SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Quarterly Period Ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-13105
ARCH COAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0921172
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One CityPlace Drive, Suite 300, St. Louis, Missouri 63141
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (314) 994-2700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
At May 1, 2002, there were 52,376,484 shares of registrant's common stock
outstanding.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2002 and
December 31, 2001...............................................................................1
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 2002 and 2001...................................................................2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2002 and 2001......................................................3
Notes to Condensed Consolidated Financial Statements.................................................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ................................................8
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................................24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................................25
Item 4. Submission of Matters to a Vote of Securities Holders......................................25
Item 6. Exhibits and Reports on Form 8-K...........................................................25
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARCH COAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, December 31,
2002 2001
---------------------- ----------------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 1,602 $ 6,890
Trade receivables 139,104 149,956
Other receivables 32,139 32,303
Inventories 70,127 60,133
Prepaid royalties 3,035 1,997
Deferred income taxes 23,840 23,840
Other 13,190 14,337
---------------------- ----------------------
Total current assets 283,037 289,456
---------------------- ----------------------
Property, plant and equipment, net 1,430,170 1,396,786
---------------------- ----------------------
Other assets
Prepaid royalties 51,116 35,216
Coal supply agreements 76,309 81,424
Deferred income taxes 197,209 195,411
Investment in Canyon Fuel 156,608 170,686
Other 36,750 34,580
---------------------- ----------------------
517,992 517,317
---------------------- ----------------------
Total assets $ 2,231,199 $ 2,203,559
====================== ======================
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 115,228 $ 99,081
Accrued expenses 147,133 134,062
Current portion of debt 6,500 6,500
---------------------- ----------------------
Total current liabilities 268,861 239,643
Long-term debt 792,354 767,355
Accrued postretirement benefits other than pension 325,618 326,098
Accrued reclamation and mine closure 126,074 123,761
Accrued workers' compensation 79,061 78,768
Accrued pension cost 5,353 22,539
Obligations under capital leases 7,691 8,210
Other noncurrent liabilities 59,548 66,443
---------------------- ----------------------
Total liabilities 1,664,560 1,632,817
---------------------- ----------------------
Stockholders' equity
Common stock 527 527
Paid-in capital 835,585 835,427
Retained deficit (249,700) (239,336)
Treasury stock, at cost (5,047) (5,047)
Accumulated other comprehensive loss (14,726) (20,829)
---------------------- ----------------------
Total stockholders' equity 566,639 570,742
---------------------- ----------------------
Total liabilities and stockholders' equity $ 2,231,199 $ 2,203,559
====================== ======================
See notes to condensed consolidated financial statements.
1
ARCH COAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
---------------- ----------------
2002 2001
---------------- ----------------
Revenues
Coal sales $ 358,595 $ 360,043
Income from equity investment 1,268 6,059
Other revenues 8,604 15,325
---------------- ----------------
368,467 381,427
---------------- ----------------
Costs and expenses
Cost of coal sales 347,211 329,525
Selling, general and administrative expenses 9,870 13,794
Amortization of coal supply agreements 5,114 7,586
Other expenses 7,592 4,329
---------------- ----------------
369,787 355,234
---------------- ----------------
Income (loss) from operations (1,320) 26,193
Interest expense, net:
Interest expense (12,002) (21,354)
Interest income 268 251
---------------- ----------------
(11,734) (21,103)
---------------- ----------------
Income (loss) before income taxes (13,054) 5,090
Income tax benefit (5,700) (1,000)
---------------- ----------------
Net income (loss) $ (7,354) $ 6,090
================ ================
Basic and diluted earnings (loss) per common share $ (0.14) $ 0.15
================ ================
Weighted average shares outstanding 52,356 40,411
================ ================
Dividends declared per share $ 0.0575 $ 0.0575
================ ================
See notes to condensed consolidated financial statements.
2
ARCH COAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
--------------------------------------------
2002 2001
-------------------- --------------------
Net income (loss) $ (7,354) $ 6,090
Adjustments to reconcile to cash provided by operating activities:
Depreciation, depletion and amortization 42,741 44,240
Prepaid royalties expensed 1,874 1,607
Net gain on disposition of assets (187) (3,435)
Income from equity investment (1,268) (6,059)
Net distributions from (contributions to) equity investment 15,346 20,755
Changes in:
Receivables 11,016 2,334
Inventories (9,994) (3,358)
Accounts payable and accrued expenses 11,218 14,249
Income taxes (5,700) (5,767)
Accrued postretirement benefits other than pension (480) (3,826)
Accrued reclamation and mine closure 2,313 (2,795)
Accrued workers' compensation benefits 293 1,044
Other 3,440 413
-------------------- --------------------
Cash provided by operating activities 63,258 65,492
-------------------- --------------------
Investing activities
Additions to property, plant and equipment (73,068) (48,547)
Proceeds from dispositions of property, plant and equipment 1,706 3,631
Additions to prepaid royalties (18,812) (18,804)
-------------------- --------------------
Cash used in investing activities (90,174) (63,720)
-------------------- --------------------
Financing activities
Net proceeds from (payments on) revolver and lines of credit 24,999 (51,725)
Payments on term loans - (47,000)
Reduction of obligations under capital leases (519) (752)
Dividends paid (3,010) (2,495)
Proceeds from sale of common stock 158 96,521
-------------------- --------------------
Cash provided by (used in) financing activities 21,628 (5,451)
-------------------- --------------------
Decrease in cash and cash equivalents (5,288) (3,679)
Cash and cash equivalents, beginning of period 6,890 6,028
-------------------- --------------------
Cash and cash equivalents, end of period $ 1,602 $ 2,349
==================== ====================
See notes to condensed consolidated financial statements.
3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
Note A - General
The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and Securities and Exchange Commission regulations, but are
subject to any year-end adjustments that may be necessary. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Results of operations for
the period ended March 31, 2002 are not necessarily indicative of results to be
expected for the year ending December 31, 2002. Arch Coal, Inc. (the "Company")
operates one reportable segment: the production of steam and metallurgical coal
from surface and deep mines throughout the United States, for sale to utility,
industrial and export markets. The Company's mines are primarily located in the
central Appalachian and western regions of the United States. All subsidiaries
(except as noted below) are wholly owned. Significant intercompany transactions
and accounts have been eliminated in consolidation.
The Company's Wyoming, Colorado and Utah coal operations are included in a joint
venture named Arch Western Resources, LLC ("Arch Western"). Arch Western is 99%
owned by the Company and 1% owned by BP Amoco. The Company also acts as the
managing member of Arch Western.
The membership interests in the Utah coal operations, Canyon Fuel Company, LLC
("Canyon Fuel"), are owned 65% by Arch Western and 35% by a subsidiary of ITOCHU
Corporation. The Company's 65% ownership of Canyon Fuel is accounted for on the
equity method in the Condensed Consolidated Financial Statements as a result of
certain super-majority voting rights in the joint venture agreement. Income from
Canyon Fuel is reflected in the Condensed Consolidated Statements of Operations
as income from equity investment (see additional discussion in "Investment in
Canyon Fuel" in Note C).
Note B - Other Comprehensive Income
Other comprehensive income items under FAS 130, Reporting Comprehensive Income,
are transactions recorded in stockholders' equity during the year, excluding net
income and transactions with stockholders. The Company adopted FAS 133,
Accounting for Derivative Instruments and Hedging Activities, on January 1,
2001. In accordance with FAS 133, the Company recorded a cumulative effect of
accounting change which is shown below. Following are the items included in
accumulated other comprehensive income (loss) and the related tax effects
including the adoption of FAS 133:
4
Minimum Accumulated Other
Pension Other
Financial Liability Comprehensive
Derivatives Adjustments Loss
--------------- -------------- ------------------
(in thousands)
Adoption (January 1, 2001)
Pre-tax amount $ (7,910) $ - $ (7,910)
Tax benefit 3,085 - 3,085
--------------- -------------- ------------------
Net amount $ (4,825) $ - $ (4,825)
=============== ============== ==================
Three months ended
March 31, 2001
Pre-tax amount $ (15,056) $ - $ (15,056)
Tax benefit 5,872 - 5,872
--------------- -------------- ------------------
Net amount $ (9,184) $ - $ (9,184)
=============== ============== ==================
March 31, 2001
Pre-tax amount $ (22,966) $ - $ (22,966)
Tax benefit 8,957 - 8,957
--------------- -------------- ------------------
Net amount $ (14,009) $ - $ (14,009)
=============== ============== ==================
Minimum Accumulated
Pension Other
Financial Liability Comprehensive
Derivatives Adjustments Loss
--------------- -------------- ------------------
December 31, 2001
Pre-tax amount $ (29,472) $ (4,673) $ (34,145)
Tax benefit 11,494 1,822 13,316
--------------- -------------- ------------------
Net amount $ (17,978) $ (2,851) $ (20,829)
=============== ============== ==================
Three months ended
March 31, 2002
Pre-tax amount $ 10,005 $ - $ 10,005
Tax benefit (3,902) - (3,902)
--------------- ------------- -------------------
Net amount $ 6,103 $ - $ 6,103
=============== ============== ===================
March 31, 2002
Pre-tax amount $ (19,467) $ (4,673) $ (24,140)
Tax benefit 7,592 1,822 9,414
--------------- -------------- -------------------
Net amount $ (11,875) $ (2,851) $ (14,726)
=============== ============== ===================
5
The following table presents comprehensive income:
Three Months Ended
March 31,
-------------------------------
2002 2001
-------------- -------------
(in thousands)
Net income (loss) $ (7,354) $ 6,090
Other comprehensive income (loss) net of income tax benefit 6,103 (14,009)
-------------- -------------
Total comprehensive loss $ (1,251) $ (7,919)
============== =============
Note C - Investment in Canyon Fuel
The following table presents unaudited summarized financial information for
Canyon Fuel, which is accounted for on the equity method:
Three Months Ended
March 31,
-------------------------------
Condensed Income Statement Information 2002 2001
-------------------------------------------------------------- -------------- -------------
(in thousands)
Revenues $ 77,648 $ 70,164
Total costs and expenses 77,155 62,154
-------------- -------------
Net income $ 493 $ 8,010
============== =============
65% of Canyon Fuel net income $ 320 $ 5,207
Effect of purchase adjustments 948 852
-------------- -------------
Arch Coal's income from its equity
investment in Canyon Fuel $ 1,268 $ 6,059
============== =============
The Company's income from its equity investment in Canyon Fuel represents 65% of
Canyon Fuel's net income after adjusting for the effect of purchase adjustments
primarily related to its investment in Canyon Fuel. The Company's investment in
Canyon Fuel reflects purchase adjustments primarily related to the reduction in
amounts assigned to sales contracts, mineral reserves and other property, plant
and equipment. The purchase adjustments are amortized consistent with the
underlying assets of the joint venture.
Note D - Inventories
Inventories consists of the following:
March 31, December 31,
2002 2001
----------------- ----------------
(in thousands)
Coal $ 37,700 $ 28,165
Repair parts and supplies 32,427 31,968
----------------- ----------------
$ 70,127 $ 60,133
================= ================
6
Note E - Debt
Debt consists of the following:
March 31, December 31,
2002 2001
----------------- ----------------
(in thousands)
Indebtedness to banks under lines of credit $ 9,000 $ 13,500
Indebtedness to banks under revolving credit
agreement, expiring May 31, 2003 111,400 80,000
Indebtedness to banks under variable rate,
non-amortizing term loan due May 31, 2003 675,000 675,000
Other 3,454 5,355
----------------- ----------------
798,854 773,855
Less current portion 6,500 6,500
----------------- ----------------
Long-term debt $ 792,354 $ 767,355
================= ================
At March 31, 2002, the Company had two credit facilities: a $675.0 million
non-amortizing term loan in the name of Arch Western and a revolving credit
facility in the name of the Company that expired on May 31, 2003. The rate of
interest on the borrowings under the agreements was a rate based on LIBOR. On
April 18, 2002, the Company and Arch Western completed a refinancing of their
existing credit facilities. The new credit facilities include five- and six-year
non-amortizing term loans totaling $675.0 million at Arch Western and a
five-year revolving credit facility totaling $350.0 million for the Company. The
five-year non-amortizing term loan at Arch Western is for $150.0 million while
the six-year non-amortizing term loan is for $525.0 million. The rate of
interest on borrowings under both of the credit facilities is based on LIBOR.
The Company's credit facility is secured by ownership interests in substantially
all of its subsidiaries, except its ownership interests in Arch Western and its
subsidiaries. The Arch Western credit facility is secured by its ownership
interests in substantially all of its subsidiaries, but is not guaranteed by the
Company.
Note F - Contingencies
The Company is a party to numerous claims and lawsuits with respect to various
matters. The Company provides for costs related to contingencies when a loss is
probable and the amount is reasonably determinable. After conferring with
counsel, it is the opinion of management that the ultimate resolution of these
claims, to the extent not previously provided for, will not have a material
adverse effect on the consolidated financial position, results of operations or
liquidity of the Company.
Note G - Changes in Estimates and Other Non-Recurring Revenues and Expenses
During the first quarter of 2001, as a result of permit revisions at the Arch of
Illinois operation, the Company reduced its reclamation liability resulting in a
pre-tax gain of $3.5 million recognized as a reduction in cost of coal sales.
The gain was more than offset by expense related to stock-based compensation
benefit programs that may be realized in future periods as a result of improved
stock performance. The compensation related accrual resulted in a pre-tax charge
of $6.3 million, $3.6 million of which was recorded in selling, general and
administrative expenses while $2.7 million was recorded in cost of coal sales.
Note H - Earnings (Loss) per Share
The following table sets forth the computation of basic and diluted earnings
(loss) per common share from continuing operations.
7
Three Months Ended
March 31,
-------------------------------------
2002 2001
---------------- ----------------
(in thousands, except per share data)
Numerator:
Net income (loss) $ (7,354) $ 6,090
================ ================
Denominator:
Weighted average shares - denominator for basic 52,356 40,411
Dilutive effect of employee stock options - 169
---------------- ----------------
Adjusted weighted average shares - denominator
for diluted 52,356 40,580
================ ================
Basic and diluted earnings (loss) per common share $ (0.14) $ 0.15
================ ================
Note I - Subsequent Event
On April 19, 2002, the Company created a limited partnership, Natural Resource
Partners L.P., with three affiliated private companies, Western Pocahontas
Properties Limited Partnership, Great Northern Properties Limited Partnership
and New Gauley Coal Corporation. Natural Resource Partners was formed to engage
principally in the business of owning and managing coal royalty properties in
the three major coal producing regions in the United States: Appalachia, the
Illinois Basin and the Western United States. The partnership has filed a
registration statement on Form S-1 with the Securities and Exchange Commission
relating to a proposed underwritten initial public offering of common units
representing limited partner interests in Natural Resource Partners. The Company
is contributing approximately 454 million tons of its 3.4 billion tons of total
coal reserves to Natural Resource Partners in exchange for its ownership
interest in the partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Statements in this quarterly report which are not statements of historical fact
are forward-looking statements within the "safe harbor" provision of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on the information available to, and the expectations and assumptions
deemed reasonable by, the Company at the time the statements were made. Because
these forward-looking statements are subject to various risks and uncertainties,
actual results may differ materially from those projected in the statements.
These expectations, assumptions and uncertainties include the Company's
expectation of growth in the demand for electricity; belief that legislation and
regulations relating to the Clean Air Act and the relatively higher costs of
competing fuels will increase demand for its compliance and low-sulfur coal;
expectation that the Company will continue to have adequate liquidity from its
cash flow from operations, together with available borrowings under its credit
facilities, to finance the Company's working capital needs and meet its debt
reduction goals; a variety of market, operational, geologic, permitting, labor
and weather related factors and the other risks and uncertainties which are
described below under "Contingencies" and "Certain Trends and Uncertainties."
RESULTS OF OPERATIONS
Quarter Ended March 31, 2002, Compared
to Quarter Ended March 31, 2001
Net Income (Loss). The net loss for the quarter ended March 31, 2002 was $7.4
million compared to net income of $6.1 million for the quarter ended March 31,
2001. Results for the current quarter were negatively impacted by the current
state of oversupply in the coal market that resulted from an extremely mild
winter and a period of economic weakness that dampened electricity demand. As a
result, during the first quarter of 2002 the Company reduced the rate of
production from planned levels at its mining operations by 7%. In addition, as
described below, the Company continued to be negatively impacted by production
difficulties at its Samples surface operation in West Virginia. Partially
offsetting these negative items in the current quarter were higher contract
prices for coal shipped during the quarter compared to the same period in the
8
prior year and reduced interest expense associated with lower debt levels and
lower interest rates. During 2001, the Company was able to enter into higher
priced contracts for coal to be shipped during 2002. Results for the first
quarter of 2001 were positively impacted by strong margins on limited tonnage
that was open to market-based pricing and by strong performances at nearly all
of the Company's mines except for the West Elk mine in Colorado. Also, during
the first quarter of 2001, the Company reversed previously recorded reclamation
liabilities at its Arch of Illinois subsidiary where, as a result of permit
revisions associated with its reclamation activities that reduced the amount of
reclamation work expected, the Company was able to recognize a $3.5 million
pre-tax gain. These positive factors during the first quarter of 2001 were
partially offset by accruals recorded during the same quarter related to
stock-based compensation programs that may be realized in future periods as a
result of improved stock price performance. The compensation related accruals
resulted in a pre-tax reduction of earnings of $6.3 million.
Results at the Samples surface operations for the first quarter of 2002 were
negatively impacted by a sandstone intrusion that caused the principal coal seam
to thin, which resulted in lower production and higher associated costs compared
to the same period in the prior year. The sandstone intrusion was first
encountered during the second quarter of 2001. During the quarter ended March
31, 2002, the Samples surface operation incurred an operating loss of $4.5
million compared to operating income of $1.4 million during the same period of
2001.
Revenues. Total revenues for the quarter ended March 31, 2002 were $368.5
million, a decrease of $12.9 million from the quarter ended March 31, 2001. The
decrease was caused primarily by reduced sales caused by the oversupply
conditions that existed in the market as described above. The Company shipped
24.7 million tons during the quarter ended March 31, 2002 compared to 27.2
million tons during the quarter ended March 31, 2001. Average coal sales
realizations on a per ton basis were $14.53 per ton for the quarter ended March
31, 2002 compared to $13.24 per ton for the quarter ended March 31, 2001. The
increase in the per ton realization was the result of the Company shipping under
more favorably priced contracts during the first quarter of 2002 as compared to
the first quarter of 2001.
Income From Equity Investment. Income from equity investment decreased during
the quarter ended March 31, 2002 to $1.3 million from $6.1 million during the
quarter ended March 31, 2001. The decrease was the result of lower realizations
due to an above market price contract expiring in the prior year and reduced
coal shipments related to a weak market environment in the first quarter of
2002.
Other Revenues. The decrease in other revenues of $6.7 million in the first
quarter of 2002 compared to the first quarter of 2001 was primarily attributable
to additional land sales during the first quarter of 2001. These land sales
resulted in a gain of $3.3 million in the first quarter of 2001 compared to $0.2
million during the first quarter of 2002. In addition, during the first quarter
of 2001, the Company amortized a gain on a coal sales contract buy-down that
resulted in $2.4 million of income. The gain was fully amortized prior to
December 31, 2001.
Income (Loss) From Operations. The following table presents income (loss) from
operations excluding the unusual items discussed above.
Three Months Ended
March 31,
------------------------------------
2002 2001
---------------- ---------------
(in millions)
Income (loss) from operations (as reported) $ (1.3) $ 26.2
Gain amortization on contract buydown - (2.4)
Samples surface operation losses 4.5 -
Land sales (0.2) (3.3)
Reclamation adjustment - (3.5)
Stock based compensation accrual adjustment - 6.3
---------------- ---------------
Adjusted income from operations $ 3.0 $ 23.3
================ ===============
The decrease in adjusted income from operations is primarily attributable to the
Company's curtailment of production during the first quarter of 2002 in response
to the weak market environment described above. The decision to scale back
production during the quarter came after the Company prepared most of the
operations to maximize production in order to capitalize on the higher market
prices for coal the Company had previously projected for 2002. In addition, the
9
Company experienced higher insurance costs and higher contract mining costs when
compared to the same period in the prior year. Therefore, certain costs incurred
to maximize production did not result in higher revenues but did increase the
cost of coal sales. Cost of coal sales on a per ton basis was $14.07 per ton for
the quarter ended March 31, 2002 compared to $12.12 per ton for the quarter
ended March 31, 2001.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses declined $3.9 million, to $9.9 million, during the first
quarter of 2002 when compared to expenses of $13.8 million in the first quarter
of 2001. The decrease is primarily attributable to the stock-based compensation
accruals recorded during the first quarter of 2001 as discussed above.
Amortization of Coal Supply Agreements. Amortization of coal supply agreements
was reduced to $5.1 million for the quarter ended March 31, 2002, compared to
$7.6 million in the same quarter of 2001. The decrease is a result of the
expiration and buy-out of above-market contracts that were valued as assets on
the Company's balance sheet and amortized in 2001.
Other Expenses. Other expenses increased to $7.6 million for the first quarter
of 2002 from $4.3 million for the first quarter of 2001 primarily due to the
cost of terminating certain contractual obligations for the purchase or sale of
coal.
Interest Expense. Interest expense decreased by $9.4 million to $12.0 million
for the first quarter of 2002 as a result of lower debt levels and lower
interest rates during the recent quarter when compared to the first quarter of
2001. The net proceeds from two public stock offerings in the first half of 2001
were used to significantly reduce debt levels.
Income Taxes. The Company's effective tax rate is sensitive to changes in
estimates of annual profitability and percentage depletion. The income tax
benefit recorded in the first quarter of 2002 is primarily the result of the
impact of percentage depletion.
Adjusted EBITDA. Adjusted EBITDA (income from operations before the effect of
net interest expense; income taxes; and depreciation, depletion and amortization
of Arch Coal, its subsidiaries and its ownership percentage in its equity
investments) was $49.1 million for the current quarter compared to $80.3 million
for the first quarter of 2001. The decrease in adjusted EBITDA was primarily
attributable to a $27.5 million decrease in income from operations resulting
from the reduction in production levels and the Samples production issues, both
of which are discussed above.
RECENT DEVELOPMENTS
Natural Resource Partners L.P. The Company announced on April 19, 2002 that it
had created a limited partnership, Natural Resource Partners L.P., with three
private companies - Western Pocahontas Properties Limited Partnership, Great
Northern Properties Limited Partnership and New Gauley Coal Corporation
(collectively, the "WPP Group"). Natural Resource Partners was formed to engage
principally in the business of owning and managing coal royalty properties in
the three major coal-producing regions of the United States: Appalachia, the
Illinois Basin and the Western United States. The partnership has filed a
Registration Statement on Form S-1 with the Securities and Exchange Commission
relating to a proposed underwritten initial public offering of common units
representing limited partner interests in the partnership including 1,901,250
common units anticipated to be sold by the Company. The Company is contributing
approximately 454 million tons of its 3.4 billion tons of total coal reserves to
Natural Resource Partners in exchange for its ownership interest in the
partnership.
Debt Refinancing. The Company and its Arch Western Resources subsidiary
completed the refinancing of their existing credit facilities on April 18, 2002.
The new credit facilities include five- and six-year term loans totaling $675.0
million at Arch Western Resources, and a five-year revolving credit facility
totaling $350.0 million for the Company. The five-year non-amortizing term loan
at Arch Western is for $150.0 million while the six-year non-amortizing term
loan is for $525.0 million. The rate of interest on borrowings under both of the
credit facilities is based on LIBOR. The Company's credit facility is secured by
ownership interests in substantially all of its subsidiaries, except its
ownership interests in Arch Western and its subsidiaries. The Arch Western
credit facility is secured by its ownership interests in substantially all of
its subsidiaries, but is not guaranteed by the Company.
10
OUTLOOK
Production Levels. The Company reduced its rate of coal production at its
eastern and western operations by approximately 7% during the first quarter of
2002 and cut its 2002 capital expenditure budget from its previous estimate of
between $180 million and $200 million, to an expected $150 million. These
actions were taken in response to the current unfavorable spot coal prices
following an extremely mild winter and a period of economic weakness that
dampened electricity demand. The Company plans to increase its rate of
production when market prices rebound. Although the timing of any recovery in
coal market prices remains uncertain, there have been indications that prices
may return to more favorable levels during the last half of 2002. These
indications include a pickup in economic activity and an increase in the price
of natural gas, a competing fuel source for electric generation.
West Elk. The Company's West Elk mine encountered higher-than-expected methane
levels following the relocation of its longwall mining system to the eastern
section of the mine in early 2001, which led to a reduction of planned shipments
from the mine during 2001. West Elk's performance has steadily improved as the
mine has implemented a series of methane control procedures. The Company is
hopeful that the mine will operate at breakeven or profitable levels during the
remainder of 2002. However, if the Company is unable to continue to adequately
control methane levels at the mine, it may be forced to continue to operate the
mine at lower levels of production than planned.
West Virginia Operations. On May 8, 2002, in Kentuckians for the Commonwealth v.
Rivenburgh, the U.S. District Court for the Southern District of West Virginia
enjoined the U.S. Army Corps of Engineers from issuing any new ss.404 Clean
Water Act permits that authorize the placement of rock and soil into channels
that comprise waters of the United States. This process is used primarily in
surface mining operations where layers of dirt and rock are removed to expose
the underlying coal seam, although underground mining operations also generate
some of this material. The excess material is then placed into "valley fills."
The court reached its conclusion on the basis that the material constituted
"waste" which may not be disposed of in valley fills under Corps issued permits.
The Company anticipates that a stay of the decision will be sought, and that the
Corps of Engineers and industry defendants will appeal the decision.
The Company idled its Dal-Tex operation on July 23, 1999 as a result of an
adverse ruling in prior litigation on the issue of valley fills. This ruling was
later reversed on appeal; however, as of the date of the 2002 injunction
described above, the Company had not yet completed the process necessary to
obtain the ss.404 permits for the mine. Therefore, the Company will not be able
to re-open its Dal-Tex surface mining operation unless the current injunction is
stayed pending appeal, or the decision is reversed on appeal and it is able to
obtain all necessary permits. If the current litigation is favorably resolved
and the Company is able to obtain the necessary permits, it may determine to
reopen the mine subject to then-existing market conditions. Unless reversed, the
ruling may also affect the Company's ability to expand its current mining
operations or open new mines in the future.
Previously, the Company had disclosed that longwall mineable reserves at Mingo
Logan were likely to be exhausted during 2002. As a result of improvements to
the mine plan, the mine is not expected to exhaust its longwall mineable
reserves until 2006, subject to permit modifications.
During the second quarter of 2001, the Company's Samples surface mine in
southern West Virginia encountered a larger-than-expected sandstone intrusion.
The intrusion resulted in the thinning of the principal coal seam which reduced
recoverable coal and drove up mining costs on a per-ton basis. In the first
quarter of 2002, the Samples mine began development work on a new reserve area
with more favorable geology. The Company expects the Samples mine to return to
profitability during the second quarter of 2002, depending on market conditions.
Low-Sulfur Coal Producer. The Company continues to believe that it is well
positioned to capitalize on the continuing growth in demand for low-sulfur coal
to produce electricity. One hundred percent of the Company's current coal
production and approximately 90% of its reserves are low in sulfur.
Approximately 66% of the Company's coal reserves are compliance quality, which
means that they meet Phase II standards of the Clean Air Act without application
of expensive scrubbing technology. With Phase II now in effect, compliance coal
has captured a growing share of United States coal demand and commands a higher
price in the marketplace than high-sulfur coal.
Chief Objectives. The Company continues to focus on taking steps designed to
improve earnings, strengthen cash generation, improve productivity and reduce
costs at its large-scale mines, while building on its leading position in its
target coal-producing basins, the Powder River Basin and the Central Appalachian
Basin.
11
LIQUIDITY AND CAPITAL RESOURCES
The following is a summary of cash provided by or used in each of the indicated
types of activities during the three months ended March 31, 2002 and 2001:
2002 2001
---------------- ----------------
(in thousands)
Cash provided by (used in):
Operating activities $ 63,258 $ 65,492
Investing activities (90,174) (63,720)
Financing activities 21,628 (5,451)
Cash provided by operating activities in the three months ended March 31, 2002
was comparable to the same period in 2001 in spite of production cutbacks and
lower income primarily as a result of reduced working capital requirements in
the first quarter of 2002.
Cash used in investing activities during the three months ended March 31, 2002
increased over the same period in 2001 due to higher capital expenditures during
the first quarter of 2002 as the Company increased capital expenditures to
maintain existing infrastructure and prepared to increase production for
anticipated higher market prices. During the first quarters of 2001 and 2002,
the Company made the third and fourth, respectively, of five annual payments
under the Thundercloud federal lease, which is part of the Black Thunder mine in
Wyoming. The remaining payment is due in January 2003.
Cash provided by financing activities was $21.6 million in the first quarter of
2002 compared to cash used in financing activities of $5.5 million during the
first quarter of 2001. The cash provided by financing activities during the
first quarter of 2002 reflects borrowings on the Company's revolver and line of
credit caused in part by higher capital expenditure during the first quarter of
2002, while cash used in financing activities during the first quarter of 2001
reflects the pay-down of $98.7 million of debt primarily from a February 2001
issuance of common stock which resulted in proceeds of $92.9 million.
The Company generally satisfies its working capital requirements and funds its
capital expenditures and debt-service obligations with cash generated from
operations. The Company believes that cash generated from operations and its
borrowing capacity will be sufficient to meet its working capital requirements,
anticipated capital expenditures and scheduled debt payments for at least the
next several years. The Company's ability to satisfy debt service obligations,
to fund planned capital expenditures, to make acquisitions and to pay dividends
will depend upon its future operating performance, which will be affected by
prevailing economic conditions in the coal industry and financial, business and
other factors, some of which are beyond the Company's control.
Expenditures for property, plant and equipment were $73.1 million for the three
months ended March 31, 2002, compared to $48.5 million for the three months
ended March 31, 2001. Capital expenditures are made to improve and replace
existing mining equipment, expand existing mines, develop new mines and improve
the overall efficiency of mining operations. The Company estimates that its
capital expenditures will be approximately $150.0 million in total for 2002. It
is anticipated that these capital expenditures will be funded by available cash
and existing credit facilities.
At March 31, 2002, the Company had $39.6 million in letters of credit
outstanding which when combined with borrowings under the revolver, allowed for
$396.0 million of available borrowings under the Company's revolving credit
facility.
On April 18, 2002, the Company and Arch Western completed a refinancing of their
existing credit facilities. The new credit facilities include five- and six-year
non-amortizing term loans totaling $675.0 million at Arch Western and a
five-year revolving credit facility totaling $350.0 million for the Company. The
five-year non-amortizing term loan at Arch Western is for $150.0 million while
the six-year non-amortizing term loan is for $525.0 million. The rate of
interest on borrowings under both of the credit facilities is based on LIBOR.
The Company's credit facility is secured by ownership interests in substantially
all of its subsidiaries, except its ownership interests in Arch Western and its
subsidiaries. The Arch Western credit facility is secured by substantially all
of its subsidiaries, but is not guaranteed by the Company.
12
Financial covenants contained in the Company's new credit facilities consist of
a maximum leverage ratio, a minimum fixed charge coverage ratio and a minimum
net worth test. The leverage ratio requires that the Company not permit the
ratio of total indebtedness at the end of any calendar quarter to adjusted
EBITDA for the four quarters then ended exceed a specified amount. The fixed
charge coverage ratio requires that the Company not permit the ratio of the
Company's adjusted EBITDA plus lease expense to interest expense plus lease
expense for the four quarters then ended to be less than a specified amount. The
net worth test requires that the Company not permit its net worth to be less
than a specified amount plus 50% of cumulative net income.
The Company periodically establishes uncommitted lines of credit with banks.
These agreements generally provide for short-term borrowings at market rates. At
March 31, 2002, there were $20.0 million of such agreements in effect, of which
$9.0 million were outstanding. The Company can also issue an additional $469.5
million in public debt and equity securities under a shelf registration
statement.
The Company is exposed to market risk associated with interest rates. At March
31, 2002, debt included $795.4 million of floating-rate debt, for which the rate
of interest is a rate based on LIBOR and current market rates for bank lines of
credit. To manage this exposure, the Company enters into interest-rate swap
agreements to modify the interest-rate characteristics of outstanding Company
debt. At March 31, 2002, the Company had interest-rate swap agreements having a
total notional value of $425.0 million. These swap agreements are used to
convert variable-rate debt to fixed-rate debt. Under these swap agreements, the
Company pays a weighted average fixed rate of 6.89% (before the credit spread
over LIBOR) and receives a weighted average variable rate based upon 30-day and
90-day LIBOR. The Company accrues amounts to be paid or received under
interest-rate swap agreements over the lives of the agreements as adjustments to
interest expense, thereby adjusting the effective interest rate on the Company's
debt. After taking into consideration interest-rate swap agreements, debt
exposed to variable rates was $370.4 million. Gains and losses on terminations
of interest-rate swap agreements are deferred on the Company's balance sheet (in
other long-term liabilities) and amortized as an adjustment to interest expense
over the original term of the terminated swap agreement as if it were still in
place. The remaining terms of the swap agreements at March 31, 2002 ranged from
5 to 39 months. All instruments are entered into for other than trading
purposes.
The Company is also exposed to commodity price risk related to its purchase of
diesel fuel. The Company enters into heating oil swaps to substantially
eliminate volatility in the price of diesel fuel purchased for its operations.
The swap agreements essentially fix the price paid for diesel fuel by requiring
the Company to pay a fixed heating oil price and receive a floating heating oil
price. The changes in the floating heating oil price highly correlate to changes
in diesel fuel prices. Gains and losses on terminations of heating oil swap
agreements are deferred on the balance sheet (in other long-term liabilities)
and amortized as an adjustment to diesel fuel cost over the original term of the
terminated heating oil swap agreement as if it were still in place.
The discussion below presents the sensitivity of the market value of the
Company's financial instruments to selected changes in market rates and prices.
The range of changes reflects the Company's view of changes that are reasonably
possible over a one-year period. Market values are the present value of
projected future cash flows based on the market rates and prices chosen. The
major accounting policies for these instruments are described in Note 1 to the
consolidated financial statements of the Company as of and for the year ended
December 31, 2001 as filed on its Annual Report on Form 10-K with the Securities
and Exchange Commission.
Changes in interest rates have different impacts on the fixed-rate and
variable-rate portions of the Company's debt portfolio. A change in interest
rates on the fixed portion of the debt portfolio impacts the net financial
instrument position but has no impact on interest incurred or cash flows. A
change in interest rates on the variable portion of the debt portfolio impacts
the interest incurred and cash flows but does not impact the net financial
instrument position. The sensitivity analysis related to the fixed portion of
the Company's debt portfolio assumes an instantaneous 100-basis-point move in
interest rates from their levels at March 31, 2002, with all other variables
held constant. A 100-basis-point decrease in market interest rates would result
in an $5.0 million increase in the fair value of the fixed portion of the debt
at March 31, 2002. Based on the variable-rate debt included in the Company's
debt portfolio as of March 31, 2002, after considering the effect of the swap
agreements, a 100-basis-point increase in interest rates would result in an
annualized additional $3.7 million of interest expense incurred based on March
31, 2002 debt levels. Similarly, relative to the Company's diesel hedge
position, at March 31, 2002, a $.05 per gallon decrease in the price of heating
oil would result in a $1.2 million increase in the fair value of the financial
position of the heating oil swap.
13
CONTINGENCIES
Reclamation.
The federal Surface Mining Control and Reclamation Act of 1977 ("SMCRA") and
similar state statutes require that mine property be restored in accordance with
specified standards and an approved reclamation plan. The Company accrues for
the costs of final mine closure reclamation over the estimated useful mining
life of the property. These costs relate to reclaiming the pit and support
acreage at surface mines and sealing portals at deep mines. Other costs of final
mine closure common to surface and underground mining are related to reclaiming
refuse and slurry ponds, eliminating sedimentation and drainage control
structures and dismantling or demolishing equipment or buildings used in mining
operations. The Company also accrues for significant reclamation that is
completed during the mining process prior to final mine closure. The
establishment of the final mine closure reclamation liability and the other
ongoing reclamation liabilities are based upon permit requirements and require
various estimates and assumptions, principally associated with costs and
productivities.
The Company reviews its entire environmental liability periodically and makes
necessary adjustments, including permit changes and revisions to costs and
productivities to reflect current experience. The Company's management believes
it is making adequate provisions for all expected reclamation and other
associated costs.
Legal Contingencies.
The Company is a party to numerous claims and lawsuits with respect to various
matters, including those discussed below. The Company provides for costs related
to contingencies, including environmental matters, when a loss is probable and
the amount is reasonably determinable. After conferring with counsel, it is the
opinion of management that the ultimate resolution of these claims, to the
extent not previously provided for, will not have a material adverse effect on
the consolidated financial condition, results of operations or liquidity of the
Company.
Kentuckians for the Commonwealth v. Rivenburgh. On May 8, 2002, the U.S.
District Court for the Southern District of West Virginia enjoined the U.S. Army
Corps of Engineers from issuing any new ss.404 Clean Water Act permits that
authorize the placement of rock and soil into channels that comprise waters of
the United States. This process is used in surface mining operations where
layers of dirt and rock are removed to expose the underlying coal seam, although
underground mining operations also generate some of this material. The excess
material is then placed into "valley fills". The court reached its conclusion on
the basis that the material constituted "waste" which may not be disposed of in
valley fills under Corps issued permits. The Company anticipates that a stay of
the decision will be sought, and that the Corps of Engineers and industry
defendants will appeal the decision. The Company is not a party to this
litigation, however the restrictions imposed by it, unless overturned, will
affect all coal mining in the state, including the Company's operations, that
require the issuance of ss.404 permits. Because it is not financially viable for
coal producers to operate some mining properties without valley fills, if the
court's decision is not reversed on appeal, future mining operations in the
region may be severely restricted.
Cumulative Hydrologic Impact Assessment ("CHIA") Litigation. On January 20,
2000, two environmental organizations, the Ohio Valley Environmental Coalition
and the Hominy Creek Watershed Association, filed suit against the West Virginia
DEP in U.S. District Court in Huntington, West Virginia. In addition to
allegations that the West Virginia DEP violated state law and provisions of the
Clean Water Act, the plaintiffs allege that the West Virginia DEP's issuance of
permits for surface and underground coal mining has violated certain
non-discretionary duties mandated by SMCRA. Specifically, the plaintiffs allege
that the West Virginia DEP has failed to require coal operators seeking permits
to conduct water monitoring to verify stream flows and ascertain water quality,
to always include certain water quality information in their permit applications
and to analyze the probable hydrologic consequences of their operations. The
plaintiffs also allege that the West Virginia DEP has failed to analyze the
cumulative hydrologic impact of mining operations on specific watersheds.
The plaintiffs sought an injunction to prohibit the West Virginia DEP from
issuing any new permits which fail to comply with all of the elements identified
in their complaint. The complaint identified, and sought to enjoin, three
pending permits sought by the Company in connection with its Mingo Logan
operations in order to continue existing surface mining operations at the
Phoenix reserve. On January 15, 2001, the West Virginia DEP notified the
plaintiffs that the Company had completed all steps necessary to obtain the
permits. On March 8, 2001, the Court denied the plaintiffs' motion for a
14
preliminary injunction seeking to enjoin the DEP's decision to issue the
permits. The Company subsequently received some of the permits necessary to
continue operating the surface mine. If the plaintiffs ultimately prevail in
this litigation, the Company's ability to mine surface coal at Mingo Logan could
be adversely affected, and depending upon the length of the suspension, the
effect could be material. This matter does not affect Mingo Logan's existing
permits related to its underground operations.
Citizens Coal Council v. Norton. On March 29, 2002, the U.S. District Court for
the District of Columbia issued a ruling that could restrict underground mining
activities conducted in the vicinity of public roads, within a variety of
federally protected lands, within national forests and within a certain
proximity of occupied dwellings. The lawsuit, Citizens Coal Council v. Norton,
was filed in February 2000 to challenge regulations issued by the Department of
Interior providing, among other things, that subsidence and underground
activities that may lead to subsidence are not surface mining activities within
the meaning of SMCRA. SMCRA generally contains restrictions and certain
prohibitions on the locations where surface mining activities can be conducted.
The District Court entered summary judgment upon the plaintiffs' claims that the
Secretary of the Interior's determination violated SMCRA. By order dated April
9, 2002, the court remanded the regulations to the Secretary of the Interior for
reconsideration.
The Company is not a party to this litigation. Its significance for the coal
mining industry remains unclear because this ruling is subject to appellate
review, and the Department of Interior and the National Mining Association, a
trade group that intervened in this action, have announced their intention to
seek a stay of the order pending appeal to the U.S. Court of Appeals for the
District of Columbia Circuit. If the stay is not granted, if the District
Court's decision is not overturned, or if some legislative solution is not
enacted, this ruling could have a material adverse affect on all coal mine
operations that utilize underground mining techniques, including those of the
Company. While it may still be possible to obtain permits for underground mining
operations in these areas, the time and expense of that permitting process is
likely to increase significantly.
CERTAIN TRENDS AND UNCERTAINTIES
Substantial Leverage - Variable Interest Rate - Covenants.
As of March 31, 2002, the Company had outstanding consolidated indebtedness of
$798.9 million, representing approximately 58.5% of the Company's capital
employed. Despite making substantial progress in reducing debt, the Company
continues to have significant debt-service obligations, and the terms of its
credit agreements limit its flexibility and result in a number of limitations on
the Company. The Company also has significant lease and royalty obligations. The
Company's ability to satisfy debt service, lease and royalty obligations and to
effect any refinancing of its indebtedness will depend upon future operating
performance, which will be affected by prevailing economic conditions in the
markets that the Company serves as well as financial, business and other
factors, many of which are beyond the Company's control. The Company may be
unable to generate sufficient cash flow from operations and future borrowings,
or other financings may be unavailable in an amount sufficient to enable it to
fund its debt service, lease and royalty payment obligations or its other
liquidity needs.
The Company's relative amount of debt and the terms of its credit agreements
could have material consequences to its business, including, but not limited to:
(i) making it more difficult to satisfy debt covenants and debt service, lease
payment and other obligations; (ii) making it more difficult to pay quarterly
dividends as the Company has in the past; (iii) increasing the Company's
vulnerability to general adverse economic and industry conditions; (iv) limiting
the Company's ability to obtain additional financing to fund future
acquisitions, working capital, capital expenditures or other general corporate
requirements; (v) reducing the availability of cash flows from operations to
fund acquisitions, working capital, capital expenditures or other general
corporate purposes; (vi) limiting the Company's flexibility in planning for, or
reacting to, changes in the Company's business and the industry in which the
Company competes; or (vii) placing the Company at a competitive disadvantage
when compared to competitors with less relative amounts of debt.
After taking into consideration the Company's interest-rate swaps which convert
the Company's variable rate debt to fixed, approximately 46% of the Company's
indebtedness bears interest at variable rates that are linked to short-term
interest rates. If interest rates rise, the Company's costs relative to those
obligations would also rise.
Terms of the Company's credit facilities and leases contain financial and other
covenants that create limitations on the Company's ability to, among other
things, effect acquisitions or dispositions and borrow additional funds, and
require the Company to, among other things, maintain various financial ratios
and comply with various other financial covenants. Failure by the Company to
15
comply with such covenants could result in an event of default under these
agreements which, if not cured or waived, would enable the Company's lenders to
declare amounts borrowed due and payable, or otherwise result in unanticipated
costs.
Losses.
The Company reported a net loss of $7.4 million for the quarter ended March 31,
2002. The losses in the first quarter of 2002 were primarily due to continued
increased costs and decreased production at the Company's Samples surface
operations as described above and decreased production at the Company's other
mines due to adverse market conditions during the quarter.
Because the coal mining industry is subject to significant regulatory oversight
and due to the possibility of continued adverse pricing trends or other industry
trends beyond the Company's control, the Company may suffer losses in the future
if legal and regulatory rulings, mine idlings and closures, adverse pricing
trends or other factors affect the Company's ability to mine and sell coal
profitably.
Environmental and Regulatory Factors.
The coal mining industry is subject to regulation by federal, state and local
authorities on matters such as:
o the discharge of materials into the environment;
o employee health and safety;
o mine permits and other licensing requirements;
o reclamation and restoration of mining properties after mining is
completed;
o management of materials generated by mining operations;
o surface subsidence from underground mining;
o water pollution;
o legislatively mandated benefits for current and retired coal miners;
o air quality standards;
o protection of wetlands;
o endangered plant and wildlife protection;
o limitations on land use;
o storage of petroleum products andsubstances that are regarded as
hazardous under applicable laws; and
o management of electrical equipment containing polychlorinated biphenyls,
or PCBs.
In addition, the electric generating industry, which is the most significant
end-user of coal, is subject to extensive regulation regarding the environmental
impact of its power generation activities, which could affect demand for the
Company's coal. The possibility exists that new legislation or regulations may
be adopted or that the enforcement of existing laws could become more stringent,
either of which may have a significant impact on the Company's mining operations
or its customers' ability to use coal and may require the Company or its
customers to change operations significantly or incur substantial costs.
While it is not possible to quantify the expenditures incurred by the Company to
maintain compliance with all applicable federal and state laws, those costs have
been and are expected to continue to be significant. The Company posts
performance bonds pursuant to federal and state mining laws and regulations for
the estimated costs of reclamation and mine closing, including the cost of
treating mine water discharge when necessary. Compliance with these laws has
substantially increased the cost of coal mining for all domestic coal producers.
Clean Air Act. The federal Clean Air Act and similar state and local laws, which
regulate emissions into the air, affect coal mining and processing operations
primarily through permitting and emissions control requirements. The Clean Air
Act also indirectly affects coal mining operations by extensively regulating the
emissions from coal-fired industrial boilers and power plants, which are the
largest end-users of the Company's coal. These regulations can take a variety of
forms, as explained below.
The Clean Air Act imposes obligations on the Environmental Protection Agency, or
EPA, and the states to implement regulatory programs that will lead to the
attainment and maintenance of EPA-promulgated ambient air quality standards,
including standards for sulfur dioxide, particulate matter, nitrogen oxides and
ozone. Owners of coal-fired power plants and industrial boilers have been
required to expend considerable resources in an effort to comply with these
ambient air standards. Significant additional emissions control expenditures
16
will be needed in order to meet the current national ambient air standard for
ozone. In particular, coal-fired power plants will be affected by state
regulations designed to achieve attainment of the ambient air quality standard
for ozone. Ozone is produced by the combination of two precursor pollutants:
volatile organic compounds and nitrogen oxides. Nitrogen oxides are a by-product
of coal combustion. Accordingly, emissions control requirements for new and
expanded coal-fired power plants and industrial boilers will continue to become
more demanding in the years ahead.
In July 1997, the EPA adopted more stringent ambient air quality standards for
particulate matter and ozone. In a February 2001 decision, the U.S. Supreme
Court largely upheld the EPA's position, although it remanded the EPA's ozone
implementation policy for further consideration. On remand, the Court of Appeals
for the D.C. Circuit affirmed EPA's adoption of these more stringent ambient air
quality standards. As a result of the finalization of these standards, states
that are not in attainment for these standards will have to revise their State
Implementation Plans to include provisions for the control of ozone precursors
and/or particulate matter. Revised State Implementation Plans could require
electric power generators to further reduce nitrogen oxide and particulate
matter emissions. The potential need to achieve such emissions reductions could
result in reduced coal consumption by electric power generators. Thus, future
regulations regarding ozone, particulate matter and other pollutants could
restrict the market for coal and the development of new mines by the Company.
This in turn may result in decreased production by the Company and a
corresponding decrease in the Company's revenues. Although the future scope of
these ozone and particulate matter regulations cannot be predicted, future
regulations regarding these and other ambient air standards could restrict the
market for coal and the development of new mines.
Furthermore, in October 1998, the EPA finalized a rule that will require 19
states in the Eastern United States that have ambient air quality problems to
make substantial reductions in nitrogen oxide emissions by the year 2004. To
achieve these reductions, many power plants would be required to install
additional control measures. The installation of these measures would make it
more costly to operate coal-fired power plants and, depending on the
requirements of individual state implementation plans, could make coal a less
attractive fuel.
Along with these regulations addressing ambient air quality, EPA has initiated a
regional haze program designed to protect and to improve visibility at and
around National Parks, National Wilderness Areas and International Parks. This
program restricts the construction of new coal-fired power plants whose
operation may impair visibility at and around federally protected areas.
Moreover, this program may require certain existing coal-fired power plants to
install additional control measures designed to limit haze-causing emissions,
such as sulfur dioxide, nitrogen oxides and particulate matter. By imposing
limitations upon the placement and construction of new coal-fired power plants,
EPA's regional haze program could affect the future market for coal.
Additionally, the U.S. Department of Justice, on behalf of the EPA, has filed
lawsuits against several investor-owned electric utilities and brought an
administrative action against one government-owned electric utility for alleged
violations of the Clean Air Act. The EPA claims that these utilities have failed
to obtain permits required under the Clean Air Act for alleged major
modifications to their power plants. The Company supplies coal to some of the
currently affected utilities, and it is possible that other of the Company's
customers will be sued. These lawsuits could require the utilities to pay
penalties and install pollution control equipment or undertake other emission
reduction measures, which could adversely impact their demand for coal.
Other Clean Air Act programs are also applicable to power plants that use the
Company's coal. For example, the acid rain control provisions of Title IV of the
Clean Air Act require a reduction of sulfur dioxide emissions from power plants.
Because sulfur is a natural component of coal, required sulfur dioxide
reductions can affect coal mining operations. Title IV imposes a two phase
approach to the implementation of required sulfur dioxide emissions reductions.
Phase I, which became effective in 1995, regulated the sulfur dioxide emissions
levels from 261 generating units at 110 power plants and targeted the highest
sulfur dioxide emitters. Phase II, implemented January 1, 2000, made the
regulations more stringent and extended them to additional power plants,
including all power plants of greater than 25 megawatt capacity. Affected
electric utilities can comply with these requirements by:
o burning lower sulfur coal, either exclusively or mixed with
higher sulfur coal;
o installing pollution control devices such as scrubbers, which reduce the
emissions from high sulfur coal;
o reducing electricity generating levels; or
o purchasing or trading emission credits.
17
Specific emissions sources receive these credits that electric utilities and
industrial concerns can trade or sell to allow other units to emit higher levels
of sulfur dioxide. Each credit allows its holder to emit one ton of sulfur
dioxide.
In addition to emissions control requirements designed to control acid rain and
to attain the national ambient air quality standards, the Clean Air Act also
imposes standards on sources of hazardous air pollutants. Although these
standards have not yet been extended to coal mining operations, the EPA recently
announced that it will regulate hazardous air pollutants from coal-fired power
plants. Under the Clean Air Act, coal-fired power plants will be required to
control hazardous air pollution emissions by no later than 2009. These controls
are likely to require significant new improvements in controls by power plant
owners. The most prominently targeted pollutant is mercury, although other
by-products of coal combustion may be covered by future hazardous air pollutant
standards for coal combustion sources.
Other proposed initiatives may have an effect upon coal operations. One such
proposal is the Bush Administration's recently announced Clear Skies Initiative.
As proposed, this initiative is designed to reduce emissions of sulfur dioxide,
nitrogen oxides, and mercury from power plants. Other so-called multi-pollutant
bills, which could regulate additional air pollutants, have been proposed by
various members of Congress. While the details of all of these proposed
initiatives vary, there appears to be a movement towards increased regulation of
a number of air pollutants. Were such initiatives enacted into law, power plants
could choose to shift away from coal as a fuel source to meet these
requirements.
Mine Health and Safety Laws. Stringent safety and health standards have been
imposed by federal legislation since the adoption of the Mine Health and Safety
Act of 1969. The Mine Safety and Health Act of 1977, which significantly
expanded the enforcement of health and safety standards of the Mine Health and
Safety Act of 1969, imposes comprehensive safety and health standards on all
mining operations. In addition, as part of the Mine Health and Safety Acts of
1969 and 1977, the Black Lung Act requires payments of benefits by all
businesses conducting current mining operations to coal miners with black lung
and to some survivors of a miner who dies from this disease. Because the
regulatory requirements imposed by mine worker health and safety laws are
comprehensive and ongoing in nature, non-compliance cannot be eliminated
completely.
Surface Mining Control And Reclamation Act. SMCRA establishes operational,
reclamation and closure standards for all aspects of surface mining as well as
many aspects of deep mining. SMCRA requires that comprehensive environmental
protection and reclamation standards be met during the course of and upon
completion of mining activities. In conjunction with mining the property, the
Company is contractually obligated under the terms of their leases to comply
with all laws, including SMCRA and equivalent state and local laws. These
obligations include reclaiming and restoring the mined areas by grading,
shaping, preparing the soil for seeding and by seeding with grasses or planting
trees for use as pasture or timberland, as specified in the approved reclamation
plan.
SMCRA also requires the Company to submit a bond or otherwise financially secure
the performance of its reclamation obligations. The earliest a reclamation bond
can be completely released is five years after reclamation has been achieved.
Federal law and some states impose on mine operators the responsibility for
repairing the property or compensating the property owners for damage occurring
on the surface of the property as a result of mine subsidence, a consequence of
longwall mining and possibly other mining operations. In addition, the Abandoned
Mine Lands Act, which is part of SMCRA, imposes a tax on all current mining
operations, the proceeds of which are used to restore mines closed before 1977.
The maximum tax is $0.35 per ton of coal produced from surface mines and $0.15
per ton of coal produced from underground mines.
The Company also leases some of its coal reserves to third party operators.
Under SMCRA, responsibility for unabated violations, unpaid civil penalties and
unpaid reclamation fees of independent mine lessees and other third parties
could potentially be imputed to other companies that are deemed, according to
the regulations, to have "owned" or "controlled" the mine operator. Sanctions
against the "owner" or "controller" are quite severe and can include civil
penalties, reclamation fees and reclamation costs. The Company is not aware of
any currently pending or asserted claims against it asserting that it "owns" or
"controls" any of its lessees' operations.
On March 29, 2002, the U.S. District Court for the District of Columbia issued a
ruling that could restrict underground mining activities conducted in the
vicinity of public roads, within a variety of federally protected lands, within
national forests and within a certain proximity of occupied dwellings. The
lawsuit, Citizens Coal Council v. Norton, was filed in February 2000 to
challenge regulations issued by the Department of Interior providing, among
other things, that subsidence and underground activities that may lead to
subsidence are not surface mining activities within the meaning of SMCRA. SMCRA
18
generally contains restrictions and certain prohibitions on the locations where
surface mining activities can be conducted. The District Court entered summary
judgment upon the plaintiff's claims that the Secretary of the Interior's
determination violated SMCRA. By order dated April 9, 2002, the court remanded
the regulations to the Secretary of the Interior for reconsideration.
The significance of this decision for the coal mining industry remains unclear
because this ruling is subject to appellate review, and the Department of
Interior and the National Mining Association, a trade group that intervened in
this action, have announced their intention to seek a stay of the order pending
appeal to the U.S. Court of Appeals for the District of Columbia Circuit. If the
stay is not granted, the District Court's decision is not overturned, or if some
legislative solution is not enacted, this ruling could have a material adverse
effect on all coal mine operations that utilize underground mining techniques,
including those of the Company. While it still may be possible to obtain permits
for underground mining operations in these areas, the time and expense of that
permitting process are likely to increase significantly.
Framework Convention on Global Climate Change. The United States and more than
160 other nations are signatories to the 1992 Framework Convention on Global
Climate Change, commonly known as the Kyoto Protocol, that is intended to limit
or capture emissions of greenhouse gases such as carbon dioxide and methane. The
U.S. Senate has neither ratified the treaty commitments, which would mandate a
reduction in U.S. greenhouse gas emissions, nor enacted any law specifically
controlling greenhouse gas emissions and the Bush Administration has withdrawn
support for this treaty. Nonetheless, future regulation of greenhouse gases
could occur either pursuant to future U.S. treaty obligations or pursuant to
statutory or regulatory changes under the Clean Air Act. Efforts to control
greenhouse gas emissions could result in reduced demand for coal if electric
power generators switch to lower carbon sources of fuel. These restrictions or
uncertainties could have a material adverse effect on the Company's business.
Clean Water Act. The Clean Water Act affects coal mining operations by imposing
restrictions on effluent discharge into navigable waters, a term which courts
have defined to include wetlands. Regular monitoring, as well as compliance with
reporting requirements and performance standards, are preconditions for the
issuance and renewal of permits governing the discharge of pollutants into
water. The Company is also subject to ss. 404 of the Clean Water Act, which
imposes permitting and mitigation requirements associated with the dredging and
filling of wetlands. The Company is contractually obligated to obtain all
necessary wetlands permits required under ss. 404, which permits are issued by
the U.S. Army Corps of Engineers. However, mitigation requirements under those
existing, and possible future, wetlands permits may vary considerably.
The U.S. Army Corps of Engineers' authority to issue Clean Water Act Section 404
permits for the discharge of mining wastes into valley fills was, however,
challenged in an August 2001 lawsuit filed by a citizens group, Kentuckians For
The Commonwealth, Inc., in the United States District Court for the Southern
District of West Virginia. On May 8, 2002, the court enjoined the Army Corps of
Engineers from issuing any new ss.404 permits that authorize the placement of
rock and soil into channels that comprise waters of the United States. The court
reached this conclusion on the basis that the material constituted "waste" which
may not be disposed of under Corps issued permits. A stay of the decision is
currently being sought, and an appeal by the Corps of Engineers and industry
defendants is expected. If the plaintiff in this litigation is eventually
successful, the costs, time and difficulty associated with obtaining Clean Water
Act permits for surface mining operations could increase and could in fact
become infeasible. Additionally, conditions made part of individual Section 404
and 402 permits could require more extensive and costly reclamation.
West Virginia Antidegradation Policy. In January 2002, a number of environmental
groups and individuals filed suit in the U.S. District Court for the Southern
District of West Virginia to challenge the EPA's approval of West Virginia's
antidegradation implementation policy. Under the federal Clean Water Act, state
regulatory authorities must conduct an antidegradation review before approving
permits for the discharge of pollutants to waters that have been designated as
high quality by the state. Antidegradation review involves public and
intergovernmental scrutiny of permits and requires permittees to demonstrate
that the proposed activities are justified in order to accommodate significant
economic or social development in the area where the waters are located. The
plaintiffs in this lawsuit, Ohio Valley Environmental Coalition v. Whitman,
challenge provisions in West Virginia's antidegradation implementation policy
that exempt current holders of National Pollutant Discharge Elimination System
(NPDES) permits and Section 404 permits, among other parties, from the
19
antidegradation-review process. The Company is exempt from antidegradation
review under these provisions. Revoking this exemption and subjecting the
Company to the antidegradation review process could delay the issuance or
reissuance of Clean Water Act permits to the Company or cause these permits to
be denied. If the plaintiffs are successful and if the Company discharges into
waters that have been designated as high-quality by the state, the costs, time
and difficulty associated with obtaining and complying with Clean Water Act
permits for surface mining of its operations could increase.
Comprehensive Environmental Response, Compensation and Liability Act. CERCLA and
similar state laws affect coal mining operations by, among other things,
imposing cleanup requirements for threatened or actual releases of hazardous
substances that may endanger public health or welfare or the environment. Under
CERCLA and similar state laws, joint and several liability may be imposed on
waste generators, site owners and lessees and others regardless of fault or the
legality of the original disposal activity. Although the EPA excludes most
wastes generated by coal mining and processing operations from the hazardous
waste laws, such wastes can, in certain circumstances, constitute hazardous
substances for the purposes of CERCLA. In addition, the disposal, release or
spilling of some products used by coal companies in operations, such as
chemicals, could implicate the liability provisions of the statute. Thus, coal
mines that the Company currently owns or has previously owned or operated, and
sites to which the Company sent waste materials, may be subject to liability
under CERCLA and similar state laws. In particular, the Company may be liable
under CERCLA or similar state laws for the cleanup of hazardous substance
contamination at sites where it owns surface rights.
Mining Permits and Approvals. Numerous governmental permits or approvals are
required for mining operations. In connection with obtaining these permits and
approvals, the Company may be required to prepare and present to federal, state
or local authorities data pertaining to the effect or impact that any proposed
production of coal may have upon the environment. The requirements imposed by
any of these authorities may be costly and time consuming and may delay
commencement or continuation of mining operations. Regulations also provide that
a mining permit can be refused or revoked if an officer, director or a
shareholder with a 10% or greater interest in the entity is affiliated with
another entity that has outstanding permit violations. Thus, past or ongoing
violations of federal and state mining laws could provide a basis to revoke
existing permits and to deny the issuance of additional permits.
In order to obtain mining permits and approvals from state regulatory
authorities, mine operators, including the Company, must submit a reclamation
plan for restoring, upon the completion of mining operations, the mined property
to its prior condition, productive use or other permitted condition. Typically
the Company submits the necessary permit applications between 12 and 18 months
before it plans to begin mining a new area. In the Company's experience, permits
generally are approved several months after a completed application is
submitted. In the past, the Company has generally obtained its mining permits
without significant delay. However, the Company cannot be sure that it will not
experience difficulty in obtaining mining permits in the future.
Future legislation and administrative regulations may emphasize the protection
of the environment and, as a consequence, the activities of mine operators,
including the Company, may be more closely regulated. Legislation and
regulations, as well as future interpretations of existing laws, may also
require substantial increases in equipment expenditures and operating costs, as
well as delays, interruptions or the termination of operations. The Company
cannot predict the possible effect of such regulatory changes.
Under some circumstances, substantial fines and penalties, including revocation
or suspension of mining permits, may be imposed under the laws described above.
Monetary sanctions and, in severe circumstances, criminal sanctions may be
imposed for failure to comply with these laws.
As indicated by the legal action involving valley fills that is discussed in
"Contingencies - Legal Contingencies - Kentuckians for the Commonwealth v.
Rivenburgh" above, the regulatory environment in West Virginia is uncertain with
respect to coal mining. No assurance can be made that the plaintiffs will not
ultimately prevail in this litigation. In such event, there could be a material
adverse effect on the Company's financial condition or results of operations.
West Virginia Cumulative Hydrologic Impact Analysis Litigation. Two
environmental groups sued the West Virginia Department of Environmental
Protection in January 2000 in federal court, alleging various violations of the
Clean Water Act and SMCRA. The lawsuit was amended in September 2001 to name
Gale Norton, Secretary of the Interior, as a defendant. The U.S. Office of
Surface Mining is a division within the Department of Interior. The lawsuit,
Ohio River Valley Environmental Coalition, Inc. v. Castle, specifically alleges
20
that the West Virginia Department of Environmental Protection has violated its
non-discretionary duty to require all surface and underground mining permit
applications to include certain stream flow and water quality data and an
analysis of the probable hydrologic consequences of the proposed mine, and that
the West Virginia Department of Environmental Protection failed to conduct
SMCRA-required cumulative hydrologic impacts analysis prior to issuing mining
permits. The lawsuit also alleges that the Office of Surface Mining has a
non-discretionary duty to apply the federal SMCRA law in West Virginia due to
the deficiencies in the state program. In March 2001, the district court denied
the plaintiff's motion for a preliminary injunction on its claims against the
West Virginia Department of Environmental Protection. In September 2001, the
district court denied a motion to dismiss for lack of jurisdiction under Bragg
filed by defendant Michael Callaghan, Secretary of the West Virginia Department
of Environmental Protection. Callaghan filed an interlocutory appeal of this
decision in October 2001. The Fourth Circuit Court of Appeals is awaiting
briefing under an extended schedule in this case. If the plaintiffs are
eventually successful in this lawsuit, the West Virginia Department of
Environmental Protection will have to modify its procedures and requirements for
the content and review of mining permit applications, or the federal government
will be ordered to assume control over mining permits in West Virginia. Any of
these changes are likely to increase the cost of preparing applications and the
time required for their review, and may entail additional operating expenditures
and, possibly, restrictions on operating.
West Virginia SMCRA Bond Lawsuit. In November 2000, the West Virginia Highlands
Conservancy filed a lawsuit in federal district court against the U.S.
Department of Interior, the U.S. Office of Surface Mining and the West Virginia
Department of Environmental Protection. The lawsuit, West Virginia Highlands
Conservancy v. Norton, which seeks declaratory and injunctive relief, generally
challenges the adequacy of the two-tier West Virginia alternative bond
reclamation program. The first tier requires mine operators to post a bond of up
to $5,000 per acre mined. The second tier creates a special reclamation fund
which is funded by an assessment on mine operators of three cents per ton of
coal. The West Virginia Highlands Conservancy claims that, individually and
collectively, the alternative bond reclamation program has inadequate funds to
cover the state's cost of conducting mining site reclamation for those sites
where the mine operator has defaulted, or might default, on its reclamation
obligations. Based upon the alleged inadequacy of the alternative bonding
program, the lawsuit claims that the Department of the Interior and the Office
of Surface Mining violated their obligations under SMCRA by either (1) not
asserting federal control over the West Virginia SMCRA bonding program or (2)
not revoking federal approval of the West Virginia SMCRA program and assuming
control under SMCRA. The lawsuit also alleges that the West Virginia Department
of Environmental Protection (1) failed to ensure that the state bonding program
met certain minimum requirements and (2) improperly issued SMCRA permits without
requiring mine operators to post sufficient reclamation bonds.
In May 2001, the district court dismissed all claims against the West Virginia
Department of Environment Protection based upon the principle of sovereign
immunity. The Office of Surface Mining, in June 2001, initiated formal
administrative action against the West Virginia Department of Environmental
Protection regarding the alleged deficiencies in the state bonding program.
The remaining claims in this lawsuit against the federal defendants were the
subject of an August 2001 order by the district court. The court denied the
federal defendants' motion to dismiss the suit and granted partial summary
judgment for the plaintiffs. The court allowed the Office of Surface Mining to
continue its administrative action. That action required the West Virginia
Department of Environmental Protection to submit proposed new regulatory
initiatives to the state legislature's rulemaking committee and, within 45 days
of the close of the 2002 legislative session, the state was required to provide
final, enacted legislation, signed by the Governor of West Virginia, that
addressed all problems with the current state bonding system. The West Virginia
Legislature passed, and the Governor of West Virginia signed, an amended
alternative bond program, called the 7-Up Plan, and the U.S. Office of Surface
Mining approved those amendments.
The plaintiffs filed a motion in January 2002 asking the court to compel the
Office of Surface Mining to perform its non-discretionary duties and find that
the new alternative bonding program promulgated by West Virginia still fails to
meet the requirements of the federal SMCRA. In March 2002, the court denied the
plaintiffs' motion, based in part upon representations by the Office of Surface
Mining that it would make a final determination regarding the adequacy of the
7-Up Plan by no later than May 28, 2002. In any event, the ultimate modification
to the bonding program will likely result in an increase in the amount of
reclamation bonds that coal mine operators in West Virginia, including the
Company, must post and could result in other taxes or fees related to the
operation of coal mines in the state. This would increase the cost of operating
the mines. Any changes to the state reclamation bonding program could also
complicate, protract the process of and increase the cost of applying for and
obtaining necessary permits.
21
Endangered Species. The federal Endangered Species Act and counterpart state
legislation protects species threatened with possible extinction. Protection of
endangered species may have the effect of prohibiting or delaying the Company
from obtaining mining permits and may include restrictions on timber harvesting,
road building and other mining or silvicultural activities in areas containing
the affected species. A number of species indigenous to the Company's properties
are protected under the Endangered Species Act. Based on the species that have
been identified to date and the current application of applicable laws and
regulations, however, the Company does not believe there are any species
protected under the Endangered Species Act that would materially and adversely
affect its ability to mine coal from its properties in accordance with current
mining plans.
Other Environmental Laws Affecting the Company. The Company is required to
comply with numerous other federal, state and local environmental laws in
addition to those previously discussed. These additional laws include, for
example, the Resource Conservation and Recovery Act, the Safe Drinking Water
Act, the Toxic Substance Control Act and the Emergency Planning and Community
Right-to-Know Act. The Company believes that it is in substantial compliance
with all applicable environmental laws.
Competition-Excess Industry Capacity.
The coal industry is intensely competitive, primarily as a result of the
existence of numerous producers in the coal-producing regions in which the
Company operates, and a number of the Company's competitors have greater
financial resources. The Company competes with several major coal producers in
the central Appalachian and Powder River Basin areas. The Company also competes
with a number of smaller producers in those and other market regions. The
Company is also subject to the risk of reduced profitability as a result of
excess industry capacity, which results in reduced coal prices.
Electric Industry Factors.
Demand for coal and the prices that the Company will be able to obtain for its
coal are closely linked to coal consumption patterns of the domestic electric
generation industry, which has accounted for approximately 90% of domestic coal
consumption in recent years. These coal consumption patterns are influenced by
factors beyond the Company's control, including the demand for electricity
(which is dependent to a significant extent on summer and winter temperatures);
government regulation; technological developments and the location,
availability, quality and price of competing sources of coal; alternative fuels
such as natural gas, oil and nuclear; and alternative energy sources such as
hydroelectric power. Demand for the Company's low-sulfur coal and the prices
that the Company will be able to obtain for it will also be affected by the
price and availability of high-sulfur coal, which can be marketed in tandem with
emissions allowances in order to meet federal Clean Air Act requirements. Any
reduction in the demand for the Company's coal by the domestic electric
generation industry may cause a decline in profitability.
Electric utility deregulation is expected to provide incentives to generators of
electricity to minimize their fuel costs and is believed to have caused electric
generators to be more aggressive in negotiating prices with coal suppliers.
Deregulation may have a negative effect on the Company's profitability to the
extent it causes the Company's customers to be more cost-sensitive.
Reliance On And Terms Of Long-Term Coal Supply Contracts.
During 2001, sales of coal under long-term contracts, which are contracts with a
term greater than 12 months, accounted for 77% of the Company's total revenues.
The prices for coal shipped under these contracts may be below the current
market price for similar type coal at any given time. As a consequence of the
substantial volume of its sales which are subject to these long-term agreements,
the Company has less coal available with which to capitalize on stronger coal
prices if and when they arise. In addition, because long-term contracts
typically allow the customer to elect volume flexibility, the Company's ability
to realize the higher prices that may be available in the spot market may be
restricted when customers elect to purchase higher volumes under such contracts,
or the Company's exposure to market-based pricing may be increased should
customers elect to purchase fewer tons. The increasingly short terms of sales
contracts and the consequent absence of price adjustment provisions in such
contracts also make it more likely that inflation related increases in mining
costs during the contract term will not be recovered by the Company.
22
Reserve Degradation And Depletion.
The Company's profitability depends substantially on its ability to mine coal
reserves that have the geological characteristics that enable them to be mined
at competitive costs. Replacement reserves may not be available when required
or, if available, may not be capable of being mined at costs comparable to those
characteristic of the depleting mines. The Company has in the past acquired and
will in the future acquire, coal reserves for its mine portfolio from third
parties. The Company may not be able to accurately assess the geological
characteristics of any reserves that it acquires, which may adversely affect the
profitability and financial condition of the Company. Exhaustion of reserves at
particular mines can also have an adverse effect on operating results that is
disproportionate to the percentage of overall production represented by such
mines. Mingo Logan's Mountaineer Mine is estimated to exhaust its longwall
mineable reserves in 2006. The Mountaineer Mine generated $12.0 million and
$11.8 million of the Company's total operating income in the first quarters of
2002 and 2001, respectively.
