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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- - - - - - - - - - - - -
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 1, 1998
Arch Coal, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-13105 43-0921172
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
CityPlace One, Suite 300, Creve Coeur, Missouri 63141
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (314) 994-2700
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
On June 1, 1998, Arch Coal, Inc. (the "Company" or "Arch Coal") acquired
Atlantic Richfield Company's ("ARCO's") Colorado and Utah coal operations and
simultaneously combined the acquired ARCO operations and the Company's Wyoming
operations with ARCO's Wyoming operations in a new joint venture to be known as
Arch Western Resources, LLC ("Arch Western"). The principal operating units of
Arch Western are Thunder Basin Coal Company, LLC, a Delaware limited liability
company owned 100% by Arch Western, that operates two coal mines in the Southern
Powder River Basin in Wyoming; Mountain Coal Company, LLC, a Delaware limited
liability company owned 100% by Arch Western, that operates a coal mine in
Colorado; Canyon Fuel Company, LLC, a Delaware limited liability company 65%
owned by Arch Western and 35% by ITOCHU Coal, Inc., a subsidiary of ITOCHU
Corporation, that operates three coal mines in Utah; and Arch of Wyoming LLC, a
Delaware limited liability company owned 100% by Arch Western, that operates two
coal mines in the Carbon Basin of Wyoming.
Arch Western is 99% owned by Arch Coal and 1% owned by ARCO. The
transaction is valued at approximately $1.14 billion, and Arch Coal will manage
the joint venture. The transaction will be accounted for as a purchase. As was
the case prior to the acquisition, the acquired ARCO operations will produce
low-sulfur coal, primarily for sale to domestic utility customers.
Upon completion of this acquisition, Arch Coal became the nation's second
largest coal producer with annual sales of nearly 110 million tons. In 1997,
ARCO's U.S. coal operations, including its 65% interest in Canyon Fuel Company,
LLC, generated revenues of $547 million and after-tax operating income of $32
million on the sale of 53.2 million tons of low-sulfur coal. On a pro forma
basis after giving effect to the ARCO transaction as of January 1, 1997, Arch
Coal had total 1997 revenues of approximately $1.8 billion, total assets at
December 31, 1997 of $2.8 billion and debt at December 31, 1997 of approximately
$1.4 billion. The total measured and indicated coal reserves of the acquired
ARCO operations are estimated to be approximately 1.3 billion tons.
In connection with the acquisition, the Company entered into three new
5-year credit facilities: a $675 million non-amortizing term loan to Arch
Western, a $300 million fully amortizing term loan to Arch Coal, and a $600
million revolver to Arch Coal. Borrowings under the new Arch Coal revolving
facility were used to finance the acquisition of ARCO's Colorado and Utah coal
operations, to pay related
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fees and expenses, to refinance existing corporate debt and for general
corporate purposes. Borrowings under the Arch Western credit facility were used
to fund a portion of a $700 million cash distribution by Arch Western to ARCO,
which distribution occurred simultaneously with ARCO's contribution of its
Wyoming coal operations to Arch Western. The Arch Western credit facility is not
guaranteed by the Company. On a historical basis, at December 31, 1997, Arch
Coal's debt was 31% of capital employed. On a pro-forma basis, at December 31,
1997, giving effect to the consummation of the ARCO Coal transaction, Arch
Coal's debt would have been approximately 70% of capital employed.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
---------------------------------------------------------
(a) The following consolidated financial statements of ARCO Coal Company
are filed as part of this Current Report on Form 8-K*:
ARCO Coal and Subsidiaries
--------------------------
Report of Coopers & Lybrand LLP, Independent Auditors;
Consolidated Balance Sheet at December 31, 1997 and 1996;
Consolidated Statement of Income for the years ended December 31,
1997, 1996 and 1995;
Consolidated Statement of Cash Flows for the years ended December
31, 1997, 1996 and 1995;
Notes to Consolidated Financial Statements;
Consolidated Balance Sheet at March 31, 1998 (unaudited) and
December 31, 1997;
Consolidated Statement of Income for the three month periods ended
March 31, 1998 and 1997 (unaudited);
Consolidated Statement of Cash Flows for the three month periods
ended March 31, 1998 and 1997 (unaudited); and
Notes to Consolidated Financial Statements.
3
Canyon Fuel Company, LLC
------------------------
Report of Coopers & Lybrand, LLP, Independent Auditors;
Balance Sheet at December 31, 1997;
Statement of Operations for the period from December 20, 1996
(inception) through December 31, 1997;
Statement of Members' Equity for the period from December 20, 1996
(inception) through December 31, 1997;
Statements of Cash Flows for the period from December 20, 1996
(inception) through December 31, 1997; and
Notes to Financial Statements.
-----------------------------
* To be filed by amendment pursuant to Form 8-K, Item 7(a) (4)
within 60 days after this report was required to be filed.
(b) The following unaudited pro forma financial information is filed as
part of this Current Report on Form 8-K*:
Unaudited Pro Forma Financial Information;
Unaudited Pro Forma Combined Balance Sheet as of March 31, 1998;
Notes to Unaudited Pro Forma Combined Balance Sheet as of March
31, 1998;
Unaudited Pro Forma Combined Statement of Income for the year ended
December 31, 1997;
Notes to Unaudited Pro Forma Combined Statement of Income for the
year ended December 31, 1997;
Unaudited Pro Forma Combined Statement of Income for the three
months ended March 31, 1998; and
Notes to Unaudited Pro Forma Combined Statement of Income for the
three months ended March 31, 1998.
-----------------------------
* To be filed by amendment pursuant to Form 8-K, Item 7(a)(4) within
60 days after this report was required to be filed.
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(c) The following Exhibits are filed with or incorporated by reference
as part of this Current Report on Form 8-K:
Exhibit No. Description
----------- -----------
2.1 Purchase and Sale Agreement dated as of
March 22, 1998 among Atlantic Richfield
Company, ARCO Uinta Coal Company, Arch Coal,
Inc. and Arch Western Acquisition
Corporation**
2.2 Contribution Agreement among Arch Coal,
Inc., Arch Western Arch Western Acquisition
Corporation, Atlantic Richfield Company,
Delta Housing Inc. and Arch Western
Resources LLC dated as of March 22, 1998**
2.3 Limited Liability Company Agreement of Arch
Western Resources LLC, dated as of June 1,
1998 between Arch Western Acquisition
Corporation and Delta Housing Inc.
2.4 Tax Sharing Agreement dated as of June 1,
1998 by and among Arch Coal, Inc., Arch
Western Acquisition Corporation, Arch
Western Resources LLC and Delta Housing Inc.
4.1 $600,000,000 Revolving Credit Facility,
$300,000,000 Term Loan Credit Agreement by
and among Arch Coal, Inc., the Lenders party
thereto, PNC Bank, National Association, as
Administrative Agent, Morgan Guaranty Trust
Company of New York, as Syndication Agent,
and First Union National Bank, as
Documentation Agent dated as of June 1,
1998
5
4.2 $675,000,000 Term Loan Credit Agreement by
and among Arch Western Resources, LLC, the
Banks party thereto, PNC Bank, National
Association, as Administrative Agent, Morgan
Guaranty Trust Company of New York, as
Syndication Agent, and NationsBank N.A., as
Documentation Agent dated as of June 1,
1998
4.3 Omnibus Amendment Agreement dated as of June
1, 1998 in respect of Arch Coal Trust No.
1998-1, Parent Guaranty and Suretyship
Agreement, Lease Intended as Security,
Subsidiary Guaranty and Suretyship Agreement
each dated as of January 15, 1998, among
Apogee Coal Company, Catenary Coal Company,
Hobet Mining, Inc., Arch Coal, Inc., Great-
West Life & Annuity Insurance Company, Bank
of Montreal, Barclays Bank, PLC, First Union
National Bank, BA Leasing and Capital
Corporation, First Security Bank, National
Association, Arch Coal Sales Company, Inc.,
Ark Land Company and Mingo Logan Coal
Company
23.1 Consent of Coopers & Lybrand LLP***
-----------
Certain exhibits and schedules to the Exhibits filed herewith have
been omitted in accordance with Item 601(b)(2) of Regulation S-K. A
copy of any omitted exhibit or schedule will be furnished to the
Commission upon request.
** Portions of the exhibit have been omitted pursuant to a request
for confidential treatment.
*** To be filed by amendment concurrently with the filing of Item
7(a) information.
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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 hereunto duly authorized.
Dated: June 15, 1998 ARCH COAL, INC.
By: /s/ Jeffry N. Quinn
-----------------------------
Jeffry N. Quinn
Senior Vice President -
Law & Human Resources,
General Counsel and Secretary
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
2.1 Purchase and Sale Agreement dated as of
March 22, 1998 among Atlantic Richfield
Company, ARCO Uinta Coal Company, Arch Coal,
Inc. and Arch Western Acquisition
Corporation*
2.2 Contribution Agreement among Arch Coal,
Inc., Arch Western Arch Western Acquisition
Corporation, Atlantic Richfield Company,
Delta Housing Inc. and Arch Western
Resources LLC dated as of March 22, 1998*
2.3 Limited Liability Company Agreement of
Arch Western Resources LLC, dated as of June
1, 1998 between Arch Western Acquisition
Corporation and Delta Housing Inc.
2.4 Tax Sharing Agreement dated as of June 1,
1998 by and among Arch Coal, Inc., Arch
Western Acquisition Corporation, Arch
Western Resources LLC and Delta Housing Inc.
4.1 $600,000,000 Revolving Credit Facility,
$300,000,000 Term Loan Credit Agreement by
and among Arch Coal, Inc., the Lenders party
thereto, PNC Bank, National Association, as
Administrative Agent, Morgan Guaranty Trust
Company of New York, as Syndication Agent,
and First Union National Bank, as
Documentation Agent dated as of June 1,
1998
4.2 $675,000,000 Term Loan Credit Agreement by
and among Arch Western Resources, LLC, the
Banks party thereto, PNC Bank, National
Association, as Administrative Agent, Morgan
Guaranty Trust Company of New York, as
Syndication Agent, and NationsBank N.A., as
Documentation Agent dated as of June 1,
1998
4.3 Omnibus Amendment Agreement dated as of June
1, 1998 in respect of Arch Coal Trust No.
1998-1, Parent Guaranty and Suretyship
Agreement, Lease Intended as Security,
Subsidiary Guaranty and Suretyship Agreement
each dated as of January 15, 1998, among
Apogee Coal Company, Catenary Coal Company,
Hobet Mining, Inc., Arch Coal, Inc., Great-
West Life & Annuity Insurance Company, Bank
of Montreal, Barclays Bank, PLC, First Union
National Bank, BA Leasing and Capital
Corporation, First Security Bank, National
Association, Arch Coal Sales Company, Inc.,
Ark Land Company and Mingo Logan Coal
Company
-----------------
Certain exhibits and schedules to the Exhibits filed herewith
have been omitted in accordance with Item 601(b)(2) of
Regulation S-K. A copy of any omitted exhibit or schedule will
be furnished to the Commission upon request.
* Portions of the exhibit have been omitted pursuant to a request
for confidential treatment.
EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
AMONG
ATLANTIC RICHFIELD COMPANY,
ARCO UINTA COAL COMPANY,
ARCH COAL, INC.,
AND
ARCH WESTERN ACQUISITION CORPORATION
* Portions of this document have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 24b-2 under the U.S.
Securities Exchange Act of 1934, as amended. Such portions have been
filed separately with the Commission and are identified in this
document by the following legend: "[Confidential Treatment
Requested]*."
