Tyson to our Board of Directors pursuant to the terms of the Series A Share. The Series A Share has a liquidation preference of $1.00.
Pursuant to the Stockholder's Agreement, for so long as Coronado Group LLC has the right to nominate and elect directors as a holder of the Series A Share and any such director has been elected, the EMG Group has the right to designate one of the directors nominated by Coronado Group LLC to be included in the membership of any board committee, except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules.
As long as the EMG Group beneficially owns in the aggregate at least 5% of the outstanding shares of our common stock, Coronado Group LLC (or its successors or permitted assigns) have the right to have one non-voting observer to receive all materials for and attend all meetings of our Board of Directors and any committees thereof. Further, we have agreed to indemnify such observer to the same extent we do our Board of Directors.
The Series A Share shall be redeemed to the fullest extent permitted by law (at a price of $1.00) by us if, at any time, the EMG Group, no longer beneficially own, in the aggregate, 10% or more of our outstanding shares of common stock.
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The Series A Share does not entitle Coronado Group LLC or its permitted transferees to any dividends as a result of holding such Series A Share, and the Series A Share may not be transferred except to a EMG Group entity. The number of Series A Shares may not be increased or decreased without the approval of:
For as long as the EMG Group beneficially owns in the aggregate at least a majority of the outstanding shares of our common stock, subject to ASX Listing Rules, any action required or permitted to be taken at any annual or special meeting of our 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, is signed by the holders of outstanding shares of our common stock by a minimum number of votes that would be necessary to authorize to take such action at a meeting.
For as long as the EMG Group beneficially owns in the aggregate at least 25% of the outstanding shares of our common stock, we require Coronado Group LLC's consent prior to taking certain corporate actions, including the following:
For as long as the EMG Group beneficially owns in the aggregate at least 5% of the outstanding shares of our common stock, Coronado Group LLC (or its successors or permitted assigns) have certain information rights with respect to our books and records and prior to certain significant corporate actions.
Our Board of Directors has authority, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our stockholders. Our Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock.
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Unless otherwise provided, no holder of our preferred stock may vote on any amendment or alteration of our certificate of incorporation to authorize, create, or increase the authorized amount of, any other series of preferred stock or alter, amend or repeal any provision of any other series of preferred stock that does not adversely affect in any material respect the rights of the series of preferred stock held by such holder.
Subject to the rights of the holders of any series of preferred stock, the affirmative vote of the holders of a majority of the outstanding shares of such class or series, voting together as a single class, may increase or decrease (but not below the number of shares thereof then outstanding) the number of authorized shares of any class or series of preferred stock, irrespective of the provisions of Section 242(b)(2) of the DGCL or any corresponding provision hereafter enacted.
Unless otherwise provided, no holder of any share of preferred stock may bring a derivative action, suit or proceeding on our behalf.
The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could delay, defer or prevent a change in our control and might adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any additional shares of preferred stock.
Stockholder's Agreement
On September 24, 2018, we entered into a Stockholder's Agreement with Coronado Group LLC, which governs the relationship between the EMG Group and us while the EMG Group beneficially owns in the aggregate at least 50% of our outstanding shares of common stock (including shares of common stock underlying CDIs). Pursuant to the Stockholder's Agreement, we will provide the EMG Group with financial and other information, and we will cooperate with and have assistance from the EMG Group in connection with any financing or refinancing we undertake. While the EMG Group beneficially owns in the aggregate at least 10% of our outstanding shares of common stock, any issuances of equity securities must have been offered to Coronado Group LLC in respect of its pro rata shares. Additionally, for as long as the EMG Group beneficially owns in the aggregate at least 25% of the outstanding shares of our common stock, Coronado Group LLC will have consent rights to certain actions, including, but not limited to, amending or restating our bylaws or certificate of incorporation, issuing any equity securities, or terminating the employment of the Chief Executive Officer or hiring a new Chief Executive Officer. Under the Stockholder's Agreement, the EMG Group has certain rights regarding the Board of Directors as described in Item 5. "Directors and Executive Officers."
Registration Rights and Sell-Down Agreement
On September 24, 2018 we entered into a Registration Rights and Sell-Down Agreement with Coronado Group LLC, which governs Coronado Group LLC's ability to require us to register shares of our common stock under the Securities Act and to assist Coronado Group LLC in selling some or all of its shares of common stock (including in the form of CDIs).
Coronado Group LLC has the right, by delivering written notice, or Demand Notice, to require us to register the requested number of registerable securities under the Securities Act, or Demand Registration, provided that an individual stockholder may not deliver more than one Demand Notice within 180 calendar days.
We may postpone a Demand Registration (but not more than twice in any 12-month period), for a reasonable period not to exceed 90 days, provided that the Chief Executive Officer and Chief Financial Officer provide a signed certification that they reasonably expect such registration and offering to materially adversely affect or materially interfere with any bona fide material financing, or any material
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transaction under consideration, or require disclosure of nonpublic information, which could materially adversely affect us.
Except with respect to a Demand Registration, if we propose to file a registration statement under the Securities Act, we will give prompt notice of such filing within 10 days prior to the filing date, or Piggyback Notice, to all of the holders of registerable securities. The Piggyback Notice shall offer such holders the opportunity to include in such registration statement the number of registerable securities as each holder may request.
Coronado Group may sell some or all of their shares of common stock without triggering registration rights under the terms of the Registration Rights and Sell-Down Agreement.
Escrow Agreements
In connection with our Australian IPO, Coronado Group LLC, as our holding company, entered into a voluntary escrow agreement under which it agreed, among other things, to certain restrictions and prohibitions from engaging in transactions involving shares of our common stock for a restricted period. All of the shares of common stock held by Coronado Group LLC, including any shares held as CDIs, and interests in Coronado Group LLC held by the EMG Group, are subject to voluntary escrow arrangements which prevent Coronado Group LLC and the EMG Group from disposing of the escrowed shares and interests in Coronado Group LLC until the first business day after the release of our results for the year ending December 31, 2019, subject to certain exceptions.
Anti-takeover Effects of Certain Provisions of our Certificate of Incorporation and Bylaws
Provisions of our certificate of incorporation, bylaws and Delaware law may make it more difficult to effect a change in control of us. The existence of some provisions in our certificate of incorporation and bylaws and of Delaware law could delay or prevent a change in control, even if that change would be beneficial to our stockholders. Our certificate of incorporation and bylaws contain provisions that may make acquiring control over us difficult, including the following provisions:
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We have elected not to be governed by Section 203 of the DGCL (or any successor provision thereto), or Section 203, until immediately following the time at which the EMG Group no longer beneficially own in the aggregate common stock representing at least 10% of the then outstanding common stock, in which case we shall thereafter be governed by Section 203 if and for so long as Section 203 by its terms would apply to us. Section 203 provides that an interested stockholder (along with its affiliates and associates)i.e. a stockholder that has purchased greater than 15%, but less than 85% of a company's outstanding voting stock (with some exclusions)may not engage in a business combination transaction with the company for a period of three years after buying more than 15% of a company's stock unless certain criteria are met or certain other corporate actions are taken by the company.
These provisions also could discourage proxy contests and make it more difficult for our stockholders to elect directors other than candidates nominated by our Board of Directors and take other corporate actions. As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholder, which may also limit the price that investors are willing to pay in the future for CDIs.
Additionally, we have designated a series of preferred stock as "Series A Share," consisting of one share of Series A preferred stock, which contains various protections. See "Preferred Stock" for details of the special rights and protections of the holder of the Series A Share.
Choice of Forum
Unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be, to the fullest extent permitted by law, the sole and exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of fiduciary duty owed by any of our current or former stockholders, directors, officers or other employees to us or to our stockholders; any action asserting a claim against us arising pursuant to the DGCL; or any action asserting a claim against us that is governed by the internal affairs doctrine. The choice of forum provision does not apply to any actions arising under the Securities Act or the Exchange Act.
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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with specified actions, suits, and proceedings, other than a derivative action by or in the right of the corporation, if they acted in good faith and in a manner they 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 their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification extends only to expenses, including attorneys' fees, actually and reasonably incurred in connection with the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement, or otherwise.
Our certificate of incorporation limits the liability of our directors for monetary damages for a breach of fiduciary duty as a director to the fullest extent permitted by the DGCL. Consequently, our directors are not personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: (i) any breach of their duty of loyalty to us or our stockholders; (ii) any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; (iii) unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or (iv) any transaction from which they derived an improper personal benefit. In addition, our bylaws provide that we (i) will indemnify any person made, or threatened to be made, a party to any action, suit, or proceeding by reason of the fact that he or she is or was one of our directors or officers or, while a director or officer, is or was serving at our request as a director, officer, employee, or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, or other enterprise and (ii) must advance expenses paid or incurred by a director, or that such director determines are reasonably likely to be paid or incurred by him or her, in advance of the final disposition of any action, suit, or proceeding upon request by him or her.
Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission, or claim that occurred or arose prior to that amendment or repeal. If the DGCL is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the DGCL.
We have entered into the Director Agreements with our directors, executive officers and certain other officers and agents pursuant to which they are provided indemnification rights that are broader than the specific indemnification provisions contained in the DGCL. These Director Agreements generally require us, among other things, to indemnify our directors, executive officers, and certain other officers and agents against liabilities that may arise by reason of their status or service. The Director Agreements also require us to advance all expenses incurred by the directors, executive officers, and certain other officers and agents in investigating or defending any such action, suit, or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve on our behalf.
The limitation of liability and indemnification provisions that are included in our certificate of incorporation, bylaws, and the Director Agreements that we enter into with our directors, executive officers, and certain other officers and agents may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful,
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might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, executive officers, and certain other officers and agents or is or was serving at our request as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made for breach of fiduciary duty or other wrongful acts as a director or executive officer and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law. We intend to enter into additional and enhanced insurance arrangements to provide coverage to our directors and executive officers against loss arising from claims relating to public securities matters.
Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our Board of Directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our consolidated financial statements, together with the report of our independent registered public accounting firm, appear on pages F-2 through F-113 of this registration statement.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
Our consolidated financial statements appear at the end of this registration statement. Please see the index to the consolidated financial statements on page F-l, which is incorporated herein by reference.
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150
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Coronado Global Resources Inc.
(Registrant) |
||||||
|
|
By: |
|
/s/ RICHARD ROSE |
||
Name: | Richard Rose | |||||
Title: | Vice President, Chief Legal Officer and Secretary |
Date: April 29, 2019
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
CORONADO GLOBAL RESOURCES INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Coronado Global Resources, Inc:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Coronado Global Resources, Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income, stockholders' equity/members' capital, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP
We have served as the Company's auditor since 2013.
Richmond, Virginia
February 18, 2019
F-2
Consolidated Balance Sheet
December 31, 2018 and 2017
(Dollars quoted in US$ thousands, except the share data)
Assets
|
Note | 2018 | 2017 | ||||||
---|---|---|---|---|---|---|---|---|---|
Current assets: |
|||||||||
Cash and restricted cash |
$ | 124,881 | $ | 28,069 | |||||
Trade receivables |
206,127 | 93,784 | |||||||
Related party receivables |
36,716 | 578 | |||||||
Other receivables |
18,170 | 1,056 | |||||||
Income tax receivable |
21 | 12,017 | | ||||||
Coal Inventories |
7 | 46,480 | 7,106 | ||||||
Supplies inventory |
7 | 48,623 | 10,974 | ||||||
Prepaid expenses and other current assets |
22,744 | 6,054 | |||||||
| | | | | | | | | |
Total current assets |
515,758 | 147,621 | |||||||
| | | | | | | | | |
Property, plant, and equipment, net |
8 | 1,618,558 | 761,040 | ||||||
Goodwill |
9 | 28,008 | 28,008 | ||||||
Intangible assets, net |
9 | 5,402 | 5,733 | ||||||
Deposits and reclamation bonds |
11,635 | 3,289 | |||||||
Deferred income tax assets |
21 | 11,848 | | ||||||
Other assets |
10 | 18,355 | 6,101 | ||||||
Total assets |
$ | 2,209,564 | $ | 951,792 | |||||
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Liabilities and Stockholders' Equity/Members' Capital |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ | 42,962 | $ | 20,969 | |||||
Accrued expenses and other current liabilities |
12 | 243,496 | 41,014 | ||||||
Income tax payable |
21 | 9,241 | | ||||||
Current asset retirement obligations |
13 | 7,719 | 3,463 | ||||||
Contingent royalty considerationcurrent |
22 | 26,832 | | ||||||
Current installments of contract obligations |
16 | 39,116 | 5,982 | ||||||
Current installments of other financial liabilities and capital lease obligations |
9,035 | 7,107 | |||||||
Current installments of interest bearing liabilities |
14 | | 1,750 | ||||||
| | | | | | | | | |
Total current liabilities |
378,401 | 80,285 | |||||||
| | | | | | | | | |
Asset retirement obligations, excluding current portion |
13 | 118,072 | 52,966 | ||||||
Contract obligations, excluding current portion |
16 | 253,578 | 37,792 | ||||||
Deferred consideration liability |
17 | 155,332 | | ||||||
Interest bearing liabilities, excluding current installments |
14 | | 128,516 | ||||||
Other financial liabilities, excluding current installments |
15 | 4,073 | 7,150 | ||||||
Capital leases, excluding current installments |
23 | 2,481 | 3,764 | ||||||
Contingent royalty considerationnon-current |
22 | 3,371 | 8,019 | ||||||
Deferred income tax liability |
21 | 38,838 | | ||||||
Other liabilities |
1,610 | | |||||||
| | | | | | | | | |
Total liabilities |
955,756 | 318,492 | |||||||
| | | | | | | | | |
Total Coronado Group LLC members' capital |
| 553,524 | |||||||
Common stock $0.01 par value; 1,000,000,000 shares authorized, 96,651,692 shares are issued and outstanding as of December 31, 2018 and 2017 respectively. |
967 | ||||||||
Series A Preferred stock $0.01 par value; 100,000,000 shares authorized, |
| | |||||||
1 Share issued and outstanding as of December 31, 2018 |
| | |||||||
Additional paid-in capital |
1,107,948 | | |||||||
Accumulated other comprehensive income (loss) |
(49,609 | ) | | ||||||
Retained earnings |
194,220 | 79,539 | |||||||
Noncontrolling interest |
11 | 282 | 237 | ||||||
Total stockholders' equity/members' capital |
1,253,808 | 633,300 | |||||||
| | | | | | | | | |
Total liabilities and stockholders' equity/members' capital |
$ | 2,209,564 | $ | 951,792 | |||||
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See accompanying notes to consolidated financial statements
F-3
Consolidated Statements of Operations and Comprehensive Income
December 31, 2018, 2017 and 2016
(Dollars in US$ thousands, except the share data)
|
Note | 2018 | 2017 | 2016 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues: |
||||||||||||
Coal revenues |
$ | 1,500,730 | $ | 384,722 | $ | 216,727 | ||||||
Coal revenues from related parties |
25 | 444,870 | 371,663 | 217,239 | ||||||||
Other revenues |
34,904 | 11,859 | 3,285 | |||||||||
| | | | | | | | | | | | |
Total revenues |
1,980,504 | 768,244 | 437,251 | |||||||||
| | | | | | | | | | | | |
Costs and expenses: |
||||||||||||
Cost of coal revenues (exclusive of items shown separately below) |
991,994 | 463,638 | 290,725 | |||||||||
Depreciation, depletion and amortization |
162,117 | 75,503 | 59,737 | |||||||||
Freight expenses |
117,699 | 15,880 | 5,447 | |||||||||
Stanwell rebate |
5 | 127,692 | | | ||||||||
Other royalties |
181,715 | 39,665 | 32,344 | |||||||||
Selling, general, and administrative expenses |
66,207 | 21,793 | 12,944 | |||||||||
| | | | | | | | | | | | |
Total costs and expenses |
1,647,424 | 616,479 | 401,197 | |||||||||
| | | | | | | | | | | | |
Operating income |
333,080 | 151,765 | 36,054 | |||||||||
| | | | | | | | | | | | |
Other income (expenses): |
||||||||||||
Interest income |
2,029 | 168 | 94 | |||||||||
Interest expense |
(60,007 | ) | (10,123 | ) | (192 | ) | ||||||
Loss on debt extinguishment |
(58,085 | ) | | | ||||||||
Other, net |
5 | (27,216 | ) | 473 | 376 | |||||||
| | | | | | | | | | | | |
Total other income (expense), net |
(143,279 | ) | (9,482 | ) | 278 | |||||||
| | | | | | | | | | | | |
Income before tax |
189,801 | 142,283 | 36,332 | |||||||||
Income tax expense |
21 | (75,212 | ) | | | |||||||
| | | | | | | | | | | | |
Net income |
114,589 | 142,283 | 36,332 | |||||||||
Less: Net loss attributable to noncontrolling interest |
(92 | ) | (70 | ) | (133 | ) | ||||||
| | | | | | | | | | | | |
Net income attributable to Coronado Global Resources Inc. |
$ | 114,681 | $ | 142,353 | $ | 36,465 | ||||||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Other comprehensive income, net of income taxes: |
||||||||||||
Foreign currency translation adjustment |
(45,827 | ) | | | ||||||||
Decrease in fair value of cash flow hedges |
(3,782 | ) | | | ||||||||
| | | | | | | | | | | | |
Total comprehensive income |
64,980 | 142,283 | 36,332 | |||||||||
Less: Net loss attributable to noncontrolling interest |
(92 | ) | (70 | ) | (133 | ) | ||||||
| | | | | | | | | | | | |
Total comprehensive income attributable to Coronado Global Resources Inc. |
$ | 65,072 | $ | 142,353 | $ | 36,465 | ||||||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Earnings per share of common stock(1) |
||||||||||||
Basic |
$ | 0.21 | ||||||||||
Diluted |
$ | 0.21 | ||||||||||
Pro forma earnings per share of common stock(2) |
||||||||||||
Basic |
$ | 0.97 | ||||||||||
Diluted |
$ | 0.97 |
See accompanying notes to consolidated financial statements
F-4
Consolidated Statements of Stockholders' Equity/Members' Capital
(Dollars in US$ thousands, except the share data)
|
|
|
|
Common Stock | Preferred Stock |
|
|
Accumulated
Other Comprehensive Income / (Loss) |
|
Total
Stockholders' / Members' Capital |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Members'
Capital |
Retained
Earnings |
Non-
controlling Interest |
Additional
Paid in Capital |
Retained
Earnings |
Non-
controlling Interest |
|||||||||||||||||||||||||||||||
|
Shares | Amount | Series A | Amount | |||||||||||||||||||||||||||||||||
Balance December 31, 2015 |
$ | 436,650 | $ | (99,279 | ) | $ | 353 | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | 337,724 | ||||||||||||||
Members' contributions |
500,000 | | 70 | | | | | | | | | 500,070 | |||||||||||||||||||||||||
Net income (loss) |
| 36,465 | (133 | ) | | | | | | | | | 36,332 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance December 31, 2016 |
$ | 936,650 | $ | (62,814 | ) | $ | 290 | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | 874,126 | ||||||||||||||
Members' contributions |
(383,126 | ) | | 17 | | | | | | | | | (383,109 | ) | |||||||||||||||||||||||
Net income (loss) |
| 142,353 | (70 | ) | | | | | | | | | 142,283 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance December 31, 2017 |
$ | 553,524 | $ | 79,539 | $ | 237 | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | 633,300 | |||||||||||||||
Members' distributions before Reorganization Transactions |
(69,074 | ) | | | | | | | | | | | (69,074 | ) | |||||||||||||||||||||||
Members' contributions before Reorganization Transactions |
181,610 | | 137 | | | | | | | | | 181,747 | |||||||||||||||||||||||||
Reorganization Transactions |
(666,060 | ) | (79,539 | ) | (374 | ) | 80,000,000 | 800 | 1 | | 665,260 | 79,539 | | 374 | | ||||||||||||||||||||||
Proceeds from initial public offering, net |
| | | 16,651,692 | 167 | | | 442,147 | | | | 442,314 | |||||||||||||||||||||||||
Share-based compensation for equity classified awards |
| | | | | | | 541 | | | | 541 | |||||||||||||||||||||||||
Net unrealized losses on cash flow hedges (net of $1,529 deferred income tax asset) |
| | | | | | | | | (3,782 | ) | (3,782 | ) | ||||||||||||||||||||||||
Net income (loss) |
| | | | | | | | 114,681 | | (92 | ) | 114,589 | ||||||||||||||||||||||||
Foreign currency translation adjustment (net of deferred income tax asset) |
| | | | | | | | | (45,827 | ) | | (45,827 | ) | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance December 31, 2018 |
$ | | $ | | $ | | 96,651,692 | $ | 967 | 1 | $ | | $ | 1,107,948 | $ | 194,220 | $ | (49,609 | ) | $ | 282 | $ | 1,253,808 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to consolidated financial statements
F-5
Consolidated Statements of Cash Flows
Years ended December 31, 2018, 2017 and 2016
(Dollars US$ in thousands)
|
2018 | 2017 | 2016 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Cash flows from operating activities: |
||||||||||
Net income |
$ | 114,589 | $ | 142,283 | $ | 36,332 | ||||
Adjustments to reconcile net income to cash and restricted cash provided by operating activities: |
||||||||||
Depreciation, depletion and amortization |
162,351 | 75,503 | 60,017 | |||||||
Amortization of deferred financing costs |
5,181 | 688 | | |||||||
Non-cash interest expense |
9,919 | 436 | | |||||||
Amortization of contract obligations |
(31,870 | ) | (4,032 | ) | (3,589 | ) | ||||
Gain on disposal of property, plant and equipment |
122 | (722 | ) | (264 | ) | |||||
Increase (decrease) in contingent royalty consideration |
8,825 | (1,588 | ) | 8,707 | ||||||
Loss on interest rate swap |
3,239 | | | |||||||
Equity-based compensation expense |
541 | | | |||||||
Change in deferred income taxes |
55,123 | | | |||||||
Reclamation of asset retirement obligations |
(4,743 | ) | (1,180 | ) | (2,344 | ) | ||||
Change in estimate of asset retirement obligation |
(234 | ) | | (280 | ) | |||||
Changes in operating assets and liabilities: |
||||||||||
Accounts receivableincluding related party receivables |
(63,126 | ) | 37,926 | (106,631 | ) | |||||
Coal inventories |
24,695 | 452 | 9,181 | |||||||
Supply inventories |
(1,276 | ) | (510 | ) | 1,913 | |||||
Prepaid expenses and other assets |
(15,057 | ) | 1,432 | (5,976 | ) | |||||
Other assets |
| (757 | ) | 77 | ||||||
Accounts payable |
12,684 | (2,625 | ) | 17,073 | ||||||
Accrued expenses and other current liabilities |
81,593 | 8,272 | 5,960 | |||||||
Change in other liabilities |
2,197 | | | |||||||
| | | | | | | | | | |
Net cash provided by operating activities |
364,753 | 255,578 | 20,176 | |||||||
| | | | | | | | | | |
Cash flows from investing activities: |
||||||||||
Capital expenditures |
(114,302 | ) | (63,923 | ) | (37,599 | ) | ||||
Proceeds from the disposal of property, plant, and equipment |
66 | 922 | 323 | |||||||
Purchase of deposits and reclamation bonds |
(9,789 | ) | (2,376 | ) | (1,271 | ) | ||||
Redemption of deposits and reclamation bonds |
1,443 | 6,054 | 11 | |||||||
Acquisition of Buchanan, net of cash acquired |
| | (425,814 | ) | ||||||
Acquisition of Curragh, net of cash acquired |
(537,207 | ) | | | ||||||
Payment of contingent purchase consideration |
(6,628 | ) | | | ||||||
| | | | | | | | | | |
Net cash used in investing activities |
(666,417 | ) | (59,323 | ) | (464,350 | ) | ||||
| | | | | | | | | | |
Cash flows from financing activities: |
||||||||||
Proceeds from borrowings, net of debt discount |
720,083 | 175,645 | 3,315 | |||||||
Proceeds from interest rate swap |
28,251 | | | |||||||
Payments on interest rate swap |
(31,490 | ) | | | ||||||
Debt issuance costs and other financing costs |
(42,075 | ) | (5,752 | ) | | |||||
Principal payments on interest bearing liabilities and other financial liabilities |
(815,758 | ) | (43,499 | ) | (4,649 | ) | ||||
Principal payments on capital lease obligations |
(1,801 | ) | (1,402 | ) | (189 | ) | ||||
Payment of contingent purchase consideration |
(4,922 | ) | | | ||||||
Members' contributions (distributions), net |
112,536 | (383,126 | ) | 500,000 | ||||||
NCI member's contributions |
137 | 17 | 70 | |||||||
Proceeds from initial public offering, net |
442,314 | | | |||||||
| | | | | | | | | | |
Net cash provided by (used in) financing activities |
407,275 | (258,117 | ) | 498,547 | ||||||
| | | | | | | | | | |
Net increase in cash and restricted cash |
105,611 | (61,862 | ) | 54,373 | ||||||
Effect of exchange rate changes on cash and restricted cash |
(8,799 | ) | | | ||||||
Cash and restricted cash at beginning of period |
28,069 | 89,931 | 35,558 | |||||||
| | | | | | | | | | |
Cash and restricted cash at end of period |
$ | 124,881 | $ | 28,069 | $ | 89,931 | ||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Supplemental disclosure of cash flow information: |
||||||||||
Cash payments for interest |
$ | 39,821 | $ | 8,690 | $ | 198 | ||||
Cash paid for taxes |
$ | 23,612 | $ | | $ | |
The Company decreased asset retirement obligations and assets in the amount of $30,928 and non-cash increases to assets in the amount of $153,793 related to the Stanwell Reserved Area asset in 2018 and increased asset retirement obligations and assets in the amount of $4,804 during 2017 for changes in cash flow projections. During 2016, the Company decreased asset retirement obligations and assets in the amount of $6,910, for changes in cash flow projections.
See accompanying notes to consolidated financial statements
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business, Basis of Presentation
(a) Organization and nature of operations
Coronado Global Resources Inc. (together with its subsidiaries, the "Company" or "Coronado") is a global producer, marketer, and exporter of a full range of metallurgical coals, an essential element in the production of steel. The Company has a portfolio of operating mines and development projects in Queensland, Australia and in the states of Pennsylvania, Virginia and West Virginia in the USA.
Coronado was incorporated on August 13, 2018 pursuant to the laws of the State of Delaware by conversion of Coronado Group HoldCo LLC, from a limited liability company to a corporation. Coronado Group HoldCo LLC was a wholly-owned subsidiary of Coronado Group LLC, a Delaware limited liability company.
Coronado Group LLC was formed on April 1, 2015 to consolidate Coronado Coal LLC and Coronado II LLC under common ownership. The consolidation was completed on July 31, 2015 through the contribution of the membership interests of Coronado Coal LLC and Coronado II LLC, in exchange for membership interest in Coronado Group LLC. On June 30, 2016, Coronado IV LLC contributed its membership interest in exchange for membership interest in Coronado Group LLC. Coronado Coal LLC, Coronado II LLC and Coronado IV LLC are referred to herein as the "US LLC's".
(b) Curragh Acquisition
On December 20, 2017 Coronado Australia Holdings Pty Ltd ("CAH") was formed as a wholly-owned subsidiary of Coronado Group HoldCo LLC for acquiring and/or investing in coal mining related interests in Australia.
On March 29, 2018, CAH purchased all the outstanding shares in Wesfarmers Curragh Pty Ltd (since renamed Coronado Curragh Pty Ltd) including two wholly-owned subsidiaries, consisting of Curragh Queensland Mining Pty Ltd and Curragh Coal Sales Co Pty Ltd (collectively, "Curragh"). Curragh's primary assets are mining facilities in Queensland, Australia.
Refer to Note (3) for further information related to the acquisition.
(c) Buchanan Acquisition
On February 26, 2016, a Membership Interest and Asset Purchase Agreement was entered among CONSOL Energy, Inc., a Delaware corporation (the "Seller"), CONSOL Amonate Mining Company LLC, a Delaware limited liability company, CONSOL Amonate Facility LLC, a Delaware liability company, the Reserve Property Sellers, CONSOL Mining Holding Company LLC, a Delaware limited liability company, CONSOL Buchanan Mining Company LLC, a Delaware limited liability company (collectively, "Buchanan") and Coronado IV LLC, a Delaware limited liability company (the "Buyer") which is wholly-owned by Coronado. The Agreement was consummated on March 31, 2016 at which time the sale was concluded.
Refer to Note (3) for further information related to the acquisition.
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Description of Business, Basis of Presentation (Continued)
(d) Reorganization Transaction
During the period, Coronado Group LLC and the Company completed a reorganization of their legal entity structure (the "Reorganization Transaction"). In connection with the Reorganization Transaction:
Immediately following the Reorganization Transaction, the Company held all the interests of Coronado Australia Holdings Pty Ltd and Coronado Coal Corporation and remained a subsidiary of Coronado Group LLC, owned by funds managed by The Energy & Minerals Group ("EMG") and certain members of the Company's management.
(e) Initial Public Offering
On October 23, 2018, the Company completed an initial public offering ("IPO") on the Australian Securities and Exchange ("ASX").
Upon completion of the IPO, the Company issued 16,651,692 new shares of common stock and Coronado Group LLC sold the equivalent of 2,691,896.4 shares of common stock. The common stock is publicly traded on the ASX under the ticker "CRN," in the form of CHESS Depositary Interests ("CDIs"). CDIs are units of beneficial ownership in shares of common stock held by CHESS Depositary Nominees Pty Limited ("CDN"), a wholly-owned subsidiary of ASX Limited, the company that operates the ASX.
Each share of common stock is equivalent to 10 CDIs.
Following the IPO, Coronado Group LLC beneficially owns 773,081,036 CDIs (77,308,103.6 shares) representing 80% of the total CDIs outstanding. The remaining 193,435,884 CDIs (19,343,588.4 shares), are owned by new investors in the form of CDIs.
Coronado Group LLC holds 1 share of Series A Preferred Stock of the Company which is the only Series A Preferred Stock issued and outstanding. The holders of Series A Preferred Stock are permitted to nominate and elect 10% of the Company's Board of Directors.
In connection with the IPO, Coronado Group LLC entered into a voluntary escrow agreement under which they agreed, among other things, to certain restrictions and prohibitions from dealing in its owned securities for a restricted period beginning on October 23, 2018 and ending on the first business day after the release of the 2019 results.
Refer to Note 6 Capital Structure for further details.
A portion of the proceeds from the IPO were used to repay all outstanding borrowings under the Term Loan B and Term Loan C (Refer to Note 14), and to pay fees and expenses related to the IPO.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Description of Business, Basis of Presentation (Continued)
(f) Basis of presentation
The consolidated financial statements have been prepared in accordance with requirements of the US Generally Accepted Accounting Principles ("US GAAP") and are presented in US dollars, unless otherwise stated.
The Reorganization Transaction was treated as a combination of entities under common control in line with Accounting Standards Codification ("ASC") 805, Business Combinations whereby the receiving entity, the Company recorded the contributed assets and liabilities at the carrying value of Coronado Group LLC.
Prior to the Reorganization Transaction, the consolidated financial statements of the Company reflect the net assets and operations of Coronado Group LLC. The financial statements presented following the Reorganization Transaction are those of the receiving entity (the Company) and are retrospectively adjusted to present that entity as if it always held the net assets or equity interests previously held by the seller, Coronado Group LLC. As such, financial information (including comparatives) of the Company has been presented as a continuation of the pre-existing accounting values of assets and liabilities in Coronado Group LLC's financial statements.
The consolidated financial statements include the accounts of the Company and its affiliates. The Company, or Coronado, are used interchangeably to refer to Coronado Global Resources Inc., Coronado Global Resources and its subsidiaries, or to Coronado Group LLC, as appropriate to the context. Interests in subsidiaries controlled by the Company are consolidated with any outside stockholder interests reflected as noncontrolling interests. All intercompany balances and transactions have been eliminated in consolidation.
The Company has reclassified certain amounts relating to its prior period results to conform to its current period presentation. These reclassifications have not changed the results of operations of prior periods.
(g) Certain Significant Risks and Uncertainties
External factors, including general economic conditions, international events and circumstances, competitor actions, governmental actions and regulations are beyond the Company's control and can cause continued fluctuations in demand for coal and volatility in the price of commodities. This is turn may hinder the Company's future operating results, purchase or investment opportunities in the coal mining industry.
Concentration of customers
For the year ended December 31, 2018 $980.8 million, or 51% of total revenues were attributable to five (5) customers. In comparison, for the year ended December 31, 2017, $576.8 million, or 76% of total revenues were attributable to five (5) customers and for the year ended December 31, 2016, $369.9 million, or 85% of total revenues were attributable to five (5) customers. As of December 31, 2018, the Company had four (4) customers that accounted for $128.3 million, or 53%, of accounts receivable. As of December 31, 2017, the Company had four (4) customers in each year that accounted for $69.6 million, or 74%, of accounts receivable.
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Description of Business, Basis of Presentation (Continued)
Concentration of labor
Out of the Company's total employees, 12% are subject to the Curragh Mine Operations Enterprise Bargaining Agreement 2015. This agreement covers work carried out by permanent, full-time, temporary, and casual coal mining employees engaged by Curragh to fulfil production, maintenance and processing activities. The agreement passed its expiry date in July 2018, however, will remain in place unless it is replaced or terminated by the Fair Work Commission (which will only occur once the Fair Work Commission has consulted with the affected employees and their unions). The Company has been negotiating in good faith with the workforce representatives and will continue to do so with the intent of entering into a new agreement which will support safe and productive outcomes for the business and our employees. Other than the Curragh Mine Operations Enterprise Bargaining Agreement 2015, there are no other collective bargaining agreements or union contracts covering employees of the Company.
2. Summary of Significant Accounting Policies
(a) Newly adopted accounting standards
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (ASC Topic 606), which replaces existing requirements in US GAAP and provides companies with a single revenue recognition model for recognizing revenue from contracts with customers.
Effective January 1, 2018, the Company elected to adopt the requirements of ASC 606 using the modified retrospective method. The Company notes that after the assessment of applicable revenue streams, there is no quantitative impact to the adoption of ASC 606. The comparative information has not been adjusted and continues to be reported under ASC 605.
The standard has been applied to contracts that have not been completed at January 1, 2018, the date of initial application. Furthermore, the Company has not retrospectively restated the contracts that were modified before the beginning of the earliest reporting period presented in accordance with the standard. The aggregate effect of all modifications when identifying the satisfied and unsatisfied performance obligations were reflected in determining and allocating the transaction price.
In August 2017, the FASB issued ASU 2017-12 Derivatives and Hedging- Targeted Improvements to Accounting for Hedging Activities" The amendments expand an entity's ability to apply hedge accounting for nonfinancial and financial risk components and allow for a simplified approach for fair value hedging of interest rate risk. ASU 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Additionally, the standard simplifies the hedge documentation and effectiveness assessment requirements under the previous guidance. The Company adopted ASU 2017-12 during the year ended December 31, 2018. The adoption of this ASU did not have a significant impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, CompensationStock Compensation: Improvements to Employee Share-Based Payment Accounting. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification in the statement of cash flows and recognition of forfeitures. The Company adopted ASU 2016-09 during the year ended December 31, 2018 which did not have a significant
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
impact on the consolidated financial statements as the Company's share-based compensation plans were new in the current period.
In April 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The standard changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. At the EITF's June 18, 2015, meeting, the SEC staff clarified that the ASU does not address debt issuance costs associated with such arrangements and announced that it would "not object to an entity deferring and presenting [such] costs as an asset and subsequently amortizing the costs ratably over the term of the revolving debt arrangement."
The Company adopted ASU 2015-15 during the year ended December 31, 2018. The Company has elected an accounting policy to present debt issuance costs incurred before the debt liability is recognized (e.g. before the debt proceeds are received) as an asset which will be amortized ratably over the term of the line-of-credit. The costs will not be subsequently reclassified as a direct deduction of the liability. This policy did not have an impact on the presentation of the December 31, 2017 balance sheet. At December 31, 2017, issuance costs incurred to establish the Company's revolver facility have been classified as an asset. Refer to Note (10) "Other Assets."
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issue Task Force), or ASU 2016-18. This new standard addresses the diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company has adopted this guidance during the year ended December 31, 2018 and has presented restricted cash and restricted cash equivalents as a component of cash and cash equivalents in the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
(b) Recently issued accounting standards
In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.
The new standard is effective for the Company on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application, which will be the effective date of January 1, 2019. Consequently, comparative financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
The most significant impact relates to the recognition of new right of use (ROU) assets and lease liabilities on our balance sheet for our buildings, office equipment, mining equipment and transportation vehicles operating leases. The Company has adopted the practical expedient allowed under ASC 842 which contains transition guidance.
The Company estimates that adoption of the standard will result in the recognition of additional ROU assets of approximately $36.5 million and corresponding lease liabilities on January 1, 2019 of approximately $50.8 million. On adoption, the lease liability is expected to include the reclassification of a terminal services contract liability of $14.3 million, which is classified as a lease under the new standard. The adoption of ASU 2016-02 is not expected to have a material impact on the Company's results of operations or its cash flows.
(c) Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include asset retirement obligations; useful lives for depreciation, depletion and amortization; purchase price allocation associated with business combinations; and other contingencies.
(d) Foreign Currency
Financial statements of foreign operations
The reporting currency of the Company is the US Dollar ("US$").
Functional currency is determined by the primary economic environment in which an entity operates. The functional currency of the US operating subsidiaries is the US$. The functional currency of the Company's foreign operating subsidiary, Curragh and its immediate parent CAH, is the Australian dollar ("A$") since Curragh's predominant sources of financing and operating expenses are denominated in that currency.
Assets and liabilities are translated at the year-end exchange rate and items in the statement of operations are translated at average rates with gains and losses from translation recorded in other comprehensive income (loss).
Foreign Currency Transactions
Monetary assets and liabilities are remeasured at year-end exchange rates while non-monetary items are remeasured at historical rates. Income and expense accounts are remeasured at the average rates in effect during the year, except for those expenses related to balance sheet amounts that are remeasured at historical exchange rates.
Gains and losses from foreign currency remeasurement related to Curragh's US dollar coal sales are included in coal revenues. All other gains and losses from foreign currency remeasurement and realized gains and losses on settlement of foreign currency swaps are included in Other, net. The Company believes that this classification best reflects the operational activities of Curragh, whose functional currency is the Australian dollar. The total aggregate impact of foreign currency transaction
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
gains or losses on the consolidated statements of operations was a net loss of $17.8 million, $0 and $0 for the year-ended December 31, 2018, 2017 and 2016, respectively. The total impact of foreign currency transactions related to US dollar coal sales in Australia (included in the total above) was a net gain of $6.9 million, $0 and $0 for the year ended December 31, 2018, 2017 and 2016, respectively.
(e) Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash at bank and short-term highly liquid investments with an original maturity date of three months or less. At December 31, 2018 and 2017, the Company had no cash equivalents.
"Cash and Restricted Cash", as disclosed in the accompanying consolidated balance sheet includes $0.2 million of restricted cash at December 31, 2018 and nil at 2017.
(f) Trade Accounts Receivable
The Company extends trade credit to its customers in the ordinary course of business. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The estimate of the allowance for doubtful accounts, which is charged off to bad debt expense, is based on management's assessment of current economic conditions and historical collection experience with each customer. Receivables are past due when they are outstanding beyond their contractual terms and are charged off to the allowance for doubtful accounts when determined uncollectible. There was no allowance for doubtful accounts on accounts receivables at December 31, 2018 and 2017.
(g) Inventories
Coal is recorded as inventory at the point in time the coal is extracted from the mine. Raw coal represents coal stockpiles that may be sold in current condition or may be further processed prior to shipment to a customer. Saleable coal represents coal stockpiles which require no further processing prior to shipment to a customer.
Coal inventories are stated at the lower of average cost and net realizable value. The cost of coal inventories is determined based on an average cost of production, which includes all costs incurred to extract, transport and process the coal. Net realizable value considers the estimated sales price of the particular coal product, less applicable selling costs, and, in the case of raw coal, estimated remaining processing costs.
Supplies inventory is comprised of replacement parts for operational equipment and other miscellaneous materials and supplies required for mining which are stated at cost on the date of purchase. Supplies inventory is valued at the lower of average cost or net realizable value, less a reserve for obsolete or surplus items. This reserve incorporates several factors, such as anticipated usage, inventory turnover and inventory levels. It is not customary to sell these inventories; the Company plans to use them in mining operations as needed.
(h) Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. No impairment losses were recognized for property, plant and equipment or amortizing intangible assets during the years ended December 31, 2018 and 2017.
Property, Plant, and Equipment
Costs for mine development incurred to expand capacity of operating mines or to develop new mines are capitalized and charged to operations on the units of production method over the estimated proven and probable reserve tonnes directly benefiting from the capital expenditures. Mine development costs include costs incurred for site preparation and development of the mines during the development stage less any incidental revenue generated during the development stage.
Property, plant, and equipment are recorded at cost and include expenditures for improvements when they substantially increase the productive lives of existing assets. Depreciation is calculated using the straight-line method over the estimated useful lives of the depreciable assets of 3 to 10 years for machinery, mining equipment and transportation vehicles, 5 to 10 years for office equipment, and 10 to 20 years for plant, buildings and improvements.
Maintenance and repair costs are expensed to operations as incurred. When equipment is retired or disposed, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss on disposal is recognized in operations.
Goodwill
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. In connection with the Buchanan acquisition on March 31, 2016, the Company recorded goodwill in the amount of $28.0 million. Goodwill is not amortized but is reviewed for impairment annually on December 31 or when circumstances or other events indicate that impairment may have occurred. The Company follows the guidance in Accounting Standards Update 2011-08 "Testing Goodwill for Impairment" (ASU 2011-08) which permits entities to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying amount. Circumstances that are considered as part of the qualitative assessment and could trigger a quantitative impairment test include but are not limited to: a significant adverse change in the business climate; a significant adverse legal judgment; adverse cash flow trends; an adverse action or assessment by a government agency; unanticipated competition; and a significant restructuring charge within a reporting unit. The Company defines reporting units at the business segment level. For purposes of testing goodwill for impairment, goodwill has been allocated to the reporting units to the extent it relates to each reporting unit.
Asset Retirement Obligations
The Company's asset retirement obligation (ARO) liabilities primarily consist of spending estimates for surface land reclamation and support facilities at both surface and underground mines in accordance with applicable reclamation laws and regulations in the US and Australia as defined by each mining permit.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
The Company estimates its ARO liabilities for final reclamation and mine closure based upon detailed engineering calculations of the amount and timing of the future cash spending for a third party to perform the required work. Spending estimates are escalated for inflation and then discounted at the credit-adjusted, risk-free rate. The Company records an ARO asset associated with the discounted liability for final reclamation and mine closure. The obligation and corresponding asset are recognized in the period in which the liability is incurred. The ARO asset is amortized on the units-of-production method over its expected life of the related asset and the ARO liability is accreted to the projected spending date. As changes in estimates occur (such as mine plan revisions, changes in estimated costs or changes in timing of the performance of reclamation activities), the revisions to the obligation and asset are recognized at the appropriate credit-adjusted, risk-free rate. The Company also recognizes an obligation for contemporaneous reclamation liabilities incurred as a result of surface mining. Contemporaneous reclamation consists primarily of grading, topsoil replacement and re-vegetation of backfilled pit areas. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded. The Company annually reviews its estimated future cash flows for its asset retirement obligations.
(i) Borrowing costs
Borrowing costs are recognized as an expense when they are incurred, except for interest charges attributable to major projects with substantial development and construction phases which are capitalized as part of the cost of the asset. There was no interest capitalized during the period ended December 31, 2018.
(j) Leases
Operating lease payments are recognized as an expense in the statement of operations on a straight-line basis for the period in which the costs relate. Operating lease incentives are recognized as a liability when received and released to earnings on a straight-line basis over the lease term.
Fixed rate increases to lease payments, excluding contingent or index based rental increases, such as Consumer Price Index and other similar increases, are recognized on a straight-line basis over the term of the lease. Where it is applicable, an asset or liability is recognized for the difference between the amount paid and the lease expense released to earnings on a straight-line basis.
Leases of property, plant and equipment that transfer to the Company substantially all of the risks and rewards of ownership are classified as capital leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.
Minimum lease payments made under capital leases are apportioned between the interest expense and the reduction of the outstanding liability. The interest expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
(k) Royalties
Lease rights to coal lands are often acquired in exchange for royalty payments. Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production. The Company had advance mining royalties of $3.1 million and $2.1 million respectively, included in prepaid expenses and other current assets as of December 31, 2018 and 2017.
The Stanwell rebate relates to a contractual arrangement entered into by Curragh with Stanwell Corporation Limited, a State of Queensland owned electricity generator, which requires payment of a rebate for export coal sold from some of Curragh's mining tenements. The rebate obligation is accounted for as an executory contract and the expense is recognized as incurred.
(l) Revenue Recognition
Prior to the Company's adoption of ASU 2014-09 Revenue from Contracts with Customers (ASC 606), coal sales were recognized when coal was loaded onto transport carriers for delivery to customers and the customer took ownership and assumed risk of loss, collection of the relevant receivable was probable, persuasive evidence of an arrangement existed and the sales price was fixed or determinable. Freight and handling costs paid to third party carriers and invoiced to coal customers were recorded as freight expenses and other revenues, respectively.
Revenue from contracts with customers
The Company accounts for revenue in accordance with ASC 606. ASC 606 was issued by the Financial Accounting Standards Board (FASB) in May 2014 in order to replace the existing requirements under US GAAP and provide the Company with a single revenue recognition model for recognizing revenue from contracts with customers. The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method.
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Once a contract is identified, the Company evaluates whether the combined or single contract should be accounted for as more than one performance obligation.
The Company recognizes revenue when control is transferred to the customer. For the Company's contracts, in order to determine the point in time when control transfers to customers, the Company uses standard shipping terms to determine the timing of transfer of legal title and the significant risks and rewards of ownership. The Company also considers other indicators including timing of when the Company has a present right to payment and when physical possession of products is transferred to customers. The amount of revenue recognized includes any adjustments for variable consideration, which is included in the transaction price and allocated to each performance obligation based on the relative standalone selling price. The variable consideration is estimated through the course of the contract using management's best estimates.
The majority of the Company's revenue is derived from short term contracts where the time between confirmation of sales orders and collection of cash is not more than a few months.
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.
Performance obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
The Company's contracts have multiple performance obligations as the promise to transfer the individual unit of coal is separately identifiable from other units of coal promised in the contracts and, therefore, distinct. Performance obligations, as described above, primarily relate to the Company's promise to deliver a designated quantity and type of coal within the quality specifications stated in the contract.
For contracts with multiple performance obligations, we allocate the contract's transaction price to each performance obligation on a relative standalone selling price basis. The standalone selling price is determined at each contract inception using an adjusted market assessment approach. This approach focuses on the amount that the Company believes the market is willing to pay for a good or service, considering market conditions, such as bench mark pricing competitor pricing, market awareness of the product and current market trends that affect the pricing.
Warranties provided to customers are assurance-type of warranties on the fitness of purpose and merchantability of the Company's goods and services. The Company does not provide service-type of warranties to customers.
Revenue is recognized at a point in time and therefore there are no unsatisfied and/or partially satisfied performance obligations at December 31, 2018.
Shipping and Handling
The Company applies the practical expedient in ASC 606-10-25-18B and accounts for shipping and handling activities after the customer obtains control of the good as an activity to fulfil the promise to transfer the good. Therefore, the Company does not evaluate whether the shipping and handling services are promised services to its customers.
Shipping and handling costs paid to third party carriers and invoiced to coal customers are recorded as freight expense and other revenues, respectively.
(m) Commodity Price Risk
The Company has commodity price risk arising from fluctuations in domestic and global coal prices.
The Company's strategy is not to enter into long term financial instruments to hedge against movements in coal prices.
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
The Company is also exposed to commodity price risk related to diesel fuel purchases. This is a cost that is borne by the Company and as such, the Company may periodically enter into arrangements that protect against the volatility in fuel prices as follows:
(n) Comprehensive Income
Comprehensive income for the year ended December 31, 2018 is not equal to net income, as foreign currency translation flows through other comprehensive income. This is in contrast to the years ended December 31, 2017 and 2016 where comprehensive income equals net income as there were no components of other comprehensive income (loss).
(o) Income Taxes
The Company uses the asset and liability approach to account for income taxes as required by ASC 740, Income Taxes, which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Valuation allowances are provided when necessary to reduce deferred income tax assets to the amount expected to be realized, on a more likely than not basis.
The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position. These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.
Prior to its conversion to a Delaware corporation in August 2018, the Company was a Delaware limited liability company, or LLC, that passed through income and losses to its members for U.S. federal and state income tax purposes. As a result of its conversion to a Delaware corporation and to reflect the fact that as a corporation the Company will be subject to entity level taxation, deferred income tax liabilities of approximately $0.1 million were recognized through income tax expense in the Statement of Operations and Comprehensive income related to temporary differences that existed as of the date of its tax status change.
On September 19, 2018 the legacy U.S. businesses were contributed to the Company. The Company recognized approximately $40.5 million of net deferred income tax liabilities through income tax expense in the Statement of Operations and Comprehensive income which consisted principally of excess book-over-tax basis in mineral reserves and property, plant and equipment and certain accruals that were transferred from the limited liability company to the corporation.
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
Coronado Group LLC, the Company's accounting predecessor, is a limited liability company that is not subject to US federal income tax. The Curragh entities are treated as a branch for U.S. tax purposes and all income flows through to the ultimate parent (the Company).
The Company's foreign structure consists of Australian entities which are treated as corporations subject to tax under Australian taxing authorities.
(p) Fair Value Measurements
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the Company distinguishes between observable and unobservable inputs, which are categorized in one of 3 levels of inputs.
See Note 22(b), "Derivatives and Fair Value Measurement" for detailed information related to the Company's fair value policies and disclosures.
(q) Derivative accounting
The Company recognizes at fair value all contracts meeting the definition of a derivative as assets or liabilities in the consolidated balance sheet.
With respect to derivatives used in hedging activities, the Company assesses, both at inception and at least quarterly thereafter, whether such derivatives are highly effective at offsetting the changes in the anticipated exposure of the hedged item. The effective portion of the change in the fair value of derivatives designated as a cash flow hedge is recorded in "Accumulated other comprehensive income (loss)" until the hedged transaction impacts reported earnings, at which time any gain or loss is reclassified to earnings. To the extent that periodic changes in the fair value of derivatives deemed highly effective exceeds such changes in the hedged item, the ineffective portion of the periodic non-cash changes are recorded in earnings in the period of the change. If the hedge ceases to qualify for hedge accounting, the Company prospectively recognizes changes in the fair value of the instrument in earnings in the period of the change. The potential for hedge ineffectiveness is present in the design of certain of the Company's cash flow hedge relationships.
The Company's asset and liability derivative positions are offset on a counterparty-by-counterparty basis if the contractual agreement provides for the net settlement of contracts with the counterparty in the event of default or termination of any one contract.
(r) Share-based compensation
The Company has a share-based compensation plan which allows for the grant of certain equity-based incentives including stock options, performance stock units ("PSU") and restricted stock units ("RSU") to employees and executive directors, valued in whole or in part with reference to the Company's CDI's or equivalent common shares (on a 10:1 CDI to common share ratio).
The fair value of each stock option granted is estimated on the date of grant using Black-Scholes-Merton option-pricing model which is a closed-form option pricing model. The pricing model requires assumptions, which impact the assumed fair value, including the expected life of the stock option, the risk-free interest rate, expected volatility of the Company's stock over the expected life and the
F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies (Continued)
expected dividend yield. For certain options and PSUs granted in 2018, the Company includes a relative Total Stockholder Return ("TSR") modifier to determine the number of shares earned at the end of the performance period. The fair value of awards that include the TSR modifier is determined using a Monte Carlo valuation model. The fair value of all other PSUs and RSUs granted is equal to the market price of the Company's stock at date of grant less the present value of expected dividends over the vesting period.
The expense for these equity-based incentives is based on their fair value at date of grant and is amortized over the requite service period, generally the vesting period. The Company estimates forfeitures when determining the amount of compensation costs to be recognized in each period.
See Note 20, "Share-Based Compensation" for detailed information related to the Company's share-based compensation plans.
(s) Earnings per Share
Basic earnings per share is computed by dividing net income attributable to stockholders of the Company by the weighted-average number of shares of common stock outstanding during the reporting period.
Diluted net income per share is computed using the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock primarily consist of employee stock options and restricted stock.
3. Acquisitions
(a) Curragh
On December 22, 2017, a Membership Interest and Asset Purchase Agreement (the Agreement) was entered by Coronado Australia Holdings Pty Ltd and Coronado Group LLC in order to acquire Wesfarmers Curragh Pty Ltd (since renamed Coronado Curragh Pty Ltd). The Agreement was executed on March 29, 2018.
The aggregate base purchase price for the Membership Interest in Curragh (the Transaction) was A$700 million and was subject to adjustments pursuant to the terms of the Agreement. The Company acquired 100% of the Membership Interest. The operating results related to the Transaction have been included in the consolidated financial statements since March 29, 2018.
The aggregate consideration on the date of the Transaction totaled $563.8 million.
Contingent consideration, specifically the Value Share Mechanism (VSM) of $26.6 million associated with the Transaction represents the fair value of a two-year, 25% royalty on sales from metallurgical coal mined at Curragh. The royalty only applies to the realized price on metallurgical coal sales above $145 per metric ton. The VSM liability is marked-to-market at each reporting date, with any fluctuations included as an operating expense in the Consolidated Statement of Operations. The payout structure of the royalty can be replicated through a probability weighted discounted cash flow approach using a Monte Carlo simulation over a 24-month period from acquisition date. As such, the Company developed a fair value of the royalty using a Monte Carlo simulation.
In connection with the acquisition, Coronado Australia Holdings Pty Ltd incurred acquisition related costs for 2018 of $53.8 million; $38.5 million of which is recorded in selling, general, and administrative expenses. The remainder, relating to foreign currency losses, is recorded in Other, net.
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions (Continued)
The Transaction has been accounted for using the acquisition method of accounting which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes total consideration transferred and the allocation of the purchase price to the acquired assets and liabilities:
|
Amount | |||
---|---|---|---|---|
|
(US$ thousands)
|
|||
Fair value of total consideration transferred: |
||||
Cash consideration |
$ | 537,207 | ||
Contingent consideration (Value Share Mechanism) |
26,552 | |||
| | | | |
Total consideration transferred |
563,759 | |||
Recognized amounts of identifiable assets acquired, and liabilities assumed: |
||||
Current assets |
$ | 240,966 | ||
Property, plant and equipment |
851,981 | |||
Deferred income tax assets |
24,432 | |||
Other long-term assets |
1,831 | |||
Current liabilities |
(141,611 | ) | ||
Contract obligations |
(306,960 | ) | ||
Asset retirement obligations |
(104,305 | ) | ||
Other long-term liabilities |
(2,575 | ) | ||
| | | | |
Total identifiable net assets acquired |
$ | 563,759 |
No goodwill has been recorded in connection with this acquisition as the purchase consideration equaled the fair value of the net assets acquired.
Unaudited pro forma financial information
The following pro forma summary reflects consolidated results of operation as if the Transaction had occurred on January 1, 2017 (unaudited).
|
2018 | 2017 | |||||
---|---|---|---|---|---|---|---|
|
(US$ thousands)
|
||||||
Revenue |
$ | 2,296,661 | $ | 2,174,100 | |||
Net Income |
192,281 | 286,300 |
The pro forma financial information was prepared based on historical financial information and has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the Transaction, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results.
These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2017 and are not necessarily indicative of the Company's consolidated results of operations in future periods. The pro forma results include adjustments related to purchase accounting, depreciation of property and equipment, and do not include any anticipated synergies or other expected benefits that may be realized from the Transaction.
F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions (Continued)
In addition to the above recurring adjustments, the pro forma results for the year ended December 31, 2018 and 2017 exclude non-recurring adjustments of $53.8 and $0, respectively, of transaction costs.
(b) Buchanan
On February 26, 2016, a Membership Interest and Asset Purchase Agreement was entered among CONSOL Energy, Inc., a Delaware corporation, CONSOL Amonate Mining Company LLC, a Delaware limited liability company, CONSOL Amonate Facility LLC, a Delaware liability company, the Reserve Property Sellers, CONSOL Mining Holding Company LLC, a Delaware limited liability company, CONSOL Buchanan Mining Company LLC, a Delaware limited liability company and Coronado IV LLC, a Delaware limited liability company which is wholly-owned by the Company. The Agreement was consummated on March 31, 2016 at which time the sale was concluded.
The aggregate base purchase price for the Membership Interest in Buchanan, Amonate Business, and the Reserve Property (together the "Transaction") was $420.0 million and was subject to adjustments pursuant to the terms of the Agreement. The Company acquired 100% of the Membership Interest, Amonate Business, and the Reserve Property. The operating results related to the transaction have been included in the consolidated financial statements since March 31, 2016. The aggregate purchase price for the acquisition was $426.8 million of which $425.9 million was paid for in cash during 2016.
The remainder due was in the form of a contingent liability of $0.9 million which represented the fair value of a five-year, 20% royalty on coal mined at Buchanan mine. The royalty only applies to the gross sales price above a certain level. This liability is marked-to-market at each reporting date, with any fluctuations included as an operating expense in the Consolidated Statement of Operations. The payout structure of the royalty can be replicated as a series of call options on the gross sales price over the next five years. As such, the Company developed a fair value of the royalty using the Black-Scholes option pricing formula for call options in a risk-neutral framework. The gross sales price upon which the 10% royalty begins to be applied escalates upon each anniversary of the Transaction closing as noted in the following table:
Anniversary of closing
|
Price per Mt ($) | |||
---|---|---|---|---|
Year 1 |
75.00 | |||
Year 2 |
78.75 | |||
Year 3 |
82.69 | |||
Year 4 |
86.82 | |||
Year 5 |
91.16 |
The royalty calculation applies to all export tons sold from Buchanan mine where the price exceeds the noted threshold and, therefore, the royalty payment is effectively uncapped.
In connection with the acquisition, Coronado IV LLC incurred acquisition related costs of approximately $1,002 during the year ended December 31, 2016.
The transaction has been accounted for using the acquisition method of accounting which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions (Continued)
the acquisition date. The following table summarized the allocation of the purchase price to the acquired assets and liabilities:
|
Amount | |||
---|---|---|---|---|
|
(US$ thousands)
|
|||
Fair value of total consideration transferred: |
||||
Cash consideration |
$ | 425,885 | ||
Contingent consideration |
900 | |||
| | | | |
Total consideration transferred |
426,785 | |||
Recognized amounts of identifiable assets acquired, and liabilities assumed: |
||||
Current assets |
$ | 14,421 | ||
Property, plant and equipment |
424,877 | |||
Intangible assets |
4,000 | |||
Other long-term assets |
6,027 | |||
Current liabilities |
(18,160 | ) | ||
Asset retirement obligations |
(32,388 | ) | ||
| | | | |
Total identifiable net assets acquired |
398,777 | |||
Residual goodwill |
28,008 | |||
| | | | |
Total net assets acquired including goodwill |
$ | 426,785 |
Based on the valuation, $28.0 million was assigned to goodwill. The primary reasons for the transaction and the principal factors that contributed to the purchase price that resulted in the recognition of goodwill are due to the synergies gained by adding a low-vol coal property to the Company's already existing mid-vol and high-vol coal properties, providing a range of coal blends to satisfy customer needs.
Goodwill recorded in the acquisition is not amortized by will be reviewed for impairment annually in the fourth quarter and/or when circumstances or other events indicate that impairment may have occurred.
Other acquisition-related transactions
In connection with the transaction, certain additional agreements have been entered into, including an Option Agreement to purchase the Amonate Preparation Plant for one dollar (Amonate Plant Option). The fair value of the option recorded as of the closing date in Other Assets for $0.8 million, which will be tested for impairment over its life.
Unaudited Pro forma financial information
The following pro forma summary reflects consolidated results of operation as if the acquisition had occurred on January 1, 2016 (unaudited)
|
2016 | |||
---|---|---|---|---|
|
(US$ thousands)
|
|||
Revenue |
$ | 489,081 | ||
Net Income |
39,794 |
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions (Continued)
The pro forma financial information was prepared based on historical financial information and has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the Transaction, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The pro forma statements of income use estimated and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may differ significantly from this pro forma financial information. The pro forma results presented do not include any anticipated synergies or other expected benefits that may be realized form the Transactions. The pro forma information is not intended to reflect the actual results that would have occurred had the companies actually been combined during the periods presented.
The pro forma results for the years ended December 31, 2016 primarily include recurring adjustments for both increases and decreases to amortization expense related to the fair value of acquired identifiable intangible assets and decreased depreciation expense related to the fair value adjustment to property, plant and equipment
In addition to the above recurring adjustments, the pro forma results for the year ended December 31, 2016 included non-recurring adjustments of $1.0 million related to transaction costs.
Since the acquisition on March 31, 2016, revenue and net income attributable to the acquired business included in the 2016 Statement of Consolidated Operations are $275.3 million and $76.9 million, respectively.
4. Segment Information
The Company has a portfolio of operating mines and development projects in Queensland, Australia and in the states of Pennsylvania, Virginia and West Virginia in the USA. The Company operates its business along four reportable segments: Curragh, Buchanan, Logan and Greenbrier. These segments are grouped based on geography. Factors affecting and differentiating the financial performance of each of these four reportable segments generally include coal quality, geology, and coal marketing opportunities, mining and transportation methods and regulatory issues. The Company believes this method of segment reporting reflects both the way its business segments are currently managed and the way the performance of each segment is evaluated. The four segments consist of similar operating activities as each segment produces similar products.
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Segment Information (Continued)
The organization of the four reportable segments reflects how the Company's chief operating decision maker ("CODM") manages and allocates resources to the various operations.
"Other and corporate" relates to additional financial information for the corporate function such as accounting, treasury, legal, human resources, compliance, and tax. As such, the corporate function is not determined to be a reportable segment but is discretely disclosed for purposes of reconciliation to the Company's consolidated financials.
The accounting policies of the segments are the same as those described in Note 2Summary of Significant Accounting Policies, except that the disaggregated financial results for the segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting internal operating decisions. Generally, the Company evaluates performance based on stand-alone segment net income (loss) before income taxes, interest, depreciation, depletion, and amortization, other foreign exchange losses and loss on debt extinguishment ("EBITDA").
Reportable segment results as of and for the years ended December 31, 2018, 2017 and 2016 are presented below.
|
Curragh | Buchanan | Logan | Greenbrier |
Other and
Corporate |
Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
($ thousands)
|
||||||||||||||||||
Year ended December 31, 2018 |
|||||||||||||||||||
Total revenues |
$ | 1,165,580 | $ | 510,430 | $ | 234,967 | $ | 69,527 | $ | | $ | 1,980,504 | |||||||
EBITDA |
314,227 | 212,485 | 31,939 | (1,402 | ) | (80,264 | ) | 476,985 | |||||||||||
Net income/(loss) |
164,331 | 130,676 | (10,290 | ) | (25,969 | ) | (144,159 | ) | 114,589 | ||||||||||
Total assets |
1,187,851 | 504,313 | 260,952 | 140,674 | 115,774 | 2,209,564 | |||||||||||||
Capital expenditures (1) |
47,208 | 33,163 | 29,889 | 4,009 | 481 | 114,750 | |||||||||||||
Year ended December 31, 2017 |
|
|
|
|
|
|
|||||||||||||
Total revenues |
$ | | $ | 465,036 | $ | 241,944 | $ | 60,105 | $ | 1,159 | $ | 768,244 | |||||||
EBITDA |
| 211,240 | 34,897 | 3,270 | (21,666 | ) | 227,741 | ||||||||||||
Net income/(loss) |
| 170,165 | 10,996 | (7,686 | ) | (31,192 | ) | 142,283 | |||||||||||
Total assets |
| 518,340 | 236,688 | 153,653 | 43,111 | 951,792 | |||||||||||||
Capital expenditures (1) |
| 35,296 | 25,535 | 12,958 | | 73,789 | |||||||||||||
Year ended December 31, 2016 |
|
|
|
|
|
|
|||||||||||||
Total revenues |
$ | | $ | 275,267 | $ | 133,899 | $ | 27,836 | $ | 249 | $ | 437,251 | |||||||
EBITDA |
| 115,523 | 3,184 | (6,758 | ) | (15,782 | ) | 96,167 | |||||||||||
Net income/(loss) |
| 84,523 | (16,925 | ) | 15,584 | (15,782 | ) | 36,332 | |||||||||||
Total assets |
| 624,257 | 272,017 | 154,018 | | 1,050,292 | |||||||||||||
Capital expenditures (1) |
| 27,747 | 10,591 | 2,268 | | 40,606 |
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Segment Information (Continued)
The reconciliation of EBITDA to net income attributable to the Company for the years ended December 31, 2018, 2017 and 2016 are as follows:
|
Year ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | |||||||
|
(US$ thousands)
|
|||||||||
Net income (loss) |
$ | 114,589 | $ | 142,283 | $ | 36,332 | ||||
Depreciation, depletion and amortization |
162,117 | 75,503 | 59,737 | |||||||
Interest expense (net of income) |
57,978 | 9,955 | 98 | |||||||
Other foreign exchange losses |
9,004 | | | |||||||
Loss on retirement of debt |
58,085 | | | |||||||
Income tax expense |
75,212 | | | |||||||
Consolidated EBITDA |
$ | 476,985 | $ | 227,741 | $ | 96,167 |
The reconciliation of Capital expenditures per the Company's segment information to capital expenditures disclosed on the consolidated statements of cash flows for the years ended December 31, 2018, 2017 and 2016 are as follows:
|
Year ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | |||||||
|
(US$ thousands)
|
|||||||||
Capital expenditures per Consolidated Statements of Cash Flows |
$ | 114,302 | $ | 63,923 | $ | 37,599 | ||||
Capital expenditures financed through other financial liabilities |
870 | 9,866 | 3,007 | |||||||
ARO change in estimate to underlying asset |
(422 | ) | | | ||||||
Capital expenditures per segment detail |
$ | 114,750 | $ | 73,789 | $ | 40,606 |
Disaggregation of revenue
The Company disaggregates the revenue from contracts with customers by major product group for each of the Company's segments, as the company believes it best depicts the nature, amount, timing and uncertainty of revenues and cash flows. All revenue is recognized at point in time.
|
Year ended December 31, 2018 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Curragh | Buchanan | Logan | Greenbrier |
Other and
Corporate |
Total | |||||||||||||
|
(US $ thousands)
|
||||||||||||||||||
Product Groups |
|||||||||||||||||||
Metallurgical coal |
$ | 1,061,402 | $ | 496,472 | $ | 194,974 | $ | 66,258 | $ | | $ | 1,819,106 | |||||||
Thermal coal |
74,656 | 13,830 | 37,215 | 792 | | 126,493 | |||||||||||||
Other |
29,522 | 128 | 2,778 | 2,477 | | 34,905 | |||||||||||||
Total |
$ | 1,165,580 | 510,430 | 234,967 | 69,527 | $ | | $ | 1,980,504 |
F-26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Segment Information (Continued)
|
Year ended December 31, 2017 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Curragh | Buchanan | Logan | Greenbrier |
Other and
Corporate |
Total | |||||||||||||
|
(US$ thousands)
|
||||||||||||||||||
Product Groups |
|||||||||||||||||||
Metallurgical coal |
$ | | $ | 461,863 | $ | 189,124 | $ | 54,479 | $ | | $ | 705,466 | |||||||
Thermal coal |
| 3,058 | 43,169 | 4,692 | | 50,919 | |||||||||||||
Other |
| 115 | 10,810 | 934 | | 11,859 | |||||||||||||
| | | | | | | | | | | | | | | | | | | |
Total |
$ | | $ | 465,036 | $ | 243,103 | $ | 60,105 | $ | | $ | 768,244 | |||||||
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
Year ended December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Curragh | Buchanan | Logan | Greenbrier |
Other and
Corporate |
Total | |||||||||||||
|
(US$ thousands)
|
||||||||||||||||||
Product Groups |
|||||||||||||||||||
Metallurgical coal |
$ | | $ | 271,676 | $ | 103,671 | $ | 23,149 | $ | | $ | 398,496 | |||||||
Thermal coal |
| 3,372 | 27,870 | 4,228 | | 35,470 | |||||||||||||
Other |
| 219 | 2,358 | 459 | 249 | 3,285 | |||||||||||||
| | | | | | | | | | | | | | | | | | | |
Total |
$ | | $ | 275,267 | $ | 133,899 | $ | 27,836 | $ | 249 | $ | 437,251 | |||||||
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Further explanation to table above:
The following is a description of the principal activities by reportable segments.
Payments from customers are generally due 30 days after invoicing. Invoicing usually occurs after shipment or delivery of goods. The timing between the recognition of revenue and receipt of payment is not significant.
The Company had certain customers whose accounts receivable balances individually represented 10% or more of the Company's total accounts receivable, or whose revenue individually represented 10% or more of the Company's total revenue. Management notes each reportable segment has some amount of sales to these key customers.
F-27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Segment Information (Continued)
The following table summarizes any customer whose revenue individually represented 10% or more of the Company's total revenue in the years ended December 31, 2018, 2017 and 2016.
|
Year ended
December 31, |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | |||||||
|
(US$ thousands)
|
|||||||||
Customer A |
23 | % | 49 | % | 50 | % | ||||
Customer B |
12 | % | n/a | 17 | % |
The following table presents revenues as a percent of total revenue from external customers by geographic region:
|
Year ended
December 31, |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | |||||||
|
(US$ thousands)
|
|||||||||
USA |
42 | % | 100 | % | 100 | % | ||||
India |
19 | % | | % | | % | ||||
Japan |
14 | % | | % | | % | ||||
Korea |
9 | % | | % | | % | ||||
Europe |
6 | % | | % | | % | ||||
Australia |
6 | % | | % | | % | ||||
Taiwan |
2 | % | | % | | % | ||||
China |
1 | % | | % | | % | ||||
Brazil |
1 | % | | % | | % | ||||
Total |
100 | % | 100 | % | 100 | % |
The Company attributes revenue to individual countries based on the location of the physical delivery of the coal.
5. Expenses
Stanwell rebate
The Stanwell rebate relates to a contractual arrangement entered into by the Company with Stanwell Corporation Limited, an electricity generator owned by the State of Queensland in Australia, which requires payment of a rebate for export coal sold from the Curragh mining tenements. The rebate obligation is accounted for as an executory contract. Accordingly, the expense is recognized as incurred.
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Expenses (Continued)
Other, net
Other, net consists of the following at December 31, 2018, 2017 and 2016:
|
2018 | 2017 | 2016 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(US$ thousands)
|
|||||||||
Loss on foreign exchange swap |
$ | 15,695 | $ | | $ | | ||||
Other foreign exchange losses |
9,004 | | | |||||||
Other expenses (income) |
2,517 | (473 | ) | 376 | ||||||
| | | | | | | | | | |
Total Other, net |
$ | 27,216 | $ | (473 | ) | $ | 376 | |||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
6. Capital Structure
(a) Stockholders' Equity
The Company has securities listed for quotation in the form of CHESS Depository Interests (CDIs) on the Australian Securities Exchange ("ASX") that trade under the symbol "CRN."
Each share of common stock (share) is equivalent to 10 CDIs.
Authorized capital stock
The Company's Articles of Incorporation, as amended, authorize the Company to issue 1,100,000,000 shares of $.01 par value capital stock consisting of 1,000,000,000 shares of common stock and 100,000,000 shares of preferred stock.
Common Stock / CDIs
As each CDI represents one tenth of a share, holders of CDIs will be entitled to one vote for every 10 CDIs they hold. CDI holders are to receive entitlements which attach to underlying shares such as participation in rights issues, bonus issues, capital reductions and liquidation preferences.
The CDIs entitle holders to dividends, if any, and other rights economically equivalent to shares of common stock, including the right to attend stockholders' meetings. CDN, as the stockholder of record, will vote the underlying shares in accordance with the directions of the CDI holders.
Preferred Stock
The Series A Preferred Share provides the holder with Board designation rights which are tied to the level of beneficial ownership of common shares in the Company. The Series A Preferred Share is not entitled to dividends and is non-transferable. The Series A Preferred Share has a liquidation preference of $1.00.
Restrictions
Voluntary escrow: Following the completion of the IPO, Coronado Group LLC entered into a voluntary escrow agreement whereby 77,308,103.6 shares of common stock (773,081,036 CDIs) were subject to voluntary escrow for a restriction period until the first business day after the release of the Company's 2019 results.
F-29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Capital Structure (Continued)
Foreign Ownership Restriction: the Company's CDIs and shares are considered 'restricted securities' under Rule 144 under the US Securities Act, and offers and sales of the CDIs and underlying shares will be subject to an initial one year distribution compliance period whereby holders of CDIs are unable to sell the CDIs into the US or to a US person unless the re-sale of the CDIs is registered under the Securities Act or an exemption is available.
Issued Stock
Following the Reorganization Transaction, 80,000,000 common shares and one Series A preferred Share were issued by the Company and held by Coronado Group LLC. All common shares and preferred shares have a par value of $0.01.
On October 23, 2018, in connection with the IPO on the ASX, the Company issued 16,651,692 new shares (166,516,920 CDIs), raising cash proceeds of $473.4 million, prior to issuance costs of $30.6 million. Coronado Group LLC sold 2,691,896.4 shares of common stock (26,918,964 CDIs) and the Company did not receive any proceeds from the sale of these securities.
As of December 31, 2018, 966,516,920 CDIs (96,651,692 shares of common stock) were outstanding.
The following options to purchase common stock are issued and outstanding:
Dividends
The dividend policy and the payment of future cash dividends are subject to the discretion of the Company's Board of Directors.
(b) Earnings per Share
Basic earnings per share of common stock is computed by dividing net income attributable to the Company for the period from October 24, 2018 through December 31, 2018, the period following the IPO, by the weighted-average number of shares of common stock outstanding during the same period. Diluted earnings per share of common stock is computed by dividing net income attributable to the Company by the weighted-average number of shares of common stock outstanding adjusted to give effect to potentially dilutive securities. There were no traded shares of common stock outstanding prior to October 23, 2018, therefore no earnings per share information has been presented for any period prior to that date.
F-30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Capital Structure (Continued)
Basic and diluted earnings per share was calculated as follows (in thousands, except per share data):
(US$ thousands, except share data)
|
2018 | |||
---|---|---|---|---|
Numerator: |
||||
Net Income |
$ | 20,746 | ||
Less: Net income attributable to Non-controlling interest |
(17 | ) | ||
| | | | |
Net Income attributable to Company stockholders (post IPO) |
$ | 20,763 | ||
| | | | |
| | | | |
| | | | |
Net Income |
$ | 114,681 | ||
Pro forma income tax expense |
(21,190 | ) | ||
| | | | |
Pro forma net Income attributable to Company stockholders |
$ | 93,491 | ||
| | | | |
| | | | |
| | | | |
Denominator |
||||
Weighted-average shares of common stock outstanding |
96,651,692 | |||
Effects of dilutive shares |
4,375 | |||
Weighted average diluted shares of common stock outstanding |
96,656,067 | |||
Earnings Per Share (US$): |
||||
Basic |
$ | 0.21 | ||
Dilutive |
$ | 0.21 | ||
Pro forma Earnings Per Share (US$): |
||||
Basic |
$ | 0.97 | ||
Dilutive |
$ | 0.97 |
7. Inventories
Inventories consist of the following at December 31, 2018 and 2017:
F-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Property, Plant and Equipment
Property, plant, and equipment consist of the following at December 31, 2018 and 2017:
(US$ thousands, except share data)
|
2018 | 2017 | |||||
---|---|---|---|---|---|---|---|
Land |
$ | 26,845 | 9,431 | ||||
Buildings and improvements |
89,027 | 9,707 | |||||
Plant, machinery, mining equipment and transportation vehicles |
765,432 | 398,548 | |||||
Mineral rights and reserves |
464,680 | 462,098 | |||||
Office and computer equipment |
3,700 | 1,238 | |||||
Mine development |
479,152 | 33,868 | |||||
Asset retirement obligation asset |
80,993 | 14,649 | |||||
Construction in process |
43,691 | 20,980 | |||||
| | | | | | | |
|
1,953,520 | 950,519 | |||||
Less accumulated depreciation, depletion and amortization |
334,962 | 189,479 | |||||
| | | | | | | |
Net property, plant and equipment |
$ | 1,618,558 | 761,040 | ||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
The amount of depreciation and depletion expense for property, plant and equipment for the years ended December 31, 2018, 2017 and 2016 was $152.7 million, $76.9 million and $58.9 million, respectively. The depreciation and depletion expense included a credit of $0.2 million, $6.4 million and $0.3 million for the years ended December 31, 2018, 2017 and 2016, respectively, relating to a change in estimate of the ARO.
9. Goodwill and Other Intangible Assets
(a) Acquired Intangible Assets
|
December 31, 2018 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Weighted
average amortization period (years) |
Gross
carrying amount |
Accumulated
amortization |
Net carrying
amount |
|||||||||
Intangible assets: |
|||||||||||||
Amortizing intangible assets: |
|||||||||||||
Mining permitsGreenbrier |
14 | $ | 1,500 | 760 | 740 | ||||||||
Mining permitsLogan |
15 | 1,642 | 638 | 1,004 | |||||||||
Mining permitsBuchanan |
28 | 4,000 | 342 | 3,658 | |||||||||
Total intangible assets |
$ | 7,142 | 1,740 | 5,402 |
F-32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Goodwill and Other Intangible Assets (Continued)
|
December 31, 2017 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Weighted
average amortization period (years) |
Gross
carrying amount |
Accumulated
amortization |
Net carrying
amount |
|||||||||
Intangible assets: |
|||||||||||||
Amortizing intangible assets: |
|||||||||||||
Mining permitsGreenbrier |
14 | $ | 1,500 | 679 | 821 | ||||||||
Mining permitsLogan |
15 | 1,642 | 513 | 1,129 | |||||||||
Mining permitsBuchanan |
28 | 4,000 | 217 | 3,783 | |||||||||
Total intangible assets |
$ | 7,142 | 1,409 | 5,733 |
Amortization expense is charged using the straight-line method over the useful lives of the respective intangible asset. The aggregate amount of amortization expense for amortizing intangible assets for the years ended December 31, 2018, 2017 and 2016 was $0.3 million, $0.3 million and $0.3 million, respectively. Estimated amortization expense for the next five years is $0.3 million in 2019, $0.2 million in 2020 and $0.2 million in 2021, $0.2 million in 2022, and $0.2 million in 2023.
(b) Goodwill
In connection with the Buchanan acquisition on March 31, 2016, the Company recorded goodwill in the amount of $28.0 million. The Company performed a qualitative assessment to determine if impairment was required at December 31, 2018 or 2017. Based upon the Company's qualitative assessment, it is more likely than not that the fair value of the reporting unit is greater than their carrying value at December 31, 2018 and 2017. The Company has not noted any indicators of impairment since the acquisition date. As a result, no impairment was recorded, and the balance of goodwill at both December 31, 2018 and 2017 was $28.0 million.
10. Other Assets
|
December 31, 2018 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Gross
carrying amount |
Accumulated
amortization |
Net carrying
amount |
|||||||
Other assets: |
||||||||||
Favorable mineral leases |
$ | 4,800 | (660 | ) | 4,140 | |||||
Deferred debt issue costs |
13,773 | (774 | ) | 12,999 | ||||||
Long service leave receivable |
1,216 | | 1,216 | |||||||
| | | | | | | | | | |
Total other assets |
$ | 19,789 | (1,434 | ) | 18,355 | |||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
F-33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Other Assets (Continued)
|
December 31, 2017 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Gross
carrying amount |
Accumulated
amortization |
Net carrying
amount |
|||||||
Other assets: |
||||||||||
Favorable mineral leases |
$ | 4,800 | (322 | ) | 4,478 | |||||
Deferred debt issue costs |
1,832 | (209 | ) | 1,623 | ||||||
| | | | | | | | | | |
Total other assets |
$ | 6,632 | (531 | ) | 6,101 | |||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
The Company has other assets consisting of favorable mineral leases, deferred debt issue costs, and long service leave receivable. The favorable mineral leases are amortized based on the coal tonnage removed from the lease property relative to the total estimated reserves on that property. The deferred debt issue costs were incurred to establish the revolver and are accordingly amortized over the life of the revolver on a straight-line basis. Long service leave is paid when leave is taken, with a subsequent reimbursement received from the coal mining industries Long Service Leave Trust Fund (Trust Fund) in Australia. The reimbursement is recognized in other assets and is measured as the present value of expected future reimbursements to be received.
11. Investments in Variable Interest EntityConsolidated
JEP Mining LLC ("JEP") was formed in 2013 between Greenbrier and SYR Energy Partners LP ("SYR"). Greenbrier contributed $0.07 million for 50% ownership and SYR contributed $0.07 million for 50% ownership in JEP (collectively the Membership Interests). JEP is governed by three Managers, two of which are appointed by Greenbrier and one is appointed by SYR.
JEP was created to hold a mine development lease for an approximate 650-acre tract of land and the associated coal reserve and mining rights. Having no operations at inception that would generate profits, additional funding of $0.2 million was provided to JEP in the form of a loan from Greenbrier. At inception of the entity, the expectation was that further capital contributions would be required as JEP continued mine development and paid prepaid lease royalties.
The Company consolidates the financial statements of JEP as it is the primary beneficiary of the variable interest entity. The Company is responsible for determining the mine plan and for mine development. The approval of the mine plan and any permitting decisions do not require unanimous consent of all three Managers but rather majority approval, and, as such, the Company has control and would be the primary beneficiary. The amounts presented for JEP in the table below exclude
F-34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Investments in Variable Interest EntityConsolidated (Continued)
intercompany balances eliminated in consolidation and include the non-controlling interest at redemption value as reported in the consolidated balance sheets.
(US$ thousands)
|
2018 | 2017 | |||||
---|---|---|---|---|---|---|---|
Asset |
|||||||
Current assets: |
|||||||
Prepaid expenses and other current assets |
$ | 250 | 125 | ||||
| | | | | | | |
Total current assets |
250 | 125 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Property, plant, and equipment, net |
637 | 613 | |||||
| | | | | | | |
Total assets |
887 | 738 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Members' Capital |
|||||||
Total Company equity/Coronado Group LLC members capital |
605 | 501 | |||||
Noncontrolling interests |
282 | 237 | |||||
| | | | | | | |
Stockholders' equity/Members' capital |
$ | 887 | 738 | ||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
12. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following at December 31, 2018 and 2017:
(US$ thousands)
|
2018 | 2017 | |||||
---|---|---|---|---|---|---|---|
Wages and employee benefits |
$ | 50,819 | 23,403 | ||||
Taxes other than income taxes |
6,512 | 5,202 | |||||
Accrued royalties |
49,129 | 5,993 | |||||
Accrued freight costs |
26,509 | 451 | |||||
Accrued mining fees |
45,615 | 3,316 | |||||
Cash flow hedge derivative liability |
5,311 | | |||||
Acquisition related accruals |
30,349 | | |||||
Other liabilities |
29,252 | 2,649 | |||||
| | | | | | | |
Total accrued expenses and other current liabilities |
$ | 243,496 | 41,014 | ||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
13. Asset Retirement Obligations
Reclamation of areas disturbed by mining operations must be performed by the Company in accordance with approved reclamation plans and in compliance with state and federal laws. For areas disturbed, a significant amount of the reclamation will take place in the future when operations cease. There were no assets that were legally restricted for purposes of settling asset retirement obligations as of December 31, 2018 and 2017. All mines are bonded for reclamation and mine plans are approved by the states of West Virginia, Virginia, and Queensland Australia. In addition, state agencies monitor compliance with the mine plans, including reclamation.
The Company records the fair value of its asset retirement obligations using the present value of projected future cash flows, with an equivalent amount recorded as basis in the related long lived asset or a change to the statements of operations if the related permit is closed. An accretion cost,
F-35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Asset Retirement Obligations (Continued)
representing the increase over time in the present value of the liability, is recorded each period and the capitalized cost is depreciated over the useful life of the related asset. As reclamation work is performed or liabilities otherwise settled, the recorded amount of the liability is reduced.
Changes in the asset retirement obligations for the year ended December 31, 2018 were as follows:
(US$ thousands)
|
|
|||
---|---|---|---|---|
Total asset retirement obligations at January 1, 2018 |
$ | 56,429 | ||
ARO liability acquired |
104,305 | |||
ARO liability additions |
8,776 | |||
Accretion |
9,376 | |||
Reclamation performed in 2018 |
(4,743 | ) | ||
Gain on settlement of ARO |
(854 | ) | ||
Change in estimate recorded to operations |
(234 | ) | ||
Change in estimate recorded to assets |
(39,677 | ) | ||
Foreign currency translation adjustment |
(7,587 | ) | ||
| | | | |
Total asset retirement obligations at December 31, 2018 |
125,791 | |||
Less current portion |
(7,719 | ) | ||
| | | | |
|
$ | 118,072 | ||
| | | | |
| | | | |
| | | | |
Changes in the asset retirement obligations for the year ended December 31, 2017 were as follows:
(US$ thousands)
|
|
|||
---|---|---|---|---|
Total asset retirement obligations at January 1, 2017 |
$ | 51,849 | ||
ARO liability additions |
4,804 | |||
Accretion |
2,541 | |||
Reclamation performed in 2017 |
(1,180 | ) | ||
Gain on settlement of ARO |
(917 | ) | ||
Change in estimate recorded to assets |
(668 | ) | ||
| | | | |
Total asset retirement obligations at December 31, 2017 |
56,429 | |||
Less current portion |
(3,463 | ) | ||
| | | | |
|
$ | 52,966 | ||
| | | | |
| | | | |
| | | | |
14. Interest bearing liabilities
On June 6, 2017, the Company and certain of its subsidiaries entered a six-year $175.0 million term loan with Bank of America ("Bank of America Term Loan"), as administrative agent, and lenders party thereto. Pursuant to the credit agreement, dated as of June 6, 2017, the Bank of America Loan matured on June 6, 2023 and accrued interest at a variable interest rate based on certain financial ratios. The Bank of America Term Loan was a primary obligation of the Company. The Bank of America Loan was extinguished on March 29, 2018.
F-36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Interest bearing liabilities (Continued)
On June 6, 2017, the Company and certain of its subsidiaries also entered a five-year Asset Backed Loan ("ABL") with Bank of America, as administrative agent, and lenders party thereto. The ABL provided the Company with a revolving credit facility with a capacity of up to $100.0 million that could be used to borrow funds or obtain letters of credit, secured against the receivables of the Company. As of December 31, 2018, no amounts were drawn and no letters of credit were outstanding. As at December 31, 2017 one letter of credit was outstanding for an amount of $9.5 million. The ABL was amended on January 16, 2018 and terminated on October 23, 2018.
On March 29, 2018, the Company and certain of its subsidiaries also entered into a seven-year $700.0 million Term Loan B with Deutsche Bank AG ("TLB"), as administrative agent, and lenders party thereto. Pursuant to the credit agreement, dated as of March 29, 2018, the TLB matured on March 29, 2025 and accrued interest at a variable interest rate based on certain financial ratios. The TLB was terminated on October 24, 2018.
On September 15, 2018, the Company entered into a fully underwritten Multi-Currency Revolving Syndicated Facility Agreement with Westpac Banking Corporation and National Australia Bank Limited ("SFA"). The SFA incorporates two facilities:
As at December 31, 2018 Facility A remains undrawn and a significant portion of Facility B has been utilized to cover bank guarantees issued on behalf of the Company (Refer to Note 24Contingencies).
The Company's lending arrangements contain, among other terms, events of default and various affirmative, negative, and reporting covenants and cross-default provisions that are typical for a facility of this nature. Should the Company be unable to comply with any future debt-related covenant (and where the non-compliance is not remedied within the permitted timeframe), the Company will be required to seek a waiver of such covenant to avoid an event of default.
The following is a summary of interest bearing liabilities at December 31, 2018:
(US$ thousands)
|
Principal |
Unamortized
discount and debt issuance costs |
|||||
---|---|---|---|---|---|---|---|
Revolving credit facility with a capacity of up to $350,000. Variable interest rate with variable monthly payments |
| * | |||||
Interest bearing liabilities, excluding current instalments |
|||||||
| | | | | | | |
|
$ | ||||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
F-37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Interest bearing liabilities (Continued)
The following is a summary of interest bearing liabilities at December 31, 2017:
(US$ thousands)
|
Principal |
Unamortized
discount and debt issuance costs |
|||||
---|---|---|---|---|---|---|---|
Term Loan maturing on June 6, 2023, payable in variable monthly payments with a variable interest rate. |
$ | 140,354 | (10,088 | ) | |||
Revolving credit facility with a capacity of up to $100,000. Variable interest rate with variable monthly payments |
| * | |||||
| | | | | | | |
Total interest bearing liabilities |
140,354 | (10,088 | ) | ||||
Less current instalments |
1,750 | ||||||
| | | | | | | |
Interest bearing liabilities, excluding current instalments |
$ | 138,604 | (10,088 | ) | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
15. Other financial liabilities
The following is a summary of other financial liabilities at December 31, 2018:
(US$ thousands)
|
Principal | |||
---|---|---|---|---|
Collateralized notes payable to equipment financing companies, payable in aggregate monthly instalments ranging from $1 to $124 through September 19, 2021. Interest is payable at fixed rates ranging up to 5.5% per annum. |
$ | 7,297 | ||
Unsecured notes payable to insurance premium finance company, payable in aggregate monthly instalments ranging from $478 to $584 with a fixed rate ranging up to 3.30% per annum. |
4,504 | |||
| | | | |
Total other financial liabilities |
11,801 | |||
Less current instalments |
7,728 | |||
| | | | |
Other financial liabilities, excluding current instalments |
$ | 4,073 | ||
| | | | |
| | | | |
| | | | |
The following table presents remaining aggregate contractual maturities for the above:
(US$ thousands)
|
December 31,
2018 |
|||
---|---|---|---|---|
2019 |
7,728 | |||
2020 |
2,526 | |||
2021 |
1,547 | |||
Thereafter |
0 | |||
| | | | |
Total debt |
11,801 | |||
| | | | |
| | | | |
| | | | |
F-38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Other financial liabilities (Continued)
The following is a summary of other financial liabilities at December 31, 2017:
(US$ thousands)
|
Principal | |||
---|---|---|---|---|
Collateralized notes payable to equipment financing companies, payable in aggregate monthly instalments ranging from $1 to $234 through March 31,2021. Interest is payable at fixed rates ranging up to 8.0% per annum. |
11,002 | |||
Unsecured notes payable to insurance premium finance company, payable in aggregate monthly instalments of $478 with a fixed rate ranging up to 2.95% per annum. |
1,429 | |||
| | | | |
Total other financial liabilities |
12,431 | |||
Less current instalments |
5,281 | |||
| | | | |
Other financial liabilities, excluding current instalments |
$ | 7,150 |
The other financial liabilities to equipment financing companies are collateralized by the equipment being financed plus certain other equipment owned by the Company.
16. Contract Obligations
In connection with the acquisition of the Logan assets, the Company assumed certain non-market contracts related to an export terminal services agreement and various coal leases. The terminal services agreement expires on March 31, 2024 and requires the Company to pay for one million tons of trans loading services each year at a fixed price regardless of whether the Company utilizes the terminal services or not. The Company recorded $25.0 million related to this obligation and is amortizing it ratably over the trans loading commitment for the contract term. The non-market coal leases require royalty payments based on a percentage of the realization from the sale of the respective coal under lease. The Company recorded $27.3 million related to the non-market portion of the coal leases and is amortizing it ratably over the respective estimated coal reserves as they are mined and sold.
In connection with the acquisition of Buchanan, the Company assumed certain sales contracts with a fixed pricing component that was effectively below the market price at the date of acquisition. The Company recorded $10.0 million related to the unfavorable pricing of these sales contracts and is amortizing it ratably based on the tons sold through the contract.
In connection with the acquisition of Curragh, the Company assumed the Stanwell non-market coal supply agreement (CSA) with a fixed pricing component that was effectively below the market price at the date of acquisition. The Company recorded $307.0 million related to the unfavorable pricing of the Stanwell CSA and is amortizing it ratably based on the tons sold through the contract. For the year ended December 31, 2018 the amortization of this liability was $28.3 million and was recorded as other revenues in the statement of comprehensive income.
F-39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Contract Obligations (Continued)
The following is a summary of the contract obligations as of December 31, 2018:
(US$ thousands)
|
Short-term | Long-term | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Terminal services contract liability |
$ | 2,717 | 11,549 | 14,266 | ||||||
Coal leases contract liability |
844 | 22,354 | 23,198 | |||||||
Stanwell below market coal supply agreement |
35,555 | 219,675 | 255,230 | |||||||
| | | | | | | | | | |
|
$ | 39,116 | 253,578 | 292,694 | ||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
The following is a summary of the contract obligations as of December 31, 2017:
(US$ thousands)
|
Short-term | Long-term | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Terminal services contract liability |
$ | 2,718 | 14,266 | 16,984 | ||||||
Coal leases contract liability |
843 | 23,526 | 24,369 | |||||||
Sales contract liability |
2,421 | | 2,421 | |||||||
| | | | | | | | | | |
|
$ | 5,982 | 37,792 | 43,774 | ||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
17. Deferred consideration liability
On August 14, 2018 the Company completed the purchase of the Stanwell Reserved Area ("SRA") adjacent to the current Curragh mining tenements. This area was acquired on a deferred consideration basis and on acquisition the Company recognized a 'Right-to-mine-asset' and a corresponding deferred consideration liability of $155.2 million, calculated using a pre-tax discount rate of 13% representing fair value of the arrangements and the date of acquisition. The deferred consideration liability will reflect passage of time changes by way of an annual accretion at the pre-tax discount rate of 13% while the liability will decrease as domestic coal is supplied to Stanwell from the SRA.
(US$ thousands)
|
2018 | 2017 | |||||
---|---|---|---|---|---|---|---|
Stanwell Reserved Area deferred consideration |
155,332 | | |||||
| | | | | | | |
|
$ | 155,332 | | ||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
18. Workers' Compensation and Pneumoconiosis ("Black Lung") Obligations
In the United States, coal mine operations generate traumatic workers compensation claims, as well as workers' compensation occupational disease claims for black lung disease. Injured workers generally file claims for traumatic injury under the governing state workers compensation act. Workers may file claims due to black lung under the governing state workers compensation act or under a series of federal laws that include the Federal Coal Mine Health and Safety Act of 1969, as amended, the Black Lung Benefits Act of 1973, and the Black Lung Benefits Reform Act of 1977. The Company provides for both traumatic workers compensation claims and occupational disease claims through an insurance policy.
On June 1, 2018, the Company obtained workers' compensation insurance for work related injuries, including black lung, through a third party commercial insurance company for claims that exceed $0.5 million per occurrence or aggregate claims in excess of $18.0 million for policy year ending May 31, 2019. On June 1, 2017, the Company obtained workers' compensation insurance for work related injuries, including black lung, through a third party commercial insurance company for claims
F-40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Workers' Compensation and Pneumoconiosis ("Black Lung") Obligations (Continued)
that exceed $0.5 million per occurrence or aggregate claims in excess of $11.5 million as amended for the policy year ending May 31, 2018. Per the contractual agreements, the Company was required to provide a collateral deposit of $16.6 million for policy years ending May 31, 2019 and May 31, 2018, which was accomplished through posting surety bonds totaling $7.9 million and $8.8 million of cash collateral in an escrow account.
Effective June 1, 2016, the Company purchased coverage from a commercial insurance company for all claims and is no longer subject to an aggregate claim limitation for the policy year ended May 31, 2017.
For the years ended December 31, 2018, 2017 and 2016, the consolidated statements of operations included Company incurred claims, premium expenses and administrative fees related to worker's compensation benefits of $18.7 million, $18.0 million and $10.9 million, respectively. As of December 31, 2018, and December 31, 2017, the estimated workers' compensation liability was $16.4 million and $11.1 million, respectively, representing claims incurred but not paid based on the estimate of the outstanding claims under the coverage limits and the actuarially determined retained liability under the aggregate claim amount. For December 31, 2017, the liability includes $3.0 million due to AIG related to a previous policy year. The Company's estimated workers' compensation liabilities are recorded within accrued expenses and other current liabilities in the consolidated balance sheets.
19. Employee Benefit Plans
The Company has a 401(k)-defined contribution plan in which all US full time employees are eligible to participate upon their date of hire. Employees generally may contribute up to 100% of their qualifying compensation subject to statutory limitations. Effective January 1, 2014, the Company matches up to 100% up to the first 4% of the participant's annual compensation for all employees except for those employed at Buchanan. For employees at Buchanan, the Company matches up to 100% of the first 6% of the participant's annual compensation. The Company's contributions immediately vest. Total Company contributions for the years ended December 31, 2018, 2017 and 2016 amounted to $3.6 million, $3.0 million and $1.7 million, respectively.
In the United States, the Company is self-insured for employee health care claims up to the lesser of $0.2 million per covered person or an aggregate amount depending on the various coverages provided to employees throughout the plan year for all employees. The Company has purchased coverage from a commercial insurance carrier to provide for any claims in excess of these amounts. At December 31, 2018 and 2017, the Company had provided accruals of $1.8 million and $3.3 million, respectively, for claims incurred but not paid based on management's estimate of the Company's self-insured liability. For the years ended December 31, 2018, 2017 and 2016, the Company incurred claims, premium expenses and administrative fees related to this plan totaling $23.7 million, $19.3 million and $17.1 million respectively.
20. Share-Based Compensation
(a) 2018 Equity Incentive Plan
In connection with the completion of the Company's initial public offering of common stock, the Company implemented the Coronado Global Resources Inc. 2018 Equity Incentive Plan (the "2018
F-41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. Share-Based Compensation (Continued)
Plan") which is designed to align compensation for certain key executives with the performance of the Company.
The 2018 Plan provides for the grant of awards including stock options ("Options"); stock appreciation rights; restricted stock units ("RSUs"); and restricted stock, valued in whole or in part with reference to shares of the Company's CDIs or common stock, as well as performance-based awards, including performance stock units ("PSUs") denominated in CDIs or shares of common stock. In 2018, the Company granted Options, RSUs and PSUs, all in CDIs with 10 CDIs representing 1 share of common stock.
Relative TSR Awards: For 25% of Options and PSUs granted in 2018 (the "Relative TSR Options" and the "Relative TSR PSUs"), the Company includes a relative total shareowner return ("TSR") modifier to determine the number of shares which will vest at the end of the performance period. For these awards determined based on the Company's total shareowner return over the 3-year performance period relative to a predefined comparator group of companies.
Scorecard Awards: For the remaining 75% of Options and PSUs granted in 2018 (the "Scorecard Options" and the "Scorecard PSUs"), the number of awards that will ultimately vest is based on the certified achievement of the predefined scorecard performance metrics related to safety, production volumes and production costs which are tested at the end of the defined 3-year performance period.
The Company measures the cost of all stock-based compensation, including stock options, at fair value on the grant date and recognizes such costs within the consolidated statements of operations. The Company recognizes compensation expense related to Options and PSUs that cliff vest using the straight-line method. For stock-based awards where vesting is dependent upon achieving certain operating performance goals, the Company estimates the likelihood of achieving the performance goals during the 3-year performance period. Stock-based compensation expense is recognized net of an estimated forfeiture rate and compensation expense is only recognized for awards that are expected to vest. Forfeiture estimates are trued-up through the vesting date or settlement date, to ensure that total compensation expense is recognized only for those awards that ultimately vest.
All 2018 Awards require the grantee to be employed by the Company at either the vesting date or settlement date except for grantees who meet certain retirement criteria under the 2018 Plan.
On October 23, 2018, 1,336,454 Options and 1,001,914 PSUs were granted under the 2018 Plan (the "2018 Awards").
Total stock-based compensation expense was $0.5 million, $0 and $0 for the years ended December 31, 2018, 2017 and 2016 respectively, and was included as a component of selling, general, and administrative expenses in the Company's consolidated statements of operations. This includes compensation expense which has been recognized in full at the grant date for employees that meet certain retirement eligibility criteria per the 2018 Plan.
As of December 31, 2018, the Company had $0.4 million (2017: $0) of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under the plans. This cost is expected to be recognized over a weighted-average period of 4.25 years as stock-based compensation expense. This expected cost does not include the impact of any future stock-based compensation awards.
F-42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. Share-Based Compensation (Continued)
Stock Option Awards
The Company's 2018 stock option awards were granted on the date of the IPO with an exercise price of $2.84 per CDI (A$4.00 per CDI) which was equal to the Company's IPO Price.
75% of the Company's 2018 stock option awards are subject to "Scorecard" criteria and vest based on service and performance conditions. The fair value of the Scorecard Options is estimated on the grant date using a Black-Scholes-Merton option-pricing model, which considers factors such as estimating the expected term of stock options and the expected volatility of our stock. The assumptions used in the Black-Sholes-Merton option-pricing model for such grants are as follows:
|
December 31,
2018 |
|||
---|---|---|---|---|
Expected term of the stock options(i) |
7.22 years | |||
Dividend yield(ii) |
10 | % | ||
Expected volatility(iii) |
35 | % | ||
Risk-free interest rate(iv) |
2.46 | % |
25% of the Company's 2018 stock option awards are subject to TSR criteria and vest based on service and market conditions. The fair value of Relative TSR Options was estimated using a Monte Carlo simulation model.
The Company's Stock Option activity is summarized below:
Stock Option Plan Activity
|
Number of
Options |
Weighted-Average
Exercise Price per CDI |
Weighted-Average
Remaining Contractual Term (in Years) |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Outstanding at December 31, 2017 |
| $ | | | ||||||
Granted |
1,336,454 | |||||||||
Forfeited |
| |||||||||
Exercised |
| |||||||||
Outstanding at December 31, 2018 |
1,336,454 | $ | 2.84 | 4.25 | ||||||
Exercisable at December 31, 2018 |
| $ | | |
F-43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. Share-Based Compensation (Continued)
As of December 31, 2018, the weighted average grant date fair value of all Option Awards granted was $0.27. There were no options forfeited or vested during the period.
Performance Stock Unit Awards
The Company's 2018 PSU awards were granted on the date of the IPO.
75% of the Company's 2018 PSU awards are subject to "Scorecard" criteria and vest based on service and performance conditions. The fair value of the Scorecard PSUs is the market value of the Company's CDIs on the grant date less the present value of the expected dividends not received during the relevant period. Holders of Scorecard PSUs are entitled to dividends only from the end of the performance period until the settlement date. Dividends are forfeitable under the same conditions as the PSU awards.
25% of the Company's 2018 PSU awards are subject to TSR criteria and vest based on service and market conditions. The grant date fair value of Relative TSR PSUs is estimated using a Monte Carlo simulation model.
Activity of the Company's performance stock units (PSUs) that are ultimately payable in the Company's CDIs or the equivalent number of shares of common stock granted under the 2018 Equity Incentive Plan is summarized below:
As of December 31, 2018, the weighted average grant date fair value of all PSU Awards granted was $1.83 (A$2.58). There were no PSUs forfeited or vested during the period.
(b) Non-Executive Director Equity Incentive Plan
Restricted Stock Units
During the year ended December 31, 2018, the Company granted 54,687 restricted stock units ("RSUs") in lieu of a salary to a non-executive director. The RSU's are granted for nil consideration, as they form part of the participant's remuneration package.
Each RSU represents the right to receive one CDI. The fair value of such awards was determined using the weighted average closing CDI price on the grant date and compensation expense is recorded over the requisite service period. Awards vest in full on the grant date.
F-44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. Share-Based Compensation (Continued)
Activity of the Company's restricted stock units (RSUs) that are ultimately payable in CDIs stock granted under the 2018 Non-Executive Director Equity Incentive Plan is summarized below:
Restricted Stock Units Plan Activity
|
Number of
RSUs |
Weighted-Average
Grant Date Fair Value (per CDI) |
|||||
---|---|---|---|---|---|---|---|
Nonvested at December 31, 2017 |
| $ | | ||||
Granted |
54,687 | ||||||
Forfeited |
| ||||||
Vested |
(10,937.4 | ) | |||||
Nonvested at December 31, 2018 |
43,749.6 | $ | 2.84 |
(c) Short Term Incentive Plan
The amount of the STI award that each participant becomes entitled to each year (if any) will be determined by the Board and Compensation and Nominating Committee based on the achievement of set financial and non-financial performance targets. 50% of the award is to be delivered in cash after the release of the Companies audited full-year financial results and then 50% will be deferred for 12 months. The deferred component of the STI will be delivered as Restricted Stock Units ("RSUs") that will vest after the release of the Company's audited full year results following the year of the award.
Each RSU is an entitlement to receive one CDI (or, if the Board determines, the equivalent value in cash of common shares), plus additional CDIs (or the equivalent value in cash or common shares) equal to any distributions made until the RSU is settled. The RSU's are granted for nil consideration, as they form part of the participant's remuneration package.
The CEO is the only Director who is entitled to participate in the grant of RSUs under deferral arrangements in the STI Plan.
21. Income Taxes
Prior to August 13, 2018, the Company and its related entities were treated as partnerships for U.S. income tax purposes and therefore provided no income taxes within the financial statements. On August 13, 2018, the Company converted to a c-corporation and began to provide U.S. income taxes on the earnings of the Curragh operations. The Curragh entities are treated as a branch for U.S. tax purposes and all income flows through to the ultimate parent (the Company). On September 19, 2018, the legacy U.S. businesses were contributed to the Company and became taxable under the ownership of the Company at that time.
On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was enacted and revised the U.S. corporate income tax system. Among other changes, the Tax Act reduced the corporate income tax rates from 35% to 21%, implemented a territorial tax system, and imposed a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The law change had no immediate impact on the Company due to the partnership tax status prior to the Tax Act enactment. The Company is currently recording its income taxes in accordance with the new law.
F-45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Income Taxes (Continued)
Income (loss) from continuing operations before income taxes for the periods presented below consisted of the following:
(US$ thousands)
|
December 31,
2018 |
December 31,
2017 |
December 31,
2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
U.S. |
$ | 133,120 | $ | | $ | | ||||
Non-U.S. |
56,681 | | | |||||||
Total |
$ | 189,801 | $ | | $ | |
Total income tax expense for the periods presented below consisted of the following:
(US$ thousands)
|
December 31,
2018 |
December 31,
2017 |
December 31,
2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Current: |
||||||||||
U.S. federal |
$ | 12,613 | $ | | | |||||
NonU.S. |
7,493 | | | |||||||
State |
1,885 | | ||||||||
Total current |
21,991 | | ||||||||
Deferred: |
| | ||||||||
U.S. federal |
33,190 | | | |||||||
NonU.S. |
11,728 | | | |||||||
State |
8,303 | | | |||||||
Total deferred |
53,221 | | | |||||||
Total income tax expense |
$ | 75,212 | $ | |
The following is a reconciliation of the expected statutory federal income tax expense (benefit) to the Company's income tax benefit for the periods presented below:
(US$ thousands)
|
December 31,
2018 |
December 31,
2017 |
December 31,
2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Current: |
||||||||||
Expected income tax expense (benefit) at U.S. federal statutory rate |
$ | 39,858 | | | ||||||
Non-taxable income |
(21,777 | ) | | | ||||||
Non- Permanent differences taxable Income |
147 | | | |||||||
Initial recognition of deferred taxes |
40,557 | | | |||||||
Australian branch impact on US taxes |
13,236 | | | |||||||
State income taxes, net of federal benefit |
3,191 | | | |||||||
Total income tax expense |
$ | 75,212 | | | ||||||
Effective tax rate |
39.63 | % | | |
The Company is recording pre-tax book income for a full year of activity. As the Company was only subject to entity-level taxation in the U.S. for the Australian operations after August 13, 2018, and for the U.S. operations after September 19, 2018, the earnings prior to these dates, for the respective operations, were included as a permanent tax difference on the effective tax rate reconciliation.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax
F-46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Income Taxes (Continued)
purposes using the enacted tax rates and laws currently in effect. Significant components of the Company's deferred income tax assets and liabilities as of December 31, 2018 were as follows:
(US$ thousands)
|
December 31,
2018 |
December 31,
2017 |
|||||
---|---|---|---|---|---|---|---|
Deferred income tax assets: |
|||||||
Accruals and provisions |
$ | 27,632 | | ||||
Contract obligations |
171,790 | | |||||
Asset retirement obligations |
23,776 | | |||||
Interest limitation carried forward |
7,561 | | |||||
| | | | | | | |
Total deferred income tax assets |
230,759 | | |||||
| | | | | | | |
Deferred income tax liabilities: |
|||||||
Property, plant, equipment and mine development, principally due to differences in depreciation, depletion and asset impairments |
(238,342 | ) | | ||||
Warehouse stock |
(12,219 | ) | | ||||
U.S. liability on foreign deferred taxes |
(7,188 | ) | | ||||
Total deferred income tax liabilities |
(257,749 | ) | | ||||
Net deferred income tax asset (liability) |
(26,990 | ) | |
Unrecognized Tax Benefits
The Company utilizes the "more likely than not" standard in recognizing a tax benefit in the financial statements. The Company concluded that they do not have any unrecognized tax benefits for the year ended December 31, 2018. If accrual for interest or penalties is required, it is the Company's policy to include these as a component of income tax expense.
Tax Returns Subject to Examination
The Company will file its initial U.S. federal income tax return, various state returns, and foreign income tax returns during 2019. The Company and its wholly-owned subsidiary, Coronado Australia Holdings Pty Ltd, will also file its first initial return in Australia during 2019. As this is the Company's first filing in all jurisdictions, it is currently not subject to any open tax audits for periods before the year-ended December 31, 2018.
22. Derivatives and Fair Value Measurement
(a) Derivatives
During the year the Company entered into forward contracts to reduce its exposure to the variability of diesel fuel prices used in the operations at Curragh. The forward diesel fuel contracts are designated as cash flow hedges.
F-47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Derivatives and Fair Value Measurement (Continued)
Activity related to the Company's derivative instruments designated as cash flow hedges consisted of the following:
|
Amount of loss recognized from derivatives | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
Derivatives designated as hedging instruments |
2018 | 2017 | 2016 | Location of loss recognized from derivatives | |||||||
Designated forward fuel contracts |
3,782 | | | Other comprehensive income (loss), net of tax |
During the year the Company entered into a foreign exchange swap contract to hedge against the exposure fluctuations in the Australian Dollar against the US Dollar on the purchase price of Curragh between the Agreement date and the completion date. The Company elected not to formally designate the swaps as cash flow hedges. As such, the Company accounted for the foreign exchange swaps as an economic hedge and recorded at fair value at the end of each reporting period. Pursuant with ASC 815, the foreign exchange swaps were initially recorded at fair value and all subsequent changes were recorded to Other, net within the Consolidated Statements of Operations. As of December 31, 2018, the Company did not have any foreign exchange swaps outstanding.
|
Amount of loss recognized from derivatives | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
Derivatives not designated as hedging instruments |
2018 | 2017 | 2016 |
Location of loss
recognized from derivatives |
|||||||
Undesignated portion of foreign exchange swaps |
15,695 | | | Other, net |
(b) Fair Value of Financial Instruments
The fair value of a financial instrument is the amount that will be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of financial instruments involve uncertainty and cannot be determined with precision.
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
F-48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Derivatives and Fair Value Measurement (Continued)
Financial Instruments Measured on a Recurring Basis
As of December 31, 2018, the Company has the following liabilities that are required to be measured at fair value on a recurring basis:
The following tables set forth the hierarchy of the Company's net financial liabilities positions for which fair value is measured on a recurring basis as of December 31, 2018:
(US$ thousands)
|
Level 1 | Level 2 | Level 3 | Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Forward commodity contracts |
$ | | 5,402 | | 5,402 | ||||||||
Contingent royalty |
| | 17,216 | 17,216 | |||||||||
VSM |
| | 12,987 | 12,987 | |||||||||
| | | | | | | | | | | | | |
|
$ | | 5,402 | 30,203 | 35,605 | ||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The Company's net financial liability positions for which fair value is measured on a recurring basis as of December 31, 2017 was as follows:
(US$ thousands)
|
Level 1 | Level 2 | Level 3 | Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Contingent royalty |
| | 8,019 | 8,019 | |||||||||
| | | | | | | | | | | | | |
|
| | 8,019 | 8,019 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Contingent Royalty Consideration
The Company recorded a liability in relation to the five year contingent royalty consideration when it acquired Buchanan on March 31, 2016. The liability was initially valued at $900 on acquisition of Buchanan.
The fair value of the liability at December 31, 2018 and December 31, 2017 was $17,216 and $8,019, respectively. As a result of the valuation on December 31, 2018 a $9,197 increase in expense was recorded as part of royalties in the consolidated statements of operations to mark the liability to market for the year-ended December 31, 2018. As a result of the valuation on December 31, 2017 a $1,588 decrease in expense was recorded as part of royalties in the consolidated statements of operations to mark the liability to market for the year-ended December 31, 2017. As a result of the valuation on December 31, 2016, a $8,707 increase in expense was recorded as part of Royalties in the Consolidated Statements of Operations to mark the liability to market for the year-ended December 31, 2016. The Company developed a fair value of the royalty using the Black-Scholes option pricing formula for call options in a risk-neutral framework. Key assumptions in the valuation include
F-49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Derivatives and Fair Value Measurement (Continued)
the gross sales price forecast, export volume forecast, volatility, the risk-free rate, and credit-spread of the Company.
|
Quantitative Information about Level 3 Fair Value Measurements | ||||||||
---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Fair value at
December 31, 2018 |
Valuation
technique |
Unobservable input | Range (Weighted Avg.) | |||||
Contingent Royalty Liability |
17,216 | Option model | Gross sales price forecast per tonne | $91.03 to $120.34 ($99.27) | |||||
|
Export volume forecast (000's)
|
8,412 tonnes over 2 years and 3 months |
|||||||
|
Volatility |
13.80% |
|||||||
|
Risk-free rate |
2.43% to 2.61% (2.52%) |
|||||||
|
Company credit spread |
0.0348 |
Value Share Mechanism
The Company recorded a liability in relation to contingent consideration, specifically the VSM, when it acquired Curragh on 29 March 2018. On the date of acquisition, the VSM liability represented the fair value of a two-year 25% royalty on sales from met coal mined at Curragh. The royalty only applies to the realized price on metallurgical coal sales above $145 per metric tonne. This liability is marked-to-market at each reporting date, with any fluctuations included as an operating expense in the statement of operations.
F-50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Derivatives and Fair Value Measurement (Continued)
The fair value of the liability at December 31, 2018 and 2017 is $13.0 million and $0, respectively. The liability was initially valued at $26.6 million on March 29, 2018, the date of the acquisition of Curragh. As a result of the valuation on December 31, 2018, a $13.6 million decrease in expense was recorded as part of Other royalties in the consolidated statements of operations to mark the liability to market as at December 31, 2018. The Company developed a fair value of the royalty using the Monte Carlo pricing simulation. The Monte Carlo simulation performs risk analysis by building models of possible results by substituting a range of values for any factor that has inherent uncertainty (in this case the future coal prices). It then calculates results over and over, each time using a different set of random values from the probability functions. Key assumptions in the valuation include the risk-free rate, the tax rate, distribution, price volatility, and Foreign Exchange ("FX") rate.
The following is a summary of all the activity related to the contingent royalty liability and value share mechanism:
|
2018 activity | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Account
classification |
Contingent
Royalty Liability |
VSM |
Incurred
royalties |
Total | ||||||||||
Beginning balance at January 1, 2018: |
$ | 8,019 | 1,652 | 9,671 | |||||||||||
Beginning balance at March 29, 2018: |
$ | 26,552 | 26,552 | ||||||||||||
Statement of Operation activity: |
|||||||||||||||
Contingent liability / VSM expense incurred |
Other royalties | $ | $ | 34,752 | 34,752 | ||||||||||
Decrease in VSM Liability value |
Other royalties | $ | (13,565 | ) | (13,565 | ) | |||||||||
Increase in Contingent Royalty Liability value |
Other royalties | $ | 9,197 | 9,197 | |||||||||||
Total Statement of Operations activity: |
$ | 9,197 | (13,565 | ) | 34,752 | 30,384 | |||||||||
| | | | | | | | | | | | | | | |
Cash paid to CONSOL/Wesfarmers |
$ | (28,109 | ) | (28,109 | ) | ||||||||||
Balance sheet: |
|||||||||||||||
Royalties payable to CONSOL/Wesfarmers |
Accrued expenses and other liabilities | $ | 8,295 | 8,295 | |||||||||||
VSM Liability |
Contingent royalty considerationcurrent | $ | 12,987 | 12,987 | |||||||||||
Contingent Royalty Liability |
Contingent royalty consideration | $ | 17,216 | 17,216 | |||||||||||
| | | | | | | | | | | | | | | |
Total liabilities |
$ | 17,216 | 12,987 | 8,295 | 38,498 | ||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
F-51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Derivatives and Fair Value Measurement (Continued)
|
2017 activity | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(US$ thousands)
|
Account
classification |
Contingent Royalty
Liability |
Incurred
royalties |
Total | ||||||||
Beginning balance at January 1, 2017: |
$ | 9,607 | 5,316 | 14,923 | ||||||||
Statement of Operation activity: |
||||||||||||
Contingent liability expense incurred |
Other royalties | $ | 11,049 | 11,049 | ||||||||
Decrease in Contingent Royalty Liability value |
Other royalties | $ | (1,588 | ) | (1,588 | ) | ||||||
Total Statement of Operations activity: |
$ | (1,588 | ) | 11,049 | 9,461 | |||||||
Cash paid to CONSOL |
$ | (14,713 | ) | (14,713 | ) | |||||||
Balance sheet: |
||||||||||||
Royalties payable to CONSOL |
Accrued expenses and other liabilities | $ | 1,652 | 1,652 | ||||||||
Contingent Royalty Liability |
Contingent royalty consideration | $ | 8,019 | | 8,019 | |||||||
Total liabilities related to the Contingent Royalty Liability |
$ | 8,019 | 1,652 | 9,671 |
Other than the estimated fair values of the assets acquired, and liabilities assumed in connection with the acquisitions described in Note 3 and Note 17, which are level 3 fair value measurements, there are no other fair value measurements of assets and liabilities that are measured at fair value on a nonrecurring basis as of December 31, 2018 and December 31, 2017.
Assets acquired, and liabilities assumed in connection with acquisitions (refer to Note 3)The total cost of the acquisitions is allocated to the underlying identifiable net tangible and intangible assets based on their respective estimated fair value. Determining the fair value of assets acquired and liabilities assumed requires management's judgment, the utilization of independent valuation experts, and often involves the use of significant estimates and assumptions with respect to the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other things.
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
F-52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Derivatives and Fair Value Measurement (Continued)
replacement costs. The market approach is based on independent secondary market data (which generally constitute Level 2 inputs under the fair value hierarchy).
Other Financial Instruments
The following methods and assumptions are used to estimate the fair value of other financial instruments as of December 31, 2018 and 2017:
23. Commitments
(a) Mineral and Operating Leases
The Company leases mineral interest and surface rights from land owners under various terms and royalty rates. The Company also has operating lease commitments for certain buildings and mining equipment. The future minimum royalties and payments under these leases as of December 31, 2018 are as follows:
(US$ thousands)
|
Amount | |||
---|---|---|---|---|
Year ending December 31, |
||||
2019 |
19,917 | |||
2020 |
18,110 | |||
2021 |
13,751 | |||
2022 |
12,237 | |||
2023 |
12,231 | |||
Thereafter |
16,861 | |||
| | | | |
Total |
$ | 93,107 | ||
| | | | |
| | | | |
| | | | |
The above table includes amounts due under noncancelable leases with initial or remaining lease terms in excess of one year. Certain leases in the above table terminate when all mineable coal is mined; these leases are assumed to expire in 2026.
Rent expense amounted to $22.8 million, $8.9 million and $5.6 million, respectively, for the years ended December 31, 2018, 2017 and 2016.
F-53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
23. Commitments (Continued)
(b) Capital Leases
The Company is obligated under capital leases for certain equipment that expire in 2020. Future minimum capital lease payments as of December 31, 2018 and 2017 are:
(US$ thousands)
|
Short-term | Long-term | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance January 1, 2017 |
$ | 329 | 438 | 767 | ||||||
New capital lease obligations |
2,153 | 4,072 | 6,225 | |||||||
Repayments |
(1,402 | ) | | (1,402 | ) | |||||
Reclass to short-term |
746 | (746 | ) | | ||||||
Balance December 31, 2017 |
1,826 | 3,764 | 5,590 | |||||||
New capital lease obligations |
||||||||||
Repayments |
(1,801 | ) | | (1,801 | ) | |||||
Reclass to short-term |
1,283 | (1,283 | ) | | ||||||
Balance December 31, 2018 |
$ | 1,308 | 2,481 | 3,789 |
The gross book value of property, plant, and equipment under capital leases was $7.1 million and $7.1 million as of December 31, 2018 and 2017, respectively, related primarily to mining equipment. The accumulated depreciation for these items was $2.9 million and $0.9 million at December 31, 2018 and 2017, respectively, and changes thereto have been included in "Depreciation, depletion and amortization" in the consolidated statements of operations.
Future principal payments on capital leases as of December 31, 2018 are as follows:
(US$ thousands)
|
Amount | |||
---|---|---|---|---|
Year ending December 31, |
||||
2019 |
$ | 1,505 | ||
2020 |
2,569 | |||
Total minimum lease payments |
4,074 | |||
Less: Amount representing interest (6.25% interest) |
285 | |||
Present value of net minimum lease payments |
$ | 3,789 |
(c) Other commitments
As of December 31, 2018, purchase commitments for capital expenditures were $8.5 million, all of which is obligated within the next year.
The company has entered into fix price contracts to purchase fuel for the US operations. As of December 31, 2018, the commitment for fuel purchases were $11.3 million, all of which is obligated within the next year.
In Australia, the Company has generally secured the ability to transport coal through rail contracts and coal export terminal contracts that are primarily funded through take-or-pay arrangements with terms ranging up to 11 years. In the U.S., the Company typically negotiates its rail and coal terminal on an annual basis. As of December 31, 2018, these Australian and U.S. commitments under take-or-pay arrangements totaled $1.13 billion, of which approximately $111.3 million is obligated within the next year.
F-54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24. Contingencies
In the normal course of business, the Company is a party to certain guarantees and financial instruments with off balance sheets risk, such as bank letters of credit and performance or surety bonds. No liabilities related to these arrangements are reflected in the Company's consolidated balance sheets. Management does not expect any material losses to result from these guarantees or off balance sheets financial instruments.
As at December 31, 2018 Facility B of the SFA, as described in Note 14, has been utilized to issue A$343.2 million of bank guarantees on behalf of the Company. A significant portion of these bank guarantees have been issued in respect of the Company's asset retirement obligations.
Curragh is a co-defendant to proceedings in the Queensland Supreme Court brought by Aurizon. Aurizon's claim relates to costs relating to the co-defendants' use of the WICET rail linksin particular, whether the 'First Milestone Target Date', which triggers certain 'WIRP Fee' payments under the WIRP Deed, has been achieved. the Company intends to continue to strongly contest the matter together with the other WICET users who are joint defendants in the proceedings. The proceedings include a claim for damages for breach of contract against Curragh. While it is not possible to precisely quantify the Company's potential exposure as a result of this litigation, it is currently expected that, were Aurizon successful in proving the relevant elements of its claim, Coronado Curragh Pty would be required to pay approximately $2.3 million (Australian dollars) per annum for the term of the WIRP Deed (which is 233 months). Resolution of this dispute would also result in the Company's below rail access to WICET (of 1.5 Mtpa) becoming a firm contractual capacity entitlement (and the subject of a 20-year take-or pay access agreement) instead of an ad hoc entitlement only. The Company's consolidated balance sheet includes a liability to cover our potential exposure from the date of the WIRP Deed to December 31, 2018 of $3.5 million.
The Company is involved in various other legal proceedings from time to time in the normal course of business including proceedings related to employment matters. At December 31, 2018 and 2017, the Company's consolidated balance sheets include liabilities for these legal actions of $0.2 million and $0.5 million, respectively.
The liabilities recorded in relation to the above litigations do not include costs associated with legal representation. In management's opinion, the Company is not currently involved in any legal proceedings, which individually or in the aggregate could have a material effect on the financial condition, results of operations and/or liquidity of the Company.
25. Related Party Transactions
Imagin Minerals, Inc.
The Company has entered into an office sharing arrangement with Imagin Minerals, Inc. (Imagin) whereby it has the right to utilize Imagin's premises and to jointly utilize office resources including office personnel. Imagin is wholly-owned by Mr. Garold Spindler, CEO of the Company. 50% of the expenses incurred by Imagin under this arrangement are expensed to the Company. Such expenses in the amount of $0.1 million, $0.1 million and $0, respectively, are recorded as selling, general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016. Accrued expenses due to Imagin of $0.02 million and $0.03 million, respectively, are recorded on the December 31, 2018 and 2017 consolidated balance sheets.
F-55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. Related Party Transactions (Continued)
JEP
Additionally, in connection with the JEP Variable Interest Entity, the Company issued a note receivable to their partner in JEP, SYR in 2013. The note provides additional capital to SYR to aid them in funding JEP. At December 31, 2018, the note had a balance of $0.6 million with related interest receivable of $0.2 million. As of December 31, 2017, the note had a balance of $0.5 million with related interest receivable of $0.1 million. These balances are included in related party receivables.
X-Coal
During the year the company sold coal to Xcoal Energy and Resources ("Xcoal"), an entity associated with Non-Executive director, Mr. Ernie Thrasher. Revenue from Xcoal of $444.9 million, $371.7 million and $217.2 million, respectively, are recorded as coal revenues on the consolidated statement of operations for the years ended December 31, 2018, 2017 and 2016. At December 31, 2018 amounts due from Xcoal in respect of coal sales are $36.0 million. As of December 31, 2017, amounts due from Xcoal in respect of coal sales were $42.9 million. These balances are included in related party receivables.
Wiggins Island Coal Export Terminal Pty Ltd
Wiggins Island Coal Export Terminal Pty Ltd (WICET) became a related party when Garold Spindler, a director of the company, became a Curragh representative director on the WICET board of directors in May 2018. WICET is one of the two providers of port services to the Company's Australian operations. Port services cost incurred for the WICET terminal during the period from when WICET become a related party to December 31, 2018 was $16.4 million. Accrued expenses due to WICET of $6.8 million are recorded on the December 31, 2018 consolidated balance sheets.
Coronado Group LLC
Under Coronado Group LLC agreement (as amended, effective October 23, 2018), 2,900 management incentive units were designated and authorized for issuance to certain members of management to motivate and retain senior management. The plan is designated to allow key members of management to share in the profits of the Company after certain returns are achieved by the equity investors. The incentive units constitute "profit interests" for the benefit of senior management in consideration of services rendered and to be rendered. At December 31, 2018, 2,900 management incentive units were outstanding.
As described in Note 1, Coronado Coal LLC and Coronado II LLC merged to form Coronado Group LLC in July 2015. Coronado IV LLC was merged into Coronado Group LLC on June 30, 2016. Under the updated formation agreement dated June 30, 2016, the 2,500 designated and authorized units under the initial formation of Coronado Group LLC were replaced by these new units. At December 31, 2017, 2,680 management incentive units were outstanding.
The new incentive units are comprised of three tiers, which entitle the holders to receive distributions from Coronado Group LLC subordinate to the distributions to be received by Members. As of December 31, 2017, a portion of the authorized units have been allocated to various members of the Company's management including Mr. Garold Spindler, CEO, and Mr. James Campbell, President and COO, both of whom are also members of Coronado Group LLC.
F-56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. Related Party Transactions (Continued)
Stockholder's Agreement and Registration Rights and Sell-Down Agreement
Following the IPO, Coronado Group LLC has beneficial ownership in the aggregate of 80% of the Company's Shares. On September 24, 2018, Coronado Group LLC and the Company entered into a Stockholder's Agreement and a Registration Rights and Sell-Down Agreement which governs the relationship between Coronado Group LLC and the Company while the EMG Group beneficially owns in the aggregate at least 50% of our outstanding shares of common stock (including shares of common stock underlying CDIs), including certain governance matters relating to the Company. Under this Agreement, Coronado Group LLC has the ability to require the Company to register its shares under the US Securities Exchange Act of 1934 and to provide assistance to Coronado Group LLC in selling some or all of its shares (including in the form of CDIs).
The Stockholder's Agreement provides for the following:
Relationship Deed
On 24 September 2018, the Company and Coronado Group LLC entered into a Relationship Deed under which the Company provides a number of indemnities in favor of Coronado Group LLC, including in relation to certain Offer-related matters and also certain guarantees that have in the past been provided or arranged by Coronado Group LLC and its Affiliates in support of Company obligations. Under the Relationship Deed, Coronado Group LLC also agrees to indemnify the Company in relation to certain Offer-related matters and reimburse certain costs
26. Subsequent Events
In the period between the end of the financial year and the date of this report there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of
F-57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. Subsequent Events (Continued)
the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years, other than the following:
Subsequent to the end of the financial period, the Directors have declared a dividend of $0.31 per CDI which is made up of an ordinary dividend of $0.06 per CDI and a special dividend of $0.25 per CDI. The dividend will have a record date of 5 March 2019 and be payable on 29 March 2019. CDI's will be quoted "ex" dividend on 4 March 2019.
F-58
Coronado Curragh Pty Ltd
and its controlled entities
(formerly Wesfarmers Curragh Pty Ltd)
In accordance with a resolution of the directors of Coronado Curragh Pty Ltd, the directors are of the opinion that:
On behalf of the board | ||
/s/ A SARIDAS A Saridas Director Brisbane 18 April 2019 |
|
|
F-59
REPORT OF INDEPENDENT AUDITORS
To the members of Coronado Curragh Pty Ltd
We have audited the accompanying consolidated financial statements of Coronado Curragh Pty Ltd and controlled entities (the Company), which comprise the consolidated statements of financial position as of 31 December 2015, 2016 and 2017, and the related consolidated statements of profit and loss and other comprehensive income, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and in conformity with Australian Accounting Standards as issued by the Australian Accounting Standards Board; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Coronado Curragh Pty Ltd and its controlled entities at 31 December 2015, 2016 and 2017, and the consolidated results of their operations and their cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and in conformity with Australian Accounting Standards as issued by the Australian Accounting Standards Board.
/s/
Ernst & Young
Brisbane, Australia
18 April 2019
F-60
Consolidated statement of profit or loss and other comprehensive income
for the 12 month periods ended 31 December 2017, 2016 and 2015
F-61
Consolidated statement of financial position
As at 31 December 2017, 2016 and 2015
F-62
Consolidated statement of changes in equity
for the 12 month periods ended 31 December 2017, 2016 and 2015
|
Note |
Contributed
equity $'000 |
(Accumulated
losses)/ retained earnings $'000 |
Total
equity $'000 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at 1 January 2014 (Unaudited) |
| 118,754 | 118,754 | |||||||||
Net loss for the year (Unaudited) |
| (139,674 | ) | (139,674 | ) | |||||||
Other comprehensive loss for the year (Unaudited) |
| | | |||||||||
| | | | | | | | | | | | |
Total comprehensive loss for the year (Unaudited) |
| (139,674 | ) | (139,674 | ) | |||||||
| | | | | | | | | | | | |
Transactions with equity holders in their capacity as equity holders: |
||||||||||||
Equity dividends (Unaudited) |
21 | | (20,000 | ) | (20,000 | ) | ||||||
| | | | | | | | | | | | |
Balance at 31 December 2014 (Unaudited) |
| (40,920 | ) | (40,920 | ) | |||||||
| | | | | | | | | | | | |
Balance at 1 January 2015 |
| (40,920 | ) | (40,920 | ) | |||||||
Net loss for the year |
| (145,514 | ) | (145,514 | ) | |||||||
Other comprehensive loss for the year |
| | | |||||||||
| | | | | | | | | | | | |
Total comprehensive loss for the year |
| (145,514 | ) | (145,514 | ) | |||||||
| | | | | | | | | | | | |
Transactions with equity holders in their capacity as equity holders: |
||||||||||||
Equity dividends |
21 | | (6,000 | ) | (6,000 | ) | ||||||
Balance at 31 December 2015 |
| (192,434 | ) | (192,434 | ) | |||||||
Balance at 1 January 2016 |
| (192,434 | ) | (192,434 | ) | |||||||
Net loss for the year |
| (585,021 | ) | (585,021 | ) | |||||||
Other comprehensive loss for the year |
| | | |||||||||
| | | | | | | | | | | | |
Total comprehensive loss for the year |
| (585,021 | ) | (585,021 | ) | |||||||
| | | | | | | | | | | | |
Balance at 31 December 2016 |
| (777,455 | ) | (777,455 | ) | |||||||
| | | | | | | | | | | | |
Balance at 1 January 2017 |
| (777,455 | ) | (777,455 | ) | |||||||
Net profit for the year |
| 37,277 | 37,277 | |||||||||
Other comprehensive loss for the year |
| | | |||||||||
| | | | | | | | | | | | |
Total comprehensive income for the year |
| 37,277 | 37,277 | |||||||||
| | | | | | | | | | | | |
Transactions with equity holders in their capacity as equity holders: |
||||||||||||
Contribution from ultimate parent |
22 | 919,749 | | 919,749 | ||||||||
| | | | | | | | | | | | |
Balance at 31 December 2017 |
919,749 | (740,178 | ) | 179,571 | ||||||||
| | | | | | | | | | | | |
F-63
Consolidated statement of cash flows
for the 12 month periods ended 31 December 2017, 2016 and 2015
|
(Unaudited) | ||||||||||||||
|
Note |
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Receipts from customers |
1,795,648 | 823,586 | 1,084,467 | 1,257,454 | |||||||||||
Payments to suppliers and employees |
(1,313,103 | ) | (917,469 | ) | (1,077,599 | ) | (1,086,571 | ) | |||||||
Interest received |
268 | 1,146 | | | |||||||||||
| | | | | | | | | | | | | | | |
Net cash flows from/(used in) operating activities |
8 | 482,813 | (92,737 | ) | 6,868 | 170,883 | |||||||||
| | | | | | | | | | | | | | | |
Cash flows from investing activities |
|||||||||||||||
Payments for property, plant and equipment |
(59,280 | ) | (87,712 | ) | (140,887 | ) | (179,652 | ) | |||||||
Proceeds from sale of property, plant and equipment |
1,763 | 174 | | | |||||||||||
| | | | | | | | | | | | | | | |
Net cash flows used in investing activities |
(57,517 | ) | (87,538 | ) | (140,887 | ) | (179,652 | ) | |||||||
| | | | | | | | | | | | | | | |
Cash flows from financing activities |
|||||||||||||||
Proceeds from borrowings |
| 169,365 | 104,218 | 50,364 | |||||||||||
Repayment of borrowings |
(403,545 | ) | | | | ||||||||||
Receipts/(payments) under the tax funding arrangement |
60,393 | 10,098 | (8,900 | ) | (14,383 | ) | |||||||||
Related party transfers |
(77,264 | ) | | | | ||||||||||
Equity dividends paid |
| | (6,000 | ) | (20,000 | ) | |||||||||
| | | | | | | | | | | | | | | |
Net cash flows (used in)/ from financing activities |
(420,416 | ) | 179,463 | 89,318 | 15,981 | ||||||||||
| | | | | | | | | | | | | | | |
Net increase/(decrease) in cash and cash equivalents |
4,880 | (812 | ) | (44,701 | ) | 7,212 | |||||||||
Cash and cash equivalents at beginning of year |
6,192 | 7,004 | 51,705 | 44,493 | |||||||||||
| | | | | | | | | | | | | | | |
Cash and cash equivalents at end of year |
8 | 11,072 | 6,192 | 7,004 | 51,705 | ||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
F-64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
1. Corporate information
The consolidated financial statements of Coronado Curragh Pty Ltd (the "Company" or "Curragh") and its controlled entities (collectively referred to as the "Group') for the 12 month periods ended 31 December 2017, 31 December 2016 and 31 December 2015 were authorized by a resolution of directors for issue on 18 April 2019. As at that date Curragh is a wholly owned subsidiary of Coronado Global Resources Inc.
Curragh is a for-profit company limited by shares incorporated and domiciled in Australia. The nature of the operations and principal activities of the Group are described in the segment information (refer to Note 4).
2. Basis of preparation and summary of significant accounting policies
a) Basis of preparation
The consolidated financial statements are general purpose financial statements which:
The consolidated financial statements:
The consolidated financial statements for the 12 month period 31 December 2015 are the first consolidated general purpose financial statements prepared by the Group. In prior years, to meet the needs of the Parent Entity for consolidation purposes, the Group prepared an internal reporting package in accordance with the recognition and measurement principles of Australian Accounting Standards ("AAS") without preparing or presenting a complete set of financial statements as defined by AASB 101 Presentation of Financial Statements (as revised in 2007).
In preparing the consolidated financial statements for the 12 month period ended 31 December 2015, the Group applied AASB 1 First-time Adoption of Australian Accounting Standards ("AASB 1")
F-65
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
which is the Australian equivalent of IFRS 1 First-time Adoption of International Financial Reporting Standards ("IFRS 1"). In this regard the Group considered the transitional exceptions and exemptions in AASB 1 and has elected not to apply:-
In addition, in preparing the first set of consolidated financial statements for the 12 month period ended 31 December 2015, the Group early adopted AASB 9 Financial Instruments as issued in July 2014. In accordance with the transitional provisions in AASB 1, the assessment of the classification and measurement of financial assets was based on the facts and circumstances that existed at the date of transition to AAS, 1 January 2014. Furthermore, at the date of transition, the directors concluded that it would require undue cost and effort to determine the credit risk of financial assets at the date they were initially recognised. Accordingly, for the purposes of impairment, the Group recognises lifetime expected credit losses on those financial assets held at the date of transition to AAS until such time as those individual financial asset are derecognised.
In each of the 12 month periods ended 31 December 2016 and 2017 the Group adopted all new and amended Accounting Standards and Interpretations that were effective for that reporting period. The adoption of these new and amended Standards and Interpretations had no impact on the Group's accounting policies. Accordingly, the significant accounting policies of the Group have been consistently applied across all periods presented.
Going concern
Having regard to the Group's financial position and its cash flow forecasts, the directors are of the opinion that the Group will be able to pay its debts as and when they fall due. Accordingly, the consolidated financial statements have been prepared on a going concern basis.
Consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has all of the following:
F-66
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
Generally, there is a presumption that a majority of voting rights results in control. When the Group has less than a majority of the voting, or similar, rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
The relevant activities are those which significantly affect the subsidiary's returns. The ability to approve the operating and capital budget of a subsidiary and the ability to appoint key management personnel are decisions that demonstrate that the Group has the existing rights to direct the relevant activities of a subsidiary.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
b) Foreign currency
Items included in the financial statements of each entity within the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in Australian Dollars, which is also the parent company's functional currency. Foreign currency transactions are translated into the functional currency using the exchange rates at the date of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss.
c) Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing
F-67
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are set out as follows:
Key Judgements
Onerous contracts
The Group assesses whether the economic benefits to be received under a contract exceed the expected costs of fulfilling its obligations in relation to the contracts. In relation to the Group's domestic coal supply commitments to Stanwell Corporation ("Stanwell") under the Stanwell Coal Supply Agreement ("Stanwell CSA") the Group incorporates in its assessment all benefits under the Stanwell CSA, including the right to mine export coking coal over the defined term of the agreement.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping costs both during the development phase and production phase of its operations. Stripping costs incurred in the development phase of a mine, before the production phase commences ("development stripping"), are capitalised as part of the cost of constructing the mine and subsequently amortised over its useful life. The capitalisation of development stripping costs ceases when the mine is commissioned and ready for use as intended by management. Stripping activities undertaken during the production phase of a surface mine ("production stripping") are generally considered to create two benefits, being either the production of inventory or improved access to a component of the ore to be mined in the future. Significant judgement is required to distinguish between development stripping and production stripping and to distinguish between the production stripping that relates to the extraction of inventory and that which relates to the creation of a stripping activity asset.
For the purposes of applying its accounting policy on stripping costs, the Group identifies the separate components of its mining operations based on information available in the mine plan in consultation with the mining operations personnel. Judgement is also required to allocate production stripping costs between inventory and any stripping activity asset for each component. The Group considers that the ratio of the expected volume of waste to be stripped for an expected volume of ore to be mined for a specific component of the ore body, to be the most suitable production measure. Given the nature of the Groups operations, a stripping activity asset is generally recognised in advance of production.
Key Estimates
Mineral reserves and resources
The Group estimates its mineral reserves and resources in accordance with the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the 'JORC code').
Estimates of the quantities of proven and probable coal reserves and resources form the basis for the life of mine ("LOM") plans, which are used for a number of important business and accounting purposes, including:
F-68
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
In addition, the underlying LOM plans are used in the impairment assessment for non-current assets.
Coal reserve and resource estimates are imprecise and depend partly on statistical inferences drawn from drilling and other data, which may prove to be unreliable. Future production could differ from reserve estimates for the following reasons:
Any of these factors may require the Group to reduce coal reserve and resource estimates.
Impairment of non-current assets
The Group determines whether assets are impaired or previous impairments need to be reversed at least on an annual basis having due regard to impairment triggers. If a trigger exists, the recoverable amount of a cash generating unit ("CGU") is determined using fair value less costs of disposal ("FVLCOD") which considers both JORC reserves and JORC resources. Expected future cash flows used to determine FVLCOD of non-current assets are inherently uncertain and could materially change over time.
These projections are discounted based on a weighted average cost of capital determined by the prevailing or benchmark market inputs, risk adjusted where necessary.
Key assumptions include long term coal prices, AUD/USD exchanges rates and mine cash costs escalations and are determined with reference to external and internal sources of information. It is reasonably possible that these assumptions may change which may then impact the estimated LOM which could result in a material adjustment to the carrying value of non-current assets.
Estimation of useful lives and residual value of assets
Useful lives and residual values of plant and equipment are reviewed annually. Judgement is applied in determining the useful lives and residual value of property, plant and equipment. These judgements are determined in consultation with internal technical experts and with reference to any technical specifications as obtained from the supplier of the specific asset or its component. Any reassessment of useful lives and residual value in a particular period will affect depreciation and amortisation expense (either increasing or decreasing) from the date of reassessment through to the end of the reassessed useful life for both the current and future periods.
F-69
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
Rehabilitation provision
The provision for future rehabilitation costs is the best estimate of the present value of the expenditure required to settle the legal and constructive obligations at the reporting date. These costs are estimated internally based on engineering and feasibility studies to determine the extent of rehabilitation activity based on activity to date. Costs of site rehabilitation are discounted using a risk free rate taking into account an estimation of the timing of rehabilitation based on the expected life of the related assets.
Future rehabilitation costs are reviewed annually and any changes in the estimate are reflected in the present value of the rehabilitation provision provided at each reporting date. Significant estimates and assumptions are made in determining the provision for mine rehabilitation, including estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates and changes in discount rates that may affect the ultimate liability payable. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provisions at balance date represent management's best estimate of the present value of the future rehabilitation costs required.
d) Revenue
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Curragh's export contracts operate on a 'free on board' basis and therefore risks and rewards have passed to the buyer when the goods pass over the ship's rail. Certain sales are subject to quotational period price adjustment post-delivery.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.
e) Borrowing costs
Borrowing costs are recognised as an expense when they are incurred, except for interest charges attributable to major projects with substantial development and construction phases which are capitalised as part of the cost of the asset. Provisions and other payables are discounted to their present value when the effect of the time value of money is significant. The impact of the unwinding of these discounts and any changes to the discounting is shown as unwind of discount rate in finance costs.
F-70
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
f) Leasesoperating leases
Operating lease payments are recognised as an expense in the statement of profit or loss and other comprehensive income on a straight line basis for the period in which the costs relate. Operating lease incentives are recognised as a liability when received and released to earnings on a straight line basis over the lease term.
Fixed rate increases to lease payments, excluding contingent or index based rental increases, such as Consumer Price Index and other similar increases, are recognised on a straight line basis over the term of the lease. An asset or liability is recognised for the difference between the amount paid and the lease expense released to earnings on a straight line basis.
g) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and on hand and short-term deposits with an original maturity of three months or less.
h) Trade and other receivables
Trade receivables are initially recognised at their transaction price and other receivables at fair value. Receivables that are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest are classified and subsequently measured at amortised cost. Receivables that do not meet the criteria for amortised cost are measured at fair value through profit or loss. This category includes trade receivables relating to sales that are subject to quotational period pricing adjustment post shipment.
The group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognises the lifetime expected credit loss for trade receivables carried at amortised cost. The expected credit losses on these financial assets are estimated based on the Group's historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as forecast conditions at the reporting date.
For all other receivables measured at amortised cost, the Group recognised lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. If on the other hand the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to expected credit losses within the next 12 months ("12m ECL").
The Group considers an event of default has occurred when a financial asset is more than 180 days past due or external sources indicate that the debtor is unlikely to pay its creditors, including the Group. A financial asset is credit impaired when there is evidence that the counterparty is in significant financial difficulty or a breach of contract, such as a default or past due event has occurred. The Group writes off a financial asset when there is information indicating the counterparty is in severe financial difficulty and there is no realistic prospect of recovery. The amount of the impairment loss is recognised in the consolidated statement of profit or loss and other comprehensive income within other
F-71
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
expenses. Subsequent recoveries of amounts previously written-off are credited against other expenses in the consolidated statement of profit or loss and other comprehensive income.
i) Reimbursement rightlong service leave
Long service leave is paid when leave is taken, with a subsequent reimbursement received from the Coal Mining Industry Long Services Leave Trust Fund ("Trust Fund"). The reimbursement asset for long service leave is recognised in current receivables and is measured at the amount of the long service leave obligation recognised at reporting date recoverable from the Trust Fund.
j) Inventories
Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
The cost of coal inventories is determined using a weighted average basis. Cost includes direct material, overburden removal, mining, processing, labour, depreciation, mine rehabilitation costs incurred in the extraction process and other fixed and variable overhead costs directly related to mining activities. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the tonnes of contained coal are based on assay data, and the estimated recovery percentage is based on the expected processing method.
Stockpile tonnages are verified by periodic surveys.
Materials and supplies are valued at the lower of cost and net realisable value. Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence.
k) Income tax
All entities within the Group are part of the Wesfarmers' tax consolidated group up until transfer of ownership, effective 29 March 2018. Wesfarmers Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement, which provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default is considered remote.
Current tax, deferred tax liabilities and deferred tax assets arising from temporary differences are allocated to members of the tax consolidated group using a 'group allocation approach". In this regard temporary differences are measured with reference to the carrying amount of assets and liabilities and the tax values within the tax consolidated group. Temporary differences are not recognised for transactions that do not give rise to a tax consequence for the tax consolidated Group. Any current tax liabilities or assets and unused tax losses of the member entity are assumed by the head entity of the tax consolidated group and are recognised as amounts payable to/(receivable from) the Parent Entity in accordance with the tax funding arrangement in place. Any difference in these amounts is recognised by the member entity as an equity contribution from or distribution to the head entity. Deferred tax assets, other than for tax losses, are recognised in the Group to the extent they are recoverable within the Wesfarmers tax consolidated group.
F-72
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
l) Other taxes
Revenues, expenses and assets are recognised net of the amount of goods and services tax ('GST'), except:
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, is classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
m) Property, plant and equipment
Initial recognition and depreciation / amortisation
Freehold land
Leasehold improvements
Mineral lease and development costs (Mine property)
F-73
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
Plant, vehicles and equipment
Useful lives and estimated residual value of property, plant and equipment are reviewed annually.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in consolidated statement of profit or loss and other comprehensive income in the period the item is derecognised.
Production stripping
Production stripping is generally considered to create two benefits, being either the production of inventory or improved access to a component of the ore to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are realised in the form of improved access to ore to be mined in the future, the costs are recognised as a non-current asset, if the following criteria are met:
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If incidental operations are occurring at the same time as the production stripping activity, but are not necessary for the production stripping activity to continue as planned, these costs are not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping activity asset are not separately identifiable, a waste to ore strip ratio is used to allocate the production stripping costs between the inventory produced and the stripping activity asset. This production measure is calculated for the identified component of the ore body and is used as a benchmark to identify the extent to which the additional activity of creating a future benefit has taken place.
The stripping activity asset is accounted for as an addition to mine property. The stripping activity asset is subsequently depreciated using the UOP method over the life of the identified component of the ore body that became more assessable as a result of the stripping activity.
F-74
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
Impairment of non-current assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired or previous impairments reversed. If any such indication exists, the Group makes an estimate of the asset's recoverable amount.
An asset's recoverable amount is the higher of its fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases, the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset or cash generating unit is considered impaired and is written down to its recoverable amount.
In determining fair value less costs of disposal, a discounted cash flow model is used. These calculations are compared to valuation multiples, or other fair value indicators where available, to ensure reasonableness. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. Where the recoverable amount is sensitive to changes in key variables, these sensitivities are considered in estimating the possible recoverable amount outcomes. A previously recognised impairment loss is reversed only if there has been a change in the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
n) Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade payables are non-interest bearing and are normally settled on terms up to 60 days.
o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transactions costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
F-75
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
p) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability, to the extent they are not already reflected in the cash flows.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Mine and plant rehabilitation
Mine rehabilitation costs will be incurred by the Group either while operating, or at the end of the operating life of, the Group's facilities and mine properties. The Group assesses its mine rehabilitation provision at each reporting date. The Group recognises a rehabilitation provision where it has a legal and constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. The nature of these restoration activities includes: dismantling and removing structures; rehabilitating mines and tailings dams; dismantling operating facilities; closing plant and waste sites; and restoring, reclaiming and revegetating affected areas.
The obligation generally arises when the asset is installed or the ground/environment is disturbed at the mining operation's location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related mining assets to the extent that it was incurred as a result of the development/construction of the mine. Any rehabilitation obligations that arise through the production of inventory are recognised as part of the related inventory item. Additional disturbances which arise due to further development/construction at the mine are recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Costs related to restoration of site damage (subsequent to start of commercial production) that is created on an ongoing basis during production are provided for at their net present values and
F-76
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
recognised in profit or loss as extraction progresses. Changes in the estimated timing of rehabilitation or changes to the estimated future costs are dealt with prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, if the initial estimate was originally recognised as part of an asset recognised.
Any reduction in the rehabilitation liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the consolidated statement of profit or loss and other comprehensive income.
If the change in estimate results in an increase in the rehabilitation liability and an addition to the carrying value of the asset, the Group considers whether this is an indication of impairment of the asset as a whole, and if so, tests for impairment.
Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognised in the consolidated statement of profit or loss and other comprehensive income as part of finance costs. For closed sites, changes to estimated costs are recognised immediately in the consolidated statement of profit or loss and other comprehensive income.
q) Employee benefits
Wages and salaries
Liabilities for wages and salaries, including non-monetary benefits expected to be settled within 12 months of the reporting date, are recognised in provisions and other payables in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave and annual leave
The Group does not expect its long service leave or annual leave benefits to be settled wholly within 12 months of each reporting date. The Group recognises a liability for long service leave and annual leave measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
Sick leave
The liability for vesting sick leave is recognised in the provision for employee benefits.
Consideration is given to the entitlement under the Collective Agreement and expected future wage levels. Expected future payments are discounted using market yields at the reporting date on national government bonds.
F-77
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
2. Basis of preparation and summary of significant accounting policies (Continued)
r) Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into with its parent entity and are subsequently measured at fair value through profit or loss. Derivatives are carried as financial assets when their value is positive and as financial liability when their value is negative.
s) Financial guarantee contracts
Financial guarantee contracts are initially measured at their fair value and are subsequently measured at the higher of:
3. Subsidiaries
The consolidated financial statements of the Group include the following subsidiaries:
|
Equity holding | ||||||||||||
|
(Unaudited)
|
||||||||||||
| | | | | | | | | | | | | |
Name of entity
|
2017 | 2016 | 2015 | 2014 | |||||||||
|
%
|
%
|
%
|
%
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Curragh Coal Sales Co Pty Ltd |
100 | 100 | 100 | 100 | |||||||||
Curragh Queensland Mining Pty Ltd |
100 | 100 | 100 | 100 |
All entities listed above are incorporated in Australia and utilise the Australian dollar as their functional currency.
4. Segment information
The Group operates a metallurgical and steaming coalmine in Queensland's Bowen Basin for the purpose of supplying to export and domestic markets. For management purposes, the Group is organised into one operating segment in Australia.
All of the Group's activities are interrelated, and discrete financial information is reported to the Chief Executive Officer (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment.
As the Group has only one reportable segment, the profit for the segment includes all income and expense items of the Group and the assets of the segment include all of the Group's assets as at balance date.
F-78
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
4. Segment information (Continued)
The table below provides information on the geographical location of revenue. Revenue from external customers is allocated to a geography based on the final shipping destination.
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Japan |
569,114 | 316,697 | 412,822 | 394,359 | |||||||||
India |
464,230 | 312,316 | 302,603 | 316,061 | |||||||||
Korea |
288,440 | 130,362 | 128,686 | 143,553 | |||||||||
Germany |
156,619 | 84,342 | 67,569 | 63,799 | |||||||||
Australia |
127,146 | 107,381 | 103,000 | 116,122 | |||||||||
Taiwan |
91,540 | 45,508 | 46,193 | 62,956 | |||||||||
China |
80,492 | | 21,655 | 28,586 | |||||||||
Brazil |
10,223 | 8,974 | 29,175 | 15,372 | |||||||||
Singapore |
4,591 | | | | |||||||||
France |
| | 7,221 | 30,528 | |||||||||
Pakistan |
| | 14,609 | 19,596 | |||||||||
Switzerland |
| 3,591 | | 637 | |||||||||
Other |
114 | 270 | | 565 | |||||||||
| | | | | | | | | | | | | |
|
1,792,509 | 1,009,441 | 1,133,533 | 1,192,134 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Included within revenue for the segment are customers each year that represent more than 10% of the Group's total revenue annually. The breakdown of revenues generated from these customers, in periods where their turnover was greater than 10%, were as follows:
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Customer A |
391,859 | 219,743 | 233,892 | 233,776 | |||||||||
Customer B |
n/a | 148,862 | 175,550 | 161,858 | |||||||||
Customer C |
n/a | 107,381 | 94,258 | n/a | |||||||||
Customer D |
201,779 | n/a | n/a | 124,383 | |||||||||
| | | | | | | | | | | | | |
|
593,638 | 475,986 | 503,700 | 520,017 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
5. Capital Management
The Board of Wesfarmers Limited (Group's ultimate parent entity, during the periods which these financial statements relate), as part of its group capital management objective, reviews the Group's capital structure on an ongoing basis. The Group's objective is to maintain an optimal capital structure which minimises its cost of capital whilst ensuring sustainable future development of the business. In order to adjust the capital structure, the Group may adjust the level of distributions it pays to equity holders.
F-79
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
6. Revenue and Expenses
|
|
|
|
(Unaudited)
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
Revenue from sale of goods |
|||||||||||||
Export coal sales |
1,688,020 | 902,060 | 1,046,961 | 1,094,075 | |||||||||
Domestic coal sales |
104,489 | 107,381 | 86,572 | 98,059 | |||||||||
| | | | | | | | | | | | | |
|
1,792,509 | 1,009,441 | 1,133,533 | 1,192,134 | |||||||||
| | | | | | | | | | | | | |
Royalty expenses |
|||||||||||||
Government mining royalties |
(172,151 | ) | (72,190 | ) | (80,006 | ) | (86,611 | ) | |||||
Stanwell rebate expense |
(191,794 | ) | (59,155 | ) | (102,341 | ) | (73,242 | ) | |||||
| | | | | | | | | | | | | |
|
(363,945 | ) | (131,345 | ) | (182,347 | ) | (159,853 | ) | |||||
| | | | | | | | | | | | | |
The Stanwell rebate relates to a contractual arrangement entered into by the Group with Stanwell Corporation Limited, a State of Queensland owned electricity generator, which requires payment of a rebate for export coal sold from some of the Group's mining tenements. The rebate obligation is accounted for as an executory contract. Accordingly, the expense is recognised as incurred.
In November 2016 the Group settled a long standing dispute with Stanwell regarding calculation of the rebates payable. The financial impact of the settlement has been recorded in 2015 financial year, being the year the claim arose.
Other operating income/expense
|
|
|
|
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Unrealised derivative gains/(losses) |
47,472 | 81,770 | (50,054 | ) | (106,574 | ) | |||||||
Realised derivative (losses)/gains |
(48,073 | ) | (89,905 | ) | (83,905 | ) | 13,198 | ||||||
Gains/(loss) on disposal of property, plant and equipment |
(1,031 | ) | 174 | (1,540 | ) | (11,916 | ) | ||||||
Rental income |
1,441 | 2,094 | 3,637 | 2,947 | |||||||||
Other |
2,563 | 3,968 | 2,052 | 2,467 | |||||||||
| | | | | | | | | | | | | |
|
2,372 | (1,899 | ) | (129,810 | ) | (99,878 | ) | ||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Employee benefits expense
|
|
|
|
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Wages and salaries |
(71,101 | ) | (64,398 | ) | (71,259 | ) | (96,292 | ) | |||||
Post-employment benefits expense |
(4,798 | ) | (4,452 | ) | (5,246 | ) | (6,766 | ) | |||||
Other |
(50 | ) | (302 | ) | (180 | ) | (525 | ) | |||||
| | | | | | | | | | | | | |
|
(75,949 | ) | (69,152 | ) | (76,685 | ) | (103,583 | ) | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
F-80
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
6. Revenue and Expenses (Continued)
Depreciation and amortisation expense
|
|
|
|
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Depreciation and amortisation expense |
(42,198 | ) | (90,107 | ) | (150,191 | ) | (132,233 | ) | |||||
| | | | | | | | | | | | | |
|
(42,198 | ) | (90,107 | ) | (150,191 | ) | (132,233 | ) | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Impairment expense
|
|
|
|
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Impairment of property, plant, equipment (refer to note 18). |
| (780,445 | ) | | | ||||||||
Loss allowance recognised on WICET preference security receivable (refer note 9) |
| (19,555 | ) | | | ||||||||
| | | | | | | | | | | | | |
|
| (800,000 | ) | | | ||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
F-81
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
7. Tax
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
The major components of tax expense are: |
|||||||||||||
Income tax expense |
|||||||||||||
Current income tax expense |
|||||||||||||
Current income tax charge |
101,102 | (69,995 | ) | 10,878 | 935 | ||||||||
Adjustment relating to prior periods |
(10,407 | ) | (13,079 | ) | (438 | ) | 2,101 | ||||||
Deferred tax expense |
|||||||||||||
Originating and reversing temporary differences |
17,358 | (180,343 | ) | (73,296 | ) | 59,066 | |||||||
Adjustments relating to prior periods |
11,988 | 13,978 | 310 | (2,012 | ) | ||||||||
| | | | | | | | | | | | | |
Income tax reported in profit and loss |
120,041 | (249,439 | ) | (62,546 | ) | 60,090 | |||||||
Reconciliation of tax expense |
|||||||||||||
Profit/(loss) before tax |
157,318 | (834,460 | ) | (208,060 | ) | (79,584 | ) | ||||||
| | | | | | | | | | | | | |
Income tax expense/(benefit) at 30 percent |
47,195 | (250,338 | ) | (62,418 | ) | (23,875 | ) | ||||||
Adjustments relating to prior periods |
1,584 | 1,158 | (128 | ) | 90 | ||||||||
Derecognition of deferred tax asset relating to Minerals Resource Rent Tax |
| | | 83,875 | |||||||||
Other non-deductible items |
71,262 | (259 | ) | | | ||||||||
| | | | | | | | | | | | | |
Income tax expense/(benefit) on profit before tax |
120,041 | (249,439 | ) | (62,546 | ) | 60,090 | |||||||
Deferred income tax in balance sheet |
|||||||||||||
Provisions |
78,078 | 74,891 | 54,157 | 56,402 | |||||||||
Employee benefits |
6,121 | 5,279 | 4,908 | 6,031 | |||||||||
Accruals and other payables |
9,531 | 5,307 | 4,018 | 3,029 | |||||||||
Fixed assets |
71,413 | 99,671 | (75,531 | ) | (129,053 | ) | |||||||
Derivatives |
4,794 | 19,035 | 50,249 | 28,550 | |||||||||
Warehouse stock |
(16,203 | ) | (18,019 | ) | (20,665 | ) | (20,358 | ) | |||||
Other |
1,048 | (2,037 | ) | 627 | 174 | ||||||||
| | | | | | | | | | | | | |
Net deferred tax assets/(liabilities) |
154,782 | 184,127 | 17,763 | (55,225 | ) | ||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Deferred income tax, excluding adjustments for prior periods, recognised in the profit and loss relates to the following:
Depreciation, amortisation and impairment |
16,273 | (189,181 | ) | (53,830 | ) | 12,523 | |||||||
Provisions |
(4,029 | ) | (21,104 | ) | 3,368 | (10,356 | ) | ||||||
Derivatives |
14,242 | 31,213 | (15,016 | ) | (31,972 | ) | |||||||
Derecognition of deferred tax asset relating to Minerals Resource Rent Tax |
| | | 83,875 | |||||||||
Other individually insignificant balances |
(9,128 | ) | (1,271 | ) | (7,818 | ) | 4,996 | ||||||
| | | | | | | | | | | | | |
Deferred tax expense |
17,358 | (180,343 | ) | (73,296 | ) | 59,066 | |||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
For all periods presented the Group formed part of the Wesfarmers tax consolidated Group. As such, the recoverability of the deferred tax assets was assessed at each reporting date in the context of the tax consolidated group (see policy note 2 k). Following the disposal of the Group on 29 March
F-82
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
7. Tax (Continued)
2018 by Wesfarmers, the Group left the Wesfarmers Tax Consolidated Group and joined a new tax consolidated group formed by its new parent entity, Coronado Australia Holdings Pty Ltd. In entering a new tax consolidated group, the Group was subject to an allocable cost amount process in order to set the tax cost base of the assets acquired by its new parent entity. This resulted in a net reduction of $22,650,000 to the tax base of assets recognised by the group at acquisition date, subsequent to the date of these financial statements, and as such the impact has not been recognised in these financial statements.
8. Cash and cash equivalents
|
|
|
|
(Unaudited)
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
For the purposes of the cash flow statement, cash and cash equivalents comprise the following: |
|||||||||||||
Cash on hand and in transit |
| 1 | 1 | 1 | |||||||||
Cash at bank and on deposit |
11,072 | 6,191 | 7,003 | 51,704 | |||||||||
| | | | | | | | | | | | | |
|
11,072 | 6,192 | 7,004 | 51,705 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Reconciliation of net profit/(loss) after tax to net cash flows from operations
Profit /(loss)for the year |
37,277 | (585,021 | ) | (145,514 | ) | (139,674 | ) | ||||||
Adjustments for: |
|||||||||||||
Depreciation and amortisation |
42,198 | 90,107 | 150,191 | 132,233 | |||||||||
Impairment of property, plant and equipment |
| 780,445 | | | |||||||||
Net loss/(gain) on disposal of property, plant and equipment |
1,031 | (174 | ) | 1,540 | 11,916 | ||||||||
Finance costs |
237,551 | | | | |||||||||
Unwind of discount rate |
6,322 | 6,153 | 5,621 | 8,175 | |||||||||
Income tax expense/(benefit) |
120,041 | (249,439 | ) | (62,546 | ) | 60,090 | |||||||
(Increase)/decrease in assets |
|||||||||||||
Trade and other receivables |
31,448 | (137,607 | ) | 22,536 | 35,736 | ||||||||
Inventories |
(994 | ) | 15,782 | 10,349 | (7,752 | ) | |||||||
Prepayments and other assets |
3,606 | (6,963 | ) | 8,264 | (22,612 | ) | |||||||
Increase/(decrease) in liabilities |
|||||||||||||
Trade and other payables |
42,087 | 28,125 | (9,500 | ) | (27,374 | ) | |||||||
Provisions |
10,096 | 43,489 | (20,595 | ) | 13,888 | ||||||||
Derivatives |
(47,472 | ) | (77,588 | ) | 45,871 | 106,574 | |||||||
Other liabilities |
(378 | ) | (46 | ) | 651 | (317 | ) | ||||||
| | | | | | | | | | | | | |
Net cash from operating activities |
482,813 | (92,737 | ) | 6,868 | 170,883 | ||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
F-83
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
9. Trade and other receivables
Trade receivables generally have terms of up to 60 days. Customers who trade on credit terms are subject to extensive credit verification procedures. For trade receivables carried at amortised cost, the Group determines expected credit losses using a provision matrix approach, based on historical credit loss experience for the debtor's past due status, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. For all periods presented the expected credit loss rate for trade debtors not past due is less than 0.5% and 3% for trade debtors past due. Accordingly, the exposure to credit risk on trade debtors is not significant. With respect to trade receivables that are neither impaired nor past due, there is no indication as of reporting date that the debtors will not meet their payment obligations.
The table below shows the movement in the loss allowance account for non-current receivables:
|
|
|
|
(Unaudited)
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
Opening balance |
19,555 | | | | |||||||||
Net remeasurement of loss allowance |
| 19,555 | | | |||||||||
| | | | | | | | | | | | | |
Closing balance |
19,555 | 19,555 | | | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
10. Inventories
Raw materials and stores |
52,508 | 58,655 | 67,379 | 67,081 | |||||||||
Work in progresscost |
28,413 | 19,427 | 9,219 | 13,346 | |||||||||
Work in progressNRV |
4,170 | 4,929 | 2,883 | 2,855 | |||||||||
Finished goodscost |
14,571 | 16,192 | 34,644 | 42,227 | |||||||||
Finished goodsNRV |
1,644 | 1,108 | 1,968 | 933 | |||||||||
| | | | | | | | | | | | | |
Total inventories at the lower of cost and net realisable value |
101,306 | 100,311 | 116,093 | 126,442 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
F-84
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
11. Property, plant and equipment
|
Leasehold
improvements |
Freehold
land |
Plant,
vehicles and equipment |
Mineral
lease and development costs |
Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
31 Dec 2017
|
$'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||
Gross carrying amount at cost |
221,034 | 8,191 | 1,334,224 | 869,969 | 2,433,418 | |||||||||||
Accumulated depreciation and impairment |
(162,390 | ) | | (1,113,444 | ) | (611,295 | ) | (1,887,129 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount |
58,644 | 8,191 | 220,780 | 258,674 | 546,289 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Movement |
||||||||||||||||
Opening carrying amountat cost |
56,672 | 8,191 | 192,375 | 274,883 | 532,121 | |||||||||||
Additions |
6,999 | | 43,661 | 8,501 | 59,161 | |||||||||||
Disposals and write-offs |
| | (2,795 | ) | | (2,795 | ) | |||||||||
Depreciation and amortisation |
(5,027 | ) | | (12,461 | ) | (24,710 | ) | (42,198 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount at end of year |
58,644 | 8,191 | 220,780 | 258,674 | 546,289 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
31 Dec 2016
|
||||||||||||||||
Gross carrying amount at cost |
214,035 | 8,191 | 1,293,997 | 861,468 | 2,377,691 | |||||||||||
Accumulated depreciation and impairment |
(157,363 | ) | | (1,101,622 | ) | (586,585 | ) | (1,845,570 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount |
56,672 | 8,191 | 192,375 | 274,883 | 532,121 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Movement |
||||||||||||||||
Opening carrying amountat cost |
143,200 | 8,191 | 619,165 | 517,057 | 1,287,613 | |||||||||||
Additions |
89 | | 33,355 | 81,438 | 114,882 | |||||||||||
Disposals and write-offs |
| | (717 | ) | | (717 | ) | |||||||||
Impairment |
(77,051 | ) | | (411,362 | ) | (292,032 | ) | (780,445 | ) | |||||||
Depreciation and amortisation |
(9,566 | ) | | (48,066 | ) | (31,580 | ) | (89,212 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount at end of year |
56,672 | 8,191 | 192,375 | 274,883 | 532,121 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
31 Dec 2015
|
||||||||||||||||
Gross carrying amount at cost |
213,946 | 8,191 | 1,261,359 | 780,030 | 2,263,526 | |||||||||||
Accumulated depreciation and impairment |
(70,746 | ) | | (642,194 | ) | (262,973 | ) | (975,913 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount |
143,200 | 8,191 | 619,165 | 517,057 | 1,287,613 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Movement |
||||||||||||||||
Opening carrying amountat cost |
157,468 | 8,191 | 661,626 | 478,388 | 1,305,673 | |||||||||||
Additions |
232 | | 38,871 | 93,599 | 132,702 | |||||||||||
Disposals and write-offs |
| | (1,542 | ) | | (1,542 | ) | |||||||||
Depreciation and amortisation |
(14,500 | ) | | (79,790 | ) | (54,930 | ) | (149,220 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount at end of year |
143,200 | 8,191 | 619,165 | 517,057 | 1,287,613 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
31 Dec 2014 (Unaudited)
|
||||||||||||||||
Gross carrying amount at cost |
213,714 | 8,191 | 1,224,030 | 686,431 | 2,132,366 | |||||||||||
Accumulated depreciation and impairment |
(56,246 | ) | | (562,404 | ) | (208,043 | ) | (826,693 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount |
157,468 | 8,191 | 661,626 | 478,388 | 1,305,673 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Movement |
||||||||||||||||
Opening carrying amountat cost |
164,710 | 8,191 | 718,990 | 345,506 | 1,237,397 | |||||||||||
Additions |
4,406 | | 40,521 | 168,399 | 213,326 | |||||||||||
Disposals and write-offs |
(45 | ) | | (12,772 | ) | | (12,817 | ) | ||||||||
Depreciation and amortisation |
(11,603 | ) | | (85,113 | ) | (35,517 | ) | (132,233 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net carrying amount at end of year |
157,468 | 8,191 | 661,626 | 478,388 | 1,305,673 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
F-85
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
11. Property, plant and equipment (Continued)
Fixed assets are encumbered to the extent set out in note 13.
12. Trade and Other Payables
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
(Unaudited)
2014 $'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current |
|||||||||||||
Trade payables |
18,348 | 14,222 | 8,906 | 8,903 | |||||||||
Accruals |
156,286 | 117,101 | 71,805 | 105,445 | |||||||||
Other payables |
1,554 | 2,778 | 25,265 | 1,128 | |||||||||
| | | | | | | | | | | | | |
|
176,188 | 134,101 | 105,976 | 115,476 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
13. Borrowings
Current |
|||||||||||||
Related party borrowingon demand |
| 1,490,184 | 1,320,819 | 1,216,601 | |||||||||
| | | | | | | | | | | | | |
|
| 1,490,184 | 1,320,819 | 1,216,601 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Non-current |
|||||||||||||
Related party borrowinglong term loan |
404,441 | | | | |||||||||
| | | | | | | | | | | | | |
|
404,441 | | | | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
|
Interest rate |
Facility Limit
($'000) |
2017
$'000 |
||||||
---|---|---|---|---|---|---|---|---|---|
Non-current: |
|||||||||
Related party AUD facilities |
11.5 | % | AUD 1,995,277 | 404,441 | |||||
Related party USD facility |
| USD 220,000 | | ||||||
| | | | | | | | | |
Total |
404,441 | ||||||||
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
(Unaudited)
2014 $'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current: |
|||||||||||||
Wesfarmers Intercompany loan |
| 1,490,184 | 1,320,819 | 1,216,601 | |||||||||
| | | | | | | | | | | | | |
Total |
| 1,490,184 | 1,320,819 | 1,216,601 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
On 25 January 2017, the Group established borrowing facilities, as shown in the table above, with Wesfarmers. Prior to this, the Group had an intercompany non-interest bearing loan with Wesfarmers which was repayable on-demand. This loan was replaced with a number of finance facilities, which are non-interest bearing and have various maturity dates from January 2020 to January 2027.
The finance facilities are secured by a fixed and floating charge over the Group's assets.
F-86
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
13. Borrowings (Continued)
As at 31 December 2017, the Group had drawn down $1,086,639,000 of the AUD facility used to settle the on demand intercompany loan, and $317,662,000 of the facility was used to cover bank guarantees issued by Wesfarmers on behalf of the Group.
At 31 December 2017 $590,976,000 of the AUD facility and all of the USD facility remained undrawn and available to be utilised by the Group.
The above facilities were provided for working capital and other purposes, such as to cover bank guarantees issued on behalf of the Group, primarily to the State Government of Queensland in respect of the Group's rehabilitation obligations.
Since the above facilities are non-interest bearing and repayable at maturity, the fair value on initial recognition of the amount drawn down under the facility was measured based on the present value of the future cash out flow on maturity, discounted using a market interest rate of 11.5%. The rate of interest applied was determined through an independent quantitative and qualitative assessment of the Group operating on a standalone basis.
As the financing facilities were provided by the ultimate parent entity at the time, the resulting difference between the fair value of the loan recognised and the face value of loan drawn down was recognised as an equity contribution (refer note 22).
On 25 August 2017, Curragh repaid $300,000,000 of the term loan facility from the excess cash it had accumulated to that date. The carrying value of the loan (measured at amortised cost) was remeasured on the repayment date using the original effective interest rate and the revised face value. This resulting in a measurement adjustment of $191,512,000 recognised in the consolidated statement of profit or loss and other comprehensive income.
The fair value of the long term loan at 31 December 2017 was $486,444 compared to its carrying value of $404,441.
F-87
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
14. Provisions
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current |
|||||||||||||
Employee benefits |
29,530 | 25,527 | 23,640 | 29,279 | |||||||||
| | | | | | | | | | | | | |
|
29,530 | 25,527 | 23,640 | 29,279 | |||||||||
| | | | | | | | | | | | | |
Non-current |
|||||||||||||
Employee benefits |
2,533 | 2,685 | 2,583 | 3,711 | |||||||||
Mine and plant rehabilitation |
239,238 | 226,673 | 179,021 | 187,228 | |||||||||
| | | | | | | | | | | | | |
|
241,771 | 229,358 | 181,604 | 190,939 | |||||||||
| | | | | | | | | | | | | |
Total provisions |
271,301 | 254,885 | 205,244 | 220,218 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Mine and plant rehabilitation provision |
|||||||||||||
Carrying amount at beginning of year |
226,673 | 179,021 | 187,228 | 153,010 | |||||||||
Arising and acquired during the year |
7,250 | 10,323 | 2,189 | (2,775 | ) | ||||||||
Utilised |
(274 | ) | (5,434 | ) | (1,503 | ) | (3,612 | ) | |||||
Unwind of discount |
6,305 | 5,605 | 5,256 | 7,053 | |||||||||
Adjustments |
(716 | ) | 37,158 | (14,149 | ) | 33,552 | |||||||
| | | | | | | | | | | | | |
Carrying amount at the end of the year |
239,238 | 226,673 | 179,021 | 187,228 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Provisions have been calculated using discount rates between two per cent and four per cent (31 December 2016, 2015 and 2014 (Unaudited): between two per cent and four per cent).
Mine and plant rehabilitation
In accordance with mining lease agreements and Group policies, obligations exist to remediate areas where mining activity has taken place. Work is ongoing at various sites and in some cases will extend over a number of years. Provisions have generally been calculated assuming current technologies. As part of the measurement methodology, the risks are incorporated in the cash flows rather than the discount rates to aid with comparability.
15. Related Party Transactions
The immediate and ultimate parent of the Group, Wesfarmers Limited, is incorporated in Australia.
All receivables and payables to and from related parties, except for related party borrowings are made on terms equivalent to those that prevail in arm's length transactions. There have been no guarantees provided to any related party with the exception of the deed of cross guarantee as disclosed in note 19. For the year ended 31 December 2017, 31 December 2016 and 31 December 2015, the
F-88
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
15. Related Party Transactions (Continued)
Group has not recorded any impairment of receivables relating to amounts owed by related parties (2014 (Unaudited): nil).
|
Sales to related parties |
Purchases of goods and
services from related parties |
Amounts owed by related parties | Amounts owed to related parties | |||||||||||||||||||||||||||||||||||||||||||||
|
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ultimate Parent: |
|||||||||||||||||||||||||||||||||||||||||||||||||
Wesfarmers Limited* |
| | | | 1,556 | 4,780 | 5,613 | 19,305 | 77,264 | ** | | | | 14 | | 740 | | ||||||||||||||||||||||||||||||||
Affiliates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
Bullivants |
| | | | 355 | 352 | 240 | 268 | | | | | 21 | 35 | | 5 | |||||||||||||||||||||||||||||||||
Bunnings |
| | | | 2 | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
Blackwoods |
| | | | 2,273 | 1,571 | 2,224 | 2,483 | | | | | 219 | 98 | | 74 | |||||||||||||||||||||||||||||||||
Officeworks |
| | | | 22 | 4 | 6 | 9 | | | | | | 2 | | | |||||||||||||||||||||||||||||||||
Protectory Alsafe |
| | | | | 30 | 278 | 617 | | | | | | | | | |||||||||||||||||||||||||||||||||
QNP |
| | | | 41,447 | 40,274 | 47,926 | 44,005 | | | | | 3,267 | 4,004 | 2,887 | 2,712 | |||||||||||||||||||||||||||||||||
Wesfarmers Federation Insurance |
| | | | 17 | 17 | 20 | 23 | | | | | | | | | |||||||||||||||||||||||||||||||||
Kleenheat Gas |
| | | | | | | 8 | | | | | | | | | |||||||||||||||||||||||||||||||||
Wesfarmers Resources Limited |
| | | | 12,114 | 10,718 | 13,494 | 16,098 | | | | | | | | | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | 57,786 | 57,746 | 69,801 | 82,816 | 77,264 | | | | 3,521 | 4,139 | 3,627 | 2,791 |
Compensation of key management personnel of the Group
|
(Unaudited) | ||||||||||||
|
2017
$ |
2016
$ |
2015
$ |
2014
$ |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Short-term benefits |
3,263,096 | 4,627,533 | 4,865,417 | 4,869,020 | |||||||||
Post-employment benefits |
87,263 | 147,910 | 129,198 | 134,773 | |||||||||
Long-term benefits |
1,307,792 | 793,649 | 1,905,586 | 1,917,066 | |||||||||
Termination benefits |
31,635 | 542,235 | 15,343 | | |||||||||
| | | | | | | | | | | | | |
Total compensation paid to key management personnel |
4,689,786 | 6,111,327 | 6,915,543 | 6,920,859 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
For key management personnel who are not directly employed by the Group but by other related parties, an allocation of compensation is made based on an estimate of time spent working within the Group.
16. Financial Risk Management
The Group holds financial instruments for the following purposes:
Financing: to raise finance for the Group's operations or to invest surplus funds. The principal types of instruments used include: term loans, intercompany loans, bank guarantees, cash and short-term deposits.
Operational: The Group's activities generate financial instruments, including cash, trade receivables and trade payables.
F-89
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
Risk management: to reduce risks arising from the financial instruments described above, the Group enters into derivative financial instruments, including forward exchange contracts.
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
The Group holds the following financial assets and liabilities at reporting date: |
|||||||||||||
Financial assets not measured at fair value |
|||||||||||||
Cash and cash equivalents |
11,072 | 6,192 | 7,004 | 51,705 | |||||||||
Related party receivables |
77,264 | | | | |||||||||
Trade and other receivables |
102,301 | 201,989 | 64,894 | 100,094 | |||||||||
Financial assets at fair value through profit or loss |
|||||||||||||
Trade receivables |
81,281 | 1,587 | 10,033 | 2,178 | |||||||||
| | | | | | | | | | | | | |
Financial assets |
271,918 | 209,768 | 81,931 | 153,977 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Liabilities at amortised cost |
|||||||||||||
Trade and other payables |
176,188 | 134,101 | 105,976 | 115,476 | |||||||||
Borrowings |
404,441 | 1,490,184 | 1,320,819 | 1,216,601 | |||||||||
Liabilities at fair value through profit and loss |
|||||||||||||
Foreign exchange derivative liabilities |
15,979 | 63,452 | 141,040 | 95,169 | |||||||||
| | | | | | | | | | | | | |
Financial liabilities |
596,608 | 1,687,737 | 1,567,835 | 1,427,246 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loans, receivables and cash deposits are initially recognised on the date that they are originated. All other financial assets are recognised initially on the date at which the Group becomes a party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amount presented in the combined statement of financial position when, and only when, there is a legal right to offset the amounts and intends to either settle on a net basis or to realise the asset and settle the liability simultaneously. There are no offsetting financial positions for the periods presented (2014 (Unaudited): $ 894,000 asset offset).
All financial liabilities are recognised initially when the contractual provisions of the instrument apply. A financial liability is derecognised when its contractual obligations are discharged, cancelled or expire.
Financial risks
The Group's activities expose it to a variety of financial risks, including market risk, liquidity risk and credit risk. There have been no changes to the Group's exposure to financial risks or the manner in which these are managed or measured.
Liquidity risk
Responsibility for managing liquidity risk lies with senior management and the board of directors, who assess the Group's short, medium and long term funding and liquidity requirements. The Group's strategy is to ensure it will have sufficient liquidity to meet its liabilities when due by managing its cash flows and having access to adequate finance facilities.
F-90
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
The Group manages liquidity risk by maintaining its IFMS borrowing and financing facilities provided by Wesfarmers, which is assessed through monitoring the Group's forecast and actual cash flows.
The following tables analyse the Group's financial liabilities, including net settled derivatives, into relevant maturity periods based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and hence will not necessarily reconcile with the amounts disclosed in the balance sheet. This maturity analysis does not include the deed of cross guarantee disclosed in note 19.
|
<3 months |
3 - 6
months |
6 - 12
months |
>12 months |
Total
liability/ (asset) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
$'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||
31 December 2017 |
||||||||||||||||
Third party trade and other payables |
176,188 | | | | 176,188 | |||||||||||
Borrowings |
| | | 1,086,639 | 1,086,639 | |||||||||||
| | | | | | | | | | | | | | | | |
Total non-derivatives |
176,188 | | | 1,086,639 | 1,262,827 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net foreign exchange derivative liabilities |
5,784 | 5,752 | 2,115 | 2,328 | 15,979 | |||||||||||
| | | | | | | | | | | | | | | | |
Total |
181,972 | 5,752 | 2,115 | 1,088,967 | 1,278,806 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
31 December 2016 |
||||||||||||||||
Third party trade and other payables |
134,101 | | | | 134,101 | |||||||||||
Borrowings |
1,490,184 | | | | 1,490,184 | |||||||||||
| | | | | | | | | | | | | | | | |
Total non-derivatives |
1,624,285 | | | | 1,624,285 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net foreign exchange derivative liabilities |
17,520 | 18,172 | 12,088 | 15,672 | 63,452 | |||||||||||
| | | | | | | | | | | | | | | | |
Total |
1,641,805 | 18,172 | 12,088 | 15,672 | 1,687,737 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
31 December 2015 |
||||||||||||||||
Third party trade and other payables |
105,976 | | | | 105,976 | |||||||||||
Borrowings |
1,320,819 | | | | 1,320,819 | |||||||||||
| | | | | | | | | | | | | | | | |
Total non-derivatives |
1,426,795 | | | | 1,426,795 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net foreign exchange derivative liabilities |
19,532 | 27,961 | 33,394 | 60,153 | 141,040 | |||||||||||
| | | | | | | | | | | | | | | | |
Total |
1,446,327 | 27,961 | 33,394 | 60,153 | 1,567,835 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
31 December 2014 (Unaudited) |
||||||||||||||||
Third party trade and other payables |
115,476 | | | | 115,476 | |||||||||||
Borrowings |
1,216,601 | | | | 1,216,601 | |||||||||||
| | | | | | | | | | | | | | | | |
Total non-derivatives |
1,332,077 | | | | 1,332,077 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net foreign exchange derivative liabilities |
10,503 | 12,157 | 22,694 | 49,815 | 95,169 | |||||||||||
| | | | | | | | | | | | | | | | |
Total |
1,342,580 | 12,157 | 22,694 | 49,815 | 1,427,246 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
F-91
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
Market riskForeign exchange risk
The Group only operates within Australia, however it is exposed to foreign currency risk from transactions in currencies other than the Australian dollar, predominately the US dollar.
The Group's exposure to the US dollar at the reporting date was as follows:
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financial assets |
|||||||||||||
Cash and cash equivalents |
11,072 | 6,191 | 7,003 | 51,704 | |||||||||
Receivables |
173,869 | 192,722 | 64,413 | 94,385 | |||||||||
Financial liabilities |
|||||||||||||
Foreign exchange derivative liabilities |
15,979 | 63,452 | 141,040 | 95,169 |
Foreign currency risk management
The Group uses different methods to measure and manage different types of risks to which it is exposed. The objective of the Group's policy on foreign exchange risk management is to protect the Group from adverse currency fluctuations. Strategies include monitoring levels of exposure to foreign exchange to ensure exposure is kept to an acceptable level and hedging the risk.
The Group's foreign currency exposure arises from sales or purchases by an operating entity in currencies other than its functional currency. The Group's export sales are denominated in currencies other than the functional currency of the operating entity making the sale.
Sensitivity to foreign exchange movements
The sensitivity analysis below shows the impact that a reasonably possible change in foreign exchange rates would have on profit after tax and equity, based solely on the Group's foreign exchange risk exposures existing at the balance sheet date. The Group has used the observed range of actual historical rates for the preceding five-year period, with a heavier weighting placed on recently observed market data, in determining reasonably possible exchange movements to be used for the current year's sensitivity analysis. Past movements are not necessarily indicative of future movements.
F-92
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
The following exchange rates have been used in performing the sensitivity analysis:
Actual 2017 |
0.78 | |||
+10% |
0.86 | |||
10% |
0.70 | |||
Actual 2016 |
0.72 | |||
+10% |
0.80 | |||
10% |
0.65 | |||
Actual 2015 |
0.73 | |||
+10% |
0.80 | |||
10% |
0.66 | |||
Actual 2014 (Unaudited) |
0.82 | |||
+10% |
0.90 | |||
10% |
0.74 |
The impact on profit and equity is estimated by relating the hypothetical changes in the US dollar exchange rate to the balance of financial instruments at the reporting date. Foreign currency risks arise on account of financial instruments being denominated in a currency that is not the functional currency of the entity holding the financial instrument.
F-93
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
Had the Australian dollar moved against the US dollar, as illustrated in the table above, with all other variables held constant, the Group's profit after tax and other equity would have been affected by the change in value of its financial assets and financial liabilities as shown in the table below.
F-94
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
Market riskCommodity price risk
The Group's exposure to commodity price risk is largely operational and arises largely from coal price fluctuations, which impact its mining operations. The Group's strategy is to not enter into any financial instruments that vary with movements in coal prices. Excluding the foreign exchange risk component, which is managed as part of the Group's overall foreign exchange risk management policies and procedures referred to previously, these exposures are not hedged. A ten per cent increase or decrease in the provisional price applied in the measurement of trade receivables at fair value through profit or loss will impact the fair value, and profit after tax, by the same proportion as noted below:
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Trade and receivablesat fair value through profit or loss |
81,281 | 1,587 | 10,033 | 2,178 | |||||||||
| | | | | | | | | | | | | |
10% increase in price |
8,128 | 159 | 1,003 | 218 | |||||||||
10% decrease in price |
(8,128 | ) | (159 | ) | (1,003 | ) | (218 | ) |
Market riskInterest rate risk
The Group is not exposed to material interest rate risk exposure.
Credit risk
The Group aims to mitigate the risk that its counterparties will default on their obligations, resulting in a financial loss to the Group, by dealing with creditworthy counterparties. The Group is exposed to credit risk primarily through its receivables balances with customers, cash at bank and intercompany receivables.
Customers who wish to trade on credit terms are subject to credit verification procedures, including an assessment of their independent credit rating, financial position, past experience and industry reputation. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant. An ageing of trade receivables past due is included in note 9.
The carrying amount of financial assets recorded in the financial statements, net of any allowance for impairment, represents the Group's maximum exposure to credit risk. This does not include the credit risk exposure on the deed of cross guarantee as disclosed in note 19. Apart of cash held within the IFMS with Wesfarmers, there are no significant concentration of credit risks within the Group.
Fair values of financial instruments
Management has assessed that the fair values of its cash and cash equivalents; trade and other receivables; and trade and other payables to approximate their carrying amounts largely due to the short-term maturities of these instruments. The intercompany loan as at 31 December 2016, 2015 and 2014 was on demand and therefore the fair value of the loan was equivalent to its carrying value.
F-95
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
16. Financial Risk Management (Continued)
The fair values of forward contracts are calculated by reference to forward exchange market rates at reporting date for contracts with similar maturity profiles. The inputs into the valuation include foreign exchange forward rates and interest rate curves.
Valuation of financial instruments
For all fair value measurements and disclosures, the Group uses the following to categories the method used:
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. In determining the fair value of trade receivables and borrowings the Group has used a discounted cash flow model valuation technique.
All of the Group's financial instruments carried at fair value were valued using market observable inputs (Level 2). The fair value of the long term borrowings disclosed in note 13, was determined using a discounted cash flow model (Level 3 in the fair value hierarchy). The significant unobservable input was the interest rate of 11.5 per cent applied.
17. Derivatives
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current |
|||||||||||||
Foreign currency forward contracts |
13,650 | 47,780 | 80,887 | 45,354 | |||||||||
| | | | | | | | | | | | | |
|
13,650 | 47,780 | 80,887 | 45,354 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Non-current |
|||||||||||||
Foreign currency forward contracts |
2,329 | 15,672 | 60,153 | 49,815 | |||||||||
| | | | | | | | | | | | | |
|
2,329 | 15,672 | 60,153 | 49,815 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
F-96
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
17. Derivatives (Continued)
|
Notional
amount |
Weighted average
forward rate |
Asset | Liability | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
|
$'000 | $'000 | $'000 | $'000 | ||||||||
Year ended 31 December 2017 |
||||||||||||
Foreign exchange contracts |
||||||||||||
Sale of USD |
USD 126,000 | 0.78 | | 99 | ||||||||
Purchases of USD |
USD 126,000 | 0.71 | | 15,880 | ||||||||
| | | | | | | | | | | | |
Total derivative liability |
| 15,979 | ||||||||||
Year ended 31 December 2016 |
||||||||||||
Foreign exchange contracts |
||||||||||||
Sale of USD |
USD 387,000 | 0.81 | | 55,328 | ||||||||
Purchase of USD |
USD 387,000 | 0.71 | | 8,124 | ||||||||
| | | | | | | | | | | | |
Total derivative liability |
| 63,452 | ||||||||||
Year ended 31 December 2015 |
||||||||||||
Foreign exchange contracts |
||||||||||||
Sale of USD |
USD 872,000 | 0.82 | | 130,888 | ||||||||
Purchase of USD |
USD 427,000 | 0.71 | | 10,152 | ||||||||
| | | | | | | | | | | | |
Total derivative liability |
| 141,040 | ||||||||||
Year ended 31 December 2014 (Unaudited) |
||||||||||||
Foreign exchange contracts |
||||||||||||
Sale of USD |
USD 1,092,000 | 0.87 | | 96,063 | ||||||||
Purchase of USD |
USD 15,000 | 0.86 | 894 | | ||||||||
| | | | | | | | | | | | |
Total derivative liability |
894 | 96,063 |
18. Impairment of non-current assets
Recognised impairment
The Group represents one CGU for impairment purposes. A $780,445,000 pre-tax impairment was recognised in 2016 in respect of plant, vehicles and equipment. The reduction in the recoverable value of Curragh was the result of a continued deterioration in export coal price forecasts and long-term exchange rate assumptions. The recoverable amount was determined using the life of mine (LOM) discounted cash flow valuation methodology and considers both JORC reserves and JORC resources.
Refer to note 11 for the class of property, plant and equipment impacted by the impairment.
Curragh's recoverable value at 31 December 2017, 31 December 2016 and 31 December 2015 approximates its carrying value.
Inputs to impairment calculations
In determining FVLCOD, the valuation model incorporates the cash flows projected over the LOM. These projections are discounted using a risk-adjusted discount rate commensurate with a typical market participant's assessment of the risk associated with the projected cash flows.
Discount rates used are based on the weighted average cost of capital determined by prevailing or benchmarked market inputs, risk adjusted where necessary. Other assumptions are determined with
F-97
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
18. Impairment of non-current assets (Continued)
reference to external sources of information and use consistent assumptions. Increases in discount rates or changes in other key assumptions, such as operating conditions or financial performance, may cause the recoverable amounts to fall below carrying values.
Key assumptions
The key assumptions used for assessing the recoverable amount of the Curragh CGU were as follows:
Any reasonable possible changes in key assumptions may lead to an impairment pre 31 December 2016 and a further impairment or reversal of previous impairment at 31 December 2017.
19. Deed of Cross Guarantee
The head entity of the Group, Coronado Curragh Pty Ltd, was a party to the Wesfarmers Limited Deed of Cross Guarantee and a member of the Wesfarmers Limited Closed Group up until and including 31 July 2017. With effect from 1 August 2017, Curragh ceased to be a party to the Wesfarmers Limited Deed of Cross Guarantee.
Each year, the loss allowance for this guarantee was measured at an amount equal to the 12 month ECL as there was no significant increase in the risk of default. Due to the net asset deficiency of the Group for each of the 12 month periods ended 31 December 2016, 2015 and 2014, the 12 month ECL was considered to be insignificant.
20. Earnings per share
|
(Unaudited) | ||||||||||||
|
2017 | 2016 | 2015 | 2014 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Profit/(loss) attributable to ordinary equity holders ($'000) |
37,277 | (585,021 | ) | (145,514 | ) | (139,674 | ) | ||||||
WANOS* used in the calculation of basic EPS (shares) |
2 | 2 | 2 | 2 | |||||||||
WANOS* used in the calculation of diluted EPS (shares) |
2 | 2 | 2 | 2 | |||||||||
Basic EPS and diluted EPS ($'000 dollars per share) |
18,639 | (292,511 | ) | (72,757 | ) | (69,837 | ) |
F-98
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
21. Dividends
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
To equity holders |
| | 6,000 | 20,000 | |||||||||
Dividends paid per share |
| | 3,000 | 10,000 |
22. Contributed equity
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Issued and fully paid2 ordinary shares (par value of $1 each) |
| | | | |||||||||
Equity contribution by Ultimate parent |
919,749 | | | | |||||||||
| | | | | | | | | | | | | |
Total contributed equity |
919,749 | | | | |||||||||
| | | | | | | | | | | | | |
There has been no movement in the Group's shares on issue. The movement in contributed equity relates to an equity contribution from Wesfarmers Limited (ultimate parent entity) as a result of putting in place formal borrowing facilities that are interest free and were drawn down during 2017 (refer note 14).
23. Commitments and contingencies
Operating lease commitments
The Group has entered into commercial leases on office buildings and equipment. The group has also entered into mining service contracts that include the use of specified equipment which are considered operating leases.
Future minimum rentals payable under non-cancellable operating leases not included within this financial report were as follows:
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Within one year |
12,276 | 12,681 | 13,254 | 10,897 | |||||||||
Greater than one year but not more than five years |
34,626 | 44,679 | 47,721 | 42,504 | |||||||||
Greater than five years |
5,591 | 8,105 | 16,500 | 25,526 | |||||||||
| | | | | | | | | | | | | |
|
52,493 | 65,465 | 77,475 | 78,927 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Capital commitments
Commitments arising from contracts for capital expenditure contracted for at balance date not included in this financial report were as follows:
Within one year |
4,343 | 3,708 | 1,800 | 1,455 | |||||||||
Greater than one year but not more than five years |
| | | | |||||||||
| | | | | | | | | | | | | |
|
4,343 | 3,708 | 1,800 | 1,455 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
F-99
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
24. Auditors remuneration
|
(Unaudited) | ||||||||||||
|
2017
$'000 |
2016
$'000 |
2015
$'000 |
2014
$'000 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ernst & Young- Australia: |
|||||||||||||
Audit of financial report |
342 | 278 | 285 | 235 | |||||||||
Other services |
45 | 11 | 11 | 11 | |||||||||
| | | | | | | | | | | | | |
|
387 | 289 | 296 | 246 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
25. Events after balance sheet date
Sale of Curragh
On 22 December 2017, Wesfarmers Limited announced it had agreed to sell the Group to Coronado Coal Group (the Purchaser") under an agreement which also includes a value share mechanism linked to future metallurgical coal prices (the "Transaction"). The sale was subject to a number of conditions precedent which were all satisfied subsequent to period end, and the sale was completed on 29 March 2018 once the conditions precedent were satisfied.
As a result of the Transaction, the value of Curragh's net assets (excluding related party loans) was realised of $700,000,000. This constitutes a trigger for the reversal of the previous impairment recognised in 2016 based on an arm's length market value for the entity. During the period ended 29 March 2018 $263,097,000 ($184,167,900 net of tax) was recognised as an impairment reversal in the consolidated statement of profit or loss and other comprehensive income to write up the property plant and equipment to equal the value of the Transaction.
New Stanwell coal supply contract and commitment
Curragh has a Coal Supply Agreement ("CSA") with Stanwell Corporation Limited ("Stanwell") to supply thermal coal to the Stanwell Power Station. The CSA also provides Curragh with mining rights to the Curragh North Mining Lease. A proportion of the Curragh North Mining Lease, the Stanwell Reserved Area ("SRA"), was reserved for the benefit of Stanwell and could not be mined without Stanwell's consent. Under the CSA, Curragh pays certain rebates to Stanwell on metallurgical coal exported from the Curragh East Mining Area and the Curragh North Mining Area.
On 14 August 2018, Curragh entered into the Curragh Mine New Coal Supply Deed ("Supply Deed") with Stanwell.
The Supply Deed grants Curragh the right to mine the coal reserves contained in the SRA and in exchange for these rights Curragh has agreed certain amendments to the CSA and has agreed to enter into a further coal supply agreement, the New Coal Supply Agreement ("NCSA") that will commence on or around the expiry of the CSA (currently expected to expire in 2027).
The consideration for the access to additional reserves and access to the SRA will be deferred and payable as a discount to thermal coal market value over the term of the NCSA. No export rebates are payable during the term of the NCSA. The net present value of the deferred consideration is approximately $210,000,000.
F-100
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
25. Events after balance sheet date (Continued)
WICET
Curragh has an equity interest and user agreement with WICET Holdings Pty Ltd ("WICET") as part of its overall port arrangements. On 11 September 2018 the Supreme Court of New South Wales approved a scheme of arrangement ("Debt Scheme") for WICET's senior secured debt facilities to be amended and its repayment, previously 30 September 2018, to be extended for a further term of 8 years.
Extension of repayment termsAUD Facility 1
As part of the sale of Curragh from Wesfarmers Limited to Coronado Group LLC (the "Transaction"), on 29 March 2018 (completion date), Curragh repaid $700,000,000 of the term loan facility from funds provided by Coronado Australia Holdings Pty Ltd (parent entity following the Transaction) and the remaining $386,000,00 of the term loan facility was assigned to Coronado Group LLC by Wesfarmers. All other facilities provided by Wesfarmers were withdrawn on completion date.
At the same time on the date of completion, Curragh entered into a new cash advance facility loan agreement with Coronado Australia Holdings Pty Ltd for $700,000,000 with a repayment date of 29 March 2028 at a market interest rate of 8.95 per cent.
On 31 August 2018 the repayment date for AUD facility 1 was extended to 25 January 2068.
No other matters or circumstances have arisen since the end of the financial year, which are not otherwise dealt with in the financial statements, that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years.
26. New and amended Accounting standards and interpretations issued but not yet effective
The following new and amended accounting standards and interpretations issued but not yet effective are relevant to current operations. They are available for early adoption but have not been applied by the Group in this financial report.
F-101
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2017, 2016 AND 2015
26. New and amended Accounting standards and interpretations issued but not yet effective (Continued)
F-102
Unaudited Pro Forma Combined Financial Information
The following unaudited consolidated pro forma statements of operations present the combination of the historical financial statements of Coronado and Curragh, adjusted to give effect to: (1) the Reorganization Transaction (see definition in Note 1 to the unaudited consolidated pro forma statements of operations) and (2) the acquisition of Wesfarmers Curragh Pty Ltd by Coronado (the "Transaction").
The unaudited consolidated pro forma statement of operations for the year ended December 31, 2018 combine the historical consolidated statement of operations of Coronado and the historical combined statement of operations for Curragh, giving effect to the Reorganization Transaction and the acquisition of Wesfarmers Curragh Pty Ltd by Coronado as if they had been consummated on January 1, 2018. The unaudited consolidated pro forma statement of operations for the year ended December 31, 2017 combine the historical consolidated statement of operations of Coronado and the historical combined statement of operations for Curragh, giving effect to the Reorganization Transaction and the acquisition of Wesfarmers Curragh Pty Ltd by Coronado as if they had been consummated on January 1, 2017. The unaudited consolidated pro forma statement of operations for the year ended December 31, 2017 has been included as a supplementary item. This will facilitate a pro forma comparison between the year ended December 31, 2018 and December 31, 2017 in Management's Discussion and Analysis of Financial Condition and Results of Operations. We believe a discussion of these two periods is more meaningful as it is on a comparable basis.
The unaudited consolidated pro forma statements of operations do not reflect the costs of any integration activities or benefits. The unaudited pro forma adjustments are based upon current available information and assumptions that Coronado believes to be reasonable. The pro forma adjustments and related assumptions are described in the accompanying notes presented on the following pages.
The unaudited consolidated pro forma statements of operations are for informational purposes only and are not intended to represent or to be indicative of the actual results of operations or financial position that the combined Coronado and Curragh group would have reported had the transactions been completed as of the dates set forth in the unaudited consolidated pro forma statements of operations and should not be taken as being indicative of Coronado's future consolidated results of operation. The actual results may differ significantly from those reflected in the unaudited consolidated pro forma statements of operations for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the unaudited consolidated pro forma statements of operations and actual amounts. As a result, the pro forma consolidated information does not purport to be indicative of what the results of operations would have been had the transaction been completed on the applicable dates of the unaudited consolidated pro forma statements of operations.
F-103
Unaudited consolidated pro forma statement of operations for the year ended December 31, 2018
Unaudited Consolidated pro forma statement of operations
For the year-ended December 31, 2018
(U.S. dollars and AUD in thousands)
|
|
Pro Forma
Adjustment Note 2(a) Income tax expense adjustment |
|
Historical 1 January 2018 to 29 March 2018 |
Pro Forma
adjustments |
|
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
Tax effected
Pro Forma Coronado Global Resources Inc. |
|
||||||||||||||||||||||||||||
|
Historical
Coronado Global Resources Inc. |
Note 2(b) | Note 2(c) |
|
|||||||||||||||||||||||||||
|
Pro forma
adjustments |
|
Consolidated
pro forma |
||||||||||||||||||||||||||||
|
Curragh | Reclassification | Curragh | Curragh | Note 2 | ||||||||||||||||||||||||||
|
USD
|
|
|
AUD
|
AUD
|
AUD
|
USD
|
USD
|
|
USD
|
|||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||||||||||
Coal revenues |
$ | 1,500,730 | | 1,500,730 | 406,696 | | 406,696 | 313,494 | | $ | 1,814,224 | ||||||||||||||||||||
Coal revenues from related parties |
444,870 | | 444,870 | | | | | | 444,870 | ||||||||||||||||||||||
Other Revenues |
34,904 | | 34,904 | | | | | 3,006 | (d | ) | 37,910 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenues |
1,980,504 | | 1,980,504 | 406,696 | | 406,696 | 313,494 | 3,006 | 2,297,004 | ||||||||||||||||||||||
Cost and expenses: |
|||||||||||||||||||||||||||||||
Cost of coal revenues (exclusive of items shown separately below) |
991,994 | | 991,994 | 204,132 | (15,367 | ) | 188,765 | 145,506 | | 1,137,500 | |||||||||||||||||||||
Depreciation, depletion and amortization |
162,117 | | 162,117 | | 16,971 | 16,971 | 13,082 | 9,153 | (e | ) | 184,352 | ||||||||||||||||||||
Freight expense |
117,699 | | 117,699 | | 47,769 | 47,769 | 36,822 | | 154,521 | ||||||||||||||||||||||
Stanwell rebate |
127,692 | | 127,692 | | 55,949 | 55,949 | 43,127 | | 170,819 | ||||||||||||||||||||||
Other royalty expenses |
181,715 | | 181,715 | 93,886 | (55,949 | ) | 37,937 | 29,243 | | 210,958 | |||||||||||||||||||||
Impairment |
| | | (263,097 | ) | | (263,097 | ) | (202,804 | ) | 202,804 | (f | ) | | |||||||||||||||||
Selling, general, and administrative expenses |
66,207 | | 66,207 | 50,098 | (47,769 | ) | 2,329 | 1,795 | (38,101 | ) | (g | ) | 29,901 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total costs and expenses |
1,647,424 | | 1,647,424 | 85,019 | 1,604 | 86,623 | 66,771 | 173,856 | 1,888,051 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income |
333,080 | | 333,080 | 321,677 | (1,604 | ) | 320,073 | 246,723 | (170,850 | ) | 408,953 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other income (expenses): |
|||||||||||||||||||||||||||||||
Interest income |
2,029 | | 2,029 | | | | | | 2,029 | ||||||||||||||||||||||
Interest expense |
(60,007 | ) | | (60,007 | ) | (444,895 | ) | 1,604 | (443,291 | ) | (341,703 | ) | 336,058 | (h | ) | (65,652 | ) | ||||||||||||||
Loss on debt extinguishment |
(58,085 | ) | | (58,085 | ) | | | | | 3,905 | (i | ) | (54,180 | ) | |||||||||||||||||
Other, net |
(27,216 | ) | | (27,216 | ) | 10,098 | | 10,098 | 7,784 | 15,695 | (j | ) | (3,737 | ) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other income (loss), net |
(143,279 | ) | | (143,279 | ) | (434,797 | ) | 1,604 | (433,193 | ) | (333,919 | ) | 355,658 | (121,540 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before tax |
189,801 | | 189,801 | (113,120 | ) | | (113,120 | ) | (87,196 | ) | 184,808 | 287,413 | |||||||||||||||||||
Income tax expense |
(75,212 | ) | (21,190 | ) | (96,402 | ) | (102,443 | ) | | (102,443 | ) | (78,966 | ) | 56,880 | (k | ) | (118,488 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income |
114,589 | (21,190 | ) | 93,399 | (215,563 | ) | | (215,563 | ) | (166,162 | ) | 241,688 | 168,925 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less: Net loss attributable to noncontrolling interest |
(92 | ) | | (92 | ) | | | | | | (92 | ) | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to Coronado Global Resources, Inc. |
114,681 | (21,190 | ) | 93,491 | (215,563 | ) | | (215,563 | ) | (166,162 | ) | 241,688 | 169,017 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per share of common stock |
|||||||||||||||||||||||||||||||
Basic |
$ | 0.21 | | 0.97 | | | | | | $ | 1.75 | ||||||||||||||||||||
Diluted |
$ | 0.21 | | 0.97 | | | | | | $ | 1.75 | ||||||||||||||||||||
Average common shares outstanding |
|||||||||||||||||||||||||||||||
Basic |
$ | 96,651,692 | | 96,651,692 | | | | | | 96,651,692 | |||||||||||||||||||||
Diluted |
$ | 96,656,067 | | 96,656,067 | | | | | | 96,656,067 |
See accompanying notes to the unaudited consolidated statement of operations.
F-104
Note 1. Basis of Preparation
The accompanying unaudited consolidated pro forma statement of operations was prepared in accordance with Article 11 of Regulation S-X and present the pro forma combined results of operations of Coronado based upon the historical financial statements of each of Coronado and Curragh, after giving effect to the Transaction and change in tax status, and are intended to reflect the impact of the Transaction and change in tax status on Coronado's statement of operations. The accompanying unaudited consolidated pro forma statement of operations has been prepared using, and should be read in conjunction with the audited consolidated financial statements of Coronado for the year ended December 31, 2018. Assumptions and estimates underlying the pro forma adjustments are described in these notes.
The accompanying unaudited consolidated pro forma statement of operations is presented for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by Coronado if the Transaction had been consummated as of the beginning of the periods presented or that will be achieved in the future. The unaudited consolidated pro forma statement of operations does not reflect the costs of any integration activities or benefits that may result from realization of synergies expected to result from the Transaction. In addition, throughout the period presented in the unaudited consolidated pro forma statement of operations until the date of acquisition on March 29, 2018, the operations of Curragh were conducted and accounted for as part of the former shareholder. Curragh's unaudited combined financial information has been derived from the former shareholder's historical accounting records and reflect certain allocations of direct costs and expenses. All of the allocations and estimates in such financial information are based on assumptions that the management of the former shareholder believes are reasonable. In the opinion of management, the unaudited consolidated pro forma statement of operations includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for the period presented. Curragh's financial information does not necessarily represent the financial position of Curragh had it been operated as a stand-alone company during the period.
The unaudited consolidated pro forma statement of operations combines the historical consolidated statement of operations of Coronado for the year ended December 31, 2018 and the unaudited combined financial information of Wesfarmer's Curragh Pty Ltd for the 3 months ended March 29, 2018, giving effect to the Transaction and change in tax status as if both had been consummated on January 1, 2018.
Note 2. Income Statement Adjustments
Coronado Global Resources, Inc. was formed on August 13, 2018 by conversion of Coronado Group HoldCo LLC, from a limited liability company to a corporation. Coronado Group HoldCo LLC was a wholly-owned subsidiary of Coronado Group LLC ("Coronado LLC"), a Delaware limited liability company.
During the year ended December 31, 2018, Coronado LLC and Coronado Global Resources, Inc. completed a common control reorganization of their legal entity structure (the "Reorganization Transaction"). In connection with the Reorganization Transaction:
Coronado Group HoldCo LLC was converted into Coronado Global Resources, Inc., a Delaware corporation to consolidate Coronado Coal Corporation and Coronado Australia Holdings Pty Ltd under common ownership.
Coronado LLC contributed all membership interest in the US LLC's to Coronado Coal Corporation, a wholly-owned subsidiary of Coronado Global Resources, Inc.
F-105
Note 2. Income Statement Adjustments (Continued)
Immediately following the Reorganization Transaction, Coronado Global Resources, Inc. held all the interests of Coronado Australia Holdings Pty Ltd and Coronado Coal Corporation and remained a subsidiary of Coronado LLC, owned by funds managed by The Energy & Minerals Group ("EMG") and members of Coronado management. Due to the Reorganization Transaction, the US-based business of the Company effectively became a taxable on September 19, 2018, the day Coronado LLC contributed all membership interests in the US LLC's to Coronado Coal Corporation.
This adjustment reflects the Reorganization Transaction as if it occurred on January 1, 2018, making the entire entity taxable at that point in time. See Note 6 of the December 31, 2018 audited financial statements of Coronado for further details on this pro forma adjustment.
These adjustments represent reclassifications to conform the accounting presentation of Curragh's financial statements to Coronado's financial statements.
In order to translate the Curragh AUD results into USD, an exchange rate of .7708 was utilized. This represents the average exchange rate for the period from January 1, 2018 to June 30, 2018.
Other revenues were adjusted as follows:
Amortization of the Stanwell below market CSA (1) |
3,006 | |||
| | | | |
Total pro form adjustment to other revenues |
3,006 |
Depreciation, depletion and amortization were adjusted as follows:
Adjustment to depreciation of Curragh assets acquired (1) |
7,977 | |||
Adjustment to accretion of Curragh asset retirement obligation (2) |
1,176 | |||
| | | | |
Total pro forma adjustment to depreciation, depletion and amortization |
9,153 | |||
| | | | |
F-106
Note 2. Income Statement Adjustments (Continued)
Impairment was adjusted as follows:
Elimination of Curragh's impairment reversal (1) |
202,804 | |||
| | | | |
Total pro form adjustment to impairment expense |
202,804 |
Selling, general and administrative expenses were adjusted as follows:
Transaction costs (1) |
(38,101 | ) | ||
| | | | |
Total pro form adjustment to other revenues |
(38,101 | ) |
Interest expense was adjusted as follows:
Eliminate intercompany interest expense (1) |
341,702 | |||
Reversal of Bank of American Term Loan (2) |
3,828 | |||
Recognition of DB Term Loan interest expense (3)(4) |
(81,117 | ) | ||
Amortization of DB Term Loan debt issuance costs and discount (5) |
$ | (1,355 | ) | |
| | | | |
Total pro forma adjustment to interest expense |
336,058 |
F-107
Note 2. Income Statement Adjustments (Continued)
representative and more meaningful for the pro forma adjustment than utilizing the current rate.
Loss on debt extinguishment was adjusted as follows:
Reversal of debt extinguishment related to the Bank of America Term Loan(1) |
3,905 | |||
| | | | |
Total pro form adjustment to loss on debt extinguishment expense |
3,905 |
Transaction costs (1) |
15,695 | |||
| | | | |
Total pro form adjustment to selling, general and administrative expenses |
15,695 |
For purposes of the unaudited pro forma condensed combined financial statements, an Australian statutory tax rate of approximately 30% has been used for pro forma adjustments related to Curragh. A US blended statutory tax rate (Federal and State) of approximately 27% has been used for pro forma adjustments related to the US LLC's. This does not reflect Coronado's effective tax rate, which will include other tax items such as state and foreign taxes as well as other tax charges and benefits, and does not take into account any historical or possible future tax events that may impact Coronado following the consummation of the Transaction.
F-108
Unaudited consolidated pro forma statement of operations for the year ended December 31, 2017
Unaudited Consolidated pro forma statement of operations
For the year-ended December 31, 2017
(U.S. dollars and AUD in thousands)
|
|
Pro Forma
Adjustment Note 2(a) Income tax expense adjustment |
|
Historical |
Pro Forma
adjustments |
|
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
Tax effected
Pro Forma Coronado Global Resources Inc. |
|
|||||||||||||||||||||||||||
|
Historical
Coronado Global Resources Inc. |
Note 2(b) | Note 2(c) |
|
||||||||||||||||||||||||||
|
Pro forma
adjustments |
|
Consolidated
pro forma |
|||||||||||||||||||||||||||
|
Curragh | Reclassification | Curragh | Curragh | Note 2 | |||||||||||||||||||||||||
|
USD
|
|
|
AUD
|
AUD
|
AUD
|
USD
|
USD
|
|
USD
|
||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||
Coal revenues |
$ | 384,722 | | 384,722 | 1,792,509 | | 1,792,509 | 1,373,824 | | $ | 1,758,546 | |||||||||||||||||||
Coal revenues from related parties |
371,663 | | 371,663 | | | | | | 371,663 | |||||||||||||||||||||
Other Revenues |
11,859 | | 11,859 | | | | | 31,443 | (d) | 43,302 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Revenues |
768,244 | | 768,244 | 1,792,509 | | 1,792,509 | 1,373,824 | 31,443 | 2,173,511 | |||||||||||||||||||||
Cost and expenses: |
||||||||||||||||||||||||||||||
Cost of coal revenues (exclusive of items shown separately below) |
463,638 | | 463,638 | 829,674 | (34,790 | ) | 794,884 | 602,219 | | 1,072,857 | ||||||||||||||||||||
Depreciation, depletion and amortization |
75,503 | | 75,503 | | 48,520 | 48,520 | 37,187 | 52,889 | (e) | 165,579 | ||||||||||||||||||||
Freight expense |
15,880 | | 15,880 | | 189,170 | 189,170 | 144,985 | | 160,865 | |||||||||||||||||||||
Stanwell rebate |
| | | | 191,794 | 191,794 | 146,996 | | 146,996 | |||||||||||||||||||||
Other royalty expenses |
39,665 | | 39,665 | 363,946 | (191,794 | ) | 172,152 | 131,942 | | 171,607 | ||||||||||||||||||||
Impairment |
| | | | | | | | | |||||||||||||||||||||
Selling, general, and administrative expenses |
21,793 | | 21,793 | 200,340 | (196,578 | ) | 3,762 | 2,883 | | 24,676 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total costs and expenses |
616,479 | | 616,479 | 1,393,960 | 6,322 | 1,400,282 | 1,073,212 | 52,889 | 1,742,580 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income |
151,765 | | 151,765 | 398,549 | (6,322 | ) | 392,227 | 300,612 | (21,446 | ) | 430,931 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other income (expenses): |
||||||||||||||||||||||||||||||
Interest income |
169 | | 168 | 268 | | 268 | 205 | | 373 | |||||||||||||||||||||
Interest expense |
(10,123 | ) | | (10,123 | ) | (243,872 | ) | 6,322 | (237,550 | ) | (182,064 | ) | 123,946 | (f) | (68,241 | ) | ||||||||||||||
Loss on debt extinguishment |
| | | | | | | | | |||||||||||||||||||||
Other, net |
473 | | 473 | 2,372 | | 2,372 | 1,818 | | 2,291 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other income (loss), net |
(9,482 | ) | | (9,482 | ) | (241,232 | ) | 6,322 | (234,910 | ) | (180,041 | ) | 123,946 | (65,577 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before tax |
142,283 | | 142,283 | (157,317 | ) | | (157,317 | ) | (120,571 | ) | 102,500 | 365,354 | ||||||||||||||||||
Income tax expense |
| (58,336 | ) | (58,336 | ) | (120,040 | ) | | (120,040 | ) | (92,002 | ) | 22,843 | (g) | (127,495 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income |
142,283 | (58,336 | ) | 83,947 | 37,277 | ) | | 37,277 | (28,569 | ) | 125,343 | 237,859 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less: Net loss attributable to noncontrolling interest |
(70 | ) | | (70 | ) | | | | | | (70 | ) | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to Coronado Global Resources, Inc. |
$ | 142,353 | (58,336 | ) | 84,017 | 37,277 | | 37,277 | 28,569 | 125,343 | 237,929 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to the unaudited consolidated statement of operations.
F-109
Note 1. Basis of Preparation
We are providing the following information on a supplemental basis. The accompanying unaudited consolidated pro forma statement of operations was prepared in accordance with Article 11 of Regulation S-X and presents the pro forma combined results of operations of Coronado based upon the historical financial statements of each of Coronado and Curragh, after giving effect to the Transaction and change in tax status, and are intended to reflect the impact of the Transaction and change in tax status on Coronado's statement of operations. The accompanying unaudited consolidated pro forma statement of operations has been prepared using, and should be read in conjunction with the audited consolidated financial statements of Coronado for the year ended December 31, 2017 and the historical combined financial statements of Wesfarmer's Curragh Pty Ltd for the year ended December 31, 2017. Assumptions and estimates underlying the pro forma adjustments are described in these notes.
The accompanying unaudited consolidated pro forma statement of operations is presented for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by Coronado if the Transaction had been consummated as of the beginning of the periods presented or that will be achieved in the future. The unaudited consolidated pro forma statement of operations does not reflect the costs of any integration activities or benefits that may result from realization of synergies expected to result from the Transaction. In addition, throughout the period presented in the unaudited consolidated pro forma statement of operations, the operations of Curragh were conducted and accounted for as part of the former shareholder. Curragh's audited consolidated financial statements have been derived from the former shareholder's historical accounting records and reflect certain allocations of direct costs and expenses. All of the allocations and estimates in such financial statements are based on assumptions that the management of the former shareholder believes are reasonable. In the opinion of management, the unaudited consolidated pro forma statement of operations includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for the period presented. Curragh's financial statements do not necessarily represent the financial position of Curragh had it been operated as a stand-alone company during the period.
The unaudited consolidated pro forma statement of operations combines the historical consolidated statement of operations of Coronado for the year ended December 31, 2017 and the historical combined financial statements of Wesfarmer's Curragh Pty Ltd for the year ended December 31, 2017, giving effect to the Transaction and change in tax status as if it had been consummated on January 1, 2017.
We believe that a comparison of the Coronado's pro forma results for the year ended December 31, 2018, included elsewhere in this Registration Statement, to the Coronado pro forma results for the year ended December 31, 2017 provides useful information because it reflects the business operations on a more comparable basis.
Note 2. Income Statement Adjustments
Coronado Global Resources, Inc. was formed on August 13, 2018 by conversion of Coronado Group HoldCo LLC, from a limited liability company to a corporation. Coronado Group HoldCo LLC was a wholly-owned subsidiary of Coronado Group LLC ("Coronado LLC"), a Delaware limited liability company.
F-110
Note 2. Income Statement Adjustments (Continued)
During the year ended December 31, 2018, Coronado LLC and Coronado Global Resources, Inc. completed a common control reorganization of their legal entity structure (the "Reorganization Transaction"). In connection with the Reorganization Transaction:
Coronado Group HoldCo LLC was converted into Coronado Global Resources, Inc., a Delaware corporation to consolidate Coronado Coal Corporation and Coronado Australia Holdings Pty Ltd under common ownership.
Coronado LLC contributed all membership interest in the US LLC's to Coronado Coal Corporation, a wholly-owned subsidiary of Coronado Global Resources, Inc.
Immediately following the Reorganization Transaction, Coronado Global Resources, Inc. held all the interests of Coronado Australia Holdings Pty Ltd and Coronado Coal Corporation and remained a subsidiary of Coronado LLC, owned by funds managed by The Energy & Minerals Group ("EMG") and members of Coronado management. Due to the Reorganization Transaction, the US-based business of the Company effectively became a taxable on September 19, 2018, the day Coronado LLC contributed all membership interests in the US LLC's to Coronado Coal Corporation.
This adjustment reflects the Reorganization Transaction as if it occurred on January 1, 2017, making the entire entity taxable at that point in time. For the purposes of calculating the pro forma income tax adjustment, a US blended statutory rate (Federal and State) of 41% was utilized. This does not reflect Coronado's effective tax rate, which will include other tax items such as state and foreign taxes as well as other tax charges and benefits, and does not take into account any historical or possible future tax events that may impact Coronado following the consummation of the Transaction.
These adjustments represent reclassifications to conform the accounting presentation of Curragh's financial statements to Coronado's financial statements.
In order to translate the Curragh AUD results into USD, an exchange rate of .7664 was utilized. This represents the average exchange rate for the period from January 1, 2017 to December 31, 2017.
Other revenues were adjusted as follows:
Amortization of the Stanwell below market CSA (1) |
31,443 | |||
| | | | |
Total pro form adjustment to other revenues |
31,443 |
F-111
Note 2. Income Statement Adjustments (Continued)
Depreciation, depletion and amortization were adjusted as follows:
Adjustment to depreciation of Curragh assets acquired (1) |
47,219 | |||
Adjustment to accretion of Curragh asset retirement obligation (2) |
5,670 | |||
| | | | |
Total pro forma adjustment to depreciation, depletion and amortization |
52,889 | |||
| | | | |
Interest expense was adjusted as follows:
Eliminate intercompany interest expense (1) |
182,064 | |||
Reversal of Bank of American Term Loan (2) |
9,333 | |||
Recognition of DB Term Loan interest expense (3)(4) |
(62,284 | ) | ||
Amortization of DB Term Loan debt issuance costs and discount (5) |
($ | 5,167 | ) | |
| | | | |
Total pro forma adjustment to interest expense |
123,946 |
F-112
Note 2. Income Statement Adjustments (Continued)
For purposes of the unaudited pro forma condensed combined financial statements, an Australian statutory tax rate of approximately 30% has been used for pro forma adjustments related to Curragh. A US blended statutory tax rate (Federal and State) of approximately 41% has been used for pro forma adjustments related to the US LLC's. This does not reflect Coronado's effective tax rate, which will include other tax items such as state and foreign taxes as well as other tax charges and benefits, and does not take into account any historical or possible future tax events that may impact Coronado following the consummation of the Transaction.
F-113
Agreement |
|
Share sale agreement Cork |
|
Wesfarmers Limited |
|
Coronado Australia Holdings Pty Ltd |
|
Coronado Group LLC |
|
|
Contents |
|
|
Table of contents |
|
|
|
|
|
|
1 |
Definitions and interpretation |
8 |
|
|
|
|
|
|
1.1 |
Definitions |
8 |
|
1.2 |
Interpretation |
27 |
|
1.3 |
Business Day |
28 |
|
1.4 |
Inclusive expressions |
28 |
|
1.5 |
Agreement components |
28 |
|
|
|
|
2 |
Conditions for Completion |
28 |
|
|
|
|
|
|
2.1 |
Conditions precedent |
28 |
|
2.2 |
Notice |
29 |
|
2.3 |
Reasonable endeavours |
29 |
|
2.4 |
Waiver |
31 |
|
2.5 |
Cut Off Date |
31 |
|
2.6 |
No binding agreement for transfer |
31 |
|
|
|
|
3 |
Termination |
31 |
|
|
|
|
|
|
3.1 |
Termination by the Buyer Entities |
31 |
|
3.2 |
Termination by the Seller |
31 |
|
3.3 |
Effect of termination |
32 |
|
3.4 |
No other right to terminate or rescind |
32 |
|
|
|
|
4 |
Sale and purchase |
33 |
|
|
|
|
|
|
4.1 |
Actions immediately prior to Completion |
33 |
|
4.2 |
Sale Shares |
33 |
|
4.3 |
Share Purchase Price |
33 |
|
4.4 |
Existing WES Intercompany Loan Agreement and Existing WES GSA |
34 |
|
4.5 |
Debt Purchase Price |
34 |
|
4.6 |
Actions on Completion |
34 |
|
4.7 |
Title and risk in Sale Shares |
34 |
|
|
|
|
5 |
Period before Completion |
34 |
|
|
|
|
|
|
5.1 |
Carrying on of business |
34 |
|
5.2 |
Material Contracts and proposed actions |
36 |
|
5.3 |
Pre Completion Dividend or Distribution |
37 |
|
5.4 |
Permitted acts |
37 |
|
5.5 |
Intra-group loans |
37 |
|
5.6 |
Wesfarmers Guarantees |
38 |
|
5.7 |
Target Entity a member of a Consolidated Group |
38 |
|
5.8 |
Access to business |
39 |
|
5.9 |
Information rights |
40 |
|
5.10 |
Co-operation with debt financing |
40 |
|
5.11 |
Financial assistance whitewash |
42 |
|
5.12 |
Notification of change of control |
42 |
|
5.13 |
VSM Deed |
42 |
|
5.14 |
Transitional Services Agreement |
43 |
|
5.15 |
United States Tax filing |
43 |
|
|
|
|
6 |
IT Licences |
43 |
|
|
|
|
|
|
6.1 |
Transfer |
43 |
|
Completion Accounts |
91 |
|
|
|
|
Schedule 8 |
|
|
Pro forma Completion Accounts |
92 |
|
|
|
|
Schedule 9 |
|
|
Structure Diagram |
93 |
|
|
|
|
Schedule 10 |
|
|
Financial Assurances and Bank Guarantees |
94 |
|
|
|
|
Schedule 11 |
|
|
Properties |
95 |
|
|
|
|
Schedule 12 |
|
|
Business Intellectual Property |
96 |
|
|
|
|
Schedule 13 |
|
|
Third Party Intellectual Property |
97 |
|
|
|
|
Schedule 14 |
|
|
Seller Trade Marks |
98 |
|
|
|
|
Schedule 15 |
|
|
Plant and Equipment |
99 |
|
|
|
|
Schedule 16 |
|
|
Insurance policies |
167 |
|
|
|
|
Schedule 17 |
|
|
Employees |
168 |
|
|
|
|
Schedule 18 |
|
|
Deed of Assignment (Debt and Security) |
169 |
|
|
|
|
Schedule 19 |
|
|
Financial statements |
170 |
|
Schedule 20 |
|
|
|
VSM Deed |
|
172 |
|
|
|
|
|
Schedule 21 |
|
|
|
Transitional Services Agreement |
|
173 |
|
|
|
|
|
Schedule 22 |
|
|
|
New Intercompany Loan Agreement |
|
174 |
|
|
|
|
|
Schedule 23 |
|
|
|
New Intercompany Loan Documents (GSA) |
|
175 |
|
|
|
|
|
Schedule 24 |
|
|
|
Deed of release |
|
176 |
|
|
|
|
|
Signing page |
|
177 |
Cork share sale agreement |
|
|
|
|
|
Date 22 December 2017 |
|
|
|
|
|
Between the parties |
|
|
Seller |
|
Wesfarmers Limited |
|
|
|
|
|
ACN 008 984 049 of Level 14, Brookfield Place Tower 2, |
|
|
123 St Georges Terrace |
|
|
Perth |
|
|
Western Australia |
|
|
6000 |
|
|
|
|
|
(Seller) |
Buyer |
|
Coronado Australia Holdings Pty Ltd |
|
|
|
|
|
ACN 623 524 989 of C/- Jones Day, Level 31, Riverside Centre, 123 |
|
|
Eagle Street |
|
|
Brisbane |
|
|
Queensland |
|
|
4000 |
|
|
|
|
|
(Buyer) |
Assignee |
|
Coronado Group LLC, a Delaware limited liability company |
|
|
|
|
|
57 Danbury Road, Suite 101 |
|
|
Wilton |
|
|
CT, USA |
|
|
06897 |
|
|
|
|
|
(Assignee) |
Buyers Guarantor |
|
Coronado Group LLC, a Delaware limited liability company |
|
|
|
|
|
57 Danbury Road, Suite 101 |
|
|
Wilton |
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CT.USA |
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06897 |
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(Buyers Guarantor) |
Recitals |
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The Seller owns the Sale Shares. |
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2 The Seller has agreed to sell and the Buyer has agreed to buy the Sale Shares and the Seller has agreed to assign and the Buyer has agreed to the assignment of the Existing WES lntercompany Loan Agreement on the terms and conditions of this agreement. |
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3 The Buyers Guarantor has agreed to guarantee the Buyers and Assignees obligations under this agreement. |
The parties agree as follows: |
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1 Definitions and interpretation
1.1 Definitions
The meanings of the terms used in this agreement are set out below.
Term |
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Meaning |
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A IFRS |
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Australian equivalents to International Financial Reporting Standards. |
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Accounting Standards |
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is defined in Schedule 7. |
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Accounts |
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in respect of the Target Entities, the consolidated balance sheet as at the Accounts Date, and the consolidated profit and loss statement of the Target Entities for the year ending on the Accounts Date . |
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Accounts Date |
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30 June 2017. |
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Adjustment Amount |
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the amount (if any) equal to the Completion Working Capital Balance minus the Target Working Capital Balance, plus Completion Net Debt. |
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Advance |
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the cash advance made by the Buyer to Wesfarmers Curragh under the New Intercompany Loan Agreement in the amount of the Repayment Amount. |
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ASIC |
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the Australian Securities and Investments Commission. |
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Authorisation |
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any approval, licence, consent, authority or permit. |
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Bank Guarantee Beneficiary |
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in respect of each Bank Guarantee, the beneficiary of that guarantee. |
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Bank Guarantees |
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the bank guarantees listed in Schedule 10. |
Term |
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Meaning |
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Bank Guarantees Replacement |
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in respect of the Bank Guarantees, a bank guarantee or bank guarantees in favour of the relevant Bank Guarantee Beneficiary in the sum stated in Schedule 10 (or such other amount as the Bank Guarantee Beneficiary may require) and in such form and from such institutions as the Bank Guarantee Beneficiary requires. |
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Business |
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the business carried out by the Target Entities. |
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Business Day |
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a day on which banks are open for business in Brisbane and Perth, other than a Saturday, Sunday or public holiday in either (or both) of those cities. |
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Business Intellectual Property |
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1 the Intellectual Property Rights set out in Schedule 12; and
2 any other Intellectual Property Rights owned by a Target Entity,
and the right to take action against Third Parties for infringement of those Intellectual Property Rights whether occurring before or after the date of this agreement, but excluding the Third Party Intellectual Property. |
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Business Records |
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all original and certified copies of the books, records, documents, information, accounts and data (whether machine readable or in printed form) owned by a Target Entity or the property of a Target Entity and any source material owned by a Target Entity and used to prepare them. |
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Buyer Claim |
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any claim, demand, legal proceedings or cause of action, including any claim, demand, legal proceedings or cause of action under common law or under statute in any way relating to any Transaction Agreement, the Sale or the Transfer, and includes a claim, demand, legal proceedings or cause of action arising from a breach of a Buyer Warranty, or under an indemnity in any Transaction Agreement. |
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Buyer Entities |
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means the Buyer and the Assignee. |
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Buyer Group |
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the Buyer Entities and each of their Related Bodies Corporate (other than the Target Entities), including the Buyers Guarantor and Buyer Group Member means any member of the Buyer Group. |
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Buyer Released Matters |
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has the meaning given in clause 12.9(d)(1). |
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Buyer Warranties |
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the representations and warranties in Schedule 5. |
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Buyers Consolidated Group |
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the Consolidated Group of which the Buyer is a member, if any. |
Term |
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Meaning |
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Buyers Fund |
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a superannuation fund established or nominated by the Buyer and notified to the Seller not less than 10 Business Days prior to Completion. |
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Change of Control Consent |
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means consent to the change of control of Wesfarmers Curragh in accordance with the Ergon Contract. |
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Claim |
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any claim, demand, legal proceedings or cause of action, including any claim, demand, legal proceedings or cause of action under common law or under statute in any way relating to any Transaction Agreement, the Sale or the Transfer and includes a claim, demand, legal proceedings or cause of action arising from a breach of Warranty , or under an indemnity in any Transaction Agreement.
For the avoidance of doubt, a Claim includes a Tax Claim. |
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Completion |
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Share Completion and Debt Completion. |
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Completion Accounts |
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the accounts setting out Completion Working Capital Balance and Completion Net Debt, prepared as at the Effective Time in accordance with Schedule 7 and in the format set out in Schedule 8, together with such information required by Schedule 7 and Schedule 8. |
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Completion Date |
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the date on which Completion occurs. |
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Completion Net Debt |
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is defined in Schedule 7. |
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Completion Steps |
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the steps that each party must carry out at Completion, which are set out in Schedule 6. |
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Completion Working Capital Balance |
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is defined in Schedule 7. |
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Condition |
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a condition in clause 2.1. |
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Confidentiality Agreements |
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the confidentiality agreement dated 10 January 2017 between the Seller and the Buyer and the confidentiality deed poll dated 23 January 2017 by the Buyer in favour of the relevant beneficiaries, as amended from time to time. |
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Meaning |
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Consequential Loss |
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1 special, exemplary or punitive damages;
2 loss of production, loss of anticipated production, loss of revenue, loss of anticipated revenue, loss of profits or loss of anticipated profits;
3 loss of business opportunities, including the opportunity to enter into or complete an arrangement with a third party; and
4 damages to goodwill or reputational damage,
whether arising in contract, tort (including negligence), equity or under statute and whether or not foreseeable at the date of this agreement. |
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Consolidated Group |
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a Consolidated Group or a MEC group as those terms are defined in section 995-1 of the ITAA 1997. |
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Contamination |
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the presence of any substance in the Environment, whether solid, liquid or gaseous, including a contaminant as defined in the Environmental Protection Act 1994 (Qld), which is:
1 harmful or potentially harmful to property, human beings, vegetation, animals, birds or other terrestrial or marine life or ecosystems; or
2 unlawful to emit, discharge or deposit to, or disturb in, the Environment. |
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Corporations Act |
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the Corporations Act 2001 (Cth). |
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Curragh Mine |
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the mine known as Curragh which is located on the Tenements. |
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Cut Off Date |
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the date which is six months after the date of this agreement. |
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Data Room |
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the online data room entitled 09 Cork Mine as hosted by Ansarada and accessed at https://dataroom.ansarada.com/projectwalter.dataroom and made available to the Buyer Entities, their representatives or advisers, the contents of which will be reproduced on a CD or USB stick (or in a form agreed between the Seller and the Buyer), and the CD or USB stick (or other device) will be initialled by the Seller and the Buyer and delivered to the Buyer on execution of this agreement. |
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Debt Commitment Letter |
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means, collectively:
1 the commitment letter among Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., the Buyer and the Buyers Guarantor dated on or before the date of this agreement; and
2 the Fee Letters related to paragraph 1,
in each case as amended, modified, supplemented or replaced from time to time, to the extent permitted by clause 5.10(c). |
Term |
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Meaning |
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Debt Completion |
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completion of the sale and transfer of the Existing WES Intercompany Loan Agreement and the Existing WES GSA under clause 4.4. |
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Debt Completion Payment |
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** |
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Debt Financing Commitments |
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means the commitment of the Debt Financing Parties to provide the Debt Financing. |
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Debt Financing Documents |
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means the definitive documentation for the Debt Financing. |
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Debt Financing Parties |
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means the entities that have committed to provide or arrange or otherwise entered into agreements (including any commitment letters) in connection with the Debt Financing, the Debt Financing Commitments or other debt financings in connection with the transactions contemplated by this agreement. |
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Debt Financing |
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means the debt financing contemplated by the Debt Commitment Letter. |
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Debt Purchase Price |
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the Debt Completion Payment plus or minus (as applicable) the Adjustment Amount and plus or minus any other adjustments made under this agreement.
For the avoidance of doubt, in this agreement, Debt Purchase Price is exclusive of GST. |
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Deed of Assignment (Debt and Security) |
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the deed of assignment of the Existing WES Intercompany Loan Agreement and the Existing WES GSA between the Seller as assignor and the Buyer as assignee in the form of Schedule 18. |
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Demand |
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a written notice of, or demand for, an amount payable. |
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Disclosure Letter |
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a letter dated on or about the date of this agreement together with the attachments to that letter addressed by the Seller to the Buyer Entities disclosing facts, matters and circumstances that are, or may be, inconsistent with the Warranties. |
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Disclosure Materials |
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1 all documents and information that were contained in the Data Room as at 21 December 2017 and included on the CD or USB stick (or other device) to be initialled by the Seller and the Buyer and delivered to the Buyer Entities on execution of this agreement; and
2 the information set out in the Disclosure Letter. |
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Disputed Matters |
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is defined in Schedule 7. |
Term |
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Meaning |
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Disputing Action |
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in respect of Tax Demand, any action to cause the Tax Demand to be withdrawn, reduced or postponed or to avoid, resist, object to, defend, appear against or compromise the Tax Demand and any judicial or administrative proceedings arising out of that action. |
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DPT Assessment |
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an assessment raised under section 145-10 of Schedule 1 of the Taxation Administration Act 1953 (Cth). |
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Duty |
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any stamp, transaction or registration duty or similar charge imposed by any Governmental Agency and includes any interest, fine, penalty, charge or other amount imposed in respect of any of them, but excludes any Tax. |
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Effective Time |
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is defined in Schedule 7. |
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Employee |
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1 an Existing Employee;
2 a Pre-Completion Transferring Employee; and
3 a Transferring Employee. |
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Employee Entitlement List |
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a document setting out at the date specified in the document the period of service (including prior service with any Target Entity or Seller Group Member), remuneration package (including details of any bonuses, profit share, or employee share plan entitlements), applicable allowances and accrued leave (including long service leave, annual leave and personal leave) of each Employee, but without identifying the name of the Employee that corresponds to that information. |
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Employee Entitlements |
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all of the Leave Benefits of each Pre-Completion Transferring Employee or Transferring Employee who accepts employment with a Target Entity in accordance with clause 7.2, accrued as at Completion. |
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Encumbrance |
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an interest or power:
1 reserved in or over an interest in any asset; or
2 created or otherwise arising in or over any interest in any asset under a security agreement, a bill of sale, mortgage, charge, lien, pledge, trust or power,
by way of, or having similar commercial effect to, security for the payment of a debt, any other monetary obligation or the performance of any other obligation, and includes, but is not limited to:
3 any agreement to grant or create any of the above; and
4 a security interest within the meaning of section 12(1) and section 12(2) of the PPSA,
but does not include a Permitted Encumbrance. |
Term |
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Meaning |
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Enterprise Agreement |
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the enterprise agreement titled Curragh Mine Operations Enterprise Agreement 2015. |
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Environment |
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has the meaning given to it in the Environmental Protection Act 1994 (Qld). |
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Environmental Harm |
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has the meaning given to it in the Environmental Protection Act 1994 (Qld). |
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Environmental Law |
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any statute or common law relating to the Environment including any law relating to land use, planning, heritage, coastal protection, water catchments, pollution of air or waters, soil or groundwater contamination, Contamination, Environmental Harm, chemicals, waste, noise, use of hazardous or dangerous goods or substances, building regulations, public and occupational health and safety, noxious trades, or any other aspect of protection of the Environment or person or property. |
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Environmental Obligations |
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the Indemnified Parties obligations in relation to the Tenements, the Properties or the Curragh Mine, which arise either:
1 prior to Completion and remains unsatisfied at Completion; or
2 after Completion,
and relate to:
3 remediation, rehabilitation, restoration or Contamination in respect of the Tenements or Properties; or
4 any notice, direction or requirement given under an Environmental Law (including in relation to financial assurance). |
Equity Financing |
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has the meaning given in the Debt Commitment Letter. |
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** |
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** |
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** |
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Existing Employee |
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an employee of a Target Entity as at the date of this agreement who remains employed by a Target Entity immediately before Completion. |
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Existing Member |
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an Employee who is a member of the Wesfarmers Fund on Completion. |
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Existing WES GSA |
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the general security agreement dated 25 January 2017 granted by Wesfarmers Curragh and the Wesfarmers Guarantors in favour of the Seller as amended from time to time. |
Term |
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Meaning |
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Existing WES Intercompany Loan Agreement |
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the loan agreement dated 25 January 2017 between the Seller as lender, Wesfarmers Curragh as borrower and the Wesfarmers Guarantors as guarantors as amended from time to time. |
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Exit Payment |
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the payment determined in accordance with the Tax Sharing Agreement and pursuant to section 721-35 of the ITAA 1997, which is required to be made by clause 5.7(e). |
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Expert |
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is defined in Schedule 7. |
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Experts Report |
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is defined in Schedule 7. |
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Fee Letters |
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means the letters between Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., the Buyer and the Buyers Guarantor that address fees and expenses related to the Debt Financing, each dated on or about the date of this agreement. |
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Finance Related Parties |
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means the Debt Financing Parties, and the parties to any joinder agreements, indentures or credit agreements entered pursuant thereto or relating thereto, together with their respective affiliates, and their respective affiliates officers, directors, employees, agents and representatives and their respective successors and assigns. |
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Financial Assurances |
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the bank guarantees provided by or on behalf of the Target Entities to the State of Queensland and the Department of Natural Resources and Mines in respect of the Tenements and related environmental authorities, for an aggregate amount of $269,048,091.19 as listed in Schedule 10. |
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Financial Assurances Replacement |
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in respect of the Financial Assurances, a bank guarantee or bank guarantees in favour of the State of Queensland or the Department of Natural Resources and Mines (as applicable) in the aggregate sum of $269,048,091.19 (or such other amount as the relevant Governmental Agency may require) and in such form and from such institutions as required by that Governmental Agency. |
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Freehold Properties |
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the freehold real estate listed in Part 1 of Schedule 11. |
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** |
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** |
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Governmental Agency |
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any government or governmental, administrative, monetary, fiscal or judicial body, department, commission, authority, tribunal, agency or entity in any part of the world. |
Term |
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Meaning |
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Group Liability |
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has the same meaning as that term is defined in section 721-10(1)(a) of the ITAA 1997. |
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Group Liability Date |
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the date Group Liability becomes due and payable. |
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GST |
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has the meaning given in clause 18. |
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GST Act |
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the A New Tax System (Goods and Services Tax) Act 1999 (Cth). |
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Head Company |
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has the same meaning as that term is defined in section 995-1 of the ITAA 1997. |
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Immediately Available Funds |
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telegraphic or other electronic means of transfer of cleared funds into a bank account nominated in advance by the payee. |
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Indemnifiable U.S. Tax |
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U.S. federal income tax liability of an Indemnified Party or Target Entity to the extent such U.S. federal income tax liability arises as a result of an election made pursuant to clause 5.15(a) of this agreement and would not have arisen in the absence of such election. |
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Indemnified Parties |
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1 the Seller Group Members;
2 each director, officer, employee or agent of the Seller Group Members; and
3 the Specified Executives. |
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Insurance |
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is defined in Warranty 16.1 in Schedule 4. |
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Intellectual Property Rights |
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all intellectual and industrial property rights and interests throughout the world, whether registered or unregistered, including trade marks, designs, patents, inventions, circuit layouts, copyright and analogous rights, confidential information, know-how and all other intellectual property rights as defined in Article 2 of the convention establishing the World Intellectual Property Organisation of 14 July 1967 as amended from time to time. |
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Interest Rate |
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the daily 11.00am cash rate quoted on Reuters page RBA30. |
Term |
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Meaning |
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Management Accounts |
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means the:
1
Board and Managing Director Reports for the period after the Accounts Date and date of this agreement (document numbers 09.06.04.01.04.07, 09.06.04.01.04.08 and 09.06.04.01.04.09);
2
Mine Cash Cost Reports for the period after the Accounts Date and the date of this agreement (document numbers 09.06.04.06.04.07, 09.06.04.06.04.08 and 09.06.04.06.04.09 in the Data Room); and
3 Trial Balance Apr-Sep 17 and Oct-Nov 17 (document numbers 09.06.06.10 and 09.06.06.12 in the Data Room). |
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Marketing Period |
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the first period of 12 consecutive New York Business Days commencing after the date of this agreement throughout which and on the first and last day of which:
1
the Buyer has the Pre-Completion Financial Statements; and
2 the Conditions in clause 2.1 have been satisfied or waived,
provided that 15 January 2018, 19 February 2018, 30 March 2018 and 28 May 2018 will not count towards the 12 New York Business Days for purposes of the Marketing Period (but for the avoidance of doubt, such exclusion shall not restart the period), and such Marketing Period will not commence before 2 January 2018. |
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Material Adverse Change |
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means any change, matter, event or circumstance which happens or is announced after the date of this agreement and before Completion which (individually or when aggregated with all such changes, matters, events or circumstances of a like kind):
1
has resulted in, or is reasonably likely to result in, a reduction in the assets or an increase in the liabilities of the Target Entities on a consolidated basis by $50,000,000 or more;
2
has resulted in the projected output of run of mine (ROM) coal of the Curragh Mine, or is reasonably likely to result in the projected output of run of mine (ROM) coal of the Curragh Mine, being reduced by two million tonnes or more over the 12 month period commencing on the Scheduled Completion Date (assuming the Marketing Period has expired as at the date that the change, matter, event or circumstance is announced or becomes known, whichever is the later) when compared to the projected output of run of mine (ROM) coal of the Curragh Mine set out in document number 09.01.02.01 in the Data Room;
3
results in the appointment of a receiver, receiver and manager, judicial manager, liquidator, administrator or like official to or over the whole or a substantial part of the undertaking or property of Wiggins Island Coal Export Terminal Pty Ltd ACN 131 210 038; or
4
has resulted in or is reasonably likely to permanently or for a material period of time result in the Target Entities carrying on their business in a substantially worse manner as was carried on as at the date of this agreement,
but does not include any change, matter, event or circumstance:
5 that has been fairly disclosed in, or otherwise reasonably identifiable or reasonably evident from (including in accordance with clause 12.1(c)) the |
Term |
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Material Contracts |
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** |
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Material Proceedings |
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is defined in Warranty 12.1 in Schedule 4. |
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Net Balance |
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is the amount which is equal to the aggregate of amounts owing to the Seller under the Existing WES Intercompany Loan Agreement and the New WES Intercompany Loan Agreement at the Completion Date less the Repayment Amount. |
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New Intercompany Loan Agreement |
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the intercompany loan agreement between the Buyer as lender, Wesfarmers Curragh as borrower and the Wesfarmers Guarantors as guarantors, in substantially the form of Schedule 22 subject to the changes to the interest rate and interest payable under the agreement. |
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New Intercompany Loan Documents |
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1 the New Intercompany Loan Agreement; and
2 the general security agreement granted by Wesfarmers Curragh and the Wesfarmers Guarantors to the Buyer, in substantially the form of Schedule 23. |
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New WES GSA |
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** |
Term |
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Meaning |
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New WES Intercompany Loan Agreement |
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** |
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New York Business Day |
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is a day on which banks are open for business in New York, other than a Saturday, Sunday or public holiday in New York. |
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Permitted Encumbrance |
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1 PPS Register Security Interest registered in the ordinary course of business by suppliers or contractors of a Target Entity (or subcontractors of those suppliers or contractors);
2 any Security Interest created or which is permitted to exist as contemplated by this agreement or any agreement entered into in contemplation of this agreement;
3 the Existing WES GSA and New WES GSA;
4 the caveat contemplated in the VSM Deed;
5 any mortgage or registration (including any covenant or easement) against the Tenements or Properties that is included in the Disclosure Materials or would have shown on a resource authority public report or a search of the public register maintained by the Queensland Title Registry three Business Days before the date of this agreement;
6 in respect of the Tenements, any reservation or covenant arising under law or arising in respect of the grant of the Tenement;
7 every lien or retention of title arrangement securing the unpaid balance of purchase money for property acquired in the ordinary course of business;
8 any Encumbrance in relation to personal property (as defined in the PPSA and to which that Act applies) that is created or provided for by:
(a) a transfer of an Account or Chattel Paper;
(b) a PPS Lease; or
(c) a Commercial Consignment,
that is not a security interest within the meaning of section 12(1) of the PPSA; or
9 the interest of the lessor or owner in respect of assets subject to a finance or capital lease, a hire-purchase agreement or a conditional sale agreement in each case entered into in the ordinary course of business.
In this definition, Account, Chattel Paper, PPS Lease and Commercial Consignment have the meanings given in the PPSA. |
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Plan of Operations |
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the plan of operations for the Curragh Mine as set out in document number 09.03.03.01 in the Data Room. |
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Plant and Equipment |
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the plant and equipment listed in Schedule 15. |
Term |
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Meaning |
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Post Completion Financial Statements |
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the financial statements set out in Part 2 of Schedule 19. |
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PPS Register |
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the register established under the PPSA. |
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PPSA |
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the Personal Property Securities Act 2009 (Cth). |
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Pre Completion Dividend or Distribution |
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a dividend or a repayment of a loan (approved in advance by the Seller) from cash held by Wesfarmers Curragh made in accordance with clause 5.3. |
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Pre Completion Financial Statements |
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the financial statements set out in Part 1 of Schedule 19. |
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Pre Completion Returns |
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is defined in clause 15.6. |
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Pre-Completion Transferring Employees |
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each of those employees employed by WRL or the Seller in connection with the Business as at the date of this agreement listed in Part A of Schedule 17 who remains employed by WRL or the Seller prior to a transfer contemplated by clause 7.2(a). |
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Properties |
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the Freehold Properties and State Leasehold Properties. |
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Property Leases |
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the real estate leases (and licences) listed in Part 3 of Schedule 11. |
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Related Body Corporate |
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has the meaning given in the Corporations Act. |
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Repayment Amount |
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** |
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** |
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** |
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Replacement Mining Services Contract |
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a contract or contracts that replace the Key Mining Services Contracts. |
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Royalty Agreement |
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** |
Term |
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Meaning |
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Sale |
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the sale and purchase of the Sale Shares in accordance with clause 4.2. |
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Sale Shares |
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all of the issued share capital in Wesfarmers Curragh, as set out in Schedule 3. |
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Scheduled Completion Date |
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the last Business Day of the month in which the first Business Day following expiration of the Marketing Period occurs.
If the Scheduled Completion Date would otherwise fall on a Monday or a day on, or following a day on, which banks are not open for business in New York, the Scheduled Completion Date will be the following Business Day. |
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Security Interest |
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a security interest as defined in the PPSA. |
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Seller Group |
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the Seller and each of its Related Bodies Corporate (other than the Target Entities) and Seller Group Member means any member of the Seller Group. |
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Seller Group Representative or Adviser |
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any representative or adviser of any Seller Group Member and any Related Bodies Corporate of such representative or adviser (or any current or former director, officer or employee of any of them). |
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Seller Released Matters |
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has the meaning given in clause 12.9(b)(1). |
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Seller Trade Marks |
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the words, logos and marks listed in Schedule 14. |
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Sellers Consolidated Group |
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the Consolidated Group of which the Seller and any of the Target Entities are members. |
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Sellers Head Company |
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the Head Company of the Sellers Consolidated Group. |
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Sellers Report |
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as defined in Schedule 7. |
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Sellers Tax Sharing Agreement |
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the Tax Sharing Agreement entered into by the Sellers Head Company and each Target Entity dated 1 September 2007, as amended 23 September 2011 and 3 February 2014. |
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SGA |
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Superannuation Guarantee (Administration) Act 1992 (Cth). |
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Share Completion |
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completion of the sale and purchase of the Sale Shares under clause 4.2. |
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Share Purchase Price |
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$1.00. |
Term |
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Meaning |
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Specified Executives |
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** |
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Stanwell |
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Stanwell Corporation Limited ABN 37 078 848 674. |
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** |
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** |
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** |
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** |
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** |
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** |
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** |
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** |
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State Leasehold Properties |
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the properties leased by or licenced to a Target Entity from the State of Queensland as listed in Part 2 of Schedule 11. |
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Straddle Returns |
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is defined in clause 15.6. |
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Target Entities |
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each of the entities listed in Schedule 3. |
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Target Working Capital Balance |
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is defined in Schedule 7. |
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Tax |
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any tax, levy, charge, impost, fee, deduction, goods and services tax, compulsory loan or withholding, that is assessed, levied, imposed or collected by any Governmental Agency and includes any interest, fine, penalty, charge, fee or any other amount imposed on, or in respect of any of the above but excludes Duty. |
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Tax Claim |
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any claim, demand, legal proceedings or cause of action including any claim, demand, legal proceedings or cause of action arising from a breach of a Tax Warranty, any Tax obligation given by a Buyer Entity under this agreement or which is the subject of the indemnity in clause 11.5. |
Term |
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Meaning |
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Tax Costs |
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all costs, and expenses incurred in:
1 managing an inquiry in relation to a Tax Demand; or
2 conducting any Disputing Action in relation to a Tax Demand. |
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Tax Demand |
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1 a Demand or assessment from a Governmental Agency requiring the payment of any Tax or Duty;
2 any document received from a Governmental Agency administering any Tax or Duty assessing, imposing, claiming or indicating an intention to claim any Tax or Duty;
3 a notice to a contributing member of a Consolidated Group given under section 721-15(5) or (5A) of the ITAA 1997; or
4 lodgement of a tax return or a request for an amendment under a law about self-assessment of Tax. |
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Tax Funding Agreement |
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any agreement where a Target Entity may be required to pay an amount to the Sellers Head Company to pay a Group Liability or to reimburse the Sellers Head Company after payment of the Group Liability. |
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Tax Law |
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any law relating to either Tax or Duty as the context requires. |
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Tax Payor |
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is defined in clause 13.3. |
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Tax Relief |
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any relief, allowance, exemption, exclusion, set-off, deduction, loss, rebate, refund, right to repayment or credit granted or available in respect of a Tax or Duty under any law. |
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Tax Sharing Agreement |
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an agreement contemplated by section 721-25 of the ITAA 1997. |
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Tax Warranty |
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Warranty 17 in Schedule 4. |
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Tenements |
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the tenements described in Schedule 2. |
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** |
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** |
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Third Party |
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any person or entity (including a Governmental Agency) other than a Seller Group Member, a Buyer Group Member or a Target Entity. |
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Third Party Claim |
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any claim, Demand, legal proceedings or cause of action made or brought by a Third Party, other than a Tax Demand. |
Term |
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Meaning |
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Third Party Intellectual Property |
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the:
1 the Intellectual Property Rights listed in Schedule 13; and
2 any other Intellectual Property Rights used by a Target Entity in the conduct of the Business that are owned by a Third Party. |
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Total Consideration |
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the Debt Purchase Price plus the Repayment Amount plus the Share Purchase Price. |
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Transaction Agreements |
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the following agreements:
1 this agreement;
2 the VSM Deed; and
3 the Transitional Services Agreement. |
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Transfer |
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the sale and transfer of the Existing WES Intercompany Loan Agreement and the Existing WES GSA in accordance with clause 4.4. |
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Transferring Employee |
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each of those employees employed by WRL or the Seller in connection with the Business as at the date of this agreement listed in Part B of Schedule 17 who remains employed by WRL or the Seller prior to a transfer contemplated by clause 7.2(b). |
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Transitional Services Agreement |
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the transitional services agreement between the Seller, Wesfarmers Curragh and the Buyers Guarantor substantially on the terms of the agreement outlined in Schedule 21 or such other terms as the parties may agree. |
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VSM Deed |
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a value share mechanism deed between the Seller and Wesfarmers Curragh substantially on the terms outlined in Schedule 20. |
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Warranties |
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the warranties in Schedule 4. |
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Wesfarmers Curragh |
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Wesfarmers Curragh Pty Ltd ACN 009 362 565. |
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Wesfarmers Guarantees |
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any guarantees, indemnities, charges or other securities given by a Seller Group Member to a Third Party to secure the performance of a Target Entity or required for the benefit of a Target Entity, excluding the Financial Assurances, Bank Guarantees and any related Security Interests. |
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Wesfarmers Guarantors |
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each of Curragh Queensland Mining Pty Ltd ACN 095 450 418 and Curragh Coal Sales Co. Pty. Ltd. ACN 010 459 220. |
Term |
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Meaning |
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** |
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** |
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Wilful Misconduct |
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any act or omission which is known to be wrongful and in respect of which a reasonable person would understand that Loss will result from the act or omission. |
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WRL |
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Wesfarmers Resources Limited ACN 096 857 126. |
1.2 Interpretation
In this agreement:
(a) Headings and bold type are for convenience only and do not affect the interpretation of this agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) Words of any gender include all genders.
(d) Other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning.
(e) An expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and any Governmental Agency as well as an individual.
(f) A reference to a clause, party, schedule, attachment or exhibit is a reference to a clause of, and a party, schedule, attachment or exhibit to, this agreement.
(g) A reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them.
(h) A reference to a document includes all amendments or supplements to, or replacements or novations of, that document.
(i) A reference to a party to a document includes that partys successors and permitted assignees.
(j) A promise on the part of two or more persons binds them jointly and severally.
(k) A reference to an agreement other than this agreement includes a deed and any legally enforceable undertaking, agreement, arrangement or understanding, whether or not in writing.
(l) A reference to liquidation or insolvency includes appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding up, dissolution, deregistration, assignment for the benefit of creditors, scheme, composition or arrangement with creditors, insolvency, bankruptcy, or any similar procedure or, where applicable, changes in the constitution of any partnership or person, or death.
(m) No provision of this agreement will be construed adversely to a party because that party was responsible for the preparation of this agreement or that provision.
(n) A reference to a body, other than a party to this agreement (including an institute, association or authority), whether statutory or not:
(1) which ceases to exist; or
(2) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially succeeds to its powers or functions.
(o) If a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day.
(p) A reference to a day is to be interpreted as the period of time commencing at midnight and ending 24 hours later.
(q) If an act prescribed under this agreement to be done by a party on or by a given day is done after 5.00pm on that day, it is taken to be done on the next day.
(r) A reference to time is a reference to Brisbane time.
(s) Where a matter or action is referred to as occurring before Completion, that shall be taken to mean before both Share Completion and Debt Completion.
(t) Where a matter or action is referred to as occurring after Completion, that shall be taken to mean after both Share Completion and Debt Completion.
(u) Where a matter or action is referred to as occurring at Completion, that shall be taken to mean at either Share Completion or at Debt Completion, as the context requires.
(v) A reference to $ is to Australian currency unless denominated otherwise.
1.3 Business Day
Where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day.
1.4 Inclusive expressions
Specifying anything in this agreement after the words include or for example or similar expressions does not limit what else is included.
1.5 Agreement components
This agreement includes any schedule and any attachment.
2 Conditions for Completion
2.1 Conditions precedent
Clauses 4, 5 (other than clauses 5.1, 5.2 and 5.4) and 6 do not become binding on the parties and are of no force or effect unless and until each of the following Conditions have been satisfied or waived in accordance with clause 2.4:
(a) Foreign Investment Review Board approval:
(1) the Buyer Entities have received a written notice under the Foreign Acquisitions and Takeovers Act 1975 (Cth), by or on behalf of the Treasurer of the Commonwealth of Australia stating or to the effect that the Commonwealth Government does not object to the transactions contemplated by this agreement, either unconditionally or on terms that do not impose unduly onerous obligations on the Buyer Entities; or
(2) the Treasurer of the Commonwealth of Australia becomes precluded from making an order in relation to the subject matter of this agreement and the transactions contemplated by it under the Foreign Acquisitions and Takeovers Act 1975 (Cth); or
(3) if an interim order is made under the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of the transactions contemplated by this agreement, the subsequent period for making a final order prohibiting the transactions contemplated by this agreement elapses without a final order being made;
(b) receiving the Stanwell Consent in a form reasonably acceptable to the Buyer and the Seller; and
(c) receiving the Change of Control Consent in a form reasonably acceptable to the Buyer and the Seller.
2.2 Notice
Each party must promptly notify the others in writing if it becomes aware that any Condition in clause 2.1 has been satisfied or has become incapable of being satisfied.
2.3 Reasonable endeavours
(a) The Buyer Entities must use all reasonable endeavours to ensure that the Condition in clauses 2.1(a) is satisfied as expeditiously as possible and in any event on or before the Cut Off Date.
(b) The Buyer Entities and the Seller must use all reasonable endeavours to ensure that the Conditions in clauses 2.1(b) and 2.1(c) are satisfied as expeditiously as possible and in any event on or before the Cut Off Date.
(c) The Buyer Entities must keep the Seller informed of the progress towards satisfaction of its obligations under clause 2.3(a).
(d) The Buyer Entities and the Seller must keep each other informed of the progress towards satisfaction of its obligations under clause 2.3(b).
(e) The Buyer Entities and the Seller must provide all reasonable assistance to the other as is necessary to satisfy the Conditions.
(f) The Buyer Entities must, within 10 Business Days after the date of this agreement file all notices and applications for approval necessary to satisfy the Condition in clause 2.1(a) and must:
(1) consult with, and provide information to, the Seller concerning any proposed approach by the Buyer Entities to a Governmental Agency or the content of any such application for approval and related material correspondence;
(2) provide the Seller with a copy of any notices and applications for approval before lodgement; and
(3) provide the Seller with a copy of any notices and applications promptly following lodgement.
The Seller must provide all information as may be reasonably requested by the Buyer Entity in connection with any notices and applications for approval under this clause 2.3(f).
(g) Promptly after the date of this agreement, the Buyer and the Seller must meet to discuss and agree an approach for engaging with Stanwell in respect of obtaining the fulfilment of the Condition in clause 2.1(b), including to:
(1) discuss the information which will be provided to Stanwell; and
(2) the timing of the provision of all notices and information to Stanwell.
(h) Without limiting any other obligations set out in this clause 2.3, to the extent reasonably considered by the Seller to be necessary or desirable in order to obtain the fulfilment of the Condition in clause 2.1(b), the Buyer Entities must:
(1) provide all information reasonably required by Stanwell; and
(2) provide in respect of the Stanwell Contracts, a parent company guarantee from the Buyers Guarantor.
(i) Without limiting any other obligations set out in this clause 2.3, in respect of the fulfilment of the Conditions in clause 2.1(b) and 2.1(c), the Buyer Entities must:
(1) consult with, and provide information to, the Seller concerning any proposed approach by the Buyer to Stanwell and Ergon and obtaining the Stanwell Consent and the Change of Control Consent (including all related material correspondence);
(2) allow the Seller and its representatives the opportunity to be present at any meetings or other engagement with Stanwell or Ergon;
(3) provide the Seller with a copy of any correspondence to Stanwell or Ergon for prior approval; and
(4) provide the Seller with a copy of any correspondence from Stanwell or Ergon promptly following receipt.
(j) Without limiting any other obligations set out in this clause 2.3, to the extent reasonably considered by the Seller to be necessary or desirable in order to obtain the fulfilment of the Condition in clause 2.1(c), the Buyer Entities must provide in respect of the contract the subject of the Condition, a deed of covenant in the form required by that contract.
(k) Other than in respect of the Conditions in clauses 2.1(a) or 2.1(b) and clause 2.3(j), nothing in this clause 2.3 will require the Buyer to pay any money or provide other valuable consideration to or for the benefit of any person or otherwise take any action which, in the Buyers reasonable opinion, would or may impact adversely on or otherwise be contrary to the interests of the Buyer.
(l) Nothing in this clause 2.3 will require the Seller to pay any money or provide other valuable consideration to or for the benefit of any person or otherwise take any action which, in the Sellers reasonable opinion, would or may impact adversely on or otherwise be contrary to the interests of the Seller.
(m) Promptly after the date of this agreement the parties will jointly approach the relevant Queensland Governmental Agencies including in respect of the replacement of the Financial Assurances and the Bank Guarantee Beneficiaries in respect of the replacement of the Bank Guarantees, and the Buyer and its representatives will be permitted to meet with those persons as reasonably required to discuss the replacement, provided it allows the Seller and its
representatives the opportunity to be present at any meetings or other engagement with those persons.
2.4 Waiver
(a) The Conditions in clause 2.1(a) and clause 2.1(b) are for the benefit of both the Seller and the Buyer and may only be waived by written agreement between the Seller and the Buyer.
(b) The Condition in clause 2.1(c) is for the benefit of the Buyer only and may only be waived in writing by the Buyer.
2.5 Cut Off Date
If a Condition in clauses 2.1(a), 2.1(b) or 2.1(c) has not been satisfied or waived in accordance with clause 2.4 by the Cut Off Date, then the Buyer Entities or the Seller may, provided they have complied with their obligations under clause 2.3, terminate this agreement before Completion by not less than two Business Days written notice to the other parties.
2.6 No binding agreement for transfer
For the avoidance of doubt, nothing in this agreement requires the Seller to transfer the Sale Shares or assign the Existing WES Intercompany Loan Agreement and the Existing WES GSA, unless and until the Conditions have been satisfied or waived in accordance with clause 2.4 and the Buyer does not obtain any rights in relation to the Sale Shares (except to the extent set out in clause 5.1, 5.2 and 5.4) nor does the Assignee acquire any rights in relation to the Existing WES Intercompany Loan Agreement or the Existing WES GSA as a result of this agreement unless and until those Conditions have been satisfied or waived.
3 Termination
3.1 Termination by the Buyer Entities
The Buyer Entities may terminate this agreement at any time before Completion by notice in writing to the Seller if:
(a) a Material Adverse Change occurs;
(b) an order is made or an effective resolution is passed for the winding up or dissolution without winding up (otherwise than for the purposes of reconstruction or amalgamation) of the Seller or any Target Entity;
(c) a receiver, receiver and manager, judicial manager, liquidator, administrator or like official is appointed over the whole or a substantial part of the undertaking or property of the Seller or any Target Entity; or
(d) a holder of an Encumbrance takes possession of the whole or any substantial part of the undertaking and property of the Seller or any Target Entity.
3.2 Termination by the Seller
The Seller may terminate this agreement at any time before Completion by notice in writing to the Buyer Entities if:
(a) an order is made or an effective resolution is passed for the winding up or dissolution without winding up (otherwise than for the purposes of reconstruction or amalgamation) of a Buyer Group Member;
(b) a receiver, receiver and manager, judicial manager, liquidator, administrator or like official is appointed over the whole or a substantial part of the undertaking or property of a Buyer Group Member; or
(c) a holder of an Encumbrance takes possession of the whole or any substantial part of the undertaking and property of a Buyer Group Member.
3.3 Effect of termination
If this agreement is terminated under clause 2.5, this clause 3, clause 9.3(b) or clause 21.10(c), then:
(a) the parties will procure that each other Transaction Agreement (if permitted by the terms of that contract) that has already been executed is terminated in accordance with its terms;
(b) each party is released from its obligations to further perform its obligations under the Transaction Agreements, except those expressed to survive termination;
(c) each party retains the rights it has against the other in respect of any breach of this agreement occurring before termination;
(d) the Buyer Entities and the Buyers Guarantor must return to the Seller all documents or information and other materials obtained from or on behalf of the Seller, any Target Entity or any of their advisers (other than a copy of the Transaction Agreements and the Confidentiality Agreements);
(e) the rights and obligations of each party under each of the following clauses and schedules will continue independently from the other obligations of the parties and survive termination of this agreement:
(1) clause 1 (Definitions and Interpretation);
(2) clause 3 (Termination);
(3) clause 12 (Qualifications and limitations of Claims);
(4) clause 13 (Procedures for dealing with Claims);
(5) clause 16 (Confidentiality and announcements);
(6) clause 17 (Duties, costs and expenses);
(7) clause 18 (GST);
(8) clause 19 (Notices);
(9) clause 20 (Guarantee by Buyers Guarantor); and
(10) clause 21 (General); and
(f) any indemnity under this agreement is independent and survives termination of this agreement.
3.4 No other right to terminate or rescind
No party may terminate or rescind this agreement (including on the grounds of any breach of Warranty or misrepresentation that occurs or becomes apparent before
Completion) except as permitted under clause 2.5, this clause 3, clause 9.3(b) or clause 21.10(c).
4 Sale and purchase
4.1 Actions immediately prior to Completion
**
4.2 Sale Shares
On the day for Completion determined under clause 9.1, and with effect from Share Completion, the Seller must sell, and the Buyer must buy, the Sale Shares for the Share Purchase Price:
(a) free and clear of all Encumbrances and Permitted Encumbrances; and
(b) with all rights, including dividend and voting rights, attached or accrued to them on and from Share Completion,
subject to this agreement.
4.3 Share Purchase Price
(a) The consideration for the sale of the Sale Shares is the payment by the Buyer of the Share Purchase Price.
(b) The Share Purchase Price will be paid on Share Completion in accordance with clause 4.6.
4.4 Existing WES Intercompany Loan Agreement and Existing WES GSA
With effect from Debt Completion and on and subject to the terms of this agreement and the Deed of Assignment (Debt and Security):
(a) the Seller agrees to sell and transfer, and the Assignee agrees to purchase and accept the transfer of, all of the Sellers right, title and interest in the Existing WES Intercompany Loan Agreement and the Existing WES GSA free of Encumbrances and Permitted Encumbrances affecting the Sellers right, title and interest for an amount equal to the Debt Purchase Price, it being acknowledged that such right title and interest will be transferred subject to the interests of the Debt Financing Parties; and
(b) the Assignee agrees to assume and discharge all liabilities relating to the Existing WES Intercompany Loan Agreement and the Existing WES GSA arising on or after Debt Completion.
4.5 Debt Purchase Price
(a) The consideration for the sale and transfer of all of the Sellers right, title and interest in the Existing WES Intercompany Loan Agreement and the Existing WES GSA is the payment by the Assignee of the Debt Purchase Price.
(b) The Debt Purchase Price will be paid as follows:
(1) the Debt Completion Payment, payable by the Assignee on Debt Completion in accordance with clause 4.6 and clause 9;
(2) the Adjustment Amount, if any, payable following finalisation of the Completion Accounts in accordance with clauses 10.2 and 10.3; and
(3) any other adjustments to the Debt Purchase Price payable in accordance with this agreement .
4.6 Actions on Completion
(a) On Share Completion the Buyer must pay the Share Purchase Price to the Seller.
(b) On Debt Completion the Assignee must pay the Debt Completion Payment to the Seller.
(c) All payments under this clause 4.6 must be made in Immediately Available Funds without counter-claim or set-off.
4.7 Title and risk in Sale Shares
Title to and risk in the Sale Shares passes to the Buyer on Share Completion.
5 Period before Completion
5.1 Carrying on of business
Subject to clause 5.2, clause 5.4, clause 5.5 and clause 5.6, between the date of this agreement and the earlier of Completion and termination of this agreement, the Seller must:
(a) ensure that the business of the Target Entities is conducted materially in the ordinary course and substantially consistent with past practice including in relation to the manner in which coal stock inventory is managed (and having regard to their obligations under law, and practices generally undertaken and observed by open-cut coal mine operators in the Queensland coal industry);
(b) procure that no Target Entity:
(1) buys back any of its shares;
(2) issues any shares, options or securities that are convertible into shares in that Target Entity;
(3) sells, leases, subleases or otherwise disposes of or agrees to dispose of or creates or agrees to create or permits to exist any Encumbrance over any material asset of a Target Entity (including any such asset required for the conduct of the Business or the operation of the Mine but excluding any residential property in the Blackwater region), other than in the ordinary course of business (and the ordinary course of business includes where an asset has reached its useful life, is being replaced or is part of a capital project);
(4) in respect of the Tenements:
(A) takes steps to surrender, cancel or transfer any Tenement (other than to the extent that the relevant part of the Tenement is required by the Mineral Resources Act 1989 (Qld) to be relinquished or surrendered);
(B) assigns, transfers, Encumbers, declares itself a trustee of or otherwise deals with or disposes of a Tenement; or
(C) fails to renew a Tenement or allows any to lapse;
(5) enters into any joint venture, partnership, unincorporated association, alliance or similar arrangement with any person;
(6) enters into any abnormal or unusual transaction which materially adversely affects the Business or a Target Entity;
(7) enters into, amends or terminates a contract or commitment that will result in aggregate receipts or expenditure in excess of $30,000,000 in any calendar year, other than for any coal sale or marketing agreement, Material Contract, Replacement Coal Handling Agreement, Replacement Mining Services Contract, Enterprise Agreement or Plan of Operations;
(8) enters into an agreement that contains an obligation on a Target Entity that materially limits or purports to materially limit the ability of the Target Entity to compete in any line of business or in any geographic area;
(9) enters into any agreement with a Related Body Corporate;
(10) amends terms of a material engagement of, or terminates the employment or encourages the resignation of, any employee of a Target Entity on total salary of over $300,000 per annum (excluding any summary dismissal or other dismissal for cause) or agrees to hire any employee, agent or contractor on total salary of over $300,000 per annum, or enters into, amends the terms of or terminates any agreement, arrangement or understanding in respect of enterprise agreements related to employees of a Target Entity, other than for the Enterprise Agreement;
(11) sells, leases, subleases or otherwise disposes of or agrees to dispose of or creates or agrees to or permits to exist any Encumbrance over any real property other than a sale, lease, sublease or disposal of any residential property in the Blackwater region;
(12) enter into any new bank facilities or other financing agreement;
(13) enter into any guarantee or indemnity on behalf of any person other than a Target Entity or provide security for the obligations of any person other than a Target Entity, except as disclosed in the Disclosure Material or which will be released on or prior to Completion;
(14) pays, authorises the payment of or agrees or commits to pay any bonuses or other incentives to any employee, agent or contractor of the Business other than under an arrangement in place prior to the execution of this agreement;
(15) alters its constitution;
(16) changes any accounting method, practice or principle used by it; or
(17) amend the Existing WES Intercompany Loan Agreement or the Existing WES GSA or repay any amount owing under the Existing WES Intercompany Loan Agreement, except as contemplated by this agreement,
or authorise, or agree conditionally or otherwise to do, any of the things referred to in this clause 5.1(b);
(c) ensure that the Financial Assurances are maintained (and, if necessary, increased) in accordance with the Environmental Protection Act 1994 (Qld), Environmental Protection Regulation 2008 (Qld), Mineral Resources Act 1989 (Qld) and the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld); and
(d) promptly notify the Buyer in the event that a Target Entity becomes aware of a material breach of an agreement which is material to the operation of the Business or any claim, proceeding or investigation which is material to the operation of the Business.
5.2 Material Contracts and proposed actions
(a) Between the date of this agreement and the earlier of Completion and termination of this agreement, the Seller must procure Wesfarmers Curragh to, no less than once per month, provide the Buyer with reasonable details about:
(1) the progress of the tender for the Replacement Mining Services Contract;
(2) the progress of the negotiations for the new Enterprise Agreement; and
(3) any proposed amendments to the Plan of Operations.
(b) If during the date of this agreement and the earlier of Completion and termination of this agreement Wesfarmers Curragh intends to:
(1) vary, amend or change a Material Contract;
(2) commence an employee voting process for the new Enterprise Agreement;
(3) extend the term of a Key Mining Services Contract or enter into the Replacement Mining Services Contract;
(4) enter into the Replacement Coal Handling Agreement;
(5) enter into a Material Coal Contract; or
(6) amend the Plan of Operations,
the Seller must procure Wesfarmers Curragh to:
(7) provide the Buyer with all information reasonably required by the Buyer to assess Wesfarmers Curraghs proposed action; and
(8) reasonably consider (and, to the extent reasonable, adopt) any comments provided by the Buyer in connection with Wesfarmers Curraghs proposed action. If the Buyer does not provide any comments within five days of the provision of information under clause 5.2(b)(7), the Buyer will be deemed not to have provided any comments.
(c) Nothing in this clause 5.2 requires the Seller or Wesfarmers Curragh to do anything which would be a breach of any legal or contractual obligation.
5.3 Pre Completion Dividend or Distribution
Before Completion but after the Buyers nominated directors have been appointed to the board of Wesfarmers Curragh, the Seller is entitled to, and the Buyer must procure the payment (without set off, deduction or condition) to the Seller of, a Pre Completion Dividend(s) or Distribution(s) in the amount and on such date as is nominated by the Seller from time to time. The Buyer must (and must procure that any other Buyer Group Member) does all things necessary to procure the payment of a Pre Completion Dividend(s) or Distribution(s) in accordance with this clause 5.3.
5.4 Permitted acts
Nothing in clause 5.1 or clause 5.2 restricts a Seller Group Member or any Target Entity from doing any of the following permitted actions:
(a) Transaction Agreements : that is contemplated in (or is necessary to comply with) any Transaction Agreement (including Schedule 8) or the Disclosure Materials (including any contractual obligations);
(b) emergencies : to reasonably and prudently respond to an emergency or disaster (including a situation giving rise to a risk of personal injury or damage to property);
(c) legal obligations: that is necessary for a Target Entity to meet its legal obligations; or
(d) Buyer approval : approved by a Buyer Entity in writing, such approval not to be unreasonably withheld or delayed.