Potential Fluctuations In Operating Results-Factors Routinely Affecting Results
Of Operations.
The Company's mining operations are inherently subject to changing conditions
that can affect levels of production and production costs at particular mines
for varying lengths of time and can result in decreases in profitability.
Weather conditions, equipment replacement or repair, fuel prices, fires,
variations in coal seam thickness, amounts of overburden rock and other natural
materials and other geological conditions have had, and can be expected in the
future to have, a significant impact on operating results. A prolonged
disruption of production at any of the Company's principal mines, particularly
its Mingo Logan operation in West Virginia, would result in a decrease, which
could be material, in the Company's revenues and profitability. Other factors
affecting the production and sale of the Company's coal that could result in
decreases in its profitability include: (i) expiration or termination of, or
sales price redeterminations or suspension of deliveries under, coal supply
agreements; (ii) disruption or increases in the cost of transportation services;
(iii) changes in laws or regulations, including permitting requirements; (iv)
litigation; (v) the timing and amount of insurance recoveries; (vi) work
stoppages or other labor difficulties; (vii) mine worker vacation schedules and
related maintenance activities; and (viii) changes in coal market and general
economic conditions.
Decreases in the Company's profitability as a result of the factors described
above could adversely impact quarterly or annual results materially. Any such
adverse impact on the Company's operating results could cause its stock price to
decline substantially, particularly if the results are below research analyst or
investor expectations.
Transportation.
The coal industry depends on rail, trucking and barge transportation to deliver
shipments of coal to customers, and transportation costs are a significant
component of the total cost of supplying coal. Disruption of these
transportation services could temporarily impair the Company's ability to supply
coal to its customers and thus adversely affect the Company's business and
operating results. Increases in transportation costs, or changes in such costs
relative to transportation costs for coal produced by its competitors or of
other fuels, could have an adverse effect on the Company's business and results
of operations.
Reserves - Title.
There are numerous uncertainties inherent in estimating quantities of
recoverable reserves, including many factors beyond the control of the Company.
Estimates of economically recoverable coal reserves and net cash flows
necessarily depend upon the number of variable factors and assumptions, such as
geological and mining conditions which may not be fully identified by available
exploration data or may differ from experience in current operations, historical
production from the area compared with production from other producing areas,
the assumed effects of regulation by governmental agencies and assumptions
concerning coal prices, operating costs, severance and excise taxes, development
costs and reclamation costs, all of which may cause estimates to vary
considerably from actual results.
For these reasons, estimates of the economically recoverable quantities
attributable to any particular group of properties, classifications of such
reserves based on risk of recovery and estimates of net cash flows expected
therefrom, prepared by different engineers or by the same engineers at different
times, may vary substantially. Actual coal tonnage recovered from identified
reserve areas or properties and revenues and expenditures with respect to the
Company's reserves may vary from estimates, and such variances may be material.
These estimates thus may not accurately reflect the Company's actual reserves.
23
A significant part of the Company's mining operations are conducted on
properties leased by the Company. The loss of any lease could adversely affect
the Company's ability to develop the associated reserves. Because title to most
of the Company's leased properties and mineral rights is not usually verified
until a commitment is made by the Company to develop a property, which may not
occur until after the Company has obtained necessary permits and completed
exploration of the property, the Company's right to mine certain of its reserves
may be adversely affected if defects in title or boundaries exist. In order to
obtain leases or mining contracts to conduct mining operations on property where
these defects exist, the Company has had to, and may in the future have to,
incur unanticipated costs. In addition, the Company may not be able to
successfully negotiate new leases or mining contracts for properties containing
additional reserves or maintain its leasehold interests in properties on which
mining operations are not commenced during the term of the lease.
Certain Contractual Arrangements.
The Company's affiliate, Arch Western Resources, LLC, is the owner of Company
reserves and mining facilities in the western United States. The agreement under
which Arch Western was formed provides that a subsidiary of the Company, as the
managing member of Arch Western, generally has exclusive power and authority to
conduct, manage and control the business of Arch Western. However, consent of BP
Amoco, the other member of Arch Western, would generally be required in the
event that Arch Western proposes to make a distribution, incur indebtedness,
sell properties or merge or consolidate with any other entity if, at such time
Arch Western has a debt rating less favorable than specified ratings with
Moody's Investors Service or Standard & Poor's or fails to meet specified
indebtedness and interest ratios.
In connection with the Company's June 1, 1998 acquisition of Atlantic Richfield
Company's ("ARCO") coal operations, the Company entered into an agreement under
which it agreed to indemnify ARCO against specified tax liabilities in the event
that these liabilities arise as a result of certain actions taken prior to June
1, 2013, including the sale or other disposition of certain properties of Arch
Western, the repurchase of certain equity interests in Arch Western by Arch
Western or the reduction under certain circumstances of indebtedness incurred by
Arch Western in connection with the acquisition. Depending on the time at which
any such indemnification obligation were to arise, it could impact the Company's
profitability for the period in which it arises.
The membership interests in Canyon Fuel, which operates three coal mines in
Utah, are owned 65% by Arch Western and 35% by a subsidiary of ITOCHU
Corporation of Japan. The agreement which governs the management and operations
of Canyon Fuel provides for a management board to manage its business and
affairs. Some major business decisions concerning Canyon Fuel require the vote
of 70% of the membership interests and therefore limit the Company's ability to
make these decisions. These decisions include admission of additional members;
approval of annual business plans; the making of significant capital
expenditures; sales of coal below specified prices; agreements between Canyon
Fuel and any member; the institution or settlement of litigation; a material
change in the nature of Canyon Fuel's business or a material acquisition; the
sale or other disposition, including by merger, of assets other than in the
ordinary course of business; incurrence of indebtedness; entering into leases;
and the selection and removal of officers. The Canyon Fuel agreement also
contains various restrictions on the transfer of membership interests in Canyon
Fuel.
The Company's Amended and Restated Certificate of Incorporation requires the
affirmative vote of the holders of at least two-thirds of outstanding common
stock voting thereon to approve a merger or consolidation and certain other
fundamental actions involving or affecting control of the Company. The Company's
Bylaws require the affirmative vote of at least two-thirds of the members of the
Board of Directors of the Company in order to declare dividends and to authorize
certain other actions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is contained under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in this report and is incorporated herein by reference.
24
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information required by this Item is contained in the "Contingencies - Legal
Contingencies" section of "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this report and is incorporated herein
by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
(a) The Company's Annual Meeting of Stockholders was held on April 25, 2002, at
the Company's headquarters at One CityPlace Drive, Suite 300, St. Louis,
Missouri, at 10:00 a.m., central time
(b) At such Annual Meeting, the holders of the Company's common stock elected
the following nominees for director:
Nominee Total Votes For Total Votes Withheld
James R. Boyd 41,998,937 1,595,502
Douglas H. Hunt 42,027,937 1,566,502
A. Michael Perry 42,007,048 1,587,391
At such Annual Meeting, the Company's stockholders, by a vote of 21,886,589 for,
15,157,678 against and 99,253 abstained, also approved an amendment to increase
the number of shares under the Arch Coal, Inc. 1997 Stock Incentive Plan.
At such Annual Meeting, the Company's stockholders, by a vote of 38,587,248 for,
4,903,997 against and 103,191 abstained, also approved the Arch Coal, Inc. 1997
Stock Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended.
At such Annual Meeting, the Company's stockholders, by a vote of 42,527,493 for,
1,029,013 against and 37,931 abstained, also ratified the appointment of Ernst &
Young LLP as the Company's independent auditors for 2002.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
3.1 Amended and Restated Certificate of Incorporation of Arch Coal, Inc.
(incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the Quarter Ended March 31, 2000)
3.2 Amended and Restated Bylaws of Arch Coal, Inc. (incorporated herein by
reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the Year Ended December 31, 2000)
4.1 Stockholders Agreement, dated as of April 4, 1997, among Carboex
International, Ltd., Ashland Inc. and Arch Coal, Inc. (formerly Arch
Mineral Corporation) (incorporated herein by reference to Exhibit 4.1 of
the Company's Registration Statement on Form S-4 (Registration No.
333-28149) filed on May 30, 1997)
4.2 Assignment of Rights, Obligations and Liabilities under the Stockholders
Agreement between Carboex International, Limited and Carboex, S.A.
effective as of October 15, 1998 (incorporated herein by reference to
Exhibit 4.2 of the Company's Annual Report on Form 10-K for the Year Ended
December 31, 1998)
4.3 Registration Rights Agreement, dated as of April 4, 1997, among Arch Coal,
Inc. (formerly Arch Mineral Corporation), Ashland Inc., Carboex
International, Ltd. and the entities listed on Schedules I and II thereto
(incorporated herein by reference to Exhibit 4.2 of the Company's
Registration Statement on Form S-4 (Registration No. 333-28149) filed on
May 30, 1997, except for amended Schedule I thereto, incorporated herein by
reference to Exhibit 4.2 of the Company's Quarterly Report on Form 10-Q for
the Quarter Ended March 31, 1998)
25
4.4 Assignment of Registration Rights between Carboex International, Limited
and Carboex, S.A. effective as of October 15, 1998 (incorporated herein by
reference to Exhibit 4.4 of the Company's Annual Report on Form 10-K for
the Year Ended December 31, 1998)
4.5 Agreement Relating to Nonvoting Observer, executed as of April 4, 1997,
among Carboex International, Ltd., Ashland Inc., Ashland Coal, Inc. and
Arch Coal, Inc. (formerly Arch Mineral Corporation) (incorporated herein by
reference to Exhibit 4.3 of the Company's Registration Statement on Form
S-4 (Registration No. 333-28149) filed on May 30, 1997)
4.6 Assignment of Right to Maintain a Non-Voting Observer at Meetings of the
Board of Directors of Arch Coal, Inc. between Carboex International,
Limited and Carboex, S.A. effective as of October 15, 1998 (incorporated
herein by referenced to Exhibit 4.6 of the Company's Annual Report on Form
10-K for the Year Ended December 31, 1998)
4.7 Amended and Restated Credit Agreement, dated as of April 18, 2002, by and
among the Company, the Lenders party thereto, PNC Bank, National
Association, as administrative agent, JPMorgan Chase Bank, as syndication
agent, and Citibank, N.A., Credit Lyonnais New York Branch, and U.S. Bank
National Association, as documentation agents (attached to this Quarterly
Report on Form 10-Q as Exhibit 4.7)
4.8 Amended and Restated Credit Agreement, dated as of April 18, 2002, by and
among the Arch Western Resources, LLC, the Lenders party thereto, PNC Bank,
National Association, as administrative agent, JPMorgan Chase Bank, as
syndication agent, and Citibank, N.A., Credit Lyonnais New York Branch, and
U.S. Bank National Association, as documentation agents (attached to this
Quarterly Report on Form 10-Q as Exhibit 4.8)
4.9 Form of Rights Agreement, dated March 3, 2000, between Arch Coal, Inc. and
First Chicago Trust Company of New York, as Rights Agent (incorporated
herein by reference to Exhibit 1 to a Current Report on Form 8-A filed on
March 9, 2000)
10.1 Arch Coal, Inc. 1997 Stock Incentive Plan (as Amended and Restated on
February 28, 2002) (attached to this Quarterly Report on Form 10-Q as
Exhibit 10.1)
(b) Reports on Form 8-K: A report on Form 8-K dated March 18, 2002 announcing
that the Company had reduced production and that its earnings would
subsequently fall short of expectations was filed by the Company in the
quarter ended March 31, 2002.
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARCH COAL, INC.
(Registrant)
Date: May 13, 2002 /s/ John W. Lorson
John W. Lorson
Controller
(Chief Accounting Officer)
27
Arch Coal, Inc.
Form 10-Q for Quarter Ended March 31, 2002
INDEX TO EXHIBITS
1. Arch Coal, Inc. Amended and Restated Credit Agreement dated as of April 18,
2002
2. Arch Western Resources, LLC Amended and Restated Credit Agreement dated as
of April 18, 2002
3. Arch Coal, Inc. Amended and Restated 1997 Stock Incentive Plan
28
Exhibit 4.7
$350,000,000 REVOLVING CREDIT FACILITY
AMENDED AND RESTATED CREDIT AGREEMENT
by and among
ARCH COAL, INC.
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as
Administrative Agent
and
JPMORGAN CHASE BANK,
as
Syndication Agent
and
CITIBANK, N.A.,
CREDIT LYONNAIS NEW YORK BRANCH,
and
U.S. BANK NATIONAL ASSOCIATION,
as Documentation Agents
Dated as of April 18, 2002
================================================================================
J.P. MORGAN SECURITIES, INC.
and
PNC CAPITAL MARKETS, INC.,
as Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Section Page
- vi -
1. CERTAIN DEFINITIONS......................................................................................1
1.1 Certain Definitions.............................................................................1
1.2 Construction...................................................................................26
1.2.1 Number; Inclusion...................................................................26
1.2.2 Determination.......................................................................26
1.2.3 Administrative Agent's Discretion and Consent.......................................26
1.2.4 Documents Taken as a Whole..........................................................26
1.2.5 Headings............................................................................27
1.2.6 Implied References to This Agreement................................................27
1.2.7 Persons.............................................................................27
1.2.8 Modifications to Documents..........................................................27
1.2.9 From, To and Through................................................................27
1.2.10 Shall; Will.........................................................................27
1.3 Accounting Principles..........................................................................27
2. REVOLVING CREDIT AND SWING LOAN FACILITIES..............................................................28
2.1 Revolving Credit Commitments...................................................................28
2.1.1 Revolving Credit Loans..............................................................28
2.1.2 Swing Loan Commitment...............................................................28
2.2 Nature of Banks' Obligations With Respect to Revolving Credit Loans............................28
2.3 Commitment Fee.................................................................................29
2.4 Loan Requests..................................................................................29
2.4.1 Committed Loan Requests.............................................................29
2.4.2 Swing Loan Requests.................................................................30
2.5 Making Revolving Credit Loans and Swing Loans..................................................30
2.5.1 Making Swing Loans..................................................................30
2.6 Swing Loan Note................................................................................30
2.7 Use of Proceeds................................................................................31
2.8 Borrowings to Repay Swing Loans................................................................31
2.9 Letter of Credit Subfacility...................................................................31
2.9.1 Issuance of Letters of Credit.......................................................31
2.9.2 Letter of Credit Fees...............................................................32
2.9.3 Participations in Letters of Credit; Disbursements, Reimbursement...................32
2.9.4 Documentation.......................................................................33
2.9.5 Determinations to Honor Drawing Requests............................................34
2.9.6 Nature of Participation and Reimbursement Obligations...............................34
2.9.7 Indemnity...........................................................................35
2.9.8 Liability for Acts and Omissions....................................................36
3. INTEREST RATES..........................................................................................37
3.1 Interest Rate Options..........................................................................37
3.1.1 Interest Rate Options...............................................................38
3.1.2 Rate Quotations.....................................................................38
3.1.3 Change in Fees or Interest Rates....................................................38
3.2 Interest Periods...............................................................................39
3.2.1 Ending Date and Business Day........................................................39
3.2.2 Amount of Borrowing Tranche.........................................................39
3.2.3 Termination Before Applicable Expiration Date......................................39
3.2.4 Renewals............................................................................39
3.3 Interest After Default.........................................................................39
3.3.1 Letter of Credit Fees, Interest Rate................................................39
3.3.2 Other Obligations...................................................................40
3.3.3 Acknowledgment......................................................................40
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.................40
3.4.1 Unascertainable.....................................................................40
3.4.2 Illegality; Increased Costs; Deposits Not Available.................................40
3.4.3 Administrative Agent's and Lender's Rights..........................................41
3.5 Selection of Interest Rate Options.............................................................41
4. PAYMENTS ...............................................................................................42
4.1 Payments.......................................................................................42
4.2 Pro Rata Treatment of Banks....................................................................42
4.3 Interest Payment Dates.........................................................................42
4.4 Prepayments....................................................................................43
4.4.1 Voluntary Prepayments...............................................................43
4.4.2 Replacement of a Lender.............................................................44
4.4.3 Change of Lending Office............................................................44
4.4.4 Voluntary Reduction of Commitments..................................................45
4.4.5 Mandatory Prepayment Upon Sale of Assets; Mandatory Reduction of Revolving
Credit Commitments..................................................................45
4.5 Additional Compensation in Certain Circumstances...............................................46
4.5.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.........................................................46
4.5.2 Indemnity...........................................................................46
4.6 Notes..........................................................................................47
4.7 Settlement Date Procedures.....................................................................47
4.8 Taxes..........................................................................................48
4.8.1 No Deductions.......................................................................48
4.8.2 Stamp Taxes.........................................................................48
4.8.3 Indemnification for Taxes Paid by Lenders...........................................48
4.8.4 Certificate.........................................................................48
4.8.5 Survival............................................................................49
4.8.6 Refund and Contest..................................................................49
5. REPRESENTATIONS AND WARRANTIES..........................................................................49
5.1 Representations and Warranties.................................................................49
5.1.1 Organization and Qualification......................................................49
5.1.2 Shares of Borrower; Subsidiaries; and Subsidiary Shares.............................49
5.1.3 Power and Authority.................................................................50
5.1.4 Validity and Binding Effect.........................................................50
5.1.5 No Conflict.........................................................................51
5.1.6 Litigation..........................................................................51
5.1.7 Financial Statements................................................................51
5.1.8 Use of Proceeds; Margin Stock.......................................................52
5.1.9 Full Disclosure.....................................................................52
5.1.10 Taxes...............................................................................53
5.1.11 Consents and Approvals..............................................................53
5.1.12 No Event of Default; Compliance With Instruments and Material Contracts.............53
5.1.13 Insurance...........................................................................54
5.1.14 Compliance With Laws................................................................54
5.1.15 Investment Companies; Regulated Entities............................................54
5.1.16 Plans and Benefit Arrangements......................................................54
5.1.17 Employment Matters..................................................................55
5.1.18 Environmental Matters...............................................................55
5.1.19 Senior Debt Status..................................................................56
5.1.20 Title to Properties.................................................................56
5.1.21 Coastal Agreement...................................................................56
5.1.22 Patents, Trademarks, Copyrights, Licenses, Etc......................................56
5.1.23 Security Interests..................................................................56
5.1.24 Status of Pledged Collateral........................................................57
5.1.25 Solvency............................................................................57
5.2 Continuation of Representations................................................................57
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT.................................................57
6.1 First Loans and Letters of Credit..............................................................58
6.1.1 Officer's Certificate...............................................................58
6.1.2 Secretary's Certificate.............................................................58
6.1.3 Delivery of Loan Documents; Filing Receipts.........................................58
6.1.4 Opinion of Counsel..................................................................59
6.1.5 Legal Details.......................................................................59
6.1.6 Payment of Fees.....................................................................59
6.1.7 Consents............................................................................59
6.1.8 Officer's Certificate Regarding No Material Adverse Change and Solvency.............60
6.1.9 No Violation of Laws................................................................60
6.1.10 No Actions or Proceedings...........................................................60
6.1.11 Insurance...........................................................................60
6.1.12 Refinancing.........................................................................60
6.1.13 Report of Independent Engineer......................................................61
6.1.14 Satisfactory Environmental Review...................................................61
6.2 Each Additional Loan or Letter of Credit.......................................................61
7. COVENANTS...............................................................................................61
7.1 Affirmative Covenants..........................................................................61
7.1.1 Preservation of Existence, Etc......................................................62
7.1.2 Payment of Liabilities, Including Taxes, Etc........................................62
7.1.3 Maintenance of Insurance............................................................62
7.1.4 Maintenance of Properties and Leases................................................63
7.1.5 Visitation Rights...................................................................63
7.1.6 Keeping of Records and Books of Account.............................................63
7.1.7 Plans and Benefit Arrangements......................................................63
7.1.8 Compliance With Laws................................................................64
7.1.9 Use of Proceeds.....................................................................64
7.1.10 Operation of Mines..................................................................64
7.1.11 Maintenance of Material Contracts...................................................64
7.1.12 Further Assurances..................................................................64
7.1.13 Subordination of Intercompany Loans.................................................65
7.2 Negative Covenants.............................................................................65
7.2.1 Indebtedness........................................................................65
7.2.2 Liens...............................................................................66
7.2.3 Liquidations, Mergers, Consolidations, Acquisitions.................................66
7.2.4 Dispositions of Assets or Subsidiaries..............................................67
7.2.5 Affiliate Transactions..............................................................69
7.2.6 Subsidiaries, Partnerships and Joint Ventures.......................................69
7.2.7 Continuation of or Change in Business...............................................70
7.2.8 Plans and Benefit Arrangements......................................................70
7.2.9 Off-Balance Sheet Financing and Capital Leases......................................70
7.2.10 Maximum Leverage Ratio..............................................................70
7.2.11 Minimum Fixed Charge Coverage Ratio.................................................71
7.2.12 Minimum Net Worth...................................................................71
7.2.13 No Restriction on Dividends.........................................................71
7.2.14 Loans and Investments...............................................................71
7.2.15 No Amendments to Acquisition Documents..............................................72
7.2.16 Transactions With Respect to AWAC...................................................72
7.3 Reporting Requirements.........................................................................73
7.3.1 Quarterly Financial Statements......................................................73
7.3.2 Annual Financial Statements.........................................................73
7.3.3 Certificate of the Borrower.........................................................74
7.3.4 Notice of Default...................................................................74
7.3.5 Notice of Litigation................................................................74
7.3.6 Notice of Change in Debt Rating.....................................................74
7.3.7 Notices Regarding Plans and Benefit Arrangements....................................74
7.3.8 Other Information...................................................................76
8. DEFAULT 76
8.1 Events of Default..............................................................................76
8.1.1 Payments Under Loan Documents.......................................................76
8.1.2 Breach of Warranty..................................................................76
8.1.3 Breach of Negative Covenants or Visitation Rights...................................77
8.1.4 Breach of Other Covenants...........................................................77
8.1.5 Defaults in Other Agreements or Indebtedness........................................77
8.1.6 Judgments or Orders.................................................................78
8.1.7 Loan Document Unenforceable.........................................................78
8.1.8 Proceedings Against Assets..........................................................78
8.1.9 Notice of Lien or Assessment........................................................78
8.1.10 Insolvency..........................................................................78
8.1.11 Events Relating to Plans and Benefit Arrangements...................................79
8.1.12 Cessation of Business...............................................................79
8.1.13 Change of Control...................................................................79
8.1.14 Involuntary Proceedings.............................................................80
8.1.15 Voluntary Proceedings...............................................................80
8.2 Consequences of Event of Default...............................................................80
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings...80
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings................................81
8.2.3 Set-off.............................................................................81
8.2.4 Suits, Actions, Proceedings.........................................................81
8.2.5 Application of Proceeds.............................................................82
8.2.6 Other Rights and Remedies...........................................................82
9. THE AGENTS..............................................................................................82
9.1 Appointment....................................................................................82
9.2 Delegation of Duties...........................................................................83
9.3 Nature of Duties; Independent Credit Investigation.............................................83
9.4 Actions in Discretion of Agents; Instructions From the Banks...................................84
9.5 Reimbursement and Indemnification of Agents by the Borrower....................................84
9.6 Exculpatory Provisions; Limitation of Liability................................................85
9.7 Reimbursement and Indemnification of Agents by the Lenders.....................................85
9.8 Reliance by Agents.............................................................................86
9.9 Notice of Default..............................................................................86
9.10 Notices........................................................................................86
9.11 Banks in Their Individual Capacities...........................................................87
9.12 Holders of Notes...............................................................................87
9.13 Equalization of Lenders........................................................................87
9.14 Successor Agents...............................................................................88
9.15 Administrative Agent's Fees....................................................................88
9.16 Availability of Funds..........................................................................89
9.17 Calculations...................................................................................89
9.18 Certain Releases of Guarantors and Collateral..................................................89
9.19 Beneficiaries..................................................................................89
10. MISCELLANEOUS...........................................................................................90
10.1 Modifications, Amendments or Waivers...........................................................90
10.1.1 Increase of Revolving Credit Commitments; Extension of Expiration Date; Modification
of Terms of Payment.................................................................90
10.1.2 Release of Guarantor................................................................90
10.1.3 Miscellaneous.......................................................................90
10.2 No Implied Waivers; Cumulative Remedies; Writing Required......................................91
10.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes............................91
10.4 Holidays.......................................................................................92
10.5 Funding by Branch, Subsidiary or Affiliate.....................................................92
10.5.1 Notional Funding....................................................................92
10.5.2 Actual Funding......................................................................93
10.6 Notices........................................................................................93
10.7 Severability...................................................................................93
10.8 Governing Law..................................................................................94
10.9 Prior Understanding............................................................................94
10.10 Duration; Survival.............................................................................94
10.11 Successors and Assigns.........................................................................94
10.11.1 Binding Effect; Assignments by Borrower.............................................94
10.11.2 Assignments and Participations by Banks.............................................95
10.11.3 Non-U.S. Assignees and Participants.................................................97
10.11.4 Assignments by Lenders to Federal Reserve Banks.....................................97
10.12 Confidentiality................................................................................97
10.12.1 General.............................................................................97
10.12.2 Sharing Information With Affiliates of the Lenders..................................98
10.13 Counterparts...................................................................................98
10.14 Agent's or Lender's Consent....................................................................98
10.15 Exceptions.....................................................................................98
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.........................................................99
10.17 Tax Withholding................................................................................99
10.18 Joinder of Guarantors.........................................................................100
10.19 Amendment and Restatement; No Novation........................................................100
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(M) - MLP PROPERTIES
SCHEDULE 2.9.1 - EXISTING LETTERS OF CREDIT
SCHEDULE 5.1.2 - CERTAIN INFORMATION REGARDING CAPITALIZATION OF BORROWER AND ITS SUBSIDIARIES
SCHEDULE 5.1.6 - LITIGATION
SCHEDULE 5.1.7 - CERTAIN DISCLOSURES REGARDING FINANCIAL STATEMENTS
SCHEDULE 5.1.11 - CONSENTS AND APPROVALS
SCHEDULE 5.1.18 - CERTAIN DISCLOSURES REGARDING ENVIRONMENTAL MATTERS
SCHEDULE 5.1.22 - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 5.1.24 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C) - AMENDED AND RESTATED COLLATERAL SHARING AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(2) - AMENDED AND RESTATED CONTINUING GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT 1.1(P) - AMENDED AND RESTATED PLEDGE AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)(1) - AMENDED AND RESTATED SUBORDINATION AGREEMENT (INTERCOMPANY)
EXHIBIT 1.1(S)(2) - SWING LOAN NOTE
EXHIBIT 2.4.1 - COMMITTED LOAN REQUEST
EXHIBIT 2.4.2 - SWING LOAN REQUEST
EXHIBIT 4.4.4 - COMMITMENT REDUCTION NOTICE
EXHIBIT 6.1.4 - OPINION OF COUNSEL
EXHIBIT 6.1.12 - CLOSING MATTERS AGREEMENT
EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 18, 2002,
and is made by and among ARCH COAL, INC., a Delaware corporation (the
"Borrower"), the LENDERS (as hereinafter defined), JPMORGAN CHASE BANK, in its
capacity as syndication agent,CITIBANK, N.A., CREDIT LYONNAIS NEW YORK BRANCH,
U.S. BANK NATIONAL ASSOCIATION, each in its capacity as a documentation agent,
and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for
the Banks under this Agreement.
WITNESSETH:
WHEREAS, the Borrower, JPMorgan Chase Bank (successor in such capacity to
Morgan Guaranty Trust Company of New York), as syndication agent, Wachovia
Corporation (successor in such capacity to First Union National Bank), as
documentation agent, PNC Bank, National Association, as administrative agent,
and certain lenders are parties to that Credit Agreement dated as of June 1,
1998, as amended as of January 21, 2000 (the "Original Credit Agreement"),
providing for a $600,000,000 revolving credit facility and a $300,000,000 term
loan facility to the Borrower; and
WHEREAS, the Borrower has requested certain amendments to the Original
Credit Agreement and, subject to the terms and conditions hereof, the parties
hereto agree that, effective as of the date hereof, the Original Credit
Agreement shall hereby be amended and restated for the convenience of such
parties in its entirety as set forth below, to provide that the revolving credit
facility under the Original Credit Agreement shall be continued and refinanced
hereby and that the term loan facility under the Original Credit Agreement shall
be repaid in full; and
WHEREAS, the pledge of equity interests of certain Subsidiaries of the
Borrower and the guaranties for the revolving credit facility under the Original
Credit Agreement shall continue to secure the revolving credit loans and all
other obligations hereunder;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
ACC shall mean the U.S. operations of ARCO Coal Company, a division of
ARCO.
Acquisition shall mean the transactions contemplated by the Purchase
Agreement and the Contribution Agreement, as such documents may be amended,
modified or supplemented after the Closing Date as permitted by Section
7.2.15.
Acquisition Documents shall mean collectively the Purchase Agreement,
the Contribution Agreement, the Tax Sharing Agreement, and the LLC
Agreements, as limited by their schedules and exhibits, as the same may be
amended, modified or supplemented after the Closing Date as permitted by
Section 7.2.15.
Administrative Agent shall mean PNC Bank, National Association, in its
capacity as administrative agent for the Lenders under this Agreement and
its successors in such capacity.
Administrative Agent's Fee shall have the meaning assigned to that
term in Section 9.15.
Administrative Agent's Letter shall have the meaning assigned to that
term in Section 9.15.
Affiliate as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common
control with such Person, (ii) which beneficially owns or holds 5% or more
of any class of the voting or other equity interests of such Person, or
(iii) 5% or more of any class of voting interests or other equity interests
of which is beneficially owned or held, directly or indirectly, by 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. Notwithstanding the foregoing, a Subsidiary of the Borrower
(other than an Excluded Subsidiary) shall not be deemed an Affiliate of the
Borrower.
Agents shall mean collectively the Administrative Agent and the
Syndication Agent, and Agent shall mean any one of the Agents,
individually.
Agreement shall mean the Original Credit Agreement (including all
schedules and exhibits) as hereby amended and restated by this Amended and
Restated Credit Agreement (including all schedules and exhibits), as the
same may hereafter be supplemented, amended, restated, refinanced,
replaced, or modified from time to time in accordance herewith.
Applicable Commitment Fee Rate shall mean the percentage rate per
annum at the indicated level of Debt Rating in effect from time to time as
set forth in the pricing grid on Schedule 1.1(A) below the heading
"Commitment Fee." The Applicable Commitment Fee Rate shall be computed in
accordance with the parameters set forth on Schedule 1.1(A). It is
expressly agreed that on the Restatement Effective Date, the Applicable
Commitment Fee Rate shall be such rate as computed in accordance with the
parameters set forth on Schedule 1.1(A) but no less than the rate set forth
in the pricing grid in Level III thereof. For periods after the Restatement
Effective Date, the Applicable Commitment Fee Rate shall be the amount
determined under Schedule 1.1(A) based upon the applicable Debt Rating in
effect from time to time.
Applicable Letter of Credit Fee Rate shall mean the rate per annum at
the indicated level of Debt Rating in effect from time to time as set forth
in the pricing grid on Schedule 1.1(A) below the heading "Letter of Credit
Fee." The Applicable Letter of Credit Fee Rate shall be computed in
accordance with the parameters set forth on Schedule 1.1(A). It is
expressly agreed that on the Restatement Effective Date, the Applicable
Letter of Credit Fee Rate shall be such rate as computed in accordance with
the parameters set forth on Schedule 1.1(A) but no less than the rate set
forth in the pricing grid in Level III thereof. For periods after the
Restatement Effective Date, the Applicable Letter of Credit Fee Rate shall
be the amount determined under Schedule 1.1(A) based upon the applicable
Debt Rating in effect from time to time.
Applicable Margin shall mean, as applicable:
(A)......the percentage spread to be added to Euro-Rate under the
Euro-Rate Option at the indicated level of Debt Rating in effect from
time to time as set forth in the pricing grid on Schedule 1.1(A) below
the heading "Revolving Credit Euro-Rate Spread," or
(B)......the percentage spread to be added to the Base Rate under
the Base Rate Option at the indicated level of Debt Rating in effect
from time to time as set forth in the pricing grid on Schedule 1.1(A)
below the heading "Revolving Credit Base Rate Spread."
The Applicable Margin shall be computed in accordance with the
parameters set forth on Schedule 1.1(A). It is expressly agreed that
on the Restatement Effective Date, the Applicable Margin shall be such
amount as determined in accordance with Schedule 1.1(A) but no less
than the amount set forth in the pricing grid in Level III thereof.
For periods after the Restatement Effective Date, the Applicable
Margin shall be the amount determined under clause (A) or clause (B)
above.
Appropriate Percentage shall mean, with respect to each Special
Subsidiary, the percentage of the equity of such Person owned by the
Borrower or any Subsidiary of the Borrower.
Arch Coal Group shall mean, as of any date of determination, the
Borrower and its Subsidiaries (other than the Excluded Subsidiaries
and the Securitization Subsidiary).
Arch of Wyoming LLC shall mean Arch of Wyoming, LLC, a limited
liability company organized and existing under the laws of the State
of Delaware.
Arch of Wyoming LLC Agreement shall mean that certain Limited
Liability Agreement, dated as of April 15, 1998, of Arch of Wyoming
LLC.
Arch Western shall mean Arch Western Resources, LLC, a limited
liability company organized and existing under the laws of the State
of Delaware.
Arch Western Credit Facility shall mean that certain Credit
Agreement by and among Arch Western, PNC Bank, as administrative
agent, and JPMorgan Chase Bank (successor in such capacity to Morgan
Guaranty Trust Company of New York), as syndication agent, providing
for a $675,000,000 term loan facility to Arch Western, dated as of
June 1, 1998, as amended and restated on the Restatement Effective
Date, as the same may hereafter be supplemented, amended, restated,
refinanced, replaced, or modified from time to time.
Arch Western Group shall mean, as of any date of determination,
AWAC, Arch Western and the Subsidiaries of Arch Western.
Arch Western LLC Agreement shall mean that certain Limited
Liability Company Agreement by and between AWAC and Delta Housing,
Inc., a Delaware corporation, dated as of June 1, 1998, with AWAC and
Delta Housing, Inc. as members and creating Arch Western Resources,
LLC, a Delaware limited liability company.
ARCO shall mean Atlantic Richfield Company, a corporation
organized and existing under the laws of the State of Delaware.
Arrangers shall mean PNC and Morgan.
Assignment and Assumption Agreement shall mean an Assignment and
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank
and the Administrative Agent, as agent and on behalf of the remaining
Banks, substantially in the form of Exhibit 1.1(A).
AU Sub LLC Agreement shall mean that certain Limited Liability
Company Agreement, dated as of April 8, 1998, as amended, of AU Sub
LLC, a limited liability company organized and existing under the laws
of the State of Delaware.
Authorized Officer shall mean those individuals, designated by
written notice to the Administrative Agent from the Borrower,
authorized to execute notices, reports and other documents on behalf
of the Loan Parties required hereunder. The Borrower may amend such
list of individuals from time to time by giving written notice of such
amendment to the Administrative Agent.
Average Pledged Account Balance shall mean, as of the date of
determination, the average daily balance on deposit in or credited to
the Escrow Account during that period commencing on the first day of
the Period of Restriction in effect on the date of determination and
continuing through the date of determination. For purposes of this
definition, "Escrow Account" shall have the meaning ascribed to such
term by that Pledge Agreement (Investment Property), dated as of the
Restatement Effective Date, executed by Arch Western and each of its
Subsidiaries, as the same may be supplemented, amended, restated,
replaced, or modified from time to time, pursuant to the Arch Western
Credit Facility.
AWAC shall mean Arch Western Acquisition Corporation, a
corporation organized and existing under the laws of the State of
Delaware.
Banks shall mean the financial institutions named on Schedule
1.1(B) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Bank.
Base Net Worth shall mean the sum of $462,811,000, plus 50% of
consolidated net income of the Borrower and its Subsidiaries (before
the after-tax effect of changes in accounting principles) for each
fiscal quarter in which net income was earned plus 100% of the net
increase in Consolidated Tangible Net Worth resulting from the
issuance of any equity securities by the Borrower, for the period from
April 1, 2002 through the date of determination. In no event shall
Base Net Worth be reduced on account of a consolidated net loss for
any fiscal period.
Base Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the Administrative Agent at its
Principal Office as its then prime rate, which rate may not be the
lowest rate then being charged commercial borrowers by the
Administrative Agent, or (ii) the Federal Funds Effective Rate plus
1/2% per annum.
Base Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms
and conditions set forth in Section 3.1.1(a)(i).
Benefit Arrangement shall mean at any time 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
otherwise contributed to by any member of the ERISA Group.
Borrower shall mean Arch Coal, Inc., a corporation organized and
existing under the laws of the State of Delaware.
Borrower Shares shall have the meaning set forth in Section
5.1.2.
Borrowing Date shall mean, with respect to any Loan, the date for
the making thereof or the renewal or conversion thereof at or to the
same or a different Interest Rate Option, which shall be a Business
Day.
Borrowing Tranche shall mean specified portions of Loans
outstanding as follows: (i) any Loans to which a Euro-Rate Option
applies which become subject to the same Interest Rate Option under
the same Committed Loan Request by the Borrower and which have the
same Interest Period shall constitute one Borrowing Tranche, and (ii)
all Loans to which a Base Rate applies shall constitute one Borrowing
Tranche.
Business shall mean the business of owning and operating the U.S.
domestic coal properties of ACC, substantially as operated by ACC at
the time of the closing of the Acquisition.
Business Day shall mean any day other than a Saturday or Sunday
or a legal holiday on which commercial banks are authorized or
required to be closed for business in Pittsburgh, Pennsylvania and New
York, New York; and if the applicable Business Day relates to any Loan
to which the Euro-Rate Option applies, such day must also be a day on
which dealings are carried on in the London interbank market.
Canyon Fuel shall mean Canyon Fuel Company, LLC, a limited
liability company organized and existing under the laws of the State
of Delaware
Canyon Fuel LLC Agreement shall mean that certain Limited
Liability Company agreement by and between Arch Western (or a
Subsidiary of Arch Western) and Itochu Coal International, Inc., a
Delaware corporation, dated as of January 1, 1997, as amended, with
Arch Western and Itochu Coal International, Inc. as members of Canyon
Fuel Company, LLC, a Delaware limited liability company.
Citibank shall mean Citibank, N.A., its successors and assigns.
Closing Date shall mean the Business Day on which the first Loan
shall be made, which shall be June 1, 1998.
Coastal Agreement shall mean that certain Purchase and Sale
Agreement among The Coastal Corporation, a Delaware corporation,
Coastal Coal, Inc., a Delaware corporation, ARCO and Itochu
Corporation, a Japanese corporation, dated as of October 23, 1996.
Collateral shall mean the property of the applicable Loan Parties
in which security interests are to be or have been granted under the
Pledge Agreements.
Collateral Agent shall mean the "Collateral Agent" as such term
is defined in the Collateral Sharing Agreement.
Collateral Documents shall mean collectively, the Indemnity
Agreements, the Pledge Agreements, the Collateral Sharing Agreement
and each other agreement providing for a security interest in and/or
lien on the Collateral.
Collateral Sharing Agreement shall mean the Amended and Restated
Collateral Agency and Sharing Agreement, among Borrower, the
Guarantors, the Administrative Agent on behalf of the Lenders, the
Owner Trustee (as defined therein), the Loan Trustee (as defined
therein), the Swap Parties (as defined therein) party thereto, and PNC
Bank, as Collateral Agent (as defined therein), substantially in the
form of Exhibit 1.1(C) hereto, as the same may be supplemented,
amended, restated, replaced, or modified from time to time.
Commercial Letter of Credit shall mean any Letter of Credit which
is a commercial letter of credit issued in respect of the purchase of
goods or services by one or more of the Loan Parties in the ordinary
course of their business.
Commitment shall mean as to any Bank the aggregate of its
Revolving Credit Commitment and, in the case of PNC Bank, its Swing
Loan Commitment, and Commitments shall mean the aggregate of the
Revolving Credit Commitments and Swing Loan Commitment of all of the
Banks.
Commitment Fee shall mean the fee referred to in Section 2.3.
Commitment Reduction Notice shall have the meaning set forth in
Section 4.4.4.
Committed Loan shall mean either a Revolving Credit Loan or a
Swing Loan.
Committed Loan Request shall mean a request for a Revolving
Credit Loan or a Swing Loan or a request to select, convert to or
renew a Base Rate Option or Euro-Rate Option with respect to an
outstanding Revolving Credit Loan in accordance with Sections 2.4, 3.1
and 3.2.
Commodity Price Protection Agreement shall mean a crude oil or
heating oil price protection agreement, for the purpose of hedging the
purchase price of diesel fuel used by the Loan Parties in the ordinary
course operations of their business, in a standard International Swap
Dealer Association Agreement, including, without limitation, providing
for the method of calculating the reimbursable amount of the
provider's credit exposure in a reasonable and customary manner.
Consolidated Tangible Net Worth shall mean as of any date of
determination total stockholders' equity less intangible assets of the
Borrower and its Subsidiaries as of such date determined and
consolidated in accordance with GAAP less the positive number, if any,
equal to the amount of the Investment by the Borrower and its
Subsidiaries in Permitted Joint Ventures in excess of $30,000,000 and
adjusted to exclude the after tax effect of any changes in accounting
principles subsequent to the Restatement Effective Date.
Contamination shall mean the presence or Release or threat of
Release of Regulated Substances in, on, under or emanating to or from
the Property, which pursuant to Environmental Laws requires
notification or reporting to an Official Body, or which pursuant to
Environmental Laws requires the investigation, cleanup, removal,
remediation, containment, abatement of or other response action or
which otherwise constitutes a violation of Environmental Laws.
Contribution Agreement shall mean that certain Contribution
Agreement among the Borrower, AWAC, ARCO, Delta Housing, Inc., a
Delaware corporation, and Arch Western.
Credit Lyonnais shall mean Credit Lyonnais New York Branch, its
successors and assigns.
Debt shall mean for any Person as of any date of determination,
the difference between the following (a) and (b): (a) the sum, without
duplication, of the following for such Person, as of such date,
determined in accordance with GAAP: (i) all indebtedness for borrowed
money (including, without limitation, all subordinated indebtedness),
(ii) all amounts raised under or liabilities in respect of any note
purchase or acceptance credit facility, (iii) all indebtedness in
respect of any other transaction (including production payments
(excluding royalties), installment purchase agreements, forward sale
or purchase agreements, capitalized leases and conditional sales
agreements) having the commercial effect of a borrowing of money
entered into by such Person to finance its operations or capital
requirements, (iv) reimbursement obligations (contingent or otherwise)
under any letter of credit (other than, with respect to the Borrower
and its Subsidiaries, contingent reimbursement obligations aggregating
at any time up to $25,000,000 and other than contingent reimbursement
obligations in respect of the letter of credit issued to support the
Port Bond), (v) fifty percent (50%) of all indebtedness and other
obligations in respect of any Permitted Receivables Financing, and
(vi) the amount of all indebtedness (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) in respect of all Guarantees by such
Person (the "Guaranteeing Person") of Debt of other Persons (each such
other Person being a "Primary Obligor" and the obligations of a
Primary Obligor which are subject to a Guarantee by a Guaranteeing
Person being "Primary Obligations") (it being understood that if the
Primary Obligations of the Primary Obligor do not constitute Debt,
then the Guarantee by the Guaranteeing Person of the Primary
Obligations of the Primary Obligor shall not constitute Debt), minus
(b) the sum of (1) the principal amount, expressly excluding any
interest income earned thereon, held on deposit in the Pledged
Collateral Account, as of the date of determination, and (2) solely
during a Period of Restriction, if any, in effect on the date of
determination, the Average Pledged Account Balance as of the date of
determination. It is expressly agreed that the amount of the
indebtedness in respect of the Guaranty by the Borrower of the Port
Bond, shall be excluded from the amount determined under clause (vi)
of the previous sentence. Further, it is expressly agreed that the
difference between actual funded indebtedness and the fair market
value of funded indebtedness recorded as required by the Statement of
the Financial Accounting Standards Board No. 141 (as in effect on the
Restatement Effective Date) will be excluded from indebtedness in the
determination of Debt.
Debt Rating shall mean the rating of the credit facility under
this Agreement by either of Standard & Poor's or Moody's.
Derivatives Obligations shall mean, for any Person, all
obligations of such Person in respect of any rate swap transaction,
basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or
any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions, including, without limitation obligations in respect of
any Interest Rate Protection Agreement.
Documentation Agent shall mean each of Citibank, Credit Lyonnais,
and U.S. Bank in its capacity as documentation agent under this
Agreement, and its successors in such capacity.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
money of the United States of America.
Drawing Date shall have the meaning assigned to that term in
Section 2.9.3.2.
EBITDDA for any period of determination shall mean with respect
to any Person income from operations before the effect of changes in
accounting principles, nonrecurring charges and extraordinary items,
net interest expense, income taxes, depreciation, depletion and
amortization, all for such period determined in accordance with GAAP.
Environmental Claim shall mean any administrative, regulatory or
judicial action, suit, claim, notice of non-compliance or violation,
notice of liability or potential liability, proceeding, consent order
or consent agreement relating in any way to any Environmental Law,
Environmental Permit, Regulated Substances, Contamination or otherwise
arising from alleged injury or threat of injury to the environment.
Environmental Complaint shall mean any written notice or
complaint by any Person or Official Body setting forth allegations
relating to or a cause of action for personal injury or property
damage, natural resource damage, contribution or indemnity for
response costs, civil or administrative penalties, criminal fines or
penalties, or declaratory or equitable relief arising under any
Environmental Laws or any order, notice of violation, citation,
subpoena, request for information or other written notice or demand of
any type issued by an Official Body pursuant to any Environmental
Laws.
Environmental Law shall mean any federal, state, local or foreign
statute, Law (including, but not limited to Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C.ss. 9601 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C.ss. 6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C.ss. 1801 et seq., the Toxic Substances
Control Act, 15 U.S.C.ss. 2601 et seq., the Federal Water Pollution
Control Act, 33 U.S.C.ss. 1251 et seq., the Federal Safe Drinking
Water Act, 42 U.S.C.ss.ss. 300f-300j, the Federal Air Pollution
Control Act, 42 U.S.C.ss. 7401 et seq., the Oil Pollution Act, 33
U.S.C.ss. 2701 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C.ss.ss. 136 to 136y, the Occupational Safety
and Health Act, 29 U.S.C.ss.ss. 651 et seq. the Mine Safety and Health
Act, 30 U.S.C.ss.ss. 801 et seq., the Surface Mining Control and
Reclamation Act 30 U.S.C.ss.ss. 1201 et seq., each as amended, or any
equivalent state or local statute, and any amendments thereto), code,
consent decree, settlement agreement, directive, judicial or agency
interpretation, policy or guidance regulating: (i) pollution or
pollution control; (ii) protection of human health from exposure to
Regulated Substances; (iii) protection of natural resources or the
environment; (iv) employee safety in the workplace and the protection
of employees from exposure to Regulated Substances in the workplace
(but excluding workers compensation and wage and hour laws); (vi) the
presence, use, management, generation, manufacture, processing,
extraction, treatment, recycling, refining, reclamation, labeling,
transport, storage, sale, collection, distribution, disposal or
Release or threat of Release of Regulated Substances; (v) the presence
of Contamination; (vi) the protection of endangered or threatened
species; and (vii) the protection of Environmentally Sensitive Areas.
Environmental Permit shall mean any permit, approval, license,
consent, bond, or other authorization required under any Environmental
Law.
Environmentally Sensitive Area shall mean (i) any wetland as
defined by applicable Environmental Laws; (ii) any area designated as
a coastal zone pursuant to applicable Laws, including Environmental
Laws; (iii) any area of historic or archeological significance or
scenic area as defined or designated by applicable Laws, including
Environmental Laws; (iv) habitats of endangered species or threatened
species as designated by applicable Laws, including Environmental
Laws; or (v) a floodplain or other flood hazard area as defined
pursuant to any applicable Laws.
ERISA shall mean the Employee Retirement Income Security Act of
1974, 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 Borrower and all members
of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other
entities which, together with the Borrower, are treated as a single
employer under Section 414 of the Internal Revenue Code.
Euro-Rate shall mean, with respect to the Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any
Interest Period, the interest rate per annum determined by the
Administrative Agent by dividing (the resulting quotient rounded
upward to the nearest 1/100 of 1% per annum) (i) the rate of interest
determined by the Administrative Agent (which determination shall be
conclusive absent manifest error) to be the average of the London
interbank offered rates of interest per annum for U.S. Dollars set
forth on Dow Jones Market Service display page 3750 or such other
display page on the Dow Jones Market Service System as may replace
such page to evidence the average of rates quoted by banks designated
by the British Bankers' Association (or appropriate successor or, if
the British Bankers' Association or its successor ceases to provide
such quotes, a comparable replacement determined by the Administrative
Agent) at 11:00 a.m. (London time) two (2) Business Days prior to the
first day of such Interest Period for an amount comparable to such
Borrowing Tranche and having a borrowing date and a maturity
comparable to such Interest Period by (ii) a number equal to 1.00
minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be
expressed by the following formula:
Dow Jones Market Service page 3750 quoted by British Bankers'
Euro-Rate = Association or appropriate successor
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate
Reserve Percentage as of such effective date. The Administrative Agent
shall give prompt notice to the Borrower and the Banks of the
Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
Euro-Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms
and conditions set forth in Section 3.1.1(a)(ii).
Euro-Rate Reserve Percentage shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as
determined by the Administrative Agent which is in effect during any
relevant period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities") of a member bank in such System.
Event of Default shall mean any of the events described in
Section 8.1 and referred to therein as an "Event of Default."
Excluded Subsidiaries shall mean, collectively, AWAC, Arch
Western and the Subsidiaries of Arch Western.
Expiration Date shall mean, with respect to the Revolving Credit
Commitments and Swing Loan Commitment, April 18, 2007.
Federal Funds Effective Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve
Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and
announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes
and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such
Federal Reserve Bank (or its successor) does not announce such rate on
any day, the "Federal Funds Effective Rate" for such day shall be the
Federal Funds Effective Rate for the last day on which such rate was
announced.
Financial Projections shall have the meaning assigned to that
term in Section 5.1.7(iii).
Fixed Charge Coverage Ratio shall mean the ratio of (a) the sum
of EBITDDA of the Borrower and its Subsidiaries, plus, without
duplication, the Appropriate Percentage of each Special Subsidiary's
EBITDDA, each on a consolidated basis in accordance with GAAP, plus
operating lease expense of the Borrower and its Subsidiaries, plus,
without duplication, the Appropriate Percentage of each Special
Subsidiary's operating lease expense, each on a consolidated basis in
accordance with GAAP, to (b) the sum of interest expense (other than
Permitted Loan Origination Expense) of the Borrower and its
Subsidiaries, plus, without duplication, the Appropriate Percentage of
interest expense of each Special Subsidiary, each on a consolidated
basis in accordance with GAAP, plus operating lease expense of the
Borrower and its Subsidiaries, plus, without duplication, the
Appropriate Percentage of operating lease expense of each Special
Subsidiary, each on a consolidated basis in accordance with GAAP, with
the amounts under the numerator and denominator of such ratio all
calculated as of the last day of each fiscal quarter for the four
fiscal quarters of the Borrower then ended. For purposes of the above
determination, during any Period of Restriction, the amount in clause
(a) above shall be increased by interest income of Arch Western and
its Subsidiaries (other than interest income on the Eligible Note
Receivable (as defined in the Arch Western Credit Facility)), all as
determined on a consolidated basis in accordance with GAAP.
GAAP shall mean Generally Accepted Accounting Principles as are
in effect from time to time, subject to the provisions of Section 1.3,
and applied on a consistent basis both as to classification of items
and amounts.
Governmental Acts shall have the meaning assigned to that term in
Section 2.9.8.
Guarantor shall mean at any time each of the Significant
Subsidiaries of the Borrower.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor
under the Guarantor Joinder and Assumption Agreement in the form of
Exhibit 1.1(G)(1).
Guaranty of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of
any other Person in any manner, whether directly or indirectly,
including any such liability arising by virtue of partnership
agreements, including any agreement to indemnify or hold harmless any
other Person, any performance bond or other suretyship arrangement and
any other form of assurance against loss, except endorsement of
negotiable or other instruments for deposit or collection in the
ordinary course of business.
Guaranty Agreement shall mean the continuing Amended and Restated
Guaranty and Suretyship Agreement in substantially the form of Exhibit
1.1(G)(2) executed and delivered by each of the Guarantors to the
Administrative Agent for the benefit of the Lenders, as the same may
be supplemented, amended, restated, replaced, or modified from time to
time, with such amendment, restatement, supplement or replacement to
be in form and substance satisfactory to the Administrative Agent.
Historical Statements shall have the meaning assigned to that
term in Section 5.1.7(i).
Hobet Dragline Lease shall mean the lease dated as of March 1,
1983, between Branch Banking and Trust Company, as successor to One
Valley Bank (formerly Kanawha Valley Bank, N.A.), as Owner Trustee,
Lessor, and Hobet Mining & Construction Co., Inc., as Lessee, as
amended through the Sixth Amendment thereto, dated as of June 1, 1998.
Inactive Subsidiaries shall mean, at any time, collectively, the
Subsidiaries of the Borrower which: (i) do not actively conduct any
business or operations, and (ii) have total assets, in the case of any
such Subsidiary, with a book value, as of any date of determination,
not in excess of $250,000.
Indebtedness shall mean, as to any Person at any time, any and
all indebtedness, obligations or liabilities (whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such Person for or in respect of:
(i) borrowed money, (ii) amounts raised under or liabilities in
respect of any note purchase or acceptance credit facility, (iii)
reimbursement obligations (contingent or otherwise) under any letter
of credit, (iv) any other transaction (including production payments
(excluding royalties), installment purchase agreements, forward sale
or purchase agreements, capitalized leases and conditional sales
agreements) having the commercial effect of a borrowing of money
entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses
incurred in the ordinary course of business which are not represented
by a promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due), or (v) any Guaranty of any
such Indebtedness. It is understood that Derivatives Obligations shall
not be deemed to be Indebtedness.
Indemnity Agreements shall mean collectively the Indemnity
Agreements, executed and delivered in connection with the amendment
dated as of January 21, 2000, to the Original Credit Agreement, by
each of the applicable Loan Parties to the Administrative Agent for
the benefit of the Lenders, as the same may be supplemented, amended,
restated, replaced, or modified from time to time, and Indemnity
Agreement shall mean any of the Indemnity Agreements.
Insolvency Proceeding shall mean, with respect to any Person, (a)
a case, action or proceeding with respect to such Person (i) before
any court or any other Official Body under any bankruptcy, insolvency,
reorganization or other similar Law now or hereafter in effect, or
(ii) for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of
any Loan Party or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for
the benefit of creditors, composition, marshaling of assets for
creditors, or other, similar arrangement in respect of such Person's
creditors generally or any substantial portion of its creditors,
undertaken under any Law.
Interest Period shall have the meaning set forth in Section 3.2.
Interest Rate Option shall mean any Euro-Rate Option, Base Rate
Option or Offered Rate Option.
Interest Rate Protection Agreement shall mean an interest rate
protection agreement in a standard International Swap Dealer
Association Agreement, including, without limitation, providing for
the method of calculating the reimbursable amount of the provider's
credit exposure in a reasonable and customary manner.
Internal Revenue Code shall mean the Internal Revenue Code of
1986, 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.
Investments shall mean collectively all of the following with
respect to any Person: (i) investments or contributions by any of the
Loan Parties or their Subsidiaries directly or indirectly in or to the
capital of or other payments to (except in connection with
transactions for the sale of goods or services for fair value in the
ordinary course of business) such Person, (ii) loans by any of the
Loan Parties or their Subsidiaries to such Person, (iii) guaranties by
any Loan Party or any Subsidiary of any Loan Party directly or
indirectly of the obligations of such Person, or (iv) other
obligations, contingent or otherwise, of any Loan Party or any
Subsidiary of any Loan Party to or for the benefit of such Person. If
the nature of an Investment is tangible property then the amount of
such Investment shall be determined by valuing such property at fair
value in accordance with the past practice of the Loan Parties and
such fair values shall be satisfactory to the Administrative Agent, in
its sole discretion.
Issuing Banks shall mean, with respect to a Letter of Credit,
including any replacements therefor or extensions thereof, PNC Bank or
any other Bank which shall have consented to its designation by the
Borrower as an "Issuing Bank" by providing prior written notice of
such designation and consent to the Administrative Agent.
JPMorgan Chase shall mean JPMorgan Chase Bank, its successors and
assigns.
Labor Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among
any Loan Party or Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree, judgment, lien or award of or
settlement agreement with any Official Body.
Lease Documents shall have the meaning assigned to that term in
the Collateral Sharing Agreement.
Lender shall mean each of the Banks.
Letter of Credit shall have the meaning assigned to that term in
Section 2.9.1.
Letter of Credit Fee shall have the meaning assigned to that term
in Section 2.9.2.
Letters of Credit Outstanding shall mean at any time the sum of
(i) the aggregate undrawn face amount of outstanding Letters of Credit
and (ii) the aggregate amount of all unpaid and outstanding
Reimbursement Obligations. If the face amount of any Letter of Credit
shall increase automatically over time, such increase shall be deemed
to occur for purposes of computing "Letters of Credit Outstanding"
under this Agreement on the date which is sixty (60) days before the
actual effective date of such automatic increase.
Leverage Ratio shall mean the ratio of the sum of Debt of the
Borrower and its Subsidiaries, plus, without duplication, the
Appropriate Percentage of Debt of each Special Subsidiary, each on a
consolidated basis in accordance with GAAP (as the numerator) to
EBITDDA of the Borrower and its Subsidiaries, plus, without
duplication, the Appropriate Percentage of each Special Subsidiary's
EBITDDA, each on a consolidated basis in accordance with GAAP (as the
denominator). For purposes of calculating the Leverage Ratio, Debt
shall be determined as of the end of each fiscal quarter of the
Borrower and EBITDDA shall be determined as of the end of each fiscal
quarter of the Borrower for the four fiscal quarters then ended.
Lien shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement
of any nature whatsoever, whether voluntarily or involuntarily given,
including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the
effect of, security and any filed financing statement or other notice
of any of the foregoing (whether or not a lien or other encumbrance is
created or exists at the time of the filing).
LLC Agreements shall mean collectively the Arch Western LLC
Agreement, Canyon Fuel LLC Agreement, Mountain Coal LLC Agreement,
Arch of Wyoming LLC Agreement, AU Sub LLC Agreement, State Leases LLC
Agreement and Thunder Basin LLC Agreement.
LLC Interests shall have the meaning given to such term in
Section 5.1.2.
Loan Documents shall mean this Agreement, the Administrative
Agent's Letter, the Guaranty Agreement, the Notes, the Pledge
Agreements, the Indemnity Agreements, the Collateral Sharing
Agreement, the Subordination Agreement, and any other instruments,
certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith as the
same may be supplemented, amended, restated, replaced, or modified
from time to time in accordance herewith or therewith, and Loan
Document shall mean any of the Loan Documents.
Loan Parties shall mean the Borrower and the Guarantors.
Loans shall mean collectively and Loan shall mean separately all
Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or
Swing Loan.
Material Adverse Change shall mean any set of circumstances or
events which (a) has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability
of this Agreement or any other Loan Document, (b) is or could
reasonably be expected to be materially adverse to the business,
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, or (c) impairs materially or could
reasonably be expected to impair materially the ability of any Agent
or any of the Lenders, to the extent permitted, to enforce their legal
remedies pursuant to this Agreement or any other Loan Document.
Material Contracts shall mean all contracts, agreements or other
instruments described in Regulation S-K, Item 601(b)(10) promulgated
pursuant to the Securities Exchange Act of 1934, as amended, which the
Borrower is required to file as an exhibit to any annual, quarterly or
other report required to be filed by the Borrower under the Securities
Exchange Act of 1934, as amended.
Material Subsidiary shall mean any Subsidiary of Borrower which
at any time (i) has gross revenues equal to or in excess of five
percent (5%) of the gross revenues of the Borrower 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 the
Borrower and its Subsidiaries, in either case, as determined and
consolidated in accordance with GAAP.
MLP Transaction shall mean the sale by the members of the Arch
Coal Group of those properties identified on Schedule 1.1(M) in an
arms-length, sale transaction on reasonable and customary terms, which
transaction forms a master limited partnership or similar entity for
the purpose of acquiring such properties and potentially other coal
mining properties from members of the Arch Coal Group and potentially
other Persons not related to the Arch Coal Group and provides
partnership interests in such partnership to the Arch Coal Group.
Month, with respect to an Interest Period under the Euro-Rate
Option, shall mean the interval between the days in consecutive
calendar months numerically corresponding to the first day of such
Interest Period. If any Interest Period for any Loan subject to a
Euro-Rate Option begins on a day of a calendar month for which there
is no numerically corresponding day in the month in which such
Interest Period is to end, the final month of such Interest Period
shall be deemed to end on the last Business Day of such final month.
Moody's shall mean Moody's Investors Service, Inc., and its
successors.
Morgan shall mean J.P. Morgan Securities Inc.
Mountain Coal LLC Agreement shall mean that certain Limited
Liability Company Agreement, dated as of March 6, 1998, as amended, of
Mountain Coal Company, L.L.C., a limited liability company organized
and existing under the laws of the State of Delaware.
Multiemployer Plan shall mean 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 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 shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any 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 Cash Proceeds shall mean, with respect to any transaction, an
amount equal to the cash proceeds received by the Borrower or any of
its Subsidiaries (other than Excluded Subsidiaries) from or in respect
of such transaction (including, when received, any cash proceeds
received as income or other cash proceeds of any non-cash proceeds of
such transaction), less (x) any expenses or charges (including
commissions, fees and taxes paid or payable) reasonably incurred by
such Person in respect of such transaction, (y) any amounts considered
appropriate by the chief financial officer of the Borrower to provide
reserves in accordance with GAAP for payment of indemnities or
liabilities that may be incurred in connection with such sale or
disposition, and (z) in the case of any asset sale permitted by
Section 7.2.4(vi), the amount of any debt secured by a Lien on the
related asset and discharged as part of such asset sale. For purposes
of this definition, if taxes or other expenses payable in connection
with the sale or other disposition of any asset are not known as of
the date of such sale or other disposition, then such fees,
commissions, expenses or taxes shall be estimated in good faith by the
chief financial officer of the Borrower and such estimated amounts
shall be deducted. At such time as any reserved amount described in
clause (y) above is no longer required to be held in reserve, the
balance thereof, after payment of the related liabilities or
indemnities, shall be used to make a mandatory prepayment of and
permanent and irrevocable Commitment reduction with respect to the
Revolving Credit Loans in accordance with Section 4.4.5.
Notes shall mean the Revolving Credit Notes and Swing Loan Note.
Notices shall have the meaning assigned to that term in Section
10.6.
Obligation shall mean any obligation, Indebtedness, or liability
of any of the Loan Parties to any Agent or any of the Lenders,
howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become
due, under or in connection with this Agreement, any Notes, the
Letters of Credit, the Administrative Agent's Letter or any other Loan
Document.
Off-Balance Sheet and Capital Lease Transactions shall have the
meaning assigned to such term in Section 7.2.9.
Offered Rate Option shall mean the rate of interest quoted from
time to time by the Administrative Agent to the Borrower and accepted
by the Borrower with respect to a Swing Loan.
Official Body shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority,
bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case
whether foreign or domestic.
Original Credit Agreement shall have the meaning assigned to such
term in the preamble hereof.
Partnership Interests shall have the meaning given to such term
in Section 5.1.2.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any
successor.
Period of Restriction shall mean any period of consecutive days
beginning on a date on which, pursuant to the terms of clause (iii) of
Section 7.2.14 [Loans and Investments] of the Arch Western Credit
Facility, Arch Western is prohibited from making any loans to the
Borrower, and continuing until such date as, pursuant to the terms of
clause (iii) of Section 7.2.14 [Loans and Investments] of the Arch
Western Credit Facility, Arch Western is permitted to make loans to
the Borrower.
Permitted Acquisitions shall have the meaning assigned to such
term in Section 7.2.3.
Permitted Investments shall mean:
(i) Direct obligations of the United States of America or
any agency or instrumentality thereof or obligations backed by
the full faith and credit of the United States of America
maturing in twelve (12) months or less from the date of
acquisition;
(ii) Commercial paper maturing in 180 days or less rated in
the highest categories by Standard & Poor's or Moody's on the
date of acquisition; and (iii) Demand deposits, time deposits or
certificates of deposit maturing within one year in a commercial
bank whose obligations are rated A-1, A or the equivalent or
better by Standard & Poor's on the date of determination.
Permitted Investments in Arch Western shall have the meaning
assigned to that term in Section 7.2.14(v).
Permitted Joint Venture shall mean any Person (i) with respect to
which the ownership of equity interests thereof by the Borrower or any
Subsidiary of the Borrower is accounted for in accordance with the
"equity method" in accordance with GAAP; (ii) engaged in a line of
business permitted by Section 7.2.7 [Continuation of or Change in
Business]; and (iii) with respect to which the equity interests
thereof were acquired by the Borrower or Subsidiary of the Borrower in
an arms-length transaction; provided that any such Person shall be
treated for purposes of this Agreement as a Subsidiary and not a
Permitted Joint Venture if (A) the Borrower has management control
over the operations of such Person and (B) the Borrower owns directly
or indirectly a majority of the economic equity interest in such
Person.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business and which are not yet
due and payable;
(ii) Pledges or deposits made in the ordinary course of
business to secure payment of reclamation liabilities, worker's
compensation, or to participate in any fund in connection with
worker's compensation, unemployment insurance, old-age pensions
or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen,
carriers, or other like Liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable
and Liens of landlords securing obligations to pay lease payments
that are not yet due and payable or in default;
(iv) 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 to secure statutory obligations, or surety,
appeal, indemnity, performance or other similar bonds required in
the ordinary course of business (it being understood that any
appeal or similar bond (other than such a bond required pursuant
to applicable Law to secure in the ordinary course payment of
worker's compensation, reclamation liabilities or royalty bonds)
in an amount exceeding $50,000,000 shall not be in the ordinary
course of business);
(v) 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;
(vi) Liens granted in the Collateral, subject to the
Collateral Sharing Agreement, to any Lender providing any
Interest Rate Protection Agreement or any Commodity Price
Protection Agreement;
(vii) Liens on property leased by any Loan Party or
Subsidiary of a Loan Party under capital leases (as the nature of
such lease is determined in accordance with GAAP) permitted under
Section 7.2.9 [Off-Balance Sheet Financing and Capital Leases]
hereof securing obligations of such Loan Party or Subsidiary to
the lessor under such leases;
(viii) Liens securing Indebtedness (other than Indebtedness
secured by Liens described in clause (vii) above) of not more
than $25,000,000 at any time, including, without limitation, in
respect of Purchase Money Security Interests;
(viii) The following, (A) if the validity or amount thereof
is being contested in good faith by appropriate and lawful
proceedings diligently conducted so long as levy and execution
thereon have been stayed and continue to be stayed or (B) if a
final judgment is entered and such judgment is discharged within
thirty (30) days of entry, and they do not in the aggregate
materially impair the ability of any member of the Arch Coal
Group to perform its Obligations hereunder or under the other
Loan Documents:
(1) Claims or Liens for taxes, assessments or charges
due and payable and subject to interest or penalty, provided
that the applicable member of the Arch Coal Group maintains
such reserves or other appropriate provisions as shall be
required by GAAP and pays all such taxes, assessments or
charges forthwith upon the commencement of proceedings to
foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of
title to, real or personal property, including any
attachment of personal or real property or other legal
process prior to adjudication of a dispute on the merits;
(3) Claims or Liens of mechanics, materialmen,
warehousemen, carriers, or other statutory nonconsensual
Liens; or
(4) Liens resulting from judgments or orders described
in Section 8.1.6;
(ix) any Lien or restriction resulting from ownership, by an
entity other than an Affiliate of the Borrower, of a minority
interest in Canyon Fuel;
(x) Liens granted in the Collateral under the Collateral
Documents to the Administrative Agent for the benefit of the
Lenders;
(xi) the pledge by Coal-Mac, Inc. and Ashland Terminal, Inc.
of their respective partnership interests in Dominion Terminal
Associates in connection with the Port Bond; and
(xii) Liens, to secure obligations under a Permitted
Receivables Financing, in those accounts receivable or contracts
giving rise to accounts receivable of any member of the Arch Coal
Group or of any Securitization Subsidiary, which accounts
receivable or contracts giving rise to accounts receivable are
either to be sold by a member of the Arch Coal Group to the
Securitization Subsidiary as part of a Permitted Receivable
Financing or which are an asset of the Securitization Subsidiary.
Permitted Loan Origination Expense shall mean the aggregate
amount of all fees and expenses incurred by the Borrower, in
connection with the closing of the transactions on the Closing Date
under the Original Credit Agreement and under the Arch Western Credit
Facility then in effect, on the date of the First Amendment to the
Original Credit Agreement, and on the Restatement Effective Date under
this Agreement and under the Arch Western Credit Facility as amended
and restated on such date, which are required to be capitalized in
accordance with GAAP.
Permitted Receivables Financing shall mean a transaction or
series of transactions pursuant to which a Securitization Subsidiary
purchases accounts receivable or contracts giving rise to accounts
receivable from any one or more members of the Arch Coal Group and
finances such accounts receivable through the issuance of Indebtedness
or equity interests or through the sale of such accounts; provided
that (a) the Board of Directors of the Borrower shall have determined
in good faith that such Permitted Receivables Financing is
economically fair and reasonable to the Borrower, (b) all sales of
accounts receivables to or by such Securitization Subsidiary are made
at fair market value (as determined in good faith by the Board of
Directors of the Borrower), (c) the provisions thereof shall be market
terms (as determined in good faith by the Board of Directors of the
Borrower), (d) no portion of the Indebtedness of a Securitization
Subsidiary is guaranteed by or is recourse to the Borrower or any of
its other Subsidiaries (other than recourse for customary
representations, warranties, covenants and indemnities, none of which
shall related to the collectibility of such accounts receivable), (e)
neither the Borrower nor any of its other Subsidiaries has any
obligation to maintain or preserve such Securitization Subsidiary's
financial condition, (f) the aggregate amount of accounts receivable
and contracts giving rise to accounts receivable sold by the members
of the Arch Coal Group shall not exceed $75,000,000, and 50 % of the
principal amount of the financing thereof to the Arch Coal Group,
immediately upon the closing of such financing transaction, shall be
used to make a permanent reduction of the Revolving Credit
Commitments.
Person shall mean 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.
Plan shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan)
which is covered by Title IV of ERISA or is subject to the minimum
funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained by any member of the ERISA Group for
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.
Pledge Agreements shall mean collectively the Amended and
Restated Pledge Agreement in substantially the form of Exhibit 1.1(P)
hereto and each other similar pledge agreement in form and substance
acceptable to the Administrative Agent, each as executed and delivered
by the applicable Loan Parties to the Administrative Agent for the
benefit of the Lenders, as the same may be supplemented, amended,
restated, replaced, or modified from time to time, and Pledge
Agreement shall mean any of the Pledge Agreements.