TABLE OF CONTENTS
ARTICLE 1 Definitions.........................................................1
1.1 Definitions ...........................................................1
1.2 Cross References, Interpretation ......................................9
ARTICLE 2 Purchase and Sale of LLC Interests..................................9
2.1 Sale of LLC Interests .................................................9
2.2 Payment of Purchase Price .............................................9
2.3 Adjustment to Unadjusted Purchase Price ...............................9
2.4 Transfer Taxes .......................................................11
ARTICLE 3 Closing............................................................11
3.1 Other Transactions ...................................................11
3.2 Closing Date .........................................................12
3.3 ARCO and Seller's Deliveries .........................................12
3.4 Arch's and Buyer's Deliveries ........................................13
3.5 Simultaneous Transactions ............................................14
ARTICLE 4 Representations and Warranties of ARCO and Seller..................14
4.1 Organization and Good Standing of ARCO and Seller ....................14
4.2 Authority ............................................................14
4.3 No Violations ........................................................14
4.4 Approvals, Consents and Other Actions ................................14
4.5 Formation and Good Standing of the Companies .........................14
4.6 Title to the LLC Interests ...........................................15
4.7 Capitalization .......................................................15
4.8 Real Property ........................................................15
4.9 Buildings, Structures and Tangible Personal Property; Other
Securities ...........................................................16
4.10 Material Contracts ...................................................16
4.11 Insurance Policies ...................................................16
4.12 Taxes ................................................................16
4.13 Licenses, Permits, Authorizations ....................................17
4.14 Litigation ...........................................................17
4.15 Compliance with Laws .................................................17
4.16 Labor Matters ........................................................17
4.17 Employee Benefit Plans ...............................................17
4.18 Bank Accounts ........................................................19
4.19 Broker Liability .....................................................19
4.20 Financial Statements .................................................19
4.21 Black Lung Disclosure ................................................19
4.22 Conduct of Business ..................................................20
4.23 Assets ...............................................................20
4.24 CERCLA................................................................20
4.25 Disclaimer of Certain Representations and Warranties .................20
4.26 No Other Commitment to Sell LLC Interests ............................20
4.27 Absence of Undisclosed Liabilities ...................................20
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ARTICLE 5 Representations and Warranties of Arch and Buyer...................21
5.1 Organization and Good Standing .......................................21
5.2 Authority ............................................................21
5.3 No Violations ........................................................21
5.4 Approvals and Consents ...............................................21
5.5 Financial Capability .................................................21
5.6 Accredited Investor ..................................................21
5.7 Investment Intent ....................................................21
5.8 Arch's and Buyer's Inquiry ...........................................22
5.9 Broker Liability .....................................................22
5.10 Qualification, Compliance with Acreage Limitations ...................22
5.11 No Independent Contact with ITOCHU ...................................22
ARTICLE 6 Covenants and Agreements of the Parties............................22
6.1 Access to Information ................................................22
6.2 Conduct of the Business Pending the Closing ..........................24
6.3 Notification .........................................................24
6.4 Antitrust Notification ...............................................24
6.5 Fees and Expenses ....................................................25
6.6 Publicity ............................................................25
6.7 Post-Closing Assistance ..............................................25
6.8 Guarantees ...........................................................25
6.9 Name Changes .........................................................25
6.10 Surety Bonds .........................................................26
6.11 Black Lung Liability .................................................26
6.12 Litigation Support ...................................................26
6.13 Insurance ............................................................27
6.14 Arch's and Buyer's Environmental Responsibilities ....................27
6.15 ARCO's and Seller's Environmental Responsibilities ..................27
6.16 Other Liabilities ....................................................27
6.17 ITOCHU Buy/Sell Agreement ............................................28
6.18 Commercially Reasonable Efforts ......................................28
6.19 [Confidential Treatment Requested]*...................................28
6.20 Substitute Member in CFC Agreement ...................................30
6.21 West Elk Mine Surface Facilities .....................................30
6.22 Disclosure Schedules .................................................31
ARTICLE 7 Employees and Employee Benefits....................................31
7.1 Retention of Employees and Continuation of Benefits ..................31
7.2 Retention of Retirement Plans for Companies ..........................31
7.3 ARCO's Pension Plan ..................................................32
7.4 Thrift Plan ..........................................................32
7.5 Other Employee Benefits ..............................................32
7.6 Flexible Spending Accounts ...........................................33
7.7 Cooperation ..........................................................33
7.8 Black Lung Matters ...................................................33
7.9 Employee Termination by Buyer ........................................33
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ARTICLE 8 Taxes..............................................................34
8.1 Certain Tax Matters ..................................................34
ARTICLE 9 Indemnification....................................................35
9.1 Arch's and Buyer's Indemnification ...................................35
9.2 ARCO's and Seller's Indemnification ..................................36
9.3 Monetary Limitation ..................................................36
9.4 Nature and Survival; Time Limits .....................................37
9.5 Limitation on Remedies; Mitigation ...................................37
9.6 General Provisions ...................................................37
9.7 Tax Treatment ........................................................38
ARTICLE 10 Conditions to Closing.............................................39
10.1 Conditions Precedent to Obligations of Arch and Buyer ...............39
10.2 Conditions Precedent to Obligations of ARCO and Seller ..............40
ARTICLE 11 Termination of Agreement..........................................41
11.1 Termination Before Closing ..........................................41
11.2 Effect of Termination ...............................................41
ARTICLE 12 Miscellaneous.....................................................41
12.1 Entire Agreement ....................................................41
12.2 Construction ........................................................42
12.3 Governing Law .......................................................42
12.4 Notices .............................................................42
12.5 Waiver ..............................................................42
12.6 Binding Effect; Assignment ..........................................43
12.7 Amendment ...........................................................43
12.8 Counterparts ........................................................43
12.9 No Third Party Beneficiaries ........................................43
12.10 Jurisdiction; Service of Process ....................................43
12.11 Disclaimer for Communications .......................................44
ATTACHMENTS
Disclosure Schedule
Exhibit A (referenced in Section 1.1, "Preliminary Interim Date Balance
Sheet" definition)
Exhibit B (referenced in Section 1.1, "Seller's Knowledge" definition)
Exhibit C (referenced in Section 7.9(b))
Exhibit D (referenced in Section 12.10(b))
iii
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into as of March 22, 1998 (the "Effective Date"), among Atlantic Richfield
Company, a Delaware corporation ("ARCO"), ARCO Uinta Coal Company, a Delaware
corporation ("Seller"), Arch Western Acquisition Corporation, a Delaware
corporation ("Buyer"), and Arch Coal, Inc., a Delaware corporation ("Arch").
Recitals
A. On the Closing Date, Seller will be the owner of (i) all of the
membership interests in Mountain Coal Company L.L.C., a Delaware limited
liability company ("MCC"), (ii) all of the membership interests in a Delaware
limited liability company to be formed by Seller ("AU Sub"), and (iii) 65% of
the membership interests in Canyon Fuel Company, LLC, a Delaware limited
liability company ("CFC," and together with MCC and AU Sub, collectively the
"Companies," and each individually, a "Company"). Seller's 65% membership
interest in CFC is referred to herein as the "CFC Interests," and the CFC
Interests, together with Seller's membership interest in MCC and AU Sub, are
referred to herein as the "LLC Interests."
B. Subject to the terms and conditions hereof, Buyer wishes to purchase
from Seller, and Seller wishes to sell to Buyer, all of the LLC Interests on the
terms and subject to the conditions set forth herein.
C. Simultaneously with the execution and delivery of this Agreement, ARCO,
Delta Housing Inc., a Delaware corporation ("Delta"), Arch, Buyer and Arch
Western Resources LLC, a Delaware limited liability company, are entering into a
Contribution Agreement (the "Contribution Agreement").
D. The satisfaction of the conditions precedent to closing set forth in
the Contribution Agreement are conditions precedent to the Closing of the
transactions and obligations set forth in this Agreement.
Agreement
In consideration of, and subject to, the mutual promises, agreements,
terms and conditions made herein, and intending to be legally bound, the parties
agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used herein, the following terms shall have the
meanings set forth below:
"ACC" shall mean the United States assets of ARCO Coal Company, a division
of ARCO.
"Adjustment" shall have the meaning set forth in Section 2.3(b).
[Confidential Treatment Requested]*
[Confidential Treatment Requested]*
"Affiliate" of any specified Person shall mean any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, such specified Person, and the
term "affiliated with" shall have a correlative meaning. For the purposes of
this definition, "control" (including with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise. As used with respect to ARCO, "Affiliate" shall not include ARCO
Chemical Company, a Delaware corporation, or Vastar Resources, Inc., a Delaware
corporation. As used with respect to Arch (except for the purposes of Section
9.2), "Affiliate" shall not include Ashland Inc., a Kentucky corporation, or any
of its subsidiaries other than Arch.
"Agent" shall have the meaning set forth in Section 12.10(b).
"Agreement" shall have the meaning set forth in the introduction to this
Agreement.
"Antitrust Division" shall have the meaning set forth in Section 6.4.
"Applicable Rate" shall mean six percent per annum.
"Arch" shall have the meaning set forth in the introduction to this
Agreement.
"ARCO" shall have the meaning set forth in the introduction to this
Agreement.
"ARCO Accumulation and Savings Plans" shall have the meaning set forth in
Section 7.4.
"ARCO Retirement Plan" shall have the meaning set forth in Section 7.3.
"Audited Financial Statements" shall have the meaning set forth in Section
2.3(a).
"AU Sub" shall have the meaning set forth in the Recitals to this
Agreement.
"Bankruptcy" shall mean (i) the commencement of any voluntary or
involuntary bankruptcy case by or against a Person as debtor under Title 11 of
the United States Code or any successor or equivalent statute, (ii) the
insolvency or inability of a Person
2
to satisfy its obligations as they become due or (iii) the general assignment by
any Person for the benefit of creditors under state Law.
"Black Lung Discount Rate" shall mean seven percent per annum.
"Buyer" shall have the meaning set forth in the introduction to this
Agreement.
"Buyer Indemnitees" shall have the meaning set forth in Section 9.2.
"Buyer's Retirement Plan" shall have the meaning set forth in Section 7.3.
"Buyer's Savings Plan" shall have the meaning set forth in Section 7.4.
"CERCLA" shall mean the Federal Comprehensive Environmental Response,
Compensation and Liability Act (as amended by the Superfund Amendments and
Reauthorization Act of 1986).
"CFC" shall have the meaning set forth in the Recitals to this Agreement.
"CFC Agreement" shall mean the Second Amended and Restated Limited
Liability Company Agreement of Canyon Fuel Company, LLC, dated as of January 1,
1997, as in effect on the Closing Date.
"CFC Interests" shall have the meaning set forth in the Recitals to this
Agreement.
"Closing" shall have the meaning set forth in Section 3.2.
"Closing Date" shall have the meaning set forth in Section 3.2.
"Closing Date Balance Sheet" shall mean the unaudited, pro forma,
combined, consolidated balance sheet of the Companies as of the close of
business on the Closing Date, which shall be derived from the combined,
consolidated unaudited balance sheet of ACC as of the same date, prepared as
though the Proposed Transactions had not been consummated. The Closing Date
Balance Sheet shall be prepared on a basis consistent with the Interim Date
Balance Sheet.
"Closing Date Members' Equity" shall have the meaning set forth in Section
2.3(b).
[Confidential Treatment Requested]*
[Confidential Treatment Requested]*
3
[Confidential Treatment Requested]*
[Confidential Treatment Requested]*
"Code" shall mean the Internal Revenue Code of 1986, as amended.
[Confidential Treatment Requested]*
"Combined Buyer's Losses" shall have the meaning set forth in Section
9.3(a).
"Company" or "Companies" shall have the meaning set forth in the Recitals
to this Agreement.
"Contribution Agreement" shall have the meaning set forth in the Recitals
to this Agreement.
"Delta" shall have the meaning set forth in the Recitals to this
Agreement.
"Disagreement Notice" shall have the meaning set forth in Section 2.3(c).
"Disclosure Schedule" shall mean the Disclosure Schedule attached to this
Agreement and incorporated herein for all purposes, which is the same Disclosure
Schedule as is attached to and incorporated in the Contribution Agreement.
"Effective Date" shall have the meaning set forth in the introduction to
this Agreement.
"Employees" shall have the meaning set forth in Section 4.17(a).
"Environmental Laws" shall mean Laws aimed at abatement of pollution;
protection of the environment; ensuring public safety from environmental
hazards; management, storage or control of Hazardous Materials; releases or
threatened releases of Hazardous Materials into the environment, including
ambient air, surface water and groundwater; and all other Laws relating to the
manufacturing, processing, distribution, use, treatment, storage, disposal,
handling or transportation of Hazardous Materials, including CERCLA, Clean Air
Act, Clean Water Act, Solid Wastes Disposal Act (as amended by the Resource
Conservation and Recovery Act), Toxic Substances Control Act, Emergency Planning
and Community Right to Know Act, Surface Mining Control and Reclamation Act,
Mine Safety and Health Act, Safe Drinking Water Act and any regulations issued
under each of such statutes, and any state or local counterparts, and any other
Laws to the extent relating to reclamation of lands affected by mining.
4
"Environmental Liabilities" shall mean any and all claims, actions, causes
of action, damages, losses, liabilities, obligations, penalties, judgments,
amounts paid in settlement, assessments, costs, disbursements or expenses
(including attorneys' fees and costs, experts' fees and costs and consultants'
fees and costs) of any kind or nature (including those absolute, accrued or
contingent, unknown or otherwise and including further, liability for study,
testing or investigatory costs, cleanup costs, response costs, removal costs,
remediation costs, containment costs, restoration costs, corrective action costs
or business losses) arising out of, based on, resulting from or alleging (i) the
presence, release, threatened release, discharge or emission into the
environment of any Hazardous Materials existing or arising on, beneath or above
any property, including claims with respect to other properties based upon
claims relating to migration or emanation (or threatened migration or emanation)
of Hazardous Materials from the property to such other properties, whether or
not immediately adjacent to the property, (ii) the violation of any
Environmental Laws involving any property, including claims with respect to
other properties based upon claims relating to migration or emanation (or
threatened migration or emanation) of Hazardous Materials from the property to
such other properties, whether or not immediately adjacent to the property, and
(iii) natural resources damages, penalties or fines, or property damages or
personal injuries claimed by private (non-governmental) parties.
"ERISA" shall have the meaning set forth in Section 4.17(a).
"Final Judgment" shall mean a judgment by a court of competent
jurisdiction or a binding award in arbitration from which no further appeal or
review may be taken, a settlement or a confession of judgment.
"FTC" shall have the meaning set forth in Section 6.4.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States, from time to time.
"Hazardous Materials" shall mean any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radio active or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor, PCBs and asbestos or
asbestos-containing materials.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" shall have the meaning set forth in Section 9.6(a).
[Confidential Treatment Requested]*
"Indemnifying Party" shall have the meaning set forth in Section 9.6(a).
5
"Independent Accountants" shall have the meaning set forth in Section
2.3(d).
"Intended Use" shall have the meaning set forth in Section 6.21(a).
"Interim Date" shall mean December 31, 1997.
"Interim Date Balance Sheet" shall mean the unaudited, pro forma,
combined, consolidated, balance sheet for the Companies, which shall be derived
from and consistent with the combined, consolidated audited balance sheet of ACC
as of the close of business on the Interim Date. The Interim Date Balance Sheet
shall be prepared on a basis consistent with the Preliminary Interim Date
Balance Sheet and, except for changes with respect to corporate adjustments and
income tax calculations and the effect thereof on total member's equity in the
Companies, will be substantially identical to the Preliminary Interim Date
Balance Sheet.
"Interim Date Members' Equity" shall have the meaning set forth in Section
2.3(b).
"ITOCHU" shall mean ITOCHU Coal International Inc.
"Laws" shall mean all existing Federal, state and local laws (statutory or
common), rules, ordinances, regulations, grants, leases, orders, directives,
judgments, decrees and other governmental restrictions of any kind or nature,
including permits and other similar requirements, whether legislative,
municipal, administrative or judicial in nature.
"LLC Interests" shall have the meaning set forth in the Recitals to this
Agreement.
"Losses" shall have the meaning set forth in Section 9.3(a).