5.5 Intra-group loans
(a) Before Completion, the Seller must:
(1) identify all existing loans between a Seller Group Member and a Target Entity; and
(2) other than in respect of the loans under the Existing WES Intercompany Loan Agreement or the New WES Intercompany Loan
Agreement, procure that all payments are made and such other actions are taken as may be necessary to ensure the payment in full, forgiveness or elimination of loan balances between any Seller Group Members (on the one hand) and any Target Entities (on the other hand).
(b) Nothing in clause 5.5(a)(2) requires the Seller to pay in full or eliminate any trading debts which exist between a Seller Group Member and a Target Entity and were incurred in the ordinary course of business. Following Completion, the Buyer must procure any Target Entity to pay any trading debt which exists between a Seller Group and that Target Entity and which was incurred in the ordinary course of business, such payment to be made in accordance with the normal terms of trade that applied as between the Seller Group Member and the Target Entity prior to Completion.
5.6 Wesfarmers Guarantees
(a) If a Seller Group Member has not been released from a Wesfarmers Guarantee disclosed in the Disclosure Material by Completion, then:
(1) the Buyer Entities must continue to take all reasonable steps to release each Seller Group Member from any actual, contingent or accrued liabilities under each Wesfarmers Guarantee until they have all been released; and
(2) the Buyer Entities and the Buyers Guarantor must pay the Seller, and must indemnify the Seller against, an amount equal to any Loss that the Seller Group Member pays, suffers, incurs or is liable for under or in relation to that Wesfarmers Guarantee after Completion.
(b) To the extent necessary or desirable to comply with the requirements of a contract or arrangement of a Target Entity because of the Sale, the Buyer Entities must provide (at the Sellers request) any new guarantee or security or increased guarantee or security in connection with that contract or arrangement, effective from Completion, on terms:
(1) the same or substantially the same as the terms of the existing guarantee or security; or
(2) to the extent of any new guarantee or security or any increased amount of any existing guarantee or security, in accordance with the terms of the contract or arrangement.
5.7 Target Entity a member of a Consolidated Group
If any Target Entity is, or will be, a member of the Sellers Consolidated Group with effect from a date prior to Completion, the Seller must:
(a) not less than seven Business Days before Completion (or other agreed date) notify or procure that the Sellers Head Company notify the Buyer of any elections or choices made, or to be made, in forming the Sellers Consolidated Group that the Seller reasonably considers will, or might reasonably be expected to, impact on the Tax position of that Target Entity or the Buyers Consolidated Group;
(b) at least five Business Days prior to Completion, enter, or procure that the Sellers Head Company enters into, a Tax Sharing Agreement with each Target Entity that covers all Group Liabilities of the Sellers Consolidated Group which fall due after execution of that agreement. The parties acknowledge that, as at
the date of this agreement, the Target Entities are already parties to a Tax Sharing Agreement with the Sellers Head Company;
(c) at least five Business Days prior to Completion, provide the Buyer with a copy of the Tax Sharing Agreement entered into between the Seller and the Target Entities;
(d) at least five Business Days prior to Completion, provide the Buyer with a draft calculation of the Exit Payment for each Target Entity, for the Buyers review (and the Buyer must provide any comments to the Seller within two Business Days);
(e) procure that each Target Entity pay the relevant Exit Payments to the Seller at least one Business Day prior to Completion; and
(f) if required by the Buyer, procure that, before Completion, the Seller releases each Target Entity from its obligations under the Tax Sharing Agreement or under any Tax Funding Agreement entered into by that Target Entity.
5.8 Access to business
(a) Subject to clause 5.8(b), clause 5.8(d) and clause 16.2 and provided the Buyer Entities and their representatives strictly comply with any safety or other site requirement, prior to the earlier of Completion and any termination of this agreement, the Seller will allow a reasonable number of persons authorised by the Buyer Entities reasonable access during normal business hours and on reasonable notice:
(1) to inspect the premises of the Target Entities (to the extent the Seller is legally able to); and
(2) to meet with senior management of the Target Entities and accounting personnel of the Target Entities and the Seller Group,
for the purpose of planning the integration of the Target Entities with the Buyer Group following Completion.
(b) Access to the Curragh Mine in accordance with clause 5.8(a)(1) and to the senior management of the Target Entities in accordance with clause 5.8(a)(2) is in each case subject to the Seller receiving written notice from a Buyer Entity at least three Business Days (or as otherwise agreed) in advance of the requested access.
(c) Subject to compliance with clauses 5.8(a), 5.8(b) and 5.8(d), during a visit to the Target Entities premises a Buyer Entity may, with the Sellers prior consent, make copies of material examined and consult with employees of the Target Entities.
(d) The Buyer Entities and each member of the Buyer Group and their respective representatives must not (prior to Completion):
(1) cause material disruption to, or have a material adverse effect on, the day to day conduct of the Business;
(2) give any direction to or seek to influence any employee of a Target Entity;
(3) directly or indirectly offer any employment or other contract to any employee or contractor of a Target Entity;
(4) cause or encourage any employee of a Target Entity to leave their employment;
(5) other than as required by clause 2, contact a contractor or supplier of a Target Entity except with the prior written consent of the Seller (acting reasonably); or
(6) other than as required by clause 2, contact any Governmental Agency in connection with the Curragh Mine or any Transaction Agreement.
(e) Subject to the other provisions of this agreement, the parties acknowledge that this clause 5.8 does not impose any obligation on the Seller to conduct the Business in accordance with any direction or representation made by the Buyer and the parties acknowledge their obligations under the Competition and Consumer Act 2010 (Cth) and all applicable laws (including all other applicable competition or anti-trust laws).
5.9 Information rights
The Seller must, between the date of this agreement and the earlier of Completion and termination of this agreement:
(a) promptly notify the Buyer Entities (including reasonable details) of any significant environmental, safety or community incident, including by providing copies of any notice, direction or other significant communication received from a Government Agency in relation to the Curragh Mine; and
(b) promptly notify the Buyer Entities in the event that there is a significant disruption, interference or suspension of mine development, coal mining, coal washing, train loading or port operations.
5.10 Co-operation with debt financing
(a) In the period between the date of this agreement and the earlier of Completion and termination of this agreement the Seller shall, and shall cause each of the Target Entities to, use its reasonable endeavours to cause its and their respective officers, directors, employees, attorneys, auditors and other representatives to, use reasonable endeavours to provide all reasonable and customary co-operation to the Buyer in connection with the arrangement of the Debt Financing or any replacement thereof where reasonably requested by the Buyer as follows:
(1) providing the Buyer and the Finance Related Parties with the Pre Completion Financial Statements by the dates set out in Schedule 19 and other pertinent historical financial information relating solely to the Business and customarily included in information memoranda for financings of the type contemplated by the Debt Commitment Letter, including information required to prepare pro forma financial statements as Buyer may reasonably request;
(2) providing such information and assistance as the Buyer and the Finance Related Parties may reasonably request in connection with preparing bank information memoranda, lender presentations, rating agency presentations, reasonable due diligence information and other marketing materials customarily used to arrange financing of a type similar to the Debt Financing;
(3) causing such senior executives as approved by the Seller to attend a reasonable number of meetings by phone, conference calls, presentations, and due diligence sessions with arrangers, rating agencies and prospective lenders and investors, and other marketing
activities, in each case that are customary for financings of a type similar to the Debt Financing; and
(4) facilitating the creation and perfection of security interests in collateral in connection with the Debt Financing provided that such security interests are not effective prior to Completion.
Notwithstanding anything to the contrary in this clause 5.10, nothing in this clause 5.10 shall (i) require cooperation to the extent it would interfere unreasonably with the business or operations of the Target Entities or any Seller Group Member, (ii) require any Seller Group Member or any Target Entity to incur any cost or expense (other than where the Buyer pays such cost or expense), (iii) prior to Completion, require the Target Entities to pay any commitment or other similar fee or incur or become subject to any other liability or obligation, or agree to provide any indemnity, in connection with the Debt Financing, (iv) require the Target Entities or any of their directors, officers or employees to give any indemnities or incur any liabilities in connection with the Debt Financing that are effective prior to Completion, (v) require any Seller Group Member or any Target Entity to provide any information that it does not have access to, (vi) require any Seller Group Member or any Target Entity to waive any legal professional privilege or permit disclosure of commercially sensitive information, (vii) require any Seller Group Member or any Target Entity to provide information which would cause any Seller Group Member to be in breach of an obligation of confidentiality to any person or which information concerns the consideration of the sale of the Curragh Mine (including any actual or potential competing proposal), (viii) require any Seller Group Member to pay any commitment or other similar fee or incur or become subject to any other liability or obligation, or agree to provide any indemnity, in connection with the Debt Financing, or (ix) require any Seller Group Member or any of their directors, officers or employees to give any indemnities in connection with the Debt Financing.
(b) The Buyer will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Debt Financing and Equity Financing on the terms and conditions (including the flex provisions) contemplated by the Debt Commitment Letter, including using commercially reasonable endeavours to:
(1) maintain in effect the Debt Commitment Letter until the transactions contemplated by this agreement are consummated;
(2) satisfy on a timely basis all conditions and covenants applicable to the Buyer and its Related Bodies Corporate in the Debt Commitment Letter;
(3) negotiate and enter into definitive agreements with respect to the Debt Financing and the Equity Financing on the terms and conditions (including the flex provisions) contemplated by the Debt Commitment Letter (or other terms which do not materially and adversely affect the availability of funds sufficient to pay the Debt Purchase Price by Completion); and
(4) upon satisfaction of the conditions contained in the Debt Commitment Letter, consummate the Debt Financing and the Equity Financing (as defined in the Debt Commitment Letter) at or prior to Completion.
(c) Notwithstanding clause 5.10(b), the Buyer may amend, modify, supplement, replace or waive any provision of the Debt Commitment Letters provided that such amendment, modification, supplement or waiver would not reasonably be expected to have the effect of:
(1) making the funding of the Debt Financing or Equity Financing less likely to occur;
(2) amending, modifying, supplementing or waiving the conditions or contingencies to the Debt Financing or Equity Financing in a manner materially adverse to the Seller; or
(3) materially delaying or preventing Completion or otherwise materially adversely affecting the Seller.
5.11 Financial assistance whitewash
The Seller and the Buyer will take such steps, and procure the passing of such resolutions before Completion within their respective control (including by directors or shareholders of relevant Target Entities and the Buyer (as applicable)), and the lodgement of such documents with ASIC (including the lodgement of all ASIC forms required under section 260B(6) at least 14 days before the Scheduled Completion Date), in order to approve the transactions contemplated by this agreement and the giving of financial assistance (including the Debt Financing and the Debt Financing Documents) for the purposes of section 260A(1)(b) of the Corporations Act and:
(a) the Seller will procure that Wesfarmers Curragh provides the Buyer with the proposed notice of meeting and any other document that will accompany the notice of meeting to be sent to the direct shareholders in each Target Entity for the purpose of approving the financial assistance before those documents are lodged with ASIC under section 260B(5) of the Corporations Act;
(b) the Buyer will provide the Seller with the proposed notice of meeting and any other document that will accompany the notice of meeting to be sent to the shareholders of the Buyer for the purpose of approving the financial assistance before the document is lodged with ASIC under section 260B(5) of the Corporations Act; and
(c) subject to clause 5.11(d), each of the Buyer and Seller will reasonably consider (and, to the extent reasonable, adopt) any comments provided by the other in connection with the resolutions to approve the financial assistance (and if the Buyer or Seller does not provide any comments within five days of the provision of such information they will be deemed not to have provided any comments); and
(d) notwithstanding clause 5.11(c), each of the Buyer and the Seller acknoweldge that any resolutions or other documents to be lodged with ASIC in connection with the approval for the purposes of section 260A(1)(b) of the Corporations Act contemplated by this clause 5.11 will need to be reviewed by, and in a form and substance satisfactory to, the Debt Financing Parties (acting reasonably).
5.12 Notification of change of control
To the extent necessary or desirable to comply with the requirements of a contract or arrangement of a Target Entity because of the Sale, the Seller must give or procure the giving of any notice or request for consent required in accordance with the requirements of that contract or arrangement.
5.13 VSM Deed
(a) Before Share Sale Completion but after the Buyers nominated directors have been appointed to the board of Wesfarmers Curragh, the Seller and Wesfarmers Curragh must enter into the VSM Deed.
(b) Prior to Completion, the Seller may not amend the terms of the VSM Deed without the agreement of the Buyer.
(c) From Completion, the Buyer Entities must procure that Wesfarmers Curragh at all times complies with the terms of the VSM Deed.
(d) No Buyer Group Member may undertake any act or omit to do anything which would cause a breach of the VSM Deed.
5.14 Transitional Services Agreement
Promptly after the date of execution the Seller and Buyer will enter into good faith negotiations with a view to entering into the Transitional Services Agreement before Completion.
5.15 United States Tax filing
**
6 IT Licences
6.1 Transfer
(a) The Seller must use all reasonable endeavours to, in respect of the IT Licences:
(1) novate to a Target Entity before Completion the rights and obligations under the IT Licences to the extent those rights and obligations relate to the supply of services under those agreements to the Business; or
(2) assign to a Target Entity before Completion the rights under the IT Licences to the extent those rights relate to the supply of services under those agreements to the Business,
and to procure that:
(3) the Seller (and each other Seller Group Entity) is released from any obligations and liabilities arising under those agreements (whether due to be performed before, on or after Completion); and
(4) the novation or assignment takes effect at or before Completion.
(b) If a Third Party consent is required for a novation or assignment contemplated by clause 6.1(a), the Seller, Buyer Entities and the Target Entities must use all reasonable endeavours to obtain that consent as soon as practicable before Completion.
(c) Where an assignment or novation required under clause 6.1(a) has not occurred at or by Completion, the Seller and the Buyer Entities must use all reasonable endeavours to ensure that novation or assignment occurs in accordance with this agreement as soon as practicable after Completion. Except where the Seller has not discharged its obligations under clause 6.1(a), clause 6.1(b) or clause 6.2, the Buyer Entities will not be entitled to make any Claim in respect of the failure to novate or assign in accordance with clause 6.1(a).
(d) Nothing in this clause 6.1 requires the Seller to make any payment, provide other valuable consideration or take any action contrary to the reasonable interests of the Seller to procure a novation or assignment.
(e) The obligation in this clause 6.1 for the Buyer Entities to use all reasonable endeavours includes the Buyer Entities paying the reasonable costs and expenses incurred or charged by Third Parties in relation to the novation of rights and obligations or assignment of rights under the IT Licences.
(f) Any novation or assignment under this clause 6.1 must be substantially in the form approved by the Seller (acting reasonably).
6.2 Obligations pending transfer
(a) If an assignment or novation required under clause 6.1 has not occurred by Completion, then after Completion and until such novation or assignment has occurred:
(1) to the extent it lawfully can, the Seller must permit the Buyer to exercise and have the benefit of the Sellers rights under the IT Licences from Completion, to the extent that those rights relate to the Business; and
(2) the Buyer must, to the extent it lawfully can, perform the non-personal obligations of the Seller under the IT Licences from Completion, to the extent that those non-personal obligations relate to the Business.
(b) Nothing in this agreement is to be construed as an attempt to assign the benefit of any contract that by its terms or by law is not assignable without a Third Party consent, unless such consent has been given.
6.3 Buyer indemnity in respect of the IT Licences
With effect from Completion, the Buyer Entities indemnify each Seller Group Member and must keep each Seller Group Member indemnified against any Loss which the Seller Group Member may pay, suffer, incur or be liable for as a result of or in connection with:
(a) any obligations, Claims and Losses in respect of the IT Licences (whether relating to the period before, on or after Completion); or
(b) any breach by the Buyer of clause 6.2(a)(2).
6.4 Warranty in respect of IT Licences
To the extent an assignment or novation is effected under clause 6.1, the Warranty in clauses 6.1, 6.2, 6.3 and 6.4 of Schedule 4 is deemed to be given in respect of the IT Licences the subject of that assignment or novation.
7 Employees
7.1 Existing Employees
(a) Subject to clause 7.1(b), the Buyer will procure that those Target Entities which employ Existing Employees will, on and from Completion, comply in comparable respects with the terms of the existing contracts of employment pursuant to which the Existing Employees are employed at the time immediately before Completion.
(b) To the extent that any terms of an existing contract of any Existing Employee are conditional upon a Target Entity being a member of the Seller Group, the Buyer will make available alternative or different terms to the relevant Existing Employee, provided that the terms, considered on an overall basis, remain no less favourable than the terms of the existing contract of employment.
7.2 Employees
(a) The Seller must use reasonable endeavours to procure that Pre-Completion Transferring Employees become employed by a Target Entity before Completion. If Pre-Completion Transferring Employees do not become employed by a Target Entity before Completion, liability for any such employees will remain with the Seller.
(b) The Seller and the Buyer must work cooperatively to enable offers of employment to be made to the Transferring Employees by a Target Entity (on behalf of the Buyer) or by an alternative entity identified by the Buyer, as soon as possible after the date of this agreement (but in no event later than 21 days prior to Completion):
(1) for a position that is at least comparable or substantially similar to the existing position of the Transferring Employee commencing on Completion;
(2) on terms and conditions of employment (including superannuation and incentives) that are substantially similar to, and, considered on an overall basis, no less favourable than the existing terms and conditions of employment of the Transferring Employee; and
(3) that states, and ensures that any contract arising from acceptance of the offer provides, that:
(A) the offer is conditional on Completion and on the resignation of the Transferring Employee from his or her existing position with WRL or the Seller (as applicable);
(B) employment commences on Completion; and
(C) the prior service of the Transferring Employee with any Target Entity or Seller Group Member will be recognised for the purposes of all service related entitlements, including the
Leave Benefits to be paid or provided and any redundancy payment that may be made after Completion,
(D) the Transferring Employee must inform the Seller of his or her acceptance within 14 days after the date of the offer and that the offer will lapse if it has not been accepted by the Transferring Employee by the end of such 14 day period; and
(E) the offer is conditional on the Transferring Employee remaining an employee of WRL or the Seller, and no notice of termination of employment having been given in respect of the Transferring Employees employment (other than pursuant to this agreement), immediately prior to Completion.
and the Seller and the Buyer must each use reasonable endeavours to encourage the Transferring Employees to accept the offers of employment referred to in this clause 7.2(a) and (b).
(c) The Seller must inform the Buyer of which Transferring Employees have accepted the offer referred to in clause 7.2(b) within 17 days after the date of the offer.
(d) The Seller agrees to pay to, or in respect of, each Pre-Completion Transferring Employee and to, or in respect of, each Transferring Employee who accepts employment with a Target Entity in accordance with clause 7.2(b):
(1) all amounts to which that employee is entitled including wages, salary, allowances, superannuation contributions and commissions accrued or arising up to and including the day of Completion (whether arising by law or under any agreement or instrument) in relation to their employment before Completion; and
(2) to the extent it has not already done so, all bonus payments which have fallen due for payment before the Completion Date,
but nothing in this clause places any obligation on the Seller to make, or to procure the making of, any payment of the Employee Entitlements of any Pre- Completion Transferring Employee or any Transferring Employee who commences employment with such Target Entity prior to or as of Completion.
7.3 Payment and indemnity
The Buyer and the Buyers Guarantor must indemnify each Seller Group Member against any Loss suffered or incurred by it:
(a) for Leave Benefits due to or accrued by an Employee after the Completion Date (including, for the avoidance of doubt, any Leave Benefits attributable to service by the Employee with the relevant Target Entity or Seller Group Member and any predecessor of the Target Entity or relevant Seller Group Member up to the Completion Date); and
(b) arising from any Claim by an Employee that is based on any event occurring on or after Completion.
7.4 Seller Indemnity
The Seller acknowledges and agrees that it remains liable for, and indemnifies the Buyer against, any Claim made against the Buyer or a Target Entity by a Transferring Employee who does not accept an offer of employment with a Target Entity for such Transferring
Employees Leave Benefits or in respect of the termination of his or her employment by WRL or the Seller.
7.5 Employment Records
At Completion, the Seller must give the Buyer complete and accurate written details of the Transferring Employees Leave Benefits and length of service as at the Completion Date.
7.6 No solicitation of employees
During the period of 12 months from Completion, the Seller must not, and must procure that each Seller Group Member does not, without the prior written consent of the Buyer, solicit, canvass, induce or encourage any Employee or contractor of a Target Entity or Buyer Group Member to leave their employment or engagement with the Target Entity or Buyer Group Member. This restriction does not apply where such an Employee responds to an advertisement published by a Seller Group Member that is targeted to a wide audience of potential applicants.
8 Superannuation
8.1 Buyers Fund
(a) Subject to any choice of fund election made by an Existing Member in accordance with relevant law, within three months (or any longer period agreed between the Buyer and the Seller) after Completion, the Buyer must ensure that the Buyers Fund replaces the Wesfarmers Fund as the default superannuation fund pursuant to the SGA in respect of the Existing Members, with effect on and from Completion.
(b) For the purposes of clause 8.1(a), membership of the Buyers Fund for each Existing Member (in respect of the period after Completion) must be on terms and conditions so as to provide benefits which, in aggregate, are no less favourable than those provided in respect of the Existing Member under the governing rules of the Wesfarmers Fund in force immediately before Completion.
8.2 Buyers undertakings
(a) The Buyer must provide, and must use all reasonable endeavours to ensure that the trustee of the Buyers Fund provides, to the Seller and the trustee of the Wesfarmers Fund any information reasonably required by them in connection with this clause 8.
(b) The Buyer must use all reasonable endeavours to ensure that the governing rules of the Buyers Fund are amended to the extent necessary to give effect to this clause 8.
9 Completion
9.1 Time and Place
(a) Subject to clause 2, Completion must take place at the office of Herbert Smith Freehills at Level 31, 480 Queen Street, Brisbane, Queensland, at 10am on the Scheduled Completion Date, or such other place, time and date as the Seller and Buyer agree.
(b) The parties acknowledge and agree that Share Completion and Debt Completion are to take place on the same date.
9.2 Completion
(a) On or before Completion (as specified in Schedule 6), each party must carry out the Completion Steps referable to it in accordance with Schedule 6.
(b) Completion is taken to have occurred when each party has performed all its obligations under this clause 9.2 and Schedule 6.
9.3 Notice to complete
(a) If the Seller or a Buyer Entity ( Defaulting Party ) fails to satisfy its obligations under clause 9.2 and Schedule 6 on the day and at the place and time for Completion determined under clause 9.1, then the Seller (in the case of a default by a Buyer Entity) or the Buyer Entities (in the case of a default by the Seller) ( Notifying Party ) may give the Defaulting Party a notice requiring the Defaulting Party to satisfy those obligations within a period of 10 Business Days from the date of the notice and declaring time to be of the essence.
(b) If the Defaulting Party fails to satisfy those obligations within those 10 Business Days the Notifying Party may, without limitation to any other rights it may have, terminate this agreement by giving written notice to the Defaulting Party.
9.4 Completion timing
(a) Subject to clause 9.4(b), the actions to take place as contemplated by clauses 4.1, 4.2, 4.4, 4.6 and 9.2 and Schedule 6 must take place on the same Business Day and in the order specified in Schedule 6. If one action does not take place, then without prejudice to any rights available to any party as a consequence:
(1) there is no obligation on any party to undertake or perform any of the other actions;
(2) to the extent that such actions have already been undertaken, the parties must do everything reasonably required to reverse those actions; and
(3) the Seller and the Buyer Entities must each return to the other all documents delivered to it under clause 9.2(a) and Schedule 6 and must each repay to the other all payments received by it under clauses 4.1, 4.2, 4.4, 4.6 and 9.2(a) and Schedule 6, without prejudice to any other rights any party may have in respect of that failure.
(b) The Buyer Entities may, in their sole discretion, waive any or all of the actions that the Seller is required to perform under clause 2.1 of Schedule 6 and the
Seller may, in its sole discretion, waive any or all of the actions that the Buyer Entities are required to perform under clause 2.2 of Schedule 6.
(c) For the avoidance of doubt, Share Completion must occur prior to Debt Completion.
(d) Without prejudice to clause 9.4(a)(2), if Completion does not occur as contemplated by that clause, and the Buyers nominated directors have been appointed to the board of Wesfarmers Curragh, the Buyer must procure that those directors resign from the board of Wesfarmers Curragh as directed by the Seller.
10 Completion Accounts
10.1 Preparation of Completion Accounts
Following Completion the Seller and the Assignee must procure that the Completion Accounts are prepared and finalised in accordance with Schedule 7 and Schedule 8.
10.2 Debt Purchase Price adjustments following Completion Accounts
If the Adjustment Amount:
(a) is less than zero (being a negative amount), the Seller must pay the Adjustment Amount to the Assignee, as an adjustment to the Debt Purchase Price;
(b) is more than zero (being a positive amount), the Assignee must pay the Adjustment Amount to the Seller, as an adjustment to the Debt Purchase Price; or
(c) is zero, no adjustment to the Debt Purchase Price will be made under this clause 10.2.
10.3 Payment of adjustments
(a) A party required to make a payment to another party under this clause 10 must make the payment in Immediately Available Funds without counter-claim or set-off within five Business Days after the finalisation of the Completion Accounts or Experts Report as applicable.
(b) All amounts payable by a party under clause 10.2 will accrue interest on a daily basis at the Interest Rate from and including the Completion Date to and including the earlier of the date of payment or five Business Days after the finalisation of the Completion Accounts or Experts Report as applicable ( Last Payment Date ). If any amount remains unpaid on or after the Last Payment Date, interest under clause 21.19 will apply from and including the Last Payment Date until the date of payment with respect to that amount.
11 Warranties and indemnity
11.1 Warranties by the Seller
Subject to the qualifications and limitations in clause 12, the Seller gives the Warranties in favour of the Buyer Entities:
(a) in respect of each Warranty that is expressed to be given on a particular date, on that date; and
(b) in respect of each other Warranty, immediately before Completion.
11.2 Independent Warranties
Each of the Warranties:
(a) remains in full force and effect after Completion; and
(b) is to be construed independently of the others and is not limited by reference to any other Warranty.
11.3 Reliance
The Seller acknowledges that the Buyer Entities have entered into this agreement and will complete this agreement in reliance on the Warranties.
11.4 Indemnity for breach of Warranty
The Seller indemnifies the Buyer Entities against any Loss suffered or incurred by the Buyer Entities as a result of a breach of a Warranty, except to the extent that the Warranty or the Sellers liability for the Loss are limited or qualified under clause 12, and this will be the sole remedy of the Buyer Entities in respect of any such breach. The Loss compensated through the indemnity under this clause 11.4 will be such as to put the Buyer Entities in the position they would have been in had the relevant Warranty not been breached.
11.5 Tax indemnity
Subject to clause 17, the Seller indemnifies the Buyer Entities and each Target Entity against, and must pay the Buyer Entities or the Target Entities the amount of, any:
(a) Tax or Duty payable by a Target Entity to the extent that Tax or Duty relates to any period, or part period, prior to Completion;
(b) Tax Costs incurred by or on behalf of a Target Entity to the extent those Tax Costs arise from or relate to any of the matters for which the Seller may be liable under clause 11.5(a); and
(c) Tax payable by a Target Entity under the Sellers Tax Sharing Agreement or as a result of the Sellers Tax Sharing Agreement not satisfying the requirements of section 721-25 of the ITAA 1997,
except to the extent that:
(d) the Sellers liability for the Tax or Duty is limited or qualified under clauses 12.4, 12.6, 12.7, 12.8, 12.9, 12.10(j), 12.12 or 12.13;
(e) the Claim results from an act of a Buyer Group Member in circumstances which breach clause 13.3(a) or clause 13.3(e); or
(f) the amount is in relation to Tax and is provided for in a Completion Working Capital Balance, but only to the extent of the relevant amount provided.
12 Qualifications and limitations on Claims
12.1 Disclosure
(a) The Buyer Entities and the Buyers Guarantor each acknowledge and agree that the Seller has disclosed or is deemed to have disclosed against the Warranties (other than the Tax Warranties), and each of the Buyer Entities and the Buyers Guarantor are aware of, and will be treated as having actual knowledge of, all facts, matters and circumstances that:
(1) are provided for or described in any Transaction Agreement;
(2) are fairly disclosed in, or otherwise reasonably identifiable or reasonably evident from the information contained in, the Disclosure Materials;
(3) would have been disclosed to the Buyer Entities if they had conducted searches 10 Business Days before the date of this agreement of the public registers maintained by any of:
(A) the High Court of Australia, the Federal Court of Australia, the Supreme Courts (including any Court of Appeal) throughout Australia, the District Court of Queensland, the Land Court of Queensland and the Land Appeal Court of Queensland;
(B) the Queensland Titles Registry, Queensland Department of Environment and Heritage Protection and Queensland Department of Natural Resources and Mines;
(C) the National Native Title Tribunal; or
(D) ASIC;
(4) would have been disclosed to the Buyer Entities if they had conducted searches on the third Business Day before the date of this agreement of the PPS Register using the company names, ABNs or ACNs of each of the Target Entities and the Seller as the search term;
(5) are within:
(A) the actual knowledge of **; and
(B) those facts, matters or circumstances of which a person listed in clause 12.1(a)(5)(A) would have been aware had that person made reasonable enquiries in the circumstances.
(b) For the avoidance of doubt, the awareness attributable to one Buyer Entity by virtue of clause 12.1(a)(5) will apply to each Buyer Entity and the Buyers Guarantor regardless of the capacity in which any person contemplated by clause 12.1(a)(5) may act.
(c) In clause 12.1(a)(2) (and in the definition of Material Adverse Change), the phrase otherwise reasonably identifiable or reasonably evident in relation to a fact, matter, circumstance or liability means that it is reasonably likely that a
prudent prospective purchaser for value of a business of the type conducted by the Target Entities, that has conducted a thorough examination of the disclosure or deemed disclosure described in clauses 12.1(a)(1) to 12.1(a)(5) by and through its:
(1) officers, employees, agents and representatives; and
(2) suitably qualified legal, accounting, financial and other professional advisers and consultants, including industry consultants,
who have been directly involved in the Buyer Entities consideration and preparation for the transactions contemplated by this agreement, would have become aware of, or being put on notice of, the relevant fact, matter, circumstance or liability.
(d) The Warranties (other than the Tax Warranties) are given subject to the disclosures or deemed disclosures described in clause 12.1(a). A Warranty (other than a Tax Warranty) will not be regarded as being untrue by reason of facts, matters or circumstances that have been disclosed or are deemed to have been disclosed under clause 12.1(a). Except for the Tax Warranties, the Seller will have no liability under the Warranties to the extent that disclosure is made or is deemed to have been made against the Warranties under this clause 12.1.
(e) The Buyer Entities and the Buyers Guarantor must not make a Claim (other than a Tax Claim), and the Seller will not be in breach of a Warranty, if the facts, matters or circumstances giving rise to such Claim are disclosed or are deemed to have been disclosed under clause 12.1.
12.2 Awareness
Where a Warranty is given to the best of the Sellers knowledge, or so far as the Seller is aware or with a similar qualification as to the Sellers awareness or knowledge, the Sellers awareness is limited to and deemed only to include those facts, matters or circumstances only of which a Specified Executive is actually aware as at the date of this agreement or would have been aware had the Specified Executive made reasonable enquiries in the circumstances.
12.3 No reliance
(a) The Buyer Entities and the Buyers Guarantor each represent and warrant to each Seller Group Member, that:
(1) at no time has:
(A) any Seller Group Member or any person on its behalf, made or given; or
(B) any Buyer Group Member relied on,
any representation, warranty, promise or undertaking in respect of the future financial performance of prospects of the Target Entities or otherwise except those expressly set out in this agreement (including in the Warranties);
(2) it has not relied on anything other than the Warranties and the terms of this agreement in agreeing to buy the Sale Shares and agreeing to the assignment of the Existing WES Intercompany Loan Agreement and the Existing WES GSA and, in particular, no representations, warranties, promises, undertakings, statements or conduct in respect
of the future financial performance or prospects of the Target Entities or otherwise have:
(A) induced or influenced the Buyer Entities or the Buyers Guarantor to enter into, or agree to any terms or conditions of, this agreement;
(B) been relied on in any way as being accurate by a Buyer Group Member;
(C) been warranted to a Buyer Group Member as being true; or
(D) been taken into account by a Buyer Entity or the Buyers Guarantor as being important to its decision to enter into, or agree to any or all of the terms of, this agreement,
except those expressly set out in this agreement (including in the Warranties);
(3) it has entered into this agreement after satisfactory inspection and investigation of the affairs of the Target Entities, including a detailed review of all the Disclosure Materials;
(4) it has made, and it relies upon, its own searches, investigations, enquiries and evaluations in respect of the Business, except to the extent expressly set out in this agreement (including in the Warranties); and
(5) on the basis of the due diligence enquiries carried out by the Buyer Entities and the Buyers Guarantor, the Disclosure Materials and any other information of which it is aware at the date of this agreement, none of the persons identified in clause 12.1(a)(5) are actually aware of any breach of any warranty or of any matter that may result in a Claim (other than a Tax Claim).
(b) The Buyer Entities and the Buyers Guarantor acknowledge that the Seller has agreed to sell the Sale Shares and assign the Existing WES Intercompany Loan Agreement and the Existing WES GSA and enters into this agreement relying on the representations and warranties in this clause 12.3 and would not be prepared to sell the Sale Shares and assign the Existing WES Intercompany Loan Agreement and the Existing WES GSA on any other basis.
12.4 Opinions, estimates and forecasts
The parties acknowledge that no Seller Group Member is under any obligation to provide any Buyer Group Member or its advisers or representatives with any information on the future financial performance or prospects of the Target Entities. If a Buyer Group Member has received opinions, estimates, projections, business plans, budget information, coal quality information, future recoverable resources, characteristics or prospects in relation to the Tenements, likely performance or cost of infrastructure or other forecasts in respect of the Business or the Curragh Mine, the Buyer Entities and the Buyers Guarantor each acknowledge and agree that:
(a) there are uncertainties inherent in attempting to make these estimates, projections, business plans, budgets, forecasts and information and the Buyer Entities and the Buyers Guarantor are familiar with these uncertainties;
(b) the Buyer Entities and the Buyers Guarantor are taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, business plans, budgets, forecasts and information furnished to them; and
(c) the Seller is not liable under any Claim arising out of or relating to any opinions, estimates, projections, business plans, budgets, forecasts or information in respect of the Target Entities, the Business or Curragh Mine.
Nothing in this clause 12.4 limits or derogates from the Buyer Entities representations and warranties in clause 12.3 or the Sellers reliance on those representations and warranties.
12.5 Maximum and minimum amounts
(a) The Seller is not liable under a Claim arising from a breach of Warranty (including a Claim under clause 11.4 but excluding a Claim under clause 10 or a Tax Claim) unless the amount finally agreed or adjudicated to be payable in respect of that Claim:
(1) exceeds $2,000,000; and
(2) either alone or together with the amount finally agreed or adjudicated to be payable in respect of other Claims that satisfy clause 12.5(a)(1) exceeds $10,000,000,
in which event, subject to clauses 12.5(b) and 12.5(d), the Seller is liable for the entire amount of the Claim and not only the excess above $10,000,000.
(b) Except in relation to a Claim under clause 10 or a Tax Claim but subject to clause 12.5(c), the maximum aggregate amount that the Seller is required to pay in respect of all Claims whenever made and howsoever arising is limited to:
(1) in respect of all Claims arising under Warranty 1 Ownership and structure, Warranty 2 Power and authority, Warranty 9 Tenements and Warranty 15 Solvency, 100% of the Total Consideration expressed as a dollar amount; and
(2) in respect of all other Claims arising from a breach of Warranty, 30% of the Total Consideration expressed as a dollar amount.
(c) Despite any other provision of this agreement or any other Transaction Agreement, except for a Claim under clause 11.5, the maximum amount that the Seller is required to pay in respect of any and all Claims (including a Claim made by a Buyer Group Member or a Target Entity), howsoever arising, is limited to the amount of the Total Consideration.
(d) For the purposes of clause 12.5(a)(1):
(1) Claims arising out of separate sets of facts, matters or circumstances will not be treated as one Claim, even if each set of facts, matters or circumstances may be a breach of the same Warranty; and
(2) Claims of the same or similar nature arising out of the same or similar facts, matters and circumstances will be treated as one Claim.
(e) The Buyer agrees that the maximum liability cap described in clauses 12.5(b) and 12.5(c) apply to all Claims (other than a Claim under clause 11.5), whether made by any Buyer Group Member, any Debt Financing Party or any subsequent purchaser of a Target Entity or the Curragh Mine.
12.6 Time limits
The Seller may only be liable under a Claim if:
(a) a Buyer Entity notifies the Seller of the Claim in accordance with clause 13.1(a) within:
(1) seven years after Completion in respect of a Tax Claim; or
(2) 18 months after Completion in all other cases; and
(b) within 12 months of the date the Buyer Entity is required to notify the Seller of the Claim under clause 12.6(a):
(1) the Claim has been agreed, compromised or settled; or
(2) the Buyer Entity has issued and served legal proceedings against the Seller in respect of the Claim in accordance with clause 21.1.
12.7 No double claims
(a) The Seller is not liable under a Claim for any Loss that a Buyer Group Member or a Target Entity recovers, or is compensated for, under a Transaction Agreement (other than this agreement) or an adjustment in accordance with clause 10.
(b) The Buyer Group Members and the Target Entity may not recover, or be compensated, under any Transaction Agreement more than once for any Loss.
(c) This clause 12.7 does not prevent the Buyer Group Member or Target Entity entitled to make a Claim under a Transaction Agreement (other than this agreement) from commencing that Claim. However, if for any reason more than one amount is paid in respect of the same Loss, the Buyer must procure that the additional amount is immediately repaid to one or more Seller Group Members nominated by the Seller so as to give full effect to clause 12.7(a).
12.8 Mitigation of loss
(a) The Buyer Entities must:
(1) take, and procure that each other Buyer Group Member and, after Completion, each Target Entity takes, all reasonable actions to mitigate any Loss that may give rise to a Claim; and
(2) not omit, and procure that no other Buyer Group Member or, after Completion, no Target Entity omits, to take any reasonable action that would mitigate any Loss that may give rise to a Claim.
(b) If the Buyer Entities do not comply with clause 12.8(a) and compliance with clause 12.8(a) would have mitigated the Loss, the Seller is not liable for the amount by which the Loss would have been reduced.
12.9 Personal Liability
(a) The Buyer Entities and the Buyers Guarantor agree that:
(1) no natural person (including the Specified Executives) will bear any liability to a Buyer Group Member or a Target Entity in respect of this agreement, the transactions contemplated by this agreement or any other Transaction Agreement, other than for an act of fraud or Wilful Misconduct by that person;
(2) no current or former officer, employee or agent of a Seller Group Member (including the Specified Executives) or any Seller Group Representative or adviser in its capacity as such in relation to the transactions contemplated by this agreement or other Transaction Agreement, will be liable to a Buyer Group Member or a Target Entity in respect of any act, matter or thing which occurred before, at or after
Completion, other than an act of fraud or Wilful Misconduct by that person; and
(3) the persons referred to in clause 12.9(a)(1) and clause 12.9(a)(2) are entitled to the benefit of this clause and the Seller holds such benefit on trust for those persons and the Seller is entitled to enforce this clause on behalf of those persons.
(b) The Buyer Entities and the Buyers Guarantor:
(1) release and discharge the natural persons referred to in clause 12.9(a)(1) and clause 12.9(a)(2) that are current or former officers of a Seller Group Member or a Target Entity (including the Specified Executives) from any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunction, specific performance or any other remedy that the Buyer Entities and the Buyers Guarantor have or may have against those natural persons in respect of any actions taken by those natural persons to cause the Target Entities to enter into the Transaction Agreements, including, without limitation, any damage, loss, cost or expense suffered by the Buyer Entities and the Buyers Guarantor whether arising at common law, in equity, or under statute or otherwise (the Seller Released Matters ); and
(2) the Buyer Entities and the Buyers Guarantor acknowledge that the natural persons referred to in clause 12.9(b)(1) are entitled to enforce this clause 12.9 to the same extent as if those natural persons were parties to this agreement and may plead this clause 12.9 in bar to any claim or proceeding by any Buyer Entity or the Buyers Guarantor (or any other Buyer Group Member or a Target Entity) in respect of the Seller Released Matters.
(c) The Seller agrees that:
(1) no natural person will bear any liability to a Seller Group Member or a Target Entity in respect of this agreement, the transactions contemplated by this agreement or any other Transaction Agreement, other than for an act of fraud or Wilful Misconduct by that person;
(2) no current or former officer, employee or agent of a Buyer Group Member or adviser in its capacity as such in relation to the transactions contemplated by this agreement or other Transaction Agreement, will be liable to a Seller Group Member or a Target Entity in respect of any act, matter or thing which occurred before, at or after Completion, other than an act of fraud or Wilful Misconduct by that person; and
(3) the persons referred to in clause 12.9(c)(1) and clause 12.9(c)(2) are entitled to the benefit of this clause and the Buyer holds such benefit on trust for those persons and the Buyer is entitled to enforce this clause on behalf of those persons.
(d) The Seller:
(1) releases and discharges the natural persons referred to in clause 12.9(c)(1) and clause 12.9(c)(2) that are current or former officers of a Buyer Group Member from any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunction, specific performance or any other remedy that the Seller has or may have against those natural persons in respect of any actions taken by those natural persons to cause the Buyer
Entities and Buyer Guarantor to enter into the Transaction Agreements, including, without limitation, any damage, loss, cost or expense suffered by the Seller whether arising at common law, in equity, or under statute or otherwise (the Buyer Released Matters ); and
(2) the Seller acknowledges that the natural persons referred to in clause 12.9(d)(1) are entitled to enforce this clause 12.9 to the same extent as if those natural persons were parties to this agreement and may plead this clause 12.9 in bar to any claim or proceeding by any Seller Group Member in respect of the Buyer Released Matters.
12.10 General limitations
The Sellers liability for any Claim is reduced or extinguished to the extent that:
(a) the Claim is in respect of a contingent Loss (unless and until the Loss becomes an actual Loss and is due and payable) but the parties agree that a diminution in the value of the Sale Shares is not a contingent Loss;
(b) the subject matter of the Claim arises from an act or omission:
(1) at the direction, or with the prior written approval, of or, by or on behalf of, a Buyer Group Member;
(2) with the knowledge of a Buyer Group Member and the Buyer did not object to the act or omission; or
(3) after Completion at the direction, or with the prior written approval, of or, by or on behalf of, a Target Entity;
but excluding an act or omission of a Buyer Group Member or, after Completion, a Target Entity, that is carried out:
(4) in the ordinary course of business;
(5) in performing this agreement, including in response to a breach by the Seller of this agreement (including a breach of Warranty); or
(6) for the purpose of meeting a contractual or legal obligation.
(c) the Claim arises from:
(1) the enactment or amendment of any legislation or regulations;
(2) a change in the judicial or administrative interpretation of the law; or
(3) a change in the practice or policy of any Governmental Agency,
after the date of this agreement, including legislation, regulations, amendments, interpretation, practice or policy that has a retrospective effect;
(d) the Claim arises or is increased as a result of a change after Completion in any accounting policy or practice of a Buyer Group Member or a Target Entity (including to align those accounting policies or practices with those used by a Buyer Entity);
(e) the Claim arises out of the cessation or alteration of the Business after Completion;
(f) the subject matter of the Claim is provided for in the Completion Accounts;
(g) the Claim arises from a Buyer Entitys or a Target Entitys failure to:
(1) make any Claim, election, surrender or disclaimer or give any notice or consent or do any other thing after Completion, the making, giving
or doing of which was taken into account or assumed in computing the provision for Tax in the Completion Accounts; or
(2) take any action after Completion required by, or that should reasonably be taken under, any applicable Tax Law in relation to any Tax or Duty (including any failure to take any such action within the time allowed),
but only to the extent that the failure has contributed to the Loss;
(h) the Claim arises in connection with any increase in the rate of Tax liable to be paid or any imposition of Tax not in effect at the date of Completion;
(i) the Claim is in connection with a matter, event or circumstance that would not have arisen but for a Buyer Group Member, or after Completion, a Target Entity admitting liability in respect of that matter, event or circumstance without the written consent of the Seller;
(j) the matter that gives rise to the Claim results in any Buyer Group Member or any Target Entity receiving, in equivalent present value terms:
(1) Tax Relief, credit, deduction, exemption, exclusion, set off, refund, right to repayment, rebate, relief or set-off;
(2) compensation or indemnification including under any contract, indemnity or otherwise (including under any insurance policy or from a Governmental Agency);
(3) an amount under any Claim against a Third Party; or
(4) payment, reduction in Tax, reduction of liability, corresponding net saving or other benefit; or
(k) the matter that gives rise to the Claim is remediable, provided it is remedied within 30 Business Days after the Seller receives notice under clause 13.1(a).
Except to the extent expressly provided under clause 11.5, this clause 12.10 will not otherwise apply in respect of a Claim under clause 11.5.
12.11 Other limitations
The liability of the Seller in respect of any Tax Claim is reduced or extinguished:
(a) by the amount of actual excess or actual understatement (as applicable) where:
(1) an accrual, allowance, provision or reserve in the Completion Accounts in respect of a Tax exceeds the actual liability in respect of that Tax and that liability has been finally satisfied; or
(2) an entitlement to any Tax Relief that is shown in the Completion Accounts is understated and the amount of the understatement has been actually received by a Target Entity;
(b) to the extent that it arises as a result of any income derived, loss, outgoing or deductions incurred or activities undertaken, or deemed for Tax purposes to have been undertaken, after the Completion Date; or
(c) to the extent that it arises as a result of the transactions contemplated by this agreement.
12.12 Consequential loss
(a) Notwithstanding any other provision of this agreement, the Seller will not, in any circumstances, be liable to a Buyer Group Member, Target Entity or any other
person for any Consequential Loss in relation to this agreement, any transaction contemplated by this agreement or any other Transaction Agreement.
(b) In a circumstance where the Buyer Entities wrongfully fail to Complete, the Buyer Entities and the Buyers Guarantor will not be liable to the Seller for any:
(1) special, exemplary or punitive damages;
(2) loss of revenue, loss of profit or loss of business opportunity assessed only by reference to an investment which the Seller could have made using any part of the Total Consideration; or
(3) damages to goodwill or reputational damage.
12.13 Sole remedy
(a) It is the intention of the parties that the Buyer Groups sole remedies in connection with the Sale or any matter under or contemplated by any Transaction Agreement (including the Disclosure Materials) will be as set out in, or determined under, this agreement.
(b) The sole remedy of the Buyer Entities in respect of any Claim, including for a breach of a Warranty (and a Buyer Entity is the only person entitled to make a Claim for breach of a Warranty), is common law damages and in no circumstances is a Buyer Entity entitled to terminate this agreement as a consequence of a Claim.
(c) No Seller Group Member has any liability to a Buyer Group Member or a Target Entity (or any of their respective officers, employees or advisers) under a Claim in connection with, or resulting from or implied by conduct made in the course of communications or negotiations in respect of, the Sale, the Transfer or any matter under or contemplated by any Transaction Agreement (including the Disclosure Materials), unless the Claim may be made under the terms of this agreement or arises out of a statutory right or other claim that cannot be excluded by contract.
(d) The Buyer Entities must not, and must procure that each Target Entity and other Buyer Group Member does not, make any Claim:
(1) that a Buyer Entity or the Buyers Guarantor would not be entitled to make under this agreement; or
(2) against a Seller Group Member that is not a party to this agreement.
12.14 Statutory actions
To the maximum extent permitted by law, each of the Buyer Entities and the Buyers Guarantor agrees not to make and waives any right it might have to make any Claim against a Seller Group Member or any of its current or former officers or employees or any Seller Group Representative or Adviser, whether in connection with this agreement, another Transaction Agreement, the Sale, the Transfer or otherwise, under:
(a) Part 7.10 of the Corporations Act;
(b) the Australian Securities and Investments Commission Act 2001 (Cth) in connection with a breach of section 12DA of that Act;
(c) the Australian Consumer Law (as contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth)) and equivalent Australian State and Territory fair trading legislation,
or any corresponding or similar provision of any Australian State or Territory legislation or any similar provision of any legislation in any relevant jurisdiction or any other applicable laws.
12.15 Payments affecting the Debt Purchase Price
(a) Any payment made by a Seller Group Member to a Buyer Group Member or a Target Entity in respect of any Claim will be in reduction of the Debt Purchase Price.
(b) Any payment (including a reimbursement) made by a Buyer Group Member or a Target Entity to a Seller Group Member in respect of any Buyer Claim will be an increase in the Debt Purchase Price.
(c) If any deduction or withholding is required by law to be deducted or withheld from any payment by the Seller in respect of a Claim, or if a Buyer Group Member or Target Entity is subject to Tax in respect of any such payment, the amount of the payment shall be increased by such additional amount as is necessary to ensure that the net amount received and retained by the Buyer Group or Target Entity is equal to the amount which it would have received and retained had the payment in question not been subject to any deductions or withholdings or Tax.
12.16 Fraud
The qualifications and limitations in this clause 12 do not apply in the case of fraud or Wilful Misconduct of a Seller Group Member or one or more employees, officers or directors of a Seller Group Member and the Buyer is not prevented from making a Claim against the Seller to the extent and in respect of those rights of recovery arising out of or relating to the fraud or Wilful Misconduct of the Seller Group Member or those persons.
12.17 Independent limitations
Each qualification and limitation in this clause 12 is to be construed independently of the others and is not limited by any other qualification or limitation.
13 Procedures for dealing with Claims
13.1 Notice of Claims
(a) ( Actual Claims ): The Buyer must within a reasonable time period notify the Seller if:
(1) it, the Assignee or the Buyers Guarantor decides to make a Claim against the Seller that either alone or together with other Claims exceeds any applicable thresholds set out in clause 12.5; or
(2) a Third Party Claim or Tax Demand is made that may give rise to a Claim against the Seller.
(b) ( Potential Claims ): Without limiting clause 13.1(a) the Buyer must also notify the Seller if:
(1) the Buyer believes that a Buyer Entity or the Buyers Guarantor would be entitled to make a Claim against the Seller but for the thresholds set out in clause 12.5; or
(2) the Buyer becomes aware of any events, matters or circumstances (including any potential threatened Third Party Claim or Tax Demand) that are reasonably likely to give rise to a Claim against the Seller, whether alone or with any other Claim or circumstances or with the passage of time).
(c) ( Details required ): The Buyer must include in each notice given under clause 13.1(a) or clause 13.1(b) all relevant details (including the amount) then known to a Buyer Group Member or a Target Entity of:
(1) the Claim and if applicable, any other Claims that together with the Claim give rise to any applicable thresholds in clause 12.5 being exceeded;
(2) if applicable, the Third Party Claim or Tax Demand; and
(3) the events, matters or circumstances giving rise to the Claim.
(d) ( Extracts ): The Buyer must also include in each notice given under clause 13.1(a) or clause 13.1(b) an extract of:
(1) any part of a Demand (including a Tax Demand) that identifies the liability or amount to which the Claim relates or other evidence of the amount of the Demand to which the Claim relates; and
(2) if available or relevant, any corresponding part of any adjustment sheet or other explanatory material issued by a Governmental Agency that specifies the basis for the Demand to which the Claim relates or other evidence of that basis.
(e) ( Demands ): The Buyer must provide a copy of any document referred to in clause 13.1(d) to the Seller as soon as practicable and in any event within five days of receipt of that document by a Buyer Group Member or a Target Entity.
(f) ( Developments ): The Buyer must also, on an on-going basis, keep the Seller informed of all material developments in relation to the Claim notified under clause 13.1(a) or clause 13.1(b).
(g) ( Compliance ): If the Buyer does not fully comply with this clause 13 in respect of a Claim, the Seller is not liable under the Claim to the extent that the non- compliance has increased the amount of the Claim.
13.2 Third Party Claims
The following additional obligations apply in respect of the Third Party Claims.
(a) ( No admission ): The Buyer must not, and must ensure that each Target Entity and Buyer Group Member does not:
(1) accept, compromise or pay;
(2) agree to arbitrate, compromise or settle; or
(3) make any admission or take any action in relation to,
a Third Party Claim that may lead to liability on the part of the Seller under a Claim without the Sellers prior written approval.
(b) ( Defence of claim ): Following receipt of a notice under clause 13.1(a) in respect of a Claim that arises from or involves or could potentially involve a Third Party Claim, the Seller may, by giving written notice to the Buyer, assume the conduct of the defence of the Third Party Claim.
(c) ( Seller assumes conduct ): If the Seller advises the Buyer that it wishes to assume the conduct of the defence of the Third Party Claim:
(1) ( indemnity ): provided that the Seller provides the Buyer with an indemnity against all Loss that may result from such action, the Buyer must promptly take, and must procure that each Buyer Group Member and Target Entity promptly takes, at the Sellers cost and expense, all action reasonably requested by the Seller to avoid, contest, compromise or defend the Third Party Claim, including using professional advisers nominated by the Seller and approved by the Seller for this purpose;
(2) ( access ): the Buyer must provide, and must procure that each Buyer Group Member and Target Entity provides, at the Sellers cost and expense, the Seller with all reasonable assistance requested by it in relation to the Third Party Claim, including providing access to witnesses and documentary or other evidence relevant to the Third Party Claim, allowing it and its legal advisers to inspect and take copies of all relevant books, records, files and documents, and providing it with reasonable access to the personnel, premises and chattels of the Seller Group Members and the Target Entities for the sole purpose of obtaining information in relation to the Third Party Claim;
(d) ( Conduct of claim by Seller ): If the Seller assumes the conduct of the defence of a Third Party Claim, in conducting any proceedings or actions in respect of that Third Party Claim the Seller must:
(1) act in good faith;
(2) liaise with the Buyer in relation to the defence of the Third Party Claim; and
(3) provide the Buyer with reasonable access to a copy of any notice, correspondence or other document relating to the Third Party Claim.
(e) ( Buyer assumes conduct ): If the Seller advises the Buyer that it does not wish to assume the conduct of the defence of the Third Party Claim (or does not advise the Buyer that it wishes to assume the conduct of the defence of the Third Party Claim within 15 Business Days of notification of the Third Party Claim under clause 13.1(a)(2)), then the Buyer must procure that any Buyer Group Member or Target Entity that is conducting any proceedings or actions in respect of that Third Party Claim:
(1) acts in good faith;
(2) liaises with the Seller in relation to the defence of the Third Party Claim;
(3) provides the Seller with reasonable access to a copy of any notice, correspondence or other document relating to the Third Party Claim; and
(4) acts reasonably in all the circumstances, including, having regard to the likelihood of success and the effect of the proceedings or actions on the goodwill or reputation of the business of the Seller Group.
13.3 Tax Demands
The following additional obligations apply in respect of Claims made against the Seller arising from or involving a Tax Demand.
(a) ( No admission ): The Buyer must not, and must ensure that each Target Entity and Buyer Group Member does not:
(1) accept, compromise or pay;
(2) agree to arbitrate, compromise or settle; or
(3) make any admission or take any action in relation to,
a Tax Demand that may lead to liability on the part of the Seller under a Claim without the prior written approval of the Seller (which must not be unreasonably withheld or delayed). However, the Buyer or a Target Entity may pay any Tax or Duty to a Governmental Agency by the due date for payment without affecting any of its rights under this agreement.
(b) ( Payment if not contesting a Tax Demand ): If the Seller does not advise the Buyer that it wishes to contest the Tax Demand then the Seller must pay in Immediately Available Funds and as a reduction in the Debt Purchase Price the amount notified by the Buyer by the later of:
(1) two Business Days before the due date for payment to the Governmental Agency; or
(2) 10 Business Days after receipt of the notice given by the Buyer under clause 13.1.
(c) ( Contesting a Tax Demand ): Following receipt of a notice under clause 13.1 in respect of a Claim that arises from or involves a Tax Demand, the Seller may, by written notice to the Buyer no later than five Business Days before the date due for payment of the relevant Tax or Duty or five Business Days after receipt of the notice, whichever is later, advise the Buyer that it wishes to contest the Tax Demand.
(d) ( Procedure for contesting a Tax Demand ): If the Seller advises the Buyer that it wishes to contest the Tax or Duty the subject of the Tax Demand under clause 13.3(c) then:
(1) ( Payment of Tax ): the Seller must pay the Buyer, in Immediately Available Funds and as a reduction in the Debt Purchase Price, so much of the Tax or Duty as is required by the relevant Governmental Agency to be paid while any action is being taken under this clause 13.3 by the date that is the later of two Business Days before the due date for payment to the Governmental Agency and 10 Business Days after receipt of the notice given by the Buyer under clause 13.1; and
(2) ( Objection to Tax Demand or Disputing Action ): at the Sellers written request, the Buyer must take, or procure that the person required to pay the Tax or Duty ( Tax Payor ) takes such Disputing Action in a timely manner in relation to the Tax Demand as the Seller may require.
(e) ( Conduct of proceedings by the Seller ): If the Seller contests the Tax or Duty the subject of a Tax Demand then the Buyer must follow, and must procure that each Buyer Group Member and Target Entity follows, all directions of the Seller relating to the conduct of any Disputing Action contemplated by this clause 13.3, including using professional advisers nominated by the Seller. In making any such directions, the Seller must:
(1) act in good faith;
(2) keep the Buyer informed in relation to the conduct of Disputing Action contemplated by this clause 13.3; and
(3) provide the Buyer with reasonable access to a copy of any notice, correspondence of other document relating to that Disputing Action.
(f) ( Costs of contesting a Tax Demand ): The Buyer or Target Entity will contest the Tax Demand at the direction of the Seller under paragraphs 13.3(d) and 13.3(e) at the Sellers cost and expense. However, any legal or tax advisers engaged by the Buyer or Target Entities, other than as nominated by the Seller pursuant to clause 13.3(e) shall be at the Buyers own cost and expense.
(g) ( Access ): The Buyer must provide, and must procure that each Buyer Group Member and Target Entity provides, the Seller with all reasonable assistance requested by it in relation to the Tax Demand and the Disputing Action contemplated by this clause 13.3 including providing, at the Sellers cost, access to witnesses and documentary or other evidence relevant to the Tax Demand or the Disputing Action, allowing it and its legal and tax advisers to inspect and take copies of all relevant books, records, files and documents, and providing it with reasonable access to the personnel, premises and chattels of the Buyer Group Members and the Target Entities.
14 Buyer Warranties
14.1 Buyer Warranties
The Buyer Entities and the Buyers Guarantor jointly and severally give the Buyer Warranties in favour of the Seller:
(a) in respect of each Buyer Warranty that is expressed to be given on a particular date, on that date; and
(b) in respect of each other Buyer Warranty, on the date of this agreement and immediately before Completion.
14.2 Independent Warranties
Each of the Buyer Warranties is to be construed independently of the others and is not limited by reference to any other Buyer Warranty.
14.3 Reliance
The Buyer Entities and the Buyers Guarantor respectively acknowledge that the Seller has entered into this agreement and will complete this agreement in reliance on the Buyer Warranties.
15 Period after Completion
15.1 Appointment of proxy
(a) From Completion until the Sale Shares are registered in the name of the Buyer, the Seller:
(1) appoints the Buyer as the sole proxy of the holders of Sale Shares to attend shareholders meetings and exercise the votes attaching to the Sale Shares;
(2) must not attend and vote at any shareholders meetings; and
(3) must take all other actions in the capacity of a registered holder of the Sale Shares as the Buyer directs.
(b) The Buyer indemnifies the Seller against all Loss suffered or incurred by it arising out of the implementation of any action taken in accordance with the proxy referred to in clause 15.1(a).
15.2 Access to records by Seller
(a) The Buyer must procure that all Business Records are preserved in respect of the period ending on the Completion Date until the later of:
(1) six years from the Completion Date; and
(2) any date required by an applicable law.
(b) After Completion the Buyer must, on reasonable notice from the Seller:
(1) provide the Seller and its advisers with reasonable access to the Business Records and allow the Seller to inspect and obtain copies or certified copies of the Business Records at the Sellers expense; and
(2) provide the Seller and its advisers with reasonable access (following reasonable prior notice) to the personnel and premises of the Buyer Group Members and the Target Entities,
for the purpose of assisting the Seller Group Members to prepare Tax returns, accounts and other financial statements, discharge statutory obligations or comply with Tax, Duty or other legal requirements or to conduct legal or arbitration proceedings.
(c) The Seller must reimburse the Buyer for its reasonable costs in retrieving any Business Records and making personnel and premises available under this clause 15.2.
(d) The Buyer is not required to comply with this clause 15.2 to the extent it would waive legal professional privilege. The Seller must comply with any reasonable steps requested by the Buyer to preserve confidentiality.
(e) The Buyer agrees that the Seller may retain copies of any Business Records that it may require to enable it to comply with any applicable law or good corporate governance after the Completion Date.
15.3 Access to records by Buyer
(a) During the period of 12 months after Completion, the Seller shall, and shall cause its Related Body Corporate to, use its reasonable endeavours to cause its and their respective officers, directors, employees, attorneys, auditors and other representatives to, use reasonable endeavours to provide such information as is held by the Seller or its Related Bodies Corporate in relation to the Target Entities and the Curragh Mine in connection with a public or private offering of securities by the Buyer or any of its Related Body Corporate ( Offering ).
(b) Without limiting clause 15.3(a), the Seller shall, and shall cause its Related Body Corporate to, use its reasonable endeavours to cause its and their respective officers, directors, employees, attorneys, auditors and other representatives to, provide all reasonable assistance and information held by the Seller or its Related Bodies Corporate to the Buyer to prepare the Post Completion Financial Statements to the extent the Buyer reasonably considers
it is necessary or desirable to prepare those financial statements in connection with an Offering and the Buyer and the Target Entities are otherwise unable to prepare those financial statements without the assistance and information of the Seller or its Related Bodies Corporate.
(c) The Buyer must reimburse and indemnify the Seller for its costs in retrieving any records or information and making available the Sellers officers, directors, employees, attorneys, auditors or other representatives under this clause 15.3.
(d) Notwithstanding anything to the contrary in this clause 15.3, nothing in this clause 15.3 shall (i) require cooperation to the extent it would interfere unreasonably with the business or operations of any Seller Group Member, (ii) require any Seller Group Member to incur any cost or expense (other than where the Buyer pays such cost or expense) (iii) require any Seller Group Member to pay any commitment or other similar fee or incur or become subject to any other liability or obligation, or agree to provide any indemnity, in connection with the Offering, (iv) require any Seller Group Member or any of their directors, officers or employees to give any indemnities in connection with the Offering, (v) require any Seller Group Member to provide any information that it does not have access to or information which a Target Entity or Buyer Group Member has, (vi) require any Seller Group Member to waive any legal professional privilege or permit disclosure of commercially sensitive information, or (vii) require any Seller Group Member to provide information which would cause any Seller Group Member to be in breach of an obligation of confidentiality to any person or which information concerns the consideration of the sale of the Curragh Mine (including any actual or potential competing proposal).
15.4 Branding and phase out
(a) Subject to clause 15.4(b), on and from Completion, the Buyer must not, and must ensure that each Buyer Group Member and Target Entity does not, use any trade mark, logo (either on its own or in combination with other material) get up or business, domain or company name containing any of:
(1) the Sellers name or logo;
(2) Wesfarmers;
(3) a Seller Trade Mark; or
(4) any word, expression, letter, name, logo or mark that is similar to or likely to be confused with the Seller, Wesfarmers or a Seller Trade Mark,
including in any form that a Target Entity has used before Completion.
(b) Subject to clause 15.4(c) and clause 15.4(d), the Seller agrees that it will not take any action against a Target Entity in respect of any breach of clause 15.4(a) in respect of the following expressions, letters, logos or marks:
(1) Wesfarmers Curragh; or
(2) the Wesfarmers Curragh logo,
during the period of three months after the Completion Date, provided that the Buyer has used all reasonable endeavours to avoid, or minimise the extent of, the breach and does not use those expressions, letters, logos or marks in a manner that is inconsistent with its use before Completion. This clause does not permit any Target Entity to continue to use any Seller Trade Mark or the word or expression Wesfarmers in its registered company name, registered business
name or domain name, which must be changed by Completion in accordance with Schedule 6.
(c) The Buyer must immediately discontinue, and procure that each Target Entity discontinues, any use referred to in clause 15.4(a) if such use would breach any law or if the breach gives rise to an offence under any law.
(d) The Seller may by not less than 10 Business Days notice to the Buyer withdraw its agreement in clause 15.4(b) if in its reasonable opinion any use referred to in clause 15.4(b) may adversely affect the Sellers reputation or capacity to effectively protect the Seller Trade Marks or its corporate name.
(e) Before Completion the Seller may procure that each Target Entity signs a letter (in a form acceptable to the Buyer and Seller) in which it acknowledges and agrees that any express or implied licences that exist at the date of this agreement, granted by the Seller or any Seller Group Member to that Target Entity to use the Seller Trade Marks, will terminate immediately on Completion.
15.5 Insurance policies in respect of Target Entities
With the exception of the insurance policies listed in Schedule 16, the Buyer acknowledges that on and from Completion, all other current insurance policies effected by the Seller (or a Seller Group Member) in respect of each Target Entity in its capacity as the insured will terminate and will no longer remain in force and effect. The Buyer may therefore choose to replace these insurance policies with effect from Completion. The Buyer is responsible for all insurances from the time of Completion. There will be no transition insurances for the Target Entities.
15.6 Pre Completion tax returns
(a) The parties will co-operate in connection with the preparation and filing of any Tax return or Tax statement of a Target Entity which is yet to be filed, and is in respect of a period or part period before the Completion Date.
(b) The Buyer will provide all assistance and information requested by the Seller in connection with the preparation of the Sellers consolidated income Tax return for the year in which the Completion Date occurs and the prior year, if the consolidated income Tax return for that year is yet to be filed.
(c) Without limiting clause 15.6(b), the Buyer must:
(1) deliver all detailed supporting documents and schedules for that part of the Sellers consolidated income Tax return which relates to the Target Entities; and
(2) prepare all documents, schedules and other information:
(A) in a manner consistent with the requirements of any Tax Law; and
(B) in accordance with the reasonable directions of the Seller (including using the software directed by the Seller).
(d) The Buyer must provide the information required under clause 15.6(b) and clause 15.6(c) as soon as reasonably possible but no later than:
(1) in respect of any Tax return relating to the period in which the Completion Date occurs, three months after the Completion Date; or
(2) in respect of any Tax return for the prior year, 10 Business Days after a request by the Seller.
(e) For the avoidance of doubt, the Seller will at its own cost and expense have the sole conduct and control of the preparation and filing of the Sellers consolidated income Tax return except to the extent the Buyer is requested to assist the Seller or is otherwise required to provide documents and information to the Seller in accordance with clause 15.6(b) and clause 15.6(c).
(f) The Buyer will, at its own cost and expense, have the sole conduct and control of the preparation and filing of all Tax returns, forms or statements of each Target Entity to the extent they relate to any periods (or part periods) ending on or before the Completion Date and have a filing date post the Completion Date ( Pre Completion Returns ).
(g) The Buyer must procure that each Pre Completion Return is prepared in a manner consistent with the position adopted by each Target Entity in the two years prior to Completion, unless that position is manifestly incorrect in accordance with the Tax Law. The Buyer must deliver each Pre Completion Return (including all detailed supporting documents and schedules) to the Seller as soon as it is available, and prior to lodgement, for the Sellers review and comment. If the Seller objects to any items set forth in the Pre Completion Return it must notify the Buyer of the objection as soon as it is aware of the objection, and the Buyer must amend the Pre-Completion Return to reflect the Sellers requested changes.
(h) The Buyer will, at its own cost and expense, have the sole conduct and control of the preparation and filing of all Tax returns, forms or statements of each Target Entity for any period that includes, but does not end on or before the Completion Date ( Straddle Returns ).
(i) The Buyer must procure that each Straddle Return is prepared in a manner consistent with the position adopted by each Target Entity in the two years prior to Completion, unless that position is manifestly incorrect in accordance with the Tax Law. The Buyer must deliver each Straddle Return (including all detailed supporting documents and schedules) to the Seller as soon as it is available, and prior to lodgement, for the Sellers review and comment. If the Seller objects to any items set forth in the Straddle Return it must notify the Buyer of the objection as soon as it is aware of the objection, and the Buyer must amend the Straddle Return to reflect the Sellers requested changes.
(j) The Buyer must procure that each Straddle Return and (subject to the Seller complying with clause 15.6(g)) each Pre Completion Return is filed by the due date for filing.
(k) Except in relation to the preparation of Pre Completion Returns and Straddle Returns (to which clauses 15.6(d) to 15.6(j) apply) the parties agree that it is the intention for the Seller to have the right to determine, control and where appropriate participate in the disclosure (including manner of disclosure) of any material or information to a Governmental Agency and any other dealings with the Governmental Agency in relation to Tax to the extent such disclosure or other dealings is in respect of any event, act, matter or transaction or amount derived (or deemed to be derived) or expenditure incurred before, on, or as a result of, Completion ( Pre Completion Tax Event ).
(l) Without limiting clause 15.6(k), from and after Completion the Buyer agrees that it will, and will procure that each Target Entity and Buyer Group Member will:
(1) not disclose any information or material to a Governmental Agency in relation to a Pre Completion Tax Event without the prior written consent of the Seller (which consent will not be unreasonably withheld or delayed), except as required by law;
(2) not make any admission of liability, or any agreement, compromise or settlement with a Governmental Agency in relation to a Pre Completion Tax Event without the prior written consent of the Seller (such approval not to be unreasonably withheld or delayed); and
(3) promptly provide the Seller with copies of any correspondence with, or material provided to or by, a Governmental Agency and keep the Seller informed of any oral discussions with a Governmental Agency in relation to a Pre Completion Tax Event.
(m) If the Buyer provides a notice under clause 13.1 in respect of a Claim that arises from or involves a Tax Demand, then at all times from the date of receipt of that notice the provisions of clause 13.3 will apply to that Tax Demand or the Tax or Pre Completion Tax Event the subject of that Tax Demand and not this clause 15.6.
15.7 Other Tax obligations
The Buyer shall:
(a) promptly notify the Seller in writing of any notice or commencement of any audit or investigation or exercise of powers under sections 263 or 264 of the Income Tax Assessment Act 1936 (Cth) or under section 35310 of Schedule 1 to the Taxation Administration Act 1953 (Cth) or any dispute with any Governmental Agency relating to taxation in relation to this transaction, or in respect of the activities of the Target Entities, for any period prior to Completion;
(b) not, without the written approval of the Seller:
(1) amend, or permit the self-amendment by the Target Entity of any Tax return in respect of a period, or part thereof, prior to the Completion Date; or
(2) apply for any binding or nonbinding advance opinion, determination or ruling in respect of or which in any way relates to an act or omission of, or occurrence affecting, the Target Entity before the opening of business on the Completion Date; and
(c) provide the Seller with a copy of Tax assessments or any other documentation issued by a or any dispute with any Governmental Agency relating to taxation in respect of a Target Entity for a period, or part thereof, prior to the Completion Date, within 10 Business Days after receipt by the Buyer or the Target Entity (as the case may be).
15.8 Financial Assurances and Bank Guarantees
(a) Subject to clause 15.9, at such time as is required by the Seller at or from Completion, the Seller and the Buyer must seek the return to the Seller of the Bank Guarantees and the Financial Assurance (including by lodging with the relevant Governmental Agency the Financial Assurances Replacement and lodging with the Bank Guarantee Beneficiaries the Bank Guarantees Replacement), and do everything possible to procure the return to the Seller of the Bank Guarantees and the Financial Assurance as soon as reasonably possible.
(b) The Buyer must promptly do everything necessary to assist the Seller with the release of the Bank Guarantees and the Financial Assurance by the date specified in clause 15.8(a) or clause 15.9(a)(2), including:
(1) lodging duly completed and executed forms as may be required with the relevant Governmental Agency or Bank Guarantee Beneficiary; and
(2) providing the relevant Governmental Agency with any further financial assurance amount in relation to the Tenements and related environmental authorities if required by the relevant Governmental Agency.
(c) If any amount is drawn against the Bank Guarantees or Financial Assurances after Completion the Buyer must immediately on demand pay to the Seller an amount equal to the amount drawn.
(d) Without limitation to clause 15.8(c), the Buyer must indemnify and hold harmless each Seller Group Member from and against any Loss the Seller Group Members may incur or sustain in relation to the Bank Guarantees and Financial Assurances (including any amount drawn down on such Bank Guarantees and Financial Assurances) on and from Completion.
15.9 Excess Bank Guarantees and Financial Assurances at Completion
(a) To the extent that the total value of the Bank Guarantees Replacement and the Financial Assurances Replacement at Completion is greater than $340,000,000 ( Excess Guarantee Amount ):
(1) the Seller will maintain or replace such Bank Guarantees or Financial Assurances as are nominated by the Seller to the Buyer to the value of the Excess Guarantee Amount ( Seller Guarantees );
(2) the Buyer and the Buyers Guarantor must replace the Seller Guarantees for such amount and in such form as is legally required by the Bank Guarantee Beneficiary or Governmental Agency (as applicable) as soon as reasonably practicable and in any event no later than the date which is 12 months after Completion; and
(3) the Buyer and the Buyers Guarantor must ensure:
(A) that a Target Entity does not make any direct or indirect payment (whether as a dividend, distribution or otherwise) to:
(a) a shareholder of a Target Entity, the Buyer or the Buyers Guarantor; or
(b) any Related Body Corporate of a Target Entity, the Buyer or the Buyers Guarantor; and
(B) that Wesfarmers Curragh and the Curragh Mine is not the subject of (or part of) a public or private offering or trade sale (whether by share sale or asset sale), except where the proceeds of the offering or sale are to be applied to replacing the Seller Guarantees,
prior to the time at which the Buyer or the Buyers Guarantor have complied with clause 15.9(a)(2).
(b) In the event that a Bank Guarantee Beneficiary or Governmental Agency has recourse to a Seller Guarantee, the Buyer and the Buyers Guarantor must indemnify the Seller and the Sellers Related Body Corporate for the amount the subject of recourse and make such payment to the Seller or the Sellers Related Body Corporate upon a written demand by the Seller. For clarification, the Seller
is not required to replace any Bank Guarantee or Financial Assurance after recourse is had to the Bank Guarantee or Financial Assurance.
(c) From the date of Completion until replacement of all of the Seller Guarantees by the Buyer or the Buyers Guarantor, the Buyer and the Buyers Guarantor will pay the Seller a fee equal to 2% of the amount of the Seller Guarantees per annum, calculated on a monthly basis. The Seller may make a claim for payment under this clause 15.9(c) no more frequently than once per month and the Buyer or the Buyers Guarantor must make payment no later than 14 days after receiving a claim for payment.
15.10 Indemnity in respect of post Completion matters
The Buyer indemnifies and holds harmless the Indemnified Parties from and against any Loss (including for any Claims but excluding a Claim by a Buyer Entity against the Seller under this agreement arising out of a breach of a Warranty) that the Indemnified Parties may incur or sustain, relating to any matter which arises after Completion in connection with a contract or asset which is transferred to the Target Entities from a Seller Group Member prior to Completion in relation to the Curragh Mine and which is used in, or is for, the operation of the Curragh Mine (and which does not result from a wrongful act or omission of the Seller after Completion).
15.11 Environmental obligations and indemnity
(a) Without limiting any other provision of this agreement, on and from Completion the Buyer:
(1) indemnifies and agrees to hold harmless the Indemnified Parties from and against all Loss that the Indemnified Parties may incur or sustain in relation to the Environmental Obligations (including for any Claims); and
(2) must comply with, perform or otherwise satisfy all Environmental Obligations, including as requested by an Indemnified Party.
(b) On and from Completion the Buyer releases the Indemnified Parties from any Claim for Loss which may arise or be incurred or sustained by the Buyer, the Buyers Guarantor, any Related Body Corporate (including the Target Entities) of the Buyer or the Buyers Guarantor, or any officer, employee or agent of the Buyer, the Buyers Guarantor or a Related Body Corporate (including the Target Entities) of the Buyer or the Buyers Guarantor, and all Claims which may be made against an Indemnified Party in relation to the Environmental Obligations.
(c) Nothing in clauses 15.11(a) or 15.11(b) requires the Buyer to indemnify an Indemnified Party for, or releases an Indemnified Party from, any Loss or Claim:
(1) arising under this agreement, including in respect of the Buyers right of recovery under the indemnities contained in this agreement or for a breach of Warranty;
(2) where the Indemnified Party is a Specified Executive, arising under that Specified Executives employment contract with a Buyer Group Member or Target Entity after Completion;
(3) resulting from the fraud or Wilful Misconduct of an Indemnified Party; or
(4) to the extent it is not permitted by law.
15.12 Wrong pockets
(a) This clause 15.12 does not apply to the IT Licences or any assets, contract, agreement or negotiations the subject of the Transitional Services Agreement.
(b) If within six months after Completion the Seller or the Buyer identifies an asset, contract, agreement or right that relates exclusively to the Business or the Target Entities (and which does not relate to the businesses of the Seller Group Members) and which is held by a Seller Group Member (or more than one of them jointly), then as soon as practicable:
(1) the Seller or Buyer (as applicable) must notify the other in writing, including details of the asset, contract or right; and
(2) the Seller must, at the Buyers cost, do all such things as may be necessary or desirable to (including procuring a Seller Group Member to):
(A) transfer or assign the asset, contract or right to a Target Entity as soon as practicable with effect from Completion; and
(B) otherwise put the relevant Target Entity into the position that it would have been in if the asset, contract or right was transferred or assigned to it with effect from Completion.
(c) If within six months after Completion the Seller or the Buyer identify an asset, contract or right that relates exclusively to the Seller Group (and which does not relate to the Business or Target Entities) and which is held by a Target Entity or more than one Target Entity jointly, then as soon as practicable:
(1) the Seller or the Buyer (as applicable) must notify the other in writing, including details of the asset, contract or right; and
(2) the Buyer must, at its cost, do all such things as may be necessary or desirable to (including procuring a Target Entity to):
(A) transfer or assign the asset, contract or right to a Seller Group Member as soon as practicable with effect from Completion; and
(B) otherwise put the relevant Seller Group Member into the position that it would have been in if the asset, contract or right was transferred or assigned to it with effect from Completion.
16 Confidentiality and announcements
16.1 Agreed announcement
A party may not make any other public announcement relating to a Transaction Agreement (including the fact that the parties have executed this agreement or any other Transaction Agreement) unless the other party has consented to the announcement (other than any immaterial changes which do not affect the substance of the announcement or which correct manifest errors therein), including the timing, form and content of that disclosure, or unless the announcement would be permitted under an exemption in clauses 16.2(a)(1) or 16.2(a)(2).
16.2 Confidentiality
(a) Each party ( recipient ) must keep secret and confidential, and must not divulge or disclose any information relating to another party or its business (which is disclosed to the recipient by the other party, its representatives or advisers), any Transaction Agreement or the terms of the Sale other than to the extent that:
(1) the information is in the public domain as at the date of this agreement (or subsequently becomes in the public domain other than by breach of any obligation of confidentiality binding on the recipient);
(2) the recipient (or its Related Body Corporate) is required to disclose the information by the rules of any recognised stock exchange on which its shares or the shares of any of its Related Bodies Corporate are listed or proposed to be listed, provided that the recipient has, to the extent possible having regard to the required timing of the disclosure, consulted with the provider of the information as to the form and content of the disclosure;
(3) the disclosure is made by the recipient to its directors, officers, employees, agents, representatives, Related Bodies Corporate, financiers or lawyers, accountants, investment bankers, consultants or other professional advisers to the extent necessary to enable the recipient to properly perform its obligations under this agreement or to conduct their business generally, in which case the recipient must ensure that such persons keep the information secret and confidential and do not divulge or disclose the information to any other person;
(4) the disclosure is necessary by the Seller or the Buyer Entities to seek satisfaction of the condition in clause 2.1(a) or for the purposes of clause 13.3(a), provided that the relevant person to whom the information is disclosed is made aware of the confidential nature of the information and is requested to keep the information secret and confidential and not to divulge or disclose the information to any other person;
(5) the disclosure is necessary by the Seller to seek satisfaction of any of the conditions in clause 2.1(b) or clause 2.1(c) or for the purposes of clause 5.12, provided that the relevant person to whom the information is disclosed is made aware of the confidential nature of the information and is requested to keep the information secret and confidential and not to divulge or disclose the information to any other person;
(6) the disclosure is required by law in Australia or elsewhere (other than under section 275 of the PPSA to the extent that disclosure is not required under that section if it would breach a duty of confidence);
(7) the disclosure is required for use in legal proceedings regarding this agreement or the Sale;
(8) the disclosure is required for use in relation to interactions with any Governmental Agency responsible for taxation; or
(9) the party to whom the information relates has consented in writing before the disclosure.
(b) Each recipient must ensure that its directors, officers, employees, agents, representatives and Related Bodies Corporate comply in all respects with the recipients obligations under this clause 16.2.
(c) From Completion, the Buyer Entities may disclose confidential information relating to the business of a Target Entity except to the extent that such information relates to a Seller Group Member or its businesses.
(d) Nothing in this agreement is to be construed as constituting the consent of a party, with respect to a Security Interest created by this agreement, to the disclosure of the terms of this agreement for the purpose of section 275(7) of the PPSA. No party who is the grantor of a Security Interest under this agreement will, after the date of this agreement, consent to the disclosure of the terms of this agreement to an interested person for the purpose of section 275 of the PPSA.
(e) To the extent not prohibited by the PPSA, each party that is the grantor of a Security Interest under this agreement waives its right to receive any notice otherwise required to be given by a secured party under section 157 (verification statements) or any other provision of the PPSA.
17 Duties, costs and expenses
17.1 Duties
The Buyer must pay, and must indemnify the Seller against, all Duty in respect of:
(a) the execution, delivery and performance of this agreement and each other Transaction Agreement;
(b) any agreement or document entered into or signed under this agreement or another Transaction Agreement; and
(c) any agreement or document entered into or signed in contemplation of this agreement or a Transaction Agreement (whether before or after the execution of this agreement or another Transaction Agreement).
17.2 Costs and expenses
(a) Unless otherwise provided for in this agreement, each party must pay its own costs and expenses in respect of the negotiation, preparation, execution, delivery and registration of this agreement and any other agreement or document entered into or signed under this agreement (including each other Transaction Agreement).
(b) Any action to be taken by a party in performing its obligations under this agreement must be taken at its own cost and expense unless otherwise provided in this agreement.
18 GST
(a) If an amount of GST is payable on a supply under this agreement:
(1) the recipient of the supply must pay, in addition to the other consideration payable or to be provided for the supply, an amount equal to the GST payable on the supply; and
(2) the recipient must pay the additional amount to the supplier at the same time as the other consideration.
However, the recipient need not pay the additional amount until the supplier gives the recipient a tax invoice (except where the recipient is required to issue the tax invoice).
(b) If an amount paid by the supplier as and for GST under this agreement is overpaid, and Division 142 of the GST Act applies to that amount, then the amount is not recoverable from the supplier unless the supplier can recover that amount from the Commissioner after taking all reasonable steps to do so.
(c) Clauses 18(a) and 18(b) do not apply to the extent that the GST on the supply is payable by the recipient under Division 83 or Division 84 of the GST Act.
(d) If any party is entitled to payment of any costs or expenses by way of reimbursement or indemnity, the claim must exclude any amount for which that party (or representative member if the party is a member of a GST group) may obtain an input tax credit.
(e) If for any reason (including, without limitation, the occurrence of an adjustment event) the amount of GST payable on a supply varies from the GST amount paid to the supplier, the parties will account to each other for the difference. If the recipient is required to pay an additional amount under this clause, and the reason an additional amount is payable is because of the occurrence of an adjustment event, the recipient need not pay the additional amount until the supplier gives the recipient an adjustment note (except where the recipient is required to issue the adjustment note).
(f) Unless clearly indicated to the contrary, all amounts referred to in this agreement, other than in this clause, are GST exclusive.
(g) Unless clearly indicated to the contrary, GST and other terms used in this clause (and in other provisions of this agreement referable to GST) have the meanings given to those terms by the GST Act.
19 Notices
19.1 Form of Notice
A notice or other communication to a party under this agreement ( Notice ) must be:
(a) in writing and in English and signed by or on behalf of the sending party; and
(b) addressed to that party in accordance with the details nominated in Schedule 1 (or any alternative details nominated to the sending party by Notice).
19.2 How Notice must be given and when Notice is received
(a) A Notice must be given by one of the methods set out in the table below.
(b) A Notice is regarded as given and received at the time set out in the table below.
However, if this means the Notice would be regarded as given and received outside the period between 9.00am and 5.00pm (addressees time) on a Business Day ( business hours period ), then the Notice will instead be regarded as given and received at the start of the following business hours period.
Method of giving Notice |
|
When Notice is regarded as given and received |
By hand to the nominated address |
|
When delivered to the nominated address |
|
|
|
By email to the nominated email address |
|
When the email (including any attachment) comes to the attention of the recipient party or a person acting on its behalf. |
19.3 Notice must not be given by electronic communication
A Notice must not be given by electronic means of communication (other than email as permitted in clause 19.2).
20 Guarantee by Buyers Guarantor
20.1 Consideration
The Buyers Guarantor acknowledges:
(a) entering into this agreement in return for the Seller agreeing to enter into this agreement and to sell the Sale Shares to the Buyer, assign the Intercompany Loan to the Assignee and for other valuable consideration; and
(b) that the Seller has relied on the operation of this clause 20.
20.2 Guarantee and indemnity
The Buyers Guarantor:
(a) unconditionally and irrevocably guarantees to the Seller on demand, the due and punctual performance of the Buyer Entities obligations under and in respect of this agreement and Transitional Services Agreement; and
(b) as a separate and additional liability, indemnifies the Seller against all Loss, actions, proceedings and judgments of any nature, incurred by, brought, made or recovered against the Seller arising from any default or delay in the due and punctual performance of:
(1) the Buyer Entities obligations under the Transaction Agreements; and
(2) after Completion, Wesfarmers Curraghs obligations under the VSM Deed.
20.3 Non-payment and non-performance
(a) If:
(1) a Buyer Entity does not perform any of its obligations under this agreement (including an obligation to pay any amount under this agreement) or the Transitional Services Agreement; or
(2) after Completion, Wesfarmers Curragh does not perform any of its obligations under the VSM Deed (including an obligation to pay any amount under the VSM Deed),
the Buyers Guarantor must perform, or procure the performance of, those obligations, in accordance with this agreement, the Transitional Services Agreement or the VSM Deed (as applicable), on demand by the Seller.
(b) A demand under this clause 20.3 may be made at any time and from time to time and a demand need only specify the obligation to be fulfilled.
20.4 Extent of guarantee and indemnity
The liability of the Buyers Guarantor under this clause 20 is not affected by anything that, but for this clause 20, might operate to release or exonerate the Buyers Guarantor in whole or in part from its obligations including any of the following, whether with or without the consent of the Buyers Guarantor:
(a) the grant to a Buyer Entity, the Buyers Guarantor or any other person of any time, waiver or other indulgence, or the discharge or release of a Buyer Entity, the Buyers Guarantor or any other person from any liability or obligation;
(b) any transaction or arrangement that may take place between the Seller, a Buyer Entity, the Buyers Guarantor or any other person;
(c) the Seller exercising or refraining from exercising its rights under any security or any other rights, powers or remedies against a Buyer Entity, the Buyers Guarantor or any other person;
(d) the amendment, replacement, extinguishment, unenforceability, failure, loss, release, discharge, abandonment or transfer either in whole or in part and either with or without consideration, of any security now or in the future held by the Seller from a Buyer Entity, the Buyers Guarantor or any other person or by the taking of or failure to take any security;
(e) the failure or omission or any delay by the Seller, a Target Entity or a Buyer Entity to give notice to the Buyers Guarantor of any default by a Buyer Entity, Target Entity or any other person under this agreement, the Transitional Services Agreement or the VSM Deed; and
(f) any legal limitation, disability, incapacity or other circumstances related to a Buyer Entity, the Buyers Guarantor or any other person.
20.5 Principal and independent obligation
This clause 20 is a principal obligation and is not to be treated as ancillary or collateral to any other right or obligation and extends to cover this agreement as amended, varied, supplemented, renewed or replaced.
20.6 Continuing guarantee and indemnity
This clause 20 is a continuing obligation of the Buyers Guarantor, despite Completion, and remains in full force and effect for so long as a Buyer Entity has any liability or obligation to the Seller, any other Seller Group Member or other person under this agreement, the Transitional Services Agreement and until all of those liabilities or obligations have been fully discharged.
20.7 No withholdings
(a) The Buyers Guarantor must make all payments that become due under this clause 20, free and clear and without deduction of all present and future withholdings (including Taxes, duties, levies, imposts, deductions and charges of Australia or any other jurisdiction).
(b) If the Buyers Guarantor is compelled by law to deduct any withholding, then in addition to any payment due under this clause 20, it must pay to the Seller such amount as is necessary to ensure that the net amount received by the Seller after withholding equals the amount the Seller would otherwise been entitled to if not for the withholding.
20.8 Currency
The Buyers Guarantor must pay all moneys that it becomes liable to pay under this clause 20 in the currency in which they are payable under this agreement and free of any commissions and expenses relating to foreign currency conversion or any other charges or expenses.
20.9 No set off
The Buyers Guarantor has no right to set off, deduct or withhold any moneys that it may be or become liable to pay under this clause 20, against any moneys that the Seller or any other Seller Group Member may be, or become, liable to pay to a Buyer Group Member whether under this agreement, the Transitional Services Agreement or otherwise.
20.10 Buyers Guarantors liability
(a) The Buyers Guarantors liability in respect of any Claim against a Buyer Entity shall not exceed the Buyer Entitys liability in respect of that Claim.
(b) The Buyers Guarantors liability in respect of any Claim against Wesfarmers Curragh shall not exceed Wesfarmers Curraghs liability in respect of that Claim.
20.11 Assigning benefit
The Seller may assign the benefit of this clause 20 without the Buyers Guarantors consent if the Seller assigns the benefit of this agreement with the Buyer Entities consent.
21 General
21.1 Governing law and jurisdiction
This agreement is governed by the law in force in Queensland.
21.2 Arbitration
Any Claim arising out of or in connection with this agreement, including any dispute regarding its existence, validity, invalidity, termination, breach or enforceability will be
referred to and finally resolved by binding arbitration administered by the Singapore International Arbitration Centre in accordance with the Arbitration Rules of the Singapore International Arbitration Centre for the time being in force. The place of arbitration will be Brisbane, Queensland.
21.3 Arbitration proceedings
The following provisions will apply to any arbitration proceedings commenced under clause 21.2:
(a) the number of arbitrators will be three;
(b) the language of the arbitration will be English;
(c) the award of the arbitrators will be final and binding and the parties waive any right to appeal under any applicable law, including the Singapore International Arbitration Act; and
(d) proceedings to enforce judgement entered on an award may be brought in any court having jurisdiction over the non-prevailing party. The prevailing party may seek, in any court having competent jurisdiction, judicial recognition of the award, or order of enforcement or any other order or decree that is necessary to give full effect to the award.
21.4 Service of process
(a) Without preventing any other mode of service, any document in an action (including, any writ of summons or other originating process or any third or other party notice) may be served on any party by being delivered to or left for that party at its address for service of notices under clause 19.
(b) The Buyers Guarantor and Assignee irrevocably appoint the Buyer as their agent for the service of process in Australia in relation to any matter arising out of this agreement. If the Buyer ceases to be able to act as such or have an address in Australia, the Buyer, Buyers Guarantor and Assignee agree to appoint a new process agent in Australia and deliver to the other party within 20 Business Days a copy of a written acceptance of appointment by the process agent, upon receipt of which the new appointment becomes effective for the purpose of each Transaction Agreement. The Buyers Guarantor and Assignee must inform the Seller in writing of any change in the address of its process agent within 20 Business Days of the change.
21.5 Actions against Finance Related Parties
Notwithstanding anything herein to the contrary in this agreement, the parties hereto acknowledge and irrevocably agree:
(a) that any Claim, whether in law or in equity, whether in contract or in tort or otherwise, involving the Debt Financing Parties arising out of, or relating to, the transactions contemplated hereby, the Debt Financing Commitments, the Debt Financing or the performance of services thereunder or related thereto shall be subject to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan, New York, New York, and any appellate court thereof and each party hereto submits for itself and its property with respect to any such Claim to the exclusive jurisdiction of such court;
(b) not to bring or permit any of their affiliates to bring or support anyone else in bringing any such Claim in any other court;
(c) to waive and hereby waive, to the fullest extent permitted by law, any objection which any of them may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such Claim in any such court;
(d) to waive and hereby waive any right to trial by jury in respect of any such Claim;
(e) that a final judgment in any such Claim shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by the law;
(f) that any such Claim shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflicts of law rules of such State that would result in the application of the laws of any other State;
(g) that the Debt Financing Parties are express third party beneficiaries of, and may enforce, this clause 21.5 and clause 21.8 of this agreement; and
(h) that this clause 21.5 and clause 21.8 may not be amended in a manner adverse to the Debt Financing Parties without the prior written consent of all Finance Related Parties.
21.6 Invalidity and enforceability
(a) If any provision of this agreement is invalid under the law of any jurisdiction the provision is enforceable in that jurisdiction to the extent that it is not invalid, whether it is in severable terms or not.
(b) Clause 21.6(a) does not apply where enforcement of the provision of this agreement in accordance with clause 21.6(a) would materially affect the nature or effect of the parties obligations under this agreement.
21.7 Waiver
(a) No party to this agreement may rely on the words or conduct of any other party as a waiver of any right unless the waiver is in writing and signed by the party granting the waiver.
(b) In this clause 21.7:
(1) conduct includes delay in the exercise of a right;
(2) right means any right arising under or in connection with this agreement and includes the right to rely on this clause; and
(3) waiver includes an election between rights and remedies, and conduct which might otherwise give rise to an estoppel.
(c) A provision of, or a right, discretion or authority created under, this agreement may not be:
(1) waived except in writing signed by the party granting the waiver; and
(2) varied except in writing signed by the parties.
(d) A failure or delay in exercise, or partial exercise, of a power, right, authority, discretion or remedy arising from a breach of, or default under this agreement does not result in a waiver of that right, power, authority, discretion or remedy.
21.8 Waiver of Claims Against Finance Related Parties
(a) Subject to clause 21.10, it is acknowledged that no Seller Group Member and no Finance Related Parties owe any duty to the other arising out of this agreement. No Seller Group Member has any liability to the Finance Related Parties under this agreement or in relation to the Debt Financing.
(b) None of the Finance Related Parties will have any liability to the Seller or its affiliates relating to or arising out of this agreement, the Debt Financing or otherwise, whether at law, or equity, in contract, in tort or otherwise, and neither the Seller nor any of its affiliates will have any rights or claims against any of the Finance Related Parties under this agreement, the Debt Financing or otherwise
21.9 Variation
A variation of any term of this agreement must be in writing and signed by the parties.
21.10 Assignment
(a) Subject to clause 21.10(b), rights arising out of or under this agreement are not assignable by a party without the prior written consent of the other party.
(b) A Buyer Entity may assign rights arising out of or under this agreement without the prior written consent of the Seller to:
(1) any Finance Related Parties (but excluding any officers, directors, employees, agents or representatives);
(2) any receiver appointed by a party referred to under clause 21.10(b)(1); or
(3) in connection with the sale of assets or business of the Buyer Entities in any form of transaction including in connection with the enforcement of an Encumbrance by a Finance Related Party (but excluding any officers, directors, employees, agents or representatives),
in each case provided that:
(4) the Buyer Entities remain fully liable for all obligations under this agreement;
(5) the maximum liability cap described in clauses 12.5(b) and 12.5(c) apply in aggregate to all Claims brought by any Buyer Group Member and any assignee; and
(6) the Buyer Entities indemnify the Seller Group Members against any Claims brought by any Buyer Group Member or assignee in excess of the maximum aggregate liability cap described under clause 21.10(b)(5).
(c) A breach of clause 21.10(a):
(1) by a Buyer Entity or the Buyers Guarantor entitles the Seller to terminate this agreement; or
(2) by the Seller entitles the Buyer Entities to terminate this agreement.
(d) Clause 21.10(c) does not affect the construction of any other part of this agreement.
21.11 Further action to be taken at each partys own expense
Subject to clause 17, each party must, at its own expense, do all things and execute all documents necessary to give full effect to this agreement and the transactions contemplated by it and use reasonable endeavours to cause relevant third parties to do the same.
21.12 Relationship of the parties
(a) Nothing in this agreement gives a party authority to bind any other party in any way.
(b) Nothing in this agreement imposes any fiduciary duties on a party in relation to any other party.
21.13 Exercise of rights
(a) Unless expressly required by the terms of this agreement, a party is not required to act reasonably in giving or withholding any consent or approval or exercising any other right, power, authority, discretion or remedy, under or in connection with this agreement.
(b) A party may (without any requirement to act reasonably) impose conditions on the grant by it of any consent or approval, or any waiver of any right, power, authority, discretion or remedy, under or in connection with this agreement. Any conditions must be complied with by the party relying on the consent, approval or waiver.
21.14 Remedies cumulative
Except as provided in this agreement and permitted by law, the rights, powers and remedies provided in this agreement are cumulative with and not exclusive to the rights, powers or remedies provided by law independently of this agreement.
21.15 Counterparts
This agreement may be executed in any number of counterparts. All counterparts, taken together, constitute one instrument. A party may execute this agreement by signing any counterpart.
21.16 No merger
The Warranties, Buyer Warranties, undertakings and indemnities in this agreement will not merge on Completion.
21.17 Entire agreement
This agreement states all the express terms of the agreement between the parties in respect of its subject matter. It supersedes all prior discussions, negotiations, understandings and agreements in respect of its subject matter.
21.18 No reliance
No party has relied on any statement by the other party not expressly included in this agreement.
21.19 Default interest
(a) If a party fails to pay any amount payable under this agreement on the due date for payment, that party must in addition to a continuing liability to pay the amount unpaid pay interest on the amount unpaid at the higher of the Interest Rate plus 3% per annum or the rate (if any) fixed or payable under any judgment or other thing into which the liability to pay the amount becomes merged.
(b) The interest payable under clause 21.19(a):
(1) accrues from day to day from and including the due date for payment up to and including the actual date of payment, before and, as an additional and independent obligation, after any judgment or other thing into which the liability to pay the amount becomes merged; and
(2) may be capitalised by the person to whom it is payable at monthly intervals on the basis of a 360 day year.
(c) The right to require payment of interest under this clause 21.19 is without prejudice to any other rights the non-defaulting party may have against the defaulting party at law or in equity.
(d) A failure to pay any amount under this agreement is not remedied until both the amount unpaid and any interest payable under this clause 21.19 have been paid in full.
21.20 Benefits held on trust
(a) The Seller holds the benefit of each indemnity, promise and obligation in this agreement expressed to be for the benefit of a director, officer or employee of a Seller Group Member, an Indemnified Party, or for the benefit of a Seller Group Member or Seller Group Representative or Adviser that is not a party to this agreement, on trust for that director, officer, employee, Seller Group Member, an Indemnified Party, or Seller Group Representative or Adviser.
(b) The Buyer Entities and the Buyers Guarantor each hold the benefit of each indemnity, promise and obligation in this agreement expressed to be for the benefit of a director, officer or employee of a Buyer Group Member, or for the benefit of a Buyer Group Member that is not a party to this agreement, on trust for that director, officer, employee, Buyer Group Member.
(c) Except where an indemnity, promise or obligation is expressly stated to be for the benefit of a third party, no person (including an Employee) other than the Buyer Entities, the Seller and the Buyers Guarantor, has or is intended to have any right, power or remedy or derives or is intended to derive any benefit under this agreement.
21.21 Attorneys
To the extent applicable, each of the attorneys executing this agreement states that the attorney has no notice of the revocation of the power of attorney appointing that attorney.
21.22 No withholdings
(a) A Buyer Entity must make all payments that become due under this agreement, free and clear and without deduction of all present and future withholdings (including Taxes of the Commonwealth of Australia or any other jurisdiction).
(b) If a Buyer Entity is required by law to deduct any withholding, then in addition to any payment due under this agreement, it must pay to the Seller such amount as is necessary to ensure that the net amount received by the Seller after withholding and taking into account any corresponding tax offset or credit for the amount withheld that is received or likely to be received by the Seller equals the amount the Seller would otherwise been entitled to if not for the withholding.
(c) The Seller declares that, for the purposes of section 14-225(1) of Schedule 1 to the Taxation Administration Act 1953 (Cth), it is and will continue to be an Australian resident at Completion.
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Buyer
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Coronado Australia Holdings Pty Ltd.
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AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CORONADO GLOBAL RESOURCES INC.
Coronado Global Resources Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Coronado Global Resources Inc. The corporation was incorporated pursuant to an original Certificate of Incorporation filed with the Secretary of State of the State of Delaware on August 13, 2018.
2. This Amended and Restated Certificate of Incorporation amends, restates and integrates the provisions of the Certificate of Incorporation of said corporation and has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware by written consent of the holder of all of the outstanding stock entitled to vote thereon in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation is hereby amended and restated to read as herein set forth in full:
AMENDED & RESTATED CERTIFICATE OF INCORPORATION
OF
CORONADO GLOBAL RESOURCES INC.
ARTICLE I
NAME
The name of the corporation is Coronado Global Resources Inc. (the Corporation ).
ARTICLE II
REGISTERED AGENT
The address of the Corporations registered office in the State of Delaware is 160 Greentree Drive #101 in the City of Dover, County of Kent, 19904. The name of its registered agent at such address is National Registered Agents, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
CAPITALIZATION
Section 4.1 Authorized Capital Stock . The total number of shares of all classes of stock which the Corporation shall have authority to issue is 1,100,000,000, of which 1,000,000,000 shares shall be designated as Common Stock and shall have a par value of U.S. $0.01 per share and 100,000,000 shares shall be designated as Preferred Stock and shall have a par value of U.S. $0.01 per share. Any stockholder who fails to pay any installment or call upon such stockholders stock shall be subject to the provisions of Section 164 of the General Corporation Law of the State of Delaware as in effect from time to time.
Section 4.2 Preferred Stock . Shares of Preferred Stock may be issued in one or more series from time to time by the board of directors. The board of directors is expressly authorized to fix by resolution or resolutions the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions thereof, of the shares of each series of Preferred Stock, including, without limitation, the following:
(a) the distinctive serial designation of such series which shall distinguish it from other series;
(b) the number of shares included in such series;
(c) the dividend rate (or method of determining such rate) payable to the holders of the shares of such series, any conditions upon which such dividends shall be paid and the date or dates upon which such dividends shall be payable;
(d) whether dividends on the shares of such series shall be cumulative and, in the case of shares of any series having cumulative dividend rights, the date or dates or method of determining the date or dates from which dividends on the shares of such series will be cumulative;
(e) whether or not the holders of the shares of such series shall have voting rights, in addition to the voting rights provided by law, and if so the terms of such voting rights;
(f) the price or prices at which, the period or periods within which and the terms and conditions upon which the shares of such series may be redeemed, in whole or in part, at the option of the Corporation or at the option of the holder or holders thereof or upon the happening of a specified event or events;
(g) the amount or amounts which shall be payable out of the assets of the Corporation to the holders of the shares of such series upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of the shares of such series;
(h) the obligation, if any, of the Corporation to purchase or redeem shares of such series pursuant to a sinking fund or otherwise and the price or prices at which, the period or periods within which and the terms and conditions upon which the shares of such series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(i) whether the shares of such series shall be convertible into, or exchangeable for, at any time or times at the option of the holder or holders thereof or at the option of the Corporation or upon the happening of a specified event or events, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation, and the price or prices or rate or rates of exchange or conversion and any adjustments applicable thereto; and
(j) any other powers, preferences and rights and qualifications, limitations and restrictions not inconsistent with the General Corporation Law of the State of Delaware.
Unless otherwise expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of any share of Preferred Stock shall be entitled as of right to vote on any amendment or alteration of this Amended & Restated Certificate of Incorporation to authorize or create, or increase the authorized amount of, any other series of Preferred Stock or any alteration, amendment or repeal of any provision of any other series of Preferred Stock that does not adversely affect in any material respect the rights of the series of Preferred Stock held by such holder.
Except as otherwise required by the General Corporation Law of the State of Delaware or expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of Common Stock, as such, shall be entitled to vote on any amendment or alteration of this Amended & Restated Certificate of Incorporation that alters, amends or changes the powers, preferences, rights or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other series of Preferred Stock, to
vote thereon pursuant to this Amended & Restated Certificate of Incorporation or pursuant to the General Corporation Law of the State of Delaware.
Subject to the rights of the holders of any series of Preferred Stock, the number of authorized shares of any class or series of Preferred Stock may be increased or decreased (but not below the number of shares thereof then-outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of such class or series, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware or any corresponding provision hereafter enacted.
Unless otherwise expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of any share of Preferred Stock shall, in such capacity, be entitled to bring a derivative action, suit or proceeding on behalf of the Corporation.
Section 4.3 Series A Preferred Stock . The Corporation hereby authorizes and designates a series of Preferred Stock, which shall have the voting powers and other rights and qualifications, limitations and restrictions thereof, as follows:
(a) Designation . The distinctive serial designation of such series is Series A Preferred Stock (the Series A Preferred Stock ).
(b) Number of Shares . The number of shares constituting the Series A Preferred Stock (the Series A Share ) shall be one (1). The Series A Share shall have a liquidation preference of one dollar (U.S. $1.00), as described herein. The number of authorized Series A Shares shall not be increased or reduced without (in addition to any other vote required by law) the approval of (1) both a majority of the Series A Directors (as defined in Section 4.3(d)(i)) (if any) and a majority of the At-Large Directors (as defined in Section 4.3(l)(ii)) (or, if no Series A Directors have been appointed, by the board of directors) and (2) the approval of the Person (as defined below) who is the owner of record of the Series A Share (the Series A Holder ), voting as a separate class to the exclusion of all other series or classes of capital stock.
(c) Redemption .
(i) The Series A Share shall not be redeemable by the Corporation, except that the Series A Share shall be redeemed to the fullest extent permitted by law, at a redemption price of one dollar (U.S. $1.00) per share, if, at any time following the date of this Amended & Restated Certificate of Incorporation, Coronado Group LLC, a Delaware limited liability company, EMG CC HC, LLC, a Delaware limited liability company, EMG Coronado II HC, LLC, a Delaware limited liability company, EMG Coronado Strategic, LP, a Delaware limited partnership, EMG Coronado IV Holdings, LLC, a Delaware limited liability company and any of their respective successors or Permitted Assigns (as defined below) (collectively, EMG ) no longer collectively beneficially own (used herein as such term is defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended), in the aggregate, ten percent (10%) or more of the outstanding shares of Common Stock. For purposes of this Amended & Restated Certificate of Incorporation, the term Permitted Assigns means any Affiliate of the entities included in the definition of EMG (other than the Corporation and any entity that is controlled by the Corporation), including for the avoidance of doubt any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity (each, a Person ).
(ii) Notice of redemption of the Series A Share shall be sent by or on behalf of the Corporation by hand delivery to the Series A Holder to be redeemed at its address as it shall appear on the records of the Corporation, (i) notifying the Series A Holder of the redemption of the Series A Share and (ii) stating the place at which the certificate(s) evidencing the Series A Share shall be surrendered. The Corporation shall act as the transfer agent for the Series A Preferred Stock.
(iii) From and after the notice of redemption having been duly given, and the redemption price having been paid or irrevocably set aside for payment, the Series A Share with respect to which such notice has been given and such redemption price paid or set aside shall no longer be, or be deemed to be, outstanding for any purpose, and all rights, preferences and powers (including voting rights and powers) of such Series A Share shall automatically cease and terminate, except the right of the Series A Holder, upon surrender of the certificate representing such Series A Share, to receive the redemption price without interest.
(d) Voting Rights of the Series A Share .
(i) Except as provided herein or otherwise required by law, the Series A Holder will not have any voting rights.
For so long as EMG beneficially owns at least ten percent (10%) of the outstanding shares of Common Stock, in the event that the Series A Holder delivers written notice to the Secretary of the Corporation of its decision thereof, the Series A Holder, voting as a separate class to the exclusion of all other series or classes of capital stock, shall be entitled to nominate and elect directors (each, a Series A Director ) in accordance with the thresholds set forth in Section 4.3(d)(ii). Upon delivery of such written notice (such event, a Series A Triggering Event ), the then-current directors shall be considered At-Large Directors and the number of directors then constituting the board of directors of the Corporation shall be automatically increased (with the new director positions created by such increase representing Series A Directors) such that the ratio of the number of Series A Directors to the Total Number of Directors following such increase is equivalent to the percentage of Series A Directors that the Series A Holder has the right to appoint pursuant to Section 4.3(d)(ii). Upon a Series A Triggering Event, such Series A Director(s) shall be initially elected by written consent of the Series A Holder and delivered to the Secretary of the Corporation, or as may otherwise be required or permitted by applicable law. In the event of a Series A Triggering Event, the Series A Holder, voting as a separate class and to the exclusion of all other series or classes of capital stock, shall have the sole and exclusive right to vote on the election of any Series A Director.
(ii) Board Representation. In the event of a Series A Triggering Event:
(A) subject to Section 4.3(d)(ii)(F), so long as EMG beneficially owns, in the aggregate, at least fifty percent (50%) of the outstanding shares of Common Stock, the Series A Holder shall have the right to nominate and elect a number of Series A Directors equal to a majority of the Total Number of Directors.
(B) subject to Section 4.3(d)(ii)(F), so long as EMG beneficially owns, in the aggregate, forty percent (40%) or more, but less than fifty percent (50%), of the outstanding shares of Common Stock, the Series A Holder shall have the right to nominate and elect a number of Series A Directors representing forty percent (40%) of the Total Number of Directors.
(C) subject to Section 4.3(d)(ii)(F), so long as EMG beneficially owns, in the aggregate, thirty percent (30%) or more, but less than forty percent (40%), of the outstanding shares of Common Stock, the Series A Holder shall have the right to nominate and elect a number of Series A Directors representing thirty percent (30%) of the Total Number of Directors.
(D) subject to Section 4.3(d)(ii)(F), so long as EMG beneficially owns, in the aggregate, twenty percent (20%) or more, but less than thirty percent (30%), of the outstanding shares of Common Stock, the Series A Holder shall have the
right to nominate and elect a number of Series A Directors representing twenty percent (20%) of the Total Number of Directors.
(E) subject to Section 4.3(d)(ii)(F), so long as EMG beneficially owns, in the aggregate, ten percent (10%) or more, but less than twenty percent (20%), of the outstanding shares of Common Stock, the Series A Holder shall have the right to nominate and elect a number of Series A Directors representing ten percent (10%) of the Total Number of Directors.
(F) The number of Series A Directors which the Series A Holder shall be entitled to nominate and elect shall not be reduced unless and until the number of shares of the outstanding shares of Common Stock beneficially owned by EMG shall be less than the applicable threshold set forth in Sections 4.3(d)(ii)(A) through (E) above for a period of thirty (30) consecutive days. After any such reduction, the number of Series A Directors that the Series A Holder shall be entitled to nominate and elect shall not be increased regardless of any subsequent increase in the percentage of outstanding Common Stock beneficially owned by EMG.
(G) For purposes of calculating the number of Series A Directors that the Series A Holder is entitled to nominate and elect pursuant to this Section 4.3(d), any fractional number of Series A Directors shall be rounded up to the nearest whole number of Series A Directors ( e.g ., if the applicable percentage of the Total Number of Directors entitled to be nominated and elected by the Series A Holder would otherwise result in one and one quarter (1¼) Series A Directors, the Series A Holder shall be entitled to nominate and elect two (2) Series A Directors), and any such calculations shall be made after taking into account any increase in the Total Number of Directors.
(H) The Corporation shall notify the Series A Holder promptly, and in any event within five (5) Business Days, of any issuance of Common Stock representing, individually or together with all issuances of Common Stock since the date of the filing of this Amended & Restated Certificate of Incorporation with the Secretary of State of the State of Delaware or the date of any previous such notice, as applicable, one percent (1%) or more of the outstanding shares of Common Stock as of the date of such filing or such previous notice.
(I) The Series A Holder will notify the Corporation promptly, and in any event within five (5) Business Days, of any action by the Series A Holder or EMG that results in a reduction in the number of shares of Common Stock that are beneficially owned by EMG representing, individually or together with all such reductions since the date of the filing of this Amended & Restated Certificate of Incorporation with the Secretary of State of the State of Delaware or the date of any previous such notice, as applicable, one percent (1%) or more of the outstanding shares of Common Stock as of the date of such filing or such previous notice, which notice will set forth the number of shares of Common Stock beneficially owned by EMG immediately following the occurrence of such reduction; provided , that for purposes of this provision, in determining the shares of Common Stock outstanding, the Series A Holder and/or EMG may rely upon the Corporations most recent annual or periodic report made available to stockholders pursuant to applicable securities laws, or any update thereof, or any notice provided by the Corporation pursuant to Section 4.3(d)(ii)(H). In the event that the number of directors that the Series A Holder is entitled to nominate and elect to the board of directors is reduced pursuant to this Section 4.3(d), the Series A Holder shall promptly cause one (1) or more of the Series A Directors to immediately resign, such that the number of remaining Series A Directors serving on the board of directors shall equal the percentage of
the Total Number of Directors that Series A Holder is then entitled to nominate and elect pursuant to this Section 4.3(d)(ii).
(iii) Term; Replacement of Directors.
(A) Each Series A Director shall hold office until the next annual meeting of the stockholders and his or her successor is elected and qualified (including through action by the Series A Holder pursuant to Section 4.3(i)), or until his or her earlier death, resignation or removal. Any Series A Director may be removed with or without cause, (x) at any time, by the Series A Holder, voting as a separate class to the exclusion of all other series or classes of capital stock, or (y) at any time, but only for so long as the Corporation is listed on the Australian Securities Exchange, by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote at an election of directors.
(B) In the event a Series A Director is no longer serving on the board of directors for any reason, including death, resignation or removal, other than any vacancy created as a result of resignation due to a reduction in the number of Series A Directors that the Series A Holder is entitled to elect pursuant to Section 4.3(d)(ii), then the Series A Holder shall have the sole and exclusive right to fill any such vacancy so long as the Series A Share remains outstanding, and such vacancy may not be filled by any other person or persons. Any director elected by the Series A Holder to fill a vacancy pursuant to this Section 4.3(d)(iii)(B) to succeed a Series A Director shall be considered a Series A Director. Notwithstanding the foregoing, to the extent that any individual has been removed from office as a Series A Director by a vote of the holders of Common Stock pursuant to Section 4.3(d)(iii)(A), such individual may not be elected as a Series A Director for at least twelve (12) months following the date of such removal.
(C) Vacancies created as a result of a resignation due to a reduction in the number of Series A Directors that the Series A Holder is entitled to elect pursuant to Section 4.3(d)(ii) shall be filled by the remaining members of the board of directors in accordance with Section 5.4 of this Amended & Restated Certificate of Incorporation.
(D) In the event that there is an increase in the Total Number of Directors subsequent to a Series A Triggering Event, the number of Series A Directors shall be automatically increased such that the ratio of the number of Series A Directors to the Total Number of Directors following such authorized increase is equivalent to the percentage of Series A Directors that the Series A Holder has the right to appoint pursuant to Section 4.3(d)(ii) hereof, and the Series A Holder shall have the right to elect such additional Series A Directors.
(iv) Approval Rights . In addition to any other vote required by law, the affirmative vote of the Series A Holder, voting separately as a class, given in person or by proxy, shall be necessary to authorize, approve or effect the amendment, alteration or repeal (whether by merger, consolidation or otherwise) of any of the provisions of the Amended & Restated Certificate of Incorporation in a manner that would adversely affect the powers, designations, preferences and other special rights of the Series A Preferred Stock.
(e) Liquidation Rights .
(i) Upon the dissolution, liquidation or winding up of the Corporation, each Series A Share shall be entitled to receive and to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment or distribution shall be made on the
Common Stock or on any other class of stock ranking junior to the Preferred Stock upon liquidation, the amount of one dollar (U.S. $1.00), and no more.
(ii) Neither the sale of all or substantially all of the assets or capital stock of the Corporation nor the merger or consolidation of the Corporation into or with any other entity, or the merger or consolidation of any other entity into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 4.3(e).
(iii) After the payment to each Series A Share of the full preferential amount provided for in this Section 4.3(e), the Series A Share shall have no right or claim to any of the remaining assets of the Corporation.
(f) Dividends . The Series A Preferred Stock shall not accrue any dividends.
(g) Ranking . Except as otherwise provided herein, for purposes of this Amended & Restated Certificate of Incorporation, any stock of any class, classes or series of the Corporation shall be deemed to rank prior to the Series A Preferred Stock upon liquidation, dissolution or winding up.
(h) Retirement . If the Series A Share is purchased, exchanged or otherwise acquired by the Corporation in any manner whatsoever, then such shares shall be retired and any certificates representing such shares shall be promptly cancelled. Upon the retirement or cancellation of the Series A Share, such share shall not for any reason be reissued as a share of Series A Preferred Stock.
(i) Series A Action by Written Consent . Notwithstanding anything to the contrary herein, any action required or permitted to be taken by the Series A Holder pursuant to Section 4.3, voting separately as a series or separately as a class with one or more other series of preferred stock, 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 the Series A Holder and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporations registered office shall be made by hand, by overnight courier or by certified or registered mail, return receipt requested.
(j) Transfers . As of the date of this Certificate of Incorporation, the Series A Holder is Coronado Group LLC, a Delaware limited liability company. The Series A Share may not be sold, transferred, assigned or otherwise disposed of by the Series A Holder except to EMG. Any attempted sale, transfer, assignment or other disposition in violation of this provision shall be void.
(k) Amendment of this Section 4.3 . Any amendment, modification or repeal of any provision of this Section 4.3 to increase or decrease in any manner or amount the powers, designations, preferences or other rights of the Series A Preferred Stock shall require (in addition to any vote required by law) the approval of both (i) a majority of the Series A Directors (if any) and a majority of the At-Large Directors (or, if no Series A Directors have been appointed, by the board of directors) and (ii) the Series A Holder.
(l) Definitions . Solely for purposes of this Section 4.3, the following terms shall have the meaning set forth in this Section 4.3(l). Capitalized terms not defined in this Section 4.3(l) shall have the meanings assigned to them elsewhere in this Amended & Restated Certificate of Incorporation.
(i) Affiliate means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or under common control with such Person. For purposes of this definition, control (including the terms controlling , controlled and under common control with ) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise; provided , that possession of ten percent (10%) of the voting securities of any Person shall be deemed to constitute control for purposes of this definition.
(ii) At-Large Directors means the directors filling the remaining seats on the board of directors other than the seats held by any Series A Directors.
(iii) Business Day means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.
(iv) Total Number of Directors means the total number of directors comprising the board of directors.
ARTICLE V
BOARD OF DIRECTORS
Section 5.1 Powers of the Board of Directors . The business and affairs of the Corporation shall be managed by or under the direction of the board of directors. In addition to the powers and authority expressly conferred upon them by applicable law or by this Amended & Restated Certificate of Incorporation or the bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
Section 5.2 Number of Directors . Subject to the rights of any series of Preferred Stock with respect to the election of directors, including the rights of the Series A Holder pursuant to Section 4.3, the total number of authorized directors constituting the board of directors shall be fixed from time to time exclusively by the board of directors pursuant to a resolution adopted by a majority of the directors then in office.
Section 5.3 Term of Directors . Except as may be provided in Section 4.3 (with respect to the Series A Preferred Stock) or in a resolution or resolutions of the board of directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, each director who is serving as a director on the date of this Amended & Restated Certificate of Incorporation shall hold office until the next annual meeting of stockholders after such date and until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal. At each annual meeting of stockholders after the date of this Amended & Restated Certificate of Incorporation, directors elected at such annual meeting shall hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified or until his or her earlier death, resignation or removal.
Section 5.4 Removal; Vacancies . Except as may be provided in Section 4.3 (with respect to the Series A Preferred Stock) or in a resolution or resolutions of the board of directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, and except as otherwise required by applicable law, any director may be removed from office at any time with or without cause by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote at an election of directors.
Except as may be provided in Section 4.3 (with respect to the Series A Preferred Stock) or in a resolution or resolutions of the board of directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, vacancies occurring on the board of directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the board of directors, although less than a quorum, or by a sole remaining director, at any meeting of the board of directors. A person so elected by the board of directors to fill a vacancy or newly created directorship shall hold office until the end of his or her predecessors term and until such directors successor is elected and qualified, or until such directors earlier death, resignation or removal.
Section 5.5 Bylaws . The board of directors is expressly authorized to make, alter or repeal the bylaws of the Corporation. Notwithstanding the foregoing, the bylaws of the Corporation may be rescinded, altered, amended or repealed in any respect by the affirmative vote of the holders of (a) a majority of the voting power of all of the then-
outstanding shares of capital stock of the Corporation entitled to vote generally for the election of directors other than Series A Directors ( Voting Stock ) while EMG beneficially owns shares of capital stock of the Corporation representing at least a majority of the voting power of all Voting Stock and (b) at least two-thirds of the voting power of the Voting Stock from and after the time that EMG beneficially owns shares of capital stock of the Corporation representing less than a majority of the voting power of all Voting Stock.
Section 5.6 Elections of Directors . Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the Corporation.
ARTICLE VI
DIRECTORS
Section 6.1 Director Liability . A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as currently in effect or as the same may hereafter be amended. No amendment, modification or repeal of this Section 6.1, or the adoption of any provision of this Amended & Restated Certificate of Incorporation inconsistent with this Section 6.1, shall adversely affect any right or protection of a director that exists at the time of such amendment, modification, repeal or adoption.
Section 6.2 Indemnification . To the fullest extent permitted by the General Corporation Law of the State of Delaware, the Corporation is authorized to provide indemnification of (and advancement of expenses to) the Corporations directors, officers and agents (and any other persons to which the General Corporation Law of the State of Delaware permits the Corporation to provide indemnification) through the Corporations bylaws, agreements with such persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law of the State of Delaware, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the Corporation, its stockholders and others, and by any applicable federal, state or foreign laws or regulations. The rights to indemnification and to the advancement of expenses conferred in this Section 6.2 shall not be exclusive of any other right which any such person may have or may hereafter acquire under this Amended & Restated Certificate of Incorporation, the Corporations bylaws, any statute, agreement, insurance policy, vote of stockholders or disinterested directors or otherwise. No amendment, modification or repeal of this Section 6.2 shall adversely affect any right or protection of a director, officer, agent or other person existing at the time of, or increase the liability of any person with respect to any acts or omissions of such person occurring prior to, such amendment, repeal or modification.
ARTICLE VII
STOCKHOLDER ACTION BY WRITTEN CONSENT
While EMG beneficially owns shares of capital stock of the Corporation representing at least a majority of the voting power of all Voting Stock, subject to the listing rules of the Australian Securities Exchange in effect from time to time for so long as the Corporation is listed on the Australian Securities Exchange, action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation 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 the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporations registered office shall be made by hand, by overnight courier or by certified or registered mail, return receipt requested. At any time when EMG beneficially owns less than a majority of the voting power of all Voting Stock (or at such time while EMG beneficially owns shares of capital stock of the Corporation representing at least a majority of the voting power of all Voting Stock but the listing rules of the Australian Securities Exchange in effect at such time do not permit action by written consent on the particular action and the Corporation is listed on the Australian Securities Exchange), any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such
holders; provided , however , that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by Section 4.3, if applicable, or by the applicable certificate of designation relating to such series of Preferred Stock.
ARTICLE VIII
AMENDMENTS
Notwithstanding any other provisions of this Amended & Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Voting Stock required by law or by the bylaws of the Corporation or by this Amended & Restated Certificate of Incorporation (or by any certificate of designation hereto), any alteration, amendment or repeal of Articles V, VI, VIII, IX or X of this Amended & Restated Certificate of Incorporation shall require the affirmative vote of (a) a majority of the voting power of the Voting Stock while EMO beneficially owns shares of capital stock of the Corporation representing at least a majority of the voting power of an Voting Stock and (b) at least two-thirds of the voting power of the Voting Stock from and after the time that EMG beneficially owns shares of capital stock representing less than a majority of the voting power of all Voting Stock.
The Corporation reserves the right to amend, alter, change, or repeal any provision contained in this Amended & Restated Certificate of Incorporation but only in the manner now or hereafter prescribed in this Amended & Restated Certificate of Incorporation, the Corporations bylaws or the General Corporation Law of the State of Delaware, and all rights herein conferred upon stockholders are granted subject to such reservation.
ARTICLE IX
CORPORATE OPPORTUNITIES
The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and the same are in furtherance of and not in limitation of the powers conferred by law:
Section 9.1 Related Party Transactions . No contract or other transaction of the Corporation with any other person, firm, corporation or other entity in which the Corporation has an interest, shall be affected or invalidated by the fact that any one or more of the directors or officers of the Corporation, individually or jointly with others, may be a party to or may be interested in any contract or transaction so long as the contract or other transaction is approved by the board of directors in accordance with the General Corporation Law of the State of Delaware. Each person who may become a director or officer of the Corporation is hereby relieved from any liability that might otherwise arise by reason of his or her contracting with the Corporation for the benefit of himself or herself or any firm or corporation in which he or she may be in any way interested.
Section 9.2 Corporate Opportunities .
(a) In recognition and anticipation that (i) certain directors, principals, officers, employees and/or other representatives of EMG and its respective Affiliates (as defined in Section 9.2(e)) may serve as directors or officers of the Corporation, (ii) EMG and its respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) members of the board of directors who are not employees of the Corporation ( Non-Employee Directors ) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Section 9.2 are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve EMG, the Non-Employee Directors or their respective Affiliates and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith.
(b) None of (i) EMG or any of its Affiliates or (ii) any Non-Employee Director or his or her Affiliates (the Persons (as defined below) identified in (i) and (ii) above being referred to, collectively, as Identified Persons and, individually, as an Identified Person ; provided , however , that no employee, consultant or officer of the Corporation shall be an Identified Person) shall, to the fullest extent permitted by law, have any duty to refrain from directly or indirectly (x) engaging in a corporate opportunity in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage, (y) making investments in any kind of property in which the Corporation may make investments or (z) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by the General Corporation Law of the State of Delaware, no Identified Person shall (A) be deemed to have acted in bad faith or in a manner inconsistent with the best interests of the Corporation or its stockholders or to have acted in a manner inconsistent with or opposed to any fiduciary duty to the Corporation or its stockholders or (B) be liable to the Corporation or its stockholders for breach of any fiduciary duty, in each case, by reason of the fact that such Identified Person engages in any such activities. The Corporation hereby renounces any interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in paragraph (c) of this Section 9.2. Subject to Section 9.2(c), in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by the General Corporation Law of the State of Delaware, shall not (A) be deemed to have acted in bad faith or in a manner inconsistent with the best interests of the Corporation or its stockholders or to have acted in a manner inconsistent with or opposed to any fiduciary duty to the Corporation or its stockholders or (B) be liable to the Corporation or its stockholders for breach of any fiduciary duty as a stockholder, director or officer of the Corporation, in each case, by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person.
(c) The Corporation does not renounce its interest in any corporate opportunity offered to any Non- Employee Director (including any Non-Employee Director who serves as an officer of this Corporation) if such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Corporation and the provisions of Section 9.2(b) shall not apply to any such corporate opportunity.
(d) In addition to and notwithstanding the foregoing provisions of this Section 9.2, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporations business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.
(e) For purposes of this Section 9.2, Affiliate shall mean (x) in respect of EMG, any Person that, directly or indirectly, is controlled by, controls or is under common control with EMG and shall include any principal, member, director, partner, shareholder, officer, employee or other representative of any of the foregoing (other than the Corporation and any entity that is controlled by the Corporation), (y) in respect of a Non-Employee Director, any Person that, directly or indirectly, is controlled by such Non- Employee Director (other than the Corporation and any entity that is controlled by the Corporation) and (z) in respect of the Corporation, any Person that, directly or indirectly, is controlled by the Corporation.
(f) To the fullest extent permitted by law, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Section 9.2.
ARTICLE X
SECTION 203
The Corporation shall not be governed by Section 203 of the General Corporation Law of the State of Delaware (or any successor provision thereto) ( Section 203 ), and the restrictions contained in Section 203 shall not apply to the
Corporation, until immediately following the time at which both of the following conditions exist (if ever): (a) Section 203 by its terms would, but for the provisions of this Article X, apply to the Corporation; and (b) EMG does not beneficially own shares of capital stock of the Corporation representing at least ten percent (10%) of the voting power of all the Voting Stock, in which case the Corporation shall thereafter be governed by Section 203 if and for so long as Section 203 by its terms would apply to the Corporation.
IN WITNESS WHEREOF, Coronado Global Resources Inc., has caused this certificate to be signed by Richard Rose, its Secretary, this 18th day of October, 2018.
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/s/ Richard Rose |
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Name: |
Richard Rose |
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Title: |
Secretary |
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AMENDED AND RESTATED BY-LAWS
OF
CORONADO GLOBAL RESOURCES INC.
September 20, 2018
ARTICLE I
Stockholders
Section 1.1. Annual Meetings . An annual meeting of stockholders shall be held for the election of directors and for the transaction of such other business as may properly come before the meeting, at such date and time as may be designated by the Board of Directors of Coronado Global Resources Inc. (the Corporation ) from time to time.
Section 1.2. Special Meetings .
(a) Special meetings of stockholders may be called at any time by the Board of Directors, the Chairperson of the Board of Directors or the Chief Executive Officer, to be held at such date and time as may be stated in the notice of the meeting. A special meeting of stockholders shall be held solely for the purposes specified in the notice of the meeting.
(b) A special meeting of stockholders shall be called by the Secretary of the Corporation (the Secretary ) if the Secretary receives a valid request or requests for a special meeting of stockholders from the record holder(s) of shares representing (x) with respect to the removal of any director (as defined in the Amended & Restated Certificate of Incorporation of the Corporation (the Certificate of Incorporation )), for so long as the Corporation is listed on the Australian Securities Exchange, more than five percent (5%) or (y) for any other matter, more than fifty percent (50%) (the Requisite Percentage ) of the combined voting power of the then-outstanding shares of all classes and series of the Corporations capital stock entitled to vote on the matter or matters proposed to be voted on at such proposed special meeting. To be valid, the request or requests must (a) be written; (b) be delivered to the Secretary at the Corporations principal executive office; (c) include (i) the specific purpose(s) of the special meeting, and the text of the matter(s) proposed to be voted on at the special meeting (including the text of any resolutions to be proposed for consideration by stockholders) and for matters other than the election of directors, a brief written statement of the reasons why such stockholders favor the proposal, (ii) with respect to the stockholders requesting the special meeting and the beneficial owners of such shares, if any, at whose direction such request is being made, the information required to be included in the Stockholder Notice in Section 1.11(b) of these by-laws, (iii) the name and address, as they appear on the Corporations books, of each stockholder of record signing such request (or on whose behalf such request is signed) and of the beneficial owner, if any, on whose behalf such request is made and (iv) an agreement by the requesting stockholder(s) to notify the Corporation immediately in the case of any disposition prior to the Notice Record Date (as defined below) for the special meeting requested by stockholders of shares of common stock of the Corporation owned of record and an acknowledgement that any such disposition shall be deemed a revocation of such written request to the extent of such disposition, such that the number of shares disposed of shall not be included in determining whether the Requisite Percentage has been reached; and (d) be signed and dated by the record holder(s). If signed by an authorized agent, such request shall not be valid unless documentary evidence is supplied to the Secretary at the time of delivery of such request (or within ten business days thereafter) of such signatorys authority to execute the request on behalf of the record holder. The first date on which unrevoked valid requests constituting not less than the Requisite Percentage shall have been delivered to the Corporation is referred to herein as the Delivery Date . In determining whether a special meeting has been requested by the record holders of shares representing in the aggregate at least the Requisite Percentage, multiple requests delivered to the Secretary will be considered together only if each such request (i) identifies substantially the same purpose or purposes of the special meeting and substantially the same matters proposed to be acted on at the special meeting (in each case as determined in good faith by the Board of Directors), and (ii) has been dated and delivered to the Secretary within sixty (60) days of the earliest dated of such requests. Any stockholder who submitted a written request for a special meeting may revoke that written request at any time by delivering a written revocation to the Secretary at the Corporations principal executive office and if, following such revocation, there
are unrevoked requests from stockholders holding less than the Requisite Percentage, the Board of Directors, in its discretion, may cancel the special meeting. In addition, if none of the stockholders who submitted a request appears or sends a qualified representative to the special meeting to present such matter(s) to be voted on at the special meeting, the Board of Directors need not present such matter(s) for a vote at such meeting.
The Corporation is not required to call a special meeting pursuant to this Section 1.2(b) with respect to any matter if (i) an identical or substantially similar matter was included on the agenda of any annual or special meeting of stockholders held within sixty (60) days prior to the Delivery Date or will be included on the agenda at an annual or special meeting of stockholders to be held within ninety (90) days after the Delivery Date (for purposes of this clause (i), the election or removal of directors shall be considered an identical or substantially similar matter with respect to all matters involving election or removal of directors), (ii) the purpose of the special meeting is not a proper matter for stockholder action or is unlawful, or (iii) the written request for a special meeting violated applicable law(s) or was not made in accordance with these by-laws.
The business conducted at the special meeting of stockholders called in accordance with this Section 1.2(b) shall be limited to the business set forth in the notice of the special meeting; provided that the Board of Directors may submit additional matters to the stockholders at the special meeting by including those matters in the notice of the special meeting of stockholders.
(c) The chairperson of a special meeting shall determine all matters relating to the conduct of the meeting, including, but not limited to, determining whether any nomination or other item of business has been properly brought before the meeting in accordance with these by-laws, and if the chairperson should so determine and declare that any nomination or other item of business has not been properly brought before the special meeting, then such business shall not be transacted at such meeting.
Section 1.3. Place of Meetings; Notice of Meetings .
(a) All meetings of the stockholders shall be held at such places as from time to time may be fixed by the Board of Directors, either within or without the State of Delaware. In addition to or instead of holding a meeting at a physical location, the Board of Directors may, in its sole discretion, determine that any meeting of stockholders shall be held solely by means of remote communications.
(b) Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting (the Voting Record Date ), if such date is different from the record date for determining stockholders entitled to notice of the meeting (the Notice Record Date ), and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the Notice Record Date for 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 stockholders address as it appears on the records of the Corporation. In addition, if stockholders have consented to receive notices by a form of electronic transmission, then such notice, by facsimile telecommunication, or by electronic mail, shall be deemed to be given when directed to a number or an electronic mail address, respectively, at which the stockholder has consented to receive notice. If such notice is transmitted by a posting on an electronic network together with separate notice to the stockholder of such specific posting, such notice shall be deemed to be given upon the later of (i) such posting, and (ii) the giving of such separate notice. If such notice is transmitted by any other form of electronic transmission, such notice shall be deemed to be given when directed to the stockholder. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the householding rules set forth in Section 233 of the General Corporation Law of the State of Delaware (the DGCL ) and the rules of the Securities and Exchange Commission (the SEC ) under the Securities Exchange Act of 1934 (the Exchange Act ), if applicable. For purposes of these by-laws, electronic transmission means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form through an automated process.
An affidavit of the mailing or other means of giving any notice of any stockholders meeting, executed by the Secretary, any Assistant Secretary of the Corporation (the Assistant Secretary ) or any transfer agent or mailing agent of the Corporation giving the notice, will be prima facie evidence of the giving of such notice.
Section 1.4. Adjournments and Postponements . Any meeting of stockholders, annual or special, may be adjourned from time to time, by the chairperson of the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, 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 (30) days, or if after the adjournment a new Notice 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. In addition, any meeting of stockholders, annual or special, may be postponed by the Board of Directors at any time before such meeting has been convened, and such postponement shall be considered a cancellation of the originally noticed meeting. Notice of the postponed meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum . At each meeting of stockholders, except where otherwise provided by law or Certificate of Incorporation or these by-laws, the holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum. In the absence of a quorum of the holders of any class of stock entitled to vote on a matter, either (i) the holders of such class so present or represented may, by majority vote, adjourn the meeting of such class from time to time in the manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present or represented or (ii) the chairperson of the meeting may on his or her own motion adjourn the meeting from time to time in the manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present and represented without the approval of the stockholders who are present in person or represented by proxy and entitled to vote, without notice other than announcement at the meeting. Shares of its own capital stock belonging on the Voting Record Date for the meeting to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided , however , that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. If a quorum is initially present at a meeting of stockholders, the stockholders may continue to transact business until adjournment of such meeting, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Section 1.6. Organization . Meetings of stockholders shall be presided over by the Chairperson of the Board of Directors, if any, or in the absence of the Chairperson by the Chief Executive Officer, or in the absence of the foregoing persons by a chairperson designated by the Board of Directors, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairperson of the meeting may appoint any person to act as secretary of the meeting.
The order of business at each such meeting shall be as determined by the chairperson of the meeting. The chairperson of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls, for each item on which a vote is to be taken.
Section 1.7. Inspectors . Prior to any meeting of stockholders, the Board of Directors or the Chief Executive Officer shall appoint one or more inspectors to act at such meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the 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 his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and
certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxy or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a stockholder who submits a proxy by electronic transmission from which it can be determined that the proxy was authorized by the stockholder, any written ballot or, if authorized by the Board of Directors, a ballot submitted by electronic transmission together with any information from which it can be determined that the electronic transmission was authorized by the stockholder, any information provided in a record of a vote if such vote was taken at the meeting by means of remote communication along with any information used to verify that any person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder, ballots and the regular books and records of the Corporation, and they may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors belief that such information is accurate and reliable.
Section 1.8. Voting; Proxies . Unless otherwise provided in the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or, in the case of a series of preferred stock that expressly so provides, to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such 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 if it 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, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or represented by proxy at such meeting shall so determine.
Each director shall be elected by a plurality of the votes cast at any meeting for the election of directors at which a quorum is present. In all other matters, unless otherwise provided by law, the Certificate of Incorporation or these by-laws the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Where a separate vote by class or classes is required, the affirmative vote of the holders of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class or classes, except as otherwise provided by law or by the Certificate of Incorporation or these by-laws. For purposes of this Section 1.8, votes cast for or against and abstentions with respect to such matter shall be counted as shares of stock of the Corporation entitled to vote on such matter, while broker non-votes (or other shares of stock of the Corporation similarly not entitled to vote) shall not be counted as shares entitled to vote on such matter.