Pledged Collateral Account shall mean that account pledged as
collateral security pursuant to that Pledge Agreement (Pledged
Collateral Account), dated as of the Restatement Effective Date,
executed by Arch Western, as the same may be supplemented, amended,
restated, replaced, or modified from time to time, pursuant to the
Arch Western Credit Facility.
PNC Bank shall mean PNC Bank, National Association, its
successors and assigns.
Port Bond shall mean collectively, those certain Coal Terminal
Revenue Refunding Bonds (Dominion Terminal Associates Project), Series
1987-A, B, C and D Bonds issued by Peninsula Ports Authority of
Virginia, a political subdivision of the Commonwealth of Virginia, in
the face amount of $23,240,000, together with any renewals thereof or
replacements therefor so long as the face amount thereof is not in
excess of $23,240,000.
Potential Default shall mean any event or condition which with
notice, passage of time or a determination by the Administrative Agent
or the Required Banks, or any combination of the foregoing, would
constitute an Event of Default.
Principal Office shall mean the main banking office of the
Administrative Agent in Pittsburgh, Pennsylvania.
Prior Security Interest shall mean a valid and enforceable
perfected first-priority security interest under the Uniform
Commercial Code in the Collateral which is subject only to Liens for
taxes not yet due and payable to the extent such prospective tax
payments are given priority by statute or, in the case of the
Collateral, Purchase Money Security Interests as permitted hereunder.
Prohibited Transaction shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of
ERISA for which neither an individual nor a class exemption has been
issued by the United States Department of Labor.
Property shall mean all real property, both owned and leased, of
any Loan Party or Subsidiary of a Loan Party.
Purchase Agreement shall mean that certain Purchase and Sale
Agreement among ARCO, ARCO Uinta Coal Company, a Delaware corporation,
the Borrower and AWAC, dated as of March 22, 1998, together with all
schedules and exhibits thereto.
Purchase Money Security Interest shall mean Liens upon tangible
personal property securing loans to any Loan Party or Subsidiary of a
Loan Party or deferred payments by such Loan Party or Subsidiary for
the purchase of such tangible personal property.
Purchasing Bank shall mean a Bank which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
Regulated Substances shall mean, without limitation, any
substance, material or waste, regardless of its form or nature,
defined under Environmental Laws 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," or "regulated substance" or
any other material, substance or waste, regardless of its form or
nature, which is regulated by the Environmental Laws due to its
radioactive, ignitable, corrosive, reactive, explosive, toxic,
carcinogenic or infectious properties or nature, or which otherwise is
regulated by any applicable Environmental Law including, without
limitation, petroleum and petroleum products (including crude oil and
any fractions thereof), natural gas, synthetic gas and any mixtures
thereof, asbestos, urea formaldehyde, polychlorinated biphenyls,
mercury and radioactive substances.
Regulation U shall mean Regulation U, T or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from
time to time.
Reimbursement Obligation shall have the meaning assigned to such
term in Section 2.9.3.2.
Release shall mean anything defined as a "release" under CERCLA
or RCRA.
Replacement Sales Certificate shall have the meaning assigned to
such term in Section 7.2.4 (iii).
Reportable Event shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a
Plan or Multiemployer Plan.
Required Banks shall mean
(A) if there are no Loans or Reimbursement Obligations
outstanding, Required Banks shall mean Banks whose Commitments
(excluding the Swing Loan Commitment) aggregate more than 50% of
the Commitments (excluding the Swing Loan Commitment) of all of
the Banks, or
(B) if there are Loans or Reimbursement Obligations
outstanding, and the Revolving Credit Commitments remain in
effect, Required Banks shall mean any Bank or group of Banks if
the sum of the principal amount of the Revolving Credit
Commitments of such Banks aggregates more than 50% of the
aggregate Revolving Credit Commitments, or
(C) if there are Loans or Reimbursement Obligations
outstanding but the Revolving Credit Commitments no longer remain
in effect, Required Banks shall mean any Bank or group of Banks
if the sum of the principal amount of the Loans and Revolving
Credit Ratable Shares of Reimbursement Obligations then
outstanding of such Banks aggregate more than 50% of the sum of
the total principal amount of all Loans then outstanding plus the
aggregate principal amount of all Reimbursements Obligations then
outstanding.
Required Share shall have the meaning assigned to such term in
Section 4.7. Restatement Effective Date shall mean April 18, 2002.
Revolving Credit Commitment shall mean, as to any Bank at any
time, the amount initially set forth opposite its name on Schedule
1.1(B) in the column labeled "Amount of Commitment for Revolving
Credit Loans," and thereafter on Schedule I to the most recent
Assignment and Assumption Agreement executed by such Bank, and
Revolving Credit Commitments shall mean the aggregate Revolving Credit
Commitments of all of the Banks.
Revolving Credit Loans shall mean collectively and Revolving
Credit Loan shall mean separately all Revolving Credit Loans or any
Revolving Credit Loan made by the Banks or one of the Banks to the
Borrower pursuant to Section 2.1 or 2.9.3.
Revolving Credit Note shall mean any Revolving Credit Note of the
Borrower in the form of Exhibit 1.1(R) issued by the Borrower at the
request of a Bank pursuant to Section 4.6 evidencing the Revolving
Credit Loans to such Bank, as the same may be supplemented, amended,
restated, refinanced, replaced, or modified from time to time in whole
or in part.
Revolving Credit Ratable Share shall mean the proportion that a
Bank's Revolving Credit Commitment (excluding the Swing Loan
Commitment) bears to the Revolving Credit Commitments (excluding the
Swing Loan Commitments) of all of the Banks.
Revolving Facility Usage shall mean at any time the sum of the
Revolving Credit Loans outstanding, the Swing Loans outstanding and
the Letters of Credit Outstanding.
SEC shall mean the Securities and Exchange Commission or any
governmental agencies substituted therefor.
Securitization Subsidiary shall mean a Subsidiary of the Borrower
(all of the outstanding equity interests of which, other than de
minimis preferred stock and director's qualifying shares, if any, are
owned, directly or indirectly, by the Borrower) or another special
purpose vehicle that is established for the limited purpose of
acquiring and financing accounts receivables and contracts giving rise
to accounts receivable of any member of the Arch Coal Group and
engaging in activities ancillary thereto.
Settlement Date shall mean each Business Day on which the
Administrative Agent effects settlement pursuant to Section 4.7.
Significant Subsidiary shall mean any Subsidiary of Borrower
other than the Excluded Subsidiaries, each Securitization Subsidiary
and the Inactive Subsidiaries.
Solvent shall mean, with respect to any Person on a particular
date, that on such date (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (ii) the
present fair salable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (iii)
such Person is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (iv) such Person does
not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged.
In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
Special Subsidiary shall mean Canyon Fuel and each other Person
to be treated as a Subsidiary in accordance with the proviso to the
definition of Permitted Joint Venture.
Standard & Poor's shall mean Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc., and its successors.
Standby Letter of Credit shall mean a Letter of Credit issued to
support obligations of one or more Persons, contingent or otherwise,
which finance the working capital and business needs of such Persons
incurred in the ordinary course of business.
State Leases LLC Agreement shall mean that certain Limited
Liability Company Agreement, dated as of April 8, 1998, as amended, of
State Leases LLC, a limited liability company organized and existing
under the laws of the State of Delaware.
Subordination Agreement shall mean the Amended and Restated
Subordination Agreement (Intercompany) in substantially the form of
Exhibit 1.1(S)(1), executed and delivered by each Loan Party to the
Administrative Agent for the benefit of the Lenders, as the same may
be supplemented, amended, restated, replaced, or modified from time to
time.
Subsidiary of any Person at any time shall mean (i) any
corporation or trust of which more than 50% (by number of shares or
number of votes) of the outstanding capital stock or shares of
beneficial interest normally entitled to vote for the election of one
or more directors or trustees (regardless of any contingency which
does or may suspend or dilute the voting rights) is at such time owned
directly or indirectly by such Person or one or more of such Person's
Subsidiaries, (ii) any partnership of which such Person is a general
partner or of which more than 50% of the partnership interests is at
the time directly or indirectly owned by such Person or one or more of
such Person's Subsidiaries, (iii) any limited liability company of
which such Person is a member or of which more than 50% of the limited
liability company interests is at the time directly or indirectly
owned by such Person or one or more of such Person's Subsidiaries or
(iv) any corporation, trust, partnership, limited liability company or
other entity which is controlled or capable of being controlled by
such Person or one or more of such Person's Subsidiaries. It is
expressly agreed that each Special Subsidiary shall be deemed to be a
Subsidiary of the Borrower for the purposes of this Agreement.
Nonetheless, the Appropriate Percentage of the assets, income,
expenses, liabilities and other items with respect to each Special
Subsidiary shall be included, without duplication, for purposes of
calculating the Leverage Ratio, the Fixed Charge Coverage Ratio and
inclusion in Section 7.2.9 [Off-Balance Sheet Financing and Capital
Leases], as described more fully in the definitions of "EBITDDA,"
"Leverage Ratio," "Fixed Charge Coverage Ratio" and Section 7.2.9.
Subsidiary Shares shall have the meaning assigned to that term in
Section 5.1.2.
Swing Loan Commitment shall mean PNC Bank's commitment to make
Swing Loans to the Borrower pursuant to Section 2.4.2 hereof, in an
aggregate principal amount up to $40,000,000.
Swing Loan Note shall mean the Swing Loan Note of the Borrower in
the form of Exhibit 1.1(S)(2) evidencing the Swing Loans, as the same
may be supplemented, amended, restated, refinanced, replaced, or
modified from time to time in whole or in part.
Swing Loan Request shall mean a request for Swing Loans made in
accordance with Section 2.4.2 hereof.
Swing Loans shall mean collectively and Swing Loan shall mean
separately all Swing Loans or any Swing Loan made by PNC Bank to the
Borrower pursuant to Section 2.5.
Syndication Agent shall mean JPMorgan Chase in its capacity as
syndication agent for the Banks under this Agreement and its
successors in such capacity.
Synthetic Lease shall have the meaning assigned to such term in
Section 7.2.9.
Tax Sharing Agreement shall mean that certain Tax Sharing
Agreement dated as of June 1, 1998 by and among the Borrower, AWAC,
Arch Western and Delta Housing, Inc., a Delaware corporation.
Thunder Basin LLC Agreement shall mean that certain Limited
Liability Company Agreement, dated as of July 10, 1998, as amended, of
Thunder Basin Coal Company, L.L.C., a limited liability company
organized and existing under the laws of the State of Delaware.
Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
Uniform Commercial Code shall have the meaning assigned to that
term in Section 5.1.23.
U.S. shall mean the United States of America.
U.S. Bank shall mean U.S. Bank National Association, its
successors and assigns.
Withholding Certificate shall have the meaning assigned to that
term in Section 10.17.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires,
the following rules of construction shall apply to this Agreement and
each of the other Loan Documents:
1.2.1 Number; Inclusion.
references to the plural include the singular, the plural, the
part and the whole; "or" has the inclusive meaning represented by the
phrase "and/or"; and "including" has the meaning represented by the
phrase "including without limitation";
1.2.2 Determination.
references to "determination" of or by the Administrative Agent
or the Lenders shall be deemed to include good-faith estimates by the
Administrative Agent or the Lenders (in the case of quantitative
determinations) and good-faith beliefs by the Administrative Agent or
the Lenders (in the case of qualitative determinations) and such
determination shall be conclusive absent manifest error;
1.2.3 Administrative Agent's Discretion and Consent.
whenever the Administrative Agent or the Lenders are granted the
right herein to act in its or their sole discretion or to grant or
withhold consent such right shall be exercised in good faith;
1.2.4 Documents Taken as a Whole.
the words "hereof," "herein," "hereunder," "hereto" and similar
terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document;
1.2.5 Headings.
the section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any), preceding
this Agreement or such other Loan Document are for reference purposes
only and shall not control or affect the construction of this
Agreement or such other Loan Document or the interpretation thereof in
any respect;
1.2.6 Implied References to This Agreement.
article, section, subsection, clause, schedule and exhibit
references are to this Agreement or other Loan Document, as the case
may be, unless otherwise specified;
1.2.7 Persons.
reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement or such other Loan Document, as the case
may be, and reference to a Person in a particular capacity excludes
such Person in any other capacity;
1.2.8 Modifications to Documents.
reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or
thereto), document or instrument means such agreement, document or
instrument as amended, modified, replaced, substituted for, superseded
or restated in accordance with the applicable provisions thereof and
hereof;
1.2.9 From, To and Through.
relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding," and "through"
means "through and including"; and
1.2.10 Shall; Will.
references to "shall" and "will" are intended to have the same
meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations
and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall
be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP;
provided, however, that all accounting terms used in Section 7.2
[Negative Covenants] (and all defined terms used in the definition of
any accounting term used in Section 7.2), as applied to the Borrower
and its Subsidiaries shall have the meaning given to such terms (and
defined terms) under GAAP as in effect on the Restatement Effective
Date applied on a basis consistent with those used in preparing the
Historical Statements referred to in Section 5.1.7(i) [Historical
Statements]. In the event of any change after the Restatement
Effective Date in GAAP, and if such change would result in the
inability to determine compliance with the financial covenants set
forth in Section 7.2 based upon the Borrower's regularly prepared
financial statements by reason of the preceding sentence, then the
parties hereto agree to endeavor, in good faith, to agree upon an
amendment to this Agreement that would adjust such financial covenants
in a manner that would not affect the substance thereof, but would
allow compliance therewith to be determined in accordance with the
Borrower's financial statements at that time.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 Revolving Credit Commitments.
2.1.1 Revolving Credit Loans.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees
to make Revolving Credit Loans to the Borrower at any time or from time to
time on or after the date hereof to the Expiration Date, provided that
after giving effect to such Revolving Credit Loan the aggregate amount of
Revolving Credit Loans from such Bank shall not exceed such Bank's
Revolving Credit Commitment minus such Bank's Revolving Credit Ratable
Share of the Letters of Credit Outstanding provided further that the
Revolving Facility Usage at any time, shall not exceed the Revolving Credit
Commitments of all the Banks. Within such limits of time and amount, and
subject to the other provisions of this Agreement, the Borrower may borrow,
repay and reborrow pursuant to this Section 2.1.
2.1.2 Swing Loan Commitment.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, PNC Bank agrees to make
Swing Loans (the "Swing Loans") to the Borrower at any time or from time to
time after the date hereof to, but not including, the Expiration Date, in
an aggregate principal amount of up to but not in excess of $40,000,000
(the "Swing Loan Commitment"), provided that the Revolving Facility Usage
at any time, shall not exceed the Revolving Credit Commitments of all the
Banks. Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrower may borrow, repay and reborrow
pursuant to this Section 2.1.2.
2.2 Nature of Banks' Obligations With Respect to Revolving Credit Loans.
Each Bank shall be obligated to participate in each request for
Revolving Credit Loans pursuant to Section 2.4 [Loan Requests] in
accordance with its Revolving Credit Ratable Share. The aggregate of each
Bank's Revolving Credit Loans outstanding hereunder to the Borrower at any
time shall never exceed its Revolving Credit Commitment minus its Revolving
Credit Ratable Share of the Letters of Credit Outstanding. The obligations
of each Bank hereunder are several. The failure of any Bank to perform its
obligations hereunder shall not affect the Obligations of the Borrower to
any other party nor shall any other party be liable for the failure of such
Bank to perform its obligations hereunder. The Banks shall have no
obligation to make Revolving Credit Loans hereunder on or after the
Expiration Date.
2.3 Commitment Fee.
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Administrative Agent for the account of each Bank, as
consideration for such Bank's Revolving Credit Commitment hereunder, a
nonrefundable commitment fee (the "Commitment Fee") equal to the Applicable
Commitment Fee Rate computed (on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed) on the average daily difference
between the amount of (i) such Bank's Revolving Credit Commitment as the
same may be constituted from time to time (for purposes of this
computation, PNC Bank's Swing Loans shall not be deemed to be borrowed
amounts under its Revolving Credit Commitment), and (ii) the sum of such
Bank's Revolving Credit Loans outstanding plus its Revolving Credit Ratable
Share of the Letters of Credit Outstanding. All Commitment Fees shall be
payable in arrears on the first Business Day of each July, October, January
and April after the date hereof and on the Expiration Date or upon
acceleration of the Loans.
2.4 Loan Requests.
2.4.1 Committed Loan Requests.
Except as otherwise provided herein, the Borrower may from time to
time prior to the Expiration Date request the Banks to make Revolving
Credit Loans, or renew or convert the Interest Rate Option applicable to
existing Revolving Credit Loans pursuant to Section 3.2 [Interest Periods],
by delivering to the Administrative Agent, not later than 10:00 a.m.,
Pittsburgh time, (i) three (3) Business Days prior to the proposed
Borrowing Date with respect to the making of Revolving Credit Loans to
which the Euro-Rate Option applies or the conversion to or the renewal of
the Euro-Rate Option for any Revolving Credit Loans; and (ii) one (1)
Business Day prior to either the proposed Borrowing Date with respect to
the making of a Revolving Credit Loan to which the Base Rate Option applies
or the last day of the preceding Interest Period with respect to the
conversion to the Base Rate Option for any Revolving Credit Loan, of a duly
completed Committed Loan Request therefor substantially in the form of
Exhibit 2.4.1 or a Committed Loan Request by telephone immediately
confirmed in writing by letter, facsimile or telex in the form of such
Exhibit, it being understood that the Administrative Agent may rely on the
authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Committed Loan
Request shall be irrevocable and shall specify (i) the proposed Borrowing
Date; (ii) the aggregate amount of the proposed Revolving Credit Loans
comprising each Borrowing Tranche, which shall be in integral multiples of
$5,000,000 and not less than $10,000,000 for each Borrowing Tranche to
which the Euro-Rate Option applies and in integral multiples of $1,000,000
and not less than the lesser of $5,000,000 or the maximum amount available
for Borrowing Tranches to which the Base Rate Option applies; (iii) whether
the Euro-Rate Option or Base Rate Option shall apply to the proposed
Revolving Credit Loans comprising an applicable Borrowing Tranche; and (iv)
in the case of a Borrowing Tranche to which the applicable Euro-Rate Option
applies, an appropriate Interest Period for the Loans comprising such
Borrowing Tranche.
2.4.2 Swing Loan Requests.
Except as otherwise provided herein, the Borrower may from time to
time prior to the Expiration Date request PNC Bank to make a Swing Loan by
delivery to PNC Bank, not later than 12:00 noon Pittsburgh time, on the
proposed Borrowing Date of a duly completed request therefor substantially
in the form of Exhibit 2.4.2 hereto or a request by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a "Swing Loan
Request"), it being understood that PNC Bank may rely on the authority of
any individual making such a telephonic request without the necessity of
receipt of such written confirmation. Each Swing Loan Request shall be
irrevocable and shall specify (i) the proposed Borrowing Date, (ii) the
term of the proposed Swing Loan, which shall be no less than one day and no
longer than three days, and (iii) the principal amount of such Swing Loan,
which shall be not less than $1,000,000 and shall be an integral multiple
of $100,000.
2.5 Making Revolving Credit Loans and Swing Loans.
The Administrative Agent shall, promptly after receipt by it of a
Committed Loan Request pursuant to Section 2.4.1 [Committed Loan Requests],
notify the Banks of its receipt of such Committed Loan Request specifying:
(i) the proposed Borrowing Date and the time and method of disbursement of
the Revolving Credit Loans requested thereby; (ii) the amount and type of
each such Revolving Credit Loan and the applicable Interest Period (if
any); and (iii) the apportionment among the Banks of such Revolving Credit
Loans as determined by the Administrative Agent in accordance with Section
2.2 [Nature of Banks' Obligations, etc.]. Each Bank shall remit the
principal amount of each Revolving Credit Loan to the Administrative Agent
such that the Administrative Agent is able to, and the Administrative Agent
shall, to the extent the Banks have made funds available to it for such
purpose and subject to Section 6.2 [Each Additional Loan or Letter of
Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars
and immediately available funds at the Principal Office prior to 2:00 p.m.,
Pittsburgh time, on the applicable Borrowing Date, provided that if any
Bank fails to remit such funds to the Administrative Agent in a timely
manner, the Administrative Agent may elect in its sole discretion to fund
with its own funds the Revolving Credit Loans of such Bank on such
Borrowing Date, and such Bank shall be subject to the repayment obligation
in Section 9.16 [Availability of Funds].
2.5.1 Making Swing Loans.
PNC Bank shall, after receipt by it of a Swing Loan Request pursuant
to Section 2.4.2, fund such Swing Loan to the Borrower in U.S. Dollars and
immediately available funds at the Principal Office prior to 3:00 p.m.,
Pittsburgh time, on the Borrowing Date. Swing Loans shall bear interest at
the Offered Rate Option.
2.6 Swing Loan Note.
The obligation of the Borrower to repay the unpaid principal amount of
the Swing Loans made to it by PNC Bank together with interest thereon shall
be evidenced by a demand promissory note of the Borrower dated the Closing
Date in substantially the form attached hereto as Exhibit 1.1(S) payable to
the order of PNC Bank in a face amount equal to the Swing Loan Commitment
of PNC Bank.
2.7 Use of Proceeds.
On and after the Restatement Effective Date, the proceeds of the Loans
shall be used to continue and refinance the indebtedness under the
revolving credit facility of the Original Credit Agreement, to repay the
term loans under the Original Credit Agreement, and for general corporate
purposes and in accordance with Section 7.1.9 [Use of Proceeds]. Subject to
Section 7.2.14 (v), proceeds of Loans may be used by the Borrower to make
loans to or investments in Arch Western and Letters of Credit may be issued
for the benefit or the use of any member of the Arch Western Group.
2.8 Borrowings to Repay Swing Loans.
PNC Bank may, at its option, exercisable at any time for any reason
whatsoever, demand repayment of the Swing Loans, and each Bank shall make
available to the Administrative Agent, on behalf of PNC Bank, an amount
equal to such Bank's Revolving Credit Ratable Share of the aggregate
principal amount of the outstanding Swing Loans, plus, if PNC Bank so
requests, accrued interest thereon, provided that no Bank shall be
obligated in any event to make Revolving Credit Loans in excess of its
Revolving Credit Commitment minus its Revolving Credit Ratable Share of the
Letters of Credit Outstanding. Revolving Credit Loans made pursuant to the
preceding sentence shall bear interest at the Base Rate Option and shall be
deemed to have been properly requested in accordance with Section 2.4.1
without regard to any of the requirements of that provision. PNC Bank shall
provide notice to all of the Banks (which may be telephonic or written
notice by letter, facsimile or telex) of the amount of such Bank's
Revolving Credit Ratable Share of the aggregate principal amount of the
outstanding Swing Loans, plus accrued interest thereon, to be made
available to the Administrative Agent on behalf of PNC Bank under this
Section 2.8. The Administrative Agent shall promptly provide to each Bank
notice of the apportionment thereof among the Banks, and the Banks shall be
unconditionally obligated to fund such amount (whether or not the
conditions specified in Section 2.4.1 are then satisfied) by the time PNC
Bank so requests, which shall not be earlier than 3:00 p.m., Pittsburgh
time, on the Business Day next after the date the Banks receive such notice
of apportionment from the Administrative Agent.
2.9 Letter of Credit Subfacility.
2.9.1 Issuance of Letters of Credit.
Borrower may request the issuance of a letter of credit (each a
"Letter of Credit") on behalf of itself or another Loan Party by delivering
or having such other Loan Party deliver to the Issuing Bank selected by the
Borrower (with a copy to the Administrative Agent) a completed application
and agreement for letters of credit in such form as such Issuing Bank may
specify from time to time by no later than 10:00 a.m., Pittsburgh time, at
least three (3) Business Days, or such shorter period as may be agreed to
by the selected Issuing Bank, in advance of the proposed date of issuance.
Each Letter of Credit shall be either a Standby Letter of Credit or a
Commercial Letter of Credit. Subject to the terms and conditions hereof and
in reliance on the agreements of the other Banks set forth in this Section
2.9, the Issuing Bank will issue a Letter of Credit provided that each
Letter of Credit shall (A) have a maximum maturity of twelve (12) Months
from the date of issuance, and (B) in no event expire later than ten (10)
Business Days prior to the Expiration Date and provided that in no event
shall (i) the Letters of Credit Outstanding exceed, at any one time,
$150,000,000, (ii) Reimbursement Obligations (contingent or otherwise)
exceed, at any one time, $10,000,000, with respect to Commercial Letters of
Credit, or (iii) the Revolving Facility Usage exceed, at any one time, the
Revolving Credit Commitments. Subject to Section 7.2.14(v), Letters of
Credit may be issued for the benefit or the use of, directly or indirectly,
any member of the Arch Western Group. No Letters of Credit shall be issued
for the benefit or the use of, directly or indirectly, any Significant
Subsidiary which is a member of the Arch Coal Group which is not a party to
the Guaranty Agreement until such time as such Significant Subsidiary has
joined the Guaranty Agreement in accordance with Section 10.18 [Joinder of
Guarantors]. Schedule 2.9.1 sets forth letters of credit, issued by PNC
Bank as an "Issuing Bank" under the Original Credit Agreement, which are
outstanding as of the Restatement Effective Date (the "Existing Letters of
Credit"). It is expressly agreed that the Existing Letters of Credit are
Letters of Credit under this Agreement.
2.9.2 Letter of Credit Fees.
Subject to the terms and conditions of this Agreement, any Issuing
Bank selected by the Borrower shall issue the requested Letter of Credit.
The Borrower shall also pay to the Issuing Bank for the Issuing Bank's sole
account the Issuing Bank's then-in-effect customary fees and administrative
expenses payable with respect to the Letters of Credit as the Issuing Bank
may generally charge or incur from time to time in connection with the
issuance, maintenance, modification (if any), assignment or transfer (if
any), negotiation, and administration of Letters of Credit. The Borrower
shall pay (i) to the Administrative Agent for the ratable account of the
Banks a fee (the "Letter of Credit Fee") equal to the Applicable Letter of
Credit Fee Rate then in effect (computed on the basis of a year of 360 days
and actual days elapsed) and (ii) to the Administrative Agent for its own
account a fronting fee equal to 0.125% per annum (computed on the basis of
a year of 360 days and actual days elapsed), which fees shall be computed
on the daily average Letters of Credit Outstanding and shall be payable
quarterly in arrears commencing with the first Business Day of each
January, April, July and October following issuance of each Letter of
Credit and on the Expiration Date.
2.9.3 Participations in Letters of Credit; Disbursements, Reimbursement.
2.9.3.1 Immediately upon issuance of each Letter of Credit, and
without further action, each Bank shall be deemed to, and hereby agrees
that it shall, have irrevocably purchased, for such Bank's own account and
risk, from the applicable Issuing Bank an individual participation interest
in such Letter of Credit in an amount equal to such Bank's Revolving Credit
Ratable Share of the maximum amount which is or at any time may become
available to be drawn thereunder, and each Bank shall be responsible to
reimburse such Issuing Bank immediately for its Revolving Credit Ratable
Share of any disbursement under any Letter of Credit which has not been
reimbursed by Borrower in accordance with Section 2.9.3.2 by making its
Revolving Credit Ratable Share of the Revolving Credit Loans referred to in
Section 2.9.3.3 available to the Administrative Agent for the account of
the Issuing Bank. Upon the request of any Bank and no less frequently than
once in each calendar month, the Administrative Agent shall notify each
Bank of the amount of such Bank's participation in Letters of Credit.
2.9.3.2 In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will
promptly notify the Borrower and the Administrative Agent. Provided that it
shall have received such notice, the Borrower shall reimburse (such
obligation to reimburse the Issuing Bank shall sometimes be referred to as
a "Reimbursement Obligation") the Administrative Agent on behalf of the
Issuing Bank prior to 12:00 noon, Pittsburgh time, on each date that an
amount is paid by the Issuing Bank under any Letter of Credit (each such
date, a "Drawing Date") in an amount equal to the amount so paid by the
Issuing Bank. In the event the Borrower fails to reimburse the
Administrative Agent on behalf of the Issuing Bank for the full amount of
any drawing under any Letter of Credit by 12:00 noon, Pittsburgh time, on
the Drawing Date, the Issuing Bank will promptly notify the Administrative
Agent and each Bank thereof, and the Borrower shall be deemed to have
requested that Revolving Credit Loans be made by the Banks under the Base
Rate Option to be disbursed on the Drawing Date under such Letter of
Credit. Any notice given by the Administrative Agent or the Issuing Bank
pursuant to this Section 2.9.3.2 may be oral if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
2.9.3.3 Each Bank shall upon any notice pursuant to Section 2.9.3.2
make available to the Administrative Agent, on behalf of the Issuing Bank,
an amount in immediately available funds equal to its Revolving Credit
Ratable Share of the amount of the drawing, whereupon the participating
Banks shall each be deemed to have made a Revolving Credit Loan under the
Base Rate Option to the Borrower in that amount. If any Bank so notified
fails to make available to the Administrative Agent for the account of the
Issuing Bank the amount of such Bank's Revolving Credit Ratable Share of
such amount by no later than 2:00 p.m., Pittsburgh time, on the Drawing
Date, then interest shall accrue on such Bank's obligation to make such
payment from the Drawing Date to the date on which such Bank makes such
payment (i) at a rate per annum equal to the Federal Funds Effective Rate
during the first three days following the Drawing Date and (ii) at a rate
per annum equal to the rate applicable to Revolving Credit Loans under the
Base Rate Option on and after the fourth day following the Drawing Date;
provided, however, that in the event that a Bank does not timely receive
notice in order to so fund its Revolving Credit Ratable Share to the
Administrative Agent prior to 2:00 p.m., Pittsburgh time, on the Drawing
Date, interest, with respect to the Drawing Date only, shall not accrue as
previously described in this sentence. The Issuing Bank will promptly give
notice to the Administrative Agent and each other Bank of the occurrence of
the Drawing Date, but failure of the Issuing Bank to give any such notice
on the Drawing Date or in sufficient time to enable any Bank to effect such
payment on such date shall not relieve such Bank from its obligation under
this Section 2.9.3.3.
2.9.4 Documentation.
Each Loan Party agrees to be bound by the terms of the selected
Issuing Bank's application and agreement for letters of credit and the
Issuing Bank's written regulations and customary practices relating to
letters of credit, though such interpretation may be different from such
Loan Party's own. In the event of a conflict between such application or
agreement and this Agreement, this Agreement shall govern. It is understood
and agreed that, except in the case of gross negligence or willful
misconduct, neither the Agents nor any Issuing Bank shall be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Loan Party's instructions or those contained in the Letters
of Credit or any modifications, amendments or supplements thereto.
2.9.5 Determinations to Honor Drawing Requests.
In determining whether to honor any request for drawing under any
Letter of Credit by the beneficiary thereof, the Issuing Bank shall be
responsible only to determine that the documents and certificates required
to be delivered under such Letter of Credit have been delivered and that
they comply on their face with the requirements of such Letter of Credit.
2.9.6 Nature of Participation and Reimbursement Obligations.
Each Bank's obligation in accordance with this Agreement to
participate in Letters of Credit and make the Revolving Credit Loans, as
contemplated by Section 2.9.3 [Participations in Letters of Credit;
Disbursements, Reimbursement], as a result of a drawing under a Letter of
Credit, and the Obligations of the Borrower to reimburse the Issuing Bank
upon a draw under a Letter of Credit, shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms
of this Section 2.9.6 under all circumstances, including the following
circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right
which such Bank may have against any Issuing Bank, either Agent, the
Borrower or any other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply with
the conditions set forth in Sections 2.1 [Revolving Credit Commitments],
2.4 [Loan Requests], 2.5 [Making Revolving Credit Loans and Swing Loans] or
6.2 [Each Additional Loan or Letter of Credit] or as otherwise set forth in
this Agreement for the making of a Revolving Credit Loan, it being
acknowledged that such conditions are not required for the making of a
Revolving Credit Loan under Section 2.9.3 [Participations in Letters of
Credit; Disbursements; Reimbursement];
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by any Loan
Party or any Bank against any beneficiary of a Letter of Credit, or the
existence of any claim, set-off, recoupment, counterclaim, crossclaim,
defense or other right which any Loan Party or any Bank may have at any
time against a beneficiary, successor beneficiary, or any transferee or
assignee of any Letter of Credit or the proceeds thereof (or any Persons
for whom any such transferee may be acting), either Agent, any Issuing
Bank, or any Bank or any other Person or, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between any Loan Party or
Subsidiaries of a Loan Party and the beneficiary for which any Letter of
Credit was procured);
(v) the lack of power or authority of any signer of (or any defect in
or forgery of any signature or endorsement on) or the form of or lack of
validity, sufficiency, accuracy, enforceability or genuineness of any
draft, demand, instrument, certificate or other document presented under or
in connection with any Letter of Credit or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provisions of services relating to a Letter of Credit, in each case even if
the Issuing Bank has been notified thereof;
(vi) payment by any Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit;
(vii) the solvency of, or any acts or omissions by, any beneficiary of
any Letter of Credit, or any other Person having a role in any transaction
or obligation relating to a Letter of Credit, or the existence, nature,
quality, quantity, condition, value or other characteristic of any property
or services relating to a Letter of Credit;
(viii) any failure by the Issuing Bank to issue any Letter of Credit
in the form requested by any Loan Party, unless the Issuing Bank has
received written notice from such Loan Party of such failure within three
Business Days after the Issuing Bank shall have furnished such Loan Party a
copy of such Letter of Credit and such error is material and no drawing has
been made thereon prior to receipt of such notice;
(ix) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of any Loan Party
or Subsidiaries of a Loan Party;
(x) any breach of this Agreement or any other Loan Document by any
party thereto;
(xi) the occurrence or continuance of an Insolvency Proceeding with
respect to any Loan Party;
(xii) the fact that an Event of Default or a Potential Default shall
have occurred and be continuing;
(xiii) the fact that the Expiration Date shall have passed or this
Agreement or the Commitments hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
2.9.7 Indemnity.
In addition to amounts payable as provided in Section 9.5
[Reimbursement and Indemnification of Agents by the Borrower], the Borrower
hereby agrees to protect, indemnify, pay and save harmless the Agents and
each Issuing Bank from and against any and all claims, demands,
liabilities, damages, taxes, penalties, interest, judgments, losses, costs,
charges and expenses (including reasonable fees, expenses and disbursements
of counsel) which any Agent or any Issuing Bank may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit, other than as a result of (A) the gross negligence or willful
misconduct of any Agent or any Issuing Bank as determined by a final
judgment of a court of competent jurisdiction or (B) subject to the
following clause (ii), the wrongful dishonor by an Issuing Bank of a proper
demand for payment made under any Letter of Credit, or (ii) the failure of
an Issuing Bank to honor a drawing under any such Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental authority (all
such acts or omissions herein called "Governmental Acts").
2.9.8 Liability for Acts and Omissions.
As between any Loan Party, each Issuing Bank and the Agents, such Loan
Party assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, neither any
Agent nor any Issuing Bank shall be responsible for any of the following
including any losses or damages to any Loan Party or other Person or
property relating therefrom: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged (even if the
Issuing Bank shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary
of any such Letter of Credit, or any other party to which such Letter of
Credit may be transferred, to comply fully with any conditions required in
order to draw upon such Letter of Credit or any other claim of any Loan
Party against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among any Loan Party and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the control
of any Issuing Bank or any Agent, including any Governmental Acts, and none
of the above shall affect or impair, or prevent the vesting of, any of the
Agents' rights or powers hereunder or of any of the rights or powers
hereunder of any Issuing Bank. Nothing in the preceding sentence shall: (x)
relieve any Agent from liability for such Agent's gross negligence or
willful misconduct in connection with actions or omissions described in
such clauses (i) through (viii) of such sentence, or (y) relieve any
Issuing Bank from liability for such Issuing Bank's gross negligence or
willful misconduct in connection with actions or omissions described in
such clauses (i) through (viii) of such sentence. In no event shall any
Issuing Bank or any Agent be liable to any Loan Party for any indirect,
consequential, incidental, punitive, exemplary or special damages or
expenses (including without limitation attorneys' fees), or for any damages
resulting from any change in the value of any property relating to a Letter
of Credit.
Without limiting the generality of the foregoing, each Issuing Bank
and the Agents (i) may rely on any oral or other communication believed in
good faith by any Issuing Bank or any Agent to have been authorized or
given by or on behalf of the applicant for a Letter of Credit, (ii) may
honor any presentation if the documents presented appear on their face
substantially to comply with the terms and conditions of the relevant
Letter of Credit; (iii) may honor a previously dishonored presentation
under a Letter of Credit, whether such dishonor was pursuant to a court
order, to settle or compromise any claim of wrongful dishonor, or
otherwise, and shall be entitled to reimbursement to the same extent as if
such presentation had initially been honored, together with any interest
paid by the Agent; (iv) may honor any drawing that is payable upon
presentation of a statement advising negotiation or payment, upon receipt
of such statement (even if such statement indicates that a draft or other
document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any
way with the relevant Letter of Credit; (v) may pay any paying or
negotiating bank claiming that it rightfully honored under the laws or
practices of the place where such bank is located; and (vi) may settle or
adjust any claim or demand made on the Agent in any way related to any
order issued at the applicant's request to an air carrier, a letter of
guarantee or of indemnity issued to a carrier or any similar document (each
an "Order") and honor any drawing in connection with any Letter of Credit
that is the subject to such Order, notwithstanding that any drafts or other
documents presented in connection with such Letter of Credit fail to
conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by any Agent or any
Issuing Bank under or in connection with the Letters of Credit issued by it
or any documents and certificates delivered thereunder, if taken or omitted
in good faith, shall not put any Agent or any Issuing Bank under any
resulting liability to the Borrower or any other Bank.
3. INTEREST RATES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Revolving Credit Loans as selected by it from the
Base Rate Option or Euro-Rate Option set forth below applicable to the
Revolving Credit Loans, it being understood that, subject to the provisions
of this Agreement, the Borrower may select different Interest Rate Options
and different Interest Periods to apply simultaneously to the Revolving
Credit Loans comprising different Borrowing Tranches and may convert to or
renew one or more Interest Rate Options with respect to all or any portion
of the Revolving Credit Loans comprising any Borrowing Tranche, provided
that there shall not be at any one time outstanding more than nine (9)
Borrowing Tranches in the aggregate among all of the Revolving Credit Loans
accruing interest at a Euro-Rate Option, and provided further that only the
Offered Rate Option shall apply to the Swing Loans. If at any time the
designated rate applicable to any Loan exceeds such Lender's highest lawful
rate, the rate of interest on such Loan shall be limited to such Lender's
highest lawful rate.
3.1.1 Interest Rate Options.
The Borrower shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans (subject to
the provisions above regarding Swing Loans):
(i) Base Rate Option: A fluctuating rate per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) equal to the Base Rate plus the Applicable Margin, such interest
rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate; or
(ii) Euro-Rate Option: A rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) equal to the Euro-Rate plus the
Applicable Margin.
Notwithstanding the foregoing, on the Restatement Effective Date, the
Applicable Margin shall be the amount determined in accordance with the
parameters set forth in Schedule 1.1(A) but shall be no less than the
amount set forth in the pricing grid under Level III thereof. It is
expressly agreed that after the Restatement Effective Date, the Applicable
Margin shall be determined, based upon the applicable Debt Rating in effect
from time to time, as set forth in Schedule 1.1(A).
3.1.2 Rate Quotations.
The Borrower may call the Administrative Agent on or before the date
on which a Committed Loan Request is to be delivered to receive an
indication of the rates then in effect as to Revolving Credit Loans, but it
is acknowledged that such projection shall not be binding on the
Administrative Agent or the Banks nor affect the rate of interest which
thereafter is actually in effect when the election is made.
3.1.3 Change in Fees or Interest Rates.
If the Applicable Margin or Applicable Commitment Fee Rate is
increased or reduced with respect to any period for which the Borrower has
already paid interest or Commitment Fees, the Administrative Agent shall
recalculate the additional interest or Commitment Fees due from or to the
Borrower and shall, within fifteen (15) Business Days after the Borrower
notifies the Administrative Agent of such increase or decrease, give the
Borrower and the Banks notice of such recalculation.
3.1.3.1 Any additional interest or Commitment Fees due from the
Borrower shall be paid to the Administrative Agent for the account of the
Banks on the next date on which an interest or fee payment is due;
provided, however, that if there are no Loans outstanding or if the Loans
are due and payable, such additional interest or Commitment Fees shall be
paid promptly after receipt of written request for payment from the
Administrative Agent.
3.1.3.2 Any interest or Commitment Fees refund due to the Borrower
shall be credited against payments otherwise due from the Borrower on the
next interest or fee payment due date or, if the Loans have been repaid and
the Banks are no longer committed to lend under this Agreement, the Banks
shall pay the Administrative Agent for the account of the Borrower such
interest or Commitment Fee refund not later than five (5) Business Days
after written notice from the Administrative Agent to the Banks.
3.2 Interest Periods.
At any time when the Borrower shall select, convert to or renew a
Euro-Rate Option, the Borrower shall notify the Administrative Agent
thereof at least three (3) Business Days prior to the effective date of
such Euro-Rate Option by delivering a Committed Loan Request. The notice
shall specify an interest period (the "Interest Period") during which such
Euro-Rate Option shall apply, such Interest Period to be one, two, three or
six Months. The following provisions shall apply to any selection of,
renewal of, or conversion to a Euro-Rate Option:
3.2.1 Ending Date and Business Day.
any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless
such Business Day falls in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day;
3.2.2 Amount of Borrowing Tranche.
each Borrowing Tranche of Revolving Credit Loans to which the
Euro-Rate Option applies shall be in integral multiples of $5,000,000 and
not less than $10,000,000;
3.2.3 Termination Before Applicable Expiration Date.
the Borrower shall not select, convert to or renew an Interest Period
for any portion of the Loans that would end, in the case of Revolving
Credit Loans, after the Expiration Date; and
3.2.4 Renewals.
in the case of the renewal of a Euro-Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be the last
day of the preceding Interest Period, without duplication in payment of
interest for such day.
3.3 Interest After Default.
To the extent permitted by Law, upon the occurrence of an Event of
Default and until such time such Event of Default shall have been cured or
waived:
3.3.1 Letter of Credit Fees, Interest Rate.
the Letter of Credit Fees and the rate of interest for each Loan
otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or
Section 3.1 [Interest Rate Options], respectively, shall be increased by
2.0% per annum; and
3.3.2 Other Obligations.
each other Obligation hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the rate of interest
applicable under the Base Rate Option plus an additional 2.0% per annum
from the time such Obligation becomes due and payable until it is paid in
full.
3.3.3 Acknowledgment.
The Borrower acknowledges that the increase in rates referred to in
this Section 3.3 reflects, among other things, the fact that such Loans or
other amounts have become a substantially greater risk given their default
status and that the Banks are entitled to additional compensation for such
risk; and all such interest shall be payable by Borrower upon demand by
Administrative Agent. Upon the occurrence of an Event of Default, no Loan
may be made, converted to or renewed under the Euro-Rate Option.
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
3.4.1 Unascertainable.
If, on any date on which a Euro-Rate would otherwise be determined
with respect to Committed Loans, the Administrative Agent shall have
determined that:
(i) adequate and reasonable means do not exist for ascertaining such
Euro-Rate, or
(ii) a contingency has occurred which materially and adversely affects
the London interbank eurodollar market relating to the Euro-Rate,
then the Administrative Agent shall have the rights specified in
Section 3.4.3.
3.4.2 Illegality; Increased Costs; Deposits Not Available.
If at any time any Lender shall have determined that:
(i) the making, maintenance or funding of any Loan to which a
Euro-Rate Option applies has been made impracticable or unlawful by
compliance by such Lender in good faith with any Law or any interpretation
or application thereof by any Official Body or with any request or
directive of any such Official Body (whether or not having the force of
Law), or
(ii) such Euro-Rate Option will not adequately and fairly reflect the
cost to such Lender of the establishment or maintenance of any such Loan,
or
(iii) after making all reasonable efforts, deposits of the relevant
amount in Dollars for the relevant Interest Period for a Loan to which a
Euro-Rate Option applies are not available to such Lender with respect to
such Loan, in the London interbank market,
then the Administrative Agent and the Lenders shall have the rights
specified in Section 3.4.3.
3.4.3 Administrative Agent's and Lender's Rights.
In the case of any event specified in Section 3.4.1 above, the
Administrative Agent shall promptly so notify the Lenders and the Borrower
thereof, and in the case of an event specified in Section 3.4.2 above, such
Lender shall promptly so notify the Administrative Agent and endorse a
certificate to such notice as to the specific circumstances of such notice,
and the Administrative Agent shall promptly send copies of such notice and
certificate to the other Lenders and the Borrower. Upon such date as shall
be specified in such notice (which shall not be earlier than the date such
notice is given), the obligation of (A) the Lenders, in the case of such
notice given by the Administrative Agent, or (B) such Lender, in the case
of such notice given by such Lender, to allow the Borrower to select,
convert to or renew a Euro-Rate Option shall be suspended until the
Administrative Agent shall have later notified the Borrower, or such Lender
shall have later notified the Administrative Agent, of the Administrative
Agent's or such Lender's, as the case may be, determination that the
circumstances giving rise to such previous determination no longer exist.
If at any time the Administrative Agent makes a determination under Section
3.4.1 and the Borrower has previously notified the Administrative Agent of
its selection of, conversion to or renewal of a Euro-Rate Option and such
Interest Rate Option has not yet gone into effect, such notification shall
be deemed to provide for the selection of, conversion to or renewal of the
Base Rate Option otherwise available with respect to such Revolving Credit
Loans if the Borrower has requested the Euro-Rate Option with respect to
such Revolving Credit Loans. If any Lender notifies the Administrative
Agent of a determination under Section 3.4.2, the Borrower shall, subject
to the Borrower's indemnification Obligations under Section 4.5.2
[Indemnity], as to any Loan of the Lender to which a Euro-Rate Option
applies, on the date specified in such notice either convert such Loan to
the Base Rate Option otherwise available with respect to such Loan or
prepay such Loan in accordance with Section 4.4.1 [Voluntary Prepayments].
Absent due notice from the Borrower of conversion or prepayment, such Loan
shall automatically be converted to the Base Rate Option otherwise
available with respect to such Loan upon such specified date.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Revolving Credit Loans under the Euro-Rate Option at
the expiration of an existing Interest Period applicable to such Borrowing
Tranche in accordance with the provisions of Section 3.2 [Interest
Periods], the Borrower shall be deemed to have converted such Borrowing
Tranche to the Base Rate Option in the case of Revolving Credit Loans
commencing upon the last day of the existing Interest Period.
4. PAYMENTS
4.1 Payments.
All payments and prepayments to be made in respect of principal, interest,
Commitment Fees, Letter of Credit Fees, Administrative Agent's Fee or other fees
or amounts due from the Borrower hereunder shall be payable prior to 11:00 a.m.,
Pittsburgh time, on the date when due without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Borrower,
and without set-off, counterclaim or other deduction of any nature, and an
action therefor shall immediately accrue. Such payments shall be made to the
Administrative Agent at the Principal Office for the account of PNC Bank with
respect to the Swing Loans and for the ratable accounts of the Banks with
respect to the Revolving Credit Loans, in U.S. Dollars and in immediately
available funds, and the Administrative Agent shall promptly distribute such
amounts to the applicable Lenders in immediately available funds, provided that
in the event payments are received by 11:00 a.m., Pittsburgh time, by the
Administrative Agent with respect to the Loans and such payments are not
distributed to the Lenders (or applicable Lender, as the case may be) on the
same day received by the Administrative Agent, the Administrative Agent shall
pay the Lenders (or applicable Lender, as the case may be) the Federal Funds
Effective Rate with respect to the amount of such payments for each day held by
the Administrative Agent and not distributed to the Lenders (or applicable
Lender, as the case may be). The Administrative Agent's and each Lender's
statement of account, ledger or other relevant record shall, in the absence of
manifest error, be conclusive as the statement of the amount of principal of and
interest on the Loans and other amounts owing under this Agreement and shall be
deemed an "account stated." The principal amount of the Revolving Credit Loans,
together with accrued interest, fees and all other Obligations payable thereon
shall be due and payable on the Expiration Date.
4.2 Pro Rata Treatment of Banks.
Each borrowing of Revolving Credit Loans shall be allocated to each Bank
according to its Revolving Credit Ratable Share, and each selection of,
conversion to or renewal of any Interest Rate Option applicable to Revolving
Credit Loans and each payment or prepayment by the Borrower with respect to
principal or interest on the Revolving Credit Loans or Commitment Fees, Letter
of Credit Fees, or other fees (except for the Administrative Agent's Fee) or
amounts due from the Borrower hereunder to the Banks with respect to the
Revolving Credit Loans, shall (except as provided in Section 3.4.3
[Administrative Agent's and Lender's Rights] in the case of an event specified
in Sections 3.4 [Euro-Rate Unascertainable, etc.], 4.4.2 [Replacement of a
Lender] or 4.5 [Additional Compensation in Certain Circumstances]) be made in
proportion to the applicable Revolving Credit Loans outstanding from each Bank
and, if no such Loans are then outstanding, in proportion, as applicable, to the
Revolving Credit Ratable Share of each Bank. Notwithstanding any of the
foregoing, each borrowing or payment or prepayment by the Borrower of principal,
interest or other amounts from the Borrower with respect to Swing Loans shall be
made by or to PNC Bank according to Section 2.
4.3 Interest Payment Dates.
Interest on Swing Loans or Revolving Credit Loans to which the Base Rate
Option applies shall be due and payable in arrears on the first Business Day of
each July, October, January and April after the date hereof and on the
Expiration Date or upon acceleration of the Loans. Interest on Committed Loans
(other than Swing Loans) to which the Euro-Rate Option applies shall be due and
payable on the last day of each Interest Period for those Loans and, if such
Interest Period is longer than three (3) Months, also on the date that is three
(3) months after the commencement of such Interest Period (and if applicable,
the date that is six (6) months after the commencement of such Interest Period)
of such Interest Period. Interest on the principal amount of each Loan or other
monetary Obligation shall be due and payable on demand after such principal
amount or other monetary Obligation becomes due and payable (whether on the
stated maturity date, upon acceleration or otherwise).
4.4 Prepayments.
4.4.1 Voluntary Prepayments.
The Borrower shall have the right at its option from time to time to prepay
the Committed Loans in whole or part without premium or penalty (except as
provided in Section 4.4.2 below or in Section 4.5 [Additional Compensation in
Certain Circumstances]):
(i) at any time with respect to any Committed Loan to which the Base Rate
Option applies,
(ii) on the last day of the applicable Interest Period with respect to
Committed Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Lender pursuant to Section
3.4 [Euro-Rate Unascertainable, etc.] with respect to any Committed Loan to
which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Committed Loans, it
shall provide a prepayment notice to the Administrative Agent by 1:00 p.m.,
Pittsburgh time, at least one (1) Business Day prior to the date of prepayment
of the Committed Loans or no later than 1:00 p.m., Pittsburgh time, on the date
of prepayment of Swing Loans setting forth the following information:
(x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(y) the application of the prepayment among the Swing Loans and the
Revolving Credit Loans; and
(z) the total principal amount of such prepayment, which shall not be less
than $10,000,000 for any Revolving Credit Loan, and in increments of $1,000,000
above $10,000,000, and not less than $1,000,000 for Swing Loans, and in
increments of $100,000 above $1,000,000.
All prepayment notices shall be irrevocable. The principal amount of the
Committed Loans for which a prepayment notice is given, together with interest
on such principal amount (except with respect to interest on Revolving Credit
Loans to which the Base Rate Option applies which shall be paid in accordance
with this Agreement on the next due date for the payment thereof), shall be due
and payable on the date specified in such prepayment notice as the date on which
the proposed prepayment is to be made. Except as provided in Section 3.4.3
[Administrative Agent's and Lender's Rights], if the Borrower prepays a
Committed Loan but fails to specify the applicable Borrowing Tranche which the
Borrower is prepaying, the prepayment shall be applied (i) first to Swing Loans,
then (ii) second to Revolving Credit Loans to which the Base Rate Option
applies, and then (iii) finally to Revolving Credit Loans to which the Euro-Rate
Option applies. Any prepayment hereunder shall be subject to the Borrower's
Obligation to indemnify the Banks under Section 4.5.2 [Indemnity].
4.4.2 Replacement of a Lender.
In the event any Lender (i) gives notice under Section 3.4 [Euro-Rate
Unascertainable, etc.] or Section 4.5.1 [Increased Costs, etc.], (ii) does not
fund Revolving Credit Loans because the making of such Loans would contravene
any Law applicable to such Lender, or (iii) becomes subject to the control of an
Official Body (other than normal and customary supervision), then the Borrower
shall have the right at its option, with the consent of the Administrative
Agent, which shall not be unreasonably withheld (except that during any period
when an Event of Default exists and is continuing, the Administrative Agent may
withhold such consent in its sole discretion), to prepay the Loans of such
Lender in whole, together with all interest and fees accrued thereon and all
other amounts due and payable to such Lender under the Loan Documents, and
terminate such Lender's Commitment within ninety (90) days after (x) receipt of
such Lender's notice under Section 3.4 [Euro-Rate Unascertainable, etc.] or
4.5.1 [Increased Costs, Etc.], (y) the date such Lender has failed to fund
Revolving Credit Loans because the making of such Loans would contravene Law
applicable to such Lender, or (z) the date such Lender became subject to the
control of an Official Body, as applicable; provided that the Borrower shall
also pay to such Lender at the time of such prepayment any amounts required
under Section 4.5 [Additional Compensation in Certain Circumstances] (except
that the Borrower shall not be required to indemnify such Lender for
liabilities, losses or expenses under Section 4.5.2(i) sustained by such Lender
as a consequence of the prepayment of the Loans of such Lender in accordance
with this Section 4.4.2 on a day other than the last day of an Interest Period
with respect to Loans to which a Euro-Rate Option applies if the Loans of such
Lender are being prepaid because such Lender has determined that the making,
maintenance or funding of such Loans by such Lender under the Euro-Rate Option
has been made unlawful or because such Lender has become subject to the control
of an Official Body) and any accrued interest due on such amount and any related
fees; provided, however, that the Commitment of such Lender shall be provided by
one or more of the remaining Lenders or a replacement bank acceptable to the
Agents and the Issuing Banks; provided, further, that the remaining Lenders
shall have no obligation hereunder to increase their Commitments.
Notwithstanding the foregoing, the Administrative Agent may only be replaced
subject to the requirements of Section 9.14 [Successor Agents] and an Issuing
Bank may only be replaced if all Letters of Credit issued by such Issuing Bank
have expired or been terminated or replaced.
4.4.3 Change of Lending Office.
Each Lender agrees that upon the occurrence of any event giving rise to
increased costs or other special payments under Section 3.4.2 [Illegality, etc.]
or 4.5.1 [Increased Costs, etc.] with respect to such Lender, it will if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
or Letters of Credit affected by such event, provided that such designation is
made on such terms that such Lender and its lending office suffer no economic,
legal or regulatory disadvantage on such Lender's good faith determination, with
the object of avoiding the consequence of the event giving rise to the operation
of such Section. Nothing in this Section 4.4.3 shall affect or postpone any of
the Obligations of the Borrower or any other Loan Party or the rights of any
Agent or any Lender provided in this Agreement.
4.4.4 Voluntary Reduction of Commitments.
The Borrower shall have the right, upon not less than five (5) Business
Days' written irrevocable notice to the Administrative Agent, to terminate the
Revolving Credit Commitments or, from time to time, to reduce the amount of the
Revolving Credit Commitments, which notice shall specify the date and amount of
any such reduction and otherwise be substantially in the form of Exhibit 4.4.4
(a "Commitment Reduction Notice"). Any such reduction shall be in a minimum
amount equal to $10,000,000 or an integral multiple of $1,000,000 in excess
thereof, provided, that the Revolving Credit Commitments may not be reduced
below the sum of the aggregate principal amount of all Revolving Facility Usage.
Each reduction of Revolving Credit Commitments shall ratably reduce the
Revolving Credit Commitments of the Banks.
4.4.5 Mandatory Prepayment Upon Sale of Assets; Mandatory Reduction of Revolving
Credit Commitments.
Within five (5) Business Days of any sale of assets by any member of the
Arch Coal Group authorized by Section 7.2.4(vi) [Disposition of Assets or
Subsidiaries] and immediately upon the closing of any Permitted Receivables
Financing, the Revolving Credit Commitments shall automatically and permanently
be reduced in an amount equal to, in the case of an asset sale under Section
7.2.4(vi), the Net Cash Proceeds of such sale of assets (as estimated in good
faith by the Borrower) or, in the case of a Permitted Receivables Financing, 50%
of the principal amount of such financing; provided, however, that, in the case
of a sale of assets authorized by Section 7.2.4(vi), the Revolving Credit
Commitments shall not be required to be reduced below $150,000,000. On the date
of any reduction of the Revolving Credit Commitments pursuant to this Section
4.4.5, the Borrower shall make a mandatory prepayment of so much of the
Revolving Credit Loans as shall be necessary in order that the Revolving
Facility Usage will not exceed the Revolving Credit Commitments after giving
effect to such reduction. Any prepayment hereunder shall be subject to the
Borrower's Obligation to indemnify the Banks under Section 4.5.2 [Indemnity]. If
the Debt Rating applicable to the Borrower is BBB- or better by Standard &
Poor's or Baa3 or better by Moody's, then at any time when either such Debt
Rating is in effect, if any member of the Arch Coal Group sells assets in
accordance with Section 7.2.4(vi), no reduction of the Revolving Credit
Commitments pursuant to this Section 4.4.5 will be required to be made. No
reduction of the Revolving Credit Commitments will be required under this
Section 4.4.5 with respect to proceeds of the MLP Transaction.
4.5 Additional Compensation in Certain Circumstances.
4.5.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc.
If any Law, guideline or interpretation or any change in any Law, guideline
or interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body:
(i) subjects any Lender to any tax or changes the basis of taxation with
respect to this Agreement, the Committed Loans or payments by the Borrower of
principal, interest, Commitment Fees, or other amounts due from the Borrower
hereunder (except for taxes on the overall net income of such Lender),
(ii) imposes, modifies or deems applicable any reserve, special deposit or
similar requirement against credits or commitments to extend credit extended by,
or assets (funded or contingent) of, deposits with or for the account of, or
other acquisitions of funds by, any Lender, or
(iii) imposes, modifies or deems applicable any capital adequacy or similar
requirement (A) against assets (funded or contingent) of, or letters of credit,
other credits or commitments to extend credit extended by, any Lender, or (B)
otherwise applicable to the obligations of any Lender under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Lender with respect to this Agreement, or the making, maintenance or funding of
any part of the Committed Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Lender's capital, taking into consideration such Lender's customary policies
with respect to capital adequacy) by an amount which such Lender in its sole
discretion deems to be material, such Lender shall from time to time notify the
Borrower and the Administrative Agent of the amount determined in good faith
(using any averaging and attribution methods employed in good faith) by such
Lender to be necessary to compensate such Lender for such increase in cost,
reduction of income, additional expense or reduced rate of return. Such notice
shall set forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by the Borrower to such Lender ten (10) Business
Days after such notice is given.
4.5.2 Indemnity.
In addition to the compensation required by Section 4.5.1 [Increased Costs,
etc.], the Borrower shall indemnify each Lender against all liabilities, losses
or expenses (including loss of margin, any loss or expense incurred in
liquidating or employing deposits from third parties and any loss or expense
incurred in connection with funds acquired by a Lender to fund or maintain Loans
subject to a Euro-Rate Option) which such Lender sustains or incurs as a
consequence of any
(i) payment, prepayment, conversion or renewal of any Loan to which a
Euro-Rate Option applies on a day other than the last day of the corresponding
Interest Period (whether or not such payment or prepayment is mandatory,
voluntary or automatic and whether or not such payment or prepayment is then
due);
(ii) attempt by the Borrower to revoke (expressly, by later inconsistent
notices or otherwise) in whole or part any Committed Loan Requests under Section
2.4.1 [Committed Loan Requests], Section 2.4.2 [Swing Loan Requests], or Section
3.2 [Interest Periods] or notice relating to prepayments under Section 4.4.1
[Voluntary Prepayments]; or
(iii) default by the Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Loan Document,
including any failure of the Borrower to pay when due (by acceleration or
otherwise) any principal of or interest on the Committed Loans, Commitment Fees
or any other amount due hereunder.
If any Lender sustains or incurs any such loss or expense, it shall from time to
time notify the Borrower of the amount determined in good faith by such Lender
(which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Lender shall deem
reasonable) to be necessary to indemnify such Lender for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such
Lender ten (10) Business Days after such notice is given.
4.6 Notes.
Upon the request of any Bank, the Revolving Credit Loans made by such Bank
may be evidenced by a Revolving Credit Note in the form of Exhibit
1.1(R).
4.7 Settlement Date Procedures.
In order to minimize the transfer of funds between the Banks and the
Administrative Agent, the Borrower may borrow, repay and reborrow Swing Loans
and PNC Bank may make Swing Loans as provided in Section 2.5 hereof during the
period between Settlement Dates. Not later than 11:00 a.m., on each Settlement
Date, the Administrative Agent shall notify each Bank of its Revolving Credit
Ratable Share of the total of the Revolving Credit Loans and the Swing Loans
(each a "Required Share"). Prior to 2:00 p.m., Pittsburgh time, on such
Settlement Date, each Bank shall pay to the Administrative Agent the amount
equal to the difference between its Required Share and its Revolving Credit
Loans, and the Administrative Agent shall pay to each Bank its Revolving Credit
Ratable Share of all payments made by the Borrower to the Administrative Agent
with respect to the Revolving Credit Loans. The Administrative Agent shall also
effect settlement in accordance with the foregoing sentence on the proposed
Borrowing Dates for Revolving Credit Loans and may at its option effect
settlement on any other Business Day. These settlement procedures are
established solely as a matter of administrative convenience, and nothing
contained in this Section 4.7 shall relieve the Banks of their obligations to
fund Revolving Credit Loans on dates other than a Settlement Date pursuant to
Sections 2.1.1 and 2.2. The Administrative Agent may at any time for any reason
whatsoever require each Bank to pay immediately to the Administrative Agent such
Bank's Revolving Credit Ratable Share of the outstanding Revolving Credit Loans,
and each Bank may at any time require the Administrative Agent to pay
immediately to such Bank its Revolving Credit Ratable Share of all payments made
by the Borrower to the Administrative Agent with respect to the Revolving Credit
Loans.
4.8 Taxes.
4.8.1 No Deductions.
All payments made by the Borrower hereunder shall be made free and clear of
and without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the net income of the Lenders and all income and
franchise taxes of the United States applicable to the Lenders (all such
non-excluded taxes, levies, imposts deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable under
the Credit Agreement, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this subsection) the Administrative Agent receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
timely pay the full amount deducted to the relevant tax authority or other
authority in accordance with applicable law.
4.8.2 Stamp Taxes.
In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder or from the execution,
delivery, or registration, or otherwise with respect to, the Credit Agreement
(hereinafter referred to as "Other Taxes").
4.8.3 Indemnification for Taxes Paid by Lenders.
The Borrower shall indemnify the Lenders for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this subsection) paid by such Lender
and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender makes written demand therefor.
4.8.4 Certificate.
Within 30 days after the date of any payment of any Taxes by the Borrower,
the Borrower shall furnish to the Administrative Agent for the benefit of the
Lenders the original or a certified copy of a receipt evidencing payment
thereof. If no Taxes are payable in respect of any payment by the Borrower, the
Borrower shall, if so requested by any Lender, provide a certificate of an
officer of the Borrower to that effect.
4.8.5 Survival.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in
subsections 4.8.1 through 4.8.4 shall survive the payment in full of principal
and interest under any promissory note made by Borrower to any Lender under the
Credit Agreement.
4.8.6 Refund and Contest.
If the Borrower determines in good faith that a reasonable basis exists for
contesting any Taxes or Other Taxes with respect to which the Borrower was
required to take the actions specified in the second sentence of subsection
4.8.1, the relevant Lender (to the extent such Lender reasonably determines in
good faith that it will not suffer any adverse effect as a result thereof) shall
cooperate with the Borrower in challenging the imposition of such Taxes or Other
Taxes at the Borrower's expense if so requested by the Borrower in writing. If
such Lender receives a refund of Taxes or Other Taxes for which the payment has
been made by the Borrower pursuant to this Agreement, which refund in the good
faith judgment of such Lender is attributable to the Borrower, then such Lender
shall reimburse the Borrower for such amount as such Lender determines to be the
proportion of the refund as will leave it, after such reimbursement, in no
better or worse position than it would have been in if the payment had not been
required. No Lender nor any Agent shall be obliged to disclose information
regarding its tax affairs or computations to Borrower in connection with this
Section 4.8.6 or any other provision of Section 4.8.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
The Borrower represents and warrants to the Agents and each of the Lenders
as follows:
5.1.1 Organization and Qualification.
Each Loan Party and each Subsidiary of each Loan Party is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each Loan
Party and each Subsidiary of each Loan Party has the lawful power to own or
lease its properties and to engage in the business it presently conducts or
proposes to conduct. Each Loan Party and each Subsidiary of each Loan Party is
duly licensed or qualified and in good standing in each jurisdiction where the
property owned or leased 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 could reasonably be expected to result in a Material Adverse Change.
5.1.2 Shares of Borrower; Subsidiaries; and Subsidiary Shares.
On the Restatement Effective Date, Schedule 5.1.2 states the name of each
of the Borrower's Subsidiaries, its jurisdiction of incorporation, its
authorized capital stock, the issued and outstanding shares (referred to herein
as the "Subsidiary Shares") and the owners thereof if it is a corporation, its
outstanding partnership interests (the "Partnership Interests") if it is a
partnership and its outstanding limited liability company interests, interests
assigned to managers thereof and the voting rights associated therewith (the
"LLC Interests") if it is a limited liability company. On the Restatement
Effective Date, Schedule 5.1.2 also sets forth the jurisdiction of incorporation
of the Borrower, its authorized capital stock (the "Borrower Shares"), the
voting rights associated therewith, and whether such Subsidiary is a Significant
Subsidiary, Inactive Subsidiary or a Special Subsidiary. The Borrower and each
Subsidiary of the Borrower has good and marketable title to all of the
Subsidiary Shares, Partnership Interests and LLC Interests it purports to own,
free and clear in each case of any Lien. All Borrower Shares, Subsidiary Shares,
Partnership Interests and LLC Interests have been validly issued, and all
Borrower Shares and all Subsidiary Shares are fully paid and nonassessable. All
capital contributions and other consideration required to be made or paid in
connection with the issuance of the Partnership Interests and LLC Interests have
been made or paid, as the case may be. On the Restatement Effective Date, there
are no options, warrants or other rights outstanding to purchase any such
Borrower Shares, Subsidiary Shares, Partnership Interests or LLC Interests
except as indicated on Schedule 5.1.2.
5.1.3 Power and Authority.
Each Loan Party has full power to enter into, execute, deliver and carry
out this Agreement and the other Loan Documents to which it is a party, to incur
the Indebtedness contemplated by the Loan Documents and to perform its
Obligations under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part. The
Borrower and each Subsidiary of the Borrower party to the Acquisition Documents
has full power to enter into, execute, deliver and perform the Acquisition
Documents to which it is a party, and all such actions have been duly authorized
by all necessary proceedings on its part.
5.1.4 Validity and Binding Effect.
This Agreement has been duly and validly executed and delivered by each
Loan Party, and each other Loan Document which any Loan Party is required to
execute and deliver on or after the date hereof will have been duly executed and
delivered by such Loan Party on the required date of delivery of such Loan
Document. This Agreement and each other Loan Document constitutes, or will
constitute, legal, valid and binding obligations of each Loan Party which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to the extent that
enforceability of any of such Loan Document may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance. The Acquisition Documents have been duly and validly executed and
delivered by the Borrower and each of its Subsidiaries party thereto. The
Acquisition Documents constitute the legal, valid and binding obligation of the
Borrower and each of its Subsidiaries party thereto, enforceable against each
such Person in accordance with the terms thereof, except to the extent that
enforceability of the Acquisition Documents may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar law, affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance. A complete copy of the Acquisition Documents has been delivered to
the Administrative Agent.
5.1.5 No Conflict.
Neither the execution and delivery of this Agreement or the other Loan
Documents by any Loan Party, nor the consummation of the transactions herein or
therein contemplated or compliance with the terms and provisions hereof or
thereof by any of them will conflict with, constitute a default under or result
in any breach of (i) the terms and conditions of the certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents of any Loan Party or (ii) any Law or any material
agreement or instrument or order, writ, judgment, injunction or decree to
whichany Loan Party or any Subsidiary of any Loan Party is a party or by which
any of the foregoing Persons is bound or to which any of the foregoing Persons
is subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan
Party or any Subsidiary of any Loan Party (other than Liens granted under the
Loan Documents).
5.1.6 Litigation.
Except as set forth on Schedule 5.1.6, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of such Loan Party at law
or equity before any Official Body which individually or in the aggregate could
reasonably be expected to result in a Material Adverse Change. None of the Loan
Parties or any Subsidiary of any Loan Party is in violation of any order, writ,
injunction or any decree of any Official Body which could reasonably be expected
to result in a Material Adverse Change.
5.1.7 Financial Statements.
(i) Historical Statements.
The Borrower has delivered to the Administrative Agent copies of its
audited consolidated year-end financial statements for and as of the end of the
fiscal year ended December 31, 2001 (the "Historical Statements"). The
Historical Statements were compiled from the books and records maintained by the
Borrower's management, are correct and complete and fairly represent the
consolidated financial condition of the Borrower and its Subsidiaries as of
their dates and the results of operations for the fiscal periods then ended and
have been prepared in accordance with GAAP consistently applied.
(ii) Accuracy of Financial Statements.
Neither the Borrower nor any Subsidiary of the Borrower has on the
Restatement Effective Date any liabilities, contingent or otherwise, or forward
or long-term commitments that are not disclosed in the Historical Statements or
in the notes thereto, and except as disclosed therein there are no unrealized or
anticipated losses from any commitments of the Borrower or any Subsidiary of the
Borrower which could reasonably be expected to result in a Material Adverse
Change. Since December 31, 2001, no Material Adverse Change has occurred, except
as set forth on Schedule 5.1.7.
(iii) Financial Projections. The Borrower has delivered to the Agents financial
projections of the Borrower and its Subsidiaries for the period January 1, 2002
through and including December 31, 2007 derived from various assumptions of the
Borrower's management (the "Financial Projections"). On the Restatement
Effective Date, the Financial Projections represent a reasonable range of
possible results in light of the history of the business, present and
foreseeable conditions and the intentions of the Borrower's management. The
Financial Projections accurately reflect the liabilities of the Borrower and its
Subsidiaries upon consummation of the transactions contemplated hereby as of the
Restatement Effective Date.
5.1.8 Use of Proceeds; Margin Stock.
5.1.8.1 General.
The Loan Parties shall use the proceeds of the Loans in accordance with
Sections 2.7 and 7.1.9.
5.1.8.2 Margin Stock.
None of the Loan Parties nor any Subsidiary of any Loan Party engages or
intends to engage principally, or as one of its important activities, in the
business of extending credit for the purpose, immediately, incidentally or
ultimately, of purchasing or carrying margin stock (within the meaning of
Regulation U). No part of the proceeds of any Loan has been or will be used,
immediately, incidentally or ultimately, to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock or to refund Indebtedness originally incurred for such purpose, or
for any purpose which entails a violation of or which is inconsistent with the
provisions of the regulations of the Board of Governors of the Federal Reserve
System. None of the Loan Parties nor any Subsidiary of any Loan Party holds or
intends to hold margin stock in such amounts that more than 25% of the
reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party
are or will be represented by margin stock.