"Material Adverse Effect" (i) as used in Sections 3.3(i), 6.22, 10.1(a)
and 11.1(b), shall mean a breach or breaches of the representations and
warranties of ARCO and/or Seller under this Agreement and ARCO and/or Delta
under the Contribution Agreement that in the aggregate, if the Proposed
Transactions were consummated, would give rise to indemnification obligations
owed to Buyer Indemnitees by ARCO and/or Seller under this Agreement and ARCO
and/or Delta under the Contribution Agreement (without regard to any applicable
limits in Section 9.3 of this Agreement or Section 10.3 of the Contribution
Agreement), together totaling more than One Hundred and Ten Million Dollars, and
(ii) as used in Section 10.1(g), shall mean (without duplication) the sum of (a)
aggregate reductions in the actual value of the business of the Companies
(excluding any reduction attributable to the portion of CFC's membership
interests owned by ITOCHU) and TBCC, on a combined, consolidated basis and taken
as a whole, resulting from any events or occurrences referred to in Section
10.1(g), and (b) a breach or breaches of the representations and warranties of
ARCO and/or Seller under this Agreement and ARCO and/or Delta under the
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Contribution Agreement that in the aggregate, if the Proposed Transactions were
consummated, would give rise to indemnification obligations owed to Buyer
Indemnitees by ARCO and/or Seller under this Agreement and ARCO and/or Delta
under the Contribution Agreement (without regard to any applicable limits in
Section 9.3 of this Agreement or Section 10.3 of the Contribution Agreement),
together totaling more than One Hundred and Ten Million Dollars.
"MCC" shall have the meaning set forth in the Recitals to this Agreement.
"Other Liabilities"' shall have the meaning set forth in Section 6.16(b).
"Other Properties" shall have the meaning set forth in Section 6.15.
"Participants" shall have the meaning set forth in Section 7.5.
"PBGC" shall have the meaning set forth in Section 4.17(e).
"Performance Bonds" shall have the meaning set forth in Section 6.10.
[Confidential Treatment Requested]*
"Person" shall mean and include, any individual, partnership, joint
venture, corporation, limited liability company, trust, joint-stock company,
unincorporated entity or association, organization or other legal entity.
"Plans" shall have the meaning set forth in Section 4.17(a).
"Post-Closing Surety Bonds" and "Post-Closing Surety Bond" shall have the
meaning set forth in Section 6.10.
"Pre-Closing Tax Period" shall have the meaning set forth in Section
8.1(a).
"Preliminary Interim Date Balance Sheet" shall mean the document attached
as Exhibit A.
"Present Value Benefit" shall mean the present value (based on a discount
rate equal to the short-term applicable federal rate as determined under Section
1274(d) of the Code at the time of determination, and assuming that the
Indemnified Party will be liable for income taxes at all relevant times at the
maximum marginal rates) of any income tax benefit.
"Properties" shall have the meaning set forth in Section 6.14.
"Proposed Transactions" shall have the meaning set forth in Section 3.2.
"Purchase Price" shall have the meaning set forth in Section 2.2.
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"Report" shall have the meaning set forth in Section 2.3(d).
"Retirement Plans" shall have the meaning set forth in Section 7.2.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the introduction to this
Agreement.
"Seller Indemnitees" shall have the meaning set forth in Section 9.1.
"Seller's Group" shall mean ARCO, Seller and any Affiliate of ARCO or
Seller (other than the Companies).
"Seller's Knowledge" shall mean the actual knowledge of the individuals
identified on Exhibit B, without any duty of inquiry.
[Confidential Treatment Requested]*
[Confidential Treatment Requested]*
"Statement" shall have the meaning set forth in Section 2.3(b).
"Substitute Surety Bonds" and "Substitute Surety Bond" shall have the
meaning set forth in Section 6.10.
"Surety Bonds" and "Surety Bond" shall have the meaning set forth in
Section 6.10.
"Surface Movement" shall have the meaning set forth in Section 6.21(a).
"Tax" or "Taxes" shall mean any tax or taxes, similar charge, fee, impost,
levy or other assessment (including income taxes, severance taxes, excise taxes,
sales taxes, franchise taxes, real estate taxes, Transfer Taxes, transfer gain
taxes, value-added taxes, use taxes, ad valorem taxes, withholding taxes,
payroll taxes or minimum taxes), together with any related liabilities,
penalties, fines, additions to tax or interest imposed by the United States or
any state, county, local or foreign government agency or taxing authority, or
any subdivision thereof.
"Tax Return" or "Tax Returns" shall mean all returns, reports, estimates
and information statements relating to, or required to be filed in connection
with any Taxes pursuant to the statutes, rules and regulations of the United
States or any state, county, local or foreign government subdivision, agency or
taxing authority.
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"TBCC" shall mean Thunder Basin Coal Company, L.L.C., a Delaware limited
liability company.
"Transfer Taxes" shall have the meaning set forth in Section 2.4.
"Transferees" shall have the meaning set forth in Section 7.1(a).
"Unadjusted Purchase Price" shall have the meaning set forth in Section
2.2.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 4.20.
"VEBA" shall have the meaning set forth in Section 4.17(a).
"West Elk Surface Movement Event" shall have the meaning set forth in
Section 6.21(b).
1.2 Cross References, Interpretation. References to "Articles" refer to
Articles of this Agreement. References to "Sections" refer to Sections and
subsections of this Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa. Whenever the word "including" is used in this Agreement
it shall be read to mean "including without limitation." The headings in this
Agreement are inserted for convenience only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
ARTICLE 2
PURCHASE AND SALE OF LLC INTERESTS
2.1 Sale of LLC Interests. At the Closing, Seller shall sell, transfer
and deliver to Buyer, and Buyer shall purchase from Seller, the LLC Interests,
subject to the terms and conditions set forth herein.
2.2 Payment of Purchase Price. At the Closing, Buyer shall pay to Seller,
in immediately available funds, by wire transfer to the account or accounts
designated by Seller not later than two days prior to the Closing Date, an
aggregate of Three Hundred Ninety Million U.S. Dollars (U.S.$390,000,000) (the
"Unadjusted Purchase Price"), which shall be subject to the adjustment set forth
in Section 2.3 (as adjusted, the "Purchase Price").
2.3 Adjustment to Unadjusted Purchase Price.
(a) Seller shall deliver to Buyer as soon as available, but in no
event later than 30 days after the Effective Date, the consolidated balance
sheet of ACC at December 31, 1997, and 1996, and its consolidated statements of
income, of equity investment and of cash flows for each of the three years in
the period ended December 31, 1997, together with the related notes thereto and
the respective audit opinion thereon of the independent auditors of ACC (the
"Audited Financial Statements"). Within 30 days after the Effective Date, Seller
shall prepare
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and deliver to Buyer a copy of the Interim Date Balance Sheet. Within 90 days
after the Closing Date, Seller shall prepare and deliver to Buyer the Closing
Date Balance Sheet.
(b) The Unadjusted Purchase Price shall be adjusted (the
"Adjustment") (i) upwards on a dollar-for-dollar basis for up to $10 million of
capital expenditures made by any of the Companies during the period from October
1, 1997, to December 31, 1997; and (ii) upwards or downwards on a
dollar-for-dollar basis for the amount by which total members' equity as
reflected on the Closing Date Balance Sheet (the "Closing Date Members' Equity")
exceeds or is less than total members' equity as reflected on the Interim Date
Balance Sheet (the "Interim Date Members' Equity"). For purposes of the
preceding sentence, the change in total members' equity will include the net
change in intercompany accounts. During the period from the Interim Date through
the Closing Date, intercompany accounts will, in part, (i) increase by
contributions of cash for operating costs and capital by Seller's Group and (ii)
decrease by cash distributions to Seller's Group. In determining the Adjustment,
any change in deferred tax asset or deferred tax liability from that reflected
on the Interim Date Balance Sheet and the corresponding effect on Closing Date
Members' Equity, except for provisions made in the ordinary course related to
income earned since the Interim Date, shall be ignored. If the Closing Date
Members' Equity exceeds the Interim Date Members' Equity, the Buyer shall pay
Seller an amount equal to such excess as set forth below. If the Interim Date
Members' Equity exceeds the Closing Date Members' Equity, the Seller shall pay
Buyer an amount equal to such excess as set forth below. Seller shall prepare
and deliver to Buyer, simultaneously with the delivery of the Closing Date
Balance Sheet, a statement (the "Statement") setting forth in reasonable detail
Seller's calculation of Closing Date Members' Equity.
(c) If Buyer disagrees with the Closing Date Balance Sheet or the
Statement, it shall, within 30 days after the receipt of the Closing Date
Balance Sheet and the Statement, deliver a notice to Seller (the "Disagreement
Notice"), setting forth its calculation of the Adjustment and specifying, in
reasonable detail, those items or amounts in the Closing Date Balance Sheet
and/or the Statement as to which Buyer disagrees and the reasons for such
disagreement. Buyer shall be deemed to have agreed with all items and amounts
contained in the Closing Date Balance Sheet and the Statement other than those
specified in a timely Disagreement Notice. If Buyer does not deliver a
Disagreement Notice to Seller within such 30-day period, Buyer shall be deemed
to have accepted the Closing Date Balance Sheet and the Statement, whereupon the
Closing Date Balance Sheet and the Statement shall become final and binding.
(d) If a Disagreement Notice is timely delivered to Seller pursuant
to this Section 2.3, the parties shall use their good faith efforts to reach
agreement on the disputed items or amounts in order to determine the Adjustment,
which in no event shall be more favorable to Seller than reflected in the
Statement nor more favorable to Buyer than shown in the calculations delivered
by Buyer pursuant to the Disagreement Notice. If the parties do not resolve all
disputed items or amounts within ten business days after delivery of the
Disagreement Notice, this Agreement and the disputed items and amounts will be
submitted to an independent nationally recognized accounting firm without any
current material financial relationship to either Buyer or Seller, or their
respective Affiliates (the "Independent Accountants"), as mutually selected by
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Seller and Buyer, or if Seller and Buyer cannot agree, as recommended by the
independent accountants regularly employed to audit Seller's and Buyer's
financial statements, for determination of the appropriate Adjustment pursuant
to this Section 2.3. The written report of the Independent Accountants (the
"Report") shall be delivered to Seller and Buyer promptly, but in no event later
than 30 days after such disputed items are submitted to the Independent
Accountants, and shall be final, conclusive and binding upon the parties. The
procedures for resolution of disputes concerning the Closing Date Balance Sheet
and the Statement set forth in Sections 2.3(c) and 2.3(d) shall be final and
exclusive of any other litigation, proceeding, contest, appeal or arbitration in
relation thereto, so that no party shall be entitled to subject any claim,
controversy or dispute with respect to the foregoing to arbitration or to any
court or tribunal. The fees and expenses of the Independent Accountants shall be
borne equally by Seller and Buyer.
(e) Within five business days after the final determination of the
Adjustment, Buyer shall pay Seller or Seller shall pay Buyer, as the case may
be, a sum of money equal to the Adjustment, plus interest at the Applicable Rate
from the Closing Date to the date the payment is made. Any amount payable
pursuant to this Section 2.3(e) will be made in immediately available funds to
an account or accounts designated by the party receiving such payment.
(f) From the Closing Date until the final determination of the
Adjustment, Seller, including its officers, employees, agents and
representatives, and the Independent Accountants, shall have access to the
Companies and their books, records and employees who are responsible for
financial matters in order to assist in preparing the Closing Date Balance Sheet
and the Statement and in determining the Adjustment. Buyer shall provide and
shall cause the Companies to provide any assistance reasonably requested by
Seller in connection with the foregoing.
2.4 Transfer Taxes. Buyer shall be solely liable for and shall pay all
applicable sales, transfer, use, stamp, conveyance, value-added, real property
transfer, recording, stock transfer and other similar taxes, if any, together
with all recording or filing fees, notarial fees and other similar costs of
Closing, that may be imposed upon, or payable, collectible or incurred in
connection with the transfer of the LLC Interests to Buyer ("Transfer Taxes").
Buyer shall indemnify and hold harmless any member of Seller's Group with
respect to all Transfer Taxes.
ARTICLE 3
CLOSING
3.1 Other Transactions.
(a) Prior to or concurrently with the Closing, each of Seller and
Buyer shall take, or cause to be taken, the actions required of such party by
this Section 3.1 and in accordance with the transactions contemplated in the
Contribution Agreement.
(b) Prior to the Closing, ARCO shall transfer, or shall cause to be
transferred, to AU Sub the properties, rights or interests indicated as being
owned by AU Sub on the Disclosure Schedule.
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3.2 Closing Date. The closing ("Closing") of the transactions
contemplated herein (the "Proposed Transactions"), including the purchase and
sale of the LLC Interests, shall take place in New York, New York, at a mutually
agreeable site at 10:00 A.M., local time, on the later of (a) 45 days after the
date hereof or (b) the third business day after the satisfaction of all
conditions to Closing set forth in Sections 10.1 and 10.2, or at such other
place or time as the parties may mutually agree. The date upon which the Closing
occurs is referred to in this Agreement as the "Closing Date."
3.3 ARCO's and Seller's Deliveries. ARCO and Seller shall deliver, or
cause to be delivered, to Buyer at the Closing the following:
(a) duly executed assignment documents transferring the LLC
Interests from Seller to Buyer;
(b) all minute books, membership records and other books and records
of the Companies;
(c) a copy, certified as of the Closing Date, by ARCO's or Seller's
Secretary or Assistant Secretary, as the case may be, of the resolutions duly
adopted by the Board of Directors of ARCO and Seller, authorizing the
transactions contemplated by this Agreement;
(d) short form certificates of existence and/or good standing for
ARCO, Seller and each Company in their respective jurisdictions of incorporation
or formation, as certified as of a recent date by the Secretary of State or
other appropriate authority of such jurisdictions;
(e) the opinion of counsel to ARCO required by Section 10.1(d);
(f) copies of the certificate of formation for each Company, as
certified as of a recent date by the Secretary of State or other appropriate
authority of their respective jurisdiction of formation;
(g) copies of the limited liability company agreements of each
Company as in effect on the Closing Date, certified by a duly authorized
representative of each Company;
(h) certificates of the Secretary or Assistant Secretary of ARCO and
Seller, as the case may be, certifying as of the Closing Date as to the
incumbency and signatures of the officer(s) of ARCO and/or Seller authorized to
sign this Agreement and the other documents to be delivered hereunder, together
with evidence of the incumbency of each such Secretary or Assistant Secretary;
(i) certificates dated the Closing Date of officers of ARCO and
Seller, as the case may be, stating that the representations and warranties of
ARCO and Seller, as the case may be, set forth herein remain true and correct in
all respects on and as of the Closing Date as if made on and as of such date
(except for representations and warranties made as of a specific date, which
shall be true and correct in all respects as of such date), except for any
breach or breaches of such representations and warranties that would not
individually or in the aggregate have a
12
Material Adverse Effect, and that all covenants and conditions to be complied
with and performed by ARCO and/or Seller on or prior to the Closing Date,
including notifications under Section 6.3, have been substantially complied with
or performed; and
(j) the resignations of the officers and directors of MCC and AU
Sub, and any officers and directors of CFC that are employees of ARCO, as
required pursuant to Section 10.1(f).