Section 1.9. Fixing Date for Determination of Stockholders of Record . In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a Notice Record Date, which Notice Record Date 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 not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the Voting Record Date unless the Board of Directors determines, at the time it fixes such Notice Record Date, that a later date on or before the date of the meeting shall be the date for making the determination of the Voting Record Date. If no record date is fixed by the Board of Directors, the Notice Record Date and the Voting Record Date 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. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board of Directors may fix a new Voting Record Date for the adjourned meeting, and in such case shall also fix the Notice Record Date for such adjourned meeting at the same or an earlier date as the Voting Record Date.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled 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 upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 1.10. List of Stockholders Entitled to Vote . The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided , however , if the Voting Record Date for such meeting is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth (10 th ) day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing in this Section 1.10 shall require the Corporation to include electronic mail addresses or other electronic content information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
Section 1.11. Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals . (a) The matters to be considered and brought before any annual or special meeting of stockholders of the Corporation shall be limited to only such matters, including the nomination and election of directors, as shall be brought properly before such meeting in compliance with the procedures set forth in this Section 1.11 and Section 1.2(b), if applicable.
(b) For any matter to be brought properly before the annual meeting of stockholders, the matter must be (i) specified in the notice of the annual meeting given by or at the direction of the Board of Directors; (ii) otherwise brought before the annual meeting by or at the direction of the Board of Directors; (iii) brought before the annual meeting by or at the direction of Coronado Group LLC, a Delaware limited liability company, EMG CC HC, LLC, a Delaware limited liability company, EMG Coronado II HC, LLC, a Delaware limited liability company, EMG Coronado Strategic, LP, a Delaware limited partnership, EMG Coronado IV Holdings, LLC, a Delaware limited liability company, or any of their respective successors or Permitted Assigns (collectively, EMG ) for so long as EMG beneficially owns (used herein as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act) shares of capital stock of the Corporation representing at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote for the election of At-Large Directors (as such term is defined in Section 4.3(l)(ii) of the Certificate of Incorporation) (the Voting Stock ) (so long as the Person bringing such matter or at whose direction such matter is brought is a beneficial owner of at least one share of capital stock of the Corporation); or (iv) brought before the annual meeting by a stockholder who is a stockholder of record of the Corporation on the date the notice provided for in this Section 1.11 is delivered to the Secretary of the Corporation, who is entitled to vote at the annual meeting and who complies with the procedures set forth in this Section 1.11. In addition to any other requirements under applicable law and the Certificate of Incorporation and these by-laws, written notice (the Stockholder Notice ) of any nomination or other proposal must be timely and any proposal, other than a nomination, must constitute a proper matter for stockholder action. To be timely, the Stockholder
Notice must be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not less than ninety (90) nor more than one hundred and twenty (120) days prior to the first anniversary date of the annual meeting for the preceding year; provided , however , that if (and only if) no annual meeting was held in the previous year or the date of the annual meeting is not scheduled to be held within a period that commences thirty (30) days before such anniversary date and ends thirty (30) days after such anniversary date (an annual meeting date outside such period being referred to herein as an Other Meeting Date ), the Stockholder Notice shall be given in the manner provided herein by the later of the close of business on (i) the date ninety (90) days prior to such Other Meeting Date or (ii) the tenth (10 th ) day following the date such Other Meeting Date is first publicly announced or disclosed. A Stockholder Notice must contain the following information: (i) whether the stockholder is providing the notice at the request of a beneficial holder of shares, whether the stockholder, any such beneficial holder or any nominee has any agreement, arrangement or understanding with (including without limitation any agreement, arrangement or understanding that would be required to be disclosed pursuant to Item 5 or Item 6 of the Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner)), or has received any financial assistance, funding or other consideration from, any other person with respect to the investment by the stockholder or such beneficial holder in the Corporation or the matter the Stockholder Notice relates to, and the details thereof, including the name of such other person (the stockholder, any beneficial holder on whose behalf the notice is being delivered, any nominees listed in the notice and any persons with whom such agreement, arrangement or understanding exists or from whom such assistance has been obtained are hereinafter collectively referred to as Interested Persons ); (ii) the name and address of all Interested Persons; (iii) a complete listing of the record and beneficial ownership positions (including number or amount) of all equity securities and debt instruments, whether held in the form of loans or capital market instruments, of the Corporation or any of its subsidiaries held by all Interested Persons; (iv) whether and the extent to which any hedging, derivative or other transaction is in place or has been entered into within the prior six (6) months preceding the date of delivery of the Stockholder Notice by or for the benefit of any Interested Person with respect to the Corporation or its subsidiaries or any of their respective securities, debt instruments or credit ratings, the effect or intent of which transaction is to give rise to gain or loss as a result of changes in the trading price of such securities or debt instruments or changes in the credit ratings for the Corporation, its subsidiaries or any of their respective securities or debt instruments (or, more generally, changes in the perceived creditworthiness of the Corporation or its subsidiaries), or to increase or decrease the voting power of such Interested Person, and if so, a summary of the material terms thereof; and (v) a representation that the stockholder is a holder of record of stock of the Corporation that would be entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose the matter set forth in the Stockholder Notice. As used herein, beneficially owned has the meaning provided in Rules 13d-3 and 13d-5 under the Exchange Act. Any Stockholder Notice with respect to a matter other than the nomination of directors must contain (i) the text of the proposal to be presented, including the text of any resolutions to be proposed for consideration by stockholders and (ii) a brief written statement of the reasons why such stockholder favors the proposal. Any Stockholder Notice relating to the nomination of directors must also contain (i) the information regarding each nominee required by any other information required to be included by applicable stock exchange rules. The Corporation may also require any proposed nominee to furnish such other information, including completion of the Corporations directors questionnaire, as it may reasonably require to determine whether the nominee would be considered independent as a director or as a member of the audit and risk committee of the Board of Directors under the various rules and standards applicable to the Corporation. The Stockholder Notice shall be updated not later than ten (10) days after the Voting Record Date to provide any material changes in the foregoing information as of the record date. As used herein, Permitted Assigns means any Affiliate of the entities included in the definition of EMG (other than the Corporation and any entity that is controlled by the Corporation), including for the avoidance of doubt any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity (each, a Person ).
Notwithstanding anything in this Section 1.11(b) to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased (other than to permit the election of any Series A Directors (as defined in the Certificate of Incorporation)) and either all of the nominees for director or the size of the increased Board of Directors is not publicly announced or disclosed by the Corporation at least one hundred (100) days prior to the first anniversary of the preceding years annual meeting, a Stockholder Notice shall also be considered timely hereunder, 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 the principal executive office of the Corporation not later than the close of business on the tenth (10 th ) day following the first date all of such nominees or the size of the increased Board of Directors shall have been publicly announced or disclosed.
(c) For any matter to be brought properly before a special meeting of stockholders, the matter must be set forth in the Corporations notice of the meeting given by or at the direction of the Board of Directors or by the Secretary pursuant to Section 1.2 of these by-laws. In the event that the Corporation calls a special meeting of stockholders for the purpose of electing one or more persons to the Board of Directors, subject to the provisions of Section 4.3 of the Certificate of Incorporation, any stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporations notice of the meeting, if the Stockholder Notice required by Section 1.11(b) hereof shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not later than the close of business on the tenth (10 th ) day following the day on which (i) the date of the special meeting and (ii) either the names of all nominees proposed by the Board of Directors or the number of directors to be elected at such meeting is publicly announced or disclosed.
(d) For purposes of this Section 1.11, a matter shall be deemed to have been publicly announced or disclosed if such matter is disclosed in an announcement given by the Australian Securities Exchange (so long as CHESS Depositary Interests representing interests in the common stock of the Corporation are listed on the Australian Securities Exchange), if any, and in one or more press releases reported by any of GlobeNewswire, the Dow Jones News Service, the Associated Press or a comparable national news service.
(e) Subject to the provisions of Section 4.3 of the Certificate of Incorporation, only persons who are nominated in accordance with the procedures set forth in this Section 1.11, or pursuant to Section 1.2(b) of these by-laws, shall be eligible for election as directors of the Corporation. In no event shall the postponement or adjournment of an annual meeting already publicly noticed, or any announcement of such postponement or adjournment, commence a new period (or extend any time period) for the giving of notice as provided in this Section 1.11.
(f) The chairperson of the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power and duty to determine whether notice of nominees and other matters proposed to be brought before a meeting has been duly given in the manner provided in this Section 1.11 and, if not so given, shall direct and declare at the meeting that such nominees and other matters are not properly before the meeting and shall not be considered. Notwithstanding the foregoing provisions of this Section 1.11, if the stockholder or a qualified representative of the stockholder does not appear at the annual or special meeting of stockholders of the Corporation to present any such nomination, or make any such proposal, such nomination or proposal shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.11 and for Section 1.2(b), to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager, or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation at the meeting by the stockholder stating that the person is authorized to act for the stockholder as proxy at the meeting of stockholders.
(g) Notwithstanding anything to the contrary contained in this Section 1.11, EMG shall not be subject to the notice procedures set forth in this Section 1.11 with respect to any annual or special meeting of stockholders.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the Certificate of Incorporation. Subject to the provisions of Section 4.3 of the Certificate of Incorporation, the Board of Directors shall consist of one or more members, each of whom shall be a natural person, the exact number thereof to be determined from time to time pursuant to a resolution adopted by the Board of Directors. Directors need not be stockholders.
Section 2.2. Election; Term of Office; Resignation; Vacancies . Each director shall hold office until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Any director may resign at any time upon notice given in writing or by electronic transmission to the Board of Directors or to the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect at the time it is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event
or events. Unless otherwise specified therein, no acceptance of such resignation shall be necessary to make it effective. Unless otherwise provided in the Certificate of Incorporation or these by-laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause shall be filled by, and only by, a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director elected or appointed to fill a vacancy shall hold office until the next annual meeting of stockholders, and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.
Section 2.3. Regular Meetings . Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine, and if so determined notice thereof need not be given.
Section 2.4. Special Meetings . Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by or at the request of the Chairperson of the Board of Directors, the Chief Executive Officer or any three directors. Reasonable notice of any special meeting of the Board of Directors stating the place, date and time of the special meeting shall be given by the person or persons calling the meeting.
Section 2.5. Participation in Meetings by Conference Telephone Permitted . Unless otherwise restricted by the Certificate of Incorporation or these by-laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or of such committee, as the case may be, by means of conference telephone, video conference or similar communications equipment by which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action . A majority of the number of Directors fixed by resolution of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the affirmative vote of a majority of the Directors present at any such meeting shall be the act of the Board of Directors unless the Certificate of Incorporation or these by-laws require a vote of a greater number. In case at any meeting of the Board of Directors a quorum shall not be present, a majority of the directors present may adjourn the meeting from time to time until a quorum shall be present.
Section 2.7. Organization . The Chairperson, shall preside at all meetings of the Board of Directors and of stockholders, or in the absence of the Chairperson of the Board of Directors, the Chief Executive Officer, or in their absence by a chairperson chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 2.8. Action by Directors Without a Meeting . Unless otherwise restricted by the Certificate of Incorporation or these by-laws, 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 if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.9. Compensation of Directors . Subject to the listing rules of the Australian Securities Exchange in effect from time to time for so long as the Corporation is listed on the Australian Securities Exchange, unless otherwise restricted by the Certificate of Incorporation or these by-laws, the Board of Directors shall have the authority to fix the compensation of directors. Nothing herein shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
Section 2.10. Board Observer Rights . (a) For so long as EMG beneficially owns (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act) shares of capital stock of the Corporation representing at least five percent (5%) of the voting power of the Voting Stock, the Corporation shall permit one (1) representative of EMG (the Observer ) (i) to attend all of the meetings (whether in person, telephonic or otherwise) of the Board of
Directors in a non-voting, observer capacity and (ii) to attend all meetings (whether in person, telephonic or otherwise) of any committee of the Board of Directors in a non-voting, observer capacity. In addition, the Corporation shall provide to the Observer, concurrently with the members of the Board of Directors or the committees thereof, as applicable, and in the same manner, notice of such meeting and a copy of all materials provided to such members, including all materials provided to such members in connection with any action to be taken by the Board of Directors or the committees thereof, as applicable, without a meeting.
ARTICLE III
Committees
Section 3.1. Committees . The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors 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. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by law to be submitted to stockholders for approval; (ii) adopting, amending or repealing these by-laws; or (iii) indemnifying directors.
Section 3.2. Committee Rules . Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board of Directors or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
Officers
Section 4.1. Election and Designation . The officers of the Corporation shall be elected by the Board of Directors and may include a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, a Controller, a Treasurer, a Secretary, and such other officers or assistant officers as the Board of Directors deems necessary or advisable and may give any of them such further designations or alternate titles as it considers desirable. The same person may hold any two or more offices.
Section 4.2. Appointment, Term of Office and Qualifications . The Board of Directors may authorize any duly elected officer to appoint one or more other officers or assistant officers. Unless the Board of Directors otherwise prescribes by resolution, each officer shall hold office until his or her respective successor shall have been duly chosen and qualified or until such officers resignation, death or removal.
Section 4.3. Vacancies . If any vacancy shall occur among the officers or assistant officers of the Corporation, the Board of Directors, or any duly elected officer authorized by the Board of Directors to appoint such officer or assistant officer, may fill such vacancy.
Section 4.4. Removal . The Board of Directors may remove any officer or assistant officer at any time either with or without cause. Any officer or assistant officer appointed by another officer may likewise be removed by such officer. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election or appointment of an officer shall not of itself create contractual rights.
Section 4.5. Powers and Duties . The officers of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in these by-laws or in a resolution of the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board and any committees in a book to be kept for that purpose. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1. Stock Certificates and Uncertificated Shares . The shares of stock in the Corporation may be certificated or uncertificated. Any certificates of stock of the Corporation shall be in such form as may be determined by the Board of Directors. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairperson, the Chief Executive Officer, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares of stock registered in certificate form owned by such holder. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be a 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 Corporation may not issue stock certificates in bearer form.
Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates . The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, 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, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owners legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
Section 5.3. Transfers . Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these by-laws. Transfers of stock shall be made on the books of the Corporation, and in the case of certificated shares of stock, only by the person named in the certificate or by such persons attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; or, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such persons attorney lawfully constituted in writing, and upon payment of all necessary transfer taxes and compliance with appropriate procedures for transferring shares in uncertificated form; provided , however , that such surrender and endorsement, compliance or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. With respect to certificated shares of stock, every certificate exchanged, returned or surrendered to the Corporation shall be marked Cancelled, with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
Section 5.4. Record Owners . 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 to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
Section 5.5. Transfer and Registry Agents . The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
Section 5.6. Registration of Transfer . The Corporation may refuse to acknowledge or register any transfer of shares of the Corporations capital stock (or beneficial interests therein represented by CHESS Depositary Interests ( CDIs )) held or acquired by a holder (including shares of the Corporations capital stock that may be acquired upon exercise of a stock option, warrant or other right) or shares of the Corporations capital stock (or CDIs) which attach to or arise from such shares or CDIs which are not made:
(a) in accordance with the provisions of Regulation S of the Securities Act of 1933 (U.S.), as amended to date and the rules and regulations promulgated thereunder (the U.S. Securities Act ) (Rule 901 through Rule 905 and preliminary notes);
(b) pursuant to registration under the U.S. Securities Act; or
(c) pursuant to an available exemption from registration under the U.S. Securities Act.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year . The fiscal year of the Corporation shall be determined by the Board of Directors.
Section 6.2. Seal . The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees . Whenever notice is required to be given by law or under any provision of the Certificate of Incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person 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. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these by-laws.
Section 6.4. Indemnification of Directors and Officers . Except as provided in this by-law, the Corporation shall indemnify Indemnitees to the full extent permitted by Delaware law. Expenses reasonably incurred by Indemnitee in defending any action, suit, or proceeding, as described in this by-law, shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of Indemnitee to repay such Expenses if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation.
Notwithstanding anything contained in this Section 6.4, except for proceedings to enforce rights provided in this Section 6.4, the Corporation shall not be obligated under this Section 6.4 to provide any indemnification or any payment or reimbursement of expenses to any person in connection with a proceeding (or part thereof) initiated by such person (which shall not include counterclaims or crossclaims initiated by others) unless the Board of Directors has authorized or consented to such proceeding (or part thereof) in a resolution adopted by the Board of Directors; it being understood, however, that this provision shall in no way prevent or prohibit the Corporation from indemnifying any person or paying or reimbursing any persons expenses in connection with a proceeding initiated by such person pursuant to a contractual arrangement between the Corporation and such person.
No claim for indemnification shall be paid by the Corporation unless the Corporation has determined that Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interest of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. Unless ordered by a court, such determinations shall be made by (1) a majority vote of the directors who are not parties to the action, suit or proceeding for which indemnification is sought, even though less than a quorum; or (2) by a committee of such directors designated by a majority vote of directors, even though less than a quorum; or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion; or (4) by stockholders.
Indemnitee shall promptly notify the Corporation in writing upon the sooner of (a) becoming aware of an action, suit or proceeding where indemnification or the advance payment or reimbursement of Expenses may be sought or (b) being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter which may be subject to indemnification or the advance payment or reimbursement of Expenses covered hereunder. The failure of Indemnitee to so notify the Corporation shall not relieve the Corporation of any obligation which it may have to Indemnitee pursuant to this by-law.
As a condition to indemnification or the advance payment or reimbursement of Expenses, any demand for payment by Indemnitee hereunder shall be in writing and shall provide reasonable accounting by Indemnitees legal counsel for the Expenses to be paid by the Corporation.
For the purposes of this by-law, the term Indemnitee shall mean any person made or threatened to be made a party, or otherwise involved in any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that such person or such persons testator or intestate is or was a director or officer of the Corporation or serves or served at the request of the Corporation at any other enterprise as a director or officer; the term Corporation shall include any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term other enterprise shall include any corporation, limited liability company, public limited company, partnership, joint venture, trust, employee benefit plan, fund or other enterprise; service at the request of the Corporation shall include service as a director or officer at the request of the Corporation of an enterprise which imposes duties on, or involves services by, such person, including without limitation, with respect to an employee benefit plan, its participants or beneficiaries; the term Expenses shall include all reasonable expenses, including without limitation, attorneys fees, retainers, court costs, transcript costs, fees and expenses of experts, including accountants and other advisors, travel expenses, duplicating costs, postage, delivery service fees, filing fees, and all other disbursements or expenses of the types typically paid or incurred in connection with investigating, defending, being a witness in, or participating (including on appeal), or preparing for an actual or threatened action, suit or proceeding (including Indemnitees counterclaims that directly respond to and negate the affirmative claim made against Indemnitee ( Permitted Counterclaims ) in such action, suit or proceeding, whether civil, criminal, administrative or investigative), but shall exclude (a) the costs of any of Indemnitees counterclaims, other than Permitted Counterclaims; (b) the costs of acquiring and maintaining an appeal or supersedeas bond or similar instrument; or (c) the fees and costs of enforcing a right to indemnification or advance payment or reimbursement under this by-law.
Any action, suit or proceeding regarding indemnification or advance payment or reimbursement of Expenses arising out of these by-laws or otherwise shall only be brought and heard in the Court of Chancery of the State of Delaware. In the event of any payment under this by-law, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (under any insurance policy or otherwise), who shall execute all papers required and shall do everything necessary to secure such rights, including but not limited to, the execution of such documents necessary to enable the Corporation to effectively bring suit to enforce such rights. Except as required by law or as otherwise becomes public, Indemnitee will keep confidential any information that arises in connection with this by-law, including but not limited to, claims for indemnification or the advance payment or reimbursement of Expenses, amounts paid or payable under this by-law and any communications between the parties. No amendment of the Certificate of Incorporation of the Corporation or this by-law shall impair the rights of any Indemnitee arising at any time with respect to events occurring at or prior to such amendment.
Section 6.5. Interested Directors; Quorum . No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because such directors or officers votes are counted for such purpose, if: (1) the material facts as to directors or officers relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to directors or officers relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
Section 6.6. Form of Records . Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records in accordance with law.
Section 6.7. Distributions . Subject to the rights of any class or series of stock set forth in the Certificate of Incorporation, the Board of Directors may from time to time, in its discretion, declare payment of dividends or other distributions on its outstanding shares of capital stock in such manner and upon such terms and conditions as are permitted by the Certificate of Incorporation and the DGCL.
Section 6.8. Amendment of By-Laws . Except as may otherwise be provided in the Certificate of Incorporation, the Board of Directors is expressly authorized to make, alter or repeal the by-laws of the Corporation. Notwithstanding the foregoing, except as may otherwise be provided in the Certificate of Incorporation, the by-laws of the Corporation may be rescinded, altered, amended or repealed in any respect by the affirmative vote of the holders of (a) a majority of the voting power of the Voting Stock while EMG beneficially owns shares of capital stock of the Corporation representing at least a majority of the voting power of all of the Voting Stock and (b) at least two-thirds of the voting power of the Voting Stock from and after the time that EMG beneficially owns shares of capital stock of the Corporation representing less than a majority of the voting power of the Voting Stock.
Section 6.9. Forum for Certain Actions . Unless the Corporation consents in writing to the selection of an alternative forum, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee or agent of the Corporation to the Corporation or the Corporations stockholders or debtholders; (iii) any action or proceeding asserting a claim against the Corporation or any director or officer or other employee or agent of the Corporation arising pursuant to any provision of the General Corporation Law of the State of Delaware or the Certificate of Incorporation or these by-laws (in each case, as they may be amended from time to time); or (iv) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine other internal corporate claim as defined in Section 115 of the General Corporation Law of the State of Delaware.
STOCKHOLDERS AGREEMENT
DATED AS OF SEPTEMBER 24, 2018
BETWEEN
CORONADO GLOBAL RESOURCES INC.
AND
CORONADO GROUP LLC
TABLE OF CONTENTS
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Page |
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ARTICLE I |
INTRODUCTORY MATTERS |
1 |
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1.1 |
Defined Terms |
1 |
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1.2 |
Construction |
3 |
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ARTICLE II |
CORPORATE GOVERNANCE MATTERS |
3 |
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2.1 |
Committee Designations |
3 |
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2.2 |
Consent Rights |
4 |
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2.3 |
Sharing of Information |
6 |
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2.4 |
Issuance of Securities |
6 |
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2.5 |
Reduction or Removal of Series A Directors |
6 |
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2.6 |
Amendment of Board Observer Rights; Indemnity and Reimbursement |
7 |
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ARTICLE III |
INFORMATION |
7 |
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3.1 |
Books and Records; Access |
7 |
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3.2 |
Co-operation and Assistance |
8 |
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3.3 |
Certain Reports |
8 |
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3.4 |
Confidentiality |
8 |
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ARTICLE IV |
GENERAL PROVISIONS |
9 |
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4.1 |
Termination |
9 |
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4.2 |
Notices |
9 |
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4.3 |
Amendment; Waiver |
9 |
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4.4 |
Further Assurances |
10 |
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4.5 |
Assignment |
10 |
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4.6 |
Third Parties |
10 |
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4.7 |
Governing Law |
10 |
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4.8 |
Jurisdiction; Waiver of Jury Trial |
10 |
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4.9 |
Specific Performance |
10 |
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4.10 |
Entire Agreement |
11 |
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4.11 |
Severability |
11 |
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4.12 |
Table of Contents; Headings and Captions |
11 |
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4.13 |
Counterparts |
11 |
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4.14 |
Effectiveness |
11 |
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4.15 |
No Recourse |
11 |
STOCKHOLDERS AGREEMENT
This Stockholders Agreement is entered into as of September 24, 2018 by and between Coronado Global Resources Inc., a Delaware corporation (the Company ), and Coronado Group, LLC, a Delaware limited liability company ( Parent ).
BACKGROUND:
WHEREAS, as of the date of this Agreement, Parent owns of record 100% of the outstanding shares of Common Stock;
WHEREAS, the Company is currently contemplating an initial public offering of CHESS Depositary Interests on the Australian Securities Exchange, with each CHESS Depositary Interest representing 1/10th of a fully paid share of the Companys Common Stock; and
WHEREAS, in connection with, and effective upon, the date of completion of the IPO (the Closing Date ), the Company and Parent wish to set forth certain understandings between such parties, including with respect to certain governance matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
INTRODUCTORY MATTERS
1.1 Defined Terms . In addition to the terms defined elsewhere herein, the following terms have the following meanings when used herein:
Affiliate has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
Agreement means this Stockholders Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.
beneficially own has the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act. For the avoidance of doubt, ownership of any CHESS Depositary Interest issued in the Common Stock shall constitute beneficial ownership of the underlying Common Stock for all purposes of this Agreement.
Board means the board of directors of the Company.
CHESS Depositary Interest means a security interest as defined in the settlement operating rules of ASX Settlement Pty Limited ABN 49 008 504 532.
Common Stock means the shares of common stock, par value $0.01 per share, of the Company, and any other securities issued or issuable with respect to any such shares by
way of share split, share dividend, recapitalization, merger, exchange or similar event or otherwise.
Control (including its correlative meanings, Controlled by and under common Control with ) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
Director means any member of the Board.
EMG means, collectively, Parent, EMG CC HC, LLC, a Delaware limited liability company, EMG Coronado II HC, LLC, a Delaware limited liability company, EMG Coronado Strategic, LP, a Delaware limited partnership, EMG Coronado IV Holdings, LLC, a Delaware limited liability company, or any of their respective successors or Permitted Assigns.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
Governmental Authority means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
Law means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
Observer means a representative of Parent with such rights as set forth in Section 2.10 of the bylaws of the Company.
Permitted Assigns means any Affiliate of the entities included in the definition of EMG (other than the Company and any entity that is controlled by the Company), including for the avoidance of doubt any Person, that agrees to become party to, and to be bound to the same extent as its Transferor by the terms of, this Agreement.
Person means any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
Share Incentive Plan means any plan of the Company in effect from time to time pursuant to which Common Stock, CHESS Depositary Interests or other beneficial interests in Common Stock may be issued, or options or other securities convertible or exercisable or exchangeable for Common Stock, CHESS Depositary Interests or other beneficial interests in Common Stock may be granted, to Directors, officers and/or employees of, and/or consultants to the Company and its Subsidiaries.
Subsidiary means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing member, managing director or other governing body or general partner of such limited liability company, partnership, association or other business entity.
Transfer (including its correlative meanings, Transferor , Transferee and Transferred ) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security. When used as a noun, Transfer shall have such correlative meaning as the context may require.
1.2 Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Unless the context otherwise requires: (a) or is disjunctive but not exclusive, (b) words in the singular include the plural and in the plural include the singular, (c) the words hereof, herein, and hereunder and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified and (d) a reference to $ is to the currency of the United States unless otherwise specified.
ARTICLE II
CORPORATE GOVERNANCE MATTERS
2.1 Committee Designations .
(a) For so long as EMG beneficially owns at least fifty percent (50%) of the outstanding shares of Common Stock, EMG shall have the right, but not the obligation, to designate the Directors to be included in the membership of any committee of the Board, and the Company agrees to take all actions necessary to cause any Directors so designated to be included in the membership of any committee of the Board, except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules.
(b) If and to the extent a Series A Triggering Event (as defined in Section 4.3 of the Amended & Restated Certificate of Incorporation of the Company (the Certificate of Incorporation )) has occurred and any Series A Director (as such term is defined in the Certificate of Incorporation) has been elected, Parent shall have the right to designate one such
Series A Director to be included in the membership of any committee of the Board, and the Company agrees to take all action necessary to cause such Series A Director to be included in the membership of any such committee of the Board, except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules.
2.2 Consent Rights . For so long as EMG beneficially owns at least twenty-five percent (25%) of the outstanding shares of Common Stock, in addition to any other vote or authorization required by law, the parties agree that the Company shall not, and shall take all actions necessary to cause its Subsidiaries to not, directly or indirectly, including by merger or consolidation or otherwise, do any of the following without the approval of Parent, in addition to the Boards approval (or the approval of the required governing body of any Subsidiary of the Company) where applicable:
(a) amending, restating, or amending and restating the Certificate of Incorporation or bylaws of the Company;
(b) issuing any equity security or securities convertible into or exercisable or exchangeable for any equity securities of the Company;
(c) merging or consolidating with or into any other entity, or transferring (by lease, assignment, sale or otherwise) all or substantially all of the Companys and its Subsidiaries assets, taken as a whole, to another entity, or entering into or agreeing to undertake any transaction or series of related transactions as a result of which any Person, other than EMG would acquire, directly or indirectly, more than 50% of the capital stock of the Company (other than, in each case, transactions among the Company and its wholly owned Subsidiaries);
(d) entering into (i) any agreement providing for the acquisition or divestiture of assets or equity securities of any Person, whether in a single transaction or a series of related transactions, in each case providing for aggregate consideration in excess of $50 million or (ii) any agreement providing for the acquisition or divestiture of assets or equity securities of any Person, whether in a single transaction or a series of related transactions, relating to any business, including any commodity, other than metallurgical coal or thermal coal when extracted or sold as an adjunct to the extraction or sale of metallurgical coal;
(e) entering into (i) any joint venture or similar business alliance having a fair market value as of the date of formation thereof (as reasonably determined by the Board) in excess of $50 million or (ii) any joint venture or similar business alliance relating to any business, including any commodity, other than metallurgical coal or thermal coal when extracted or sold as an adjunct to the extraction or sale of metallurgical coal;
(f) initiating a voluntary liquidation, dissolution, receivership, bankruptcy or other insolvency proceeding involving (i) the Company or (ii) any Subsidiary the assets or net income of which are greater than ten percent (10%) of the Companys consolidated total assets or net income, respectively (or, if subject to the reporting requirements of the Exchange Act, a subsidiary that is a significant subsidiary as defined in Rule 1-02 of Regulation S-X under the Exchange Act);
(g) any redemption, acquisition or other purchase of any shares of Common Stock or CHESS Depositary Interests (a Repurchase ) other than Repurchases in accordance with any existing compensation plan of the Company or any Subsidiary or a Repurchase from an employee in connection with such employees termination of employment with the Company or any Subsidiary;
(h) any payment or declaration of any dividend or other distribution on any shares of Common Stock or CHESS Depositary Interests or entering into any recapitalization transaction the primary purpose of which is to pay a dividend, except in each case in accordance with the dividend policy of the Company as disclosed in the prospectus, dated September 24, 2018;
(i) the incurrence of indebtedness for borrowed money (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another Person) in an aggregate principal amount in excess of $50 million, other than (x) the incurrence of trade payables arising in the ordinary course of business of the Company and its Subsidiaries or (y) borrowings under the Companys revolving credit facility (or amendments, extensions, or replacements thereof);
(j) any currency, commodity or interest rate hedging, derivative or trading transactions of any kind, except transactions which are conducted in accordance with a policy approved by both Parent and a majority of the Board;
(k) terminating the employment of the Chief Executive Officer of the Company or hiring a new Chief Executive Officer of the Company;
(l) the adoption of an annual business plan of the Company and its Subsidiaries, taken as a whole (the Business Plan ), that contemplates or would result in the following:
(i) any reduction of 1 million tonnes or more in planned annual production for the applicable budget year from the prior years production;
(ii) any decision to undertake extraction or sale of a commodity other than (A) metallurgical coal, or (B) thermal coal when extracted or sold as an adjunct to the extraction or sale of metallurgical coal; or
(iii) undertaking any new greenfield development projects;
(m) any amendments to, or departures from, the then-effective Business Plan approved by the Board that contemplate or would result in the following:
(i) an increase or decrease in aggregate capital expenditures of thirty percent (30%) or more as compared to the amount set forth in such Business Plan;
(ii) a decrease in total production for any particular mine of ten percent (10%) or more as compared to the amount set forth in such Business Plan; or
(iii) that would result in any of the actions contemplated by paragraph (l) above.
(n) engage in any transaction with or involving any Affiliate of the Company or any Affiliate of any stockholder of the Company that beneficially owns in excess of ten percent (10%) of the voting power of the Company (in each case, other than EMG), other than any transaction or series of related transactions in the ordinary course of business and on arms- length third-party terms and in an amount less than $10 million; provided , however that written notice shall be given to the Board at least five (5) business days prior to entering into any related party transaction.
2.3 Sharing of Information . Individuals associated with Parent or any of its Affiliates may, from time to time, serve on the Board or the boards of directors of the Companys Subsidiaries. The Company, on its behalf and on behalf of its Subsidiaries, recognizes that such individuals (i) will, from time to time, receive non-public information concerning the Company and its Subsidiaries and (ii) may (subject to the obligation to maintain the confidentiality of such information in accordance with Section 3.4) share such information with other individuals associated with Parent. Such sharing will be for the dual purpose of facilitating support to such individuals in their capacity as directors and enabling Parent, as equityholder, to better evaluate the Companys performance and prospects. The Company, on behalf of itself and its Subsidiaries, hereby irrevocably consents to such sharing.
2.4 Issuance of Securities . Unless Parent agrees otherwise, for so long as EMG beneficially owns at least ten percent (10%) of the outstanding shares of Common Stock:
(a) any equity securities or securities convertible into or exercisable or exchangeable for any equity securities of the Company which are to be allocated under a Share Incentive Plan will be sourced by purchasing them in the market rather than by issuing them (provided that nothing in this Section 2.4(a) prevents the Company from issuing options or similar rights to receive equity securities or securities convertible into or exercisable or exchangeable for any equity securities of the Company, where those underlying securities will be purchased in the market); and
(b) any issuance of equity securities or securities convertible into or exercisable or exchangeable for any equity securities of the Company must have been offered to Parent in respect of its pro rata share (calculated in accordance with the number of outstanding shares of Common Stock then held by it), and the Company must ensure that any such issuance is structured in a manner which permits this to occur in accordance with applicable Law and the listing rules of any stock exchange on which the Company is listed from time to time.
2.5 Reduction or Removal of Series A Directors . In the event that any Series A Directors required to resign pursuant to Section 4.3 of the Certificate of Incorporation are unwilling to resign, Parent will take all such actions as are necessary to cause the removal of
such Series A Directors. In the event that the holders of Common Stock vote to remove any Series A Directors pursuant to Section 4.3 of the Certificate of Incorporation and the affirmative vote received to remove such director is equal to a vote of the holders of a majority of shares of Common Stock present in person or represented by proxy at the meeting and entitled to vote on the subject matter, but less than the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, Parent will take all such actions as are necessary to cause the removal of such Series A Directors, including but not limited to voting in its capacity as the Series A Holder (as such term is defined in the Certificate of Incorporation) as a separate class to the exclusion of all other series or classes of capital stock to remove such Series A Directors.
2.6 Amendment of Board Observer Rights; Indemnity and Reimbursement .
(a) Section 2.10 (Board Observer Rights) of the bylaws of the Company may not be amended, altered or repealed without the express consent of Parent.
(b) The Company shall indemnify and advance expenses to the Observer to the same extent as a Director shall be indemnified (and have the right to advancement) under Section 6.2 of the Companys Certificate of Incorporation and Section 6.4 of its by-laws, in each case in effect on the date hereof, and the provisions thereof shall, to the fullest extent possible, apply mutatis mutandis to the Observer. The Company shall also use commercially reasonable efforts to have the Observer covered by the Companys existing director and officer indemnity insurance on the same terms and conditions as such director and officer indemnity insurance provides for the coverage of any other persons covered thereby.
(c) The Company shall reimburse the Observer for all reasonable and documented out-of-pocket expenses incurred in connection with the Observers attendance at meetings of the Board and any committees thereof, including travel, lodging and meal expenses. All reimbursements payable by the Company pursuant to Section 2.10 of the Companys bylaws to directors shall be paid to the Observer in accordance with the Companys policies and practices with respect to director expense reimbursement then in effect.
ARTICLE III
INFORMATION
3.1 Books and Records; Access . For so long as EMG beneficially owns at least five percent (5%) of the outstanding shares of Common Stock, the Company shall, and shall cause its Subsidiaries to, keep proper books, records and accounts, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each of its Subsidiaries in accordance with generally accepted accounting principles. The Company shall, and shall cause its Subsidiaries to, permit Parent and its respective designated representatives, at reasonable times and upon reasonable prior notice to the Company, to have access to and review the books and records of the Company or any of such Subsidiaries and to discuss the affairs, finances and condition of the Company or any of such Subsidiaries with the officers of the Company or any such Subsidiary; provided , however , that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used its best efforts to provide such information to Parent without the loss of any such privilege and notified Parent that such information has not been provided.
3.2 Co-operation and Assistance . For so long as EMG beneficially owns at least five percent (5%) of the outstanding shares of Common Stock, subject to compliance with all applicable Law, the Company and Parent must, if EMG so requests, work cooperatively, reasonably and in good faith with EMG, as applicable, and must provide it with any assistance reasonably requested, in connection with any loan or credit facilities, borrowings, financial accommodation or other financing agreement or arrangement entered into or to be entered into by Parent or EMG ( Financing Arrangements ) including, without limitation, any refinancing of such Financing Arrangements.
3.3 Certain Reports . For so long as EMG beneficially owns at least five percent (5%) of the outstanding shares of Common Stock, the Company shall provide or cause to be provided to Parent, at Parents request:
(a) direct access to the Companys auditors and officers;
(b) copies of all materials provided to the Board or any committee of the Board (or equivalent governing body) at the same time as provided to the Directors or the members of the relevant committee of the Board (or their equivalent);
(c) information in advance with respect to any significant corporate actions, including, without limitation, extraordinary dividends, mergers, acquisitions or dispositions of assets, issuances of significant amounts of debt or equity, purchases by the Company of any debt or equity securities of the Company and material amendments to the Certificate of Incorporation or bylaws of the Company or any of its respective Subsidiaries, and to provide Parent with the right to consult with the Company and its Subsidiaries with respect to such actions prior to completion of any such actions;
(d) to the extent otherwise prepared by the Company, operating and capital expenditure budgets and periodic information packages relating to the operations and cash flows of the Company and its Subsidiaries; and
(e) such other reports and information or assistance from an officer of the Company or a Subsidiary of the Company, as may be reasonably requested by Parent; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used its best efforts to enter into an arrangement pursuant to which it may provide such information to Parent or any of its Affiliates without the loss of any such privilege.
3.4 Confidentiality . Subject to Section 3.1 and Section 3.3, Parent and its respective designated representatives (and any party receiving information from Parent and its respective designated representatives) shall maintain the confidentiality of any information provided to Parent or its respective designated representatives pursuant to this Agreement, and the Company shall not be required to disclose any privileged information about the Company so long as the Company has used its commercially reasonable efforts to enter into an arrangement pursuant to which it may provide such information to Parent without the loss of such privilege. The obligations set forth in this Section 3.4 shall not apply to any confidential information which has become generally known to competitors of the Company or any of the Companys Subsidiaries
or to Parent or any of its Affiliates through no act or omission of Parent or any of its Affiliates, nor shall the obligations set forth in this Section 3.4 apply to disclosures made to regulatory authorities pursuant to applicable whistleblower Laws or regulations or that are otherwise required by law or judicial process.
ARTICLE IV
GENERAL PROVISIONS
4.1 Termination . This Agreement shall terminate on the earlier to occur of (a) such time as Parent is no longer entitled to receive information pursuant to Article III hereof and (b) upon the delivery of a written notice by Parent to the Company requesting that this Agreement terminate.
4.2 Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, mailed first class mail (postage prepaid), sent by reputable overnight courier service (charges prepaid) or sent by facsimile, to the Company or Parent at the address or facsimile number set forth below (as applicable) and to any other recipient at the address or facsimile number indicated on the Companys records, or at such address or facsimile number or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when, the day delivered personally, five (5) days after deposit in the U.S. mail, one (1) day after deposit with a reputable overnight courier service, or the day sent by facsimile (receipt confirmed).
The Companys address is:
Coronado Global Resources Inc.
100 Bill Baker Way
Beckley, West Virginia 25801
Attention: Richard D. Rose, Chief Legal Officer
**
With a copy (which shall not constitute notice) to:
Garold R. Spindler
**
Parents address is:
Coronado Group LLC
c/o The Energy & Minerals Group
2229 San Felipe Street
Suite 1300
Houston, Texas 77019
Attention: Laura Tyson, Chief Operating Officer and General Counsel
**
Fax: **
4.3 Amendment; Waiver . This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and the other parties
hereto. Neither the failure nor delay on the part of any party hereto to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
4.4 Further Assurances . The parties hereto will sign such further documents, cause such meetings to be held and resolutions passed, exercise their votes and do and perform and cause to be done such further acts and things necessary, proper or advisable in order to give full effect to this Agreement and every provision hereof. To the fullest extent permitted by Law, the Company shall not directly or indirectly take any action that is intended to, or would reasonably be expected to result in, Parent being deprived of the rights contemplated by this Agreement.
4.5 Assignment . This Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns. This Agreement may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void; provided , however , that Parent shall be entitled to assign, in whole or in part, to any of Person forming part of EMG without such prior written consent any of its rights hereunder.
4.6 Third Parties . This Agreement does not create any rights, claims or benefits inuring to any Person that is not a party hereto or create or establish any third-party beneficiary hereto.
4.7 Governing Law . This Agreement and any claims and causes of action hereunder shall be governed by and construed in accordance with the Laws of the State of Delaware, without regard to principles of conflicts of laws thereof.
4.8 Jurisdiction; Waiver of Jury Trial . In any judicial proceeding involving any dispute, controversy or claim arising out of or relating to this Agreement, each of the parties unconditionally accepts the jurisdiction and venue of the Delaware Court of Chancery or, if the Delaware Court of Chancery does not have subject matter jurisdiction over this matter, the Superior Court of the State of Delaware (Complex Commercial Division) or, if jurisdiction over the matter is vested exclusively in federal courts, the United States District Court for the District of Delaware, and the appellate courts to which orders and judgments thereof may be appealed. In any such judicial proceeding, the parties agree that in addition to any method for the service of process permitted or required by such courts, to the fullest extent permitted by Law, service of process may be made by delivery provided pursuant to the directions in Section 4.2. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
4.9 Specific Performance . Each party hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the other parties hereto would be
irreparably harmed and could not be made whole by monetary damages. Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at Law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at Law or in equity, shall be entitled to specific performance of this Agreement without the posting of bond.
4.10 Entire Agreement . This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. There are no agreements, representations, warranties, covenants or understandings with respect to the subject matter hereof or thereof other than those expressly set forth herein and therein. This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.
4.11 Severability . If any provision of this Agreement, or the application of such provision to any Person or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (a) the remainder of this Agreement shall not be affected thereby, and each other provision hereof shall be valid and enforceable to the fullest extent permitted by Law, (b) as to such Person or circumstance or in such jurisdiction, such provision shall be reformed to be valid and enforceable to the fullest extent permitted by Law and (c) the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby.
4.12 Table of Contents; Headings and Captions . The table of contents, headings, subheadings and captions contained in this Agreement are included for convenience of reference only and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof.
4.13 Counterparts . This Agreement and any amendment hereto may be signed in any number of separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one Agreement (or amendment, as applicable).
4.14 Effectiveness . This Agreement shall become effective upon the Closing Date.
4.15 No Recourse . This Agreement may only be enforced against, and any claims or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, may only be made against the entities that are expressly identified as parties hereto, and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any party hereto shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim based on, in respect of, or by reason of the transactions contemplated hereby.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement on the day and year first above written.
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[Signature Page to Stockholders Agreement]
REGISTRATION RIGHTS AND SELL-DOWN AGREEMENT
This REGISTRATION RIGHTS and SELL-DOWN AGREEMENT (this Agreement ), dated as of September 24, 2018, is by and between Coronado Group LLC, a Delaware limited liability company ( Parent ), and Coronado Global Resources Inc., a Delaware corporation (the Corporation ). Parent and any other Person who may become a party hereto pursuant to Section 13(c) or Section 13(d) is referred to individually as the Stockholder and collectively as the Stockholders .
WHEREAS, the Corporation is currently contemplating an initial public offering ( IPO ) of CHESS Depositary Interests on the Australian Securities Exchange, with each CHESS Depositary Interest representing 1/10 th fully paid shares of the Corporations Common Stock.
WHEREAS, in connection with, and effective upon, the date of completion of the IPO, the Corporation agrees to assist the Stockholder in certain dispositions, either in the United States or in Australia.
NOW, THEREFORE, for and in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions . As used in this Agreement, the following terms shall have the following meanings:
Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
Agreement shall have the meaning set forth in the Preamble.
beneficially owns shall have the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act. For the avoidance of doubt, ownership of any CHESS Depositary Interest issued in the Common Stock shall constitute beneficial ownership of the Common Stock for all purposes of this Agreement.
Board shall mean the board of directors of the Corporation.
CHESS Depositary Interest shall mean a security interest as defined in the settlement operating rules of ASX Settlement Pty Limited ABN 49 008 504 532.
Common Stock shall mean all shares existing or hereafter authorized of any class of common stock of the Corporation, that have the right (subject always to the rights of any class or series of preferred stock of the Corporation) to participate in the distribution of the assets and earnings of the Corporation without limit as to per share amount, including any shares of capital stock into which Common Stock may be converted (as a result of recapitalization, share exchange or similar event or otherwise) or are issued or issuable with respect to Common Stock, including with respect to any stock split, stock dividend, merger, or similar event or otherwise or with respect to a successor security, and in each case shall include any CHESS Depositary Interests issued in respect thereof.
Corporation shall have the meaning set forth in the Preamble.
Demand Notice shall have the meaning set forth in Section 3(a) hereof.
Demand Registration shall have the meaning set forth in Section 3(a) hereof.
EMG shall mean Parent, EMG CC HC, LLC, a Delaware limited liability company, EMG Coronado II HC, LLC, a Delaware limited liability company, EMG Coronado Strategic, LP, a Delaware limited partnership, EMG Coronado IV Holdings, LLC, a Delaware limited liability company, or any of their respective successors or Permitted Assigns.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.
FINRA shall mean the U.S. Financial Industry Regulatory Authority.
Indemnified Party shall have the meaning set forth in Section 8(c) hereof.
Indemnifying Party shall have the meaning set forth in Section 8(c) hereof.
Long-Form Registrations shall have meaning set forth in Section 3(a) hereof.
Losses shall have the meaning set forth in Section 8(a) hereof.
Notice shall have the meaning set forth in Section 3(c) hereof.
Permitted Assigns shall mean any Affiliate of the entities included in the definition of EMG (other than the Corporation and any entity that is controlled by the Corporation), including for the avoidance of doubt any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity or any transferee pursuant to Section 13(d) hereof).
Person shall mean any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
Piggyback Notice shall have the meaning set forth in Section 4(a) hereof.
Piggyback Registration shall have the meaning set forth in Section 4(a) hereof.
Potential Transaction shall have the meaning set forth in Section 12(a)(v) hereof.
Proceeding shall mean an action, claim, suit, arbitration or proceeding (including an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
Prospectus shall mean the prospectus included in any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement,
and all other amendments and supplements to the prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.
Public Offering shall mean the sale of Common Stock to the public pursuant to an effective Registration Statement (other than Form S-4 or Form S-8 or any similar or successor form) filed under the Securities Act or any comparable law or regulatory scheme of any foreign jurisdiction.
Registrable Securities shall mean any shares of Common Stock currently held or hereafter acquired by the Stockholders and any other securities issued or issuable with respect to any such shares by way of share split, share dividend, recapitalization, merger, exchange or similar event or otherwise. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) they are sold pursuant to an effective Registration Statement under the Securities Act; (ii) they are sold pursuant to Rule 144 (or any similar provision then in force under the Securities Act); (iii) they shall have ceased to be outstanding; or (iv) they have been sold in a private transaction in which the transferors rights under this Agreement are not assigned to the transferee of the securities. No Registrable Securities may be registered under more than one Registration Statement at any one time.
Registration Statement shall mean any registration statement of the Corporation under the Securities Act that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
Rule 144 shall mean Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
SEC shall mean the United States Securities and Exchange Commission or any successor agency having jurisdiction under the Securities Act.
Securities Act shall mean the Securities Act of 1933, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.
Sell-Down shall have the meaning set forth in Section 12(a)(i) hereof.
Shelf Underwritten Offering shall have the meaning set forth in Section 4(c) hereof.
Short-Form Registrations shall have meaning set forth in Section 3(a) hereof.
Stockholders shall have the meaning set forth in the Preamble.
Take-Down Notice shall have the meaning set forth in Section 4(c) hereof.
underwritten registration or underwritten offering shall mean a registration in which securities of the Corporation are sold to an underwriter for reoffering to the public.
SECTION 2. Holders of Registrable Securities . A Person is deemed, and shall only be deemed, to be a holder of Registrable Securities if such Person beneficially owns Registrable Securities or has a right to acquire such Registrable Securities and such Person is a Stockholder.
SECTION 3. Demand Registrations .
(a) Requests for Registration . Subject to the following paragraphs of this Section 3(a), EMG shall have the right, by delivering a written notice to the Corporation, to require the Corporation to register pursuant to the terms of this Agreement, under and in accordance with the provisions of the Securities Act, the number of Registrable Securities requested to be so registered pursuant to the terms of this Agreement on Form S-1 or any similar or successor long-form registration ( Long-Form Registrations ) or, if available, on Form S-3 or any similar or successor short-form registration ( Short-Form Registrations ) (any such written notice, a Demand Notice and any such registration, a Demand Registration ), provided , however , that EMG shall not be permitted to deliver more than one Demand Notice for a Demand Registration in any period of one-hundred eighty (180) calendar days and (ii) the Corporation shall not be required to effect an underwritten offering in which the only EMG Persons selling Registrable Securities are transferees pursuant to Section 13(d) unless the total expected gross proceeds to such Stockholders in the offering exceeds $50,000,000. EMG may, in connection with any Demand Registration requested by such holder that is a Short-Form Registration, require the Corporation to file such registration statement with the SEC in accordance with and pursuant to Rule 415 under the Securities Act including, if the Corporation is then eligible, as an automatic shelf registration. Following receipt of a Demand Notice for a Demand Registration delivered in accordance with this Section 3(a), the Corporation shall use its reasonable best efforts to file a Registration Statement as promptly as practicable and shall use its reasonable best efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof.
(b) No Demand Registration shall be deemed to have occurred for purposes of this Section 3 if the Registration Statement relating thereto (i) does not become effective; (ii) is not maintained effective for the period required pursuant to this Section 3; or (iii) the offering of the Registrable Securities pursuant to such Registration Statement is subject to a stop order, injunction, or similar order or requirement of the SEC during such period, in which case, such requesting holder of Registrable Securities shall be entitled to an additional Demand Registration in lieu thereof.
(c) Within ten (10) days after receipt by the Corporation of a Demand Notice in accordance with Section 3(a), the Corporation shall give written notice (the Notice ) of such Demand Notice to all other holders of Registrable Securities and shall, subject to the provisions of Section 3(b) hereof, include in such registration all Registrable Securities with respect to which the Corporation received written requests for inclusion therein within five (5) days after such Notice is given by the Corporation to such holders.
(d) All requests made pursuant to this Section 3 will specify the number of Registrable Securities to be registered.
(e) The Corporation shall be required to maintain the effectiveness of the Registration Statement with respect to any Demand Registration for a period of at least one-hundred eighty (180) days after the effective date thereof or such shorter period during which all Registrable Securities included in such Registration Statement have actually been sold; provided , however , that such period shall be extended for a period of time equal to the period the holder of Registrable Securities refrains from selling any securities included in such Registration Statement at the request of the Corporation or an underwriter of the Corporation pursuant to the provisions of this Agreement.
Notwithstanding the foregoing, with respect to any shelf registration statement covering Registrable Securities, the Corporation shall use its reasonable best efforts (if the Corporation is not eligible to use an automatic shelf registration statement at the time of filing) to keep such shelf registration statement continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by Stockholders until the earlier of (i) the date as of which all Registrable Securities have been sold pursuant to the shelf registration statement or another registration statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder) and (ii) the date as of which each of the Stockholders participating in such Shelf Registration is permitted to sell its Registrable Securities without registration pursuant to Rule 144 under the Securities Act without volume limitation or other restrictions on transfer thereunder.
(f) Priority on Demand Registration . If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter or underwriters advise the holders of such securities in writing that in its view the total number or dollar amount of Registrable Securities proposed to be sold in such offering is such as to adversely affect the success of such offering (including securities proposed to be included by other holders of securities entitled to include securities in such Registration Statement pursuant to incidental or piggyback registration rights), then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities that in the opinion of such managing underwriter can be sold without adversely affecting such offering, and such number of Registrable Securities shall be allocated as follows, unless the underwriter requires a different allocation:
(i) first , securities for which inclusion in such Demand Registration was for the account of the Corporation;
(ii) second , pro rata among the holders of Registrable Securities on the basis of the percentage of the Registrable Securities requested to be included in such Registration Statement by such holders; and
(iii) third , the securities for which inclusion in such Demand Registration, as the case may be, was requested by other holders of Corporation securities.
For purposes of any underwriter cutback, all Registrable Securities held by any Stockholder shall also include any Registrable Securities held by the partners, retired partners, stockholders or Affiliates of such holder, or the estates and family members of any such holder
or such partners and retired partners, any trusts for the benefit of any of the foregoing Persons and, at the election of such holder or such partners, retired partners, trust or Affiliates, any charitable organization, in each case to which any of the foregoing shall have been distributed, transferred or contributed Registrable Securities prior to the execution of the underwriting agreement in connection with such underwritten offering; provided that such distribution, transfer or contribution occurred not more than 90 days prior to such execution, and such holder and other Persons shall be deemed to be a single selling holder, and any pro rata reduction (unless the managing underwriter requires a different allocation) with respect to such selling holder shall be based upon the aggregate amount of Registrable Securities owned by all Persons included in such selling holder, as defined in this sentence. No securities excluded from the underwriting by reason of the underwriters marketing limitation shall be included in such registration.
(g) Postponement of Demand Registration . The Corporation shall be entitled to postpone (but not more than twice in any twelve (12)-month period), for a reasonable period of time not in excess of ninety (90) days, the filing of a Registration Statement if the Corporation delivers to the holders requesting registration a certificate signed by both the chief executive officer and chief financial officer of the Corporation certifying that, in the good faith judgment of the Board, such registration and offering would reasonably be expected to materially adversely affect or materially interfere with any bona fide material financing of the Corporation or any material transaction under consideration by the Corporation or would require disclosure of information that has not been disclosed to the public, the premature disclosure of which would materially adversely affect the Corporation. Such certificate shall contain a statement of the reasons for such postponement and an approximation of the anticipated delay. The holders receiving such certificate shall keep the information contained in such certificate confidential subject to the same terms set forth in Section 6(p). If the Corporation shall so postpone the filing of a Registration Statement, EMG shall have the right to withdraw the request for registration by giving written notice to the Corporation within twenty (20) days of the anticipated termination date of the postponement period, as provided in the certificate delivered to the holders.
(h) Cancellation of a Demand Registration . Holders of a majority of the Registrable Securities that are to be registered in a particular offering pursuant to this Section 3 shall have the right to notify the Corporation that they have determined that the Registration Statement be abandoned or withdrawn, in which event the Corporation shall abandon or withdraw such Registration Statement.
(i) Number of Demand Notices . In connection with the provisions of this Section 3, EMG shall have an unlimited number of Demand Notices which it is permitted to deliver (or cause to be delivered) to the Corporation hereunder.
(j) Registration Statement Form . If any registration requested pursuant to this Section 3 that is proposed by the Corporation to be effected by the filing of a Registration Statement on Form S-3 (or any successor or similar Short-Form Registrations) shall be in connection with an underwritten Public Offering, and if the managing underwriter shall advise the Corporation in writing that, in its opinion, the use of another form of Registration Statement is of material importance to the success of such proposed offering or is otherwise required by applicable law, then such registration shall be effected on such other form.
SECTION 4. Piggyback Registration .
(a) Right to Piggyback . Except with respect to a Demand Registration, the procedures for which are addressed in Section 3, if the Corporation proposes to file a Registration Statement under the Securities Act with respect to an offering of Common Stock whether or not for sale for its own account (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan), then, each such time, the Corporation shall give prompt written notice of such filing no later than ten (10) days prior to the filing date (the Piggyback Notice ) to all of the holders of Registrable Securities. The Piggyback Notice shall offer such holders the opportunity to include (or cause to be included) in such Registration Statement the number of Registrable Securities as each such holder may request (a Piggyback Registration ). Subject to Section 4(b) hereof, the Corporation shall include in each such Piggyback Registration all Registrable Securities with respect to which the Corporation has received written requests for inclusion therein within ten (10) days after notice has been given to the applicable holder. The Corporation shall not be required to maintain the effectiveness of the Registration Statement for a Piggyback Registration beyond the earlier to occur of (i) one-hundred eighty (180) days after the effective date thereof and (ii) consummation of the distribution by the holders of the Registrable Securities included in such Registration Statement.
Notwithstanding anything to the contrary in this Agreement, no member of management of the Corporation who has been provided with piggyback rights shall be permitted to exercise such rights in connection with any Public Offering, unless EMG is selling Registrable Securities in such transaction.
(b) Priority on Piggyback Registrations . The Corporation shall use reasonable best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit holders of Registrable Securities who have submitted a Piggyback Notice in connection with such offering to include in such offering all Registrable Securities included in each holders Piggyback Notice on the same terms and conditions as any other shares of capital stock, if any, of the Corporation included in the offering. Notwithstanding the foregoing, if the managing underwriter or underwriters of such underwritten offering have informed the Corporation in writing that it is their good faith opinion that the total amount of securities that such holders, the Corporation and any other Persons having rights to participate in such registration, intend to include in such offering is such as to adversely affect the success of such offering, then there shall be included in such underwritten offering the number or dollar amount of securities that in the opinion of such managing underwriter can be sold without adversely affecting such offering, and such number of securities shall be allocated as follows, unless the underwriter requires a different allocation:
(i) first , securities for which inclusion in such registration was for the account of the Corporation;
(ii) second , pro rata among the holders of Registrable Securities on the basis of the percentage of the Registrable Securities requested to be included in such registration by such holders; and
(iii) third , the securities for which inclusion in such registration was requested by other holders of Corporation securities.
(c) Shelf Take-Downs . At any time that a shelf registration statement covering Registrable Securities pursuant to Section 3 or this Section 4 is effective, if any holder or group of holders of Registrable Securities delivers a notice to the Corporation (a Take-Down Notice ) stating that it intends to effect an underwritten offering of all or part of its Registrable Securities included by it on the shelf registration statement (a Shelf Underwritten Offering ), then, the Corporation shall amend or supplement the shelf registration statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering (taking into account the inclusion of Registrable Securities by any other holders pursuant to this Section 4(c)). In connection with any Shelf Underwritten Offering:
(i) such proposing holder(s) shall also deliver the Take-Down Notice to all other holders of Registrable Securities included on such shelf registration statement and permit each such holder to include its Registrable Securities included on the shelf registration statement in the Shelf Underwritten Offering if such holder notifies the proposing holders and the Corporation within five (5) days after delivery of the Take-Down Notice to such holder; and
(ii) in the event that the underwriter determines that marketing factors (including an adverse effect on the per share offering price) require a limitation on the number of Registrable Securities that would otherwise be included in such take down, the underwriter may limit the number of Registrable Securities that would otherwise be included in such take-down offering in the same manner as described in Section 4(b) with respect to a limitation of shares to be included in a registration.
SECTION 5. Restrictions on Public Sale by Holders of Registrable Securities . Each holder of Registrable Securities agrees, in connection with any underwritten offering made pursuant to a Registration Statement filed pursuant to Section 3 or Section 4 hereof (whether or not such holder elected to include Registrable Securities in such Registration Statement), if requested (pursuant to a written notice) by the managing underwriter or underwriters in an underwritten offering, not to effect any public sale or distribution of any of the Corporations securities (except as part of such underwritten offering), including a sale pursuant to Rule 144 or any swap or other economic arrangement that transfers to another any of the economic consequences of owning the Common Stock, or to give any Demand Notice, during the period commencing on the date of the request (which shall be no earlier than fourteen (14) days prior to the expected pricing of such offering) and continuing for not more than ninety (90) days after the date of the Prospectus (or Prospectus supplement if the offering is made pursuant to a shelf registration), pursuant to which such Public Offering shall be made, or such lesser period as is required by the managing underwriter. Parent shall be responsible for negotiating all lock-up agreements with the underwriters and, in addition to the foregoing provisions of this Section 5, the Stockholders and holders of Registrable Securities agree to execute the form so negotiated. If any registration pursuant to Section 3 of this Agreement shall be in connection with any underwritten Public Offering, the Corporation will not affect any public sale or distribution of any common equity (or securities convertible into or exchangeable or exercisable for common equity) (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms
thereto or (ii) filed solely in connection with an exchange offer or any employee benefit or dividend reinvestment plan) for its own account, within ninety (90) days (or such shorter periods as the managing underwriters may agree to with Parent) after the effective date of such registration except as may otherwise be agreed between the Corporation and the managing underwriters of such Public Offering.
SECTION 6. Registration Procedures . If and whenever the Corporation is required to effect the registration of any Registrable Securities under the Securities Act as provided in Section 3 and Section 4 hereof, the Corporation shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Corporation shall cooperate in the sale of the securities and shall, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the holders thereof or by the Corporation in accordance with the intended method or methods of distribution thereof, and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective as provided herein; provided , however , that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Corporation shall furnish or otherwise make available to the holders of the Registrable Securities covered by such Registration Statement, their counsel and the managing underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Corporations books and records, officers, accountants and other advisors. The Corporation shall not file any such Registration Statement or Prospectus or any amendments or supplements thereto (including such documents that, upon filing, would be incorporated or deemed to be incorporated by reference therein) with respect to a Demand Registration to which the holders of a majority of the Registrable Securities covered by such Registration Statement, their counsel, or the managing underwriters, if any, shall reasonably object, in writing, on a timely basis, unless, in the opinion of the Corporation, such filing is necessary to comply with applicable law;
(b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective during the period provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement and cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act;
(c) notify each selling holder of Registrable Securities, its counsel and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any Proceedings for that purpose, (iv) if at any time the Corporation has reason to believe that the representations and warranties of the Corporation contained in any agreement (including any underwriting agreement) contemplated by Section 6(o) below cease to be true and correct, (v) of the receipt by the Corporation of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, and (vi) if the Corporation has knowledge of the happening of any event that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not 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 not misleading and, that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material nonpublic information);
(d) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practicable;
(e) if requested by the managing underwriters, if any, or the holders of a majority of the then-outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and such holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Corporation has received such request; provided , however , that the Corporation shall not be required to take any actions under this Section 6(e) that are not, in the opinion of counsel for the Corporation, in compliance with applicable law;
(f) furnish or make available to each selling holder of Registrable Securities, its counsel and each managing underwriter, if any, without charge, at least one conformed copy of the Registration Statement, the Prospectus and Prospectus supplements, if applicable, and each post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits,
unless requested in writing by such holder, counsel or underwriter); provided that the Corporation may furnish or make available any such documents in electronic format;
(g) deliver to each selling holder of Registrable Securities, its counsel and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such Persons may reasonably request from time to time in connection with the distribution of the Registrable Securities; provided that the Corporation may furnish or make available any such documents in electronic format, and the Corporation, subject to the last paragraph of this Section 6, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;
(h) prior to any Public Offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with the selling holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to take any other action that may be necessary or advisable to enable such holders of Registrable Securities to consummate the disposition of such Registrable Securities in such jurisdiction; provided , however , that the Corporation will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each holder of such Registrable Securities that the Registrable Securities represented by the certificates so delivered by such holder will be transferred in accordance with the Registration Statement and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or holders may request at least two business days prior to any sale of Registrable Securities in a firm commitment Public Offering, but in any other such sale, within ten (10) business days prior to having to issue the securities;
(j) use its reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by all other applicable governmental agencies or authorities within the United States, except as may be required solely as a consequence of the nature of such selling holders business, in which case the Corporation will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of, and its knowledge of, any event contemplated by Section 6(c)(vi) above, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(l) prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;
(m) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement;
(n) use its reasonable best efforts to cause all shares of Registrable Securities covered by such Registration Statement to be listed on a national securities exchange if shares of the particular class of Registrable Securities are at that time listed on such exchange, or if shares of the particular class of Registrable Securities are not at that time listed on such exchange, to cause the class of Registrable Securities to become listed on a national securities exchange, as the case may be, prior to the effectiveness of such Registration Statement;
(o) enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions reasonably requested by the holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in connection therewith, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Corporation and its subsidiaries, the Registration Statement, the Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish to the selling holders of such Registrable Securities opinions of counsel to the Corporation and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and counsels to the selling holders of the Registrable Securities), addressed to each selling holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its reasonable best efforts to obtain cold comfort letters and updates thereof from the independent certified public accountants of the Corporation (and, if necessary, any other independent certified public accountants of any subsidiary of the Corporation or of any business acquired by the Corporation for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each
selling holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in cold comfort letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures substantially to the effect set forth in Section 8 hereof with respect to all parties to be indemnified pursuant to said Section and (v) deliver such documents and certificates as may be reasonably requested by the holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, their counsel and the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 6(o)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Corporation. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;
(p) make available for inspection by a representative of the selling holders of Registrable Securities, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Corporation and its subsidiaries and cause the officers, directors and employees of the Corporation and its subsidiaries to supply all information in each case reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided , however , that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process, or (iii) such information becomes generally available to the public other than as a result of a non-permitted disclosure or failure to safeguard by such Person. In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Corporation written notice of the proposed disclosure prior to such disclosure and, if requested by the Corporation, assist the Corporation in seeking to prevent or limit the proposed disclosure. Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Corporation or its subsidiaries in violation of law;
(q) cause its officers to use their reasonable best efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including participation in road shows) taking into account the Corporations business needs; and
(r) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA.
The Corporation may require each holder of Registrable Securities as to which any registration is being effected to furnish to the Corporation in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Corporation may, from time to time, reasonably request in writing and the
Corporation may exclude from such registration the Registrable Securities of any holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.
Each holder of Registrable Securities agrees if such holder has Registrable Securities covered by such Registration Statement that, upon receipt of any notice from the Corporation of the happening of any event of the kind described in Sections 6(c)(ii), 6(c)(iii), 6(c)(iv), 6(c)(v) or 6(c)(vi) hereof, such holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such holders receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(k) hereof, or until it is advised in writing by the Corporation that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided , however , that the time periods under Section 3 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time the holder is required to discontinue disposition of such securities.
SECTION 7. Registration Expenses . All reasonable fees and expenses incident to the performance of or compliance with this Agreement by the Corporation, including (i) all registration and filing fees (including fees and expenses with respect to (A) filings required to be made with the SEC and FINRA and (B) compliance with securities or blue sky laws, including any fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities pursuant to Section 6(h)), (ii) printing expenses (including expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriters, if any, or by the holders of a majority of the Registrable Securities included in any Registration Statement), (iii) messenger, telephone and delivery expenses of the Corporation, (iv) fees and disbursements of counsel for the Corporation, (v) expenses of the Corporation incurred in connection with any road show, (vi) fees and disbursements of all independent certified public accountants referred to in Section 6(o)(iii) hereof (including the expenses of any cold comfort letters required by this Agreement) and any other Persons, including special experts retained by the Corporation, and (vii) fees and disbursements of one counsel for EMG and the holders of Registrable Securities whose shares are included in a Registration Statement, which counsel shall be selected by Parent (and otherwise, by the holders of a majority of the Registrable Securities being sold in connection therewith) shall be borne by the Corporation whether or not any Registration Statement is filed or becomes effective. In addition, the Corporation shall pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange on which similar securities issued by the Corporation are then listed and rating agency fees and the fees and expenses of any Person, including special experts, retained by the Corporation.
The Corporation shall not be required to pay (i) fees and disbursements of any counsel retained by any holder of Registrable Securities or by any underwriter (except as set forth in Sections 7(i)(B) and 7(vii)), (ii) any underwriters fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals)
relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Corporation), or (iii) any other expenses of the holders of Registrable Securities not specifically required to be paid by the Corporation pursuant to the first paragraph of this Section 7.
SECTION 8. Indemnification .
(a) Indemnification by the Corporation . The Corporation shall, without limitation as to time, indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities whose Registrable Securities are covered by a Registration Statement or Prospectus, the officers, directors, partners, members, managers, stockholders, accountants, attorneys, agents and employees of each of them, each Person who controls each such holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, managers, stockholders, accountants, attorneys, agents and employees of each such controlling Person, each underwriter, if any, and each Person who controls such underwriter (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all losses, claims, damages, liabilities, costs (including costs of preparation and reasonable attorneys fees and any legal or other fees or expenses incurred by such party in connection with any investigation or Proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, Losses ), as incurred, arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any Prospectus, offering circular, or other document (including any related Registration Statement, notification, or the like) incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Corporation of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation thereunder applicable to the Corporation and (without limitation of the preceding portions of this Section 8(a)) will reimburse each such holder, each of its officers, directors, partners, members, managers, stockholders, accountants, attorneys, agents and employees and each Person who controls each such holder and the officers, directors, partners, members, managers, stockholders, accountants, attorneys, agents and employees of each such controlling Person, each such underwriter and each Person who controls any such underwriter for any legal and other expenses reasonably incurred in connection with investigating and defending or settling any such claim, Loss, damage, liability, or action, provided that the Corporation will not be liable in any such case to the extent that any such claim, Loss, damage, liability, or expense arises out of or is based on any untrue statement or omission by such holder or underwriter, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Corporation by such holder for use therein. It is agreed that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such Loss, claim, damage, liability, or action if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld).
(b) Indemnification by Holder of Registrable Securities . The Corporation may require, as a condition to including any Registrable Securities in any Registration Statement filed in accordance with this Agreement, that the Corporation shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such Registrable Securities to indemnify, to the fullest extent permitted by law, severally and not jointly with any other holders of Registrable Securities, the Corporation, its directors and officers, each Person who controls the Corporation (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers from and against all Losses arising out of or based on any untrue statement of a material fact contained in any such Registration Statement, Prospectus, offering circular, or other document, or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and to (without limitation of the portions of this Section 8(b)) reimburse the Corporation, its directors and officers, each Person who controls the Corporation (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, Loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, Prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Corporation by such holder for inclusion in such Registration Statement, Prospectus, offering circular or other document; provided , however , that the obligations of such holder under such undertaking shall not apply to amounts paid in settlement of any such claims, Losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such holder (which consent shall not be unreasonably withheld); and provided , further , that the liability of such holder of Registrable Securities shall be limited to the net proceeds received by such selling holder from the sale of Registrable Securities covered by such Registration Statement.
(c) Conduct of Indemnification Proceedings . If any Person shall be entitled to indemnity hereunder or under the undertaking contemplated by Section 8(b) (an Indemnified Party ), such Indemnified Party shall give prompt notice to the party from which such indemnity is sought (the Indemnifying Party ) of any claim or of the commencement of any Proceeding with respect to which such Indemnified Party seeks indemnification or contribution pursuant hereto; provided , however , that the delay or failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any obligation or liability except to the extent that the Indemnifying Party has been materially prejudiced by such delay or failure. The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Party promptly after the receipt of written notice from such Indemnified Party of such claim or Proceeding, to, unless in the Indemnified Partys reasonable judgment a conflict of interest between such Indemnified Party and such Indemnifying Party may exist in respect of such claim, assume, at the Indemnifying Partys expense, the defense of any such claim or Proceeding, with counsel reasonably satisfactory to such Indemnified Party; provided , however , that an Indemnified Party shall have the right to employ separate counsel in any such claim or Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless: (i) the Indemnifying Party agrees to pay such fees and expenses or (ii) the Indemnifying Party fails to promptly assume, or in the event of a conflict of interest cannot assume, the defense of such claim or Proceeding or fails to employ counsel reasonably satisfactory to such Indemnified Party, in which case the Indemnified Party shall have the right to employ separate counsel and to assume the defense of such claim or Proceeding at the Indemnifying Partys expense; provided , further , however , that the Indemnifying Party shall not, in connection with any one such claim or Proceeding or separate but substantially similar or
related claims or Proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the Indemnified Parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). The Indemnifying Party shall not consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation for which such Indemnified Party would be entitled to indemnification hereunder.
(d) Contribution . If the indemnification provided for in this Section 8 is unavailable to an Indemnified Party in respect of any Losses (other than in accordance with its terms), then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made (or omitted) by, or relates to information supplied by, such Indemnifying Party or Indemnified Party and the parties relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 8(d), an Indemnifying Party that is a selling holder of Registrable Securities shall not be required to contribute any amount in excess of the amount that such Indemnifying Party has otherwise been, or would otherwise be, required to pay pursuant to Section 8(b) by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 12(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten Public Offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
SECTION 9. Rule 144 .
(a) At all times after the Corporation has filed a Registration Statement with the SEC under the Securities Act or the Exchange Act, the Corporation shall (i) use reasonable
best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner, (ii) take such further action as any holder of Registrable Securities may reasonably request and (iii) furnish to each holder of Registrable Securities forthwith upon written request (x) a written statement by the Corporation as to its compliance with the applicable reporting requirements of Rule 144, the Securities Act and the Exchange Act, (y) to the extent required by Rule 144, a copy of the most recent annual or quarterly report of the Corporation and (z) such other reports and documents so filed by the Corporation as such holder may reasonably request in availing itself of Rule 144, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144. Upon the request of any holder of Registrable Securities, the Corporation shall deliver to such holder a written statement as to whether it has complied with such requirements.
(b) The foregoing provisions of this Section 9 are not intended to modify or otherwise affect any restrictions on transfers of securities contained in any other contract or agreement.
SECTION 10. Limitations on Subsequent Registration Rights . From and after the date hereof, the Corporation shall not, without the prior written consent of the Stockholders holding of not less than a majority of the outstanding Registrable Securities, enter into any agreement with any current or future holder of any securities of the Corporation that would allow such holder to require the Corporation to include securities in any Registration Statement on a basis that is senior in any way to the cutback rights granted to the Stockholders under Section 4(b).
SECTION 11. Underwritten Registrations . In connection with any underwritten offering, the investment banker or investment bankers and managers shall be selected by (i) EMG in a Demand Registration or a Shelf Underwritten Offering it initiates, which selection shall be subject to approval by the Corporation, not to be unreasonably withheld, and (ii) the Corporation to administer any other offering, including any Piggyback Registration (other than a Shelf Underwritten Offering initiated by EMG).
No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell the Registrable Securities it desires to have covered by a Registration Statement on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided that such Person shall not be required to make any representations or warranties other than those related to title and ownership of such Persons Registrable Securities being sold and as to the accuracy and completeness of statements made in a Registration Statement, Prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Corporation or the managing underwriter by such Person for use therein.
SECTION 12. Sell-Down Assistance .
(a) Support and Assistance for Further Sell-Down .
(i) In addition to the registration rights in the United States afforded to the Stockholders under the terms hereof, EMG may, at any time, in its absolute discretion, decide to sell some or all of the shares of Common Stock held directly or indirectly by it (in the form of a sale of shares of Common Stock, CHESS Depositary Interests representing shares of Common Stock or otherwise as EMG may reasonably request) without triggering the registration rights in the United States offered to the Stockholders under the terms of this Agreement (a Sell-Down ).
(ii) If EMG decides to conduct a Sell-Down, EMG may in its absolute discretion request the reasonable cooperation and assistance of the Corporation in facilitating a Sell-Down.
(iii) Subject to Section 12(a)(iv) and Section 12(a)(v) herein, if requested to do so by EMG, the Corporation must provide all cooperation and assistance reasonably required by EMG to facilitate a Sell-Down. Without limiting the foregoing, if requested by EMG, the Corporation must:
(A) promptly provide all information as EMG or its respective advisers reasonably require in connection with a Sell-Down;
(B) allow EMG or its respective advisers full and free access at all reasonable times to the premises, books and records of the Corporation and its subsidiaries to enable EMG to obtain any information about the Corporation and its subsidiaries and any matters which EMG reasonably requires in connection with a Sell-Down;
(C) use its reasonable endeavors to provide the full support of, and access to, the Corporations senior executives in marketing and promoting any Sell-Down; and
(D) provide or assist in providing any necessary cleansing statement, prospectus or other document and take any other actions or steps (including, without limitation, in connection with any underwriting) which EMG determines are necessary or desirable in connection with a Sell-Down.
(iv) EMG will consult with the Corporation about the preferences of the Corporation for the manner in which any Sell-Down is to be effected under that Sell-Down.
(v) If the Corporation is requested to provide cooperation and assistance to facilitate a Sell-Down and the Board, acting in good faith, determines that the provision of such cooperation and assistance requested by EMG should be deferred because it would otherwise materially adversely affect a pending or proposed material acquisition or merger or capital markets transaction, or negotiations or discussions with respect thereto (a Potential Transaction ), then:
(A) the Corporation will have the right to defer the provision of such cooperation and assistance requested by EMG until such Potential Transaction is announced or is no longer being pursued by the Corporation, provided that (1) such deferral shall not extend for a period of more than sixty (60) days after the date on which the Board has determined to defer the provision of cooperation and assistance and (2) such deferral right may not be exercised by the Corporation more than twice in any twelve (12)-month period; and
(B) the Corporation will promptly give written notice to EMG of (1) the Boards determination to defer the provision of cooperation and assistance and (2) the fact that a Potential Transaction is no longer being pursued by the Corporation.
(b) Assistance in Connection with Enquiry or Proceedings about Sell-Down .
(i) Subject to applicable law and the rules of any applicable stock market or stock exchange, the Corporation agrees to allow EMG and its directors, officers and advisers, full and free access to the premises, books and records of the Corporation and its subsidiaries at all reasonable times during any regulatory enquiry or litigation proceedings (threatened or actual) in relation to any Sell-Down to enable EMG to obtain any information about the Corporation and its subsidiaries and any matters which EMG reasonably requires in relation to any Sell-Down. The Corporation and its subsidiaries must provide any information, assistance and facilities which EMG reasonably requires for those purposes.
(ii) Without limiting the above, if reasonably requested, the Corporation must, subject to applicable law and the rules of any applicable stock market or stock exchange, provide EMG and its directors, officers and advisers with full and free access to, and copies of all materials and documents used or created in connection with the due diligence investigations conducted in connection with the IPO or any Sell-Down including supporting documents and work papers, on receipt of reasonable notice, and must maintain those materials and documents for a least six (6) years after closing of the IPO or any Sell-Down, as applicable, for that purpose.
SECTION 13. Miscellaneous .
(a) Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the written consent of Parent; provided , however , that (x) any amendment, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would subject a Stockholder to adverse differential treatment relative to the other Stockholders shall require the agreement of the differentially treated Stockholder and (y) any amendment, modification, supplement, waiver or consent to departures from the provisions of this Agreement that would be adverse to a right specifically granted to a specific Stockholder herein (but not to other Stockholders) shall require the agreement of that Stockholder; and provided , further , that any adverse amendment,
modification, supplement or waiver or consent to departures from (i) the registration rights provisions or related cutback provisions contained in Section 3(c), Section 3(f), Section 4(a), Section 4(b) and Section 4(c), (ii) Section 5, (iii) Section 9 and (iv) this Section 13(a), including, in each such case, to any definitions used in such sections, shall require the consent of holders holding a majority of the Registrable Securities covered hereby (excluding for such calculation any Registrable Securities held by EMG). Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other holders of Registrable Securities may be given by holders of at least a majority of the Registrable Securities being sold by such holders pursuant to such Registration Statement.
(b) Notices . All notices required to be given hereunder shall be in writing and shall be deemed to be duly given if personally delivered, telecopied and confirmed, or mailed by certified mail, return receipt requested, or overnight delivery service with proof of receipt maintained, at the following address (or any other address that any such party may designate by written notice to the other parties):
If to the Corporation, to:
Coronado Global Resources Inc.
100 Bill Baker Way
Beckley, West Virginia 25801
Attention: Richard D. Rose, Chief Legal Officer
With a copy (which shall not constitute notice) to:
Garold R. Spindler
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If to any Stockholder, at such Stockholders address as set forth on the records of the Corporation.
Any such notice shall, if delivered personally, be deemed received upon delivery; shall, if delivered by telecopy, be deemed received on the first business day following confirmation; shall, if delivered by overnight delivery service, be deemed received the first business day after being sent; and shall, if delivered by mail, be deemed received upon the earlier of actual receipt thereof or five business days after the date of deposit in the U.S. mail.
(c) Successors and Assigns; Stockholder Status . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including the Corporation and subsequent holders of Registrable Securities acquired, directly or indirectly, from the Stockholders; provided that Parent may transfer its rights under this Agreement to any Person forming part of the defined term EMG; provided , further , however , that such successor or assign shall not be entitled to such rights unless the successor or assign shall have executed and delivered to the Corporation an Addendum Agreement substantially in the form of Exhibit A hereto (which shall also be executed by the Corporation) promptly following the acquisition of such Registrable Securities, in which event such successor or assign
shall be deemed a Stockholder for purposes of this Agreement. Except as provided in Section 8 with respect to an Indemnified Party, nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the parties hereto and their respective successors and permitted assigns any legal or equitable right, remedy or claim under, in or in respect of this Agreement or any provision herein contained.
(d) Transfer or Assignment of Registration Rights . Notwithstanding the foregoing, the rights granted to the Stockholder under this Agreement may be transferred or assigned by any such Stockholder to one or more transferee(s) or assignee(s), in whole or in part, of such Registrable Securities so long as (a) the amount of Registrable Securities transferred or assigned to such transferee or assignee represents at least $100 million of Registrable Securities (based on the then current market price of the shares), (b) the Corporation is given written notice to any said transfer or assignment, stating the name and address of each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and (c) each such transferee assumes in writing responsibility for its portion of the obligations of the Stockholder who so transferred the shares by delivering to the Corporation an Addendum Agreement substantially in the form of Exhibit A hereto (which shall also be executed by the Corporation). The restrictions in this Section 13(d) shall not apply to a transfer or assignment that is to an Affiliate of, and after such transfer or assignment continues to be an Affiliate of, such Stockholder prior to the time of such transfer or assignment.
(e) Aggregation of Registrable Securities . All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.
(f) Change of Control . The Corporation shall not merge, consolidate or combine with any other Person unless the agreement providing for such merger, consolidation or combination expressly provides for the continuation of the registration rights specified in this Agreement with respect to the Registrable Securities.
(g) Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(h) Headings; Construction . The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the context requires otherwise: (i) pronouns in the masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa; (ii) the term including shall be construed to be expansive rather than limiting in nature and to mean including, without limitation; (iii) references to sections and paragraphs refer to sections and paragraphs of this Agreement; and (iv) the words this Agreement, herein, hereof, hereby, hereunder and words of similar import refer to this Agreement as a whole, including Exhibit A hereto, and not to any particular subdivision unless expressly so limited.
(i) Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to any otherwise governing principles of conflicts of law.
(j) Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(k) Entire Agreement . This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings with respect to the subject matter contain herein, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
(l) Securities Held by the Corporation or Its Subsidiaries . Whenever the consent or approval of holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Corporation or its subsidiaries shall not be counted in determining whether such consent or approval was given by the holders of such required percentage.
(m) Specific Performance . The parties hereto recognize and agree that money damages may be insufficient to compensate the holders of any Registrable Securities for breaches by the Corporation of the terms hereof and, consequently, that the equitable remedy of specific performance of the terms hereof will be available in the event of any such breach.
(n) Actions by EMG . EMG agrees to take, or cause to be taken, such actions as are necessary to effectuate the rights of Stockholders hereunder, including making request and elections at the request of EMG entities in respect of Registrable Securities. EMG shall not have any liability to any Stockholder under this Section 13(n) for any act taken or omitted in good faith.
(o) Term . This Agreement shall terminate with respect to a Stockholder on the date on which such Stockholder ceases to hold Registrable Securities; provided that such Stockholders rights and obligations pursuant to Section 8, as well as the Corporations obligations to pay expenses pursuant to Section 7, shall survive with respect to any Registration Statement in which any Registrable Securities of such Stockholders were included and, for the avoidance of doubt, any underwriter lock-up that a Stockholder has executed prior to a Stockholders termination in accordance with this clause shall remain in effect in accordance with its terms.
(p) Consent to Jurisdiction; Waiver of Jury Trial . In any judicial proceeding involving any dispute, controversy or claim arising out of or relating to this Agreement, each of the Stockholders and EMG unconditionally accepts the nonexclusive jurisdiction and venue of any United States District Court located in the State of Delaware, or of the Court of Chancery of the State of Delaware, and the appellate courts to which orders and judgments thereof may be appealed. In any such judicial proceeding, the Stockholders and EMG agree that in addition to any method for the service of process permitted or required by such courts, to the fullest extent permitted by law, service of process may be made by delivery provided pursuant to Section 13(b). The parties hereby irrevocably waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of venue of any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. This consent to jurisdiction is being given solely for purposes of this Agreement and is not intended to, and shall not, confer consent to jurisdiction with respect to any other dispute in which a party to this Agreement may become involved.
Each of the parties hereto hereby consents to process being served by any party to this Agreement in any Proceeding of the nature specified in the paragraph above by the mailing of a copy thereof in the manner specified by the provisions of subsection (b) of this Section 13.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed as of the date first above written.
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CORONADO GLOBAL RESOURCES INC. |
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By: |
/s/ Richard D. Rose |
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Name: Richard D. Rose |
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Title: V.P., Chief Legal Officer & Secretary |
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CORONADO GROUP LLC |
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By: |
/s/ Richard D. Rose |
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Name: Richard D. Rose |
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Title: V.P., Chief Legal Officer & Secretary |
EXHIBIT A
ADDENDUM AGREEMENT
This Addendum Agreement is made this day of , 20 by and between (the New Stockholder ) and Coronado Global Resources Inc. (the Corporation ), pursuant to a Registration Rights and Sell-Down Agreement dated as of [ · ], 2018 (the Agreement ), by and among the Corporation, EMG and the Stockholders. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.
WITNESSETH:
WHEREAS, the Corporation has agreed to provide registration rights with respect to the Registrable Securities as set forth in the Agreement.
WHEREAS, the New Stockholder has acquired Registrable Securities directly or indirectly from a Stockholder.
WHEREAS, the Corporation and the Stockholders have required in the Agreement that all Persons desiring registration rights must enter into an Addendum Agreement binding the New Stockholder to the Agreement to the same extent as if it were an original party thereto.
NOW, THEREFORE, in consideration of the mutual promises of the parties, the New Stockholder acknowledges that it has received and read the Agreement and that the New Stockholder shall be bound by, and shall have the benefit of, all of the terms and conditions set out in the Agreement to the same extent as if it were an original party to the Agreement and shall be deemed to be a Stockholder thereunder.
The New Stockholder beneficially owns .
New Stockholder Address:
EXHIBIT A-1
AGREED TO on behalf of Coronado Global Resources Inc. pursuant to Section 13(c) of the Agreement.
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CORONADO GLOBAL RESOURCES INC. |
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By: |
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Printed Name and Title: |
Deed
Relationship Deed
Coronado Global Resources, Inc.
Coronado Group LLC
EMG Fund IV Finance, LLC
The Energy & Minerals Group Fund IV, LP
EMG Fund IV Offshore, LP
Table of contents
1 |
Definitions and interpretation |
2 |
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1.1 |
Definitions |
2 |
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1.2 |
Interpretation |
4 |
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2 |
Indemnity in relation to agreements with Wesfarmers Limited |
5 |
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3 |
Indemnity in relation to Stanwell Guarantee |
5 |
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4 |
Indemnity in relation to Bank Guarantee Facility |
5 |
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5 |
Indemnity in relation to a Parent Observer |
6 |
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6 |
Indemnity in relation to the Offer Documents |
6 |
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6.1 |
Indemnity of the Parent Indemnified Persons by the Company |
6 |
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6.2 |
Indemnity of the Company Indemnified Persons by the Parent |
7 |
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6.3 |
Notice and Procedures |
7 |
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6.4 |
Contribution |
8 |
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7 |
Other Parent Costs in connection with the Offer |
9 |
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8 |
Termination |
9 |
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9 |
Amendment |
9 |
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10 |
General |
10 |
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10.1 |
Governing law and jurisdiction |
10 |
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10.2 |
Counterparts |
10 |
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10.3 |
Invalidity and enforceability |
10 |
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10.4 |
Waiver |
10 |
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10.5 |
Variation |
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10.6 |
Further action to be taken at each partys own expense |
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10.7 |
Entire agreement |
11 |
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10.8 |
Notices |
11 |
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Schedule 1 |
12 |
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Notice details |
12 |
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Signing page |
13 |
Relationship Deed
Date 24 September 2018
Between the parties |
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Company |
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Coronado Global Resources, Inc.
ARBN 628 199 468 of 100 Bill Baker Way, Beckley, West Virginia 25801 |
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Parent |
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Coronado Group LLC
of 100 Bill Baker Way, Beckley, West Virginia 25801 |
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EMG Borrower |
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EMG Fund IV Finance, LLC
Delaware limited liability company with its registered office located at 850 New Burton Road, Suite 201, Dover, Delaware, 19904, USA |
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EMG Guarantors |
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The Energy & Minerals Group Fund IV, LP
a Delaware limited partnership with its registered office located at 850 New Burton Road, Suite 201, Dover, Delaware, 19904, USA acting through its general partner EMG Fund IV GP, LP, acting through its general partner EMG Fund IV, LLC
EMG Fund IV Offshore, LP
Delaware limited partnership with its registered office located at 850 New Burton Road, Suite 201, Dover, Delaware, 19904, USA acting through its general partner EMG Fund IV GP, LP, acting through its general partner EMG Fund IV, LLC |
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Recitals |
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1 As at the date of this deed, the Parent owns 100% of the outstanding shares of Common Stock.
2 The Company is currently contemplating an initial public offering (IPO) of CHESS Depository Interests on the Australian Securities Exchange, with each CHESS Depository Interest representing 0.1 fully paid shares of the Companys Common Stock (Offer CDIs).
3 In connection with, and effective upon, the date of completion of the IPO (Closing Date), the Company agrees to indemnify the Parent for certain Liabilities as set out in this deed. |
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This deed witnesses as follows: |
1 Definitions and interpretation
1.1 Definitions
The meanings of the terms used in this deed are set out below:
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Meaning |
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ASIC |
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means the Australian Securities and Investments Commission. |
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ASX |
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means ASX Limited or the Australian Securities Exchange, as appropriate. |
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Bank Guarantee Facility |
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the Multi-Currency Facility Agreement dated 15 March 2018 between the EMG Borrower, the EMG Guarantors, EMG Fund IV GP, LP, EMG Fund IV Management, LP and Australia and New Zealand Banking Group Limited. |
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Bookbuild |
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means the bookbuild process to be undertaken in accordance with clause 5 of the Offer Management Agreement to determine institutional investor demand for the Offer CDIs and to determine the price under the Offer. |
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CHESS Depository Interest |
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a security interest defined in the settlement operating rules of ASX Settlement Pty Limited ABN 49 008 504 532. |
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CHESS Depository Nominee |
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means CHESS Depositary Nominees Pty Limited ABN 75 071 346 506. |
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Closing Date |
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has the meaning given in Recital 3. |
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Commission |
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means the United States Securities and Exchange Commission. |
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Common Stock |
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the shares of common stock, par value US$0.01 per share, of the Company, and any other securities issued or issuable with respect to any such shares by way of share split, share dividend, recapitalisation, merger, exchange or similar event or otherwise. |
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Company Indemnified Person |
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the Company, and each of its directors, officers, employees and agents. |
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Corporations Act |
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the Corporations Act 2001 (Cth). |
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Costs |
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mean any costs, charges or expenses. |
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Governmental Agency |
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means any government or any governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency, bureau, municipal, board, instrumentality or entity in any jurisdiction and includes ASIC and the Takeovers Panel. |
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Meaning |
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Institutional Offering Memorandum |
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has the meaning given under the Offer Management Agreement. |
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IPO |
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has the meaning given in Recital 2. |
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Joint Lead Manager |
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has the meaning given under the Offer Management Agreement. |
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Liability |
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any liability of any kind including damages, costs, fees and expenses and any applicable taxes levied in respect of that liability. |
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Losses |
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has the meaning given under the Offer Management Agreement. |
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New Shares |
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the shares to be issued by the Company in the form of CHESS Depository Interests under the Offer. |
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Offer |
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has the meaning given under the Offer Management Agreement. |
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Offer CDIs |
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has the meaning given under the Offer Management Agreement. |
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Offer Documents |
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has the meaning given under the Offer Management Agreement. |
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Offer Management Agreement |
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the agreement of that name entered into on or about the date of this document between, amongst others, the Parent, Company and the joint lead managers to the IPO. |
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Offer Price |
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has the meaning given under the Offer Management Agreement. |
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Offeror Written Communication |
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has the meaning given under the Offer Management Agreement. |
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Parent Indemnified Person |
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the Parent, and each of its directors, officers, employees and agents, and each person, if any, who controls the Parent within the meaning of Section 15 of the U.S. Securities Act or Section 20 of the U.S. Exchange Act, and each of the directors, officers, employees and agents of each such controlling person. |
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Parent Observer |
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any person appointed by the Parent as an observer to the board of the Company pursuant to section 2.10 of the amended and restated by-laws of the Company and section 2.6 of the Stockholders Agreement. |
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Pricing Disclosure Package |
|
has the meaning given under the Offer Management Agreement. |
Term |
|
Meaning |
|
|
|
Sale Shares |
|
the shares to be sold by the Parent in the form of CHESS Depository Interests under the Offer. |
|
|
|
Share Sale Agreement Guarantee |
|
the guarantee given by the Parent pursuant to clause 20 of the Share Sale Agreement between Wesfarmers Limited, Coronado Australia Holdings Pty Ltd and Coronado Group dated 22 December 2017, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof. |
|
|
|
Stanwell Guarantee |
|
the guarantee and indemnity given by the Parent to Stanwell Corporation Limited dated 13 March 2018, as amended on 14 August 2018. |
|
|
|
Stockholders Agreement |
|
the agreement of that name entered into on or about the date of this deed between the Parent and the Company. |
|
|
|
Subsidiary |
|
has the meaning given in the Corporations Act. |
|
|
|
Transitional Services Agreement Guarantee |
|
the guarantee given by the Parent pursuant to clause 19 of the Transitional Services Agreement between Wesfarmers Limited, Wesfarmers Curragh Pty Ltd (renamed Coronado Curragh Pty Ltd) and Coronado Group dated 29 March 2018, and the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof. |
|
|
|
U.S. Exchange Act |
|
means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. |
|
|
|
U.S. Offer |
|
has the meaning given under the Offer Management Agreement. |
|
|
|
U.S. Securities Act |
|
means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. |
1.2 Interpretation
In this deed, including the recitals, unless the contrary intention appears:
(a) the singular includes the plural and vice versa;
(b) a reference to a party includes its successors, personal representatives and transferees; and
(c) the schedules form part of this deed.
2 Indemnity in relation to agreements with Wesfarmers Limited
(a) On and from the Closing Date, the Company indemnifies the Parent on a full indemnity basis, and to the fullest extent permitted by law, against all losses or Liabilities (including all reasonable legal costs) incurred by the Parent under the terms of the:
(1) Share Sale Agreement Guarantee; and
(2) Transitional Services Agreement Guarantee.
(b) The indemnity in clause 2(a) is an irrevocable, unconditional, continuing and principal obligation of the Company and remains in full force and effect until released by the Parent.
(c) The obligation of the Company under this clause 2 is a principal obligation which will not be affected by any act, omission, matter or thing which, but for this provision, would reduce, release, discharge or prejudice any of its obligations under this clause 2 (without limitation and whether or not known to it or any other person).
3 Indemnity in relation to Stanwell Guarantee
(a) On and from the Closing Date, the Company indemnifies the Parent on a full indemnity basis, and to the fullest extent permitted by law, against all losses or Liabilities (including all reasonable legal costs) incurred by the Parent under the terms of the Stanwell Guarantee.
(b) The indemnity in clause 3(a) is an irrevocable, unconditional, continuing and principal obligation of the Company and remains in full force and effect until released by the Parent.
(c) The obligation of the Company under this clause 3 is a principal obligation which will not be affected by any act, omission, matter or thing which, but for this provision, would reduce, release, discharge or prejudice any of its obligations under this clause 3 (without limitation and whether or not known to it or any other person).
4 Indemnity in relation to Bank Guarantee Facility
(a) On and from the Closing Date, the Company indemnifies the EMG Borrower and EMG Guarantors on a full indemnity basis, and to the fullest extent permitted by law, against all losses or Liabilities (including all reasonable legal costs) incurred by the EMG Borrower or the EMG Guarantors under the terms of the Bank Guarantee Facility to the extent that such losses or liabilities relate to financial guarantees or performance bonds (each an Instrument) issued under the Bank Guarantee Facility on behalf of the Company or a Subsidiary of the Company which have not been cancelled by return of the Instrument to the lender in accordance with the terms of the Bank Guarantee Facility.
(b) The indemnity in clause 4(a) is an irrevocable, unconditional, continuing and principal obligation of the Company and remains in full force and effect until released by the Parent.
(c) The obligation of the Company under this clause 4 is a principal obligation which will not be affected by any act, omission, matter or thing which, but for this provision, would reduce, release, discharge or prejudice any of its obligations under this clause 4 (without limitation and whether or not known to it or any other person).
5 Indemnity in relation to a Parent Observer
On and from the Closing Date, the Company must indemnify any Parent Observer on the same basis (with any necessary modifications) as it indemnifies Company directors, and must also reimburse any Parent Observers travel costs associated with attending Company Board meetings on the same basis as it reimburses such travel costs of Company directors.
6 Indemnity in relation to the Offer Documents
6.1 Indemnity of the Parent Indemnified Persons by the Company
The Company will indemnify and hold harmless, to the fullest extent permitted by law, each Parent Indemnified Person from and against any losses, claims, damages or liabilities to which such Parent Indemnified Person may become subject, under applicable law, insofar as such Losses or Liabilities (or actions in respect thereof) arise out of, or are based upon:
1. except to the extent covered by clause 6.1(2) below:
a. any misstatement or misleading or deceptive statement in the Offer Documents; or
b. any omission from the Offer Documents of material required by the Corporations Act or any other applicable law; and
2. any untrue statement or alleged untrue statement of a material fact contained in any preliminary or final Institutional Offering Memorandum or the Pricing Disclosure Package, or any amendment or supplement thereto, or any Offeror Written Communication to the extent those documents relate to the U.S. Offer, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The Company will reimburse, to the fullest extent permitted by law, each Parent Indemnified Person for any legal or other expenses reasonably incurred by such Parent Indemnified Person in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent such Loss or Liability arises out of, or is based upon, an untrue statement or alleged untrue statement or omission or alleged omission made in any Offer Document in reliance upon and in conformity with any information furnished in writing to the Company by (a) any Joint Lead Manager or (b) the Parent, in each case, expressly for use therein (or in respect of any Loss or Liability for which such indemnification would not be lawful). To avoid doubt, pro forma financial information of the Company derived from financial information of the Parent and the historical financial information of the Parent shall not be treated as having been stated in reliance upon or in conformity with information furnished to the Company by the Parent for the purposes of this clause.
6.2 Indemnity of the Company Indemnified Persons by the Parent
The Parent will indemnify and hold harmless, to the fullest extent permitted by law, each Company Indemnified Person from and against any Losses or Liabilities, joint or several, to which such Company Indemnified Person may become subject, under applicable law, insofar as such Losses or Liabilities (or actions in respect thereof) arise out of, or are based upon:
1. except to the extent covered by clause 6.2(2) below:
a. any misstatement or misleading or deceptive statement in the Offer Documents; or
b. any omission from the Offer Documents of material required by the Corporations Act or any other applicable law; and
2. any untrue statement or alleged untrue statement of a material fact contained in any preliminary or final Institutional Offering Memorandum or the Pricing Disclosure Package, or any amendment or supplement thereto, or any Offeror Written Communication to the extent those documents relate to the U.S. Offer, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
in each case to the extent, but only to the extent, that such misleading, deceptive or untrue statement or alleged untrue statement (as applicable) or omission or alleged omission was made in Offer Document in reliance upon and in conformity with any information furnished in writing to the Company by the Parent expressly for use therein. To avoid doubt, pro forma financial information of the Company derived from financial information of the Parent and the historical financial information of the Parent shall not be treated as having been stated in reliance upon or in conformity with information furnished to the Company by the Parent for the purposes of this clause.
The Parent will reimburse, to the fullest extent permitted by law, each Company Indemnified Person for any legal or other expenses reasonably incurred by such Company Indemnified Person in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Parent shall not be liable in any such case to the extent such Loss or Liability arises out of, or is based upon, an untrue statement or alleged untrue statement or omission or alleged omission made in any Offer Document in reliance upon and in conformity with any information furnished in writing to the Company by any Joint Lead Manager expressly for use therein (or in respect of any Loss or Liability for which such indemnification would not be lawful) and provided further, that the Liability of the Parent pursuant to this clause 6.1 shall not exceed the product of the number of Offer CDIs sold by the Parent in the Offer and the Offer Price.
6.3 Notice and Procedures
Promptly after receipt by an indemnified party under clauses 6.1 or 6.2 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such clause, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any Liability which it may have to any indemnified party otherwise than under such clause.
In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defence thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defence thereof, the indemnifying party shall not be liable to such indemnified party under such clause for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defence thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all Liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.
The Parent holds the benefit of the indemnity provided under clause 6.1 for the Parent Indemnified Parties, and shall also take all reasonable steps to ensure that each Parent Indemnified Party complies with the requirements of this clause 6 as though it was a party hereto. The Company holds the benefit of the indemnity provided under clause 6.2 for the Company Indemnified Parties, and shall also take all reasonable steps to ensure that each Company Indemnified Party complies with the requirements of this clause 6 as though it was a party hereto.
6.4 Contribution
If the indemnification provided for in clauses 6.1 and 6.2 is unavailable to or insufficient to hold harmless an indemnified party under clause 6.1 or 6.2 above in respect of any Losses or Liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable or suffered or incurred by such indemnified party as a result of such Losses or Liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Parent on the other from the offering of the Offer CDIs in the Offer.
If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, or if the indemnified party failed to give the notice required under clause 6.3, then each indemnifying party shall contribute to such amount paid or payable or suffered or incurred by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Parent on the other in connection with the statements or omissions which resulted in such Losses or Liabilities (or actions in respect thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Parent on the other shall be deemed to be in the same proportion as the total net proceeds from the Offer (before deducting expenses) received by the Company and the Parent, respectively.
The relative fault shall be determined by reference to, among other things, whether the misleading, deceptive or untrue statement or alleged untrue statement (as applicable) or omission or alleged omission relates to information supplied by the Company on the one hand or the Parent on the other and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Parent agree that it would not be just and equitable if contribution pursuant to this clause 6.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this clause 6.4.
The amount paid or payable by an indemnified party as a result of the Losses or Liabilities (or actions in respect thereof) referred to above in this clause 6.4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this clause 6.4 the Liability of the Parent pursuant to clause 6.2 and this clause 6.4 shall not exceed the product of the number of Offer CDIs sold by the Parent in the Offer and the Offer Price.
7 Other Parent Costs in connection with the Offer
The Company must pay, or reimburse the Parent for, the reasonable Costs of and incidental to the Offer, including but not limited to:
(a) all reasonable Costs (including legal fees and disbursements, bookbuild expenses and travel and accommodation expenses (including, for the avoidance of doubt, reasonable Costs of representatives of the Parent accompanying representatives of the Company on the roadshow), electronic bookbuild platform costs and Netroadshow) in respect of the Offer Management Agreement and any aspect of the Offer (including any aspect arising after Closing Date) incurred by the Parent; and
(b) reasonable fees of any public relations advisers and printers, any listing, quotation or registration fees, and any reasonable expenses incurred in connection with the qualification of the Offer CDIs for issue or sale under the laws of the relevant jurisdictions outside Australia as agreed between the Company and the joint lead managers in which the Offer CDIs are offered, issued or sold,
as soon as reasonably practicable, and in any case within 5 days, after a request for payment or reimbursement is made by the Parent or on termination of the Offer Management Agreement, and whether the costs or expenses were or are incurred before or after the date of this deed or the Offer Management Agreement or before or after the Closing Date. For the avoidance of doubt, this clause shall in no way affect the Companys obligations set forth in clauses 11, 12, 13, 14 or 15 of the Offer Management Agreement.
Despite the foregoing, the Company will not be liable to pay, or reimburse the Parent, for any fees that are fees payable by the Parent to the joint lead managers in relation to the Sale Shares sold under the Offer under clause 11.1 of the Offer Management Agreement.
8 Termination
This deed terminates automatically if the Company withdraws the Offer.
9 Amendment
This deed may not be amended without the prior written consent of the parties.
10 General
10.1 Governing law and jurisdiction
(a) This deed is governed by the laws of Queensland, Australia; provided that, to the extent that the indemnity, contribution and related provisions in clause 6 relate to the U.S. Offer, such indemnity, contribution and related provisions shall be governed by and construed in accordance with the laws of the State of New York without regard to any conflict of laws principles that would indicate the applicability of the laws of any other jurisdiction.
(b) Each of the parties irrevocably submits to the non-exclusive jurisdiction of courts exercising jurisdiction in Queensland and the United States federal and state courts in The City of New York and County of New York and courts of appeal from them in respect of any proceedings arising out of or in connection with this deed or the transactions contemplated hereby.
(c) Each of the parties waives to the fullest extent permitted by law any objection that it may now or in the future have to the venue of any proceedings, and any claim it may now or in the future have that any proceedings have been brought in an inconvenient forum, if that venue falls within clause 10.1(b).
(d) Each of the parties irrevocably waives to the fullest extent permitted by law any immunity in respect of its obligations under this deed which that party may acquire from the jurisdiction of any court or any legal process for any reason including, but not limited to, the service of notice, attachment prior to judgment, attachment in aid of execution or execution.
(e) Each of the parties irrevocably waives to the fullest extent permitted by law, any and all right to trial by jury with respect to any proceedings arising out or relating to this deed or the transactions contemplated hereby insofar as this deed or such transactions relate to the U.S. Offer.
10.2 Counterparts
This deed may be executed in any number of counterparts.
10.3 Invalidity and enforceability
(a) If any provision of this deed is invalid under the law of any jurisdiction the provision is enforceable in that jurisdiction to the extent that it is not invalid, whether it is in severable terms or not.
(b) Clause 10.3(a) does not apply where enforcement of the provision of this deed in accordance with clause 10.3(a) would materially affect the nature or effect of the parties obligations under this deed.
10.4 Waiver
No party to this deed may rely on the words or conduct of any other party as a waiver of any right unless the waiver is in writing and signed by the party granting the waiver.
The meanings of the terms used in this clause 10.4 are set out below.
Term |
|
Meaning |
|
|
|
conduct |
|
includes delay in the exercise of a right. |
|
|
|
right |
|
any right arising under or in connection with this deed and includes the right to rely on this clause. |
|
|
|
waiver |
|
waiver includes an election between rights and remedies, and conduct which might otherwise give rise to an estoppel. |
10.5 Variation
A variation of any term of this deed must be in writing and signed by the parties.
10.6 Further action to be taken at each partys own expense
Other than as expressly set out in this deed, each party must, at its own expense, do all things and execute all documents necessary to give full effect to this deed and the transactions contemplated by it.
10.7 Entire agreement
This deed states all the express terms agreed by the parties in respect of its subject matter. It supersedes all prior discussions, negotiations, understandings and agreements in respect of its subject matter.
10.8 Notices
(a) A notice, demand or other communication relating to this deed must be in writing and given to the partys current delivery address for notices as set out in Schedule 1 or as otherwise notified by a party to this deed.
(b) A notice, demand or other communication relating to this deed is regarded as given by a party to another party:
(1) the day of delivery of that notice to the address of the other party;
(2) five (5) days after deposit in the United States mail;
(3) one (1) day after deposit with a reputable overnight courier service; or
(4) four hours after transmission of that notice by email to the email address specified in the address of that other party (unless a message is received indicating that it has not been delivered), provided in each case that if delivery is deemed to have occurred after 5.00pm or before 9.00am in the place of receipt, or on a day which is not a business day in the place of receipt, then it will be deemed received at 9.00am on the next succeeding business day (or on that business day, in the case of notices deemed delivered before 9.00am on a business day) in the place of receipt.
Schedule 1
Notice details
Company |
|
Coronado Global Resources, Inc. |
|
|
|
Address |
|
100 Bill Baker Way Beckley, West Virginia 25801 |
|
|
|
Attention |
|
Richard D. Rose, Chief Legal Officer |
|
|
|
Email address |
|
** |
|
|
|
Parent |
|
Coronado Group LLC |
|
|
|
Address |
|
100 Bill Baker Way Beckley, West Virginia 25801 |
|
|
|
Attention |
|
Laura L. Tyson, General Counsel |
|
|
|
Fax |
|
** |
|
|
|
EMG Borrower and EMG Guarantors |
|
c/o EMG Fund IV Finance , LLC |
|
|
|
Address |
|
2229 San Felipe St, Ste 1300 Houston, TX 77019
with a copy to
2000 McKinney Avenue, Suite 1250 Dallas, TX 75201 |
|
|
|
Attention |
|
Laura L. Tyson **
with a copy to
T. Nolen Taylor ** |
|
|
|
Email addresses: |
|
**
with a copy to
** |
Signing page
|
Executed as a deed |
|
|
|
Company |
|
|
|
Signed sealed and delivered by |
|
Coronado Global Resources Inc. |
|
in the presence of |
|
|
sign here |
/s/ G.R. Spindler |
|
sign here |
/s/ Peter Watson |
|
Authorised signatory |
|
|
Witness |
|
|
|
|
|
|
|
|
|
|
print name |
G.R. Spindler |
|
print name |
Peter Watson |
|
|
|
|
|
|
Parent |
|
|
|
Signed sealed and delivered by |
|
Coronado Group, LLC |
|
in the presence of |
sign here |
/s/ G.R. Spindler |
|
sign here |
/s/ Peter Watson |
|
Authorised signatory |
|
|
Witness |
|
|
|
|
|
|
|
|
|
|
print name |
G.R. Spindler |
|
print name |
Peter Watson |
|
|
|
|
|
|
EMG Borrower |
|
|
|
Signed sealed and delivered by |
|
EMG Fund IV Finance, LLC |
sign here |
/s/ John Calvert |
|
sign here |
/s/ Peter Watson |
|
Authorised signatory |
|
|
Witness |
|
|
|
|
|
|
|
|
|
|
print name |
John Calvert |
|
print name |
Peter Watson |
|
EMG Guarantor |
|
|
|
Signed sealed and delivered by |
|
The Energy & Minerals Group Fund IV, LP |
|
|
|
By: EMG Fund IV GP, LP, its general partner |
|
By: EMG Fund IV, LLC, its general partner |
sign here |
/s/ John Calvert |
|
sign here |
/s/ Peter Watson |
|
Authorised signatory |
|
|
Witness |
|
|
|
|
|
|
|
|
|
|
print name |
John Calvert |
|
print name |
Peter Watson |
|
EMG Guarantor |
|
|
|
Signed sealed and delivered by |
|
EMG Fund IV Offshore, LP |
|
|
|
By: EMG Fund IV GP, LP, its general partner |
|
By: EMG Fund IV, LLC, its general partner |
|
sign here |
/s/ John Calvert |
|
sign here |
/s/ Peter Watson |
|
Authorised signatory |
|
|
Witness |
|
|
|
|
|
|
|
|
|
|
print name |
John Calvert |
|
print name |
Peter Watson |
EXECUTED VERSION
SECURED MULTICURRENCY REVOLVING SYNDICATED FACILITY AGREEMENT
INCORPORATING AN AUD BANK GUARANTEE FACILITY
(Australian Branch)
SYNDICATED FACILITY AGREEMENT
dated 15 September 2018
for
CORONADO FINANCE PTY LTD (ACN 628 668 235)
arranged and underwritten by
WESTPAC BANKING CORPORATION (ABN 33 007 457 141)
with
WESTPAC BANKING CORPORATION (ABN 33 007 457 141)
acting as Agent
NORTON ROSE FULBRIGHT AUSTRALIA
Level 18, Grosvenor Place
225 George Street
Sydney, NSW 2000
Tel: +61 02 9330 8000
nortonrosefulbright.com
Our ref: 4008970
CONTENTS
Clause |
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|
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Page |
|
|
|
|
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SECTION 1 |
|
INTERPRETATION |
|
1 |
SECTION 2 |
|
THE FACILITIES |
|
49 |
SECTION 3 |
|
UTILISATION |
|
52 |
SECTION 4 |
|
REPAYMENT, PREPAYMENT AND CANCELLATION |
|
57 |
SECTION 5 |
|
COSTS OF UTILISATION |
|
63 |
SECTION 6 |
|
ADDITIONAL PAYMENT OBLIGATIONS |
|
68 |
SECTION 7 |
|
GUARANTEE |
|
77 |
SECTION 8 |
|
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT |
|
80 |
SECTION 9 |
|
CHANGES TO PARTIES |
|
108 |
SECTION 10 |
|
THE FINANCE PARTIES |
|
116 |
SECTION 11 |
|
ADMINISTRATION |
|
128 |
SECTION 12 |
|
GOVERNING LAW AND ENFORCEMENT |
|
146 |
|
|
|
|
|
Schedule 1 |
|
THE ORIGINAL LENDERS |
|
149 |
Schedule 2 |
|
CONDITIONS PRECEDENT |
|
150 |
Schedule 3 |
|
REQUESTS |
|
151 |
Schedule 4 |
|
FORM OF TRANSFER CERTIFICATE |
|
152 |
Schedule 5 |
|
FORM OF ACCESSION LETTER |
|
153 |
Schedule 6 |
|
FORM OF RESIGNATION LETTER |
|
154 |
Schedule 7 |
|
FORM OF COMPLIANCE CERTIFICATE |
|
155 |
Schedule 8 |
|
FORM OF CONFIDENTIALITY UNDERTAKING |
|
156 |
Schedule 9 |
|
Timetables Loans |
|
157 |
Schedule 10 |
|
Real Property |
|
158 |
Schedule 11 |
|
Restructure - Steps Paper |
|
159 |
THIS AGREEMENT is dated 15 September 2018 and made between:
(1) CORONADO FINANCE PTY LTD (ACN 628 668 235) (Original Borrower)
(2) THE ENTITIES listed in Part I of Schedule 1 as original guarantors (the Original Guarantors )
(3) CORONADO GLOBAL RESOURCES, INC (the Parent )
(4) WESTPAC BANKING CORPORATION (ABN 33 007 457 141) as mandated lead arranger, underwriter and bookrunner (the Arranger )
(5) THE ENTITIES listed in Part II of Schedule 1 as lenders (the Original Lenders )
(6) WESTPAC BANKING CORPORATION (ABN 33 007 457 141) (the Agent )
IT IS AGREED as follows:
SECTION 1
INTERPRETATION
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
ABL Facility means the facility provided under the Asset-Based Revolving Credit Agreement, dated as of June 6, 2017, as amended as of the effective date of 29 March 2018, among Coronado Group LLC and related entities, Bank of America, N.A., and certain lenders and issuing banks.
Acceptable Bank means:
(a) a bank or financial institution which has a rating for its long-term unsecured and non credit-enhanced debt obligations of A- or higher by Standard & Poors Rating Services or Fitch Ratings Ltd or A3 or higher by Moodys Investors Service Limited or a comparable rating from an internationally recognised credit rating agency; or
(b) any other bank or financial institution approved by the Agent.
Accession Deed has the meaning given to the term Accession Deed in the Security Trust Deed.
Accession Letter means a document substantially in the form set out in Schedule 5 ( Form of Accession Letter ) .
Additional Borrower means a company which becomes an Additional Borrower in accordance with Clause 27 ( Changes to the Obligors ) .
Additional Guarantor means a company which becomes an Additional Guarantor in accordance with Clause 27 ( Changes to the Obligors ) .
Additional Obligor means an Additional Borrower or an Additional Guarantor.
Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
Agents Spot Rate of Exchange means, in relation to Australian dollars at any time, the rate of exchange to buy US dollars with Australian dollars as determined by reference to Bloombergs page WMFXAU10 Index average rate being the Australian Hedge Settlement Rate at that time. If for any reason the rate is not displayed, the rate will be the Agents spot rate of exchange for the purchase of US dollars with Australian dollars at or around 11:00am on the relevant day.
A-IFRS means the Australian equivalents of the international financial reporting standards issued by the International Accounting Standards Board, as in effect from time to time.
Anti-Corruption Laws means all applicable laws, rules and regulations relating to bribery or corruption, including the US Foreign Corrupt Practices Act of 1977 (US), as amended ( FCPA ), the UK Bribery Act 2010 (UK) and any other applicable anti-corruption or anti-bribery laws.
Assignment Agreement means an agreement in the form agreed between the Agent and the relevant assignor and assignee.
Associate has the meaning given to it in Section 128F(9) of the Tax Act.
ASX means the Australian Securities Exchange Limited and the equity securities exchange is manages.
Auditors means KPMG, Ernst Young, PWC or Deloitte, or any other firm approved in advance by the Majority Lenders (such approval not to be unreasonably withheld or delayed).
Australian Mining Tenement means Mining Lease Numbers 1878, 1990, 80010, 80011, 80012, 80086, 80110, 80112, 80123, 80171, 700006, 700007, 700008 and 700009 and Mineral Development Licence Numbers 162, 328 and 329 and any renewals, extensions and amendments thereof and any tenements issued to Coronado Curragh Pty Limited in place thereof or over any part of the area covered by the foregoing tenements any other mining tenement issued to an Obligor that is not a Project Asset and any other mining tenement as agreed for the purposes of this definition between the Parent and Agent or otherwise the subject of a Mining Tenement Security, from time to time.
Australian Mortgage means each real property mortgage granted by an Obligor over leasehold and freehold real property interests in Australia.
Australian Withholding Tax means any Australian Tax required to be withheld or deducted from any interest or other payment under Division 11A of Part III of the Tax Act or Subdivision 12-F of Schedule 1 to the Taxation Administration Act 1953 (Cth).
Authorised Officer means:
(a) in respect of an Obligor, any director or secretary, or the chief executive officer or group chief financial officer, of such Obligor, or any person from time to time nominated as an Authorised Officer by it by an Authorised Officer Certificate or notice to the Finance Parties accompanied by certified copies of signatures of all new persons so appointed (and in respect of which the identity of that person has been verified to each Finance Partys satisfaction in order to manage its anti-money laundering, counter-terrorism financing or know your customer laws or economic and trade sanctions risk or to comply with any laws or regulations in Australia or any other country and the Agent has not received notice of revocation of the appointment); and
(b) in respect of each Finance Party, any person whose title or acting title includes the word, Head , Director , Manager or President or a person performing the functions of any of them, any
attorney appointed by that Finance Party and any other person appointed by that Finance Party to act as its authorised officer for the purpose of this Agreement.
Authorised Officer Certificate means a properly executed certificate in the form in Part IV of Schedule 2 ( Authorised Officer Certificate ) .
Authorisation means:
(a) an authorisation, consent, approval, resolution, licence, exemption, filing or registration; or
(b) in relation to anything which will be fully or partly prohibited or restricted by law if a Governmental Agency intervenes or acts in any way within a specified period after lodgement, filing, registration or notification, the expiry of that period without intervention or action.
Available Commitment means, in relation to a Facility, a Lenders Commitment under that Facility minus:
(a) the Base Currency Amount of its participation in any outstanding Utilisations under that Facility; and
(b) in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date,
other than, in relation to any proposed Utilisation under Facility A only, that Lenders participation in any Facility A Utilisations that are due to be repaid or prepaid on or before the proposed Utilisation Date.
Available Facility means, in relation to a Facility, the aggregate for the time being of each Lenders Available Commitment in respect of that Facility.
Availability Period means the period from and including the date of this Agreement to and including the date falling one Month before the Termination Date.
Bank Guarantee means a letter of credit, bank guarantee, performance bond or other instrument in the form requested by the Borrower and agreed by an Issuing Bank.
Bankruptcy Law means Title 11 of the United States Code (11 USC. § 101 et seq.) and all other liquidation, conservatorship, bankruptcy, general assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States from time to time in effect and affecting the rights of creditors generally.
Base Currency Amount means, in relation to a Utilisation, the amount specified in the Utilisation Request delivered by a Borrower for that Utilisation or, if, in relation to Facility A the amount requested is not denominated in the Facility A Base Currency, that amount converted into the Facility A Base Currency at the Agents Spot Rate of Exchange:
(a) for a proposed Facility A Utilisation, on the date which is three Business Days before the Utilisation Date (or if later, on the date the Agent receives the Utilisation Request) of that Proposed Facility A Utilisation; and
(b) in relation to an outstanding Facility A Utilisation, on the date the Agent receives a Utilisation Request in respect of any proposed new Facility A Utilisation,
adjusted to reflect any repayment, prepayment, consolidation or division of a Facility A Utilisation.
BBSY Bid means in relation to any Loan in Australian dollars:
(a) the applicable Screen Rate as of the Specified Time for Australian dollars and for a period equal in length to the Interest Period of that Loan; or
(b) as otherwise determined pursuant to Clause 12.1 ( Unavailability of Screen Rate ).
and if, in either case, that rate is less than zero, BBSY Bid shall be deemed to be zero.
Beneficial Ownership Certification means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
Beneficial Ownership Regulation means 31 C.F.R. § 1010.230.
Beneficiaries has the meaning given to it in the Security Trust Deed.
Benefit Arrangement means an employee benefit plan, within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a Multiemployer Plan and which is maintained, sponsored or contributed to by any member of the ERISA Group.
Benefit Plan means any of (a) an employee benefit plan (as defined in ERISA) that is subject to Title I of ERISA, (b) a plan as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such employee benefit plan or plan.
Black Lung Act means collectively, the Black Lung Benefits Revenue Act of 1977, as amended and the Black Lung Benefits Reform Act of 1977, as amended.
Borrower means an Original Borrower or an Additional Borrower unless it has ceased to be a Borrower in accordance with Clause 27 ( Changes to the Obligors ).
Borrower Affiliate means the Borrower, any Affiliates of the Borrower, any trust of which it or any of its Affiliates is a trustee, any partnership of which it or any of its Affiliates is a partner and any trust, fund or other entity which is managed by, or is under the control of, it or any of its Affiliates.
Break Costs means the amount (if any) by which:
(a) the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds:
(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Market or acquiring a bill of exchange accepted by a leading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
It is an amount payable in lieu of interest which would otherwise have been paid.
Buchanan Mine means the Obligors underground mine located near the town of Oakwood in Buchanan County, in the State of Virginia, in the United States of America.
Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in Sydney and Brisbane and, for transactions to be effected or amounts owing in US dollars, London, New York, Brisbane and Sydney.
CAH Loan Agreement means the loan agreement dated 29 March 2018 between Coronado Curragh Pty Limited, Curragh Queensland Mining Pty Ltd, Curragh Coal Sales Co. Pty. Ltd. and Coronado Australia Holdings Pty Limited.
Change of Control means, after the Listing Date, the occurrence of any of the following:
(a) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of Securities (within the meaning of Rule 13d under the Exchange Act) (in each case other than the Energy & Minerals Group and its Affiliates) shall be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of Capital Stock having more, directly or indirectly, than 50% of the total voting power of all outstanding Capital Stock of Parent; or
(b) any person alone or together with its associates (as defined in section 12 of the Corporations Act) other than the Energy & Minerals Group and its Affiliates has voting power (as defined in s610 of the Corporations Act) in the Parent of more than 50%, or otherwise controls the Parent (where, in this paragraph (ii), control has the meaning given in s50AA of the Corporations Act).
For the purposes of this definition:
Affiliate as to any Person shall mean any other Person which directly or indirectly controls, is controlled by, or is under common control with such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.
Capital Stock shall mean with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest.
Coal Act means the Coal Industry Retiree Health Benefits Act of 1992, as amended.
Commitment means a Facility A Commitment or Facility B Commitment.
Compliance Certificate means a certificate substantially in the form set out in Schedule 7 ( Form of Compliance Certificate ).
Compulsory Acquisition means an actual or proposed compulsory acquisition, resumption, appropriation or confiscation of, or freezing, restraining or forfeiture order in connection with, assets under legislation or otherwise, including a restriction or order under which compensation is payable in connection with assets.
Confidential Information means all information relating to a Borrower, any Obligor, the Group, the Finance Documents or a Facility of which a Finance Party becomes aware in its capacity as, or for the
purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or a Facility from either:
(a) any Group Member or any of its advisers; or
(b) another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Group Member or any of its advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes:
(i) information that:
(A) is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 41 ( Confidentiality ); or
(B) is identified in writing at the time of delivery as non-confidential by any Group Member or any of its advisers; or
(C) is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and
(ii) any Funding Rate or Reference Bank Quotation.
Confidentiality Undertaking means a confidentiality undertaking substantially in a form as set out in Schedule 8 ( Form of Confidentiality Undertaking ) or in any other form agreed between a Borrower and the Agent.
Consol Arrangements means the arrangements and transactions embodied in the Royalty arrangement documented in the Membership Interest and Asset Purchase Agreement between, among others, Coronado IV LLC and Consol Energy Inc in relation to the Buchanan mine.
Consolidated Net Income mean consolidated net income (or loss) of the Group, excluding (without duplication):
(a) the effect of non-cash compensation expenses related to common stock and other equity securities issued to employees;
(b) the effect of any extraordinary or non-recurring gains, losses or expenses (including fees) (including IPO Costs and costs and expenses, including fees, incurred in connection with the consummation of the transactions contemplated under the Finance Documents);
(c) the gains or losses on discontinued operations or disposal of discontinued operations or costs and expenses associated with the closure of any mines (including any reclamation or disposal obligations);
(d) equity earnings or losses of Affiliates (other than earnings or losses of a Group Member);
(e) non-cash charges due to cumulative effects of changes in accounting principles;
(f) non-cash unwind of the below market contract in the Stanwell Arrangements;
(g) non-cash impact of the unwind of the Stanwell Reserve Area/Stanwell Rebate (as those terms are contemplated by the Stanwell Arrangements); and
(h) non-cash gains/losses related to hedge book or interest rate swap revaluation.
Contamination shall mean the presence or Release or threat of Release of Regulated Substances in, at, on, under or emanating to or from any property, whether owned or leased, of any Obligor or any Subsidiary of an Obligor, which pursuant to Environmental Health and Safety Laws requires notification or reporting to a Governmental Agency, or which pursuant to Environmental Health and Safety Laws requires performance of a Remedial Action or which otherwise constitutes a violation of Environmental Health and Safety Laws.
Contested Tax means a Tax payable by an Obligor where that Obligor is diligently contesting its liability to pay that Tax in good faith.
Corporations Act means the Corporations Act 2001 (Cth).
Cross Charge means any Security given by an Obligor who is party to a joint venture over any of its interest in that joint venture to another party (or parties) to that joint venture to secure the due payment of amounts payable or obligations incurred and/or the performance of any other obligations, under or in respect of that joint venture.
Curragh Intercompany Loans means any of the following, if and for so long as they are subordinated in accordance with the terms of the Curragh Intercompany Subordination Deed;
(a) the loan made by Coronado Australia Holdings Pty Limited to Coronado Curragh Pty Ltd pursuant to the CAH Loan Agreement;
(b) the loan made by the Parent to Coronado Curragh Pty Limited pursuant to the Parent Loan Agreement; and
(c) any loan made by an Obligor to another Obligor.
Curragh Intercompany Subordination Deed means a subordination deed in the form of the subordination deed delivered to the Agent as a condition precedent under Part I of Schedule 2 ( Conditions precedent ) or any other form of subordination deed agreed between the Agent (acting on the instructions of the Majority Lenders) and the Parent.
Curragh Mine means the Obligors open-pit mines located in Queenslands Bowen Basin, in Australia and the subject of the Australian Mining Tenements.
Debt Purchase Transaction means, in relation to a person, a transaction where such person:
(a) acquires by way of assignment, novation or transfer;
(b) enters into any sub-participation in respect of; or
(c) enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of, or allowing it to control the exercise of rights relating to,
any Commitment or amount outstanding under this Agreement.
Default means:
(a) an Event of Default; or
(b) any event or circumstance specified in Clause 25 ( Events of Default ) which would (with the expiry of a grace period or the giving of notice, the making of any determination under the Finance Documents, or any combination of any of the foregoing) be an Event of Default.
Defaulting Finance Party means any Finance Party (other than a Lender which is a Borrower Affiliate):
(a) which (in any capacity) has failed to make a payment when due under this Agreement or has notified a Party that it will not make such a payment, except where:
(i) its failure to pay is caused by:
(A) administrative or technical error; or
(B) a Disruption Event; and
payment is made within 3 Business Days of its due date; or
(ii) the Finance Party is disputing in good faith whether it is contractually obliged to make the payment in question;;
(b) which (in any capacity) has otherwise rescinded or repudiated a Finance Document; or
(c) which is a Lender which has failed to issue a Bank Guarantee (or has notified the Agent or a Borrower (which has notified the Agent) that it will not issue a Bank Guarantee) in accordance with Clause 6.5 ( Issue of Bank Guarantees ) or which has failed to pay a claim (or has notified the Agent or a Borrower (which has notified the Agent) that it will not pay a claim) in accordance with (and as defined in) Clause 7.1 ( Claims under a Bank Guarantee ); or
(d) which:
(i) is or is adjudicated to be insolvent;
(ii) applies or resolves to be wound up, given protection against creditors or placed in bankruptcy or any analogous process; or
(iii) is subject to the appointment of a liquidator, administrator, manager, trustee in bankruptcy or any analogous process,
unless, in the case of paragraphs (a) and (c) above:
(iv) its failure to pay or to issue a Bank Guarantee, is caused by:
(A) administrative or technical error; or
(B) a Disruption Event; and
payment is made within 3 Business Days of its due date; or
(v) the Finance Party is disputing in good faith whether it is contractually obliged to make the payment in question;
Disruption Event means either or both of:
(a) a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facilities (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:
(i) from performing its payment obligations under the Finance Documents; or
(ii) from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
Distribution means any of the following paid by a person to a shareholder or Affiliate of that person:
(a) a distribution (whether of cash or other assets) by way of dividend, charge, interest, fee, payment or other distribution on, or buy back, return of capital, redemption, repurchase, retirement or repayment on or in respect of, any Marketable Security or loan; and
(b) any management or similar fees.
EBITDA means for any period of determination with respect to the Group for such period of determination:
(a) Consolidated Net Income; plus
(b) the sum of the following, without duplication and to the extent deducted in determining Consolidated Net Income:
(i) Interest Expense (net of interest income),
(ii) income tax expense,
(iii) depreciation, depletion and amortization of property, plant, equipment and intangibles,
(iv) non-cash debt extinguishment costs,
(v) non-cash impairment charges or asset write-offs and non-cash charges due to cumulative effects of changes in accounting principles, plus
(c) cash dividends or distributions received from Affiliates (other than received from Group Members to the extent not included in determining Consolidated Net Income).
All items included in the definition of EBITDA shall be determined in each case for the applicable Person for the period of determination on a consolidated basis in accordance with US GAAP.
Environment means components of the earth, including:
(a) land, surface and subsurface, strata, sediment, indoor and outdoor air, and water, including surface water, groundwater and drinking water; and
(b) any layer of the atmosphere;
and includes interacting natural ecosystems that include components referred to in the foregoing. Environmental has the like meaning.
Environmental Approval means any permits, licenses, franchises, certificates, approvals and other similar authorisations (or waivers in lieu thereof) required under any applicable Law pertaining to the Environment.
Environmental Health and Safety Claim means any administrative, regulatory or judicial action, suit, claim, written notice of noncompliance or violation, written notice of liability or potential liability, written request for information, demand letter or proceeding relating to any Environmental Health and Safety Laws, any Environmental Health and Safety Permit, any Regulated Substances, any Contamination, the performance of any Remedial Action.
Environmental Health and Safety Complaint means any written notice or complaint by any Person or Governmental Agency setting forth allegations relating to or a cause of action arising under any Environmental Health and Safety Laws for personal injury or property damage, natural resource damage, contribution or indemnity for the costs associated with the performance of a Remedial Action, civil or administrative penalties, criminal fines or penalties, or declaratory or equitable relief arising under any Environmental Health and Safety Laws or any order, notice of violation, citation, subpoena, request for information or other written notice or demand of any type issued by a Governmental Agency pursuant to any Environmental Health and Safety Laws.
Environmental Health and Safety Laws mean, collectively, any applicable federal, state, local or foreign statute, Law (including, but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC § 9601 et seq, the Resource Conservation and Recovery Act, 42 USC § 6901 et seq, the Hazardous Materials Transportation Act, 49 USC § 1801 et seq, the Toxic Substances Control Act, 15 USC § 2601 et seq, the Federal Water Pollution Control Act, 33 USC § 1251 et seq, the Federal Safe Drinking Water Act, 42 USC § § 300f-300j, the Federal Air Pollution Control Act, 42 USC § 7401 et seq, the Oil Pollution Act, 33 USC § 2701 et seq, the Federal Insecticide, Fungicide and Rodenticide Act, 7 USC §§ 136 to 136y, the Occupational Safety and Health Act, 29 USC § § 651 et seq related to Regulated Substances, the Mine Safety and Health Act, 30 USC § § 801 et seq, related to Regulated Substances, the Surface Mining Control and Reclamation Act 30 USC §§ 1201 et seq, the Atomic Energy Act, 42 USC § 2011 et seq, the National Historic Preservation Act, 16 USC § 470 et seq, the Endangered Species Act, 16 USC § 1531 et seq, the Wild and Scenic Rivers Act, 16 USC §§ 1271-1278, the Environmental Protection (Impact of Proposals) Act 1974 (rep, to the extent applicable) of Australia, the Environment Protection and Biodiversity Conservation Act 1999 of Australia, the Work Health and Safety Act 2011 of Australia, the Environmental Protection Act 1994 of Queensland, Australia, the Work Health and Safety Act 2011 of Queensland, Australia, the Coal Mining Safety and Health Act 1999 of Queensland, Australia, each as amended, or any equivalent state or local statute, and any amendments thereto), code, consent decree, settlement agreement, directive or any binding judicial or agency interpretation, policy or guidance, in each case regulating: (i) pollution or pollution control; (ii) protection of human health from exposure to Regulated Substances; (iii) protection of the Environment (including mining reclamation obligations and related financial assurance requirements); (iv) employee health and safety in the workplace related to Regulated Substances (but excluding workers compensation and wage and hour laws); and (v) the presence, use, management, generation, manufacture, processing, extraction, mining, treatment, recycling, refining, reclamation,
labelling, transport, storage, collection, distribution, Release or threat of Release of Regulated Substances.
Environmental Health and Safety Orders shall mean all decrees, orders, directives, judgments, opinions, rulings writs, injunctions, settlement agreements or consent orders issued by or entered into with a Governmental Agent relating or pertaining to Contamination, Environmental Health and Safety Laws, Environmental Health and Safety Permits, Regulated Substances or Remedial Actions.
Environmental Health and Safety Permit shall mean any applicable Permit required under any of the Environmental Health and Safety Laws.
Environmental Liability means any claim, action, damage, loss, liability, obligation, cost, charge, expense, outgoing or payment relating to any actual or alleged Environmental Health and Safety Laws, Environmental Approval or exposure to or release of any Regulated Substance, including but not limited to
(a) any investigation or remediation required by any Environmental Health and Safety Laws;
(b) any claim by any third party pursuant to any Environmental Health and Safety Laws;
(c) any action, order, declaration or notice by a Governmental Agency under an Environmental Health and Safety Laws; or
(d) any agreement between any Group Member and any:
(i) owner or occupier of land; or
(ii) Governmental Agency,
to which liability is assumed or imposed with respect to any of the foregoing.
ERISA shall mean the Employee Retirement Income Security Act of 1974 (US), as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
ERISA Group shall mean, at any time, the Parent and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control or treated as a single employer under Section 414(b) or (c) of the US Tax Code.
Event of Default means any event or circumstance specified as such in Clause 25 ( Events of Default ).
Exchange Act means the United States Securities Exchange Act of 1934, as amended.
Excluded Interest Expense means:
(a) any interest and amounts in the nature of interest or of similar effect to interest:
(i) paid or payable by in respect of any Limited Recourse Financial Indebtedness; or
(ii) accruing, but not paid by the Group (determined on a consolidated basis) on Financial Indebtedness which is Subordinated Debt;
(b) any capitalised interest of a Group Member (if and for so long as that capitalised interest is subordinated in accordance with the terms of the Curragh Intercompany Subordination Deed); and
(c) any non-cash unwinding of the effects of discounting on provisions or any other non-cash interest expense that is not associated with interest bearing liabilities which is shown as an interest expense in the Financial Statements of the Group for the relevant period.
Excluded Subsidiary means a Subsidiary of the Parent:
(a) which is not a wholly-owned Subsidiary; or
(b) which is a Project Company.
Existing Arrangements Intercreditor Deed means an intercreditor deed of that name dated after the date of this Agreement between the Security Trustee, Stanwell Corporation Limited, Wesfarmers Limited, Coronado Australia Holdings Pty Ltd, the Parent, Coronado Curragh Pty Limited, Curragh Queensland Mining Pty Ltd and Curragh Coal Sales Co. Pty. Ltd. To avoid doubt, and without limitation, this document must contain undertakings from the Security Trustee in favour of Stanwell Corporation Limited in terms substantially the same as those given to it by Wilmington Trust, National Association, in Clause 2 of the Deed Poll dated 29 March 2018.
Expiry Date means, for a Bank Guarantee, the last day of its Term.
Facility means Facility A or Facility B.
Facility A means the multicurrency revolving credit facility made available under this Agreement as described in Clause 2 ( The Facilities ).
Facility A Base Currency means US dollars.
Facility A Base Currency Amount means, in relation to a Facility A Loan, the amount of the Loan if denominated in Facility A Base Currency or, if the amount requested is denominated in Australian dollars, that amount converted into Facility A Base Currency at the Agents Spot Rate of Exchange.
Facility A Commitment means:
(a) in relation to an Original Lender, the amount in the Facility A Base Currency set opposite its name under the heading Facility A Commitment in Part II of Schedule 1 ( The Original Parties ) and the amount of any other Facility A Commitment transferred to it under this Agreement; and
(b) in relation to any other Lender, the amount in the Facility A Base Currency of any Facility A Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
Facility A Lender means:
(a) each Original Lender who is shown in Part II of Schedule 1 as having a Facility A Commitment; and
(b) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 26 ( Changes to the Lenders ) with a Facility A Commitment,
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
Facility A Loan means a loan made or to be made under Facility A or the principal amount outstanding for the time being of that loan.
Facility B means the revolving bank guarantee facility made available under this Agreement as described in Clause 2 ( The Facilities ).
Facility B Commitment means:
(a) in relation to an Original Lender, the amount in Australian dollars set opposite its name under the heading Facility B Commitment in Pail II of Schedule 1 ( T he Original Parties ) and the amount of any other Facility B Commitment transferred to it under this Agreement; and
(b) in relation to any other Lender, the amount in Australian dollars of any Facility B Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
Facility B Lender means:
(a) each Original Lender who is shown in Part II of Schedule 1 as having a Facility B Commitment; and
(b) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 26 ( Changes to the Lenders ) with a Facility B Commitment,
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
Facility B Utilisation means a Bank Guarantee.
Facility Office means each office of each Lender shown as such in Part II of Schedule 1 (or in any relevant Transfer Certificate, as the case may be), or such other addresses in Australia or the United States of America, as applicable, as the Agent (on behalf of a Lender) or a Lender otherwise specifies in consultation with the Parent, being the offices in Australia and the United States of America through which a Lender will perform its obligations under this Agreement.