5.1.9 Full Disclosure.
Neither this Agreement nor any other Loan Document, nor the Acquisition
Documents, nor any certificate, statement, agreement or other documents
furnished to the Administrative Agent or any Lender in connection herewith or
therewith, contains with respect to the Borrower and its Subsidiaries any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to any Loan Party which materially adversely affects the business, financial
condition or results of operations of the Borrower and its Subsidiaries taken as
a whole which has not been set forth in this Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the
Administrative Agent and the Lenders prior to or at the date hereof in
connection with the transactions contemplated hereby.
5.1.10 Taxes.
All federal, state, local and other tax returns required to have been filed
with respect to each Loan Party and each Subsidiary of each Loan Party have been
filed, and payment or adequate provision has been made for the payment of all
taxes, fees, assessments and other governmental charges which have or may become
due pursuant to said returns or to assessments received, except to the extent
that such taxes, fees, assessments and other charges are being contested in good
faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made. There are no agreements or waivers extending the statutory
period of limitations applicable to any federal income tax return of any Loan
Party or Subsidiary of any Loan Party for any period.
5.1.11 Consents and Approvals.
No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is required
by any Law or any agreement in connection with the execution, delivery and
carrying out of this Agreement and the other Loan Documents by any Loan Party,
except as listed on Schedule 5.1.11, all of which shall have been obtained or
made on or prior to the Restatement Effective Date except as otherwise indicated
on Schedule 5.1.11.
5.1.12 No Event of Default; Compliance With Instruments and Material Contracts.
No event has occurred and is continuing and no condition exists or will
exist after giving effect to the borrowings or other extensions of credit to be
made on the Restatement Effective Date under or pursuant to the Loan Documents
which constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiary of any Loan Party is in violation of (i) any term of
its certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii) any material agreement or
instrument to which it is a party or by which it or any of its properties may be
subject or bound where such violation could reasonably be expected to result in
a Material Adverse Change. All Material Contracts described in the definition of
"Material Contracts" to which any Loan Party or any Subsidiary of any Loan Party
is a party or by which any Loan Party or Subsidiary of any Loan Party is bound
are valid, binding and enforceable upon such Loan Party or Subsidiary and to the
best knowledge of the Borrower upon each of the other parties thereto in
accordance with their respective terms, and there is no default by any Loan
Party or any Subsidiary of any Loan Party under any Material Contract nor, to
the Loan Parties' knowledge, any default thereunder with respect to parties
thereto other than any Loan Party or Subsidiary of a Loan Party except in each
case to the extent the same could not reasonably be expected to result in a
Material Adverse Change. None of the Loan Parties or their Subsidiaries is bound
by any contractual obligation, or subject to any restriction in any organization
document, or any requirement of Law which could reasonably be expected to result
in a Material Adverse Change.
5.1.13 Insurance.
No notice has been given or claim made and no grounds exist to cancel or
avoid any insurance policies or bonds to which the Loan Parties are subject, or
to reduce the coverage provided thereby. Such policies and bonds provide
adequate coverage from reputable and financially sound insurers in amounts
sufficient to insure the assets and risks of each Loan Party and each Subsidiary
of each Loan Party in accordance with prudent business practice in the industry
of the Loan Parties and their Subsidiaries.
5.1.14 Compliance With Laws.
The Loan Parties and their Subsidiaries are in compliance in all material
respects with all applicable Laws (other than Environmental Laws which are
specifically addressed in Section 5.1.18 [Environmental Matters]) in all
jurisdictions in which any Loan Party or Subsidiary of any Loan Party is doing
business except where the failure to do so could not reasonably be expected to
result in a Material Adverse Change.
5.1.15 Investment Companies; Regulated Entities.
None of the Loan Parties or any Subsidiaries of any Loan Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control." None of the Loan
Parties or any Subsidiary of any Loan Party is subject to any other Federal or
state statute or regulation limiting its ability to incur Indebtedness for
borrowed money.
5.1.16 Plans and Benefit Arrangements.
(i) The Borrower and each other member of the ERISA Group are in compliance
in all material respects with any applicable provisions of ERISA with respect to
all Benefit Arrangements and Plans. There has been no Prohibited Transaction
with respect to any Benefit Arrangement or any Plan or, to the best knowledge of
the Borrower, with respect to any Multiemployer Plan or Multiple Employer Plan,
which could result in any material liability of the Borrower or any other member
of the ERISA Group. The Borrower 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
Borrower and each other member of the ERISA Group (i) have fulfilled in all
material respects their obligations under the minimum funding standards of
ERISA, (ii) have not incurred any liability to the PBGC (other than premium
payments), and (iii) have not had asserted against them any penalty for failure
to fulfill the minimum funding requirements of ERISA. All Plans and Benefit
Arrangements have been administered in all material respects with their terms
and applicable Law.
(ii) No event requiring notice to the PBGC under Section 302(f)(4)(A) of
ERISA has occurred or is reasonably expected to occur with respect to any Plan,
and no amendment with respect to which security is required under Section 307 of
ERISA has been made or is reasonably expected to be made to any Plan.
(iii) Neither the Borrower nor any other member of the ERISA Group has
incurred or reasonably expects to incur any material withdrawal liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower
nor any other member of the ERISA Group has been notified by any Multiemployer
Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer
Plan has been terminated within the meaning of Title IV of ERISA and, to the
best knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan
is reasonably expected to be reorganized or terminated, within the meaning of
Title IV of ERISA.
5.1.17 Employment Matters.
Each of the Loan Parties and each of their Subsidiaries is in substantial
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, where
the failure to comply could reasonably be expected to result in a Material
Adverse Change. There are no outstanding grievances, arbitration awards or
appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of any of the Loan Parties or any of their Subsidiaries which in any
case could reasonably be expected to result in a Material Adverse Change.
5.1.18 Environmental Matters.
Except as set forth on Schedule 5.1.18:
(a) the Loan Parties and their Subsidiaries are and have been in
substantial compliance with all Environmental Laws, except where the failure to
so comply could not reasonably be expected to result in a Material Adverse
Change;
(b) the Loan Parties and their Subsidiaries hold and are operating in
substantial compliance with Environmental Permits, except where the failure to
so comply could not reasonably be expected to result in a Material Adverse
Change;
(c) neither any property of any Loan Party or any Subsidiary of any Loan
Party nor their respective operations conducted thereon violates any order of
any court of governmental authority made pursuant to Environmental Laws except
for noncompliance with respect thereto which could not reasonably be expected to
result in a Material Adverse Change;
(d) there are no pending or, to the knowledge of any Loan Party, threatened
Environmental Claims against any Loan Party or any Subsidiary of any Loan Party
which could reasonably be expected to result in a Material Adverse Change; and
(e) there are no pending or, to the knowledge of any Loan Party, threatened
Environmental Complaints against any Loan Party or any Subsidiary of any Loan
Party which could reasonably be expected to result in a Material Adverse Change.
5.1.19 Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the Guaranty
Agreement and each of the other Loan Documents to which it is a party do rank
and will rank at least pari passu in priority of payment with all other
Indebtedness of such Loan Party except Indebtedness of such Loan Party to the
extent secured by Permitted Liens. There is no Lien upon or with respect to any
of the properties or income of any Loan Party or Subsidiary of any Loan Party
which secures indebtedness or other obligations of any Person except for
Permitted Liens.
5.1.20 Title to Properties.
Each Loan Party and each Subsidiary of each Loan Party has good and
marketable title to or valid leasehold interest in all material properties,
assets and other rights which it purports to own or lease or which are reflected
as owned or leased on its books and records, free and clear of all Liens and
encumbrances except Permitted Liens, and subject to the terms and conditions of
the applicable leases.
5.1.21 Coastal Agreement.
Canyon Fuel is a "Buyer Indemnitee" under the Coastal Agreement and, as
such, has the rights of an "Indemnified Party" under the Coastal Agreement.
Consummation of the Acquisition did not alter the rights of Canyon Fuel under
the Coastal Agreement.
5.1.22 Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party and each Subsidiary of each Loan Party owns or possesses
all the material patents, trademarks, service marks, trade names, copyrights,
licenses, registrations and franchises necessary to own and operate its
properties and to carry on its business as presently conducted and planned to be
conducted by such Loan Party or Subsidiary, without known possible, alleged or
actual conflict with the rights of others. All material patents, trademarks,
service marks, trade names, copyrights, licenses, registrations and franchises
of each Loan Party and each Subsidiary of each Loan Party are listed and
described on Schedule 5.1.22.
5.1.23 Security Interests.
The Liens and security interests continued on the Restatement Effective
Date or thereafter granted to the Administrative Agent for the benefit of the
Lenders pursuant to the Pledge Agreements in the Collateral constitute and will
continue to constitute Prior Security Interests under the Uniform Commercial
Code as in effect in each applicable jurisdiction (the "Uniform Commercial
Code") or other applicable Law entitled to all the rights, benefits and
priorities provided by the Uniform Commercial Code or such Law. Financing
Statements relating to said security interests have been filed in each office
and in each jurisdiction where required in order to perfect the security
interests described above, possession has been taken of all stock certificates
or other certificates evidencing the Collateral, all such action as is necessary
or advisable to establish such rights of the Agent has been taken, and there is
no necessity for any further action in order to preserve, protect and continue
such rights, except the filing of continuation statements with respect to such
financing statements within six months prior to each five-year anniversary of
the filing of such financing statements or within not less than six months prior
to such other longer anniversary date in any jurisdiction (and the Borrower
shall notify the Administrative Agent, in writing if such anniversary date is
other than five years). All filing fees and other expenses in connection with
each such action have been or will be paid by the Borrower.
5.1.24 Status of Pledged Collateral.
All the shares of capital stock, Partnership Interests or LLC Interests
included in the Collateral pledged pursuant to the Pledge Agreements are or will
be upon issuance validly issued and nonassessable and owned beneficially and of
record by the pledgor free and clear of any Lien or restriction on transfer,
except as otherwise provided by the Pledge Agreements and except as the right of
the Lenders to dispose of the shares of capital stock, Partnership Interests or
LLC Interests may be limited by the Securities Act of 1933, as amended, and the
regulations promulgated by the SEC thereunder and by applicable state securities
laws. There are no shareholder, partnership, limited liability company or other
agreements or understandings with respect to the shares of capital stock,
Partnership Interests or LLC Interests included in the Collateral except for the
partnership agreements and limited liability company agreements described on
Schedule 5.1.24. The Loan Parties have delivered true and correct copies of such
partnership agreements and limited liability company agreements to the
Administrative Agent.
5.1.25 Solvency.
On the Restatement Effective Date and at the time of each borrowing of
Revolving Credit Loans, both the Borrower and the Borrower and its Subsidiaries
on a consolidated basis are Solvent after giving effect to the transactions
contemplated by the Loan Documents and any incurrence of Indebtedness and all
other Obligations.
5.2 Continuation of Representations.
Except as to those representations and warranties limited by their terms to
the Closing Date or the Restatement Effective Date, as the case may be, the
Borrower makes the representations and warranties in this Section 5 on the
Restatement Effective Date and on each date thereafter on which a Loan is made
or a Letter of Credit is issued as provided in and subject to Sections 6.1
[First Loans and Letters of Credit] and 6.2 [Each Additional Loan or Letter of
Credit].
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to amend and restate the Original Credit
Agreement and make Loans and of the Issuing Banks to issue Letters of Credit
hereunder is subject to the performance by the Borrower of its Obligations to be
performed hereunder at or prior to the making of any such Loans or issuance of
such Letters of Credit and to the satisfaction of the following further
conditions:
6.1 First Loans and Letters of Credit.
On the Restatement Effective Date:
6.1.1 Officer's Certificate.
The representations and warranties of the Borrower contained in Section 5
and of each Loan Party in each of the other Loan Documents shall be true and
accurate on and as of the Restatement Effective Date with the same effect as
though such representations and warranties had been made on and as of such date
(except representations and warranties which relate solely to an earlier date or
time, which representations and warranties shall be true and correct on and as
of the specific dates or times referred to therein), and each of the Loan
Parties shall have performed and complied with all covenants and conditions
hereof and thereof, no Event of Default or Potential Default shall have occurred
and be continuing or shall exist; and there shall be delivered to the
Administrative Agent for the benefit of each Lender a certificate of the
Borrower dated the Restatement Effective Date and signed by the Chief Executive
Officer, President or Chief Financial Officer of the Borrower to each such
effect.
6.1.2 Secretary's Certificate.
There shall be delivered to the Administrative Agent for the benefit of
each Lender a certificate dated the Restatement Effective Date and signed by the
Secretary or an Assistant Secretary of each of the Loan Parties, certifying as
appropriate as to:
(i) all action taken by each Loan Party in connection with this Agreement
and the other Loan Documents;
(ii) the names of the officer or officers authorized to sign this Agreement
and the other Loan Documents and the true signatures of such officer or officers
and specifying the Authorized Officers permitted to act on behalf of each Loan
Party for purposes of this Agreement and the true signatures of such officers,
on which the Administrative Agent and each Lender may conclusively rely; and
(iii) in the case of the Borrower, copies of its organizational documents,
including its certificate of incorporation and bylaws as in effect on the
Restatement Effective Date and, in the case of the certificate of incorporation
certified by the appropriate state official where such documents are filed in a
state office, together with certificates from the appropriate state officials as
to the continued existence and good standing of the Borrower in the state of its
formation and the state of its principal place of business.
6.1.3 Delivery of Loan Documents; Filing Receipts.
This Agreement, the Notes, the Guaranty Agreement, the Collateral
Documents, the Subordination Agreement, and the other Loan Documents shall have
been duly executed and delivered to the Administrative Agent and shall continue
the Obligations and the liens and security interests in the Collateral for the
benefit of the Lenders, together with all appropriate financing statements and
appropriate stock powers and certificates evidencing the Subsidiary Shares, the
Partnership Interests and the LLC Interests, and all other instruments and
Collateral required to be delivered to the Administrative Agent for the benefit
of the Lenders under the Collateral Documents. The Administrative Agent shall
have received copies of all filing receipts and acknowledgments issued by any
governmental authority to evidence any recordation or filing necessary to
continue the perfection of the Lien of the Lenders on the Collateral or other
satisfactory evidence of such recordation
and filing.
6.1.4 Opinion of Counsel.
There shall be delivered to the Administrative Agent for the benefit of
each Lender a written opinion of Kirkpatrick & Lockhart LLP and of Robert G.
Jones, the General Counsel for the Loan Parties (who may rely on the opinions of
such other counsel as may be acceptable to the Administrative Agent), dated the
Closing Date and in form and substance satisfactory to the Administrative Agent
and its counsel:
(i) as to the matters set forth in Exhibit 6.1.4; and
(ii) as to such other matters incident to the transactions contemplated
herein as the Administrative Agent may reasonably request.
6.1.5 Legal Details.
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be in form and
substance satisfactory to the Administrative Agent and counsel for the
Administrative Agent, and the Administrative Agent shall have received all such
other counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the Administrative Agent and said counsel, as the Administrative
Agent or said counsel may reasonably request.
6.1.6 Payment of Fees.
The Borrower shall have paid or caused to be paid to the Arrangers all fees
required to be paid by the Borrower to the Arrangers, to the Administrative
Agent for itself and for the account of the Lenders to the extent not previously
paid all fees accrued through the Restatement Effective Date and the costs and
expenses for which the Arrangers and the Lenders are entitled to be reimbursed.
6.1.7 Consents.
All material consents required to effectuate the transactions contemplated
by the Loan Documents and by the Acquisition Documents shall have been obtained,
including, as may be necessary, the consent of the requisite parties to the
Lease Documents in connection with the amendment and restatement of the
Collateral Sharing Agreement (including, without limitation, for the release of
a portion of the Collateral as described therein).
6.1.8 Officer's Certificate Regarding No Material Adverse Change and Solvency.
Since December 31, 2001, no Material Adverse Change shall have occurred;
since December 31, 2001, and through the Restatement Effective Date, there shall
have been no material change in the management of the Borrower; and there shall
have been delivered to the Administrative Agent for the benefit of each Lender a
certificate dated the Restatement Effective Date, in form and substance
satisfactory to the Agents and signed by the Chief Executive Officer, President
or Chief Financial Officer of the Borrower to each such effect and further
certifying that the Borrower and its Subsidiaries, on a consolidated basis are
Solvent after giving effect to the transactions contemplated hereby, the
accuracy of all representations and warranties by the Loan Parties under the
Loan Documents, the compliance with all covenants under the Loan Documents and
the absence of any Event of Default or Potential Default.
6.1.9 No Violation of Laws.
The making of the Loans, the issuance of the Letters of Credit and the
consummation of the transactions contemplated hereby shall not contravene any
Law applicable to any Loan Party or any of the Lenders.
6.1.10 No Actions or Proceedings.
No action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain or prohibit, or to obtain damages in
respect of, this Agreement, the other Loan Documents or the consummation of the
transactions contemplated hereby or thereby or which, in the Administrative
Agent's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
6.1.11 Insurance.
The Borrower shall have delivered to the Agents evidence of the insurance
required under the Loan Documents.
6.1.12 Refinancing.
(a) To permit the refinancing by the Lenders of the revolving credit loans
and the prepayment of the term loans, all as outstanding under the Original
Credit Agreement, Borrower shall have (i) delivered to the Administrative Agent
not later than 10:00 a.m., Pittsburgh time, three (3) Business Days prior to the
first Borrowing Date hereunder an appropriately completed irrevocable Committed
Loan Request pursuant to which Revolving Credit Loans in an amount sufficient to
refinance the revolving credit loans and prepay the term loans under the
Original Credit Agreement shall be requested, and (ii) made appropriate
arrangements with respect to all amounts outstanding under the Original Credit
Agreement in order to accomplish the amendment and restatement thereof on such
first Borrowing Date. Each Lender which was a lender under the Original Credit
Agreement, by execution of this Agreement, waives all notice of prepayment of
loans and all notice of termination of the commitments under the Original Credit
Agreement.
(b) In the event Borrower requests that the first Borrowing Date hereunder
occur on the Restatement Effective Date, Borrower shall provide to the
Administrative Agent, in addition to the Committed Loan Request required by
clause (a) directly above, its agreement in the form of Exhibit 6.1.12 pursuant
to which Borrower shall be bound by the terms of Section 4.5.2 with respect to
such proposed borrowing notwithstanding that this Agreement shall not be
effective at the time of such request and may not become effective on the date
such borrowing is contemplated.
6.1.13 Report of Independent Engineer.
The Borrower shall have delivered to the Agents the report of Weir
International, independent engineers, with respect to the coal reserves of
Borrower and its Subsidiaries and such other matters as are contained in such
report.
6.1.14 Satisfactory Environmental Review.
The environmental condition of the Loan Parties' and their Subsidiaries'
assets shall be satisfactory to the Agents in all respects.
6.2 Each Additional Loan or Letter of Credit.
At the time of making any Loans or issuing any Letters of Credit other than
Loans made or Letters of Credit issued on the Closing Date and after giving
effect to the proposed extensions of credit: the representations and warranties
of the Borrower contained in Section 5 and of the Loan Parties in the other Loan
Documents shall be true on and as of the date of such additional Loan or Letter
of Credit with the same effect as though such representations and warranties had
been made on and as of such date (except representations and warranties which
expressly relate solely to an earlier date or time, which representations and
warranties shall be true and correct on and as of the specific dates or times
referred to therein) and the Borrower shall have performed and complied with all
covenants and conditions hereof; no Event of Default or Potential Default shall
have occurred and be continuing or shall exist; the making of the Loans or
issuance of such Letter of Credit shall not contravene any Law applicable to the
Borrower or any Subsidiary of the Borrower or any of the Lenders; and the
Borrower shall have delivered to the Administrative Agent (and the Issuing Banks
in the case of a request for a Letter of Credit, and PNC Bank in the case of a
request for a Swing Loan) a duly executed and completed Committed Loan Request
or application for a Letter of Credit as the case may be.
7. COVENANTS
7.1 Affirmative Covenants.
The Borrower covenants and agrees that until payment in full of the Loans
and Reimbursement Obligations and interest thereon, expiration or termination of
all Letters of Credit, satisfaction of all of the Loan Parties' other
Obligations under the Loan Documents and termination of the Commitments, the
Borrower shall, and shall cause each of its Subsidiaries to, comply at all times
with the following affirmative covenants:
7.1.1 Preservation of Existence, Etc.
The Borrower shall, and shall cause Arch Western to, maintain its legal
existence as a corporation or limited liability company, as the case may be. The
Borrower shall cause each of its Subsidiaries (other than Arch Western, which is
subject to the previous sentence) to maintain its legal existence as a
corporation, limited partnership or limited liability company, as the case may
be, except as otherwise expressly permitted in Section 7.2.3 [Liquidations,
Mergers, etc.]. The Borrower shall, and shall cause Arch Western to, maintain
its license or qualification and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary, except where the failure to so qualify or maintain
such qualification could be corrected without a material adverse effect on the
Borrower or Arch Western. The Borrower shall cause each of its Subsidiaries
(other than Arch Western, which is subject to the previous sentence) to maintain
its license or qualification and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary, except where the failure to so qualify could not
reasonably be expected to result in a Material Adverse Change.
7.1.2 Payment of Liabilities, Including Taxes, Etc.
The Borrower shall, and shall cause each of its Subsidiaries to, duly pay
and discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties belonging to it,
prior to the date on which penalties attach thereto, and all lawful claims
which, if unpaid after becoming due, might become a lien or charge upon any
properties of the Borrower or any Subsidiary of the Borrower, provided that
neither the Borrower nor any Subsidiary of the Borrower shall be required to pay
any such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings and with respect to which there are proper
reserves as required by GAAP.
7.1.3 Maintenance of Insurance.
Each Loan Party shall, and shall cause each of its Subsidiaries to, insure
its properties and assets against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including fire, extended
coverage, property damage, workers' compensation, public liability and business
interruption insurance) and against other risks (including errors and omissions)
in such amounts as similar properties and assets are insured by prudent
companies in similar circumstances carrying on similar businesses, and with
reputable and financially sound insurers, including self-insurance to the extent
customary. At the request of the Administrative Agent, the Loan Parties shall
deliver to the Administrative Agent and each of the Lenders (x) on each
anniversary of the Restatement Effective Date and such other date as the
Administrative Agent shall reasonably request an original certificate of
insurance signed by the Loan Parties' independent insurance broker describing
and certifying as to the existence of the insurance required to be maintained by
this Agreement and the other Loan Documents and (y) from time to time a summary
schedule indicating all insurance then in force with respect to each of the Loan
Parties.
7.1.4 Maintenance of Properties and Leases.
The Borrower shall, and shall cause each of its Subsidiaries to, maintain
and preserve all of its respective material properties, necessary or useful in
the proper conduct of the business of the Borrower or such Subsidiary of the
Borrower, in good working order and condition, ordinary wear and tear excepted.
Without limiting the generality of the foregoing, the Borrower shall, and shall
cause each of its Subsidiaries to, maintain in full force and effect all
patents, trademarks, service marks, trade names, copyrights, licenses and
franchises necessary for the ownership and operation of its properties and
business if the failure so to maintain the same would constitute a Material
Adverse Change.
7.1.5 Visitation Rights.
The Borrower shall, and shall cause each of its Subsidiaries to, permit any
of the officers or authorized employees or representatives of the Administrative
Agent or any of the Banks to visit and inspect during normal business hours any
of its properties and to examine and make excerpts from its books and records
and discuss its business affairs, finances and accounts with its officers, all
in such detail and at such times and as often as any of the Banks may reasonably
request, provided that each Bank shall provide the Borrower and the
Administrative Agent with reasonable notice prior to any visit or inspection. In
the event any Bank desires to conduct an audit of the Borrower or any Subsidiary
of the Borrower, such Bank shall make a reasonable effort to conduct such audit
contemporaneously with any audit to be performed by the Administrative Agent.
7.1.6 Keeping of Records and Books of Account.
The Borrower shall, and shall cause each Subsidiary of the Borrower to,
maintain and keep proper books of record and account which enable the Borrower
and its Subsidiaries to issue financial statements in accordance with GAAP and
as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which
full, true and correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
7.1.7 Plans and Benefit Arrangements.
The Borrower shall, and shall cause each other member of the ERISA Group
to, comply with ERISA, the Internal Revenue Code and other applicable Laws
applicable to Plans and Benefit Arrangements except where such failure, alone or
in conjunction with any other failure, could not reasonably be expected to
result in a Material Adverse Change. Without limiting the generality of the
foregoing, the Borrower shall cause all of its Plans and all Plans maintained by
any member of the ERISA Group to be funded in accordance with the minimum
funding requirements of ERISA and shall make, and cause each member of the ERISA
Group to make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
7.1.8 Compliance With Laws.
The Borrower shall, and shall cause each of its Subsidiaries to, comply
with all applicable Laws, including all Environmental Laws, in all respects,
provided that it shall not be deemed to be a violation of this Section 7.1.8 if
any failure to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which in the
aggregate could reasonably be expected to result in a Material Adverse Change.
Without limiting the generality of the foregoing, the Borrower shall, and shall
cause each of its Subsidiaries to, comply with all Environmental Permits
applicable to their respective operations and properties; obtain, maintain,
comply with and renew all Environmental Permits necessary for their respective
operations and properties; and manage, use and handle all Regulated Substances
in compliance with all applicable Environmental Laws, in each case, except for
such non-compliance which would not or could not reasonably be expected to
result in a Material Adverse Change.
7.1.9 Use of Proceeds.
On and after the Restatement Effective Date, the Borrower will use the
Letters of Credit and the proceeds of the Loans only (i) to continue and
refinance indebtedness under the revolving credit facility of the Original
Credit Agreement, (ii) to repay the term loans under the Original Credit
Agreement, or (iii) for general corporate purposes and for working capital for
the Borrower and its Subsidiaries . The Borrower's use of the Letters of Credit
and the proceeds of the Loans shall not be for any purpose which contravenes any
applicable Law or any provision hereof.
7.1.10 Operation of Mines.
The Borrower shall, and shall cause each of its Subsidiaries to, operate
their mines in all material respects in accordance with sound coal mining
practices.
7.1.11 Maintenance of Material Contracts.
The Borrower shall, and shall cause each of its Subsidiaries to, comply
with the provisions of and to maintain in full force and effect all material
licenses, material permits and Material Contracts (other than Environmental
Permits which are addressed in Section 7.1.8 above) to which any such Person is
a party, except where the failure to so maintain in full force and effect a
material license, material permit or a Material Contract could not be reasonably
expected to result in a Material Adverse Change.
7.1.12 Further Assurances.
Each Loan Party shall, from time to time, at its expense, faithfully
preserve and protect the Collateral Agent's Lien on and Prior Security Interest
in the Collateral as a continuing first priority perfected Lien, subject only to
Permitted Liens, and shall do such other acts and things as the Administrative
Agent or the Collateral Agent in their sole discretion may deem necessary or
advisable from time to time in order to preserve, perfect and protect the Liens
granted under the Loan Documents and to exercise and enforce its rights and
remedies thereunder with respect to the Collateral.
7.1.13 Subordination of Intercompany Loans.
Each Loan Party shall cause any intercompany Indebtedness, loans or
advances owed by any Loan Party to any other Loan Party or by any Subsidiary of
any Loan Party to any Loan Party to be subordinated pursuant to the terms of the
Subordination Agreement.
7.2 Negative Covenants.
The Borrower covenants and agrees that until payment in full of the Loans
and Reimbursement Obligations and interest thereon, expiration or termination of
all Letters of Credit, satisfaction of all of the Loan Parties' other
Obligations hereunder and termination of the Commitments, the Borrower shall,
and shall cause each of its Subsidiaries to, comply with the following negative
covenants:
7.2.1 Indebtedness.
The Borrower shall not, and shall not permit any of its Subsidiaries to, at
any time create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) additional, unsecured Indebtedness of the Borrower incurred after the
Restatement Effective Date, in an aggregate amount not to exceed $250,000,000
outstanding at any time, so long as, both before and after giving effect to any
proposed additional Indebtedness:
(y) the Borrower and its Subsidiaries shall be in compliance with Section
7.2.10 [Maximum Leverage Ratio], Section 7.2.11 [Minimum Fixed Charge Coverage
Ratio], and Section 7.2.12 [Minimum Net Worth] determined on a pro forma basis
(in the case of the Fixed Charge Coverage Ratio, the Minimum Net Worth test and
the Leverage Ratio as of the end of the fiscal quarter most recently ended and
as if such proposed additional Indebtedness was outstanding as of the first day
of such fiscal quarter), and
(z) the covenants and defaults applicable in respect of such proposed
additional Indebtedness are not, taken as a whole, materially more restrictive
with respect to the Borrower and its Subsidiaries than the covenants and
defaults under this Agreement;
(iii) Indebtedness of Arch Western payable to Borrower, subject to the
limitations of Section 7.2.14(v);
(iv) Indebtedness of Arch Western and its Subsidiaries pursuant to the Arch
Western Credit Facility;
(v) Indebtedness of any Subsidiary of the Borrower which is a member of the
Arch Coal Group payable to the Borrower or to any other member of the Arch Coal
Group, so long as such Indebtedness is subordinated to the obligations of the
Loan Parties under the Loan Documents pursuant to the Subordination Agreement;
(vi) Indebtedness of the Borrower payable to Arch Western;
(vii) Indebtedness of the Borrower and its Subsidiaries reflected in the
Historical Statements (other than Indebtedness refinanced with the proceeds of
the Loans) and any refinancings thereof or amendments thereto that do not
increase the amount of such Indebtedness beyond an amount otherwise permitted by
this Agreement;
(viii) Indebtedness of the Securitization Subsidiary in a
PermittedReceivables Financing; and
(ix) additional unsecured Indebtedness of the Borrower or any other Loan
Party incurred after the Restatement Effective Date for the purpose of
refinancing the indebtedness of Arch Western under the Arch Western Credit
Facility, so long as, the terms and conditions thereof are reasonably
satisfactory to the Agents and the Required Lenders.
7.2.2 Liens.
The Borrower shall not, and shall not permit AWAC or any member of the Arch
Coal Group to, at any time create, incur, assume or suffer to exist any Lien on
any of its respective property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except, in the case of
the Borrower and the Arch Coal Group, Permitted Liens.
7.2.3 Liquidations, Mergers, Consolidations, Acquisitions.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
dissolve, liquidate or wind-up its affairs, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise all or substantially
all of the assets or capital stock of any other Person, provided that:
(1) any Subsidiary of the Borrower may consolidate or merge into any other
Subsidiary of the Borrower (except for the Excluded Subsidiaries), and
(2) any Loan Party may acquire, whether by purchase or by merger, (A) all
of the ownership interests of another Person or (B) substantially all of assets
of another Person or of a business or division of another Person (each a
"Permitted Acquisition"), provided that each of the following requirements is
met:
(i) the board of directors or other equivalent governing body of such
Person shall have approved such Permitted Acquisition;
(ii) the business acquired, or the business conducted by the Person whose
ownership interests are being acquired, as applicable, shall be substantially
the same as one or more line or lines of business conducted by the Loan Parties
and shall comply with Section 7.2.7 [Continuation of or Change in Business], in
the case of any merger a Loan Party shall be the surviving entity after giving
effect to such transaction, all of the equity interests of the business or
Person acquired shall be pledged to the Administrative Agent for the benefit of
the Lenders on a first priority perfected basis pursuant to the Pledge
Agreements and such other Collateral Documents as are necessary to create a
Prior Security Interest in such assets, to the extent that a Significant
Subsidiary is acquired or formed in connection with or as a result of such
acquisition, the Loan Parties shall comply with the provisions of Section 7.2.6
[Subsidiaries, Partnerships and Joint Ventures] and Section 10.18 [Joinder of
Guarantors], and in connection with such acquisition and the granting of such
Liens and security interests, the Borrower shall deliver to the Administrative
Agent for the benefit of the Lenders such opinions of counsel, certificates and
such other Loan Documents as the Administrative Agent may reasonably request;
(iii) no Potential Default or Event of Default shall exist immediately
prior to and after giving effect to such Permitted Acquisition;
(iv) the Borrower and its Subsidiaries shall be in compliance with the
covenants contained in Sections 7.2.10 [Maximum Leverage Ratio], 7.2.11 [Minimum
Fixed Charge Coverage Ratio], and 7.2.12 [Minimum Net Worth] determined on a pro
forma basis after giving effect to such Permitted Acquisition (including in such
computation Indebtedness or other liabilities assumed or incurred in connection
with such Permitted Acquisition as if such liabilities were incurred as of the
first day of the applicable period of determination); and
(v) after giving effect to such Permitted Acquisition, the Revolving Credit
Commitments shall exceed the Revolving Facility Usage by at least $75,000,000.
7.2.4 Dispositions of Assets or Subsidiaries.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
sell, convey, assign, lease, abandon, securitize or enter into a securitization
transaction, or otherwise transfer or dispose of, voluntarily or involuntarily,
any of its properties or assets, tangible or intangible (including sale,
assignment, discount or other disposition of accounts, contract rights, chattel
paper, equipment, general intangibles with or without recourse or of capital
stock, shares of beneficial interest, partnership interests or limited liability
company interests of a Subsidiary of the Borrower), except:
(i) transactions involving the sale of inventory in the ordinary course of
business;
(ii) subject to the first proviso of clause (v) below, any sale, transfer
or lease of assets by any Subsidiary of the Borrower which is a member of the
Arch Coal Group to any other member of the Arch Coal Group or any sale, transfer
or lease of assets by any Subsidiary of Arch Western which is a member of the
Arch Western Group to any other member of the Arch Western Group;
(iii) subject to the first proviso of clause (v) below, any sale of assets
if and to the extent the Net Cash Proceeds thereof are applied within 180 days
of the consummation of such sale to the purchase by the Borrower or a Subsidiary
of substitute assets; provided that the Borrower shall have delivered to the
Administrative Agent a certificate (a "Replacement Sales Certificate") of the
chief financial officer or the treasurer of the Borrower, certifying as to (x)
the amount of such Net Cash Proceeds and (y) the fact that the Borrower or a
Subsidiary shall invest such Net Cash Proceeds in substitute assets within 180
days after the date of consummation of such sale; and provided further that if
and to the extent such Net Cash Proceeds are not so applied to the purchase of
substitute assets within such 180-day period, such sale shall be deemed to have
been made on the last day of such period pursuant to clause (vi) below;
(iv) any sale of accounts receivable or contracts giving rise to accounts
receivable in a Permitted Receivables Financing, provided that at the time of
any such sale, no Event of Default shall exist or shall result from such
saleafter giving effect thereto;
(v) any sale, transfer or lease (including any lease transaction under
Section 7.2.9 [Off-Balance Sheet Financing and Capital Leases]) of assets, other
than those specifically excepted pursuant to clauses (i) through (iv) above,
provided that any disposition of assets by Borrower after the consummation of
the MLP Transaction to the master limited partnership or similar entity formed
in connection with the MLP Transaction shall be subject to and governed by
solely this clause (v), provided further that (a) at the time of any such
disposition, no Event of Default shall exist or shall result from such
disposition, (b) the Borrower and its Subsidiaries shall be in compliance with
the covenants contained in Sections 7.2.10 [Maximum Leverage Ratio], 7.2.11
[Minimum Fixed Charge Coverage Ratio], and 7.2.12 [Minimum Net Worth] determined
on a pro forma basis after giving effect to each such sale, transfer or lease of
assets, and (c) the aggregate net book value, as determined in accordance with
GAAP, of all assets so sold, transferred, or leased by the Borrower and its
Subsidiaries shall not exceed in any calendar year $40,000,000;
(vi) subject to the first proviso of clause (v) above, any sale, transfer
or lease of assets, other than those specifically excepted pursuant to clauses
(i) through (v) above or clause (vii), (viii), (ix), or (x) below, so long as a
permanent reduction of the Revolving Credit Commitments with respect to the Net
Cash Proceeds thereof is made in accordance with the provisions of Section
4.4.5;
(vii) any transfer of assets by the Borrower to Arch Western as
contemplated by the Contribution Agreement;
(viii) any transfer of assets by any member of the Arch Western Group
permitted by the Arch Western Credit Facility, as in effect on the Closing Date;
(ix) any disposition of assets by any member of the Arch Coal Group to
consummate the MLP Transaction, provided that (a) at the time of any
disposition, no Event of Default shall exist or shall result from such
disposition after giving effect thereto, and (b) the Borrower and its
Subsidiaries shall be in compliance with the covenants contained in Sections
7.2.10 [Maximum Leverage Ratio], 7.2.11 [Minimum Fixed Charge Coverage Ratio],
and 7.2.12 [Minimum Net Worth] determined on a pro forma basis after giving
effect to the MLP Transaction; or
(x) any disposition of partnership or other interests in a master limited
partnership or similar entity or in any general partner of such master limited
partnership, in any such case, received as part of the MLP Transaction permitted
by Section 7.2.4 [Dispositions of Assets or Subsidiaries] hereof provided that
at the time of any such disposition, no Event of Default shall exist or shall
result from such disposition after giving effect thereto.
7.2.5 Affiliate Transactions.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into or carry out any transaction (including purchasing property or
services from or selling property or services to) with any Affiliate of the
Borrower unless such transaction is not otherwise prohibited by this Agreement
and is entered into in the ordinary course of business upon fair and reasonable
arm's length terms and conditions; provided, however, that the MLP Transaction
and any other transaction permitted hereby involving the transfer of assets to
the master limited partnership or similar entity established in connection with
the MLP Transaction shall be deemed to be a transaction that is entered into in
the ordinary course of business of the Borrower.
7.2.6 Subsidiaries, Partnerships and Joint Ventures.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
own or create directly or indirectly any Subsidiaries other than (i)
Subsidiaries which are not Significant Subsidiaries, and (ii) any Significant
Subsidiary which has joined the Guaranty Agreement as Guarantor, which has
pledged the equity interests it owns in any other Significant Subsidiary to the
Collateral Agent for the benefit of the Lenders on a first priority perfected
basis pursuant to the Pledge Agreements, who has executed all other Loan
Documents, who has also delivered to the Administrative Agent such opinions of
counsel and other documents in connection therewith as the Administrative Agent
may reasonably request, and who has caused all of the issued and outstanding
capital stock, partnership interests, member interests or other equity interest
of such Significant Subsidiary that are owned by the Borrower or another
Subsidiary of the Borrower to be pledged on a first priority perfected basis to
the Collateral Agent for the benefit of the Lenders pursuant to the Pledge
Agreements, all in form and substance satisfactory to the Administrative Agent.
Neither the Borrower nor any Subsidiary of the Borrower shall become or agree to
become a general or limited partner in any general or limited partnership or
become a member or manager of, or hold a limited liability company interest in,
a limited liability company, except that (1) the Loan Parties may make an
Investment in a Permitted Joint Venture; provided, however, that the aggregate
permitted Investments in all Permitted Joint Ventures shall not at any time
exceed, for all Loan Parties and their Subsidiaries, $50,000,000, (2) the Loan
Parties may hold limited partnership interests or limited liability company
member interests in any general partner of the master limited partnership formed
as part of the MLP Transaction, or (3) the Loan Parties may be general or
limited partners in other Loan Parties or be members or managers of, or hold
limited liability company interests in, other Loan Parties and except that the
Borrower may hold a limited liability company interest in Arch Western and Arch
Western may hold limited liability company interests in its Subsidiaries which
are members of the Arch Western Group.
7.2.7 Continuation of or Change in Business.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than the business substantially as conducted and
operated by the Borrower or such Subsidiary as of the Restatement Effective Date
and any business substantially related thereto, and neither the Borrower nor any
Subsidiary of the Borrower shall permit any material change in such business.
7.2.8 Plans and Benefit Arrangements.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in a Prohibited Transaction with any Plan, Benefit Arrangement or
Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances results in liability under ERISA which could reasonably
be expected to result in a Material Adverse Change.
7.2.9 Off-Balance Sheet Financing and Capital Leases.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into any lease which would constitute a capital lease in accordance with
GAAP or engage in any off-balance sheet transaction (i.e., the liabilities in
respect of which do not appear on the liability side of the balance sheet)
providing the functional equivalent of borrowed money (including sale/leasebacks
or Synthetic Leases) (collectively, "Off-Balance Sheet and Capital Lease
Transactions"), except Indebtedness or other obligations in respect of
Off-Balance Sheet and Capital Lease Transactions, so long as the aggregate
amount of Indebtedness or other obligations in respect of Off-Balance Sheet and
Capital Lease Transactions does not at any time exceed $100,000,000. For
purposes of this Section 7.2.9, (a) "Synthetic Lease" shall mean any lease
transaction under which the parties intend that (i) the lease will be treated as
an "operating lease" by the lessee pursuant to Statement of Financial Accounting
Standards No. 13, as amended, and (ii) the lessee will be entitled to various
tax benefits ordinarily available to owners (as opposed to lessees) of like
property and (b) the amount of any lease which is not a capital lease in
accordance with GAAP is the aggregate amount of minimum lease payments due
pursuant to such lease for any noncancelable portion of its term.
7.2.10 Maximum Leverage Ratio.
The Borrower shall not at any time permit the Leverage Ratio to exceed the
ratio set forth below for the periods specified below:
Period Ratio
Restatement Effective Date through and
including December 31, 2002 3.50 to 1.00
January 1, 2003 through and including
December 31, 2003 3.25 to 1.00
January 1, 2004 and thereafter 3.00 to 1.00
7.2.11 Minimum Fixed Charge Coverage Ratio.
The Borrower shall not permit the Fixed Charge Coverage Ratio, to be less
than the ratio set forth below for the periods specified below:
Period Ratio
Restatement Effective Date through and
including December 31, 2002 2.75 to 1.00
January 1, 2003 through and including
December 31, 2003 3.25 to 1.00
January 1, 2004 and thereafter 4.00 to 1.00
7.2.12 Minimum Net Worth.
The Borrower shall not at any time permit Consolidated Tangible Net Worth
(determined without regard to the valuation of derivatives as required by GAAP
and as the effect thereof is reported in the "Other Comprehensive Income"
category on the Borrower's consolidated balance sheet for each period from and
after April 1, 2002) to be less than the Base Net Worth.
7.2.13 No Restriction on Dividends.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into or be bound by any agreement which prohibits or restricts, in any
manner, the payment of dividends (whether in cash, securities, property or
otherwise), other than restrictions applicable to the Arch Western Group set
forth in the Arch Western Credit Facility, other than restrictions applicable to
Arch Western set forth in the Arch Western LLC Agreement and other than
restrictions applicable to Canyon Fuel set forth in the Canyon Fuel LLC
Agreement.
7.2.14 Loans and Investments.
The Borrower shall not, and shall not permit any of its Subsidiaries to, at
any time make or suffer to remain outstanding any loan or advance to, or
purchase, acquire or own any stock, bonds (other than, in the ordinary course of
business, royalty bonds or bonds securing performance by the Borrower or a
Subsidiary of the Borrower under bonus bids), notes or securities of, or any
partnership interest (whether general or limited) or limited liability company
interest in, or any other Investment or interest in, or make any capital
contribution to, any other Person (an "investment"), or agree, become or remain
liable to do any of the foregoing, except:
(i) trade credit extended on usual and customary terms in the ordinary
course of business;
(ii) investments by the Borrower in its Subsidiaries which are members of
the Arch Coal Group;
(iii) Permitted Investments;
(iv) investments in Permitted Joint Ventures in accordance with Section
7.2.6 [Subsidiaries, Partnerships and Joint Ventures]; (v) investments by the
Borrower in, or reimbursement obligations by the Borrower to an Issuing Bank
with respect to any Letter of Credit issued for the direct or indirect benefit
of, Arch Western (collectively the "Permitted Investments in Arch Western");
provided, however, that the Borrower shall not make any Permitted Investment in
Arch Western if at the time such investment is proposed to be made and after
giving effect thereto (x) the aggregate amount of the Permitted Investments in
Arch Western would exceed $100,000,000 and (y) the Leverage Ratio would be
greater than 3.00 to 1.00;
(vi) loans and advances permitted by Section 7.2.1(v);
(vii) other Investments, in connection with or related to the operations of
the Borrower and its Subsidiaries, not exceeding $50,000,000 in the aggregate at
any time;
(viii) Investments constituting capitalization of any Securitization
Subsidiary consistent with normal practice for transactions of such type; and
(ix) limited partnership or other interests in a master limited partnership
or similar entity received as part of the MLP Transaction permitted by Section
7.2.4 [Dispositions of Assets or Subsidiaries] hereof and limited partnership
interests or limited liability company member interests in any general partner
of the master limited partnership received as part of the MLP Transaction.
7.2.15 No Amendments to Acquisition Documents.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into any amendment or modification to or waiver or consent under (or
solicit any such amendment, modification, waiver or consent) any of the
Acquisition Documents or the Coastal Agreement which could reasonably be
expected to be material and adverse to the Banks without the prior written
consent of the Agents.
7.2.16 Transactions With Respect to AWAC.
The Borrower shall not permit AWAC to: (i) incur any indebtedness or other
obligation or liabilities (whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, or joint or several);
and (ii) own any asset other than its member interest in Arch Western.
7.3 Reporting Requirements.
The Borrower covenants and agrees that until payment in full of the Loans
and Reimbursement Obligations, and interest thereon, expiration or termination
of all Letters of Credit, satisfaction of all of the Loan Parties' other
Obligations hereunder and under the other Loan Documents and termination of the
Commitments, the Borrower will furnish or cause to be furnished to the
Administrative Agent and each of the Banks:
7.3.1 Quarterly Financial Statements.
As soon as available and in any event within forty-five (45) calendar days
after the end of each of the first three fiscal quarters in each fiscal year,
financial statements of the Borrower and its Subsidiaries, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal
quarter, related consolidated and consolidating statements of income and
stockholders' equity and related consolidated statement of cash flows for the
fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end audit adjustments)
by the Chief Executive Officer, President or Chief Financial Officer of the
Borrower as having been prepared in accordance with GAAP, consistently applied,
and setting forth in comparative form the respective financial statements for
the corresponding date and period in the previous fiscal year. The Borrower will
be deemed to have complied with the delivery requirements with respect to the
consolidated financial statements required to be delivered under this Section
7.3.1 if within forty-five (45) days after the end of its fiscal quarter, the
Borrower delivers to the Administrative Agent and each of the Banks a copy of
the Borrower's Form 10-Q as filed with the SEC and the financial statements
contained therein meet the requirements described in this Section.
7.3.2 Annual Financial Statements.
As soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Borrower, financial statements of the Borrower and
its Subsidiaries consisting of a consolidated and consolidating balance sheet as
of the end of such fiscal year, related consolidated and consolidating
statements of income and stockholders' equity and related consolidated statement
of cash flows for the fiscal year then ended, all in reasonable detail and
setting forth in comparative form the financial statements as of the end of and
for the preceding fiscal year, and certified, in the case of the consolidated
financial statements, by independent certified public accountants of nationally
recognized standing satisfactory to the Administrative Agent. The certificate or
report of accountants shall be free of qualifications (other than any
consistency qualification that may result from a change in the method used to
prepare the financial statements as to which such accountants concur) and shall
not indicate the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan Documents.
The Borrower will be deemed to have complied with the delivery requirements with
respect to the consolidated financial statements required to be delivered under
this Section 7.3.2 if within ninety (90) days after the end of its fiscal year,
the Borrower delivers to the Administrative Agent and each of the Banks a copy
of the Borrower's Annual Report and Form 10-K as filed with the SEC and the
financial statements and certification of public accountants contained therein
meet the requirements described in this Section.
7.3.3 Certificate of the Borrower.
Concurrently with the financial statements of the Borrower furnished to the
Administrative Agent and to the Banks pursuant to Sections 7.3.1 [Quarterly
Financial Statements] and 7.3.2 [Annual Financial Statements], a certificate of
the Borrower signed by the Chief Executive Officer, President or Chief Financial
Officer of the Borrower, in the form of Exhibit 7.3.3, to the effect that,
except as described pursuant to Section 7.3.4 [Notice of Default], (i) the
representations and warranties of the Borrower contained in Section 5 and in the
other Loan Documents are true on and as of the date of such certificate with the
same effect as though such representations and warranties had been made on and
as of such date (except representations and warranties which expressly relate
solely to an earlier date or time which shall be true and correct on and as of
the specific dates or times referred to therein) and the Loan Parties have
performed and complied with all covenants and conditions hereof, (ii) no Event
of Default or Potential Default exists and is continuing on the date of such
certificate, (iii) containing a list of each Significant Subsidiary, each
Inactive Subsidiary, and each Special Subsidiary, other than those set forth on
Schedule 5.1.2, and (iv) containing calculations in sufficient detail to
demonstrate compliance as of the date of such financial statements with all
financial covenants contained in Section 7.2 [Negative Covenants].
7.3.4 Notice of Default.
Promptly after any officer of the Borrower has learned of the occurrence of
an Event of Default or Potential Default, a certificate signed by the Chief
Executive Officer, President or Chief Financial Officer of the Borrower setting
forth the details of such Event of Default or Potential Default and the action
which the Borrower proposes to take with respect thereto.
7.3.5 Notice of Litigation.
Promptly after the commencement thereof or promptly after the determination
thereof, notice of all actions, suits, proceedings or investigations before or
by any Official Body or any other Person against any Loan Party or any
Subsidiary of any Loan Party, which (x) involve or could be reasonably expected
to involve assessments against any Loan Party or any Subsidiary of any Loan
Party in excess of $20,000,000, individually or in the aggregate, or (y) involve
a claim or series of claims which if adversely determined could reasonably be
expected to result in a Material Adverse Change.
7.3.6 Notice of Change in Debt Rating.
Within five (5) Business Days after Standard & Poor's or Moody's announces
a change in the Borrower's Debt Rating, notice of such change. Borrower will
deliver together with such notice a copy of any written notification which
Borrower received from the applicable rating agency regarding such change of
Debt Rating.
7.3.7 Notices Regarding Plans and Benefit Arrangements.
7.3.7.1 Certain Events.
Promptly upon becoming aware of the occurrence thereof, notice (including
the nature of the event and, when known, any action taken or threatened by the
Internal Revenue Service or the PBGC with respect thereto) of:
(i) any Reportable Event with respect to the Borrower or any other member
of the ERISA Group which has not been waived by the PBGC,
(ii) any Prohibited Transaction which could subject the Borrower or any
other member of the ERISA Group to a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in
connection with any Plan, any Benefit Arrangement or any trust created
thereunder but only if the assessment of such civil penalty or tax could
reasonably be expected to result in a Material Adverse Change,
(iii) any assertion of material withdrawal liability with respect to any
Multiemployer Plan,
(iv) any partial or complete withdrawal from a Multiemployer Plan by the
Borrower or any other member of the ERISA Group under Title IV of ERISA (or
assertion thereof), where such withdrawal is likely to result in material
withdrawal liability,
(v) any cessation of operations (by the Borrower or any other member of the
ERISA Group) at a facility in the circumstances described in Section 4062(e) of
ERISA where such cessation of operations is likely to result in a material
liability under ERISA Sections 4063 or 4064,
(vi) withdrawal by the Borrower or any other member of the ERISA Group from
a Multiple Employer Plan where such withdrawal is likely to result in material
withdrawal liability,
(vii) a failure by the Borrower or any other member of the ERISA Group to
make a payment to a Plan required to avoid imposition of a Lien under Section
302(f) of ERISA,
(viii) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or
(ix) any change in the actuarial assumptions or funding methods used for
any Plan, where the effect of such change is to materially increase the unfunded
benefit liability or obligation to make periodic contributions.
7.3.7.2 Notices of Involuntary Termination and Annual Reports.
As soon as available or within thirty (30) days after receipt thereof,
copies of (a) all notices received by the Borrower or any other member of the
ERISA Group of the PBGC's intent to terminate any Plan administered or
maintained by the Borrower or any member of the ERISA Group, or to have a
trustee appointed to administer any such Plan; and (b) at the request of the
Administrative Agent or any Lender, each annual report (IRS Form 5500 series)
and all accompanying schedules, the most recent actuarial reports, the most
recent financial information concerning the financial status of each Plan
administered or maintained by the Borrower or any other member of the ERISA
Group, and schedules showing the amounts contributed to each such Plan by or on
behalf of the Borrower or any other member of the ERISA Group in which any of
their personnel participate or from which such personnel may derive a benefit,
and each Schedule B (Actuarial Information) to the annual report filed by the
Borrower or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
7.3.7.3 Notice of Voluntary Termination.
Promptly upon the filing thereof, copies of any notice of standard or
distressed termination with the PBGC, or any successor or equivalent form, filed
with the PBGC in connection with the termination of any Plan.
7.3.8 Other Information.
Promptly following request therefor, such other information as any Agent or
Lender may reasonably request, including, without limitation, forecasts and
projections.
8. DEFAULT
8.1 Events of Default.
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
8.1.1 Payments Under Loan Documents.
The Borrower shall fail to pay (i) any principal of any Loan (including
scheduled installments, mandatory prepayments or the payment due at maturity) or
Reimbursement Obligation when such principal is due hereunder or (ii) any
interest on any Loan or Reimbursement Obligation or any other amount owing
hereunder or under the other Loan Documents within three (3) Business Days after
such interest or other amount becomes due in accordance with the terms hereof or
thereof;
8.1.2 Breach of Warranty.
Any representation or warranty made at any time by the Borrower herein or
by any of the Loan Parties in any other Loan Document, or in any certificate,
other instrument or statement furnished pursuant to the provisions hereof or
thereof, shall prove to have been false or misleading in any material respect as
of the time it was made or furnished;
8.1.3 Breach of Negative Covenants or Visitation Rights.
Any of the Loan Parties shall default in the observance or performance of
any covenant contained in Section 7.1.5 [Visitation Rights], Section 7.2
[Negative Covenants] or 7.3.4 [Notice of Default];
8.1.4 Breach of Other Covenants.
(a) Any of the Loan Parties shall fail to timely perform the covenants set
forth in Sections 7.3.1, 7.3.2 or 7.3.3 [Reporting Requirements] and such
default shall continue unremedied for a period of thirty (30) Business Days
after any officer of any Loan Party becomes aware of the occurrence thereof;
(b) Any of the Loan Parties shall default in the observance or performance
of any other covenant, condition or provision hereof or of any other Loan
Document and such default shall continue unremedied for a period of thirty (30)
Business Days after any officer of any Loan Party becomes aware of the
occurrence thereof (such grace period to be applicable only in the event such
default can be remedied by corrective action of the Loan Parties as determined
by the Administrative Agent in its sole discretion);
8.1.5 Defaults in Other Agreements or Indebtedness.
(a) A default or event of default shall occur at any time under the terms
of any other agreement involving borrowed money or the extension of credit or
any other Indebtedness or any Derivatives Obligations under which any Loan Party
or Subsidiary of any Loan Party (other than Excluded Subsidiaries) may be
obligated as a borrower or guarantor in excess of $20,000,000 in the aggregate,
and such default or event of default consists of the failure to pay (beyond any
period of grace permitted with respect thereto, whether waived or not) any
indebtedness when due (whether at stated maturity, by acceleration or otherwise)
or if such default or event of default permits or causes (or with the giving of
notice or the passage of time or both would permit or cause) the acceleration of
any indebtedness (whether or not such right shall have been waived) or the
termination of any commitment to lend;
(b) A default or event of default shall occur at any time under the terms
of any of the Lease Documents or under or with respect to any other Obligations
(as such term is defined in the Collateral Sharing Agreement) and such default
or event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any indebtedness or other
obligation thereunder when due (whether at stated maturity, by acceleration or
otherwise) or if such default or event of default permits or causes (or with the
giving of notice or the passage of time or both would permit or cause) the
acceleration of any indebtedness or other obligation thereunder (whether or not
such right shall have been waived) or the termination of any of the Lease
Documents or the termination of any other agreement or instrument evidencing any
other Obligations (as such term is defined in the Collateral Sharing Agreement);
8.1.6 Judgments or Orders.
Any judgments or orders for the payment of money in excess of $20,000,000
in the aggregate shall be entered against any Loan Party or any Subsidiary of
any Loan Party by a court having jurisdiction in the premises, which judgment is
not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry; provided, however, that any such
judgment or order shall not be an Event of Default under this Section 8.1.6 if
and for so long as (i) the amount of such judgment or order in excess of
$20,000,000 is covered by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (ii) such insurer, which
shall be rated at least "A" by A.M. Best Company, has been notified of, and has
not disputed the claim made for payment of, the amount of such judgment or
order;
8.1.7 Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against any Loan Party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
or shall in any way be challenged or contested or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
8.1.8 Proceedings Against Assets.
Any of the Loan Parties' or any of their Subsidiaries' assets are attached,
seized, levied upon or subjected to a writ or distress warrant; or such come
within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not cured within thirty (30) days
thereafter;
8.1.9 Notice of Lien or Assessment.
A notice of Lien or assessment in excess of $20,000,000 which is not a
Permitted Lien is filed of record with respect to all or any part of any of the
Loan Parties' or any of their Subsidiaries' assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including the PBGC, or any taxes or
debts owing at any time or times hereafter to any one of these becomes payable
and the same is not paid within thirty (30) days after the same becomes payable;
8.1.10 Insolvency.
The Borrower and its Subsidiaries, taken as a whole, cease to be Solvent,
or the Borrower and its Subsidiaries, taken as a whole, fail to pay their debts
generally as they become due or admit their inability to pay their debts
generally as they become due;
8.1.11 Events Relating to Plans and Benefit Arrangements.
Any of the following occurs: (i) any Reportable Event, which the
Administrative Agent determines in good faith constitutes 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) the
PBGC shall give notice of its intent to institute proceedings to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and,
in the case of the occurrence of (i), (ii), (iii) or (iv) above, the
Administrative Agent determines in good faith that the amount of the Borrower's
liability is likely to exceed 10% of its Consolidated Tangible Net Worth; (v)
the Borrower or any member of the ERISA Group shall fail to make any
contributions when due to a Plan or a Multiemployer Plan; (vi) the Borrower or
any other member of the ERISA Group shall make any amendment to a Plan with
respect to which security is required under Section 307 of ERISA; (vii) the
Borrower or any other member of the ERISA Group shall withdraw completely or
partially from a Multiemployer Plan; (viii) the Borrower or any other member of
the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of
ERISA to withdraw) from a Multiple Employer Plan; or (ix) any applicable Law is
adopted, changed or interpreted by any Official Body with respect to or
otherwise affecting one or more Plans, Multiemployer Plans or Benefit
Arrangements and, with respect to any of the events specified in (v), (vi),
(vii), (viii) or (ix), the Administrative Agent determines in good faith that
any such occurrence would be reasonably likely to materially and adversely
affect the total enterprise represented by the Borrower and the other members of
the ERISA Group;
8.1.12 Cessation of Business.
The Loan Parties, taken as a whole, cease to conduct their business as
contemplated, except as expressly permitted under Section 7.2.3 [Liquidations,
Mergers, etc.] or 7.2.4 [Dispositions of Assets and Subsidiaries], or are
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of their business and such injunction, restraint or other
preventive order is not dismissed within thirty (30) days after the entry
thereof;
8.1.13 Change of Control.
Any person or group of persons (within the meaning of Sections 13(d) or
14(a) of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the SEC
under said Act) 35% or more of the voting capital stock of the Borrower; or (ii)
within a period of twelve (12) consecutive calendar months, individuals who (1)
were directors of the Borrower on the first day of such period, (2) were
nominated for election by the Borrower, or (3) were appointed by the Board shall
cease to constitute a majority of the board of directors of the Borrower;
8.1.14 Involuntary Proceedings.
A proceeding shall have been instituted in a court having jurisdiction in
the premises seeking a decree or order for relief in respect of any Loan Party
or any Material Subsidiary of a Loan Party in an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of any Loan
Party or any Material Subsidiary of a Loan Party for any substantial part of its
property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undisguised or unseated and in effect for a period of
thirty (30) consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding; or
8.1.15 Voluntary Proceedings.
Any Loan Party or any Material Subsidiary of a Loan Party shall commence a
voluntary case under any applicable bankruptcy, insolvency, reorganization or
other similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or other similar official) of
itself or for any substantial part of its property or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action in furtherance of any of the
foregoing.
8.2 Consequences of Event of Default.
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.
If an Event of Default specified under Sections 8.1.1 through 8.1.13 shall
occur and be continuing, the Banks, the Issuing Banks and the Administrative
Agent shall be under no further obligation to make Revolving Credit Loans or
Swing Loans or issue Letters of Credit, as the case may be (and the
Administrative Agent shall not make any Swing Loans without the consent of the
Required Banks nor shall any Issuing Bank issue any Letter of Credit without
consent of the Required Banks), and the Administrative Agent may, and upon the
request of the Required Banks shall, by written notice to the Borrower, take one
or both of the following actions: (i) terminate the Commitments and thereupon
the Commitments shall be terminated and of no further force and effect, or (ii)
declare the unpaid principal amount of the Revolving Credit Loans and Swing
Loans then outstanding and all interest accrued thereon, any unpaid fees and all
other Indebtedness of the Borrower to the Lenders hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Administrative Agent for the benefit of each
Bank without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, and (iii) require the Borrower to, and the
Borrower shall thereupon, deposit in a non-interest-bearing account with the
Administrative Agent, as cash collateral for its Obligations under the Loan
Documents, an amount equal to the maximum amount currently or at any time
thereafter available to be drawn on all outstanding Letters of Credit, and the
Borrower hereby pledges to the Administrative Agent and the Banks, and grants to
the Administrative Agent and the Banks a security interest in, all such cash as
security for such Obligations. Upon the curing of all existing Events of Default
to the satisfaction of the Required Banks, the Administrative Agent shall return
such cash collateral to the Borrower; and
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section 8.1.14 [Involuntary
Proceedings] or 8.1.15 [Voluntary Proceedings] shall occur, the Commitments
shall automatically terminate and be of no further force and effect, the Lenders
shall be under no further obligation to make Revolving Credit Loans or Swing
Loans hereunder or to issue Letters of Credit and the unpaid principal amount of
the Loans then outstanding and all interest accrued thereon, any unpaid fees and
all other Indebtedness of the Borrower to the Lenders hereunder and thereunder
shall be immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived; and
8.2.3 Set-off.
If an Event of Default shall occur and be continuing, any Lender to whom
any Obligation is owed by any Loan Party hereunder or under any other Loan
Document or any participant of such Lender which has agreed in writing to be
bound by the provisions of Section 9.13 [Equalization of Lenders] and any
branch, Subsidiary or Affiliate of such Lender or participant anywhere in the
world shall have the right, in addition to all other rights and remedies
available to it, without notice to such Loan Party, to set-off against and apply
to the then unpaid balance of all the Loans and all other Obligations of the
Borrower and the other Loan Parties hereunder or under any other Loan Document
any debt owing to, and any other funds held in any manner for the account of,
the Borrower or such other Loan Party by such Lender or participant or by such
branch, Subsidiary or Affiliate, including all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Borrower or such
other Loan Party for its own account (but not including funds held in custodian
or trust accounts) with such Lender or participant or such branch, Subsidiary or
Affiliate. Such right shall exist whether or not any Lender or the
Administrative Agent shall have made any demand under this Agreement or any
other Loan Document, whether or not such debt owing to or funds held for the
account of the Borrower or such other Loan Party is or are matured or unmatured
and regardless of the existence or adequacy of any Guaranty or any other
security, right or remedy available to any Lender or the Administrative Agent;
and
8.2.4 Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing, and whether or not
the Administrative Agent shall have accelerated the maturity of the Committed
Loans pursuant to any of the foregoing provisions of this Section 8.2, the
Agents or the Required Banks (or at the request of the Agents or the Required
Banks, any Bank, and any such Bank that has received such a request shall thus
be entitled to exercise the rights set forth in this Section ) if owed any
amount with respect to the Loans, may, to the extent permitted by Law, proceed
to protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement or the other Loan Documents, including as
permitted by applicable Law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of any Agent or such Bank; and
8.2.5 Application of Proceeds.
From and after the date on which the Administrative Agent or any Lender
shall have taken any action pursuant to this Section 8.2 and until all
Obligations of the Loan Parties have been paid in full, subject to the
provisions of the Collateral Sharing Agreement, any and all proceeds received by
the Administrative Agent or any Lender from the exercise of any remedy by the
Administrative Agent or any Lender shall be applied as follows:
(i) first, to reimburse the Administrative Agent and the Lenders for
out-of-pocket costs, expenses and disbursements, including reasonable attorneys'
and paralegals' fees and legal expenses, incurred by the Administrative Agent or
the Lenders in connection with collection of any Obligations of any of the Loan
Parties under any of the Loan Documents;
(ii) second, to the repayment of all Indebtedness then due and unpaid of
the Loan Parties to the Lenders incurred under this Agreement or any of the
other Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Administrative Agent may determine in its
discretion; and
(iii) the balance, if any, as required by Law.
8.2.6 Other Rights and Remedies.
In addition to all of the rights and remedies contained in this Agreement
or in any of the other Loan Documents, the Administrative Agent shall have all
of the rights and remedies under applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by Law.
The Administrative Agent may, and upon the request of the Required Banks shall,
exercise all post-default rights granted to the Administrative Agent and the
Lenders under the Loan Documents or applicable Law.
9. THE AGENTS
9.1 Appointment.
Each Lender hereby designates, appoints and authorizes: (i) PNC Bank to act
as Administrative Agent for such Lender under this Agreement and the other Loan
Documents for such Lender under this Agreement and to execute and deliver or
accept on behalf of each of the Lenders the other Loan Documents, and (ii)
authorizes each of PNC Bank and JPMorgan Chase to act as Agent for such Lender
under this Agreement. Each Lender hereby irrevocably authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the Agents, the
Administrative Agent or any of them by the terms hereof, together with such
powers as are reasonably incidental thereto. PNC Bank agrees to act as the
Administrative Agent on behalf of the Lenders to the extent provided in this
Agreement, and each of PNC Bank and JPMorgan Chase agrees to act as Agent on
behalf of the Banks to the extent provided in this Agreement.
9.2 Delegation of Duties.
The Agents and the Administrative Agent may perform any of their respective
duties hereunder by or through agents or employees (provided such delegation
does not constitute a relinquishment of their respective duties as Agents or the
Administrative Agent, as the case may be) and, subject to Sections 9.5
[Reimbursement and Indemnification of Agents by the Borrower] and 9.6
[Exculpatory Provisions; Limitation of Liability], shall be entitled to engage
and pay for the advice or services of any attorneys, accountants or other
experts concerning all matters pertaining to its duties hereunder and to rely
upon any advice so obtained. It is acknowledged and agreed that each of
Citibank, Credit Lyonnais, and U.S. Bank has received the title of Documentation
Agent under this Agreement, however, such designation is solely to give each of
Citibank, Credit Lyonnais, and U.S. Bank such title and each of Citibank, Credit
Lyonnais, and U.S. Bank has no duties, responsibilities, functions, obligations
or liabilities implied or otherwise under the Loan Documents solely as a result
of being so designated as Documentation Agent.
9.3 Nature of Duties; Independent Credit Investigation.
Neither the Agents nor the Administrative Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist. The duties of
the Administrative Agent and of the Agents shall be mechanical and
administrative in nature; neither the Administrative Agent nor the Agents shall
have by reason of this Agreement a fiduciary or trust relationship in respect of
any Lender; and nothing in this Agreement, expressed or implied, is intended to
or shall be so construed as to impose upon the Administrative Agent or any Agent
any obligations in respect of this Agreement except as expressly set forth
herein. Without limiting the generality of the foregoing, the use of the term
"Agents" in this Agreement with reference to the Agents or Administrative Agent,
as the case may be, is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Each Lender expressly acknowledges (i) that neither the
Administrative Agent nor any Agent has made any representations or warranties to
it and that no act by the Administrative Agent or any Agent hereafter taken,
including any review of the affairs of any of the Loan Parties, shall be deemed
to constitute any representation or warranty by the Administrative Agent or any
Agent to any Lender; (ii) that it has made and will continue to make, without
reliance upon the Administrative Agent or any Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that neither the Administrative Agent nor
any Agent shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Loan, the issuance of any Letter of Credit or at any time or times
thereafter.
9.4 Actions in Discretion of Agents; Instructions From the Banks.
The Administrative Agent and each Agent agrees, upon the written request of
the Required Banks, to take or refrain from taking any action of the type
specified as being within the Administrative Agent's or such Agent's rights,
powers or discretion herein, provided that neither the Administrative Agent nor
any Agent shall be required to take any action which exposes the Administrative
Agent or any Agent to personal liability or which is contrary to this Agreement
or any other Loan Document or applicable Law. In the absence of a request by the
Required Banks, the Administrative Agent and each Agent shall have authority, in
their sole discretion, to take or not to take any such action, unless this
Agreement specifically requires the consent of the Required Banks or all of the
Banks. Any action taken or failure to act pursuant to such instructions or
discretion shall be binding on the Banks, subject to Section 9.6 [Exculpatory
Provisions, etc.]. Subject to the provisions of Section 9.6, no Lender shall
have any right of action whatsoever against the Administrative Agent or any
Agent as a result of the Administrative Agent or any Agent acting or refraining
from acting hereunder in accordance with the instructions of the Required Banks,
or in the absence of such instructions, in the absolute discretion of the
Administrative Agent or the Agents, as the case may be.
9.5 Reimbursement and Indemnification of Agents by the Borrower.
The Borrower unconditionally agrees to pay or reimburse the Administrative
Agent and each Agent and hold the Administrative Agent and each Agent harmless
against (a) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements, including fees and expenses of outside counsel,
appraisers and environmental consultants, incurred by the Administrative Agent
or any Agent (i) in connection with the development, negotiation, preparation,
printing, execution, administration, syndication, interpretation and performance
of this Agreement and the other Loan Documents, (ii) relating to any requested
amendments, waivers or consents pursuant to the provisions hereof, (iii) in
connection with the enforcement of this Agreement or any other Loan Document or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (iv) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, and (b) all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent or any Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Administrative Agent or any Agent hereunder
or thereunder, provided that the Borrower shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements if the same results from the
Administrative Agent's or any Agent's gross negligence or willful misconduct, or
if the Borrower was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the Borrower
shall remain liable to the extent such failure to give notice does not result in
a loss to the Borrower), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which shall not be
unreasonably withheld.