3.4 Arch's and Buyer's Deliveries. Arch and Buyer shall deliver, or
cause to be delivered, to Seller at the Closing the following:
(a) the Unadjusted Purchase Price in the manner and amount specified
in Section 2.2;
(b) a copy, certified as of the Closing Date by Arch's or Buyer's
Secretary or Assistant Secretary, as the case may be, of the resolutions duly
adopted by the Board of Directors of Arch and Buyer, authorizing the
transactions contemplated by this Agreement;
(c) short form certificates of good standing for Arch and Buyer in
their respective jurisdiction of incorporation, as certified as of a recent date
by the Secretary of State or other appropriate authority of such jurisdiction;
(d) the opinion of counsel to Buyer required by Section 10.2(d);
(e) copies of the certificates of incorporation of Arch and Buyer,
as certified as of a recent date by the Secretary of State or other appropriate
authority of their respective jurisdiction of incorporation;
(f) copies of the bylaws of Arch and Buyer as in effect on the
Closing Date, certified as of the Closing Date by the Secretary or Assistant
Secretary of Arch or Buyer, as the case may be;
(g) certificates of the Secretary or Assistant Secretary of Arch and
Buyer, as the case may be, certifying as of the Closing Date as to the
incumbency and signatures of the officer(s) or representatives of Arch and Buyer
authorized to sign this Agreement and the other documents to be delivered
hereunder, together with evidence of the incumbency of each such Secretary or
Assistant Secretary; and
(h) certificates dated the Closing Date of an officer of Buyer and
an officer of Arch, as the case may be, stating that the representations and
warranties of Arch and Buyer, as the case may be, set forth herein remain true
and correct in all material respects on and as of the Closing Date as if made on
and as of such date (except for representations and warranties made as of a
specified date, which shall be true and correct in all material respects as of
such date) and that all covenants and conditions to be complied with and
performed by Arch and/or Buyer on or prior to the Closing Date have been
substantially complied with or performed.
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3.5 Simultaneous Transactions. All of the transactions and deliveries
identified in this Article 3 shall be deemed to occur simultaneously on the
Closing Date, and no one transaction shall be deemed completed until all are
completed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ARCO AND SELLER
ARCO and Seller represent and warrant, jointly and severally, to Arch and
Buyer, as of the Effective Date (or such other date as is specified therein), as
follows:
4.1 Organization and Good Standing of ARCO and Seller. ARCO and Seller
are corporations duly incorporated, validly existing and in good standing under
the laws of their respective states of incorporation.
4.2 Authority. ARCO and Seller have full corporate power and authority to
enter into this Agreement and to perform their respective obligations hereunder.
This Agreement constitutes a valid and binding obligation of each of ARCO and
Seller, enforceable against ARCO and Seller in accordance with its terms,
subject to applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
4.3 No Violations. Except as set forth in Section 4.3 of the Disclosure
Schedule, the execution and delivery of this Agreement by ARCO and Seller do
not, and the consummation of the transactions contemplated hereby will not, (i)
violate any provisions of the certificate of incorporation or bylaws of ARCO or
Seller or of the limited liability company agreement of any Company; (ii) result
in the breach of, or constitute a default under, any material agreement or other
material instrument to which ARCO, Seller or any Company is a party or to which
any of their respective properties or assets are bound; (iii) violate any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award applicable to ARCO, Seller or any Company or their respective
properties or assets; or (iv) constitute an event that, with notice, lapse of
time or both, would result in any such violation, breach or default.
4.4 Approvals, Consents and Other Actions. Except (i) with respect to the
filings required under the HSR Act, (ii) as contemplated by this Agreement or
(iii) as set forth in Section 4.4 of the Disclosure Schedule, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission or
other governmental authority or instrumentality, or any third party is required
to be made or obtained by or with respect to ARCO or Seller in connection with
the execution, delivery and performance of this Agreement by ARCO or Seller.
4.5 Formation and Good Standing of the Companies. Each of MCC and CFC is,
and as of the Closing Date, AU Sub shall be, a limited liability company, duly
organized, validly existing and in good standing under the laws of their
respective states of formation.
14
4.6 Title to the LLC Interests. Seller holds or will hold of record and
owns or will own beneficially, and will transfer or cause to be transferred to
Buyer on the Closing Date, the LLC Interests, and, upon delivery to Buyer at the
Closing of assignment documents in accordance with Section 3.3(a), registration
of the transfer of the LLC Interests on the books of each respective Company and
payment of the Unadjusted Purchase Price therefor, Seller will transfer to Buyer
the LLC Interests, free and clear of any security interests, pledges, liens and
encumbrances, except as set forth in the limited liability company agreements of
each Company.
4.7 Capitalization. Section 4.7 of the Disclosure Schedule sets forth a
list of the Companies, their respective jurisdictions of formation and their
respective ownership of outstanding membership interests as of the Closing Date.
ARCO, Seller and/or their Affiliates own all of the outstanding membership
interests of MCC and 65% of the outstanding membership interests of CFC. As of
the Closing Date, Seller will own all of the outstanding membership interests of
AU Sub. Except as set forth in the limited liability company agreements of each
Company and except as set forth in Section 4.7 of the Disclosure Schedule, as of
the Closing Date, no Company will have any outstanding securities,
subscriptions, options or other agreements or commitments obligating it to issue
additional membership interests or any other securities.
4.8 Real Property. Section 4.8 of the Disclosure Schedule sets forth, as
of the Closing Date, a list of all material real property, leaseholds, water
rights and other material interests in real property or water held by the
Companies. Except as set forth in Section 4.8 of the Disclosure Schedule, each
Company will hold, as of the Closing Date, an interest in the real property
described in Section 4.8 of the Disclosure Schedule sufficient to permit each
Company to operate its businesses in the ordinary course and consistent with
past practices, according to the terms of the instrument, conveyance or document
creating such interest, free and clear of all liens, encumbrances, equities,
claims, covenants, conditions, reservations, restrictions, easements, rights of
way and other agreements, except for (a) liens for Taxes not yet due and
payable, or that may hereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings or that are listed or
described in the Disclosure Schedule, (b) liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics, workmen and materialmen and construction or
similar liens arising by operation of law or in the ordinary course of business
in respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings, (c) liens to be released at or prior to
the Closing, (d) rights reserved to or vested in any Federal, state or local
governmental body, authority or agency to control or regulate any such real
property interests in any manner, (e) easements, reservations, rights-of-way,
restrictions, covenants, conditions and other similar encumbrances, whether of
record or apparent on the premises (including road, highway, pipeline, railroad
and utility easements, and defects in the chain of title), that do not
materially and adversely affect the present use of such real property, and (f)
other defects and irregularities in title or encumbrances that are not
substantial or material in character, amount or extent. Except as set forth in
Section 4.8 of the Disclosure Schedule, each of the material leases, subleases,
easements, licenses and agreements described in Section 4.8 of the Disclosure
Schedule is in full force and effect according to the terms of each respective
instrument, and to Seller's Knowledge, each holder of such leases, subleases,
easements, licenses and agreements has complied with all material requirements
in connection therewith, and there is
15
not under any such lease, sublease, easement, license or agreement, any existing
material breach or default (or event that, with notice, lapse of time or both,
would constitute a material breach or default) by a Company.
4.9 Buildings, Structures and Tangible Personal Property; Other
Securities. Section 4.9 of the Disclosure Schedule lists (i) all material
buildings, structures and improvements and all material items of machinery,
equipment and other tangible personal property owned or leased by ARCO, Seller
or any of their Affiliates as of February 28, 1998, that will be owned or leased
by any Company on the Closing Date, and (ii) all securities of any other Person
held by any of the Companies on the Closing Date. Since February 28, 1998, no
such assets have been acquired or disposed of except in the ordinary course of
business.
4.10 Material Contracts. Section 4.10 of the Disclosure Schedule lists all
material contracts and agreements and all documents evidencing rights of or
commitments by any Company to which any Company is a party or its property or
assets are bound as of the Closing Date. Except as set forth in Section 4.10 of
the Disclosure Schedule, each such contract, agreement and document is in full
force and effect according to the terms of each respective instrument, and each
Company which is a party to such contracts, agreements and documents has
complied with all requirements in connection therewith, and there is not under
any such contract, agreement or document, any existing breach or default (or
event that, with notice, lapse of time or both, would constitute a breach or
default) by a Company.
4.11 Insurance Policies. Section 4.11 of the Disclosure Schedule lists all
policies of insurance issued by third-party insurers for the 1998 policy period,
including amounts of coverage thereof, that are maintained by ARCO or Seller for
the benefit of the Companies or by a Company for which such Company is named as
an insured party, in each case as of the Closing Date. Except as set forth in
Section 4.11 of the Disclosure Schedule, such policies are in full force and
effect and all premiums due have been paid.
4.12 Taxes.
(a) Except as set forth in Section 4.12(a) of the Disclosure
Schedule, with respect to Tax Returns that relate to taxable periods that end
before January 1, 1997, each Company has filed or caused to be filed with the
appropriate local, state, Federal and foreign governmental entities all Tax
Returns required to be filed by such Companies on or prior to the Closing Date
(taking into account all extensions of due dates), and has paid or caused to be
paid or adequately provided for all Taxes shown thereon as owing.
(b) Except as set forth in Section 4.12(b) of the Disclosure
Schedule, with respect to Tax Returns that relate to taxable periods that end on
or after January 1, 1997, each Company has filed or caused to be filed with the
appropriate local, state, Federal and foreign governmental entities all Tax
Returns required to be filed by such Companies on or prior to the Closing Date
(taking into account all extensions of due dates), and has paid or caused to be
paid or adequately provided for all Taxes shown thereon as owing. For all
taxable periods that begin prior to the Closing Date for which a Tax Return is
not due on or prior to the Closing Date (whether or not such taxable period ends
on or after the Closing Date), the Closing Date Balance
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Sheet shall provide an adequate reserve for Taxes to fully pay such Taxes up to
and including the Closing Date (as if the Taxable Period ended on the Closing
Date).
4.13 Licenses, Permits, Authorizations. Section 4.13 of the Disclosure
Schedule lists all material licenses, permits (including mining permits and the
amount of any bond or other surety for each mining permit), certificates, bonds,
consents, rights and other such authorizations issued or granted, as of the
Closing Date, to each of the Companies by local, state or Federal governmental
authorities or agencies. Except as set forth in Section 4.13 of the Disclosure
Schedule, each of the licenses, permits, certificates, bonds, consents, rights
and other authorizations listed in Section 4.13 of the Disclosure Schedule is in
full force and effect according to the material terms of each instrument, each
holder of such licenses, permits, certificates, bonds, consents, rights and
other authorizations has complied with all material requirements in connection
therewith, and there is not under any such licenses, permits, certificates,
bonds, consents, rights and other authorizations any existing material breach or
default (or event that, with notice, lapse of time or both, would constitute a
material breach or default) by a Company.
4.14 Litigation. Except as set forth in Section 4.14 of the Disclosure
Schedule, (i) none of the Companies is a party to any lawsuit, claim or
proceeding or to Seller's Knowledge, any investigation, and (ii) none of the
Companies is in default under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality applicable to it or any of its properties or assets.
4.15 Compliance with Laws. Except as set forth in Section 4.15 of the
Disclosure Schedule, each of the Companies is in compliance in all material
respects with all applicable statutes, laws, ordinances, rules, orders and
regulations of any governmental authority or instrumentality.
4.16 Labor Matters. Except as set forth in Section 4.16 of the Disclosure
Schedule, none of the Companies is a party to any collective bargaining
agreement with any labor union or association, there are no formal negotiations,
demands or proposals that are pending or have been recently conducted or made
with or by any labor union or association, and there are no pending strikes,
work stoppages or material labor disputes involving the Companies.
4.17 Employee Benefit Plans.
(a) Section 4.17 of the Disclosure Schedule sets forth a list of all
"employee benefit plans" as defined in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other pension or
retirement, savings, profit sharing, deferred compensation, stock option
(including restricted or performance units), severance, vacation, medical,
vision, dental, long term disability, life insurance, group accident,
occupational death, business travel, long term care, educational assistance,
floating holiday, personal business, gainshare, bonus, financial counseling,
welfare or sick leave or other employee benefit plan, procedure, policy or
practice of any nature, as well as any employment, consulting, engagement or
retention agreement or agreements, and any trust or funding mechanism for each
plan or arrangement described above (collectively, the "Plans") covering
employees of a Company and
17
any employees of ARCO and/or Seller whose employment is related primarily to one
or more of the businesses of the Companies (collectively, the "Employees"). With
respect to each Plan maintained by the Companies, ARCO and/or Seller have
delivered to Buyer true, correct and complete copies of all documents and
summary plan descriptions creating or evidencing any such Plan, and, to the
extent applicable, the most recent (i) determination letter and any outstanding
request for determination letter for such Plan; (ii) Form 5500 and attached
Schedule B (including any related actuarial valuation report) for such Plan; and
(iii) ruling letter and any outstanding request for a ruling letter with respect
to the tax-exempt status of any Voluntary Employees' Beneficiary Association
("VEBA") as defined in Code Section 501(c)(9).
(b) Except as set forth in Section 4.17 of the Disclosure Schedule,
each Plan complies with and has been administered, operated and maintained in
compliance with all applicable material provisions of ERISA, the Code and other
applicable laws. Except as set forth in Section 4.17 of the Disclosure Schedule,
none of the Companies has engaged in a prohibited transaction that would subject
it to a material tax imposed under Section 4975 of the Code.
(c) Neither Seller nor any Company is or has within the preceding
five years been a party to or contributed to any "multi-employer plan," as
defined in Section 4001(a)(3) of ERISA. Except as set forth in Section 4.17 of
the Disclosure Schedule, neither Seller nor any Company has been a party to or
contributed to any such multi-employer plan since September 26, 1980.