FATCA means:
(a) sections 1471 to 1474 of the US Tax Code or any associated regulations;
(b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c) any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.
FATCA Application Date means:
(a) in relation to a withholdable payment described in section 1473(l)(A)(i) of the US Tax Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;
(b) in relation to a withholdable payment described in section 1473(1 )(A)(ii) of the US Tax Code (which relates to gross proceeds from the disposition of property of a type that can produce interest from sources within the US), 1 January 2019; or
(c) in relation to a passthru payment described in section 1471(d)(7) of the US Tax Code not falling within paragraphs (a) or (b) above, 1 January 2019 or the date of the publication of final US Treasury Regulations defining the term passthru payment;
or, in each case, such later date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
Fee Letter means any letter or letters dated on or after the date of this Agreement setting out any of the fees referred to in Clause 13 ( Fees ), and any letter that amends or replaces any of them.
Finance Document means:
(a) this Agreement;
(b) any Fee Letter;
(c) any Compliance Certificate;
(d) the Security Trust Deed;
(e) any Recognition Certificate;
(f) any Transaction Security Document;
(g) the Existing Arrangements Intercreditor Deed;
(h) the Curragh Intercompany Subordination Deed;
(i) the Deed of Undertaking from the Security Trustee in favour of Winged Horse Pty Ltd as trustee for the Pegasus Royalty Unit Trust;
(j) any Accession Letter;
(k) any Accession Deed;
(l) any Resignation Letter;
(m) any Hedging Agreement;
(n) any document designated by the Agent or Security Trustee in connection with the appointment and performance of a US Security Agent;
(o) any document amending or amending and restating any of the above; and
(p) any other document designated as such by the Agent and the Borrowers.
Finance Lease means any lease:
(a) which effectively transfers from the lessor to the lessee substantially all the risks and benefits incident to ownership of the leased property without transferring the legal ownership; or
(b) the liabilities under which are required to be capitalised on the lessees balance sheet according to US GAAP as in effect on the date of this Agreement.
Finance Party means the Agent, the Arranger, the Security Trustee, any US Security Agent appointed under a Finance Document or a Lender.
Financial Covenant means each financial covenant in Clause 23.1 ( Financial covenants ).
Financial Indebtedness means any indebtedness for or in respect of:
(a) moneys borrowed;
(b) any amount raised under any acceptance credit, bill acceptance or bill endorsement facility or dematerialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d) the amount of any liability under a Finance Lease;
(e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f) any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing of money, which would, in accordance with US GAAP, be treated as a liability in the audited consolidated Financial Statements of the Group;
(g) any deferred purchase price agreement in relation to any asset or service, excluding:
(i) any such deferred purchase price agreement which provides for a deferred purchase price of no more than 180 days; and
(ii) any other deferred purchase price agreement in respect of any asset or service entered into in the ordinary course of business;
(h) (for the purposes of Clause 25.5 ( Cross-default ) only) any close out amount, early termination amount or any other amount payable in respect of any Treasury Transaction which has been dosed out or terminated;
(i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary bank guarantee or any other instrument issued by a bank or financial institution; and
(j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.
Despite the above, Financial Indebtedness shall not include any liabilities of any person under any lease that is not a Finance Lease.
Financial Statements means:
(a) a statement of comprehensive income (otherwise known as a statement of financial performance or profit and loss statement);
(b) a statement of financial position;
(c) a statement of cash flow; and
(d) a statement of changes in equity,
together with any notes to those documents and any accompanying reports, statements, declarations and other documents or information.
Flood Laws means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iv) Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
Funding Rate means any individual rate notified by a Lender to the Agent pursuant to Clause 12.4(a)(ii) ( Cost of funds ).
General Security Deed means the General Security Deed entered into by each Australian Obligor with the Security Trustee after the date of this Agreement by which the Australian Obligors grant security over all their present and after acquired property.
Good Operating Practice means the exercise of skill, prudence and operating practice which would reasonably and ordinarily be expected from a reputable, skilled and experienced owner and operator engaged in the same business as the Obligors under similar circumstances in compliance with all applicable legislation, industry codes of practice, Authorisations and all relevant documents relating to the Obligors business.
Governmental Agency means any government or any governmental, semi-governmental or judicial entity or authority in any relevant jurisdiction. It also includes any self-regulatory organisation established under statute or any stock exchange.
Greenbrier Mine means the underground bord and pillar mine and the surface contour and highwall mining operations located in the Greenbrier and Nicholas Counties of West Virginia, in the United States of America.
Group means the Parent and its Subsidiaries for the time being.
Group Member means an entity that is a member of the Group.
Group Structure Diagram means the diagram showing the structure of the Group, provided to the Agent with the Parents verification certificate as a condition precedent under Part I of Schedule 2, as replaced from time to time under Clause 22.4(i) ( Information: miscellaneous ).
Guarantee means the guarantee, undertaking and indemnity given under Clause 20 ( Guarantee ).
Guarantor means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with Clause 27 ( Changes to the Obligors ).
Head Company means the head company (as defined in the Tax Act) of a Tax Consolidated Group.
Hedge Counterparty means a Lender or an Affiliate of a Lender that is, or has become, a party to the Security Trust Deed as a Hedge Counterparty in accordance with the provisions of the Security Trust Deed.
Hedging Agreement means any master agreement, confirmation, schedule or other agreement or trade entered into or to be entered into by a Borrower or other Obligor and a Hedge Counterparty for the purpose of Treasury Transactions required or permitted to be entered into by this Agreement.
Hedging Policy means any board approved policy describing the hedging arrangements to be entered into for the purpose of entering into Treasury Transactions in connection with carrying on the Groups business in a prudent and responsible manner.
Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary.
Indirect Tax means any goods and services tax, consumption tax, value added tax or any tax of a similar nature.
Interest Expense means all interest and amounts in the nature of interest or of similar effect to interest (including amounts other than principal payable under the Finance Documents) paid or payable by the Group (determined on a consolidated basis) including:
(a) any dividend or distribution payable on any Marketable Security which is Financial Indebtedness;
(b) the interest component of rentals in respect of Finance Lease obligations;
(c) the face amount of bills of exchange or other financial instruments drawn, issued, endorsed or accepted by any Group Member less their net proceeds after discount or issue and payment of any acceptance, endorsement, underwriting or similar fee; and
(d) all line, facility, letter of credit, guarantee and similar fees and all fees and other amounts of a regular or recurring nature payable in relation to Financial Indebtedness but not establishment, arrangement and other fees payable once only on the initial provision of financial accommodation,
plus or minus the amount of any net payments by or to a Group Member under any interest rate Treasury Transaction.
It excludes any Excluded Interest Expense.
Interest Period means, in relation to a Loan, each period determined in accordance with Clause 11 ( Interest Periods ) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 10.3 ( Default interest ).
Interpolated Screen Rate means, in relation to any Loan, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
(a) the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Loan; and
(b) the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Loan,
each as of the Specified Time for the currency of that Loan.
IPO means the proposed initial public offering and listing on the ASX of securities in the Parent.
IPO Costs means third party costs and expenses (including all value added taxes) (including adviser, joint lead manager and other syndicate fees) incurred by the Parent or any Subsidiary of the Parent (or recharged to the Parent by Coronado Group LLC) relating to the IPO.
Issuing Bank means, in relation to a Bank Guarantee, a Facility B Lender that has issued or is to issue that Bank Guarantee under Facility B.
JORC Code means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves from time to time.
Labor Contracts mean all employment agreements, employment contracts, collective bargaining agreements and other agreements among any Obligor or Subsidiary of an Obligor and its employees.
Law means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Agency, foreign or domestic.
Lender means:
(a) any Original Lender; and
(b) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 26 ( Changes to the Lenders ),
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
LIBOR means, in relation to any Loan:
(a) the applicable Screen Rate as of the Specified Time for the currency of that Loan and for a period equal in length to the Interest Period of that Loan; or
(b) as otherwise determined pursuant to Clause 12.1 ( Unavailability of Screen Rate ),
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
Limited Recourse Financial Indebtedness means any Financial Indebtedness incurred in connection with a Project where the provider of the indebtedness only has recourse, in respect of the Parent and its Subsidiaries, to all or any of the following:
(a) the Project Assets;
(b) shares in a Project Company;
(c) the Project Company or Project Companies, provided that (other than in the case of fraud, wilful misconduct or negligence of the Project Company), if the Project Assets do not comprise all or substantially all of a Project Companys business or interests the recourse is limited to recoveries in respect of the Project Assets and the provider of the Financial Indebtedness or any agent appointed by the provider of the Financial Indebtedness has no right to take any step towards its winding up or dissolution or the appointment of a liquidator, administrator, administrative receiver or similar officer in respect of it or its assets; and
(d) the giver of any Surety that is Permitted Financial Accommodation under paragraph (e) of that definition.
Listing Date means the first day that the securities in the Parent are able to be traded on the ASX.
Loan means a Facility A Loan or a Facility B Loan.
Logan Mine means the underground and surface mining operations located in the Counties of Boone, Logan and Wyoming in West Virginia, in the United States of America.
Majority Lenders means at any time:
(a) if there are only two Lenders, then all Lenders; or
(b) where a Lender or Lenders whose Commitments aggregate at least 66 2/3% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated at least 66 2/3% of the Total Commitments immediately prior to the reduction). Where a Lenders Commitment has been reduced to zero, but it has an outstanding participation in any outstanding Utilisations, then for this purpose its Commitment will be taken to be the aggregate amount of its participation.
For the purposes of this definition, Commitments and Total Commitments are to be calculated by converting any Facility B Commitment or Facility A or Facility B participation into US dollars at the Agents Spot Rate of Exchange.
Margin means, in respect of Facility A:
(a) until the first Compliance Certificate is delivered and received by the Agent in accordance with this Agreement, 2.85% per annum; and
(b) after delivery of a Compliance Certificate pursuant to Clause 22.2 ( Compliance Certificate and other information ), such other applicable margin based on the pricing grid below:
|
Facility A Margin |
|
> 2.00 times |
|
3.25% per annum |
>1.50 times and < 2.00 times |
|
3.00% per annum |
< 1.50 times |
|
2. 85% per annum |
Any change in Margin arising by reason of the delivery of a Compliance Certificate will take effect on the first day of the next applicable Interest Period occurring after the date of receipt by the Agent of the applicable Compliance Certificate. If a Compliance Certificate is not delivered when due, for the purposes of determining the applicable Margin, Net Debt to EBITDA will be assumed to be greater than 2.00 times until a Compliance Certificate is delivered.
Marketable Security has the meaning given to securities in section 92(3) of the Corporations Act, but also includes:
(a) an undertaking referred to in the exceptions in paragraphs (a) and (b) of the definition of debenture in the Corporations Act;
(b) a unit or other interest in a trust or partnership;
(c) a negotiable instrument; and
(d) a right or an option in respect of a Marketable Security, whether issued or unissued, including any of the above.
Material Adverse Effect means a material adverse effect on:
(a) the financial condition of the Group taken as a whole; or
(b) the ability of the Obligors taken as a whole to perform their obligations under the Finance Documents; or
(c) the validity or enforceability of the whole or any material part of any Finance Document or the ranking of any Security granted or purported to be granted pursuant to the Finance Documents or any material rights or remedies of a Finance Party under the Finance Documents.
Material Contract means each of the following:
(a) Stanwell Amended Coal Supply Agreement dated 6 November 2009 between Stanwell Corporation Limited and Coronado Curragh Pty Ltd, as amended by the ACS A Deed of Amendment entered into on or about 21 November 2016;
(b) Curragh Mine New Coal Supply Deed between Stanwell Corporation Limited and Coronado Curragh Pty Ltd dated 14 August 2018 including any agreement arising from the binding term sheet attached thereto;
(c) Take or pay agreement dated 27 September 2011 between Coronado Curragh Pty Ltd and WICET Pty Ltd;
(d) Coal Handling Agreement dated 1 June 2004 between Coronado Curragh Pty Ltd and Gladstone Ports Corporation;
(e) Wiggins Island Rail Project Deed (2011) between Coronado Curragh and Aurizon Network Pty Ltd dated 5 September 2011, as amended from time to time;
(f) Rail Transportation Agreement between Aurizon Operations Limited and Coronado Curragh Pty Ltd dated 11 November 2011, as amended from time to time;
(g) QR Coal Transport Agreement between Aurizon Operations Limited and Coronado Curragh Pty Ltd dated 31 May 2004, as amended from time to time;
(h) each Australian Mining Tenement;
(i) each lease and the other contractual rights comprising or affecting the property described in Schedule 10 ( Real Property ) and other real property on which infrastructure and equipment necessary for the business as usual operations of an Obligors mine site is located;
(j) Membership Interest and Asset Purchase Agreement between Consol Energy, Inc, Consol Mining Holding Company LLC, Consol Buchanan Mining Company LLC, Consol Amonate
Mining Company LLC, Consol Mining Company LLC, CXN Land LLC, CXN Marine Terminals Inc, CXN RCPC LLC, Consol Pennsylvania Coal Company LLC, Consol Amonate Facility LLC and Coronado IV LLC, dated 26 February 2018;
(k) CONSOL Energy Amendment and Restatement of Master Cooperation and Safety Agreement between Consol Buchanan Mining Company LLC, Coronado IV LLC, CNX Gas Company LLC, Consol Energy Inc. and various CEI Subsidiaries, dated 31 March 2016;
(l) Command Center Services Agreement between Consol Buchanan Mining Company LLC and CNX Gas Company LLC dated 31 March 2016;
(m) Drilling and Related Services Agreement between Consol Buchanan Mining Company LLC and CNX Gas Company LLC, dated 31 March 2016;
(n) Subsidence and Relocation Agreement between Cardinal States Gathering Company, Coronado IV LLC and Coronado Buchanan Mining Company LLC, dated 31 March 2016; and
(o) any other contract or agreement to which an Obligor is a party (other than the Finance Documents) for which breach, non-performance, cancellation or failure to renew would have or would be reasonably likely to have a Material Adverse Effect (which, for the avoidance of doubt, unless otherwise agreed, includes any contract or agreement that replaces any of the above).
Material Subsidiary means any Subsidiary of Parent which at any time (i) has gross revenues equal to or in excess of five percent (5%) of the gross revenues of Parent and its Subsidiaries on a consolidated basis, or (ii) has total assets equal to or in excess of five percent (5%) of the total assets of Parent and its Subsidiaries, in either case, as determined and consolidated in accordance with US GAAP.
Mining Laws means any and all applicable federal, state, local and foreign statutes, laws, regulations, guidance, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions or common law causes of action relating to Mining Operations and activities, or oil, natural gas, minerals, and other hydrocarbons and their constituents production operations and activities. Mining Laws shall include but not be limited to, (i) the Mineral Lands Leasing Act of 1920, the Federal Coal Leasing Amendments Act, the Surface Mining Control and Reclamation Act, all other land reclamation and use statutes and regulations relating to coal mining, the Federal Coal Mine Health and Safety Act, the Black Lung Act and the Coal Act, the Mine Safety and Health Act and the Occupational Safety and Health Act, each as amended, and their state and local counterparts or equivalents; and (ii) Laws of Queensland and the Commonwealth of Australia relating to mining, coal and the environment, each as amended.
Mining Operations shall mean (i) the removal of coal, gas and other minerals or similar resources from the natural deposits or from waste or stock piles by any surface or underground mining methods; (ii) operations or activities conducted underground or on the surface associated with or incident to the preparation, development, operation, maintenance, opening and reopening of an underground or surface mine storage or stockpiling of mined materials, backfilling, sealing and other closure procedures related to a mine or the movement, assembly, disassembly or staging of any mining equipment; (iii) milling; (iv) coal preparation, coal processing or testing; (v) coal refuse disposal, coal fines disposal or the operation and maintenance of impoundments; (vi) the operation of any mine drainage system; (vii) reclamation activities and operations; or (viii) the operation of coal terminals, river or rail load-outs or any other transportation facilities.
Mining Tenement Security means each of:
(a) the Mortgages required to be on mining tenements pursuant to the terms of this Agreement;
(b) the Australian Mortgages;
(c) the General Security Deed;
(d) each other Transaction Security Document entered into from time to time to comply with Clause 24.20 ( Mining tenements; Further assurances regarding Secured Property ).
Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;
(b) if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.
The above rules will only apply to the last Month of any period.
Mortgage means each of the fee and leasehold mortgages, deeds of trust, assignments of leases and rents and other security documents, in each case substantially in the form of (other than as to US Excluded Property definitions) the Mortgages (as defined in the Term Loan Facility Agreement) and otherwise in such form reasonably satisfactory to the Security Trustee and the Agent, delivered on or after the date of this Agreement with respect to Real Property to be encumbered pursuant to this Agreement or the applicable US Security Document, as each may be amended, supplemented or otherwise modified from time to time.
Multiemployer Plan means any employee benefit plan which is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any other member of the ERISA Group is then making or accruing an obligation to make contributions or, within the preceding five plan years, has made or had an obligation to make such contributions.
Multiple Employer Plan means a Plan which has two or more contributing sponsors (including the Borrower or any other member of the ERISA Group) at least two of whom are not under common control, as such a plan is described in Sections 4063 and 4064 of ERISA.
Net Debt means:
(a) the total amount of current and non-current interest bearing loans and borrowings of the Group but excluding leases that are not Finance Leases, Subordinated Debt and Limited Recourse Financial Indebtedness; and
(b) in accordance with US GAAP, the total amount shown as a liability in those Financial Statements for any guarantee or indemnity, or a counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other similar instrument, but only up to that amount shown as a liability (except in relation to Bank Guarantees issued and outstanding under Facility B, of which only 50% of the aggregate face value of all such Bank Guarantees is to be included for the purposes of this paragraph (b)); less
(c) the total amount shown in those Financial Statements as cash and cash equivalents but only to the extent such are not subject to any Security (other than a Transaction Security).
To avoid doubt, Net Debt does not include any amount attributable to open Treasury Transactions.
Net Interest Expense means, for a period, Interest Expense for that period, less interest income received by the Group during that period (determined on a consolidated basis).
New Lender has the meaning given to that term in Clause 26 ( Changes to the Lenders ).
Non-Consenting Lender means a Lender that does not agree to consent to a waiver, amendment of, or a consent under, any provision of a Finance Document which has been requested by the Borrower or the Agent where the requested waiver, amendment or consent is one which requires the consent of all Lenders and Lenders whose Commitments aggregate at least 75% of the Total Commitments have voted in favour of the relevant waiver, amendment and consent.
Obligor means a Borrower or a Guarantor.
Obligor Group means the Borrower and the Guarantors.
OFAC means the US Treasury Departments Office of Foreign Assets Control.
Offshore Associate means an Associate:
(a) which is a non-resident of Australia and does not become a Lender or receive a payment in carrying on a business in Australia at or through a permanent establishment of the Associate in Australia; or
(b) which is a resident of Australia and which becomes a Lender or receives a payment in carrying on a business in a country outside Australia at or through a permanent establishment of the Associate in that country; and
which does not become a Lender and receive payment in the capacity of a clearing house, custodian, funds manager or responsible entity of a registered scheme.
Original Financial Statements means:
(a) the consolidated Financial Statements for Coronado Curragh Pty Ltd as at 30 June 2018; and
(b) the consolidated Financial Statements for Coronado Group LLC as at 31 December 2017.
Original Obligor means an Original Borrower or an Original Guarantor.
Parent Loan Agreement means the loan agreement dated 25 January 2017 between Coronado Curragh Pty Limited, Curragh Queensland Mining Pty Ltd, Curragh Coal Sales Co. Pty. Ltd. and Wesfarmers Limited, as amended and restated on 22 December 2017, as assigned by Wesfarmers Limited to Coronado Group LLC pursuant to a deed of assignment dated 29 March 2018 and as assigned by Coronado Group LLC to the Parent pursuant to a deed of assignment dated 13 August 2018 and as further amended by deed of amendment dated 31 August 2018.
Participating Member State means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
Party means a party to this Agreement.
PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
Permit shall mean any and all permits, approvals, licenses, registrations, consents, notifications, identification numbers, bonds, waivers or exemptions and any other regulatory authorization, in each case, from a Governmental Agency having jurisdiction over the applicable activity.
Permitted Disposal means each of the following:
(a) a disposal of trading stock or inventory in the ordinary course of the Groups business on ordinary commercial terms;
(b) the disposal of any agreement, mining licence, mining or mineral lease or fee property, permit or other asset in the ordinary course of the Groups business on commercial terms so long as the aggregate book value of the assets to be disposed of and the assets already disposed of in any 12 month period under this paragraph and paragraphs (c) and (j) below does not exceed 10% of Total Tangible Assets;
(c) the disposal of an interest in a joint venture or joint venture vehicle, agreement, licence, permit or other asset in the ordinary course of the Groups business on commercial terms so long as the aggregate book value of the assets to be disposed of and the assets already disposed of in any 12 month period under this paragraph and paragraph (b) above and paragraph (j) below does not exceed 10% of Total Tangible Assets;
(d) a disposal of assets in contemporaneous exchange for other assets comparable or superior as to type, value and quality or for cash which is applied in or towards the purchase of assets comparable or superior as to type, value and quality;
(e) a disposal of obsolete, damaged, used or worn out assets or assets (excluding assets of the kind described in paragraphs (b) and (c) above) no longer required for the purpose of the relevant Obligors business or operations;
(f) the payment of cash for any asset acquired in the ordinary course of business;
(g) the investment of funds which are not immediately required in the relevant Obligors business in accordance with the Groups established money market treasury policies or the realisation of such investments;
(h) the application of the proceeds of an issue of securities (whether debt or equity) for the purpose stated in the prospectus or other offering document relating to that issue;
(i) any disposal by a non-Obligor Group Member to an Obligor (including any inter-company debt forgiveness, from time to time), provided the disposal is on arms length terms and for fair market value or on terms and for value more favourable to the Obligor, or any disposal by a non-Obligor Group Member to another non-Obligor Group Member;
(j) a disposal comprised in or which occurs as part of any sale and lease-back, forward sale, stock loan or repurchase transaction so long as the aggregate book value of the assets to be disposed of and the assets already disposed of in any 12 month period under this paragraph and paragraphs (b) and (c) above does not exceed 10% of Total Tangible Assets; and
(k) a disposal which also constitutes or arises as a result of any Permitted Security,
in the case of each of the above (other than paragraph (k) insofar as it relates to any disposal by a non-Obligor Group Member to another non-Obligor Group Member), where the relevant transaction was entered into in good faith, for fair market value and on an arms length basis; and
(l) the payment of cash for any payment permitted under Clause 24.12 ( Distributions );
(m) transfers of condemned property as a result of the exercise of eminent domain or other similar policies to the respective Governmental Agency or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of properties that have been subject to a casualty to the respective insurer of such property as part of an insurance settlement, and transfers of properties that have been the subject of a Compulsory Acquisition;
(n) any disposal by way of cash constituted by or comprised in the Consol Arrangements;
(o) any disposal constituted by or comprised in the Stanwell Arrangements;
(p) any disposal by way of cash constituted by or comprised in the Wesfarmers Arrangements;
(q) any disposal by way of cash constituted by or comprised in the Winged Horse Arrangements; and
(r) a disposal. not falling within any of the above to which the Agent (acting on the instructions of the Majority Lenders) has consented in writing.
Permitted Financial Accommodation means:
(a) except where such is prohibited under the laws of incorporation or formation of the relevant Group Members, a loan or other accommodation made available by a Group Member to or for the benefit of employees or directors or officers of a Group Member to acquire shares in a Group Member in an amount in aggregate for all employees and directors not exceeding US$5,000,000;
(b) any deposit funds of an Obligor with a bank in the ordinary course of its business;
(c) any trade credit not exceeding 180 days provided, or otherwise accommodated by an Obligor to acquire goods and services on extended terms in the ordinary course of trading;
(d) the Curragh Intercompany Loans and any other accommodation made by an Obligor to another Obligor;
(e) accommodation including a Surety made by an Obligor to a Project Company (or (in the case of a Surety in connection with a Project Company) so long as the giving of that accommodation does not result in a breach of Clause 22.7 ( Financial covenants ) and the aggregate accommodation made available by Obligors under this paragraph and paragraph (f) together does not exceed 5% of Total Tangible Assets at any time;
(f) accommodation provided to a partnership, joint venture, non-wholly owned subsidiary or other entity contemplated by Clause 24.18 ( Partnerships and joint ventures ) so long as that accommodation is provided by an Obligor and does not result in a breach of Clause 22.7 ( Financial covenants ) and the aggregate accommodation made available by Obligors under this paragraph and paragraph (e) together does not exceed 5% of Total Tangible Assets at any time; and
(g) accommodation (not being accommodation which is permitted under paragraph (e) or which is prohibited under the laws of incorporation of the relevant Group Members) made by an Obligor
to a Group Member which is not an Obligor provided that such accommodation does not exceed A$5,000,000 in aggregate for all financial accommodation provided under this paragraph (f).
Permitted Financial Indebtedness means each of the following:
(a) any Financial Indebtedness created under a Finance Document;
(b) any Financial Indebtedness owing by a Group Member to another Group Member which is Permitted Financial Accommodation provided Financial Indebtedness owing by an Obligor (including without limitation any member of the Obligor Group) to any Group Member other than a member of the Obligor Group must be subordinated pursuant to an Curragh Intercompany Subordination Deed;
(c) any Financial Indebtedness raised via the issuance of bonds, notes, debentures or other instruments of that type in the domestic, United States of America, European or other debt capital markets;
(d) any Financial Indebtedness in respect of Finance Leases and hire purchase agreements entered into in the ordinary course of business;
(e) any Financial Indebtedness which is guaranteed or otherwise supported by an export credit agency;
(f) any Financial Indebtedness raised under transactional banking facilities;
(g) any Financial Indebtedness which is Subordinated Debt;
(h) any Financial Indebtedness (including, without limitation, reimbursement obligations in respect of letters of credit and bank guarantees) on account of any demand, request or requirement of any Governmental Agency for any surety bond, letter of credit or other financial assurance pursuant to any Environmental Health and Safety Laws, or any related permit, in each case, in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances;
(i) any Financial Indebtedness owing by a non-Obligor Group Member to another non-Obligor Group Member;
(j) any Financial Indebtedness in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade letters of credit (other than obligations in respect of other Financial Indebtedness) in the ordinary course of business and to the extent it is secured by cash or cash equivalents;
(k) any Financial Indebtedness under any Treasury Transaction;
(l) any Financial Indebtedness constituted by or comprised in the Wesfarmers Arrangements;
(m) in addition to the above, unsecured Financial Indebtedness in aggregate for all Obligors not exceeding 5% of Total Tangible Assets; and
(n) in addition to the above, any Financial Indebtedness to which the Agent (acting on the instructions of the Majority Lenders) has consented in writing.
For the avoidance of doubt, Permitted Financial Indebtedness also includes any Financial Indebtedness incurred as Limited Recourse Financial Indebtedness.
Permitted Security means each of the following:
(a) any Security which secures the Obligations of an Obligor under a Finance Document;
(b) any Security expressly permitted under a provision of a Finance Document (including, any Security provided by a Security Provider in favour of the Security Trustee);
(c) any Security under a Cross Charge;
(d) any Security under present commercial or present or future statutory royalty agreements in connection with a Project so long as, at any time, the aggregate amount secured by a Security described in this paragraph (d) when aggregated with the amounts referred to in paragraph (f) and paragraph (q) does not exceed 5% of Total Tangible Assets;
(e) a lien arising by operation of law (other than under the PPSA) in the ordinary course of day to day trading and not securing Financial Indebtedness where it duly pays the indebtedness secured by that lien other than indebtedness contested in good faith;
(f) any Security granted to a Governmental Agency over funds deposited as security in support of an Obligors obligations in respect of the abandonment of a Project so long as, at any time, the aggregate amount so deposited and subject to a Security described in this paragraph (f) when aggregated with the amounts referred to in paragraph (d) and paragraph (q) does not exceed 5% of Total Tangible Assets;
(g) any Security over the assets of a company which becomes a Group Member after the date of this Agreement and which:
(i) is in existence at the date the company becomes a Group Member and has not been created in anticipation of that company becoming a Group Member, provided that the Security is discharged within 180 days after the date the company becomes a Group Member; or
(ii) that the company is contractually bound to enter into at the time it becomes a Group Member and has not become so bound in anticipation of the company becoming a Group Member, provided that the Security is discharged within 180 days after its creation,
and, in each case, the principal amount secured has not increased in contemplation of, or since the acquisition of, that company;
(h) a Security which is over any asset acquired by a Group Member after the date of this Agreement and is in existence at the date of such acquisition and has not been created in anticipation of such acquisition, but only to the extent of the indebtedness secured by any such Security at the date of such acquisition, and provided that the Security is discharged within 180 days after the asset is acquired;
(i) a Security which is a netting or set-off arrangement entered into by any Group Member:
(i) in the ordinary course of its or the Groups transactional banking arrangements on a banks standard terms and conditions (or on terms more favourable to Group Members) for the purpose of netting debit and credit balances; or
(ii) under any Treasury Transaction on market standard terms and conditions (or terms and conditions more favourable to Group Members);
(j) a Security provided for by one of the following transactions so long as the transaction does not secure payment or performance of an obligation:
(i) a transfer of an account or chattel paper in respect of which a Group Member is the transferor; or
(ii) a commercial consignment in respect of which a Group Member is the consignee; or
(iii) a PPS lease in respect of which a Group Member is the lessee; or
(k) all Security securing any part of the Curragh Intercompany Loans if and for so long as the priority of such Security is regulated by the Curragh Intercompany Subordination Deed;
(l) any Security for Contested Taxes granted to a Governmental Agency and as to which appropriate reserves have been established in accordance with US GAAP or other appropriate accounting principles;
(m) any Security given in the ordinary course of business to secure payment of reclamation liabilities, workers compensation, or to participate in any fund in connection with workers compensation, unemployment insurance, or other social security programs (including Security to secure, letters of credit or bank guarantees issued to assure payment of such obligations);
(n) any Security over cash or cash equivalents in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade letters of credit (other than obligations in respect of other Financial Indebtedness) in the ordinary course of business;
(o) good-faith pledges or deposits made in the ordinary course of business to secure performance of bids (including bonus bids), tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder or other amounts as may be customary, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business (including liens on such good-faith pledges or deposits to secure letters of credit issued to assure payment of such obligations);
(p) encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;
(q) all other Security so long as the aggregate principal amount of indebtedness secured by all such other Security when aggregated with the amounts referred to in paragraph (d) and paragraph (f) does not exceed at any time, 5% of Total Tangible Assets;
(r) a Security comprised in or constituted by a Finance Lease that is limited to the asset being leased;
(s) a Security securing Financial Indebtedness and obligations incurred in connection with the financing by the Parent or a Subsidiary of the Parent (either alone or together with a co-venturer or group of co-venturers, either directly or through a special purpose finance vehicle) of all or part of the purchase price of new assets:
(i) of the Parent or a Subsidiary of the Parent; and/or
(ii) in which the Parent, a Subsidiary of the Parent or a co-venturer or co-venturers of the Parent or a Subsidiary of the Parent has or have or will have an interest, either directly or indirectly,
provided that:
(iii) any such Security shall be confined solely to the assets acquired and/or the shares, units or other interests held by any Group Member in any Subsidiary of the Parent which holds the relevant acquired assets or interest in the relevant assets (including the proceeds of any dividends, distributions, return on capital or similar rights, the proceeds of or rights to payments in respect of intercompany loans or any other compensation, proceeds, amounts or assets received or receivable by the Parent or any subsidiary of the Parent in connection with such shareholding, unitholding or other interest); and
(iv) any such Security will cease to be Permitted Security as and from the date which is 120 days after the date of the relevant acquisition;
(t) any Security securing Limited Recourse Financial Indebtedness over any assets referred to in paragraphs (a) or (b) of the definition of Limited Recourse Financial Indebtedness; and
(u) any Security constituted by or comprised in the Stanwell Arrangements if and for so long as the priority of such Security is regulated by the Existing Arrangements Intercreditor Deed;
(v) any Security constituted by or comprised in the Wesfarmers Arrangements if and for so long as the priority of such Security is regulated by the Existing Arrangements Intercreditor Deed;
(w) any Security by way of caveat constituted by or comprised in the Winged Horse Arrangements;
(x) a Security securing indemnity obligations to an export credit agency in respect of a guarantee or other support provided by that agency;
(y) any Security securing Subordinated Debt for so long as the priority arrangements are satisfactory to the Agent;
(z) any Security existing as at the Listing Date to the extent it affects US Excluded Property; and
(aa) a Security not falling within paragraphs (a) to (z) above which is created with the consent in writing of the Agent (acting on the instructions of Majority Lenders).
Person means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.
Personal Information means information or an opinion about an identified individual or an individual who is reasonably identifiable.
Plan means any employee pension benefit plan (including a Multiple Employer Plan, but excluding a Multiemployer Plan) that is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the US Tax Code and either (i) is maintained by any member of the ERISA Group for any employees of any member of the ERISA Group, or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.
PPSA means the Personal Property Securities Act 2009 (Cth).
Premises means any property owned, leased or occupied by any Group Member or which is used by any Group Member to carry on any activities.
Prime Bank means a bank determined by ASX Benchmarks Pty Limited (or any other person which takes over the administration of the Screen Rate for Australian dollars) as being a Prime Bank or an acceptor or issuer of bills of exchange or negotiable certificates of deposit for the purposes of calculating that Screen Rate. If ASX Benchmarks Pty Limited or such other person ceases to make such determination, the Prime Banks shall be the Prime Banks last so appointed.
Privacy Statement means the current version of each Lenders privacy statement as required under the Australian Privacy Principles set out in the Privacy Act 1998 (Cth), as provided to the Borrower from time to time.
Prohibited Transaction means any prohibited transaction as defined in Section 4975 of the US Tax Code or Section 406 of ERISA.
Producing Unincorporated Joint Venture means any unincorporated joint venture of a member of the Group that is generating income.
Production means, in relation to a period, the volume of coal produced and available for sale from a mine during that period.
Project means any particular project of the Parent or any Subsidiary of the Parent relating to the ownership, creation, development, operation, exploration, investigation or exploitation of any assets in the coal sector acquired by the Parent or any Subsidiary of the Parent after the date of this Agreement.
Project Assets means any assets used exclusively for and in connection with a Project.
Project Company means any entity which is a Subsidiary of the Parent (other than one which is a Subsidiary of the Parent as at the date of this Agreement) and is established or maintained following the date of this Agreement solely for the purpose of the acquisition, development or operation of a Project, either alone or in conjunction with other parties that are non-Group Members and which owes Limited Recourse Financial Indebtedness.
However, upon a Project Company ceasing to have any Limited Recourse Financial Indebtedness it will cease to be a Project Company and will be taken into account for the purposes of compliance with Clause 24.16 ( Composition of Obligor Group ).
Prospectus means the prospectus to be issued by Coronado Group LLC and the Parent, which as at the date of this Agreement is intended to be dated on or about 24 September 2018 and lodged with the Australian Securities and Investments Commission on or about that date.
PTE means a prohibited transaction class exemption issued by the US Department of Labor, as any such exemption may be amended from time to time.
Quarter means the period of 3 calendar months ending on each of 31 March, 30 June, 30 September and 31 December each year.
Quotation Day means, in relation to any period for which an interest rate is to be determined:
(a) if the currency is Australian dollars, the first day of that period; and
(b) if the currency is US dollars, 2 Business Days before the first day of that period.
Real Property means, individually as the context requires, the real property (other than as set forth in the proviso below) that is owned, leased or licensed by an Obligor, including, but not limited to surface, coal and other mineral rights, interests, mining leases, exploration permits, mineral development licenses, and other related mining tenements and coal leases associated with the properties described in Schedule 10 ( Real Property ), and Real Property shall mean, collectively, as the context requires, all of the foregoing; provided, however, Real Property shall not include (i) US Excluded Property, (ii) any asset that shall have been released from the Transaction Security pursuant to the express provisions of the Finance Documents or (iii) any building or mobile home (each as defined in Regulation H as promulgated by the Federal Reserve Board under the Flood Laws).
Reclamation Laws means all applicable federal, state, local and foreign statutes, laws, regulations, guidance, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions or common law causes of action relating to mining reclamation or reclamation liabilities.
Recognition Certificate has the meaning given in the Security Trust Deed.
Reference Bank Quotation means any quotation supplied to the Agent by a Reference Bank.
Reference Bank Rate means:
(a) in relation to BBSY Bid, the sum of:
(i) the following rates:
(A) the arithmetic mean of the rates (rounded upwards to 4 decimal places) as supplied to the Agent at its request by the Reference Banks as the mid discount rate (expressed as a yield percent to maturity) observed by the relevant Reference Bank for marketable parcels of Australian dollar denominated bank accepted bills and negotiable certificates of deposit accepted or issued by Prime Banks, and which mature on the last day of the relevant period or in the same half month period under market conventions; or
(B) (if there is no observable market rate for marketable parcels of Prime Bank Australian dollar securities referred to in paragraph (A)above), the arithmetic mean of the rates (rounded upwards to 4 decimal places) as supplied to the Agent at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in Australian dollars in the Australian interbank market and for the relevant period were it to do so by asking for and then accepting interbank offers for deposits in reasonable market sizes and for that period; and
(ii) 0.05% per annum;
(b) the arithmetic mean of the rates (rounded upwards to 4 decimal places) as supplied to the Agent at its request by the Reference Banks in relation to LIBOR as either:
(i) if:
(A) the Reference Bank is a contributor to the applicable Screen Rate; and
(B) it consists of a single figure,
the rate (if any and applied to the relevant Reference Bank and the relevant currency and period) which contributors to the applicable Screen Rate are asked to submit to the relevant administrator; or
(ii) in any other case, the rate at which the relevant Reference Bank could fund itself in the relevant currency for the relevant period with reference to the unsecured wholesale funding market.
Reference Banks means:
(a) in relation to BBSY Bid, the principal office in Sydney of any three of the following:
(i) Australia and New Zealand Banking Group Limited;
(ii) Commonwealth Bank of Australia;
(iii) National Australia Bank Limited; and
(iv) Westpac Banking Corporation; and
(b) in relation to LIBOR, the principal Sydney offices of:
(i) Australia and New Zealand Banking Group Limited;
(ii) Commonwealth Bank of Australia;
(iii) National Australia Bank Limited; and
(iv) Westpac Banking Corporation.
Regulated Substances means, without limitation, any substance, material or waste, regardless of its form or nature, defined under Environmental Health and Safety Law as a hazardous substance, pollutant, pollution, contaminant, hazardous or toxic substance, extremely hazardous substance, toxic chemical, toxic substance, toxic waste, hazardous waste, special handling waste, industrial waste, residual waste, solid waste, municipal waste, mixed waste, infectious waste, chemotherapeutic waste, medical waste, regulated substance or words of similar import, or any other material, substance or waste, regardless of its form or nature, which is regulated by Environmental Health and Safety Law due to its radioactive, ignitable, corrosive, reactive, explosive, toxic, carcinogenic or infectious properties or nature, or which otherwise is regulated by any Environmental Health and Safety Law including, without limitation, petroleum and petroleum products (including crude oil and any fractions thereof), natural gas, coalbed methane gas, synthetic gas and any mixtures thereof, asbestos and asbestos containing materials, urea formaldehyde, polychlorinated biphenyls, mercury and radioactive substances.
Related Fund in relation to a fund (the first fund ), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
Release means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the Environment or within, from or into any building, structure, facility or fixture, including all mines and other subsurface structures.
Relevant Group means the Parent and its Subsidiaries, excluding any Project Company.
Relevant Market means:
(a) in relation to Australian dollars, the Australian interbank market for bank accepted bills and negotiable certificates of deposits; and
(b) in relation to US dollars, the London interbank market.
Remedial Action means any investigation, identification, preliminary assessment, characterization, delineation, feasibility study, cleanup, corrective action, removal, remediation, risk assessment, fate and transport analysis, in-situ treatment, the treatment of discharges or seeps, containment, operation and maintenance or management in-place, control, abatement or other response actions to Regulated Substances and any closure or postclosure measures, or reclamation activities associated therewith.
Repeating Representations means each of the representations set out in Clauses 21.1 ( Status ) to 21.8 ( No default ), 21.10 ( No misleading information ), 21.12 ( Financial Statements ) to 21.34 ( Projects ) and paragraphs (b) and (c) of Clause 21.36 ( Group Structure Diagram ).
Reportable Event means a reportable event described in Section 4043 of ERISA or regulations thereunder with respect to a Plan or a Multiemployer Plan (other than any such event as to which the thirty-day notice period is waived); provided that, in the case of any such reportable event with respect to a Multiemployer Plan, such event shall only be deemed a Reportable Event for purposes of this Agreement if the Borrowers have knowledge of such event.
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
Reserves means the Mineral Resources and Ore Reserves (as those terms are defined in the JORC Code) of coal within the Mining Tenements.
Reserves Statement means a statement given in accordance with the JORC Code showing, amongst other things, the Mineral Resources and Ore Reserves (as those terms are defined in the JORC Code) of coal within the Mining Tenements as at a given date.
Resignation Letter means a letter substantially in the form set out in Schedule 6 ( Form of Resignation Letter ).
Review Event means any of the following events:
(a) a Change of Control occurs without the prior consent of the Agent (acting on the instructions of all Lenders); or
(b) the Parent is delisted from the ASX or an application is made by a competent person to delist the Parent from the ASX; or
(c) trading in the Parents shares on the ASX is suspended for 7 consecutive trading days, unless due to a pending market announcement not related to financial difficulties of the Parent; or
(d) the Reserves as at the Termination Date as forecast in the most recent 5 year forecast provided pursuant to Clause 22.2 ( Compliance Certificate and other information ) are less than 60% of the Reserves as disclosed in the Prospectus; or
(e) any Environmental Liability of or relating to any Group Member occurs, is subsisting or is otherwise identified or determined to exist, in each case that will have or is reasonably likely to have a Material Adverse Effect.
Rollover Loan means one or more Facility A Loans:
(a) made or to be made on the same day that a maturing Facility A Loan is due to be repaid;
(b) the aggregate amount of which is equal to or less than the amount of the maturing Facility A Loan;
(c) made or to be made to the same Borrower for the purpose of refinancing that maturing Facility A Loan; and
(d) made in the same currency as the maturing Facility A Loan.
Sanctioned Country means, at any time, a country or territory which is itself the subject or target of any Sanctions (currently, Cuba, Iran, North Korea, Syria, and the Crimea region of Ukraine).
Sanctioned Person means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or the US Department of State, the United Nations Security Council, the European Union, any Member State of the European Union, any Governmental Authority of Australia, or the United Kingdom (irrespective of its status vis-a- vis the European Union), (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons.
Sanctions means economic or financial sanctions, trade embargoes or similar measures enacted, administrated or enforced by the United States of America, Australia; the United Nations Security Council, and/or the European Union or any present or future state thereof and/or the French Republic, and/or Her Majestys Treasury or any other relevant sanctions authority or by any agency of the above.
Screen Rate means:
(a) in relation to BBSY Bid:
(i) the Australian Bank Bill Swap Reference Rate (Bid) administered by ASX Benchmarks Pty Limited (or any other person which takes over the administration of that rate) for the relevant period displayed on page BBSY of the Thomson Reuters Screen (or any replacement Thomson Reuters page which displays that rate). If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with a Borrower; and
(ii) if the rate described in sub-paragraph (i) above is not available, the sum of:
(A) the Australian Bank Bill Swap Reference Rate administered by ASX Benchmarks Pty Limited (or any other person which takes over the administration of that rate) for the relevant period displayed on page BBSW of the Thomson Reuters Screen (or any replacement Thomson Reuters page which displays that rate). If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with a Borrower; and
(B) 0.05% per annum; and
(b) in relation to LIBOR, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOROl or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.
Secured Money has the meaning given to that term in the Security Trust Deed.
Secured Property means all of the assets of the Obligors which from time to time are the subject of the Transaction Security.
Security means a mortgage, charge, pledge, license, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect, including any security interest as defined in the PPSA or the US Uniform Commercial Code.
Security Provider means an Obligor that is a party to a Transaction Security.
Security Trust means the trust established by the Security Trust Deed.
Security Trust Deed means the deed entitled Security Trust Deed dated after the date of this Agreement and made between, among others, the Borrower, and Westpac Administration Pty Limited (ACN 008 617 203) (as Security Trustee).
Security Trustee means Westpac Administration Pty Limited (ACN 008 617 203) or such other person appointed from time to time as the trustee of the Security Trust.
Selection Notice means a notice substantially in the form set out in Part III of Schedule 3 ( Requests ) given in accordance with Clause 11 ( Interest Periods ) in relation to Facility A.
Specified Time means a time determined in accordance with Schedule 9 ( Timetables ).
Stanwell Arrangements means the arrangements and transactions embodied in:
(a) the Stanwell Amended Coal Supply Agreement dated 6 November 2009 between Stanwell Corporation Limited and Coronado Curragh Pty Ltd, as amended by the ACS A Deed of Amendment entered into on or about 21 November 2016; and
(b) the Curragh Mine New Coal Supply Deed between Stanwell Corporation Limited and Coronado Curragh Pty Ltd dated 14 August 2018 including any agreement arising from and consistent with the binding term sheet attached thereto.
Subordinated Debt means all debt of a Group Member under which:
(a) the Agent is satisfied that the creditors rights are subordinated to the rights of the Finance Parties under the Finance Documents in a form and substance satisfactory to the Agent; and
(b) (without limiting paragraph (a) above), such debt must meet the following criteria (as a minimum):
(i) as at the time it is originally incurred it has a maturity date that falls at least 180 days after the maturity date for the Financial Indebtedness owed pursuant to the Finance Documents;
(ii) it is not subject to prepayment events, other than events of default (however defined, but only for the purpose of capitalising interest) (or such events have been approved by the Finance Parties in writing); and
(iii) it is on terms which do not impose more onerous obligations (including in relation to Financial Covenants) on the Obligors than those under the Finance Documents unless the Finance Parties also agree to make corresponding changes to the Finance Documents (or advise the Parent that they do not require such changes).
Subsidiary has the meaning given in the Corporations Act 2001, but as if body corporate includes any entity. It also includes (a) an entity required by current accounting practice to be included in the consolidated annual Financial Statements of that entity or would be required if that entity were a corporation and (b) with respect to any entity (herein referred to as the parent ), any corporation, partnership, association or other business entity (i) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled (as defined in the definition of Change of Control) or held by the parent or one or more subsidiaries of the parent or (ii) whose accounts are consolidated with the accounts of the parent or one or more subsidiaries of the parent in such parents or subsidiarys US Securities and Exchange Commission filings (or the filings of any Governmental Agency succeeding to any or all of its functions). Unless the context otherwise requires, Subsidiary shall mean a Subsidiary of Parent.
Surety means an obligation or offer to provide funds (including by subscription or purchase) or otherwise be responsible in respect of an obligation or indebtedness, or the financial condition or insolvency, of another person. It includes a guarantee, indemnity, letter of credit or legally binding letter of comfort, or an obligation or offer to purchase an obligation or indebtedness of another person.
Tangible Net Worth means total shareholders equity in the Group, less intangible assets, non-current deferred tax assets and non-current prepayments (each determined in accordance with US GAAP and as shown in the most recent consolidated Financial Statements for the Group delivered to the Agent under Clause 22.1 ( Financial Statements ), and after adding back:
(a) liabilities related to below-market contract obligations;
(b) any difference between the actual amount of interest bearing loans and borrowings of the Group and their fair market value as shown in the Financial Statements; and
(c) any asset or liability related to the Stanwell Reserve Area (as that term is contemplated by the Stanwell Arrangements).
Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty, interest or addition to tax payable in connection with any failure to pay or any delay in paying any of the same).
Tax Act means the Income Tax Assessment Act 1936 (Cth) or the Income Tax Assessment Act 1997 (Cth), as the context requires.
Tax Agreements means the Tax Funding Agreement and the Tax Sharing Agreement.
Tax Consolidated Group means a Consolidated Group or an MEC Group as defined in the Tax Act.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
Tax Funding Agreement mans a tax funding agreement between each member of the Tax Consolidated Group which includes:
(a) reasonably appropriate arrangements for the funding of tax payments by the Head Company, having regard to the position of each member of the Tax Consolidated Group;
(b) an undertaking from each member of the Tax Consolidated Group to compensate each other member adequately for loss of tax attributes (including tax losses and tax offsets) as a result of being a member of the tax Consolidated Group; and
(c) an undertaking from the Head Company to pay all group liabilities (as described in section 721-10 of the Tax Act) of the Tax Consolidated Group before the members of the Tax Consolidated Group make any payments to the Head Company under the agreement.
Tax Sharing Agreement means, for any jurisdiction, any tax sharing agreement in relation to the sharing of tax liabilities in that jurisdiction between one or more Group Members in that jurisdiction, including an agreement between each member of the Tax Consolidated Group which takes effect as a tax sharing agreement under section 721-25 of the Tax Act and which complies with the Tax Act and any law, official directive, request, guideline or policy (whether or not having the force or law issued in connection with the Tax Act).
Term means each period determined under this Agreement for which the Issuing Bank is under a liability under a Bank Guarantee.
Term Loan B Facility means the US$550,000,000 Term Loan B Facility under and as defined in the Term Loan Facility Agreement.
Term Loan C Facility means the US$150,000,000 Term Loan C Facility under and as defined in the Term Loan Facility Agreement.
Term Loan Facility Agreement means the Term Loan Syndicated Facilities Agreement dated as March 29, 2018 (as amended by Amendment No. 1 dated as of May 5, 2018) between Coronado Group LLC, a Delaware limited liability company, Coronado Australia Holdings Pty Limited, an Australian company, Coronado Curragh LLC, a Delaware limited liability company, the lenders party thereto from time to time, Deutsche Bank AG New York Branch, in its capacity as administrative agent and Wilmington Trust, National Association, in its capacity as collateral trustee.
Termination Date means the date that falls 41 Months after the date of this Agreement.
Total Tangible Assets means the total assets shown as such in the most recent consolidated Financial Statements of the Group delivered to the Agent under Clause 22.1 ( Financial Statements ) after deducting intangible assets and deferred tax assets.
Total Commitments means the aggregate of the Total Facility A Commitments and the Total Facility B Commitments. For the purposes of this definition, the Total Facility B Commitments are to be calculated by converting all Facility B Commitments into US dollars at the Agents Spot Rate of Exchange.
Total Facility A Commitments means the aggregate of the Facility A Commitments, being US$350,000,000 at the date of this Agreement.
Total Facility B Commitments means the aggregate of the Facility B Commitments, being A$370,000,000 at the date of this Agreement.
Transaction Security means the Security created or expressed to be created in favour of, or held for the benefit of, the Security Trustee pursuant to the Transaction Security Documents.
Transaction Security Documents means each of:
(a) the General Security Deed;
(b) each Australian Mortgage;
(c) each Mining Tenement Security;
(d) each US Security Document; and
(e) any other Finance Document under which a Security is created or expressed to be created in favour of the Security Trustee.
Transfer Certificate means a certificate substantially in the form set out in Schedule 4 ( Form of Transfer Certificate ) or any other form agreed between the Agent and a Borrower.
Transfer Date means, in relation to an assignment or a transfer, the later of:
(a) the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
(b) the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.
Treasury Transaction means any interest rate swap, foreign exchange transaction, equity or equity index option, bond option, commodity swap, commodity option, cap transaction, currency swap transaction, cross-currency swap rate transaction or any other hedge or derivative transaction or product entered into in connection with protection against, or benefit from, fluctuation in any rate, currency, commodity or price.
Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.
US or United States means, in each case, the United States of America.
US Borrower means a Borrower which is incorporated, organised or formed under the laws of the United States or any state or commonwealth thereof (including the District of Columbia).
US Excluded Property means, solely with respect to the assets of US Security Providers:
(a) assets subject to certificates of title (other than mining tenements) not in excess of $100,000;
(b) the assets of any Group Member who is not an Obligor (but only if and for so long as it is not an Obligor);
(c) voting equity interests in excess of 65% of the voting equity interests of any Subsidiary of the Parent that is a first-tier CFC or first-tier CFC Holdco (excluding any Subsidiary (including a successor entity) that is a Guarantor), where:
(i) CFC means controlled foreign corporation within the meaning of Section 957(a) of the Internal Revenue Code (provided, however, that for purposes of the Finance Documents, neither the Borrower, nor any Subsidiary of the Borrower, including their successors, will be deemed to be a CFC); and
(ii) CFC Holdco means a Subsidiary (and any successor entity of such Subsidiary) that has no material assets other than the capital stock (or capital stock and indebtedness) of one or more foreign subsidiaries that are CFCs
provided that no such Subsidiary is an Obligor incorporated in Australia;
(d) the assets with respect to which any pledge or security interests thereof would be:
(i) prohibited by law or would require consent of any Governmental Authority, or
(ii) in the case of equity interests of non-wholly owned Subsidiaries or joint ventures permitted by Clause 24.18 ( Partnerships and joint ventures ), prohibited by the organizational documents of such non-wholly owned Subsidiary or joint venture, except to the extent such prohibition is ineffective or rendered unenforceable under applicable law (including the US Uniform Commercial Code) or principles of equity (provided, however, that the proceeds of any such equity interests shall not be US Excluded Property);
(e) real property existing on the Listing Date, whether owned or leased or licensed by any Group Member, including but not limited to surface, coal and other mineral rights, interests and coal leases, mining leases, exploration permits, mineral development licences, and other related mining tenements, other than the real property listed in Schedule 10 ( Real Property ) or required to ensure the representation in Clause 21.43 ( Surface Facilities ) is correct;
(f) real property that does not contain proven reserves or material operations;
(g) any:
(i) owned real property acquired after the Listing Date with a fair market value not exceeding $500,000; and
(ii) buildings or other structures situated on any real property described in the foregoing paragraph (i);
(h) any real property lease:
(i) where the terms of the lease do not permit the grant of a security interest, provided that (x) with respect to any such real property lease as of the Listing Date, the Obligors comply with Clause 4.5 ( Conditions subsequent - other ) in relation to obtaining consent and (y) with respect to any such real property lease entered into after the Listing Date, the Obligors comply with Clause 24.20 ( Mining tenements; After-Acquired Properly; Further assurances regarding Secured Property ) (it being understood that, in each case, no Obligor will be required to pay any fee or pay any other consideration or agree to any commercial change that would be detrimental to any Obligor to obtain any such consent); (z) the representation in Clause 21.43 ( Surface Facilities ) remains correct at all times; or
(ii) entered into after the Listing Date with a Obligor as lessee, and with the lessor being a Person that is not a Obligor or Affiliate thereof, with annual minimum royalties, rents or any similar payment obligations, not exceeding $500,000;
(i) any contract or lease agreement (other than a real property lease agreement) if the grant of a security interest in such contract or lease agreement is prohibited by the terms of such contract or lease agreement or would give another party thereto any rights of termination or acceleration, except to the extent that:
(i) the term in such contract or lease providing for such prohibition or right of termination or acceleration is ineffective or rendered unenforceable under applicable law (including the US Uniform Commercial Code) or principles of equity; or
(ii) any consent or waiver has been obtained that would permit a Transaction Security to attach notwithstanding the prohibition or restriction on the pledge of or security interest in such contract or lease agreement;
(j) any property which is subject to a Permitted Security pursuant to documents which prohibit the applicable Obligor from granting any other Security in such property or to the extent the grant of a security interest therein would violate or invalidate such documents or would create a termination right in favour of any other party thereto (other than to the extent that any such prohibition would be rendered ineffective pursuant to the US Uniform Commercial Code or any other applicable law or principles of equity and other than to the extent all necessary consents to the creation, attachment and perfection of Transaction Security thereon have been obtained), and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms that prohibit such Obligor from granting any other Security in such property or the obtainment of such consents to the creation, attachment and perfection of Transaction Security thereon, such property shall cease to constitute an Excluded Property;
(k) any intent-to-use trademark applications prior to the filing, and acceptance by the United States Patent and Trademark Office, of a Statement of Use or Amendment to Allege Use with respect thereto, if any, to the extent that, and solely during the period in which, the grant of a security interest therein prior to such filing and acceptance would impair the validity or enforceability of such intent-to-use trademark applications or the resulting trademark registrations under applicable federal law;
(l) letter of credit rights, except to the extent a security interest therein can be perfected by a US Uniform Commercial Code filing;
(m) commercial tort claims below $500,000 in the aggregate for all of the Group in aggregate;
(n) margin stock;
(o) equity interests in JEP Mining LLC;
(p) any of the following accounts,
(i) any deposit account that is used solely for payment of payroll, bonuses, other compensation and related expenses, in each case, for employees or former employees;
(ii) escrow accounts to the extent the use of such, escrowed funds is permitted under the Finance Documents and the amount on deposit therein in connection with any letter of intent in respect of a purchase that would reasonably be expected to result in an acquisition or other investment that would not cause or result in an Event of Default;
(iii) fiduciary or trust accounts for the benefit of third parties (other than Obligors);
(iv) zero-balance accounts, so long as the balance in such account is zero at the end of each Business Day; and
(v) any other deposit accounts with an aggregate daily balance as at the end of each Business Day of less than $1,000,000 in the aggregate for all such deposit accounts;
(q) assets or property (other than the real property listed in Schedule 10 ( Real Property ) or real property necessary to ensure the representation in Clause 21.43 ( Surface Facilities ) is correct) as to which creating or perfecting a security interest therein would be expected to result in material adverse tax consequences to any Group Member; and
(r) assets or property as to which in the reasonable determination of the Agent the cost of creating or perfecting a security interest therein is excessive in relation to the benefit to the Finance Parties to be afforded thereby;
provided , however that no assets or other property that would be required to constitute Collateral securing the obligations of the obligors under the Term Loan Facility Agreement as of the date of this Agreement shall constitute US Excluded Property under any Finance Document.
US GAAP means the generally accepted accounting principles in the United States as are in effect from time to time and applied on a consistent basis as to classification of items and amounts.
US Guarantee Agreement means the Guarantee Agreement substantially in the form of the Guaranty Agreement (as defined in the Term Loan Agreement) and otherwise in form and substance reasonably satisfactory to the Agent executed and delivered by the US Guarantors party thereto for the benefit of the Finance Parties pursuant to Clause 4 ( Conditions of Utilisation ), as the same may be supplemented, amended, restated, replaced, or modified from time to time, in accordance with the terms hereof and thereof.
US Guarantor means a Guarantor which is incorporated, organised or formed in the United States or any state or commonwealth thereof (including the District of Columbia).
US Person means an entity which is incorporated, organised or formed under the laws of the United States of America or any state or commonwealth thereof (including the District of Columbia).
US Security Agent means any Person appointed from time to time by or behalf of the Agent or the Security Trustee as a co-agent, co-security trustee, sub-agent, sub-security trustee or attorney-in-fact under the US Security Documents to act as agent, collateral agent, trustee, security trustee, collateral trustee or similar capacity with respect to the Security Trust in favour of, or held for the benefit of, the Beneficiaries under the US Security Documents.
US Security Agreement means the Security Agreement substantially in the form (other than as to US Excluded Property definitions) of the U.S. Security Agreement (as defined in the Term Loan Facility Agreement) and otherwise in form and substance reasonably satisfactory to the Security Trustee executed and delivered by the US Security Providers party thereto for the benefit of the Security Trustee and the Beneficiaries, as the same may be supplemented, amended, restated, replaced, or modified from time to time, in accordance with the terms hereof and thereof.
US Security Documents means:
(a) the US Security Agreement;
(b) the US Guarantee;
(c) each Mortgage;
(d) each Intellectual Property Security Agreement (as defined in the US Security Documents);
(e) any supplement to any of the foregoing delivered to the Security Trustee pursuant to the terms hereof or of any other Transaction Security Document;
(f) the Perfection Certificate (as defined in the US Security Agreement); and
(g) each of the other instruments and documents with respect to the Transaction Security that is governed by the laws of the United States or any state or commonwealth thereof (including the District of Columbia).
US Security Provider means a Security Provider which is a US Person.
US Tax Code means the United States Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder.
US Uniform Commercial Code means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state of the US the laws of which are required to be applied to the Secured Property.
USA PATRIOT Act means the US Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. No. 107-56, 115 Stat. 272 (2001).
Utilisation means a utilisation of a Facility.
Utilisation Date means the date of a Utilisation, being the date on which the relevant Loan is to be made or the relevant Bank Guarantee is to be issued.
Utilisation Request means a notice substantially in the form set out in Part I (for Facility A) or Part II (for Facility B) (as applicable) of Schedule 3 ( Requests ).
Wesfarmers Arrangements means the arrangements and transactions embodied in the Value Share Mechanism Deed entered into between Coronado Curragh Pty Ltd and Wesfarmers Limited on 29 March 2018, pursuant to which Wesfarmers Limited has lodged a caveat in respect of each Mining Tenement held by Coronado Curragh, securing its rights under the Value Share Mechanism Deed.
Winged Horse Arrangements means the arrangements and transactions embodied in the Royalty Deed dated 31 August 2010 (as amended, novated or assigned), pursuant to which Winged Horse Pty Limited as trustee for the Pegasus Royalty Unit Trust and B. McDonald (No. 2) Pty Limited are entitled to a royalty with respect to any coal produced from any mine covering some or all of MDL 162.
1.2 Construction
(a) Unless a contrary indication appears, any reference in this Agreement to:
(i) the Agent , the Arranger , any Finance Party , any Hedge Counterparty , any Lender , any Issuing Bank , any Obligor , any Party or the Security Trustee shall be construed so as to include its executors, administrators, successors, substitutes (including by novation) and assigns to, or of, its rights and/or obligations under the Finance Documents or Finance Documents;
(ii) assets includes present and future properties, revenues and rights of every description;
(iii) a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended or restated;
(iv) a group of Lenders includes all the Lenders;
(v) guarantee means (other than in Clause 20 ( Guarantee )) (A) any guarantee, bank guarantee, bond, indemnity or similar assurance against loss, or (B) any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;
(vi) indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(vii) the Interest Period of a Bank Guarantee shall be construed as a reference to the Term of that Bank Guarantee;
(viii) a person or entity includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality) or two or more of them and any reference to a particular person or entity (as so defined) includes a reference to that persons or entitys executors, administrators, successors, substitutes (including by novation) and assigns;
(ix) a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation and if not having the force of law, with which responsible entities in the position of the relevant Party would normally comply;
(x) a Utilisation made or to be made to a Borrower includes a Bank Guarantee issued on its behalf;
(xi) a provision of Law or a regulation is a reference to that provision as amended or re-enacted and all statutory and regulatory provisions consolidating, amending, replacing, supplementing, superseding or interpreting that provision;
(xii) a time of day is a reference to Sydney time; and
(xiii) the words including , for example or such as when introducing an example do not limit the meaning of the words to which the example relates to that example or examples of a similar kind.
(b) The determination of the extent to which a rate is for a period equal in length to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.
(c) Section, Clause and Schedule headings are for ease of reference only.
(d) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(e) A Borrower providing cash cover for a Bank Guarantee means a Borrower paying an amount in the currency of the Bank Guarantee to the Issuing Bank of such Bank Guarantee who must apply the amount in accordance with Clause 25.1 ( Cash cover ).
(f) A Default (other than an Event of Default) is continuing if it has not been remedied to the satisfaction of all Lenders acting reasonably or waived and an Event of Default or Review Event is continuing if it has not been remedied to the satisfaction of all Lenders acting reasonably or waived.
(g) A Borrower repaying or prepaying a Bank Guarantee means:
(i) that Borrower providing cash cover for that Bank Guarantee;
(ii) that Borrower making a payment under Clause 7.1 ( Claims under a Bank Guarantee ) in respect of the Bank Guarantee or a Borrower reimbursing an amount paid by the Issuing Bank under the Bank Guarantee under Clause 7.2 ( Indemnities );
(iii) the maximum amount payable under the Bank Guarantee being reduced or cancelled in accordance with its terms;
(iv) the Issuing Bank being satisfied that it has no further liability under that Bank Guarantee; or
(v) if the Issuing Bank has given its prior consent, providing a back-to-back bank guarantee, bank guarantee or similar from a bank which, along with the terms (including fees and identity of the issuer) of such bank guarantee, bank guarantee or similar instrument, must be acceptable to the Issuing Bank in its absolute discretion,
and the amount by which a Bank Guarantee is repaid or prepaid under paragraphs (i), (ii), (iii) and (v) above is the amount of the relevant cash cover, payment, reimbursement, reduction or cancellation. When under this Agreement a Borrower is obliged to repay or prepay a Bank Guarantee, it must:
(A) provide cash cover for the outstanding amount of the Bank Guarantee (less the total amount paid by the Issuing Bank under the Bank Guarantee); and
(B) pay under Clause 7.1 ( Claims under a Bank Guarantee ) or Clause 7.2 ( Indemnities ) an amount equal to the total amount paid by the Issuing Bank under the Bank Guarantee,
except to the extent that the amount of the Bank Guarantee has been repaid or prepaid by another means.
(h) An amount borrowed includes any amount utilised by way of Bank Guarantee.
(i) Amounts outstanding under this Agreement include amounts actually or contingently outstanding under or in respect of any Bank Guarantee.
(j) An outstanding amount of a Bank Guarantee at any time is the maximum amount that is or may be payable by the relevant Borrower in respect of that Bank Guarantee at that time.
(k) A Borrowers obligation on Utilisations becoming due and payable includes the Borrower repaying any Bank Guarantee in accordance with paragraph (g) above.
(l) With respect to any US limited liability company, any reference herein to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by any such limited liability company, or an
allocation of assets to a series of any such limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of any US limited liability company shall constitute a separate Person hereunder (and each division of any such limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
(m) Notwithstanding anything to the contrary in this Agreement or any other Finance Document, any references contained herein or therein to the Security Trustee shall be deemed to be a reference to the Security Trustee party hereto and any co-agents or co-security trustee (including any US Security Agent), sub-agents or sub-security trustee (including any US Security Agent) and attorneys-in-fact appointed by such Security Trustee or Agent pursuant to the terms of this Agreement or any other Transaction Security Document (including, without limitation, the US Security Agreement), as applicable.
1.3 Currency symbols and definitions
(a) A$ , AUD and Australian dollars denote the lawful currency of Australia.
(b) US$ , USD and US dollars denote the lawful currency of the United States of America.
1.4 Obligors agent
(a) All communications and notices under the Finance Documents to and from the Obligors may be given to or by the Original Borrower and each Obligor irrevocably authorises each Finance Party to give those communications to the Original Borrower.
(b) Each Obligor (other than a Borrower) irrevocably appoints the Original Borrower to act on its behalf as its agent in connection with the Finance Documents and irrevocably authorises the Original Borrower on its behalf to:
(i) supply all information relating to itself as contemplated by any Finance Document to any Finance Party;
(ii) give and receive all communications and notices (including any Utilisation Request or Selection Notice) and instructions under the Finance Documents; and
(iii) agree and sign all documents under or in connection with the Finance Documents (including any amendment, novation, supplement, extension or restatement of or to any Finance Document) without further reference to, or the consent of, that Obligor.
(c) An Obligor shall be bound by any act of the Original Borrower under this Clause 1.4 ( Obligors agent ) irrespective of whether the Obligor knew about it or whether it occurred before the Obligor became an Obligor under any Finance Document.
(d) To the extent that there is any conflict between any communication or notice by the Original Borrower on behalf of an Obligor and any other Obligor, those of the Original Borrower shall prevail.
1.5 Security Trustee limitation of liability
(a) The Security Trustee enters into and performs the Finance Documents to which it is a party and the transactions they contemplates only in its capacity as the trustee of the Security Trust (and not in its personal capacity, or in its capacity as trustee of any other trust other than the Security Trust), except where expressly stated otherwise. This applies also in respect of any past and future conduct (including omissions) relating to this agreement or those transactions.
(b) Under and in connection with the Finance Documents and those transactions and conduct:
(i) the Security Trustees liability (including for negligence) is strictly limited, and can only be enforced against the Security Trustee, to the extent to which it can be satisfied out of the Security Trust assets or the Security Trustee is actually indemnified for the liability. This limitation will not apply to any obligation or liability of the Security Trustee only to the extent it is not so satisfied because there is a reduction in the extent of the Security Trustees indemnification out of the Security Trust assets caused by the Security Trustees fraud, gross negligence or wilful misconduct. The Security Trustee need not pay any such liability out of other assets;
(ii) another party may only do the following with respect to the Security Trustee (but any resulting liability remains subject to the limitations in this Clause):
(A) prove and participate in, and otherwise benefit from, any form of insolvency administration of the Security Trustee but only with respect to Security Trust assets;
(B) exercise rights and remedies with respect to Security Trust assets, including set-off;
(C) enforce its security (if any) and exercise contractual rights; and
(D) bring any proceedings against the Security Trustee seeking relief or orders that are not inconsistent with the limitations in this Clause,
and may not:
(E) bring other proceedings against the Security Trustee;
(F) take any steps to have the Security Trustee placed in any form of insolvency administration or to have a receiver or receiver and manager appointed or see to have the Security Trustee wound up, or prove in any winding up of the Security Trustee; or
(G) seek by any means (including set-off) to have a liability of the Security Trustee to that party (including for negligence) satisfied out of any assets of the Security Trustee other than Security Trust assets;
(H) have an administrator appointed to the Security Trustee;
(I) obtain a judgment against the Security Trustee for the payment of money;
(J) carry out any distress or execution on any property of the Security Trustee; or
(K) exercise any:
(1) right of set-off;
(2) right to combine or consolidate accounts; or
(3) bankers lien,
against the Security Trustee, other than in respect of the Security Trust, in connection with the Security Trustees obligations under the Finance Documents.
(c) Paragraphs (a) and (b) apply despite any other provision in any Finance Document but do not apply with respect to any liability of the Security Trustee to another party (including for negligence) to the extent that the Security Trustee has no right or power to have Security Trust
assets applied towards satisfaction of that liability, or its right or power to do so is subject to a deduction, reduction, limit or requirement to make good, in either case because of the Security Trustees fraud, gross negligence or wilful misconduct.
(d) The limitation in paragraph (b)(i) is to be disregarded for the purposes (but only for the purposes) of the rights and remedies described in paragraph (b)(ii), and interpreting this agreement and any security for it, including determining the following:
(i) whether amounts are to be regarded as payable (and for this purpose damages or other amounts will be regarded as a payable if they would have been owed had a suit or action barred under paragraph (b)(ii) been brought);
(ii) the calculation of amounts owing; or
(iii) whether a breach or default has occurred,
but any resulting liability will be subject to the limitations in this Clause.
(e) Nothing in paragraph (c) above shall make the Security Trustee liable to any claim for an amount greater than the amount which the other parties would have been able to claim and recover from the Security Trust assets in relation to the relevant liability if the Security Trustees right of indemnification out of the assets of the Security Trust had not been prejudiced by the Security Trustees fraud, gross negligence or wilful misconduct.
(f) This Clause applies despite any other provision of any Finance Document or any principle of equity or law to the contrary.
1.6 Liability must be limited and must be indemnified
The Security Trustee is not obliged to do or not do anything in connection with the Finance Document (including enter into any transaction or incur any liability) unless:
(a) the Security Trustees liability is limited in a manner which is consistent with Clause 1.5( Security Trustee limitation of liability );
(b) the Security Trustee is indemnified (or otherwise put in funds) to its reasonable satisfaction against any liability or loss arising from, and any costs, charges and expenses (including those incurred in connection with advisers) properly incurred in connection with, doing or not doing that thing; and
(c) it has received the relevant instructions from the relevant Beneficiaries.
1.7 Administration in connection with Facility B
Despite any other provision of this Agreement and while no Default subsists, any notice, request, correspondence, payment or administration mechanics (including in relation to fees, principal and interest) in connection with Facility B or Bank Guarantees issued under Facility B may be given, made or operated directly between the relevant-Borrower and the Facility B Lender or Issuing Bank without reference to the Agent, unless the Borrower and the Issuing Bank or Facility B Lender agree otherwise and, where applicable, any references to the Agent in this Agreement will be read as references to that Issuing Bank or Facility B Lender.
1.8 Contractual recognition of bail-in
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to this Agreement, each party acknowledges and accepts that any liability of any party to any other party under or in connection with the Finance Documents may be
subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a) any Bail-In Action in relation to any such liability, including (without limitation):
(i) a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii) a cancellation of any such liability; and
(b) a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
In this clause:
Bail-In Action means the exercise of any Write-down and Conversion Powers.
Bail-In Legislation means:
(a) in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time ; and
(b) in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
EEA Member Country means any member state of the European Union, Iceland, Liechtenstein and Norway.
EU Bail-In Legislation Schedule means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
Resolution Authority means any body which has authority to exercise any Write-down and Conversion Powers.
Write-down and Conversion Powers means:
(a) in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b) in relation to any other applicable Bail-In Legislation:
(i) any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in
respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii) any similar or analogous powers under that Bail- In Legislation.
SECTION 2
THE FACILITIES
2. THE FACILITIES
2.1 The Facilities
Subject to the terms of this Agreement:
(a) Facility A: the Facility A Lenders make available to the Borrowers a US dollar based revolving credit facility for Loans drawable in US dollars and Australian dollars, in an aggregate amount equal to the Total Facility A Commitments; and
(b) Facility B: the Facility B Lenders make available to the Borrowers an Australian dollar revolving bank guarantees facility in an aggregate amount equal to the Total Facility B Commitments.
2.2 Finance Parties rights and obligations
(a) The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b) The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and for the avoidance of doubt, any part of a Utilisation or any other amount owed by an Obligor which relates to a Finance Partys participation in a Facility or its role under a Finance Document (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor.
(c) A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents.
3. PURPOSE
3.1 Purpose
(a) Facility A: Utilisations under Facility A may only be used:
(i) to refinance the Term Loan B Facility, the Term Loan C Facility and the ABL Facility; and
(ii) for working capital requirements and for general corporate purposes of the Group.
(b) Facility B: Bank Guarantees drawn under Facility B may only be issued in favour of beneficiaries (which may include the issuers of existing instruments) in support of the business operations of the Group.
3.2 Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4. CONDITIONS OF UTILISATION
4.1 Initial conditions precedent
Subject to Clause 4.5 ( Conditions subsequent - other ), the Borrower may not deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 ( Conditions precedent ) in form and substance satisfactory to the Agent acting on the instructions of all Lenders. The Agent shall notify a Borrower and the Lenders promptly upon being so satisfied.
4.2 Further conditions precedent
The Lenders will only be obliged to comply with Clause 5.4 ( Lenders participation ) if on the date of the Utilisation Request and on the proposed Utilisation Date:
(a) in the case of:
(i) a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan; and
(ii) in the case of any other Utilisation, no Default or Review Event is continuing or would result from the proposed Utilisation;
(b) the Repeating Representations to be made by each Obligor are true in all material respects and not misleading; and
(c) despite Clause 8.2 ( Repayments for currency equalisation ), the relevant Facility Commitment is not and will not be exceeded based on a currency conversion at the Agents Spot Rate of Exchange (where applicable).
4.3 Maximum number of Utilisations
A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation 10 or more Loans would be outstanding. There is no limit to the number of Bank Guarantees that may be outstanding at any time.
4.4 Condition subsequent - Tax Consolidation
If not done before the first Utilisation of a Facility, the Parent must deliver to the Agent in form and substance satisfactory to the Agent (acting on the instructions of all Lenders) within 40 Business Days after the Listing Date, a certified copy of the Tax Sharing Agreement and the Tax Funding Agreement to which Coronado Australia Holdings Pty Limited and all of its Australian incorporated wholly-owned Subsidiaries are party.
4.5 Conditions subsequent - other
(a) If any of the conditions precedent described in Part I of Schedule 2 ( Conditions precedent ), other than those identified in paragraph (b) below, have not been received by the Agent in form and substance satisfactory to the Agent acting on the instructions of all Lenders by the proposed Listing Date, then they shall cease to be conditions precedent to the first Utilisation Request and, subject to Clause 4.5(c), they must instead be received by the Agent in form and substance satisfactory to the Agent acting on the instructions of all Lenders (each acting reasonably) by no later than the 45 th day after the Listing Date together with such other documents referred to in item 1 of Part I of Schedule 2 ( Conditions precedent ) to enable the delivery of such opinions referred to in item 3 of Part I of Schedule 2 ( Conditions precedent ) as the Finance Parties may require with respect to the items being delivered as conditions subsequent. To that extent a condition subsequent arising pursuant to this paragraph (a) is the execution of a Finance Document, then subject to Clause 4.5(c), the opinions described in item 3 of Part I of Schedule 2 ( Conditions Precedent ) must also be delivered in connection with those Finance Documents no later than the 45 th day after the Listing Date.
(b) Paragraph (a) does not apply to the matters described in the following items in Part I of Schedule 2 ( Conditions precedent ) and those items shall always remain conditions precedent, unless the Agent (acting on the instructions of all the Lenders) agrees otherwise in writing:
(i) item 1(a), (b) and (c) (insofar as (c) relates to property of Obligors incorporated in Australia);
(ii) item 2(a), (b), (c), (e) (insofar as (e) relates to Security to be granted by Obligors incorporated in Australia but except if and to the extent the reason why any part of (e) cannot be satisfied over a Relevant Asset is the absence of a Security Consent), (f), (g), (h), (i) and (j) (insofar as (i) and (j) relate to Security to be granted by Obligors incorporated in Australia), (k) and (1);
(iii) item 3;
(iv) item 4 (except if and to the extent the reason why any part of this item cannot be satisfied over a Relevant Asset is the absence of Security Consent); and
(v) item 5(a), (b), (c), (d), (e), (f), (g) (insofar as (g) relates to the Winged Horse Arrangements and Wesfarmers Arrangements) , (h), (i) (except in relation to reliance letters), (j) and (k).
(c) If by the 120 th day after the Listing Date (or any later date stipulated by the Agent) any Security Consent has not been obtained and as a consequence Security over the Relevant Asset as contemplated by a Transaction Security Document has not been perfected to the satisfaction of the Agent acting on the instructions of the Majority Lenders (each acting reasonably), then:
(i) that failure, of itself, will not constitute an Event of Default or Review Event;
(ii) the Obligors must promptly (and, in any case, no later than 5 Business Days after the 120 th day after the Listing Date (or any later date stipulated by the Agent)) provide to the Agent sufficient information in reasonable detail about each missing Security Consent together with details of the reasonable commercial endeavours undertaken to obtain the Security Consents; and
(iii) the Obligors must, on request from the Agent from time to time (acting on the instructions of the Majority Lenders), again use reasonable commercial endeavours to obtain that Security Consent and perfect the Security over that Relevant Asset, and must respond promptly to requests by the Agent for information concerning progress in that regard together with details of the reasonable endeavours undertaken to obtain the Security Consents.
(d) In this Clause, Clause 24.20 ( Mining tenements; After-Acquired Property; Further assurances regarding Secured Property ) and Part II of Schedule 2 ( Conditions precedent ), Security Consent means a consent or permission from a Governmental Agency, a landlord, a lessor or another person (not being a Group Member), without which an Obligor may not give or perfect the Security over an asset that is contemplated by a Transaction Security Document without contravening a law or breaching a contract, or without which any such Security would be ineffective or invalid. Relevant Asset means the asset contemplated by a Transaction Security Document in respect of which a Security Consent is required. To avoid doubt, it is acknowledged that, in using reasonable commercial endeavours to obtain a Security Consent, no Obligor will be required to pay any fee or pay any other consideration or agree to any commercial change that would be detrimental to any Obligor.
4.6 US Excluded Property
(a) Despite anything to the contrary in the Finance Documents, nothing in the Finance Documents obliges the Obligors to provide to the Security Trustee or any other Finance Party any Security
over any US Excluded Property, or makes the giving of any such Security a condition to the provision of financial accommodation under the Finance Documents.
(b) If any US Excluded Property is affected by any Transaction Security, the Security Trustee must do all things reasonably requested by the Parent to release that property from that Transaction Security.
4.7 Group Restructure
The Finance Parties consent to the restructure of the Group described in the document set out in Schedule 11 ( Restructure - Steps Paper ) by 31 October 2018.
SECTION 3
UTILISATION
5. UTILISATION - LOANS
5.1 Utilising Facility A
(a) A Borrower may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
(b) This Clause 5 does not apply to Utilisations by way of Bank Guarantees, in respect of which, Clause 6 ( Utilisation - Bank Guarantees ) applies.
5.2 Completion of a Utilisation Request for Loans
(a) Each Utilisation Request for a Loan is irrevocable and will not be regarded as having been duly completed unless:
(i) it identifies that Facility A is to be utilised;
(ii) the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;
(iii) the currency and amount of the Utilisation comply with Clause 5.3 ( Currency and amount );
(iv) the proposed Interest Period complies with Clause 11 ( Interest Periods );
(v) it is signed by an Authorised Officer of a Borrower.
(b) Only one Loan may be requested in each Utilisation Request.
5.3 Currency and amount
(a) The currency specified in a Utilisation Request under Facility A must be US dollars or Australian dollars.
(b) The amount of the proposed Loan must be an amount whose Base Currency Amount is not more than Available Facility for Facility A and must be:
(i) if in US dollars, a minimum of US$1,000,0000 and a whole multiple of US$500,000 or, if less, the Available Facility for Facility A; and
(ii) if in Australian dollars, a minimum of A$ 1,000,0000 and a whole multiple of A$500,000 or, if less, the Available Facility for Facility A.
5.4 Lenders participation
(a) If the conditions set out in this Agreement have been met, and subject to Clause 8.1 ( Repayment of Facility A Loans ), each Facility A Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.
(b) The amount of each Lenders participation in each Loan will be equal to the proportion borne by its Facility A Available Commitment to the Available Facility for Facility A immediately prior to making the Loan.
5.5 Cancellation of Facility A Commitment
The Facility A Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period for Facility A.
6. UTILISATION - BANK GUARANTEES
6.1 Utilising Facility B
(a) Facility B may only be utilised by way of Bank Guarantees.
(b) Clause 5 ( Utilisation - Loans ) does not apply to Utilisations by way of Bank Guarantees.
(c) In determining the amount of the Available Facility for the purposes of this Agreement the Available Commitment of a Lender will be calculated ignoring any cash cover or any back-to-back bank guarantee or other instrument provided for outstanding Bank Guarantees.
(d) The Facility B Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period for Facility B.
6.2 Delivery of a Utilisation Request for Bank Guarantees
A Borrower may request a Bank Guarantee to be issued by delivery to the Issuing Bank (with a copy to the Agent) of a duly completed Utilisation Request not later than 11:00am (Sydney time) on the third Business Days before proposed Utilisation Date. A Borrower must use its reasonable commercial endeavours to ensure, that each Issuing Bank has, to the extent practicable, an amount of Bank Guarantees issued by it outstanding that is proportionate to its Facility B Commitment.
6.3 Completion of a Utilisation Request for Bank Guarantees
Each Utilisation Request for a Bank Guarantee is irrevocable and will not be regarded as having been duly completed unless:
(a) it specifies that it is for a Bank Guarantee;
(b) the proposed Utilisation Date is a Business Day within the Availability Period for Facility B;
(c) the currency and amount of the Bank Guarantee comply with Clause 6.4 ( Currency and amount );
(d) the form of Bank Guarantee is attached and is in the form that has been agreed in writing by the Issuing Bank;
(e) if the Bank Guarantee is to have an Expiry Date (which it need not), it specifies that fact and the Expiry Date of the Bank Guarantee must fall on or before the Termination Date for Facility B;
(f) the delivery instructions for the Bank Guarantee are specified;
(g) the identity of the beneficiary of the Bank Guarantee is approved by the Issuing Bank;
(h) the underlying contract or agreement or obligation in respect of which the Bank Guarantee is issued is specified; and
(i) it is signed by an Authorised Officer of a Borrower.
6.4 Currency and amount
(a) The currency specified in a Utilisation Request, and the denomination of a Bank Guarantee, must be Australian dollars.
(b) The amount of the proposed Bank Guarantee must not be more than the Issuers Available Commitment for Facility B.
6.5 Issue of Bank Guarantees
(a) If the conditions set out in this Agreement have been met, the Issuing Bank shall issue the Bank Guarantee on the Utilisation Date.
(b)
(i) The Issuing Bank will only be obliged to comply with paragraph (a) above if on the date of the Utilisation Request and on the proposed Utilisation Date, no Default or Review Event is continuing or would result from the proposed Utilisation; and
(ii) the Repeating Representations to be made by each Obligor are true in all material respects.
(c) The Issuing Bank has no duty to enquire of any person whether or not any of the conditions set out in paragraph (b) above have been met. The Issuing Bank may assume that those conditions have been met unless it is expressly notified to the contrary by the Agent. The Issuing Bank will have no liability to any person for issuing a Bank Guarantee based on such assumption.
(d) The Issuing Bank is solely responsible for the form of the Bank Guarantee that it issues. The Agent has no duty to monitor the form of that document.
(e) Subject to paragraph (j) of Clause 29.7 ( Rights and discretions ), each of the Issuing Bank and the Agent shall provide the other with any information reasonably requested by the other that relates to a Bank Guarantee and its issue.
(f) The Issuing Bank may issue a Bank Guarantee in the form of a SWIFT message or other form of communication customary in the relevant market but has no obligation to issue that Bank Guarantee in any particular form of communication.
6.6 Notification of the Agent
The Issuing Bank shall, upon request, provide to the Agent details of all Bank Guarantees issued under this Agreement including details of the initial face value of each Bank Guarantee, the tenor, the Expiry Date, the relevant Borrower and the beneficiary under that Bank Guarantee.
6.7 Reduction or expiry of Bank Guarantee
If the amount of any Bank Guarantee is wholly or partially reduced or it is repaid or prepaid or it expires prior to its Expiry Date, the relevant Issuing Bank and the Borrower that requested the issue of that Bank Guarantee shall promptly notify the Agent of the details upon becoming aware of them.
6.8 Bank Guarantee which does not expire before Termination Date
A Bank Guarantee may be issued with or without an Expiry Date. If a Bank Guarantee does not have an Expiry Date, or the Expiry Date of the Bank Guarantee is after the Termination Date applicable to Facility
B, the Borrower that requested the issue of that Bank Guarantee shall repay or prepay the Bank Guarantee on the Termination Date applicable to Facility B.
7. BANK GUARANTEES
7.1 Claims under a Bank Guarantee
(a) Each Borrower irrevocably and unconditionally authorises the Issuing Bank to pay any claim made or purported to be made under a Bank Guarantee requested by it and which appears on its face to be in order and to make any payment under Clause 7.4 ( Restrictions on voluntary pay-out of Bank Guarantees ), each of a claim or payment under Clause 7.4 ( Restrictions on voluntary pay-out of Bank Guarantees ) is a claim ).
(b) The relevant Borrower shall pay to the Issuing Bank an amount equal to the amount of any claim on the day on which the Issuing Bank pays that claim. If the Borrower does not pay this amount to the Issuing Bank on the date on which the Issuing Bank pays the claim, interest shall accrue on the amount from that date up to the actual date of payment in accordance with Clause 10.3 ( Default interest ).
(c) If under this Agreement, a Borrower is obliged to pay or indemnify the Issuing Bank for amounts paid under a claim under a Bank Guarantee, the Borrower shall (unless the Borrower notifies the Issuing Bank otherwise) be deemed to have requested a Loan under Facility A in Australian dollars in accordance with paragraph (d) below.
(d) On the date the Issuing Bank pays a claim made under a Bank Guarantee, the Borrower shall be deemed to have delivered to the Agent a duly completed Utilisation Request requesting a Loan under Facility A in Australian dollars:
(i) for an amount equal to the amount of the claim (if applicable, less any cash cover);
(ii) for an Interest Period of 3 Months or such other period of up to 6 Months as notified by the relevant Borrower to the Agent prior to the Utilisation Date; and
(iii) with a Utilisation Date on the date of receipt of the relevant demand or notification.
The proceeds of the Loan shall be used to pay the relevant claim.
(e) Each Borrower acknowledges that the Issuing Bank:
(i) may make payments under a Bank Guarantee by any means that it determines;
(ii) may make any payments under a Bank Guarantee despite any direction by the Borrower to the Issuing Bank not to pay, any dispute between the Borrower and the Issuing Bank as to the Issuing Banks obligation to pay, any dispute between the Borrower and the beneficiary of the Bank Guarantee or any claim by the Borrower that a claim under the Bank Guarantee is not valid;
(iii) is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim;
(iv) may refuse to make a payment under a Bank Guarantee (in its absolute discretion) where it considers that a claim under, or any other document presented under the Bank Guarantee, does not comply with the terms of the Bank Guarantee; and
(v) deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.
(f) The obligations of a Borrower under this Clause 7.1 will not be affected by:
(i) the sufficiency, accuracy or genuineness of any claim or any other document;
(ii) any incapacity of, or limitation on the powers of, any person signing a claim or other document;
(iii) any act of any Governmental Agency, court, arbitral body, agency or authority or the application of any law or regulation affecting any Bank Guarantee; or
(iv) any failure by any person to obtain any Authorisation required or desirable in connection with any Bank Guarantee.
7.2 Indemnities
(a) Without prejudice to each Borrowers obligation under Clause 7.1 ( Claims under a Bank Guarantee ), each Borrower shall immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Banks gross negligence or wilful misconduct) in acting as the Issuing Bank under any Bank Guarantee requested by that Borrower (including as a result of the Issuing Bank making a payment under Clause 7.4 ( Restrictions on voluntary pay-out)).
(b) The obligations of each Borrower under this Clause 7.2 ( Indemnities ) are continuing obligations and will extend to the ultimate balance of sums payable by the Borrower in respect of any Bank Guarantee, regardless of any intermediate payment or discharge in whole or in part.
(c) The obligations of any Borrower under this Clause 7.2 ( Indemnities ) will not be affected by any act, omission, matter or thing which, but for this Clause 7.2 ( Indemnities ), would reduce, release or prejudice any of its obligations under this Clause 7.2 ( Indemnities ) (without limitation and whether or not known to it or any other person) including:
(i) any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Bank Guarantee or any other person;
(ii) the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor or any Group Member;
(iii) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Bank Guarantee or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(iv) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Bank Guarantee or any other person;
(v) any amendment (however fundamental) or replacement of a Finance Document, any Bank Guarantee or any other document or security;
(vi) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Bank Guarantee or any other document or security; or
(vii) any insolvency or similar proceedings.
7.3 Rights of contribution
No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause 7.
7.4 Restrictions on voluntary pay-out of Bank Guarantees
Despite the terms of any issued Bank Guarantee, an Issuing Bank may cancel a Bank Guarantee, by paying to the beneficiary of the relevant Bank Guarantee the outstanding amount of the Bank Guarantee or any lesser amount specified by the beneficiary, but only if:
(a) an Event of Default is continuing; or
(b) the Issuing Bank would be entitled to exercise its rights under Clause 9.2 ( Illegality in relation to Bank Guarantee ) or Clause 33.11 ( Anti-Money Laundering ).
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
8. REPAYMENT
8.1 Repayment of Facility A Loans
(a) Each Borrower which has drawn a Loan shall repay that Loan on the last day of its Interest Period.
(b) Without prejudice to each Borrowers obligation under paragraph (a) above, if:
(i) one or more Loans are to be made available to a Borrower:
(A) on the same day that a maturing Loan is due to be repaid by that Borrower; and
(B) in the same currency as the maturing Loan; and
(C) in whole or in part for the purpose of refinancing the maturing Loan; and
(ii) the proportion borne by each Facility A Lenders participation in the maturing Facility A Loan to the amount of that maturing Facility A Loan is the same as the proportion borne by that Facility A Lenders participation in the new Facility A Loans to the aggregate amount of those new Facility A Loans,
the aggregate amount of the new Facility A Loans shall, unless the Borrower notifies the Agent to the contrary in the relevant Utilisation Request, be treated as if applied in or towards repayment of the maturing Facility A Loan so that:
(A) if the amount of the maturing Facility A Loan exceeds the aggregate amount of the new Facility A Loans:
(1) the relevant Borrower will only be required to make a payment under Clause 33.1 ( Payments to the Agent ) in an amount in the relevant currency equal to that excess; and
(2) each Facility A Lenders participation in the new Facility A Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Facility A Lenders participation in the maturing Facility A Loan and that Facility A Lender will not be required to make a payment under Clause 33.1 ( Payments to the Agent ) in respect of its participation in the new Facility A Loans; and
(B) if the amount of the maturing Facility A Loan is equal to or less than the aggregate amount of the new Facility A Loans:
(1) the relevant Borrower will not be required to make a payment under Clause 33.1 ( Payments to the Agent ); and
(2) each Facility A Lender will be required to make a payment under Clause 33.1 ( Payments to the Agent ) in respect of its participation in the new Facility A Loans only to the extent that its participation in the new Facility A Loans exceeds that Facility A Lenders participation in the maturing Facility A Loan and the remainder of that Facility A Lenders participation in the new Facility A Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Facility A Lenders participation in the maturing Facility A Loan.
8.2 Repayments for currency equalisation
(a) On the last day of each Quarter, on receipt of a Utilisation Request in respect of Facility A and on each Utilisation Date in respect of Facility A the Agent may recalculate the Facility A Base Currency Amount of each Loan denominated in Australian dollars by notionally converting the outstanding amount of that Loan into Facility A Base Currency using the Agents Spot Rate of Exchange on the date of calculation.
(b) If at any time the aggregate Facility A Base Currency Amount of all Loans outstanding under Facility A (after converting Loans denominated in Australian dollars in accordance with paragraph (a)) (the Aggregate Base Currency Amount) exceeds 110% of the Facility A Commitment then a Borrower shall:
(i) (subject to paragraph (ii) below), within 5 Business Days of written notice from the Agent, ensure that Loans are prepaid in an amount equal at least to the difference between the Aggregate Base Currency Amount and the Facility A Commitment; or
(ii) if prepaying Loans in the time specified in paragraph (i) above would cause the Borrower to incur Break Costs, the Borrower may instead pay an amount equal at least to the difference between the Aggregate Base Currency Amount and the Facility A Commitment to a blocked suspense account of the Agent to be applied in prepayment of Loans on the last day of the current Interest Period for such Loans.
8.3 Bank Guarantees outstanding on the Termination Date
In respect of each Bank Guarantee issued under Facility B that remains outstanding on the Termination Date for Facility B, the Borrower must place cash cover with the Issuing Bank, to the value of that banks potential liability under that Bank Guarantee, to be held on the terms of Clause 25.21 ( Cash cover ) or otherwise repay or prepay that Bank Guarantee.
8.4 Term out of Defaulting Finance Partys Facility A Utilisations
(a) When a Facility A Lender becomes a Defaulting Finance Party, the participation of the Facility A Lender in the Loans then outstanding denominated in any currency will be treated as a separate Facility A Utilisation denominated in that currency (the Separate Loans ) and the maturity date of that Utilisation will be automatically extended to the Termination Date in relation to Facility A.
(b) A Borrower may prepay any such Utilisation if it gives at least 5 Business Days prior notice to the Agent, who shall promptly notify the relevant Defaulting Finance Party.
(c) If the Borrower makes a prepayment of a Facility A Utilisation, a Borrower to whom a Separate Loan is outstanding may prepay that Separate Loan by giving not less than 5 Business Days prior notice to the Agent. The proportion borne by the amount of the prepayment of the Separate Loan to the amount of the Separate Loans shall not exceed the proportion borne by the amount of the prepayment of the Facility A Utilisation to the Facility A Utilisations. The Agent will
forward a copy of a prepayment notice received in accordance with this paragraph (c) to the Defaulting Finance Party concerned as soon as practicable on receipt.
(d) Interest in respect of any such Utilisation will accrue for successive Interest Periods selected by the Borrower by the time and date specified by the Agent (acting reasonably) and will be payable by that Borrower to the Agent (for the account of that Defaulting Finance Party) on the last day of each such Interest Period.
9. PREPAYMENT AND CANCELLATION
9.1 Illegality
If, in any applicable jurisdiction, it becomes unlawful (or impossible as a result of a change in law or regulation after the date of this Agreement) for any Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Utilisation:
(a) that Lender shall promptly notify the Agent upon becoming aware of that event;
(b) upon the Agent notifying the Borrowers, each Available Commitment of that Lender will be immediately cancelled; and
(c) to the extent that the Lenders participation has not been transferred pursuant to Clause 9.5 ( Restrictions ), each Borrower shall repay that Lenders participation in the Utilisations made to that Borrower on the last day of the Interest Period for each Utilisation occurring after the Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lenders corresponding Commitment(s) shall be cancelled in the amount of the participations repaid.
9.2 Illegality in relation to Bank Guarantee
If, in any applicable jurisdiction, it becomes unlawful (or impossible as a result of a change in law or regulation) for the Issuing Bank to issue or leave outstanding any Bank Guarantee:
(a) the Issuing Bank shall promptly notify the Agent upon becoming aware of that event;
(b) upon the Agent notifying the Borrowers, the Issuing Bank shall not be obliged to issue any Bank Guarantee;
(c) the Borrowers shall use their best endeavours to procure the release of each Bank Guarantee issued by the Issuing Bank and outstanding at such time on or before the date specified by the Issuing Bank in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law); and
(d) if that results in there being no Facility B Commitments, Facility B shall cease to be available for the issue of Bank Guarantees.
9.3 Voluntary cancellation
The Borrowers may, if they gives the Agent not less than 3 Business Days (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part of an Available Facility, subject, in the case of part cancellations, to:
(a) Facility A: it being in a minimum amount of US$1,000,000 and an integral multiple of US$500,000; and
(b) Facility B: it being in a minimum amount of A$1,000,000 and an integral multiple of A$500,000.
Any cancellation under this Clause 9.3 shall reduce the Commitments of the Lenders rateably under that Facility.
9.4 Voluntary prepayment of Facility A Loans
(a) A Borrower to which a Facility A Loan has been made may, if it gives the Agent not less than 3 Business Days (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of any Facility A Loan (but, if in part, being an amount that reduces the Facility A Base Currency Amount of the Loan by a minimum amount of US$ 100,000).
9.5 Restrictions
(a) Any notice of cancellation or prepayment given under this Clause 9 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the relevant currency amount of that cancellation or prepayment.
(b) Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid in the relevant currency and, subject to any Break Costs, without premium or penalty.
(c) Unless a contrary indication appears in this Agreement, any part of Facility A which is prepaid or repaid may be reborrowed in accordance with the terms of this Agreement.
9.6 Right of replacement or repayment and cancellation in relation to a single Lender or Issuing Bank
(a) If:
(i) a Lender is a Non-Consenting Lender;
(ii) an Obligor becomes obliged to pay any amount in accordance with Clause 9.1 ( Illegality ) to any Lender;
(iii) a Lender becomes an Affected Lender (as defined in Clause 12.3 ( Market disruption )) and no substitute basis for determining the rate of interest payable to the Lender is agreed at the end of the period provided for by Clause 12.4(b) ( Cost of funds );
(iv) any sum payable to any Lender by an Obligor is required to be increased under Clause 14.2(c) ( Tax gross-up );
(v) any Lender claims any sum from the Borrower under Clause 14.3 ( Tax indemnity ) or Clause 16.1 ( Increased costs ); or
(vi) a Facility B Lender is not or ceases to be an approved security provider as defined in section 36 of the Financial and Performance Management Standard 2009 (Qld),
the Borrower may:
(vii) in the case of sub-paragraph (a)(i), within 120 days after the relevant Lender becoming a Non-Consenting Lender; or
(viii) in all other cases, whilst the circumstance giving rise to the requirement for that increase or claim continues,
give the Agent and the relevant Lender:
(ix) notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lenders participation in the Loans; or
(x) notice of its intention to replace that Lender in accordance with paragraph (d) below.
(b) On receipt of a notice of cancellation referred to in paragraph (a) above in relation to a Lender, the Commitment of that Lender shall immediately be reduced to zero.
(c) On the last day of each Interest Period which ends after the Borrower has given notice of cancellation under paragraph (a) above (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lenders participation in each Loan and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.
(d) If any of the circumstances set out in paragraph (a) above apply to a Lender, the Borrower may, on 10 Business Days prior notice to the Agent and that Lender, replace that Lender by requiring that Lender to (and, to the extent permitted by law, that Lender shall) transfer pursuant to Clause 26 ( Changes to the Lenders ) all (and not part only) of its rights and obligations under this Agreement to a Lender or another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (including credit derivatives) in any such case selected by the Borrower which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 26 ( Changes to the Lenders ) for a purchase price in cash payable at the time of the transfer in an amount equal to the outstanding principal amount of such Lenders participation in the outstanding Loans and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.
(e) The replacement of a Lender pursuant to paragraph (d) above shall be subject to the following conditions:
(i) the Borrower shall have no right to replace the Agent;
(ii) neither the Agent nor any Lender shall have any obligation to find a replacement Lender;
(iii) in no event shall the Lender replaced under paragraph (d) above be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and
(iv) the Lender shall only be obliged to transfer its rights and obligations pursuant to paragraph (d) above once it is satisfied that it has complied with all necessary know your customer or other similar checks under all applicable laws and regulations in relation to that transfer; and
(v) in the case of any replacement of a Lender resulting from payments required to be made pursuant to paragraph (a)(iv) above or a claim for compensation under paragraph (a)(v) above, such transfer of rights and obligations pursuant to paragraph (d) above will result in a reduction in such payments or compensation thereafter.
(f) A Lender shall perform the checks described in paragraph (e)(iv) above as soon as reasonably practicable following delivery of a notice referred to in paragraph (d) above and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks.
9.7 Right of cancellation in relation to a Defaulting Finance Party
(a) The Borrowers may give the Agent 5 Business Days notice of cancellation of each Available Commitment of a Lender that is, and continues to be, a Defaulting Finance Party.
(b) On the notice becoming effective, each Available Commitment of the Defaulting Finance Party will reduce to zero.
(c) The Agent shall notify all the Lenders as soon as practicable after receiving the notice.
9.8 Review Event
If a Review Event occurs:
(a) The Borrowers shall promptly notify the Agent upon becoming aware of that event. If the Agent becomes aware of a Review Event that has not been notified, it may give the Borrowers a notice of that Review Event.
(b) Once a notice is given under paragraph (a), a Lender shall not be obliged to fund a Utilisation (except for a Rollover Loan) for so long as the Review Event continues.
(c) The Obligors and the Lenders must enter into negotiations for a period of up to 30 days after a notice is given under paragraph (a), with a view to agreeing terms on which:
(i) if the Review Event is a Change of Control, all Lenders; or
(ii) in any other case, the Majority Lenders,
would be prepared to offer to provide, fund or maintain all or any of the Facilities.
(d) If agreement is reached, the Obligors must promptly do all acts and execute all documents as the Majority Lenders reasonably require to document, or to protect, preserve or secure the Finance Parties rights and interests under, such agreement.
(e) If agreement is not reached within 30 days after a notice is given under paragraph (a), or if (in the opinion of the Majority Lenders) any of the Obligors do not do all acts and execute all documents as the Majority Lenders reasonably require to document, or to protect, preserve or secure for the Finance Parties rights and interests under, any agreement, the Agent, acting on the instruction of:
(i) any Lender if the Review Event is a Change of Control; or
(ii) the Majority Lenders in any other case,
may by giving written notice to the Borrower:
(iii) cancel the whole or any part of a Facility whereupon it will be immediately cancelled; and
(iv) declare that all or any part of the outstanding Utilisations, together with accrued interest, and all other amounts accrued under the Finance Documents is due and payable whereupon it will be due and payable within 60 days.
(f) If the Borrower fails to prepay all amounts payable under Clause (e) within 60 days, that failure will constitute an Event of Default.
(g) To avoid doubt, neither the failure to reach agreement nor the giving of a notice under this Clause 9.8 constitutes an Event of Default.
SECTION 5
COSTS OF UTILISATION
10. INTEREST
10.1 Calculation of interest
The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a) Margin; and
(b) in relation to any Loan in:
(i) Australian dollars, BBSY Bid; and
(ii) US dollars, LIBOR.
10.2 Payment of interest
The Borrower to which a Loan has been made shall pay accrued interest in the relevant currency on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six-monthly intervals after the first day of the Interest Period).
10.3 Default interest
(a) If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is the sum of 2 per cent per annum and the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 10.3 ( Default interest ) shall be immediately payable by the Obligor on demand by the Agent.
(b) If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:
(i) the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii) the rate of interest applying to the overdue amount during that first Interest Period shall be the sum of 2 per cent per annum and the rate which would have applied if the overdue amount had not become due.
(c) Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
10.4 Notification of rates of interest
(a) The Agent shall promptly notify the relevant Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement.
(b) The Agent shall promptly notify the relevant Borrower of each Funding Rate relating to a Loan.
11. INTEREST PERIODS
11.1 Selection of Interest Periods
(a) A Borrower may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice.
(b) Each Selection Notice for a Facility A Loan is irrevocable and must be delivered to the Agent by the Borrower to which that Facility A Loan was made not later than the Specified Time.
(c) If a Borrower fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will, be the same duration as the Interest Period just ended.
(d) Subject to this Clause 11 ( Interest Periods ), a Borrower may only select Interest Periods of:
(i) 1, 2, 3 or 6 Months for Loans denominated in US dollars; and
(ii) 1, 2, 3 or 6 Months for Loans denominated in Australian dollars,
or another period agreed by the Majority Lenders.
(e) An Interest Period for a Loan shall not extend beyond the Termination Date.
(f) Each Interest Period for a Facility A Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.
11.2 Non-Business Days
(a) If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
11.3 Consolidation and division of Facility A Loans
(a) Subject to paragraph (b) below, if two or more Interest Periods:
(i) relate to Facility A Loans made to the same Borrower;
(ii) in the same currency; and
(iii) end on the same date,
those Facility A Loans will, unless that Borrower (or a Borrower on its behalf) specifies to the contrary in the Selection Notice for the next Interest Period, be consolidated into, and treated as, a single Facility A Loan on the last day of the Interest Period.
(b) Subject to Clause 4.3 ( Maximum number of Utilisations ) and Clause 5.3 ( Currency and amount ), if a Borrower (or a Borrower on its behalf) requests in a Selection Notice that a Facility A Loan be divided into two or more Facility A Loans, that Facility A Loan will, on the last day of its Interest Period, be so divided with amounts specified in that Selection Notice, being an aggregate amount equal to the amount of the Facility A Loan immediately before its division.
12. CHANGES TO THE CALCULATION OF INTEREST
12.1 Unavailability of Screen Rate
(a) Interpolated Screen Rate: If no Screen Rate is available for BBSY Bid or LIBOR (as the case may be) for the Interest Period of a Loan, the applicable BBSY Bid or LIBOR (as the case may be) shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of that Loan.
(b) Reference Bank Rate: If no Screen Rate is available for BBSY Bid or LIBOR (as the case may be) for:
(i) the currency of a Loan; or
(ii) the Interest Period of a Loan and it is not possible to calculate the Interpolated Screen Rate,
the applicable BBSY Bid or LIBOR (as the case may be) shall be the Reference Bank Rate as of the Specified Time for the currency of that Loan and for a period equal in length to the Interest Period of that Loan.
(c) Cost of Funds: If paragraph (b) above applies but no Reference Bank Rate is available for the relevant currency and Interest Period there shall be no BBSY Bid or LIBOR (as the case may be) for that Loan and Clause 12.4 ( Cost of funds ) shall apply to that Loan for that Interest Period.
12.2 Calculation of Reference Bank Rate
(a) Subject to paragraph (b) below, if BBSY Bid or LIBOR (as the case may be) is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by the Specified Time, the Reference Bank. Rate shall be calculated on the basis of the quotations of the remaining Reference Banks.
(b) If at or about noon (Sydney time) on the Quotation Day none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for that Interest Period.
12.3 Market disruption
If before 5pm (Sydney time) on the Business Day after the Quotation Day for the relevant Interest Period the Agent receives notifications from Lender or Lenders (whose participations in a Loan exceed 35 per cent of that Loan) that as a result of market circumstances not limited to it (whether or not those circumstances, or their effect on the Lenders cost of funds, subsist on the date it becomes a Lender), the cost to it of funding its participation in that Loan (from whatever source it may reasonably select) would be in excess of BBSY Bid or LIBOR (as the case may be) (in which case an Affected Lender will be a Lender which gives such a notification), then Clause 12.4 ( Cost of funds ) shall apply to the participation in the Loan of each Affected Lender for the relevant Interest Period.
12.4 Cost of funds
(a) If this Clause 12.4 ( Cost of funds ) applies, the rate of interest on each relevant Lenders share of the relevant Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i) the Margin; and
(ii)
(A) in the circumstances described in Clause 12.3 ( Market disruption ), the rate notified to the Agent by the relevant Affected Lender; and
(B) in the circumstances described in Clause 12.1 ( Unavailability of Screen Rate ) or 12.7(c) ( Successor LIBOR ), the rate of interest notified to the Agent by the Lender,
to be that which expresses as a percentage rate per annum, the cost to the Lender of funding its participation in that Loan from whatever source it may reasonably select. That rate is to be notified as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period.
(b) If this Clause 12.4 ( Cost of funds ) applies and the Agent or a Borrower so requires, the Agent and a Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.
(c) Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and a Borrower, be binding on all Parties.
12.5 Agents role
The Agent shall promptly notify the Borrowers if there is a market disruption event under Clause 12.3 ( Market disruption ) and of the identity of any Lender or Lenders giving a notice under that Clause.
12.6 Break Costs
(a) Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
(b) Each Lender shall, as soon as reasonably practicable after a demand by the Agent or the Borrower, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
12.7 Successor LIBOR
(a) If at any time the Agent determines (which determination shall be conclusive absent manifest error), or the Borrower notifies the Agent that it has determined, that:
(i) the circumstances set out in Clause 12.1(b) have arisen with respect to LIBOR and such circumstances are unlikely to be temporary or;
(ii) the circumstances set out in Clause 12.1(b) have not arisen but the supervisor for the administrator of LIBOR has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for loans,
then the Agent and the Borrower shall endeavour to establish an alternate rate of interest to LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in Australia at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable.
(b) Notwithstanding anything to the contrary in Clause 39, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Agent shall not have received, within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Majority Lenders stating that such Majority Lenders object to such amendment.
(c) If the Agent and the Borrower cannot reach agreement on the terms of a proposed amendment within 10 Business Days of commencing discussions for the purpose or if the Majority Lenders provide to the Agent a notice pursuant to paragraph (b) above, Clause 12.4 ( Cost of funds ) will apply.
13. FEES
13.1 Commitment fee
(a) The Borrowers shall pay:
(i) to the Agent for the account of each Facility A Lender, a fee (in US dollars) computed at the rate of 50 per cent of the applicable Margin per annum on that Lenders Available Commitment under Facility A for the Availability Period applicable to Facility A; and
(ii) subject to Clause 1.7 ( Administration in connection with Facility B ) to a Facility B Lender, a fee (in Australian dollars) computed at the rate of 50 per cent of the applicable Margin per annum on that Lenders Available Commitment under Facility B for the Availability Period applicable to Facility B.
(b) The accrued commitment fee is payable in arrears on the last day of each Quarter during the relevant Availability Period, on the last day of the Availability Period, and on the cancelled amount of the relevant Lenders Commitment at the time the cancellation is effective.
13.2 Arrangement and underwriting fee
The Borrowers shall pay to the Arranger an arrangement fee in the amount and at the times agreed in a Fee Letter.
13.3 Establishment Fee
The Borrowers shall pay to the Agent an establishment fee in the amount and at the times agreed in a Fee Letter.
13.4 Agency and Security Trustee fee and US Security Agent fee
(a) The Borrowers shall pay to the Agent and the Security Trustee (for their own respective account) an agency fee and security trustee fee in the amount and at the times agreed in a Fee Letter.
(b) The Borrowers shall pay to any US Security Agent appointed from time to time an agency fee (for the US Security Agents own account) in the amount and at the times agreed in a Fee Letter.
13.5 Fees payable in respect of Bank Guarantees
(a) Each Borrower shall pay to the Issuing Bank a Bank Guarantee fee, computed at:
(i) for a Bank Guarantee that is a performance guarantee, a rate equal to 70 per cent of the Margin applicable to a Loan; and
(ii) for a Bank Guarantee that is a financial guarantee, a rate equal to the Margin applicable to a Loan
on the outstanding amount of each requested Bank Guarantee for the period from the issue of that Bank Guarantee until its Expiry Date or if the Bank Guarantee does not have an Expiry Date, until the Bank Guarantee is repaid in one of the ways set out Clauses 1.2(g)(ii) to 1.2(g)(iv).
(b) The accrued Bank Guarantee fee on a Bank Guarantee shall be payable on the last day of each successive period of three Months (or such shorter period as shall end on the Expiry Date for that Bank Guarantee) starting on the date of issue of that Bank Guarantee. If the outstanding amount of a Bank Guarantee is reduced, any Bank Guarantee fee accrued in respect of the amount of that reduction shall be payable on the day that that reduction becomes effective.
(c) If a Borrower provides cash cover in respect of any Bank Guarantee:
(i) the Bank Guarantee fee shall continue to be payable until the expiry of the Bank Guarantee; and
(ii) each Borrower shall be entitled to apply interest accrued on the cash cover to pay the fees described in paragraph (i) above provided that no Event of Default is continuing.
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
14. TAX GROSS UP AND INDEMNITIES
14.1 Definitions
(a) In this Clause 14 (Tax Gross Up and Indemnities):
Protected Party means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
Tax Credit means a credit against, relief or remission for, or repayment of any Tax.
Tax Payment means either the increase in a payment made by an Obligor to a Finance Party under Clause 14.2 ( Tax Gross-up ) or a payment under Clause 14.3 ( Tax indemnity ).
14.2 Tax Gross-up
(a) Each Obligor shall make all payments to be made by it under the Finance Documents without any Tax Deduction unless such Tax Deduction is required by law.
(b) The Borrowers or a Finance Party shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. If the Agent receives such notification from a Finance Party it shall notify a Borrower and that Obligor.
(c) If a Tax Deduction is required by law to be made by an Obligor or an applicable withholding agent except in relation to a Tax described in Clause 14.4 ( Exclusions ), the Obligor shall pay an additional amount together with the payment so that, after making any Tax Deduction (including Tax Deduction applicable to the additional amount payable under this Clause), the Finance Party receives an amount equal to the sum which would have been due if no Tax Deduction had been required.
(d) If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction to the relevant taxing authority within the time allowed and in the minimum amount required by law.
(e) Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence satisfactory to that Finance Party, acting reasonably, that the Tax Deduction has been made and/or (as applicable) any appropriate payment paid to the relevant taxing authority.
14.3 Tax indemnity
(a) Subject to Clause 14.4 ( Exclusions ) and except if they are compensated for by the payment of an additional amount under Clause 14.2 ( Tax gross-up ), the Borrowers shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document or a transaction or payment under it. A certificate as to the amount of such loss, liability or cost suffered for or on account of Tax delivered to a Borrower by a Protected Party, or by the Agent on its own behalf or on behalf of a Protected Party, shall be conclusive absent manifest error.
(b) A Protected Party making or intending to make a claim pursuant to Clause 14.3(a) shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower.
(c) A Protected Party shall, on receiving a payment from an Obligor under this Clause 14.3, notify the Agent.
14.4 Exclusions
(a) Clauses 14.2 ( Tax gross-up ) and 14.3 ( Tax indemnity ) shall not apply:
(i) with respect to any Tax assessed on a Finance Party if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party:
(A) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(B) under the law of the jurisdiction in which that Finance Partys Facility Office is located in respect of amounts received or receivable in that jurisdiction; or
(ii) with respect to Australian Withholding Tax; or
(iii) (where the relevant Finance Party is an Australian resident, or a non-resident carrying on business in Australia or through a permanent establishment of the non-resident in Australia) if the Tax is imposed because that Finance Party has not supplied an appropriate tax file number, an Australian business number or other exemption details; or
(iv) with respect to a Tax which would not be required to be deducted by the Obligor if, the Commissioner of Taxation of the Commonwealth of Australia had not given a notice under section 260-5 of Schedule 1 of the Australian Taxation Administration Act 1953 (Cth) or section 255 of the Tax Act requiring the relevant Obligor to deduct that Tax from any payment to be made by the Obligor to the Finance Party; or
(v) with respect to a Tax Deduction required to be made for a US federal withholding tax, to the extent any such Tax Deductions imposed on amounts payable to or for the account of a Lender with respect to an applicable interest in a Loan pursuant to a law in effect on the date on which (x) the Lender acquires such interest in the Loan or (y) such Lender changes its Facility Office, except in each case of (x) and (y) to the extent that, pursuant to Clause 14, amounts with respect to such Taxes were payable either to such Lenders assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Facility Office; or
(vi) if the Tax Deduction is required to be made as a result of a breach by the Finance Party of any of its obligations under Clause 15 ( US Tax Matters );
(vii) if the Tax Deduction is required to be made as a result of any representation or warranty given by the Finance Party (and not its predecessors) under Clause 15.3 ( US Tax Matters ) being untrue; or
(viii) to the extent the relevant loss, liability or cost relates to a FATCA Deduction required to be made by a Party.
14.5 Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines in its absolute discretion that:
(a) a Tax Credit is attributable to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and
(b) that Finance Party has obtained, utilised and retained that Tax Credit,
subject to Clause 30 ( Conduct of Business by the Finance Parties ), the Finance Party shall pay an amount to the Obligor which that Finance Party determines in its absolute discretion will leave it (after that payment) in the same after-Tax position as it would have been in had the circumstances not arisen which caused the Tax Payment to be required to be made by the Obligor. If an Obligor at any time requests that a Finance Party make a determination under this Clause the Finance Party must do so in good faith and provide the Borrower with the results of that determination in writing, within reasonable time of the request (it being understood that the determination shall be made in the Finance Partys absolute discretion).
14.6 Stamp duties and Taxes The Borrowers shall:
(a) pay; and
(b) within three Business Days of demand, indemnify each Finance Party against any cost, expense, loss or liability that Finance Party incurs in relation to,
all stamp duty, registration, documentary or other similar Tax payable in respect of any Finance Document except Transfer .Certificates (other than Transfer Certificates executed pursuant to Clause 9.6 ( Right of replacement or repayment and cancellation in relation to a single Lender or Issuing Bank ).
14.7 Indirect Tax
(a) All payments to be made by an Obligor under or in connection with any Finance Document have been calculated without regard to Indirect Tax. If all or part of any such payment is the consideration for a taxable supply or chargeable with Indirect Tax then, when the Obligor makes the payment:
(i) it must pay to the Finance Party an additional amount equal to that payment (or part) multiplied by the appropriate rate of Indirect Tax; and
(ii) the Finance Party will promptly provide to the Obligor a tax invoice complying with the relevant law relating to that Indirect Tax.
(b) Where a Finance Document requires an Obligor to reimburse or indemnify a Finance Party for any costs or expenses, that Obligor shall also at the same time pay and indemnify that Finance Party against all Indirect Tax incurred by that Finance Party in respect of the costs or expenses save to the extent that that Finance Party is entitled to repayment or credit in respect of the Indirect Tax. The Finance Party will promptly provide to the Obligor a tax invoice complying with the relevant law relating to that Indirect Tax.
14.8 FATCA Information
(a) Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
(i) confirm to that other Party whether it is:
(A) a FATCA Exempt Party, or
(B) not a FATCA Exempt Party;
(ii) supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Partys compliance with FATCA;
(iii) supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Partys compliance with any other law, regulation, or exchange of information regime.
(b) If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c) Paragraph (a) above shall not oblige any Finance Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:
(i) any law or regulation;
(ii) any fiduciary duty; or
(iii) any duty of confidentiality.
(d) If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
14.9 FATCA Deduction
(a) Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
(b) Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify a Borrower and the Agent and the Agent shall notify the other Finance Parties.
15. US TAX MATTERS
15.1 Finance Partys Obligations
(a) Without limiting the generality of Clause 14.4 ( Exclusions ):
(i) each Lender (other than where a Lender is a United States Person within the meaning of Section 7701(a)(30) of the US Tax Code) shall, subject to Clause 15.l(a)(iii), deliver to the Borrower (and/or such other Obligors as the Borrower designates) and the Agent two duly executed copies (or such other number as may be specified by the Borrower in order to comply with then applicable requirements of US law) of whichever of the following US Internal Revenue Service Forms is applicable,-namely W-8BEN, W-8BEN-E, W-8-ECI, W-8-IMY or any successor to any such form including (if applicable) certification by each relevant Lender under the applicable income tax treaty to which the United States is a party (and, where that Lender is (through its relevant Facility Office) claiming exemption from US federal income and withholding tax under Section 871(h) or 881(c) of the US Tax Code a statement that it is not a person described in Section 881(c)(3) of the US Tax Code) and/ or such other forms, certificates and documentation as may be necessary or appropriate to establish, in each case, whether it is entitled to receive payments under the Facilities without a Tax Deduction for US federal income or withholding tax or with a Tax Deduction at a reduced rate;
(ii) each Lender, where it is a United States Person within the meaning of Section 7701(a)(30) of the US Tax Code, shall, subject to Clause 15.1 (a)(iii), deliver to the Borrower (and/or such other Obligors as the Borrower designates) and the Agent the appropriate number of copies of duly executed US Internal Revenue Service Form W-9 or any successor to that form;
(iii) each Lender is not obliged to deliver any form(s) under Clause 15.l(a)(i) or (ii) above if, and to the extent that, as a result of the introduction of, or change in, or change in the interpretation or application by any relevant authority of, any law, treaty or regulation or any practice or concession of the US Internal Revenue Service after the date of this Agreement, such Lender is not legally entitled to complete the form(s) in a manner which will enable the Borrower to make payments to, or for, such Lender (through its relevant Facility Office) without deduction or withholding in respect of Taxes in the United States of America or with a Tax Deduction at a reduced rate; and
(iv) each Lender (copying in the Agent at all times) shall deliver the forms, certificates and documentation described in this Clause 15.1(a) to the Borrower at the following times:
(A) on or prior to becoming a party to this Agreement;
(B) upon a change in circumstances (other than the mere passage of time) requiring a new or additional form, certificate or documentation; and
(C) when reasonably requested by the Borrower.
(b) If any form, document or request for information referred to in Clause 15.1(a) or 15.1(c) requires the disclosure of information, other than information necessary to compute the Tax payable and such information as is required to be provided on the withholding forms, certificates and documents (including all attachments, revisions, updates and replacements currently required) that the relevant Lender is required to provide at the time it becomes a party to, or acquires an interest in, this Agreement which information each Lender reasonably considers to be confidential, that Lender shall not be obligated to include in such form or document such confidential information provided, however that the identity of any person shall not be considered confidential if such information is required to avoid or reduce withholding taxes.
(c) Each Lender shall promptly provide, upon reasonable request from the Borrower any additional information that the Borrower needs in order for the Borrower to determine the amount of any applicable withholding taxes, if applicable.
15.2 Register of Loans
(a) The Agent shall maintain a register (the US Register) for the registration and transfer of the Loans, and shall enter the names and addresses of the registered holders of the Loans, the transfers of the Loans and the names and addresses of the transferees of the Loans. Each Lender, to the extent such Lender sells participations to any Person in all or a portion of such Lenders rights and/or obligations under this Agreement but remains solely responsible to the other Parties hereto for the performance of such Lenders obligations, shall maintain a register (the Participant Register) on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participants interest in the Loans or other obligations under the Finance Documents. The entries in the US Register and the Participant Register shall be conclusive absent manifest error.
(b) A Borrower and any Lender (as to its own Loans) shall be provided reasonable opportunities to inspect the US Register from time to time upon reasonable prior notice. No Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participants interest in any commitments, loans, letters of credit or its other obligations under any Finance Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of the US Treasury Regulations (or any successor regulations).
(c) A Borrower shall treat any registered holder as the absolute owner of any Loans held by such holder, as indicated in the US Register, for the purpose of receiving payment of all amounts payable with respect to such Loans and for all other purposes. Each Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.
(d) Solely for the purposes of this Clause 15.2 and for US federal income tax purposes, the Agent and each Lender shall be the Borrowers non-fiduciary agent for purposes of maintaining the US Register and the Participant Register.
(e) This Clause 15.2 shall be construed so that the Loans are at all times maintained in registered form meaning:
(i) the Loans are registered obligations and the right, title and interest of each Lender and its assignees or participants in and to such Loans, shall be transferable only upon notation of such transfer in the US Register or the Participant Register; and
(ii) the right to principal and interest is transferable only through an entry on the books of the obligations Lender or Agent.
15.3 US Representations
(a) If a Lender is a US Person, that Lender warrants, represents and undertakes to a Borrower that at all times it is, and (except solely as a result of a change in law of the type described in Clause 16 ( Increased costs )) shall be, a United States person for US federal withholding tax purposes.
(b) The warranties, representations and undertakings in this Clause 15.3 survive execution of this Agreement and apply at all times during the currency of this Agreement.
16. INCREASED COSTS
16.1 Increased costs
(a) Subject to Clause 16.3 ( Exceptions ) a Borrower shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:
(i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation;
(ii) compliance with any law or regulation,
made after the date of this Agreement. This includes any law or regulation with regard to capital adequacy, prudential limits, liquidity, reserve assets or Tax.
(b) In this Agreement Increased Costs means:
(i) a reduction in the rate of return from a Facility or on a Finance Partys (or its Affiliates) overall capital (including as a result of any Tax on capital or reduction in the rate of return on capital as more capital is required to be allocated);
(ii) an additional or increased cost; or
(iii) a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.
(c) In this Agreement Basel III means:
(i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in Basel III: A global regulatory framework for more resilient banks and banking systems, Basel III: International framework for liquidity risk measurement, standards and monitoring and Guidance for national authorities operating the countercyclical capital buffer published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(ii) the rules for global systemically important banks contained in Global systemically important banks: assessment methodology and the additional loss absorbency requirement Rules text published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III.
16.2 Increased cost claims
(a) A Finance Party intending to make a claim pursuant to Clause 16.1 ( Increased costs ) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify a Borrower.
(b) Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
16.3 Exceptions
Clause 16.1 ( Increased costs ) does not apply to the extent any Increased Cost is:
(a) attributable to a Tax Deduction required by law to be made by an Obligor;
(b) attributable to a FATCA Deduction required to be made by a Party;
(c) compensated for by Clause 14.3 ( Tax indemnity ) (or would have been compensated for under Clause 14.3 ( Tax indemnity ) but was not so compensated solely because any of the exclusions in Clause 14.4 ( Exclusions ) applied); or
(d) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
(e) attributable to the implementation or application of or compliance with the International Convergence of Capital Measurement and Capital Standards, a Revised Framework published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding any amendment arising out of Basel III) ( Basel II ) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).
17. OTHER INDEMNITIES
17.1 Currency indemnity
(a) If any sum due from an Obligor under the Finance Documents (a Sum ), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency ) in which that Sum is payable into another currency (the Second Currency ) for the purpose of:
(i) making or filing a claim or proof against that Obligor;
(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall as an independent obligation, within three Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, expense, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
17.2 Other indemnities
The Borrowers shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify each Finance Party against any cost, expense, loss or liability (including legal fees) incurred by that Finance Party as a result of:
(a) the occurrence of any Default;
(b) any enquiry, investigation, subpoena (or similar order) or litigation with respect to any Obligor or with respect to the transactions contemplated or financed under this Agreement;
(c) a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, expense, loss or liability arising as a result of Clause 31 ( Sharing among the Finance Parties );
(d) funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone);
(e) issuing or making arrangements to issue a Bank Guarantee requested by a Borrower in a Utilisation Request but not issued by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or
(f) a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by a Borrower or a Borrower; or
(g) an amount being paid or payable by that Finance Party to the Agent or another Finance Party under Clause 29.11 ( Lenders indemnity to the Agent ); or
(h) security being provided by that Finance Party to the Agent under Clause 29.7(j) ( Rights and discretions ) or Clause 29.11(d) ( Lenders indemnity to the Agent ) including costs and expenses in providing that security and, if the security is cash, a Borrower shall pay interest on the amount provided from the date of provision in the manner provided in Clause 10.3 ( Default interest ); or
(i) any Environmental Liability of or relating to any Group Member, including any failure by any Group Member to comply with any Environmental Health and Safety Law or any Environmental Approval,
in each case only to the extent that the cost, loss or liability does not arise as a result of any gross negligence, wilful misconduct or fraud on the part of the relevant Finance Party, its Affiliates or any of its employees.
17.3 Indemnity to the Agent
The Borrowers shall promptly indemnify the Agent against any cost, expense, loss or liability incurred by the Agent (acting reasonably) as a result of:
(a) investigating any event which it reasonably believes is a Default;
(b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or
(c) instructing lawyers, accountants, tax advisers, surveyors or other experts or professional advisers as permitted under this Agreement.
18. MITIGATION BY THE FINANCE PARTIES
18.1 Mitigation
(a) Each Finance Party shall, in consultation with a Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or its Commitment being cancelled pursuant to, any of Clause 9.1 ( Illegality ) or, in respect of the Issuing Bank, Clause 9.2 ( Illegality in relation to Bank Guarantee ), Clause 14 ( Tax Gross Up and Indemnities ) (other than Clause 14.7 ( Indirect Tax )) or Clause 16 ( Increased Costs ) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b) Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.
18.2 Limitation of liability
(a) The Borrowers shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 18.1 ( Mitigation ).
(b) A Finance Party is not obliged to take any steps under Clause 18.1 ( Mitigation ) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
19. COSTS AND EXPENSES
19.1 Transaction expenses
The Borrowers shall promptly on demand pay the Agent and the Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution and registration of:
(a) this Agreement and any other documents referred to in this Agreement and the Transaction Security; and
(b) any other Finance Documents executed after the date of this Agreement.
This Clause overrides any provision to the contrary contained in a Priority Deed.
19.2 Amendment costs
If (a) an Obligor requests an amendment, waiver or consent or makes or initiates a request or demand under the PPSA or (b) an amendment is required pursuant to Clause 33.10 ( Change of currency ), a
Borrower shall, within three Business Days of demand, reimburse the Agent and each other Finance Party for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent or other Finance Party in responding to, evaluating, negotiating or complying with that request or requirement.
19.3 Enforcement costs
The Borrowers shall, within three Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with:
(a) the enforcement of, or the preservation of any rights under, any Finance Document (including the cost in carrying out the audit in accordance with Clause 24.17(c) ( Environmental matters )); and
(b) any proceedings instituted by or against the Security Trustee as a consequence of taking or holding the Transaction Security.
19.4 Restrictions
The Borrower is not obliged to make a payment under Clause 19.1 ( Transaction expenses ) or 19.2 ( Amendment costs ), while any one or more of the following subsists in respect of that payment:
(a) the Borrower (acting reasonably) does not receive documentary evidence which substantiates the costs or expenses claimed by a Finance Party; or
(b) the costs or expenses claimed by that Finance Party are attributable to the internal management time of the Finance Party (unless such costs or expenses attributable to internal management time are contemplated in any Fee Letter to which that Finance Party is a party).
SECTION 7
20. GUARANTEE
20.1 Guarantee
Each Guarantor irrevocably and unconditionally jointly and severally:
(a) guarantees to each Finance Party punctual performance by each Obligor of all that Obligors obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever an Obligor does not pay any amount when due under or in connection with any Finance Document (or anything which would have been due if the Finance Document or the amount was enforceable, valid and not illegal), that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
(c) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, expense, loss or liability it incurs as a result of an Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount of the cost, expense, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.
Each of paragraphs (a), (b) and (c) is a separate obligation. None is limited by reference to the other.
20.2 Continuing guarantee
This Guarantee is a continuing obligation and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
20.3 Reinstatement
If any payment to or any discharge, release or arrangement given or entered into by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced for any reason (including as a result of insolvency, breach of fiduciary or statutory duties or any similar event) in whole or in part, then the liability of each Guarantor under this Clause 20 ( Guarantee ) will continue or be reinstated as if the discharge, release or arrangement had not occurred and any relevant security shall be reinstated.
20.4 Waiver of defences
The obligations of each Guarantor under this Clause 20 ( Guarantee ) will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 20 ( Guarantee ) (without limitation and whether or not known to it or any Finance Party) including:
(a) any time, waiver or other concession or consent granted to, or composition with, any Obligor or other person;
(b) the release or resignation of any other Obligor or any other person;
(c) any composition or arrangement with any creditor of any Obligor or other person;
(d) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, execute, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(e) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;
(f) any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
(g) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security;
(h) any set off, combination of accounts or counterclaim;
(i) any insolvency or similar proceedings; or
(j) this Agreement or any other Finance Document not being executed by or binding against any other Obligor or any other party.
References in Clause 20.1 ( Guarantee ) to obligations of an Obligor or amounts due will include what would have been obligations or amounts due but for any of the above, as well as obligations and amounts due which result from any of the above.
20.5 Immediate recourse
Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 20 ( Guarantee ). This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
20.6 Appropriations
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or rights held or received or recovered (by set off or otherwise) by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and
(b) without limiting paragraph (a), refrain from applying any moneys received or recovered (by set off or otherwise) from any Guarantor or on account of any Guarantors liability under this Clause 20 ( Guarantee ) in discharge of that liability and claim or prove against anyone in respect of the full amount owing by the Obligors.
20.7 Deferral of Guarantors rights
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 20 ( Guarantee ):
(a) to be indemnified by an Obligor;
(b) to claim any contribution from any other guarantor of or provider of security for any Obligors obligations under the Finance Documents;
(c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;
(d) to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a Guarantee under Clause 20.1 ( Guarantee );
(e) to exercise any right of set-off against any Obligor;
(f) to claim or prove as a creditor of any Obligor in competition with any Finance Party; and/or
(g) in any form of administration of an Obligor (including liquidation, winding up, bankruptcy, voluntary administration, dissolution or receivership or any analogous process) prove for or claim, or exercise any vote or other rights in respect of, any indebtedness of any nature owed to it by the Obligor.
If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be
repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 33 ( Payment Mechanics ).
20.8 Release of Guarantors right of contribution
If any Guarantor (a Retiring Guarantor ) ceases to be a Guarantor in accordance with the terms of the Finance Documents for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such Retiring Guarantor ceases to be a Guarantor:
(a) that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and
(b) each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.
20.9 Additional security
This Guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
21. REPRESENTATIONS
Each Obligor (except where expressly noted otherwise) makes the representations and warranties set out in this Clause 21 ( Representations ) to, and for the benefit of, each Finance Party on the date of this Agreement and makes the Repeating Representations on the other dates set out in Clause 21.37 ( Repetition ).
21.1 Status
(a) It is a corporation, partnership or limited liability company duly organised, validly existing and (where applicable) in good standing and duly incorporated and validly existing under the laws of its jurisdiction of incorporation or organisation (as applicable). It and each of its Subsidiaries is duly licensed or qualified and (where applicable) in good standing in each jurisdiction where the property owned or leased or licensed by it or the nature of the business transacted by it or both makes such licensing or qualification necessary and where the failure to so qualify would reasonably be expected to result in a Material Adverse Effect.
(b) It and each of its wholly owned Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
21.2 Binding obligations
(a) This Agreement has been duly and validly executed and delivered by it, and each other Finance Document which it is required to execute and deliver on or after the date hereof will have been duly executed and delivered by it on the required date of delivery of such Finance Document. The obligations expressed to be assumed by it in each Finance Document to which it is a party are, subject to any necessary stamping, registrations and Authorisations, equitable principles, bankruptcy, insolvency, reorganization, moratorium or other equitable principles and similar laws generally affecting creditors rights, legal, valid, binding and enforceable obligations.
(b) Without limiting the generality of paragraph (a) above, each Transaction Security Document to which it is a party creates the Security which that Transaction Security Document purports to create and that Security is, subject to any necessary stamping, Authorisations and registration requirements, equitable principles and laws generally affecting creditors rights, valid and effective.
21.3 Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, the Finance Documents including the granting of the Transaction Security do not and will not conflict with:
(a) any law or regulation applicable to it which is material;
(b) its or any of its wholly owned Subsidiaries constitutional documents; or
(c) any agreement or instrument binding upon it or any of its assets where a breach would have or would be reasonably likely to have a Material Adverse Effect.
21.4 Power and authority
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
21.5 Authorisations
All Authorisations required or desirable:
(a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party;
(b) to make the Finance Documents to which it is a party, its legal, valid, binding and enforceable obligations, admissible in evidence in its jurisdiction of incorporation;
(c) to perfect the Transaction Security; and
(d) for it and its Subsidiaries to carry on their business, where failure to obtain that Authorisation would have or would be reasonably likely to have a Material Adverse Effect,
have been obtained or effected and are in full force and effect.
21.6 Governing law and enforcement
(a) The choice of law referred to in a Finance Document as the governing law of that Finance Document will be recognised and enforced in its jurisdiction of incorporation.
(b) Any judgment obtained against it in Queensland in relation to a Finance Document will be recognised and enforced in its jurisdiction of incorporation.
21.7 No filings or stamp Taxes
Under the law of its jurisdiction of incorporation it is not necessary in order to ensure that the Finance Documents are and remain legal, valid, binding and enforceable and that the Transaction Security has the ranking and priority which it is expressed to have in the Transaction Security Documents, that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents, except registration of security interests arising under the Finance Documents which are governed by the PPSA or the US Uniform Commercial Code on the personal property securities register established pursuant to the PPSA or with the applicable state
governmental authority under the US Uniform Commercial Code, as applicable and except registration of Mining Tenement Security.
21.8 No default
(a) No Event of Default is continuing or may reasonably be expected to result from the making of any Utilisation.
(b) No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its wholly owned Subsidiaries to which its assets (or the assets of its wholly owned Subsidiaries) are subject which would or would be reasonably likely to have a Material Adverse Effect.
21.9 Disclosure
It has disclosed in writing to the Original Lenders all information known to it which could reasonably be expected to be material to the ability of the Obligors (taken as a whole) to perform their obligations under the Finance Documents or to an Original Lenders assessment of the nature and degree of risk undertaken by it in granting financial accommodation to the Obligors in entering into the Finance Documents. As of the Utilisation Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.
21.10 No misleading information
(a) Any factual information provided by or with the authority of an Obligor or any other member of the Group in writing in connection with the Finance Documents and the transactions they contemplate (excluding financial projections) was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated, and there are no undisclosed agreements or other information material to the transactions contemplated by the Finance Documents.
(b) Any financial projections provided by or with the authority of an Obligor or any other Group Member have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
(c) Nothing has occurred and no information has been given or withheld or omitted that results in the information described in this Clause being untrue or misleading in any material respect.
21.11 Original Financial Statements
(a) Its Original Financial Statements were prepared:
(i) in the case of the consolidated Financial Statements for Coronado Curragh Pty Ltd as at 30 June 2018, in accordance with A-IFRS consistently applied unless expressly disclosed to the Finance Parties in writing to the contrary before the date of this Agreement; and
(ii) in the case of the consolidated Financial Statements for Coronado Group LLC as at 31 December 2017 in accordance with US GAAP consistently applied unless expressly disclosed to the Finance Parties in writing to the contrary before the date of this Agreement.