9.6 Exculpatory Provisions; Limitation of Liability.
Neither the Administrative Agent, any Agent nor any of their respective
directors, officers, employees, agents, attorneys or Affiliates shall (a) be
liable to any Lender for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith including pursuant to any Loan Document,
unless caused by its or their own gross negligence or willful misconduct, (b) be
responsible in any manner to any of the Lenders for the effectiveness,
enforceability, genuineness, validity or the due execution of this Agreement or
any other Loan Documents or for any recital, representation, warranty, document,
certificate, report or statement herein or made or furnished under or in
connection with this Agreement or any other Loan Documents, or (c) be under any
obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Loan Parties, or the financial condition of the Loan
Parties, or the existence or possible existence of any Event of Default or
Potential Default. No claim may be made by any of the Loan Parties, any Lender,
the Administrative Agent or any Agent or any of their respective Subsidiaries
against the Administrative Agent, any Agent, any Lender or any of their
respective directors, officers, employees, agents, attorneys or Affiliates, or
any of them, for any special, indirect or consequential damages or, to the
fullest extent permitted by Law, for any punitive damages in respect of any
claim or cause of action (whether based on contract, tort, statutory liability,
or any other ground) based on, arising out of or related to any Loan Document or
the transactions contemplated hereby or any act, omission or event occurring in
connection therewith, including the negotiation, documentation, administration
or collection of the Loans, and the Borrower (for itself and on behalf of each
of its Subsidiaries), the Administrative Agent, each Agent and each Lender
hereby waives, releases and agrees never to sue upon any claim for any such
damages, whether such claim now exists or hereafter arises and whether or not it
is now known or suspected to exist in its favor. Each Lender agrees that, except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent or any Agent hereunder or given to the
Administrative Agent or any Agent for the account of or with copies for the
Lenders, the Administrative Agent, each Agent and each of their respective
directors, officers, employees, agents, attorneys or Affiliates shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Administrative Agent, any Agent or any of their
directors, officers, employees, agents, attorneys or Affiliates.
9.7 Reimbursement and Indemnification of Agents by the Lenders.
Each Lender agrees to reimburse and indemnify the Administrative Agent and
each Agent (to the extent not reimbursed by the Borrower and without limiting
the Obligation of the Borrower to do so) in proportion to its Revolving Credit
Ratable Share, from and against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, reasonable costs, expenses or
disbursements, including attorneys' fees and disbursements, and costs of
appraisers and environmental consultants, of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Administrative Agent, the
Agents, or any of them in their respective capacities as such, in any way
relating to or arising out of this Agreement or any other Loan Documents or any
action taken or omitted by the Administrative Agent or any Agent hereunder or
thereunder, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (a) if the same results from the Administrative
Agent's or any Agent's gross negligence or willful misconduct, as the case may
be, or (b) if such Lender was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense (except that
such Lender shall remain liable to the extent such failure to give notice does
not result in a loss to the Lender), or (c) if the same results from a
compromise and settlement agreement entered into without the consent of such
Lender, which shall not be unreasonably withheld. In addition, each Lender
agrees promptly upon demand to reimburse the Administrative Agent and each Agent
(to the extent not reimbursed by the Borrower and without limiting the
Obligation of the Borrower to do so) in proportion to its Revolving Credit
Ratable Share, for all amounts due and payable by the Borrower to the
Administrative Agent or the Agents, as the case may be in connection with the
periodic audit of the Loan Parties' books, records and business properties by
the Administrative Agent or the Agents.
9.8 Reliance by Agents.
The Administrative Agent and each Agent shall be entitled to rely upon any
writing, telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
the advice and opinions of counsel and other professional advisers selected by
the Administrative Agent or any Agent. The Administrative Agent and each Agent
shall be fully justified in failing or refusing to take any action hereunder
unless it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
9.9 Notice of Default.
Neither the Administrative Agent nor any Agent shall be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default unless such person has received written notice from a Bank or the
Borrower referring to this Agreement, describing such Potential Default or Event
of Default and stating that such notice is a "notice of default."
9.10 Notices.
Each of the Administrative Agent and each Agent agrees to promptly send to
each Bank a copy of all notices received from the Borrower pursuant to the
provisions of this Agreement or the other Loan Documents promptly upon receipt
thereof. The Administrative Agent shall promptly notify the Borrower and the
other Banks of each change in the Base Rate and the effective date thereof.
9.11 Banks in Their Individual Capacities.
With respect to its Revolving Credit Commitment, the Revolving Credit
Loans, the Swing Loans, the issuance of any Letter of Credit made by it and any
other rights and powers given to it as a Bank hereunder or under any of the
other Loan Documents, the Administrative Agent and each Agent shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though it were not the Administrative Agent or an Agent, as the case may be, and
the term "Banks" shall, unless the context otherwise indicates, include the
Administrative Agent and each Agent in its individual capacity. PNC Bank and its
Affiliates, JPMorgan Chase and its Affiliates, each other Agent and its
Affiliates, and each of the Lenders and their respective Affiliates may, without
liability to account, except as prohibited herein, make loans to, accept
deposits from, discount drafts for, act as trustee under indentures of, and
generally engage in any kind of banking or trust business with the Loan Parties
and their Affiliates, in the case of the Administrative Agent or any Agent, as
though it were not acting as Administrative Agent or Agent, as the case may be,
hereunder and in the case of each Lender, as though such Lender were not a
Lender hereunder. The Lenders acknowledge that, pursuant to such activities, the
Administrative Agent or its Affiliates or any Agent or its respective Affiliates
may (i) receive information regarding the Loan Parties (including information
that may be subject to confidentiality obligations in favor of the Loan Parties)
and acknowledge that neither the Administrative Agent nor any Agent shall be
under any obligation to provide such information to them, and (ii) accept fees
and other consideration from the Loan Parties for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
9.12 Holders of Notes.
The Administrative Agent and each Agent may deem and treat any payee of any
Note as the owner thereof for all purposes hereof unless and until written
notice of the assignment or transfer thereof shall have been filed with the
Administrative Agent and the Agents. Any request, authority or consent of any
Person who at the time of making such request or giving such authority or
consent is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
9.13 Equalization of Lenders.
The Lenders and the holders of any participations in any Commitments or
Loans or other rights or obligations of a Lender hereunder agree among
themselves that, with respect to all amounts received by any Lender or any such
holder for application on any Obligation hereunder or under any such
participation, whether received by voluntary payment, by realization upon
security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will be
made in the manner stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Lenders and such holders in
proportion to their interests in payments on the Loans, except as otherwise
provided in Sections 3.4.3 [Administrative Agent's and Lender's Rights], 4.4.2
[Replacement of a Lender] or 4.5 [Additional Compensation in Certain
Circumstances]. The Lenders or any such holder receiving any such amount shall
purchase for cash from each of the other Lenders an interest in such Lender's
Loans in such amount as shall result in a ratable participation by the Lenders
and each such holder in the aggregate unpaid amount of the Loans, provided that
if all or any portion of such excess amount is thereafter recovered from the
Lender or the holder making such purchase, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by law (including court order) to be
paid by the Lender or the holder making such purchase.
9.14 Successor Agents.
Any Agent or the Administrative Agent (i) may resign as Agent or
Administrative Agent, as the case may be or (ii) shall resign if such
resignation is requested by the Required Banks (if the Agent or Administrative
Agent is a Bank, such Agent's or Administrative Agent's Loans and Commitment
shall be considered in determining whether the Required Banks have requested
such resignation) or required by Section 4.4.2 [Replacement of a Lender], in
either case of (i) or (ii) by giving not less than thirty (30) days' prior
written notice to the Borrower. If any Agent or the Administrative Agent shall
resign under this Agreement, then either (a) the Required Banks shall appoint
from among the Banks a successor to such Agent or Administrative Agent, as the
case may be, for the Banks, subject to the consent of the Borrower, such consent
not to be unreasonably withheld (provided, that, no consent of the Borrower
shall be required during any period when an Event of Default exists and is
continuing), or (b) if a successor Agent or Administrative Agent shall not be so
appointed and approved within the thirty (30) day period following an Agent's or
the Administrative Agent's notice, as the case may be, to the Banks of its
resignation, then the resigning Administrative Agent or resigning Agent, as the
case may be, shall appoint, with the consent of the Borrower, such consent not
to be unreasonably withheld (provided, that, no consent of the Borrower shall be
required during any period when an Event of Default exists and is continuing), a
successor who shall be a Bank shall serve as Administrative Agent or Agent, as
the case may be, until such time as the Required Banks appoint and the Borrower
consents to the appointment of a successor to such resigning Administrative
Agent or Agent. Upon its appointment pursuant to either clause (a) or (b) above,
such successor Administrative Agent or Agent shall succeed to the rights, powers
and duties of the resigning Administrative Agent or Agent, as the case may be,
and the terms "Agent" and "Administrative Agent" shall mean such successor Agent
or Administrative Agent, as the case may be, effective upon its appointment, and
the former Administrative Agent's or Agent's rights, powers and duties as an
Agent or Administrative Agent shall be terminated without any other or further
act or deed on the part of such former Agent or Administrative Agent or any of
the parties to this Agreement. After the resignation of the Administrative Agent
or any Agent hereunder, the provisions of this Section 9 shall inure to the
benefit of such former Administrative Agent and each former Agent, and such
former Administrative Agent and each former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was Administrative Agent or an Agent under this Agreement.
9.15 Administrative Agent's Fees.
The Borrower shall pay to the Administrative Agent a nonrefundable fee (the
"Administrative Agent's Fee") for the Administrative Agent's services hereunder
under the terms of a letter (the "Administrative Agent's Letter") between the
Borrower and the Administrative Agent, as amended from time to time.
9.16 Availability of Funds.
The Administrative Agent may assume that each Lender has made or will make
the proceeds of a Loan available to the Administrative Agent unless the
Administrative Agent shall have been notified by such Lender on or before the
later of (1) the close of Business on the Business Day preceding the Borrowing
Date with respect to such Loan or two (2) hours before the time on which the
Administrative Agent actually funds the proceeds of such Loan to the Borrower
(whether using its own funds pursuant to this Section 9.16 or using proceeds
deposited with the Administrative Agent by the Lenders and whether such funding
occurs before or after the time on which Lenders are required to deposit the
proceeds of such Loan with the Administrative Agent). The Administrative Agent
may, in reliance upon such assumption (but shall not be required to), make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Administrative Agent by such Lender, the
Administrative Agent shall be entitled to recover such amount on demand from
such Lender (or, if such Lender fails to pay such amount forthwith upon such
demand from the Borrower) together with interest thereon, in respect of each day
during the period commencing on the date such amount was made available to the
Borrower and ending on the date the Administrative Agent recovers such amount,
at a rate per annum equal to (i) the Federal Funds Effective Rate during the
first three (3) days after such interest shall begin to accrue and (ii) the
applicable interest rate in respect of such Loan after the end of such three-day
period.
9.17 Calculations.
In the absence of gross negligence or willful misconduct, the
Administrative Agent shall not be liable for any error in computing the amount
payable to any Lender whether in respect of the Loans, fees or any other amounts
due to the Lenders under this Agreement. In the event an error in computing any
amount payable to any Lender is made, the Administrative Agent, the Borrower and
each affected Lender shall, forthwith upon discovery of such error, make such
adjustments as shall be required to correct such error, and any compensation
therefor will be calculated at the Federal Funds Effective Rate.
9.18 Certain Releases of Guarantors and Collateral.
It is expressly agreed that, upon the written request of the Borrower
(accompanied by such certificates and other documentation as the Administrative
Agent may reasonably request) the Administrative Agent on behalf of the Lenders
and without any consent or action by any Lender, may, so long as no Event of
Default exists after giving effect thereto, release: (i) any Collateral or any
Guarantor from a Guaranty Agreement, in either case, in connection with any
sale, transfer, lease, disposition, merger or other transaction permitted by
this Agreement, or (ii) any Subsidiary from the Guaranty Agreement if such
Subsidiary is no longer a Significant Subsidiary.
9.19 Beneficiaries.
Except as expressly provided herein, the provisions of this Section 9 are
solely for the benefit of the Administrative Agent, each Agent and the Lenders,
and the Loan Parties shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent and each Agent shall act solely as the Administrative
Agent or Agent, as the case may be, of the Lenders and do not assume and shall
not be deemed to have assumed any obligation toward or relationship of agency or
trust with or for any of the Loan Parties.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the Administrative Agent,
acting on behalf of all the Lenders, and the Borrower, on behalf of the Loan
Parties, may from time to time enter into written agreements amending or
changing any provision of this Agreement or any other Loan Document or the
rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant
written waivers or consents to a departure from the due performance of the
Obligations of the Loan Parties hereunder or thereunder. Any such agreement,
waiver or consent made with such written consent shall be effective to bind all
the Lenders and the Loan Parties; provided, that no such agreement, waiver or
consent may be made which will:
10.1.1 Increase of Revolving Credit Commitments; Extension of Expiration Date;
Modification of Terms of Payment.
Without the written consent of all Banks, increase the amount of the
Revolving Credit Commitment of any Bank hereunder, extend the Expiration Date,
whether or not any Revolving Credit Loans are outstanding, extend the time for
payment of principal or interest of any Revolving Credit Loan, the Commitment
Fee or any other fee payable to any Bank which has a Revolving Credit
Commitment, reduce the principal amount of or the rate of interest borne by any
Revolving Credit Loan, reduce the rate of the Commitment Fee or any other fee
payable to any Bank which has a Revolving Credit Commitment;
10.1.2 Release of Guarantor.
Except as set forth in Section 9.18, without the written consent of all
Banks, release any Guarantor from its Obligations under the Guaranty Agreement
or any of the Collateral for any of the Loan Parties' Obligations; or
10.1.3 Miscellaneous.
Without the written consent of all Banks, amend Sections 4.2 [Pro Rata
Treatment of Banks], 9.6 [Exculpatory Provisions, etc.] or 9.13 [Equalization of
Lenders] or this Section 10.1, alter any provision regarding the pro rata
treatment of the Lenders, change the definition of Required Banks, or change any
requirement providing for the Lenders, all the Lenders or the Required Banks to
authorize the taking of any action hereunder; provided, further, that no
agreement, waiver or consent which would modify the interests, rights or
obligations of any Agent in its capacity shall be effective without the written
consent of such Agent; no agreement, waiver or consent which would modify the
interests, rights or obligations of the Administrative Agent in its capacity
shall be effective without the written consent of the Administrative Agent; and
no agreement, waiver or consent which would modify the interests, rights or
obligations of any Issuing Bank as the issuer of Letters of Credit shall be
effective without the written consent of such Issuing Bank.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Administrative Agent,
any Agent or any Lender in exercising any right, power, remedy or privilege
under this Agreement or any other Loan Document shall affect any other or future
exercise thereof or operate as a waiver thereof, nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power, remedy or privilege preclude any further exercise thereof or of
any other right, power, remedy or privilege. The rights and remedies of the
Administrative Agent, each Agent and the Lenders under this Agreement and any
other Loan Documents are cumulative and not exclusive of any rights or remedies
which they would otherwise have. Any waiver, permit, consent or approval of any
kind or character on the part of any Lender of any breach or default under this
Agreement or any such waiver of any provision or condition of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing.
10.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes.
The Borrower agrees unconditionally upon demand to pay or reimburse to each
Lender (other than the Administrative Agent and the Agents, as to which the
Borrower's Obligations are set forth in Section 9.5 [Reimbursement and
Indemnification of Agents by the Borrower]) and to save such Lender harmless
against (i) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements (including fees and expenses of outside counsel) for
each Lender (except with respect to (A) and (B) below), incurred by such Lender
(a) in connection with the administration and interpretation of this Agreement,
and other instruments and documents to be delivered hereunder, (b) relating to
any amendments, waivers or consents pursuant to the provisions hereof, (c) in
connection with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against such Lender, in its capacity as such, in any way relating to or arising
out of this Agreement or any other Loan Documents or any action taken or omitted
by such Lender hereunder or thereunder, provided that the Borrower shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (A) if
the same results from such Lender's gross negligence or willful misconduct, or
(B) if the Borrower was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense (except that
the Borrower shall remain liable to the extent such failure to give notice does
not result in a loss to the Borrower), or (C) if the same results from a
compromise or settlement agreement entered into without the consent of the
Borrower, which shall not be unreasonably withheld. None of the Agents nor any
Lender shall be liable for any damages arising from the use by unauthorized
persons of information or other materials sent through electronic,
telecommunications, or other information transmission systems that are
intercepted by such persons. None of the Agents nor any Lender shall be liable
or responsible to the Borrower or other party hereto for any special, indirect,
consequential or punitive damages in connection with the Loans or otherwise
under or in connection with the Loan Documents, the transactions contemplated
thereby or any of their respective obligations thereunder. The Lenders will
attempt to minimize the fees and expenses of legal counsel for the Lenders which
are subject to reimbursement by the Borrower hereunder by considering the use of
one law firm to represent the Lenders, the Administrative Agent, and the Agents
if appropriate under the circumstances. The Borrower agrees unconditionally to
pay all stamp, document, transfer, recording or filing taxes or fees and similar
impositions now or hereafter determined by the Administrative Agent, any Agent
or any Lender to be payable in connection with this Agreement or any other Loan
Document, and the Borrower agrees unconditionally to save the Administrative
Agent, each Agent and the Lenders harmless from and against any and all present
or future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions.
10.4 Holidays.
Whenever payment of a Loan to be made or taken hereunder shall be due on a
day which is not a Business Day, such payment shall be due on the next Business
Day and such extension of time shall be included in computing interest and fees,
except that the Revolving Credit Loans and Swing Loans shall be due on the
Business Day preceding the Expiration Date if the Expiration Date is not a
Business Day. Whenever any payment or action to be made or taken hereunder
(other than payment of the Loans) shall be stated to be due on a day which is
not a Business Day, such payment or action shall be made or taken on the next
following Business Day (except as provided in Section 3.2 [Interest Periods]
with respect to Interest Periods under the Euro-Rate Option), and such extension
of time shall not be included in computing interest or fees, if any, in
connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1 Notional Funding.
Each Lender shall have the right from time to time, without notice to the
Borrower, to deem any branch, Subsidiary or Affiliate (which for the purposes of
this Section 10.5 shall mean any corporation or association which is directly or
indirectly controlled by or is under direct or indirect common control with any
corporation or association which directly or indirectly controls such Lender) of
such Lender to have made, maintained or funded any Loan to which the Euro-Rate
Option applies at any time, provided that immediately following (on the
assumption that a payment were then due from the Borrower to such other office),
and as a result of such change, the Borrower would not be under any greater
financial obligation pursuant to Section 4.5 [Additional Compensation in Certain
Circumstances] than it would have been in the absence of such change. Notional
funding offices may be selected by each Lender without regard to such Lender's
actual methods of making, maintaining or funding the Loans or any sources of
funding actually used by or available to such Lender.
10.5.2 Actual Funding.
Each Lender shall have the right from time to time to make or maintain any
Loan by arranging for a branch, Subsidiary or Affiliate of such Lender to make
or maintain such Loan subject to the last sentence of this Section 10.5.2. If
any Lender causes a branch, Subsidiary or Affiliate to make or maintain any part
of the Loans hereunder, all terms and conditions of this Agreement shall, except
where the context clearly requires otherwise, be applicable to such part of the
Loans to the same extent as if such Loans were made or maintained by such
Lender, but in no event shall any Lender's use of such a branch, Subsidiary or
Affiliate to make or maintain any part of the Loans hereunder cause such Lender
or such branch, Subsidiary or Affiliate to incur any cost or expenses payable by
the Borrower hereunder or require the Borrower to pay any other compensation to
any Lender (including any expenses incurred or payable pursuant to Section 4.5
[Additional Compensation in Certain Circumstances]) which would otherwise not be
incurred.
10.6 Notices.
All notices, requests, demands, directions and other communications (as
used in this Section 10.6, collectively referred to as "notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the respective parties at the addresses and numbers set forth
under their respective names on Schedule 1.1(B) hereof or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly herein provided, be effective (a) in the
case of telex or facsimile, when received, (b) in the case of hand-delivered
notice, when hand-delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mail with first-class postage prepaid, return receipt requested, and (e) if
given by any other means (including by air courier), when delivered; provided,
that notices to the Agents or to the Administrative Agent shall not be effective
until received. Any Lender giving any notice to the Borrower shall
simultaneously send a copy thereof to the Administrative Agent, and the
Administrative Agent shall promptly notify the other Lenders of the receipt by
it of any such notice. Any notice delivered to the Borrower shall be deemed to
be notice to the Loan Parties and shall be binding upon all of the Loan Parties.
10.7 Severability.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
10.8 Governing Law.
Each Letter of Credit and Section 2.9 [Letter of Credit Subfacility] shall
be subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, as the same
may be revised or amended from time to time, and to the extent not inconsistent
therewith, the internal laws of the Commonwealth of Pennsylvania without regard
to its conflict of laws principles, and the balance of this Agreement shall be
deemed to be a contract under the Laws of the Commonwealth of Pennsylvania and
for all purposes shall be governed by and construed and enforced in accordance
with the internal laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles.
10.9 Prior Understanding.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
10.10 Duration; Survival.
All representations and warranties of the Borrower contained herein or made
by any Loan Party in connection herewith shall survive the making of Loans and
issuance of Letters of Credit and shall not be waived by the execution and
delivery of this Agreement, any investigation by the Administrative Agent, any
Agent or the Lenders, the making of Loans, issuance of Letters of Credit, or
payment in full of the Loans. All covenants and agreements of the Borrower
contained in Sections 7.1 [Affirmative Covenants], 7.2 [Negative Covenants] and
7.3 [Reporting Requirements] herein shall continue in full force and effect from
and after the date hereof so long as the Borrower may borrow or request Letters
of Credit hereunder and until termination of the Commitments and payment in full
of the Loans and expiration or termination of all Letters of Credit. All
covenants and agreements of the Borrower contained herein relating to the
payment of principal, interest, premiums, additional compensation or expenses
and indemnification, including those set forth in Section 4 [Payments] and
Sections 9.5 [Reimbursement and Indemnification of Agents by the Borrower], 9.7
[Reimbursement and Indemnification of Agents by Lenders] and 10.3 [Reimbursement
and Indemnification of Lenders by the Borrower, etc.], shall survive payment in
full of the Loans, expiration or termination of the Letters of Credit and
termination of the Commitments.
10.11 Successors and Assigns.
10.11.1 Binding Effect; Assignments by Borrower.
This Agreement shall be binding upon and shall inure to the benefit of the
Lenders, the Agents, the Administrative Agent, the Issuing Banks, the Borrower
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights and Obligations hereunder or any interest
herein without the consent of all of the Banks.
10.11.2 Assignments and Participations by Banks.
(a) This Section shall apply to any assignment or participation by a Lender
of its Loans, Letters of Credit Outstanding or Commitments. Each Bank may, at
its own cost, make assignments of all or any part of its Revolving Credit
Commitment and Revolving Credit Loans, and its Revolving Credit Ratable Share of
Letters of Credit Outstanding to one or more banks or other entities, subject to
the consent of the Borrower (which consent shall not be required during any
period in which an Event of Default exists), the applicable Issuing Banks, and
the Administrative Agent with respect to any assignee, such consents not to be
unreasonably withheld, provided, however, that consent of neither the Borrower,
the Administrative Agent nor any Issuing Bank shall be required for any
assignment by a Lender to an Affiliate of such Lender (so long as the assigning
Lender provides notice of such assignment to the Administrative Agent and pays
to the Administrative Agent the $3,500 service fee as hereinafter provided in
this Section 10.11.2(a)), and provided further, that assignments may not be made
in amounts less than $5,000,000 (unless such assignment is an assignment of all
of a Bank's Loans or Commitments or unless such assignment is made by a Lender
to an Affiliate of such Lender or to another Lender). Each Lender may, at its
own cost, grant participations in all or any part of its Revolving Credit
Commitment and the Revolving Credit Loans made by it and of its Revolving Credit
Ratable Share of Letters of Credit Outstanding to one or more banks or other
entities, without the consent of any party hereto. In the case of an assignment
of all or any portion of a Revolving Credit Commitment, upon receipt by the
Administrative Agent of the Assignment and Assumption Agreement, the assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if it had
been a signatory Bank hereunder, the Commitments in Section 2.1 shall be
adjusted accordingly, and upon surrender of any Revolving Credit Note subject to
such assignment, the Borrower shall execute and deliver a new Revolving Credit
Note to the assignee in an amount equal to the amount of the Revolving Credit
Commitment assumed by it and a new Revolving Credit Note to the assigning Bank
in an amount equal to the Revolving Credit Commitment retained by it hereunder.
Any assigning Lender shall pay to the Administrative Agent a service fee in the
amount of $3,500 for each assignment, which amount shall not be subject to
reimbursement or indemnification by the Borrower. In the case of a
participation, the participant shall have only the rights specified in Section
8.2.3 [Set-Off] (the participant's rights against the selling Lender in respect
of such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto and not to include any
voting rights except with respect to changes of the type referenced in Sections
10.1.1, 10.1.2 and 10.1.3), all of such Lender's obligations under this
Agreement or any other Loan Document shall remain unchanged, and all amounts
payable by any Loan Party hereunder or thereunder shall be determined as if such
Lender had not sold such participation.
(b) Designation.
(i) Notwithstanding anything to the contrary contained herein, any Lender
(a "Designating Lender") may grant to one or more special purpose funding
vehicles (each, an "SPV"), identified as such in writing from time to time by
the Designated Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Revolving Credit Loan that
such Designating Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; provided that (x) nothing herein shall constitute a
commitment by any SPV to make any Revolving Credit Loan, (y) if an SPV elects
not to exercise such option or otherwise fails to provide all or any part of
such Revolving Credit Loan, the Designating Lender shall be obligated to make
such Revolving Credit Loan pursuant to the terms hereof and (z) the Designating
Lender shall remain liable for any indemnity or other payment obligation with
respect to its Commitment hereunder. The making of a Revolving Credit Loan by an
SPV hereunder shall utilize the Commitment of the Designating Lender to the same
extent, and as if, such Revolving Credit Loan were made by such Designating
Lender.
(ii) As to any Revolving Credit Loans or portion thereof made by it, each
SPV shall have all the rights that a Lender making such Revolving Credit Loans
or portion thereof would have had under this Agreement; provided, however, that
each SPV shall have granted to its Designating Lender an irrevocable power of
attorney, to deliver and receive all communications and notices under this
Agreement (and any Loan Documents) and to exercise, on such SPV's behalf, all of
such SPV's voting rights under this Agreement. No additional Note shall be
required to evidence the Revolving Credit Loans or portion thereof made by an
SPV; and the related Designating Lender shall be deemed to hold its Note as
agent for such SPV to the extent of the Revolving Credit Loans or portion
thereof funded by such SPV. In addition, any payments for the account of any SPV
shall be paid to its Designating Lender as agent for such SPV. Notwithstanding
any term or condition hereof, no SPV, unless it shall have become a Lender
hereunder in accordance with the terms of Section 10.11.2(a), shall be a party
hereto or have any right to vote or give or withhold its consent under this
Agreement. The Administrative Agent shall have no duty or obligation to give any
notices required to be delivered hereunder to any SPV.
(iii) Each party hereto hereby agrees that no SPV shall be liable for any
indemnity or payment under this Agreement for which a Lender would otherwise be
liable. In furtherance of the foregoing, each party hereto hereby agrees (which
agreements shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the later of (x) payment in full of all
outstanding commercial paper or other senior indebtedness of any SPV, (y) the
payment in full of all Revolving Credit Loans, and (z) the termination of all
Commitments, it will not institute against, or join any other person in
instituting against, such SPV any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof, provided that the Designating Lender for each SPV hereby agrees
to indemnify, save and hold harmless each other party hereto for any loss, cost,
damage and expense arising out of the inability to institute any such proceeding
against such SPV.
(iv) In addition, notwithstanding anything to the contrary contained in
this Section 10.11.2(b) or otherwise in this Agreement (other than the proviso
set forth directly below in this Section 10.11.2(b), any SPV may (y) with notice
to, but without the prior written consent of the Borrower or the Administrative
Agent, at any time and without paying any processing fee therefor, assign or
participate all or a portion of its interest in any Revolving Credit Loans to
the Designating Lender or to any financial institutions providing liquidity
and/or credit support to or for the account of such SPV to support the funding
or maintenance of Revolving Credit Loans and (z) disclose on a confidential
basis any non public information relating to its Revolving Credit Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancements to such SPV; provided, however, that in no
event may any non-public financial information provided by the Borrower under
Section 7.3 [Reporting Requirements] be provided by any SPV to any other Person.
In no event shall the Borrower be obligated to pay to any SPV that has made a
Revolving Credit Loan any greater amount than the Borrower would have been
obligated to pay under this Agreement if the Designating Lender had made such
Revolving Credit Loan. This Section 10.11.2(b) may not be amended without the
written consent of any Designating Lender affected thereby.
10.11.3 Non-U.S. Assignees and Participants.
Any assignee or participant which is not incorporated under the Laws of the
United States of America or a state thereof shall deliver to the Borrower and
the Administrative Agent the form of certificate described in Section 10.17
relating to federal income tax withholding. Each Lender may furnish any publicly
available information concerning any Loan Party or its Subsidiaries and any
other information concerning any Loan Party or its Subsidiaries in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees or participants), provided that such assignees
and participants agree to be bound by the provisions of Section 10.12
[Confidentiality].
10.11.4 Assignments by Lenders to Federal Reserve Banks.
Notwithstanding any other provision in this Agreement, any Lender may at
any time pledge or grant a security interest in all or any portion of its rights
under this Agreement, its Notes (if any) and the other Loan Documents to any
Federal Reserve Bank without notice to or consent of the Borrower and the
Administrative Agent. No such pledge or grant of a security interest shall
release the transferor Lender of its obligations hereunder or under any other
Loan Document.
10.12 Confidentiality.
10.12.1 General.
The Agents, the Administrative Agent and the Lenders each agree to keep
confidential all information obtained from any Loan Party or its Subsidiaries
which is nonpublic and confidential or proprietary in nature (including any
information the Borrower specifically designates as confidential), except as
provided below, and to use such information only in connection with their
respective capacities under this Agreement and for the purposes contemplated
hereby. The Agents, the Administrative Agent and the Lenders shall be permitted
to disclose such information (i) to outside legal counsel, accountants and other
professional advisors who need to know such information in connection with the
execution, administration and enforcement of this Agreement, subject to the
agreement of such Persons to maintain the confidentiality, (ii) to assignees and
participants as contemplated by Section 10.11 [Successors and Assigns], (iii) to
any direct or indirect contractual counterparty in any swap, hedge or similar
agreement or such contractual counterparty's professional advisor (so long as
such contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 10.12) (iv) to
the extent requested by any bank regulatory authority or, with notice to the
Borrower as permitted by applicable Law, as otherwise required by applicable Law
or by any subpoena or similar legal process, or in connection with any
investigation or proceeding arising out of the transactions contemplated by this
Agreement, (v) if it becomes publicly available other than as a result of a
breach of this Agreement or becomes available from a source not known to be
subject to confidentiality restrictions, (vi) any nationally recognized rating
agency that requires access to information about the Lender's investment
portfolio, (vii) in connection with the exercise, preservation or protection of
any right or remedy hereunder or under the other Loan Documents, applicable law
or in equity, or (viii) if the Borrower shall have consented to such disclosure.
10.12.2 Sharing Information With Affiliates of the Lenders.
The Borrower acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to the Borrower
or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and the Borrower (on its own behalf and on behalf of its Subsidiaries)
hereby authorizes each Lender to share any information delivered to such Lender
by the Borrower and its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Lender to enter into this Agreement, to any
such Subsidiary or Affiliate of such Lender, it being understood that any such
Subsidiary or Affiliate of any Lender receiving such information shall be bound
by the provisions of Section 10.12.1 as if it were a Lender hereunder. Such
authorization shall survive the repayment of the Loans and other Obligations and
the termination of the Commitments.
10.13 Counterparts.
This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be
an original, and all such counterparts shall together constitute one and the
same instrument.
10.14 Agent's or Lender's Consent.
Whenever the Administrative Agent's, any Agent's or any Lender's consent is
required to be obtained under this Agreement or any of the other Loan Documents
as a condition to any action, inaction, condition or event, the Administrative
Agent, each Agent and each Lender shall be authorized to give or withhold such
consent in its sole and absolute discretion and to condition its consent upon
the giving of additional collateral, the payment of money or any other matter.
10.15 Exceptions.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT
COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS
PROVIDED FOR IN SECTION 10.6 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON ACTUAL RECEIPT THEREOF. THE BORROWER WAIVES ANY OBJECTION TO JURISDICTION
AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT
TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. THE BORROWER, THE
AGENTS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL
EXTENT PERMITTED BY LAW.
10.17 Tax Withholding.
Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the U. S. or a state thereof (and, upon the written request of
the Administrative Agent, each other Lender or assignee or participant of a
Lender) agrees that it will deliver to each of the Borrower and the
Administrative Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under ss.1.1441-1(c)(16) of the Income Tax Regulations
("Regulations")) certifying its status (i.e., U.S. or foreign Person) and, if
appropriate, making a claim of reduced, or exemption from, U.S. withholding tax
on the basis of an income tax treaty or an exemption provided by the Internal
Revenue Code. The term "Withholding Certificate" includes a Form W-9; Form
W-8BEN; Form W-8ECI; or, Form W-8IMY, and the related statements and
certifications as required under ss. 1.1441-1(c)(3) of the Regulations; a
statement described in ss.1.871-14(c)(2)(v) of the Regulations; or, any other
certificates under the Internal Revenue Code or Regulations that certify or
establish the status of a payee or beneficial owner as a U.S. or foreign Person.
Each Lender, assignee or participant required to deliver to the Borrower and the
Administrative Agent a valid Withholding Certificate pursuant to the preceding
sentence shall deliver such valid Withholding Certificate as follows: (A) each
Lender which is a party hereto on the Restatement Effective Date shall deliver
such valid Withholding Certificate at least five (5) Business Days prior to the
first date on which any interest or fees are payable by the Borrower hereunder
for the account of such Lender; (B) each assignee or participant shall deliver
such valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless the Administrative
Agent in its sole discretion shall permit such assignee or participant to
deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by the
Administrative Agent). Each Lender, assignee or participant which so delivers a
valid Withholding Certificate further undertakes to deliver to each of the
Borrower and the Administrative Agent two (2) additional copies of such
Withholding Certificate (or a successor form) on or before the date that such
Withholding Certificate expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Borrower or the Administrative Agent.
Notwithstanding the submission of a Withholding Certificate claiming a reduced
rate of, or exemption from U.S. withholding tax, the Administrative Agent shall
be entitled to withhold U. S. federal income taxes at the full withholding rate,
unless the Lender, assignee or participant establishes pursuant to the foregoing
that it is entitled to an exemption or that it is subject to a reduced rate, or
if in its reasonable judgment the Administrative Agent is not required to do so
under the due diligence requirements imposed upon a withholding agent under
ss.1.1441-7(b) of the Regulations. The Administrative Agent shall be indemnified
under ss.1.1461-1(e) of the Regulations against any claims and demands of any
Lender or assignee or participant of a Lender for the amount of any tax it
deducts and withholds in accordance with regulations under ss.1441 of the
Internal Revenue Code.
10.18 Joinder of Guarantors.
Any Significant Subsidiary of the Borrower which is required to become a
Guarantor pursuant to Section 7.2.6. [Subsidiaries, Partnerships and Joint
Ventures] shall execute and deliver to the Administrative Agent (i) a Guarantor
Joinder in substantially the form attached hereto as Exhibit 1.1(G)(1) pursuant
to which it shall join as a Guarantor each of the documents to which the
Guarantors are parties; (ii) all of the other Loan Documents required by Section
7.2.6, and (iii) documents in the forms described in Section 6.1 [First Loans
and Letters of Credit] modified as appropriate to relate to such Subsidiary.
10.19 Amendment and Restatement; No Novation.
This Agreement amends and restates in its entirety the Original Credit
Agreement; and, Borrower confirms that the Original Credit Agreement, the
Collateral Documents, the other Loan Documents and the Collateral for the
Obligations thereunder (as all such capitalized terms are defined in the
Original Credit Agreement) have at all times, since the date of the execution
and delivery of such documents, remained in full force and effect and continued
to secure such obligations which are continued as the Obligations hereunder as
amended hereby; and, all such Collateral (as defined in the Original Credit
Agreement), pursuant to the Collateral Documents hereunder shall continue to
secure the Obligations hereunder. The Revolving Credit Loans and Swing Loans
hereunder are a continuation of and refinance the Revolving Credit Loans and
Swing Loans under (and as such terms are defined in) the Original Credit
Agreement. Borrower and Administrative Agent acknowledge and agree that the
amendment and restatement of the Original Credit Agreement by this Agreement is
not intended to constitute, nor does it constitute, a novation, interruption,
suspension of continuity, satisfaction, discharge or termination of the
obligations, loans, liabilities, or indebtedness under the Original Credit
Agreement and other Loan Documents thereunder or the collateral security
therefor and this Agreement and the other Loan Documents are entitled to all
rights and benefits originally pertaining to the Original Credit Agreement and
the other Loan Documents (as such term is defined therein).
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
ATTEST: ARCH COAL, INC.
/s/ Janet L. Horgan By: /s/ Robert J. Messey
Name: Janet L. Horgan Name: Robert J. Messey
Title: Assistant Secretary Title: Senior Vice President and
Chief Financial Officer
[Seal]
PNC BANK, NATIONAL ASSOCIATION
individually and as Administrative Agent
By: /s/ Richard C. Munsick
Richard C. Munsick
Managing Director
JP MORGAN CHASE BANK, individually and
as Syndication Agent
By: /s/ Peter S. Predun
Vice President
CITIBANK, N.A., individually and as
Documentation Agent
By: /s/ Raymond G. Dunning
Raymond G. Dunning
Managing Director
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Documentation
Agent
By: /s/ Attila Koc
Senior Vice President
U.S. BANK NATIONAL ASSOCIATION,
individually and as Documentation Agent
By: /s/ Eric Hartman
Eric Hartman
Vice President
BANK LEUMI USA
By: /s/ Joung Hee Hong
Joung Hee Hong
Vice President
BNP PARIBAS
By: /s/ Evans R. Swann
Evans R. Swann
Director
/s/ Polly Schot
Polly Schot
Vice President
CREDIT INDUSTRIEL ET COMMERCIAL
By: /s/ Brian O'Leary
Brian O'Leary
Vice President
/s/ Anthony Rock
Anthony Rock
Vice President
FLEET NATIONAL BANK
By: /s/ Jeffrey H. Rathkamp
Vice President
MIZUHO CORPORATE BANK LIMITED
By: /s/ Nobuyasu Fukatsu
Nobuyasu Fukatsu
Senior Vice President
THE BANK OF NEW YORK
By: /s/ Craig J. Anderson
Craig J. Anderson
Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ David L. Driggers
David L. Driggers
Managing Director
Exhbit 4.8
$675,000,000 TERM LOAN FACILITIES
AMENDED AND RESTATED CREDIT AGREEMENT
by and among
ARCH WESTERN RESOURCES, LLC
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and
JPMORGAN CHASE BANK,
as Syndication Agent
and
CITIBANK, N.A.,
CREDIT LYONNAIS NEW YORK BRANCH,
and
U.S. BANK NATIONAL ASSOCIATION
as Documentation Agents
Dated as of April 18, 2002
================================================================================
J.P. MORGAN SECURITIES INC.
and
PNC CAPITAL MARKETS, INC.,
as Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Section Page
1. CERTAIN DEFINITIONS......................................................................................1
1.1 Certain Definitions.............................................................................1
1.2 Construction...................................................................................24
1.2.1 Number; Inclusion.....................................................................24
1.2.2 Determination.........................................................................24
1.2.3 Administrative Agent's Discretion and Consent.........................................24
1.2.4 Documents Taken as a Whole............................................................24
1.2.5 Headings..............................................................................24
1.2.6 Implied References to This Agreement..................................................25
1.2.7 Persons...............................................................................25
1.2.8 Modifications to Documents............................................................25
1.2.9 From, To and Through..................................................................25
1.2.10 Shall; Will...........................................................................25
1.3 Accounting Principles..........................................................................25
2. TERM LOAN FACILITY......................................................................................26
2.1 Commitments....................................................................................26
2.1.1 Tranche A Commitment..................................................................26
2.1.2 Tranche B Commitment..................................................................26
2.2 Nature of Lenders' Obligations with Respect to Term Loans......................................26
2.3 Noteless Agreement; Evidence of Indebtedness...................................................27
2.4 Use of Proceeds................................................................................27
2.5 Request to Select Interest Rate Options........................................................27
2.6 Required Payments..............................................................................28
3. INTEREST RATES..........................................................................................28
3.1 Interest Rate Options..........................................................................28
3.1.1 Interest Rate Options.................................................................29
3.1.2 Rate Quotations.......................................................................29
3.2 Interest Periods...............................................................................29
3.2.1 Ending Date and Business Day..........................................................29
3.2.2 Amount of Borrowing Tranche...........................................................30
3.2.3 Termination Before Expiration Date....................................................30
3.2.4 Renewals..............................................................................30
3.3 Interest After Default.........................................................................30
3.3.1 Interest Rate.........................................................................30
3.3.2 Other Obligations.....................................................................30
3.3.3 Acknowledgment........................................................................30
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.................31
3.4.1 Unascertainable.......................................................................31
3.4.2 Illegality; Increased Costs; Deposits Not Available...................................31
3.4.3 Administrative Agent's and Lender's Rights............................................31
3.5 Selection of Interest Rate Options.............................................................32
4. PAYMENTS................................................................................................32
4.1 Payments.......................................................................................32
4.2 Pro Rata Treatment of Lenders..................................................................33
4.3 Interest Payment Dates.........................................................................33
4.4 Prepayments....................................................................................34
4.4.1 Voluntary Prepayments.................................................................34
4.4.2 Replacement of a Lender...............................................................35
4.4.3 Change of Lending Office..............................................................36
4.5 Additional Compensation in Certain Circumstances...............................................36
4.5.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc..................................................36
4.5.2 Indemnity.............................................................................37
4.6 [Intentionally Omitted]........................................................................38
4.7 Taxes..........................................................................................38
4.7.1 No Deductions.........................................................................38
4.7.2 Stamp Taxes...........................................................................38
4.7.3 Indemnification for Taxes Paid by Lenders.............................................38
4.7.4 Certificate...........................................................................39
4.7.5 Survival..............................................................................39
4.7.6 Refund and Contest....................................................................39
5. REPRESENTATIONS AND WARRANTIES..........................................................................39
5.1 Representations and Warranties.................................................................39
5.1.1 Organization and Qualification........................................................39
5.1.2 LLC Interests of Borrower; Subsidiaries; and Subsidiary Shares........................40
5.1.3 Power and Authority...................................................................40
5.1.4 Validity and Binding Effect...........................................................40
5.1.5 No Conflict...........................................................................41
5.1.6 Litigation............................................................................41
5.1.7 Financial Statements..................................................................41
5.1.8 Use of Proceeds; Margin Stock.........................................................42
5.1.9 Full Disclosure.......................................................................43
5.1.10 Taxes.................................................................................43
5.1.11 Consents and Approvals................................................................43
5.1.12 No Event of Default; Compliance With Instruments and Material Contracts...............43
5.1.13 Insurance.............................................................................44
5.1.14 Compliance With Laws..................................................................44
5.1.15 Investment Companies; Regulated Entities..............................................44
5.1.16 Plans and Benefit Arrangements........................................................44
5.1.17 Employment Matters....................................................................45
5.1.18 Environmental Matters.................................................................45
5.1.19 Senior Debt Status....................................................................46
5.1.20 Title to Properties...................................................................46
5.1.21 Security Interests....................................................................46
5.1.22 Status of the Pledged Collateral......................................................47
5.1.23 Coastal Agreement.....................................................................47
5.1.24 Solvency..............................................................................47
5.2 Continuation of Representations................................................................47
6. CONDITIONS OF LENDING...................................................................................48
6.1 Conditions to Amendment and Restatement of the Credit Agreement................................48
6.1.1 Officer's Certificate.................................................................48
6.1.2 Secretary's Certificate...............................................................48
6.1.3 Delivery of Loan Documents; Filing Receipts...........................................49
6.1.4 Opinion of Counsel....................................................................49
6.1.5 Legal Details.........................................................................49
6.1.6 Payment of Fees.......................................................................49
6.1.7 Consents..............................................................................50
6.1.8 Officer's Certificate Regarding No Material Adverse Change............................50
6.1.9 No Violation of Laws..................................................................50
6.1.10 No Actions or Proceedings.............................................................50
6.1.11 Insurance.............................................................................50
6.1.12 Report of Independent Engineer........................................................50
6.1.13 Credit Facility for the Parent........................................................51
6.1.14 Satisfactory Environmental Review.....................................................51
6.1.15 Refinancing...........................................................................51
7. COVENANTS...............................................................................................51
7.1 Affirmative Covenants..........................................................................51
7.1.1 Preservation of Existence, Etc........................................................51
7.1.2 Payment of Liabilities, Including Taxes, Etc..........................................52
7.1.3 Maintenance of Insurance..............................................................52
7.1.4 Maintenance of Properties and Leases..................................................52
7.1.5 Visitation Rights.....................................................................52
7.1.6 Keeping of Records and Books of Account...............................................53
7.1.7 Plans and Benefit Arrangements........................................................53
7.1.8 Compliance With Laws..................................................................53
7.1.9 Use of Proceeds.......................................................................53
7.1.10 Operation of Mines....................................................................54
7.1.11 Maintenance of Material Contracts.....................................................54
7.1.12 Further Assurances....................................................................54
7.1.13 Subordination of Intercompany Loans...................................................54
7.1.14 Pledged Collateral Account............................................................54
7.2 Negative Covenants.............................................................................55
7.2.1 Indebtedness..........................................................................55
7.2.2 Liens.................................................................................56
7.2.3 Liquidations, Mergers, Consolidations, Acquisitions...................................56
7.2.4 Dispositions of Assets or Subsidiaries................................................57
7.2.5 Affiliate Transactions................................................................58
7.2.6 Subsidiaries, Partnerships and Joint Ventures.........................................58
7.2.7 Continuation of or Change in Business.................................................58
7.2.8 Plans and Benefit Arrangements........................................................58
7.2.9 No Restriction on Dividends...........................................................59
7.2.10 Maximum Leverage Ratio................................................................59
7.2.11 Minimum Fixed Charge Coverage Ratio...................................................59
7.2.12 Minimum EBITDDA.......................................................................59
7.2.13 Minimum Net Worth.....................................................................60
7.2.14 Loans and Investments.................................................................60
7.2.15 No Amendments to Acquisition Documents................................................61
7.2.16 Limitation on Capital Expenditures....................................................61
7.3 Reporting Requirements.........................................................................61
7.3.1 Quarterly Financial Statements........................................................61
7.3.2 Annual Financial Statements...........................................................62
7.3.3 Certificate of the Borrower...........................................................62
7.3.4 Notice of Default.....................................................................63
7.3.5 Notice of Litigation..................................................................63
7.3.6 Notice of Change in Debt Rating.......................................................63
7.3.7 Notices Regarding Plans and Benefit Arrangements......................................63
7.3.8 Certain Events........................................................................63
7.3.9 Notices of Involuntary Termination and Annual Reports.................................64
7.3.10 Notice of Voluntary Termination.......................................................64
7.3.11 Other Information.....................................................................65
7.3.12 Annual Reserves Verification..........................................................65
8. DEFAULT.................................................................................................65
8.1 Events of Default..............................................................................65
8.1.1 Payments Under Loan Documents.........................................................65
8.1.2 Breach of Warranty....................................................................65
8.1.3 Breach of Negative Covenants or Visitation Rights.....................................65
8.1.4 Breach of Other Covenants.............................................................66
8.1.5 Defaults in Other Agreements or Indebtedness..........................................66
8.1.6 Judgments or Orders...................................................................66
8.1.7 Loan Document Unenforceable...........................................................67
8.1.8 Proceedings Against Assets............................................................67
8.1.9 Notice of Lien or Assessment..........................................................67
8.1.10 Insolvency............................................................................67
8.1.11 Events Relating to Plans and Benefit Arrangements.....................................67
8.1.12 Cessation of Business.................................................................68
8.1.13 Change of Control.....................................................................68
8.1.14 Involuntary Proceedings...............................................................68
8.1.15 Voluntary Proceedings.................................................................69
8.2 Consequences of Event of Default...............................................................69
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings...........................................................................69
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings..................................69
8.2.3 Set-off...............................................................................70
8.2.4 Suits, Actions, Proceedings...........................................................70
8.2.5 Application of Proceeds...............................................................70
8.2.6 Other Rights and Remedies.............................................................71
8.2.7 Notice of Sale........................................................................71
9. THE AGENTS..............................................................................................71
9.1 Appointment....................................................................................71
9.2 Delegation of Duties...........................................................................72
9.3 Nature of Duties; Independent Credit Investigation.............................................72
9.4 Actions in Discretion of Agents; Instructions From the Lenders.................................73
9.5 Reimbursement and Indemnification of Agents by the Borrower....................................73
9.6 Exculpatory Provisions; Limitation of Liability................................................74
9.7 Reimbursement and Indemnification of Agents by the Lenders.....................................74
9.8 Reliance by Agents.............................................................................75
9.9 Notice of Default..............................................................................75
9.10 Notices........................................................................................75
9.11 Lenders in Their Individual Capacities.........................................................76
9.12 Holders of Term Notes..........................................................................76
9.13 Equalization of Lenders........................................................................76
9.14 Successor Agents...............................................................................77
9.15 Administrative Agent's Fee.....................................................................78
9.16 Availability of Funds..........................................................................78
9.17 Calculations...................................................................................78
9.18 Certain Releases of Guarantors and Collateral..................................................78
9.19 Beneficiaries..................................................................................79
10. MISCELLANEOUS...........................................................................................79
10.1 Modifications, Amendments or Waivers...........................................................79
10.1.1 Increase of Commitments; Extension of Expiration Date.................................79
10.1.2 Extension of Payment; Reduction of Principal, Interest or Fees; Modification
of Terms of Payment...................................................................79
10.1.3 Release of Collateral or Guarantor....................................................80
10.1.4 Miscellaneous.........................................................................80
10.2 No Implied Waivers; Cumulative Remedies; Writing Required......................................80
10.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes. Limitations..............80
10.4 Holidays.......................................................................................81
10.5 Funding by Branch, Subsidiary or Affiliate.....................................................82
10.5.1 Notional Funding......................................................................82
10.5.2 Actual Funding........................................................................82
10.6 Notices........................................................................................82
10.7 Severability...................................................................................83
10.8 Governing Law..................................................................................83
10.9 Prior Understanding............................................................................83
10.10 Duration; Survival.............................................................................83
10.11 Successors and Assigns.........................................................................84
10.11.1 Binding Effect; Assignments by Borrower...............................................84
10.11.2 Assignments and Participations by Lenders; Designations...............................84
10.11.3 Non-U.S. Assignees and Participants...................................................86
10.11.4 Assignments by Lenders to Federal Reserve Banks.......................................87
10.12 Confidentiality................................................................................87
10.12.1 General...............................................................................87
10.12.2 Sharing Information With Affiliates of the Lenders....................................88
10.13 Counterparts...................................................................................88
10.14 Agent's or Lender's Consent....................................................................88
10.15 Exceptions.....................................................................................88
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.........................................................88
10.17 Tax Withholding................................................................................89
10.18 Joinder of Guarantors..........................................................................90
10.19 Register.......................................................................................90
10.20 Amendment and Restatement......................................................................91
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
SCHEDULE 5.1.2 - CERTAIN INFORMATION REGARDING CAPITALIZATION OF BORROWER AND ITS
SUBSIDIARIES
SCHEDULE 5.1.11 - CONSENTS AND APPROVALS
SCHEDULE 5.1.18 CERTAIN DISCLOSURES REGARDING ENVIRONMENTAL MATTERS
SCHEDULE 5.1.22 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 7.2.6 - CERTAIN MATTERS REGARDING SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C) - AMENDED AND RESTATED COLLATERAL AGENCY AND SHARING AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER AND ASSUMPTION
EXHIBIT 1.1(G)(2) - AMENDED AND RESTATED CONTINUING GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT 1.1(I) INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(N) - AMENDED AND RESTATED NOTE PLEDGE AGREEMENT
EXHIBIT 1.1(P)(1) - AMENDED AND RESTATED PLEDGE AGREEMENT (INVESTMENT PROPERTY)
EXHIBIT 1.1(P)(2) - PLEDGE AGREEMENT (PLEDGED COLLATERAL ACCOUNT)
EXHIBIT 1.1(P)(3) - AMENDED AND RESTATED PLEDGE AGREEMENT (SUBSIDIARY EQUITY INTERESTS)
EXHIBIT 1.1(T)(1) - TRANCHE A TERM NOTE
EXHIBIT 1.1(T)(2) - TRANCHE B TERM NOTE
EXHIBIT 2.5 - RATE REQUEST
EXHIBIT 6.1.4 - OPINION OF COUNSEL
EXHIBIT 6.1.15 - CLOSING MATTERS AGREEMENT
EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 18, 2002,
and is made by and among ARCH WESTERN RESOURCES, LLC, a Delaware limited
liability company (the "Borrower"), the LENDERS (as hereinafter defined),
JPMORGAN CHASE BANK, in its capacity as syndication agent, CITIBANK, N.A.,
CREDIT LYONNAIS NEW YORK BRANCH, and U.S. BANK NATIONAL ASSOCIATION, each in its
capacity as a documentation agent, and PNC BANK, NATIONAL ASSOCIATION, in its
capacity as administrative agent for the Lenders under this Agreement.
WITNESSETH:
WHEREAS, the Borrower, JPMorgan Chase Bank (successor in such capacity to
Morgan Guaranty Trust Company of New York, as syndication agent), PNC Bank,
National Association, as administrative agent, and certain lenders are parties
to that Credit Agreement dated as of June 1, 1998 (the "Original Credit
Agreement"), providing for a $675,000,000 term loan facility to the Borrower;
and
WHEREAS, the Borrower has requested certain amendments to the Original
Credit Agreement and, subject to the terms and conditions hereof, the parties
hereto agree that, effective as of the date hereof, the Original Credit
Agreement shall hereby be amended and for the convenience of such parties
restated in its entirety as set forth below, to provide that the term loan under
the Original Credit Agreement shall be continued in like amount and amended to
consist of Tranche A Term Loans and Tranche B Term Loans (hereinafter defined);
and
WHEREAS, the pledge of equity interests of certain Subsidiaries of the
Borrower and guaranties for the term loan facility under the Original Credit
Agreement shall continue to secure such Tranche A Term Loans and Tranche B Term
Loans and all other obligations hereunder.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing and
the mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
ACC shall mean the U.S. operations of ARCO Coal Company, a division of
ARCO.
Acquisition Documents shall mean collectively the Purchase Agreement, the
Contribution Agreement, the Tax Sharing Agreement, and the LLC Agreements, as
limited by their schedules and exhibits, as the same may be amended, restated,
modified or supplemented from time to time after the Closing Date as permitted
by Section 7.2.15 [No Amendments to Acquisition Documents].
Acquisition Transactions shall mean the transactions contemplated by the
Purchase Agreement and the Contribution Agreement, as such documents may be
amended, modified or supplemented after the Closing Date as permitted by Section
7.2.15 [No Amendments to Acquisition Documents].
Adjusted EBITDDA for any period of determination shall mean with respect to
any Person the sum of income from operations and interest income all before the
effect of changes in accounting principles, nonrecurring charges and
extraordinary items, interest expense, income taxes, depreciation, depletion and
amortization, in each case for such period determined in accordance with GAAP.
Administrative Agent shall mean PNC Bank, National Association, in its
capacity as administrative agent for the Lenders under this Agreement and its
successors in such capacity.
Administrative Agent's Fee shall have the meaning assigned to that term in
Section 9.15 [Administrative Agent's Fee].
Administrative Agent's Letter shall have the meaning assigned to that term
in Section 9.15 [Administrative Agent's Fee].
Affiliate as to any Person shall mean any other Person (i) which directly
or indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds 5% or more of any class of the
voting or other equity interests of such Person, or (iii) 5% or more of any
class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by 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. Notwithstanding the foregoing, a Subsidiary of the
Borrower shall not be deemed an Affiliate of the Borrower.
Agents shall mean collectively the Administrative Agent and the Syndication
Agent, and Agent shall mean any one of the Agents, individually.
Agreement shall mean the Original Credit Agreement (including all schedules
and exhibits) as hereby amended and restated by this Amended and Restated Credit
Agreement (including all schedules and exhibits), as the same may hereafter be
modified, amended, restated, supplemented, refinanced or replaced from time to
time in accordance herewith.
Appropriate Percentage shall mean, with respect to each Special Subsidiary,
the percentage of the equity of such Person owned by the Borrower or any
Subsidiary of the Borrower.
Approved Fund shall mean with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in commercial loans and is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
Arch Credit Facility shall mean that certain Credit Agreement by and among
Parent, PNC Bank as administrative agent, JPMorgan Chase Bank (successor to
Morgan Guaranty Trust Company of New York) as syndication agent and Wachovia
Corporation (as successor in such capacity to First Union National Bank) as
documentation agent, and the lenders party thereto dated as of June 1, 1998, as
amended by Amendment No. 1 thereto dated as of January 21, 2000, as amended and
restated as of the date hereof, providing for certain credit facilities to
Parent, as the same may hereafter be modified, amended, restated, supplemented,
refinanced or replaced from time to time in accordance therewith .
Arch of Wyoming LLC shall mean Arch of Wyoming, LLC, a limited liability
company organized and existing under the laws of the State of Delaware.
Arch of Wyoming LLC Agreement shall mean that certain Limited Liability
Agreement, dated as of April 15, 1998, of Arch of Wyoming LLC.
Arch Western LLC Agreement shall mean that certain Limited Liability
Company Agreement by and between AWAC and Delta Housing, dated as of June 1,
1998, with AWAC and Delta Housing as members and creating the Borrower.
ARCO shall mean Atlantic Richfield Company, a corporation organized and
existing under the laws of the State of Delaware.
ARCO Member shall have the meaning assigned to such term in the Arch
Western LLC Agreement.
Arrangers shall mean PNC Bank and Morgan.
Assigned Reserves shall mean Recoverable Reserves that have been designated
for mining by a specific operation of the Borrower or any of its Subsidiaries,
all as disclosed in the Parent's statements most recently filed with the SEC
identifying the Assigned Reserves.
Assignment and Assumption Agreement shall mean an Assignment and Assumption
Agreement by and among a Purchasing Lender, a Transferor Lender and the
Administrative Agent, as agent and on behalf of the remaining Lenders,
substantially in the form of Exhibit 1.1(A)(1).
AU Sub LLC Agreement shall mean that certain Limited Liability Company
Agreement, dated as of April 8, 1998, as amended, of AU Sub LLC, a limited
liability company organized and existing under the laws of the State of
Delaware.
Authorized Officer shall mean those individuals, designated by written
notice to the Administrative Agent from the Borrower, authorized to execute
notices, reports and other documents on behalf of the Loan Parties required
hereunder. The Borrower may amend such list of individuals from time to time by
giving written notice of such amendment to the Administrative Agent.
Average Balance of the Eligible Note Receivable shall mean, for any period
of determination, the average daily outstanding principal amount of the Eligible
Note Receivable during such period.
Average Pledged Account Balance shall mean, for any period of
determination, the average daily balance in the "Escrow Account" (as such term
is defined in the Pledge Agreement (Investment Property)) pledged on a first
priority perfected basis to the Administrative Agent for the benefit of the
Lenders pursuant to the Pledge Agreement (Investment Property) during such
period.
AWAC shall mean Arch Western Acquisition Corporation, a corporation
organized and existing under the laws of the State of Delaware.
Base Net Worth shall mean the sum of $389,194,000, plus 50% of consolidated
net income of the Borrower and its Subsidiaries (before the after-tax effect of
changes in accounting principles) for each fiscal quarter in which net income
was earned, for the period from April 1, 2002 through the date of determination.
In no event shall Base Net Worth be reduced on account of a consolidated net
loss for any fiscal period.
Base Rate shall mean the greater of (i) the interest rate per annum
announced from time to time by the Administrative Agent at its Principal Office
as its then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Administrative Agent, or (ii) the Federal Funds
Effective Rate plus 1/2% per annum.
Base Rate Option shall mean the option of the Borrower to have Term Loans
bear interest at the rate and under the terms and conditions set forth in
Section 3.1.1(a) [Base Rate Option].
Benefit Arrangement shall mean at any time 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 otherwise contributed
to by any member of the ERISA Group.
Borrower shall mean Arch Western Resources, LLC, a limited liability
company organized and existing under the laws of the State of Delaware.
Borrower LLC Interests shall have the meaning set forth in Section 5.1.2
[LLC Interests of Borrower; Subsidiaries; and Subsidiary Shares].
Borrowing Date shall mean, with respect to any Term Loan, the date for the
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of outstanding Tranche A
Term Loans or Tranche B Term Loans as follows: (i) any Tranche A Term Loans to
which a Euro-Rate Option applies which become subject to the same Interest Rate
Option under the same Rate Request by the Borrower and which have the same
Interest Period shall constitute one Borrowing Tranche; (ii) any Tranche B Term
Loans to which a Euro-Rate Option applies which become subject to the same
Interest Rate Option under the same Rate Request by the Borrower and which have
the same Interest Period shall constitute one Borrowing Tranche; (iii) all
Tranche A Term Loans to which a Base Rate applies shall constitute one Borrowing
Tranche; and (iv) all Tranche B Term Loans to which a Base Rate applies shall
constitute one Borrowing Tranche.
Business shall mean the business of owning and operating the U.S. domestic
coal properties of ACC, substantially as operated by ACC at the time of the
closing of the Acquisition Transactions.
Business Day shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Pittsburgh, Pennsylvania and New York, New York; and if the
applicable Business Day relates to a Term Loan to which the Euro-Rate Option
applies, such day must also be a day on which dealings are carried on in the
London interbank market.
Canyon Fuel shall mean Canyon Fuel Company, LLC, a limited liability
company organized and existing under the laws of the State of Delaware.
Canyon Fuel LLC Agreement shall mean that certain Limited Liability Company
agreement by and between the Borrower (or a Subsidiary of the Borrower) and
Itochu Coal International, Inc., a Delaware corporation, dated as of January 1,
1997, as amended, with the Borrower and Itochu Coal International, Inc. as
members of the Canyon Fuel Company, LLC, a Delaware limited liability company.
Carbon Basin Reserves shall mean those certain reserves controlled by
Borrower or any of its Subsidiaries located within the following townships and
ranges: T. 20 N., R. 79 W.; T 20 N., R. 80 W.; T 21 N., R. 79 W.; T. 21 N., R.
80 W., Carbon County, Wyoming containing approximately 186.7 million tons of
recoverable coal.
Citibank shall mean Citibank, N.A., its successors and assigns.
Closing Date shall mean June 1, 1998.
Coastal Agreement shall mean that certain Purchase and Sale Agreement among
The Coastal Corporation, a Delaware corporation, Coastal Coal, Inc., a Delaware
corporation, ARCO and Itochu Corporation, a Japanese corporation, dated as of
October 23, 1996.
Collateral shall mean collectively the property of the Borrower in which
security interests are or have been granted or purported to be granted to the
Administrative Agent for the benefit of the Lenders under the Collateral
Documents.
Collateral Documents shall mean collectively, the Pledge Agreement
(Subsidiary Equity Interests), the Pledge Agreement (Investment Property), the
Pledge Agreement (Pledged Collateral Account), the Collateral Sharing Agreement,
and the Note Pledge Agreement, and Collateral Document shall mean any of the
Collateral Documents.
Collateral Sharing Agreement shall mean the Amended and Restated Collateral
Agency and Sharing Agreement among the Borrower, the Guarantors, the Lenders
party thereto, the Swap Parties (as defined therein) and the Collateral Agent
(as defined therein), substantially in the form of Exhibit 1.1(C)(1) hereto, as
the same may hereafter be modified, amended, restated, supplemented, refinanced
or replaced from time to time in accordance herewith or therewith.
Commitment shall mean as to any Lender the aggregate of its Tranche A
Commitments and Tranche B Commitments and Commitments shall mean the aggregate
of the Tranche A Commitments and Tranche B Commitments of all of the Lenders.
Commodity Price Protection Agreement shall mean a crude oil or heating oil
price protection agreement, for the purpose of hedging the purchase price of
diesel fuel used by the Loan Parties in the ordinary course operations of their
business, in a standard International Swap Dealer Association Agreement,
including, without limitation, providing for the method of calculating the
reimbursable amount of the provider's credit exposure in a reasonable and
customary manner.
Consolidated Tangible Net Worth shall mean as of any date of determination,
total equity less intangible assets of the Borrower and its Subsidiaries as of
such date determined and consolidated in accordance with GAAP, and adjusted to
exclude the after tax effect of any changes in accounting principles subsequent
to the Restatement Effective Date.
Contamination shall mean the presence or Release or threat of Release of
Regulated Substances in, on, under or emanating to or from the Property, which
pursuant to Environmental Laws requires notification or reporting to an Official
Body, or which pursuant to Environmental Laws requires the investigation,
cleanup, removal, remediation, containment, abatement of or other response
action or which otherwise constitutes a violation of Environmental Laws.
Contribution Agreement shall mean that certain Contribution Agreement among
the Borrower, AWAC, ARCO, Delta Housing and the Parent.
Credit Lyonnais shall mean Credit Lyonnais New York Branch, its successors
and assigns.
Debt shall mean for any Person as of any date of determination, the
difference between the following (a) and (b): (a) the sum, without duplication,
of the following for such Person, as of such date, determined in accordance with
GAAP: (i) all indebtedness for borrowed money (including all subordinated
indebtedness), (ii) all amounts raised under or liabilities in respect of any
note purchase or acceptance credit facility, (iii) all indebtedness in respect
of any other transaction (including production payments (excluding royalties),
installment purchase agreements, forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such Person to finance its
operations or capital requirements, (iv) reimbursement obligations (contingent
or otherwise) under any letter of credit (v) the amount of all indebtedness
(whether matured or unmatured, liquidated or unliquidated, direct or indirect,
absolute or contingent, or joint or several) in respect of all Guarantees of
indebtedness for borrowed money, minus (b) the sum of (1) the Permitted
Reduction Amount, if any, and (2) the principal amount, expressly excluding any
interest income earned thereon, held on deposit in the Pledged Collateral
Account, as of the date of determination.
Debt Rating shall mean the rating of the Parent's indebtedness under the
Arch Credit Facility by either of Standard & Poor's or Moody's.
Delta Housing shall mean Delta Housing Inc., a corporation organized and
existing under the laws of the State of Delaware.
Delta Housing Guaranty shall mean that certain Master Guaranty of
Collection dated as of June 1, 1998, executed by Delta Housing in favor of the
judgment creditors referred to therein.
Derivatives Obligations shall mean for any Person obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions,
including, without limitation obligations in respect of any Interest Rate
Protection Agreement.
Documentation Agent shall mean each of Citibank, N.A., Credit Lyonnais, and
U.S. Bank in its capacity as documentation agent under this Agreement, and its
successors in such capacity.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of
the United States of America.
EBITDDA for any period of determination shall mean, with respect to any
Person, income from operations before the effect of changes in accounting
principles, nonrecurring charges and extraordinary items, interest expense,
income taxes, depreciation, depletion and amortization, in each case for such
period determined in accordance with GAAP.
Eligible Note Receivable shall mean that certain note payable by the Parent
to the Borrower, satisfactory in form and substance to the Agents (including the
providing of and terms and conditions of all collateral and guarantees provided
as security therefor), and pledged, on a first priority perfected basis, to the
Administrative Agent for the benefit of the Lenders pursuant to the Note Pledge
Agreement, as such note may hereafter be modified, amended, restated,
supplemented, refinanced, replaced, extended or renewed from time to time with
the prior written consent of the Agents.
Eligible Reserves shall mean the sum of all Assigned Reserves plus 80% of
the Unassigned Reserves, minus (a) the sum of (i) the amount of divestitures of
Assigned Reserves and Unassigned Reserves by the Borrower or any of its
Subsidiaries since the date of the most recent statement filed by the Parent
with the SEC identifying the Assigned Reserves and the Unassigned Reserves, and
(ii) the amount of Assigned Reserves and Unassigned Reserves mined since the
date of the most recent statement filed by the Parent with the SEC identifying
the Assigned Reserves and the Unassigned Reserves, plus (b) the amount of any
acquisitions or leases of Assigned Reserves and Unassigned Reserves by the
Borrower or any of its Subsidiaries since the date of the most recent statement
filed by the Parent with the SEC identifying the Assigned Reserves and the
Unassigned Reserves, provided that, if Assigned Reserves or Unassigned Reserves
have been acquired or leased from an Affiliate, the terms and conditions of the
acquisition or lease shall be reasonably satisfactory to the Agents.
Environmental Claim shall mean any administrative, regulatory or judicial
action, suit, claim, notice of noncompliance or violation, notice of liability
or potential liability, proceeding, consent order or consent agreement relating
in any way to any Environmental Law, Environmental Permit, Regulated Substances
or Contamination or arising from alleged injury or threat of injury to the
environment.
Environmental Complaint shall mean any written notice or complaint setting
forth allegations relating to or a cause of action for personal injury or
property damage, natural resource damage, contribution or indemnity for response
costs, civil penalties, criminal penalties, or declaratory or equitable relief
arising under any Environmental Law or any order, notice of violation, citation,
subpoena, request for information or other written notice of any type issued by
an Official Body pursuant to any Environmental Law.
Environmental Law shall mean any federal, state, local or foreign statute,
Law (including, but not limited to Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C.ss. 9601 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.ss. 6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C.ss. 1801 et seq., the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water Pollution
Control Act, 33 U.S.C.ss. 1251 et seq., the Federal Safe Drinking Water Act, 42
U.S.C.ss.ss. 300f-300j, the Federal Air Pollution Control Act, 42 U.S.C.ss. 7401
et seq., the Oil Pollution Act, 33 U.S.C.ss. 2701 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss. 136 to 136y, the
Occupational Safety and Health Act, 29 U.S.C.ss.ss. 651 et seq. the Mine Safety
and Health Act, 30 U.S.C. ss.ss. 801 et seq., the Surface Mining Control and
Reclamation Act 30 U.S.C.ss.ss. 1201 et seq., each as amended, or any equivalent
state or local statute, and any amendments thereto), code, consent decree,
settlement agreement, directive, judicial or agency interpretation, policy or
guidance regulating: (i) pollution or pollution control; (ii) protection of
human health from exposure to Regulated Substances; (iii) protection of natural
resources or the environment; (iv) employee safety in the workplace and the
protection of employees from exposure to Regulated Substances in the workplace
(but excluding workers compensation and wage and hour laws); (vi) the presence,
use, management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, sale,
collection, distribution, disposal or Release or threat of Release of Regulated
Substances; (v) the presence of Contamination; (vi) the protection of endangered
or threatened species; and (vii) the protection of Environmentally Sensitive
Areas.
Environmental Permit shall mean any permit, approval, license, consent,
bond or other authorization required under any Environmental Law.
Environmentally Sensitive Area shall mean (i) any wetland as defined by
applicable Environmental Laws; (ii) any area designated as a coastal zone
pursuant to applicable Laws, including Environmental Laws; (iii) any area of
historic or archeological significance or scenic area as defined or designated
by applicable Laws, including Environmental Laws; (iv) habitats of endangered
species or threatened species as designated by applicable Laws, including
Environmental Laws; or (v) a floodplain or other flood hazard area as defined
pursuant to any applicable Laws.
ERISA shall mean the Employee Retirement Income Security Act of 1974, 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 Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the Internal
Revenue Code.