(d) Each Plan that is intended to qualify under Code Sections 401(a)
and 501(a) is so qualified and has been determined by the Internal Revenue
Service to so qualify or has an outstanding determination letter request, and
nothing has occurred to cause the loss of the Plan's qualified status since the
issuance of the most recent favorable determination letter by the IRS with
respect to such Plan.
(e) No accumulated funding deficiency, except for annual minimum
contributions which are not yet due, within the meaning of ERISA Section 302 or
Code Section 412 has been incurred with respect to any Plan of the Companies.
The Companies do not have any liability for (i) any lien imposed under ERISA
Section 302(f) or Code Section 412(n), (ii) any interest payments required under
ERISA Section 302(e) or Code Section 412(m) or (iii) any excise tax imposed by
Code Section 4971. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted or threatened a proceeding to terminate any Plan pursuant to Subtitle
1 of Title IV of ERISA. No Plan has been the subject of a reportable event (as
defined in ERISA Section 4043) as to which a notice would be required to be
filed with the PBGC.
(f) With respect to each Plan, no action, suit, grievance, claim,
arbitration or other manner of litigation with respect to the assets of the Plan
(other than routine claims for benefits made in the ordinary course of Plan
administration for which Plan administrator review procedures have not been
exhausted) is pending, or to Seller's Knowledge, threatened or imminent against
or with respect to the Plan or any Plan sponsor or fiduciary (as defined in
ERISA Section 3(21)).
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(g) Except as otherwise provided in this Agreement, each Plan
(including any Plan covering former employees of any Company) which is
established and maintained by the Companies may be amended or terminated by the
Companies or Buyer on or at any time after the Closing Date.
(h) No payment under any Plan made within two years after the
Closing Date shall constitute an "excess parachute payment" under Section 280G
of the Code.
4.18 Bank Accounts. Section 4.18 of the Disclosure Schedule sets forth
the name of each bank, savings and loan or other financial institution in which
any Company has any account or safe deposit box.
4.19 Broker Liability. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of ARCO, Seller or their Affiliates
in connection with this Agreement or the transactions contemplated hereby, ARCO
and Seller shall be solely responsible and liable for any brokerage, finder's or
similar consultant's fee or other commission in respect of such broker, finder
or similar consultant.
4.20 Financial Statements. The Audited Financial Statements to be
delivered in accordance with Section 2.3(a) shall have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities Exchange Act of 1934, as
amended. The audited balance sheets of ACC at December 31, 1997, and 1996
(including the notes thereto), present fairly the financial position of ACC at
such dates, and the consolidated statement of income, of equity investment and
of cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1997, fairly present the results of operations, equity
investment and cash flows of ACC for each of such years. The unaudited balance
sheets (if any) of ACC as of the last day of each calendar quarter ending
subsequent to December 31, 1997, and prior to the Closing Date, and consolidated
statements of income, of equity investment and of cash flows for the quarterly
periods then ended (the "Unaudited Financial Statements") have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities Exchange Act of 1934, as
amended. Each balance sheet (if any) included among the Unaudited Financial
Statements (including the notes thereto) fairly presents the financial position
of ACC as of the date thereof, and each consolidated statement of income, of
equity investment and of cash flows included among the Unaudited Financial
Statements (including the notes thereto) fairly presents the results of
operations, equity investment and cash flows of ACC for each period presented.
The Interim Date Balance Sheet and the Closing Date Balance Sheet will be
derived from the combined, consolidated balance sheets of ACC. The Interim Date
Balance Sheet (including the related notes) will fairly present the combined
consolidated financial position of the Companies as of its date.
4.21 Black Lung Disclosure. The present actuarial value (determined using
the Black Lung Discount Rate) of the Companies' black lung liability as of the
Interim Date does not exceed that which has been reserved for by the Companies
on the Interim Date Balance Sheet.
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4.22 Conduct of Business. Except as set forth in Section 4.22 of the
Disclosure Schedule, since the Interim Date, the Companies have conducted their
respective businesses only in, and have not engaged in any transaction other
than in, the ordinary and usual course of such businesses or as described in the
Contribution Agreement, and there has not been any change by the Companies in
accounting principles, practices or methods that is not required by GAAP. Except
as provided for herein and other than in the ordinary course consistent with
past practice, since the Interim Date there has not been (i) any increase in the
compensation payable or which could become payable by the Companies to their
respective officers or employees or (ii) any amendment of any of the Companies'
Plans.
4.23 Assets. Except as set forth in Section 4.23 of the Disclosure
Schedule, prior to the Closing Date, ARCO and/or Seller will have transferred or
caused to be transferred to the Companies all tangible and intangible assets of
every description held by ARCO, Seller or any Affiliate of ARCO and/or Seller
under intercompany agreements and arrangements with ARCO, Seller or any
Affiliate of ARCO and/or Seller or otherwise and used exclusively by the
Companies in the conduct of the Companies' respective businesses on and since
the Interim Date.
4.24 CERCLA. None of the Properties is listed on the National Priority
List pursuant to CERCLA or on any similar list pursuant to any state
Environmental Laws.
4.25 Disclaimer of Certain Representations and Warranties. ARCH AND BUYER
ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF ARCO,
SELLER OR ANY AFFILIATE, EMPLOYEE OR AGENT OF ARCO OR SELLER HAS MADE ANY
REPRESENTATION, PROMISE, COVENANT OR WARRANTY REGARDING ANY OF THE COMPANIES,
THEIR PROPERTIES, ASSETS, BUSINESS, OPERATIONS, LIABILITIES OR OBLIGATIONS, OR
OTHERWISE. ARCO AND SELLER HEREBY DISCLAIM ANY IMPLIED WARRANTIES, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN.
4.26 No Other Commitment to Sell LLC Interests. Neither ARCO nor Seller
has sold or has committed to sell the LLC Interests to any other Person, except
to the extent that ITOCHU may have the right to initiate certain procedures
under the provisions contained in Articles 9 and 10 of the CFC Agreement with
respect to the CFC Interests.
4.27 Absence of Undisclosed Liabilities. To Seller's Knowledge, none of
the Companies has any material liabilities, whether accrued, or contingent,
other than (i) liabilities (or reserves therefor) set forth in the Preliminary
Interim Date Balance Sheet, (ii) liabilities set forth in the Disclosure
Schedule, and (iii) liabilities incurred since the date of the Preliminary
Interim Date Balance Sheet in connection with this Agreement or in the ordinary
course of business, consistent with past practices.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ARCH AND BUYER
Arch and Buyer represent and warrant, jointly and severally, to ARCO and
Seller, as of the Effective Date, as follows:
5.1 Organization and Good Standing. Arch and Buyer are corporations duly
incorporated, validly existing and in good standing under the laws of their
states of incorporation.
5.2 Authority. Arch and Buyer have full corporate power and authority to
enter into this Agreement and to perform their respective obligations hereunder.
This Agreement constitutes a valid and binding obligation of each of Arch and
Buyer, enforceable against Arch and Buyer in accordance with its terms, subject
to applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
5.3 No Violations. The execution and delivery of this Agreement by Arch
and Buyer does not, and the consummation of the transactions contemplated hereby
will not, (i) violate any of the provisions of the certificates of incorporation
or bylaws of Arch or Buyer; (ii) result inthe breach of, or constitute a default
under, any material agreement or other material instrument to which Arch or
Buyer is a party or to which any of their respective properties or assets are
bound; (iii) violate any statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award applicable to Arch, Buyer or their
respective properties or assets; or (iv) constitute an event that, with notice,
lapse of time or both, would result in any such violation, breach or default.
5.4 Approvals and Consents. Except with respect to the filings required
under the HSR Act, no consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency, commission or other governmental authority or instrumentality, or any
third party is required to be made or obtained by or with respect to Arch or
Buyer in connection with the execution, delivery and performance of this
Agreement by Arch or Buyer.
5.5 Financial Capability. Arch and Buyer have the financial capability to
perform all of their obligations under this Agreement, and Buyer has available
all funds necessary to pay the Unadjusted Purchase Price, the Adjustment (if
payable by Buyer) and any other amounts contemplated by this Agreement.
5.6 Accredited Investor. Buyer is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act.
5.7 Investment Intent. Buyer is acquiring the LLC Interests for its own
account for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in any transaction that would be in
violation of the securities laws of the United States or
21
any state thereof. Arch and Buyer each acknowledge that the LLC Interests have
not been registered or qualified under, and are sold in reliance upon an
exemption from the registration requirements of, the Securities Act and any
applicable state securities or "Blue Sky" laws, and may not be offered, sold,
transferred, pledged, hypothecated or otherwise assigned unless they are
registered under the Securities Act and any applicable securities or "Blue Sky"
laws of any state or an exemption from such registration is available.
5.8 Arch's and Buyer's Inquiry. Arch and Buyer and their representatives
have reviewed or received copies of, or had the opportunity to review, including
in a data room maintained by Seller, such information from ARCO, Seller and each
of the Companies as they have requested, and have had the opportunity to make
such inquiry of representatives of ARCO, Seller and each of the Companies as
they deem appropriate. Arch and Buyer acknowledge that there are no
representations or warranties, expressed or implied, except as expressly set
forth in this Agreement.
5.9 Broker Liability. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of Arch or Buyer, in connection
with this Agreement or the Proposed Transactions, Arch or Buyer, as the case may
be, shall be solely responsible and liable for any brokerage, finder's or
similar consultant's fee or other commission in respect of such broker, finder
or similar consultant.
5.10 Qualification, Compliance with Acreage Limitations. Each of Arch and
Buyer is qualified under all applicable Laws to hold the interests in Federal
and state coal leases it will acquire at the Closing. Immediately after the
consummation of the Proposed Transactions, neither Arch nor Buyer will itself,
directly or indirectly, or in combination with any Person, own holdings of
Federal or state coal leases in excess of any applicable limitations.
5.11 No Independent Contact with ITOCHU. None of Arch, Buyer, any
Affiliate of either or any officer, director, employee, agent or representative
of any of the foregoing has, or prior to the Closing will have, communicated
with or contacted ITOCHU in respect of the transactions contemplated by this
Agreement, other than in the presence of one or more representatives of ARCO or
as otherwise authorized by ARCO.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 Access to Information.
(a) Arch and Buyer acknowledge that prior to the Effective Date,
Seller has caused each of the Companies to give Buyer and its authorized
representatives reasonable access to the employees, offices, properties and a
data room containing certain books and records of the Companies and their
predecessors, has permitted Buyer to make inspections of and tour the Companies'
mines and has furnished Buyer with certain financial and operating data and
other information with respect to the business, assets, properties, operations,
liabilities and obligations of each of the Companies and their predecessors.
Prior to the Closing Date, Buyer shall have reasonable access during normal
business hours to the operations, facilities, employees and
22
representatives of Seller, the Companies or ARCO as reasonably necessary to (i)
verify the representations and warranties given by Seller and/or ARCO hereunder,
or by ARCO and/or Delta under the Contribution Agreement, and (ii) begin
planning for an orderly transition process with respect to transactions
contemplated by this Agreement. Except as set forth in the preceding sentence or
otherwise provided in this Agreement, from and after the Effective Date, neither
Arch nor Buyer shall have the right to access the employees, offices,
properties, books and records of any of the Companies, to inspect the Companies'
mines or other properties or to inspect or have furnished financial or operating
data or other information with respect to the business, assets, properties,
operations, liabilities or obligations of Seller or any of the Companies.
(b) Prior to the Closing, Buyer shall keep (and shall cause its
directors, officers, employees, representatives, advisors and Affiliates to
keep) all information relating to each of the Companies (including any such
information received prior to the date hereof) confidential, and shall use such
information only, on the terms and conditions as are set forth in the
confidentiality agreements between Seller and Buyer, together with any
supplements or amendments thereto reasonably requested by Seller from time to
time. After the Closing, each party hereto agrees to keep the terms and
conditions of this Agreement confidential, and to redact any provisions
reasonably requested by any other party (including Sections 6.19 and Section
6.21) from copies of this Agreement filed with the Securities and Exchange
Commission, except for such matters as may be required to be disclosed by law or
applicable stock exchange requirements or that are generally available in the
public domain other than as a result of a breach of this Agreement by such
party.
(c) After the Closing, Buyer shall, at its own expense or at the
expense of the Companies, cause each Company to preserve and keep, or transport
to a storage site of its own selection where it shall preserve and keep, the
books and records of each of the Companies obtained by Buyer or retained by the
Companies, including financial or business transaction records, books of
original entry, tax records and supporting documents, for a period of seven
years from the Closing Date or such longer period if required under applicable
Laws. Within 60 days after the Closing, Seller shall provide Buyer with a list
or inventory of the document types and inclusive dates of the records
transmitted to Buyer or retained by the Companies. Buyer shall make or shall
cause the Companies to make such acquired or retained records as are dated up to
the Closing Date and included in the inventory provided by Seller, including the
general ledger and mining reports, available to Seller as may be reasonably
requested by Seller in connection with, among other things, any of Seller's
financial reporting or Tax filing obligations, for a period of seven years from
the Closing Date or such longer period if required under applicable Laws. For a
period of 15 years after the Closing Date, Buyer shall notify Seller in writing,
on an annual basis, of the document types and, if applicable, inclusive dates of
any such retained records, that it or the Companies intend to destroy during the
following one-year period. If Seller desires access to such records for a period
of time longer than specified in Buyer's annual notice, Seller shall notify
Buyer in writing, not more than 60 days following Seller's receipt of Buyer's
annual notice, of its desire to retain such records, and Buyer shall deliver, or
cause the Companies to deliver, such records to Seller. If Seller does not
notify Buyer of its desire to retain records
23
within such 60-day period, Buyer or the Companies may dispose of such records
according to prudent records management practices in the ordinary course of
business.
(d) The parties hereby acknowledge that any in-house counsel of the
Companies or Seller who are Employees and who participated in the preparation,
negotiation or consummation of this Agreement or the transactions contemplated
hereby were providing legal representation for the Seller and, notwithstanding
any other provision of this Agreement, neither the Companies or Seller nor such
counsel shall be required to disclose under any circumstance any information or
documents covered by the attorney-client privilege or the work-product doctrine
as such information or documents were developed in the course of such
representation. All such information and documents shall remain the sole and
exclusive property of Seller.