(b) Its Original Financial Statements give a true and fair view and fairly represent its financial position and performance (consolidated in the case of the Parent) during the financial year ending, in the case of the consolidated Financial Statements for Coronado Curragh Pty Ltd, 30 June 2018 and, in the case of the consolidated Financial Statements for Coronado Group LLC, 31 December 2017, except as expressly disclosed in those Financial Statements.
21.12 Financial Statements
(a) Excluding the Original Financial Statements, its most recent Financial Statements were prepared in accordance with US GAAP consistently applied and as US GAAP applied as at the date of this Agreement unless expressly disclosed to the contrary in those Financial Statements.
(b) Excluding the Original Financial Statements, its most recent Financial Statements give a true and fair view and represent its financial position and performance (consolidated in the case of the Parent) during the relevant financial year unless expressly disclosed to the contrary in those Financial Statements.
21.13 Pari passu ranking
Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
21.14 Ranking
The Transaction Security has or will have the ranking in priority which it is expressed to have in the Transaction Security Documents (if any) and it is not subject to any prior ranking or pari passu ranking Security other than any Permitted Security which takes priority under the PPSA or US Uniform Commercial Code (as the context permits) or which is mandatorily required by any other applicable law to have priority (and which has not been subordinated to the Transaction Security under the terms of a Finance Document. Upon the filing of financing statements relating to said Transaction Security in each office and in each jurisdiction where required in order to perfect the Transaction Security described above, the Security created by the US Security Agreement in favor of the Security Trustee for the benefit of the Beneficiaries will constitute fully perfected first priority Security (subject to Permitted Security) on all right, title and interest of the Security Providers in the Secured Property, in each case to the extent perfection can be obtained by filing financing statements. All filing fees and other expenses in connection with each such action have been or will be paid by the Borrowers.
21.15 No proceedings pending
(a) No litigation, arbitration, Tax claim, dispute or administrative or other proceeding is current or pending or, to the best of its knowledge and belief, threatened against it or its wholly owned Subsidiaries, which, to the best of its knowledge and belief, would have or is reasonably likely to have a Material Adverse Effect except:
(i) for which it has set aside sufficient reserves in accordance with US GAAP or other appropriate accounting principles and which are being contested in good faith, unless failure to pay would have or is reasonably likely to have a Material Adverse Effect; and
(ii) as notified in writing by it to the Agent.
(b) Other than as notified to the Agent, no judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any government or other regulatory body which would have or would be reasonably likely to have a Material Adverse Effect has (to the best of its knowledge and belief) been made against it or any of its wholly owned Subsidiaries.
21.16 Trustee
It does not enter into any Finance Document or hold any property as trustee.
21.17 Authorised signatories
Any person specified as its authorised signatory under Part I of Schedule 2 ( Conditions precedent ) or Clause 22.4 ( Information: miscellaneous ) is authorised to sign Utilisation Requests and other notices on its behalf except where it has previously notified the Agent that the authority has been revoked.
21.18 Tax Matters
(a) After the Parent has complied with Clause 4.4 ( Condition subsequent - Tax Consolidation ), each Obligor which is incorporated in Australia is a member of a Tax Consolidated Group for which the Head Company is Coronado Australia Holdings Pty Limited in accordance with the Tax Agreements.
(b) Except where failure to do so would not reasonably be expected to result in a Material Adverse Effect, all federal, state, local and other Tax returns required to have been filed with respect to each Obligor and each Subsidiary of each Obligor have been filed, and payment or adequate provision has been made for the payment of all Taxes that have or may become due pursuant to said returns or to assessments received, except to the extent that such Taxes are Contested Taxes and for which such reserves or other appropriate provisions, if any, as shall be required by US GAAP or other appropriate accounting principles shall have been made. There are no agreements or waivers extending the statutory period of limitations applicable to any income Tax return of any Obligor or Subsidiary of any Obligor for any period.
21.19 Solvency
There are no reasonable grounds to suspect that it is unable to pay its debts as and when they become due and payable.
21.20 Compliance with laws
Each Obligor and its wholly owned Subsidiaries has complied in all respects with all laws to which it or they may be subject, if failure so to comply would have or would be reasonably likely to have a Material Adverse Effect.
21.21 No benefit to related party
It has not contravened nor will contravene section 208 or 209 of the Corporations Act by entering into any Finance Document to which it is a party or participating in any transaction connected with them.
21.22 Ownership of property
It is the beneficial owner of, and has good title to, or valid leases or licences of, and all appropriate Authorisations to use, all property held by it or on its behalf and all undertakings carried on by it free from any Security except as permitted under Clause 24.5 ( Negative pledge ) and except for minor defects in title that do not interfere with its ability to conduct its business as conducted or to utilize such property for its intended purpose or represent a material diminution in value of that property upon its sale or transfer.
21.23 Shares
The shares, membership or other interests, or other securities in or issued by any member of the Group which are subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights. The constitutional or other documents of entities whose shares, membership or other interests, or other securities are subject to the Security do not and could not restrict or inhibit any transfer or creation or enforcement of the Security.
21.24 No immunity
Neither it nor its assets is immune from the jurisdiction of a court or from legal process in relation to its obligations under the Finance Documents to which it is a party.
21.25 Benefit
It benefits by entering into the Finance Documents to which it is a party.
21.26 Insurance
It, and each member of the Group, has obtained and maintained insurance cover for its assets that is consistent with Good Operating Practice with, in the case of an Obligor, the Security Trustees interest noted where it is customary to do so.
21.27 Sanctions
It and its Subsidiaries, and its and their respective directors and officers, and to its knowledge, its and their respective employees, agents, affiliates and representatives, are in compliance with Sanctions in all material respects. None of it or any of its Subsidiaries, nor any of its or their respective directors or officers, or to its knowledge, any of its or their respective employees, agents, affiliates or representatives, is a Sanctioned Person. It and its Subsidiaries maintain in effect policies and procedures designed to ensure compliance by the Obligors, each of their Subsidiaries and the respective directors, officers, employees and agents of the Obligors and their Subsidiaries with applicable Sanctions.
21.28 Anti-money laundering, anti-corruption laws
(a) Neither it nor any of its Subsidiaries, nor any of its or their respective directors or officers, or, to its best knowledge, any of its or their respective affiliates, agents or employees, have engaged in any activity or conduct which would violate any Anti- Corruption Laws. It and its Subsidiaries maintain in effect policies and procedures designed to ensure compliance by the Obligors, each of their Subsidiaries and the respective directors, officers, employees and agents of the Obligors and their Subsidiaries with Anti-Corruption Laws.
(b) The operations of the Obligors are, have been and will be conducted at all times in compliance in all material respects with all applicable money laundering statutes of Australia, the United States, and any other applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Agency (collectively, the Money Laundering Laws ) and no action, suit or proceeding by or before any court or Governmental Agency or body or any arbitrator involving the Obligors with respect to the Money Laundering Laws is pending or, to the knowledge of the Obligors, threatened.
(c) Notwithstanding any other provisions of a Finance Document to the contrary, a Finance Party is not obliged to do or omit to do anything if it would, or might in its reasonable opinion, constitute a breach of any law or regulation, including any Money Laundering Laws or Sanctions.
(d) Each Obligor undertakes to the Agent that if requested by the Agent, it (the Discloser) will provide any information or assistance to the Agent that is required by the Agent to satisfy its obligations in relation to any law or regulation including any Money Laundering Laws.
21.29 Environmental
(a) No Group Member has incurred any Environmental Liability, and no act or omission has occurred or is occurring and there is no circumstance relating to any Group Members assets, operations or business which has given rise or is reasonably likely to give rise to an Environmental Liability affecting any Group Members assets, operations or business which in each case above has or is reasonably likely to have a Material Adverse Effect.
(b) It and each of its Subsidiaries and Affiliates is in compliance, and has at all times complied, with all Environmental Health and Safety Laws (which compliance includes obtaining, maintaining and complying where failure to do so would have or is reasonably likely to have a Material Adverse Effect.
21.30 No violation of US margin regulations
The borrowings made under any Finance Document, and the use of proceeds thereof, will not violate, or give rise to a violation of, the US Margin Regulations (being regulations T, U and X of the Board of Governors of the Federal Reserve System of the United States from time to time in force, 12 CFR, Parts 220, 221 and 224, respectively).
21.31 US Investment Company Act
None of the Obligors nor any of their Affiliates is, and each Obligor shall ensure that neither it nor any of its Affiliates shall become, an investment company or a company controlled by an investment company, as defined in, or subject to rules and regulations promulgated under, the US Investment Company Act of 1940.
21.32 Fraudulent transfers
In respect of any Obligor that is a US Person, and after taking account support from the Parent or any other member of the Group which the directors or officers of that Obligor reasonably believe is assured, the aggregate amount of its debts (including its obligations under the Finance Documents) is less than the aggregate value of its assets; its capital is not unreasonably small to carry on its business as it is being conducted; it has not incurred and does not intend to incur debts beyond its ability to pay as they mature; and it has not made a transfer or incurred any obligation under any Finance Document with the intent to hinder, delay or defraud any of its present or future creditors.
21.33 ERISA
Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect:
(a) the Parent and each other member of the ERISA Group are in compliance with any applicable provisions of ERISA and the Internal Revenue Code with respect to all Benefit Arrangements, Plans, and Multiemployer Plans. There has been no non-exempt Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the knowledge of the Parent, with respect to any Multiemployer Plan or Multiple Employer Plan, which could result in any liability of the Parent or any other member of the ERISA Group. The Parent and all other members of the ERISA Group have made when due any and all payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any law pertaining thereto. With respect to each Plan and Multiemployer Plan, the Parent and each other member of the ERISA Group (i) have fulfilled their obligations under the minimum funding standards of ERISA and the Internal Revenue Code, (ii) have not incurred nor reasonably expect to incur any liability to the PBGC, and (iii) have not had nor reasonably expect to have asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA or the Internal Revenue Code. All Plans, Benefit Arrangements and, to the knowledge of the Parent, Multiemployer Plans have been administered in accordance with their terms and applicable law;
(b) neither the Parent nor any other member of the ERISA Group nor the PBGC has instituted or is reasonably expected to institute proceedings to terminate any Plan.
(c) no event requiring notice to the PBGC under Section 303(k)(4) of ERISA has occurred or is reasonably expected to occur with respect to any Plan;
(d) to the extent that any Benefit Arrangement is insured, the Parent and all other members of the ERISA Group have paid when due all premiums required to be paid. To the extent that any Benefit Arrangement is funded other than with insurance, the Parent and all other members of the ERISA Group have made when due all contributions required to be paid;
(e) neither the Parent nor any other member of the ERISA Group has withdrawn or reasonably expects to withdraw from a Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer, as defined in Section 4001(a)(2) of ERISA or has incurred or reasonably expects to incur any liability under Section 4062(e) of ERISA. To the knowledge of the Parent, no Multiemployer Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA. No Plan is, or is expected to be, in at-risk status (within the meaning of Section 430(i)(4) of the Internal Revenue Code or Section 303(i)(4) of ERISA). Neither the Parent nor any other member of the ERISA Group has received any notice concerning the imposition of withdrawal liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent (within the meaning of Title IV of ERISA) or in endangered or critical status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA); and
(f) neither the Parent nor any other member of the ERISA Group has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.
21.34 Projects
Except where non-compliance is subject to a dispute in good faith, each Group Member has complied with all obligations in connection with Projects, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
21.35 Producing Unincorporated Joint Ventures
As at the date of this Agreement, each member of the Obligor Group who owns shares in an Obligor that is a participant in a Producing Unincorporated Joint Venture is permitted under the terms of that Producing Unincorporated Joint Venture to create a Security in that shareholding in favour of the Security Trustee.
21.36 Group Structure Diagram
(a) The Group Structure Diagram delivered to the Agent as a condition precedent under Part I of Schedule 2 ( Conditions precedent ), complete and accurate in all material respects on the first Utilisation Date.
(b) The most recent Group Structure Diagram delivered to the Agent under Clause 22.4(i) ( Information: miscellaneous ) is true, complete and accurate in all material respects.
(c) All necessary intra-Group loans, transfers, share exchanges and other steps resulting in the final Group structure are set out in the Group Structure Diagram and have been or will be taken in compliance with all relevant laws and regulations and all requirements of relevant regulatory authorities.
21.37 Intellectual Property
Each Obligor and each Subsidiary of each Obligor owns or possesses all the patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights, without conflict with the rights of others, necessary for the Obligors to own and operate their properties and to carry on their businesses as presently conducted and planned to be conducted by such Obligors and Subsidiaries, except where the failure to so own or possess with or without such conflict would reasonably be expected to result in a Material Adverse Effect.
21.38 Employment Matters
(a) Each of the Obligors and each of their Subsidiaries is, and has been, in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, except where the failure to comply could not reasonably be expected to result in a Material Adverse Effect. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor
Contracts (as defined in the Term Loan Facility Agreement) or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of any of the Obligors or any of their Subsidiaries which in any case could reasonably be expected to result in a Material Adverse Effect.
(b) Except as could not reasonably be expected to result in a Material Adverse Effect: (i) each of the Obligors, each of their Subsidiaries and each of the related persons (as defined in the Coal Act) of each Obligor and each Subsidiary of each Obligor are in compliance with the Coal Act, to the extent that the Coal Act applies to it; and (ii) none of the Obligors, any Subsidiary of any Obligor nor any related person of any Obligor or its Subsidiaries has any liability under the Coal Act except with respect to premiums or other payments required thereunder which have been paid when due. The Obligors and their Subsidiaries are in compliance in all material respects with the Black Lung Act, to the extent that the Black Lung Act applies to it. None of the Obligors nor any of their Subsidiaries has any liability under the Black Lung Act except with respect to premiums, contributions or other payments required thereunder which have been paid when due.
21.39 Environmental Health and Safety Matters .
(a) The Obligors and their Subsidiaries and their respective operations and facilities are and have been in compliance with all Environmental Health and Safety Laws, including holding and operating in compliance with Environmental Health and Safety Permits, and have submitted timely applications for the issuance or renewal of all such Permits to the extent required to support ongoing or planned operations, except in any such case which could not reasonably be expected to result in a Material Adverse Effect.
(b) There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Obligor, threatened against any Obligor or any Subsidiary of any Obligor at Law or equity before or by any Official Body relating to Environmental Health and Safety Laws or Environmental Health and Safety Permits, and no prior action, suit, proceeding or investigation has resulted in a consent decree, order, settlement or other agreement, except, in each case, which could not reasonably be expected to result in a Material Adverse Effect.
(c) There are no pending or, to the knowledge of any Obligor, threatened Environmental Health and Safety Claims which could reasonably be expected to result Environmental Liability to any Obligor or any Subsidiary, except for any such Environmental Health and Safety Claims which could not reasonably be expected to result in a Material Adverse Effect.
(d) To the knowledge of any Obligor, there are no facts, circumstances, conditions or occurrences (including any Contamination or Release of Regulated Substances) that would be reasonably expected to cause any Obligor or any Subsidiary to incur or be subject to any Environmental Liabilities, (other than ordinary course compliance with Environmental Health and Safety Laws and reclamation, closure and decommissioning obligations) except in each case that could not reasonably be expected to result in a Material Adverse Effect.
(e) No current or anticipated Security on the ownership, occupancy, use or transferability of real property or facilities, whether owned or leased or licensed (other than Permitted Security), authorized by Environmental Health and Safety Laws exist against any real property, whether owned or leased or licensed, of any Obligor or any Subsidiary which could reasonably be expected to result in a Material Adverse Effect.
21.40 Title to Real Property .
Each Obligor and each Subsidiary of each Obligor (i) owns or leases or licenses all Real Property interests that are necessary or appropriate for Parent and its Subsidiaries to conduct their respective operations in all material respects, (ii) and, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect, has good and valid title to all of their other respective assets, in the case of both the foregoing items (i) and (ii) of this sentence, free and clear of all Security and encumbrances
except Permitted Security, and subject to the terms and conditions of the applicable leases and subject to the terms of the Stairwell Arrangements; provided, however , an Obligor or a Subsidiary of an Obligor shall not be in breach of the foregoing in the event that (x) it fails to own a valid leasehold interest which, either considered alone or together with all other such valid leaseholds which it fails to own, is not material to the continued operations of such Obligor or Subsidiary of such Obligor or (y) such Obligors or such Subsidiarys interest in a leasehold is less than fully marketable because the consent of the lessor to future assignments has not been obtained.
21.41 Surety Bonds
All surety, reclamation and similar bonds required to be maintained by Parent or any of its Subsidiaries under any Environmental Health and Safety Laws, Reclamation Laws, Mining Laws or any provisions of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound (i) are in full force and effect except for any failure which individually or when taken together with all failures under all such bonds would not reasonably be expected to result in a Material Adverse Effect, and (ii) were not and will not be terminated, suspended, revoked or otherwise adversely affected by virtue of the consummation of the financing (including all Loans made after the date of this Agreement) contemplated by this Agreement, provided that certain of such bonds may be terminated, suspended or revoked so long as, taken together, such events could not reasonably be expected to result in a Material Adverse Effect. All required guaranties of, and letters of credit with respect to, such surety, reclamation and similar bonds are in full force and effect except where such failure to be in full force and effect could not reasonably be expected to result in a Material Adverse Effect.
21.42 Mine sites
Except as listed in Schedule 10 ( Real Property ), no mining tenement or interest in Real Property is necessary to enable the mining of the Buchanan Mine, the Greenbrier Mine, the Logan Mine or the Curragh Mine and, subject to Clause 4.5 ( Conditions precedent - other ), each such tenement or interest is subject to a Mining Tenement Security.
21.43 Surface Facilities
All Surface Facilities are located on the surface of Real Property that is owned (and not leased) by an Obligor and is subject to a perfected Mining Tenement Security, with the following exceptions:
(a) all of the Surface Facilities servicing the Logan Mine are on leased land; and
(b) some small part of the Surface Facilities servicing the Buchanan Mine are on leased land
but in the case of both (a) and (b) the Obligors own the structures, infrastructure and equipment comprising the Surface Facilities. For the purpose of this Clause 21.43, Surface Facilities means the coal washing and preparation facilities, together with related structures and equipment, which provide coal washing, preparation, storage and loadout services at the Logan Mine, the Buchanan Mine and the Greenbrier Mine.
21.44 Repetition
The Repeating Representations are deemed to be made by each Obligor:
(a) the date of each Utilisation Request and the first day of each Interest Period; and
(b) in the case of an Additional Obligor, the day on which the company becomes (or it is proposed that the company becomes) an Additional Obligor
with reference to the facts and circumstances then existing; except that the representations and warranties set out in Clauses 21.10(a) ( No misleading information ) and 21.10(b) ( No misleading information ) will be repeated with reference to the facts and circumstances subsisting at the time the relevant information was provided or stated (in the case of Clause 21.10(a)) or at the time the relevant financial projections were prepared (in the case of Clause 21.10(b)).
21.45 Reliance by Finance Parties
Each Obligor acknowledges that the Finance Parties have entered into each Finance Document in reliance on the representations and warranties given by it under this agreement.
22. INFORMATION UNDERTAKINGS
The undertakings in this Clause 22 ( Information Undertakings ) remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
22.1 Financial Statements
The Parent shall supply to the Agent:
(a) as soon as the same become available, but in any event within 120 days after the end of each of its financial years its audited consolidated Financial Statements for that financial year; and
(b) as soon as the same become available, but in any event within 90 days after the end of each half of each of its financial years its unaudited consolidated Financial Statements for that financial half year.
22.2 Compliance Certificate and other information
The Parent shall supply to the Agent, with each set of Financial Statements delivered pursuant to Clause 22.1(a) and Clause 22. (( ^ ( Financial statements ):
(a) a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 22.7 ( Financial covenants ) as at the date as at which those Financial Statements were drawn up. Each Compliance Certificate shall be signed by 2 officers or an officer plus any of the chief executive officer or group chief financial officer of the Parent; and
(b) updated 5 year financial forecasts outlining:
(i) Production;
(ii) Reserves;
(iii) operating expenses;
(iv) capital expenditure;
(v) cashflows; and
(vi) EBITDA.
22.3 Requirements as to Financial Statements
(a) The Parent shall procure that each set of annual Financial Statements delivered by the Parent pursuant to Clause 22.1 ( Financial statements ) shall be audited by the Auditors.
(b) Each set of Financial Statements delivered pursuant to Clause 22.1 ( Financial statements ) shall be certified by a director or chief financial officer or chief executive officer of the relevant
company as giving a true and fair view of (in the case of annual Financial Statements for any financial year) or (in other cases) fairly representing its financial condition as at the date as at which those Financial Statements were drawn up.
(c) The Parent shall procure that each set of Financial Statements of an Obligor delivered pursuant to Clause 22.1 ( Financial statements ) is prepared using US GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the previous Financial Statements supplied under this agreement (except if they are the Original Financial Statements) unless, in relation to any set of Financial Statements, it notifies the Agent that there has been a change in US GAAP, the accounting practices or reference periods and its Auditors (or, if appropriate, the Auditors of the Obligor) deliver to the Agent:
(i) a description of any change necessary for those Financial Statements to reflect the US GAAP, accounting practices and reference periods upon which that Obligors Original Financial Statements were prepared; and
(ii) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to determine whether Clause 23 ( Financial covenants ) has been complied with and make an accurate comparison between the financial position indicated in those Financial Statements and that Obligors Original Financial Statements.
(d) Any reference in this Agreement to those Financial Statements shall be construed as a reference to those Financial Statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
22.4 Information: miscellaneous
The Parent shall supply to the Agent:
(a) Reserves Statements, contemporaneously with them being provided to the ASX;
(b) with the first Compliance Certificate delivered to the Agent under Clause 22.2(a) ( Compliance Certificate and other matters ), a copy of the Hedging Policy;
(c) promptly, a copy of the amended Hedging Policy promptly after it is changed in a material way from time to time;
(d) all documents dispatched by the Parent to its shareholders (or any class of them) or its creditors generally (or any class of them) at the same time as they are dispatched;
(e) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group, and which would, if adversely determined amount to a judgement, order or penalty in excess of A$20,000,000 or would have or would be reasonably likely to have a Material Adverse Effect;
(f) promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which is made against any member of the Group and which would have or would be reasonably likely to have a Material Adverse Effect;
(g) promptly, such information as the Agent may reasonably require about the Secured Property and compliance of the Obligors with the terms of any Transaction Security Documents; and
(h) promptly, notice of any change in authorised signatories of any Borrower signed by a director or secretary of the Borrower accompanied by specimen signatures of any new signatories;
(i) an updated Group Structure Diagram promptly after there is a change in the structure of the Group that would render the last Group Structure Diagram given to the Agent incorrect;
(j) promptly, notice of any Environmental Liability of or relating to any Group Member, including without limitation any alleged breach of any Environmental Health and Safety Law or Environmental Approval by any Group Member that has given rise or is likely to give rise to expenditure by any Group Member or a claim against any Group Member, in each case that may exceed A$ 10,000,000 or a requirement that a Group Member ceases or substantially alters a material activity;
(k) promptly upon request by the Agent, evidence of insurance being maintained as required by this Agreement;
(l) promptly, upon request by the Agent, evidence that no royalty payment required to be paid by an Obligor is in arrears; and
(m) promptly, any other information relating to the financial performance (including for the purposes of testing covenants under Clause 23.1 ( Financial covenants ) or business and operations of the Group reasonably requested by the Agent on behalf of a Lender (including information in relation to Production and Reserves and any other technical information reasonably requested by the Agent which a Group Member has in its possession).
22.5 Notification of Defaults and Review Events
(a) Each Borrower shall notify the Agent of any Default or Review Event (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Borrower is aware that a notification has already been provided by another Obligor).
(b) Promptly upon a request by the Agent, the Parent shall supply to the Agent a certificate signed by a director or chief financial officer or chief executive officer on its behalf certifying that no Default or Review Event is continuing (or if a Default or Review Event is continuing, specifying the Default or Review Event, as applicable, and the steps, if any, being taken to remedy it).
22.6 Know your customer checks
The Obligors shall supply promptly all documents and other evidence reasonably requested by the Agent or a Lender in order for the Agent, the Lender or a proposed New Lender under Clause 26 ( Changes to the Lenders ) to carry out all necessary know your customer or other similar checks in relation to an Obligor or proposed Additional Obligor under all applicable laws and regulations where such information is not already available to the recipient.
22.7 Producing Unincorporated Joint Ventures
The Obligors shall supply to the Agent promptly upon becoming aware of them, the details of any alleged breach of or dispute under the terms of a Producing Unincorporated Joint Venture which could reasonably be expected to adversely affect the relevant member of the Groups interest in or revenues from that Producing Unincorporated Joint Venture (including without limitation, a dilution or forfeiture of the relevant member of the Groups interest in that Producing Unincorporated Joint Venture).
22.8 Environmental Health and Safety Matters
Each of Parent and the Borrowers shall, and shall cause each of its Subsidiaries to (i) comply with applicable Environmental Health and Safety Laws and Environmental Health and Safety Orders, (ii) obtain, maintain in full force and effect and comply with the terms and conditions of all Environmental Health and Safety Permits; (iii) take commercially reasonable precautions to prevent Contamination on the real property, whether owned or leased, of any Obligor or any Subsidiary of a Obligor; (iv) take commercially reasonable precautions against the imposition, attachment, filing or recording of any
Security (other than Permitted Security) or other encumbrance authorized by Environmental Health and Safety Laws (other than Permitted Security) to be imposed, attached or be filed or recorded against the Real Property or any other real property owned or leased by any of them; and (v) perform or pay for performance of any Remedial Actions necessary to (A) respond to any Environmental Health and Safety Orders or Environmental Health and Safety Complaints related to the real property, whether owned or leased, of any Obligor or any Subsidiary of a Obligor, or (B) to manage Contamination at, in, on, under, emanating to or from or otherwise affecting the real property, whether owned or leased, of any Obligor or any Subsidiary of a Obligor; except, in the case of each of clauses (i)-(v) above, as could not reasonably be expected to result in a Material Adverse Effect; provided , in each case, that a failure to take such actions described above shall not be a Default if Parent, the Borrowers or the applicable Subsidiary is in good faith reasonably contesting such matter in the applicable jurisdiction in accordance with applicable Environmental Health and Safety Laws.
23. FINANCIAL COVENANTS
23.1 Financial covenants
The Parent must ensure that at all times:
(a) the ratio of Net Debt to EBITDA for the preceding 12 month period does not exceed 2.50 times;
(b) the ratio of EBITDA to Net Interest Expense for the preceding 12 month period is at least 3.00 times; and
(c) the ratio of Net Debt to Net Debt plus Tangible Net Worth, expressed as a percentage, does not exceed 40%.
When calculating EBITDA for the purposes of the Financial Covenants the following amounts are to be excluded:
(i) cash flows generated from assets subject to a Security securing Limited Recourse Financial Indebtedness, except to the extent that they have been received by an Obligor as Distributions that have been accounted for as cash in the relevant accounting period; and
(ii) amounts otherwise included in EBITDA which are attributable to Group Members which are not wholly-owned Subsidiaries of the Parent, except if and to the extent that they have been received by an Obligor as Distributions that have been accounted for as cash in the relevant accounting period.
Further, if a Group Member acquires either an asset, or an entity that becomes a Group Member, and when next tested in accordance with Clause 23.2 ( Testing of covenants ) the Net Debt to EBITDA Financial Covenant or the EBITDA to Net Interest Expense Financial Covenant would otherwise be breached solely because EBITDA does not include the contribution of that asset or entity for all of the 12 month period preceding the date as at which the Financial Covenants are tested, then EBITDA is to be calculated to include the contribution of that asset or entity for all of the 12 month period preceding the date as at which the Financial Covenants are tested (including EBITDA for the period during which that asset or entity was not owned by the Group). Promptly upon request by the Agent, the Parent must provide such documents, certifications, audit reports, projections and other supporting information and evidence as the Agent may require to substantiate the adjustments to EBITDA the subject of this paragraph.
23.2 Testing of covenants
Without limiting the requirement to maintain compliance with the Financial Covenants at all times, the Borrowers shall be required to demonstrate compliance with the Financial Covenants at the following times and on the basis of the following evidence:
(a) as at 31 December each year, on the basis of:
(i) the audited consolidated Financial Statements of the Group as at, and for the financial year ending on, that date; and
(ii) the Compliance Certificate,
given to the Agent under this Agreement; and
(b) as at 30 June each year, on the basis of:
(i) the unaudited consolidated Financial Statements of the Group as at, and for the financial half-year ending on, that date; and
(ii) the Compliance Certificate,
given to the Agent under this Agreement; and
(iii) the consolidated Financial Statements of the Group as at, and for the financial half-year ending on, the immediately preceding 31 December (for the purpose of calculating, in conjunction with the Financial Statements referred to in Clause 23.2(a)(1), EBITDA and Net Interest Expense for the 12 months ending on the half-year reporting date referred to in Clause 23.2(b)(i)).
(c) If, at any time changes to US GAAP relevant to the Group and/or changes to the Groups accounting treatment (provided such changes in such accounting treatment are certified by the Auditors of the Parent without qualification as resulting in the Financial Statements of the Group presenting a true and fair view of the state of affairs and results of the Group) shall cause either:
(i) the mathematical results of any Financial Covenant; or
(ii) the determination of any definition or element used in the calculation of any Financial Covenant,
to be different to the results which would have been derived prior to such changes in accounting in such a manner so as to prejudice the ability of the Obligors to comply with the terms of the Financial Covenants or any definition or element used in the calculation of any Financial Covenant, then the Parent must notify the Agent (or if the changes are identified by the Agent, the Agent must notify the Parent) of the occurrence of such changes in US GAAP and accounting treatments (as soon as the relevant party becomes aware of any such changes, such notification being the Notification Date) and then the Parent and the Agent (acting on the instructions of the Majority Lenders) will enter into discussions to agree appropriate variations to the terms of the Financial Covenants or any definition or element used in the calculation of any Financial Covenant (being the Relevant Covenants and Definitions) so that their original effect and intent may be maintained.
(d) If the parties fail to agree on the appropriate variations to the Relevant Covenants and Definitions within 30 days (or such longer period as the Parent and the Agent (acting on the instructions of the Majority Lenders) may agree) of the Notification Date, then from that time, the Parent will provide the Financial Reports, each Compliance Certificate and all other financial information required to be provided under this Agreement together with reconciliation
statements necessary to enable the Parent to demonstrate compliance with the Relevant Covenants and Definitions based on the US GAAP prior to the relevant change occurring and there shall be no Default or Event of Default under this Agreement in respect of the Relevant Covenants and Definitions so long as the Parent demonstrates compliance with the Relevant Covenants and Definitions based on the US GAAP prior to the change occurring, notwithstanding that the Parent may not be able to demonstrate such compliance based on the changed US GAAP.
24. GENERAL UNDERTAKINGS
The undertakings in this Clause 24 ( General Undertakings ) remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
24.1 Authorisations
Each Obligor shall promptly:
(a) obtain, comply with and do all that is necessary to maintain in full force and effect:
(i) any Authorisation required to enable it to perform its obligations under the Finance Documents to which it is a party and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document to which it is a party; and
(ii) any Authorisation required for it to carry on its business; and
(b) on request by the Agent, supply certified copies to the Agent of any Authorisation referred to in sub paragraph (a)(i).
24.2 Compliance with laws and payment of Taxes
(a) Each Group Member shall comply in all respects with all laws (including Environmental Health and Safety Laws and Environmental Approvals) to which it is subject, and ensure that each of its Subsidiaries also complies, if failure so to comply would have or would be reasonably likely to have a Material Adverse Effect, except for Anti-Corruption Laws and Sanctions, where compliance is required in all material respects. The Obligors shall, and shall cause each of their Subsidiaries to, maintain in effect policies and procedures designed to ensure compliance by the Obligors, each of their Subsidiaries and the respective directors, officers, employees and agents of the Obligors and their Subsidiaries with Anti-Corruption Laws and applicable Sanctions.
(b) Each Obligor must pay all Taxes (including any Indirect Taxes) when due, other than Contested Taxes as to which appropriate reserves have been established in accordance with US GAAP or other appropriate accounting principles and ensure that each of its wholly owned Subsidiaries does the same.
24.3 Corporate Existence
Each Obligor will do everything necessary to maintain its existence in good standing, and not transfer its jurisdiction of incorporation or enter into any merger or consolidation, other than a solvent liquidation, merger, consolidation or reorganisation.
24.4 Change of business
Each Obligor will ensure that the general nature of the business of the Group is and remains the exploration for and mining of, and marketing and sale of, coal.
24.5 Negative pledge
(a) The Obligors must not create a Security or allow one to exist on the whole or any part of their present or future assets, other than a Permitted Security.
(b) Without limiting paragraph (a), no Obligor shall (unless it is a Permitted Security or otherwise expressly permitted by this Agreement):
(i) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be lease to or re-acquired by an Obligor;
(ii) sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(iii) enter into any title retention arrangement in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset;
(iv) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set off or made subject to a combination of accounts, unless in the ordinary course of its banking arrangements or Treasury Transactions; or
(v) enter into any other preferential arrangement having similar effect.
(c) The Obligors must ensure that no Recognition Certificate is delivered to the Security Trustee other than pursuant to Section 9 ( Changes to parties ) of this Agreement or with the consent of the Agent (acting on the instructions of the Majority Lenders).
24.6 Preservation of assets
Each Obligor shall (and the Parent shall ensure that each member of the Group will) maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary in the conduct of its business.
24.7 Material Contracts
(a) The Parent shall not (and shall ensure that each other member of the Group does not):
(i) amend in any way, or waive any requirement of, a Material Contract which would be materially adverse to the interests of the Finance Parties;
(ii) assign or permit any assignment of, or terminate or do anything or fail to do anything which would give rise to another party having the right to terminate, any Material Contract where such assignment or termination would have or would be reasonably likely to have a Material Adverse Effect; or
(iii) fail to procure the extension or renewal on materially comparable terms (or more favourable to the Group) each Material Contract where such failure would have or would be reasonably likely to have a Material Adverse Effect,
in each case, without the prior consent of the Agent acting on the instructions of the Majority Lenders.
(b) The Parent shall ensure that any royalty payments in connection with a mining tenement do not fall into arrears.
24.8 Pari passu ranking
Each Obligor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party and the Security Trustee against it under the Transaction Security Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
24.9 Financial accommodation No Obligor may:
(a) advance money or make available financial accommodation to or for the benefit of; or
(b) give a Surety in connection with an obligation or liability of,
any person who is not also an Obligor unless it is Permitted Financial Accommodation.
24.10 Financial Indebtedness
Each Obligor undertakes not to incur, or to permit any other Group Member to incur any Financial Indebtedness other than Permitted Financial Indebtedness.
24.11 Disposals
(a) No Obligor may enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary, to sell, lease, transfer, create an interest in or otherwise dispose of any asset, other than, subject to paragraph (b), a Permitted Disposal.
(b) No Obligor may enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of its right to mine the Curragh Mine or the Buchanan Mine (including but not limited to any sale, lease, transfer or disposal of the Australian Mining Tenement and the Real Property or freehold or leasehold interests in those mines).
(c) The Finance Parties must procure, promptly and in any event no later than 15 Business Days after an Obligor requests it, a full and unconditional release by the Security Trustee of any Security over Secured Property the subject of a Permitted Disposal such release to become effective on occurrence of the relevant disposal, provided that the request is accompanied by a certificate signed by the Parent confirming that:
(i) no Default is continuing or would result from the disposal; and
(ii) there will be no breach of a Financial Covenant at the next testing date under Clause 23.2 ( Testing of covenants ) based on projected financials for the Group prepared and provided by the Parent (after excluding the assets the subject of the disposal), together with calculations evidencing compliance with Clause 23.2 ( Testing of covenants ).
The Security Trustee need not comply with this Clause if all Beneficiaries (as defined in the Security Trust Deed) instruct the Security Trustee that they believe that the statements in the certificate are incorrect in a material respect.
24.12 Distributions
The Parent will not make a Distribution except in accordance with the law and only if an Event of Default is not continuing and will not occur as a result of the Distribution.
24.13 Personal Property Securities Act 2009
(a) If a Finance Document (or a transaction in connection with it) operates as, or gives rise to, a security interest in favour of a Finance Party for the purposes of the PPSA, each Borrower will, at its cost and expense, do anything (including, but not limited to, obtaining consents, signing and producing documents, getting documents completed and signed and supplying information, and procuring any related party to do any of those things) which the Agent (acting in the instructions of the Majority Lenders) reasonably requests and is reasonably necessary for the purposes of:
(i) ensuring that the Finance Document and security interest is fully effective, enforceable and perfected with the contemplated priority; or
(ii) enabling that Finance Party to apply for any registration, or give any notification, in connection with the security interest so that the security interest has the priority intended by the parties at the date of this Agreement; or
(iii) enabling that Finance Party to exercise rights in connection with its security interest.
(b) Where any Finance Party has a security interest (as defined in the PPSA) under any Finance Document, to the extent the law permits:
(i) for the purposes of sections 115(1) and 115(7) of the PPSA:
(A) each Finance Party with the benefit of the security interest need not comply with sections 95, 118, 121(4), 125, 130, 132(3)(d) or 132(4) of the PPSA; and
(B) sections 142 and 143 of the PPSA are excluded;
(ii) for the purposes of section 115(7) of the PPSA, each Finance Party with the benefit of the security interest need not comply with sections 132 and 137(3);
(iii) each Party waives its right to receive from any Finance Party any notice required under the PPSA (including a notice of a verification statement; and
(iv) if a Finance Party with the benefit of a security interest exercises a right, power or remedy in connection with it, that exercise is taken not to be an exercise of a right, power or remedy under the PPSA unless the Finance Party states otherwise at the time of exercise. However, this Clause does not apply to a right, power or remedy which can only be exercised under the PPSA.
(c) This does not affect any rights a person has or would have other than by reason of the PPSA and applies despite any other Clause in any Finance Document.
24.14 Anti-money laundering
(a) Each Obligor agrees that a Finance Party may delay, block or refuse to process any transaction without incurring any liability if that Finance Party suspects that:
(i) the transaction may breach any laws or regulations in Australia or any other country;
(ii) the transaction involves any Sanctioned Person; or
(iii) the transaction may directly involve the proceeds of, or be applied for the purposes of, conduct which is unlawful in Australia or any other country.
If a Finance Party decides to delay, block or refuse to process any transaction on the basis of this Clause it must first give the Parent written notice of that fact and the reasons for it doing so (to the extent giving that information is not prohibited by law).
(b) Each Obligor must provide all information to the Agent which the Agent or a Lender reasonably requires in order to manage its money-laundering, terrorism financing or Sanctions risk or to comply with any laws or regulations in Australia or any other country.
(c) Unless an Obligor has disclosed that it is acting in a trustee capacity or on behalf of another party, each Obligor warrants that it is acting on its own behalf in entering into any Finance Document.
(d) Each Obligor declares and undertakes that the processing of any transaction by a Finance Party in accordance with the Obligors instructions will not breach any laws or regulations in Australia or any other country in which the Group conducts business.
(e) Each Obligor agrees that:
(i) no person that is a Sanctioned Person will have any legal or beneficial interest in any funds repaid or remitted by the Borrowers to any Finance Party in connection with the Facilities; and
(ii) they shall not use any revenue or benefit derived from any activity or dealing with a Sanctioned Person for the purpose of discharging amounts owing to any Finance Party in respect of the Facilities.
24.15 Sanctions; Anti-Corruption
No Obligor shall (and each Obligor shall ensure that no other member of the Group will) directly or indirectly, use the proceeds of any Facility (or lend, contribute or otherwise make available such proceeds to any person): (i) to fund any activities of or business with any Sanctioned Person, or in any Sanctioned Country, or in any other manner that would result in a violation of Sanctions by any Finance Party or (ii) in violation of any Anti-Corruption Laws.
24.16 Composition of Obligor Group
(a) The Parent must ensure that, subject to paragraph (d), at all times during the term of the Facilities, the Obligor Group together accounts for:
(i) at least 90% of Total Tangible Assets (on a consolidated basis) of the Relevant Group; and
(ii) at least 90% of EBITDA (on a consolidated basis) of the Relevant Group.
(b) For the purposes of these tests, in calculating:
(i) Total Tangible Assets of the Relevant Group, Total Tangible Assets will be adjusted to eliminate the direct contributions of Excluded Subsidiaries; and
(ii) EBITDA of the Relevant Group, EBITDA will be adjusted to eliminate:
(A) amounts otherwise included in EBITDA which are attributable to Group Members which are Excluded Subsidiaries, except if and to the extent that they have been received by an Obligor as Distributions that have been accounted for as cash or cash equivalents in the relevant accounting period; and
(B) cash flows generated from assets subject to a Security securing Limited Recourse Financial Indebtedness, except if and to the extent that they have been received by an Obligor as Distributions that have been accounted for as cash or cash equivalents in the relevant accounting period.
(c) Without limiting the Parents obligations under Clause 24.16(a), upon a Project Company ceasing to have any Limited Recourse Financial Indebtedness it will cease to be a Project Company and will be taken into account for the purposes of calculating compliance with Clause 24.16(a). If the relevant entity is required to be a Guarantor to comply with Clause 24.16(a), the Parent must procure that it becomes a Guarantor (and where it is incorporated in Australia or the United States of America (or any state or commonwealth thereof, including the District of Columbia), a member of the Obligor Group) within 3 Months of it ceasing to be a Project Company.
(d) If required in order to ensure compliance with Clause 24.16(a) the Parent must ensure that a Subsidiary (other than an Excluded Subsidiary) becomes party to this Agreement (and the Security Trust Deed and relevant Transaction Security Documents) as a Guarantor by complying with Clause 27 ( Changes to Obligors ) within 30 days of delivery of a Compliance Certificate or otherwise becoming aware that the tests in paragraph (a) may not be met.
24.17 Environmental matters
(a) Each Group Member shall:
(i) obtain, maintain and ensure material compliance with all Environmental Approvals; and
(ii) implement and maintain procedures and management systems which are adequate to ensure and monitor its compliance with Environmental Health and Safety Laws and to prevent any Environmental Liability.
(b) Without limiting any other reporting obligations in this Agreement, each Group Member shall, promptly upon becoming aware, notify the Agent of:
(i) each written request, notification, demand or other communication received from a Governmental Agency in connection with a breach or potential breach of any Environmental Health and Safety Law or Environmental Approval;
(ii) any proceedings that would reasonably be likely to give rise to an Environmental Liability that are ongoing or commenced or, to its knowledge, threatened in writing; or
(iii) any circumstances reasonably likely to result in an Environmental Liability,
in each case (a) and (b) above which has, had or is reasonably likely to have a Material Adverse Effect or would otherwise result in any liability (including any Environmental Liability) of a Finance Party.
(c) Where a Finance Party reasonably suspects that a Group Member is not complying in a material respect with an Environmental Health and Safety Law or Environmental Approval and, after consultation with the Group Member, the Finance Party reasonably continues to suspect non-compliance, a Finance Party may (but shall have no obligation to), at the cost of the Borrower, appoint an Environmental expert (in consultation with the Borrower) to conduct an audit of the relevant Group Members Premises, procedures and management systems (limited in scope to those matters directly relating to the alleged non-compliance), and compliance with such procedures and systems relating to that area and/or request copies of any risk registers or internal or external audits of such procedures and compliance conducted by the relevant Group Member. Each Group Member will do everything reasonably necessary to facilitate any such audit. For the avoidance of doubt, nothing in this clause requires any Finance Party to monitor or take any action to monitor compliance by the Group Members with their obligations under an Environmental Health and Safety Law or Environmental Approval. This audit is not to be a general audit of all of the Group Members system and processes.
(d) Without limitation to any other rights of a Finance Party, where the procedures or the audit referred to in clause (c) above reveal any Environmental Liability or non- compliance with Environmental Health and Safety Law or Environmental Approval, the Borrower will promptly implement a plan to remedy such Environmental Liability or non-compliance and provide the Agent with an update on the implementation of such plan.
(e) Each Group Member will ensure that at all times it has made adequate provision to comply with its reclamation, rehabilitation and restoration obligations under Environmental Health and Safety Law in respect of land upon which its activities are or have been conducted, including but not limited to the provision and maintenance of adequate financial assurances under Environmental Health and Safety Law.
(f) Where a Utilisation is used to fund a project to which the Equator Principles would apply, the Borrower will ensure that the development of that project complies with the Equator Principles or comparable standards that meet or exceed the objectives of the Equator Principles.
24.18 Partnerships and joint ventures
Other than investments in existence as at the date of this Agreement and disclosed in the materials delivered to the Agent as a condition precedent under Part I of Schedule 2 ( Conditions precedent ), no Group Member shall make any new or additional investment by way of partnership, joint venture (whether incorporated or unincorporated) or non-wholly owned Subsidiary or acquire any further equity in or provide financial accommodation (subject always to Clause 24.9 ( Financial accommodation )) to such partnership, joint venture or non- wholly owned subsidiary unless the entity that is party to or holds the investment in (as the case may be) the partnership or joint venture, or who holds the equity in the incorporated joint venture or non-wholly owned Subsidiary, or provides the financial accommodation is an Obligor.
24.19 Treasury Transactions
(a) No Obligor shall enter into any Treasury Transaction except Treasury Transactions consistent with and compliant with the Hedging Policy.
(b) No Obligor shall enter into any Treasury Transaction for the purpose of speculation.
24.20 Mining tenements; After-Acquired Property; Further assurances regarding Secured Property
(a) Each Obligor will ensure that at all times, (1) each mining tenement issued to it or in its favour (other than a Project Asset) is and remains at all times the subject of a Mining Tenement Security and (2) if any such Obligor acquires, leases, licenses or otherwise obtains any rights to any additional property or asset after the Listing Date (other than US Excluded Property), such Obligor shall execute and deliver to the Security Trustee for the benefit of the Beneficiaries, the Transaction Security Documents reasonably necessary, or as the Agent may reasonably deem necessary, to grant first priority perfected Security and security interests (subject only to Permitted Security) in and to such property or asset of such Obligor, in each case in accordance with the terms of the Finance Documents.
(b) Whenever the Agent or the Security Trustee requests an Obligor to do anything: (i) to ensure any Finance Document (or any security interest (as defined in the PPSA) or other Security under any Finance Document) is fully effective, enforceable and perfected with the contemplated priority; (ii) for more satisfactorily assuring or securing to the Finance Parties the property the subject of any such security interest or other Security in a manner consistent with the Finance Documents; or (iii) for aiding the exercise of any power in any Finance Document, the Obligor shall do it promptly at its own cost. This may include obtaining consents, signing documents, getting documents completed and signed and supplying information, delivering documents and evidence of title and executed blank transfers, or otherwise giving possession or control with respect to any property the subject of any security interest or Security, and/or executing, endorsing, acknowledging, filing or delivering to the Security Trustee, promptly, upon the reasonable request of the Agent or the Security Trustee, any document or instrument supplemental to or confirmatory of the Transaction Security Documents, including opinions of counsel, or otherwise deemed by the Agent or the Security Trustee reasonably necessary for the continued validity, perfection (or the equivalent under applicable Australian law) and priority of the Transaction Security covered thereby subject to no other Security except for Permitted Security or as otherwise permitted by the applicable Transaction Security Document.
(c) Without limitation of clause (a) or (b) above, with respect to Real Property;
(i) if any Obligor acquires, leases or licenses any Real Property after the Listing Date, such Obligor shall promptly provide to the Security Trustee and Agent notice thereof with details as to such Real Property, and within one hundred twenty (120) days thereafter (or such longer period as may be extended by the Agent in its sole discretion), shall work diligently with the Security Trustee and Agent to confirm that all documentation has been prepared, executed and delivered (including third party consents) which is necessary to grant a first- priority perfected Transaction Security on
all such Real Property, including as extracted minerals and fixtures of the Obligors in connection with such Real Property (other than US Excluded Property) in favor of the Security Trustee, including opinions of local counsel in each applicable jurisdiction as to the enforceability of the applicable Mortgages and the authority of the Obligors to grant such Mortgage (including third party consents), with such opinions to be reasonably satisfactory to the Security Trustee and the Agent; provided that, if after such period any Security Consent has not been obtained and Security over the Relevant Asset as contemplated by a Transaction Security Document has not been perfected to the satisfaction of the Agent, then (x) that shall not be an Event of Default or Review Event but the Obligors must continue to use reasonable commercial endeavours to obtain that Security Consent and perfect the Security over that Relevant Asset, and must respond promptly to requests by the Agent for information concerning progress in that regard together with details of the reasonable endeavours undertaken and (y) the Obligors must promptly (and, in any case, no later than 5 Business Days after such period) provide to the Agent sufficient information in reasonable detail about each missing Security Consent to enable the Agent to ascertain the materiality or otherwise of the absence of that or those Security Consents (and it is acknowledged that, in using reasonable commercial endeavours to obtain a Security Consent, no Obligor will be required to pay any fee or pay any other consideration or agree to any commercial change that would be detrimental to any Obligor);
(ii) each Obligor shall, and shall cause each Subsidiary, from time to time, at its expense, to preserve and protect the Security Trustees Security on the Real Property as a continuing first priority perfected Transaction Security, subject only to Permitted Security, and shall do such other acts and things as may be necessary or as the Agent may reasonably deem necessary from time to time in order to preserve, perfect and protect the Security granted under the Transaction Security Documents and to exercise and enforce its rights and remedies thereunder with respect to the Real Property, except to the extent otherwise permitted hereunder; and
(iii) if any portion of any real property that is subject to a Mortgage as required hereunder is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrowers shall, or shall cause each Subsidiary to (i) maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Laws and (ii) deliver to the Agent and Security Trustee evidence of such compliance in form and substance reasonably acceptable to the Agent and Security Trustee. Each Obligor or Subsidiary shall take all actions required under the Flood Laws and/or reasonably requested by the Security Trustee or Agent, to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Transaction Security, including, to the extent applicable, providing the Security Trustee and Agent with the address and/or GPS coordinates of each structure on any real property that will be subject to a Mortgage hereunder, and, to the extent required, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Transaction Security, and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Laws. Parent shall provide the Security Trustee and Agent with at least twenty-five (25) days prior written notice (which such notice shall promptly be furnished to the Lenders) of any Mortgage and that, upon confirmation from the Lenders that flood insurance due diligence has been completed and compliance with the flood insurance requirements set forth in this Agreement, such real property will be pledged as Transaction Security under the Transaction Security Documents.
24.21 Real Property Mortgages
Without limiting Clause 4.5 ( Conditions Subsequent - other ) the Obligors shall, and shall cause each of the Subsidiaries, to work diligently with the Security Trustee and Agent to confirm that all documentation has been prepared, executed and delivered (including third party consents) which is necessary to grant a first-priority perfected Transaction Security on all Real Property, as extracted minerals and fixtures of the Borrowers or applicable Subsidiary (other than US Excluded Property) in favor of the Security Trustee, including opinions of local counsel in each applicable jurisdiction as to the enforceability of the applicable Mortgages and the authority of the Borrowers or the applicable Subsidiary to grant such Mortgage (including third party consents), with such opinions to be reasonably satisfactory to the Security Trustee and the Agent within 120 days after the Listing Date, which date may be extended by the Agent in its reasonable discretion.
25. EVENTS OF DEFAULT
Each of the events or circumstances (whether or not it is within the control of any Obligor) set out in this Clause 25 ( Events of Default ) is an Event of Default save for Clause 25.20 ( Consequences of Event of Default ) and Clause 25.21 ( Cash cover ).
25.1 Non-payment
An Obligor does not pay any amount payable pursuant to a Finance Document on its due date at the place and in the currency in which it is expressed to be payable (except where the failure to pay within that time is solely due to technical difficulties or an administrative error in the banking system and the Obligor pays within 3 Business Days of the due date).
25.2 Financial covenants
Any requirement of Clause 23.1 ( Financial covenants ) is not satisfied when tested in accordance with Clause 23.2 ( Testing of covenants ).
25.3 Other obligations
(a) An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 25.1 ( Non-payment ) and Clause 25.2 ( Financial covenants )) or with any condition of any waiver or consent by a Finance Party under or in connection with any Finance Document.
(b) No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 10 Business Days of the Agent giving notice to the Parent, or the Obligors becoming aware of it, whichever is first.
25.4 Misrepresentation
(a) Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or with the authority of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.
(b) No Event of Default under paragraph (a) above will occur in relation to a representation deemed to be made under the Finance Documents after the first Utilisation Date being incorrect or misleading if the facts or circumstances which caused the representation to be incorrect or misleading are capable of remedy and are remedied within 10 Business Days of the Agent giving notice to the Parent, or the Obligors becoming aware of it, whichever is first.
25.5 Cross default
(a) Any Financial Indebtedness of an Obligor is not paid when due nor within any originally applicable grace period and the obligation to pay is not being diligently defended and disputed in good faith.
(b) Any Financial Indebtedness of an Obligor is declared to be or otherwise becomes due and payable or becomes capable of being declared due and payable prior to its specified maturity as a result of an event of default or review event (however described).
(c) Any commitment for any Financial Indebtedness of an Obligor is cancelled or suspended by a creditor of any of them as a result of an event of default or review event (however described).
(d) No Event of Default will occur under this Clause 25.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (c) above is less than A$20,000,000 (or its equivalent in any other currency or currencies).
25.6 Insolvency
(a) An Obligor is or is presumed or deemed under a law having that effect to be unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.
(b) A moratorium is declared in respect of any indebtedness of any Obligor.
25.7 Insolvency proceedings
Any corporate action is taken or any legal proceedings are commenced or other procedure or step is taken in relation to:
(a) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, judicial management, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor (other than an Obligor formed and incorporated in the United States of America) other than:
(i) a solvent liquidation or reorganisation of an Obligor in respect of which the Agent (acting on the instructions of the Majority Lenders) has provided its prior written consent; or
(ii) an application made to a court for the purposes of winding up such a person which is disputed by the Obligor acting diligently and in good faith and dismissed within 10 Business Days;
(b) any composition, assignment or arrangement with the creditors of any Obligor (excluding a US Obligor);
(c) the appointment of a liquidator, receiver, administrator, judicial manager, administrative receiver, compulsory manager, statutory manager or other similar officer in respect of any Obligor (excluding an Obligor formed and incorporated in the United States of America) or any of its assets other than:
(i) in respect of a solvent liquidation of the Obligor in respect of which the Agent (acting on the instructions of the Majority Lenders) has provided its prior written consent;
(ii) an application made to a court for the purposes of appointing such a person which is disputed by the Obligor acting diligently and in good faith and dismissed within 10 Business Days;
(d) enforcement of any Security over any assets of any Obligor (excluding an Obligor formed and incorporated in the United States of America) with a value of over A$20,000,000 (or its equivalent in any other currency or currencies); or
(e) any analogous event occurs in any jurisdiction.
25.8 US Bankruptcy Procedures
With respect to any Obligor that is a US Person or Material Subsidiary, (1) an involuntary proceeding is commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of such person, or of a substantial part of the property or assets of such person, under the Bankruptcy Law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such person or for a substantial part of its property or assets or (iii) the winding-up or liquidation of such person; and such proceeding or petition is not dismissed or stayed within 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (2) it has (i) voluntarily commenced any proceeding or filed any petition seeking relief under the Bankruptcy Law, (ii) consented to the institution of, or failed to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (1), (iii) applied for or consented to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or for a substantial part of its property or assets, (iv) filed an answer admitting the material allegations of a petition filed against it in any such proceeding; or (3) it admits in writing its inability to pay its debts as and when they become due.
25.9 Creditors process
Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of any Obligor having an aggregate value of A$20,000,000 (or its equivalent in any other currency or currencies) and is not discharged within 10 Business Days.
25.10 Cessation of business
The Group ceases to carry on its business or a material part of it or threatens to do the same.
25.11 Ownership of the Borrowers
A Borrower is not or ceases to be a wholly-owned Subsidiary of the Parent while it is a Borrower under this Agreement.
25.12 Unlawfulness
It is or becomes unlawful for an Obligor to perform any of its payment or other material obligations under the Finance Documents or any Security created or evidenced by the Transaction Security Documents ceases to be effective.
25.13 Authorisation
An Authorisation which is material to the performance by an Obligor of its payment or other material obligations under the Finance Documents, or to the validity and enforceability of the Finance Documents as a whole, or to the rights of the Finance Parties to require payment under this Agreement is repealed, revoked or terminated or expires without renewal.
25.14 Repudiation
An Obligor repudiates a Finance Document or any Security created or evidenced by the Transaction Security Documents or evidences in writing an intention to repudiate a Finance Document or any Security created or evidenced by the Transaction Security Documents.
25.15 Vitiation of Finance Documents; Transaction; Security Documents
A provision of a Finance Document is or becomes or is claimed in writing by a party other than a Finance Party to be wholly or partly invalid, void, voidable or unenforceable in any material respect and that is not rectified by replacement documentation reasonably satisfactory to the Finance Parties within 15 Business Days. Any Transaction Security on a material portion of the Secured Property purported to be created by any Transaction Security Document shall cease to be in full force and effect, or shall cease to give the Security Trustee, for the benefit of the Beneficiaries, the Security, rights, powers and privileges purported to be created and granted under such Transaction Security Document (including a perfected security interest in and Security on all of the Secured Property thereunder (except as otherwise expressly provided in such Transaction Security Document)) in favor of the Security Trustee, or shall be asserted by Parent or any other Obligor not to be a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Transaction Security Document) security interest in or Security on the Secured Property covered thereby.
25.16 Litigation
A litigation, arbitration, proceeding or dispute affecting an Obligor or any of its assets has been formally commenced by initiating process before a court, Governmental Agency, commission or arbitrator, but only where the litigation, arbitration, administrative proceeding or dispute is likely, based on an opinion from a Queens Counsel or Senior Counsel selected by the Agent and jointly instructed by the Agent (on behalf of the Lenders) and the Borrower at the cost of the Borrower, to be determined adversely to the Obligor and if so determined, might have a Material Adverse Effect.
25.17 Material Adverse Effect
An event occurs which has or will have (or a series of events occurs which, together, has or will have) a Material Adverse Effect.
25.18 Tax Consolidation
After the Parent has complied with Clause 4.4 ( Condition subsequent - Tax Consolidation ) and without the prior written consent of all Lenders, an Obligor ceases to be a member of the Tax Consolidated Group formed under the Tax Agreements.
25.19 Events Relating to Plans and Benefit Arrangements
Any of the following occurs, in each case, which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect: (i) any Reportable Event, which could reasonably be expected to constitute grounds for the termination of any Plan by the PBGC or the appointment of a trustee to administer or liquidate any Plan, shall have occurred and be continuing; (ii) proceedings shall have been instituted or other action taken to terminate any Plan, or a termination notice shall have been filed with respect to any Plan; (iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) Parent or any other member of the ERISA Group shall fail to make any contributions when due to a Plan or a Multiemployer Plan, whether or not waived, or fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA; (v) Parent or any other member of the ERISA Group shall withdraw completely or partially from a Multiemployer Plan or a Multiemployer Plan shall be determined to be insolvent (within the meaning of Title IV of ERISA) or in endangered or critical status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA); or (vi) Parent or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Plan.
25.20 Consequences of an Event of Default
(a) Subject to paragraphs (b) and (c) below, on and at any time after the occurrence of an Event of Default which is continuing the Agent may (and shall if so directed by the Majority Lenders), by notice to the Parent and the Borrowers:
(i) cancel the Total Commitments whereupon they shall immediately be cancelled;
(ii) declare that all or part of the Utilisations, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable;
(iii) declare that all or part of the Utilisations be payable on demand, whereupon they shall immediately become payable on demand by the Agent acting on the instructions of the Majority Lenders;
(iv) declare that full cash cover in respect of each Bank Guarantee is immediately due and payable whereupon it shall become immediately due and payable; and/or
(v) exercise or direct the Security Trustee under the Security Trust Deed to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.
(b) In the event of an Event of Default set out under Clause 25.8 ( US Bankruptcy Procedures ), the Commitments that are available to the Borrower shall, if not already cancelled under this Agreement, be immediately and automatically cancelled, and all Utilisations owing by the Borrower, together with accrued interest, and all other amounts accrued under the Finance Documents with respect thereto shall be immediately due and payable, without any declaration, notice or other act by a Finance Party.
(c) In respect of any Hedging Agreement, any action or notice will not be taken or given by the Agent but will only be taken or given by the relevant Finance Party which is a party to such Hedging Agreement.
25.21 Cash cover
The Issuing Bank shall place any cash it receives from a Borrower by way of cash cover into an account in the name of the Borrower (Cash Cover Account) and in respect of which the following conditions must be met:
(a) the account is with the Issuing Bank for which that cash cover is to be provided;
(b) until no amount is or may be outstanding under that Bank Guarantee, the Issuing Bank may apply (including by combination of accounts or set-off) amounts due and payable to it under this Agreement in respect of that Bank Guarantee; and
(c) if the Issuing Bank requests it, the Borrower has executed a security document, in form and substance satisfactory to the Issuing Bank with which that account is held, creating a first ranking security interest over that account.
25.22 Interest on cash cover
(a) Each Issuing Bank must pay interest on the credit balance of each Cash Cover Account held with it at the rate it pays on credit balances held for its good corporate customers for balances equal to the then current balance of the Cash Cover Account.
(b) Interest under this Clause 25.22 accrues daily and is calculated on actual days elapsed and a 365 day year.
(c) Interest under this Clause 25.22 must be credited to each Cash Cover Account on the last day of each calendar month.
(d) Accrued interest under this Clause 25.22 may be applied by the relevant Issuing Bank in accordance with Clause 25.21(b) ( Cash cover ) or otherwise must be paid to the relevant Borrower in accordance with Clause 25.23 ( Termination of cash cover )
25.23 Termination of cash cover
(a) If an Issuing Bank is satisfied that it has no further lability under a Bank Guarantee for which a Borrower has provided cash cover to the Issuing Bank, the relevant Issuing Bank must within 3 Business Days of request by the relevant Borrower permit the relevant Borrower to withdraw an amount equal to the face value of that Bank Guarantee plus any accrued interest in respect of that cash cover from the Cash Cover Account held with that Issuing Bank.
(b) If an Issuing Bank is satisfied that every Bank Guarantee that has been issued by it has been paid in full or discharged, then that Issuing Bank must, if it receives written notice from the relevant Borrower to do so, permit that Borrower to withdraw from the Cash Cover Account held with that Issuing Bank any amount paid to the Issuing Bank by it which has not been, or is not required to be, applied in accordance with Clause 25.21(b) ( Cash cover ).
SECTION 9
CHANGES TO PARTIES
26. CHANGES TO THE LENDERS
26.1 Assignments and novations by the Lenders
Subject to this Clause 26 ( Changes to the Lenders ), a Lender (the Existing Lender ) may:
(a) assign any of its rights; or
(b) novate any of its rights and obligations,
under the Finance Documents to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (including credit derivatives) (the New Lender ).
26.2 Conditions of assignment or novation
(a) The consent of a Borrower is required for an assignment or novation by an Existing Lender, unless the assignment or novation is:
(i) to another Lender or an Affiliate of a Lender; or
(ii) made at a time when an Event of Default or Review Event is continuing; or
(iii) to a securitisation or funding vehicle.
(b) The consent of a Borrower to an assignment or novation must not be unreasonably withheld or delayed or subject to unreasonable conditions. The Borrowers will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused by a Borrower within that time.
(c) An assignment will only be effective:
(i) if the procedure set out in Clause 26.6 ( Procedure for assignment ) is complied with;
(ii) on receipt by the Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties and the other Beneficiaries as it would have been under if it was an Original Lender;
(iii) on performance by the Agent of all necessary know your customer or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender; and
(iv) on receipt by the Agent of confirmation from the Security Trustee that the Security Trustee has performed all necessary know your customer or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender (the receipt of which the Agent shall promptly notify to the Existing Lender and the New Lender) and the New Lender has become bound by a relevant Recognition Certificate.
(d) A novation will only be effective:
(i) if the procedure set out in Clause 26.5 ( Procedure for novation ) is complied with;
(ii) on performance by the Agent of all necessary know your customer or other similar checks under all applicable laws and regulations in relation to such novation to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender; and
(iii) on receipt by the Agent of confirmation from the Security Trustee that the Security Trustee has performed all necessary know your customer or other similar checks under all applicable laws and regulations in relation to such novation to a New Lender (the receipt of which the Agent shall promptly notify to the Existing Lender and the New Lender) and the New Lender has become bound by a relevant Recognition Certificate.
(e) If:
(i) a Lender assigns or novates any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii) as a result of circumstances existing at the date the assignment, novation or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 14 ( Tax Gross Up and Indemnities ) or Clause 16 ( Increased Costs ),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, novation or change had not occurred except to the extent such entitlement to receive a greater payment results from a change in law or regulation that occurs after the assignment or novation. This paragraph (e) shall not apply:
(iii) in respect of an assignment or novation made in the ordinary course of the primary syndication of the Facilities; or
(iv) where the payment is in relation to Australian Withholding Tax and there are at least two Lenders after the assignment, novation or change, and the New Lender, or Lender acting through its new Facility Office, is not an Offshore Associate of the Borrower. In such instances, the New Lender, or Lender acting through its new Facility Office
will be entitled to full payment under Clause 14 ( Tax Gross Up and Indemnities ), subject to Clause 14.4 ( Exclusions ) .
(f) Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the novation or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.
(g) A Lender may not assign or novate any of its rights or obligations under the Finance Documents or change its Facility Office, if the New Lender or the Lender acting through its new Facility Office would be entitled to exercise any rights under Clause 9.1 ( Illegality ) as a result of circumstances existing as at the date the assignment, novation or change is proposed to occur.
26.3 Assignment or novation fee
The New Lender shall, on the date upon which an assignment or novation takes effect, pay to the Agent (for its own account) a fee as notified by the Agent from time to time.
26.4 Limitation of responsibility of Existing Lenders
(a) Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(i) the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(ii) the financial condition of any Obligor or any other person;
(iii) the performance and observance by any Obligor or any other person of its obligations under the Finance Documents or any other documents; or
(iv) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,
and any representations or warranties implied by law are excluded.
(b) Each New Lender confirms to the Existing Lender, the other Finance Parties and the Beneficiaries that it:
(i) has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities and any other person in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities and any other person whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.
(c) Nothing in any Finance Document obliges an Existing Lender to:
(i) accept a novation or re-assignment from a New Lender of any of the rights and obligations assigned or novated under this Clause 26 ( Changes to the Lenders ); or
(ii) support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor or any other person of its obligations under the Finance Documents or otherwise.
26.5 Procedure for novation
(a) Subject to the conditions set out in Clause 26.2 ( Conditions of assignment or novation ) a novation is effected in accordance with paragraph (e) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to paragraphs (b) and (c) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.
(b) The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary know your customer or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.
(c) The Agent may refrain from executing a Transfer Certificate pending satisfaction of Clause 26.2(c)(iii) ( Conditions of assignment or novation ) and acting reasonably, may delay executing a Transfer Certificate pending a payment, distribution or Utilisation under or in respect of the Finance Documents.
(d) Each Party other than the Existing Lender irrevocably authorises the Agent to execute any Transfer Certificate on its behalf.
(e) Subject to Clause 26.9 ( Pro rata interest settlement ), on the Transfer Date:
(i) to the extent that in the Transfer Certificate the Existing Lender seeks to novate its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the Discharged Rights and Obligations );
(ii) each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;
(iii) the Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the novation and to that extent the Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under the Finance Documents;
(iv) the New Lender shall become a Party as a Lender and entitled to the benefits of any other document entered into by the Agent as agent for the Lenders and will be bound by obligations equivalent to the Relevant Obligations (as defined in Clause 26.6(c)(ii) ( Procedure for assignment ) below); and
(v) for the purposes of this Agreement, Commitments, participations in Loans and rights and obligations will be taken to have been transferred under a Transfer Certificate even though it operates as a novation and Commitments, participations in Loans and rights and obligations are replaced rather than transferred.
26.6 Procedure for assignment
(a) Subject to the conditions set out in Clause 26.2 ( Conditions of assignment or novation ) an assignment may be effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and
the New Lender. The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.
(b) The Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary know your customer or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.
(c) Subject to Clause 26.9 ( Pro rata interest settlement ), on the Transfer Date:
(i) the Existing Lender will assign absolutely to the New Lender the rights under the Finance Documents expressed to be the subject of the assignment in the Assignment Agreement;
(ii) the Existing Lender will be released by each Obligor and the other Finance Parties from the obligations owed by it (the Relevant Obligations ) and expressed to be the subject of the release in the Assignment Agreement; and
(iii) the New Lender shall become a Party as a Lender and entitled to the benefits of any other document entered into by the Agent as agent for the Lenders and will be bound by obligations equivalent to the Relevant Obligations.
(d) Lenders may utilise procedures other than those set out in this Clause 26.6 ( Procedure for assignment ) to assign (including by equitable assignment) their rights under the Finance Documents (but not, without the consent of the relevant Obligor or unless in accordance with Clause 26.5 ( Procedure for novation ), to obtain a release by that Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 26.2 ( Conditions of assignment or novation ).
26.7 Copy of Transfer Certificate or Assignment Agreement to Company
The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to a Borrower a copy of that Transfer Certificate or Assignment Agreement.
26.8 Security over Lenders rights
In addition to the other rights provided to Lenders under this Clause 26 ( Changes to the Lenders ), each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including:
(a) any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and
(b) any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,
except that no such charge, assignment or Security shall:
(i) release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or
(ii) require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.
26.9 Pro rata interest settlement
(a) If the Agent has notified the Lenders that it is able to distribute interest payments on a pro rata basis to Existing Lenders and New Lenders then (in respect of any novation pursuant to Clause 26.5 ( Procedure for novation ) or any assignment pursuant to Clause 26.6 ( Procedure for assignment ) the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):
(i) any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date ( Accrued Amounts ) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and
(ii) the rights assigned or novated by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:
(A) when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
(B) the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 26.9 ( Pro rata interest settlement ), have been payable to it on that date, but after deduction of the Accrued Amounts.
(b) In this Clause 26.9 ( Pro rata interest settlement ) references to Interest Period shall be construed to include a reference to any other period for accrual of fees.
(c) An Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 26.9 ( Pro rata interest settlement ) but which does not have a Commitment shall be deemed not to be a Lender for the purposes of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents.
27. CHANGES TO THE OBLIGORS
27.1 Assignments and novation by Obligors
No Obligor may assign any of its rights or novate any of its rights or obligations under the Finance Documents.
27.2 Additional Borrowers
(a) Subject to compliance with the provisions of Clause 22.3 ( Know your client ) the Parent may request that any of its wholly-owned Subsidiaries incorporated in Australia becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if:
(i) all the Lenders approve the addition of that Subsidiary;
(ii) the Parent delivers to the Agent a duly completed and executed Accession Letter;
(iii) unless that Subsidiary is, at that time, an Obligor under the Security Trust Deed, it accedes to the Security Trust Deed as an Additional Obligor by signing and
delivering to the Security Trustee an Accession Deed and any other documents or information required under the Security Trust Deed;
(iv) the Parent confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and
(v) the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 ( Conditions precedent ) in relation to that Additional Borrower, each in form and substance satisfactory to the Agent acting on the instructions of all Lenders.
(b) The Agent shall notify the Parent and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it acting on the instructions of all Lenders) all the documents and other evidence listed in Part II of Schedule 2 ( Conditions precedent ).
(c) The Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever as a result of giving any such notification.
27.3 Resignation of a Borrower
(a) The Parent may request that a Borrower ceases to be a Borrower by delivering to the Agent a Resignation Letter.
(b) The Agent shall accept a Resignation Letter and notify the Parent and the Lenders of its acceptance if:
(i) no Default is continuing or would result from the acceptance of the Resignation Letter (and the Parent has confirmed this is the case); and
(ii) the Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents,
whereupon that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents as a Borrower (and without prejudice to any obligations it may have as a Guarantor).
27.4 Additional Guarantors
(a) Subject to compliance with the provisions of Clause 22.3 ( Know your client ), the Parent may request that any of its wholly-owned] Subsidiaries become an Additional Guarantor. That Subsidiary shall become an Additional Guarantor if:
(i) the Parent delivers to the Agent a duly completed and executed Accession Letter executed as a deed;
(ii) the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 ( Conditions precedent ) in relation to that Additional Guarantor, each in form and substance satisfactory to the Agent acting on the instructions of all Lenders; and
(iii) the relevant Group Member accedes to the Security Trust Deed as an Additional Obligor by signing and delivering to the Security Trustee an Accession Deed and any other documents or information required under the Security Trust Deed.
(b) The Agent shall notify the Parent and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it acting on the instructions of all Lenders) all the documents and other evidence listed in Part II of Schedule 2 ( Conditions precedent ).
(c) The Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever as a result of giving any such notification.
27.5 Repetition of Representations
Delivery of an Accession Letter constitutes confirmation by the relevant Subsidiary that the Repeating Representations are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.
27.6 Resignation of a Guarantor
(a) The Parent may request that a Guarantor (other than a Borrower) ceases to be a Guarantor by delivering to the Agent a Resignation Letter.
(b) The Agent shall accept a Resignation Letter and notify the Parent and the Lenders of its acceptance if:
(i) no Default is continuing or would result from the acceptance of the Resignation Letter (and a Borrower has confirmed this is the case);
(ii) all the Lenders have consented to a Borrowers request,
whereupon that company shall cease to be a Guarantor and shall have no further rights or obligations under the Finance Documents as a Guarantor.
28. RESTRICTION ON DEBT PURCHASE TRANSACTIONS
28.1 Prohibition on Debt Purchase Transactions by Borrower Affiliates
Without limiting Clause 26.2 ( Conditions of assignment or novation ), a Borrower shall not, and shall procure that each Borrower Affiliate shall not, be a Lender or enter into any Debt Purchase Transactions or beneficially own or control all or a material part of the equity of an entity that is a Lender or a party to a Debt Purchase Transaction.
28.2 Disenfranchisement on Debt Purchase Transactions entered into by Borrower Affiliates
(a) Subject to Clause 26.2 ( Conditions of assignment or novation ), for so long as a Borrower Affiliate (i) beneficially owns any participation in a Utilisation drawn utilising a Commitment or (ii) has entered into a Debt Purchase Transaction relating to such a participation or Commitment and such agreement or arrangement has not been terminated:
(i) in ascertaining whether the Majority Lenders, all Lenders or Lenders representing any given percentage of the Total Commitments give a consent, approval, waiver, amendment, instructions or other decision under the Finance Documents such participation and Commitment shall be deemed to be zero; and
(ii) for the purposes of Clause 39.2 ( All Lender matters ), such Borrower Affiliate or the person with whom it has entered into such sub-participation, other agreement or arrangement shall be deemed not to be a Lender (unless it is a Lender with another Commitment and is not a Borrower Affiliate).
(b) Each Lender shall promptly notify the Agent in writing if:
(i) it knowingly enters into a Debt Purchase Transaction with a Borrower Affiliate; or
(ii) such transaction is terminated or ceases to be with a Borrower Affiliate.
(c) Each Borrower Affiliate that is a Lender agrees that:
(i) unless the Agent otherwise agrees, it shall not attend or participate any meeting or conference call of Lenders or be entitled to receive the agenda or any minutes; and
(ii) in its capacity as Lender, unless the Agent otherwise agrees, it shall not be entitled to receive any report or other document prepared at the behest of, or on the instructions of, the Agent or one or more of the Lenders.
SECTION 10
THE FINANCE PARTIES
29. ROLE OF THE AGENT, THE ARRANGER, THE REFERENCE BANKS
29.1 Appointment of the Agent
(a) Each of the Arranger and the Lenders appoints the Agent to act as its agent under and in connection with the Finance Documents. The Agent will be agent for the Arranger and the Lenders except as described in paragraph (d) below.
(b) Each of the Arranger and the Lenders irrevocably appoints the Agent to act as its agent to execute a relevant Recognition Certificate on its behalf, ratifies that execution, and agrees it is therefore bound as set out the Recognition Certificate by the terms set out in the Security Trust Deed.
(c) Each of the Arranger and the Lenders authorises the Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
(d) Where the Agent provides services in connection with the administration of the Utilisations, that is when it calculates rates and amounts, keeps records, receives and distributes payments and information received under Clause 22 ( Information Undertakings ) and Clause 22.4 ( Information: miscellaneous ), and receives and deals with Utilisation Requests and Selection Notices, it does not provide those services as agent for the Arranger or the Lenders, but as principal, but the remainder of this Clause 29 ( Role of the Agent, the Arranger, the Reference Banks ) still applies.
29.2 Instructions
(a) The Agent shall:
(i) unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by:
(A) all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
(B) in all other cases, the Majority Lenders if the relevant Finance Document stipulates the matter is a Majority Lender decision; and
(ii) not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with paragraph (i) above.
(b) The Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Lender or group of Lenders, from that Lender or group of Lenders) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion. The Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
(c) Save in the case of decisions stipulated to be a matter for any other Lender or group of Lenders under the relevant Finance Document and unless a contrary indication appears in a Finance
Document, any instructions given to the Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
(d) The Agent may refrain from acting in accordance with any instructions of any Lender or group of Lenders until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions. The Agent may specify that the security be cash, in which case a Borrower must provide it on request, failing which each Lender must on request pay its proportion of the cash according to its Commitment. Any amount recovered by the Agent under any security will be taken to be an amount paid by the party which provided that security.
(e) In the absence of instructions, the Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.
(f) The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lenders consent) in any legal or arbitration proceedings relating to any Finance Document.
29.3 Duties of the Agent
(a) The Agents duties under the Finance Documents are solely mechanical and administrative in nature.
(b) Subject to paragraph (c) below, the Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
(c) Without prejudice to Clause 26.7 ( Copy of Transfer Certificate or Assignment Agreement to Company ) paragraph (b) above shall not apply to any Transfer Certificate or to any Assignment Agreement.
(d) Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(e) If the Agent receives notice from a Party referring to this Agreement, describing a Default or Review Event and stating that the circumstance described is a Default or Review Event, it shall promptly notify the other Finance Parties.
(f) If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Arranger) under this Agreement it shall promptly notify the other Finance Parties.
(g) The Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
(h) If the Agent receives a request by a Lender, the Agent will provide a privacy notice (in the form recommended by the Asia Pacific Loan Market Association (Australian Branch) or as otherwise directed by a Finance Party) to a representative of the officers of an Obligor whose personal information has been collected on behalf of the Finance Parties, which details the manner in which personal information collected in connection with this Agreement may be used and disclosed by the Finance Parties.
29.4 Role of the Arranger
Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
29.5 No fiduciary duties
(a) Nothing in any Finance Document constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.
(b) None of the Agent, the Security Trustee or the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
29.6 Business with the Group
The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Group Member.
29.7 Rights and discretions; Delegation of Duties
(a) The Agent may:
(i) rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;
(ii) assume that:
(A) any instructions received by it from the Majority Lenders, any Lenders or any group of Lenders are duly given in accordance with the terms of the Finance Documents; and
(B) unless it has received notice of revocation, that those instructions have not been revoked; and
(iii) rely on a written statement from any person:
(A) as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B) to the effect that such person approves of any particular dealing, transaction, step, action or thing,
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that statement.
(b) The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:
(i) no Default or Review Event has occurred (unless it has actual knowledge of a Default);
(ii) any right, power, authority or discretion vested in any Party or any group of Lenders has not been exercised; and
(iii) any notice or request made by a Borrower (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.
(c) The Agent may engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts or professional advisers.
(d) Without prejudice to the generality of paragraph (c) above or paragraph (e) below, the Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Agent (and so separate from any lawyers instructed by the Lenders) if the Agent in its reasonable opinion deems this to be necessary.
(e) The Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
(f) The Agent may act in relation to the Finance Documents through its officers, employees, secondees and agents.
(g) Unless a Finance Document expressly provides otherwise the Agent may disclose to any other Party any information it reasonably believes it has received as Agent under this Agreement.
(h) Without limiting paragraph (g) above, the Agent may disclose the identity of a Defaulting Finance Party to the other Finance Parties and a Borrower and shall disclose it on the written request of a Borrower or the Majority Lenders.
(i) Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
(j) Notwithstanding any provision of any Finance Document to the contrary, the Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
(k) The Parties need not enquire whether any instructions from all or a percentage of Lenders or the Majority Lenders have been given to the Agent or as to the terms of those instructions. As between the other Parties on the one hand and the Agent and Lenders on the other, everything done by the Agent under or in relation to the Finance Documents will be taken to be authorised.
29.8 Responsibility for documentation
Neither the Agent nor the Arranger is responsible or liable for:
(a) the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document; or
(b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document; or
(c) any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
29.9 No duty to monitor
The Agent shall not be bound to enquire:
(a) whether or not any Default or Review Event has occurred;
(b) as to the performance, default or any breach by any Party of its obligations under any Finance Document or any other agreement, arrangement or document; or
(c) whether any other event specified in any Finance Document has occurred.
29.10 Exclusion of liability
(a) Without limiting paragraph (b) below (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Agent), the Agent will not be liable for:
(i) any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct;
(ii) exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document, other than by reason of its gross negligence or wilful misconduct; or
(iii) without prejudice to the generality of paragraphs (i) and (ii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever (but not including any claim based on the fraud of the Agent) arising as a result of:
(A) any act, event or circumstance not reasonably within its control; or
(B) the general risks of investment in, or the holding of assets in, any jurisdiction,
including (in each case and without limitation) such damages, costs, losses to any person, any diminution in value or any liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b) No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause 29.10 ( Exclusion of liability ).
(c) The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised dealing or settlement system used by the Agent for that purpose.
(d) Nothing in this Agreement shall oblige the Agent or the Arranger to carry out:
(i) any know your customer or other checks in relation to any person; or
(ii) any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender or for any Affiliate of any Lender,
on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger.
(e) Without prejudice to any provision of any Finance Document excluding or limiting the Agents liability, any liability of the Agent arising under or in connection with any Finance Document shall be limited to the amount of actual loss which has been suffered (as determined by reference to the date of default of the Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent at any time which increase the amount of that loss. In no event shall the Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent has been advised of the possibility of such loss or damages.
29.11 Lenders indemnity to the Agent
(a) Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three Business Days of demand, against any cost, expense, loss or liability incurred by the Agent (otherwise than by reason of the Agents gross negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document).
(b) A Lenders share will be the proportion of its share of the Total Commitments or, if the Total Commitments are then zero, its share of the Total Commitments immediately prior to their reduction to zero. Where a Lenders Commitment has been reduced to zero, but it has a participation in any outstanding Utilisations, then for this purpose its Commitment will be taken to be the aggregate amount of its participation (and the Total Commitments calculated accordingly).
(c) If any Lender fails to pay its share of any amount due under paragraph (a) one or more other Lenders may pay all or part of that share to the Agent. In that case, the defaulting Lender must immediately pay each such paying Lender the amount paid by that paying Lender together with interest equal to the rate from time to time certified by the paying Lender to be its cost of funds plus a margin of 2% per annum, compounding monthly.
(d) If any Lender fails to provide its share of security to the Agent when requested under Clause 29.7 ( Rights and discretions ) one or more other Lenders may provide all or part of that share on its behalf. Where that security is cash the non providing Lender must immediately pay each Lender that provided cash the amount provided by it together with interest equal to its cost of funds plus a margin of 2% per annum, compounding monthly.
29.12 Resignation of the Agent
(a) The Agent may resign and appoint one of its Affiliates acting through an office in Australia as successor by giving notice to the Lenders and a Borrower.
(b) Alternatively the Agent may resign by giving 30 days notice to the Lenders and a Borrower, in which case the Majority Lenders (after consultation with a Borrower) may appoint a successor Agent.
(c) If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Agent (after consultation with a Borrower) may appoint a successor Agent (acting through an office in the same time zone as Australia).
(d) If the Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Agent is entitled to appoint a successor Agent under paragraph (c) above, the Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Agent to become a party to this Agreement as Agent) agree with the proposed successor Agent amendments to this Clause 29 ( Role of the Agent, the Arranger, the Reference Banks) and any other term of this Agreement dealing with the rights or obligations of the Agent consistent with then current market practice for the
appointment and protection of agents of syndicated financing transactions together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Agents normal fee rates and those amendments will bind the Parties.
(e) The retiring Agent shall make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. The Borrowers shall, within three Business Days of demand, reimburse the retiring Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance save for where the Agent is a Defaulting Finance Party.
(f) The Agents resignation notice shall only take effect upon the appointment of a successor.
(g) Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (e) above) but shall remain entitled to the benefit of this Clause 30 ( Conduct of Business by the Finance Parties ) (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(h) After consultation with a Borrower, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above. In this event, the Agent shall resign in accordance with paragraph (b) above (or, at any time the Agent is a Defaulting Finance Party, by giving any shorter notice determined by the Majority Lenders).
(i) The Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to paragraph (c) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:
(i) the Agent fails to respond to a request under Clause 14.8 ( FATCA Information ) and a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
(ii) the information supplied by the Agent pursuant to Clause 14.8 ( FATCA Information ) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or
(iii) the Agent notifies a Borrower and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and a Borrower or that Lender, by notice to the Agent, requires it to resign.
29.13 Confidentiality
(a) In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b) If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.
29.14 Relationship with the Lenders
(a) Subject to Clause 26.9 ( Pro rata interest settlement ), the Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Agents principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:
(i) entitled to or liable for any payment due under any Finance Document on that day; and
(ii) entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,
unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b) Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 35.2 ( Addresses ) and the Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
(c) The Agent may rely on or receive instructions from any attorney acting on behalf of a Lender, or any person acting on behalf of a Lender whose title or acting title includes the word Manager, Head, Executive, Director or President or cognate expressions, or any secretary or director of a Lender.
29.15 Credit appraisal by the Lenders
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:
(a) the financial condition, status and nature of each Group Member;
(b) the legality, validity, priority, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document;
(c) whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document; and
(d) the adequacy, accuracy or completeness of any information provided by the Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by any Finance Documents or any other agreement, arrangement or document.
29.16 Role of Reference Banks
(a) No Reference Bank is under any obligation to provide a quotation or any other information to the Agent.
(b) No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any Reference Bank Quotation, unless directly caused by its gross negligence or wilful misconduct.
(c) No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it may have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any Reference Bank Quotation.
(d) Any officer, employee or agent of each Reference Bank may rely on this Clause 29.16 ( Role of Reference Banks ). The Reference Bank holds the benefit of this Clause on trust for any such officer, employee or agent.
29.17 Third party Reference Banks
This Agreement constitutes an irrevocable offer by each Party to each Reference Bank, which accepts the offer by consenting to be a Reference Bank and providing a Reference Bank Quotation. It may rely on Clause 29.16 ( Role of Reference Banks ) and Clause 43 ( Confidentiality of Funding Rates and. Reference Bank Quotations ).
29.18 Agents management time
Any amount payable to the Agent under Clause 19 ( Costs and Expenses ) and Clause 29.11 ( Lenders indemnity to the Agent ) shall include the cost of utilising the Agents management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to a Borrower and the Lenders, and is in addition to any fee paid or payable to the Agent under Clause 13 ( Fees ).
29.19 Deduction from amounts payable by the Agent
If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
30. CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a) interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b) oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c) oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
31. SHARING AMONG THE FINANCE PARTIES
31.1 Payments to Finance Parties
(a) If a Finance Party (a Recovering Finance Party ) receives or recovers (including by combination of accounts or set off) any amount from an Obligor other than in accordance with Clause 33 ( Payment Mechanics ) and applies that amount to a payment due under the Finance Documents then:
(i) the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;
(ii) the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 33 ( Payment Mechanics ), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and
(iii) the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the Sharing Payment ) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 33.6 ( Partial payments ).
(b) Paragraph (a) above:
(i) shall not apply to any amount received or recovered by the Issuing Bank and applied by it towards any amount then payable to it by way of the provision of cash cover (which has been provided to the Issuing Bank in accordance with the Finance Documents) or otherwise in respect of a Bank Guarantee at any time when receipts and recoveries by the Finance Parties are sufficient to discharge all amounts then due and payable under the Finance Documents; and
(ii) shall apply to any amount received or recovered by the Issuing Bank and applied by it towards any amount then payable to it by way of the provision of cash cover or otherwise in respect of a Bank Guarantee at any time when receipts and recoveries by the Finance Parties are not sufficient to discharge all amounts then due and payable under the Finance Documents; and
(iii) shall not apply to any application by the Issuing Bank under Clause 25.1 ( Cash cover ) of cash cover which has been provided to the Issuing Bank in accordance with the Finance Documents.
31.2 Redistribution of payments
The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties ) in accordance with Clause 33.6 ( Partial payments ) towards the obligations of that Obligor to the Sharing Finance Parties.
31.3 Recovering Finance Partys rights
(a) Unless paragraph (b) applies:
(i) the receipt or recovery referred to in Clause 31.1 ( Payments to Finance Parties ) will be taken to have been a payment for the account of the Agent and not to the Recovering Finance Party for its own account, and the liability of the relevant Obligor to the Recovering Finance Party will only be reduced to the extent of any distribution retained by the Recovering Finance Party under Clause 31.1(a)(iii) ( Payments to Finance Parties ); and
(ii) (without limiting sub-paragraph (i)) the relevant Obligor shall indemnify the Recovering Finance Party against a payment under Clause 31.1(a)(iii) ( Payments to Finance Parties ) to the extent that (despite sub-paragraph (i)) its liability has been discharged by the recovery or payment.
(b) Where:
(i) the amount referred to in Clause 31.1 ( Payments to Finance Parties ) above was received or recovered otherwise than by payment (for example, set off); and
(ii) the relevant Obligor, or the person from whom the receipt or recovery is made, is insolvent at the time of the receipt or recovery, or at the time of the payment to the Agent, or becomes insolvent as a result of the receipt or recovery,
then the following will apply so that the Finance Parties have the same rights and obligations as if the money had been paid by the relevant Obligor to the Agent for the account of the Finance Parties and distributed accordingly:
(iii) each other Finance Party will assign to the Recovering Finance Party an amount of the debt owed by the relevant Obligor to that Finance Party under the Finance Documents equal to the amount received by that Finance Party under Clause 31.2 ( Redistribution of payments );
(iv) the Recovering Finance Party will be entitled to all rights (including interest and voting rights) under the Finance Documents in respect of the debt so assigned; and
(v) that assignment will take effect automatically on payment of the Sharing Payment by the Agent to the other Finance Party.
31.4 Reversal of redistribution
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a) each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount );
(b) as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor and the relevant Obligor shall indemnify the Sharing Finance Party against a payment under sub-paragraph (a) to the extent that the relevant Obligors liability has been discharged by the recovery or payment; and
(c) to the extent necessary, any debt assigned under paragraph (b) of Clause 31.3 ( Recovering Finance Pattys rights ) will be reassigned.
31.5 Exceptions
(a) This Clause 31 ( Sharing among the Finance Parties ) shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause 31 ( Sharing among the Finance Parties ), have a valid and enforceable claim (or right of proof in an administration) against the relevant Obligor.
(b) A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:
(i) it notified that other Finance Party of the legal or arbitration proceedings; and
(ii) that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.
32. PUBLIC OFFER
32.1 Arrangers representations, warranties and undertakings
The Arranger undertakes, represents and warrants to the Borrower as follows:
(a) on behalf of the Borrowers it will make before the 30 th day after the date of this Agreement invitations to become a Lender under this Agreement:
(i) in the form agreed with the Borrowers to at least ten parties, each of whom, as at the date the relevant invitation is made, the Arrangers relevant officers involved in the transaction on a day to day basis believe carries on the business of providing finance or investing or dealing in securities in the course of operating in financial markets, for the purposes of Section 128F(3A)(a)(i) of the Tax Act, and each of whom has been disclosed to the Borrowers; or
(ii) in an electronic form that is used by financial markets for dealing in debentures (as defined in Section 128F(9) of the Tax Act) or debt interests (as defined in Sections 974-15 and 974-20 of the Tax Act) such as Reuters or Bloomberg.
(b) At least 10 of the parties to whom the Arranger will make invitations referred to in paragraph (a)(i) are not, as at the date the invitations are made, to the knowledge of the relevant officers of the Arranger involved in the transaction, Associates of any of the others of those 10 offerees/the Arranger.
(c) It has not made and will not make offers or invitations referred to in paragraph (a)(i) to parties whom its relevant officers involved in the transaction on a day to day basis are aware are Offshore Associates of the relevant Borrower.
32.2 Borrowers confirmation
(a) Each Borrower confirms that none of the potential offerees whose names were disclosed to it by the Arranger before the date of this Agreement were known or suspected by it to be an Offshore Associate of that Borrower or an Associate of any other such offeree.
(b) It will immediately advise the Arranger or the Agent if the potential offerees disclosed to it by the Arranger or the Agent are known or suspected by it to be an Offshore Associate of that Borrower or an Associate of any other offeree.
32.3 Lenders representations and warranties
Each Lender represents and warrants to each Borrower that if it received an invitation under Clause 32.1(a)(i) at the time it received the invitation it was carrying on the business of providing finance, or investing or dealing in securities, in the course of operating in financial markets.
32.4 Information
Each of the Arranger and each Lender will provide to the Company when reasonably requested by. the Company any factual information in its possession or which it is reasonably able to provide to assist the Company to demonstrate (based upon tax advice received by the Company) that Section 128F of the Tax Act has been satisfied where to do so will not in the Arrangers or Lenders reasonable opinion breach any law or regulation or any duty of confidence.
32.5 Co-operation if Section 128F requirements not satisfied
If, for any reason, the requirements of Section 128F of the Tax Act have not been satisfied in relation to interest payable on Loans (except to an Offshore Associate of a Borrower), then on request by the Agent, the Arranger or a Borrower, each Party shall co-operate and take steps reasonably requested with a view to satisfying those requirements:
(a) where a Finance Party breached Clause 32.1 ( Arrangers representations, warranties and undertakings ) or Clause 32.3 ( Lenders representations and warranties ), at the cost of that Finance Party; or
(b) in all other cases, at the cost of the Borrowers.
SECTION 11
ADMINISTRATION
33. PAYMENT MECHANICS
33.1 Payments to the Agent
(a) On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time in immediately available funds or if agreed by the Agent in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(b) Payment shall be made to such account:
(i) in the case of Australian dollars, at the city of the Agent; or
(ii) in the case of any other currency, in the principal financial centre of the country of that currency,
with such bank as the Agent, in each case, specifies.
(c) Payment by an Obligor to the Agent for the account of a Finance Party satisfies the Obligors obligations to make that payment.
33.2 Distributions by the Agent
Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 33.3 ( Distributions to an Obligor ) and Clause 33.4 ( Clawback and pre- funding ) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days notice with a bank specified by that Party in Australia, in the case of Australian dollars, and, in the case of any other currency in the principal financial centre of the country of that currency.
33.3 Distributions to an Obligor
The Agent may (with the consent of the Obligor or in accordance with Clause 34 ( Set-Off )) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
33.4 Clawback and pre-funding
(a) Where a sum is to be paid by a Party (the Payer) to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b) Unless paragraph (c) below applies, if the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on
demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.
(c) If the Agent has notified the Lenders that it] is willing to make available amounts for the account of a Borrower before receiving funds from the Lenders then if and to the extent that the Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to a Borrower:
(i) the Agent shall notify a Borrower of that Lenders identity and the Borrower to whom that sum was made available shall on demand refund it to the Agent; and
(ii) the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrower to whom that sum was made available, shall on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.
(d) The Payer will still remain liable to make the assumed payment, but until the other Party does repay the Agent under paragraph (b), the Payers liability will be to the Agent in the Agents own right.
33.5 Agent a Defaulting Finance Party
(a) If, at any time, the Agent becomes Defaulting Finance Party, a Party which is required to make a payment under the Finance Documents to the Agent for the account of other Parties under Clause 33.1 ( Payments to the Agent ) may instead on the due date for payment either pay that amount direct to the required payee or pay that amount to an interest-bearing account held in the name of the payer and designated as a trust account for the benefit of the payee or payees with an Acceptable Bank.
(b) All interest accrued on the trust account will be for the benefit of the beneficiaries of that trust account pro rata to their respective entitlements.
(c) A Party which has made a payment under paragraph (a) shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts in the trust account.
(d) Promptly upon the appointment of a successor Agent under Clause 29.12 ( Resignation of the Agent ), each Party which has made a payment to a trust account under paragraph (a) shall give all requisite instructions to the bank to transfer the amount (together with any accrued interest) to the successor Agent for distribution under Clause 33.2 ( Distributions by the Agent ).
33.6 Partial payments
(a) If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:
(i) first, in or towards payment pro rata of any amounts payable but unpaid in respect of fees, costs, expenses, losses or liabilities of the Agent under the Finance Documents or the Security Trustee under the Finance Documents;
(ii) secondly, in or towards payment pro rata of all amounts (including interest) payable by the Obligor to Lenders in respect of amounts or security paid or provided by the Lenders to the Agent in place of another Lender under Clause 29.11 (c) or 29.11 (d) ( Lenders indemnity to the Agent );
(iii) thirdly, in or towards payment pro rata of all amounts payable by the Obligor to Lenders in respect of amounts or security paid by the Lenders to the Agent under
Clause 29.11(a) ( Lenders indemnity to the Agent ) or Clause 29.2 ( Instructions ) plus interest on such amounts;
(iv) fourthly, in or towards payment pro rata of any accrued interest, fees or commission due but unpaid under the Finance Documents;
(v) fifthly, in or towards payment pro rata of any principal due but unpaid under those Finance Documents; and
(vi) sixthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.
(b) The Agent shall, if so directed by all Lenders, vary the order set out in paragraphs (a)(ii) to (a)(vi) above inclusive.
(c) Paragraphs (a) and (b) above will override any appropriation made by an Obligor.
33.7 No set-off by Obligors
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
33.8 Business Days
(a) Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
33.9 Currency of account
(a) Subject to paragraphs (b) to (e) below, Australian dollars is the currency of account and payment for any sum due from or payable by an Obligor under any Finance Document.
(b) A repayment or prepayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated, pursuant to this Agreement, on its due date.
(c) Each payment of interest or fees shall be made in the currency in which the sum in respect of which the interest is payable was denominated, pursuant to this Agreement, when that interest accrued.
(d) Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e) Any amount expressed to be payable in a currency other than Australian dollars shall be paid in that other currency.
33.10 Change of currency
(a) Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:
(i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with a Borrower); and
(ii) any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).
(b) If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with a Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Market and otherwise to reflect the change in currency.
33.11 Anti-money laundering
(a) A Finance Party may delay, block or refuse to process any payment or other transaction without incurring any liability if the Finance Party knows or reasonably suspects that the transaction or the application of its proceeds will:
(i) breach, or cause a Finance Party to breach, any applicable laws or regulations of any jurisdiction (including any Sanctions); or
(ii) allow the imposition of any penalty on the Finance Party or its Affiliates under any such law or regulation,
including where the transaction or the application of its proceeds involves any Sanctioned Person or Sanctioned Country, or the direct or indirect proceeds of unlawful activity.
(b) As soon as practicable after a Finance Party becomes aware that it will delay, block or refuse to process a transaction under paragraph (a), it will notify a Borrower and the Agent and consult in good faith but in each case only to the extent the Finance Party determines it is legally permitted to do so. In making that determination the Finance Party shall act reasonably.
(c) The Borrowers shall promptly advise the Agent if any Obligor enters into any Finance Document in the capacity as agent and promptly supply, or procure the supply of, such information as may be reasonably requested by the Agent (for itself or on behalf of any Finance Party) from time to time in relation to any principal for which an Obligor may be acting.
(d) Each Obligor undertakes to exercise its rights and perform its obligations under the Finance Documents in accordance with all Money Laundering Laws and applicable Sanctions.
33.12 Know your customer
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary know your customer or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
Each Finance Party that is subject to the requirements of the USA PATRIOT Act hereby notifies the Borrowers that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Finance Party to identify the Borrowers in accordance with the USA PATRIOT Act.
34. SET-OFF
A Finance Party may, but need not, set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any obligation owed by that Finance Party to that Obligor (whether or not matured), regardless of the place of payment, booking
branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
35. NOTICES
35.1 Communications in writing
Any communication or document to be made or delivered under or in connection with the Finance Documents:
(a) must be in writing;
(b) in the case of:
(i) a notice by an Obligor; or
(ii) a specification of a bank or account by the Agent under paragraph (b) of Clause 33.1 ( Payments to the Agent ) or a Lender under Clause 33.2 ( Distributions by the Agent ),
must be signed by an authorised signatory of the sender (directly or with a facsimile signature), subject to Clause 35.6 ( Email communication ), Clause 35.7 ( Communication through secure website ) and Clause 35.8 ( Reliance ), and
(c) unless otherwise stated, may be made or delivered by fax, by letter, by email or as specified in Clause 35.7 ( Communication through secure website ).
35.2 Addresses
The address, email address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:
(a) in the case of a Borrower, that identified with its name below;
(b) in the case of each Lender or any other Original Obligor, that specified in Schedule 1 ( The Original Parties ) or notified in writing to the Agent on or prior to the date on which it becomes a Party; and
(c) in the case of the Agent, that identified with its name below,
or any substitute address, fax number, email address or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days notice.
Address for service of communications:
Agent:
Level 3, 275 Kent Street
SYDNEY NSW 2000
Australia
**
Attn: Ruby Gacosta
**
Administrative Contact:
Level 9, 55 Market Street
SYDNEY NSW 2000
Australia
**
Attn: Lending Management Operations
**
Company:
Central Plaza 1, Level 31
345 Queen Street, Brisbane, Queensland, 4000
Attention: Ayten Saridas, Group Chief Financial Officer
**
35.3 Delivery
(a) Any communication or document to be made or delivered by one Party to another under or in connection with the Finance Documents will be taken to be effective or delivered:
(i) if by way of fax, when the sender receives a successful transmission report unless the recipient informs the sender that it has not been received in legible form by any means within two hours after:
(A) receipt, if in business hours in the city of the recipient; or
(B) if not, the next opening of business in the city of the recipient; or
(ii) if by way of letter or any physical communication, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or
(iii) if by way of email, as specified in Clause 35.6 ( Email communication ); or
(iv) if it complies with Clause 35.7 ( Communication through secure website )],
and, in the case of a communication, if a particular department or officer is specified as part of its address details provided under Clause 35.2 ( Addresses ), if addressed to that department or officer.
(b) All communication to or from an Obligor must be sent through the Agent.
(c) Any communication or document made or delivered to a Borrower in accordance with this Clause 35 ( Notices ) will be deemed to have been made or delivered to each of the Obligors.
(d) A communication by fax, email or under Clause 35.7 ( Communication through secure website ) after business hours in the city of the recipient will be taken not to have been received until the next opening of business in the city of the recipient.
35.4 Notification of address, fax number and email address
Promptly upon receipt of notification of an address, fax number and email address or change of address, fax number or email address of an Obligor under Clause 35.2 ( Addresses ) or upon changing its own address, fax number or email address, the Agent shall notify the other Parties.
35.5 Communication when Agent is a Defaulting Finance Party
If and so long as the Agent is a Defaulting Finance Party, the Parties may, instead of communicating with each other through the Agent, communicate with each other directly and all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Agent are varied so that communications may be made and notices given to or by the relevant Parties directly.
35.6 Email communication
(a) Any communication or document under or in connection with the Finance Documents may be made by or attached to an email and will be effective or delivered only:
(i) in the case of a notice to the Agent of a Default, Review Event or Event of Default or a notice to the Agent under or referred to in Clause 9.8 ( Review Event ) or Clause 24.17 ( Event of Default ), when actually opened in legible format by the recipient Party;
(ii) in all other cases, on the first to occur of the following:
(A) when it is dispatched by the sender to each of the email addresses specified by the recipient, unless for each of the addresses, the sender receives an automatic notification that the e-mail has not been received (other than an out of office greeting for the named addressee) and it receives the notification before 2 hours after the last to occur (for all addresses) of:
(1) dispatch, if in business hours in the city of the address; or
(2) if not, the next opening of business in such city;
(B) the sender receiving a message from the intended recipients information system confirming delivery of the email; and
(C) the email being available to be read at one of the email addresses specified by the sender; and
(iii) the email is in an appropriate and commonly used format, and any attached file is a pdf, jpeg, tiff or other appropriate and commonly used format.
(b) In relation to an email with attached files:
(i) if the attached files are more than 3 MB in total, then:
(A) at the time of dispatch the giver of the e-mail must send a separate email without attachments notifying the recipient of the dispatch of the email; and
(B) if the recipient notifies the sender that it did not receive the email with attached files, and the maximum size that is able to receive under its firewalls, then the sender shall promptly send to the recipient the attached files in a manner that can be received by the recipient; and
(ii) if the recipient of the email notifies the sender that it is unable to read the format of an attached file or that an attached file is corrupted, specifying appropriate and commonly used formats that it is able to read, the sender must promptly send to the recipient the file in one of those formats or send the attachment in some other manner; and
(iii) if within two hours of:
(A) dispatch of the email if in business hours in the city of the recipient; or
(B) if not, the next opening of business in the city of the recipient,
the recipient notifies the sender as provided in subparagraph (i)(B) or (ii), then the relevant attached files will be taken not to have been received until the sender complies with that subparagraph.
(c) An email which is a covering email for a notice signed by the Obligors authorised signatory does not itself need to be signed by an authorised signatory.
(d) Email and other electronic notices from the Agent generated by Loan IQ or other system software do not need to be signed.
35.7 Communication through secure website
(a) The Agent may establish a secure website to which access is restricted to the Agent and the Lenders or the Obligors or both (and, where applicable, their respective financial and legal advisers).
(b) After the Agent notifies the Lenders or a Borrower on behalf of the Obligors or both (as the case may be) of the establishment of the secure website, then any communication or document given or delivered by or to the Agent to or by Lenders or Obligors (as the case may be) any specified by the Agent],
(i) may be given by means of the secure website in the manner specified by the Agent (or in the absence of such specification, as specified by the operator of the website); and
(ii) unless otherwise agreed will be taken to be made or delivered upon satisfaction of the following:
(A) a communication or document being posted on that secure website;
(B) either:
(1) receipt by the Agent of an email from the relevant website confirming that the website has sent an email to the relevant Partys email addresses nominated under paragraph (d) notifying that a communication or document has been uploaded on the website; or
(2) the website containing or providing confirmation that the communication or document has been opened by the intended recipient; and
(C) compliance with any other requirements specified by the Agent under paragraph (c).
(c) By notice to the Lenders or a Borrower on behalf of the Obligors or both (as the case may be) the Agent acting reasonably may from time to time specify and amend rules concerning the operation of the secure website in the manner in which communications or documents may be
posted, and will be taken to have been made or delivered. Those rules or moments will bind the recipients of the notice and the Agent.
(d) When it establishes the secure website, the Agent shall nominate to the website for each Party the email address given to it by the Party under this Clause 35 ( Notices ). Subsequently, the nominated email address for each Party for that website will be the address nominated by that Party to the secure website or by the Agent (who will notify the Party accordingly). The Agent shall notify the website of changes in email addresses notified to it.
(e) The Borrowers consents to the inclusion in the secure website of its company logo.
(f) Each of the other Parties agrees that the Agent is not liable for any liability, loss, damage, costs or expenses incurred or suffered by them as a result of their access or use of the secure website or inability to access or use the secure website except to the extent caused by its gross negligence or wilful misconduct.
35.8 Reliance
(a) Any communication or document sent under this Clause 35 ( Notices ) can be relied on by the recipient if the recipient reasonably believes it to be genuine and (if such a signature is required under Clause 35.1(b) ( Communications in writing ) it bears what appears to be the signature (original or facsimile or email) of an authorised signatory of the sender (without the need for further enquiry or confirmation).
(b) Each Party must take reasonable care to ensure that no forged, false or unauthorised notices are sent to another Party.
35.9 English language
(a) Any notice or other communication given under or in connection with any Finance Document must be in English.
(b) All other documents provided under or in connection with any Finance Document must be:
(i) in English; or
(ii) if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
36. CALCULATIONS AND CERTIFICATES
36.1 Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
36.2 Certificates and Determinations
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
36.3 Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 days or, in any case where the practice in the Relevant Market differs, in accordance with that market practice.
36.4 Settlement conditional
If:
(a) any Finance Party has at any time released or discharged:
(i) an Obligor from its obligations under any Finance Document; or
(ii) any assets of an Obligor from a Security,
in either case in reliance on a payment, receipt or other transaction to or in favour of any Finance Party; or
(b) any payment, receipt or other transaction to or in favour of any Finance Party has the effect of releasing or discharging:
(i) an Obligor from its obligations under any Finance Document; or
(ii) any assets of an Obligor from a Security; and
(c) that payment, receipt or other transaction is subsequently claimed by any person to be void, voidable or capable of being set aside for any reason (including under any law relating to insolvency, sequestration, liquidation, winding up or bankruptcy and any provision of any agreement, arrangement or scheme, formal or informal, relating to the administration of any of the assets of any person); and
(d) that claim is upheld or is conceded or compromised by a Finance Party,
then:
(i) each Finance Party will immediately become entitled against that Obligor to all rights (including under any Finance Document) as it had immediately before that release or discharge;
(ii) that Obligor must, to the extent permitted by law:
(A) immediately do all things and execute all documents as any Finance Party may, acting reasonably, require to restore to each Finance Party all those rights; and
(B) indemnify each Finance Party against all costs and losses suffered or incurred by it in or in connection with any negotiations or proceedings relating to the claim or as a result of the upholding, concession or compromise of the claim.
37. PARTIAL INVALIDITY
If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
38. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any of the Finance Documents. No election to affirm any Finance Document on the part of any Finance Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and
remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
39. AMENDMENTS AND WAIVERS
39.1 Required consents
(a) Subject to Clause 39.2 ( All Lender matters ) and Clause 39.3 ( Other exceptions ) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.
(b) The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 39 ( Amendments and Waivers ).
(c) Paragraph (c) of Clause 26.9 ( Pro rata interest settlement ) shall apply to this Clause 39.
39.2 All Lender matters
(a) Subject to Clause 39.4 ( Replacement of Screen Rate ) an amendment or waiver of any term of any Finance Document that has the effect of changing or which relates to:
(i) the definition of Majority Lenders in Clause 1.1 ( Definitions );
(ii) a waiver of any of the conditions precedent under Clause 4.1 ( Initial conditions precedent );
(iii) an extension to the date of payment of any amount under the Finance Documents;
(iv) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable or any other payment obligation;
(v) an increase in any Commitment, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments of the Lenders rateably under the relevant Facility;
(vi) a change to the Borrowers or Guarantors other than in accordance with Clause 27 ( Changes to the Obligors );
(vii) any provision which expressly requires the consent of all the Lenders;
(viii) Clause 2.2 (Finance Parties rights and obligations), Clause 5.1 (Utilising Facility A), Clause 9.1 (Illegality), Clause 9.8 (Review Event), Clause 26 (Changes to the Lenders), Clause 27 (Changes to the Obligors), Clause 31 (Sharing among the Finance Parties), Clause 33.6 (Partial payments), this Clause 39 (Amendments and Waivers), Clause 47 (Governing Law) or Clause 48.1 (Jurisdiction);
(ix) (other than as expressly permitted by the provisions of this Agreement or the Security Trust Deed):
(A) the nature or scope of the Transaction Security or the nature or scope of the guarantee and indemnity granted under Clause 20 ( Guarantee ); or
(B) the Secured Property; or
(C) the manner in which the proceeds of enforcement of the Transaction Security are distributed; or
(x) the release of any guarantee and indemnity granted under Clause 20 ( Guarantee ) or of any Transaction Security unless permitted under this Agreement or the Security Trust
Deed or relating to a disposal of an asset which is the subject of the Transaction Security, or of the grantor of the guarantee and indemnity or Transaction Security or of the grantors Holding Company, where such disposal is permitted under this Agreement,
shall not be made without the prior consent of all the Lenders.
(b) Where one or more Defaulting Finance Parties have been disenfranchised under Clause 40.4 ( Failure to respond ), no amendment of the kind referred to in paragraph (a) which applies to Defaulting Finance Parties in a manner different from other Finance Parties may be made without the consent of the Defaulting Finance Parties.
39.3 Other exceptions
An amendment or waiver which relates to the rights or obligations of the Agent or the Arranger or the Security Trustee (each in their capacity as such) may not be effected without the consent of the Agent or, as the case may be, the Arranger, or the Security Trustee.
39.4 Replacement of Screen Rate
Subject to Clause 39.3 ( Other exceptions ), if any Screen Rate is not available for a currency which can be selected for a Loan, any amendment or waiver which relates to providing for another benchmark rate to apply in relation to that currency in place of that Screen Rate (or which relates to aligning any provision of a Finance Document to the use of that other benchmark rate) may be made with the consent of the Majority Lenders and the Obligors.
40. INSTRUCTIONS AND DECISIONS
40.1 Abstentions
In determining whether the Majority Lenders, have given instructions or a consent, approval, waiver, amendment or other decision, a Lender will be deemed to have Commitments or a participation of zero if it has so elected by notice to the Agent.
40.2 Transferees bound
A consent, approval, waiver, amendment or other decision by a Lender or any instruction to the Agent by a Lender binds that Lenders assigns and successors unless revoked under Clause 40.3 ( Limitations on revocation ).
40.3 Limitations on revocation
Any instructions, consent, approval, waiver, amendment or other decision by the Majority Lenders may be revoked only by the Majority Lenders, and may not be revoked if the decision has been acted upon.
40.4 Failure to respond
If any Lender fails to respond to a request for instructions, consent, approval, waiver, amendment or other decision in relation to any Finance Document within 15 Business Days of that request (or any longer period agreed by the Borrower and the Agent), that Lender, its Commitment and its participation shall not be included for the purpose of calculating the Total Commitments or participations under the relevant Facility when ascertaining whether the Majority Lenders have responded to that request.
40.5 Disenfranchisement of Defaulting Finance Parties
For so long as a Defaulting Finance Party has any Available Commitment, in ascertaining the Majority Lenders or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments or the Commitments of any specified group of Lenders or the agreement of all Lenders or all of any specified group of Lenders has been obtained in respect of any request for instructions, consent,
approval, waiver, amendment or other decision under the Finance Documents, that Defaulting Finance Partys Commitments will be reduced by the amount of its Available Commitments.
For the purposes of this Clause, the Agent may assume that the following Lenders are Defaulting Finance Parties:
(a) any Lender which has notified the Agent that it has become a Defaulting Finance Party;
(b) any Lender in relation to which the relevant officers of the Agent having day to day conduct of its role are aware that any of the events or circumstances referred to in the definition of Defaulting Finance Party has occurred,
unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased to be a Defaulting Finance Party.
40.6 Replacement of a Defaulting Finance Party
(a) The Borrower may, at any time a Lender has become and continues to be a Defaulting Finance Party, by giving 5 Business Days prior written notice to the Agent and such Lender require that Defaulting Finance Party to do one of the following under Clause 26 ( Changes to the Lenders ) and the Defaulting Finance Party shall comply with the notice:
(i) transfer all of its rights and obligations under this Agreement;
(ii) transfer all of the undrawn Facility A Commitment and Facility B Commitment (if any) of the Lender; or
(iii) transfer all of its rights and obligations in respect of Facility A and Facility B (if any),
to a Lender or another bank, financial institution, or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (including credit derivatives) (a Replacement Lender ) selected by a Borrower, and which (unless the Agent is an Defaulting Finance Party) is acceptable to the Agent (acting reasonably) or in case of any transfer of a Facility B Commitment is acceptable to the Issuing Bank, which confirms its willingness to assume and does assume all the obligations or all the relevant obligations of the transferring Lender (including the assumption of the transferring Lenders participations or unfunded participations (as the case may be) on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lenders participation in the outstanding Utilisations and all accrued interest and/or Break Costs and other amounts payable in relation to them under the Finance Documents.
(b) Any transfer of rights and obligations of a Defaulting Finance Party pursuant to this Clause 40 ( Instructions and Decisions ) shall be subject to the following conditions:
(i) a Borrower shall have no right to replace the Agent or Security Trustee;
(ii) neither the Agent nor the Defaulting Finance Party shall have any obligation to a Borrower to find a Replacement Lender;
(iii) the transfer must take place no later than 10 Business Days after the notice referred to in paragraph (a) above; and
(iv) in no event shall the Defaulting Finance Party be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Finance Party pursuant to the Finance Documents.
41. CONFIDENTIALITY
41.1 Confidential Information
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 41.2 ( Disclosure of Confidential Information ) and Clause 41.3 ( Disclosure to numbering service providers ), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information. To the extent that Confidential Information comprises personal information of any officer, director or employee of an Obligor, each Finance Party agrees to hold that personal information in accordance with the Australian Privacy Principles.
41.2 Disclosure of Confidential Information Any Finance Party may disclose:
(a) to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall, be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
(b) to any person:
(i) to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Agent and, in each case, to any of that persons Affiliates, Related Funds, Representatives and professional advisers;
(ii) with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that persons Affiliates, Related Funds, Representatives and professional advisers;
(iii) appointed by any Finance Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (c) of Clause 29.14 ( Relationship with the Lenders ));
(iv) who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (ii) above;
(v) to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation (except this paragraph does not permit the disclosure of any information under section 275(4) of the PPSA unless section 275(7) of the PPSA applies);
(vi) to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes (except this paragraph does not permit the disclosure of any information under section 275(4) of the PPSA unless section 275(7) of the PPSA applies);
(vii) to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 26.8 ( Security over Lenders rights );
(viii) who is a Party; or
(ix) with the consent of a Borrower;
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
(A) in relation to paragraphs (b)(i), (b)(ii) and (b)(iii) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B) in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C) in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; and
(c) to any person appointed by that Finance Party or by a person to whom paragraph (b) (i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between a Borrower and the relevant Finance Party; and
(d) to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.
41.3 Disclosure to numbering service providers
(a) Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facilities and/or one or more Obligors the following information:
(i) names of Obligors;
(ii) country of domicile of Obligors;
(iii) place of incorporation of Obligors;
(iv) date of this Agreement;
(v) Clause 47 ( Governing Law );
(vi) the names of the Agent and the Arranger;
(vii) date of each amendment and restatement of this Agreement;
(viii) amounts of, and names of, the Facilities (and any tranches);
(ix) amount of Total Commitments;
(x) currencies of the Facilities;
(xi) type of Facilities;
(xii) ranking of Facilities;
(xiii) Termination Date for Facilities;
(xiv) changes to any of the information previously supplied pursuant to paragraphs (i) to (xiii) above; and
(xv) such other information agreed between such Finance Party and a Borrower,
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
(b) The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facilities and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.
(c) Each Obligor represents that none of the information set out in paragraphs (a)(i) to (a)(xv) above is, nor will at any time be, unpublished price-sensitive information.
(d) The Agent shall notify a Borrower and the other Finance Parties of:
(i) the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Facilities and/or one or more Obligors; and
(ii) the number or, as the case may be, numbers assigned to this Agreement, the Facilities and/or one or more Obligors by such numbering service provider.
41.4 Entire agreement
This Clause 41 ( Confidentiality ) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
41.5 Inside information
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
41.6 Notification of disclosure
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform a Borrower:
(a) of the circumstances of any disclosure of Confidential Information made pursuant to paragraphs (b)(v) and (b)(vi) of Clause 41.2 ( Disclosure of Confidential Information ) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and
(b) upon becoming aware that Confidential Information has been disclosed in breach of this Clause 41 ( Confidentiality ).
41.7 Continuing obligations
The obligations in this Clause 41 ( Confidentiality ) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of twelve months from the earlier of:
(a) the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and
(b) the date on which such Finance Party otherwise ceases to be a Finance Party.
42. PPSA PROVISIONS
Where any Finance Party has a security interest (as defined in the PPSA) under any Finance Document, to the extent the law permits:
(a) for the purposes of sections 115(1) and 115(7) of the PPSA:
(i) each Finance Party with the benefit of the security interest need not comply with sections 95, 118, 121(4), 125,130, 132(3)(d) or 132(4) of the PPSA; and
(ii) sections 142 and 143 of the PPSA are excluded;
(b) for the purposes of section 115(7) of the PPSA, each Finance Party with the benefit of the security interest need not comply with sections 132 and 137(3);
(c) each Party waives its right to receive from any Finance Party any notice required under the PPSA (including a notice of a verification statement);
(d) if a Finance Party with the benefit of a security interest exercises a right, power or remedy in connection with it, that exercise is taken not to be an exercise of a right, power or remedy under the PPSA unless the Finance Party states otherwise at the time of exercise. However, this Clause 42 does not apply to a right, power or remedy which can only be exercised under the PPSA; and
(e) if the PPSA is amended to permit the Parties to agree not to comply with or to exclude other provisions of the PPSA, the Agent may notify a Borrower and the Finance Parties that any of these provisions is excluded, or that the Finance Parties need not comply with any of these provisions.
This does not affect any rights a person has or would have other than by reason of the PPSA and applies despite any other Clause in any Finance Document.
43. CONFIDENTIALITY OF FUNDING RATES AND REFERENCE BANK QUOTATIONS
43.1 Confidentiality and disclosure
(a) The Agent and each Obligor agree to keep each Funding Rate (and, in the case of the Agent, each Reference Bank Quotation) confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b), (c) and (d) below.
(b) The Agent may disclose:
(i) any Funding Rate (but not, for the avoidance of doubt, any Reference Bank Quotation) to the relevant Borrower pursuant to Clause 10.4 ( Notification of rates of interest ); and
(ii) any Funding Rate or any Reference Bank Quotation to any person appointed by it to provide administration services in respect of one or more of the Finance Documents to the extent necessary to enable such service provider to provide those services if the service provider to whom that information is to be given has entered into a confidentiality agreement substantially in the form of the LMA - Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Agent and the relevant Lender or Reference Bank, as the case may be.
(c) The Agent may disclose any Funding Rate or any Reference Bank Quotation, and each Obligor may disclose any Funding Rate, to:
(i) any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives if any person to whom that Funding Rate or Reference Bank Quotation is to be given pursuant to this paragraph (i) is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of that Funding Rate or Reference Bank Quotation or is otherwise bound by requirements of confidentiality in relation to it;
(ii) any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person to whom that Funding Rate or Reference Bank Quotation is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances;
(iii) any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes if the person to whom that Funding Rate or Reference Bank Quotation is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; and
(iv) any person with the consent of the relevant Lender or Reference Bank, as the case may be.
(d) The Agents obligations in this Clause 43 ( Confidentiality of Funding Rates and Reference Bank Quotations ) relating to Reference Bank Quotations are without prejudice to its obligations to make, notifications under Clause 10.4 ( Notification of rates of interest ) provided that (other than
pursuant to paragraph (b)(i) above) the Agent shall not include the details of any individual Reference Bank Quotation as part of any such notification.
43.2 Related obligations
(a) The Agent and each Obligor acknowledge that each Funding Rate (and, in the case of the Agent, each Reference Bank Quotation) is or may be price-sensitive information and that its use may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Agent and each Obligor undertake not to use any Funding Rate or, in the case of the Agent, any Reference Bank Quotation for any unlawful purpose.
(b) The Agent and each Obligor agree (to the extent permitted by law and regulation) to inform the relevant Lender or Reference Bank, as the case may be:
(i) of the circumstances of any disclosure made pursuant to Clause 43.1(c)(ii) ( Confidentiality and disclosure ) above except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and
(ii) upon becoming aware that any information has been disclosed in breach of this Clause 43 ( Confidentiality of Funding Rates and Reference Bank Quotations ).
43.3 No Event of Default
No Event of Default will occur under Clause 24.17 (Events of Default) by reason only of an Obligors failure to comply with this Clause 43 ( Confidentiality of Funding Rates and Reference Bank Quotations ).
44. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
45. INDEMNITIES AND REIMBURSEMENT
All indemnities and reimbursement obligations (and any other payment obligations of any Obligor) in each Finance Document are continuing and survive termination of the Finance Document, repayment of the Utilisations and cancellation or expiry of the Commitments.
46. ACKNOWLEDGEMENT
Except as expressly set out in the Finance Documents none of the Asia Pacific Loan Market Association, the Finance Parties or any of their advisers have given any representation or warranty or other assurance to any Obligor in relation to the Finance Documents and the transactions they contemplate, including as to tax or other effects. The Obligors have not relied on any of them or on any conduct (including any recommendation) by any of them. The Obligors have obtained their own tax and legal advice.
The Code of Banking Practice does not apply to the Finance Documents and the transactions under them.
SECTION 12
GOVERNING LAW AND ENFORCEMENT
47. GOVERNING LAW
This Agreement is governed by Queensland law.
48. ENFORCEMENT
48.1 Jurisdiction
(a) The courts having jurisdiction in Queensland have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement (a Dispute ).
(b) The Parties agree that those courts are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
(c) Notwithstanding paragraph (a) above, no Finance Party or Beneficiary shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties and the Beneficiaries may take concurrent proceedings in any number of jurisdictions.
48.2 Service of process
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in Australia):
(a) irrevocably appoints the Original Borrower as its agent for service of process in relation to any proceedings in connection with any Finance Document; and
(b) agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.
48.3 Certain ERISA Matters
(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Obligor, that at least one of the following is and will be true:
(i) such Lender is not using plan assets (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lenders entrance into, participation in, administration of and performance of the Loans, the letters of credit, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lenders entrance into, participation in, administration of and performance of the Loans, the letters of credit, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a Qualified Professional Asset Manager (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the letters of credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the letters of credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lenders
entrance into, participation in, administration of and performance of the Loans, the letters of credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Obligor, that the Agent is not a fiduciary with respect to the assets of such Lender involved in such Lenders entrance into, participation in, administration of and performance of the Loans, the letters of credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Agent under this Agreement, any Finance Document or any documents related hereto or thereto).
This Agreement has been entered into on the date stated at the beginning of this Agreement.
EXECUTION VERSION
Schedule 11
Restructure - Steps Paper
EXECUTION PAGES
Executed as an Agreement on the date shown on the first page.
Each person who executes this Agreement on behalf of a party under a power of attorney declares that he or she is not aware of any fact or circumstance that might affect his or her authority to do so under that power of attorney.
BORROWER |
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Signed for and on behalf of CORONADO FINANCE PTY LTD by its attorney Ayten Saridas under power of attorney dated 13 September 2018 in the presence of: |
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/s/Ayten Saridas |
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/s/Melanie Hunter |
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Signature of witness |
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Melanie Hunter |
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Name of witness (BLOCK LETTERS) |
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Address of witness |
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PARENT |
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CORONADO GLOBAL RESOURCES, INC |
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/s/Ayten Saridas |
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Ayten Saridas: |
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Title: |
Authorized Signatory |
ORIGINAL GUARANTORS (including the Parent) |
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Signed for and on behalf of CORONADO FINANCE PTY LTD by its attorney Ayten Saridas under power of attorney dated 13 September 2018 in the presence of: |
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/s/Ayten Saridas |
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/s/Melanie Hunter |
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Signature of witness |
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Melanie Hunter |
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Name of witness (BLOCK LETTERS) |
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Address of witness |
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CORONADO GLOBAL RESOURCES, INC |
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By: |
/s/Ayten Saridas |
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Ayten Saridas: |
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Authorized Signatory |
Signed for and on behalf of CORONADO AUSTRALIA HOLDINGS PTY LTD by its attorney Ayten Saridas under power of attorney dated 13 September 2018 in the presence of: |
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/s/Ayten Saridas |
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/s/Melanie Hunter |
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Signature of witness |
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Melanie Hunter |
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Name of witness (BLOCK LETTERS) |
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Address of witness |
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Signed for and on behalf of CORONADO CURRAGH PTY LTD by its attorney Ayten Saridas under power of attorney dated 13 September 2018 in the presence of: |
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/s/Ayten Saridas |
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/s/Melanie Hunter |
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Signature of witness |
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Melanie Hunter |
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Name of witness (BLOCK LETTERS) |
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Address of witness |
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CORONADO COAL LLC |
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/s/Ayten Saridas |
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Ayten Saridas: |
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Authorized Signatory |
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CORONADO II LLC |
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/s/Ayten Saridas |
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Ayten Saridas: |
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Authorized Signatory |
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CORONADO IV LLC |
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/s/Ayten Saridas |
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Ayten Saridas: |
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Signed for and on behalf of CURRAGH QUEENSLAND MINING PTY LTD by its attorney Ayten Saridas under power of attorney dated 13 September 2018 in the presence of: |
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/s/Ayten Saridas |
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/s/Melanie Hunter |
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Signature of witness |
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Melanie Hunter |
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Name of witness (BLOCK LETTERS) |
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Address of witness |
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Signed for and on behalf of CURRAGH COAL SALES CO. PTY. LTD. by its attorney Ayten Saridas under power of attorney dated 13 September 2018 in the presence of: |
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/s/Ayten Saridas |
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/s/Melanie Hunter |
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Signature of witness |
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Melanie Hunter |
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POWHATAN MID-VOL COAL SALES, L.L.C. |
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/s/Ayten Saridas |
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Ayten Sarid |
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MATOAKA LAND COMPANY, LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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GREENBRIER SMOKELESS COAL MINING, L.L.C. |
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/s/Ayten Saridas |
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Ayten Saridas |
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CORONADO COAL II LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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CORONADO CURRAGH LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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BUCHANAN MINING COMPANY LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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CORONADO VA, LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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GREENBRIER MINERALS, LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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MIDLAND TRAIL RESOURCES LLC |
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/s/Ayten Saridas |
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Ayten Saridas |
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BUCHANAN MINERALS, LLC |
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By: |
/s/Ayten Saridas |
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Ayten Saridas |
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AGENT |
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Signed for and on behalf of Westpac Banking Corporation ABN 33 007 457 141 by its Attorney under a Power of Attorney dated 17 January 2001, and the Attorney declares that the Attorney has not received any notice of the revocation of such Power of Attorney, in the presence of: |
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/s/Ruby Gacosta |
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Signature of Attorney |
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Ruby Gacosta |
/s/Jo Cassar |
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Tier Three Attorney |
Signature of Witness |
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Name of Attorney in Full |
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Jo Cassar |
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Name of Witness in full |
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ARRANGER |
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Signed for and on behalf of Westpac Banking Corporation ABN 33 007 457 141 by its Attorney under a Power of Attorney dated 17 January 2001, and the Attorney declares that the Attorney has not received any notice of the revocation of such Power of Attorney, in the presence of: |
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/s/Liron Israeli |
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Signature of Attorney |
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Liron Israeli |
/s/Ruby Gacosta |
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Tier 3 Attorney |
Signature of Witness |
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Name of Attorney in Full |
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Ruby Gacosta |
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Name of Witness in full |
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LENDERS |
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Signed for and on behalf of Westpac Banking Corporation ABN 33 007 457 141 by its Attorney under a Power of Attorney dated 17 January 2001, and the Attorney declares that the Attorney has not received any notice of the revocation of such Power of Attorney, in the presence of: |
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/s/Liron Israeli |
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Signature of Attorney |
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Liron Israeli |
/s/Ruby Gacosta |
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Tier 3 Attorney |
Signature of Witness |
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Name of Attorney in Full |
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Ruby Gacosta |
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Name of Witness in full |
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SHORT TERM INCENTIVE PLAN EXECUTIVE KMPs |
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Owner |
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VP, People and Culture |
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1. PURPOSE
These guidelines provide information on the Coronado Global Resources 2019 Short Term Incentive Plan (STIP) of which executive Key Management Personnel (KMPs) of Coronado Global Resources (the Company) may be eligibility to participate.
The STIP does not form part of an executive KMPs contract of employment nor does STIP form part of their salary for the purpose of calculating payment in lieu of notice or any other entitlement (except for superannuation / 401k contributions by the Company).
All payments remain at the absolute discretion of the Companys Board of Directors and can be reduced or cancelled at any time throughout the performance period.
The performance period relative to these guidelines will commence on January 1, 2019 and conclude December 31, 2019. The plan will be reviewed annually and is subject to change at the discretion of the Companys Board of Directors.
2. ELIGABILITY
· All executive KMP, whose employment commences prior to 1 October 2019 and who are employed on an ongoing basis as at 31 December 2019 will be eligible to participate in the 2019 STIP.
· Where a participant ceases employment before 31 December 2019 by reason of redundancy, ill health, death or retirement, they may be entitled to receive a pro-rata amount of the STIP based on the actual performance against the applicable measures and the period employed during the year. Determination of entitlements will be made by the Board of Directors and payment will be made following the end of the 2019 STI period.
3. OPPORTUNITY / PAYMENT
· Maximum STIP opportunity will be expressed as a percentage of Fixed Annual Remuneration (FAR) for those executive KMP on FAR packages or base salary for those on base arrangements.
· Any award of STI to the CEO, President and Chief Operating Officer and Group CFO will be delivered as follows:
· 50% will be delivered in cash after the release of the Companys audited full-year financial results; and
· 50% will be deferred for 12 months and delivered as RSUs that will vest after the release of the Companys audited full-year financial results for the year following the year of the award. Each RSU is an entitlement to receive one CDI (or, if the Board determines, the equivalent value in cash or Shares), plus additional CDIs (or the equivalent value in cash or Shares) equal to any distributions made, until the
Coronado Curragh Pty Ltd ABN 90 009 362 565 |
Level 31, Central Plaza One 345 Queen Street GPO Box 51 Brisbane QLD 4000 |
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Private Mail Bag Blackwater QLD 4717 |
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www.curragh.com.au |
RSU is settled. The RSUs are granted for nil consideration. The number of RSUs granted will be calculated by dividing the value of the deferred element of the STI award by the 30-day volume weighted average price of CDIs to 1 January in the fiscal period of the date the STI award is determined. The vesting of the deferred STI will be contingent on continued service to the vesting date (except in certain good leaver scenarios).
· Awards of STI to other executive KMPs will be delivered in cash without any deferral. Payments will be calculated and made as soon as practicable after the audited results have been received and accepted by the board.
· Payments will be calculated based on the participants FAR / base salary as at 31 December 2019.
· Regardless of business performance, payments may be reduced or cancelled with respect to individual performance or behaviour at the discretion of the Board of Directors.
4. STIP MEASURES
The 2019 STIP is performance based, with payments dependent upon the achievement of predetermined targets.
50% of payment will be based on the Coronado Global Resources 2019 STIP scorecard shown below.
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Weighting |
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STI Award (75%) |
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STI Award (100%) |
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Metrics |
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1 Safety |
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30 |
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AU |
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10% reduction in TRIFR compared to prior year |
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20% reduction in TRIFR compared to prior year |
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TRIR = 80% of national average |
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TRIR = 60% of national average |
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2 Production |
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21.7mt |
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22.3mt |
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3 EBITDA |
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US$737m |
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US$980m |
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The other 50% will be based on operational / individual goals which will approved by the Board of Directors prior to being finalised with the participant.
CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 EQUITY INCENTIVE PLAN
ARTICLE I
GENERAL
1.1 Purpose
The Coronado Global Resources Inc. 2018 Equity Incentive Plan (as amended from time to time, the Plan ) is designed to help the Company (as hereinafter defined): (a) attract, retain and motivate key employees (including prospective employees) and consultants (other than non-employee directors of Coronado (as hereinafter defined)); (b) align the interests of such persons with the Companys stockholders; and (c) promote ownership of the Companys equity. The Plan is subject to subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth).
1.2 Definitions of Certain Terms
For purposes of this Plan, the following terms have the meanings set forth below:
1.2.1 ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange, as the context required.
1.2.2 ASX Listing Rules means the official listing rules of the ASX as they apply to the Company from time to time.
1.2.3 ASX Settlement means ASX Settlement Pty Limited (ABN 49 008 504 532).
1.2.4 ASX Settlement Operating Rules means the settlement operating rules of ASX Settlement.
1.2.5 Award means an award made pursuant to the Plan.
1.2.6 Award Agreement means the written document by which each Award is evidenced, and which may, but need not be (as determined by the Committee), executed or acknowledged by a Grantee as a condition to receiving an Award or the benefits under an Award, and which sets forth the terms and provisions applicable to Awards granted under the Plan to such Grantee. Any reference herein to an agreement in writing will be deemed to include an electronic writing to the extent permitted by applicable law.
1.2.7 Board means the Board of Directors of Coronado.
1.2.8 Business Combination has the meaning provided in the definition of Change in Control.
1.2.9 Cause means (a) with respect to a Grantee employed pursuant to a written employment agreement which agreement includes a definition of Cause, Cause as defined in
that agreement or (b) with respect to any other Grantee, the occurrence of any of the following: (i) such Grantees conviction of, or plea of nolo contendere, to any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof or under the laws of any other jurisdiction, (ii) such Grantees attempted commission of, or participation in, a fraud or theft against the Company or any client of the Company, (iii) such Grantees willful engagement in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, (iv) such Grantees repeated failure to substantially perform his or her duties and responsibilities to the Company (other than failure resulting from incapacity due to mental or physical illness or injury or from any permitted leave required by law), (v) such Grantees material violation of any contract or agreement between the Grantee and the Company or any written Company policy or any provision of the Companys code of business conduct and ethics (including any successor thereto) or any other Company-established code of conduct to which such Grantee is subject or (vi) such Grantees disqualification or bar by any governmental or self-regulatory authority from serving in the capacity required by his or her job description or such Grantees loss of any governmental or self-regulatory license that is reasonably necessary for such Grantee to perform his or her duties or responsibilities, in each case as an Employee or a Consultant, as applicable, of the Company.
1.2.10 Certificate means a stock certificate (or other appropriate document or evidence of ownership) representing shares of Common Stock.
1.2.11 Change in Control means, except in connection with any initial public offering of the Common Stock, CDIs or other security interest of the Company, the occurrence of any of the following events:
(a) during a period of not more than 36 months, individuals who constitute the Board as of the beginning of the period (the Incumbent Directors ) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of Coronado in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided , however , that no individual initially elected or nominated as a director of Coronado as a result of an actual or publicly threatened election contest with respect to directors or as a result of any other actual or publicly threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b) any person (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Coronado representing 50% or more of the combined voting power of Coronados then-outstanding securities eligible to vote for the election of the Board ( Coronado Voting Securities ); provided , however , that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of the ownership or acquisition of Coronado Voting Securities: (A) by Coronado or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by Coronado or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-
Qualifying Transaction (as defined in paragraph (c) of this definition) or (E) by Energy Minerals Group, Coronado LLC or any of their affiliates;
(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving Coronado that requires the approval of Coronados stockholders, whether for such transaction or the issuance of securities in the transaction (a Business Combination ), excluding such a Business Combination with Energy Minerals Group, Coronado LLC or any of their affiliates, unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the entity resulting from such Business Combination (the Surviving Entity ), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power is represented by Coronado Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares or other securities into which such Coronado Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Coronado Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity) and (C) at least 50% of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Boards approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) of this paragraph (c) shall be deemed to be a Non-Qualifying Transaction );
(d) the consummation of a sale of all or substantially all of Coronados assets (other than to Energy Minerals Group, Coronado or any of their affiliates); or
(e) the stockholders of Coronado approve a plan of complete liquidation or dissolution of Coronado.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 50% of the Coronado Voting Securities as a result of the acquisition of Coronado Voting Securities by Coronado which reduces the number of Coronado Voting Securities outstanding; provided , that if after such acquisition by Coronado, such person (other than Energy Minerals Group, Coronado LLC or any of their affiliates) becomes the beneficial owner of additional Coronado Voting Securities that increases the percentage of outstanding Coronado Voting Securities beneficially owned by such person, a Change in Control shall then occur.