Euro-Rate shall mean, with respect to the Term Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period,
the interest rate per annum determined by the Administrative Agent by dividing
(the resulting quotient rounded upward to the nearest 1/100 of 1% per annum) (i)
the rate of interest determined by the Administrative Agent (which determination
shall be conclusive absent manifest error) to be the average of the London
interbank offered rates of interest per annum for U.S. Dollars set forth on Dow
Jones Market Service display page 3750 or such other display page on the Dow
Jones Market Service System as may replace such page to evidence the average of
rates quoted by banks designated by the British Bankers' Association (or
appropriate successor or, if the British Bankers' Association or its successor
ceases to provide such quotes, a comparable replacement determined by the
Administrative Agent) at 11:00 a.m. (London time) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such Borrowing
Tranche and having a borrowing date and a maturity comparable to such Interest
Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage.
The Euro-Rate may also be expressed by the following formula:
Dow Jones Market Service page 3750 quoted by British Bankers'
Euro-Rate = Association or appropriate successor
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Administrative Agent shall give prompt
notice to the Borrower and the Lenders of the Euro-Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.
Euro-Rate Option shall mean the option of the Borrower to have the Term
Loans bear interest at the rate and on the terms and conditions set forth in
Section 3.1.1(b) [Euro-Rate Option].
Euro-Rate Reserve Percentage shall mean the maximum percentage (expressed
as a decimal rounded upward to the nearest 1/100 of 1%) as determined by the
Administrative Agent which is in effect during any relevant period, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such System.
Event of Default shall mean any of the events described in Section 8.1
[Events of Default] and referred to therein as an "Event of Default."
Federal Funds Effective Rate for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
Financial Projections shall have the meaning assigned to that term in
Section 5.1.7(iii) [Financial Projections].
Fixed Charge Coverage Ratio shall mean the ratio of (a) the sum of Adjusted
EBITDDA of the Borrower and its Subsidiaries, plus, without duplication, the
Appropriate Percentage of each Special Subsidiary's Adjusted EBITDDA, each on a
consolidated basis in accordance with GAAP, plus operating lease expense of the
Borrower and its Subsidiaries, plus, without duplication, the Appropriate
Percentage of each Special Subsidiary's operating lease expense, each on a
consolidated basis in accordance with GAAP, to (b) the sum of interest expense
(other than Permitted Loan Origination Expense) of the Borrower and its
Subsidiaries plus, without duplication, the Appropriate Percentage of interest
expense of each Special Subsidiary, each on a consolidated basis in accordance
with GAAP, plus operating lease expense of the Borrower and its Subsidiaries,
plus, without duplication, the Appropriate Percentage of operating lease expense
of each Special Subsidiary, each on a consolidated basis in accordance with
GAAP, all calculated as of the last day of each fiscal quarter for the four
fiscal quarters of the Borrower then ended.
GAAP shall mean Generally Accepted Accounting Principles as are in effect
from time to time, subject to the provisions of Section 1.3 [Accounting
Principles], and applied on a consistent basis both as to classification of
items and amounts.
Guarantors shall mean at any time collectively each of the Significant
Subsidiaries of the Borrower, other than Canyon Fuel.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor under the
Guarantor Joinder and Assumption Agreement in the form of Exhibit 1.1(G)(1).
Guaranty of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any such
liability arising by virtue of partnership agreements, including any agreement
to indemnify or hold harmless any other Person, any performance bond or other
suretyship arrangement and any other form of assurance against loss, except
endorsement of negotiable or other instruments for deposit or collection in the
ordinary course of business.
Guaranty Agreement shall mean the Amended and Restated Continuing Guaranty
and Suretyship Agreement in substantially the form of Exhibit 1.1(G)(2) executed
and delivered by each of the Guarantors to the Administrative Agent for the
benefit of the Lenders, as the same may hereafter be modified, amended,
restated, supplemented, refinanced or replaced from time to time in accordance
herewith or therewith.
Historical Statements shall have the meaning assigned to that term in
Section 5.1.7(i) [Borrower Historical Statements].
Hypothetical Income Tax Amount shall have the meaning assigned to that term
in the Arch Western LLC Agreement.
Inactive Subsidiaries shall mean, at any time, collectively, the
Subsidiaries of the Borrower which: (i) do not actively conduct any business or
operations, and (ii) have total assets, in the case of any such Subsidiary, with
a book value, as of any date of determination, not in excess of $250,000.
Indebtedness shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, (iv) any other transaction (including
production payments (excluding royalties), installment purchase agreements,
forward sale or purchase agreements, capitalized leases and conditional sales
agreements) having the commercial effect of a borrowing of money entered into by
such Person to finance its operations or capital requirements (but not including
trade payables and accrued expenses incurred in the ordinary course of business
which are not represented by a promissory note or other evidence of indebtedness
and which are not more than thirty (30) days past due), or (v) any Guaranty of
any such Indebtedness. It is understood that Derivatives Obligations shall not
be deemed to be Indebtedness.
Insolvency Proceeding shall mean, with respect to any Person, (a) a case,
action or proceeding with respect to such Person (i) before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or otherwise relating to the
liquidation, dissolution, winding-up or relief of such Person, or (b) any
general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of such Person's
creditors generally or any substantial portion of its creditors, undertaken
under any Law.
Intercompany Subordination Agreement shall mean the Intercompany
Subordination Agreement substantially in the form of Exhibit 1.1(I) executed and
delivered by the Borrower and its Subsidiaries to the Administrative Agent for
the benefit of the Lenders, as the same may hereafter be modified, amended,
restated, supplemented, refinanced or replaced from time to time in accordance
herewith or therewith.
Interest Period shall have the meaning set forth in Section 3.2.
Interest Rate Option shall mean any Euro-Rate Option or Base Rate Option.
Interest Rate Protection Agreement shall mean an interest rate protection
agreement in a standard International Swap Dealer Association Agreement,
including, without limitation, providing for the method of calculating the
reimbursable amount of the provider's credit exposure in a reasonable and
customary manner.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, 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.
Investments shall mean collectively all of the following with respect to
any person:(i) investments or contributions by any of the Loan Parties or their
Subsidiaries directly or indirectly in or to the capital of or other payments to
(except in connection with transactions for the sale of goods or services for
fair value in the ordinary course of business) such Person, (ii) loans by any of
the Loan Parties or their Subsidiaries to such Person, (iii) guaranties by any
Loan Party or any Subsidiary of any Loan Party directly or indirectly of the
obligations of such Person, or (iv) other obligations, contingent or otherwise,
of any Loan Party or any Subsidiary of any Loan Party to or for the benefit of
such Person. If the nature of an Investment is tangible property, then the
amount of such Investment shall be determined by valuing such property at fair
value in accordance with the past practice of the Loan Parties and such fair
values shall be satisfactory to the Administrative Agent, in its sole
discretion.
JPMorgan Chase shall mean JPMorgan Chase Bank, its successors and assigns.
Labor Contracts shall mean all employment agreements, employment contracts,
collective bargaining agreements and other agreements among any Loan Party or
Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, judgment, lien or award of or settlement agreement
with any Official Body.
Lenders shall mean the financial institutions and other parties named on
Schedule 1.1(B) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Lender.
Leverage Ratio shall mean the ratio of the sum of Debt of the Borrower and
its Subsidiaries, plus, without duplication, the Appropriate Percentage of Debt
of each Special Subsidiary, each on a consolidated basis in accordance with GAAP
(as the numerator) to EBITDDA of the Borrower and its Subsidiaries, plus,
without duplication, the Appropriate Percentage of each Special Subsidiary's
EBITDDA, each on a consolidated basis in accordance with GAAP (as the
denominator). For purposes of calculating the Leverage Ratio, Debt shall be
determined as of the end of each fiscal quarter of the Borrower and EBITDDA
shall be determined as of the end of each fiscal quarter of the Borrower for the
four fiscal quarters then ended.
Lien shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
LLC Agreements shall mean collectively the Arch Western LLC Agreement, the
Canyon Fuel LLC Agreement, the Mountain Coal LLC Agreement, the Arch of Wyoming
LLC Agreement, the AU Sub LLC Agreement, the State Leases LLC Agreement and the
Thunder Basin LLC Agreement.
LLC Interests shall have the meaning given to such term in Section 5.1.2
[LLC Interests of Borrower; Subsidiaries; and Subsidiary Shares].
Loan Documents shall mean this Agreement, the Administrative Agent's
Letter, the Collateral Sharing Agreement, the Guaranty Agreement, the
Intercompany Subordination Agreement, the Pledge Agreement (Subsidiary Equity
Interests), the Pledge Agreement (Investment Property), the Pledge Agreement
(Pledged Collateral Account), the Note Pledge Agreement, the Term Notes and any
other instruments, certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection herewith or therewith, as the
same may hereafter be modified, amended, restated, supplemented, refinanced or
replaced from time to time in accordance herewith or therewith, and Loan
Document shall mean any of the Loan Documents.
Loan Parties shall mean the Borrower and the Guarantors.
Material Adverse Change shall mean any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any other
Loan Document, (b) is or could reasonably be expected to be materially adverse
to the business, financial condition or results of operations of the Borrower
and its Subsidiaries taken as a whole, or (c) impairs materially or could
reasonably be expected to impair materially the ability of any Agent or any of
the Lenders, to the extent permitted, to enforce their legal remedies pursuant
to this Agreement or any other Loan Document.
Material Contracts shall mean collectively all contracts, agreements or
other instruments described in Regulation S-K, Item 601(b)(10) promulgated
pursuant to the Securities Exchange Act of 1934, as amended, which the Parent is
required to file as an exhibit to any annual, quarterly or other report required
to be filed by the Parent under the Securities Exchange Act of 1934, as amended.
Month, with respect to an Interest Period under the Euro-Rate Option, shall
mean the interval between the days in consecutive calendar months numerically
corresponding to the first day of such Interest Period. If any Interest Period
for any Term Loan subject to a Euro-Rate Option begins on a day of a calendar
month for which there is no numerically corresponding day in the month in which
such Interest Period is to end, the final month of such Interest Period shall be
deemed to end on the last Business Day of such final month.
Moody's shall mean Moody's Investors Service, Inc., and its successors.
Morgan shall mean J.P. Morgan Securities Inc.
Mountain Coal LLC Agreement shall mean that certain Limited Liability
Company Agreement, dated as of March 6, 1998, as amended, of Mountain Coal
Company, L.L.C., a limited liability company organized and existing under the
laws of the State of Delaware.
Multiemployer Plan shall mean 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 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 shall mean a Plan which has two or more contributing
sponsors (including the Borrower or any 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 Cash Proceeds shall mean, with respect to any transaction, an amount
equal to the cash proceeds received by the Borrower or any of its Subsidiaries
from or in respect of such transaction (including, when received, any cash
proceeds received as income or other cash proceeds of any non-cash proceeds of
such transaction), less (x) any expenses or charges (including commissions, fees
and taxes paid or payable) reasonably incurred by such Person in respect of such
transaction, (y) any amounts considered appropriate by the chief financial
officer of the Borrower to provide reserves in accordance with GAAP for payment
of indemnities or liabilities that may be incurred in connection with such sale
or disposition, and (z) in the case of any asset sale permitted by Section 7.2.4
(iii), the amount of any debt secured by a Lien on the related asset and
discharged as part of such asset sale. For purposes of this definition, if taxes
or other expenses payable in connection with the sale or other disposition of
any asset are not known as of the date of such sale or other disposition, then
such fees, commissions, expenses or taxes shall be estimated in good faith by
the chief financial officer of the Borrower and such estimated amounts shall be
deducted.
Note Pledge Agreement shall mean the Amended and Restated Note Pledge
Agreement substantially in the form of Exhibit 1.1(N) executed and delivered by
the Borrower to the Administrative Agent for the benefit of the Lenders, as the
same may hereafter be modified, amended, restated, supplemented, refinanced or
replaced from time to time in accordance herewith or therewith.
notices shall have the meaning assigned to that term in Section 10.6
[Notices].
Obligation shall mean any obligation, Indebtedness or liability of any of
the Loan Parties to any Agent or any of the Lenders, howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with this
Agreement, any Term Notes, the Administrative Agent's Letter or any other Loan
Document.
Official Body shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic,
including, without limitation, the National Association of Insurance
Commissioners or similar body.
Original Credit Agreement shall have the meaning assigned to such term in
the preamble hereto.
Parent shall mean Arch Coal, Inc., a corporation organized and existing
under the laws of the State of Delaware.
Partnership Interests shall have the meaning given to such term in Section
5.1.2 [LLC Interests of Borrower; Subsidiaries; and Subsidiary Shares].
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Acquisitions shall have the meaning assigned to such term in
Section 7.2.3 [Liquidations, Mergers, Consolidations, Acquisitions].
Permitted Investments shall mean
(i) direct obligations of the U.S. or any agency or instrumentality thereof
or obligations backed by the full faith and credit of the U.S. maturing in
twelve (12) months or less from the date of acquisition;
(ii) commercial paper maturing in 180 days or less rated in the highest
categories by Standard & Poor's or Moody's on the date of acquisition; and
(iii) demand deposits, time deposits or certificates of deposit maturing
within one year in a commercial bank whose obligations are rated A-1, A or the
equivalent or better by Standard & Poor's on the date of determination.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business and which are not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business to secure
payment of reclamation liabilities, worker's compensation, or to participate in
any fund in connection with worker's compensation, unemployment insurance,
old-age pensions or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen, carriers, or other
like Liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable and Liens of landlords securing obligations to
pay lease payments that are not yet due and payable or in default;
(iv) 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 to secure statutory obligations, or surety,
appeal, indemnity, performance or other similar bonds required in the ordinary
course of business (it being understood that any appeal or similar bond (other
than such a bond required pursuant to applicable Law to secure in the ordinary
course payment of worker's compensation, reclamation liabilities or royalty
bonds) in an amount exceeding $50,000,000 shall not be in the ordinary course of
business);
(v) 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;
(vi) Liens granted in the Collateral, subject to the Collateral Sharing
Agreement, to any Lender providing any Interest Rate Protection Agreement or any
Commodity Price Protection Agreement;
(vii) Liens securing Indebtedness of not more than $25,000,000 at any time;
(viii) The following, (A) if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue to
be stayed or (B) if a final judgment is entered and such judgment is discharged
within thirty (30) days of entry, and they do not adversely affect the value of
the Collateral or the first priority perfected Lien and security interest of the
Administrative Agent for the benefit of the Lenders in the Collateral or, in the
aggregate, materially impair the ability of any Loan Party to perform its
Obligations hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments or charges due and
payable and subject to interest or penalty, provided that the
applicable Loan Party maintains such reserves or other appropriate
provisions as shall be required by GAAP and pays all such taxes,
assessments or charges forthwith upon the commencement of proceedings
to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to,
real or personal property other than the Collateral, including any
attachment of personal or real property or other legal process prior
to adjudication of a dispute on the merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsensual Liens; or
(4) Liens resulting from judgments or orders described in Section
8.1.6 [Judgments or Orders];
(ix) Liens granted in the Collateral under the Collateral Documents to the
Administrative Agent for the benefit of the Lenders;
(x) Liens in favor of Bank of Montreal granted in the Collateral, subject
to the Collateral Sharing Agreement, to secure Swap Obligations (as such term is
defined in the Collateral Sharing Agreement) of the Borrower under the
International Swap Dealers Association Master Agreement (including the schedule
thereto) dated as of August 6, 1998 between the Borrower and Bank of Montreal;
and
(xi) Any Lien or restriction resulting from ownership, by an entity other
than an Affiliate of the Borrower, of a minority interest in Canyon Fuel.
Permitted Loan Origination Expense shall mean the aggregate amount of all
fees and expenses incurred by the Borrower in connection with the closing on the
Closing Date of the transactions under the Original Credit Agreement and on the
Restatement Effective Date of the transactions under this Agreement which the
Borrower is required to capitalize in accordance with GAAP.
Permitted Reduction Amount shall mean the sum of:
(i) for any period of determination, if throughout such period either (i)
the Debt Rating is BB or better by Standard & Poor's and Ba2 or better by
Moody's, or (ii) the Leverage Ratio (as defined in the Arch Credit Facility) is
less than or equal to 3.5 to 1.0, the amount of the Average Balance of the
Eligible Note Receivable for such period; and
(ii) for any period of determination, the amount of the Average Pledged
Account Balance for such period.
The applicable period of determination for purposes of clauses (i) and (ii)
above shall be the period identical to the period for which EBITDDA is being
measured for purposes of calculating the Leverage Ratio.
Person shall mean 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.
Plan shall mean at any time an employee pension benefit plan (including a
Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title
IV of ERISA or is subject to the minimum funding standards under Section 412 of
the Internal Revenue Code and either (i) is maintained by any member of the
ERISA Group for 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.
Pledge Agreement (Investment Property) shall mean the Amended and Restated
Pledge Agreement (Investment Property) substantially in the form of Exhibit
1.1(P)(1) executed and delivered by the Borrower and each of its Subsidiaries to
the Administrative Agent for the benefit of the Lenders, as the same may
hereafter be modified, amended, restated, supplemented, refinanced or replaced
from time to time in accordance herewith or therewith.
Pledge Agreement (Pledged Collateral Account) shall mean the Pledge
Agreement (Pledged Collateral Account) substantially in the form of Exhibit
1.1(P)(2) executed and delivered by the Borrower to the Administrative Agent for
the benefit of the Lenders, as the same may hereafter be modified, amended,
restated, supplemented, refinanced or replaced from time to time in accordance
herewith or therewith.
Pledge Agreement (Subsidiary Equity Interests) shall mean the Pledge
Agreement (Subsidiary Equity Interests) substantially in the form of Exhibit
1.1(P)(3) executed and delivered by the Borrower and each of its Subsidiaries
pledging equity interests which it owns in any other Subsidiary of the Borrower
to the Administrative Agent for the benefit of the Lenders, as the same may
hereafter be modified, amended, restated, supplemented, refinanced or replaced
from time to time in accordance herewith or therewith.
Pledged Collateral Account shall have the meaning given to such term in
Section 7.1.14 [Pledged Collateral Account].
PNC Bank shall mean PNC Bank, National Association, its successors and
assigns.
Potential Default shall mean any event or condition which with notice,
passage of time or a determination by the Administrative Agent or the Required
Lenders, or any combination of the foregoing, would constitute an Event of
Default.
Principal Office shall mean the main banking office of the Administrative
Agent in Pittsburgh, Pennsylvania.
Prior Security Interest shall mean a valid and enforceable perfected
first-priority security interest under the Uniform Commercial Code or other
applicable Law in the Collateral.
Probable Reserves shall mean coal reserves for which (a) quantity and/or
quality are computed from information similar to that used for Proven Reserves,
but the sites for inspection, sampling, and measurement are farther apart or are
otherwise less adequately spaced, and (b) a degree of assurance, although lower
than that for proved reserves, is high enough to assume continuity between
points of observation.
Prohibited Transaction shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United States
Department of Labor.
Property shall mean all real property, both owned and leased, of any Loan
Party or Subsidiary of a Loan Party.
Proven Reserves shall mean coal reserves 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 coal reserves are well-established.
Purchase Agreement shall mean that certain Purchase and Sale Agreement
among ARCO, ARCO Uinta Coal Company, a Delaware corporation, the Parent and
AWAC, dated as of March 22, 1998, together with all schedules and exhibits
thereto.
Purchasing Lender shall mean a Lender which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean, as the context requires: (a) in the case of
Commitments, the proportion that a Lender's Commitment bears to the Commitments
of all of the Lenders, (b) in the case of Term Loans, the proportion that a
Lender's Term Loans bears to the Term Loans of all Lenders, (c) in the case of
Tranche A Term Loans or Tranche A Commitments, the proportion that a Lender's
Tranche A Commitment bears to the Tranche A Commitments of all Lenders, and (d)
in the case of Tranche B Term Loans or Tranche B Commitments, the proportion
that a Lender's Tranche B Commitment bears to the Tranche B Commitments of all
Lenders.
Rate Request shall mean a request to select, convert to or renew a Base
Rate Option or Euro-Rate Option with respect to the Term Loans in accordance
with Section 2.5 [Request to Select Interest Rate Options].
Recoverable Reserves shall mean the amount of Proven Reserves and Probable
Reserves of the Borrower and its Subsidiaries that can actually be recovered
from the reserve base taking into account all mining and preparation losses
involved in producing a saleable product using existing methods and under
current law, provided that the amount of Recoverable Reserves held by Canyon
Fuel shall be included only to the extent of the Appropriate Percentage.
Register shall have the meaning set forth in Section 10.19 [Register]
hereof.
Regulated Substances shall mean, without limitation, any substance,
material or waste, regardless of its form or nature, defined under Environmental
Laws 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," or "regulated substance" or any other material, substance or waste,
regardless of its form or nature, which is regulated by the Environmental Laws
due to its radioactive, ignitable, corrosive, reactive, explosive, toxic,
carcinogenic or infectious properties or nature, or which otherwise is regulated
by any applicable Environmental Law including, without limitation, petroleum and
petroleum products (including crude oil and any fractions thereof), natural gas,
synthetic gas and any mixtures thereof, asbestos, urea formaldehyde,
polychlorinated biphenyls, mercury and radioactive substances.
Regulation U shall mean Regulation U, T or X as promulgated by the Board of
Governors of the Federal Reserve System, as amended from time to time.
Regulation shall mean anything defined as a "release" under CERCLA or RCRA.
Reportable Event shall mean a reportable event described in Section 4043 of
ERISA and regulations thereunder with respect to a Plan or Multiemployer Plan.
Required Lenders shall mean
(i) if there are no Term Loans outstanding, Lenders whose Commitments
aggregate more than 50% of the Commitments of all of the Lenders, or
(ii) if there are Term Loans outstanding, Lenders whose outstanding Term
Loans aggregate more than 50% of the total principal amount of all of the Term
Loans then outstanding.
Restatement Effective Date shall mean April 18, 2002.
SEC shall mean the Securities and Exchange Commission or any governmental
agencies substituted therefor.
Significant Subsidiary shall mean any Subsidiary of Borrower other than the
Inactive Subsidiaries.
Solvent shall mean, with respect to any Person on a particular date, that
on such date (i) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed as the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
Special Subsidiary shall mean Canyon Fuel and each other Person (i) with
respect to which the ownership of equity interests thereof by the Borrower or
any Subsidiary of the Borrower is accounted for in accordance with the "equity
method" in accordance with GAAP; (ii) engaged in a line of business permitted by
Section 7.2.7 [Continuation of or Change in Business]; (iii) with respect to
which the equity interests thereof were acquired by the Borrower or Subsidiary
of the Borrower in an arms-length transaction; (iv) the operations of which the
Borrower has management control over; and (v) a majority of the economic equity
interests of which are owned directly or indirectly by the Borrower.
Standard & Poor's shall mean Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., and its successors.
Subsidiary of any Person at any time shall mean (i) any corporation or
trust of which more than 50% (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such Person's
Subsidiaries, (ii) any partnership of which such Person is a general partner or
of which more than 50% of the partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
more than 50% of the limited liability company interests is at the time directly
or indirectly owned by such Person or one or more of such Person's Subsidiaries
or (iv) any corporation, trust, partnership, limited liability company or other
entity which is controlled or capable of being controlled by such Person or one
or more of such Person's Subsidiaries. As of the Closing Date, the Borrower owns
65% of the member interests of Canyon Fuel. It is expressly agreed that each
Special Subsidiary shall be deemed to be a Subsidiary of the Borrower for
purposes of this Agreement. Nonetheless, the Appropriate Percentage of the
assets, income, expenses, liabilities and other items with respect to each
Special Subsidiary shall be included, without duplication, for purposes of
calculating the Leverage Ratio and the Fixed Charge Coverage Ratio as described
more fully in the definitions of "Leverage Ratio" and "Fixed Charge Coverage
Ratio" and for purposes of calculating EBITDDA for purposes of Section 7.2.12
[Minimum EBITDDA].
State Leases LLC Agreement shall mean that certain Limited Liability
Company Agreement, dated as of April 8, 1998, as amended, of State Leases LLC, a
limited liability company organized and existing under the laws of the State of
Delaware.
Subsidiary Shares shall have the meaning assigned to that term in Section
5.1.2 [LLC Interests of Borrower; Subsidiaries; and Subsidiary Shares].
Syndication Agent shall mean JPMorgan Chase in its capacity as syndication
agent for the Lenders under this Agreement and its successors in such capacity.
Tax Sharing Agreement shall mean that certain Tax Sharing Agreement dated
as June 1, 1998 by and among the Borrower, AWAC, the Parent and Delta Housing.
Term Loan shall mean separately any Tranche A Term Loan or Tranche B Term
Loan, and Term Loans shall mean collectively all of the Tranche A Term Loans and
Tranche B Term Loans.
Term Notes shall mean collectively all of the Tranche A Term Notes and
Tranche B Term Notes of the Borrower, and Term Note shall mean separately any of
the Term Notes.
Thunder Basin LLC Agreement shall mean that certain Limited Liability
Company Agreement, dated as of July 10, 1997, as amended, of Thunder Basin Coal
Company, L.L.C., a limited liability company organized and existing under the
laws of the State of Delaware.
Tranche A Commitment shall mean, as to any Lender at any time, the amount
initially set forth opposite its name on Schedule 1.1(B) in the column labeled
"Amount of Tranche A Commitment" and thereafter on Schedule 1.1(B) to the most
recent Assignment and Assumption Agreement, and Tranche A Commitments shall mean
the aggregate Tranche A Commitments of all the Lenders.
Tranche A Expiration Date shall mean April 18, 2007.
Tranche A Term Loan shall have the meaning given to such term in Section
2.1.1 [Tranche A Commitment]; Tranche A Term Loans shall mean collectively all
of the Tranche A Term Loans.
Tranche A Term Notes shall mean collectively all of the Tranche A Term
Notes of the Borrower in the form of Exhibit 1.1(T)(1) evidencing the Tranche A
Term Loans, as the same may hereafter be modified, amended, restated,
supplemented, refinanced, replaced, extended or renewed from time to time in
accordance herewith or therewith in whole or in part, and Tranche A Term Note
shall mean separately any of the Tranche A Term Notes.
Tranche B Commitment shall mean, as to any Lender at any time, the amount
initially set forth opposite its name on Schedule 1.1(B) in the column labeled
"Amount of Tranche B Commitment" and thereafter on Schedule 1.1(B) to the most
recent Assignment and Assumption Agreement, and Tranche B Commitments shall mean
the aggregate Tranche B Commitments of all the Lenders.
Tranche B Expiration Date shall mean April 18, 2008.
Tranche B Term Loan shall have the meaning given to such term in Section
2.1.2 [Tranche B Commitment]; Tranche B Term Loans shall mean collectively all
of the Tranche B Term Loans.
Tranche B Term Notes shall mean collectively all of the Tranche B Term
Notes of the Borrower in the form of Exhibit 1.1(T)(2) evidencing the Tranche B
Term Loans, as the same may hereafter be modified, amended, restated,
supplemented, refinanced, replaced, extended or renewed from time to time in
accordance herewith or therewith in whole or in part, and Tranche B Term Note
shall mean separately any of the Tranche B Term Notes.
Transferor Lender shall mean the selling Lender pursuant to an Assignment
and Assumption Agreement.
Unassigned Reserves shall mean all Recoverable Reserves that have not yet
been designated for mining by a specific operation of the Borrower or any of its
Subsidiaries, all as disclosed in the Parent's statements most recently filed
with the SEC identifying the Unassigned Reserves, excluding the Carbon Basin
Reserves.
Uniform Commercial Code shall have the meaning assigned to that term in
Section 5.1.21 [Security Interests].
U.S. shall mean the United States of America.
U.S. Bank shall mean U.S. Bank National Association, its successors and
assigns.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 Number; Inclusion.
references to the plural include the singular, the plural, the part and the
whole; "or" has the inclusive meaning represented by the phrase "and/or"; and
"including" has the meaning represented by the phrase "including without
limitation";
1.2.2 Determination.
references to "determination" of or by the Administrative Agent or the
Lenders shall be deemed to include good-faith estimates by the Administrative
Agent or the Lenders (in the case of quantitative determinations) and good-faith
beliefs by the Administrative Agent or the Lenders (in the case of qualitative
determinations) and such determination shall be conclusive absent manifest
error;
1.2.3 Administrative Agent's Discretion and Consent.
whenever the Administrative Agent or the Lenders are granted the right
herein to act in its or their sole discretion or to grant or withhold consent
such right shall be exercised in good faith;
1.2.4 Documents Taken as a Whole.
the words "hereof," "herein," "hereunder," "hereto" and similar terms in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document as a whole and not to any particular provision of this Agreement
or such other Loan Document;
1.2.5 Headings.
the section and other headings contained in this Agreement or such other
Loan Document and the Table of Contents (if any), preceding this Agreement or
such other Loan Document are for reference purposes only and shall not control
or affect the construction of this Agreement or such other Loan Document or the
interpretation thereof in any respect;
1.2.6 Implied References to This Agreement.
article, section, subsection, clause, schedule and exhibit references are
to this Agreement or other Loan Document, as the case may be, unless otherwise
specified;
1.2.7 Persons.
reference to any Person includes such Person's successors and assigns but,
if applicable, only if such successors and assigns are permitted by this
Agreement or such other Loan Document, as the case may be, and reference to a
Person in a particular capacity excludes such Person in any other capacity;
1.2.8 Modifications to Documents.
reference to any agreement (including this Agreement and any other Loan
Document together with the schedules and exhibits hereto or thereto), document
or instrument means such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated in accordance with the
applicable provisions thereof and hereof;
1.2.9 From, To and Through.
relative to the determination of any period of time, "from" means "from and
including," "to" means "to but excluding," and "through" means "through and
including"; and
1.2.10 Shall; Will.
references to "shall" and "will" are intended to have the same meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
used in Section 7.2 [Negative Covenants] (and all defined terms used in the
definition of any accounting term used in Section 7.2), as applied to the
Borrower and its Subsidiaries shall have the meaning given to such terms (and
defined terms) under GAAP as in effect on the Restatement Effective Date applied
on a basis consistent with those used in preparing the Historical Statements
referred to in Section 5.1.7(i) [Borrower Historical Statements]. In the event
of any change after the Restatement Effective Date in GAAP, and if such change
would result in the inability to determine compliance with the financial
covenants set forth in Section 7.2 based upon the Borrower's regularly prepared
financial statements by reason of the preceding sentence, then the parties
hereto agree to endeavor, in good faith, to agree upon an amendment to this
Agreement that would adjust such financial covenants in a manner that would not
affect the substance thereof, but would allow compliance therewith to be
determined in accordance with the Borrower's financial statements at that time.
2. TERM LOAN FACILITY
2.1 Commitments.
The Term Loans under and as defined in the Original Credit Agreement shall
on the Restatement Effective Date be refinanced by the Tranche A Term Loans and
the Tranche B Term Loans hereunder as set forth below.
2.1.1 Tranche A Commitment.
Subject to the terms and conditions hereof, and relying upon the
representations and warranties herein set forth, each Lender with a Tranche A
Commitment severally agrees to make a term loan (the "Tranche A Term Loan") to
the Borrower on the Restatement Effective Date in such principal amount as the
Borrower shall request up to, but not exceeding, such Lender's Tranche A
Commitment.
2.1.2 Tranche B Commitment.
Subject to the terms and conditions hereof, and relying upon the
representations and warranties herein set forth, each Lender with a Tranche B
Commitment severally agrees to make a term loan (the "Tranche B Term Loan") to
the Borrower on the Restatement Effective Date in such principal amount as the
Borrower shall request up to, but not exceeding, such Lender's Tranche B
Commitment.
2.2 Nature of Lenders' Obligations with Respect to Term Loans.
The obligations of each Lender with a Tranche A Commitment to make a
Tranche A Term Loan to the Borrower shall be in the proportion that such
Lender's Tranche A Commitment bears to the Tranche A Commitments of all Lenders,
provided, however, that each Lender's Tranche A Term Loan to the Borrower shall
never exceed its Tranche A Commitment. The obligations of each Lender with a
Tranche B Commitment to make a Tranche B Term Loan to the Borrower shall be in
the proportion that such Lender's Tranche B Commitment bears to the Tranche B
Commitments of all Lenders, provided, however, that each Lender's Tranche B Term
Loan to the Borrower shall never exceed its Tranche B Commitment. The failure of
any Lender to make a Term Loan shall not relieve any other Lender of its
obligations to make a Term Loan nor shall it impose any additional liability on
any other Lender hereunder. The Lenders shall have no obligation to make Term
Loans hereunder after the Restatement Effective Date. The Commitments are not
revolving credit commitments, and the Borrower shall not have the right to
borrow, repay and reborrow the Term Loans. The Lenders shall have no obligation
hereunder to make Term Loans after the Restatement Effective Date.
2.3 Noteless Agreement; Evidence of Indebtedness.
Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the Obligation of the Borrower to such Lender resulting
from each Term Loan made by such Lender, including the amount of principal and
interest payable and paid to such Lender from time to time hereunder. The
Administrative Agent shall also maintain accounts in which it will record (a)
the amount of each Term Loan made hereunder, the Interest Rate Option applicable
thereto, and the Interest Period applicable thereto, (b) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder, and (c) the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof. The entries maintained in the accounts maintained pursuant to this
Section 2.3 shall be prima facie evidence of the existence and amounts of the
Obligation therein recorded; provided, however, that the failure of the
Administrative Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Obligation in accordance with its terms.
Any Lender may request that its Term Loans be evidenced by a promissory
note substantially in the form of Exhibit 1.1(T)(1) or Exhibit 1.1(T)(2), as
applicable. In such event, the Borrower shall execute and deliver to such
Lender, as applicable, a Tranche A Term Note or Tranche B Term Note, dated the
Restatement Effective Date, payable to the order of such Lender in a face amount
equal to the Tranche A Commitment or Tranche B Commitment, as the case may be,
of such Lender, and thereafter the Term Loans evidenced by each such Term Note
and interest thereon shall at all times (including after any assignment pursuant
to Section 10.11) be represented by one or more Term Notes payable to the order
of the payee named therein or any assignee pursuant to Section 10.11, except to
the extent that any such Lender or assignee subsequently returns any such Term
Note for cancellation and requests that such Term Loans once again be evidenced
as described in the immediately prior paragraph of this Section 2.3. The
principal amount of each Tranche A Term Note as provided therein shall be due
and payable on the Tranche A Expiration Date. The principal amount of each
Tranche B Term Note as provided therein shall be due and payable on the Tranche
B Expiration Date.
2.4 Use of Proceeds.
On and after the Restatement Effective Date, the proceeds of the Term Loans
shall be used to continue and refinance the term loan under the Original Credit
Agreement and in accordance with Section 7.1.9 [Use of Proceeds].
2.5 Request to Select Interest Rate Options.
Except as otherwise provided herein, the Borrower may on the Restatement
Effective Date select the initial Interest Rate Options applicable to the Term
Loans and thereafter from time to time prior to the Tranche A Expiration Date in
the case of the Tranche A Term Loans and the Tranche B Expiration Date in the
case of the Tranche B Term Loans request the Lenders to renew or convert the
Interest Rate Option applicable to existing Term Loans pursuant to Section 3.2
[Interest Periods], by delivering to the Administrative Agent, not later than
10:00 a.m., Pittsburgh time, (i) three (3) Business Days prior to the proposed
Borrowing Date with respect to the making of the Term Loans on the Restatement
Effective Date or the conversion to or the renewal of the Euro-Rate Option for
any Term Loans, and (ii) one (1) Business Day prior to the making of the Term
Loans on the Restatement Effective Date to which the Base Rate Option applies or
the last day of the preceding Interest Period with respect to the conversion to
the Base Rate Option for any Term Loan, of a duly completed request therefor
substantially in the form of Exhibit 2.5 (each a "Rate Request") or a request
therefor by telephone immediately confirmed in writing by letter, facsimile or
telex in the form of such Exhibit, it being understood that the Administrative
Agent may rely on the authority of any individual making such a telephonic
request without the necessity of receipt of such written confirmation. Each Rate
Request shall be irrevocable and shall specify (i) the proposed Borrowing Date;
(ii) the aggregate amount of the Tranche A Term Loans and Tranche B Term Loans
comprising each Borrowing Tranche, which shall be in integral multiples of
$25,000,000 and not less than $25,000,000 for each Borrowing Tranche to which
the Euro-Rate Option applies and in integral multiples of $500,000 and not less
than the lesser of $25,000,000 or the maximum amount available for Borrowing
Tranches to which the Base Rate Option applies; (iii) whether the Euro-Rate
Option or Base Rate Option shall apply to the applicable Borrowing Tranche; and
(iv) in the case of a Borrowing Tranche to which the Euro-Rate Option applies,
an appropriate Interest Period for the Term Loans comprising such Borrowing
Tranche. The Administrative Agent shall, promptly after receipt by it of a Rate
Request pursuant to Section 2.5 [Request to Select Interest Rate Options],
notify the Lenders of its receipt of such Rate Request and provide each Lender
with a copy thereof.
2.6 Required Payments.
The principal amount of the Tranche A Term Loans, together with accrued
interest, fees and all other Obligations payable thereon shall be due and
payable on the Tranche A Expiration Date. The principal amount of the Tranche B
Term Loans, together with accrued interest, fees and all other Obligations
payable thereon shall be due and payable on the Tranche B Expiration Date.
3. INTEREST RATES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Term Loans as selected by it from the Base Rate Option
or Euro-Rate Option set forth below, it being understood that, subject to the
provisions of this Agreement, the Borrower may select different Interest Rate
Options and different Interest Periods to apply simultaneously to the Term Loans
comprising different Borrowing Tranches and may convert to or renew one or more
Interest Rate Options with respect to all or any portion of the Term Loans
comprising any Borrowing Tranche, provided that there shall not be at any one
time outstanding more than eight (8) Borrowing Tranches in the aggregate among
all of the Term Loans accruing interest at a Euro-Rate Option. If at any time
the designated rate applicable to any Term Loan exceeds such Lender's highest
lawful rate, the rate of interest on such Term Loan shall be limited to such
Lender's highest lawful rate.
3.1.1 Interest Rate Options.
The Borrower shall have the right to select from the following Interest
Rate Options applicable to the Term Loans:
(i) Base Rate Option: A fluctuating rate per annum (computed on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal
to the Base Rate plus 1.00% in the case of Tranche A Term Loans, and equal to
the Base Rate plus 1.50% in the case of Tranche B Term Loans, such interest rate
to change automatically from time to time effective as of the effective date of
each change in the Base Rate; or
(ii) Euro-Rate Option: A rate per annum (computed on the basis of a year of
360 days and actual days elapsed) equal to the Euro-Rate plus 2.50% in the case
of Tranche A Term Loans, and equal to the Euro-Rate plus 3.00% in the case of
Tranche B Term Loans.
3.1.2 Rate Quotations.
The Borrower may call the Administrative Agent on or before the date on
which a Rate Request is to be delivered to receive an indication of the rates
then in effect as to Term Loans, but it is acknowledged that such projection
shall not be binding on the Administrative Agent or the Lenders nor affect the
rate of interest which thereafter is actually in effect when the election is
made.
3.2 Interest Periods.
At any time when the Borrower shall select, convert to or renew a Euro-Rate
Option, the Borrower shall notify the Administrative Agent thereof at least
three (3) Business Days prior to the effective date of such Euro-Rate Option by
delivering a Rate Request. The notice shall specify an interest period (the
"Interest Period") during which the Euro-Rate Option shall apply, such Interest
Period to be one, two, three or six Months. Notwithstanding the preceding
sentence, the following provisions shall apply to any selection of, renewal of,
or conversion to a Euro-Rate Option:
3.2.1 Ending Date and Business Day.
any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
3.2.2 Amount of Borrowing Tranche.
each Borrowing Tranche of Term Loans to which the Euro-Rate Option applies
shall be in integral multiples of $25,000,000 and not less than $25,000,000;
3.2.3 Termination Before Expiration Date.
the Borrower shall not select, convert to or renew an Interest Period for
any portion of the Term Loans that would end, in the case of Tranche A Term
Loans, after the Tranche A Expiration Date, or in the case of Tranche B Term
Loans, after the Tranche B Expiration Date; and
3.2.4 Renewals.
in the case of the renewal of a Euro-Rate Option at the end of an Interest
Period, the first day of the new Interest Period shall be the last day of the
preceding Interest Period, without duplication in payment of interest for such
day.
3.3 Interest After Default.
To the extent permitted by Law, upon the occurrence of an Event of Default
and until such time such Event of Default shall have been cured or waived:
3.3.1 Interest Rate.
the rate of interest for each Term Loan otherwise applicable pursuant to
Section 3.1.1 [Interest Rate Options] shall be increased by 2.0% per annum; and
3.3.2 Other Obligations.
each other Obligation hereunder if not paid when due shall bear interest at
a rate per annum equal to the sum of the rate of interest applicable under the
Base Rate Option plus an additional 2.0% per annum from the time such Obligation
becomes due and payable until it is paid in full.
3.3.3 Acknowledgment.
The Borrower acknowledges that the increase in rates referred to in this
Section 3.3 reflects, among other things, the fact that such Term Loans or other
amounts have become a substantially greater risk given their default status and
that the Lenders are entitled to additional compensation for such risk and all
such interest shall be payable by Borrower upon demand by Administrative Agent.
Upon the occurrence of an Event of Default, no Term Loan may be converted to or
renewed under the Euro-Rate Option.
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
3.4.1 Unascertainable.
If, on any date on which a Euro-Rate would otherwise be determined with
respect to Term Loans, the Administrative Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining such
Euro-Rate, or
(ii) a contingency has occurred which materially and adversely affects the
London interbank eurodollar market relating to the Euro-Rate,
then the Administrative Agent shall have the rights specified in Section
3.4.3 [Administrative Agent's and Lender's Rights].
3.4.2 Illegality; Increased Costs; Deposits Not Available.
If at any time any Lender shall have determined that:
(i) the making, maintenance or funding of any Term Loan to which a
Euro-Rate Option applies has been made impracticable or unlawful by compliance
by such Lender in good faith with any Law or any interpretation or application
thereof by any Official Body or with any request or directive of any such
Official Body (whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and fairly reflect the cost
to such Lender of the establishment or maintenance of any such Term Loan, or
(iii) after making all reasonable efforts, deposits of the relevant amount
in Dollars for the relevant Interest Period for a Term Loan to which a Euro-Rate
Option applies are not available to such Lender with respect to such Term Loan
in the London interbank market,
then the Administrative Agent and the Lenders shall have the rights specified in
Section 3.4.3 [Administrative Agent's and Lender's Rights].
3.4.3 Administrative Agent's and Lender's Rights.
In the case of any event specified in Section 3.4.1 [Unascertainable]
above, the Administrative Agent shall promptly so notify the Lenders and the
Borrower thereof, and in the case of an event specified in Section 3.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Lender shall
promptly so notify the Administrative Agent and endorse a certificate to such
notice as to the specific circumstances of such notice, and the Administrative
Agent shall promptly send copies of such notice and certificate to the other
Lenders and the Borrower. Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given), the obligation
of (A) the Lenders, in the case of such notice given by the Administrative
Agent, or (B) such Lender, in the case of such notice given by such Lender, to
allow the Borrower to convert to or renew a Euro-Rate Option shall be suspended
until the Administrative Agent shall have later notified the Borrower, or such
Lender shall have later notified the Administrative Agent, of the Administrative
Agent's or such Lender's, as the case may be, determination that the
circumstances giving rise to such previous determination no longer exist. If at
any time the Administrative Agent makes a determination under Section 3.4.1 and
the Borrower has previously notified the Administrative Agent of its selection
of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option
has not yet gone into effect, such notification shall be deemed to provide for
the selection of, conversion to or renewal of the Base Rate Option otherwise
available with respect to such Term Loans. If any Lender notifies the
Administrative Agent of a determination under Section 3.4.2, the Borrower shall,
subject to the Borrower's indemnification Obligations under Section 4.5.2
[Indemnity] as to any Term Loan of the Lender to which a Euro-Rate Option
applies, on the date specified in such notice either convert such Term Loan to
the Base Rate Option otherwise available with respect to such Term Loan or
prepay such Term Loan in accordance with Section 4.4 [Prepayments]. Absent due
notice from the Borrower of conversion or prepayment, such Term Loan shall
automatically be converted to the Base Rate Option otherwise available with
respect to such Term Loan upon such specified date.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Term Loans under the Euro-Rate Option at the expiration of
an existing Interest Period applicable to such Borrowing Tranche in accordance
with the provisions of Section 3.2 [Interest Periods], the Borrower shall be
deemed to have converted such Borrowing Tranche to the Base Rate Option
commencing upon the last day of the existing Interest Period.
4. PAYMENTS
4.1 Payments.
All payments and prepayments to be made in respect of principal, interest,
Administrative Agent's Fee or other fees or amounts due from the Borrower
hereunder shall be payable prior to 11:00 a.m., Pittsburgh time, on the date
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower, and without set-off,
counterclaim or other deduction of any nature, and an action therefor shall
immediately accrue. Such payments shall be made to the Administrative Agent at
the Principal Office for the ratable accounts of the Lenders with respect to the
Term Loans, in U.S. Dollars and in immediately available funds, and the
Administrative Agent shall promptly distribute such amounts to the Lenders in
immediately available funds, provided that in the event payments are received by
11:00 a.m., Pittsburgh time, by the Administrative Agent and such payments are
not distributed to the Lenders on the same day received by the Administrative
Agent, the Administrative Agent shall pay the Lenders the Federal Funds
Effective Rate with respect to the amount of such payments for each day held by
the Administrative Agent and not distributed to the Lenders. The Administrative
Agent's and each Lender's statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement of the
amount of principal of and interest on the Term Loans and other amounts owing
under this Agreement and shall be deemed an "account stated."
4.2 Pro Rata Treatment of Lenders.
The Tranche A Term Loans shall be allocated to each Lender according to its
Ratable Share, as such Ratable Share relates specifically to the Tranche A
Commitments of all Lenders having Tranche A Commitments. The Tranche B Term
Loans shall be allocated to each Lender according to its Ratable Share, as such
Ratable Share relates specifically to the Tranche B Commitments of all Lenders
having Tranche B Commitments. Each selection of, conversion to or renewal of any
Interest Rate Option applicable to Tranche A Term Loans and each payment or
prepayment by the Borrower with respect to principal or interest on the Tranche
A Term Loans or other fees related thereto (except for the Administrative
Agent's Fee) or amounts due from the Borrower hereunder to the Lenders with
respect to the Tranche A Term Loans, shall (except as provided in Section 3.4.3
[Administrative Agent's and Lender's Rights] in the case of an event specified
in Sections 3.4 [Euro-Rate Unascertainable, etc.], 4.4.2 [Replacement of a
Lender] or 4.5 [Additional Compensation in Certain Circumstances]) be made in
proportion to the Ratable Share of Tranche A Term Loans outstanding from each
Lender and, if no Tranche A Term Loans are then outstanding, in proportion to
the Ratable Share with respect to Tranche A Commitments of each Lender. Each
selection of, conversion to or renewal of any Interest Rate Option applicable to
Tranche B Term Loans and each payment or prepayment by the Borrower with respect
to principal or interest on the Tranche B Term Loans or other fees related
thereto (except for the Administrative Agent's Fee) or amounts due from the
Borrower hereunder to the Lenders with respect to the Tranche B Term Loans,
shall (except as provided in Section 3.4.3 [Administrative Agent's and Lender's
Rights] in the case of an event specified in Sections 3.4 [Euro-Rate
Unascertainable, etc.], 4.4.2 [Replacement of a Lender] or 4.5 [Additional
Compensation in Certain Circumstances]) be made in proportion to the Ratable
Share of Tranche B Term Loans outstanding from each Lender and, if no Tranche B
Term Loans are then outstanding, in proportion to the Ratable Share with respect
to Tranche B Commitments of each Lender. Amounts due from the Borrower hereunder
which are not otherwise related to the Tranche A Term Loans or the Tranche B
Term Loans shall be made in proportion to each Lender's Ratable Share with
respect to the Term Loans outstanding and, if no Term Loans are then
outstanding, in proportion to each Lender's Ratable Share with respect to the
Commitments.
4.3 Interest Payment Dates.
Interest on Term Loans to which the Base Rate Option applies shall be due
and payable in arrears on the first Business Day of each July, October, January
and April after the date hereof, in the case of the Tranche A Term Loans, on the
Tranche A Expiration Date, in the case of the Tranche B Term Loans, on the
Tranche B Expiration Date or upon acceleration of the Term Loans. Interest on
Term Loans to which the Euro-Rate Option applies shall be due and payable on the
last day of each Interest Period for those Term Loans and, if such Interest
Period is longer than three (3) Months, also on the date that is three (3)
Months after the commencement of such Interest Period (and if applicable, the
date that is six (6) Months after the commencement of such Interest Period) of
such Interest Period, in the case of the Tranche A Term Loans, on the Tranche A
Expiration Date, in the case of the Tranche B Term Loans, on the Tranche B
Expiration Date or, in each case, upon acceleration of the Term Loans. Interest
on the principal amount of the Term Loans or other monetary Obligation shall be
due and payable on demand after such principal amount or other monetary
Obligation becomes due and payable (whether on the stated maturity date, upon
acceleration or otherwise).
4.4 Prepayments.
4.4.1 Voluntary Prepayments.
The Borrower shall have the right at its option from time to time to prepay
the Term Loans in whole or part without premium or penalty (except as provided
in Section 4.4.2 [Replacement of a Lender] below or in Section 4.5 [Additional
Compensation in Certain Circumstances]):
(i) at any time with respect to Term Loans to which the Base Rate Option
applies,
(ii) on the last day of the applicable Interest Period with respect to Term
Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Lender pursuant to Section
3.4 [Euro-Rate Unascertainable, etc.] with respect to any Term Loan to which a
Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Term Loans, it
shall provide a prepayment notice to the Administrative Agent by 1:00 p.m.,
Pittsburgh time, at least three (3) Business Days prior to the date of
prepayment of the Term Loans, setting forth the following information:
(x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made (the "Prepayment Date");
(y) a statement indicating whether the prepayment is of Tranche A Term
Loans or Tranche B Term Loans; and
(z) the total principal amount of such prepayment, which shall not be less
than $5,000,000 and in increments of $1,000,000 above $5,000,000.
All prepayment notices shall be irrevocable. The principal amount of the
Term Loans for which a prepayment notice is given, together with interest on
such principal amount, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be made.
During any period prior to the repayment in full of the Tranche A Term
Loans, in accordance with the provision hereinafter set forth in this paragraph,
in the event of any proposed prepayment of any portion of the Tranche B Loans, a
Lender with outstanding Tranche B Term Loans may elect not to receive its
Ratable Share of such proposed prepayment. Upon its receipt of any notice of
prepayment of Tranche B Term Loans pursuant to this Section 4.4.1, the
Administrative Agent shall promptly give the Lenders with outstanding Tranche B
Term Loans notice of the amount of prepayment specified in such notice. Prior to
the repayment in full the Tranche A Term Loans, in the event that any Lender
with outstanding Tranche B Term Loans elects not to receive its Ratable Share of
such prepayment, such Lender shall, on or before the first Business Day (the
"Cutoff Date") prior to the Prepayment Date, provide written notice to the
Administrative Agent of the amount, if any, it elects not to receive in
prepayment of its Tranche B Term Loan (it being understood that any Lender which
does not notify the Administrative Agent of its election not to receive all or
part of any prepayment on or before the Cutoff Date shall be deemed to have
elected, as of the Cutoff Date, not to make such election). All amounts that
Lenders with Tranche B Term Loans have elected not to receive pursuant to this
paragraph shall be applied in the following manner: (i) first, to prepay the
Tranche B Term Loans of the Lenders that have not elected not to receive such
prepayments according to the Ratable Share with respect to the outstanding
Tranche B Term Loans of each such Lender, (ii) second, to prepay the Tranche A
Term Loans according to the Ratable Share with respect to the outstanding
Tranche A Term Loans of each Lender; and (iii) third, the excess, if any, shall
be returned to the Borrower.
After the date of repayment in full of the Tranche A Term Loans, a Lender
with Tranche B Term Loans outstanding shall no longer have the option, as
provided in the immediately prior paragraph, to elect not to receive its Ratable
Share of any prepayment of Tranche B Term Loans. Without limiting the foregoing,
from and after the date of repayment in full of the Tranche A Term Loans, each
voluntary prepayment of Tranche B Term Loans made pursuant to this Section shall
be applied to prepay the Tranche B Term Loans of the Lenders according to the
Ratable Share with respect to the outstanding Tranche B Term Loans of each such
Lender.
Except as provided in Section 3.4.3 [Administrative Agent's and Lender's
Rights], if the Borrower prepays Term Loans but fails to specify the applicable
Borrowing Tranche which the Borrower is prepaying, the prepayment shall be
applied (i) first to Term Loans to which the Base Rate Option applies, and (ii)
then to Term Loans to which the Euro-Rate Option applies. Any prepayment
hereunder shall be subject to the Borrower's Obligation to indemnify the Lenders
under Section 4.5.2 [Indemnity].
4.4.2 Replacement of a Lender.
In the event any Lender (i) gives notice under Section 3.4 [Euro-Rate
Unascertainable, etc.] or Section 4.5.1 [Increased Costs, etc.], or (ii) becomes
subject to the control of an Official Body (other than normal and customary
supervision), then the Borrower shall have the right at its option, with the
consent of the Administrative Agent, which shall not be unreasonably withheld
(except that during any period when an Event of Default exists and is
continuing, the Administrative Agent may withhold such consent in its sole
discretion), to prepay the Term Loans of such Lender in whole, together with all
interest and fees accrued thereon and all other amounts due and payable to such
Lender under the Loan Documents, and terminate such Lender's Commitment within
ninety (90) days after (y) receipt of such Lender's notice under Section 3.4
[Euro-Rate Unascertainable, etc.] or 4.5.1 [Increased Costs, etc.], or (z) the
date such Lender became subject to the control of an Official Body, as
applicable; provided that the Borrower shall also pay to such Lender at the time
of such prepayment any amounts required under Section 4.5 [Additional
Compensation in Certain Circumstances] (except that the Borrower shall not be
required to indemnify such Lender for liabilities, losses or expenses under
Section 4.5.2(i) sustained by such Lender as a consequence of the prepayment of
the Term Loans of such Lender in accordance with this Section 4.4.2 on a day
other than the last day of an Interest Period with respect to Term Loans to
which a Euro-Rate Option applies if the Term Loans of such Lender are being
prepaid because such Lender has determined that the making, maintenance or
funding of such Term Loans by such Lender under the Euro-Rate Option has been
made unlawful or because such Lender has become subject to the control of an
Official Body) and any accrued interest due on such amount and any related fees;
provided, however, that the Commitment and any Term Loan of such Lender shall be
provided by one or more of the remaining Lenders at its sole discretion or a
replacement lender acceptable to the Administrative Agent. Notwithstanding the
foregoing, the Administrative Agent may only be replaced subject to the
requirements of Section 9.14 [Successor Agents].
4.4.3 Change of Lending Office.
Each Lender agrees that upon the occurrence of any event giving rise to
increased costs or other special payments under Section 3.4.2 [Illegality, etc.]
or 4.5.1 [Increased Costs, etc.] with respect to such Lender, it will if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Term
Loan affected by such event, provided that such designation is made on such
terms that such Lender and its lending office suffer no economic, legal or
regulatory disadvantage, in such Lender's good faith determination, with the
object of avoiding the consequence of the event giving rise to the operation of
such Section. Nothing in this Section 4.4.3 shall affect or postpone any of the
Obligations of the Borrower or any other Loan Party or the rights of any Agent
or any Lender provided in this Agreement.
4.5 Additional Compensation in Certain Circumstances.
4.5.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc.
If any Law, guideline or interpretation or any change in any Law, guideline
or interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body:
(i) subjects any Lender to any tax or changes the basis of taxation with
respect to this Agreement or the Term Loans or payments by the Borrower of
principal, interest or other amounts due from the Borrower hereunder (except for
taxes on the overall net income of such Lender),
(ii) imposes, modifies or deems applicable any capital adequacy or similar
requirement (A) against assets (funded or contingent) of, or other credits or
commitments to extend credit extended by, any Lender, or (B) otherwise
applicable to the obligations of any Lender under this Agreement,
(iii) imposes, modifies or deems applicable any reserve, special deposit or
similar requirement against credits or commitments to extend credit extended by,
or assets (funded or contingent) of, deposits with or for the account of, or
other acquisitions of funds by, any Lender, or
and the result of any of the foregoing is to increase the cost to, reduce
the income receivable by, or impose any expense (including loss of margin) upon
any Lender with respect to this Agreement, or the making, maintenance or funding
of any part of the Term Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Lender's capital, taking into consideration such Lender's customary policies
with respect to capital adequacy) by an amount which such Lender in its sole
discretion deems to be material, such Lender shall from time to time notify the
Borrower and the Administrative Agent of the amount determined in good faith
(using any averaging and attribution methods employed in good faith) by such
Lender to be necessary to compensate such Lender for such increase in cost,
reduction of income, additional expense or reduced rate of return. Such notice
shall set forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by the Borrower to such Lender ten (10) Business
Days after such notice is given.
4.5.2 Indemnity.
In addition to the compensation required by Section 4.5.1 [Increased Costs,
etc.], the Borrower shall indemnify each Lender against all liabilities, losses
or expenses (including loss of margin, any loss or expense incurred in
liquidating or employing deposits from third parties and any loss or expense
incurred in connection with funds acquired by a Lender to fund or maintain Term
Loans subject to a Euro-Rate Option) which such Lender sustains or incurs as a
consequence of any
(i) payment, prepayment, conversion or renewal of the Term Loans to which a
Euro-Rate Option applies on a day other than the last day of the corresponding
Interest Period (whether or not such payment or prepayment is mandatory,
voluntary or automatic and whether or not such payment or prepayment is then
due),
(ii) attempt by the Borrower to revoke (expressly, by later inconsistent
notices or otherwise) in whole or part any Rate Request under Section 2.5
[Request to Select Interest Rate Options] or Section 3.2 [Interest Periods] or
notice relating to prepayments under Section 4.4 [Prepayments], or
(iii) default by the Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Loan Document,
including any failure of the Borrower to pay when due (by acceleration or
otherwise) any principal of or interest on the Term Loans or any other amount
due hereunder.
If any Lender sustains or incurs any such loss or expense, it shall from
time to time notify the Borrower of the amount determined in good faith by such
Lender (which determination may include such assumptions, allocations of costs
and expenses and averaging or attribution methods as such Lender shall deem
reasonable) to be necessary to indemnify such Lender for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such
Lender ten (10) Business Days after such notice is given.
4.6 [Intentionally Omitted]
4.7 Taxes.
4.7.1 No Deductions.
All payments made by the Borrower hereunder shall be made free and clear of
and without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the net income of the Lenders and all income and
franchise taxes of the United States applicable to the Lenders (all such
non-excluded taxes, levies, imposts deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable under
the Credit Agreement, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this subsection), the Administrative Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall timely pay the full amount deducted to the relevant tax authority
or other authority in accordance with applicable law.
4.7.2 Stamp Taxes.
In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder or from the execution,
delivery, or registration or otherwise with respect to, the Credit Agreement
(hereinafter referred to as "Other Taxes").
4.7.3 Indemnification for Taxes Paid by Lenders.
The Borrower shall indemnify the Lenders for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this subsection) paid by such Lender
and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender makes written demand therefor.
4.7.4 Certificate.
Within 30 days after the date of any payment of any Taxes by the Borrower,
the Borrower shall furnish to the Administrative Agent for the benefit of the
Lenders the original or a certified copy of a receipt evidencing payment
thereof. If no Taxes are payable in respect of any payment by the Borrower, the
Borrower shall, if so requested by any Lender, provide a certificate of an
officer of the Borrower to that effect.
4.7.5 Survival.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in
subsections 4.7.1 [No Deductions] through 4.7.4 [Certificate] shall survive the
payment in full of the Term Loan made to Borrower by any Lender under the
Agreement.
4.7.6 Refund and Contest.
If the Borrower determines in good faith that a reasonable basis exists for
contesting any Taxes or Other Taxes with respect to which the Borrower was
required to take the actions specified in the second sentence of subsection
4.7.1 [No Deductions], the relevant Lender (to the extent such Lender reasonably
determines in good faith that it will not suffer any adverse effect as a result
thereof) shall cooperate with the Borrower in challenging the imposition of such
Taxes or Other Taxes at the Borrower's expense if so requested by the Borrower
in writing. If such Lender receives a refund of Taxes or Other Taxes for which
the payment has been made by the Borrower pursuant to this Agreement, which
refund in the good faith judgment of such Lender is attributable to the
Borrower, then such Lender shall reimburse the Borrower for such amount as such
Lender determines to be the proportion of the refund as will leave it, after
such reimbursement, in no better or worse position than it would have been in if
the payment had not been required. No Lender nor any Agent shall be obliged to
disclose information regarding its tax affairs or computations to Borrower in
connection with this Section 4.7.6 or any other provision of Section 4.7
[Taxes].
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
The Borrower represents and warrants to the Agents and each of the Lenders
as follows:
5.1.1 Organization and Qualification.
Each Loan Party and each Subsidiary of each Loan Party is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each Loan
Party and each Subsidiary of each Loan Party has the lawful power to own or
lease its properties and to engage in the business it presently conducts or
proposes to conduct. Each Loan Party and each Subsidiary of each Loan Party is
duly licensed or qualified and in good standing in each jurisdiction where the
property owned or leased 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 could reasonably be expected to result in a Material Adverse Change.
5.1.2 LLC Interests of Borrower; Subsidiaries; and Subsidiary Shares.
Schedule 5.1.2 states the name of each of the Borrower's Subsidiaries,
whether such Subsidiary is a Significant Subsidiary, Inactive Subsidiary or a
Special Subsidiary, its jurisdiction of organization, its authorized capital
stock, the issued and outstanding shares (referred to herein as the "Subsidiary
Shares") and the owners thereof if it is a corporation, its outstanding
partnership interests (the "Partnership Interests") if it is a partnership and
its outstanding limited liability company interests, interests assigned to
managers thereof and the voting rights associated therewith (the "LLC
Interests") if it is a limited liability company. Schedule 5.1.2 also sets forth
the jurisdiction of organization of the Borrower, its outstanding limited
liability company interests, interests assigned to managers thereof and the
voting rights associated therewith (the "Borrower LLC Interests"). The Borrower
and each Subsidiary of the Borrower has good and marketable title to all of the
Subsidiary Shares, Partnership Interests and LLC Interests it purports to own,
free and clear in each case of any Lien, other than liens in favor of the
Administrative Agent for the benefit of the Lenders under the Loan Documents.
AWAC has good and marketable title to all of the Borrower LLC Interests it
purports to own, free and clear in each case of any Lien. All Borrower LLC
Interests, Subsidiary Shares, Partnership Interests and LLC Interests have been
validly issued, and all Subsidiary Shares are fully paid and nonassessable. All
capital contributions and other consideration required to be made or paid in
connection with the issuance of the Partnership Interests, LLC Interests and
Borrower LLC Interests have been made or paid, as the case may be. There are no
options, warrants or other rights outstanding to purchase any such Borrower LLC
Interests, Subsidiary Shares, Partnership Interests or LLC Interests except as
indicated on Schedule 5.1.2.
5.1.3 Power and Authority.
Each Loan Party has full power to enter into, execute, deliver and carry
out this Agreement and the other Loan Documents to which it is a party, to incur
the Indebtedness contemplated by the Loan Documents and to perform its
Obligations under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part. The
Borrower and each Subsidiary of the Borrower party to the Acquisition Documents
has full power to enter into, execute, deliver and perform the Acquisition
Documents to which it is a party, and all such actions have been duly authorized
by all necessary proceedings on its respective part.
5.1.4 Validity and Binding Effect.
This Agreement has been duly and validly executed and delivered by each
Loan Party, and each other Loan Document which any Loan Party is required to
execute and deliver on or after the date hereof will have been duly executed and
delivered by such Loan Party on the required date of delivery of such Loan
Document. This Agreement and each other Loan Document constitutes, or will
constitute, legal, valid and binding obligations of each Loan Party which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to the extent that
enforceability of any of such Loan Document may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance. The Acquisition Documents have been duly and validly executed and
delivered by the Borrower and each Subsidiary of the Borrower party thereto. The
Acquisition Documents constitute the legal, valid and binding obligation of the
Borrower and each Subsidiary of the Borrower party thereto, enforceable against
each such Person in accordance with the terms thereof, except to the extent that
enforceability of the Acquisition Documents may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar law, affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance. A complete copy of the Acquisition Documents has been delivered to
the Administrative Agent.
5.1.5 No Conflict.
Neither the execution and delivery of this Agreement or the other Loan
Documents by any Loan Party, nor the consummation of the transactions herein or
therein contemplated or compliance with the terms and provisions hereof or
thereof by any of them will conflict with, constitute a default under or result
in any breach of (i) the terms and conditions of the certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents of any Loan Party or (ii) any Law or any material
agreement or instrument or order, writ, judgment, injunction or decree to which
any Loan Party or any Subsidiary of any Loan Party, is a party or by which any
of the foregoing Persons is bound or to which any of the foregoing Persons is
subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan
Party or any Subsidiary of any Loan Party (other than Liens granted under the
Loan Documents).
5.1.6 Litigation.
There are no actions, suits, proceedings or investigations pending or, to
the knowledge of any Loan Party, threatened against such Loan Party or any
Subsidiary of such Loan Party at law or equity before any Official Body which
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Change. None of the Loan Parties or any Subsidiary of any Loan
Party is in violation of any order, writ, injunction or any decree of any
Official Body which could reasonably be expected to result in a Material Adverse
Change.
5.1.7 Financial Statements.
(i) Borrower Historical Statements. The Borrower has delivered to the
Administrative Agent copies of its audited consolidated year-end financial
statements for and as of the end of the fiscal year ended December 31, 2001 (the
"Historical Statements"). The Historical Statements were compiled from the books
and records maintained by the Borrower's management, are correct and complete
and fairly represent the consolidated financial condition of the Borrower and
its Subsidiaries as of their dates and the results of operations for the fiscal
periods then ended and have been prepared in accordance with GAAP consistently
applied.
(ii) Accuracy of Financial Statements. Neither the Borrower nor any
Subsidiary of the Borrower has on the Restatement Effective Date any
liabilities, contingent or otherwise, or forward or long-term commitments that
are not disclosed in the Historical Statements or in the notes thereto, and
except as disclosed therein there are no unrealized or anticipated losses from
any commitments of the Borrower or any Subsidiary of the Borrower which could
reasonably be expected to result in a Material Adverse Change. Since December
31, 2001, no Material Adverse Change has occurred, except as set forth on
Schedule 5.1.7.
(iii) Financial Projections. The Borrower has delivered to the Agents
financial projections of the Borrower and its Subsidiaries, on a consolidated
and consolidating basis, for the period January 1, 2002, through and including
December 31, 2007, derived from various assumptions of the Borrower's management
(the "Financial Projections"). The Financial Projections represent a reasonable
range of possible results in light of the history of the business, present and
foreseeable conditions and the intentions of the Borrower's management. The
Financial Projections accurately reflect, in all material respects on a
consolidated basis, the liabilities of the Borrower and its Subsidiaries upon
consummation of the transactions contemplated hereby as of the Restatement
Effective Date.
5.1.8 Use of Proceeds; Margin Stock.
(i) General.
The Loan Parties shall use the proceeds of the Term Loans in accordance
with Sections 2.4 [Use of Proceeds] and 7.1.9 [Use of Proceeds].
(ii) Margin Stock.
None of the Loan Parties nor any Subsidiary of any Loan Party engages or
intends to engage principally, or as one of its important activities, in the
business of extending credit for the purpose, immediately, incidentally or
ultimately, of purchasing or carrying margin stock (within the meaning of
Regulation U). No part of the proceeds of any Term Loan has been or will be
used, immediately, incidentally or ultimately, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock or to refund Indebtedness originally incurred for such purpose,
or for any purpose which entails a violation of or which is inconsistent with
the provisions of the regulations of the Board of Governors of the Federal
Reserve System. None of the Loan Parties nor any Subsidiary of any Loan Party
holds or intends to hold margin stock in such amounts that more than 25% of the
reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party
are or will be represented by margin stock.
5.1.9 Full Disclosure.
Neither this Agreement nor any other Loan Document, nor the Acquisition
Documents, nor any certificate, statement, agreement or other documents
furnished to the Administrative Agent or any Lender in connection herewith or
therewith, contains with respect to the Borrower and its Subsidiaries any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to any Loan Party which materially adversely affects the business, financial
condition or results of operations of the Borrower and its Subsidiaries taken as
a whole which has not been set forth in this Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the
Administrative Agent and the Lenders prior to or at the date hereof in
connection with the transactions contemplated hereby.
5.1.10 Taxes.
All federal, state, local and other tax returns required to have been filed
with respect to each Loan Party and each Subsidiary of each Loan Party have been
filed, and payment or adequate provision has been made for the payment of all
taxes, fees, assessments and other governmental charges which have or may become
due pursuant to said returns or to assessments received, except to the extent
that such taxes, fees, assessments and other charges are being contested in good
faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made. There are no agreements or waivers extending the statutory
period of limitations applicable to any federal income tax return of any Loan
Party or Subsidiary of any Loan Party for any period.
5.1.11 Consents and Approvals.
No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is required
by any Law or any agreement in connection with the execution, delivery and
carrying out of this Agreement and the other Loan Documents by any Loan Party,
except as listed on Schedule 5.1.11, all of which shall have been obtained or
made on or prior to the Restatement Effective Date except as otherwise indicated
on Schedule 5.1.11.
5.1.12 No Event of Default; Compliance With Instruments and Material Contracts.
No event has occurred and is continuing and no condition exists or will
exist after giving effect to the borrowings or other extensions of credit to be
made on the Restatement Effective Date under or pursuant to the Loan Documents
which constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiary of any Loan Party is in violation of (i) any term of
its certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii) any material agreement or
instrument to which it is a party or by which it or any of its properties may be
subject or bound where such violation could reasonably be expected to result in
a Material Adverse Change. All Material Contracts described in the definition of
"Material Contracts" to which any Loan Party or any Subsidiary of any Loan Party
is a party or by which any Loan Party or Subsidiary of any Loan Party is bound
are valid, binding and enforceable upon such Loan Party or Subsidiary and to the
best knowledge of the Borrower upon each of the other parties thereto in
accordance with their respective terms and there is no default by any Loan Party
or any Subsidiary of any Loan Party under any Material Contract nor, to the Loan
Parties' knowledge, any default thereunder with respect to parties thereto other
than any Loan Party or Subsidiary of a Loan Party except in each case to the
extent the same could not reasonably be expected to result in a Material Adverse
Change. None of the Loan Parties or their Subsidiaries is bound by any
contractual obligation, or subject to any restriction in any organization
document, or any requirement of Law which could reasonably be expected to result
in a Material Adverse Change.
5.1.13 Insurance.
No notice has been given or claim made and no grounds exist to cancel or
avoid any insurance policies or bonds to which the Loan Parties are subject or
to reduce the coverage provided thereby. The Loan Parties are subject to
insurance policies and bonds providing adequate coverage from reputable and
financially sound insurers in amounts sufficient to insure the assets and risks
of each Loan Party and each Subsidiary of each Loan Party in accordance with
prudent business practice in the industry of the Loan Parties and their
Subsidiaries.