6.2 Conduct of the Business Pending the Closing. From the Effective Date
to the Closing Date, except in connection with the transactions contemplated by
this Agreement and the Contribution Agreement, or as otherwise consented to in
writing by Buyer (which consent shall not be unreasonably withheld, conditioned
or delayed), Seller and/or ARCO shall use commercially reasonable efforts, and
consistent with its obligations under the limited liability company agreements
of each of the Companies and TBCC, to cause each Company and TBCC to (a) conduct
its business in the ordinary course and consistent with past practices, except
that (i) none of the properties or assets listed in the Disclosure Schedule
valued at $250,000 or more may be transferred, disposed of encumbered or
hypothecated, (ii) no individual capital expenditure by any Company or TBCC in
excess of $1 million or capital expenditures aggregating (for all Companies and
TBCC) in excess of $25 million shall be made or committed and (iii) no Company
or TBCC shall enter into any coal supply agreement with a term in excess of one
year or materially amend any coal supply agreement disclosed in the Disclosure
Schedule having a term in excess of one year (but TBCC shall have the right, but
not the obligation, to bid on the Thunder Cloud Federal Lease Tract on such
terms and conditions, including the amount of any bonus bid, as it elects in its
sole discretion), (b) keep in full force and effect its limited liability
company existence, (c) comply in all material respects with all material
contracts, agreements and commitments set forth in Section 4.10 of the
Disclosure Schedule to which it is a party, (d) use commercially reasonable
efforts to retain its employees and maintain its business relationships with
customers and suppliers and (e) maintain all facilities, equipment and other
tangible assets in accordance with past maintenance practices of such Company or
TBCC.
6.3 Notification. Between the Effective Date and the Closing Date, Seller
and Buyer will each, promptly upon becoming aware thereof, notify the other in
writing of any fact or condition that causes or constitutes a breach of any of
the other party's representations and warranties made as of the Effective Date
or of any default in the other party's performance of its covenants and
agreements herein.
6.4 Antitrust Notification. Seller and Buyer shall, as promptly as
practicable, but in no event later than ten business days after the Effective
Date, file with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") the
notification and report form required for the Proposed Transactions pursuant to
the HSR Act. Seller and Buyer shall furnish to each other such necessary
information and
24
reasonable assistance as may be requested in connection with the preparation of
any filing required to be made under the HSR Act. Seller and Buyer shall use
commercially reasonable efforts to respond as promptly as practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation and to obtain as promptly as practicable any
clearance required under the HSR Act for the purchase and sale of the LLC
Interests.
6.5 Fees and Expenses. Except as otherwise specifically provided in this
Agreement, Seller and Buyer shall bear their own fees and expenses incurred in
connection with this Agreement (including fees and expenses of their respective
investment bankers) and in connection with all obligations required to be
performed by each of them under this Agreement.
6.6 Publicity. Except as otherwise required by law or applicable stock
exchange requirements, no party hereto shall issue any press release or public
statement relating to or concerning this Agreement or the matters contained
herein, without obtaining the prior approval of the other party hereto of the
contents and the manner of presentation and publication thereof, which approval
shall not be unreasonably withheld, conditioned or delayed.
6.7 Post-Closing Assistance. From and after the Closing Date, upon the
request of either Arch or Buyer, on the one hand, or ARCO or Seller, on the
other, the parties hereto shall do, execute, acknowledge and deliver all such
further acts, assurances, deeds, assignments, transfers, conveyances and other
instruments and papers as may be reasonably required or appropriate to carry out
the transactions contemplated by this Agreement.
6.8 Guarantees. ARCO and/or Seller have provided certain guarantees,
indemnities and similar obligations with respect to the Companies, which
guarantees, indemnities and obligations are set forth in Section 6.8 of the
Disclosure Schedule. Arch and Buyer agree to cooperate with ARCO and Seller and
use their best efforts to cause the release of each such guarantee, indemnity
and obligation, including the substitution of Arch, Buyer and/or an Affiliate of
Arch or Buyer as the guarantor, indemnitor or responsible party thereunder and
the release of ARCO and Seller, on or as soon as practicable after the Closing.
Without limiting the foregoing, Arch and Buyer hereby undertake, assume and
agree to perform, pay and discharge all such guarantees, indemnities and
obligations, and Arch and Buyer shall indemnify and hold harmless any member of
Seller's Group, including any officers, directors or Affiliates of such member,
with respect to all Losses arising out of or relating to any such guarantee,
indemnity or obligation.
6.9 Name Changes. No later than 30 days following the Closing Date,
Buyer shall amend the certificate of incorporation of each Company to remove the
word "ARCO" or any similarity or reference thereto. The new corporate name of
the Companies adopted by Buyer shall not contain any word or words confusingly
similar to "ARCO" or the "Atlantic Richfield Company." No later than six months
following the Closing Date, Buyer shall remove the marks and names "ARCO," "ARCO
COAL" and "ATLANTIC RICHFIELD" and the Spark Design and any other words, names
or symbols proprietary to Seller, from all tangible and intangible properties,
real and personal, acquired by Buyer hereunder.
25
6.10 Surety Bonds. Buyer will use commercially reasonable efforts to
submit surety bonds (collectively, "Substitute Surety Bonds" and individually, a
"Substitute Surety Bond"), effective as of the Closing, in substitution for
ARCO's or Seller's surety bonds listed in Section 4.13 of the Disclosure
Schedule (collectively, "Surety Bonds" and individually, a "Surety Bond"). If
all the Substitute Surety Bonds are not effective 90 days after the Closing
Date, Buyer shall be required to pay ARCO or Seller, in consideration of ARCO or
Seller keeping in effect those Surety Bonds for which a Substitute Surety Bond
is not then effective (collectively, the "Post-Closing Surety Bonds" and
individually, a "Post-Closing Surety Bond"), an amount equal to one-half of one
percent of the face value of the Post-Closing Surety Bonds per month (or pro
rata portion thereof) until such time as Substitute Surety Bonds are effective,
it being agreed that the aggregate face value of the Post-Closing Surety Bonds
shall be reduced dollar-for-dollar by the face value of Substitute Surety Bonds
as such Substitute Surety Bonds become effective after the Closing Date without
regard to whether any of the Post-Closing Surety Bonds are released. In the
event Substitute Surety Bonds in substitution for all the Post-Closing Surety
Bonds are not effective within 180 days after the Closing Date, in lieu of
Buyer's payment obligation under the preceding sentence, Buyer shall obtain, for
the benefit of ARCO and/or Seller, performance bonds or other assurances, from
such surety providers and with such terms and conditions reasonably acceptable
to ARCO and Seller (the "Performance Bonds") in an aggregate face value equal to
the aggregate face value of the Post-Closing Surety Bonds on and after such
180th day, it being agreed that the aggregate face value of the Performance
Bonds shall be reduced dollar-for-dollar by the face value of Substitute Surety
Bonds as such Substitute Surety Bonds thereafter become effective without regard
to whether any of the Post-Closing Surety Bonds secured by the Performance Bonds
are released. Without limiting the foregoing, Arch and Buyer shall indemnify and
hold harmless each member of Seller's Group with respect to all Losses arising
under the Surety Bonds.
6.11 Black Lung Liability. Arch and Buyer have reviewed any reserves and
accruals of the Companies, including those which are with respect to potential
liability under the Black Lung Benefits Act of 1972, as amended, the Black Lung
Benefits Reform Act of 1977, as amended, and other applicable Federal and state
black lung acts or laws designed to provide such benefits to employees. Buyer
acknowledges that, except with respect to any breach of the representation and
warranty made by Seller in Section 4.21 in respect of black lung liabilities,
any Loss in respect of black lung shall not form the basis for any assertion of
a breach of a representation or warranty contained in this Agreement.
6.12 Litigation Support. From and after the Closing Date, Arch and Buyer
shall indemnify and hold harmless each member of Seller's Group with respect to
all Losses arising out of or relating to any matter set forth in Section 4.14 of
the Disclosure Schedule. Without limiting the foregoing, if and for so long as
ARCO or Seller is defending or contesting any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction involving any of the Companies,
Arch and Buyer shall cooperate and shall cause the Companies to cooperate (on
and after the Closing Date) with ARCO or Seller and its counsel and agents in
such defense or contest, make available its and their personnel and provide
26
such testimony and access to its and their books and records as shall be
necessary in connection with such defense or contest, all at Buyer's cost.
6.13 Insurance. Buyer has reviewed the insurance policies set forth in
Section 4.11 of the Disclosure Schedule. Seller agrees that all such insurance
policies shall remain in full force and effect until the Closing. All coverage
and benefits under such insurance policies and any other insurance policies of
Seller or its Affiliates (subject to the terms thereof) shall cease at the
Closing. On and after the Closing Date, Buyer shall be solely responsible for
obtaining and maintaining any and all insurance coverage and protection relating
to the respective business, assets, properties, operations, liabilities and
obligations of the Companies.
6.14 Arch's and Buyer's Environmental Responsibilities. Arch and Buyer
hereby acknowledge and agree that all Environmental Liabilities asserted against
the Companies with respect or related to any property listed in Section 6.14 of
the Disclosure Schedule (the "Properties") shall be retained by the Companies on
and following the Closing Date, and that all Environmental Liabilities asserted
against any member of Seller's Group with respect or related to the Properties
shall be assumed by Arch and Buyer. From and after the Closing Date, Arch and
Buyer shall perform, pay and discharge or cause the Companies to perform, pay
and discharge all retained and assumed Environmental Liabilities, and shall
indemnify and hold harmless each member of Seller's Group with respect to such
Environmental Liabilities.
6.15 ARCO's and Seller's Environmental Responsibilities. ARCO and Seller
hereby acknowledge and agree that all Environmental Liabilities resulting from
the ownership or operation of properties other than the Properties (the "Other
Properties") by the Companies or any of their predecessors or Affiliates (unless
caused by Buyer, Arch, the Companies or any of their respective Affiliates on or
after the Closing Date) shall be assumed by ARCO and Seller. From and after the
Closing Date, ARCO and Seller shall perform, pay and discharge any such
Environmental Liabilities assumed pursuant to this Section 6.15, and shall
indemnify and hold harmless each Buyer Indemnitee with respect to such
Environmental Liabilities.
6.16 Other Liabilities.
(a) Except as otherwise expressly provided in this Agreement and
without limiting ARCO's or Seller's liability for breaches of representations
and warranties and defaults of covenants and agreements under this Agreement and
the Contribution Agreement, in addition to the Environmental Liabilities, Arch
and Buyer hereby acknowledge and agree that all Other Liabilities shall be
retained by the Companies on and following the Closing Date. Except with respect
to Other Liabilities retained by Seller or required to be indemnified by ARCO
and/or Seller, in each case as expressly provided under this Agreement, and by
ARCO and/or Delta, in each case as expressly provided under the Contribution
Agreement, from and after the Closing Date, Buyer shall perform, pay or
discharge or cause the Companies to perform, pay or discharge such Other
Liabilities, and shall indemnify and hold harmless any member of Seller's Group
and any officer, director, employee, agent or Affiliate of such member with
respect to such Other Liabilities.
27
(b) "Other Liabilities" shall mean any and all claims, actions,
causes of action, damages, losses, liabilities, obligations, penalties,
judgments, amounts paid in settlement, assessments, costs, disbursements or
expenses (including attorneys' fees and costs, experts' fees and costs and
consultants' fees and costs) of any kind or nature, whether existing on the
Closing Date or arising thereafter (including those absolute, accrued,
contingent, unknown or otherwise), that are asserted against a Company or any
member of Seller's Group (including liability for property damages, business
losses, personal injuries, penalties or fines and any losses of any character
whatsoever arising from or relating to any surface slippage or subsidence at the
West Elk Mine, except as provided in Section 6.21) arising out of, based on or
relating to the business, assets, properties, operations, liabilities or
obligations of any and all Companies, other than Environmental Liabilities.
6.17 ITOCHU Buy/Sell Agreement. Seller and Buyer acknowledge that the
execution and delivery of this Agreement may give ITOCHU the right to initiate,
at its election, certain procedures under the provisions contained in Articles 9
and 10 of the CFC Agreement and agree to use commercially reasonable efforts to
cause ITOCHU to waive any such rights relating to the Proposed Transactions
prior to the Closing Date. Within five days after the Effective Date, Seller
shall give ITOCHU a "notice of proposed Transfer" pursuant to Section 9.1.2 of
the CFC Agreement.
6.18 Commercially Reasonable Efforts. Each of Seller and Buyer will use
commercially reasonable efforts to take all actions and do all things necessary
in order to consummate and make effective the transactions contemplated by this
Agreement (including the satisfaction, but not the waiver, of the closing
conditions set forth in Sections 10.1 and 10.2).
6.19 [Confidential Treatment Requested; material omitted from pp. 28-30.]*
28
29
6.20 Substitute Member in CFC Agreement. Buyer shall use its best
efforts, in accordance with the terms of the CFC Agreement, to cause any
references to Seller in the CFC Agreement to be amended to refer to Buyer,
including references to Seller contained in Sections 5.2.5, 5.7, 5.10, 6.1, 9.1
and 10.5.3 of the CFC Agreement.
6.21 West Elk Mine Surface Facilities.
(a) The parties hereto acknowledge that movement of the surface of
the earth (a "Surface Movement") at the West Elk Mine has in the past required,
and may after the Effective Date require, certain remedial activities in order
to permit the use, including the conveying and loading of coal (the "Intended
Use"), of the surface facilities of the West Elk Mine. Prior to the Closing
Date, Seller and ARCO shall take such periodic remedial activities as they
reasonably determine are appropriate to permit the Intended Use of the surface
facilities of the West Elk Mine. In addition, to the extent remedial activities
are required as a result of a Surface Movement occurring prior to the Closing
Date, if not previously remediated, Seller and/or ARCO shall, at their election,
either (i) during the 15-day period following the Closing Date perform at
Seller's and/or ARCO's cost and expense such actions as are reasonably required
to permit the Intended Use of the surface facilities of the West Elk Mine, or
(ii) reimburse Buyer for the actual costs reasonably incurred by Buyer to
perform, during the 15-day period following the Closing Date, actions reasonably
required to permit the Intended Use of the surface facilities of the West Elk
Mine. During such 15-day period, Buyer and Arch shall
30
reasonably cooperate with ARCO and Seller in any activities conducted by either
pursuant to this Section 6.21(a).