1.2.12 CDI is a CHESS depositary interest, being a security interest as defined in the ASX Settlement Operating Rules, and any other securities or property issued in exchange therefor or in lieu thereof pursuant to Section 1.6 .
1.2.13 Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the applicable rulings and regulations thereunder.
1.2.14 Committee has the meaning set forth in Section 1.3.1 .
1.2.15 Common Stock means the common stock of Coronado, par value $0.01 per share, and any other securities or property issued in exchange therefor or in lieu thereof pursuant to Section 1.6 .
1.2.16 Company means Coronado and any Subsidiary.
1.2.17 Consent has the meaning set forth in Section 3.3.2 .
1.2.18 Consultant means any individual (other than a non-employee director of Coronado), corporation, partnership, limited liability company or other entity that provides bona fide consulting or advisory services to Coronado or any Subsidiary.
1.2.19 Coronado means Coronado Global Resources Inc.
1.2.20 Coronado Voting Securities has the meaning provided in the definition of Change in Control.
1.2.21 Covered Person has the meaning set forth in Section 1.3.4 .
1.2.22 Director means a member of the Board.
1.2.23 Disability means the Grantee (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.
1.2.24 Effective Date has the meaning set forth in Section 3.22 .
1.2.25 Employee means a regular, active employee and/or a prospective employee of Coronado or any Subsidiary, but not including a non-employee director of Coronado.
1.2.26 Employment means a Grantees performance of services for Coronado or any Subsidiary, as determined by the Committee. The terms employ and employed will have their correlative meanings. The Committee in its sole discretion may determine (a) whether and when a Grantees leave of absence results in a termination of Employment, (b) whether and when a change in a Grantees association with Coronado or any Subsidiary results in a termination of Employment and (c) the impact, if any, of any such leave of absence or change in association on outstanding Awards. Unless expressly provided otherwise, any references in the
Plan or any Award Agreement to a Grantees Employment being terminated will include both voluntary and involuntary terminations.
1.2.27 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.
1.2.28 Fair Market Value means, (i) with respect to a CDI, the closing price for a CDI on the applicable date as reported on the ASX or, if not so reported, as determined in accordance with a valuation methodology approved by the Committee and (ii) with respect to a Share, the product of (x) ten and (y) the closing price for a CDI on the applicable date as reported on the ASX or, if not so reported, as determined in accordance with a valuation methodology approved by the Committee, in each case, unless determined as otherwise specified herein; provided that if the Shares are listed on the New York Stock Exchange or NASDAQ, then the Fair Market Value will mean, with respect to a Share, the closing price for a Share on the applicable date as reported on the New York Stock Exchange or NASDAQ, as applicable. For purposes of the grant of any Award, unless otherwise provided in an Award Agreement, the applicable date will be the trading day immediately prior to the date the Award is granted. For purposes of the exercise of any Award, the applicable date is the date a notice of exercise is received by the Company or, if such date is not a trading day, the trading day immediately following the date a notice of exercise is received by the Company.
1.2.29 Financial Misstatement Circumstance means a material misstatement or omission in the financial statements of the Company or any other circumstances or events which, in the opinion of the Board, may, or are likely to, affect the Companys financial soundness or require re-statement of the Companys financial accounts, including, without limitation, as a result of misrepresentations, errors, omissions, or negligence.
1.2.30 Good Reason means (a) with respect to a Grantee employed pursuant to a written employment agreement which agreement includes a definition of Good Reason, Good Reason as defined in that agreement or (b) with respect to any other Grantee, the occurrence of any of the following in the absence of the Grantees prior written consent: (i) such Grantee has incurred a material reduction in base salary, authority, duties or responsibilities; or (ii) such Grantee has been provided notice that his principal place of work will be relocated to a place more than 50 miles from the Grantees base of employment immediately prior to the Change in Control; provided in each case, that no event or circumstance described by the foregoing sentence will constitute Good Reason unless (i) the Grantee provides the Company notice thereof within ninety (90) days after the occurrence or existence of such event or circumstance, (ii) the Company fails to cure such event or circumstance within thirty (30) days after delivery of such notice and (iii) the Grantees employment with the Company terminates within thirty (30) days after the expiration of such cure period.
1.2.31 Grantee means an Employee or Consultant who receives an Award.
1.2.32 Incentive Stock Option means a stock option to purchase Shares that is intended to be an incentive stock option within the meaning of Sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is designated as an Incentive Stock Option in the applicable Award Agreement.
1.2.33 Incumbent Directors has the meaning provided in the definition of Change in Control.
1.2.34 Non-Qualifying Transaction has the meaning provided in the definition of Change in Control.
1.2.35 Other Stock-Based or Cash-Based Awards has the meaning set forth in Section 2.8.1 .
1.2.36 Performance-Based Awards means certain Awards granted pursuant to Section 2.8.2 .
1.2.37 Performance Goals means the performance goals established by the Committee in connection with the grant of Awards.
1.2.38 Plan Action will have the meaning set forth in Section 3.3.1 .
1.2.39 Retirement means, unless otherwise defined in an Award Agreement, a voluntary termination of employment initiated by a Grantee (while such Grantee is in good standing with the Company) (i) on or after age 60 with five years of service or (ii) on or after age 55 with 10 years of service.
1.2.40 Section 409A means Section 409A of the Code, including any amendments or successor provisions to that section, and any regulations and other administrative guidance thereunder, in each case as they may be from time to time amended or interpreted through further administrative guidance.
1.2.41 Securities Act means the Securities Act of 1933, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.
1.2.42 Shares means shares of Common Stock.
1.2.43 Subsidiary means any corporation, partnership, limited liability company or other legal entity in which Coronado has a direct or indirect ownership interest of 50% or more of the total combined voting power of all classes of the then-outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or managing partners or in which Coronado has the right to receive 50% or more of the distribution of profits or 50% of the assets on liquidation or dissolution.
1.2.44 Surviving Entity has the meaning provided in the definition of Change in Control.
1.2.45 Ten Percent Stockholder means a person owning securities possessing more than 10% of the total combined voting power of all classes of securities of Coronado and of any Subsidiary or parent corporation of Coronado.
1.2.46 Treasury Regulations means the regulations promulgated under the Code by the United States Treasury Department, as amended.
For the avoidance of doubt, any references to stock or shares in this Plan may be read as a reference to CDIs or Shares as the context reasonably requires, unless the contrary intention is expressly stated in the Plan.
1.3 Administration
1.3.1 The Compensation and Nominating Committee of the Board (as constituted from time to time, and including any successor committee, the Committee ) will administer the Plan. In particular, the Committee will have the authority in its sole discretion to:
(a) exercise all of the powers granted to it under the Plan;
(b) construe, interpret and implement the Plan and all Award Agreements;
(c) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing the Committees own operations;
(d) make all determinations necessary or advisable in administering the Plan;
(e) correct any defect, supply any omission and reconcile any inconsistency in the Plan;
(f) amend the Plan to reflect changes in applicable law;
(g) grant, or recommend to the Board for approval to grant, Awards and determine who will receive Awards, when such Awards will be granted and the terms of such Awards, including setting forth provisions with regard to the effect of a termination of Employment on such Awards and conditioning the vesting of, or lapsing of any applicable vesting restrictions or other vesting conditions on, Awards upon the attainment of Performance Goals and/or upon continued service;
(h) amend any outstanding Award Agreement in any respect, including, without limitation, to
(1) accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may provide that any CDIs or Shares acquired pursuant to such Award will be restricted CDIs or Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Grantees underlying Award),
(2) accelerate the time or times at which CDIs or Shares are delivered under the Award (and, without limitation on the Committees rights, in connection with such acceleration, the Committee may provide that any CDIs or Shares delivered pursuant to such Award will be restricted CDIs or Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Grantees underlying Award),
(3) waive or amend any goals, restrictions, vesting provisions or conditions set forth in such Award Agreement, or impose new goals, restrictions, vesting provisions and conditions or
(4) reflect a change in the Grantees circumstances ( e.g. , a change to part-time employment status or a change in position, duties or responsibilities); and
(i) determine at any time whether, to what extent and under what circumstances and method or methods, subject to Section 3.14 ,
(1) Awards may be
(A) settled in cash, CDIs, Shares, other securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on the Grantees Award, including the effect on any repayment provisions under the Plan or Award Agreement),
(B) exercised or
(C) canceled, forfeited or suspended,
(2) CDIs, Shares, cash, other securities, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Grantee thereof or of the Committee,
(3) to the extent permitted under applicable law, loans (whether or not secured by Common Stock) may be extended by the Company with respect to any Awards,
(4) Awards may be settled by Coronado, any of its Subsidiaries or affiliates or any of their designees and
(5) the exercise price for any stock option (other than an Incentive Stock Option, unless the Committee determines that such a stock option will no longer constitute an Incentive Stock Option) or stock appreciation right may be reset.
1.3.2 Actions of the Committee may be taken by the vote of a majority of its members present at a meeting (which may be held telephonically). Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken will be fully as effective as if it had been taken by a vote at a meeting. The determination of the Committee on all matters relating to the Plan or any Award Agreement will be final, binding and conclusive. The Committee may allocate among its members and delegate to any person who is not a member of the Committee, or to any administrative group within the Company, any of its powers, responsibilities or duties. In delegating its authority, the Committee will consider the extent to which any delegation may cause Awards to fail to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act. Except as specifically provided to the contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated its duties and powers.
1.3.3 Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee herein.
1.3.4 No member of the Committee or any person to whom the Committee delegates its powers, responsibilities, or duties in writing, including by resolution (each such person, a Covered Person ), will have any liability to any person (including any Grantee) for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award, except as expressly provided by statute. Each Covered Person will be indemnified and held harmless by the Company against and from:
(a) any loss, cost, liability or expense (including attorneys fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each case, in good faith and
(b) any and all amounts paid by such Covered Person, with Coronados approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that Coronado will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once Coronado gives notice of its intent to assume the defense, Coronado will have sole control over such defense with counsel of Coronados choice.
The foregoing right of indemnification will not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Persons bad faith, fraud or willful misconduct. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under Coronados Certificate of Incorporation or By-laws, as amended from time to time, pursuant to any individual indemnification agreements between such Covered Person and the Company, as a matter of law, or otherwise, or any other power that Coronado may have to indemnify such persons or hold them harmless.
1.4 Persons Eligible for Awards
Awards under the Plan may be made to Employees and Consultants.
1.5 Types of Awards Under Plan
Awards may be made under the Plan in the form of cash-based and/or stock-based Awards. Stock-based Awards may be in the form of any of the following, in each case in respect of CDIs or Shares as determined from time to time:
(a) stock options,
(b) stock appreciation rights,
(c) restricted shares or CDIs,
(d) restricted stock units,
(e) dividend equivalent rights and
(f) Performance-based awards or other equity-based or equity-related Awards (as further described in Section 2.8) including performance stock units, that the Committee determines to be consistent with the purposes of the Plan and the interests of the Company. For the avoidance of doubt, stock options, stock appreciation rights, restricted shares, and restricted stock units may constitute performance-based awards.
For the further avoidance of doubt, the Committee may determine that an Award will be satisfied by cash, Shares or CDIs, with such decision to be determined by the Committee at any time after the Award date (including on vesting and, if applicable, exercise of the relevant Award).
1.6 Adjustments
The Committee will:
(a) adjust the number of Shares set forth in Section 2.3.2 that can be issued through Incentive Stock Options and
(b) adjust the terms of any outstanding Awards (including, without limitation, the number of CDIs or Shares covered by each outstanding Award, the type of property to which the Award relates and the exercise or strike price of any Award), in such manner as it deems appropriate (including, without limitation, by payment of cash) to prevent the enlargement or dilution of rights, as a result of any increase or decrease in the number of issued CDIs or Shares (or issuance of shares of stock other than shares of Common Stock) resulting from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of CDIs or Shares, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure, CDIs or Shares, including any extraordinary dividend or extraordinary distribution; provided that no such adjustment shall be made if or to the extent that it would cause an outstanding Award to cease to be exempt from, or to fail to comply with, Section 409A of the Code, or to the extent that such adjustment would be contrary to the ASX Listing Rules if Coronado is listed on the ASX. Where applicable, the Committee will make the adjustments referred to in this Section in the manner allowed or required by the ASX Listing Rules, if Coronado is listed on the ASX.
ARTICLE II
AWARDS UNDER THE PLAN
2.1 Agreements Evidencing Awards
Each Award granted under the Plan will be evidenced by an Award Agreement that will contain such provisions and conditions as the Committee deems appropriate. Unless otherwise provided
herein and subject to the ASX Listing Rules, the Committee may grant Awards in tandem with or, subject to Section 3.14 , in substitution for or satisfaction of any other Award or Awards granted under the Plan or any award granted under any other plan of Coronado. By accepting an Award pursuant to the Plan, a Grantee thereby agrees that the Award will be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.
2.2 No Rights as a Stockholder
No Grantee (or other person having rights pursuant to an Award) will have any of the rights of a stockholder of Coronado or holder of CDIs with respect to CDIs or Shares subject to an Award until the delivery of such CDIs or Shares. Except as otherwise provided in Section 1.6 , no adjustments will be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, CDIs, Shares, other securities or other property) for which the record date is before the date the Grantee is registered as the holder of CDIs or Shares, as applicable, as determined by the Committee or the Certificates for the Shares are delivered, or in the event the Committee elects to use another system, such as book entries by the transfer agent, before the date in which such system evidences the Grantees ownership of such CDIs or Shares.
2.3 Options
2.3.1 Grant . Stock options may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee may determine. A stock option granted under the Plan represents a right to purchase a CDI or a Share, as applicable, at a specified price for a specified period of time.
2.3.2 Incentive Stock Options . At the time of grant, the Committee will determine:
(a) whether all or any part of a stock option granted to an eligible Employee will be an Incentive Stock Option and
(b) the number of Shares subject to such Incentive Stock Option; provided , however , that
(1) the aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by an eligible Employee during any calendar year (under all such plans of Coronado and of any Subsidiary or parent corporation or Coronado affiliate) will not exceed $100,000 and
(2) no Incentive Stock Option (other than an Incentive Stock Option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code applies) may be granted to a person who is not eligible to receive an Incentive Stock Option under the Code.
The form of any stock option which is entirely, or in part, an Incentive Stock Option will clearly indicate that such stock option is an Incentive Stock Option or, if applicable, the number of Shares subject to the Incentive Stock Option.
2.3.3 Exercise Price . The exercise price per CDI or Share with respect to each stock option will be determined by the Committee but, except as otherwise permitted by Section 1.6 , may never be less than the Fair Market Value (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110% of the Fair Market Value).
2.3.4 Term of Stock Option . In no event will any stock option be exercisable after the expiration of 10 years (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 5 years) from the date on which the stock option is granted.
2.3.5 Vesting and Exercise of Stock Option and Payment for CDIs and Shares . A stock option may vest and be exercised at such time or times and subject to such terms and conditions as will be determined by the Committee at the time the stock option is granted and set forth in the Award Agreement. Subject to any limitations in the applicable Award Agreement, any CDIs or Shares not acquired pursuant to the exercise of a stock option on or following the applicable vesting date because the Grantee chose to exercise less than the total number of vested options at the time of exercise may be acquired thereafter at any time before the final expiration of the stock option.
To exercise a stock option, the Grantee must give written notice to Coronado specifying the number of stock options to be exercised and accompanied by payment of the full purchase price therefor in cash or by certified or official bank check or in another form as determined by the Company, which may include:
(a) personal check,
(b) CDIs or Shares, based on the Fair Market Value as of the exercise date, of the same class of securities as those to be granted by exercise of the stock option,
(c) any other form of consideration approved by the Company and permitted by applicable law and
(d) any combination of the foregoing.
The Committee may also make arrangements for the cashless exercise of a stock option. Any person exercising a stock option will make such representations and agreements and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance by Coronado on terms acceptable to Coronado with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. The Committee may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share or other applicable security certificates and issuing stop-transfer notices to agents and registrars. If a Grantee so requests, CDIs or Shares acquired pursuant to the exercise of a stock option may be issued in the name of the Grantee and another jointly with the right of survivorship.
2.3.6 Repricing . Except as otherwise permitted by Section 1.6 and subject to the ASX Listing Rules, reducing the exercise price of stock options issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or
repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval of Coronados stockholders.
2.4 Stock Appreciation Rights
2.4.1 Grant . Stock appreciation rights may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee may determine. A stock appreciation right granted under the Plan represents a right to receive, upon exercise, a payment equal to the excess of the Fair Market Value of a CDI or a Share, as applicable, on the date of exercise of a stock appreciation right over the exercise price of such stock appreciation right.
2.4.2 Exercise Price . The exercise price per CDI or Share with respect to each stock appreciation right will be determined by the Committee but, except as otherwise permitted by Section 1.6 , may never be less than the Fair Market Value.
2.4.3 Term of Stock Appreciation Right . In no event will any stock appreciation right be exercisable after the expiration of 10 years from the date on which the stock appreciation right is granted.
2.4.4 Vesting and Exercise of Stock Appreciation Right and Delivery of CDIs and Shares . Each stock appreciation right may vest and be exercised in such installments as may be determined in the Award Agreement at the time the stock appreciation right is granted. Subject to any limitations in the applicable Award Agreement, any stock appreciation rights not exercised on or following the applicable vesting date because the Grantee chose to exercise less than the total number of vested stock appreciation rights at the time of exercise may be exercised thereafter at any time before the final expiration of the stock appreciation right.
To exercise a stock appreciation right, the Grantee must give written notice to Coronado specifying the number of stock appreciation rights to be exercised. Upon exercise of stock appreciation rights, CDIs, Shares, cash or other securities or property, or a combination thereof, as specified by the Committee, equal in value to:
(a) the excess of:
(1) the Fair Market Value of the CDIs or Shares on the date of exercise over
(2) the exercise price of such stock appreciation right multiplied by
(b) the number of stock appreciation rights exercised will be delivered to the Grantee.
Any person exercising a stock appreciation right will make such representations and agreements and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance by Coronado on terms acceptable to Coronado with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. If a Grantee so requests, CDIs or Shares purchased may be issued in the name of the Grantee and another jointly with the right of survivorship.
2.4.5 Repricing . Except as otherwise permitted by Section 1.6 and subject to the ASX Listing Rules, reducing the exercise price of stock appreciation rights issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval of Coronados stockholders.
2.5 Restricted Shares and CDIs
2.5.1 Grants . The Committee may grant or offer for sale restricted shares or restricted CDIs, subject to applicable law and ASX Listing Rules in such amounts and subject to such terms and conditions as the Committee may determine. Upon the delivery of such restricted shares or restricted CDIs, as applicable, the Grantee will have, in the case of restricted shares, the rights of a stockholder with respect to the restricted shares, and, in the case of restricted CDIs, the rights of a holder of CDIs with respect to the restricted CDIs, in each case subject to any other restrictions and conditions as the Committee may include in the applicable Award Agreement. Each Grantee of an Award of restricted shares will be issued a Certificate in respect of such shares, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of such shares. In the event that a Certificate is issued in respect of restricted shares, such Certificate may be registered in the name of the Grantee, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, but will be held by Coronado or its designated agent until the time the restrictions lapse. Each Grantee of an Award of restricted CDIs will be noted in a book entry system and will be subject to a holding lock until the time the restriction lapses.
2.5.2 Right to Vote and Receive Dividends on Restricted Shares . Each Grantee of an Award of restricted shares or restricted CDIs will, during the period of restriction, be the beneficial and record owner of such restricted shares or restricted CDIs and will have full voting rights with respect thereto. Unless the Committee determines otherwise in an Award Agreement, during the period of restriction, all ordinary cash dividends or other ordinary distributions paid upon any restricted share or restricted CDIs will be paid to the relevant Grantee (any extraordinary dividends or other extraordinary distributions will be treated in accordance with Section 1.6) .
2.6 Restricted Stock Units
The Committee may grant Awards of restricted stock units in such amounts and subject to such terms and conditions as the Committee may determine. A restricted stock unit granted under the Plan represents the right to receive CDIs, Shares, cash or other securities or property in the future, at such times, and subject to such conditions, as the Committee shall determine. A Grantee of a restricted stock unit will have only the rights of a general unsecured creditor of Coronado, until delivery of CDIs, Shares, cash or other securities or property is made as specified in the applicable Award Agreement. On the delivery date specified in the Award Agreement, the Grantee of each restricted stock unit not previously forfeited or terminated will receive CDIs, Shares, cash or other securities or property or a combination thereof, as specified by the Committee.
2.7 Dividend Equivalent Rights
The Committee may include in the Award Agreement, with respect to any Award, a dividend equivalent right entitling the Grantee to receive amounts equal to all or any portion of the regular cash dividends that would be paid on CDIs or Shares covered by such Award if such CDIs or Shares had been delivered pursuant to such Award. The grantee of a dividend equivalent right will have only the rights of a general unsecured creditor of Coronado until payment of such amounts is made as specified in the applicable Award Agreement. In the event such a provision is included in an Award Agreement, the Committee will determine whether such payments will be made in cash, CDIs, Shares or in another form, whether they will be conditioned upon the exercise of the Award to which they relate (subject to compliance with Section 409A of the Code), the time or times at which they will be made, and such other terms and conditions as the Committee will deem appropriate.
2.8 Performance-Based Awards and Other Stock-Based or Cash-Based Awards
The Committee may grant other types of equity-based, equity-related or cash-based Awards (including the grant or offer for sale of unrestricted CDIs, Shares, performance share awards, performance units settled in cash ( Other Stock-Based or Cash-Based Awards )) in such amounts and subject to such terms and conditions as the Committee may determine. The terms and conditions set forth by the Committee in the applicable Award Agreement may relate to the achievement of Performance Goals, as determined by the Committee at the time of grant. Such Awards may entail the transfer of CDIs or Shares to Award recipients and may include Awards designed to comply with or take advantage of the applicable local laws of a specific jurisdiction. For the avoidance of doubt, stock options, stock appreciation rights, restricted shares, and restricted stock units may constitute performance-based awards.
ARTICLE III
MISCELLANEOUS
3.1 Amendment of the Plan
3.1.1 Unless otherwise provided in the Plan or in an Award Agreement, the Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever but, subject to Sections 1.3 , 1.6 and 3.6 , no such amendment shall materially adversely impair the rights of the Grantee of any Award without the Grantees consent. Subject to Sections 1.3 , 1.6 and 3.6 , an Award Agreement may not be amended to materially adversely impair the rights of a Grantee without the Grantees consent.
3.1.2 Unless otherwise determined by the Board, stockholder approval of any suspension, discontinuance, revision or amendment will be obtained only to the extent necessary to comply with any applicable laws, regulations or rules of a securities exchange or self-regulatory agency; provided , however , if and to the extent the Board determines it is appropriate for the Plan to comply with the provisions of Section 422 of the Code, no amendment that would require stockholder approval under Section 422 of the Code will be effective without the approval of the stockholders of Coronado.
3.2 Tax Withholding
Grantees shall be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any Award. As a condition to the delivery of any CDIs or Shares, cash or other securities or property pursuant to any Award or the lifting or lapse of restrictions on any Award, or in connection with any other event that gives rise to a federal or other governmental tax withholding obligation on the part of the Company relating to an Award,
(a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a Grantee whether or not pursuant to the Plan (including CDIs or Shares otherwise deliverable),
(b) the Committee will be entitled to require that the Grantee remit cash to the Company (through payroll deduction or otherwise) or
(c) the Company may enter into any other suitable arrangements to withhold, in each case in an amount not to exceed in the opinion of the Company the maximum amounts of such taxes required by law to be withheld.
3.3 Required Consents and Legends
3.3.1 If the Committee at any time determines that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of CDIs or Shares or the delivery of any cash, securities or other property under the Plan, or the taking of any other action thereunder (each such action a Plan Action ), then, subject to Section 3.14 , such Plan Action will not be taken, in whole or in part, unless and until such Consent will have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing Shares delivered pursuant to the Plan will bear a legend setting forth such restrictions on transferability as the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop transfer order against any legended shares.
3.3.2 The term Consent as used in this Article III with respect to any Plan Action includes:
(a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state, or local law, or law, rule or regulation of a jurisdiction outside the United States,
(b) any and all written agreements and representations by the Grantee with respect to the disposition of CDIs, Shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made,
(c) any and all other consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory body or any stock exchange or self-regulatory agency,
(d) any and all consents by the Grantee to:
(1) the Companys supplying to any third-party record-keeper of the Plan such personal information as the Committee deems advisable to administer the Plan,
(2) the Companys deducting amounts from the Grantees wages, or another arrangement satisfactory to the Committee, to reimburse the Company for advances made on the Grantees behalf to satisfy certain withholding and other tax obligations in connection with an Award and
(3) the Companys imposing sales and transfer procedures and restrictions and hedging restrictions on CDIs or Shares delivered under the Plan and
(e) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Committee. Nothing herein will require the Company to list, register or qualify the shares of Common Stock or other security interests of the Company on any securities exchange.
3.4 Right of Offset
The Company will have the right to offset against its obligation to deliver CDIs or Shares (or other property or cash) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Grantee then owes to the Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Committee will have no right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement if such offset could subject the Grantee to the additional tax imposed under Section 409A of the Code in respect of an outstanding Award.
3.5 Non-assignability; No Hedging
No Award (or any rights and obligations thereunder) granted to any person under the Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged, in any manner (including through the use of any cash-settled instrument), whether voluntarily or involuntarily and whether by operation of law or otherwise, other than by will or by the laws of descent and distribution, and all such Awards (and any rights thereunder) will be exercisable during the life of the Grantee only by the Grantee or the Grantees legal representative, unless the Committee otherwise determines in its sole discretion. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions of this Section 3.5 will be null and void and any Award which is hedged in any
manner will immediately be forfeited. All of the terms and conditions of the Plan and the Award Agreements will be binding upon any permitted successors and assigns.
3.6 Change in Control
3.6.1 In the event of a Change in Control, unless otherwise set forth in an applicable Award Agreement, a Grantees Award shall be treated, to the extent determined by the Committee to be permitted under Section 409A, in accordance with one of the following methods as determined by the Committee in its sole discretion: (i) settle such Awards for an amount (as determined in the sole discretion of the Committee) of cash or securities, where in the case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of Employment within a specified period after a Change in Control, subject to ASX Listing Rules) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Committee) after closing; (v) accelerate the vesting of Awards in full or on a pro-rata basis as determined by the Committee; or provide that for a period of at least 20 days prior to the Change in Control, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Change in Control will be exercisable as to all CDIs and Shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. For the avoidance of doubt, in the event of a Change in Control where all stock options and stock appreciation rights are settled for an amount (as determined in the sole discretion of the Committee) of cash or securities, the Committee may, in its sole discretion, terminate any stock option or stock appreciation right for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor. Similar actions to those specified in this Section 3.6.1 may be taken in the event of a merger or other corporate reorganization that does not constitute a Change in Control.
3.7 No Continued Employment or Engagement; Right of Discharge Reserved
Neither the adoption of the Plan nor the grant of any Award (or any provision in the Plan or Award Agreement) will confer upon any Grantee any right to continued Employment, or other engagement, with the Company, nor will it interfere in any way with the right of the Company to terminate, or alter the terms and conditions of, such Employment or other engagement at any time.
3.8 Nature of Payments
3.8.1 Any and all grants of Awards and deliveries of CDIs, Common Stock, cash, securities or other property under the Plan will be in consideration of services performed or to be performed for Coronado or any Subsidiary by the Grantee. Awards under the Plan may, in the discretion of the Committee, be made in substitution in whole or in part for cash or other compensation otherwise payable to a Grantee. Only whole CDIs or Shares will be delivered under the Plan. Awards will, to the extent reasonably practicable, be aggregated in order to eliminate any fractional CDIs or Shares. Fractional CDIs or Shares may, in the discretion of the Committee, be forfeited or be settled in cash or otherwise as the Committee may determine.
3.8.2 All such grants and deliveries of CDIs, Shares, cash, securities or other property under the Plan will constitute a special discretionary incentive payment to the Grantee and will not be required to be taken into account in computing the amount of salary or compensation of the Grantee for the purpose of determining any contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or under any agreement with the Grantee, unless the Company specifically provides otherwise.
3.9 Non-Uniform Determinations
3.9.1 The Committees determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a Grantees Employment has been terminated for purposes of the Plan.
3.9.2 To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purposes of the Plan, the Committee may, without amending the Plan, establish special rules applicable to Awards to Grantees who are foreign nationals, are employed in a particular jurisdiction or both and grant Awards (or amend existing Awards) in accordance with those rules.
3.10 Other Payments or Awards
Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
3.11 Plan Headings
The headings in the Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof.
3.12 Termination of Plan
The Board reserves the right to terminate the Plan at any time; provided , however , that in any case, the Plan will terminate on the day before the tenth anniversary of the Effective Date, and provided , further , that all Awards made under the Plan before its termination will remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements.
3.13 Clawback/Recapture
Where, in the opinion of the Board:
(a) a Grantee:
(1) has acted fraudulently or dishonestly;
(2) has engaged in gross misconduct;
(3) has engaged in an act which has brought the Company into disrepute;
(4) has breached his or her duties or obligations to the Company; or
(5) is convicted of an offence or has a judgment entered against them in connection with the affairs of the Company; or
(b) There is Financial Misstatement Circumstance; or
(c) a Grantees Awards vest or may vest as a result of the fraud, dishonesty or breach of duties or obligations of any other person and, in the opinion of the Board, the Awards would not have otherwise vested; or
(d) the Company is required by or entitled under law or Company policy to reclaim remuneration from a Grantee,
The Board may determine that:
(e) any of the following held by or on behalf of the Grantee:
(1) unvested Awards;
(2) vested but unexercised Awards;
(3) restricted stock units, restricted shares and/or CDIs or Shares allocated under the Plan,
Will lapse or be deemed to be forfeited (as the case may be), and/or
(f) a Grantee must pay or repay (as the case may be) to the Company as a debt:
(1) all or part of the net proceeds of sale where CDIs or Shares allocated under the Plan have been sold;
(2) any cash payment received on vesting of Awards or in lieu of an allocation of CDIs or Shares; and/or
(3) any dividends received in respect of CDIs or Shares allocated under the Plan.
The Board may specify in an Award Agreement additional circumstances in which a Grantees entitlement to Awards may be reduced or extinguished.
3.14 Section 409A
3.14.1 All Awards made under the Plan that are intended to be deferred compensation subject to Section 409A shall be interpreted, administered and construed to comply with Section 409A, and all Awards made under the Plan that are intended to be exempt from Section 409A shall be interpreted, administered and construed to comply with and preserve such exemption. The Board and the Committee shall have full authority to give effect to the intent of the foregoing sentence. To the extent necessary to give effect to this intent, in the case of any conflict or potential inconsistency between the Plan and a provision of any Award or Award Agreement with respect to an Award, the Plan shall govern.
3.14.2 Without limiting the generality of Section 3.14.1 , with respect to any Award made under the Plan that is intended to be deferred compensation subject to Section 409A:
(a) any payment due upon a Grantees termination of employment shall be paid only upon such Grantees separation from service from the Company within the meaning of Section 409A;
(b) any payment due upon a Change in Control of the Company will be paid only if such Change in Control constitutes a change in ownership or change in effective control within the meaning of Section 409A, and in the event that such Change in Control does not constitute a change in the ownership or change in the effective control within the meaning of Section 409A, such Award will vest upon the Change in Control and any payment will be delayed until the first compliant date under Section 409A;
(c) any payment to be made with respect to such Award in connection with the Grantees separation from service from the Company within the meaning of Section 409A (and any other payment that would be subject to the limitations in Section 409A(a)(2)(b) of the Code) shall be delayed until six months after the Grantees separation from service (or earlier death) in accordance with the requirements of Section 409A;
(d) to the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver in lieu of CDIs or Shares in
respect of an Award shall not have the effect of deferring delivery or payment beyond the date on which such delivery or payment would occur with respect to the CDIs or Shares that would otherwise have been deliverable (unless the Committee elects a later date for this purpose in accordance with the requirements of Section 409A);
(e) with respect to any required Consent described in Section 3.3 or the applicable Award Agreement, if such Consent has not been effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay of payment is not permitted in accordance with the requirements of Section 409A, such Award or portion thereof, as applicable, will be forfeited and terminate notwithstanding any prior earning or vesting;
(f) if the Award includes a series of installment payments (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Grantees right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment;
(g) if the Award includes dividend equivalents (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Grantees right to the dividend equivalents shall be treated separately from the right to other amounts under the Award; and
(h) for purposes of determining whether the Grantee has experienced a separation from service from the Company within the meaning of Section 409A, subsidiary shall mean a corporation or other entity in a chain of corporations or other entities in which each corporation or other entity, starting with Coronado, has a controlling interest in another corporation or other entity in the chain, ending with such corporation or other entity. For purposes of the preceding sentence, the term controlling interest has the same meaning as provided in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations, provided that the language at least 20 percent is used instead of at least 80 percent each place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations.
3.15 Governing Law
THE PLAN AND ALL AWARDS MADE AND ACTIONS TAKEN THEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
3.16 Severability; Entire Agreement
If any of the provisions of the Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; provided that if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any Award Agreements contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises,
covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.
3.17 Waiver of Claims
Each Grantee of an Award recognizes and agrees that before being selected by the Committee to receive an Award he or she has no right to any benefits under the Plan. Accordingly, in consideration of the Grantees receipt of any Award hereunder, he or she expressly waives any right to contest the amount of any Award, the terms of any Award Agreement, any determination, action or omission hereunder or under any Award Agreement by the Committee, the Company or the Board, or any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award Agreement to which his or her consent is expressly required by the express terms of an Award Agreement). Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Grantee. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).
3.18 No Liability With Respect to Tax Qualification or Adverse Tax Treatment
Notwithstanding anything to the contrary contained herein, in no event shall the Company be liable to a Grantee on account of an Awards failure to (a) qualify for favorable United States or foreign tax treatment or (b) avoid adverse tax treatment under United States or foreign law, including, without limitation, Section 409A.
3.19 No Third-party Beneficiaries
Except as expressly provided in an Award Agreement, neither the Plan nor any Award Agreement will confer on any person other than the Company and the Grantee of any Award any rights or remedies thereunder. The exculpation and indemnification provisions of Section 1.3.4 will inure to the benefit of a Covered Persons estate and beneficiaries and legatees.
3.20 Successors and Assigns of Coronado
The terms of the Plan will be binding upon and inure to the benefit of Coronado and any successor entity contemplated by Section 3.6 .
3.21 Waiver of Jury Trial
EACH GRANTEE WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THE PLAN.
3.22 Directors
If the Grantee is a Director, stock-based awards (other than restricted shares or CDIs) that entitle the Grantee to receive Shares or CDIs on vesting (and if applicable, exercise) must be satisfied by Shares or CDIs that have been purchased on market, unless:
a) stockholder approval is not required under the ASX Listing Rules; or
b) stockholder approval has been obtained to the extent required under the ASX Listing Rules.
3.23 Participation in new issues
Equity-based or equity-related Awards (other than restricted shares and restricted CDIs) carry no entitlement to participate in new issues of Shares or CDIs by the Company prior to the vesting and exercise (if applicable) of the Award.
3.24 Date of Adoption and Approval of Stockholders
The Plan was adopted on September 21, 2018 by the Board (the Effective Date ) and approved by Coronados stockholders on September 21, 2018.
CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 NON-EXECUTIVE DIRECTOR PLAN
ARTICLE I
GENERAL
1.1 Purpose
The Coronado Global Resources Inc . 2018 Non-Executive Director Plan (as amended from time to time, the Plan ) is designed to help the Company (as hereinafter defined): (a) attract, retain and motivate non-employee directors of the Board of Directors of Coronado Global Resources Inc., a Delaware corporation ( Coronado ) (each such director, a Non-Executive Director ); (b) align the interests of such directors with the Companys shareholders; and (c) promote ownership of the Companys equity. The Plan is subject to subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth).
1.2 Definitions of Certain Terms
For purposes of this Plan, the following terms have the meanings set forth below:
1.2.1 ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange, as the context required.
1.2.2 ASX Listing Rules means the official listing rules of the ASX as they apply to the Company from time to time.
1.2.3 ASX Settlement means ASX Settlement Pty Limited (ABN 49 008 504 532).
1.2.4 ASX Settlement Operating Rules means the settlement operating rules of ASX Settlement.
1.2.5 Award means an award made pursuant to the Plan.
1.2.6 Award Agreement means the written document by which each Award is evidenced, and which may, but need not be (as determined by the Committee), executed or acknowledged by a Grantee as a condition to receiving an Award or the benefits under an Award, and which sets forth the terms and provisions applicable to Awards granted under the Plan to such Grantee. Any reference herein to an agreement in writing will be deemed to include an electronic writing to the extent permitted by applicable law.
1.2.7 Board means the Board of Directors of Coronado.
1.2.8 Business Combination has the meaning provided in the definition of Change in Control.
1.2.9 CDI is a CHESS depositary interest, being a security interest as defined in the ASX Settlement Operating Rules, and any other securities or property issued in exchange therefor or in lieu thereof pursuant to Section 1.6.2 .
1.2.10 Certificate means a stock certificate (or other appropriate document or evidence of ownership) representing shares of Common Stock.
1.2.11 Change in Control means, except in connection with any initial public offering of the Common Stock, CDIs or other security interest of the Company, the occurrence of any of the following events:
(a) during a period of not more than 36 months, individuals who constitute the Board as of the beginning of the period (the Incumbent Directors ) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of Coronado in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided , however , that no individual initially elected or nominated as a director of Coronado as a result of an actual or publicly threatened election contest with respect to directors or as a result of any other actual or publicly threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b) any person (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Coronado representing 50% or more of the combined voting power of Coronados then-outstanding securities eligible to vote for the election of the Board ( Coronado Voting Securities ); provided , however , that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of the ownership or acquisition of Coronado Voting Securities: (A) by Coronado or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by Coronado or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c) of this definition) or (E) by Energy Minerals Group, Coronado LLC or any of their affiliates;
(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving Coronado that requires the approval of Coronados stockholders, whether for such transaction or the issuance of securities in the transaction (a Business Combination ), excluding such a Business Combination with Energy Minerals Group, Coronado LLC or any of their affiliates, unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the entity resulting from such Business Combination (the Surviving Entity ), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power is represented by Coronado Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares or other security into which such Coronado Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Coronado Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), is or
becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity) and (C) at least 50% of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Boards approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) of this paragraph (c) shall be deemed to be a Non-Qualifying Transaction );
(d) the consummation of a sale of all or substantially all of Coronados assets (other than to Energy Minerals Group, Coronado or any of their affiliates); or
(e) the stockholders of Coronado approve a plan of complete liquidation or dissolution of Coronado.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 50% of the Coronado Voting Securities as a result of the acquisition of Coronado Voting Securities by Coronado which reduces the number of Coronado Voting Securities outstanding; provided , that if after such acquisition by Coronado, such person (other than Energy Minerals Group, Coronado LLC or any of their affiliates) becomes the beneficial owner of additional Coronado Voting Securities that increases the percentage of outstanding Coronado Voting Securities beneficially owned by such person, a Change in Control shall then occur.
1.2.12 Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the applicable rulings and regulations thereunder.
1.2.13 Committee has the meaning set forth in Section 1.3.1 .
1.2.14 Common Stock means the common stock of Coronado, par value $0.01 per share, and any other securities or property issued in exchange therefor or in lieu thereof pursuant to Section 1.6.3 .
1.2.15 Company means Coronado and any Subsidiary.
1.2.16 Consent has the meaning set forth in Section 3.3.2 .
1.2.17 Coronado Voting Securities has the meaning provided in the definition of Change in Control.
1.2.18 Covered Person has the meaning set forth in Section 1.3.4 .
1.2.19 Effective Date has the meaning set forth in Section 3.22 .
1.2.20 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.
1.2.21 Fair Market Value means, (i) with respect to a CDI, the closing price for the CDI on the applicable date as reported on the ASX or, if not so reported, as determined in accordance with a valuation methodology approved by the Committee, and (ii) with respect to a Share, the product of (x) ten and (y) the closing price for a CDI on the applicable date as reported on the ASX or, if not so reported, as determined in accordance with a valuation methodology approved by the Committee, in each case unless determined as otherwise specified herein; provided that if the Shares are listed on the New York Stock Exchange or NASDAQ, then the Fair Market Value will mean, with respect to a Share, the closing price for a Share on the applicable date as reported on the New York Stock Exchange or NASDAQ, as applicable. For purposes of the grant of any Award, unless otherwise provided in an Award Agreement, the applicable date will be the trading day immediately prior to the date the Award is granted. For purposes of the exercise of any Award, the applicable date is the date a notice of exercise is received by the Company or, if such date is not a trading day, the trading day immediately following the date a notice of exercise is received by the Company.
1.2.22 Grantee means a Non-Executive Director who receives an Award.
1.2.23 Incumbent Directors has the meaning provided in the definition of Change in Control.
1.2.24 Non-Qualifying Transaction has the meaning provided in the definition of Change in Control.
1.2.25 Plan Action will have the meaning set forth in Section 3.3.1 .
1.2.26 Section 409A means Section 409A of the Code, including any amendments or successor provisions to that section, and any regulations and other administrative guidance thereunder, in each case as they may be from time to time amended or interpreted through further administrative guidance.
1.2.27 Securities Act means the Securities Act of 1933, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.
1.2.28 Shareholder Approval Limit means the aggregate dollar amount of compensation approved by the Coronados shareholders for payment to the Non-Executive Directors with respect to a period of time established by such shareholders in accordance with law.
1.2.29 Shares means shares of Common Stock.
1.2.30 Subsidiary means any corporation, partnership, limited liability company or other legal entity in which Coronado has a direct or indirect ownership interest of 50% or more of the total combined voting power of all classes of the then-outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or managing partners or in which Coronado has the right to receive 50% or more of the distribution of profits or 50% of the assets on liquidation or dissolution.
1.2.31 Surviving Entity has the meaning provided in the definition of Change in Control.
1.2.32 Treasury Regulations means the regulations promulgated under the Code by the United States Treasury Department, as amended.
For the avoidance of doubt, any references to stock or shares in this Plan may be read as a reference to CDIs or Shares as the context reasonably requires, unless the contrary intention is expressly stated in the Plan.
1.3 Administration
1.3.1 The Compensation and Nominating Committee of the Board (as constituted from time to time, and including any successor committee, the Committee ) will administer the Plan. In particular, the Committee will have the authority in its sole discretion to:
(a) exercise all of the powers granted to it under the Plan;
(b) construe, interpret and implement the Plan and all Award Agreements;
(c) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing the Committees own operations;
(d) make all determinations necessary or advisable in administering the Plan;
(e) correct any defect, supply any omission and reconcile any inconsistency in the Plan;
(f) amend the Plan to reflect changes in applicable law;
(g) grant, or recommend to the Board for approval to grant, Awards and determine who will receive Awards, when such Awards will be granted and the terms of such Awards, including setting forth provisions with regard to the effect of a termination of directorship on such Awards and conditioning the vesting of, or the lapsing of any applicable vesting restrictions or other vesting conditions on, Awards upon continued service;
(h) amend any outstanding Award Agreement in any respect, including, without limitation, to
(1) accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may provide that any CDIs or Shares acquired pursuant to such Award will be restricted CDIs or Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Grantees underlying Award),
(2) accelerate the time or times at which CDIs or Shares are delivered under the Award (and, without limitation on the Committees rights, in connection with such acceleration, the Committee may provide that any CDIs or Shares delivered pursuant to such
Award will be restricted CDIs or Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Grantees underlying Award),
(3) waive or amend any goals, restrictions, vesting provisions or conditions set forth in such Award Agreement, or impose new goals, restrictions, vesting provisions and conditions or
(4) reflect a change in the Grantees circumstances ( e.g. , a change in position, duties or responsibilities); and
(i) determine at any time whether, to what extent and under what circumstances and method or methods, subject to Section 3.14 ,
(1) Awards may be
(A) settled in cash, CDIs, Shares, other securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on the Grantees Award, including the effect on any repayment provisions under the Plan or Award Agreement),
(B) exercised or
(C) canceled, forfeited or suspended,
(2) CDIs, Shares, cash, other securities, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Grantee thereof or of the Committee,
(3) to the extent permitted under applicable law, loans (whether or not secured by Common Stock) may be extended by the Company with respect to any Awards,
(4) Awards may be settled by Coronado, any of its Subsidiaries or affiliates or any of their designees and
(5) the exercise price for any stock option or stock appreciation right may be reset.
1.3.2 Actions of the Committee may be taken by the vote of a majority of its members present at a meeting (which may be held telephonically). Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken will be fully as effective as if it had been taken by a vote at a meeting. The determination of the Committee on all matters relating to the Plan or any Award Agreement will be final, binding and conclusive. The Committee may allocate among its members and delegate to any person who is not a member of the Committee, or to any administrative group within the Company, any of its powers, responsibilities or duties. In delegating its authority, the Committee will consider the extent to which any delegation may cause Awards to fail to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act. Except as specifically provided to the
contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated its duties and powers.
1.3.3 Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee herein.
1.3.4 No member of the Committee or any person to whom the Committee delegates its powers, responsibilities or duties in writing, including by resolution (each such person, a Covered Person ), will have any liability to any person (including any Grantee) for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award, except as expressly provided by statute. Each Covered Person will be indemnified and held harmless by the Company against and from:
(a) any loss, cost, liability or expense (including attorneys fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each case, in good faith and
(b) any and all amounts paid by such Covered Person, with Coronados approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that Coronado will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once Coronado gives notice of its intent to assume the defense, Coronado will have sole control over such defense with counsel of Coronados choice.
The foregoing right of indemnification will not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Persons bad faith, fraud or willful misconduct. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under Coronados Certificate of Incorporation or By-laws, as amended from time to time, pursuant to any individual indemnification agreements between such Covered Person and the Company, as a matter of law, or otherwise, or any other power that Coronado may have to indemnify such persons or hold them harmless.
1.4 Persons Eligible for Awards
Awards under the Plan may be made to Non-Executive Directors.
1.5 Types of Awards Under Plan
Awards may be made under the Plan in the form of cash-based and/or stock-based Awards. Stock- based Awards may be in the form of any of the following, in each case in respect of CDIS or Shares as determined from time to time:
(a) stock options,
(b) stock appreciation rights,
(c) restricted shares or CDIs,
(d) restricted stock units,
(e) dividend equivalent rights and
(f) other equity-based or equity-related Awards (as further described in Section 2.8 ), that the Committee determines to be consistent with the purposes of the Plan and the interests of the Company.
For the avoidance of doubt, the Committee may determine that an Award will be satisfied by cash, Shares or CDIs, with such decision to be determined by the Committee at any time after the Award date (including on vesting and, if applicable, exercise of the relevant Award).
1.6 Shares of Common Stock Available for Awards
1.6.1 Shareholder Approval Limit . Aggregate Awards to any one Grantee in respect of any fiscal year, solely with respect to his or her service as a director of the Board, may not exceed the Shareholder Approval Limit in effect at any time based on the aggregate value of cash Awards and Fair Market Value of stock-based Awards, in each case, determined as of the date of grant.
1.6.2 Adjustments . The Committee will adjust the terms of any outstanding Awards (including, without limitation, the number of CDIs or Shares covered by each outstanding Award, the type of property to which the Award relates and the exercise or strike price of any Award),in such manner as it deems appropriate (including, without limitation, by payment of cash) to prevent the enlargement or dilution of rights, as a result of any increase or decrease in the number of issued CDIs or Shares (or issuance of shares of stock other than shares of Common Stock) resulting from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of CDIs or Shares, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure, CDIs or Shares, including any extraordinary dividend or extraordinary distribution; provided that no such adjustment shall be made if or to the extent that it would cause an outstanding Award to cease to be exempt from, or to fail to comply with, Section 409A of the Code , or to the extent that such adjustment would be contrary to the ASX Listing Rules if Coronado is listed on the ASX. Where applicable, the Committee will make the adjustments referred to in this Section in the manner allowed or required by the ASX Listing Rules, if Coronado is listed on the ASX.
ARTICLE II
AWARDS UNDER THE PLAN
2.1 Agreements Evidencing Awards
Each Award granted under the Plan will be evidenced by an Award Agreement that will contain such provisions and conditions as the Committee deems appropriate. Unless otherwise provided herein and subject to the ASX Listing Rules, the Committee may grant Awards in tandem with or, subject to Section 3.13 , in substitution for or satisfaction of any other Award or Awards granted under the Plan or any award granted under any other plan of Coronado. By accepting an Award pursuant to the Plan, a Grantee thereby agrees that the Award will be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.
2.2 No Rights as a Stockholder
No Grantee (or other person having rights pursuant to an Award) will have any of the rights of a stockholder of Coronado or holder of CDIs with respect to CDIs or Shares subject to an Award until the delivery of such CDIs or Shares. Except as otherwise provided in Section 1.6.2 , no adjustments will be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, CDIs, Common Stock, other securities or other property) for which the record date is before the date the Grantee is registered as the holder of CDIs or Shares, as applicable, as determined by the Committee or the Certificates for the Shares are delivered, or in the event the Committee elects to use another system, such as book entries by the transfer agent, before the date in which such system evidences the Grantees ownership of such CDIs or Shares.
2.3 Options
2.3.1 Grant . Stock options may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee may determine. A stock option granted under the Plan represents a right to purchase a CDI or a Share at a specified price for a specified period of time.
2.3.2 Exercise Price . The exercise price per CDI or share with respect to each stock option will be determined by the Committee but, except as otherwise permitted by Section 1.6.2 , may never be less than the Fair Market Value.
2.3.3 Term of Stock Option . In no event will any stock option be exercisable after the expiration of 10 years from the date on which the stock option is granted.
2.3.4 Vesting and Exercise of Stock Option and Payment for CDIs and Shares . A stock option may vest and be exercised at such time or times and subject to such terms and conditions as will be determined by the Committee at the time the stock option is granted and set forth in the Award Agreement. Subject to any limitations in the applicable Award Agreement, any CDIs or Shares not acquired pursuant to the exercise of a stock option on or following the applicable vesting date because the Grantee chose to exercise less than the total number of vested options at the time of exercise may be acquired thereafter at any time before the final expiration of the stock option.
To exercise a stock option, the Grantee must give written notice to Coronado specifying the number of stock options to be exercised and accompanied by payment of the full purchase price therefor in cash or by certified or official bank check or in another form as determined by the Company, which may include:
(a) personal check,
(b) CDIs or Shares, based on the Fair Market Value as of the exercise date, of the same class of securities as those to be granted by exercise of the stock option,
(c) any other form of consideration approved by the Company and permitted by applicable law and
(d) any combination of the foregoing.
The Committee may also make arrangements for the cashless exercise of a stock option. Any person exercising a stock option will make such representations and agreements and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance by Coronado on terms acceptable to Coronado with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. The Committee may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share or other applicable security certificates and issuing stop-transfer notices to agents and registrars. If a Grantee so requests, CDIs or Shares acquired pursuant to the exercise of a stock option may be issued in the name of the Grantee and another jointly with the right of survivorship.
2.3.5 Repricing . Except as otherwise permitted by Section 1.6.2 and subject to the ASX Listing Rules, reducing the exercise price of stock options issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval of Coronados stockholders.
2.4 Stock Appreciation Rights
2.4.1 Grant . Stock appreciation rights may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee may determine. A stock appreciation right granted under the Plan represents a right to receive, upon exercise, a payment equal to the excess of the Fair Market Value of a CDI or a Share on the date of exercise of a stock appreciation right over the exercise price of the stock appreciation right.
2.4.2 Exercise Price . The exercise price per CDI or Shares with respect to each stock appreciation right will be determined by the Committee but, except as otherwise permitted by Section 1.6.2 , may never be less than the Fair Market Value.
2.4.3 Term of Stock Appreciation Right . In no event will any stock appreciation right be exercisable after the expiration of 10 years from the date on which the stock appreciation right is granted.
2.4.4 Vesting and Exercise of Stock Appreciation Right and Delivery of CDIs and Shares . Each stock appreciation right may vest and be exercised in such installments as may be determined in the Award Agreement at the time the stock appreciation right is granted. Subject to any limitations in the applicable Award Agreement, any stock appreciation rights not exercised on or following the applicable vesting date because the Grantee chose to exercise less than the total number of vested stock appreciation rights at the time of exercise may be exercised thereafter at any time before the final expiration of the stock appreciation right.
To exercise a stock appreciation right, the Grantee must give written notice to Coronado specifying the number of stock appreciation rights to be exercised. Upon exercise of stock appreciation rights, CDIs, Shares, cash or other securities or property, or a combination thereof, as specified by the Committee, equal in value to:
(a) the excess of:
(1) the Fair Market Value of CDIs or Shares on the date of exercise over
(2) the exercise price of such stock appreciation right multiplied by
(b) the number of stock appreciation rights exercised will be delivered to the Grantee.
Any person exercising a stock appreciation right will make such representations and agreements and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance by Coronado on terms acceptable to Coronado with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. If a Grantee so requests, CDIs or Shares purchased may be issued in the name of the Grantee and another jointly with the right of survivorship.
2.4.5 Repricing . Except as otherwise permitted by Section 1.6.2 and subject to the ASX Listing Rules , reducing the exercise price of stock appreciation rights issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval of Coronados stockholders.
2.5 Restricted Shares and CDIs
2.5.1 Grants . The Committee may grant or offer for sale restricted shares or restricted CDIs, subject to applicable law and ASX Listing Rules in such amounts and subject to such terms and conditions as the Committee may determine. Upon the delivery of such restricted shares or restricted CDIs, as applicable, the Grantee will have, in the case of restricted shares, the rights of a stockholder with respect to the restricted shares, and, in the case of restricted CDIs, the rights of a holder of CDIs with respect to the restricted CDIs, in each case subject to any other restrictions and conditions as the Committee may include in the applicable Award Agreement. Each Grantee of an Award of restricted shares will be issued a Certificate in respect of such shares, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of such shares. In the event that a Certificate is issued in
respect of restricted shares, such Certificate may be registered in the name of the Grantee, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, but will be held by Coronado or its designated agent until the time the restrictions lapse. Each Grantee of an Award of restricted CDIs will be noted in a book entry system and will be subject to a holding lock until the time the restriction lapses.
2.5.2 Right to Vote and Receive Dividends on Restricted Shares . Each Grantee of an Award of restricted shares or restricted CDIs will, during the period of restriction, be the beneficial and record owner of such restricted shares or restricted CDIs and will have full voting rights with respect thereto. Unless the Committee determines otherwise in an Award Agreement, during the period of restriction, all ordinary cash dividends or other ordinary distributions paid upon any restricted share or restricted CDI will be paid to the relevant Grantee (any extraordinary dividends or other extraordinary distributions will be treated in accordance with Section 1.6.2 ).
2.6 Restricted Stock Units
The Committee may grant Awards of restricted stock units in such amounts and subject to such terms and conditions as the Committee may determine. A restricted stock unit granted under the Plan represents the right to receive CDIs, Shares, cash or other securities or property in the future, at such times, and subject to such conditions, as the Committee shall determine. A Grantee of a restricted stock unit will have only the rights of a general unsecured creditor of Coronado, until delivery of CDIs, Shares, cash or other securities or property is made as specified in the applicable Award Agreement. On the delivery date specified in the Award Agreement, the Grantee of each restricted stock unit not previously forfeited or terminated will receive CDIs, Shares, cash or other securities or property or a combination thereof, as specified by the Committee. Unless otherwise specified in an Award Agreement, in the event that a Grantee is removed or terminated as a director, or otherwise ceases to be a director of the Company, then, subject to and in accordance with the terms of this Plan, each vested restricted stock unit then held by the Grantee as of the date of such cessation of services shall be settled as of such date.
2.7 Dividend Equivalent Rights
The Committee may include in the Award Agreement with respect to any Award a dividend equivalent right entitling the Grantee to receive amounts equal to all or any portion of the regular cash dividends that would be paid on the CDIs or Shares covered by such Award if such CDIs or Shares had been delivered pursuant to such Award. The grantee of a dividend equivalent right will have only the rights of a general unsecured creditor of Coronado until payment of such amounts is made as specified in the applicable Award Agreement. In the event such a provision is included in an Award Agreement, the Committee will determine whether such payments will be made in cash, CDIs, Shares or in another form, whether they will be conditioned upon the exercise of the Award to which they relate (subject to compliance with Section 409A of the Code), the time or times at which they will be made, and such other terms and conditions as the Committee will deem appropriate.
2.8 Other Stock-Based or Cash-Based Awards
The Committee may grant other types of equity-based, equity-related or cash-based Awards (including retainers and meeting-based fees and the grant or offer for sale of unrestricted shares of Common Stock) in such amounts and subject to such terms and conditions as the Committee may determine. Such Awards may entail the transfer of CDIs or Shares to Award recipients and may include Awards designed to comply with or take advantage of the applicable local laws of a specific jurisdiction.
ARTICLE III
MISCELLANEOUS
3.1 Amendment of the Plan
3.1.1 Unless otherwise provided in the Plan or in an Award Agreement, the Board may at any time and from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever but, subject to Sections 1.3 , 1.6.2 , and 3.6 , no such amendment shall materially adversely impair the rights of the Grantee of any Award without the Grantees consent. Subject to Sections 1.3 , 1.6.2 , and 3.6 , an Award Agreement may not be amended to materially adversely impair the rights of a Grantee without the Grantees consent.
3.1.2 Unless otherwise determined by the Board, stockholder approval of any suspension, discontinuance, revision or amendment will be obtained only to the extent necessary to comply with any applicable laws, regulations or rules of a securities exchange or self-regulatory agency.
3.2 Tax Withholding
Grantees shall be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any Award. As a condition to the delivery of any CDIs, Shares, cash or other securities or property pursuant to any Award or the lifting or lapse of restrictions on any Award, or in connection with any other event that gives rise to a federal or other governmental tax withholding obligation on the part of the Company relating to an Award,
(a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a Grantee whether or not pursuant to the Plan (including CDIs or Shares otherwise deliverable),
(b) the Committee will be entitled to require that the Grantee remit cash to the Company (through payroll deduction or otherwise) or
(c) the Company may enter into any other suitable arrangements to withhold, in each case in an amount not to exceed in the opinion of the Company the maximum amounts of such taxes required by law to be withheld.
3.3 Required Consents and Legends
3.3.1 If the Committee at any time determines that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of CDIs or Shares or the delivery of any cash, securities or other property under the Plan, or the taking of any other action thereunder (each such action a Plan Action ), then, subject to Section 3.14 , such Plan Action will not be taken, in whole or in part, unless and until such Consent will have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing Shares delivered pursuant to the Plan will bear a legend setting forth such restrictions on transferability as the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop transfer order against any legended shares.
3.3.2 The term Consent as used in this Article III with respect to any Plan Action includes:
(a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state, or local law, or law, rule or regulation of a jurisdiction outside the United States,
(b) any and all written agreements and representations by the Grantee with respect to the disposition of CDIs, Shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made,
(c) any and all other consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory body or any stock exchange or self-regulatory agency,
(d) any and all consents by the Grantee to:
(1) the Companys supplying to any third-party record-keeper of the Plan such personal information as the Committee deems advisable to administer the Plan,
(2) the Companys deducting amounts from the Grantees wages, or another arrangement satisfactory to the Committee, to reimburse the Company for advances made on the Grantees behalf to satisfy certain withholding and other tax obligations in connection with an Award and
(3) the Companys imposing sales and transfer procedures and restrictions and hedging restrictions on CDIs or Shares delivered under the Plan and
(e) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Committee. Nothing herein will require the Company to list, register or qualify the shares of Common Stock or other security interests of the Company on any securities exchange.
3.4 Right of Offset
The Company will have the right to offset against its obligation to deliver CDIs or Shares (or other property or cash) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other programs) that the Grantee then owes to the Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Committee will have no right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement if such offset could subject the Grantee to the additional tax imposed under Section 409A of the Code in respect of an outstanding Award.
3.5 Non-assignability; No Hedging
No Award (or any rights and obligations thereunder) granted to any person under the Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged, in any manner (including through the use of any cash-settled instrument), whether voluntarily or involuntarily and whether by operation of law or otherwise, other than by will or by the laws of descent and distribution, and all such Awards (and any rights thereunder) will be exercisable during the life of the Grantee only by the Grantee or the Grantees legal representative, unless the Committee otherwise determines in its sole discretion. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions of this Section 3.5 will be null and void and any Award which is hedged in any manner will immediately be forfeited. All of the terms and conditions of the Plan and the Award Agreements will be binding upon any permitted successors and assigns.
3.6 Change in Control
3.6.1 Unless the Committee determines otherwise or as otherwise provided in the applicable Award Agreement and subject to the ASX Listing Rules, upon a Change in Control, each Award shall become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable and any CDIs or Shares deliverable pursuant to restricted stock units shall be delivered promptly (but no later than 15 days) following such Change in Control.
3.6.2 In the event of a Change in Control, unless otherwise provided in the applicable Award Agreement, a Grantees Award shall be treated, to the extent determined by the Committee to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Committee in its sole discretion: (i) settle such Awards for an amount (as determined in the sole discretion of the Committee) of cash or securities, where in the case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of directorship within a specified period after a Change
in Control, subject to ASX Listing Rules) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate or (iv) provide that for a period of at least 20 days prior to the Change in Control, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Change in Control will be exercisable as to all CDIs or Shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. For the avoidance of doubt, in the event of a Change in Control where all stock options and stock appreciation rights are settled for an amount (as determined in the sole discretion of the Committee) of cash or securities, the Committee may, in its sole discretion, terminate any stock option or stock appreciation right for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor. Similar actions to those specified in this Section 3.6.2 may be taken in the event of a merger or other corporate reorganization that does not constitute a Change in Control.
3.7 Right of Discharge Reserved
Neither the adoption of the Plan nor the grant of any Award (or any provision in the Plan or Award Agreement) will (1) confer upon any Grantee the right to remain in the service of Coronado or any of its Subsidiaries as a Non-Executive Director, (2) affect any right which Coronado or any Subsidiary may have to terminate or alter the terms and conditions of such service or (3) create any obligation on behalf of the Board to nominate any Non-Executive Director for re-election to the Board by Coronados stockholders or to nominate and elect such person to the board of directors of any of Coronados Subsidiaries.
3.8 Nature of Payments
3.8.1 Any and all grants of Awards and deliveries of CDIs or Common Stock, cash, securities or other property under the Plan will be in consideration of services performed or to be performed for Coronado or any Subsidiary by the Grantee. Awards under the Plan may, in the discretion of the Committee, be made in substitution in whole or in part for cash or other compensation otherwise payable to a Grantee. Only whole CDIs or Shares will be delivered under the Plan. Awards will, to the extent reasonably practicable, be aggregated in order to eliminate any fractional CDIs or Shares. Fractional CDIs or Shares may, in the discretion of the Committee, be forfeited or be settled in cash or otherwise as the Committee may determine.
3.8.2 All such grants and deliveries of CDIs, Shares, cash, securities or other property under the Plan will constitute a special discretionary incentive payment to the Grantee, will not entitle the Grantee to the grant of any future awards and will not be required to be taken into account in computing the amount of salary or compensation of the Grantee for the purpose of determining any contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or under any agreement with the Grantee, unless the Company specifically provides otherwise.
3.9 Non-Uniform Determinations
3.9.1 The Committees determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a Grantees directorship has been terminated for purposes of the Plan.
3.9.2 To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purposes of the Plan, the Committee may, in its sole discretion and without amending the Plan, establish special rules applicable to Awards to Grantees who are foreign nationals and grant Awards (or amend existing Awards) in accordance with those rules.
3.10 Other Payments or Awards
Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
3.11 Plan Headings
The headings in the Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof.
3.12 Termination of Plan
The Board reserves the right to terminate the Plan at any time; provided , however , that in any case, the Plan will terminate on the day before the tenth anniversary of the Effective Date, and provided , further , that all Awards made under the Plan before its termination will remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements.
3.13 Section 409A
3.13.1 All Awards made under the Plan that are intended to be deferred compensation subject to Section 409A shall be interpreted, administered and construed to comply with Section 409A, and all Awards made under the Plan that are intended to be exempt from Section 409A shall be interpreted, administered and construed to comply with and preserve such exemption. The Board and the Committee shall have full authority to give effect to the intent of the foregoing sentence. To the extent necessary to give effect to this intent, in the case of any conflict or potential inconsistency between the Plan and a provision of any Award or Award Agreement with respect to an Award, the Plan shall govern.
3.13.2 Without limiting the generality of Section 3.14.1 , with respect to any Award made under the Plan that is intended to be deferred compensation subject to Section 409A:
(a) any payment due upon a Grantees ceasing to provide services to the Company shall be paid only upon such Grantees separation from service from the Company within the meaning of Section 409A;
(b) any payment due upon a Change in Control of the Company will be paid only if such Change in Control constitutes a change in ownership or change in effective control within the meaning of Section 409A, and in the event that such Change in Control does not constitute a change in the ownership or change in the effective control within the meaning of Section 409A, such Award will vest upon the Change in Control and any payment will be delayed until the first compliant date under Section 409A;
(c) any payment to be made with respect to such Award in connection with the Grantees separation from service from the Company within the meaning of Section 409A (and any other payment that would be subject to the limitations in Section 409A(a)(2)(b) of the Code) shall be delayed until six months after the Grantees separation from service (or earlier death) in accordance with the requirements of Section 409A;
(d) to the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver in lieu of CDIs or Shares in respect of an Award shall not have the effect of deferring delivery or payment beyond the date on which such delivery or payment would occur with respect to the CDIs or Shares that would otherwise have been deliverable (unless the Committee elects a later date for this purpose in accordance with the requirements of Section 409A);
(e) with respect to any required Consent described in Section 3.3 or the applicable Award Agreement, if such Consent has not been effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay of payment is not permitted in accordance with the requirements of Section 409A, such Award or portion thereof, as applicable, will be forfeited and terminate notwithstanding any prior earning or vesting;
(f) if the Award includes a series of installment payments (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Grantees right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment;
(g) if the Award includes dividend equivalents (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Grantees right to the dividend equivalents shall be treated separately from the right to other amounts under the Award; and
(h) for purposes of determining whether the Grantee has experienced a separation from service from the Company within the meaning of Section 409A, subsidiary shall mean a corporation or other entity in a chain of corporations or other entities in which each corporation or other entity, starting with Coronado, has a controlling interest in another corporation or other entity in the chain, ending with such corporation or other entity. For
purposes of the preceding sentence, the term controlling interest has the same meaning as provided in Section 1.414(c)- 2(b)(2)(i) of the Treasury Regulations, provided that the language at least 20 percent is used instead of at least 80 percent each place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations.
3.14 Governing Law
THE PLAN AND ALL AWARDS MADE AND ACTIONS TAKEN HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
3.15 Severability; Entire Agreement
If any of the provisions of the Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; provided that if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any Award Agreements contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.
3.16 Waiver of Claims
Each Grantee of an Award recognizes and agrees that before being selected by the Committee to receive an Award he or she has no right to any benefits under the Plan. Accordingly, in consideration of the Grantees receipt of any Award hereunder, he or she expressly waives any right to contest the amount of any Award, the terms of any Award Agreement, any determination, action or omission hereunder or under any Award Agreement by the Committee, the Company or the Board, or any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award Agreement to which his or her consent is expressly required by the express terms of an Award Agreement). Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Grantee. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).
3.17 No Liability With Respect to Tax Qualification or Adverse Tax Treatment
Notwithstanding anything to the contrary contained herein, in no event shall the Company be liable to a Grantee on account of an Awards failure to (a) qualify for favorable United States or foreign tax treatment or (b) avoid adverse tax treatment under United States or foreign law, including, without limitation, Section 409A.
3.18 No Third-party Beneficiaries
Except as expressly provided in an Award Agreement, neither the Plan nor any Award Agreement will confer on any person other than the Company and the Grantee of any Award any rights or remedies thereunder. The exculpation and indemnification provisions of Section 1.3.4 will inure to the benefit of a Covered Persons estate and beneficiaries and legatees.
3.19 Successors and Assigns of Coronado
The terms of the Plan will be binding upon and inure to the benefit of Coronado and any successor entity contemplated by Section 3.6 .
3.20 Waiver of Jury Trial
EACH GRANTEE WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THE PLAN.
3.21 Non-Executive Directors of Coronado
If the Grantee is a Non-Executive Director of Coronado , Non-Stock-based awards (other than Restricted Shares or CDIs) that entitle the Grantee to receive Shares or CDIs on vesting (and if applicable, exercise) must be satisfied by Shares or CDIs that have been purchased on market, unless:
(a) stockholder approval is not required under the ASX Listing Rules; or
(b) stockholder approval has been obtained to the extent required under the ASX Listing Rules.
3.22 Participation in new issues
Equity-based or equity-related Awards (other than restricted shares and restricted CDIs) carry no entitlement to participate in new issues of Shares or CDIs by the Company prior to the vesting and exercise (if applicable) of the Award.
3.23 Date of Adoption and Approval of Stockholders
The Plan was adopted on September 21, 2018 by the Board (the Effective Date ) and approved by Coronados stockholders on September 21, 2018.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( Agreement ), made as of 21 Sep 2018, effective on 21 September, 2018, between CORONADO GLOBAL RESOURCES INC. (the Company ), a Delaware corporation and Garold R. Spindler ( Employee ), presently residing in or near Wilton, Connecticut.
WITNESSETH:
WHEREAS, Employee is presently employed as Chief Executive Officer of the Company or its affiliate, in which capacity he has contributed materially to the Companys success;
WHEREAS, the Company wishes to ensure the continued availability of Employees services and of reasonable protection against Employees competing against the Company, and Employee is willing to give such assurance in return for certain protections as set forth in this Agreement; and
NOW, THEREFORE, intending to be legally bound hereby, the Company on behalf of itself or a subsidiary hereby agrees to employ Employee, and Employee hereby agrees to be employed by the Company or a subsidiary of the Company, upon the following terms and conditions:
1. Duties and Responsibilities.
Employee shall hold the position of Chief Executive Officer and shall render such services and perform such duties commensurate with his position as may be reasonably assigned to him from time to time by the Company. Excluding any periods of vacation and sick leave to which Employee is entitled, Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Employee hereunder, to use Employees reasonable best efforts to perform faithfully and efficiently such responsibilities.
2. Compensation.
Employees base salary effective as of the effective date set forth above shall be $1,000,000 per year, which shall be reviewed from time to time and may be increased by the Company in the best interests of the Company and in accordance with Employees then current responsibilities, paid in accordance with the Companys regular payroll practices and on regularly scheduled payroll dates. In addition, Employee shall be entitled to participate in all short term incentive, long term incentive, welfare, savings and retirement and other employee benefit plans, practices, policies, and programs applicable generally to other executive officers of the Company.
3. Term; Termination of Employment.
(a) Subject to the terms and provisions of this Agreement, Employees employment hereunder shall commence as of 21 September, 2018 and shall continue until December 31, 2019 (the Expiration Date ). Notwithstanding the forgoing to the contrary, each year the Expiration Date shall be automatically extended to December 31 of the following year unless either party gives written notice to the other party, on or before September 30 of the year in which the Expiration Date is scheduled to occur, of its intention not to extend the Expiration Date.
(b) The employment of Employee hereunder may be terminated by the Company with or without Cause (as defined below) or by Employee with our without Good Reason (as defined below). Employees employment shall terminate automatically if Employee dies. If the Company determines in good faith that the Disability (as defined below) of Employee has occurred, it may give to Employee written notice of its intention to terminate Employees employment. In such event, Employees employment with the Company shall terminate effective on the 30th day after receipt of such notice by Employee, provided that, within the 30 days after such receipt, Employee shall not have returned to full-time performance of Employees duties.
(c) Cause shall mean by reason of Employees: (I) conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or its Affiliates or involving acts of theft, fraud, embezzlement, moral turpitude, or similar conduct, (II) repeated intoxication by alcohol or drugs during the performance of such holders duties in a manner that materially and adversely affects the holders performance of such duties, (III) malfeasance, in the conduct of such holders duties, that consists of (1) willful and intentional misuse or diversion of funds of the Company or its Affiliates, (2) embezzlement, or (3) fraudulent or willful and material misrepresentations or concealments on any written reports submitted to the Company or its Affiliates, or (IV) material failure to perform the duties of Employees employment or material failure to follow or comply with the reasonable and lawful written directives of the board of directors or the board of managers or other governing body a subsidiary or affiliate of the Company by which such holder is employed, in either case after the holder shall have been informed, in writing, of such material failure and given a period of not more than thirty (30) days to fully remedy same.
(d) Disability shall mean Employees incapacity due to physical or mental illness that (i) shall have prevented Employee from performing his or her duties for the Company or any of its subsidiaries or affiliates on a full-time basis for more than 180 days or (ii) (x) the board of directors determines is likely to prevent Employee from performing such duties for such a 180 period and (y) 30 days has elapsed since delivery to Employee of the determination of the board and Employee has not resumed such performance (in which case the date of termination in the case of a termination for Disability pursuant to this clause (ii) shall be deemed to be the last day of such 30-day period).
(e) Good Reason shall mean, without Employees express written consent, the occurrence of any one or more of the following: (u) a material diminution of Employees authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements) as an employee of the Company (any such diminution occurring as a result of the Companys ceasing to be a publicly traded entity shall be deemed material for purposes of the foregoing); (v) the Companys requiring Employee to be based at a location in excess of thirty-five miles from the location of Employees principal job location or office immediately prior to such change; (w) a reduction in Employees base salary or any material reduction by the Company of Employees other compensation or benefits; (x) the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Companys obligations under this Agreement; (y) any purported termination by the Company of Employees employment that is not effected pursuant to a notice of termination in writing which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employees employment under the provision so indicated, and for purposes of this Agreement, no such purported termination shall be effective; and (z) a material breach of this Agreement by the Company.
4. Compensation Upon Termination of Employment.
(a) Termination by the Company for Cause or Resignation by Employee Without Good Reason . If Employees employment is terminated by the Company for Cause or by Employee without Good Reason, the Company shall provide the following (referred to in this Agreement as the Accrued Obligations ) to the Employee (i) Employees base salary, vacation and other cash entitlements accrued through the date of termination shall be paid to Employee in a lump sum of cash on the first regularly scheduled payroll date that is at least ten (10) days from the date of termination to the extent theretofore unpaid, (ii) the amount of any compensation previously deferred by Employee shall be paid to Employee in accordance with the terms of the applicable deferred compensation plan to the extent theretofore unpaid and (iii) amounts that are vested benefits or that Employee is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company at or subsequent to the date of termination, payable in accordance with such plan, policy, practice or program or contract or agreement, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
(b) Termination by the Company Without Cause or Resignation by the Employee for Good Reason . If Employees employment is terminated by the Company without Cause or If Employee resigns for Good Reason, the Company shall provide the following to Employee (i) the Accrued Obligations, payable as provided in Section 4(a) hereof and (ii) a period of twelve (12) months ( Severance Period ) base salary based upon the salary Employee earned at the time of his termination, which is payable in a lump sum on the date which is the first day following the six (6) month anniversary of the date of termination, and the Company shall have no other severance obligations with respect to Employee under this.
(c) Death or Disability . If Employees employment is terminated by reason of Employees death or Disability, the Company shall provide the Accrued Obligations to Employee, or in the event of Employees death, to his estate or beneficiaries, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
5. Confidential Information, etc.
(a) Employee recognizes and acknowledges that: (i) in the course of Employees employment by the Company it will be necessary for Employee to acquire information which could include, in whole or in part, information concerning the Companys sales, sales volume, sales methods, sales proposals, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customers purchases from the Company, the Companys sources of supply, computer programs, system documentation, special hardware, product hardware, related software development, manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions or other confidential or proprietary information belonging to the Company or relating to the Companys affairs (collectively referred to herein as the Confidential Information ); (ii) the Confidential Information is the property of the Company; (iii) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Company; and (iv) it is essential to the protection of the Companys good will and to the maintenance of the Companys competitive position that the Confidential Information be kept secret and that Employee not disclose the Confidential Information to others or use the Confidential Information to Employees own advantage or the advantage of others. For purposes of this Agreement Confidential Information shall not include information known by Employee before his employment with the Company or information that becomes publicly available through some means other than disclosure by Employee in violation of this agreement.
(b) Employee further recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Employee be restrained (i) from soliciting or inducing any Employee of the Company or of any subsidiary of the Company (as used in Sections 5, 6 and 7 hereof, collectively, the Company ) to leave the employ of the Company, (ii) from hiring or attempting to hire any Employee of the Company, (iii) from soliciting the trade of or trading with the customers of the Company for any business purpose, and (iv) from competing against the Company each according to the terms of Section 6 following.
6. Confidentiality, Non-compete and Related Covenants.
(a) Employee agrees to hold and safeguard the Confidential Information in trust for the Company, its successors and assigns and agrees that he shall not, without the prior written consent of the Company, disclose or make available to anyone for use outside the Company at any time, either during his employment by the Company or subsequent to the termination of his employment by the Company for any reason, including without limitation termination by the Company in a Termination for Cause or otherwise, any of the Confidential Information, whether or not developed by Employee, except as required in the performance of Employees duties to the Company. For the avoidance of doubt, this provision shall not prohibit Employee from reporting possible violations of federal law or regulation to any governmental agency or entity or from making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Companys approval shall not be required, nor shall notice to the Company be required, in connection with such reports or disclosures.
(b) Upon the termination of Employees employment by the Company or by Employee for any reason, including without limitation termination by the Company in a termination for Cause or otherwise, Employee shall promptly deliver to the Company all originals and copies of correspondence, drawings, blueprints, financial and business records, marketing and publicity materials, manuals, letters, notes, notebooks, laptops, reports, flow-charts, programs, proposals and any documents concerning the Companys customers or concerning products or processes used by the Company and, without limiting the foregoing, shall promptly deliver to the Company any and all other documents or materials containing or constituting Confidential Information.
(c) Subject to the provisions of Section 6(f) following, Employee agrees that during his employment by the Company he shall not, directly or indirectly, solicit the trade of, or trade with, any customer or prospective customer of the Company for any business purpose other than for the benefit of the Company. Upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee further agrees that for a period of one year after such termination of employment hereunder, Employee shall not, directly or indirectly, solicit the trade of, or trade with, any customers, or prospective customers, of the Company, or solicit or induce, or attempt to solicit or induce, any employee of the Company to leave the Company for any reason whatsoever or hire any employee of the Company.
(d) Subject to the provisions of Section 6(f) following, During the period of Employees employment hereunder and upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee agrees that for a period of one year after such termination of employment hereunder, Employee shall not, in any Competitive Territory, engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, (i) the term Competing Business shall mean the production
or sales of metallurgical bituminous coal, and (ii) the term Competitive Territory shall mean the United States of America, Australia and any other nation in which, to the knowledge of Employee, the Company has made or considered making such sales, either itself or through a subsidiary, affiliate or joint venture partner, during the last two years prior to the termination of Employees employment hereunder.
(e) Prior to accepting employment during the non-compete period referred to herein, Employee shall notify the Company in order to determine if the position Employee is seeking violates this Agreement.
(f) Notwithstanding the provisions of Sections 6(c) or 6(d) to the contrary, the Company, it is sole and absolute discretion, may, by written notice delivered to Employee promptly after the termination of Employees employment by the Company or the resignation of Employee, elect to waive and not enforce the non-solicitation and non-compete provisions of Sections 6(c) and 6(d). In the event that the Company elects to waive and not enforce both such sections, (but only both and not just one such section) then the provisions of Section 6(g) following shall not apply.
(g) Unless the Company has provided notice that it has waived and will not enforce both the non-solicitation and non-compete provisions of Sections 6(c) and 6(d) as provided in Section 6(f), during the one year period beginning on the first business day following the last day of Employees employment with the Company, the Company shall pay the Employee, in twelve equal monthly payments during such year commencing 30 days after the last day of Employees employment with the Company, an amount equal to one half (1/2) of the annual salary of Employee as of the business day immediately preceding the last day of Employees employment with the Company. Payments under this section shall be in addition to any severance or other payments due to Employee under the terms of this Agreement. During such one-year period (unless the waiver contemplated by Section 6(f) has been made), and in consideration of the payments contemplated by this Section 6(g), Employee agrees to consult with the Company as requested by the Company provided such consultation shall not require more than twenty (20) hours of consultation per week and shall be reasonably related to the duties of Employee while employed. Employee shall provide such consultation by phone, e-mail or other remote communication or at the location of Employees principal job location or office immediately prior to the termination of his employment and shall not be required to otherwise travel.
7. Injunctive and other relief.
(a) Employee represents that his experience and capabilities are such that Sections 5 and 6 hereof not prevent him from earning his livelihood and acknowledges that it would cause the Company serious and irreparable injury and cost if Employee were to use his ability and knowledge in competition with the Company or to otherwise breach the obligations contained in said paragraphs.
(b) In the event of a breach by Employee of the terms of this Agreement, the Company shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by Employee and to enjoin Employee from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Employee acknowledges, however, that the remedies at law for any breach by him of the provisions of this Agreement may be inadequate and that the Company shall be entitled to injunctive relief against him in the event of any breach whether or not the Company may also be entitled to recover damages hereunder.
(c) It is the intention of the parties that the provisions of Sections 5 and 6 hereof shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or modify, as necessary, the offending provision or provisions and to alter the bounds thereof in order to render it valid and enforceable.
8. Arbitration.
Any dispute arising out of or relating to this Agreement or the breach, termination or validation hereof, other than actions for specific performance or an injunction under Section 7 hereof, shall be finally settled by arbitration conducted expeditiously in accordance with the American Arbitration Association Employment Arbitration Rules by three independent and impartial arbitrators. Each party shall appoint one of such arbitrators, and the two arbitrators so appointed shall appoint the third arbitrator. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Beckley West Virginia. The arbitrators are not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any damages in excess of comp ensatory damages.
9. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia without giving effect to any choice or conflict of law provision or rule (whether of the State of West Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of West Virginia.
10. Amendments, waivers, etc.
No amendment of any provision of this Agreement, and no postponement or waiver of any such provision or of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless such amendment, postponement or waiver is in writing and signed by or on behalf of the Company and Employee. No such amendment, postponement or waiver shall be deemed to extend to any prior or subsequent matter, whether or not similar to the subject matter of such amendment, postponement or waiver. No failure or delay on the part of the Company or Employee in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
11. Assignment.
The rights and duties of the Company under this Agreement may be transferred to, and shall be binding upon, any person or company which acquires or is a successor to the Company, its business or a significant portion of the assets of the Company by merger, purchase or otherwise, and the Company shall require any such acquirer or successor by agreement in form and substance reasonably satisfactory to Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company, as the case may be, would be required to perform if no such acquisition or succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any acquirer or successor in accordance with the operation of law and such acquirer or successor shall be deemed the Company, as the case may be, for purposes of this Agreement. Except as
otherwise provided in this Section 11, neither the Company nor Employee may transfer any of their respective rights and duties hereunder except with the written consent of the other party hereto.
12. Interpretation, etc.
The Company and Employee have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Company and Employee and no presumption or burden of proof shall arise favoring or disfavoring the Company or Employee because of the authorship of any of the provisions of this Agreement. The word including shall mean including without limitation. The rights and remedies expressly specified in this Agreement are cumulative and are not exclusive of any rights or remedies which either party would otherwise have. The Section headings hereof are for convenience only and shall not affect the meaning or interpretation of this Agreement. For purposes of this Agreement, the term termination when used in the context of a condition to, or timing of, payment hereunder shall be interpreted to mean a separation from service as that term is used in Section 409A of the Code.
13. Integration; counterparts.
This Agreement constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate to the subject matter hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.
14. Code Section 409A.
All amounts payable under this Agreement are intended to comply with the short term deferral exception from Section 409A of the Internal Revenue Code (Section 409A) specified in Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) or the separation pay plan exception specified in Treas. Reg. § 1.409A-1(b)(9) (or any successor provision), or both of them, and shall be interpreted in a manner consistent with the applicable exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, this Agreement shall be interpreted and administered in such a way as to comply with Section 409A to the maximum extent possible. Each installment payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A. If payment of any amount subject to Section 409A is triggered by a separation from service that occurs while the Employee is a specified employee (as defined by Section 409A), and if such amount is scheduled to be paid within six (6) months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Employees estate following the Employees death. Termination of employment, resignation or words of similar import, as used in this Agreement shall mean, with respect to any payments subject to Section 409A, the Employees separation from service as defined by Section 409A.
WITNESS the due execution hereof as of the date first above written.
Witness: |
CORONADO GLOBAL RESOURCES INC. |
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/s/ Emma Pollard |
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By: |
/s/ James I. Campbell |
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James I. Campbell |
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President and Chief Operating Officer |
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Witness: |
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/s/ Kerry-Lee Doyle |
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By: |
/s/ Garold R. Spindler |
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Garold R. Spindler |
31 August 2018
PRIVATE AND CONFIDENTIAL
Ayten Saridas
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Dear Ayten,
As you are aware, the Coronado group is currently in the process of listing on the Australian Securities Exchange.
In preparation of this listing, we ask that you agree to some amendments to your employment contract, which we consider to be appropriate given your role as part of an ASX-listed company. You will see that we have enclosed a mark-up of your employment contract so that you can see the changes from your previous contract.
We look forward to continuing to work with you to ensure the success of our operations.
To accept this employment offer please return a signed and dated copy of this Letter of Offer and associated documents to Emma Pollard ** by 7 September 2018. Should you have any queries concerning this offer, please do not hesitate to contact Emma.
Yours sincerely
/s/ Garold R. Spindler |
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Garold R Spindler |
Coronado Group Chief Executive Officer
I have read, understand and agree to all the terms and conditions that apply to my employment with the Company as outlined in this offer and related documents, including the contract of employment. I confirm that the fixed annual remuneration which I receive under the contract of employment, satisfies any obligations on the Company to pay to me any entitlements to which I may otherwise be entitled under an industrial instrument or law.
By signing this agreement, I accept the undertaking in the Clause Compliance with Company Policies & Procedures of the attached Contract of Employment and agree to the earnings set out in the Clause Fixed Annual Remuneration.
Signed: |
/s/ Ayten Saridas |
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Date: |
31/8/18 |
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Ayten Saridas |
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Contract of Employment
Curragh Queensland Mining Pty Ltd
ABN 55 095 450 418 |
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Private Mail Bag |
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Blackwater QLD 4717 |
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Page 1 of 15
www.curragh.com.au
The following terms and conditions will apply to your continued employment with Curragh Queensland Mining Pty Ltd ( Company ) in the role of Chief Financial Officer ( CFO ) from the date both parties sign this agreement:
1. Commencement and Operation of Employment
The Company acknowledges that your employment commenced on 18 June 2018. Your position is a permanent full time position which currently reports to the Coronado Group Chief Executive Officer ( Leader ).
2. Location of Employment
Your position will be based in Brisbane, but you will need to work as required by the Company at other locations to perform the inherent requirements of your position. The Company may require you to travel within the state, interstate or overseas to perform your duties.
In recognition of your relocation from NSW to Brisbane to take up the role of CFO, you continue to be eligible to receive the benefits outlined in Appendix 1, in accordance with that Appendix.
You may be required to transfer to other positions and locations with the Company or the Group, subject to appropriate consultation and notice.
3. Duties
During your employment you must:
(a) during your working hours, devote your whole time, attention and ability to the business of the Company;
(b) serve the Company diligently, honestly and faithfully;
(c) exercise and carry out all duties required of you within your skills and competence and follow all lawful directions and instructions;
(d) follow all lawful and reasonable directions and instructions given to you by the Company;
(e) not, without the written consent of the Company, engage in any other employment or in other activity (whether paid or unpaid) which may conflict with your duties as an employee of the Company or may adversely affect the reputation of the Company. You must advise the Company immediately if this occurs or may occur;
(f) use your best efforts to promote the interests and welfare of the Company; and
(g) as required by the Company, perform work for any other member or members of the Group.
The Company may vary your duties and responsibilities from time to time or assign you additional duties and responsibilities as may be directed by the Company or your Leader. In particular, you may be required to perform any duties in any area of the operation, subject to your competence and any safety and statutory requirements. You may also be required to train and become competent in new skills as required by the Company.
4. Hours of Work
You must work the hours which are reasonably necessary to fulfil the requirements of the position or as required by the Company. Your remuneration includes compensation for all hours that may be worked (and when they are worked) during the course of your employment. Your remuneration is in full satisfaction of any entitlement you may have under any law or any industrial instrument or agreement including overtime, loadings, allowances or penalties.
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Your Leader will advise of indicative start and finish times to accommodate regular work requirements and teams working in your location or elsewhere in the Companys operations.
Your hours of work may be averaged over a period of up to six months.
5. Fixed Annual Remuneration
Your remuneration comprises a fixed annual remuneration ( FAR ) which will be AU$670,000. Your FAR is made up of the following components:
(a) Cash salary:
Your cash salary will be the amount remaining after deducting from your FAR the amounts for Company superannuation contribution, and any other pre-tax deductions nominated by you. Your cash salary, net of tax and authorised deductions, will be paid on a monthly basis by electronic funds transfer into bank account/s nominated by you.
(b) Superannuation:
Your FAR includes the compulsory superannuation guarantee contributions paid by the Company for your benefit. The Company will make compulsory superannuation guarantee contributions, on your behalf, up to the quarterly maximum contribution required under the Superannuation Guarantee (Administration) Act 1992 (Cth). Superannuation guarantee contributions are included as part of your FAR. For the 2018/19 financial year, the maximum contribution required to avoid the superannuation guarantee charge is the lesser of 9.5% of your ordinary time earnings or $5132.85 per quarter. This amount may be varied from time to time by the Australian Taxation Office.
Superannuation will be contributed to the default Mercer Superannuation Plan or any other complying superannuation fund selected by you.
Compulsory superannuation guarantee contributions will be processed by the Company as 9.5% of your ordinary time earnings each pay period of the quarter until the maximum required contribution for the quarter is reached. Where 9.5% of your ordinary time earnings for a quarter is less than the maximum contribution required, then compulsory superannuation guarantee contributions will be 9.5% of your ordinary time earnings for that quarter.
You may choose to make additional voluntary contributions to your chosen fund from either your pre-tax or after-tax FAR.
Please note that in any financial year, the total value of your pre-tax and post-tax contributions should not exceed the annual limits as determined under the relevant tax legislation. The Human Resources Department will be able to advise what the limit applicable to you is at any time. There may be tax consequences should your superannuation contributions exceed your annual limit. We suggest that you discuss these consequences with your financial or tax advisor. If you reach your limit, further contributions in that financial year will attract an additional tax on top of the normal superannuation tax
If you do not choose a fund, contributions payable on your behalf will be directed to the default super fund. A Choice of Fund form can be returned after this date and future contributions made to your nominated fund accordingly but you may be liable for excess fees and charges by having membership in more than one fund. Should you complete the relevant paperwork after your commencement date, Mercer will contact you regarding your existing account and provide you with the appropriate paperwork to consolidate your superannuation into your new fund.
By accepting this offer and contract of employment, you are consenting to the provision of your personal information, including any health information, between the Company and the superannuation fund and their service providers. This information is necessary
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to facilitate the provision of benefits in the course of your employment and for the management of the fund.
If you require further information or assistance on superannuation please contact the Human Resources Department.
(c) Parking Benefit
Due to the seniority of this position, you will be entitled to a company paid car park space within the office building as a benefit in addition to your FAR. The Company reserves the right to review your eligibility to paid parking from time to time. This benefit is not redeemable for cash or transferable for any other benefit arrangement.
Your FAR will be subject to review each year in line with your annual salary review.
Your FAR is in full recognition of the requirements of the role. Your FAR includes compensation for all entitlements, benefits or payments that, you may be otherwise entitled to, including under any applicable industrial instrument. Accordingly, you will not be paid any special rates or allowances for working particular times or under particular conditions unless otherwise agreed in writing.
6. Incentive arrangements
You may be eligible to participate in incentive arrangements offered by the Company or Group from time to time. Details of these arrangements will be provided to you separately, and do not form a part of your employment agreement.
7. Annual Leave
In accordance with the applicable legislation and Company policy, you will be entitled to 4 weeks annual leave per annum. You are required to apply for annual leave at least 4 weeks prior to your first day of intended leave, or such shorter period as may be agreed with your Leader. Annual leave approved by your Leader and taken during employment will be paid based on your FAR.
Annual leave is to be taken within 12 months of accruing. If you do not take the leave within this period, the Company may direct you to do so upon giving you one months notice.
You and the Company may agree in writing for you to cash out an amount of paid annual leave provided that the agreement does not result in your remaining accrued entitlement to paid annual leave being less than 4 weeks. Each agreement must be a separate agreement in writing. Annual leave which is cashed out and foregone will be paid based on your FAR and your accrued annual leave entitlement will be reduced accordingly.
On termination of employment, you will be paid for any untaken leave based on your FAR.
8. Long Service Leave
You are entitled to long service leave in accordance with applicable legislation and Company policy as advised to you and amended from time to time.
9. Personal/Carers Leave
You are entitled to 10 days paid personal/carers leave per year of service with the Company in accordance with applicable legislation and Company policy. You may take personal/carers leave if:
(a) you are unable to attend work due to personal injury or illness; or
(b) you need to provide care and support for members of your immediate family or members of your household in the event of genuine injury or illness or unexpected emergency affecting the family member.
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You should notify your Manager as soon as practicable of the need to take personal/carers leave and the period, or expected period, of the leave. You are required to provide a medical certificate or other evidence as reasonably required by the Company for leave equal to or in excess of two days. A medical certificate or statutory declaration may also be required to establish the illness of the person concerned or the unexpected emergency. The entitlement to carers leave is subject to you being responsible for, and the only person available to provide care for the person concerned.
Approved personal/carers leave will be paid based on your FAR. There is no payment for unused personal/carers leave upon termination for any reason.
Where you have a requirement for carers leave and you do not have any accrued personal/carers leave, you are entitled to up to 2 days unpaid leave on each occasion.
Requests for longer periods of paid or unpaid carers leave or any other arrangements for the provision of carers leave will be considered on a case by case basis.
10. Parental Leave
You are entitled to receive parental leave in accordance with the applicable legislation and Company policy as advised to you and amended from time to time.
11. Compassionate Leave
You are entitled to up to two days paid leave (in addition to the balance of the day on which you are notified) in the event that a member of your immediate family or your household, contracts or develops a personal illness or sustains a personal injury, that poses a serious threat to their life, or in the event of their death. The entitlement to compassionate leave is in accordance with the applicable legislation and Company policy as advised to you and amended from time to time.
For the purposes of this clause, immediate family is your spouse or de facto spouse, and you or your spouses, child/step-child, parent/step-parent, grandparent, grandchild or siblings. You are required to let your Manager know as soon as possible when you realise you will be unable to attend work.
A medical certificate or statutory declaration may be required to establish that the leave is taken for a permissible reason.
Payment for approved compassionate leave will be based on your FAR.
12. Jury Service Leave
You are entitled to jury service leave in accordance with the applicable legislation and Company policy as advised to you and amended from time to time.
13. Public Holidays
Public Holidays will be those recognised in the applicable legislation, or other agreed replacement days. Although you are not normally required to work public holidays, you may be requested to do so, from time to time to meet the operational requirements of the Company, consideration for which is included in your FAR.
14. Medical Assessments
In order for the Company to satisfy its duty of care and safety obligations, it may require you to undertake a medical assessment by a doctor or other health professional(s) nominated by the Company, including regular medicals or health checks that may be organised by the Company and random drug and alcohol testing (at the Companys expense).
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You consent to the doctor or health professional releasing the results of that assessment to the Company. The Company will keep the medical information provided to it under this clause confidential and you agree that the medical information which is collected may be used by the Company to manage your employment, including determining whether you are capable of safely performing the duties of your position.
The above requirement is separate to, and in addition to, any requirement for a health or medical assessment under applicable legislation.
15. Guarantee of annual earnings
Your salary includes compensation for all entitlements, benefits or payments that might otherwise be due under any industrial instrument that may apply to your employment including but not limited to:
· overtime;
· penalty payments for out of hours work and working weekends and public holidays;
· shift loadings; and
· any other loadings, penalties, overtime or allowances.
Accordingly, you will not be paid any special rates or allowances for working particular times or under particular conditions unless otherwise agreed in writing.
For the purpose of section 330 the Fair Work Act 2009 (Cth), the Company undertakes that it will pay you your FAR as set out in the Clause Fixed Annual Remuneration for a period of at least 12 months. This undertaking constitutes a guarantee of annual earnings for the purposes of the Fair Work Act 2009 (Cth). As a result, to the extent they would otherwise apply, the terms of the Black Coal Mining Industry Award 2010 will not apply to your employment for the period during which the guarantee of annual earnings applies as your annual earnings will exceed the high income threshold for the purposes of the Fair Work Act 2009 (Cth).
This undertaking will continue until the earlier of the following:
· your employment with the Company ends;
· you accept a new undertaking from the Company; or
· you and the Company agree to revoke this undertaking.
This undertaking does not affect the rights of either you or the Company to end the employment relationship in accordance with the termination provisions set out in this agreement.
By accepting this offer and contract of employment, you agree to the guarantee of annual earnings given by the Company.
16. Compliance with Company Policies & Procedures
During your employment you are required to comply with the Companys policies and procedures as varied from time to time.
It is your obligation to take reasonable steps to familiarise yourself with current policies and procedures that are relevant to your employment and to comply at all times with such policies and procedures. The Companys policies and procedures operate independently of this contract and are not incorporated into this contract and are not binding on the Company.
The Company reserves the right to amend, revoke or replace its policies and procedures at its discretion, in accordance with what the Company considers to be its business needs . The
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Company will notify you of any changes to policies and procedures which impose a requirement on you as an employee.
17. Occupational Health & Safety
You must comply with all occupational health and safety systems that are relevant to your work. You must attend to your work safely, take all reasonable care and notify your Leader if you become aware of any workplace risks. You must not create a potential safety risk to yourself or others in the course of your employment, including (but not limited to) by the excessive consumption of alcohol or the use of illicit drugs.
18. Privacy
You consent to the Company collecting, storing, using and disclosing your personal and health information for any lawful purpose relating to your employment. You also consent to the Company transferring your personal and health information outside Queensland and Australia in the course of its business activities.
You also consent to the Company disclosing your personal and health information to other persons for any lawful purpose relating to your employment. These persons include the Australian Tax Office, superannuation fund trustees and administrators, contractors, bankers, insurers, medical, rehabilitation or occupational practitioners, laboratory analysts, investigators, financial and legal advisers, potential purchasers on sale of business, law enforcement bodies and regulatory authorities.
19. Confidentiality
During your employment with the Company you will have access to or may become acquainted with information belonging to or in the possession of the Group relating to its operations and the affairs of the Group including, but not limited to, information about the Groups products, processes, assets, plans, strategies, and information received from third parties under an obligation of confidence ( Confidential Information ).
You must not use or disclose Confidential Information, except
(a) for the purpose of and to the extent necessary to properly perform your duties; or
(b) where disclosure of specific Confidential Information is required to comply with any applicable law; or
(c) the use or disclosure of the Confidential Information is agreed by the Company.
You agree that upon termination of your employment for any reason you will return to the Company all of the Confidential Information that you have in your possession.
Your obligation not to use or disclose confidential information in accordance with the terms of this clause continues after your employment ends.
20. Intellectual property
For the purpose of this clause:
Work means any invention, discovery, design, improvement, formula, process, technique, literary or artistic work, or any other item in which Intellectual Property Rights subsist or are capable of subsisting and is wholly or partly created, made or discovered by you either:
(a) during your employment; or
(b) otherwise using the facilities, resources, time, Confidential Information or any other opportunity provided by the Company, or the Group.
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Intellectual Property Rights means all existing and future rights, which may be protected by copyright, patent, design, trademark or other registration or other forms of protection in Australia or elsewhere.
Moral Rights includes the right to be identified as the author of the work, the right not to have any other person identified as the author of the work and the right not to have the work subjected to any derogatory treatment.
The Work and all Intellectual Property Rights in the Work will belong absolutely to the relevant company or companies within the Group and you agree to do all things necessary and execute any document required to give effect to this ownership.
You must immediately and fully disclose to the Company any Work created, made or discovered by you.
You consent to the use of all existing and future Works made by you in the course of your employment, and agree to waive any Moral Rights you may have in them, in favour of the Company or the relevant company or companies within the Group.
You also agree that this consent and waiver extends to any licensees and successors in title to the relevant company within the Group in respect of such Works, as well as to any persons who are authorised by the Group or by its licensees and successors in title to do acts comprising the copyright of such Works.
You agree to execute any further document necessary to give effect to this. If you do not comply with such a request by the Company within 7 days, you authorise the Company (or any persons authorised by the Company) to do all things and execute all documents necessary to give effect to that request on your behalf.
For the avoidance of doubt, your obligations under this clause continue after your employment ends.
21. Termination of Employment
Either party may terminate your employment by giving the other party three months written notice.
In the event that the Company terminates your employment for any reason other than the reasons set forth under clause 21 subparagraphs (a), (b) and (c), the Company will pay a termination payment equivalent to six months FAR.
The Company may make a payment in lieu of notice for all or the balance of the notice period. In the event that you end your employment without giving the specified period of notice, you agree to pay the Company an amount equal to your total remuneration for the balance of the notice period not serviced. You agree that this amount is a genuine pre-estimate of the loss the Company is likely to suffer as a result of the failure to give the specified period of notice.
The period of notice prescribed above applies throughout your employment with the Company, unless a new period is agreed in writing. If notice of termination is given to you, the Company is not obliged to provide any work to you during the notice period.
The Company may terminate your employment immediately without notice or payment in lieu of notice if you:
(a) engage in any serious or wilful misconduct including by committing any wilful, serious or persistent breach of your terms and conditions of employment or any Company policy or by serious neglect in the performance of your duties;
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(b) engage in any other conduct (either inside or outside of the workplace) which in the reasonable opinion of the Company is likely to affect adversely the reputation of the Company or the Group and/or your ability to effectively perform your duties; or
(c) are unwilling or unable, wholly or partially, to properly and effectively perform your duties.
If your employment is terminated for any of the above reasons, the Company will pay you up to the day of termination only.
22. Directorships
The Company may require you to become a director of the Company or any of its Related Bodies Corporate without any additional remuneration and the benefits under this Agreement are in part consideration of you agreeing to become a director.
On termination of your employment:
(a) you must resign all directorships held as a consequence of the employment, as directed by the Company; and
(b) you irrevocably appoint the Company Secretary of the Company as your agent to execute any documents on your behalf.
You agree to resign as a director if the Chairperson or the Company requires you to do so.
23. Company Property
Upon the cessation of your employment you will return to the Company or an authorised officer of the Company:
(a) all originals and copies in any form (including but not limited to computer data) of all books, records and documents relating to your duties, functions and responsibilities as an employee of the Company or its business affairs (including customer lists and details); and
(b) all other things belonging to the Company (including but not limited to keys, security cards and passes, corporate credit cards, mobile phones, copies of documents and computerised information) which you have in your possession or which has otherwise been provided to you in the course of your employment with the Company.
24. Set Off
Immediately on your employment ending or at any other time requested by the Company, you:
(a) agree to pay to the Company all amounts you owe to it (for example, amounts such as personal expenses incurred on a Company mobile telephone, or amounts owing for Company funded study assistance) or any amounts mistakenly paid to you such as an overpayment;
(b) authorise and direct the Company to withhold unpaid amounts from monies otherwise owed to you during employment or upon termination of employment; and
(c) acknowledge that if you fail to repay any monies owing to the Company, including any amounts paid to you by mistake, the Company may demand and enforce the recovery of such monies as a debt immediately due and payable by you to the Company.
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25. Post-employment restrictions
Competitive Business means any business that competes with the Group during the period of 6 months preceding the End Date or during the Restricted Period.
End Date means the date on which your employment with the Company ends.
Entity means an individual, company, partnership, joint venture (whether corporate or incorporate) or any other body (whether corporate or incorporate).
Prescribed Position means:
1 a position as employee, director, secretary, company officer, agent, contractor, consultant or adviser of any Entity;
2 a partner, shareholder or member of any Entity; and
3 acting as any of the persons referred to in items 1 and 2 of this definition.
Restricted Area means:
1 Any country where the Group has operations, including at the date of this agreement the United States of America and Australia; or failing that
2 The United States of America and Australia; or failing that
3 Australia; or failing that
4 Queensland and New South Wales; or failing that
5 Queensland.
Restricted Period means:
1 the period of 12 months starting on the End Date; or failing that
2 the period of 6 months starting on the End Date; or failing that
3 the period of 3 months starting on the End Date; or failing that
4 the period of 1 months starting on the End Date.
Inducing directors, employees or contractors to leave the Group
You must not, during the Restricted Period and in the Restricted Area, directly or indirectly induce or attempt to induce any director, employee or contractor of the Group, with whom you had work related dealings during the 12 months preceding the End Date, or of whom you have, or have had, Confidential Information about in respect of their engagement with the Group, to terminate his or her engagement with the entity within the Group which engages them, whether or not that person would commit a breach of that persons contract of engagement.
Persuading the Groups customers or suppliers to cease or reduce business
You must not, during the Restricted Period and in the Restricted Area, directly or indirectly solicit or persuade any customer or supplier of the Group with whom you had work related dealings during the 12 months preceding the End Date, or of whom you have, or have had, Confidential Information about, to cease doing business with the Group, or reduce the amount of business which the person would normally do, or otherwise have done, with the Group.
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Competing with the Group
You agree that you will not (whether directly or indirectly and in any position including a Prescribed Position), during the Restricted Period and in the Restricted Area, carry on, be employed by, or engaged in or otherwise interested in any Competitive Business:
(a) for purposes of providing services which are the same as or similar to those you provided to the Group at any time within the 12 months prior to the End Date; or
(b) to use Confidential Information to gain an advantage for a Competitive Business or cause detriment to the Group.
Priority of restrictions
You agree that you intend the restrictions in this clause 25 to operate to their maximum extent. However, should a Court consider it necessary to reduce the extent of a restriction, the parties intend that any reduction should be made to the Restricted Area before any reductions are made to the Restricted Period.
Consent
The restrictions in this clause do not apply in circumstances where you have obtained the Companys prior written consent.
Restrictions reasonable and inclusive
You agree that:
(a) you will obtain Confidential Information during your employment, the disclosure of which could materially harm the Group;
(b) the restrictions in this clause are reasonable and necessary for the protection of the Groups Confidential Information and goodwill;
(c) you intend the restrictions to operate to the maximum extent;
(d) damages may be inadequate to protect the Groups interests and the Group is entitled to seek and obtain injunctive relief, or any other remedy, in any court; and
(e) the restrictions are separate, distinct and several, so that the unenforceability of any restriction does not affect the enforceability of the other restrictions.
(f) consideration for these restraints is included in your remuneration.
Modification of restrictions
If the restrictions in this clause:
(g) are void as unreasonable for the protection of the Groups interests; and
(h) would be valid if part of the wording was deleted or the period or area was reduced,
the restrictions will apply with the modifications necessary to make them effective.
Your obligations under this clause 25 survive the ending of your employment.
26. Retrenchment Benefits
In addition to the above notice period, if your position is made redundant by the Company you will be entitled to receive retrenchment benefits in accordance with applicable legislation.
27. Relationship to Other Instruments
If an industrial instrument applies to your employment:
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(a) your FAR and other benefits provided under this contract compensate you for all work performed, including but not limited to any overtime, loadings, penalty rates, allowances and any other entitlement which may be due to you under the industrial instrument;
(b) your FAR and other benefits provided under this contract satisfy the Companys obligations to make payments to which you may otherwise be entitled to under the industrial instrument or law; and
(c) any entitlement under the industrial instrument will be calculated by reference to the applicable rate of pay in the industrial instrument.
You agree that if necessary, the Company may retrospectively offset the amount of your salary and other benefits provided under this contract, in excess of any entitlements which may otherwise apply under an industrial instrument or law, to satisfy the Companys obligations under the industrial instrument or law.
28. Reference and background checks
This offer of employment with the Company is made to you on the understanding that the information you provided to us during the recruitment process is accurate and complete. However, to ensure the integrity of the recruitment process, the Company requires all new employees to undergo reference and background checking. Accordingly, you acknowledge and accept that:
· this agreement is conditional upon the satisfactory completion of the reference and background checks set out below. If the Company is not satisfied with the results of any of the following checks, it may withdraw this offer of employment made to you;
· the Company may carry out the following checks on you to determine your suitability for the position:
· reference check with previous employers;
· academic qualification check; and/or
· Federal Police criminal record check.
29. General
(a) This contract and the letter of offer constitute the entire agreement relating to your employment and supersede all prior offers, written or oral, with respect to your employment by the Company. These terms may only be modified by an agreement in writing signed by both parties.
(b) Any notice to be given under these terms and conditions must be given in writing and may be given either personally or by registered mail. Any notice you are required to provide must be handed to your Leader or mailed addressed to the Company at the address set out on the first page of this letter. If the Company is required to provide you with notice, it will be either handed to you or addressed to you at your last known place of residence.
(c) In this contract, a reference to:
(i) legislation is to that legislation as amended, re-enacted or replaced, and includes any subordinate legislation issued under it;
(ii) a policy or other document is to that policy or document as amended, supplemented, replaced or novated;
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(iii) the Group is to the Company and each of its Related Bodies Corporate (as defined by the Corporations Act 2001 (Cth)) and includes a reference to any member of the Group.
(d) Any provision of this contract which is unenforceable or partly unenforceable is, where possible, to be severed to the extent necessary to make this contract enforceable, unless this would materially change the intended effect of this contract.
(e) These terms and conditions and your employment referred to in this contract will be governed by the laws of Queensland.
30. Acceptance of Contract
By signing this contract, you are acknowledging that:
(a) you have had sufficient time to review its contents;
(b) you have been given an opportunity to obtain advice concerning its contents and effect; and
(c) you have read and understand the contents of this contract and the letter of offer and your obligations.
Signed: |
/s/ Ayten Saridas |
|
Date: |
31/8/18 |
|
|
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||
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Ayten Saridas |
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Appendix 1 Relocation Terms
The Coronado Curragh Workforce Planning Relocation, Transfer and Secondment Policy will apply. Without limiting the content of this policy, please find below a summary of your entitlements.
New Starter
Where offered as a term of hire, new employees may be relocated by the Company. At the discretion of the recruiting line manager, new employees may be offered: a pre-relocation visit, removal costs, travel arrangements, and temporary rental accommodation, the express terms of the employees Letter of Offer, and or the Curragh Relocation Guideline.
The company may also provide a hire car for up to one week pending the relocation of the new employees personal vehicle.
Pre-Relocation Visit
At the discretion of the line CEO, the employee and their partner may be entitled to a pre-relocation visit to the new location. The Company will provide economy class airfares and accommodation to a maximum of three days.
Removal Costs
· The Company will meet reasonable (as determined by the Company) removal costs including packing, removal, insurance and delivery of personal and household effects from the employees residence at the time of recruitment/transfer to their new residence or place of storage; and delivery of personal and household effects from storage to the employees new residence.
· Expensive items requiring special care (eg pianos, art works etc) are at the employees cost and accountability.
· The Company will provide relocation of up to two vehicles (cars or motorbikes).
· The Company will provide relocation of one pet.
· The Company will not provide assistance for the relocation of boats, caravans and trailers. This is the employees responsibility.
· The employee is required to obtain two (2) quotations from reputable removalists, car carriers or other required contractors, and submit to Human Resources to ensure that the volume and cost of household effects are reasonable.
· Following approval, it is the employees responsibility to make arrangements with the suppliers, and forward invoices to Human Resources for payment.
Storage of Goods
Reasonable storage of goods is available for a maximum period of six months.
Travel Arrangements
Air Travel
· Economy class airfares for the employee and dependants from the place of recruitment/transfer to the nearest capital or major regional city. Flights must be via the most direct route utilising a standard commercial air service.
· The Company will provide a hire car where it is the most cost effective method of transport from the airport to the work location.
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Vehicle
The Company will provide a hire car for up to one week pending the relocation of the employees personal vehicle.
Temporary Accommodation
If the employee is unable to occupy private accommodation upon arrival at the new location, the Company will provide up to four weeks accommodation in a fully furnished self-serviced apartment for all employees covered by this policy. The temporary accommodation period commences from the date of arrival and is subject to the employee sourcing suitable permanent accommodation in the new location.
Termination of Employment
If the employee leaves the Company within 12 months of commencement of the relocated position, the Company retains the right to recover all or part of all relocation costs covered by the Company. Where an employee resigns, there will be no repatriation to point of origin.
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( Agreement ), made as of 21 Sep 2018, effective on 21 September, 2018, between CORONADO GLOBAL RESOURCES INC. (the Company ), a Delaware corporation and James I. Campbell ( Employee ), presently residing in or near Frankford West Virginia.
WITNESSETH:
WHEREAS, Employee is presently employed as President and Chief Operating Officer of the Company or its affiliate, in which capacity he has contributed materially to the Companys success;
WHEREAS, the Company wishes to ensure the continued availability of Employees services and of reasonable protection against Employees competing against the Company, and Employee is willing to give such assurance in return for certain protections as set forth in this Agreement; and
NOW, THEREFORE, intending to be legally bound hereby, the Company hereby agrees on behalf of itself or a subsidiary to employ Employee, and Employee hereby agrees to be employed by the Company or a subsidiary of the Company, upon the following terms and conditions:
1. Duties and Responsibilities.
Employee shall hold the position of President and Chief Operating Officer and shall render such services and perform such duties commensurate with his position as may be reasonably assigned to him from time to time by the Company. Excluding any periods of vacation and sick leave to which Employee is entitled, Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Employee hereunder, to use Employees reasonable best efforts to perform faithfully and efficiently such responsibilities.
2. Compensation.
Employees base salary effective as of the effective date set forth above shall be $650,000 per year, which shall be reviewed from time to time and may be increased by the Company in the best interests of the Company and in accordance with Employees then current responsibilities, paid in accordance with the Companys regular payroll practices and on regularly scheduled payroll dates. In addition, Employee shall be entitled to participate in all short term incentive, long term incentive, welfare, savings and retirement and other employee benefit plans, practices, policies, and programs applicable generally to other executive officers of the Company.
3. Term; Termination of Employment.
(a) Subject to the terms and provisions of this Agreement, Employees employment hereunder shall commence as of 21 September, 2018 and shall continue until December 31, 2019 (the Expiration Date ). Notwithstanding the forgoing to the contrary, each year the Expiration Date shall be automatically extended to December 31 of the following year unless either party gives written notice to the other party, on or before September 30 of the year in which the Expiration Date is scheduled to occur, of its intention not to extend the Expiration Date.
(b) The employment of Employee hereunder may be terminated by the Company with or without Cause (as defined below) or by Employee with our without Good Reason (as defined below). Employees employment shall terminate automatically if Employee dies. If the Company determines in good faith that the Disability (as defined below) of Employee has occurred, it may give to Employee written notice of its intention to terminate Employees employment. In such event, Employees employment with the Company shall terminate effective on the 30th day after receipt of such notice by Employee, provided that, within the 30 days after such receipt, Employee shall not have returned to full-time performance of Employees duties.
(c) Cause shall mean by reason of Employees: (I) conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or its Affiliates or involving acts of theft, fraud, embezzlement, moral turpitude, or similar conduct, (II) repeated intoxication by alcohol or drugs during the performance of such holders duties in a manner that materially and adversely affects the holders performance of such duties, (III) malfeasance, in the conduct of such holders duties, that consists of (1) willful and intentional misuse or diversion of funds of the Company or its Affiliates, (2) embezzlement, or (3) fraudulent or willful and material misrepresentations or concealments on any written reports submitted to the Company or its Affiliates, or (IV) material failure to perform the duties of Employees employment or material failure to follow or comply with the reasonable and lawful written directives of the board of directors or the board of managers or other governing body a subsidiary or affiliate of the Company by which such holder is employed, in either case after the holder shall have been informed, in writing, of such material failure and given a period of not more than thirty (30) days to fully remedy same.
(d) Disability shall mean Employees incapacity due to physical or mental illness that (i) shall have prevented Employee from performing his or her duties for the Company or any of its subsidiaries or affiliates on a full-time basis for more than 180 days or (ii) (x) the board of directors determines is likely to prevent Employee from performing such duties for such a 180 period and (y) 30 days has elapsed since delivery to Employee of the determination of the board and Employee has not resumed such performance (in which case the date of termination in the case of a termination for Disability pursuant to this clause (ii) shall be deemed to be the last day of such 30-day period).
(e) Good Reason shall mean, without Employees express written consent, the occurrence of any one or more of the following: (u) a material diminution of Employees authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements) as an employee of the Company (any such diminution occurring as a result of the Companys ceasing to be a publicly traded entity shall be deemed material for purposes of the foregoing); (v) the Companys requiring Employee to be based at a location in excess of thirty-five miles from the location of Employees principal job location or office immediately prior to such change; (w) a reduction in Employees base salary or any material reduction by the Company of Employees other compensation or benefits; (x) the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Companys obligations under this Agreement; (y) any purported termination by the Company of Employees employment that is not effected pursuant to a notice of termination in writing which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employees employment under the provision so indicated, and for purposes of this Agreement, no such purported termination shall be effective; and (z) a material breach of this Agreement by the Company.
4. Compensation Upon Termination of Employment.
(a) Termination by the Company for Cause or Resignation by Employee Without Good Reason . If Employees employment is terminated by the Company for Cause or by Employee without Good Reason, the Company shall provide the following (referred to in this Agreement as the Accrued Obligations ) to the Employee (i) Employees base salary, vacation and other cash entitlements accrued through the date of termination shall be paid to Employee in a lump sum of cash on the first regularly scheduled payroll date that is at least ten (10) days from the date of termination to the extent theretofore unpaid, (ii) the amount of any compensation previously deferred by Employee shall be paid to Employee in accordance with the terms of the applicable deferred compensation plan to the extent theretofore unpaid and (iii) amounts that are vested benefits or that Employee is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company at or subsequent to the date of termination, payable in accordance with such plan, policy, practice or program or contract or agreement, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
(b) Termination by the Company Without Cause or Resignation by the Employee for Good Reason . If Employees employment is terminated by the Company without Cause or If Employee resigns for Good Reason, the Company shall provide the following to Employee (i) the Accrued Obligations, payable as provided in Section 4(a) hereof and (ii) a period of twelve (12) months ( Severance Period ) base salary based upon the salary Employee earned at the time of his termination, which is payable in a lump sum on the date which is the first day following the six (6) month anniversary of the date of termination, and the Company shall have no other severance obligations with respect to Employee under this.
(c) Death or Disability . If Employees employment is terminated by reason of Employees death or Disability, the Company shall provide the Accrued Obligations to Employee, or in the event of Employees death, to his estate or beneficiaries, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
5. Confidential Information, etc.
(a) Employee recognizes and acknowledges that: (i) in the course of Employees employment by the Company it will be necessary for Employee to acquire information which could include, in whole or in part, information concerning the Companys sales, sales volume, sales methods, sales proposals, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customers purchases from the Company, the Companys sources of supply, computer programs, system documentation, special hardware, product hardware, related software development, manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions or other confidential or proprietary information belonging to the Company or relating to the Companys affairs (collectively referred to herein as the Confidential Information ); (ii) the Confidential Information is the property of the Company; (iii) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Company; and (iv) it is essential to the protection of the Companys good will and to the maintenance of the Companys competitive position that the Confidential Information be kept secret and that Employee not disclose the Confidential Information to others or use the Confidential Information to Employees own advantage or the advantage of others. For purposes of this Agreement Confidential Information shall not include information known by Employee before his employment with the Company or information that becomes publicly available through some means other than disclosure by Employee in violation of this agreement.
(b) Employee further recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Employee be restrained (i) from soliciting or inducing any Employee of the Company or of any subsidiary of the Company (as used in Sections 5, 6 and 7 hereof, collectively, the Company ) to leave the employ of the Company, (ii) from hiring or attempting to hire any Employee of the Company, (iii) from soliciting the trade of or trading with the customers of the Company for any business purpose, and (iv) from competing against the Company each according to the terms of Section 6 following. .
6. Confidentiality, Non-compete and Related Covenants.
(a) Employee agrees to hold and safeguard the Confidential Information in trust for the Company, its successors and assigns and agrees that he shall not, without the prior written consent of the Company, disclose or make available to anyone for use outside the Company at any time, either during his employment by the Company or subsequent to the termination of his employment by the Company for any reason, including without limitation termination by the Company in a Termination for Cause or otherwise, any of the Confidential Information, whether or not developed by Employee, except as required in the performance of Employees duties to the Company. For the avoidance of doubt, this provision shall not prohibit Employee from reporting possible violations of federal law or regulation to any governmental agency or entity or from making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Companys approval shall not be required, nor shall notice to the Company be required, in connection with such reports or disclosures.
(b) Upon the termination of Employees employment by the Company or by Employee for any reason, including without limitation termination by the Company in a termination for Cause or otherwise, Employee shall promptly deliver to the Company all originals and copies of correspondence, drawings, blueprints, financial and business records, marketing and publicity materials, manuals, letters, notes, notebooks, laptops, reports, flow-charts, programs, proposals and any documents concerning the Companys customers or concerning products or processes used by the Company and, without limiting the foregoing, shall promptly deliver to the Company any and all other documents or materials containing or constituting Confidential Information.
(c) Subject to the provisions of Section 6(f) following, Employee agrees that during his employment by the Company he shall not, directly or indirectly, solicit the trade of, or trade with, any customer or prospective customer of the Company for any business purpose other than for the benefit of the Company. Upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee further agrees that for a period of one year after such termination of employment hereunder, Employee shall not, directly or indirectly, solicit the trade of, or trade with, any customers, or prospective customers, of the Company, or solicit or induce, or attempt to solicit or induce, any employee of the Company to leave the Company for any reason whatsoever or hire any employee of the Company.
(d) Subject to the provisions of Section 6(f) following, During the period of Employees employment hereunder and upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee agrees that for a period of one year after such termination of employment hereunder, Employee shall not, in any Competitive Territory, engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, (i) the term Competing Business shall mean the production
or sales of metallurgical bituminous coal, and (ii) the term Competitive Territory shall mean the United States of America, Australia and any other nation in which, to the knowledge of Employee, the Company has made or considered making such sales, either itself or through a subsidiary, affiliate or joint venture partner, during the last two years prior to the termination of Employees employment hereunder.
(e) Prior to accepting employment during the non-compete period referred to herein, Employee shall notify the Company in order to determine if the position Employee is seeking violates this Agreement.
(f) Notwithstanding the provisions of Sections 6(c) or 6(d) to the contrary, the Company, it is sole and absolute discretion, may, by written notice delivered to Employee promptly after the termination of Employees employment by the Company or the resignation of Employee, elect to waive and not enforce the non-solicitation and non-compete provisions of Sections 6(c) and 6(d). In the event that the Company elects to waive and not enforce both such sections, (but only both and not just one such section) then the provisions of Section 6(g) following shall not apply.
(g) Unless the Company has provided notice that it has waived and will not enforce both the non-solicitation and non-compete provisions of Sections 6(c) and 6(d) as provided in Section 6(f), during the one year period beginning on the first business day following the last day of Employees employment with the Company, the Company shall pay the Employee, in twelve equal monthly payments during such year commencing 30 days after the last day of Employees employment with the Company, an amount equal to one half (1/2) of the annual salary of Employee as of the business day immediately preceding the last day of Employees employment with the Company. Payments under this section shall be in addition to any severance or other payments due to Employee under the terms of this Agreement. During such one-year period (unless the waiver contemplated by Section 6(f) has been made), and in consideration of the payments contemplated by this Section 6(g), Employee agrees to consult with the Company as requested by the Company provided such consultation shall not require more than twenty (20) hours of consultation per week and shall be reasonably related to the duties of Employee while employed. Employee shall provide such consultation by phone, e-mail or other remote communication or at the location of Employees principal job location or office immediately prior to the termination of his employment and shall not be required to otherwise travel.
7. Injunctive and other relief.
(a) Employee represents that his experience and capabilities are such that Sections 5 and 6 hereof not prevent him from earning his livelihood and acknowledges that it would cause the Company serious and irreparable injury and cost if Employee were to use his ability and knowledge in competition with the Company or to otherwise breach the obligations contained in said paragraphs.
(b) In the event of a breach by Employee of the terms of this Agreement, the Company shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by Employee and to enjoin Employee from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Employee acknowledges, however, that the remedies at law for any breach by him of the provisions of this Agreement may be inadequate and that the Company shall be entitled to injunctive relief against him in the event of any breach whether or not the Company may also be entitled to recover damages hereunder.
(c) It is the intention of the parties that the provisions of Sections 5 and 6 hereof shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or modify, as necessary, the offending provision or provisions and to alter the bounds thereof in order to render it valid and enforceable.
8. Arbitration.
Any dispute arising out of or relating to this Agreement or the breach, termination or validation hereof, other than actions for specific performance or an injunction under Section 7 hereof, shall be finally settled by arbitration conducted expeditiously in accordance with the American Arbitration Association Employment Arbitration Rules by three independent and impartial arbitrators. Each party shall appoint one of such arbitrators, and the two arbitrators so appointed shall appoint the third arbitrator. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Beckley West Virginia. The arbitrators are not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any damages in excess of compensatory damages.
9. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia without giving effect to any choice or conflict of law provision or rule (whether of the State of West Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of West Virginia.
10. Amendments, waivers, etc.
No amendment of any provision of this Agreement, and no postponement or waiver of any such provision or of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless such amendment, postponement or waiver is in writing and signed by or on behalf of the Company and Employee. No such amendment, postponement or waiver shall be deemed to extend to any prior or subsequent matter, whether or not similar to the subject matter of such amendment, postponement or waiver. No failure or delay on the part of the Company or Employee in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
11. Assignment.
The rights and duties of the Company under this Agreement may be transferred to, and shall be binding upon, any person or company which acquires or is a successor to the Company, its business or a significant portion of the assets of the Company by merger, purchase or otherwise, and the Company shall require any such acquirer or successor by agreement in form and substance reasonably satisfactory to Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company, as the case may be, would be required to perform if no such acquisition or succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any acquirer or successor in accordance with the operation of law and such acquirer or successor shall be deemed the Company, as the case may be, for purposes of this Agreement. Except as
otherwise provided in this Section 11, neither the Company nor Employee may transfer any of their respective rights and duties hereunder except with the written consent of the other party hereto.
12. Interpretation, etc.
The Company and Employee have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Company and Employee and no presumption or burden of proof shall arise favoring or disfavoring the Company or Employee because of the authorship of any of the provisions of this Agreement. The word including shall mean including without limitation. The rights and remedies expressly specified in this Agreement are cumulative and are not exclusive of any rights or remedies which either party would otherwise have. The Section headings hereof are for convenience only and shall not affect the meaning or interpretation of this Agreement. For purposes of this Agreement, the term termination when used in the context of a condition to, or timing of, payment hereunder shall be interpreted to mean a separation from service as that term is used in Section 409A of the Code.
13. Integration; counterparts.
This Agreement constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate to the subject matter hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.
14. Code Section 409A.
All amounts payable under this Agreement are intended to comply with the short term deferral exception from Section 409A of the Internal Revenue Code (Section 409A) specified in Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) or the separation pay plan exception specified in Treas. Reg. § 1.409A-1(b)(9) (or any successor provision), or both of them, and shall be interpreted in a manner consistent with the applicable exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, this Agreement shall be interpreted and administered in such a way as to comply with Section 409A to the maximum extent possible. Each installment payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A. If payment of any amount subject to Section 409A is triggered by a separation from service that occurs while the Employee is a specified employee (as defined by Section 409A), and if such amount is scheduled to be paid within six (6) months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Employees estate following the Employees death. Termination of employment, resignation or words of similar import, as used in this Agreement shall mean, with respect to any payments subject to Section 409A, the Employees separation from service as defined by Section 409A.
WITNESS the due execution hereof as of the date first above written.
Witness: |
CORONADO GLOBAL RESOURCES INC. |
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/s/ Kerry-Lee Doyle |
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By: |
/s/ Garold R. Spindler |
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Garold R. Spindler |
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Chief Executive Officer |
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Witness: |
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/s/ Emma Pollard |
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By: |
/s/ James I. Campbell |
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James I. Campbell |
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( Agreement ), made as of December 20, 2018, effective on December 20, 2018, between [CORONADO GLOBAL RESOURCES INC.] (the Company ), a Delaware corporation and Richard Rose ( Employee ), presently residing in or near Pittsburgh, PA.
WITNESSETH:
WHEREAS, Employee is presently employed as Vice President, Chief Legal Officer & Secretary of the Company, in which capacity he has contributed materially to the Companys success;
WHEREAS, the Company wishes to ensure the continued availability of Employees services and of reasonable protection against Employees competing against the Company, and Employee is willing to give such assurance in return for certain protections as set forth in this Agreement; and
NOW, THEREFORE, intending to be legally bound hereby, the Company hereby agrees to employ Employee, and Employee hereby agrees to be employed by the Company, upon the following terms and conditions:
1. Duties and Responsibilities.
Employee shall hold the position of Vice President, Chief Legal Officer & Secretary and shall render such services and perform such duties commensurate with his position as may be reasonably assigned to him from time to time by the Company. Excluding any periods of vacation and sick leave to which Employee is entitled, Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Employee hereunder, to use Employees reasonable best efforts to perform faithfully and efficiently such responsibilities.
2. Compensation.
Employees base salary effective as of the effective date set forth above shall be $331,800 per year, which shall be reviewed from time to time and may be increased by the Company in the best interests of the Company and in accordance with Employees then current responsibilities, paid in accordance with the Companys regular payroll practices and on regularly scheduled payroll dates. In addition, Employee shall be entitled to participate in all short term incentive, long term incentive, welfare, savings and retirement and other employee benefit plans, practices, policies, and programs applicable generally to other executive officers of the Company.
3. Term; Termination of Employment.
(a) Subject to the terms and provisions of this Agreement, Employees employment hereunder shall commence as of December 20, 2018 and shall continue until December 31, 2019 (the Expiration Date ). Notwithstanding the forgoing to the contrary, each year the Expiration Date shall be automatically extended to December 31 of the following year unless either party gives written notice to the other party, on or before September 30 of the year in which the Expiration Date is scheduled to occur, of its intention not to extend the Expiration Date.
(b) The employment of Employee hereunder may be terminated by the Company with or without Cause (as defined below) or by Employee with our without Good Reason (as defined below). Employees employment shall terminate automatically if Employee dies. If the Company determines in good faith that the Disability (as defined below) of Employee has occurred, it may give to Employee written notice of its intention to terminate Employees employment. In such event, Employees employment with the Company shall terminate effective on the 30th day after receipt of such notice by Employee, provided that, within the 30 days after such receipt, Employee shall not have returned to full-time performance of Employees duties.
(c) Cause shall mean by reason of Employees: (I) conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or its Affiliates or involving acts of theft, fraud, embezzlement, moral turpitude, or similar conduct, (II) repeated intoxication by alcohol or drugs during the performance of such holders duties in a manner that materially and adversely affects the holders performance of such duties, (III) malfeasance, in the conduct of such holders duties, that consists of (1) willful and intentional misuse or diversion of funds of the Company or its Affiliates, (2) embezzlement, or (3) fraudulent or willful and material misrepresentations or concealments on any written reports submitted to the Company or its Affiliates, or (IV) material failure to perform the duties of Employees employment or material failure to follow or comply with the reasonable and lawful written directives of the board of directors or the board of managers or other governing body a subsidiary or affiliate of the Company by which such holder is employed, in either case after the holder shall have been informed, in writing, of such material failure and given a period of not more than thirty (30) days to fully remedy same.
(d) Disability shall mean Employees incapacity due to physical or mental illness that (i) shall have prevented Employee from performing his or her duties for the Company or any of its subsidiaries or affiliates on a full-time basis for more than 180 days or (ii) (x) the board of directors determines is likely to prevent Employee from performing such duties for such a 180 period and (y) 30 days has elapsed since delivery to Employee of the determination of the board and Employee has not resumed such performance (in which case the date of termination in the case of a termination for Disability pursuant to this clause (ii) shall be deemed to be the last day of such 30-day period).
(e) Good Reason shall mean, without Employees express written consent, the occurrence of any one or more of the following: (u) a material diminution of Employees authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements) as an employee of the Company (any such diminution occurring as a result of the Companys ceasing to be a publicly traded entity shall be deemed material for purposes of the foregoing); (v) the Companys requiring Employee to be based at a location in excess of thirty-five miles from the location of Employees principal job location or office immediately prior to such change; (w) a reduction in Employees base salary or any material reduction by the Company of Employees other compensation or benefits; (x) the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Companys obligations under this Agreement; (y) any purported termination by the Company of Employees employment that is not effected pursuant to a notice of termination in writing which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employees employment under the provision so indicated, and for purposes of this Agreement, no such purported termination shall be effective; and (z) a material breach of this Agreement by the Company.
4. Compensation Upon Termination of Employment.
(a) Termination by the Company for Cause or Resignation by Employee Without Good Reason . If Employees employment is terminated by the Company for Cause or by Employee without Good Reason, the Company shall provide the following (referred to in this Agreement as the Accrued Obligations ) to the Employee (i) Employees base salary, vacation and other cash entitlements accrued through the date of termination shall be paid to Employee in a lump sum of cash on the first regularly scheduled payroll date that is at least ten (10) days from the date of termination to the extent theretofore unpaid, (ii) the amount of any compensation previously deferred by Employee shall be paid to Employee in accordance with the terms of the applicable deferred compensation plan to the extent theretofore unpaid and (iii) amounts that are vested benefits or that Employee is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company at or subsequent to the date of termination, payable in accordance with such plan, policy, practice or program or contract or agreement, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
(b) Termination by the Company Without Cause or Resignation by the Employee for Good Reason . If Employees employment is terminated by the Company without Cause or If Employee resigns for Good Reason, the Company shall provide the following to Employee (i) the Accrued Obligations, payable as provided in Section 4(a) hereof and (ii) a period of twelve (12) months ( Severance Period ) base salary based upon the salary Employee earned at the time of his termination, which is payable in a lump sum on the date which is the first day following the six (6) month anniversary of the date of termination, and the Company shall have no other severance obligations with respect to Employee under this.
(c) Death or Disability . If Employees employment is terminated by reason of Employees death or Disability, the Company shall provide the Accrued Obligations to Employee, or in the event of Employees death, to his estate or beneficiaries, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
5. Confidential Information, etc.
(a) Employee recognizes and acknowledges that: (i) in the course of Employees employment by the Company it will be necessary for Employee to acquire information which could include, in whole or in part, information concerning the Companys sales, sales volume, sales methods, sales proposals, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customers purchases from the Company, the Companys sources of supply, computer programs, system documentation, special hardware, product hardware, related software development, manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions or other confidential or proprietary information belonging to the Company or relating to the Companys affairs (collectively referred to herein as the Confidential Information ); (ii) the Confidential Information is the property of the Company; (iii) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Company; and (iv) it is essential to the protection of the Companys good will and to the maintenance of the Companys competitive position that the Confidential Information be kept secret and that Employee not disclose the Confidential Information to others or use the Confidential Information to Employees own advantage or the advantage of others. For purposes of this Agreement Confidential Information shall not include information known by Employee before his employment with the Company or information that becomes publicly available through some means other than disclosure by Employee in violation of this agreement.
(b) Employee further recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Employee be restrained (i) from soliciting or inducing any Employee of the Company or of any subsidiary of the Company (as used in Sections 5, 6 and 7 hereof, collectively, the Company ) to leave the employ of the Company, (ii) from hiring or attempting to hire any Employee of the Company, (iii) from soliciting the trade of or trading with the customers of the Company for any business purpose, and (iv) from competing against the Company each according to the terms of Section 6 following.
6. Confidentiality, Non-compete and Related Covenants.
(a) Employee agrees to hold and safeguard the Confidential Information in trust for the Company, its successors and assigns and agrees that he shall not, without the prior written consent of the Company, disclose or make available to anyone for use outside the Company at any time, either during his employment by the Company or subsequent to the termination of his employment by the Company for any reason, including without limitation termination by the Company in a Termination for Cause or otherwise, any of the Confidential Information, whether or not developed by Employee, except as required in the performance of Employees duties to the Company. For the avoidance of doubt, this provision shall not prohibit Employee from reporting possible violations of federal law or regulation to any governmental agency or entity or from making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Companys approval shall not be required, nor shall notice to the Company be required, in connection with such reports or disclosures.
(b) Upon the termination of Employees employment by the Company or by Employee for any reason, including without limitation termination by the Company in a termination for Cause or otherwise, Employee shall promptly deliver to the Company all originals and copies of correspondence, drawings, blueprints, financial and business records, marketing and publicity materials, manuals, letters, notes, notebooks, laptops, reports, flow-charts, programs, proposals and any documents concerning the Companys customers or concerning products or processes used by the Company and, without limiting the foregoing, shall promptly deliver to the Company any and all other documents or materials containing or constituting Confidential Information.
(c) Subject to the provisions of Section 6(f) following, Employee agrees that during his employment by the Company he shall not, directly or indirectly, solicit the trade of, or trade with, any customer or prospective customer of the Company for any business purpose other than for the benefit of the Company. Upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee further agrees that for a period of one year after such termination of employment hereunder, Employee shall not, directly or indirectly, solicit the trade of, or trade with, any customers, or prospective customers, of the Company, or solicit or induce, or attempt to solicit or induce, any employee of the Company to leave the Company for any reason whatsoever or hire any employee of the Company.
(d) Subject to the provisions of Section 6(f) following, During the period of Employees employment hereunder and upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee agrees that for a period of one year after such termination of employment hereunder, Employee shall not, in any Competitive Territory, engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, (i) the term Competing Business shall mean the production
or sales of metallurgical bituminous coal, and (ii) the term Competitive Territory shall mean the United States of America, Australia and any other nation in which, to the knowledge of Employee, the Company has made or considered making such sales, either itself or through a subsidiary, affiliate or joint venture partner, during the last two years prior to the termination of Employees employment hereunder.
(e) Prior to accepting employment during the non-compete period referred to herein, Employee shall notify the Company in order to determine if the position Employee is seeking violates this Agreement.
(f) Notwithstanding the provisions of Sections 6(c) or 6(d) to the contrary, the Company, it is sole and absolute discretion, may, by written notice delivered to Employee promptly after the termination of Employees employment by the Company or the resignation of Employee, elect to waive and not enforce the non-solicitation and non-compete provisions of Sections 6(c) and 6(d). In the event that the Company elects to waive and not enforce both such sections, (but only both and not just one such section) then the provisions of Section 6(g) following shall not apply.