5.1.14 Compliance With Laws.
The Loan Parties and their Subsidiaries are in compliance in all material
respects with all applicable Laws (other than Environmental Laws which are
specifically addressed in Section 5.1.18 [Environmental Matters]) in all
jurisdictions in which any Loan Party or Subsidiary of any Loan Party is doing
business except where the failure to do so could not reasonably be expected to
result in a Material Adverse Change.
5.1.15 Investment Companies; Regulated Entities.
None of the Loan Parties or any Subsidiaries of any Loan Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control." None of the Loan
Parties or any Subsidiary of any Loan Party is subject to any other Federal or
state statute or regulation limiting its ability to incur Indebtedness for
borrowed money.
5.1.16 Plans and Benefit Arrangements.
(i) The Borrower and each other member of the ERISA Group are in compliance
in all material respects with any applicable provisions of ERISA with respect to
all Benefit Arrangements, Plans and Multiemployer Plans. There has been no
Prohibited Transaction with respect to any Benefit Arrangement or any Plan or,
to the best knowledge of the Borrower, with respect to any Multiemployer Plan or
Multiple Employer Plan, which could result in any material liability of the
Borrower or any other member of the ERISA Group. The Borrower 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 Borrower and each other member of the ERISA Group (i)
have fulfilled in all material respects their obligations under the minimum
funding standards of ERISA, (ii) have not incurred any liability to the PBGC,
and (iii) have not had asserted against them any penalty for failure to fulfill
the minimum funding requirements of ERISA. All Plans, Benefit Arrangements and
Multiemployer Plans have been administered in accordance with their terms and
applicable Law.
(ii) No event requiring notice to the PBGC under Section 302(f)(4)(A) of
ERISA has occurred or is reasonably expected to occur with respect to any Plan,
and no amendment with respect to which security is required under Section 307 of
ERISA has been made or is reasonably expected to be made to any Plan.
(iii) Neither the Borrower nor any other member of the ERISA Group has
incurred or reasonably expects to incur any material withdrawal liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower
nor any other member of the ERISA Group has been notified by any Multiemployer
Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer
Plan has been terminated within the meaning of Title IV of ERISA and, to the
best knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan
is reasonably expected to be reorganized or terminated, within the meaning of
Title IV of ERISA.
5.1.17 Employment Matters.
Each of the Loan Parties and each of their Subsidiaries is in substantial
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, where
the failure to comply could reasonably be expected to result in a Material
Adverse Change. There are no outstanding grievances, arbitration awards or
appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of any of the Loan Parties or any of their Subsidiaries which in any
case could reasonably be expected to result in a Material Adverse Change.
5.1.18 Environmental Matters.
Except as set forth on Schedule 5.1.18:
(a) the Loan Parties and their Subsidiaries are and have been in
substantial compliance with all Environmental Laws, except where the failure to
so comply could not reasonably be expected to result in a Material Adverse
Change;
(b) the Loan Parties and their Subsidiaries hold and are operating in
substantial compliance with Environmental Permits, except where the failure to
so comply could not reasonably be expected to result in a Material Adverse
Change;
(c) neither any property of any Loan Party or any Subsidiary of any Loan
Party nor their respective operations conducted thereon violates any order of
any court governmental authority made pursuant to Environmental Laws except for
noncompliance with respect thereto which could not reasonably be expected to
result in a Material Adverse Change;
(d) there are no pending or, to the knowledge of any Loan Party, threatened
Environmental Claims against any Loan Party or any Subsidiary of any Loan Party
which could reasonably be expected to result in a Material Adverse Change; and
(d) there are no pending or, to the knowledge of any Loan Party, threatened
Environmental Complaints against any Loan Party or any Subsidiary of any Loan
Party which could reasonably be expected to result in a Material Adverse Change.
5.1.19 Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the Guaranty
Agreement and each of the other Loan Documents to which it is a party do rank
and will rank at least pari passu in priority of payment with all other
Indebtedness of such Loan Party except Indebtedness of such Loan Party to the
extent secured by Permitted Liens. There is no Lien upon or with respect to any
of the properties or income of any Loan Party or Subsidiary of any Loan Party
which secures indebtedness or other obligations of any Person except for
Permitted Liens.
5.1.20 Title to Properties.
Each Loan Party and each Subsidiary of each Loan Party has good and
marketable title to or valid leasehold interest in all material properties,
assets and other rights which it purports to own or lease or which are reflected
as owned or leased on its books and records, free and clear of all Liens and
encumbrances except Permitted Liens, and subject to the terms and conditions of
the applicable leases.
5.1.21 Security Interests.
The Liens and security interests continued on the Restatement Effective
Date or thereafter granted to the Administrative Agent for the benefit of itself
and the Lenders pursuant to the Collateral Documents constitute and will
continue to constitute Prior Security Interests under the Uniform Commercial
Code as in effect in each applicable jurisdiction (the "Uniform Commercial
Code") or other applicable Law, entitled to all the rights, benefits and
priorities provided by the Uniform Commercial Code or such Law. Financing
statements relating to said security interests have been filed in each office
and, in each jurisdiction where required in order to perfect the security
interests described above, possession has been taken of all certificates or
instruments evidencing the Collateral, and all such action as is necessary or
advisable to establish such rights of the Administrative Agent for the benefit
of itself and the Lenders has been taken, and there is no necessity for any
further action in order to preserve, protect and continue such rights, except
the filing of continuation statements with respect to such financing statements
within six months prior to each five-year anniversary of the filing of such
financing statements. All filing fees and other expenses in connection with each
such action have been or will be paid by the Borrower.
5.1.22 Status of the Pledged Collateral.
All the Subsidiary Shares, Partnership Interests or LLC Interests included
in the Collateral to be pledged pursuant to the Pledge Agreement (Subsidiary
Equity Interests) are or will be upon issuance validly issued and nonassessable
and owned beneficially and of record by the pledgor free and clear of any Lien
or restriction on transfer, except as otherwise provided by the Pledge Agreement
(Subsidiary Equity Interests) and except as the right of the Lenders to dispose
of the Subsidiary Shares, Partnership Interests or LLC Interests may be limited
by the Securities Act of 1933, as amended, and the regulations promulgated by
the SEC thereunder and by applicable state securities laws and the Canyon Fuel
LLC Agreement. There are no shareholder, partnership, limited liability company
or other agreements or understandings with respect to the Subsidiary Shares,
Partnership Interests or LLC Interests included in the Collateral except for the
partnership agreements and limited liability company agreements described on
Schedule 5.1.22. The Loan Parties have delivered true and correct copies of such
partnership agreements and limited liability company agreements to the
Administrative Agent.
5.1.23 Coastal Agreement.
Canyon Fuel is a "Buyer Indemnitee" under the Coastal Agreement and, as
such, has the rights of an "Indemnified Party" under the Coastal Agreement.
Consummation of the Acquisition Transactions did not alter the rights of Canyon
Fuel under the Coastal Agreement.
5.1.24 Solvency.
On the Restatement Effective Date and at the time of the borrowing of the
Term Loans, both the Borrower and the Borrower and its Subsidiaries on a
consolidated basis are Solvent after giving effect to the transactions
contemplated by the Loan Documents and any incurrence of Indebtedness and all
other Obligations.
5.2 Continuation of Representations.
Except as to those representations and warranties limited by their terms to
the Closing Date or the Restatement Effective Date, as the case may be, the
Borrower makes the representations and warranties in this Section 5 on the
Restatement Effective Date.
6. CONDITIONS OF LENDING
The obligation of each Lender to amend and restate the Original Credit
Agreement and make the Term Loans hereunder is subject to the performance by the
Borrower of its Obligations to be performed hereunder at or prior to the making
of the Term Loans and to the satisfaction of the following further conditions:
6.1 Conditions to Amendment and Restatement of the Credit Agreement.
On the Restatement Effective Date:
6.1.1 Officer's Certificate.
The representations and warranties of the Borrower contained in Section 5
[Representations and Warranties] and of each Loan Party in each of the other
Loan Documents shall be true and accurate on and as of the Restatement Effective
Date with the same effect as though such representations and warranties had been
made on and as of such date (except representations and warranties which relate
solely to an earlier date or time, which representations and warranties shall be
true and correct on and as of the specific dates or times referred to therein),
and each of the Loan Parties shall have performed and complied with all
covenants and conditions hereof and thereof, no Event of Default or Potential
Default shall have occurred and be continuing or shall exist; and there shall be
delivered to the Administrative Agent for the benefit of each Lender a
certificate of the Borrower dated the Restatement Effective Date and signed by
the Chief Executive Officer, President, Chief Financial Officer, other
authorized officer or Managing Member of the Borrower to each such effect.
6.1.2 Secretary's Certificate.
There shall be delivered to the Administrative Agent for the benefit of
each Lender a certificate dated the Restatement Effective Date and signed by the
Secretary or an Assistant Secretary of each of the Loan Parties, certifying as
appropriate as to:
(i) all action taken by each Loan Party in connection with this Agreement
and the other Loan Documents;
(ii) the names of the officer or officers authorized to sign this Agreement
and the other Loan Documents and the true signatures of such officer or officers
and specifying the Authorized Officers permitted to act on behalf of each Loan
Party for purposes of this Agreement and the true signatures of such officers,
on which the Administrative Agent and each Lender may conclusively rely; and
(iii) a copy of each Loan Party's organizational documents, including its
certificate of incorporation and bylaws, certificate of limited partnership and
partnership agreement, or limited liability company certificate and agreement,
as the case may be, as in effect on the Restatement Effective Date and, in the
case of the certificate of incorporation, limited partnership certificate or
limited liability company certificate, certified by the appropriate state
official where such documents are filed in a state office, together with
certificates from the appropriate state officials as to the continued existence
and good standing of each Loan Party in the state of its formation and each
jurisdiction where it conducts business.
6.1.3 Delivery of Loan Documents; Filing Receipts.
This Agreement, the Guaranty Agreement, the Collateral Sharing Agreement,
the Collateral Documents, the Term Notes, the Intercompany Subordination
Agreement, and the other Loan Documents shall have been duly executed and
delivered to the Administrative Agent and shall continue the Obligations and the
liens and security interests in the Collateral for the benefit of the Lenders,
together with all appropriate financing statements and appropriate stock powers
and certificates evidencing the Subsidiary Shares, the Partnership Interests and
the LLC Interests, and all other instruments and Collateral required to be
delivered to the Administrative Agent for the benefit of the Lenders under the
Collateral Documents. The Administrative Agent shall have received copies of all
filing receipts and acknowledgments issued by any governmental authority to
evidence any recordation or filing necessary to continue the perfection of the
Lien of the Lenders on the Collateral or other satisfactory evidence of such
recordation and filing.
6.1.4 Opinion of Counsel.
There shall be delivered to the Administrative Agent for the benefit of
each Lender a written opinion of Kirkpatrick & Lockhart LLP and of Robert G.
Jones, General Counsel for the Loan Parties (who may rely on the opinions of
such other counsel as may be acceptable to the Administrative Agent), dated the
Restatement Effective Date and in form and substance satisfactory to the
Administrative Agent and its counsel:
(i) as to the matters set forth in Exhibit 6.1.4; and
(ii) as to such other matters incident to the transactions contemplated
herein as the Administrative Agent may reasonably request.
6.1.5 Legal Details.
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be in form and
substance satisfactory to the Administrative Agent and counsel for the
Administrative Agent, and the Administrative Agent shall have received all such
other counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the Administrative Agent and said counsel, as the Administrative
Agent or said counsel may reasonably request.
6.1.6 Payment of Fees.
The Borrower shall have paid or caused to be paid to the Arrangers all fees
required to be paid by the Borrower to the Arrangers for their own account or
for the account of each Lender, and all other fees accrued through the
Restatement Effective Date and the costs and expenses for which the Arrangers
and the Lenders are entitled to be reimbursed.
6.1.7 Consents.
All material consents required to effectuate the transactions contemplated
by the Loan Documents shall have been obtained.
6.1.8 Officer's Certificate Regarding No Material Adverse Change.
Since December 31, 2001, no event shall have occurred with respect to the
Borrower and its Subsidiaries which could reasonably be expected to result in a
Material Adverse Change; since December 31, 2001, there shall have been no
material change in the management of the Borrower; and there shall have been
delivered to the Administrative Agent for the benefit of each Lender a
certificate dated the Restatement Effective Date, in form and substance
satisfactory to the Agents, and signed by the President, other executive
financial officer or Managing Member of the Borrower to each such effect and
further certifying that the Borrower and its Subsidiaries on a consolidated
basis are Solvent after giving effect to the transactions contemplated hereby,
the accuracy of all representations and warranties by the Loan Parties under the
Loan Documents, the compliance with all covenants under the Loan Documents and
the absence of any Event of Default or Potential Default.
6.1.9 No Violation of Laws.
The making of the Term Loans, and the consummation of the transactions
contemplated hereby shall not contravene any Law applicable to any Loan Party or
any of the Lenders.
6.1.10 No Actions or Proceedings.
No action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain or prohibit, or to obtain damages in
respect of, this Agreement or the other Loan Documents, or the consummation of
the transactions contemplated hereby or thereby or which, in the Administrative
Agent's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents .
6.1.11 Insurance.
The Borrower shall have delivered to the Agents evidence of the insurance
required under the Loan Documents.
6.1.12 Report of Independent Engineer.
The Borrower shall have delivered to the Agents the report of Weir
International, independent engineers, with respect to the coal reserves of
Borrower and its Subsidiaries and such other matters as are contained in such
report.
6.1.13 Credit Facility for the Parent.
All conditions to the effectiveness of the amendment and restatement on the
Restatement Effective Date of the Arch Credit Facility shall have been
satisfied.
6.1.14 Satisfactory Environmental Review.
The environmental condition of the Loan Parties' and their Subsidiaries'
assets shall be satisfactory to the Agents in all respects.
6.1.15 Refinancing.
(a) To permit the refinancing by the Lenders of the term loans outstanding
under the Original Credit Agreement, Borrower shall have (i) delivered to the
Administrative Agent not later than 10:00 a.m., Pittsburgh time, three (3)
Business Days prior to the first Borrowing Date hereunder an appropriately
completed irrevocable Rate Request pursuant to which Term Loans in an amount
sufficient to refinance the term loans under the Original Credit Agreement shall
be requested, and (ii) made appropriate arrangements with respect to all amounts
outstanding under the Original Credit Agreement in order to accomplish the
amendment and restatement thereof on such first Borrowing Date.
(b) In the event Borrower requests that the first Borrowing Date hereunder
occur on the Restatement Effective Date, Borrower shall provide to the
Administrative Agent, in addition to the Rate Request required by Clause (a)
directly above, its agreement in the form of Exhibit 6.1.15 pursuant to which
Borrower shall be bound by the terms of Section 4.5.2 [Indemnity] with respect
to such proposed borrowing notwithstanding that this Agreement shall not be
effective at the time of such request and may not become effective on the date
such borrowing is contemplated.
7. COVENANTS
7.1 Affirmative Covenants.
The Borrower covenants and agrees that until payment in full of the Term
Loans and interest thereon, satisfaction of all of the Loan Parties' other
Obligations under the Loan Documents and termination of the Commitments, the
Borrower shall, and shall cause each of its Subsidiaries to, comply at all times
with the following affirmative covenants:
7.1.1 Preservation of Existence, Etc.
The Borrower shall maintain its legal existence as a limited liability
company. The Borrower shall maintain its license or qualification and good
standing in each jurisdiction in which its ownership or lease of property or the
nature of its business makes such license or qualification necessary, except
where the failure to so qualify or maintain such qualification could be
corrected without a material adverse effect on the Borrower. The Borrower shall
cause each of its Subsidiaries to maintain its legal existence as a corporation,
limited partnership or limited liability company, as the case may be except as
otherwise expressly permitted in Section 7.2.3 [Liquidations, Mergers, etc.].
The Borrower shall cause each of its Subsidiaries to maintain its license or
qualification and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or
qualification necessary, except where the failure to so qualify could not
reasonably be expected to result in a Material Adverse Change.
7.1.2 Payment of Liabilities, Including Taxes, Etc.
The Borrower shall, and shall cause each of its Subsidiaries to, duly pay
and discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties belonging to it,
prior to the date on which penalties attach thereto, and all lawful claims
which, if unpaid after becoming due, might become a lien or charge upon any
properties of the Borrower or any Subsidiary of the Borrower, provided that
neither the Borrower nor any Subsidiary of the Borrower shall be required to pay
any such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings and with respect to which there are proper
reserves as required by GAAP, but only to the extent that failure to discharge
any such liabilities would not adversely affect the value of the Collateral.
7.1.3 Maintenance of Insurance.
The Borrower shall, and shall cause each of its Subsidiaries to, be subject
to insurance policies which insure their respective properties and assets
against loss or damage by fire and such other insurable hazards as such assets
are commonly insured (including fire, extended coverage, property damage,
workers' compensation, public liability and business interruption insurance) and
against other risks (including errors and omissions) in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary.
7.1.4 Maintenance of Properties and Leases.
The Borrower shall, and shall cause each of its Subsidiaries to, maintain
and preserve all of its respective material properties, necessary or useful in
the proper conduct of the business of the Borrower or such Subsidiary of the
Borrower, in good working order and condition, ordinary wear and tear excepted.
7.1.5 Visitation Rights.
The Borrower shall, and shall cause each of its Subsidiaries to, permit any
of the officers or authorized employees or representatives of the Administrative
Agent or any of the Lenders to visit and inspect during normal business hours
any of its properties and to examine and make excerpts from its books and
records and discuss its business affairs, finances and accounts with its
officers, all in such detail and at such times and as often as any of the
Lenders may reasonably request, provided that each Lender shall provide the
Borrower and the Administrative Agent with reasonable notice prior to any visit
or inspection. In the event any Lender desires to conduct an audit of the
Borrower or any Subsidiary of the Borrower, such Lender shall make a reasonable
effort to conduct such audit contemporaneously with any audit to be performed by
the Administrative Agent.
7.1.6 Keeping of Records and Books of Account.
The Borrower shall, and shall cause each Subsidiary of the Borrower to,
maintain and keep proper books of record and account which enable the Borrower
and its Subsidiaries to issue financial statements in accordance with GAAP and
as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which
full, true and correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
7.1.7 Plans and Benefit Arrangements.
The Borrower shall, and shall cause each other member of the ERISA Group
to, comply with ERISA, the Internal Revenue Code and other applicable Laws
applicable to Plans and Benefit Arrangements except where such failure, alone or
in conjunction with any other failure, could not reasonably be expected to
result in a Material Adverse Change. Without limiting the generality of the
foregoing, the Borrower shall cause all of its Plans and all Plans maintained by
any member of the ERISA Group to be funded in accordance with the minimum
funding requirements of ERISA and shall make, and cause each member of the ERISA
Group to make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
7.1.8 Compliance With Laws.
The Borrower shall, and shall cause each of its Subsidiaries to, comply
with all applicable Laws, including all Environmental Laws, in all respects,
provided that it shall not be deemed to be a violation of this Section 7.1.8 if
any failure to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which in the
aggregate could reasonably be expected to result in a Material Adverse Change.
Without limiting the generality of the foregoing, the Borrower shall and shall
cause each of its Subsidiaries to comply with all Environmental Permits
applicable to their respective operations and properties; obtain, maintain,
comply with and renew all Environmental Permits necessary for their respective
operations and properties; and manage, use and handle all Regulated Substances
in compliance with all applicable Environmental Laws, in each case, except for
such non-compliance which would not or could not reasonably be expected to
result in a Material Adverse Change.
7.1.9 Use of Proceeds.
On and after the Restatement Effective Date, the Borrower will use the
proceeds of the Term Loans only to continue and refinance the term loans under
the Original Credit Agreement. The Borrower's use of the proceeds of the Term
Loans shall not be for any purpose which contravenes any applicable Law or any
provision hereof.
7.1.10 Operation of Mines.
The Borrower shall, and shall cause each of its Subsidiaries to, operate
their mines in all material respects in accordance with sound coal mining
practices.
7.1.11 Maintenance of Material Contracts.
The Borrower shall, and shall cause each of its Subsidiaries to, comply
with the provisions of and to maintain in full force and effect all material
licenses and material permits required for the lawful operation of the Borrower
and each of its Subsidiaries (other than Environmental Permits which are
addressed in Section 7.1.8 [Compliance With Laws] above) and all Material
Contracts to which any such Person is a party, except where the failure to so
maintain in full force and effect a material license, material permit or
Material Contract could not be reasonably expected to result in a Material
Adverse Change.
7.1.12 Further Assurances.
Each Loan Party shall, from time to time, at its expense, faithfully
preserve and protect the Administrative Agent's Lien on and Prior Security
Interest in the Collateral as a continuing first priority perfected Lien and
shall do such other acts and things as the Administrative Agent in its sole
discretion may deem necessary or advisable from time to time in order to
preserve, perfect and protect the Liens granted under the Loan Documents and to
exercise and enforce its rights and remedies thereunder with respect to the
Collateral.
7.1.13 Subordination of Intercompany Loans.
Each Loan Party shall cause any intercompany Indebtedness, loans or
advances owed by any Loan Party to any other Loan Party or by any Subsidiary of
any Loan Party to any Loan Party to be subordinated pursuant to the terms of the
Intercompany Subordination Agreement.
7.1.14 Pledged Collateral Account.
The Borrower shall deposit in an account (the "Pledged Collateral Account")
at the end of each fiscal quarter the amount specified below:
For Each Fiscal Quarter Ending Deposit Amount
June 30, 2002 $0
September 30,2002 $0
December 31, 2002 $0
March 31, 2003 $0
June 30, 2003 $0
September 30, 2003 $0
December 31, 2003 $0
March 31, 2004 $7,500,000
June 30, 2004 $7,500,000
September 30, 2004 $7,500,000
December 31, 2004 $7,500,000
March 31, 2005 $17,500,000
June 30, 2005 $17,500,000
September 30, 2005 $17,500,000
December 31, 2005 $17,500,000
March 31, 2006 $56,250,000
June 30, 2006 $56,250,000
September 30, 2006 $56,250,000
December 31, 2006 $56,250,000
March 31, 2007 $70,000,000
June 30, 2007 $70,000,000
September 30, 2007 $70,000,000
December 31, 2007 $70,000,000
March 31, 2008 $70,000,000
It is acknowledged that the amount deposited in the Pledged Collateral
Account shall be held as collateral security for the Loans in accordance with
the Pledge Agreement (Pledged Collateral Account).
7.2 Negative Covenants.
The Borrower covenants and agrees that until payment in full of the Term
Loans and interest thereon, satisfaction of all of the Loan Parties' other
Obligations hereunder and termination of the Commitments, the Borrower shall and
shall, cause each of its Subsidiaries to, comply with the following negative
covenants:
7.2.1 Indebtedness.
The Borrower shall not, and shall not permit any of its Subsidiaries to, at
any time create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) unsecured Indebtedness of the Borrower payable to the Parent;
(iii) other Indebtedness, not to exceed in the aggregate at any time
outstanding for the Borrower and its Subsidiaries, $50,000,000; and
(iv) Indebtedness of any Subsidiary of the Borrower payable to the
Borrower, so long as such Indebtedness is subordinated to the obligations of the
Loan Parties under the Loan Documents pursuant to the Intercompany Subordination
Agreement.
7.2.2 Liens.
The Borrower shall not, and shall not permit any of its Subsidiaries to, at
any time create, incur, assume or suffer to exist any Lien on any of its
respective property or assets, tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except Permitted Liens.
7.2.3 Liquidations, Mergers, Consolidations, Acquisitions.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
dissolve, liquidate or wind-up its affairs, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise all or substantially
all of the assets or capital stock of any other Person, provided that:
(1) any Subsidiary of the Borrower may consolidate or merge into any other
Subsidiary of the Borrower (except for Canyon Fuel);
(2) any Loan Party may acquire, whether by purchase or by merger, (A) all
of the ownership interests of another Person, (B) substantially all of assets of
another Person or of a business or division of another Person, or (C) any
additional ownership interest in Canyon Fuel (each a "Permitted Acquisition"),
provided that each of the following requirements is met:
(i) the board of directors or other equivalent governing body of such
Person shall have approved such Permitted Acquisition;
(ii) the business acquired, or the business conducted by the Person whose
ownership interests are being acquired, as applicable, shall be substantially
the same as one or more line or lines of business conducted by the Loan Parties
and shall comply with Section 7.2.7 [Continuation of or Change in Business], and
in the case of any merger a Loan Party shall be the surviving entity after
giving effect to such transaction;
(iii) no Potential Default or Event of Default shall exist immediately
prior to and after giving effect to such Permitted Acquisition; and
(iv) the Borrower and its Subsidiaries shall be in compliance with the
covenants contained in Sections 7.2.10 [Maximum Leverage Ratio], 7.2.11 [Minimum
Fixed Charge Coverage Ratio], 7.2.12 [Minimum EBITDDA], and 7.2.13 [Minimum Net
Worth] determined on a pro forma basis after giving effect to such Permitted
Acquisition (including in such computation Indebtedness or other liabilities
assumed or incurred in connection with such Permitted Acquisition as if such
Indebtedness were incurred as of the first day of the applicable period of
determination).
7.2.4 Dispositions of Assets or Subsidiaries.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
sell, convey, assign, lease, abandon, securitize or enter into a securitization
transaction or otherwise transfer or dispose of, voluntarily or involuntarily,
any of its properties or assets, tangible or intangible (including sale,
assignment, discount or other disposition of accounts, contract rights, chattel
paper, equipment, general intangibles, with or without recourse, or of capital
stock, shares of beneficial interest, partnership interests or limited liability
company interests of a Subsidiary of the Borrower), except:
(i) transactions involving the sale of inventory or equipment in the
ordinary course of business;
(ii) any sale, transfer or lease of assets by any wholly-owned Significant
Subsidiary of the Borrower to the Borrower or to any other wholly-owned
Significant Subsidiary of the Borrower;
(iii) any sale of assets if and to the extent the Net Cash Proceeds thereof
are applied within 180 days of the consummation of such sale to the purchase by
the Borrower or a Subsidiary of substitute assets; provided that the Borrower
shall have delivered to the Administrative Agent a certificate (a "Replacement
Sales Certificate") of the chief financial officer or the treasurer of the
Borrower, certifying as to (x) the amount of such Net Cash Proceeds and (y) the
fact that the Borrower or a Subsidiary shall invest such Net Cash Proceeds in
substitute assets within 180 days of the date of consummation of such sale;
(iv) any other sale, transfer or lease of assets so long as after giving
effect thereto the Borrower and its Subsidiaries shall be in compliance with the
covenants contained in Sections 7.2.10 [Maximum Leverage Ratio], 7.2.11 [Minimum
Fixed Charge Coverage Ratio], 7.2.12 [Minimum EBITDDA], and 7.2.13 [Minimum Net
Worth] determined on a pro forma basis, and prior to consummating any such sale,
transfer or lease of assets, the Borrower shall have provided written notice
thereof to the Administrative Agent together with a certification of the
Borrower of the compliance of the Borrower and its Subsidiaries with such
covenants, setting forth in such certification a detailed calculation of such
pro forma compliance; or
(v) any sale, transfer, lease or other disposition of assets in the
ordinary course of business which are obsolete or are no longer necessary or
required in the conduct of such Loan Party's or such Subsidiary's business.
Notwithstanding the provisions of this Section 7.2.4, it is expressly agreed
that the Borrower shall not, and shall not permit any of its Subsidiaries to,
sell, convey, assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily, any of the properties or assets, tangible or
intangible, or any of the limited liability interests of Thunder Basin Coal
Company LLC, a Delaware limited liability company, other than transactions
permitted by clauses (i), (iii) or (v) above.
7.2.5 Affiliate Transactions.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into or carry out any transaction (including purchasing property or
services from or selling property or services to) with any Affiliate of the
Borrower unless such transaction is not otherwise prohibited by this Agreement
and is entered into in the ordinary course of business upon fair and reasonable
arm's length terms and conditions.
7.2.6 Subsidiaries, Partnerships and Joint Ventures.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
own or create directly or indirectly any Subsidiaries other than (i) any
Significant Subsidiary (other than Canyon Fuel) which has joined the Guaranty
Agreement as Guarantor on the Closing Date; (ii) any Subsidiary which after the
Closing Date becomes a Significant Subsidiary and which upon becoming a
Significant Subsidiary becomes a Guarantor in accordance with Section 10.18
[Joinder of Guarantors] and whose equity interests are pledged to the
Administrative Agent for the benefit of the Lenders in accordance with Section
10.18; and (iii) any Subsidiary which is not a Significant Subsidiary. The
Borrower shall cause any of its Subsidiaries which at any time becomes a
Significant Subsidiary to become a Guarantor in accordance with Section 10.18
and shall cause each owner of the equity interests thereof to pledge such equity
interests to the Administrative Agent for the benefit of the Lenders in
accordance with Section 10.18. Except as shown on Schedule 7.2.6, neither the
Borrower nor any Subsidiary of the Borrower shall become or agree to become (1)
a general or limited partner in any general or limited partnership, except that
the Loan Parties may be general or limited partners in other Loan Parties, or
(2) a member or manager of, or hold a limited liability company interest in, a
limited liability company, except that the Loan Parties may be members or
managers of, or hold limited liability company interests in, other Loan Parties.
7.2.7 Continuation of or Change in Business.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than the business substantially as conducted and
operated by the Borrower or such Subsidiary as of the date of consummation of
the transactions contemplated by the Contribution Agreement and any business
substantially related thereto, and neither the Borrower nor any Subsidiary of
the Borrower shall permit any material change in such business.
7.2.8 Plans and Benefit Arrangements.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
engage in a Prohibited Transaction with any Plan, Benefit Arrangement or
Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances, results in liability under ERISA or which could
reasonably be expected to result in a Material Adverse Change.
7.2.9 No Restriction on Dividends.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into or be bound by any agreement which prohibits or restricts, in any
manner, the payment of dividends or other distributions (whether in cash,
securities, property or otherwise), the incurrence of Indebtedness by the
Borrower or any Subsidiary of the Borrower which is payable to Parent or the
making of any loan to the Parent by the Borrower or any Subsidiary of the
Borrower other than this Agreement, the restrictions applicable to Canyon Fuel
set forth in the Canyon Fuel LLC Agreement and the restrictions applicable to
the Borrower set forth in the Arch Western LLC Agreement.
7.2.10 Maximum Leverage Ratio.
The Borrower shall not at any time permit the Leverage Ratio to exceed the
ratio set forth below for the periods specified below:
Period Ratio
Restatement Effective Date through and
including December 31, 2002 3.25 to 1.00
January 1, 2003 through and including
December 31, 2003 2.75 to 1.00
January 1, 2004 and
thereafter 2.25 to 1.00
7.2.11 Minimum Fixed Charge Coverage Ratio.
The Borrower shall not permit the Fixed Charge Coverage Ratio to be less
than the ratio specified below for the periods specified below:
Period Ratio
Restatement Effective Date through and
including December 31, 2003 2.75 to 1.00
January 1, 2004 and
thereafter 3.75 to 1.00
7.2.12 Minimum EBITDDA.
The Borrower shall not permit the sum of EBITDDA of the Borrower and its
Subsidiaries, plus, without duplication, the Appropriate Percentage of each
Special Subsidiary's EBITDDA, each on a consolidated basis in accordance with
GAAP, calculated as of the end of each fiscal quarter for the four (4) fiscal
quarters then ended, to be less than the amount specified below during the
following periods:
Period Minimum EBITDDA
Restatement Effective Date through and including
December 31, 2002 $140,000,000
January 1, 2003 through June 30, 2003 $150,000,000
July 1, 2003 through December 31, 2003 $175,000,000
January 1, 2004 through June 30, 2005 $200,000,000
July 1, 2005 and thereafter $225,000,000
7.2.13 Minimum Net Worth.
The Borrower shall not at any time permit Consolidated Tangible Net Worth
(determined without regard to the valuation of derivatives as required by GAAP
and as the effect thereof is reported in the "Other Comprehensive Income"
category on the Borrower's consolidated balance sheet for each period from and
after April 1, 2002) to be less than the Base Net Worth.
7.2.14 Loans and Investments.
The Borrower shall not, and shall not permit any of its Subsidiaries to, at
any time make or suffer to remain outstanding any loan or advance to, or
purchase, acquire or own any stock, bonds (other than, in the ordinary course of
business, royalty bonds or bonds securing performance by the Borrower or a
Subsidiary of the Borrower under bonus bids), notes or securities of, or any
partnership interest (whether general or limited) or limited liability company
interest in, or any other Investment or interest in, or make any capital
contribution to, any other Person, or agree, become or remain liable to do any
of the foregoing, except:
(i) trade credit extended on usual and customary terms in the ordinary
course of business;
(ii) Permitted Investments;
(iii) loans by the Borrower to the Parent so long as each such loan is
evidenced by the Eligible Note Receivable which is pledged to the Administrative
Agent for the benefit of the Lenders pursuant to the Note Pledge Agreement;
provided, however, that no such loans shall be made at any time that (x) an
Event of Default has occurred and is continuing and the Required Lenders have
requested the Administrative Agent to prohibit loans to the Parent by the
Borrower as provided in Section 8.2.1 or such loans have automatically been
prohibited by the operation of Section 8.2.2, or (y) the Eligible Reserves, as
measured as of the end of each fiscal quarter, are less than 1,350,000,000 tons;
(iv) the investment by the Borrower in its Subsidiaries; and
(v) other Investments, in connection with or related to the operations of
the Borrower and its Subsidiaries, not exceeding $25,000,000 in the aggregate at
any time.
It is expressly agreed that no loans, investments, advances, dividends,
distributions, dispositions or other transfers of cash of any nature by the
Borrower to the Parent shall be made unless made pursuant to the Eligible Note
Receivable in accordance with clause (iii) of this Section 7.2.14, other than ,
so long as no Event of Default exists after giving effect thereto, any
distribution, in an amount equal to the Hypothetical Income Tax Amount pursuant
to Section 4.3 of the Arch Western LLC Agreement, to Parent concurrent with the
making of such distribution to the ARCO Member.
7.2.15 No Amendments to Acquisition Documents.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into any amendment or modification to or waiver or consent under (or
solicit any such amendment, modification, waiver or consent) any of the
Acquisition Documents or the Coastal Agreement which could reasonably be
expected to be material and adverse to the Lenders without the prior written
consent of the Agents.
7.2.16 Limitation on Capital Expenditures.
The Borrower shall not, and shall not permit any of its Subsidiaries to,
make any payments exceeding $150,000,000 in the aggregate in any fiscal year on
account of the purchase or lease of any assets which if purchased would
constitute fixed assets or which if leased would constitute a capitalized lease.
7.3 Reporting Requirements.
The Borrower covenants and agrees that until payment in full of the Term
Loans and interest thereon, satisfaction of all of the Loan Parties' other
Obligations hereunder and under the other Loan Documents and termination of the
Commitments, the Borrower will furnish or cause to be furnished to the
Administrative Agent and each of the Lenders:
7.3.1 Quarterly Financial Statements.
As soon as available and in any event within forty-five (45) calendar days
after the end of each of the first three fiscal quarters in each fiscal year,
financial statements of the Borrower and its Subsidiaries consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal
quarter, related consolidated and consolidating statements of income and equity,
and related consolidated statement of cash flows for the fiscal quarter then
ended and the fiscal year through that date, all in reasonable detail and
certified (subject to normal year-end audit adjustments) by the Chief Executive
Officer, President, Treasurer or Chief Financial Officer of the Borrower as
having been prepared in accordance with GAAP, consistently applied, and setting
forth in comparative form the respective financial statements for the
corresponding date and period in the previous fiscal year.
7.3.2 Annual Financial Statements.
As soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Borrower, financial statements of the Borrower and
its Subsidiaries consisting of a consolidated and consolidating balance sheet as
of the end of such fiscal year, related consolidated and consolidating
statements of income and equity, and related consolidated statement of cash
flows for the fiscal year then ended, all in reasonable detail and setting forth
in comparative form the financial statements as of the end of and for the
preceding fiscal year, and with respect to the consolidated financial statements
certified by independent certified public accountants of nationally recognized
standing satisfactory to the Administrative Agent. The certificate or report of
accountants shall be free of qualifications (other than any consistency
qualification that may result from a change in the method used to prepare the
financial statements as to which such accountants concur) and shall not indicate
the occurrence or existence of any event, condition or contingency which would
materially impair the prospect of payment or performance of any covenant,
agreement or duty of any Loan Party under any of the Loan Documents.
7.3.3 Certificate of the Borrower.
Concurrently with the financial statements of the Borrower furnished to the
Administrative Agent and to the Lenders pursuant to Sections 7.3.1 [Quarterly
Financial Statements] and 7.3.2 [Annual Financial Statements], a certificate of
the Borrower signed by the Chief Executive Officer, President, Treasurer or
Chief Financial Officer of the Borrower, in the form of Exhibit 7.3.3, to the
effect that, except as described pursuant to Section 7.3.4 [Notice of Default],
(i) the representations and warranties of the Borrower contained in Section 5
[Representations and Warranties] and in the other Loan Documents are true on and
as of the date of such certificate with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time which shall be true and correct on and as of the specific dates or times
referred to therein) and the Loan Parties have performed and complied with all
covenants and conditions hereof, (ii) no Event of Default or Potential Default
exists and is continuing on the date of such certificate, (iii) containing a
list of each Significant Subsidiary, each Inactive Subsidiary and each Special
Subsidiary, other than those set forth on Schedule 5.1.2, (iv) containing
calculations in sufficient detail to demonstrate compliance as of the date of
such financial statements with all financial covenants contained in Section 7.2
[Negative Covenants], and (v) certifying the amount of the Eligible Reserves as
required by clause (iii) of Section 7.2.14 hereof, including setting forth for
the period applicable to such certificate the Eligible Reserves mined during
such period, the Eligible Reserves acquired during such period, and the Eligible
Reserves divested during such period, all in form and substance reasonably
satisfactory to the Agents.
7.3.4 Notice of Default.
Promptly after any officer of the Borrower has learned of the occurrence of
an Event of Default or Potential Default, a certificate signed by the Chief
Executive Officer, President or Chief Financial Officer of the Borrower setting
forth the details of such Event of Default or Potential Default and the action
which the Borrower proposes to take with respect thereto.
7.3.5 Notice of Litigation.
Promptly after the commencement thereof or promptly after the determination
thereof, notice of all actions, suits, proceedings or investigations before or
by any Official Body or any other Person against any Loan Party or any
Subsidiary of any Loan Party, which (x) involve or could be reasonably expected
to involve assessments against any Loan Party or any Subsidiary of any Loan
Party in excess of $10,000,000, individually or in the aggregate, or (y) involve
a claim or series of claims which if adversely determined could reasonably be
expected to result in a Material Adverse Change or (z) adversely affect the
value of the Collateral.
7.3.6 Notice of Change in Debt Rating.
Within five (5) Business Days after Standard & Poor's or Moody's announces
a change in the Debt Rating, notice of such change. Borrower will deliver
together with such notice a copy of any written notification which Borrower
received from the applicable rating agency regarding such change of the Debt
Rating.
7.3.7 Notices Regarding Plans and Benefit Arrangements.
7.3.8 Certain Events.
Promptly upon becoming aware of the occurrence thereof, notice (including
the nature of the event and, when known, any action taken or threatened by the
Internal Revenue Service or the PBGC with respect thereto) of:
(i) any Reportable Event with respect to the Borrower or any other member
of the ERISA Group (regardless of whether the obligation to report said
Reportable Event to the PBGC has been waived),
(ii) any Prohibited Transaction which could subject the Borrower or any
other member of the ERISA Group to a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in
connection with any Plan, any Benefit Arrangement or any trust created
thereunder,
(iii) any assertion of material withdrawal liability with respect to any
Multiemployer Plan,
(iv) any partial or complete withdrawal from a Multiemployer Plan by the
Borrower or any other member of the ERISA Group under Title IV of ERISA (or
assertion thereof), where such withdrawal is likely to result in material
withdrawal liability,
(v) any cessation of operations (by the Borrower or any other member of the
ERISA Group) at a facility in the circumstances described in Section 4062(e) of
ERISA,
(vi) withdrawal by the Borrower or any other member of the ERISA Group from
a Multiple Employer Plan,
(vii) a failure by the Borrower or any other member of the ERISA Group to
make a payment to a Plan required to avoid imposition of a Lien under Section
302(f) of ERISA,
(viii) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or
(ix) any change in the actuarial assumptions or funding methods used for
any Plan, where the effect of such change is to materially increase or
materially reduce the unfunded benefit liability or obligation to make periodic
contributions.
7.3.9 Notices of Involuntary Termination and Annual Reports.
As soon as available or within thirty (30) days after receipt thereof,
copies of (a) all notices received by the Borrower or any other member of the
ERISA Group of the PBGC's intent to terminate any Plan administered or
maintained by the Borrower or any member of the ERISA Group, or to have a
trustee appointed to administer any such Plan; and (b) at the request of the
Administrative Agent or any Lender each annual report (IRS Form 5500 series) and
all accompanying schedules, the most recent actuarial reports, the most recent
financial information concerning the financial status of each Plan administered
or maintained by the Borrower or any other member of the ERISA Group, and
schedules showing the amounts contributed to each such Plan by or on behalf of
the Borrower or any other member of the ERISA Group in which any of their
personnel participate or from which such personnel may derive a benefit, and
each Schedule B (Actuarial Information) to the annual report filed by the
Borrower or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
7.3.10 Notice of Voluntary Termination.
Promptly upon the filing thereof, copies of any notice of standard or
distress termination with the PBGC, or any successor or equivalent form, filed
with the PBGC in connection with the termination of any Plan.
7.3.11 Other Information.
Promptly following request therefor, such other information as any Agent or
Lender may reasonably request, including, without limitation, forecasts and
projections.
7.3.12 Annual Reserves Verification.
Within one hundred twenty (120) days following each fiscal year end of the
Borrower, the Borrower shall deliver to each Agent and each Lender the report of
Weir International, or such other independent engineer as shall be reasonably
satisfactory to the Agents, verifying the amount of the Eligible Reserves by
using reasonable assumptions and standards.
8. DEFAULT
8.1 Events of Default.
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
8.1.1 Payments Under Loan Documents.
The Borrower shall fail to pay (i) any principal of any Term Loan
(including scheduled installments, mandatory prepayments or the payment due at
maturity) when such principal is due hereunder or (ii) any interest on any Term
Loan, or any other amount owing hereunder or under the other Loan Documents
within three (3) Business Days after such interest or other amount becomes due
in accordance with the terms hereof or thereof;
8.1.2 Breach of Warranty.
Any representation or warranty made at any time by the Borrower herein or
by any of the other Loan Parties in any other Loan Document, or in any
certificate, other instrument or statement furnished pursuant to the provisions
hereof or thereof, shall prove to have been false or misleading in any material
respect as of the time it was made or furnished;
8.1.3 Breach of Negative Covenants or Visitation Rights.
Any of the Loan Parties shall default in the observance or performance of
any covenant contained in Section 7.1.5 [Visitation Rights], Section 7.2
[Negative Covenants], or Section 7.3.4 [Notice of Default];
8.1.4 Breach of Other Covenants.
(a) Any of the Loan Parties shall fail to timely perform the covenants set
forth in Sections 7.3.1 [Quarterly Financial Statements], 7.3.2 [Annual
Financial Statements] or 7.3.3 [Certificate of the Borrower] and such default
shall continue unremedied for a period of thirty (30) Business Days after any
officer of any Loan Party becomes aware of the occurrence thereof;
(b) Any of the Loan Parties shall default in the observance or performance
of any other covenant, condition or provision hereof or of any other Loan
Document and such default shall continue unremedied for a period of thirty (30)
Business Days after any officer of any Loan Party becomes aware of the
occurrence thereof (such grace period to be applicable only in the event such
default can be remedied by corrective action of the Loan Parties as determined
by the Administrative Agent in its sole discretion);
8.1.5 Defaults in Other Agreements or Indebtedness.
(a) A default or event of default shall occur at any time under the terms
of any other agreement involving borrowed money or the extension of credit or
any other Indebtedness or any Derivatives Obligations under which any Loan Party
or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in
excess of $10,000,000 in the aggregate, and such breach, default or event of
default consists of the failure to pay (beyond any period of grace permitted
with respect thereto, whether waived or not) any indebtedness when due (whether
at stated maturity, by acceleration or otherwise) or if such breach or default
permits or causes (or with the giving of notice or the passage of time or both
would permit or cause) the acceleration of any indebtedness (whether or not such
right shall have been waived) or the termination of any commitment to lend;
(b) A default or event of default shall occur at any time under the terms
of or with respect to any Obligation (as such term is defined in the Collateral
Sharing Agreement), and such breach, default or event of default consists of the
failure to pay (beyond any period of grace permitted with respect thereto,
whether waived or not) any indebtedness or other obligation thereunder when due
(whether at stated maturity, by acceleration or otherwise) or if such breach or
default permits or causes (or with the giving of notice or the passage of time
or both would permit or cause) the acceleration of any indebtedness or other
obligation (whether or not such right shall have been waived) or the termination
of any other agreement or instrument evidencing any Obligations (as such term is
defined in the Collateral Sharing Agreement);
8.1.6 Judgments or Orders.
Any judgments or orders for the payment of money in excess of $10,000,000
in the aggregate shall be entered against any Loan Party or any Subsidiary of
any Loan Party by a court having jurisdiction in the premises, which judgment is
not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry; provided, however, that any such
judgment or order shall not be an Event of Default under this Section 8.1.6 if
and for so long as (i) the amount of such judgment or order in excess of
$10,000,000 is covered by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (ii) such insurer, which
shall be rated at least "A" by A.M. Best Company, has been notified of, and has
not disputed the claim made for payment of, the amount of such judgment or
order;
8.1.7 Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against any Loan Party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
or shall in any way be challenged or contested or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
8.1.8 Proceedings Against Assets.
Any of the Loan Parties' or any of their Subsidiaries' assets are attached,
seized, levied upon or subjected to a writ or distress warrant; or such come
within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not cured within thirty (30) days
thereafter;
8.1.9 Notice of Lien or Assessment.
A notice of Lien or assessment in excess of $10,000,000 which is not a
Permitted Lien is filed of record with respect to all or any part of any of the
Loan Parties' or any of their Subsidiaries' assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including the PBGC, or any tax or debt
owing at any time or times hereafter to any one of these becomes payable and the
same is not paid within thirty (30) days after the same becomes payable;
8.1.10 Insolvency.
The Borrower and its Subsidiaries, taken as a whole, cease to be Solvent,
or the Borrower and its Subsidiaries, taken as a whole, fail to pay their debts
generally as they become due or admit their inability to pay their debts
generally as they become due;
8.1.11 Events Relating to Plans and Benefit Arrangements.
Any of the following occurs: (i) any Reportable Event, which the
Administrative Agent determines in good faith constitutes 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) the
PBGC shall give notice of its intent to institute proceedings to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and,
in the case of the occurrence of (i), (ii), (iii) or (iv) above, the
Administrative Agent determines in good faith that the amount of the Borrower's
liability is likely to exceed 10% of its Consolidated Tangible Net Worth; (v)
the Borrower or any member of the ERISA Group shall fail to make any
contributions when due to a Plan or a Multiemployer Plan; (vi) the Borrower or
any other member of the ERISA Group shall make any amendment to a Plan with
respect to which security is required under Section 307 of ERISA; (vii) the
Borrower or any other member of the ERISA Group shall withdraw completely or
partially from a Multiemployer Plan; (viii) the Borrower or any other member of
the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of
ERISA to withdraw) from a Multiple Employer Plan; or (ix) any applicable Law is
adopted, changed or interpreted by any Official Body with respect to or
otherwise affecting one or more Plans, Multiemployer Plans or Benefit
Arrangements and, with respect to any of the events specified in (v), (vi),
(vii), (viii) or (ix), the Administrative Agent determines in good faith that
any such occurrence would be reasonably likely to materially and adversely
affect the total enterprise represented by the Borrower and the other members of
the ERISA Group;
8.1.12 Cessation of Business.
The Loan Parties, taken as a whole, cease to conduct their business as
contemplated, except as expressly permitted under Section 7.2.3 [Liquidations,
Mergers, etc.] or 7.2.4 [Dispositions of Assets and Subsidiaries], or are
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of their business and such injunction, restraint or other
preventive order is not dismissed within thirty (30) days after the entry
thereof;
8.1.13 Change of Control.
Any of the following shall occur: (i) Parent shall cease to own, directly
or indirectly, at least ninety-nine percent (99%) of all issued and outstanding
member interests in the Borrower, (ii) any person or group of persons (within
the meaning of Sections 13(d) or 14(a) of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership of (within the meaning of
Rule 13d-3 promulgated by the SEC under said Act) 35% or more of the voting
capital stock of the Parent; or (iii) within a period of twelve (12) consecutive
calendar months, individuals who (1) were directors of the Parent on the first
day of such period, (2) were nominated for election by the Parent, or (3) were
appointed by the board of directors of the Parent shall cease to constitute a
majority of the board of directors of the Parent;
8.1.14 Involuntary Proceedings.
A proceeding shall have been instituted in a court having jurisdiction in
the premises seeking a decree or order for relief in respect of the Parent, any
Loan Party or Significant Subsidiary of a Loan Party in an involuntary case
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect, or for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar official) of
the Parent, any Loan Party or Significant Subsidiary of a Loan Party for any
substantial part of its property, or for the winding-up or liquidation of its
affairs, and such proceeding shall remain undisguised or unseated and in effect
for a period of thirty (30) consecutive days or such court shall enter a decree
or order granting any of the relief sought in such proceeding; or
8.1.15 Voluntary Proceedings.
The Parent, any Loan Party or Significant Subsidiary of a Loan Party shall
commence a voluntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, shall consent to
the entry of an order for relief in an involuntary case under any such law, or
shall consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or other similar
official) of itself or for any substantial part of its property or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any action in furtherance of any of
the foregoing.
8.2 Consequences of Event of Default.
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.
If an Event of Default specified under Sections 8.1.1 [Payments Under Loan
Documents] through 8.1.13 [Change of Control] shall occur and be continuing, the
Lenders and the Administrative Agent shall be under no further obligation to
make Term Loans, and the Administrative Agent may, and upon the request of the
Required Lenders shall, by written notice to the Borrower, take one or both of
the following actions: (i) terminate the Commitments and thereupon the
Commitments shall be terminated and of no further force and effect, (ii) declare
the unpaid principal amount of the Term Loans then outstanding and all interest
accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to
the Lenders hereunder and thereunder to be forthwith due and payable, and the
same shall thereupon become and be immediately due and payable to the
Administrative Agent for the benefit of each Lender without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, and (iii) prohibit loans by the Borrower to the Parent, provided,
however, that action under this clause (iii) shall be taken only upon the
request of the Required Lenders; and
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section 8.1.14 [Involuntary
Proceedings] or 8.1.15 [Voluntary Proceedings] shall occur, the Commitments
shall automatically terminate and be of no further force and effect, the Lenders
shall be under no further obligation to make Term Loans hereunder and the unpaid
principal amount of the Term Loans then outstanding and all interest accrued
thereon, any unpaid fees and all other Indebtedness of the Borrower to the
Lenders hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, and loans by the Borrower to the Parent shall automatically be
prohibited; and
8.2.3 Set-off.
If an Event of Default shall occur and be continuing, any Lender to whom
any Obligation is owed by any Loan Party hereunder or under any other Loan
Document or any participant of such Lender which has agreed in writing to be
bound by the provisions of Section 9.13 [Equalization of Lenders] and any
branch, Subsidiary or Affiliate of such Lender or participant anywhere in the
world shall have the right, in addition to all other rights and remedies
available to it, without notice to such Loan Party, to set-off against and apply
to the then unpaid balance of all the Term Loans and all other Obligations of
the Borrower and the other Loan Parties hereunder or under any other Loan
Document any debt owing to, and any other funds held in any manner for the
account of, the Borrower or such other Loan Party by such Lender or participant
or by such branch, Subsidiary or Affiliate, including all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited or
finally credited, or otherwise) now or hereafter maintained by the Borrower or
such other Loan Party for its own account (but not including funds held in
custodian or trust accounts) with such Lender or participant or such branch,
Subsidiary or Affiliate. Such right shall exist whether or not any Lender or the
Administrative Agent shall have made any demand under this Agreement or any
other Loan Document, whether or not such debt owing to or funds held for the
account of the Borrower or such other Loan Party is or are matured or unmatured
and regardless of the existence or adequacy of any Collateral, Guaranty or any
other security, right or remedy available to any Lender or the Administrative
Agent; and
8.2.4 Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing, and whether or not
the Administrative Agent shall have accelerated the maturity of the Term Loans
pursuant to any of the foregoing provisions of this Section 8.2, the Agents or
the Required Lenders (or, at the request of the Agents or the Required Lenders,
any Lender, and any such Lender that has received such a request shall thus be
entitled to exercise the rights set forth in this Section) if owed any amount
with respect to the Term Loans, may, to the extent permitted by Law, proceed to
protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement or the other Loan Documents, including as
permitted by applicable Law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of any Agent or such Lender; and
8.2.5 Application of Proceeds.
From and after the date on which the Administrative Agent or any Lender
shall have taken any action pursuant to this Section 8.2 and until all
Obligations of the Loan Parties have been paid in full, subject to the
provisions of the Collateral Sharing Agreement, any and all proceeds received by
the Administrative Agent or any Lender from any sale or other disposition of the
Collateral, or any part thereof, or the exercise of any remedy by the
Administrative Agent or any Lender shall be applied as follows:
(i) first, to reimburse the Administrative Agent and the Lenders for
out-of-pocket costs, expenses and disbursements, including reasonable attorneys'
and paralegals' fees and legal expenses, incurred by the Administrative Agent or
the Lenders in connection with realizing on the Collateral or collection of any
Obligations of any of the Loan Parties under any of the Loan Documents,
including advances for taxes, insurance, repairs and the like and reasonable
expenses incurred to sell or otherwise realize on, or prepare for sale or other
realization on, any of the Collateral;
(ii) second, to the repayment of all Indebtedness then due and unpaid of
the Loan Parties to the Lenders incurred under this Agreement or any of the
other Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Administrative Agent may determine in its
discretion; and
(iii) the balance, if any, as required by Law.
8.2.6 Other Rights and Remedies.
In addition to all of the rights and remedies contained in this Agreement
or in any of the other Loan Documents, the Administrative Agent shall have all
of the rights and remedies under applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by Law.
The Administrative Agent may, and upon the request of the Required Lenders
shall, exercise all post-default rights granted to the Administrative Agent and
the Lenders under the Loan Documents or applicable Law.
8.2.7 Notice of Sale.
Any notice required to be given by the Administrative Agent of a sale,
lease, or other disposition of the Collateral or any other intended action by
the Administrative Agent, if given ten (10) days prior to such proposed action,
shall constitute commercially reasonable and fair notice thereof to the
Borrower.
9. THE AGENTS
9.1 Appointment.
Each Lender hereby designates, appoints and authorizes: (i) PNC Bank to act
as Administrative Agent for such Lender under this Agreement and the other Loan
Documents for such Lender under this Agreement and to execute and deliver or
accept on behalf of each of the Lenders the other Loan Documents, and (ii)
authorizes each of PNC Bank and JPMorgan Chase to act as Agent for such Lender
under this Agreement. Each Lender hereby irrevocably authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the Agents, the
Administrative Agent or any of them by the terms hereof, together with such
powers as are reasonably incidental thereto. PNC Bank agrees to act as the
Administrative Agent on behalf of the Lenders to the extent provided in this
Agreement, and each of PNC Bank and JPMorgan Chase agrees to act as Agent on
behalf of the Lenders to the extent provided in this Agreement.
9.2 Delegation of Duties.
The Agents and the Administrative Agent may perform any of their respective
duties hereunder by or through agents or employees (provided such delegation
does not constitute a relinquishment of their respective duties as Agents or the
Administrative Agent, as the case may be) and, subject to Sections 9.5
[Reimbursement and Indemnification of Agents by the Borrower] and 9.6
[Exculpatory Provisions; Limitation of Liability], shall be entitled to engage
and pay for the advice or services of any attorneys, accountants or other
experts concerning all matters pertaining to its duties hereunder and to rely
upon any advice so obtained. It is acknowledged and agreed that each of
Citibank, Credit Lyonnais, and U.S. Bank has received the title of Documentation
Agent under this Agreement, however, such designation is solely to give each of
Citibank, Credit Lyonnais, and U.S. Bank such title and each of Citibank, Credit
Lyonnais, and U.S. Bank has no duties, responsibilities, functions, obligations
or liabilities implied or otherwise under the Loan Documents solely as a result
of being so designated as Documentation Agent.
9.3 Nature of Duties; Independent Credit Investigation.
Neither the Agents nor the Administrative Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist. The duties of
the Administrative Agent and of the Agents shall be mechanical and
administrative in nature; neither the Administrative Agent nor the Agents shall
have by reason of this Agreement a fiduciary or trust relationship in respect of
any Lender; and nothing in this Agreement, expressed or implied, is intended to
or shall be so construed as to impose upon the Administrative Agent or any Agent
any obligations in respect of this Agreement except as expressly set forth
herein. Without limiting the generality of the foregoing, the use of the term
"Agents" in this Agreement with reference to the Agents or Administrative Agent,
as the case may be, is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Each Lender expressly acknowledges (i) that neither the
Administrative Agent nor any Agent has made any representations or warranties to
it and that no act by the Administrative Agent or any Agent hereafter taken,
including any review of the affairs of any of the Loan Parties, shall be deemed
to constitute any representation or warranty by the Administrative Agent or any
Agent to any Lender; (ii) that it has made and will continue to make, without
reliance upon the Administrative Agent or any Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Term Loans hereunder; and (iii)
except as expressly provided herein, that neither the Administrative Agent nor
any Agent shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Term Loan, the issuance of any Letter of Credit or at any time or times
thereafter.
9.4 Actions in Discretion of Agents; Instructions From the Lenders.
The Administrative Agent and each Agent agrees, upon the written request of
the Required Lenders, to take or refrain from taking any action of the type
specified as being within the Administrative Agent's or such Agent's rights,
powers or discretion herein, provided that neither the Administrative Agent nor
any Agent shall be required to take any action which exposes the Administrative
Agent or any Agent to personal liability or which is contrary to this Agreement
or any other Loan Document or applicable Law. In the absence of a request by the
Required Lenders, the Administrative Agent and each Agent shall have authority,
in their sole discretion, to take or not to take any such action, unless this
Agreement specifically requires the consent of the Required Lenders or all of
the Lenders. Any action taken or failure to act pursuant to such instructions or
discretion shall be binding on the Lenders, subject to Section 9.6 [Exculpatory
Provisions, etc.]. Subject to the provisions of Section 9.6, no Lender shall
have any right of action whatsoever against the Administrative Agent or any
Agent as a result of the Administrative Agent or any Agent acting or refraining
from acting hereunder in accordance with the instructions of the Required
Lenders, or in the absence of such instructions, in the absolute discretion of
the Administrative Agent or the Agents, as the case may be.
9.5 Reimbursement and Indemnification of Agents by the Borrower.
The Borrower unconditionally agrees to pay or reimburse the Administrative
Agent and each Agent and hold the Administrative Agent and each Agent harmless
against (a) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements, including fees and expenses of outside counsel,
appraisers and environmental consultants, incurred by the Administrative Agent
or any Agent (i) in connection with the development, negotiation, preparation,
printing, execution, administration, syndication, interpretation and performance
of this Agreement and the other Loan Documents, (ii) relating to any requested
amendments, waivers or consents pursuant to the provisions hereof, (iii) in
connection with the enforcement of this Agreement or any other Loan Document or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (iv) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, and (b) all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent or any Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Administrative Agent or any Agent hereunder
or thereunder, provided that the Borrower shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements if the same results from the
Administrative Agent's or any Agent's gross negligence or willful misconduct, or
if the Borrower was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the Borrower
shall remain liable to the extent such failure to give notice does not result in
a loss to the Borrower), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which shall not be
unreasonably withheld.
9.6 Exculpatory Provisions; Limitation of Liability.
Neither the Administrative Agent, any Agent nor any of their respective
directors, officers, employees, agents, attorneys or Affiliates shall (a) be
liable to any Lender for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith including pursuant to any Loan Document,
unless caused by its or their own gross negligence or willful misconduct, (b) be
responsible in any manner to any of the Lenders for the effectiveness,
enforceability, genuineness, validity or the due execution of this Agreement or
any other Loan Documents or for any recital, representation, warranty, document,
certificate, report or statement herein or made or furnished under or in
connection with this Agreement or any other Loan Documents, or (c) be under any
obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Loan Parties, or the financial condition of the Loan
Parties, or the existence or possible existence of any Event of Default or
Potential Default. No claim may be made by any of the Loan Parties, any Lender,
the Administrative Agent or any Agent or any of their respective Subsidiaries
against the Administrative Agent, any Agent, any Lender or any of their
respective directors, officers, employees, agents, attorneys or Affiliates, or
any of them, for any special, indirect or consequential damages or, to the
fullest extent permitted by Law, for any punitive damages in respect of any
claim or cause of action (whether based on contract, tort, statutory liability,
or any other ground) based on, arising out of or related to any Loan Document or
the transactions contemplated hereby or any act, omission or event occurring in
connection therewith, including the negotiation, documentation, administration
or collection of the Term Loans, and the Borrower (for itself and on behalf of
each of its Subsidiaries), the Administrative Agent, each Agent and each Lender
hereby waives, releases and agrees never to sue upon any claim for any such
damages, whether such claim now exists or hereafter arises and whether or not it
is now known or suspected to exist in its favor. Each Lender agrees that, except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent or any Agent hereunder or given to the
Administrative Agent or any Agent for the account of or with copies for the
Lenders, the Administrative Agent, each Agent and each of their respective
directors, officers, employees, agents, attorneys or Affiliates shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Administrative Agent, any Agent or any of their
directors, officers, employees, agents, attorneys or Affiliates.
9.7 Reimbursement and Indemnification of Agents by the Lenders.
Each Lender agrees to reimburse and indemnify the Administrative Agent and
each Agent (to the extent not reimbursed by the Borrower and without limiting
the Obligation of the Borrower to do so) in proportion to its Ratable Share of
Term Loans (or if no Term Loans are outstanding, of Commitments) from and
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, reasonable costs, expenses or disbursements, including
attorneys' fees and disbursements, and costs of appraisers and environmental
consultants, of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Administrative Agent, the Agents, or any of them in
their respective capacities as such, in any way relating to or arising out of
this Agreement or any other Loan Documents or any action taken or omitted by the
Administrative Agent or any Agent hereunder or thereunder, provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
(a) if the same results from the Administrative Agent's or any Agent's gross
negligence or willful misconduct, as the case may be, or (b) if such Lender was
not given notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense (except that such Lender shall remain liable to
the extent such failure to give notice does not result in a loss to the Lender),
or (c) if the same results from a compromise and settlement agreement entered
into without the consent of such Lender, which shall not be unreasonably
withheld. In addition, each Lender agrees promptly upon demand to reimburse the
Administrative Agent and each Agent (to the extent not reimbursed by the
Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share of Term Loans (or if no Term Loans are
outstanding, of Commitments) for all amounts due and payable by the Borrower to
the Administrative Agent or the Agents, as the case may be in connection with
the periodic audit of the Loan Parties' books, records and business properties
by the Administrative Agent or the Agents.
9.8 Reliance by Agents.
The Administrative Agent and each Agent shall be entitled to rely upon any
writing, telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
the advice and opinions of counsel and other professional advisers selected by
the Administrative Agent or any Agent. The Administrative Agent and each Agent
shall be fully justified in failing or refusing to take any action hereunder
unless it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
9.9 Notice of Default.
Neither the Administrative Agent nor any Agent shall be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default unless such person has received written notice from a Lender or the
Borrower referring to this Agreement, describing such Potential Default or Event
of Default and stating that such notice is a "notice of default."
9.10 Notices.
Each of the Administrative Agent and each Agent agrees to promptly send to
each Lender a copy of all notices received from the Borrower pursuant to the
provisions of this Agreement or the other Loan Documents promptly upon receipt
thereof. The Administrative Agent shall promptly notify the Borrower and the
other Lenders of each change in the Base Rate and the effective date thereof.
9.11 Lenders in Their Individual Capacities.
With respect to its Commitment and the Term Loans made by it and any other
rights and powers given to it as a Lender hereunder or under any of the other
Loan Documents, the Administrative Agent and each Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not the Administrative Agent or an Agent, as the case may be, and
the term "Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent and each Agent in its individual capacity. PNC Bank and its
Affiliates, JPMorgan Chase and its Affiliates, each other Agent and its
Affiliates and each of the Lenders and their respective Affiliates may, without
liability to account, except as prohibited herein, make loans to, accept
deposits from, discount drafts for, act as trustee under indentures of, and
generally engage in any kind of banking or trust business with the Loan Parties
and their Affiliates, in the case of the Administrative Agent or any Agent, as
though it were not acting as Administrative Agent or Agent, as the case may be,
hereunder and in the case of each Lender, as though such Lender were not a
Lender hereunder. The Lenders acknowledge that, pursuant to such activities, the
Administrative Agent or its Affiliates or any Agent or its respective Affiliates
may (i) receive information regarding the Loan Parties (including information
that may be subject to confidentiality obligations in favor of the Loan Parties)
and acknowledge that neither the Administrative Agent nor any Agent shall be
under any obligation to provide such information to them, and (ii) accept fees
and other consideration from the Loan Parties for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
9.12 Holders of Term Notes.
The Administrative Agent and each Agent may deem and treat any payee of any
Term Note as the owner thereof for all purposes hereof unless and until written
notice of the assignment or transfer thereof shall have been filed with the
Administrative Agent and the Agents. Any request, authority or consent of any
Person who at the time of making such request or giving such authority or
consent is the holder of any Term Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Term Note or of any Term Note
or Term Notes issued in exchange therefor.
9.13 Equalization of Lenders.
The Lenders and the holders of any participations in any Commitments or
Term Loans or other rights or obligations of a Lender hereunder agree among
themselves that, with respect to all amounts received by any Lender or any such
holder for application on any Obligation hereunder or under any such
participation, whether received by voluntary payment, by realization upon
security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will be
made in the manner stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Lenders and such holders in
proportion to their interests in payments on the Term Loans, except as otherwise
provided in Sections 3.4.3 [Administrative Agent's and Lender's Rights], 4.4.2
[Replacement of a Lender] or 4.5 [Additional Compensation in Certain
Circumstances]. The Lenders or any such holder receiving any such amount shall
purchase for cash from each of the other Lenders an interest in such Lender's
Term Loans in such amount as shall result in a ratable participation by the
Lenders and each such holder in the aggregate unpaid amount of the Term Loans,
provided that if all or any portion of such excess amount is thereafter
recovered from the Lender or the holder making such purchase, such purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, together with interest or other amounts, if any, required by law
(including court order) to be paid by the Lender or the holder making such
purchase.
9.14 Successor Agents.
Any Agent or the Administrative Agent (i) may resign as Agent or
Administrative Agent, as the case may be or (ii) shall resign if such
resignation is requested by the Required Lenders (if the Agent or Administrative
Agent is a Lender, such Agent's or Administrative Agent's Term Loans and
Commitment shall be considered in determining whether the Required Lenders have
requested such resignation) or required by Section 4.4.2 [Replacement of a
Lender], in either case of (i) or (ii) by giving not less than thirty (30) days'
prior written notice to the Borrower. If any Agent or the Administrative Agent
shall resign under this Agreement, then either (a) the Required Lenders shall
appoint from among the Lenders a successor to such Agent or Administrative
Agent, as the case may be, for the Lenders, subject to the consent of the
Borrower, such consent not to be unreasonably withheld, provided that, no
consent of the Borrower shall be required during any period when an Event of
Default exists and is continuing, or (b) if a successor Agent or Administrative
Agent shall not be so appointed and approved within the thirty (30) day period
following an Agent's or the Administrative Agent's notice, as the case may be,
to the Lenders of its resignation, then the resigning Administrative Agent or
resigning Agent, as the case may be shall appoint, with the consent of the
Borrower, such consent not to be unreasonably withheld, provided that, no
consent of the Borrower shall be required during any period when an Event of
Default exists and is continuing, a successor who shall be a Lender shall serve
as Administrative Agent or Agent, as the case may be, until such time as the
Required Lenders appoint and the Borrower consents to the appointment of a
successor to such resigning Administrative Agent or Agent. Upon its appointment
pursuant to either clause (a) or (b) above, such successor Administrative Agent
or Agent shall succeed to the rights, powers and duties of the resigning
Administrative Agent or Agent, as the case may be, and the terms "Agent" and
"Administrative Agent" shall mean such successor Agent or Administrative Agent,
as the case may be, effective upon its appointment, and the former
Administrative Agent's or Agent's rights, powers and duties as an Agent or
Administrative Agent shall be terminated without any other or further act or
deed on the part of such former Agent or Administrative Agent or any of the
parties to this Agreement. After the resignation of the Administrative Agent or
any Agent hereunder, the provisions of this Section 9 shall inure to the benefit
of such former Administrative Agent and each former Agent, and such former
Administrative Agent and each former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was Administrative Agent or an Agent under this Agreement.
9.15 Administrative Agent's Fee.
The Borrower shall pay to the Administrative Agent a nonrefundable fee (the
"Administrative Agent's Fee") for the Administrative Agent's services hereunder
under the terms of a letter (the "Administrative Agent's Letter") between the
Borrower and the Administrative Agent, as amended from time to time.
9.16 Availability of Funds.
The Administrative Agent may assume that each Lender has made or will make
the proceeds of a Term Loan available to the Administrative Agent unless the
Administrative Agent shall have been notified by such Lender on or before the
later of (1) the close of Business on the Business Day preceding the Borrowing
Date with respect to such Term Loan or two (2) hours before the time on which
the Administrative Agent actually funds the proceeds of such Term Loan to the
Borrower (whether using its own funds pursuant to this Section 9.16 or using
proceeds deposited with the Administrative Agent by the Lenders and whether such
funding occurs before or after the time on which Lenders are required to deposit
the proceeds of such Term Loan with the Administrative Agent). The
Administrative Agent may, in reliance upon such assumption (but shall not be
required to), make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand from the Borrower) together with interest thereon, in
respect of each day during the period commencing on the date such amount was
made available to the Borrower and ending on the date the Administrative Agent
recovers such amount, at a rate per annum equal to (i) the Federal Funds
Effective Rate during the first three (3) days after such interest shall begin
to accrue and (ii) the applicable interest rate in respect of such Term Loan
after the end of such three-day period.
9.17 Calculations.
In the absence of gross negligence or willful misconduct, the
Administrative Agent shall not be liable for any error in computing the amount
payable to any Lender whether in respect of the Term Loans, fees or any other
amounts due to the Lenders under this Agreement. In the event an error in
computing any amount payable to any Lender is made, the Administrative Agent,
the Borrower and each affected Lender shall, forthwith upon discovery of such
error, make such adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds Effective Rate.
9.18 Certain Releases of Guarantors and Collateral.
It is expressly agreed that, upon the written request of the Borrower
(accompanied by such certificates and other documentation as the Administrative
Agent may reasonably request) the Administrative Agent on behalf of the Lenders
and without any consent or action by any Lender, may, so long as no Event of
Default exists after giving effect thereto, release: (i) any Collateral or any
Guarantor from a Guaranty Agreement, in either case, in connection with any
sale, transfer, lease, disposition, merger or other transaction permitted by
this Agreement, or (ii) any Subsidiary from the Guaranty Agreement if such
Subsidiary is no longer a Significant Subsidiary.