(b) If any Surface Movement occurs prior to the Closing Date that
precludes the Intended Use of the surface facilities of the West Elk Mine, and
that is not capable of being substantially remedied within the 15-day period
following the Closing Date or which is not substantially remedied by Seller or
ARCO within such 15-day period pursuant to Section 6.21(a) (a "West Elk Surface
Movement Event"), Seller and ARCO shall indemnify and hold harmless Buyer
against any and all Losses caused by and resulting from such West Elk Surface
Movement Event. ARCO and Seller shall have no obligation to indemnify any Buyer
Indemnitee for any Losses arising from or relating to any Surface Movement that
occurs at the West Elk Mine on or after the Closing Date.
6.22 Disclosure Schedules. The parties hereto shall have ten (10) days
after the Effective Date to revise the Disclosure Schedules delivered hereunder
by written notice to the other party; provided, however, that no such revision
shall materially alter the nature or effect of the specific item so modified, or
alone or in the aggregate have a Material Adverse Effect. The revised Disclosure
Schedules shall become the Disclosure Schedules to the Agreement as if initially
attached hereto.
ARTICLE 7
EMPLOYEES AND EMPLOYEE BENEFITS
7.1 Retention of Employees and Continuation of Benefits.
(a) Section 7.1(a) of the Disclosure Schedule sets forth a list of
the Employees who will be retained in employment by the Buyer ("Transferees"),
which list shall be updated and supplemented by ARCO and agreed to by Buyer on
and as of the Closing Date. Buyer shall take such action as may be necessary to
provide that as of the Closing Date, the Transferees shall remain employed by
the Companies or shall be employed by Buyer and Transferees shall, except as
otherwise provided, participate in Buyer's employee benefit plans offered to
similarly situated employees.
(b) Without limiting the foregoing, for purposes of this Article 7,
Buyer shall ensure that on and following the Closing Date, the Transferees shall
receive credit with respect to any benefit plan, arrangement or other right
whether contemplated in Section 4.17 of the Disclosure Schedule or otherwise for
any period of employment with ARCO or the Companies (including any applicable
predecessors or Affiliates) prior to the Closing Date for eligibility and
vesting purposes under each employee benefit plan, arrangement or other right;
provided, however, that in no event shall any Transferees be given credit for
any such purpose for any period of employment that was not counted for such
purpose under any applicable plan, arrangement or Plan of ARCO or the Companies
prior to the Closing Date.
7.2 Retention of Retirement Plans for Companies. Section 7.2 of the
Disclosure Schedule sets forth a list of any retirement plan established and
maintained by the Companies (collectively, the "Retirement Plans"). Buyer shall
take such action as may be necessary to cause
31
any applicable Company to continue to administer and maintain its respective
Retirement Plan until December 31, 1998. On and following the Closing Date,
Buyer shall be responsible for retaining the sponsorship and all assets,
accounts, liabilities and obligations of the Retirement Plans applicable to
Transferees or former employees of the applicable Companies, and Buyer shall
release, indemnify and hold harmless ARCO and any member of Seller's Group with
respect to all Losses arising out of or relating to the Retirement Plans. Buyer
agrees that if, after December 31, 1998, the defined benefit Retirement Plan is
merged into the Buyer's Retirement Plan, the opening balance credits in the
Buyer's Retirement Plan with respect to Transferees shall be no less than the
assets of the merged Retirement Plan allocable to the Transferees, and
Transferees shall be entitled to the transition credits, though not longer than
December 31, 2012, based on their years of Retirement Plan benefit accrual
service, as provided by the Buyer's Retirement Plan as of the date of such
merger.
7.3 ARCO's Pension Plan. As of the Closing Date, any Transferees who are
participants in the Atlantic Richfield Retirement Plan II (the "ARCO Retirement
Plan") shall no longer participate in such plan. Buyer shall take such action as
may be necessary to provide that all such Transferees shall participate in
Buyer's cash balance defined benefit retirement plan (the "Buyer's Retirement
Plan"). Buyer understands and agrees that the accrued benefits of any
Transferees under the ARCO Retirement Plan shall not increase following the
Closing Date and that any surplus under such plan with respect to such
Transferees shall be retained by ARCO. Buyer agrees to provide open balance
credits in Buyer's Retirement Plan with respect to Transferees based on the
Transferee's monthly accrued benefit under the ARCO Retirement Plan and the
conversion factor under the Buyer's Retirement Plan, as in effect on the Closing
Date. Such Transferee's open balance credits shall be reduced by the present
value of the Transferee's accrued benefit under the ARCO Retirement Plan. Buyer
also agrees to provide Transferee's with transition credits, though not longer
than December 31, 2012, based on their years of ARCO Retirement Plan benefit
accrual service, as provided under Buyer's Retirement Plan, as in effect on the
Closing Date.
7.4 Thrift Plan. As of the Closing Date, any Transferees who are
participants in the Atlantic Richfield Capital Accumulation Plan II and the
Atlantic Richfield Savings Plan II (collectively, the "ARCO Accumulation and
Savings Plans") shall no longer participate in such plans. Buyer shall take such
action as may be necessary to provide that all such Transferees shall
participate in Buyer's defined contribution retirement plan(s) (collectively,
the "Buyer's Savings Plan"). Buyer shall allow Transferees to make direct
rollovers under Section 401(a)(31) of the Code or elective transfers under
Treas. Reg. 1.411(d)-4, Q&A-3 of their account balances from the ARCO
Accumulation and Savings Plans to Buyer's Savings Plan. Buyer and Seller
understand and acknowledge that Transferees who are participants in the ARCO
Accumulation and Savings Plans may at their election choose to leave their
contributions in either or both of the ARCO Accumulation and Savings Plans.
7.5 Other Employee Benefits. Except as specifically set forth in Sections
7.2, 7.3 and 7.4, as of the Closing Date (i) Employees of ARCO or the Companies
(and their respective beneficiaries and dependents) shall no longer participate
in any employee benefit plan or arrangement maintained by ARCO and (ii) Buyer
and the Companies shall assume or retain (as
32
applicable) all liabilities relating to Transferees or former employees of the
Companies (and their respective beneficiaries and dependents). Without limiting
the provisions of Section 7.1, Buyer shall continue to provide until December
31, 1998 under plans comparable to plans applicable to Transferees prior to the
Closing, the following benefits: (i) the group health coverage currently
provided to the Transferees, former employees and their dependents, or any
sub-group thereof (collectively, the "Participants"), or comparable group health
coverage which shall (A) waive any pre-existing condition limitations on
benefits for the Participants, (B) waive any eligibility waiting periods for the
Participants, and (C) give effect, in determining or applying any deductible and
maximum out-of-pocket limitations, to claims incurred, amounts paid by or on
behalf of and amounts reimbursed to the Participants under ARCO's or a Company's
group health plan during the calendar year in effect as of the Closing Date, and
(ii) benefits under the employee benefit plans described in Section 4.17 of the
Disclosure Schedule. Without limiting the foregoing, Buyer agrees to provide
coverage to the Transferees as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985.
7.6 Flexible Spending Accounts. Seller and Buyer agree to cooperate with
each other in all reasonable respects to effect an orderly transition for
Employees from the flexible spending account plans in which such Employees
currently participate to Buyer's comparable plans as appropriate and to the
extent permitted by applicable law.
7.7 Cooperation. Seller and Buyer agree to cooperate with each other in
all reasonable respects with respect to administrative issues arising out of
this Agreement that relate to the Plans of Seller, Buyer or their respective
Affiliates.
7.8 Black Lung Matters. After the Closing, and subject to Arch's and
Buyer's right to indemnity for ARCO's and/or Seller's breach of its
representation and warranty in Section 4.21 of this Agreement, Buyer shall pay
or cause the Companies to pay all liabilities of Seller or the Companies under
the Federal Mine Safety and Health Act of 1977, as amended, and applicable
Federal and state laws for claims for disability or death due to "black lung" or
pneumoconiosis, whenever created.
7.9 Employee Termination by Buyer.
(a) In the event the employment of any Transferee is terminated for
any or no reason following the Closing Date, ARCO shall have no liability with
respect to any severance or other post-employment benefits applicable to such
termination, and Buyer shall indemnify and hold harmless ARCO and any member of
Seller's Group for all losses, claims, damages, liabilities, costs and expenses
(including any attorney fees) arising out of or relating to any termination of
employment or any severance or other post-employment benefit with respect to the
Transferees following the Closing Date. Without limiting the foregoing, Buyer
agrees to defend and indemnify ARCO or any member of Seller's Group for any
losses, claims, damages, liabilities, costs and expenses (including any attorney
fees) arising out of or relating to any claim for severance benefits for
whatever reason or basis, including a change of a Transferee's terms and
conditions of employment with the Buyer such as a change in compensation or
employee benefit plans.
33
(b) Without limiting the generality of the foregoing, in the event
the employment of any Transferee is terminated for any or no reason, other than
for cause in accordance with Buyer's applicable disciplinary procedures, if any,
within one year following the Closing Date, Buyer shall provide such Transferee
severance benefits, including the payment of an allowance and the continuation
of medical and dental coverage and the R-60, in accordance with the provisions
of the Atlantic Richfield Special Termination Allowance Plan, as amended, the
Atlantic Richfield Termination Allowance Plan Policy Provisions, the Canyon Fuel
Company Special Termination Allowance Plan and the Canyon Fuel Company Special
Termination Plan Policy Provisions, copies of which are attached hereto as
Exhibit C, and any individual severance arrangement as set forth in Section 4.17
of the Disclosure Schedule, applicable to the Transferees prior to the Closing
Date.
(c) Notwithstanding anything else in this Agreement, Buyer shall not
be required to provide severance benefits for any of the individuals set forth
in Section 7.9(c) of the Disclosure Schedule.
ARTICLE 8
TAXES
8.1 Certain Tax Matters.
(a) Seller will prepare and file or cause to be prepared and filed
all Tax Returns for each Company required to be filed prior to the Closing Date
with the appropriate United States, state, local and foreign governmental
entities for any taxable period of each Company that ends on or before the
Closing Date (the "Pre-Closing Tax Period"). Seller will make all payments shown
thereon as owing with respect to any such Tax Return. Seller will prepare and,
if required to do so by applicable law, deliver to Buyer for signing and filing
any state income Tax Returns of each Company with respect to any Pre-Closing Tax
Period (including any short period) that have not been filed prior to the
Closing Date. Buyer will make all payments shown thereon as owing with respect
to any such Tax Return.
(b) Except as otherwise provided in Section 8.1(a) or (c), Buyer
will prepare and file or cause to be prepared and filed all Tax Returns for each
Company that are required to be filed with the appropriate United States, state,
local and foreign governmental entities for all periods as to which such Tax
Returns are due after the Closing Date. Buyer will pay or cause to be paid all
Taxes required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include
but not end on the Closing Date, to the extent permissible pursuant to
applicable law, Seller will, and Buyer will cause each Company to, (i) take all
steps as are or may be reasonably necessary, including the filing of elections
or returns with applicable taxing authorities, to cause such period to end on
the Closing Date; or (ii) if clause (i) is inapplicable, report the operations
of each Company only for the portion of such period ending on or immediately
before the Closing Date in a combined, consolidated or unitary Tax Return filed
by Seller, notwithstanding that such taxable period does not end on the Closing
Date. If clause (ii) applies to a taxable period of a Company, the portion of
such taxable period included in such return filed by Seller will be
34
treated as a Pre-Closing Tax Period described in Section 8.1(a) and Buyer will
not be responsible for filing such return for such year pursuant to Section
8.1(b).
(d) In order to assist Seller in the preparation of all Tax Returns
that Seller is required to prepare pursuant to Section 8.1(a), Buyer will
prepare or cause each Company to prepare and deliver within 60 days of receipt
Seller's standard Federal and state tax return data gathering packages relating
to the Companies. In addition to providing such packages, Buyer will promptly
provide or cause to be provided to Seller such other information as Seller may
reasonably request (including access to books, records and personnel) in order
for the operations of the Companies to be properly reported in such Tax Returns,
for the preparation for any Tax audit or for the prosecution or defense of any
claim, suit or proceeding relating to Taxes.
(e) To the extent refunds of Taxes are not recorded on the Closing
Balance Sheet, Buyer will pay or cause to be paid to Seller all refunds or
credits of Taxes (including any interest thereon) received by Buyer or CFC after
the Closing Date and attributable to Taxes paid by Seller with respect to any
Pre-Closing Tax Period. Such payment will be made to Seller within 30 days after
receipt of any such refund from or allowance of such credit by the relevant
taxing authority.
(f) Seller will indemnify and hold Buyer harmless from and against
any and all liability for any taxable period as a result of Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law) for taxes
of any corporation or other entity, other than the Companies, which is or has
been affiliated with the Seller.
ARTICLE 9
INDEMNIFICATION
9.1 Arch's and Buyer's Indemnification. Subject to any applicable
limitations set forth in this Article 9, Arch and Buyer, jointly and severally,
shall indemnify and hold harmless each member of Seller's Group and their
respective officers, directors, employees, agents and Affiliates, other than the
Companies (collectively, the Seller Indemnitees"), from and against any and all
Losses to which they or any of them may become subject, including as a result of
claims by third parties, to the extent caused by:
(a) any breach or default in performance by Arch or Buyer of any
covenant, obligation or agreement of Arch or Buyer contained in this Agreement,
including those obligations of Arch and Buyer set forth in Articles 3, 6, 7 and
8 hereof, specifically including any covenant, obligation or agreement of Arch
or Buyer in respect of Environmental Liabilities related to the Properties as
provided in Section 6.14, and in respect of Other Liabilities as provided in
Section 6.16(a); or
(b) any breach of any representation or warranty made by Arch or
Buyer in this Agreement or in any certificate, instrument or other document
delivered by or on behalf of Arch or Buyer at the Closing;
35
and as otherwise expressly provided for in this Agreement, including in respect
of Transfer Taxes as provided in Section 2.4.