(g) Unless the Company has provided notice that it has waived and will not enforce both the non-solicitation and non-compete provisions of Sections 6(c) and 6(d) as provided in Section 6(f), during the one year period beginning on the first business day following the last day of Employees employment with the Company, the Company shall pay the Employee, in twelve equal monthly payments during such year commencing 30 days after the last day of Employees employment with the Company, an amount equal to one half (1/2) of the annual salary of Employee as of the business day immediately preceding the last day of Employees employment with the Company. Payments under this section shall be in addition to any severance or other payments due to Employee under the terms of this Agreement. During such one-year period (unless the waiver contemplated by Section 6(f) has been made), and in consideration of the payments contemplated by this Section 6(g), Employee agrees to consult with the Company as requested by the Company provided such consultation shall not require more than twenty (20) hours of consultation per week and shall be reasonably related to the duties of Employee while employed. Employee shall provide such consultation by phone, e-mail or other remote communication or at the location of Employees principal job location or office immediately prior to the termination of his employment and shall not be required to otherwise travel.
7. Injunctive and other relief.
(a) Employee represents that his experience and capabilities are such that Sections 5 and 6 hereof not prevent him from earning his livelihood and acknowledges that it would cause the Company serious and irreparable injury and cost if Employee were to use his ability and knowledge in competition with the Company or to otherwise breach the obligations contained in said paragraphs.
(b) In the event of a breach by Employee of the terms of this Agreement, the Company shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by Employee and to enjoin Employee from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Employee acknowledges, however, that the remedies at law for any breach by him of the provisions of this Agreement may be inadequate and that the Company shall be entitled to injunctive relief against him in the event of any breach whether or not the Company may also be entitled to recover damages hereunder.
(c) It is the intention of the parties that the provisions of Sections 5 and 6 hereof shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or modify, as necessary, the offending provision or provisions and to alter the bounds thereof in order to render it valid and enforceable.
8. Arbitration.
Any dispute arising out of or relating to this Agreement or the breach, termination or validation hereof, other than actions for specific performance or an injunction under Section 7 hereof, shall be finally settled by arbitration conducted expeditiously in accordance with the American Arbitration Association Employment Arbitration Rules by three independent and impartial arbitrators. Each party shall appoint one of such arbitrators, and the two arbitrators so appointed shall appoint the third arbitrator. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Beckley West Virginia. The arbitrators are not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any damages in excess of compensatory damages.
9. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia without giving effect to any choice or conflict of law provision or rule (whether of the State of West Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of West Virginia.
10. Amendments, waivers, etc.
No amendment of any provision of this Agreement, and no postponement or waiver of any such provision or of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless such amendment, postponement or waiver is in writing and signed by or on behalf of the Company and Employee. No such amendment, postponement or waiver shall be deemed to extend to any prior or subsequent matter, whether or not similar to the subject matter of such amendment, postponement or waiver. No failure or delay on the part of the Company or Employee in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
11. Assignment.
The rights and duties of the Company under this Agreement may be transferred to, and shall be binding upon, any person or company which acquires or is a successor to the Company, its business or a significant portion of the assets of the Company by merger, purchase or otherwise, and the Company shall require any such acquirer or successor by agreement in form and substance reasonably satisfactory to Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company, as the case may be, would be required to perform if no such acquisition or succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any acquirer or successor in accordance with the operation of law and such acquirer or successor shall be deemed the Company, as the case may be, for purposes of this Agreement. Except as
otherwise provided in this Section 11, neither the Company nor Employee may transfer any of their respective rights and duties hereunder except with the written consent of the other party hereto.
12. Interpretation, etc.
The Company and Employee have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Company and Employee and no presumption or burden of proof shall arise favoring or disfavoring the Company or Employee because of the authorship of any of the provisions of this Agreement. The word including shall mean including without limitation. The rights and remedies expressly specified in this Agreement are cumulative and are not exclusive of any rights or remedies which either party would otherwise have. The Section headings hereof are for convenience only and shall not affect the meaning or interpretation of this Agreement. For purposes of this Agreement, the term termination when used in the context of a condition to, or timing of, payment hereunder shall be interpreted to mean a separation from service as that term is used in Section 409A of the Code.
13. Integration; counterparts.
This Agreement constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate to the subject matter hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.
14. Code Section 409A.
All amounts payable under this Agreement are intended to comply with the short term deferral exception from Section 409A of the Internal Revenue Code (Section 409A) specified in Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) or the separation pay plan exception specified in Treas. Reg. § 1.409A-1(b)(9) (or any successor provision), or both of them, and shall be interpreted in a manner consistent with the applicable exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, this Agreement shall be interpreted and administered in such a way as to comply with Section 409A to the maximum extent possible. Each installment payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A. If payment of any amount subject to Section 409A is triggered by a separation from service that occurs while the Employee is a specified employee (as defined by Section 409A), and if such amount is scheduled to be paid within six (6) months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Employees estate following the Employees death. Termination of employment, resignation or words of similar import, as used in this Agreement shall mean, with respect to any payments subject to Section 409A, the Employees separation from service as defined by Section 409A.
WITNESS the due execution hereof as of the date first above written.
Witness: |
CORONADO [GLOBAL RESOURCES INC.] |
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/s/ Frances B. Blue |
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By: |
/s/ Garold R. Spindler |
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Garold R. Spindler |
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Chief Executive Officer |
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Witness: |
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/s/ Miranda Thomas |
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By: |
/s/ Richard Rose |
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Richard Rose |
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( Agreement ), made as of December 25, 2018, effective on December 25, 2018, between CORONADO GLOBAL RESOURCES INC. (the Company ), a Delaware corporation and Ellen Ewart ( Employee ), presently residing in or near Annapolis, Maryland.
WITNESSETH:
WHEREAS, Employee is presently employed as Vice President, Investor Relations of the Company, in which capacity she has contributed materially to the Companys success;
WHEREAS, the Company wishes to ensure the continued availability of Employees services and of reasonable protection against Employees competing against the Company, and Employee is willing to give such assurance in return for certain protections as set forth in this Agreement; and
NOW, THEREFORE, intending to be legally bound hereby, the Company hereby agrees to employ Employee, and Employee hereby agrees to be employed by the Company, upon the following terms and conditions:
1. Duties and Responsibilities .
Employee shall hold the position of Vice President, Investor Relations and shall render such services and perform such duties commensurate with her position as may be reasonably assigned to her from time to time by the Company. Excluding any periods of vacation and sick leave to which Employee is entitled, Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Employee hereunder, to use Employees reasonable best efforts to perform faithfully and efficiently such responsibilities.
2. Compensation .
Employees base salary effective as of the effective date set forth above shall be $250,000 per year, which shall be reviewed from time to time and may be increased by the Company in the best interests of the Company and in accordance with Employees then current responsibilities, paid in accordance with the Companys regular payroll practices and on regularly scheduled payroll dates. In addition, Employee shall be entitled to participate in all short term incentive, long term incentive, welfare, savings and retirement and other employee benefit plans, practices, policies, and programs applicable generally to other executive officers of the Company.
3. Term; Termination of Employment .
(a) Subject to the terms and provisions of this Agreement, Employees employment hereunder shall commence as of December 25, 2018 and shall continue until December 31, 2019 (the Expiration Date ). Notwithstanding the forgoing to the contrary, each year the Expiration Date shall be automatically extended to December 31 of the following year unless either party gives written notice to the other party, on or before September 30 of the year in which the Expiration Date is scheduled to occur, of its intention not to extend the Expiration Date.
(b) The employment of Employee hereunder may be terminated by the Company with or without Cause (as defined below) or by Employee with or without Good Reason (as defined below). Employees employment shall terminate automatically if Employee dies. If the Company determines in good faith that the Disability (as defined below) of Employee has occurred, it may give to Employee written notice of its intention to terminate Employees employment. In such event, Employees employment with the Company shall terminate effective on the 30th day after receipt of such notice by Employee, provided that, within the 30 days after such receipt, Employee shall not have returned to full-time performance of Employees duties.
(c) Cause shall mean by reason of Employees: (I) conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or its Affiliates or involving acts of theft, fraud, embezzlement, moral turpitude, or similar conduct, (II) repeated intoxication by alcohol or drugs during the performance of such holders duties in a manner that materially and adversely affects the holders performance of such duties, (III) malfeasance, in the conduct of such holders duties, that consists of (1) willful and intentional misuse or diversion of funds of the Company or its Affiliates, (2) embezzlement, or (3) fraudulent or willful and material misrepresentations or concealments on any written reports submitted to the Company or its Affiliates, or (IV) material failure to perform the duties of Employees employment or material failure to follow or comply with the reasonable and lawful written directives of the board of directors or the board of managers or other governing body a subsidiary or affiliate of the Company by which such holder is employed, in either case after the holder shall have been informed, in writing, of such material failure and given a period of not more than thirty (30) days to fully remedy same.
(d) Disability shall mean Employees incapacity due to physical or mental illness that (i) shall have prevented Employee from performing his or her duties for the Company or any of its subsidiaries or affiliates on a full-time basis for more than 180 days or (ii) (x) the board of directors determines is likely to prevent Employee from performing such duties for such a 180 period and (y) 30 days has elapsed since delivery to Employee of the determination of the board and Employee has not resumed such performance (in which case the date of termination in the case of a termination for Disability pursuant to this clause (ii) shall be deemed to be the last day of such 30-day period).
(e) Good Reason shall mean, without Employees express written consent, the occurrence of any one or more of the following: (u) a material diminution of Employees authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements) as an employee of the Company (any such diminution occurring as a result of the Companys ceasing to be a publicly traded entity shall be deemed material for purposes of the foregoing); (v) the Companys requiring Employee to be based at a location in excess of thirty- five miles from the location of Employees principal job location or office immediately prior to such change; (w) a reduction in Employees base salary or any material reduction by the Company of Employees other compensation or benefits; (x) the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Companys obligations under this Agreement; (y) any purported termination by the Company of Employees employment that is not effected pursuant to a notice of termination in writing which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employees employment under the provision so indicated, and for purposes of this Agreement, no such purported termination shall be effective; and (z) a material breach of this Agreement by the Company.
4. Compensation Upon Termination of Employment .
(a) Termination by the Company for Cause or Resignation by Employee Without Good Reason . If Employees employment is terminated by the Company for Cause or by Employee without Good Reason, the Company shall provide the following (referred to in this Agreement as the Accrued Obligations ) to the Employee (i) Employees base salary, vacation and other cash entitlements accrued through the date of termination shall be paid to Employee in a lump sum of cash on the first regularly scheduled payroll date that is at least ten (10) days from the date of termination to the extent theretofore unpaid, (ii) the amount of any compensation previously deferred by Employee shall be paid to Employee in accordance with the terms of the applicable deferred compensation plan to the extent theretofore unpaid and (iii) amounts that are vested benefits or that Employee is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company at or subsequent to the date of termination, payable in accordance with such plan, policy, practice or program or contract or agreement, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
(b) Termination by the Company Without Cause or Resignation by the Employee for Good Reason . If Employees employment is terminated by the Company without Cause or If Employee resigns for Good Reason, the Company shall provide the following to Employee (i) the Accrued Obligations, payable as provided in Section 4(a) hereof and (ii) a period of twelve (12) months ( Severance Period ) base salary based upon the salary Employee earned at the time of her termination, which is payable in a lump sum on the date which is the first day following the six (6) month anniversary of the date of termination, and the Company shall have no other severance obligations with respect to Employee under this.
(c) Death or Disability . If Employees employment is terminated by reason of Employees death or Disability, the Company shall provide the Accrued Obligations to Employee, or in the event of Employees death, to her estate or beneficiaries, and the Company shall have no other severance obligations with respect to Employee under this Agreement except as provided in Section 4(d) following.
5. Confidential Information, etc .
(a) Employee recognizes and acknowledges that: (i) in the course of Employees employment by the Company it will be necessary for Employee to acquire information which could include, in whole or in part, information concerning the Companys sales, sales volume, sales methods, sales proposals, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customers purchases from the Company, the Companys sources of supply, computer programs, system documentation, special hardware, product hardware, related software development, manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions or other confidential or proprietary information belonging to the Company or relating to the Companys affairs (collectively referred to herein as the Confidential Information ); (ii) the Confidential Information is the property of the Company; (iii) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Company; and (iv) it is essential to the protection of the Companys good will and to the maintenance of the Companys competitive position that the Confidential Information be kept secret and that Employee not disclose the Confidential Information to others or use the Confidential Information to Employees own advantage or the advantage of others. For purposes of this Agreement Confidential
Information shall not include information known by Employee before her employment with the Company or information that becomes publicly available through some means other than disclosure by Employee in violation of this agreement.
(b) Employee further recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Employee be restrained (i) from soliciting or inducing any Employee of the Company or of any subsidiary of the Company (as used in Sections 5, 6 and 7 hereof, collectively, the Company ) to leave the employ of the Company, (ii) from hiring or attempting to hire any Employee of the Company, (iii) from soliciting the trade of or trading with the customers of the Company for any business purpose, and (iv) from competing against the Company each according to the terms of Section 6 following.
6. Confidentiality, Non-compete and Related Covenants .
(a) Employee agrees to hold and safeguard the Confidential Information in trust for the Company, its successors and assigns and agrees that he shall not, without the prior written consent of the Company, disclose or make available to anyone for use outside the Company at any time, either during her employment by the Company or subsequent to the termination of her employment by the Company for any reason, including without limitation termination by the Company in a Termination for Cause or otherwise, any of the Confidential Information, whether or not developed by Employee, except as required in the performance of Employees duties to the Company. For the avoidance of doubt, this provision shall not prohibit Employee from reporting possible violations of federal law or regulation to any governmental agency or entity or from making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Companys approval shall not be required, nor shall notice to the Company be required, in connection with such reports or disclosures.
(b) Upon the termination of Employees employment by the Company or by Employee for any reason, including without limitation termination by the Company in a termination for Cause or otherwise, Employee shall promptly deliver to the Company all originals and copies of correspondence, drawings, blueprints, financial and business records, marketing and publicity materials, manuals, letters, notes, notebooks, laptops, reports, flow-charts, programs, proposals and any documents concerning the Companys customers or concerning products or processes used by the Company and, without limiting the foregoing, shall promptly deliver to the Company any and all other documents or materials containing or constituting Confidential Information.
(c) Subject to the provisions of Section 6(f) following, Employee agrees that during her employment by the Company he shall not, directly or indirectly, solicit the trade of, or trade with, any customer or prospective customer of the Company for any business purpose other than for the benefit of the Company. Upon termination of Employees employment by the Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee further agrees that for a period of one year after such termination of employment hereunder, Employee shall not, directly or indirectly, solicit the trade of, or trade with, any customers, or prospective customers, of the Company, or solicit or induce, or attempt to solicit or induce, any employee of the Company to leave the Company for any reason whatsoever or hire any employee of the Company.
(d) Subject to the provisions of Section 6(f) following, During the period of Employees employment hereunder and upon termination of Employees employment by the
Company, including without limitation termination by the Company in a termination for Cause or otherwise, or upon the resignation of the Employee except in the case of Good Reason, Employee agrees that for a period of one year after such termination of employment hereunder, Employee shall not, in any Competitive Territory, engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, (i) the term Competing Business shall mean the production or sales of metallurgical bituminous coal, and (ii) the term Competitive Territory shall mean the United States of America, Australia and any other nation in which, to the knowledge of Employee, the Company has made or considered making such sales, either itself or through a subsidiary, affiliate or joint venture partner, during the last two years prior to the termination of Employees employment hereunder.
(e) Prior to accepting employment during the non-compete period referred to herein, Employee shall notify the Company in order to determine if the position Employee is seeking violates this Agreement.
(f) Notwithstanding the provisions of Sections 6(c) or 6(d) to the contrary, the Company, at is sole and absolute discretion, may, by written notice delivered to Employee promptly after the termination of Employees employment by the Company or the resignation of Employee, elect to waive and not enforce the non-solicitation and non-compete provisions of Sections 6(c) and 6(d). In the event that the Company elects to waive and not enforce both such sections, (but only both and not just one such section) then the provisions of Section 6(g) following shall not apply.
(g) Unless the Company has provided notice that it has waived and will not enforce both the non-solicitation and non-compete provisions of Sections 6(c) and 6(d) as provided in Section 6(f), during the one year period beginning on the first business day following the last day of Employees employment with the Company, the Company shall pay the Employee, in twelve equal monthly payments during such year commencing 30 days after the last day of Employees employment with the Company, an amount equal to one half (1/2) of the annual salary of Employee as of the business day immediately preceding the last day of Employees employment with the Company. Payments under this section shall be in addition to any severance or other payments due to Employee under the terms of this Agreement. During such one-year period (unless the waiver contemplated by Section 6(f) has been made), and in consideration of the payments contemplated by this Section 6(g), Employee agrees to consult with the Company as requested by the Company provided such consultation shall not require more than twenty (20) hours of consultation per week and shall be reasonably related to the duties of Employee while employed. Employee shall provide such consultation by phone, e-mail or other remote communication or at the location of Employees principal job location or office immediately prior to the termination of her employment and shall not be required to otherwise travel.
7. Injunctive and other relief .
(a) Employee represents that her experience and capabilities are such that Sections 5 and 6 hereof not prevent him from earning her livelihood and acknowledges that it would cause the Company serious and irreparable injury and cost if Employee were to use her ability and knowledge in competition with the Company or to otherwise breach the obligations contained in said paragraphs.
(b) In the event of a breach by Employee of the terms of this Agreement, the Company shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by Employee and to enjoin Employee from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Employee acknowledges, however, that the remedies at law for any breach by him of the provisions of this Agreement may be inadequate and that the Company shall be entitled to injunctive relief against him in the event of any breach whether or not the Company may also be entitled to recover damages hereunder.
(c) It is the intention of the parties that the provisions of Sections 5 and 6 hereof shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or modify, as necessary, the offending provision or provisions and to alter the bounds thereof in order to render it valid and enforceable.
8. Arbitration .
Any dispute arising out of or relating to this Agreement or the breach, termination or validation hereof, other than actions for specific performance or an injunction under Section 7 hereof, shall be finally settled by arbitration conducted expeditiously in accordance with the American Arbitration Association Employment Arbitration Rules by three independent and impartial arbitrators. Each party shall appoint one of such arbitrators, and the two arbitrators so appointed shall appoint the third arbitrator. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Beckley West Virginia. The arbitrators are not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any damages in excess of compensatory damages.
9. Governing Law .
This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia without giving effect to any choice or conflict of law provision or rule (whether of the State of West Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of West Virginia.
10. Amendments, waivers, etc .
No amendment of any provision of this Agreement, and no postponement or waiver of any such provision or of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless such amendment, postponement or waiver is in writing and signed by or on behalf of the Company and Employee. No such amendment, postponement or waiver shall be deemed to extend to any prior or subsequent matter, whether or not similar to the subject matter of such amendment, postponement or waiver. No failure or delay on the part of the Company or Employee in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
11. Assignment .
The rights and duties of the Company under this Agreement may be transferred to, and shall be binding upon, any person or company which acquires or is a successor to the Company, its business or a significant portion of the assets of the Company by merger, purchase or otherwise, and the Company shall require any such acquirer or successor by agreement in form and substance reasonably satisfactory to Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company, as the case may be, would be required to perform if no such acquisition or succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any acquirer or successor in accordance with the operation of law and such acquirer or successor shall be deemed the Company, as the case may be, for purposes of this Agreement. Except as otherwise provided in this Section 11, neither the Company nor Employee may transfer any of their respective rights and duties hereunder except with the written consent of the other party hereto.
12. Interpretation, etc .
The Company and Employee have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Company and Employee and no presumption or burden of proof shall arise favoring or disfavoring the Company or Employee because of the authorship of any of the provisions of this Agreement. The word including shall mean including without limitation. The rights and remedies expressly specified in this Agreement are cumulative and are not exclusive of any rights or remedies which either party would otherwise have. The Section headings hereof are for convenience only and shall not affect the meaning or interpretation of this Agreement. For purposes of this Agreement, the term termination when used in the context of a condition to, or timing of, payment hereunder shall be interpreted to mean a separation from service as that term is used in Section 409A of the Code.
13. Integration; counterparts .
This Agreement constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate to the subject matter hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.
14. Code Section 409A .
All amounts payable under this Agreement are intended to comply with the short term deferral exception from Section 409A of the Internal Revenue Code (Section 409A) specified in Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) or the separation pay plan exception specified in Treas. Reg. § 1.409A-1(b)(9) (or any successor provision), or both of them, and shall be interpreted in a manner consistent with the applicable exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, this Agreement shall be interpreted and administered in such a way as to comply with Section 409A to the maximum extent possible. Each installment payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A. If payment of any amount subject to Section 409A is triggered by a separation from service that occurs while the Employee is a specified employee (as defined by Section 409A), and if such amount is scheduled to be paid within six (6) months
after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Employees estate following the Employees death. Termination of employment, resignation or words of similar import, as used in this Agreement shall mean, with respect to any payments subject to Section 409A, the Employees separation from service as defined by Section 409A.
WITNESS the due execution hereof as of the date first above written.
Witness: |
CORONADO [GLOBAL RESOURCES INC.] |
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/s/ Kerry-Lee Doyle |
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By: |
/s/ Garold R. Spindler |
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Garold R. Spindler |
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Chief Executive Officer |
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Witness: |
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/s/ Richard D. Rose |
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By: |
/s/ Ellen Ewart |
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Ellen Ewart |
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18 October 2018
PRIVATE AND CONFIDENTIAL
Emma Pollard
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Dear Emma,
As you are aware, the Coronado group is currently in the process of listing on the Australian Securities Exchange.
In preparation of this listing, we ask that you agree to some amendments to your employment contract, which we consider to be appropriate given your role as part of an ASX-listed company.
You will see from your updated contract that we have sought to keep key commercial terms the same. However, you will need to compare the terms of this contract with those of your previous contract and obtain legal and other advice that you consider appropriate. To try and help your review, we sought to outline some of what we consider to be the main changes:
1. Commencement and operation of employment (clause 1) : Your contract now operates on an ongoing basis, as opposed to your previous maximum-term contract.
2. Incentive plan (clause 6) : You will notice that the incentive clause looks slightly different. This is simply to reflect that the Coronado group is implementing new incentive arrangements as part of its listing and details of your eligibility will be provided to you separately.
3. Guarantee of annual earnings (clause 15) : Your contract now includes a guarantee from the company to pay your fixed annual remuneration above the high income threshold (which is currently $145,400). In return for this, to the extent they would otherwise apply, the terms of the Black Coal Mining Industry Award 2010 will not apply to your employment.
4. Confidentiality and intellectual property (clauses 19 and 20) : You will notice a slight change to these provisions in that your confidentiality and intellectual property obligations are now extended to protect the entire Coronado group.
5. Directorships (clause 22) : There are some new provisions dealing with your obligations in the event that you become a board director.
6. Post-employment restraints (clause 25) : There are minor changes to the way in which your post-employment restraints are framed. Your restraint period and area remain unchanged, other than that your non-compete has been reduced to apply in Australia only.
We look forward to continuing to work with you to ensure the success of our operations.
To accept this employment offer please return a signed and dated copy of this Letter of Offer and associated documents to Keane Hunter by 31 October 2018.
Yours sincerely
/s/ Garold R Spindler |
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Garold R Spindler |
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Coronado Group Chief Executive Officer |
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I have read, understand and agree to all the terms and conditions that apply to my employment with the Company as outlined in this offer and related documents, including the contract of employment. I confirm that the fixed annual remuneration which I receive under the contract of employment, satisfies any obligations on the Company to pay to me any entitlements to which I may otherwise be entitled under an industrial instrument or law.
By signing this agreement, I accept the undertaking in the Clause Compliance with Company Policies & Procedures of the attached Contract of Employment and agree to the earnings set out in the Clause Fixed Annual Remuneration.
Signed: |
/s/ Emma Pollard |
Date: 18/10/18 |
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Emma Pollard |
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Contract of Employment
The following terms and conditions will apply to your continued employment with Curragh Queensland Mining Pty Ltd (Company) in the role of Vice President, People and Culture from 1 October 2018:
1. Commencement and Operation of Employment
The Company acknowledges that your employment commenced on 22 January 2018. Your position is a permanent full time position which currently reports to the Coronado Group Chief Executive Officer ( Leader ).
2. Location of Employment
Your position will be based in Brisbane, but you will need to work as required by the Company at other locations to perform the inherent requirements of your position. The Company may require you to travel within the state, interstate or overseas to perform your duties.
You may be required to transfer to other positions and locations with the Company or the Group, subject to appropriate consultation and notice.
3. Duties
During your employment you must:
(a) during your working hours, devote your whole time, attention and ability to the business of the Company;
(b) serve the Company diligently, honestly and faithfully;
(c) exercise and carry out all duties required of you within your skills and competence and follow all lawful directions and instructions;
(d) follow all lawful and reasonable directions and instructions given to you by the Company;
(e) not, without the written consent of the Company, engage in any other employment or in other activity (whether paid or unpaid) which may conflict with your duties as an employee of the Company or may adversely affect the reputation of the Company. You must advise the Company immediately if this occurs or may occur;
(f) use your best efforts to promote the interests and welfare of the Company; and
(g) as required by the Company, perform work for any other member or members of the Group.
The Company may vary your duties and responsibilities from time to time or assign you additional duties and responsibilities as may be directed by the Company or your Leader. In particular, you may be required to perform any duties in any area of the operation, subject to your competence and any safety and statutory requirements. You may also be required to train and become competent in new skills as required by the Company.
4. Hours of Work
You must work the hours which are reasonably necessary to fulfil the requirements of the position or as required by the Company. Your remuneration includes compensation for eal hours that may be worked (and when they are worked) during the course of your employment. Your remuneration is in full satisfaction of any entitlement you may have under any law or any Industrial Instrument or agreement including overtime, loadings, allowances or penalties.
Your Leader will advise of indicative start and finish times to accommodate regular work requirements and teams working in your location or elsewhere in the Company. operations.
Your hours of work may be averaged over a period of up to six months.
5. Fixed Annual Remuneration
Your remuneration comprises a fixed annual remuneration ( FAR ) which will be AU$380,000. Your FAR is made up of the following components:
(a) Cash salary:
Your cash salary will be the amount remaining after deducting from your FAR the amounts for Company superannuation contribution, motor vehicle and parking (as applicable) and any other pre-tax deductions nominated by you. Your cash salary, net of tax and authorised deductions, will be paid on a monthly basis by electronic funds transfer into bank accounts nominated by you.
(b) Superannuation:
Your FAR includes the compulsory superannuation guarantee contributions paid by the Company for your benefit. The Company will make compulsory superannuation guarantee contributions, on your behalf, up to the quarterly maximum contribution required under the Superannuation Guarantee (Administration) Act 1992 (Cth). Superannuation guarantee contributions are included as part of your FAR. For the 2018/19 financial year, the maximum contribution required to avoid the superannuation guarantee charge is the lesser of 9.5% of your ordinary time earnings or $5132.85 per quarter. This amount may be varied from time to time by the Australian Taxation Office.
Superannuation will be contributed to the default Mercer Superannuation Plan or any other complying superannuation fund selected by you.
Compulsory superannuation guarantee contributions will be processed by the Company as 9.5% of your ordinary time earnings each pay period of the quarter until the maximum required contribution for the quarter is reached. Where 9.5% of your ordinary time earnings for a quarter is less than the maximum contribution required, then compulsory superannuation guarantee contributions will be 9.5% of your ordinary time earnings for that quarter.
You may choose to make additional voluntary contributions to your chosen fund from either your pre-tax or after-tax FAR.
Please note that in any financial year, the total value of your pretax and post-tax contributions should not exceed the annual limits as determined under the relevant tax legislation. The Human Resources Department will be able to advise what the limit applicable to you is at any time. There may be tax consequences should your superannuation contributions exceed your annual limit. We suggest that you discuss these consequences with your financial or tax advisor. If you reach your limit, further contributions in that financial year will attract an additional tax on top of the normal superannuation tax
If you do not choose a fund, contributions payable on your behalf will be directed to the default super fund. A Choice of Fund form can be returned after this date and future contributions made to your nominated fund accordingly but you may be liable for excess fees and charges by having membership in more than one fund. Should you complete the relevant paperwork after your commencement date, Mercer will contact you regarding your existing account and provide you with the appropriate paperwork to consolidate your superannuation into your new fund.
By accepting this offer and contract of employment, you are consenting to the provision of your personal information, including any health information, between the Company and the superannuation fund and their service providers. This information is necessary to facilitate the provision of benefits in the course of your employment and for the management of the fund.
If you require further information or assistance on superannuation please contact the Human Resources Department.
(c) Motor vehicle benefit
Your FAR includes consideration for the value of a motor vehicle. We will discuss motor vehicle options in accordance with Company policy, with the annual value, determined in accordance with applicable Company policy and deducted from your FAR.
(d) Parking Benefit
Your FAR includes the cost of providing a company car park space within the office building.
Your FAR includes leave loading and a component for reasonable additional hours. Your FAR will be subject to review each year in line with your annual salary review.
Your FAR is in full recognition of the requirements of the role. Your FAR includes compensation for all entitlements, benefits or payments that, you may be otherwise entitled to, including under any applicable industrial instrument. Accordingly, you will not be paid any special rates or allowances for working particular times or under particular conditions unless otherwise agreed in writing.
6. Incentive arrangements
You may be eligible to participate in incentive arrangements offered by the Company or Group from time to time. Details of these arrangements will be provided to you separately, and do not form a part of your employment agreement
7. Annual Leave
In accordance with the applicable legislation and Company policy, you will be entitled to 4 weeks annual leave per annum. You are required to apply for annual leave at least 4 weeks prior to your first day of intended leave, or such shorter period as may be agreed with your Leader. Annual leave approved by your Leader and taken during employment will be paid based on your FAR.
Annual leave is to be taken within 12 months of accruing. If you do not take the leave within this period, the Company may direct you to do so upon giving you one months notice.
You and the Company may agree in writing for you to cash out an amount of paid annual leave provided that the agreement does not result in your remaining accrued entitlement to paid annual leave being less than 4 weeks. Each agreement must be a separate agreement in writing. Annual leave which is cashed out and foregone will be paid based on your FAR and your accrued annual leave entitlement will be reduced accordingly.
On termination of employment, you will be paid for any untaken leave based on your FAR.
8. Long Service Leave
You are entitled to long service leave in accordance with applicable legislation and Company policy as advised to you and amended from time to time.
9. Personal/Carers Leave
You are entitled to 10 days paid personal/carers leave per year of service with the Company in accordance with applicable legislation and Company policy. You may take personal/carers leave if:
(e) you are unable to attend work due to personal injury or illness; or
(f) you need to provide care and support for members of your immediate family or members of your household in the event of genuine injury or illness or unexpected emergency affecting the family member.
You should notify your Manager as soon as practicable of the need to take personal/carers leave and the period, or expected period, of the leave. You are required to provide a medical certificate or other evidence as reasonably required by the Company for leave equal to or in excess of two days. A medical certificate or statutory declaration may also be required to establish the illness of the person concerned or the unexpected emergency. The entitlement to carers leave is subject to you being responsible for, and the only person available to provide care for the person concerned.
Approved personal/carers leave will be paid based on your FAR. There is no payment for unused personal/carers leave upon termination for any reason.
Where you have a requirement for carers leave and you do not have any accrued personal/carers leave, you are entitled to up to 2 days unpaid leave on each occasion.
Requests for longer periods of paid or unpaid carers leave or any other arrangements for the provision of carers leave will be considered on a case by case basis.
10. Parental Leave
You are entitled to receive parental leave in accordance with the applicable legislation and Company policy as advised to you and amended from time to time.
11. Compassionate Leave
You are entitled to up to two days paid leave (in addition to the balance of the day on which you are notified) in the event that a member of your immediate family or your household, contracts or develops a personal illness or sustains a personal injury, that poses a serious threat to their life, or in the event of their death. The entitlement to compassionate leave is in accordance with the applicable legislation and Company policy as advised to you and amended from time to time.
For the purposes of this cause, immediate family is your spouse or de facto spouse, and you or your spouses, child/step-child, parent/step-parent, grandparent, grandchild or siblings. You are required to let your Manager know as soon as possible when you realise you will be unable to attend work.
A medical certificate or statutory declaration may be required to establish that the leave is taken for a permissible reason.
Payment for approved compassionate leave will be based on your FAR.
12. Jury Service Leave
You are entitled to jury service leave in accordance with the applicable legislation and Company policy as advised to you and amended from time to time.
13. Public Holidays
Public Holidays will be those recognised in the applicable legislation, or other agreed replacement days. Although you are not normally required to work public holidays, you may be requested to do so, from time to time to meet the operational requirements of the Company, consideration for which is included in your FAR.
14. Medical Assessments
In order for the Company to satisfy its duty of care and safety obligations, it may require you to undertake a medical assessment by a doctor or other health professional(s) nominated by the Company, including regular medicals or health checks that may be organised by the Company and random drug and alcohol testing (at the Companys expense).
You consent to the doctor or health professional releasing the results of that assessment to the Company. The Company will keep the medical information provided to it under this clause confidential and you agree that the medical information which is collected may be used by the Company to manage your employment, including determining whether you are capable of safely performing the duties of your position.
The above requirement is separate to, and in addition to, any requirement for a health or medical assessment under applicable legislation.
15. Guarantee of annual earnings
Your salary includes compensation for all entitlements, benefits or payments that might otherwise be due under any industrial instrument that may apply to your employment including but not limited to:
· overtime;
· penalty payments for out of hours work and working weekends and public holidays;
· shift loadings; and
· any other loadings, penalties, overtime or allowances.
Accordingly, you will not be paid any special rates or allowances for working particular times or under particular conditions unless otherwise agreed in writing.
For the purpose of section 330 the Fair Work Act 2009 (Cth), the Company undertakes that it will pay you your FAR as set out in the Clause Fixed Annual Remuneration fora period of at least 12 months. This undertaking constitutes a guarantee of annual
earnings for the purposes of the Fair Work Act 2009 (CM). As a rogue, to the extent they would otherwise apply, the terms of the Black Coal Mining Industry Award 2010 will not apply to your employment for the period during which the guarantee of annual earnings applies as your annual earnings will exceed the high income threshold for the purposes of the Fair Work Act 2009 (Cth).
This undertaking will continue until the earlier of the following:
· your employment with the Company ends;
· you accept a new undertaking from the Company;
· or you and the Company agree to revoke this undertaking.
This undertaking does not affect the rights of either you or the Company to end the employment relationship in accordance with the termination provisions set out in this agreement.
By accepting this offer and contract of employment, you agree to the guarantee of annual earnings given by the Company.
16. Compliance with Company Policies & Procedures
During your employment you are required to comply with the Companys policies and procedures as varied from time to time.
It is your obligation to take reasonable steps to familiarise yourself with current policies and procedures that are relevant to your employment and to comply at all times with such policies and procedures. The Companys policies and procedures operate independently of this contract and are not incorporated into this contract and are not binding on the Company.
The Company reserves the right to amend, revoke or replace its policies and procedures at its discretion, in accordance with what the Company considers to be its business needs. The Company will notify you of any changes to policies and procedures which impose a requirement on you as an employee.
17. Occupational Health & Safety
You must comply with all occupational health and safety systems that are relevant to your work. You must attend to your work safely, take all reasonable care and notify your Leader if you become aware of any workplace risks. You must not create a potential safety risk to yourself or others in the course of your employment, including (but not limited to) by the excessive consumption of alcohol or the use of illicit drugs.
18. Privacy
You consent to the Company collecting, storing, using and disclosing your personal and health information for any lawful purpose relating to your employment. You also consent to the Company transferring your personal and health information outside Queensland and Australia in the course of its business activities.
You also consent to the Company disclosing your personal and health information to other persons for any lawful purpose relating to your employment. These persons include the Australian Tax Office, superannuation fund trustees and administrators, contractors, bankers, insurers, medical, rehabilitation or occupational practitioners, laboratory analysts, investigators, financial and legal advisers, potential purchasers on sale of business, law enforcement bodies and regulatory authorities.
19. Confidentiality
During your employment with the Company you will have access to or may become acquainted with information belonging to or in the possession of the Group relating to its operations and the affairs of the Group including, but not limited to, information about the Groups products, processes, assets, plans, strategies, and information received from third parties under an obligation of confidence ( Confidential Information ).
You must not use or disclose Confidential Information, except
(g) for the purpose of and to the extent necessary to properly perform your duties; or
(h) where disclosure of specific Confidential Information is required to comply with any applicable law; or
(i) the use or disclosure of the Confidential information is agreed by the Company.
You agree that upon termination of your employment for any reason you will return to the Company all of the Confidential Information that you have in your possession.
Your obligation not to use or disclose confidential information in accordance with the terms of this clause continues after your employment ends.
20. Intellectual property
For the purpose of this clause:
Work means any invention, discovery, design, improvement, formula, process, technique, literary or artistic work, or any other item in which Intellectual Property Rights subsist or are capable of subsisting and is wholly or partly created, made or discovered by you either:
(a) during your employment; or
(b) otherwise using the facilities, resources, time, Confidential Information or any other opportunity provided by the Company, or the Group.
Intellectual Property Rights means all existing and future rights, which may be protected by copyright, patent, design, trademark or other registration or other forms of protection in Australia or elsewhere.
Moral Rights includes the right to be identified as the author of the work, the right not to have any other person identified as the author of the work and the right not to have the work subjected to any derogatory treatment.
The Work and all Intellectual Property Rights in the Work will belong absolutely to the relevant company or companies within the Group and you agree to do all things necessary and execute any document required to give effect to this ownership.
You must immediately and fully disclose to the Company any Work created, made or discovered by you.
You consent to the use of all existing and future Works made by you in the course of your employment, and agree to waive any Moral Rights you may have in them, in favour of the Company or the relevant company or companies within the Group.
You also agree that this consent and waiver extends to any licensees and successors in title to the relevant company within the Group in respect of such Works, as well as to any persons who are authorised by the Group or by its licensees and successors in title to do acts comprising the copyright of such Works.
You agree to execute any further document necessary to give effect to this. If you do not comply with such a request by the Company within 7 days, you authorise the Company (or any persona authorised by the Company) to do all things and execute all documents necessary to give effect to that request on your behalf.
For the avoidance of doubt, your obligations under this clause continue after your employment ends.
21. Termination of Employment
Either party may terminate your employment by giving the other party four weeks written notice (or other greater period if required by law).
The Company may make a payment in lieu of notice for all or the balance of the notice period. In the event that you end your employment without giving the specified period of notice, you agree to pay the Company an amount equal to your total remuneration for the balance of the notice period not serviced. You agree that this amount is a genuine pre-estimate of the loss the Company is likely to suffer as a result of the failure to give the specified period of notice.
The period of notice prescribed above applies throughout your employment with the Company, unless a new period is agreed in writing. If notice of termination is given to you, the Company is not obliged to provide any work to you during the notice period.
The Company may terminate your employment immediately without notice or payment in lieu of notice if you:
(a) engage in any serious or wilful misconduct including by committing any wilful, serious or persistent breach of your terms and Conditions of employment or any Company policy or by serious neglect in the performance of your duties;
(b) engage in any other conduct (either inside or outside of the workplace) which in the reasonable opinion of the Company is likely to affect adversely the reputation of the Company or the Group and/or your ability to effectively perform your duties; or
(c) are unwilling or unable, wholly or partially, to property and effectively perform your duties.
If your employment is terminated for any of the above reasons, the Company will pay you up to the day of termination only.
22. Directorships
The Company may require you to become a director of the Company or any of its Related Bodies Corporate without any additional remuneration and the benefits under this Agreement are in part consideration of you agreeing to become a director.
On termination of your employment:
(a) you must resign all directorships held as a consequence of the employment, as directed by the Company, and
(b) you irrevocably appoint the Company Secretary of the Company as your agent to execute any documents on your behalf.
You agree to resign as a director if the Chairperson or the Company requires you to do so.
23. Company Property
Upon the cessation of your employment you will return to the Company or an authorised officer of the Company:
(a) all originals and copies in any form (including but not limited to computer data) of all books, records and documents relating to your duties, functions and responsibilities as an employee of the Company or its business affairs (including customer lists and details); and
(b) all other things belonging to the Company (including but not limited to keys, security cards and passes, corporate credit cards, mobile phones, copies of documents and computerized information) which you have in your possession or which has otherwise been provided to you in the course of your employment with the Company.
24. Set Off
Immediately on your employment ending or at any other time requested by the Company, you:
(a) agree to pay to the Company all amounts you owe to it (for example, amounts such as personal expenses incurred on a Company mobile telephone, or amounts owing for Company funded study assistance) or any amounts mistakenly paid to you such as an overpayment;
(b) authorise and direct the Company to withhold unpaid amounts from monies otherwise owed to you during employment or upon termination of employment; and
(c) acknowledge that if you fall to repay any monies owing to the Company, including any amounts paid to you by mistake, the Company may demand and enforce the recovery of such monies as a debt immediately due and payable by you to the Company.
25. Post-employment restrictions
Competitive Business means any business that competes with the Group during the period of 6 months preceding the End Date or during the Restricted Period.
End Date means the date on which your employment with the Company ends.
Entity means an individual, company, partnership, Joint venture (whether corporate or incorporate) or any other body (whether corporate or incorporate).
Prescribed Position means:
1 a position as employee, director, secretary, company officer, agent, contractor, consultant or adviser of any Entity;
2 a partner, shareholder or member of any Entity; and
3 acting as any of the persons referred to in Items 1 and 2 of this definition.
Restricted Area means:
1 Australia; or failing that
2 Queensland and New South Wales; or failing that
3 Queensland.
Restricted Period means:
1 the period of 12 months starting on the End Date; or failing that
2 the period of 8 months starting on the End Date; or failing that
3 the period of 3 months starting on the End Date; or falling that
4 the period of 1 months starting on the End Date.
Inducing directors, employees or contractors to leave the Group
You must not, during the Restricted Period and in the Restricted Area, directly or indirectly induce or attempt to induce any director, employee or contractor of the Group, with whom you had work related dealings during the 12 months preceding the End Date, or of whom you have, or have had, Confidential Information about in respect of their engagement with the Group, to terminate his or her engagement with the entity within the Group which engages them, whether or not that person would commit a breach of that persons contract of engagement.
Persuading the Groups customers or suppliers to cease or reduce business
You must not, during the Restricted Period and in the Restricted Area, directly or indirectly solicit or persuade any customer or supplier of the Group with whom you had work related dealings during the 12 months preceding the End Date, or of whom you have, or have had, Confidential information about, to cease doing business with the Group, or reduce the amount of business which the person would normally do, or otherwise have done, with the Group.
Competing with the Group
You agree that you will not (whether directly or indirectly and in any position including a Prescribed Position), during the Restricted Period and in the Restricted Area, carry on, be employed by, or engaged in or otherwise interested in any Competitive Business:
(a) for purposes of providing services which are the same as or similar to those you provided to the Group at any time within the 12 months prior to the End Date; or
(b) to use Confidential Information to gain an advantage for a Competitive Business or cause detriment to the Group.
Priority of restrictions
You agree that you intend the restrictions in this clause 25 to operate to their maximum extent. However, should a Court consider it necessary to reduce the extent of a restriction, the parties intend that any reduction should be made to the Restricted Area before any reductions are made to the Restricted Period.
Consent
The restrictions in this clause do not apply in circumstances where you have obtained the Companys prior written consent.
Restrictions reasonable and inclusive
You agree that:
(j) you will obtain Confidential information during your employment, the disclosure of which could materially harm the Group;
(k) the restrictions in this clause are reasonable and necessary for the protection of the Groups Confidential information and goodwill;
(l) you intend the restrictions to operate to the maximum extent
(m) damages may be inadequate to protect the Groups interests and the Group is entitled to seek and obtain injunctive relief, or any other remedy, in any court; and
(n) the restrictions are separate, distinct and several, so that the unenforceability of any restriction does not affect the enforceability of the other restrictions.
(o) consideration for these restraints is included in your remuneration.
Modification of restrictions
If the restrictions in this clause:
(p) are void as unreasonable for the protection of the Groups interests; and
(q) would be valid if part of the wording was deleted or the period or area was reduced, the restrictions will apply with the modifications necessary to make them effective.
Your obligations under this clause 25 survive the ending of your employment.
26. Retrenchment Benefits
In addition to the above notice period, if your position is made redundant by the Company you will be entitled to receive retrenchment benefits in accordance with applicable legislation.
27. Relationship to Other Instruments
If an industrial instrument applies to your employment:
(a) your FAR and other benefits provided under this contract compensate you for all work performed, including but not limited to any overtime, loadings, penalty
rates, allowances and any other entitlement which may be due to you under the industrial instrument;
(b) your FAR and other benefits provided under this contract satisfy the Companys obligations to make payments to which you may otherwise be entitled to under the Industrial Instrument or law; and
(c) any entitlement under the industrial instrument will be calculated by reference to the applicable rate of pay in the industrial instrument.
You agree that if necessary, the Company may retrospectively offset the amount of your salary and other benefits provided under this contract in excess of any entitlements which may otherwise apply under an industrial instrument or law, to satisfy the Companys obligations under the industrial instrument or law.
28. Reference and background checks
This offer of employment with the Company is made to you on the understanding that the information you provided to us during the recruitment process is accurate and complete. However, to ensure the integrity of the recruitment process, the Company requires all new employees to undergo reference and background checking. Accordingly, you acknowledge and accept that:
· this agreement is conditional upon the satisfactory completion of the reference and background checks set out below. If the Company is not satisfied with the results of any of the following checks, it may withdraw this offer of employment made to you;
· the Company may carry out the following checks on you to determine your suitability for the position:
· reference check with previous employers;
· academic qualification check; and/or
· Federal Police criminal record check.
29. General
(a) This contract and the letter of offer constitute the entire agreement relating to your employment and supersede all prior offers, written or oral, with respect to your employment by the Company. These terms may only be modified by an agreement in writing signed by both parties.
(b) Any notice to be given under these terms and conditions must be given in writing and may be given either personally or by registered mail. Any notice you are required to provide must be handed to your Leader or mailed addressed to the Company at the address set out on the first page of this letter. If the Company is
required to provide you with notice, it will be either handed to you or addressed to you at your last known place of residence.
(c) In this contract, a reference to:
(i) legislation is to that legislation as amended, re-enacted or replaced, and includes any subordinate legislation issued under it;
(ii) a policy or other document is to that policy or document as amended, supplemented, replaced or novated;
(iii) the Group is to the Company and each of its Related Bodies Corporate (as defined by the Corporations Act 2001 (Cth)) and includes a reference to any member of the Group.
(d) Any provision of this contract which is unenforceable or partly unenforceable is, where possible, to be severed to the extent necessary to make this contract enforceable, unless this would materially change the intended effect of this contract.
(e) These terms and conditions and your employment referred to in this contract will be governed by the laws of Queensland.
30. Acceptance of Contract
By signing this contract, you are acknowledging that:
(a) you have had sufficient time to review its contents;
(b) you have been given an opportunity to obtain advice concerning its contents and effect; and
(c) you have read and understand the contents of this contract and the letter of offer and your obligations.
Signed: |
/s/ Emma Pollard |
Date: 18/10/18 |
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Emma Pollard |
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CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 EQUITY INCENTIVE PLAN
FORM OF
STOCK OPTION AWARD AGREEMENT (LONG TERM INCENTIVE GRANT)
This Stock Option Award Agreement (this Award Agreement ) evidences an award of stock options ( Options ) by Coronado Global Resources Inc., a Delaware Corporation ( Coronado ) under the Coronado Global Resources Inc. 2018 Equity Incentive Plan (the Plan ). Capitalized terms not defined in the Award Agreement have the meanings given to them in the Plan. A copy of the Plan is attached to this Award Agreement.
Name of Grantee: |
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(the Grantee ). |
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Grant Date: |
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(the Grant Date ).
The Grantee does not have to pay anything for the grant of Options. |
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Number of Options: |
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(the Target Number of Options ). The number of Options that will actually vest will range from 0% to 100% of the Target Number of Options and be determined based on achievement of the Performance Metrics below. |
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Each Option represents the right to purchase one CDI at the Exercise Price set forth below on the terms and conditions set forth herein. In accordance with Sections 1.3 and 1.5 of the Plan, in lieu of all or any portion of the CDIs otherwise deliverable in respect of the Grantees Options upon the exercise of such Options in accordance herewith, the Company may deliver to the Grantee an equivalent value in cash or Shares (or a combination thereof). |
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Exercise Price: |
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The Exercise Price will be A$ [insert] (the final Offer Price as determined in Coronados Prospectus dated [insert], (the Exercise Price ). |
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Performance Period: |
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January 1, 2019 to December 31, 2021. |
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Testing Date: |
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Achievement of the Performance Metrics will be assessed following release of Coronados audited full year financial results for the financial year ended 31 December 2021 (generally no later than March 31, 2022) (the Testing Date ). The Grantee will be advised of the number of Options earned (which will vest upon employment through the Vesting Date), and the remainder of Options will immediately lapse and be forfeited for no consideration. |
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Vesting Date: |
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The Options shall vest on the one year anniversary of the Testing |
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Date and no later than March 31, 2023 (the Vesting Date ). |
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The Options will only vest if the Grantee is, and has been, continuously employed by the Company from the Grant Date through the Vesting Date. |
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Unless the Board determines otherwise, if the Grantee ceases employment with the Company prior to the Vesting Date: (1) in circumstances justifying the Grantees termination for Cause or due to the Grantees resignation, then the Grantees unvested Options will lapse and be forfeited for no consideration; and (2) by reason of death, Disability, termination without Cause, Retirement or other circumstances approved by the Board, a number of the Grantees Options prorated from January 1, 2019 through the date of the Grantees termination of employment will remain eligible to vest on the Vesting Date subject to satisfaction of the Performance Metrics and will be tested in the ordinary course. The remainder of the Options will lapse and be forfeited for no consideration. |
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Unless the Board determines otherwise, upon a Change in Control that occurs during the Performance Period, a number of the Grantees Options prorated from January 1, 2019 through the date of the Change in Control will vest subject to satisfaction of the Performance Metrics measured at the time of the Change in Control as determined by the Committee in its sole discretion, and any Options that do not vest in accordance with this sentence shall be forfeited for no consideration upon the Change in Control. Any vested but unexercised Options will be automatically exercised on a Change in Control, unless the Board determines otherwise. For the avoidance of doubt, the orderly sell down of CDIs or Shares by Coronado Group LLC will not be considered a Change in Control unless it amounts to an event in Section 1.2.11(b) of the Plan. |
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Performance Metrics: |
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The number of Options that will be earned at the end of the Performance Period (or, if earlier, through the date of a Change in Control) will equal the sum of (i) the Relative TSR Options, plus (ii) the Scorecard Options (in each case, as defined below) (the Total Earned Options ). For the avoidance of doubt, in no event will the total number of Options vesting on the Vesting Date exceed the Target Number of Options. |
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Relative TSR (25% weighting) |
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The Relative TSR Options will equal the product of (i) the Target Number of Options multiplied by (ii) 25% (the weighting of Metric 1) multiplied by (iii) the Percentage of Options Earned, as calculated based on the table below. |
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Performance Level |
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Achievement of
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Percentage of
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Maximum |
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At or above 75 th Percentile of Peer Group TSR |
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100% |
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Above Threshold and Below Maximum |
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Above 50 th and below 75 th Percentile of Peer Group TSR |
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interpolated on a straight-line basis |
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Threshold |
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50 th Percentile of Peer Group TSR |
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50% |
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Below Threshold |
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Below 50 th Percentile of Peer Group TSR |
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0% |
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Relative TSR compares Coronados TSR to members of the company peer group using standard Microsoft Excel percentile treatment with the Company excluded from the company peer group. Relative TSR for this purpose uses a percentile rank measurement in which payout percentage is determined dependent on the Companys rank compared against the comparator group. |
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TSR represents the total return on a companys common stock to an investor (stock price appreciation plus dividends). For this purpose, TSR is determined as follows: |
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TSR = (Change in CDI Price + Dividends Paid) / Beginning CDI Price |
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Beginning CDI Price: Average closing price of CDIs over the 30 trading days immediately prior to the first day of the performance period (adjusted for dividend distributions and stock splits). |
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Ending CDI Price: Average closing price of CDIs over the last 30 trading days of the performance period (adjusted for dividend distributions and stock splits). |
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Change in CDI Price: Difference between the Beginning CDI Price and the Ending CDI Price. |
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Dividends Paid: Dividends shall be treated as though they are reinvested on the ex-dividend date based on the closing price of CDIs on that date. |
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For purposes of the Relative TSR performance metric, the peer group shall be as follows: |
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[TSR Peer Group to be inserted] |
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Scorecard (75% weighting) |
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The Scorecard Options will vest based on the level of achievement of the performance metrics set out in the scorecard advised to the Grantee separately. |
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Term: |
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The latest date the Option will expire is on the 10 th anniversary of the Grant Date (the Expiration Date ). However, in the event the employment of the Grantee terminates for any reason prior to the Expiration Date, vested Options shall remain exercisable for the period as set forth below, unless the Board determines otherwise: |
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· |
Upon a termination of employment for any reason other than for Cause, Retirement, Disability or death, the Grantee may exercise the Options until the earlier of the date that is three months following the termination of employment or the Expiration Date, whichever is earlier. |
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· |
Upon a termination of employment for Cause, the Options shall expire and immediately cease to be exercisable upon the date of the termination of employment. |
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· |
Upon a termination of employment due to death, Disability or Retirement, the Options shall expire one year after the date of the Grantees termination, but in no event later than the Expiration Date. |
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Exercise of Option: |
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Vested Options may be exercised by submitting to the Company a written notice specifying the number of Options to be exercised accompanied by the full Exercise Price in cash or by certified or official bank check or in another form as determined by Coronado. The Committee may also make arrangements for the cashless exercise of an Option. |
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As soon as reasonably practicable following the Companys determination that the Option has been validly exercised, the Company shall issue and allot, or procure the transfer of, the relevant number of CDIs to be allocated to the Grantee, or at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) with a Fair Market Value equal to the Fair Market Value of the relevant number of CDIs to be allocated to the Grantee in respect of the exercised Option. If the |
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Board determines to allocate Shares to the Grantee, the number of Shares will be rounded to the nearest whole number of Shares. |
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U.S. Securities Laws Restrictions: |
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Grantee understands and agrees that any Shares and/or CDIs (including Shares underlying CDIs) issued under this Award will be subject to resale restrictions under U.S. securities laws. These restrictions are set forth in the share legend contained in Annex A hereto. The Company intends to remove these restrictions as soon as practicable and advise Grantee once they have been lifted, but these resale restrictions will last at least one year from the date of the completion of the Companys initial public offering of CDIs on the Australian Securities Exchange. If you have any questions regarding these restrictions, please contact Rick Rose **. |
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All Other Terms: |
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As set forth in the Plan. |
The Plan is incorporated herein by reference. Except as otherwise set forth in the Award Agreement, the Award Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the Options. In the event that any provision of the Award Agreement is inconsistent with the Plan, the terms of the Award Agreement will control. Except as specifically provided herein, in the event that any provision of this Award Agreement is inconsistent with any employment agreement between the Grantee and Coronado ( Employment Agreement ), the terms of the Employment Agreement will control. By accepting this Award, the Grantee agrees to be subject to the terms and conditions of the Plan.
This Award Agreement may be executed in counterparts, which together will constitute one and the same original.
Any advice given by the Company in connection with this award offer is general advice only and does not take into account your objectives, financial situation and needs. You should consider obtaining your own financial product advice from an independent person who is licensed by the Australian Securities and Investments Commission to give such advice.
Details of the current market price of CDIs are available on the ASX website, http://www.asx.com.au/.
There are risks involved in acquiring and holding Options including: (1) There is no guarantee that any securities in Coronado (including Options) will grow in value they may decline in value. Stock markets are subject to fluctuations and Coronados securities price can rise and fall, depending on the Companys performance and other internal and external factors; (2) the Board may decide not to pay dividends at the current level, or may decide to cease the payment of dividends; and (3) there are tax implications involved in acquiring and holding securities in Coronado and the tax regime applying to you may change.
IN WITNESS WHEREOF , the parties have caused this Award Agreement to be duly executed and effective as of the Grant Date.
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CORONADO GLOBAL RESOURCES INC. |
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By: |
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Name: |
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Title: |
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Acknowledged and Agreed: |
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[NAME OF GRANTEE] |
ANNEX A
THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT.
THE HOLDER HEREOF, BY ACQUIRING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN, AGREES FOR THE BENEFIT OF CORONADO GLOBAL RESOURCES INC. (THE COMPANY) THAT THESE SECURITIES AND ANY BENEFICIAL INTERESTS THEREIN MAY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (I) (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT, AND ARE NOT ACTING FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN RULE 902(k) UNDER THE U.S. SECURITIES ACT) IN AN OFFSHORE TRANSACTION (AS DEFINED IN RULE 902(h) UNDER THE U.S. SECURITIES ACT) COMPLYING WITH REGULATION S (REGULATION S) UNDER THE U.S. SECURITIES ACT THAT IS NOT THE RESULT OF ANY DIRECTED SELLING EFFORTS (AS DEFINED IN RULE 903(C) UNDER THE U.S. SECURITIES ACT), (C) IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, INCLUDING, SO LONG AS THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT (RULE 144A), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A)(QIB) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER, OR (D) IN A TRANSACTION REGISTERED UNDER THE U.S. SECURITIES ACT (WHICH IT ACKNOWLEDGES THE COMPANY IS UNDER NO OBLIGATION TO DO EXCEPT AS MAY BE SET FORTH IN ANY REGISTRATION RIGHTS AND SELL-DOWN AGREEMENT THAT HAS OR MAY BE ENTERED INTO AMONG THE COMPANY AND CORONADO GROUP LLC SOLELY FOR THE BENEFIT OF CORONADO GROUP LLC), AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTIONS.
PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST (X) THAT THE TRANSFEROR AND/OR TRANSFEREE PROVIDE DECLARATIONS AND CERTIFICATIONS TO THE COMPANY AND THE SHARE REGISTRY IN SUCH FORM AS THE COMPANY MAY PRESCRIBE FROM TIME TO TIME, INCLUDING THAT THE TRANSFEREE IS EITHER (I) NOT A U.S. PERSON (AS DEFINED IN REGULATION S), IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN IN A TRANSACTION COMPLYING WITH REGULATION S AND IS NOT HOLDING THE SECURITIES FOR THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON OR (II) IS A QIB AND IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTEREST THEREIN FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER (IF AVAILABLE) AND/OR (Y) THAT AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY BE DELIVERED TO THE COMPANY THAT SUCH TRANSFER IS TO BE EFFECTED IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S OR RULE 144A (IF AVAILABLE) UNDER THE U.S. SECURITIES ACT OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
BENEFICIAL INTERESTS IN THE SECURITIES REPRESENTED HEREBY MAY BE HELD IN THE FORM OF CHESS DEPOSITARY INTERESTS (CDIs). BY ACQUIRING ANY CDIs OR ANY INTERESTS THEREIN, THE HOLDER THEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT ANY SUCH CDIs OR INTERESTS THEREIN MAY ONLY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN ACCORDANCE WITH ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF SUCH CDIs IMPOSED BY
THE AUSTRALIAN SECURITIES EXCHANGE OR ANY SUCCESSOR OR REPLACEMENT SECURITIES EXCHANGE (ASX).
HEDGING TRANSACTIONS INVOLVING THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THE HOLDER HEREOF FURTHER AGREES THAT THE SECURITIES REPRESENTED HEREBY AND ANY SHARES TRANSMUTED TO CDIs WILL BE SUBJECT TO A HOLDING LOCK THAT WILL PREVENT THE HOLDER FROM TRANSFERRING SUCH SECURITIES OR CDIs FOR SO LONG AS ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF THE CDIs IMPOSED BY THE ASX REMAIN IN PLACE OR SUCH SECURITIES AND CDIs ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT, UNLESS THE COMPANY OTHERWISE DETERMINES TO REMOVE SUCH HOLDING LOCK.
NO AFFILIATE (AS DEFINED IN RULE 405 OF THE U.S. SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN, IN THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF THE COMPANY MAY PURCHASE, OTHERWISE ACQUIRE OR HOLD THE SECURITIES OR A BENEFICIAL INTEREST THEREIN AND ANY ACQUISITION OF THE SECURITIES EVIDENCED HEREBY OR ANY BENEFICIAL INTEREST THEREIN BY SUCH AN AFFILIATE OR PERSON SHALL BE NULL AND VOID AB INITIO, PROVIDED THAT THE SECURITIES OR A BENEFICIAL INTEREST THEREIN MAY BE ACQUIRED BY SUCH AN AFFILIATE OR PERSON SO LONG AS THE ACQUIRER DOES NOT HOLD THE SECURITY OR A BENEFICIAL INTEREST THEREIN IN THE FORM OF CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES OR, IF SUCH AFFILIATE ACQUIRES ANY CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES IT IMMEDIATELY TRANSMUTES THOSE CHESS DEPOSITARY INTERESTS INTO SHARES OF COMMON STOCK OF THE COMPANY.
THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. AS PROVIDED IN THE BYLAWS OF THE COMPANY, THE COMPANY OR THE SHARE REGISTRAR MAY REFUSE TO REGISTER ANY TRANSFER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN NOT MADE IN ACCORDANCE WITH THE RESTRICTIONS ABOVE.
THE FOREGOING RESTRICTIONS SHALL REMAIN IN PLACE UNTIL SUCH TIME AS THE COMPANY DETERMINES IT IS APPROPRIATE TO REMOVE THEM.
BY ITS ACQUISITION HEREOF, OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER REPRESENTS THAT IT IS PERMITTED TO ACQUIRE SUCH AN INTEREST AS SET FORTH IN THIS LEGEND AND AGREES TO COMPLY WITH THE FOREGOING RESTRICTIONS.
CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 EQUITY INCENTIVE PLAN
FORM OF
PERFORMANCE STOCK UNIT AWARD AGREEMENT (LONG TERM INCENTIVE GRANT)
This Performance Stock Unit Award Agreement (this Award Agreement ) evidences an award of performance stock units ( PSUs ) by Coronado Global Resources Inc., a Delaware Corporation ( Coronado ) under the Coronado Global Resources Inc. 2018 Equity Incentive Plan (the Plan ). Capitalized terms not defined in the Award Agreement have the meanings given to them in the Plan. A copy of the Plan is attached to this Award Agreement.
Name of Grantee: |
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(the Grantee ). |
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Grant Date: |
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(the Grant Date ). |
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The Grantee does not have to pay anything for the grant of PSUs. |
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Number of PSUs: |
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(the Target Number of PSUs ). The number of PSUs that will actually vest will range from 0% to 100% of the Target Number of PSUs and be determined based on achievement of the Performance Metrics below. |
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Each PSU represents an unfunded, unsecured promise by Coronado to deliver to the Grantee one CDI (and any additional distributions as described below) on the Settlement Date. In accordance with Sections 1.3 and 1.5 of the Plan, in the discretion of the Committee, in lieu of all or any portion of the CDIs otherwise deliverable in respect of the Grantees PSUs, the Company may deliver to the Grantee an equivalent value in cash or Shares (or a combination thereof). |
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Performance Period: |
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January 1, 2019 to December 31, 2021. |
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Testing Date: |
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Achievement of the Performance Metrics will be assessed following release of Coronados audited full year financial results for the financial year ended 31 December 2021 (generally no later than March 31, 2022) (the Testing Date ). The Grantee will be advised of the number of earned PSUs (which will vest upon employment through the Vesting Date), and the remainder of PSUs will immediately lapse and be forfeited for no consideration. |
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Vesting Date: |
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PSUs shall vest on the one year anniversary of the Testing Date and no later than March 31, 2023 (the Vesting Date ). |
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The PSUs will only vest if the Grantee is, and has been, continuously employed by the Company from the Grant Date through the Vesting Date. |
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Unless the Board determines otherwise, if the Grantee ceases employment with the Company prior to the Vesting Date: (1) in circumstances justifying the Grantees termination for Cause or due to the Grantees resignation, then the Grantees unvested PSUs will lapse and be forfeited for no consideration; and (2) by reason of death, Disability, termination without Cause, Retirement or other circumstances approved by the Board, a number of the Grantees PSUs prorated from January 1, 2019 through the date of the Grantees termination of employment will remain eligible to vest on the Vesting Date subject to satisfaction of the Performance Metrics and will be tested in the ordinary course. Any such PSUs that vest following testing will be settled on the Settlement Date (as defined below). The remainder of the PSUs will lapse and be forfeited for no consideration. |
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Unless the Board determines otherwise, upon a Change in Control that occurs during the Performance Period, a number of the Grantees PSUs prorated from January 1, 2019 through the date of the Change in Control will vest subject to satisfaction of the Performance Metrics measured at the time of the Change in Control as determined by the Committee in its sole discretion, and any PSUs that do not vest in accordance with this sentence shall be forfeited for no consideration upon the Change in Control. Any vested but unsettled PSUs will be automatically settled on a Change in Control, unless the Board determines otherwise. For the avoidance of doubt, the orderly sell down of CDIs or Shares by Coronado Group LLC will not be considered a Change in Control unless it amounts to an event in Section 1.2.11(b) of the Plan. |
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Performance Metrics: |
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The number of PSUs that will be earned at the end of the Performance Period (or, if earlier, through the date of a Change in Control) will equal the sum of (i) the Relative TSR PSUs, plus (ii) the Scorecard PSUs (in each case, as defined below) (the Total Earned PSUs ). For the avoidance of doubt, in no event will the total number of PSUs vesting on the Vesting Date exceed the Target Number of PSUs. |
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Relative TSR (25% weighting) |
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The Relative TSR PSUs will equal the product of (i) the Target Number of PSUs multiplied by (ii) 25% (the weighting of Metric 1) multiplied by (iii) the Percentage of PSUs Earned, as calculated based on the table below. |
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Performance Level |
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Achievement of
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Percentage of PSUs
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Maximum |
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At or above 75 th Percentile of Peer Group TSR |
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100% |
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separately. |
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Settlement Date: |
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No later than 30 days after the Vesting Date, Coronado will allocate to the Grantee one CDI or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) with a Fair Market Value equal to the Fair Market Value of a CDI on the settlement date in respect of any PSU that vests, in each case subject to applicable withholding tax (the date of such allocation or payment, the Settlement Date ). If the Board determines to allocate Shares to the Grantee, the number of Shares will be rounded to the nearest whole number of Shares. |
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Distributions: |
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On the Settlement Date, Coronado will also allocate to the Grantee additional CDIs or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) in respect of the number of any PSUs that vest. The number of additional CDIs or Shares to be granted or the value of the cash payment will be equal to any cash dividends or other distributions (other than cash dividends or other distributions pursuant to which the PSUs were adjusted pursuant to Section 1.6 of the Plan) paid on CDIs allocated in respect of vested PSUs over the period from the end of the Performance Period to the Settlement Date (assuming such distributions were reinvested in additional CDIs at the then Fair Market Value of CDIs on the ex-dividend date) (including for this purpose any CDIs which would have been delivered on the Settlement Date but for being withheld to satisfy tax withholding obligations). |
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U.S. Securities Laws Restrictions: |
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Grantee understands and agrees that any Shares and/or CDIs (including Shares underlying CDIs) issued under this Award will be subject to resale restrictions under U.S. securities laws. These restrictions are set forth in the share legend contained in Annex A hereto. The Company intends to remove these restrictions as soon as practicable and advise Grantee once they have been lifted, but these resale restrictions will last at least one year from the date of the completion of the Companys initial public offering of CDIs on the Australian Securities Exchange. If you have any questions regarding these restrictions, please contact Rick Rose **. |
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All Other Terms: |
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As set forth in the Plan. |
The Plan is incorporated herein by reference. Except as otherwise set forth in the Award Agreement, the Award Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the PSUs. In the event that any provision of the Award Agreement is inconsistent with the Plan, the terms of the Award Agreement will control. Except as specifically provided herein, in the event that any provision of this Award Agreement is inconsistent with any employment agreement between the Grantee and Coronado ( Employment Agreement ), the terms of the Employment Agreement will control. By accepting this Award, the Grantee agrees to be subject to the terms and conditions of the Plan.
This Award Agreement may be executed in counterparts, which together will constitute one and the same original.
Any advice given by the Company in connection with this award offer is general advice only and does not take into account your objectives, financial situation and needs. You should consider obtaining your own financial product advice from an independent person who is licensed by the Australian Securities and Investments Commission to give such advice.
Details of the current market price of CDIs are available on the ASX website, http://www.asx.com.au/.
There are risks involved in acquiring and holding PSUs including: (1) There is no guarantee that any securities in Coronado (including PSUs) will grow in value they may decline in value. Stock markets are subject to fluctuations and Coronados securities price can rise and fall, depending on the Companys performance and other internal and external factors; (2) the Board may decide not to pay dividends at the current level, or may decide to cease the payment of dividends; and (3) there are tax implications involved in acquiring and holding securities in Coronado and the tax regime applying to you may change.
IN WITNESS WHEREOF , the parties have caused this Award Agreement to be duly executed and effective as of the Grant Date.
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CORONADO GLOBAL RESOURCES INC. |
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By: |
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Name: |
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Title: |
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Acknowledged and Agreed: |
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[NAME OF GRANTEE] |
ANNEX A
THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT.
THE HOLDER HEREOF, BY ACQUIRING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN, AGREES FOR THE BENEFIT OF CORONADO GLOBAL RESOURCES INC. (THE COMPANY) THAT THESE SECURITIES AND ANY BENEFICIAL INTERESTS THEREIN MAY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (I) (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT, AND ARE NOT ACTING FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN RULE 902(k) UNDER THE U.S. SECURITIES ACT) IN AN OFFSHORE TRANSACTION (AS DEFINED IN RULE 902(h) UNDER THE U.S. SECURITIES ACT) COMPLYING WITH REGULATION S (REGULATION S) UNDER THE U.S. SECURITIES ACT THAT IS NOT THE RESULT OF ANY DIRECTED SELLING EFFORTS (AS DEFINED IN RULE 903(C) UNDER THE U.S. SECURITIES ACT), (C) IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, INCLUDING, SO LONG AS THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT (RULE 144A), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A)(QIB) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER, OR (D) IN A TRANSACTION REGISTERED UNDER THE U.S. SECURITIES ACT (WHICH IT ACKNOWLEDGES THE COMPANY IS UNDER NO OBLIGATION TO DO EXCEPT AS MAY BE SET FORTH IN ANY REGISTRATION RIGHTS AND SELL-DOWN AGREEMENT THAT HAS OR MAY BE ENTERED INTO AMONG THE COMPANY AND CORONADO GROUP LLC SOLELY FOR THE BENEFIT OF CORONADO GROUP LLC), AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTIONS.
PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST (X) THAT THE TRANSFEROR AND/OR TRANSFEREE PROVIDE DECLARATIONS AND CERTIFICATIONS TO THE COMPANY AND THE SHARE REGISTRY IN SUCH FORM AS THE COMPANY MAY PRESCRIBE FROM TIME TO TIME, INCLUDING THAT THE TRANSFEREE IS EITHER (I) NOT A U.S. PERSON (AS DEFINED IN REGULATION S), IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN IN
A TRANSACTION COMPLYING WITH REGULATION S AND IS NOT HOLDING THE SECURITIES FOR THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON OR (II) IS A QIB AND IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTEREST THEREIN FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER (IF AVAILABLE) AND/OR (Y) THAT AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY BE DELIVERED TO THE COMPANY THAT SUCH TRANSFER IS TO BE EFFECTED IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S OR RULE 144A (IF AVAILABLE) UNDER THE U.S. SECURITIES ACT OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
BENEFICIAL INTERESTS IN THE SECURITIES REPRESENTED HEREBY MAY BE HELD IN THE FORM OF CHESS DEPOSITARY INTERESTS (CDIs). BY ACQUIRING ANY CDIs OR ANY INTERESTS THEREIN, THE HOLDER THEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT ANY SUCH CDIs OR INTERESTS THEREIN MAY ONLY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN ACCORDANCE WITH ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF SUCH CDIs IMPOSED BY THE AUSTRALIAN SECURITIES EXCHANGE OR ANY SUCCESSOR OR REPLACEMENT SECURITIES EXCHANGE (ASX).
HEDGING TRANSACTIONS INVOLVING THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THE HOLDER HEREOF FURTHER AGREES THAT THE SECURITIES REPRESENTED HEREBY AND ANY SHARES TRANSMUTED TO CDIs WILL BE SUBJECT TO A HOLDING LOCK THAT WILL PREVENT THE HOLDER FROM TRANSFERRING SUCH SECURITIES OR CDIs FOR SO LONG AS ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF THE CDIs IMPOSED BY THE ASX REMAIN IN PLACE OR SUCH SECURITIES AND CDIs ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT, UNLESS THE COMPANY OTHERWISE DETERMINES TO REMOVE SUCH HOLDING LOCK.
NO AFFILIATE (AS DEFINED IN RULE 405 OF THE U.S. SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN, IN THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF THE COMPANY MAY PURCHASE, OTHERWISE ACQUIRE OR HOLD THE SECURITIES OR A BENEFICIAL INTEREST THEREIN AND ANY ACQUISITION OF THE SECURITIES EVIDENCED HEREBY OR ANY BENEFICIAL INTEREST THEREIN BY SUCH AN AFFILIATE OR PERSON SHALL BE NULL AND VOID AB INITIO, PROVIDED THAT THE SECURITIES OR A BENEFICIAL INTEREST THEREIN MAY BE ACQUIRED BY SUCH AN AFFILIATE OR PERSON SO LONG AS THE ACQUIRER DOES NOT HOLD THE SECURITY OR A BENEFICIAL INTEREST THEREIN IN THE FORM OF CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES OR, IF SUCH AFFILIATE ACQUIRES ANY CHESS DEPOSITARY
INTERESTS REPRESENTING THE SECURITIES IT IMMEDIATELY TRANSMUTES THOSE CHESS DEPOSITARY INTERESTS INTO SHARES OF COMMON STOCK OF THE COMPANY.
THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. AS PROVIDED IN THE BYLAWS OF THE COMPANY, THE COMPANY OR THE SHARE REGISTRAR MAY REFUSE TO REGISTER ANY TRANSFER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN NOT MADE IN ACCORDANCE WITH THE RESTRICTIONS ABOVE.
THE FOREGOING RESTRICTIONS SHALL REMAIN IN PLACE UNTIL SUCH TIME AS THE COMPANY DETERMINES IT IS APPROPRIATE TO REMOVE THEM.
BY ITS ACQUISITION HEREOF, OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER REPRESENTS THAT IT IS PERMITTED TO ACQUIRE SUCH AN INTEREST AS SET FORTH IN THIS LEGEND AND AGREES TO COMPLY WITH THE FOREGOING RESTRICTIONS.
CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 NON-EXECUTIVE DIRECTOR PLAN
NON-EXECUTIVE DIRECTOR FORM OF RESTRICTED STOCK UNIT
AWARD AGREEMENT
This Restricted Stock Unit Award Agreement (this Award Agreement ) evidences an award of restricted stock units ( RSUs ) by Coronado Global Resources Inc., a Delaware corporation ( Coronado ), under the Coronado Global Resources Inc. 2018 Non-Executive Director Plan (as amended, supplemented or modified, from time to time, the Plan ). Capitalized terms used but not defined in this Award Agreement have the meanings given to them in the Plan. A copy of the Plan is attached to this Award Agreement.
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Number of RSUs |
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Non-Executive Director fee sacrifice arrangements: |
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Non-Executive Director fees will be sacrificed in approximately equal installments over the 15 month period from 1 October 2018 to 31 December 2019. |
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Grant Date: |
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RSUs will be granted in approximately five equal tranches over the 15 month period at three month intervals in respect of the fees sacrificed over the preceding three months. The dates of grant will be on or around [ insert dates ] (each the Grant Date ) unless such date would fall within a blackout period under the Securities Dealing Policy, in which case the Board may nominate a later date for the allocation of RSUs. |
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Vesting Date: |
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The RSUs are fully vested on the Grant Date. |
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Settlement Date: |
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No later than 30 days after the earliest of: (i) 5 years from the relevant Grant Date, (ii) the Grantee ceasing to be a Non-Employee Director |
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of Coronado or (iii) a Change in Control, Coronado will issue to the Grantee one CDI or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) with a Fair Market Value equal to the Fair Market Value of a CDI on the settlement date for, each RSU subject to applicable tax withholding (the date the Shares are so issued, the Settlement Date ). For the avoidance of doubt, the orderly sell down of CDIs or Shares by Coronado Group LLC will not be considered a Change in Control unless it amounts to an event in Section 1.2.11(b) of the Plan. If the Board determines to allocate Shares to the Grantee, the number of Shares will be rounded to the nearest whole number of Shares. |
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Distributions: |
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On the Settlement Date, Coronado will also allocate to the Grantee additional CDIs or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) in respect of the number of any RSUs that vest. The number of additional CDIs or Shares to be granted or the value of the cash payment will be equal to any cash dividends or other distributions (other than cash dividends or other distributions pursuant to which the RSUs were adjusted pursuant to Section 1.6.3 of the Plan) paid on the CDIs allocated in respect of vested RSUs from the Grant Date to the Settlement Date (assuming such distributions were reinvested in additional CDIs at the then Fair Market Value of Coronados CDIs on the ex-dividend date) (including for this purpose any CDIs which would have been delivered on the Settlement Date but for being withheld to satisfy tax withholding obligations). |
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U.S. Securities Laws Restrictions: |
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Grantee understands and agrees that any Shares and/or CDIs (including Shares underlying CDIs) issued under this Award will be subject to resale restrictions under U.S. securities laws. These restrictions are set forth in the share legend contained in Annex A hereto. The Company intends to remove these restrictions as soon as practicable and advise Grantee once they have been lifted, but these resale restrictions will last at least one year from the date of the completion of the Companys initial public offering of CDIs on the Australian Securities Exchange. If you have any questions regarding these restrictions, please contact Rick Rose **. |
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All Other Terms: |
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As set forth in the Plan. |
The Plan is incorporated herein by reference. Except as otherwise set forth in the Award Agreement, the Award Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the RSUs. In the event that any provision of the Award Agreement is inconsistent with the Plan, the terms of the Award Agreement will control. By accepting this Award, the Grantee agrees to be subject to the terms and conditions of the Plan.
This Award Agreement may be executed in counterparts, which together will constitute one and the same original.
IN WITNESS WHEREOF , the parties have caused this Award Agreement to be duly executed and effective as of the date of this agreement.
Date: [insert]
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CORONADO GLOBAL RESOURCES INC. |
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By: |
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Name: |
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Acknowledged and Agreed: |
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[NAME OF GRANTEE] |
ANNEX A
THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT.
THE HOLDER HEREOF, BY ACQUIRING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN, AGREES FOR THE BENEFIT OF CORONADO GLOBAL RESOURCES INC. (THE COMPANY) THAT THESE SECURITIES AND ANY BENEFICIAL INTERESTS THEREIN MAY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (I) (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT, AND ARE NOT ACTING FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN RULE 902(k) UNDER THE U.S. SECURITIES ACT) IN AN OFFSHORE TRANSACTION (AS DEFINED IN RULE 902(h) UNDER THE U.S. SECURITIES ACT) COMPLYING WITH REGULATION S (REGULATION S) UNDER THE U.S. SECURITIES ACT THAT IS NOT THE RESULT OF ANY DIRECTED SELLING EFFORTS (AS DEFINED IN RULE 903(C) UNDER THE U.S. SECURITIES ACT), (C) IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, INCLUDING, SO LONG AS THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT (RULE 144A), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A)(QIB) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER, OR (D) IN A TRANSACTION REGISTERED UNDER THE U.S. SECURITIES ACT (WHICH IT ACKNOWLEDGES THE COMPANY IS UNDER NO OBLIGATION TO DO EXCEPT AS MAY BE SET FORTH IN ANY REGISTRATION RIGHTS AND SELL-DOWN AGREEMENT THAT HAS OR MAY BE ENTERED INTO AMONG THE COMPANY AND CORONADO GROUP LLC SOLELY FOR THE BENEFIT OF CORONADO GROUP LLC), AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTIONS.
PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST (X) THAT THE TRANSFEROR AND/OR TRANSFEREE PROVIDE DECLARATIONS AND CERTIFICATIONS TO THE COMPANY AND THE SHARE REGISTRY IN SUCH FORM AS THE COMPANY MAY PRESCRIBE FROM TIME TO TIME, INCLUDING THAT THE TRANSFEREE IS EITHER (I) NOT A U.S. PERSON (AS DEFINED IN REGULATION S), IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN IN A TRANSACTION COMPLYING WITH REGULATION S AND IS NOT HOLDING THE
SECURITIES FOR THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON OR (II) IS A QIB AND IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTEREST THEREIN FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER (IF AVAILABLE) AND/OR (Y) THAT AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY BE DELIVERED TO THE COMPANY THAT SUCH TRANSFER IS TO BE EFFECTED IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S OR RULE 144A (IF AVAILABLE) UNDER THE U.S. SECURITIES ACT OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
BENEFICIAL INTERESTS IN THE SECURITIES REPRESENTED HEREBY MAY BE HELD IN THE FORM OF CHESS DEPOSITARY INTERESTS (CDIs). BY ACQUIRING ANY CDIs OR ANY INTERESTS THEREIN, THE HOLDER THEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT ANY SUCH CDIs OR INTERESTS THEREIN MAY ONLY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN ACCORDANCE WITH ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF SUCH CDIs IMPOSED BY THE AUSTRALIAN SECURITIES EXCHANGE OR ANY SUCCESSOR OR REPLACEMENT SECURITIES EXCHANGE (ASX).
HEDGING TRANSACTIONS INVOLVING THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THE HOLDER HEREOF FURTHER AGREES THAT THE SECURITIES REPRESENTED HEREBY AND ANY SHARES TRANSMUTED TO CDIs WILL BE SUBJECT TO A HOLDING LOCK THAT WILL PREVENT THE HOLDER FROM TRANSFERRING SUCH SECURITIES OR CDIs FOR SO LONG AS ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF THE CDIs IMPOSED BY THE ASX REMAIN IN PLACE OR SUCH SECURITIES AND CDIs ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT, UNLESS THE COMPANY OTHERWISE DETERMINES TO REMOVE SUCH HOLDING LOCK.
NO AFFILIATE (AS DEFINED IN RULE 405 OF THE U.S. SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN, IN THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF THE COMPANY MAY PURCHASE, OTHERWISE ACQUIRE OR HOLD THE SECURITIES OR A BENEFICIAL INTEREST THEREIN AND ANY ACQUISITION OF THE SECURITIES EVIDENCED HEREBY OR ANY BENEFICIAL INTEREST THEREIN BY SUCH AN AFFILIATE OR PERSON SHALL BE NULL AND VOID AB INITIO, PROVIDED THAT THE SECURITIES OR A BENEFICIAL INTEREST THEREIN MAY BE ACQUIRED BY SUCH AN AFFILIATE OR PERSON SO LONG AS THE ACQUIRER DOES NOT HOLD THE SECURITY OR A BENEFICIAL INTEREST THEREIN IN THE FORM OF CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES OR, IF SUCH AFFILIATE ACQUIRES ANY CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES IT IMMEDIATELY TRANSMUTES THOSE CHESS
DEPOSITARY INTERESTS INTO SHARES OF COMMON STOCK OF THE COMPANY. THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. AS PROVIDED IN THE BYLAWS OF THE COMPANY, THE COMPANY OR THE SHARE REGISTRAR MAY REFUSE TO REGISTER ANY TRANSFER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN NOT MADE IN ACCORDANCE WITH THE RESTRICTIONS ABOVE.
THE FOREGOING RESTRICTIONS SHALL REMAIN IN PLACE UNTIL SUCH TIME AS THE COMPANY DETERMINES IT IS APPROPRIATE TO REMOVE THEM.
BY ITS ACQUISITION HEREOF, OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER REPRESENTS THAT IT IS PERMITTED TO ACQUIRE SUCH AN INTEREST AS SET FORTH IN THIS LEGEND AND AGREES TO COMPLY WITH THE FOREGOING RESTRICTIONS.
CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 EQUITY INCENTIVE PLAN
FORM OF RESTRICTED STOCK UNIT AWARD AGREEMENT
(RETENTION GRANT)
This Restricted Stock Unit Award Agreement (this Award Agreement ) evidences an award of restricted stock units (the RSUs ) by Coronado Global Resources Inc., a Delaware corporation ( Coronado ), under the Coronado Global Resources Inc. 2018 Equity Incentive Plan (as amended, supplemented or modified, from time to time, the Plan ). Capitalized terms used but not defined in this Award Agreement have the meanings given to them in the Plan. A copy of the Plan is attached to this Award Agreement.
Name of Grantee: |
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(the Grantee ). |
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Grant Date: |
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(the Grant Date ). |
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The Grantee does not have to pay anything for the grant of RSUs. |
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Number of RSUs: |
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Vesting Date: |
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The RSUs will vest on the earlier of (x) the release of the FY 2020 financial results, which shall be no later than March 31, 2021 and (y) a Change in Control (the
Vesting Date
). Except as provided below, the RSUs will only vest if the Grantee is, and has been, continuously employed by the Company from the Grant Date through the Vesting Date.
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on the Vesting Date. The remainder of the RSUs will lapse and be forfeited for no consideration.
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Settlement Date: |
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[
For U.S. Employees
: No later than 30 days after the Vesting Date, Coronado will allocate to the Grantee one CDI, or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) with a Fair Market Value equal to the Fair Market Value of a CDI on the settlement date for each vested RSU, in each case subject to applicable withholding tax (the date of such issuance or payment, the
Settlement Date
). If the Board determines to allocate Shares to the Grantee, the number of Shares will be rounded to the nearest whole number of Shares.
]
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U.S. Securities Laws Restrictions: |
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Grantee understands and agrees that any Shares and/or CDIs (including Shares underlying CDIs) issued under this Award will be subject to resale restrictions under U.S. securities laws. These restrictions are set forth in the share legend contained in Annex A hereto. The Company intends to remove these restrictions as soon as practicable and advise Grantee once they have been lifted, but these resale restrictions will last at least one year from the date of the completion of the Companys initial public offering of CDIs on the Australian Securities Exchange. If you have any questions regarding these restrictions, please contact Rick Rose **. |
All Other Terms : |
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As set forth in the Plan. |
The Plan is incorporated herein by reference. Except as otherwise set forth in the Award Agreement, the Award Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the RSUs. In the event that any provision of the Award Agreement is inconsistent with the Plan, the terms of the Award Agreement will control. By accepting this Award, the Grantee agrees to be subject to the terms and conditions of the Plan.
This Award Agreement may be executed in counterparts, which together will constitute one and the same original.
Any advice given by the Company in connection with this award offer is general advice only and does not take into account your objectives, financial situation and needs. You should consider obtaining your own financial product advice from an independent person who is licensed by the Australian Securities and Investments Commission to give such advice.
Details of the current market price of CDIs are available on the ASX website, http://www.asx.com.au/.
There are risks involved in acquiring and holding RSUs including: (1) There is no guarantee that any securities in Coronado (including RSUs) will grow in value they may decline in value. Stock markets are subject to fluctuations and Coronados securities price can rise and fall, depending on the Companys performance and other internal and external factors; (2) the Board may decide not to pay dividends at the current level, or may decide to cease the payment of dividends; and (3) there are tax implications involved in acquiring and holding securities in Coronado and the tax regime applying to you may change.
IN WITNESS WHEREOF , the parties have caused this Award Agreement to be duly executed and effective as of the Grant Date.
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CORONADO GLOBAL RESOURCES INC. |
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By: |
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Title: |
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Acknowledged and Agreed: |
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[NAME OF GRANTEE] |
ANNEX A
THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT.
THE HOLDER HEREOF, BY ACQUIRING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN, AGREES FOR THE BENEFIT OF CORONADO GLOBAL RESOURCES INC. (THE COMPANY) THAT THESE SECURITIES AND ANY BENEFICIAL INTERESTS THEREIN MAY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (I) (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT, AND ARE NOT ACTING FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN RULE 902(k) UNDER THE U.S. SECURITIES ACT) IN AN OFFSHORE TRANSACTION (AS DEFINED IN RULE 902(h) UNDER THE U.S. SECURITIES ACT) COMPLYING WITH REGULATION S (REGULATION S) UNDER THE U.S. SECURITIES ACT THAT IS NOT THE RESULT OF ANY DIRECTED SELLING EFFORTS (AS DEFINED IN RULE 903(C) UNDER THE U.S. SECURITIES ACT), (C) IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, INCLUDING, SO LONG AS THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT (RULE 144A), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A)(QIB) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER, OR (D) IN A TRANSACTION REGISTERED UNDER THE U.S. SECURITIES ACT (WHICH IT ACKNOWLEDGES THE COMPANY IS UNDER NO OBLIGATION TO DO EXCEPT AS MAY BE SET FORTH IN ANY REGISTRATION RIGHTS AND SELL-DOWN AGREEMENT THAT HAS OR MAY BE ENTERED INTO AMONG THE COMPANY AND CORONADO GROUP LLC SOLELY FOR THE BENEFIT OF CORONADO GROUP LLC), AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTIONS.
PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST (X) THAT THE TRANSFEROR AND/OR TRANSFEREE PROVIDE DECLARATIONS AND CERTIFICATIONS TO THE COMPANY AND THE SHARE REGISTRY IN SUCH FORM AS THE COMPANY MAY PRESCRIBE FROM TIME TO TIME, INCLUDING THAT THE TRANSFEREE IS EITHER (I) NOT A U.S. PERSON (AS DEFINED IN REGULATION S), IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN IN A TRANSACTION COMPLYING WITH REGULATION S AND IS NOT HOLDING THE
SECURITIES FOR THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON OR (II) IS A QIB AND IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTEREST THEREIN FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER (IF AVAILABLE) AND/OR (Y) THAT AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY BE DELIVERED TO THE COMPANY THAT SUCH TRANSFER IS TO BE EFFECTED IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S OR RULE 144A (IF AVAILABLE) UNDER THE U.S. SECURITIES ACT OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
BENEFICIAL INTERESTS IN THE SECURITIES REPRESENTED HEREBY MAY BE HELD IN THE FORM OF CHESS DEPOSITARY INTERESTS (CDIs). BY ACQUIRING ANY CDIs OR ANY INTERESTS THEREIN, THE HOLDER THEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT ANY SUCH CDIs OR INTERESTS THEREIN MAY ONLY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN ACCORDANCE WITH ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF SUCH CDIs IMPOSED BY THE AUSTRALIAN SECURITIES EXCHANGE OR ANY SUCCESSOR OR REPLACEMENT SECURITIES EXCHANGE (ASX).
HEDGING TRANSACTIONS INVOLVING THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THE HOLDER HEREOF FURTHER AGREES THAT THE SECURITIES REPRESENTED HEREBY AND ANY SHARES TRANSMUTED TO CDIs WILL BE SUBJECT TO A HOLDING LOCK THAT WILL PREVENT THE HOLDER FROM TRANSFERRING SUCH SECURITIES OR CDIs FOR SO LONG AS ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF THE CDIs IMPOSED BY THE ASX REMAIN IN PLACE OR SUCH SECURITIES AND CDIs ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT, UNLESS THE COMPANY OTHERWISE DETERMINES TO REMOVE SUCH HOLDING LOCK.
NO AFFILIATE (AS DEFINED IN RULE 405 OF THE U.S. SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN, IN THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF THE COMPANY MAY PURCHASE, OTHERWISE ACQUIRE OR HOLD THE SECURITIES OR A BENEFICIAL INTEREST THEREIN AND ANY ACQUISITION OF THE SECURITIES EVIDENCED HEREBY OR ANY BENEFICIAL INTEREST THEREIN BY SUCH AN AFFILIATE OR PERSON SHALL BE NULL AND VOID AB INITIO, PROVIDED THAT THE SECURITIES OR A BENEFICIAL INTEREST THEREIN MAY BE ACQUIRED BY SUCH AN AFFILIATE OR PERSON SO LONG AS THE ACQUIRER DOES NOT HOLD THE SECURITY OR A BENEFICIAL INTEREST THEREIN IN THE FORM OF CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES OR, IF SUCH AFFILIATE ACQUIRES ANY CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES IT IMMEDIATELY TRANSMUTES THOSE CHESS
DEPOSITARY INTERESTS INTO SHARES OF COMMON STOCK OF THE COMPANY.
THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. AS PROVIDED IN THE BYLAWS OF THE COMPANY, THE COMPANY OR THE SHARE REGISTRAR MAY REFUSE TO REGISTER ANY TRANSFER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN NOT MADE IN ACCORDANCE WITH THE RESTRICTIONS ABOVE.
THE FOREGOING RESTRICTIONS SHALL REMAIN IN PLACE UNTIL SUCH TIME AS THE COMPANY DETERMINES IT IS APPROPRIATE TO REMOVE THEM.
BY ITS ACQUISITION HEREOF, OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER REPRESENTS THAT IT IS PERMITTED TO ACQUIRE SUCH AN INTEREST AS SET FORTH IN THIS LEGEND AND AGREES TO COMPLY WITH THE FOREGOING RESTRICTIONS.
[DRAFTING NOTE: ANNEX TO BE INSERTED FOR AUSTRALIAN EMPLOYEES ONLY]
ANNEX B
DO
NOT
USE THIS FORM UNLESS YOU WANT TO VOLUNTARILY
ELECT A LATER SETTLEMENT DATE FOR YOUR RESTRICTED STOCK UNITS
Retention Grant
Coronado Global Resources Inc. (Company)
To be valid, this Notice of Settlement Date Form must be received by the Company no later than 5:00pm (Sydney time) on [Insert date] 2018. This date is prior to the Grant Date advised to you in your Form of Restricted Stock Unit Award Agreement. You can return this Notice of Settlement Date Form to the Company by [Insert e.g. emailing a scanned copy to [Insert email address]
I nominate a Settlement Date of year(s) (up to a maximum of 10 years) from the Grant Date for any CHESS Depository Interests ( CDIs ), Shares or cash that I am allocated as a result of the vesting of Restricted Stock Units ( RSUs ) under the Retention Grant. I acknowledge that the Settlement Date I nominate may not be changed after RSUs are granted to me.
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Notice of Settlement Date Form received after 5:00pm (Sydney Time) on [Insert date] will not be effective. If your Notice of Settlement Date Form is received after this time, the Settlement Date specified in your Form of Restricted Stock Unit Award Agreement will apply.
CONFIDENTIAL
CORONADO GLOBAL RESOURCES INC.
2018 EQUITY INCENTIVE PLAN
FORM OF
RESTRICTED STOCK UNIT AWARD AGREEMENT (STIP DEFERRAL GRANT)
This Restricted Stock Unit Award Agreement (this Award Agreement ) evidences an award of restricted stock units (the RSUs ) by Coronado Global Resources Inc., a Delaware corporation ( Coronado ), under the Coronado Global Resources Inc. 2018 Equity Incentive Plan (as amended, supplemented or modified, from time to time, the Plan ). Capitalized terms used but not defined in this Award Agreement have the meanings given to them in the Plan. A copy of the Plan is attached to this Award Agreement.
Name of Grantee: |
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(the Grantee ). |
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Grant Date: |
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(the Grant Date ).
The Grantee does not have to pay anything for the grant of RSUs. |
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Number of RSUs: |
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Vesting Date: |
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The RSUs will vest following the release of Coronados audited full year financial results for the financial year ended 31 December 2020 (the Vesting Date ). Except as provided below, the RSUs will only vest if the Grantee is, and has been, continuously employed by the Company from the Grant Date through the Vesting Date.
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number of days worked from the grant date to the date of termination.
Unless the Board determines otherwise, upon a Change in Control that occurs prior to the Vesting Date, the RSUs will automatically vest in full and be settled. For the avoidance of doubt, the orderly sell down of CDIs or Shares by Coronado Group LLC will not be considered a Change in Control unless it amounts to an event in Section 1.2.11(b) of the Plan. |
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Settlement Date: |
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No later than 30 days after the Vesting Date, Coronado will allocate to the Grantee one CDI or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) with a Fair Market Value equal to the Fair Market Value of a CDI on the settlement date for any RSU that vests, in each case subject to applicable withholding tax (the date of such issuance or payment, the Settlement Date ). If the Board determines to allocate Shares to the Grantee, the number of Shares will be rounded to the nearest whole number of Shares. |
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Distributions: |
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On the Settlement Date, Coronado will allocate to the Grantee additional CDIs or, at the discretion of the Committee, deliver to the Grantee an amount in cash or Shares (or a combination thereof) in respect of the number of any RSUs that vest. The number of additional CDIs or Shares to be granted or the value of the cash payment will be equal to the value of any cash dividends or other distributions (other than cash dividends or other distributions pursuant to which the RSUs were adjusted pursuant to Section 1.6 of the Plan) paid on CDIs allocated in respect of vested RSUs from the Grant Date to the Settlement Date (assuming such distributions were reinvested in additional CDIs at the then Fair Market Value of CDIs on the ex-dividend date) (including for this purpose any CDIs which would have been delivered on the Settlement Date but for being withheld to satisfy tax withholding obligations). |
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U.S. Securities Laws Restrictions: |
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Grantee understands and agrees that any Shares and/or CDIs (including Shares underlying CDIs) issued under this Award will be subject to resale restrictions under U.S. securities laws. These restrictions are set forth in the share legend contained in Annex A hereto. The Company intends to remove these restrictions as soon as practicable and advise Grantee once they have been lifted, but these resale restrictions will last at least one year from the date of the completion of the Companys initial public offering of CDIs on the Australian Securities Exchange. If you have any questions regarding these restrictions, please contact Rick Rose **. |
All Other Terms: |
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As set forth in the Plan. |
The Plan is incorporated herein by reference. Except as otherwise set forth in the Award Agreement, the Award Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the RSUs. In the event that any provision of the Award Agreement is inconsistent with the Plan, the terms of the Award Agreement will control. Except as specifically provided herein, in the event that any provision of this Award Agreement is inconsistent with any employment agreement between the Grantee and Coronado ( Employment Agreement ), the terms of the Employment Agreement will control. By accepting this Award, the Grantee agrees to be subject to the terms and conditions of the Plan.
This Award Agreement may be executed in counterparts, which together will constitute one and the same original.
Any advice given by the Company in connection with this award offer is general advice only and does not take into account your objectives, financial situation and needs. You should consider obtaining your own financial product advice from an independent person who is licensed by the Australian Securities and Investments Commission to give such advice.
Details of the current market price of CDIs are available on the ASX website, http://www.asx.com.au/.
There are risks involved in acquiring and holding RSUs including: (1) There is no guarantee that any securities in Coronado (including RSUs) will grow in value they may decline in value. Stock markets are subject to fluctuations and Coronados securities price can rise and fall, depending on the Companys performance and other internal and external factors; (2) the Board may decide not to pay dividends at the current level, or may decide to cease the payment of dividends; and (3) there are tax implications involved in acquiring and holding securities in Coronado and the tax regime applying to you may change.
IN WITNESS WHEREOF , the parties have caused this Award Agreement to be duly executed and effective as of the Grant Date.
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CORONADO GLOBAL RESOURCES INC. |
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By: |
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Name: |
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Title: |
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Acknowledged and Agreed: |
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[NAME OF GRANTEE] |
ANNEX A
THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT.
THE HOLDER HEREOF, BY ACQUIRING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN, AGREES FOR THE BENEFIT OF CORONADO GLOBAL RESOURCES INC. (THE COMPANY) THAT THESE SECURITIES AND ANY BENEFICIAL INTERESTS THEREIN MAY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (I) (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT, AND ARE NOT ACTING FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN RULE 902(k) UNDER THE U.S. SECURITIES ACT) IN AN OFFSHORE TRANSACTION (AS DEFINED IN RULE 902(h) UNDER THE U.S. SECURITIES ACT) COMPLYING WITH REGULATION S (REGULATION S) UNDER THE U.S. SECURITIES ACT THAT IS NOT THE RESULT OF ANY DIRECTED SELLING EFFORTS (AS DEFINED IN RULE 903(C) UNDER THE U.S. SECURITIES ACT), (C) IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, INCLUDING, SO LONG AS THE SECURITIES REPRESENTED HEREBY AND ANY BENEFICIAL INTERESTS THEREIN ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT (RULE 144A), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A)(QIB) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER, OR (D) IN A TRANSACTION REGISTERED UNDER THE U.S. SECURITIES ACT (WHICH IT ACKNOWLEDGES THE COMPANY IS UNDER NO OBLIGATION TO DO EXCEPT AS MAY BE SET FORTH IN ANY REGISTRATION RIGHTS AND SELL-DOWN AGREEMENT THAT HAS OR MAY BE ENTERED INTO AMONG THE COMPANY AND CORONADO GROUP LLC SOLELY FOR THE BENEFIT OF CORONADO GROUP LLC), AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (II) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTIONS.
PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST (X) THAT THE TRANSFEROR AND/OR TRANSFEREE PROVIDE DECLARATIONS AND CERTIFICATIONS TO THE COMPANY AND THE SHARE REGISTRY IN SUCH FORM AS THE COMPANY MAY PRESCRIBE FROM TIME TO TIME, INCLUDING THAT THE TRANSFEREE IS EITHER (I) NOT A U.S. PERSON (AS DEFINED IN REGULATION S), IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN IN A TRANSACTION COMPLYING WITH REGULATION S AND IS NOT HOLDING THE
SECURITIES FOR THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON OR (II) IS A QIB AND IS PURCHASING THESE SECURITIES OR ANY BENEFICIAL INTEREST THEREIN FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QIBs IN ONE OR MORE TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO RULE 144A THEREUNDER (IF AVAILABLE) AND/OR (Y) THAT AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY BE DELIVERED TO THE COMPANY THAT SUCH TRANSFER IS TO BE EFFECTED IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S OR RULE 144A (IF AVAILABLE) UNDER THE U.S. SECURITIES ACT OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
BENEFICIAL INTERESTS IN THE SECURITIES REPRESENTED HEREBY MAY BE HELD IN THE FORM OF CHESS DEPOSITARY INTERESTS (CDIs). BY ACQUIRING ANY CDIs OR ANY INTERESTS THEREIN, THE HOLDER THEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT ANY SUCH CDIs OR INTERESTS THEREIN MAY ONLY BE OFFERED, SOLD, REOFFERED, RESOLD, PLEDGED, DELIVERED, DISTRIBUTED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN ACCORDANCE WITH ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF SUCH CDIs IMPOSED BY THE AUSTRALIAN SECURITIES EXCHANGE OR ANY SUCCESSOR OR REPLACEMENT SECURITIES EXCHANGE (ASX).
HEDGING TRANSACTIONS INVOLVING THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THE HOLDER HEREOF FURTHER AGREES THAT THE SECURITIES REPRESENTED HEREBY AND ANY SHARES TRANSMUTED TO CDIs WILL BE SUBJECT TO A HOLDING LOCK THAT WILL PREVENT THE HOLDER FROM TRANSFERRING SUCH SECURITIES OR CDIs FOR SO LONG AS ANY RESTRICTIONS APPLICABLE TO TRANSFERS OF THE CDIs IMPOSED BY THE ASX REMAIN IN PLACE OR SUCH SECURITIES AND CDIs ARE RESTRICTED SECURITIES AS DEFINED UNDER RULE 144(a)(3) UNDER THE U.S. SECURITIES ACT, UNLESS THE COMPANY OTHERWISE DETERMINES TO REMOVE SUCH HOLDING LOCK.
NO AFFILIATE (AS DEFINED IN RULE 405 OF THE U.S. SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN, IN THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF THE COMPANY MAY PURCHASE, OTHERWISE ACQUIRE OR HOLD THE SECURITIES OR A BENEFICIAL INTEREST THEREIN AND ANY ACQUISITION OF THE SECURITIES EVIDENCED HEREBY OR ANY BENEFICIAL INTEREST THEREIN BY SUCH AN AFFILIATE OR PERSON SHALL BE NULL AND VOID AB INITIO, PROVIDED THAT THE SECURITIES OR A BENEFICIAL INTEREST THEREIN MAY BE ACQUIRED BY SUCH AN AFFILIATE OR PERSON SO LONG AS THE ACQUIRER DOES NOT HOLD THE SECURITY OR A BENEFICIAL INTEREST THEREIN IN THE FORM OF CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES OR, IF SUCH AFFILIATE ACQUIRES ANY CHESS DEPOSITARY INTERESTS REPRESENTING THE SECURITIES IT IMMEDIATELY TRANSMUTES THOSE CHESS
DEPOSITARY INTERESTS INTO SHARES OF COMMON STOCK OF THE COMPANY.
THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. AS PROVIDED IN THE BYLAWS OF THE COMPANY, THE COMPANY OR THE SHARE REGISTRAR MAY REFUSE TO REGISTER ANY TRANSFER OF THE SECURITIES OR ANY BENEFICIAL INTERESTS THEREIN NOT MADE IN ACCORDANCE WITH THE RESTRICTIONS ABOVE.
THE FOREGOING RESTRICTIONS SHALL REMAIN IN PLACE UNTIL SUCH TIME AS THE COMPANY DETERMINES IT IS APPROPRIATE TO REMOVE THEM.
BY ITS ACQUISITION HEREOF, OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER REPRESENTS THAT IT IS PERMITTED TO ACQUIRE SUCH AN INTEREST AS SET FORTH IN THIS LEGEND AND AGREES TO COMPLY WITH THE FOREGOING RESTRICTIONS.
Coronado Global Resources Inc. Non-Executive Director Compensation Summary
Director Fees and Expenses
Non-Executive Directors (each, a Director ) will receive compensation for their services as a Director of the Board of Coronado Global Resources Inc. (the Company ) in accordance with the compensation program for Directors as in effect from time to time. Currently, this compensation program includes: a standard Directors fee of A$175,000 per annum, a fee of A$330,000 per annum for the Chairman of the Board, or a fee of A$190,000 per annum for a Director acting as Chair of any Board Committee. These fees include any statutory superannuation required. The following table sets forth Directors fee arrangements:
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Fee* |
Board Member (other than Chairman of the Board) |
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$130,883 (A$175,000) |
Chairman of the Board |
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$246,807 (A$330,000) |
Chairman of the Audit, Governance & Risk Committee (Additional Fee) |
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$11,219 (A$15,000) |
Chairman of the Compensation and Nominating Committee (Additional Fee) |
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$11,219 (A$15,000) |
Chairman of the Health Safety, Environment and Community Committee (Additional Fee) |
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$11,219 (A$15,000) |
* U.S. dollar amounts shown based on the average exchange rate for the fiscal year ended December 31, 2018, which was approximately A$1.00 to US$0.75.
Each Director may elect to receive some of his or her annual base fees as Restricted Security Units.
If applicable, a Director may choose to receive his or her superannuation contributions through the Companys superannuation fund. Alternatively, the Director may choose to receive his or her superannuation contributions through his or her nominated personal superannuation fund or other complying fund.
Directors act as independent contractors and not as employees of the Company or any of its affiliates. Directors are not entitled to participate in any benefit plan,
policy or program sponsored or maintained by the Company or its affiliates for the benefit of their employees. Directors are solely responsible for making all applicable tax filings and remittances with respect to amounts paid to the Director as a Director. Directors are required to provide any information or forms reasonably requested by the Company to determine whether applicable law requires that taxes should be withheld from any payment made to the Director pursuant to his or her appointment letter. Notwithstanding the foregoing, if the Company reasonably determines that applicable law requires that such taxes should be withheld, the Company reserves the right to withhold, as legally required, and will notify the Director accordingly.
Directors are entitled to be reimbursed travelling and other expenses the Director properly incurs concerning the Companys affairs, including attending and returning from general meetings of the Company or meetings of the Board or Board committees. It is the usual practice for the Company to provide transport and accommodation for Directors in respect of Company related business.
Except for expenses associated with travelling, Directors should obtain the approval of the Chairman for the expense before incurring such expense. The Company does not pay benefits (other than statutory entitlements) on retirement.
Directors Shareholding Policy
The Company has established a Minimum Shareholding Policy for Non-Executive Directors which requires Directors to maintain a minimum holding of Company securities.
The Company also has in place a Securities Dealing Policy that regulates dealing in the Companys securities by Directors and their associates.
Directors are also required to disclose any trading in Company securities.
CONFIDENTIAL
Directors agreement of indemnity, insurance and access
Coronado Global Resources Inc.
[Insert Director name]
Contents
Table of contents
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1. |
Definitions, interpretation and agreement components |
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1.1 |
Definitions |
6 |
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1.2 |
Interpretation |
10 |
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1.3 |
Interpretation of inclusive expressions |
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1.4 |
Business Day |
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1.5 |
Agreement components |
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2. |
Indemnity |
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2.1 |
Indemnification and Advancement of Expenses |
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2.2 |
General Limitations on Indemnification |
14 |
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2.3 |
Notification and Defense of Claim |
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2.4 |
Subrogation |
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2.5 |
Reimbursement |
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2.6 |
Non-Exclusivity |
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3. |
D&O Policy |
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3.1 |
Company to maintain D&O Policy |
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3.2 |
Terms of D&O Policy |
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3.3 |
Directors obligations |
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4. |
Access |
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4.1 |
Access to books and records |
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4.2 |
Confidentiality |
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5. |
General |
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5.1 |
Governing law and jurisdiction |
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5.2 |
Effectiveness |
21 |
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5.3 |
Notices |
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5.4 |
Severability |
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5.5 |
Amendments |
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5.6 |
Waiver |
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5.7 |
Further action |
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5.8 |
Stamp duty |
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5.9 |
Other rights |
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5.10 |
Tax on payments |
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5.11 |
Entire agreement |
23 |
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5.12 |
No reliance |
23 |
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5.13 |
Counterparts |
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5.14 |
Relationship of the parties |
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5.15 |
Exercise of rights |
23 |
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5.16 |
Subsidiary companies |
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Signing page |
1 |
Herbert Smith Freehills owns the copyright in this document and using it without permission is strictly prohibited
Directors agreement of indemnity, insurance and access
Date ► |
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2018 |
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Between the parties |
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Company |
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Coronado Global Resources Inc.
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Director |
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[
Insert Director name
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Recitals
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Indemnitee is a director or officer of the Company. |
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Both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in todays environment. |
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3 |
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The Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the full extent permitted by law and the Indemnitee has been serving and continues to serve as a director or officer of the Company in part in reliance on such Bylaws. |
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4 |
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Section 145(f) of the DGCL (as defined below) expressly recognizes that the indemnification provisions of the DGCL are not exclusive of any other rights to which a person seeking indemnification may be entitled by bylaw, agreement, vote of stockholders or otherwise, and this agreement is being entered into pursuant to such provision. |
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In recognition of Indemnitees need for substantial protection against personal liability in order to assure Indemnitees continued service to the Company in an effective manner and Indemnitees reliance on the aforesaid Bylaws, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Bylaws or any change in the composition of the Companys board of directors or acquisition of the Company), the Company wishes to provide in this agreement for the indemnification of and the advancing of expenses to Indemnitee to the full extent (whether partial or complete) permitted by law and as set forth in this agreement. |
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The Director has been a director of the Company since the Appointment Date. |
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In consideration of the Director agreeing to act as a director of the Company, the Company has agreed to: |
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indemnify the Director against losses or liabilities incurred by the Director as an officer of the Company; and |
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maintain a D&O Policy, |
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on the terms contained in this agreement. |
This agreement witnesses as follows:
1 Definitions, interpretation and agreement components
1.1 Definitions
The meanings of the terms used in this agreement are set out below.
Term |
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Meaning |
affiliate |
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as to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be. |
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Appointment Date |
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the date the Director commenced acting as a director of the Company. |
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board |
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the board of directors of the Company. |
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Business Day |
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a day on which banks are open for business in New York other than a Saturday, Sunday or a public holiday in that city. |
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Bylaws |
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the Companys Bylaws at the date of this agreement. |
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Certificate of Incorporation |
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the Companys Certificate of Incorporation at the date of this agreement. |
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Change of Control |
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shall be deemed to have occurred if (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than (w) the Company, (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (y) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (z) EMG, is or becomes the beneficial owner (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Companys then outstanding voting securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the board and any new director whose election by the board or nomination for election by the Companys stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was |
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Meaning |
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previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Companys assets. |
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claim |
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is any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by or on behalf of the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other. |
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Corporate Status |
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the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company. |
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DGCL |
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the General Corporation Law of the State of Delaware. |
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D&O Period |
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in relation to the Company and each Relevant Company (as the case may be) the period commencing on the Appointment Date and ending on the later of:
the date any Relevant Proceedings commenced (and notified by the Director to the Company) during the period specified in item 1 have been finally resolved. |
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D&O Policy |
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a policy of insurance provided and maintained by the Company insuring the Director (among others) against liability as a director and officer of the Company and its subsidiaries. |
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EMG |
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collectively, certain affiliates of EMG CC HC LLC, EMG Coronado II HC LLC, EMG Coronado Strategic LP and EMG Coronado IV |
Term |
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Meaning |
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Holdings LLC (together with their affiliates, subsidiaries, successors and assigns (other than the Company and its subsidiaries). |
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Exchange Act |
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the Securities Exchange Act of 1934, as amended. |
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Expenses |
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any reasonable expense, including without limitation, attorneys fees, retainers, court costs, transcript costs, fees and expenses of experts, including accountants and other advisors, travel expenses, duplicating costs, postage, delivery service fees, filing fees, and all other disbursements or expenses of the types typically paid or incurred in connection with investigating, defending, being a witness in, or participating (including on appeal), or preparing for an actual or threatened action, suit or proceeding (including Permitted Counterclaims) in such action, suit or proceeding, whether civil, criminal, administrative or investigative), but shall exclude (i) the costs of any of Indemnitees counterclaims, other than Permitted Counterclaims or (ii) amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. |
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Government Agency |
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any government or governmental, administrative, monetary, fiscal, judicial or investigative body, department, commission, authority, tribunal, agency or entity in any part of the world. |
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Indemnifiable Event |
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any event or occurrence related to the fact that Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer, employee, trustee, agent or fiduciary of another corporation, limited liability company, public limited company, partnership, joint venture, trust, employee benefit plan, fund or other enterprise. |
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Indemnitee |
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any person made or threatened to be made a party, or otherwise involved in any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that such person or such persons testator or intestate is or was a director or officer of the Company or serves or served at the request of the Company at any other enterprise as a director or officer. |
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liability |
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a liability of any kind including damages, costs, fees and expenses and any applicable taxes levied in respect of that liability. |
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Losses |
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any judgments, fines and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, |
Term |
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Meaning |
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fines, penalties or amounts paid in settlement) of such action, suit or proceeding. |
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Permitted Counterclaims |
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Indemnitees counterclaims that directly respond to and negate the affirmative claim made against Indemnitee. |
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Person |
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any individual, corporation, partnership, limited liability company, association, joint stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity. |
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Relevant Company |
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each affiliate of the Company of which the Director is a director from time to time. |
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Relevant Period |
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the period commencing on the Appointment Date and ending on the date the Director ceases to act as a director of the Company or Relevant Company (as the case may be). |
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Relevant Proceedings |
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in relation to the Director:
any hearing, conference, dispute, inquiry or investigation of a court, arbitrator, mediator, tribunal or governmental or administrative body; and
in which the Director is involved in defending or responding to because the Director is or was a director of the Company or Relevant Company (as the case may be) in the Relevant Period. |
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Reviewing Party |
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(i) by vote of a majority of directors that are not parties to the claim, even though less than a quorum, (ii) a committee of directors that are not parties to the claim selected by a majority of such directors, even though less than a quorum, (iii) if there has been a Change in Control, if there are no such directors, or if such directors so direct, the special, independent counsel referred to in clause 3.2(b) hereof, which shall be selected by the board and reasonably approved by the Indemnitee (which approval shall not be unreasonably withheld), other than in connection with a Change in Control. |
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Sarbanes-Oxley Act |
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the Sarbanes-Oxley Act of 2002. |
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Securities Act |
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the Securities Act of 1933, as amended. |
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SEC |
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the Securities Exchange Commission. |
1.2 Interpretation
In this agreement:
(a) headings and bold type are for convenience only and do not affect the interpretation of this agreement;
(b) the singular includes the plural and the plural includes the singular;
(c) words of any gender include all genders;
(d) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning;
(e) an expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and any Government Agency as well as an individual;
(f) a reference to any thing (including, but not limited to, any right) includes a part of that thing;
(g) a reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them;
(h) a reference to a clause, party, schedule, attachment or exhibit is a reference to a clause of, and a party, schedule, attachment or exhibit to, this agreement;
(i) a reference to a body, other than a party to this agreement (including an institute, association or authority), whether statutory or not:
(1) which ceases to exist; or
(2) whose powers or functions are transferred to another body,
(is a reference to the body which replaces it or which substantially succeeds to its powers or functions;)
(j) a promise on the part of 2 or more persons binds them jointly and severally;
(k) a provision of this agreement may not be construed adversely to a party solely on the ground that the party was responsible for the preparation of this agreement or that provision;
(l) a reference to a party to a document includes that partys successors and permitted assignees; and
(m) a reference to the Director includes the estate, heirs and legal representatives of any deceased or mentally incompetent Director.
1.3 Interpretation of inclusive expressions
Specifying anything in this agreement after the words include or for example or similar expressions does not limit what else is included.
1.4 Business Day
Where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day.
1.5 Agreement components
This agreement includes any schedule.
2 Indemnity
2.1 Indemnification and Advancement of Expenses
The Company agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time in accordance with the terms of this agreement. In furtherance of this indemnification, and without limiting the generality of such indemnification:
(a) General Agreement regarding Indemnification .
(1) Indemnitee shall be entitled to the rights of indemnification provided in this Section 2 if, by reason of Indemnitees Corporate Status, Indemnitee is, or is threatened to be made, a party to any threatened, pending, or completed Relevant Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this Section 2, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitees behalf in connection with such Relevant Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Relevant Proceeding, had no reasonable cause to believe Indemnitees conduct was unlawful.
(2) Indemnitee shall be entitled to the rights of indemnification provided in this Section 2 if, by reason of Indemnitees Corporate Status, Indemnitee is, or is threatened to be made, a party to any threatened, pending or completed Relevant Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by Indemnitee or on Indemnitees behalf in connection with such Proceeding or any claim, issue or matter therein if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Indemnification will not be provided against such Expenses if made in respect of any claim, issue, or matter in such Relevant Proceeding as to which
Indemnitee will have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery in the State of Delaware will determine that such indemnification may be made.
Notwithstanding any other provision of this agreement other than Section 2.1(c), for purposes of this Section 2.1(a)(2), to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any Claim regarding any Indemnifiable Event, Indemnitee shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Relevant Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues, or matters in such Relevant Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with each successfully resolved claim, issue, or matter. For purposes of this Section 2.1(a)(2), the termination of any claim, issue, or matter in such Relevant Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue, or matter.
(3) Without limiting the generality of the foregoing and other than in respect of the advancement of Expenses in accordance with Section 2.1(b) hereof, such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than five (5) business days after written demand by Indemnitee therefor is presented to the Company.
(4) In addition to, and without regard to any limitations on, the indemnification provided for in this Section 2.1(a), the Company shall indemnify and hold Indemnitee harmless against all Expenses, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf if, by reason of his or her Corporate Status, he or she is, or is threatened to be made, a party to or participant in any Relevant Proceeding (including a Relevant Proceeding by or in the right of the Company), including, without limitation, any and all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that will exist on the Companys obligations pursuant to this Agreement will be that the Company will not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, in Section 2.2) to be unlawful.
(b) Advancement of Expenses . In the event Indemnitee is, was or becomes a party to or witness or other participant in any Claim by reason of an Indemnifiable Event, if so requested by Indemnitee in writing and with an undertaking by Indemnitee to repay such Expenses if it is ultimately determined that he or she is not entitled to be indemnified by the Company, the Company shall advance any and all such Expenses to Indemnitee to the fullest extent permitted by applicable law. Any request for advancement of Expenses shall be accompanied by an itemization, in reasonable detail, of the Expenses for which advancement is sought; provided, however, that Indemnitee need not submit to the Company any information that counsel for Indemnitee deems is privileged and exempt
from compulsory disclosure in any proceeding. Advancement of Expenses shall be made without regard to Indemnitees ability to repay the Expenses. Indemnitees obligation to reimburse the Company for the advancement of Expenses shall be unsecured and no interest shall be charged thereon.
(c) Exception to Obligation to Indemnify and Advance Expenses . Notwithstanding anything in this agreement to the contrary, Indemnitee shall not be entitled to indemnification or advancement of Expenses pursuant to this agreement in connection with any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, internal, administrative or investigative that relates to an Indemnifiable Event initiated by Indemnitee against the Company or any director or officer of the Company unless the board has consented to the initiation of such Claim in a resolution adopted by the board.
(d) Contribution . Whether or not the indemnification provided for in this Section 2 is available, in respect of any threatened, pending, or completed action, suit, or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding), the Company will pay, in the first instance, the entire amount of any judgment or settlement of such action, suit, or proceeding without requiring Indemnitee to contribute to such payment, and the Company waives and relinquishes any right of contribution it may have against Indemnitee. The Company will not enter into any settlement of any action, suit, or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee. The Company will not settle any action or claim in a manner that would impose any penalty or admission of guilt or liability on Indemnitee without Indemnitees written consent.
Without diminishing or impairing the obligations of the Company in the preceding subparagraph, if Indemnitee elects or is required to pay all or any portion of any judgment or settlement in any threatened, pending, or completed action, suit, or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding), the Company will contribute to the amount of Expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors, or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose. To the extent necessary to conform to law, the proportion determined on the basis of relative benefit may be further adjusted by reference to the relative fault of the Company and all officers, directors, or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines, or settlement amounts, as well as any other equitable considerations which the applicable law may require to be considered. The relative fault of the Company and all officers, directors, or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, will be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal
profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their respective conduct is active or passive.
The Company agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by the Companys officers, directors, or employees, other than Indemnitee, who may be jointly liable with Indemnitee.
To the fullest extent permissible under applicable law, if the indemnification provided for in this agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement or for Expenses, in connection with any claim relating to an Indemnifiable Event under this agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding to reflect: (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving cause to such Proceeding; and (ii) the relative fault of the Company (and its directors, officers, employees, and agents) and Indemnitee in connection with such events and transactions.
2.2 General Limitations on Indemnification
(a) Determination of Reviewing Party . Notwithstanding the foregoing, (i) the obligations of the Company set forth in Section 2.1 hereof (except with respect to Expenses advances made prior to any determination by a Reviewing Party referred to below that Indemnitee substantively would not be permitted to be indemnified for Claims for Indemnifiable Events with respect to which such advances are being made) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the special, independent counsel referred to in clause 3.2(b) hereof is involved) that Indemnitee would not be permitted to be so indemnified under applicable law, and (ii) if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid (unless Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, in which event Indemnitee shall not be required to so reimburse the Company until a final judicial determination is made with respect thereto as to which all rights of appeal therefrom have been exhausted or lapsed) and shall not be obligated to indemnify or advance any additional amounts to Indemnitee (unless there has been a determination by a court of competent jurisdiction that the Indemnitee would be permitted to be so indemnified under applicable law).
Indemnitee will cooperate with the person, persons. or entity making such determination with respect to Indemnitees entitlement to indemnification, including providing such person, persons, or entity on reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any independent counsel or member of the board will act reasonably and in good faith in making a determination regarding the Indemnitees entitlement to indemnification under this agreement. Any costs or expenses (including attorneys fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons, or entity making such determination will be borne by the Company (irrespective of the determination as to Indemnitees entitlement to indemnification), and the Company indemnifies and agrees to hold Indemnitee harmless therefrom.
A determination with respect to Indemnitees entitlement to indemnification shall, to the extent practicable, be made by the Reviewing Party not later than thirty (30) calendar days after receipt by the Company of a written demand on the Company for indemnification (which written demand shall include such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification). The Reviewing Party making the determination with respect to Indemnitees entitlement to indemnification shall notify Indemnitee of such written determination no later than two (2) business days thereafter.
If the person, persons, or entity empowered or selected under Section 2.2(a) to determine whether Indemnitee is entitled to indemnification has not made a determination within 30 days after receipt by the Company of the request, the requisite determination of entitlement to indemnification will be deemed to have been made, and Indemnitee will be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitees statement not materially misleading in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. Such 30-day period may be extended for a reasonable time, not to exceed an additional 60 days, if the person, persons, or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation or information relating thereto.
If the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an order or judgment by the court equivalent to the determination of the Reviewing Party or challenging any such determination by the Reviewing Party or any aspect thereof; any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. The Company hereby consents to service of process and to appear in any such proceeding.
(b) Presumptions . In making a determination with respect to entitlement to indemnification under this agreement, the person or persons or entity making such determination will presume that Indemnitee is entitled to indemnification under this agreement. Anyone seeking to overcome this presumption will have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including by the board or independent counsel) to have made a determination prior to the commencement of any action pursuant to this agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by the board or independent counsel) that Indemnitee has not met such applicable standard of conduct,
will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
Indemnitee will be deemed to have acted in good faith if Indemnitees action is based on the records or books of account of the Company or Relevant Company (as the case may be), including financial statements, or on information supplied to Indemnitee by the officers of the Company or Relevant Company (as the case may be) in the course of their duties, or on the advice of legal counsel for the Company or Relevant Company (as the case may be) or on information or records given or reports made to the Company or Relevant Company (as the case may be) by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or Relevant Company (as the case may be). In addition, the knowledge and actions, or failure to act, of any director, officer, agent, or employee of the Company or Relevant Company (as the case may be) will not be imputed to Indemnitee for purposes of determining the right to indemnification under this agreement. Whether or not the foregoing provisions of this Section 2.2(b) are satisfied, it will in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company. Anyone seeking to overcome this presumption will have the burden of proof and the burden of persuasion by clear and convincing evidence.
The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption, and uncertainty. In the event that any action, claim, or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it will be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit, or proceeding. Anyone seeking to overcome this presumption will have the burden of proof and the burden of persuasion by clear and convincing evidence.
The termination of any Relevant Proceeding or of any claim, issue, or matter in any Relevant Proceeding, by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(c) Change in Control of Company . The Company agrees that if there is a Change in Control of the Company, then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expenses advanced under this agreement or any other agreements or the Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, the Company shall seek legal advice only from special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (other than in connection with such matters) or Indemnitee. Such special, independent counsel, among other things, shall be the Reviewing Party
hereunder and shall determine whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law and shall render its written opinion to the Company and Indemnitee to such effect. No law firm or lawyer shall qualify to serve as special, independent counsel if that person would, under the applicable standards of professional conduct then prevailing, have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitees rights under this agreement.
The Company agrees to pay the reasonable legal fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses and Losses arising out of or relating to this agreement or its engagement pursuant hereto.
(d) Notwithstanding any provision in this agreement, the Company shall not be obligated under this agreement to make any indemnification payment in connection with any claim made against Indemnitee for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act, or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), (iii) a final judgment or other final adjudication made that Indemnitees conduct was in bad faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct (but only to the extent of such specific determination), (iv) with respect to remuneration paid to Indemnitee if it is determined by final judgment or other final adjudication that such remuneration was in violation of law (and, in this respect, both the Company and Indemnitee have been advised that the SEC believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication) and (v) on account of conduct that is established by a final judgment as constituting a breach of Indemnitees duty of loyalty to the Company or Relevant Company (as the case may be) or resulting in any personal profit or advantage to which Indemnitee is not legally entitled.
2.3 Notification and Defense of Claim
(a) Promptly after receipt by Indemnitee of notice of the commencement of any action, suit or proceeding, Indemnitee will, if a Claim in respect thereof is to be made against the Company under this agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve it from any liability which it may have to Indemnitee otherwise than under this agreement.
(b) With respect to any such action, suit or proceeding as to which Indemnitee notifies the Company of the commencement thereof:
(1) the Company will be entitled to participate therein at its own expense; and
(2) except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Indemnitee.
After notice from the Company to Indemnitee of its election to assume the defense thereof, the Company will not be liable to Indemnitee under this agreement for Expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ separate counsel in such action, suit or proceeding, but the Expenses related thereto incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless (w) the employment of counsel by Indemnitee has been authorized by the Company, (x) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such action, (y) after a Change in Control, the employment of counsel has been approved by the special, independent counsel referred to in Section 2.2(b) or (z) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which the Indemnitee shall have made the conclusion provided for in (x) above.
(c) The Company shall not be liable to indemnify the Indemnitee under this agreement for any amounts paid in settlement of any Claim effected without its written consent. The Company shall not settle any Claim in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitees written consent. Neither the Company nor the Indemnitee will unreasonably withhold their consent to any proposed settlement.
2.4 Subrogation
In the event of payment under this agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company to effectively bring suit to enforce such rights.
2.5 Reimbursement
The Company shall not be liable under this agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder. The Company hereby agrees (i) that the Company is the indemnitor of first resort (i.e., its obligations to the Indemnitee are primary and any obligation of such other persons to advance Expenses or to provide indemnification for the same Expenses or liabilities incurred by the Indemnitee are secondary), (ii) that the Company shall be required to advance the full amount of Expenses incurred by the Indemnitee and shall be liable for the full indemnifiable amounts, without regard to any rights the Indemnitee may have against any such other person and (iii) that the Company irrevocably waives, relinquishes and releases such other persons from any and all claims against any such other persons for contribution, subrogation or any other
recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by any of such other persons on behalf of the Indemnitee with respect to any Claim for which the Indemnitee has sought indemnification from the Company shall affect the foregoing and such other persons shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Indemnitee against the Company. The Company and the Indemnitee agree that such other persons are express third-party beneficiaries under the terms of this Section 2.5.
2.6 Non-Exclusivity
The rights of the Indemnitee hereunder shall not be deemed exclusive of any other rights he or she may have under the Bylaws or the DGCL or otherwise, and to the extent that during the D&O Period the rights of the then existing directors and officers are more favorable to such directors or officers than the rights currently provided thereunder or under this agreement to Indemnitee, Indemnitee shall be entitled to the full benefits of such more favorable rights.
3 D&O Policy
3.1 Company to maintain D&O Policy
(a) Subject to clause 3.2, the Company must maintain a D&O Policy from the date of this agreement until the end of the D&O Period.
(b) To the extent required to comply with its disclosure obligations in relation to the D&O Policy, the Company will seek information from the Director within a reasonable period before the renewal of the policy.
(c) The Company will not do or fail to do anything which will, or is likely to, reduce the cover of the Director under or invalidate the D&O Policy (other than by making a claim under the D&O Policy).
3.2 Terms of D&O Policy
The Company must:
(a) to the extent that such a policy is available from a reputable insurance company at reasonable commercial rates, ensure that the D&O Policy:
(1) is at least as comprehensive as those available from reputable and financially secure insurance companies containing the kinds of terms, conditions, exclusions and additional cover commonly included in a directors and officers insurance policy of the kind effected by companies in the same industry as the Company that have a comparable market capitalisation, size and nature of operations and a similar financial status to the Company and a desire to protect directors and former directors to the maximum extent that is reasonable in the circumstances; and
(2) is in a form and extends to an amount of cover substantially similar to the policy existing at the time of entering into the agreement and in any event is at least as
comprehensive as the directors and officers insurance policy effected for the benefit of the existing directors of the Company from time to time during the D&O Period;
(b) to the maximum extent permitted by law, pay the cost of any premiums under the D&O Policy;
(c) to the extent that any part of the premium for the D&O Policy may not by law be paid by the Company, give the Director notice of and a reasonable opportunity to contribute that part of the additional premium which is attributable to the Director (if required for the policy to be effective); and
(d) at the request of the Director, give the Director a copy of the D&O Policy and a certificate of currency in respect of the D&O Policy.
3.3 Directors obligations
(a) To the extent permitted by law and required for the Company to comply with its disclosure obligations in relation to the D&O Policy, the Director will provide the Company with the information requested by it within a reasonable period before the renewal of the policy.
(b) Nothing in this agreement modifies or limits any obligation of the Director under the terms of any applicable D&O Policy. Furthermore, the terms of this agreement shall not negate any obligation that the Director might have to assist the Company in complying with any obligations it may have under the terms of such D&O Policy and to the extent permitted by law, the Director must not take or fail to take any action which may prejudice the ability of the Company to recover under any such D&O Policy.
4 Access
4.1 Access to books and records
Indemnitee shall have the right to examine the corporations stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to the Indemnitees position as a current or former director to the extent such documents would be made available to a director under Section 220(d) of the DCGL.
4.2 Confidentiality
The Indemnitee must not disclose any confidential information contained in any materials obtained pursuant to Section 4.1 to a third party unless:
(1) the Company or Relevant Company (as the case may be) has given its prior written consent;
(2) the Indemnitee is required to do so by law or judicial process;
General
(3) the disclosure is made for the purpose of obtaining professional advice or for a proper purpose and in the due performance of the Indemnitees duties; or
(4) the disclosure is made in connection with the Relevant Proceedings or the threat of Relevant Proceedings in relation to which Indemnitee was given access to the Board Paper,
and the Indemnitee uses the Indemnitees best endeavours to ensure all information disclosed is kept confidential. Nothing in this agreement or any other policy or agreement that Indemnitee may have entered into with the Company prohibits Indemnitee from providing truthful information to governmental or regulatory bodies, including reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Indemnitee does not need the prior authorization of the Company to make any such reports or disclosures and you are not required to notify the Company that Indemnitee has made such reports or disclosures.
5 General
5.1 Governing law and jurisdiction
(a) This agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware.
(b) Any action, suit or proceeding regarding indemnification or advance payment or reimbursement of Expenses arising out of this agreement or otherwise shall only be brought and heard in the United States in the Court of Chancery of the State of Delaware or in courts having jurisdiction in Queensland, Australia, in such case applying the laws of the State of Delaware. The parties hereby irrevocably consent to the nonexclusive jurisdiction of any such court, and the parties further waive any objection to venue in any such court and any objection to any action or proceeding in such court on the basis of forum non conveniens .
(c) Notwithstanding the foregoing, to the extent any provision of this agreement conflicts with the DGCL, the DGCL shall control.
5.2 Effectiveness
This agreement shall be of full force and effect immediately upon its execution or, if later, Indemnitees appointment to the board.
5.3 Notices
Any notice or other communication to or by a party to this agreement:
(a) must be in legible writing addressed as shown at the commencement of this agreement or as specified to the sender by any party by notice; and
(b) may be delivered by hand or sent by prepaid post or electronic transmission.
5.4 Severability
(a) If any provision of this agreement is invalid under the law of any jurisdiction the provision is enforceable in that jurisdiction to the extent that it is not invalid, whether it is in severable terms or not.
(b) Section 5.4(a) does not apply where enforcement of the provision of this agreement in accordance with section 5.4(a) would materially affect the nature or effect of the parties obligations under this agreement.
5.5 Amendments
A amendment of any term of this agreement must be in writing and signed by the parties.
5.6 Waiver
(a) A party waives a right under this agreement only if it does so in writing.
(b) A party does not waive a right simply because it:
(1) fails to exercise the right;
(2) delays exercising the right; or
(3) only exercises part of the right.
(c) No waiver of any of the provisions of this agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
5.7 Further action
Each party must do all things and execute all further documents necessary to give full effect to this agreement.
5.8 Stamp duty
The Company must pay any stamp duty chargeable on this agreement.
5.9 Other rights
Nothing in this agreement limits or restricts any other right of indemnity or other exoneration or protection available to the Director independently of this agreement, whether under general or statutory law or otherwise, including arising from a relationship of employment with the Company
but nothing in this agreement requires the Company to pay more than once in respect of any claim.
5.10 Tax on payments
If payment is due to the Director under this agreement ( Payment ) and its receipt or derivation gives rise to a liability for tax (including income or goods and services tax) on or payable by the Director, the Company must increase the Payment by the amount necessary to ensure that, after payment of the tax, the balance remaining to the Director is equal to the amount of the Payment.
5.11 Entire agreement
This agreement states all the express terms agreed by the parties in respect of its subject matter. It supersedes all prior discussions, negotiations, understandings and agreements in respect of its subject matter.
5.12 No reliance
Neither party has relied on any statement by the other party not expressly included in this agreement.
5.13 Counterparts
(a) This agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement.
(b) A party may execute this agreement by signing any counterpart.
(c) Any signature delivered by a party by facsimile or electronic transmission (including email transmission of a PDF or TIFF image) shall be deemed to be an original signature hereto.
5.14 Relationship of the parties
(a) Nothing in this agreement gives a party authority to bind any other party in any way.
(b) Nothing in this agreement imposes any fiduciary duties on a party in relation to any other party.
5.15 Exercise of rights
(a) Unless expressly required by the terms of this agreement, a party is not required to act reasonably in giving or withholding any consent or approval or exercising any other right, power, authority, discretion or remedy, under or in connection with this agreement.
(b) A party may (without any requirement to act reasonably) impose conditions on the grant by it of any consent or approval, or any waiver of any right, power, authority, discretion or remedy, under or in connection with this agreement. Any conditions must be complied with by the party relying on the consent, approval or waiver.
5.16 Subsidiary companies
(a) This agreement and the indemnity contained in Section 2 do not apply to any liability incurred by the Director as a director of an affiliate after it ceases to be an affiliate of the Company.
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CORONADO GLOBAL RESOURCES INC.
SUBSIDIARIES
AS OF MARCH 31, 2019
Name |
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Coronados Effective Ownership |
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Place of Incorporation |
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Buchanan Minerals, LLC |
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100 |
% |
Delaware |
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Buchanan Mining Company LLC |
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100 |
% |
Delaware |
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Coronado Australia Holdings Pty Ltd |
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100 |
% |
Australia |
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Coronado Coal Corporation |
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100 |
% |
Delaware |
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Coronado Coal II LLC |
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100 |
% |
Delaware |
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Coronado Coal LLC |
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100 |
% |
Delaware |
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Coronado Curragh LLC |
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100 |
% |
Delaware |
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Coronado Curragh Pty Ltd |
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100 |
% |
Australia |
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Coronado Finance Pty Ltd |
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100 |
% |
Australia |
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Coronado II LLC |
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100 |
% |
Delaware |
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Coronado II Offshore, Ltd. |
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100 |
% |
Cayman Islands |
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Coronado IV LLC |
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100 |
% |
Delaware |
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Coronado VA, LLC |
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100 |
% |
Delaware |
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Curragh Coal Sales Co Pty Ltd |
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100 |
% |
Australia |
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Curragh Queensland Mining Pty Ltd |
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100 |
% |
Australia |
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Greenbrier Minerals, LLC |
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100 |
% |
Delaware |
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Greenbrier Smokeless Coal Mining, LLC |
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100 |
% |
Delaware |
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JEP Mining LLC |
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50 |
% |
Delaware |
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Matoaka Land Company, LLC |
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100 |
% |
Delaware |
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Midland Trail Resources, LLC |
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100 |
% |
West Virginia |
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Powhatan Mid-Vol Coal Sales, LLC |
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100 |
% |
Delaware |
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