9.19 Beneficiaries.
Except as expressly provided herein, the provisions of this Section 9 are
solely for the benefit of the Administrative Agent, each Agent and the Lenders,
and the Loan Parties shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent and each Agent shall act solely as the Administrative
Agent or Agent, as the case may be, of the Lenders and do not assume and shall
not be deemed to have assumed any obligation toward or relationship of agency or
trust with or for any of the Loan Parties.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
With the written consent of the Required Lenders, the Administrative Agent,
acting on behalf of all the Lenders, and the Borrower, on behalf of the Loan
Parties, may from time to time enter into written agreements amending or
changing any provision of this Agreement or any other Loan Document or the
rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant
written waivers or consents to a departure from the due performance of the
Obligations of the Loan Parties hereunder or thereunder. Any such agreement,
waiver or consent made with such written consent shall be effective to bind all
the Lenders and the Loan Parties; provided, that, no such agreement, waiver or
consent may be made which will:
10.1.1 Increase of Commitments; Extension of Expiration Date.
Increase the amount of the Commitment of any Lender hereunder or extend the
Tranche A Expiration Date or the Tranche B Expiration Date without the prior
written consent of each Lender directly affected thereby;
10.1.2 Extension of Payment; Reduction of Principal, Interest or Fees;
Modification of Terms of Payment.
Whether or not any Term Loans are outstanding, extend the time for payment
of principal or interest of any Term Loan or any fee payable to any Lender, or
reduce the principal amount of or the rate of interest borne by any Term Loan or
reduce the rate of any fee payable to any Lender without the prior written
consent of each Lender directly affected thereby;
10.1.3 Release of Collateral or Guarantor.
Except as set forth in Section 9.18, release any of the Collateral
(including, without limitation, any amount held in the Pledged Collateral
Account) or release any Guarantor from its Obligations under the Guaranty
Agreement or any other security for any of the Loan Parties' Obligations without
the prior written consent of each Lender; or
10.1.4 Miscellaneous.
Amend Sections 4.2 [Pro Rata Treatment of Lenders], 7.1.14 [Pledged
Collateral Account], 9.6 [Exculpatory Provisions, etc.] or 9.13 [Equalization of
Lenders] or this Section 10.1, alter any provision regarding the pro rata
treatment of the Lenders, change the definition of Required Lenders, or change
any requirement providing for the Lenders, the Required Lenders or all the
Lenders to authorize the taking of any action hereunder without the prior
written consent of each Lender adversely affected thereby; provided, further,
that no agreement, waiver or consent which would modify the interests, rights or
obligations of any Agent in its capacity as such shall be effective without the
written consent of such Agent and no agreement, waiver or consent which would
modify the interests, rights or obligations of the Administrative Agent in its
capacity shall be effective without the written consent of the Administrative
Agent.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Administrative Agent,
any Agent or any Lender in exercising any right, power, remedy or privilege
under this Agreement or any other Loan Document shall affect any other or future
exercise thereof or operate as a waiver thereof, nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power, remedy or privilege preclude any further exercise thereof or of
any other right, power, remedy or privilege. The rights and remedies of the
Administrative Agent, each Agent and the Lenders under this Agreement and any
other Loan Documents are cumulative and not exclusive of any rights or remedies
which they would otherwise have. Any waiver, permit, consent or approval of any
kind or character on the part of any Lender of any breach or default under this
Agreement or any such waiver of any provision or condition of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing.
10.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes.
Limitations.
The Borrower agrees unconditionally upon demand to pay or reimburse to each
Lender (other than the Administrative Agent and the Agents, as to which the
Borrower's Obligations are set forth in Section 9.5 [Reimbursement and
Indemnification of Agents by the Borrower]) and to save such Lender harmless
against (i) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements (including fees and expenses of outside counsel) for
each Lender (except with respect to (A) and (B) below), incurred by such Lender
(a) in connection with the administration and interpretation of this Agreement,
and other instruments and documents to be delivered hereunder, (b) relating to
any amendments, waivers or consents pursuant to the provisions hereof, (c) in
connection with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against such Lender, in its capacity as such, in any way relating to or arising
out of this Agreement or any other Loan Documents or any action taken or omitted
by such Lender hereunder or thereunder, provided that the Borrower shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (A) if
the same results from such Lender's gross negligence or willful misconduct, or
(B) if the Borrower was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense (except that
the Borrower shall remain liable to the extent such failure to give notice does
not result in a loss to the Borrower), or (C) if the same results from a
compromise or settlement agreement entered into without the consent of the
Borrower, which shall not be unreasonably withheld. None of the Agents nor any
Lender shall be liable for any damages arising from the use by unauthorized
persons of information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such persons. None of the Agents nor any Lender shall be liable
or responsible to the Borrower or other party hereto for any special, indirect,
consequential or punitive damages in connection with the Term Loans or otherwise
under or in connection with the Loan Documents, the transactions contemplated
thereby or any of their respective obligations thereunder. The Lenders will
attempt to minimize the fees and expenses of legal counsel for the Lenders which
are subject to reimbursement by the Borrower hereunder by considering the use of
one law firm to represent the Lenders, the Administrative Agent, and the Agents
if appropriate under the circumstances. The Borrower agrees unconditionally to
pay all stamp, document, transfer, recording or filing taxes or fees and similar
impositions now or hereafter determined by the Administrative Agent, any Agent
or any Lender to be payable in connection with this Agreement or any other Loan
Document, and the Borrower agrees unconditionally to save the Administrative
Agent, each Agent and the Lenders harmless from and against any and all present
or future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions.
10.4 Holidays.
Whenever payment of a Term Loan to be made or taken hereunder
shall be due on a day which is not a Business Day, such payment shall be due on
the next Business Day and such extension of time shall be included in computing
interest and fees, except that the Tranche A Term Loans shall be due on the
Business Day preceding the Tranche A Expiration Date if the Tranche A Expiration
Date is not a Business Day and except that the Tranche B Term Loans shall be due
on the Business Day preceding the Tranche B Expiration Date if the Tranche B
Expiration Date is not a Business Day. Whenever any payment or action to be made
or taken hereunder (other than payment of the Term Loans) shall be stated to be
due on a day which is not a Business Day, such payment or action shall be made
or taken on the next following Business Day (except as provided in Section 3.2
[Interest Periods] with respect to Interest Periods under the Euro-Rate Option),
and such extension of time shall not be included in computing interest or fees,
if any, in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1 Notional Funding.
Each Lender shall have the right from time to time, without notice to the
Borrower, to deem any branch, Subsidiary or Affiliate (which for the purposes of
this Section 10.5 shall mean any corporation or association which is directly or
indirectly controlled by or is under direct or indirect common control with any
corporation or association which directly or indirectly controls such Lender) of
such Lender to have made, maintained or funded any Term Loan to which the
Euro-Rate Option applies at any time, provided that immediately following (on
the assumption that a payment were then due from the Borrower to such other
office), and as a result of such change, the Borrower would not be under any
greater financial obligation pursuant to Section 4.5 [Additional Compensation in
Certain Circumstances] than it would have been in the absence of such change.
Notional funding offices may be selected by each Lender without regard to such
Lender's actual methods of making, maintaining or funding the Term Loans or any
sources of funding actually used by or available to such Lender.
10.5.2 Actual Funding.
Each Lender shall have the right from time to time to make or maintain any
Term Loan by arranging for a branch, Subsidiary or Affiliate of such Lender to
make or maintain such Term Loan subject to the last sentence of this Section
10.5.2. If any Lender causes a branch, Subsidiary or Affiliate to make or
maintain any part of the Term Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Term Loans to the same extent as if such Term
Loans were made or maintained by such Lender, but in no event shall any Lender's
use of such a branch, Subsidiary or Affiliate to make or maintain any part of
the Term Loans hereunder cause such Lender or such branch, Subsidiary or
Affiliate to incur any cost or expenses payable by the Borrower hereunder or
require the Borrower to pay any other compensation to any Lender (including any
expenses incurred or payable pursuant to Section 4.5 [Additional Compensation in
Certain Circumstances]) which would otherwise not be incurred.
10.6 Notices.
All notices, requests, demands, directions and other communications (as
used in this Section 10.6, collectively referred to as "notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the respective parties at the addresses and numbers set forth
under their respective names on Schedule 1.1(B) hereof or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly herein provided, be effective (a) in the
case of telex or facsimile, when received, (b) in the case of hand-delivered
notice, when hand-delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mail with first-class postage prepaid, return receipt requested, and (e) if
given by any other means (including by air courier), when delivered; provided,
that notices to the Agents or to the Administrative Agent shall not be effective
until received. Any Lender giving any notice to the Borrower shall
simultaneously send a copy thereof to the Administrative Agent, and the
Administrative Agent shall promptly notify the other Lenders of the receipt by
it of any such notice. Any notice delivered to the Borrower shall be deemed to
be notice to the Loan Parties and shall be binding upon all of the Loan Parties.
10.7 Severability.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
10.8 Governing Law.
This Agreement shall be deemed to be a contract under the Laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed and enforced in accordance with the internal laws of the Commonwealth
of Pennsylvania without regard to its conflict of laws principles.
10.9 Prior Understanding.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
10.10 Duration; Survival.
All representations and warranties of the Borrower contained herein or made
by any Loan Party in connection herewith shall survive the making of Term Loans
and shall not be waived by the execution and delivery of this Agreement, any
investigation by the Administrative Agent, any Agent or the Lenders, the making
of Term Loans or payment in full of the Term Loans. All covenants and agreements
of the Borrower contained in Sections 7.1 [Affirmative Covenants], 7.2 [Negative
Covenants] and 7.3 [Reporting Requirements] herein shall continue in full force
and effect from and after the date hereof so long as the Borrower may borrow
hereunder and until termination of the Commitments and payment in full of the
Term Loans. All covenants and agreements of the Borrower contained herein
relating to the payment of principal, interest, premiums, additional
compensation or expenses and indemnification, including those set forth in
Section 4 [Payments] and Sections 9.5 [Reimbursement and Indemnification of
Agents by the Borrower], 9.7 [Reimbursement and Indemnification of Agents by the
Lenders] and 10.3 [Reimbursement and Indemnification of Lenders by the Borrower,
etc.], shall survive payment in full of the Term Loans and termination of the
Commitments.
10.11 Successors and Assigns.
10.11.1 Binding Effect; Assignments by Borrower.
This Agreement shall be binding upon and shall inure to the benefit of the
Lenders, the Agents, the Administrative Agent, the Borrower and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights and Obligations hereunder or any interest herein without the
consent of all of the Lenders.
10.11.2 Assignments and Participations by Lenders; Designations.
(a) Assignments and Participations.
This Section shall apply to any assignment or participation by a Lender of
its Term Loans or Commitments. Each Lender may, at its own cost, make
assignments of all or any part of its Commitment and Term Loans to one or more
banks or other entities, subject to the consent of the Borrower (which consent
shall not be required during any period in which an Event of Default exists) and
the Administrative Agent with respect to any assignee, such consents not to be
unreasonably withheld, provided that assignments by a Lender to an Affiliate of
such Lender or Approved Fund of any Lender may be made without the consent of
either of the Borrower or the Administrative Agent upon written notice of such
assignment to the Administrative Agent and compliance with the terms and
conditions of this Section, and provided further that assignments may not be
made in amounts less than $1,000,000 unless such assignment is an assignment of
all of a Lender's Commitment or Term Loans or unless such assignment is an
assignment to an Affiliate of such Lender, an Approved Fund of any Lender or to
another Lender. Each Lender may, at its own cost, grant participations in all or
any part of its Commitment and Term Loans made by it to one or more banks or
other entities without the consent of any party hereto. In the case of an
assignment of all or any portion of a Commitment, upon receipt by the
Administrative Agent of the Assignment and Assumption Agreement, the assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if it had
been a signatory Lender hereunder, the Commitments in Section 2.1 [Commitments]
shall be adjusted accordingly, and upon surrender of the Term Note subject to
such assignment, the Borrower shall execute and deliver a new Term Note to the
assignee in an amount equal to the amount of the Commitment assumed by it and a
new Term Note to the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Any assigning Lender (including a Lender assigning all
or a portion of its Commitment and Term Loans to an Affiliate of such Lender or
Approved Fund of any Lender and, in the case of a Lender which is a fund, to a
fund under common control with such Lender) shall pay to the Administrative
Agent a service fee in the amount of $2,500 for each assignment, which amount
shall not be subject to reimbursement or indemnification by the Borrower;
provided, however, in the case of assignments on the same day by a Lender to an
Approved Fund, so long as the Administrative Agent in its sole discretion agrees
in writing prior to any such assignment only a single $2,500 service fee shall
be payable for all such assignments on such day by such Lender to such Approved
Funds. In the case of a participation, the participant shall have only the
rights specified in Section 8.2.3 [Set-Off] (the participant's rights against
the selling Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating thereto
and not to include any voting rights except with respect to changes of the type
referenced in Sections 10.1.1 [Increase of Commitments, etc.], 10.1.2 [Extension
of Payment, etc.] and 10.1.3 [Release of Collateral or Guarantor]), all of such
Lender's obligations under this Agreement or any other Loan Document shall
remain unchanged, and all amounts payable by any Loan Party hereunder or
thereunder shall be determined as if such Lender had not sold such
participation. Any assignee or participant which is not incorporated under the
Laws of the United States of America or a state thereof shall deliver to the
Borrower and the Administrative Agent the form of certificate described in
Section 10.17 [Tax Withholding] relating to federal income tax withholding. Each
Lender may furnish any publicly available information concerning any Loan Party
or its Subsidiaries and any other information concerning any Loan Party or its
Subsidiaries in the possession of such Lender from time to time to assignees and
participants (including prospective assignees or participants), provided that
such assignees and participants agree to be bound by the provisions of Section
10.12 [Confidentiality].
(b) Designation.
(i) Notwithstanding anything to the contrary contained herein, any Lender
(a "Designating Lender") may grant to one or more special purpose funding
vehicles (each, an "SPV"), identified as such in writing from time to time by
the Designated Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Term Loan that such
Designating Lender would otherwise be obligated to make to the Borrower pursuant
to this Agreement; provided that (x) nothing herein shall constitute a
commitment by any SPV to make any Term Loan, (y) if an SPV elects not to
exercise such option or otherwise fails to provide all or any part of such Term
Loan, the Designating Lender shall be obligated to make such Term Loan pursuant
to the terms hereof and (z) the Designating Lender shall remain liable for any
indemnity or other payment obligation with respect to its Commitment hereunder.
The making of a Term Loan by an SPV hereunder shall utilize the Commitment of
the Designating Lender to the same extent, and as if, such Term Loan were made
by such Designating Lender.
(ii) As to any Term Loans or portion thereof made by it, each SPV shall
have all the rights that a Lender making such Term Loans or portion thereof
would have had under this Agreement; provided, however, that each SPV shall have
granted to its Designating Lender an irrevocable power of attorney, to deliver
and receive all communications and notices under this Agreement (and any Loan
Documents) and to exercise, on such SPV's behalf, all of such SPV's voting
rights under this Agreement. No additional Note shall be required to evidence
the Term Loans or portion thereof made by an SPV; and the related Designating
Lender shall be deemed to hold its Note as agent for such SPV to the extent of
the Term Loans or portion thereof funded by such SPV. In addition, any payments
for the account of any SPV shall be paid to its Designating Lender as agent for
such SPV. Notwithstanding any term or condition hereof, no SPV, unless it shall
have become a Lender hereunder in accordance with the terms of Section
10.11.2(a), shall be a party hereto or have any right to vote or give or
withhold its consent under this Agreement. The Administrative Agent shall have
no duty or obligation to give any notices required to be delivered hereunder to
any SPV.
(iii) Each party hereto hereby agrees that no SPV shall be liable for any
indemnity or payment under this Agreement for which a Lender would otherwise be
liable. In furtherance of the foregoing, each party hereto hereby agrees (which
agreements shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the later of (x) payment in full of all
outstanding commercial paper or other senior indebtedness of any SPV, (y) the
payment in full of all Term Loans, and (z) the termination of all Commitments,
it will not institute against, or join any other person in instituting against,
such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof, provided
that the Designating Lender for each SPV hereby agrees to indemnify, save and
hold harmless each other party hereto for any loss, cost, damage and expense
arising out of the inability to institute any such proceeding against such SPV.
(iv) In addition, notwithstanding anything to the contrary contained in
this Section 10.11.2(b) or otherwise in this Agreement (other than the proviso
set forth directly below in this Section 10.11.2(b), any SPV may (y) with notice
to, but without the prior written consent of the Borrower or the Administrative
Agent, at any time and without paying any processing fee therefor, assign or
participate all or a portion of its interest in any Term Loans to the
Designating Lender or to any financial institutions providing liquidity and/or
credit support to or for the account of such SPV to support the funding or
maintenance of Term Loans and (z) disclose on a confidential basis any non
public information relating to its Term Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancements to such SPV; provided, however, that in no event may any non-public
financial information provided by the Borrower under Section 7.3 [Reporting
Requirements] be provided by any SPV to any other Person. In no event shall the
Borrower be obligated to pay to any SPV that has made a Term Loan any greater
amount than the Borrower would have been obligated to pay under this Agreement
if the Designating Lender had made such Term Loan. This Section 10.11.2(b) may
not be amended without the written consent of any Designating Lender affected
thereby.
10.11.3 Non-U.S. Assignees and Participants.
Each Lender or assignee or participant of a Lender that is not incorporated
under the laws of the U.S. or a state thereof (and, upon the written request of
the Administrative Agent, each other Lender or assignee or participant of a
Lender) shall deliver to the Borrower and the Administrative Agent a Withholding
Certificate as described in Section 10.17 [Tax Withholding] relating to federal
income tax withholding. Each Lender may furnish any publicly available
information concerning any Loan Party or its Subsidiaries and any other
information concerning any Loan Party or its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees or participants), provided that such assignees and
participants agree to be bound by the provisions of Section 10.12
[Confidentiality].
10.11.4 Assignments by Lenders to Federal Reserve Banks.
Notwithstanding any other provision in this Agreement, any Lender may at
any time pledge or grant a security interest in all or any portion of its rights
under this Agreement, its Term Notes (if any) and the other Loan Documents to
any Federal Reserve Bank without notice to or consent of the Borrower and the
Administrative Agent, and any Lender which is an investment fund may pledge all
or any portion of its Term Notes or Term Loans to its trustee in support of its
obligations to such trustee. No such pledge or grant of a security interest
shall release the transferor Lender of its obligations hereunder or under any
other Loan Document. In no event shall such Federal Reserve Bank or trustee, as
a result of such pledge or grant of a security interest, be considered to be a
"Lender" hereunder or be entitled to require the assigning Lender to take or
omit to take any action hereunder. For avoidance of doubt, the parties to this
Agreement acknowledge that the provisions of this Section 10.11 concerning
assignments relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including any pledge or
assignment by a Lender to any Federal Reserve Bank in accordance with applicable
law.
10.12 Confidentiality.
10.12.1 General.
The Agents, the Administrative Agent and the Lenders each agree to keep
confidential all information obtained from any Loan Party or its Subsidiaries
which is nonpublic and confidential or proprietary in nature (including any
information the Borrower specifically designates in writing as confidential),
except as provided below, and to use such information only in connection with
their respective capacities under this Agreement and for the purposes
contemplated hereby. The Agents, the Administrative Agent and the Lenders shall
be permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such information in
connection with the execution, administration and enforcement of this Agreement,
subject to the agreement of such Persons to maintain the confidentiality, (ii)
to assignees and participants as contemplated by Section 10.11 [Successors and
Assigns], (iii) to any direct or indirect contractual counterparty in any swap,
hedge or similar agreement or such contractual counterparty's professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section 10.12) (iv) to the extent requested by any bank regulatory authority,
insurance company regulatory authority or, with notice to the Borrower as
permitted by applicable Law, as otherwise required by applicable Law or by any
subpoena or other legal process, or in connection with any investigation or
proceeding arising out of the transactions contemplated by this Agreement, (v)
if it becomes publicly available other than as a result of a breach of this
Agreement or becomes available from a source not known to be subject to
confidentiality restrictions, (vi) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about the Lender's investment
portfolio, (vii) in connection with the exercise, preservation or protection of
any right or remedy hereunder or under the other Loan Documents, applicable law
or in equity or (viii) if the Borrower shall have consented to such disclosure.
10.12.2 Sharing Information With Affiliates of the Lenders.
The Borrower acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to the Borrower
or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and the Borrower (on its own behalf and on behalf of its Subsidiaries)
hereby authorizes each Lender to share any information delivered to such Lender
by the Borrower and its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Lender to enter into this Agreement, to any
such Subsidiary or Affiliate of such Lender, it being understood that any such
Subsidiary or Affiliate of any Lender receiving such information shall be bound
by the provisions of Section 10.12.1 above as if it were a Lender hereunder.
Such authorization shall survive the repayment of the Term Loans and other
Obligations and the termination of the Commitments.
10.13 Counterparts.
This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be
an original, and all such counterparts shall together constitute one and the
same instrument.
10.14 Agent's or Lender's Consent.
Whenever the Administrative Agent's, any Agent's or any Lender's consent is
required to be obtained under this Agreement or any of the other Loan Documents
as a condition to any action, inaction, condition or event, the Administrative
Agent, each Agent and each Lender shall be authorized to give or withhold such
consent in its sole and absolute discretion and to condition its consent upon
the giving of additional collateral, the payment of money or any other matter.
10.15 Exceptions.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT
COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS
PROVIDED FOR IN SECTION 10.6 [NOTICES] AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON ACTUAL RECEIPT THEREOF. THE BORROWER WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN
AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. THE
BORROWER, THE AGENTS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
10.17 Tax Withholding.
Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the U.S. or a state thereof (and, upon the written request of
the Administrative Agent, each other Lender or assignee or participant of a
Lender) agrees that it will deliver to each of the Borrower and the
Administrative Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under ss.1.1441-1(c)(16) of the Income Tax Regulations
("Regulations")) certifying its status (i.e., U.S. or foreign Person) and, if
appropriate, making a claim of reduced, or exemption from, U.S. withholding tax
on the basis of an income tax treaty or an exemption provided by the Internal
Revenue Code. The term "Withholding Certificate" includes Form W-9; Form W-8BEN;
Form W-8ECI; or, Form W-8IMY, and the related statements and certifications as
required under ss.1.1441-1(c)(3) of the Regulations; a statement described in
ss.1.871-14(c)(2)(v) of the Regulations; or, any other certificates under the
Code or Regulations that certify or establish the status of a payee or
beneficial owner as a U.S. or foreign Person. Each Lender, assignee or
participant required to deliver to the Borrower and the Administrative Agent a
valid Withholding Certificate pursuant to the preceding sentence shall deliver
such valid Withholding Certificate as follows: (A) each Lender which is a party
hereto on the Restatement Effective Date shall deliver such valid Withholding
Certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by the Borrower hereunder for the account of such
Lender; (B) each assignee or participant shall deliver such valid Withholding
Certificate at least five (5) Business Days before the effective date of such
assignment or participation (unless the Administrative Agent in its sole
discretion shall permit such assignee or participant to deliver such Withholding
Certificate less than five (5) Business Days before such date in which case it
shall be due on the date specified by the Administrative Agent). Each Lender,
assignee or participant which so delivers a valid Withholding Certificate
further undertakes to deliver to each of the Borrower and the Administrative
Agent two (2) additional copies of such Withholding Certificate (or a successor
form) on or before the date that such Withholding Certificate expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent Withholding Certificate so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Administrative Agent. Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of, or exemption from, U.S. withholding tax,
the Administrative Agent shall be entitled to withhold U. S. federal income
taxes at the full withholding rate unless the Lender, assignee or participant
establishes pursuant to the foregoing that it is entitled to an exemption or
that it is subject to a reduced rate or, if in its reasonable judgment the
Administrative Agent is not required to do so under the due diligence
requirements imposed upon a withholding agent under ss.1.1441-7(b) of the
Regulations. The Administrative Agent shall be indemnified under ss.1.1461-1(e)
of the Regulations against any claims and demands of any Lender or assignee or
participant of a Lender for the amount of any tax it deducts and withholds in
accordance with regulations under ss.1441 of the Internal Revenue Code.
10.18 Joinder of Guarantors.
Any Significant Subsidiary of the Borrower which is required to become a
Guarantor pursuant to Section 7.2.6 [Subsidiaries, Partnerships and Joint
Ventures] shall execute and deliver to the Administrative Agent (i) a Guarantor
Joinder in substantially the form attached hereto as Exhibit 1.1(G)(1) pursuant
to which it shall join as a Guarantor each of the documents to which the
Guarantors are parties; (ii) documents in the forms described in Section 6.1
[Conditions to Closing] modified as appropriate to relate to such Subsidiary;
and (iii) documents necessary to grant and perfect a Prior Security Interest to
the Administrative Agent for the benefit of the Lenders in all of the equity
interests of such Subsidiary and in all Collateral held by such Subsidiary. The
Borrower shall deliver such Guarantor Joinder and related documents to the
Administrative Agent within thirty (30) Business Days after the end of the
fiscal quarter in which such Subsidiary of the Borrower becomes a Significant
Subsidiary. In addition, Canyon Fuel (assuming it is a Significant Subsidiary)
shall join the Loan Documents as a Guarantor at such time as the Borrower can
unilaterally, under the terms of the Canyon Fuel LLC Agreement, cause such
joinder to occur.
10.19 Register.
The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at its address for notices referred to at Section 10.6
[Notices] a register (the "Register") and an account for each Lender in which
the Administrative Agent will record the names and addresses of the Lenders and
the Commitments of, and principal amount of the Term Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Commitments and the Term Loans recorded therein for all purposes of
this Agreement; provided, however that the failure of the Administrative Agent
to maintain the Register or an account for any Lender shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Term Loans made to the Borrower by such Lender in accordance with the terms of
this Agreement. An assignment of any Term Loan shall be effective only upon
appropriate entries with respect thereto being made in the Register. Any
assignment or transfer of all or part of a Term Loan evidenced by a Term Note
shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Term Note evidencing such Term Loan, accompanied
by a duly executed Assignment and Assumption Agreement, and thereupon one or
more new Term Notes in the same aggregate principal amount shall be issued by
the Borrower in the appropriate amount(s) to the designated assignee and the
assigning Lender, if such Lender retains any portion of its Term Loans, and the
old Term Notes shall be returned by the Administrative Agent to the Borrower
marked "replaced". The Administrative Agent shall maintain a copy of each
Assignment and Assumption Agreement delivered to it as part of the Register. The
Register shall be available for inspection by the Borrower, and the Lenders and
their representatives (including counsel and accountants), at any reasonable
time and from time to time upon reasonable prior notice. Upon its receipt of a
duly completed Assignment and Assumption Agreement executed by an assigning
Lender and an assignee and meeting the requirements set forth in Section 10.11.2
[Assignments and Participations by Lenders] hereof, the Administrative Agent
shall (i) accept such Assignment and Assumption Agreement, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the Lenders. Notwithstanding anything to the contrary contained
herein, no assignment under Section 10.11.2 shall be effective unless and until
the Administrative Agent shall have recorded such assignment in the Register.
The Administrative Agent shall record the name of the transferor, the name of
the transferee, and the amount of the transfer in the Register after receipt of
all documents required pursuant to Section 10.11.2 and such other documents as
the Administrative Agent may reasonably request.
10.20 Amendment and Restatement.
This Agreement amends and restates in its entirety the Original Credit
Agreement; and, Borrower confirms that the Original Credit Agreement, the
Collateral Documents, the other Loan Documents and the Collateral for the
Obligations thereunder (as all such capitalized terms are defined in the
Original Credit Agreement) have at all times, since the date of the execution
and delivery of such documents, remained in full force and effect and continued
to secure such obligations which are continued as the Obligations hereunder as
amended hereby; and, all such Collateral (as defined in the Original Credit
Agreement), pursuant to the Collateral Documents hereunder shall continue to
secure the Obligations hereunder. The Term Loans hereunder are a continuation of
the Term Loans under (and as such term is defined in) the Original Credit
Agreement and are amended to consist of Tranche A Term Loans and Tranche B Term
Loans. Borrower and Administrative Agent acknowledge and agree that the
amendment and restatement of the Original Credit Agreement by this Agreement is
not intended to constitute, nor does it constitute, a novation, interruption,
suspension of continuity, satisfaction, discharge or termination of the
obligations, loans, liabilities, or indebtedness under the Original Credit
Agreement and other Loan Documents thereunder or the collateral security
therefor and this Agreement and the other Loan Documents are entitled to all
rights and benefits originally pertaining to the Original Credit Agreement and
the other Loan Documents (as such term is defined therein).
[SIGNATURES APPEAR ON FOLLOWING PAGES]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
ATTEST: ARCH WESTERN RESOURCES, LLC
/s/ Janet L. Horgan By: /s/ Robert J. Messey
Name: Janet L. Horgan Name: Robert J. Messey
Title: Secretary Title: Vice President r
[Seal]
PNC BANK, NATIONAL ASSOCIATION
individually and as Administrative Agent
By: /s/ Richard C. Munsick
Richard C. Munsick
Managing Director
JP MORGAN CHASE BANK, individually and
as Syndication Agent
By: /s/ Peter S. Predun
Vice President
CITIBANK, N.A., individually and as
Documentation Agent
By: /s/ Raymond G. Dunning
Raymond G. Dunning
Managing Director
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Documentation
Agent
By: /s/ Attila Koc
Senior Vice President
U.S. BANK NATIONAL ASSOCIATION,
individually and as Documentation Agent
By: /s/ Eric Hartman
Eric Hartman
Vice President
BANK LEUMI USA
By: /s/ Joung Hee Hong
Joung Hee Hong
Vice President
BNP PARIBAS
By: /s/ Evans R. Swann
Evans R. Swann
Director
/s/ Polly Schot
Polly Schot
Vice President
CREDIT INDUSTRIEL ET COMMERCIAL
By: /s/ Brian O'Leary
Brian O'Leary
Vice President
/s/ Anthony Rock
Anthony Rock
Vice President
ERSTE BANK
By: /s/ Gregory Aptman
Gregory Aptman
Vice President
By: /s/ John Runnion
Managing Director
FLEET NATIONAL BANK
By: /s/ Jeffrey H. Rathkamp
Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ William S. Richardson
William S. Richardson
Duly Authorized Signatory
KZH CNC LLC
By: /s/ Susan Lee
Susan Lee
Authorized Agent
KZH CYPRESSTREE-1 LLC
By: /s/ Susan Lee
Susan Lee
Authorized Agent
KZH ING-2 LLC
By: /s/ Susan Lee
Susan Lee
Authorized Agent
KZH PONDVIEW LLC
By: /s/ Susan Lee
Susan Lee
Authorized Agent
KZH STERLING LLC
By: /s/ Susan Lee
Susan Lee
Authorized Agent
KZH WATERSIDE LLC
By: /s/ Susan Lee
Susan Lee
Authorized Agent
MIZUHO CORPORATE BANK LIMITED
By: /s/ Nobuyasu Fukatsu
Nobuyasu Fukatsu
Senior Vice President
NATIONAL CITY BANK
By: /s/ Jennifer R. Hammarlund
Jennifer R. Hammarlund
Assistant Vice President
PRINCIPAL LIFE INSURANCE COMPANY
By: /s/ Jon C. Heiny
Jon C. Heiny
Counsel
By: /s/ JoEllen J. Watts
JoEllen J. Watts
Counsel
THE BANK OF NEW YORK
By: /s/ Craig J. Anderson
Craig J. Anderson
Vice President
THE SUMITOMO TRUST & BANKING CO.
LTD., NEW YORK BRANCH
By: /s/ Elizabeth A. Quirk
Elizabeth A. Quirk
Vice President
THE TRAVELERS INSURANCE COMPANY
By: /s/ Robert M. Mills
Robert M. Mills
Investment Officer
TORONTO DOMINION (NEW YORK) INC.
By: /s/ Gwen Zirkle
Gwen Zirkle
Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ David L. Driggers
David L. Driggers
Managing Director
Exhibit 10.1
ARCH COAL, INC.
1997 STOCK INCENTIVE PLAN
(As Amended and Restated on February 28, 2002)
SECTION 1
Statement of Purpose
1.1. The Arch Coal, Inc. 1997 Stock Incentive Plan (the "Plan") has been
established by Arch Mineral Corporation, which pursuant to the Agreement and
Plan of Merger by and between the Company and Ashland Coal, Inc., et. al, will
change its name to Arch Coal, Inc., to become effective at the Effective Time as
defined herein in order to:
(a) attract and retain executive, managerial and other salaried employees;
(b) motivate participating employees, by means of appropriate incentives,
to achieve long-range goals;
(c) provide incentive compensation opportunities that are competitive with
those of other major corporations; and
(d) further identify a Participant's interests with those of the Company's
other stockholders through compensation based on the Company's common stock;
thereby promoting the long-term financial interest of the Company and its
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term stockholder return.
SECTION 2
Definitions
2.1. Unless the context indicates otherwise, the following terms shall have the
meaning set forth below:
(a) Acquiring Corporation. The term "Acquiring Corporation" shall mean the
surviving, continuing successor or purchasing corporation in an acquisition or
merger with the Company in which the Company is not the surviving corporation.
(b) Award. The term "Award" shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Stock, Performance Units, Merit Awards, Phantom Stock Awards and Stock acquired
through purchase under Section 12.
(c) Board. The term "Board" shall mean the Board of Directors of the
Company acting as such but shall not include the Committee or other committees
of the Board acting on behalf of the Board.
(d) Cause. The term "Cause" shall mean (a) the continued failure by the
Participant to substantially perform his or her duties with the Company (other
than any such failure resulting from his or her incapacity due to physical or
mental illness), or (b) the engaging by the Participant in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
(e) Change in Control. A "Change in Control" shall mean a change in control
of the Company of a nature that would be required to be reported (assuming such
event has not been "previously reported") in response to Item 1(a) of a Current
Report on Form 8-K pursuant to Section 13 or 15(d) of the Exchange Act as in
effect on the date this Plan is approved by the shareholders of the Company;
provided that, without limitation, such a Change in Control shall be deemed to
have occurred (1) upon the approval of the Board (or if approval of the Board is
not required as a matter of law, the shareholders of the Company) of (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Stock would
be converted into cash, securities or other property, other than a merger in
which the holders of the Stock immediately prior to the merger will have more
than 50% of the ownership of common stock of the surviving corporation
immediately after the merger, (B) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company, or (C) adoption of any plan or proposal for
the liquidation or dissolution of the Company, or (2) when any "person" (as
defined in Section 13(d) of the Exchange Act), other than a Significant
Stockholder, or any subsidiary of the Company or employee benefit plan or trust
maintained by the Company or any of its subsidiaries, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 20% of the Stock outstanding at the time, without
the prior approval of the Board.
(f) Code. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
(g) Committee. The term "Committee" means the committee of the Board
selected in accordance with the provisions of Subsection 4.2.
(h) Company. The term "Company" means Arch Coal, Inc., a Delaware
corporation, which prior to the Effective Date was known as Arch Mineral
Corporation.
(i) Date of Termination. A Participant's "Date of Termination" shall be the
date on which his or her employment with all Employers and Related Companies
2
terminates for any reason; provided that for purposes of this Plan only, a
Participant's employment shall not be deemed to be terminated by reason of a
transfer of the Participant between the Company and a Related Company (including
Employers) or between two Related Companies (including Employers); and further
provided that a Participant's employment shall not be considered terminated by
reason of the Participant's leave of absence from an Employer or a Related
Company that is approved in advance by the Participant's Employer.
(j) Disability. Except as otherwise provided by the Committee, a
Participant shall be considered to have a "Disability" during the period in
which he or she is unable, by reason of a medically determined physical or
mental impairment, to carry out his or her duties with an Employer, which
condition, in the discretion of the Committee, shall generally be an event which
qualifies as a "long term disability" under applicable long term disability
benefit programs of the Company.
(k) Effective Date. The term "Effective Date" shall mean the "Effective
Time" of the "Merger" under the Agreement and Plan of Merger dated as of April
4, 1997, among the Company, Ashland Coal, Inc., and AMC Merger Corporation.
(l) Employee. The term "Employee" shall mean a person with an employment
relationship with an Employer.
(m) Employer. The Company and each Subsidiary which, with the consent of
the Company, participates in the Plan for the benefit of its eligible Employees
are referred to collectively as the "Employers" and individually as an
"Employer".
(n) Exchange Act. The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(o) Exercise Price. The term "Exercise Price" means, with respect to each
share of Stock subject to an Option, the price fixed by the Committee at which
such share may be purchased from the Company pursuant to the exercise of such
Option, which price at no time may be less than 100% of the Fair Market Value of
the Stock on the date the Option is granted, except as permitted and
contemplated by Section 21 of the Plan.
(p) Fair Market Value. The "Fair Market Value" of the Stock on any given
date shall be the last sale price, regular way, or, in case no such sale takes
place on such date, the average of the closing bid and asked prices, regular
way, of the Stock, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the NYSE or, if the Stock is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Stock is listed or admitted to trading or, if the Stock is not
listed or admitted to trading on any national securities exchange, the last
3
quoted sale price on such date or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market on such date, as reported by
the National Association of Securities Dealers, Inc. Automated Quotations System
or such other system then in use, or, if on any such date the Stock is not
quoted by any such organization, the average of the closing bid and asked prices
on such date as furnished by a professional market maker making a market in the
Stock. If the Stock is not publicly held or so listed or publicly traded, "Fair
Market Value" per share of Stock shall mean the Fair Market Value per share as
reasonably determined by the Committee.
(q) Immediate Family. With respect to a particular Participant, the term
"Immediate Family" shall mean, whether through consanguinity or adoptive
relationships, the Participant's spouse, children, stepchildren, siblings and
grandchildren.
(r) Incentive Stock Option. The term "Incentive Stock Option" shall mean
any Incentive Stock Option granted under the Plan.
(s) Merit Award. The term "Merit Award" shall mean any Merit Award granted
under the Plan.
(t) Non-Employee Director. The term "Non-Employee Director" shall mean a
person who qualifies as such under Rule 16b-3(b)(3) under the Exchange Act or
any successor provision, and who also qualifies as an "outside director" under
Section 162(m) of the Code.
(u) Non-Qualified Stock Option. The term "Non-qualified Stock Option" shall
mean any Non-Qualified Stock Option granted under the Plan.
(v) NYSE. The term "NYSE" refers to the New York Stock Exchange, Inc.
(w) Option. The term "Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.
(x) Participant. The term "Participant" means an Employee who has been
granted an award under the Plan.
(y) Performance-Based Compensation. The term "Performance-Based
Compensation" shall have the meaning ascribed to it in Section 162(m)(4)(C) of
the Code.
(z) Performance Goals. The term "Performance Goals" means the goals
established by the Committee under an Award which, if met, will entitle the
Participant to payment under such Award and will qualify such payment as
"Performance-Based Compensation" as that term is used in Code Section
162(m)(4)(C). Such goals will be based upon one or more of the following
business criteria: net income; earnings per share; earnings before interest and
4
taxes ("EBIT"); earnings before interest, taxes, depreciation, and amortization
("EBITDA"); debt reduction; safety; return on investment; operating income;
operating ratio; cash flow; return on assets; stockholders' return; revenue;
return on equity; economic value added (EVA(R)); operating costs; sales; or
compliance with Company policies.
(aa) Performance Period. The term "Performance Period" shall mean the
period over which applicable performance is to be measured.
(bb) Performance Stock. The term "Performance Stock" shall have the meaning
ascribed to it in Section 10 of the Plan.
(cc) Performance Units. The term "Performance Units" shall have the meaning
ascribed to it in Section 11 of the Plan.
(dd) Phantom Stock Award. The term "Phantom Stock Award" shall mean any
Phantom Stock Award granted under the Plan.
(ee) Plan. The term "Plan" shall mean this Arch Coal, Inc. 1997 Stock
Incentive Plan as the same may be from time to time amended or revised.
(ff) Qualified Retirement Plan. The term "Qualified Retirement Plan" means
any plan of an Employer or a Related Company that is intended to be qualified
under Section 401(a) of the Code.
(gg) Related Companies. The term "Related Companies' means any Significant
Stockholder and their subsidiaries; and any other company during any period in
which it is a Subsidiary or a division of the Company, including any entity
acquired by, or merged with or into, the Company or a Subsidiary.
(hh) Restricted Period. The term "Restricted Period" shall mean the period
of time for which shares of Restricted Stock or Restricted Stock Units are
subject to forfeiture pursuant to the Plan or during which Options and Stock
Appreciation Rights are not exercisable.
(ii) Restricted Stock. The term "Restricted Stock" shall have the meaning
ascribed to it in Section 8 of the Plan.
(jj) Restricted Stock Units. The term "Restricted Stock Units" shall have
the meaning ascribed to it in Section 9 of the Plan.
(kk) Retirement. "Retirement" of a Participant shall mean the occurrence of
a Participant's Date of Termination under circumstances that constitute such
Participant's retirement at normal or early retirement age under the terms of
5
the Qualified Retirement Plan of Participant's Employer that is extended to the
Participant immediately prior to the Participant's Date of Termination or, if no
such plan is extended to the Participant on his or her Date of Termination,
under the terms of any applicable retirement policy of the Participant's
Employer.
(ll) SEC. "SEC" means the Securities and Exchange Commission.
(mm) Significant Stockholder. The term "Significant Stockholder" shall mean
any shareholder of the Company who, immediately prior to the Effective Date,
owned more than 5% of the common stock of the Company.
(nn) Stock. The term "Stock" shall mean shares of common stock, $.01 par
value per share, of the Company.
(oo) Stock Appreciation Rights. The term "Stock Appreciation Rights" shall
mean any Stock Appreciation Right granted under the Plan.
(pp) Subsidiary. The term "Subsidiary" shall mean any present or future
subsidiary corporation of the Company within the meaning of Code Section 424(f).
(qq) Tax Date. The term "Tax Date" shall mean the date a withholding tax
obligation arises with respect to an Award.
SECTION 3
Eligibility
3.1. Subject to the discretion of the Committee and the terms and conditions of
the Plan, the Committee shall determine and designate from time to time, the
Employees or other persons as contemplated by Section 21 of the Plan who will be
granted one or more Awards under the Plan.
SECTION 4
Operation and Administration
4.1. The Plan has been adopted by the Board on April 1, 1997, effective as of
the Effective Date, subject to the further approval of the shareholders of the
Company. In addition, if the Plan is approved by the shareholders, to the extent
required pursuant to Section 162(m) of the Code, it or any part thereof shall be
resubmitted to shareholders for reapproval at the first shareholders' meeting
that occurs during the fifth year following the year of the initial approval and
thereafter at five year intervals, in each case, as may be required to qualify
any Award hereunder as Performance-Based Compensation. The Plan shall be
unlimited in duration and remain in effect until termination by the Board;
provided however, that no Incentive Stock Option may be granted under the Plan
after April 1, 2007.
6
4.2. The Plan shall be administered by the Committee which shall consist of two
or more members of the Board who are Non-Employee Directors. Plenary authority
to manage and control the operation and administration of the Plan shall be
vested in the Committee, which authority shall include, but shall not be limited
to:
(a) Subject to the provisions of the Plan, the authority and discretion to
select Employees to receive Awards, to determine the time or times of receipt,
to determine the types of Awards and the number of shares covered by the Awards,
to establish the terms, conditions, performance criteria, restrictions, and
other provisions of such Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by the
respective Employee, his or her present and potential contribution to the
Company's success and such other factors as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the authority and discretion to
determine the extent to which Awards under the Plan will be structured to
conform to the requirements applicable to Performance-Based Compensation as
described in Code Section 162(m), and to take such action, establish such
procedures, and impose such restrictions at the time such awards are granted as
the Committee determines to be necessary or appropriate to conform to such
requirements.
(c) The authority and discretion to interpret the Plan and the Awards
granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, to make all other determinations that it
deems necessary or advisable for the administration of the Plan and to correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Award, in each case, in the manner and to the extent the Committee deems
necessary or advisable to carry it into effect.
4.3. Any interpretation of the Plan by the Committee and any decision made by it
under the Plan shall be final and binding on all persons. The express grant in
the Plan of any specific power to the Committee shall not be construed as
limiting any power or authority of the Committee. Provided, however, that except
as otherwise permitted under Treasury Regulation 1.162-27(e)(2)(iii)(C), the
Committee may not increase any Award once made if payment under such Award is
intended to constitute Performance-Based Compensation.
4.4. The Committee may only act at a meeting by unanimous consent if comprised
of two members, and otherwise by a majority of its members. Any determination of
the Committee may be made without a meeting by the unanimous written consent of
its members. In addition, the Committee may authorize one or more of its members
or any officer of an Employer to execute and deliver documents and perform other
administrative acts pursuant to the Plan.
7
4.5. No member or authorized delegate of the Committee shall be liable to any
person for any action taken or omitted in connection with the administration of
the Plan unless attributable to his or her own fraud or gross misconduct. The
Committee, the individual members thereof, and persons acting as the authorized
delegates of the Committee under the Plan, shall be indemnified by the Employers
against any and all liabilities, losses, costs and expenses (including legal
fees and expenses) of whatsoever kind and nature which may be imposed on,
incurred by, or asserted against, the Committee or its members or authorized
delegates by reason of the performance of any action pursuant to the Plan if the
Committee or its members or authorized delegates did not act in willful
violation of the law or regulation under which such liability, loss, cost or
expense arises. This indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance policy, contract with the
indemnitee or the Company's By-laws.
4.6. Notwithstanding any other provision of the Plan to the contrary, but
without giving effect to Awards made pursuant to Section 21, the maximum number
of shares of Stock with respect to which any Participant may receive any Award
of an Option or a Stock Appreciation Right under the Plan during any calendar
year is 300,000; the maximum number of shares with respect to which any
Participant may receive Awards of Restricted Stock during any calendar year is
100,000; the maximum number of shares with respect to which any Participant may
receive Merit Awards during any calendar year is 100,000; and the maximum number
of shares with respect to which any Participant may receive other Awards during
any calendar year is 100,000.
4.7. To the extent that the Committee determines that it is necessary or
desirable to conform any Awards under the Plan with the requirements applicable
to "Performance-Based Compensation", as that term is used in Code Section
162(m)(4)(C), it may, at or prior to the time an Award is granted, establish
Performance Goals for a particular Performance Period. If the Committee
establishes Performance Goals for a Performance Period, it may approve a payment
from that particular Performance Period upon attainment of the Performance Goal.
SECTION 5
Shares Available Under the Plan
5.1. The shares of Stock with respect to which Awards may be made under the Plan
shall be shares of currently authorized but unissued or treasury shares acquired
by the Company, including shares purchased in the open market or in private
transactions. Subject to the provisions of Section 16, the total number of
shares of Stock available for grant of Awards shall not exceed nine million
(9,000,000) shares of Stock. Except as otherwise provided herein, if any Award
shall expire or terminate for any reason without having been exercised in full,
the unissued shares of Stock subject thereto (whether or not cash or other
consideration is paid in respect of such Award) shall again be available for the
purposes of the Plan. Any shares of Stock which are used as full or partial
payment to the Company upon exercise of an Award shall be available for purposes
of the Plan.
8
SECTION 6
Options
6.1. The grant of an "Option" under this Section 6 entitles the Participant to
purchase shares of Stock at a price fixed at the time the Option is granted, or
at a price determined under a method established at the time the Option is
granted, subject to the terms of this Section 6. Options granted under this
Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options,
and subject to Subsection 6.6 and Sections 15 and 20, shall not be exercisable
for at least six months from the date of grant, as determined in the discretion
of the Committee. An "Incentive Stock Option" is an Option that is intended to
satisfy the requirements applicable to an "incentive stock option" described in
Section 422(b) of the Code. A "Non-Qualified Option" is an Option that is not
intended to be an "incentive stock option" as that term is described in Section
422(b) of the Code.
6.2. The Committee shall designate the Employees to whom Options are to be
granted under this Section 6 and shall determine the number of shares of Stock
to be subject to each such Option. To the extent that the aggregate Fair Market
Value of Stock with respect to which Incentive Stock Options are exercisable for
the first time by any individual during any calendar year (under all plans of
the Company and all Related Companies) exceeds $100,000, such Options shall be
treated as Non-Qualified Stock Options, but only to the extent required by
Section 422 of the Code.
6.3. The determination and payment of the purchase price of a share of Stock
under each Option granted under this Section shall be subject to the following
terms of this Subsection 6.3:
(a) The purchase price shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option is
granted; provided, however, that in no event shall the price per share be less
than the Fair Market Value per share on the date of the grant except as
otherwise permitted by Section 21 of the Plan;
(b) The full purchase price of each share of Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise and, as soon
as practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto; and
(c) The purchase price shall be paid either in cash, in shares of Stock
(valued at Fair Market Value as of the day of exercise), through a combination
of cash and Stock (so valued) or through such cashless exercise arrangement as
9
may be approved by the Committee and established by the Company, provided that
any shares of Stock used for payment shall have been owned by the Participant
for at least six (6) months.
6.4. Except as otherwise expressly provided in the Plan, an Option granted under
this Section 6 shall be exercisable in accordance with the following terms of
this Subsection 6.4.
(a) The terms and conditions relating to exercise of an Option shall be
established by the Committee, and may include, without limitation, conditions
relating to completion of a specified period of service, achievement of
performance standards prior to exercise of the Option, or achievement of Stock
ownership objectives by the Participant. No Option may be exercised by a
Participant after the expiration date applicable to that Option.
(b) The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right, if any.
6.5. The exercise period of any Option shall be determined by the Committee but
the term of any Option shall not extend more than ten years after the date of
grant.
SECTION 7
Stock Appreciation Rights
7.1. Subject to the terms of this Section 7, a Stock Appreciation Right granted
under the Plan entitles the Participant to receive, in cash or Stock (as
determined in accordance with Subsection 7.4), value equal to all or a portion
of the excess of: (a) the Fair Market Value of a specified number of shares of
Stock at the time of exercise; over (b) a specified price which shall not be
less than 100% of the Fair Market Value of the Stock at the time the Stock
Appreciation Right is granted, or, if granted in tandem with an Option, the
exercise price with respect to shares under the tandem Option.
7.2. Subject to the provisions of the Plan, the Committee shall designate the
Employees to whom Stock Appreciation Rights are to be granted under the Plan,
shall determine the exercise price or a method by which the price shall be
established with respect to each such Stock Appreciation Right, and shall
determine the number of shares of Stock on which each Stock Appreciation Right
is based. A Stock Appreciation Right may be granted in connection with all or
any portion of a previously or contemporaneously granted Option or not in
connection with an Option. If a Stock Appreciation Right is granted in
connection with an Option then, in the discretion of the Committee, the Stock
Appreciation Right may, but need not, be granted in tandem with the Option.
7.3. The exercise of Stock Appreciation Rights shall be subject to the
following:
10
(a) If a Stock Appreciation Right is not in tandem with an Option, then the
Stock Appreciation Right shall be exercisable in accordance with the terms
established by the Committee in connection with such rights but, subject to
Sections 15 and 20, shall not be exercisable for six months from the date of
grant and the term of any Stock Appreciation Right shall not extend more than
ten years from the date of grant; and may include, without limitation,
conditions relating to completion of a specified period of service, achievement
of performance standards prior to exercise of the Stock Appreciation Rights, or
achievement of objectives relating to Stock ownership by the Participant; and
(b) If a Stock Appreciation Right is in tandem with an Option, then the
Stock Appreciation Right shall be exercisable only at the time the tandem Option
is exercisable and the exercise of the Stock Appreciation Right will result in
the surrender of the corresponding rights under the tandem Option.
7.4. Upon the exercise of a Stock Appreciation Right, the value to be
distributed to the Participant, in accordance with Subsection 7.1, shall be
distributed in shares of Stock (valued at their Fair Market Value at the time of
exercise), in cash, or in a combination of Stock or cash, in the discretion of
the Committee.
SECTION 8
Restricted Stock
8.1. Subject to the terms of this Section 8, Restricted Stock Awards under the
Plan are grants of Stock to Participants, the vesting of which is subject to
certain conditions established by the Committee, with some or all of those
conditions relating to events (such as continued employment or satisfaction of
performance criteria) occurring after the date of the grant of the Award,
provided, however, that to the extent that vesting of a Restricted Stock Award
is contingent on continued employment, the required employment period shall
generally (unless otherwise determined by the Committee) not be less than one
year following the grant of the Award unless such grant is in substitution for
an Award under this Plan or a predecessor plan of the Company or a Related
Company. To the extent, if any, required by the General Corporation Law of the
State of Delaware, a Participant's receipt of an Award of newly issued shares of
Restricted Stock shall be made subject to payment by the Participant of an
amount equal to the aggregate par value of such newly issued shares of Stock.
8.2. The Committee shall designate the Employees to whom Restricted Stock is to
be granted, and the number of shares of Stock that are subject to each such
Award. The Award of shares under this Section 8 may, but need not, be made in
conjunction with a cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.
11
8.3. Shares of Restricted Stock granted to Participants under the Plan shall be
subject to the following terms and conditions:
(a) Restricted Stock granted to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Restricted Period;
(b) The Participant as owner of such shares shall have all the rights of a
stockholder, including but not limited to the right to vote such shares and,
except as otherwise provided by the Committee or as otherwise provided by the
Plan, the right to receive all dividends and other distributions paid on such
shares;
(c) Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the Participant but,
at the discretion of the Committee, each such certificate may be deposited with
the Company with a stock power endorsed in blank or in a bank designated by the
Committee;
(d) The Committee may award Restricted Stock as Performance-Based
Compensation, which shall be Restricted Stock that will be earned (or for which
earning is accelerated) upon the achievement of Performance Goals established by
the Committee and the Committee may specify the number of shares that will be
earned upon achievement of different levels of performance; except as otherwise
provided by the Committee, achievement of maximum targets during the Performance
Period shall result in the Participant's earning of the full amount of
Restricted Stock comprising such Performance-Based Compensation and, in the
discretion of the Committee, achievement of the minimum target but less than the
maximum target, the Committee may result in the Participant's earning of a
portion of the Award; and
(e) Except as otherwise provided by the Committee, any Restricted Stock
which is not earned by the end of a Restricted Period or Performance Period, as
the case may be, shall be forfeited. If a Participant's Date of Termination
occurs prior to the end of a Restricted Period or Performance Period, as the
case may be, the Committee may determine, in its sole discretion, that the
Participant will be entitled to settlement of all or any portion of the
Restricted Stock as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Restricted
Stock or make such other adjustments as the Committee, in its sole discretion,
deems desirable. Subject to the limitations of the Plan and the Award of
Restricted Stock, upon the vesting of Restricted Stock, such Restricted Stock
will be transferred free of all restrictions to the Participant (or his or her
legal representative, beneficiary or heir).
12
SECTION 9
Restricted Stock Units
9.1. Subject to the terms of this Section 9, a Restricted Stock Unit entitles a
Participant to receive shares for the units at the end of a Restricted Period to
the extent provided by the Award with the vesting of such units to be contingent
upon such conditions as may be established by the Committee (such as continued
employment or satisfaction of performance criteria) occurring after the date of
grant of the Award, provided, however, that to the extent that the vesting of a
Restricted Stock Unit is contingent on continued employment, the required
employment period shall generally not be less than one year following the date
of grant of the Award unless such grant is in substitution for an Award under
this Plan or a predecessor plan of the Company or a Related Company. The Award
of Restricted Stock Units under this Section 9 may, but need not, be made in
conjunction with a cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.
9.2. The Committee shall designate the Employees to whom Restricted Stock Units
shall be granted and the number of units that are subject to each such Award.
During any period in which Restricted Stock Units are outstanding and have not
been settled in Stock, the Participant shall not have the rights of a
stockholder, but, in the discretion of the Committee, may be granted the right
to receive a payment from the Company in lieu of a dividend in an amount equal
to any cash dividends that might be paid during the Restricted Period.
9.3 Except as otherwise provided by the Committee, any Restricted Stock Unit
which is not earned by the end of a Restricted Period shall be forfeited. If a
Participant's Date of Termination occurs prior to the end of a Restricted
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all, any portion, or none of the
Restricted Stock Units as to which he or she would otherwise be eligible, and
may accelerate the determination of the value and settlement of such Restricted
Stock Units or make such other adjustments as the Committee, in its sole
discretion, deems desirable.
SECTION 10
Performance Stock
10.1. Subject to the terms of this Section 10, an Award of Performance Stock
provides for the distribution of Stock to a Participant upon the achievement of
performance objectives, which may include Performance Goals, established by the
Committee.
10.2. The Committee shall designate the Employees to whom Awards of Performance
Stock are to be granted, and the number of shares of Stock that are subject to
13
each such Award. The Award of shares of Performance Stock under this Section 10
may, but need not, be made in conjunction with a cash-based incentive
compensation program maintained by the Company, and may, but need not, be in
lieu of cash otherwise awardable under such program.
10.3. Except as otherwise provided by the Committee, any Award of Performance
Stock which is not earned by the end of the Performance Period shall be
forfeited. If a Participant's Date of Termination occurs prior to the end of a
Performance Period, the Committee, in its sole discretion, may determine that
the Participant will be entitled to settlement of all, any portion, or none of
the Performance Stock as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Performance
Stock or make such other adjustments as the Committee, in its sole discretion,
deems desirable.
SECTION 11
Performance Units
11.1. Subject to the terms of this Section 11, the Award of Performance Units
under the Plan entitles the Participant to receive value for the units at the
end of a Performance Period to the extent provided under the Award. The number
of Performance Units earned, and value received from them, will be contingent on
the degree to which the performance measures established at the time of grant of
the Award are met.
11.2. The Committee shall designate the Employees to whom Performance Units are
to be granted, and the number of Performance Units to be subject to each such
Award.
11.3. For each Participant, the Committee will determine the value of
Performance Units, which may be stated either in cash or in units representing
shares of Stock; the performance measures used for determining whether the
Performance Units are earned; the Performance Period during which the
performance measures will apply; the relationship between the level of
achievement of the performance measures and the degree to which Performance
Units are earned; whether, during or after the Performance Period, any revision
to the performance measures or Performance Period should be made to reflect
significant events or changes that occur during the Performance Period; and the
number of earned Performance Units that will be settled in cash and/or shares of
Stock.
11.4. Settlement of Performance Units shall be subject to the following:
(a) The Committee will compare the actual performance to the performance
measures established for the Performance Period and determine the number of
Performance Units as to which settlement is to be made;
(b) Settlement of Performance Units earned shall be wholly in cash, wholly
in Stock or in a combination of the two, to be distributed in a lump sum or
installments, as determined by the Committee; and
14
(c) Shares of Stock distributed in settlement of Performance Units shall be
subject to such vesting requirements and other conditions, if any, as the
Committee shall determine, including, without limitation, restrictions of the
type that may be imposed with respect to Restricted Stock under Section 8.
11.5. Except as otherwise provided by the Committee, any Award of Performance
Units which is not earned by the end of the Performance Period shall be
forfeited. If a Participant's Date of Termination occurs prior to the end of a
Performance Period, the Committee, in its sole discretion, may determine that
the Participant will be entitled to settlement of all, any portion, or none of
the Performance Units as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Performance
Units or make such other adjustments as the Committee, in its sole discretion,
deems desirable.
SECTION 12
Stock Purchase Program
12.1. The Committee may, from time to time, establish one or more programs under
which Employees will be permitted to purchase shares of Stock under the Plan,
and shall designate the Employees eligible to participate under such Stock
purchase programs. The purchase price for shares of Stock available under such
programs, and other terms and conditions of such programs, shall be established
by the Committee. The purchase price may not be less than 75% of the Fair Market
Value of the Stock at the time of purchase (or, in the Committee's discretion,
the average Stock value over a period determined by the Committee), and further
provided that if newly issued shares of Stock are sold, the purchase price may
not be less than the aggregate par value of such newly issued shares of Stock.
12.2. The Committee may impose such restrictions with respect to shares
purchased under this Section 12, as the Committee, in its sole discretion,
determines to be appropriate. Such restrictions may include, without limitation,
restrictions of the type that may be imposed with respect to Restricted Stock
under Section 8.
SECTION 13
Merit Awards
13.1. The Committee may from time to time make an Award of Stock under the Plan
to selected Employees for such reasons and in such amounts as the Committee, in
its sole discretion, may determine. The consideration to be paid by an Employee
for any such Merit Award, if any, shall be fixed by the Committee from time to
time, but, if required by the General Corporation Law of the State of Delaware,
it shall not be less than the aggregate par value of the shares of Stock awarded
to him or her.
15
SECTION 14
Phantom Stock Awards
14.1. The Committee may make Phantom Stock Awards to selected Employees which
may be based solely on the value of the underlying shares of Stock, solely on
any earnings or appreciation thereon, or both. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority to determine the
number of hypothetical or target shares as to which each such Phantom Stock
Award is subject and to determine the terms and conditions of each such Phantom
Stock Award. There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected Employee, and the terms and conditions of
each such Phantom Stock Award may differ from each other.
14.2. The Committee shall establish vesting or performance measures for each
Phantom Stock Award on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time, in its sole discretion,
determine. Such measures may be based on years of service or periods of
employment, or the achievement of individual or corporate performance
objectives, but shall, in each instance, be based upon one or more of the
business criteria as determined pursuant to Section 4.7. The vesting and
performance measures determined by the Committee shall be established at the
time a Phantom Stock Award is made. Phantom Stock Awards may not be sold,
assigned, transferred, pledged, or otherwise encumbered, except as provided in
Section 17, during the Performance Period.
14.3. The Committee shall determine, in its sole discretion, the manner of
payment, which may include cash or shares of Stock in such proportions as the
Committee shall determine.
14.4. Except as otherwise provided by the Committee, any Award of Phantom Stock
which is not earned by the end of the Performance Period shall be forfeited. If
a Participant's Date of Termination occurs prior to the end of a Performance
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all or a portion of the Phantom
Stock for which he or she would otherwise be eligible, and may accelerate the
determination of the value and settlement of Phantom Stock or make such other
adjustment as the Committee, in its sole discretion, deems desirable.
16
SECTION 15
Termination of Employment
15.1. If a Participant's employment is terminated by the Participant's Employer
for Cause or if the Participant's employment is terminated by the Participant
without the written consent and approval of the Participant's Employer, all of
the Participant's unvested Awards, including any unexercised Options, shall be
forfeited.
15.2. If a Participant's Date of Termination occurs by reason of death,
Disability or Retirement, all Options and Stock Appreciation Rights outstanding
immediately prior to the Participant's Date of Termination shall immediately
become exercisable and shall be exercisable until one year from the
Participant's Date of Termination and thereafter shall be forfeited if not
exercised, and all restrictions on any Awards outstanding immediately prior to
the Participant's Date of Termination shall immediately lapse. Options and Stock
Appreciation Rights which are or become exercisable at the time of a
Participant's death may be exercised by the Participant's designated beneficiary
or, in the absence of such designation, by the person to whom the Participant's
rights will pass by will or the laws of descent and distribution.
15.3. If a Participant's Date of Termination occurs by reason of Participant's
employment being terminated by the Participant's Employer for any reason other
than Cause, or by the Participant with the written consent and approval of the
Participant's Employer, the Restricted Period shall lapse on a proportion of any
Awards outstanding immediately prior to the Participant's Date of Termination
(except that, to the extent that an Award of Restricted Stock, Restricted Stock
Units, Performance Units, Performance Stock and Phantom Stock is subject to a
Performance Period), such proportion of the Award shall remain subject to the
same terms and conditions for vesting as were in effect prior to the Date of
Termination and shall be determined at the end of the Performance Period. The
proportion of an Award upon which the Restricted Period shall lapse shall be a
fraction, the denominator of which is the total number of months of any
Restricted Period applicable to an Award and the numerator of which is the
number of months of such Restricted Period which elapsed prior to the Date of
Termination.
15.4. Options and Stock Appreciation Rights which are or become exercisable by
reason of the Participant's employment being terminated by the Participant's
Employer for reasons other than Cause or by the Participant with the consent and
approval of the Participant's Employer, shall be exercisable until 60 days from
the Participant's Termination Date and shall thereafter be forfeited if not
exercised.
15.5. Except to the extent the Company shall otherwise determine, if, as a
result of a sale or other transaction (other than a Change in Control), a
Participant's Employer ceases to be a Related Company (and the Participant's
Employer is or becomes an entity that is separate from the Company), the
occurrence of such transaction shall be treated as the Participant's Date of
Termination caused by the Participant's employment being terminated by the
Participant's Employer for a reason other than Cause.
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15.6. Notwithstanding the foregoing provisions of this Section 15, the Committee
may, with respect to any Awards of a Participant (or portion thereof) that are
outstanding immediately prior to the Participant's Date of Termination,
determine that a Participant's Date of Termination will not result in forfeiture
or other termination of the Award, or may extend the period during which any
Options or Stock Appreciation Rights may be exercised, but shall not extend such
period beyond the expiration date set forth in the Award.
SECTION 16
Adjustments to Shares
16.1. If the Company shall effect a reorganization, merger, or consolidation, or
similar event or effect any subdivision or consolidation of shares of Stock or
other capital readjustment, payment of stock dividend, stock split, spin-off,
combination of shares or recapitalization or other increase or reduction of the
number of shares of Stock outstanding without receiving compensation therefor in
money, services or property, then the Committee shall appropriately adjust (i)
the number of shares of Stock available under the Plan, (ii) the number of
shares of Stock available under any individual or other limitations under the
Plan, (iii) the number of shares of Stock subject to outstanding Awards and (iv)
the per-share price under any outstanding Award to the extent that the
Participant is required to pay a purchase price per share with respect to the
Award.
16.2. If the Committee determines that an adjustment in accordance with the
provisions of Subsection 16.1 would not be fully consistent with the purposes of
the Plan or the purposes of the outstanding Awards under the Plan, the Committee
may make such other adjustments, if any, that the Committee reasonably
determines are consistent with the purposes of the Plan and/or the affected
Awards.
16.3. To the extent that any reorganization, merger, consolidation, or similar
event or any subdivision or consolidation of shares of Stock or other capital
readjustment, payment of stock dividend, stock split, spin-off, combination of
shares or recapitalization or other increase or reduction of the number of
shares of Stock hereunder is also accompanied by or related to a Change in
Control, the adjustment hereunder shall be made prior to the acceleration
contemplated by Section 20.
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SECTION 17
Transferability and Deferral of Awards
17.1. Awards under the Plan are not transferable except by will or by the laws
of descent and distribution. To the extent that a Participant who receives an
Award under the Plan has the right to exercise such Award, the Award may be
exercised during the lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this Section 17, the Committee may,
subject to any restrictions under applicable securities laws, permit Awards
under the Plan (other than an Incentive Stock Option) to be transferred by a
Participant for no consideration to or for the benefit of the Participant's
Immediate Family (including, without limitation, to a trust for the benefit of a
Participant's Immediate Family or to a Partnership comprised solely of members
of the Participant's Immediate Family), subject to such limits as the Committee
may establish, provided the transferee shall remain subject to all of the terms
and conditions applicable to such Award prior to such transfer.
17.2. The Committee may permit a Participant to elect to defer payment under an
Award under such terms and conditions as the Committee, in its sole discretion,
may determine; provided that any such deferral election must be made prior to
the time the Participant has become entitled to payment under the Award.
SECTION 18
Award Agreement
18.1. Each Participant granted an Award pursuant to the Plan shall sign an Award
Agreement which signifies the offer of the Award by the Company and the
acceptance of the Award by the Participant in accordance with the terms of the
Award and the provisions of the Plan. Each Award Agreement shall reflect the
terms and conditions of the Award. Participation in the Plan shall confer no
rights to continued employment with an Employer nor shall it restrict the right
of an Employer to terminate a Participant's employment at any time for any
reason, not withstanding the fact that the Participant's rights under this Plan
may be negatively affected by such action.
SECTION 19
Tax Withholding
19.1 All Awards and other payments under the Plan are subject to withholding of
all applicable taxes, which withholding obligations shall be satisfied (without
regard to whether the Participant has transferred an Award under the Plan) by a
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cash remittance, or with the consent of the Committee, through the surrender of
shares of Stock which the Participant owns or to which the Participant is
otherwise entitled under the Plan pursuant to an irrevocable election submitted
by the Participant to the Company at the office designated for such purpose. The
number of shares of Stock needed to be submitted in payment of the taxes shall
be determined using the Fair Market Value as of the applicable tax date rounding
down to the nearest whole share.
SECTION 20
Change in Control
20.1. After giving effect to the provisions of Section 16 (relating to the
adjustment of shares of Stock), and except as otherwise provided in the Plan or
the Agreement reflecting the applicable Award, upon the occurrence of a Change
in Control:
(a) All outstanding Options (regardless of whether in tandem with Stock
Appreciation Rights) shall become fully exercisable and may be exercised at any
time during the original term of the Option;
(b) All outstanding Stock Appreciation Rights (regardless of whether in
tandem with Options) shall become fully exercisable and may be exercised at any
time during the original term of the Option;
(c) All shares of Stock subject to Awards shall become fully vested and be
distributed to the Participant; and
(d) Performance Units may be paid out in such manner and amounts as may be
reasonably determined by the Committee.
SECTION 21
MERGERS / ACQUISITIONS
21.1 In the event of any merger or acquisition involving the Company and/or a
Subsidiary of the Company and another entity which results in the Company being
the survivor or the surviving direct or indirect parent corporation of the
merged or acquired entity, the Committee may grant Awards under the provisions
of the Plan in substitution for awards held by employees or former employees of
such other entity under any plan of such entity immediately prior to such merger
or acquisition upon such terms and conditions as the Committee, in its
discretion, shall determine and as otherwise may be required by the Code to
ensure such substitution is not treated as the grant of a new Award for tax or
accounting purposes.
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21.2 In the event of a merger or acquisition involving the Company in which the
Company is not the surviving corporation, the Acquiring Corporation shall either
assume the Company's rights and obligations under outstanding Awards or
substitute awards under the Acquiring Corporation's plans, or if none,
securities for such outstanding Awards. In the event the Acquiring Corporation
elects not to assume or substitute for such outstanding Awards, and without
limiting Section 20, the Board shall provide that any unexercisable and/or
unvested portion of the outstanding Awards shall be immediately exercisable and
vested as of a date prior to such merger or consolidation, as the Board so
determines. The exercise and/or vesting of any Award that was permissible solely
by reason of this Section 21.2 shall be conditioned upon the consummation of the
merger or consolidation. Unless otherwise provided in the Plan or the Award, any
Awards which are neither assumed by the Acquiring Corporation nor exercised on
or prior to the date of the transaction shall terminate effective as of the
effective date of the transaction.
SECTION 22
Termination and Amendment
22.1 The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (a) increase the aggregate number of shares of Stock
which may be issued under the Plan, (b) would change the method of determining
the exercise price of Options, other than to change the method of determining
Fair Market Value of Stock as set forth in Section 2.1(o) of the Plan, or (c)
materially modify the requirements as to eligibility for participation in the
Plan, shall be subject to the approval of the Company's stockholders, except
that any such increase or modification that may result from adjustments
authorized by Section 16 does not require such approval. No suspension,
termination, modification or amendment of the Plan may terminate a Participant's
existing Award or materially and adversely affect a Participant's rights under
such Award without the Participant's consent.
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