9.2 ARCO's and Seller's Indemnification. Subject to any applicable
limitations set forth in this Article 9, ARCO and Seller, jointly and severally,
shall indemnify and hold harmless Arch, Buyer and their respective officers,
directors, employees, agents and Affiliates, including after the Closing, the
Companies (other than CFC) and their officers, directors, employees, agents and
Affiliates (collectively, the "Buyer Indemnitees"), from and against any and all
Losses to which they or any of them may become subject, including as a result of
claims by third parties, to the extent caused by:
(a) any breach or default in performance by ARCO or Seller, as the
case may be, of any covenant, obligation or agreement of ARCO or Seller
contained in this Agreement including those obligations of ARCO and Seller set
forth in Articles 3, 6, 7 and 8 hereof, specifically including any covenant,
obligation or agreement of ARCO or Seller in respect of Environmental
Liabilities related to the ownership or operation of the Other Properties, as
provided in Section 6.15, and in respect of certain Tax liabilities under
Section 8.1(f); or
(b) any breach of any representation or warranty made by ARCO or
Seller in this Agreement or in any certificate, instrument or other document
delivered by or on behalf of ARCO or Seller at the Closing;
and as otherwise expressly provided for in this Agreement.
9.3 Monetary Limitation.
(a) As used in this Agreement, "Losses" shall mean any losses,
claims, damages, liabilities, out-of-pocket costs and expenses (including
judgment costs of settlement and reasonable attorneys', consultants' and
experts' fees). "Other Losses" shall mean any Losses as defined in the
Contribution Agreement. "Combined Buyer's Losses" shall mean the aggregate of
all Losses of Buyer Indemnitees and all Other Losses of Buyer Indemnitees that
ARCO, Seller or Delta are obligated to indemnify against pursuant to this
Agreement or pursuant to the Contribution Agreement, [Confidential Treatment
Requested]*. Notwithstanding the foregoing, the dollar amount of any Losses
shall be determined after taking into account the limitations set forth in
Section 9.6(d).
(b) ARCO, Seller and Delta shall have no obligation to indemnify any
Buyer Indemnitee pursuant to Section 9.2 (other than for any breach of the
representations, warranties or covenants set forth in Sections 4.6, 4.12(b),
4.26, 6.15 and 6.21), unless and until the Combined Buyer's Losses incurred or
sustained by all Buyer Indemnitees exceeds $25 million (provided that no
individual Loss or Other Loss of less than $500,000 shall be counted against
such $25 million), and then only for the excess over $25 million. In addition,
the liability of ARCO, Seller and Delta to indemnify the Buyer Indemnitees for
Combined Buyer's Losses (other than Losses arising under Sections 4.6, 4.26,
6.15 and 6.21 of this Agreement [Confidential Treatment
Requested]* shall in no event exceed $500 million in the aggregate.
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9.4 Nature and Survival; Time Limits.
(a) All representations and warranties set forth in Articles 4 and 5
shall survive the Closing and continue in effect until the first anniversary of
the Closing Date, at which time any and all liability arising out of or relating
to such representations and warranties shall terminate, provided that ARCO's and
Seller's representations and warranties under Section 4.6 as to title to the LLC
Interests to which Buyer's indemnification obligations apply shall survive the
Closing for three years. Any claim against any party hereto for indemnification
pursuant to this Agreement as a result of any breach of representation or
warranty made by such party must be made promptly, and in all events within the
period of time during which such representation or warranty survives the Closing
pursuant to this Section 9.4(a), if any.
(b) Except for the representations and warranties described in
Section 9.4(a), all covenants, obligations and agreements of the parties set
forth in this Agreement, including those obligations set forth in Articles 6, 7
and 8 hereof, shall survive indefinitely.
9.5 Limitation on Remedies; Mitigation. The indemnification provided in
this Agreement, subject to any applicable limitations thereto set forth in this
Agreement, shall be the sole and exclusive remedy available to a party for any
breach, default or violation of this Agreement by the other party. The
Indemnified Party shall use all reasonable efforts to mitigate any Losses.
9.6 General Provisions. In the case of any claim for indemnification
brought pursuant to this Agreement:
(a) The party entitled to indemnification (the "Indemnified Party")
shall notify the party obligated to provide indemnification (the "Indemnifying
Party") promptly upon (i) receipt of notice of the commencement of the claim by
a third party for which indemnification is sought pursuant to this Agreement,
(ii) becoming aware of a claim for indemnification not involving a claim by a
third party and (iii) the occurrence of any material event or change with
respect to any ongoing claim, in writing and in reasonable detail, and within
any applicable time limits specified in this Agreement.
(b) In case any such claim is brought against any Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, or in
respect of any ongoing action, the Indemnifying Party will be entitled to
participate therein and, to the extent it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense thereof. Subsequent
to such assumption of defense, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; provided, however,
that the Indemnified Party shall thereafter have the right to participate in the
defense of such claim and to be represented, solely at its expense, by advisory
counsel selected by it. In all cases in which the Indemnifying Party assumes the
defense of such claim, the Indemnifying Party shall control such defense, and
any settlement of such claim shall require the consent of the Indemnified Party,
which consent may not be unreasonably withheld, conditioned or delayed.
Notwithstanding anything to the contrary contained in this Section 9.6, the
Indemnified Party shall have the right to employ separate
37
counsel at its sole cost and expense if there shall be available one or more
defenses or one or more counterclaims available to the Indemnified Party which
conflicts with one or more defenses or one or more claims or counterclaims
available to the Indemnifying Party. Whether or not the Indemnifying Party shall
have assumed the defense of a claim for which the Indemnified Party is entitled
to be indemnified, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such claim without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed.
(c) The Indemnified Party will, at the expense of the Indemnifying
Party, cooperate and consult with the Indemnifying Party in the defense of any
such action and shall furnish any documents and endeavor to make available any
witnesses under its control.
(d) Any indemnification payment shall be (i) limited to the Losses
actually incurred (after giving effect to the Present Value Benefit, realized or
realizable by the Indemnified Party in connection with or as a result of the
incurrence of the Loss for which the indemnity payment is to be made) and shall
not include punitive damages, indirect damages or consequential damages
(including lost profits) incurred by the Indemnified Party, (ii) net of
insurance proceeds received by the Indemnified Party (and the amount of
indemnification payable under this Agreement shall not include the amount of any
insurance proceeds actually recovered by the Indemnified Party with respect to a
Loss) and (iii) in the case of Buyer Indemnitees, net of any reserves of the
Companies reflected on the Interim Date Balance Sheet applicable thereto. The
foregoing limitations shall apply before application of the monetary limitations
specified in Section 9.3(b). If the amount to be netted hereunder from any
payment by the Indemnifying Party is determined after the Indemnifying Party has
already paid any amount required to be paid pursuant to this Agreement, the
Indemnified Party shall repay to the Indemnifying Party, promptly after such
determination, any amount that the Indemnifying Party would not have had to pay
pursuant to this Agreement had such determination been made at the time of such
payment.
(e) Notwithstanding anything to the contrary contained herein, any
indemnification obligation of Seller or ARCO pursuant to this Agreement relating
to a Loss realized by CFC shall be limited to reflect the then-existing
ownership percentage of the membership interests in CFC owned by Buyer and/or
its Affiliates (without giving effect to any increase in Buyer's and/or its
Affiliates' ownership of membership interests in CFC subsequent to the Closing
Date).
9.7 Tax Treatment. Any indemnity payment by Arch and/or Buyer under this
Agreement shall be treated as an increase in the Purchase Price for tax
purposes, and any indemnity payment by ARCO and/or Seller under this Agreement
shall be treated as a decrease in the Purchase Price for tax purposes unless
otherwise required by applicable Laws, in which case such payment shall be made
in an amount sufficient to indemnify the party on a net after-tax basis taking
into account any tax deduction allowed the indemnified party with respect to the
indemnified event.
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ARTICLE 10
CONDITIONS TO CLOSING
10.1 Conditions Precedent to Obligations of Arch and Buyer. The obligation
of Arch and Buyer to purchase and pay for the LLC Interests is subject to the
satisfaction (or waiver by Buyer), prior to or on the Closing Date, of each of
the following conditions:
(a) Any breach or breaches of the representations and warranties of
ARCO or Seller contained in this Agreement or in the Contribution Agreement at
and as of the Closing Date, after giving effect to such representations and
warranties as though made on and as of the Closing Date (except for
representations and warranties made as of a specific date, which shall be given
effect as of such date), that alone or in the aggregate do not have a Material
Adverse Effect.
(b) ARCO and Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by ARCO or Seller prior to or at the Closing,
including notifications under Section 6.3.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any Federal laws,
any of the transactions contemplated by the Agreement.
(d) Buyer shall have received an opinion, dated the Closing Date, of
counsel employed by ARCO, in form and substance reasonably acceptable to Arch
and Buyer.
(e) There shall not be in effect any injunction or order issued by
any court or administrative agency of competent jurisdiction preventing in any
material respect the consummation of the transactions contemplated by this
Agreement on the Closing Date.
(f) Buyer shall have received such resignations of the officers and
directors of the Companies as shall have been requested by Buyer in writing not
less than 30 days prior to the Closing Date, subject to the provisions of
Article 7.
(g) Since the Effective Date, there have been no adverse events or
occurrences, other than adverse events or occurrences as a result of general
economic conditions or other conditions affecting the industry in which the
Companies operate (including fluctuations in coal prices and legislative or
regulatory conditions) that together with the total amount of the claims of
Buyer Indemnitees for ARCO's or Seller's breaches of their representations or
warranties contained in this Agreement or the Contribution Agreement as of the
Closing Date, have a Material Adverse Effect.
(h) The transactions contemplated in the Contribution Agreement
shall be consummated concurrently with the Closing.
39
If the Closing occurs, nothing in this Section 10.1 shall be construed to
limit Buyer's indemnification rights or the amount of ARCO's or Seller's
indemnification obligations, and it is expressly agreed that unless waived in
writing by Arch and Buyer at or prior to the Closing, any remedy available to
Arch or Buyer for ARCO's or Seller's breach of its representations and
warranties or substantial failure to perform or comply with any obligation or
covenant, including Arch's or Seller's indemnification obligations after the
Closing in respect of such breaches and failures occurring on or prior to
Closing, shall survive Closing and be unaffected thereby.
10.2 Conditions Precedent to Obligations of ARCO and Seller. The
obligation of ARCO and Seller to sell and deliver the LLC Interests to Arch and
Buyer is subject to the satisfaction (or waiver by Seller), prior to or on the
Closing Date, of each of the following conditions:
(a) The representations and warranties of Arch and Buyer contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date, with the same effect as though made on and as of the
Closing Date (except for representations and warranties made as of a specific
date of which shall be true and correct in all material respects as of such
date).
(b) Arch and Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Arch or Buyer prior to or at the Closing.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any Federal laws,
any of the transactions contemplated by this Agreement.
(d) Seller shall have received an opinion, dated the Closing Date,
of counsel for Buyer, in form and substance reasonably acceptable to ARCO and
Seller.
(e) There shall not be in effect any injunction or order issued by
any court or administrative agency of competent jurisdiction preventing the
consummation of the transactions contemplated by this Agreement on the Closing
Date.
(f) The transactions contemplated in the Contribution Agreement
shall be consummated concurrently with the Closing.
(g) Any consents necessary to transfer operating permits for mines
owned by any of the Companies shall have been obtained, unless Arch and Buyer
shall have agreed to indemnify ARCO and Seller from any Losses arising out of
the failure to obtain such consents.
If the Closing occurs, nothing in this Section 10.2 shall be construed to
limit ARCO's or Seller's indemnification rights or the amount of Arch's or
Buyer's indemnification obligations, and it is expressly agreed that, unless
waived by ARCO and Seller in writing at or prior to the Closing, any remedy
available to ARCO or Seller for Arch's or Buyer's breach of their
40
representations and warranties or substantial failure to perform or comply with
any obligation or covenant, including Arch's and Buyer's indemnification
obligations after the Closing in respect of such breaches and failures occurring
on or prior to Closing, shall survive Closing and be unaffected thereby.
ARTICLE 11
TERMINATION OF AGREEMENT
11.1 Termination Before Closing. This Agreement may be terminated at any
time before Closing:
(a) by the mutual consent of ARCO, Seller, Arch and Buyer in
writing;
(b) by Buyer(i) if there have been breaches by ARCO or Seller of
any representations or warranties of ARCO and/or Seller contained in this
Agreement or in the Contribution Agreement that alone or in the aggregate have a
Material Adverse Effect, and if the breaches have continued for a period of 30
days following Buyer's notification to Seller of such breaches, or (ii) if
events have occurred which have made it impossible to satisfy the conditions
precedent to the obligations of Arch and Buyer set forth in Section 10.1;
(c) by Seller (i) if there have been material breaches by Arch or
Buyer of any representations or warranties of Arch and/or Buyer contained in
this Agreement or in the Contribution Agreement, and if the breaches have
continued for a period of 30 days following Seller's notification to Buyer of
such breaches, or (ii) if events have occurred which have made it impossible to
satisfy the conditions precedent to the obligations of ARCO and Seller set forth
in Section 10.2;
(d) by Buyer if Closing has not occurred on or prior to 75 days
after the Effective Date other than primarily as a result of Buyer's breach or
default of this Agreement; or
(e) by Seller if the Closing has not occurred on or prior to 75
days after the Effective Date other than primarily as a result of Seller's
breach or default of this Agreement.
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1, all further obligations of the parties under this Agreement will
terminate and there shall be no liability on the part of any party to this
Agreement, except for material willful breaches of and intentional misstatements
in or pursuant to this Agreement prior to the time of such termination;
provided, however, that the obligations in Sections 6.1(b), 6.5, 6.6, 11.2, 12.3
and 12.10 shall survive the termination of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 Entire Agreement. This Agreement, including the Exhibits and the
Disclosure Schedule, and, to the extent referenced herein, the Contribution
Agreement set forth the entire
41
agreement and understanding of the parties in respect of the transactions
contemplated herein and supersedes any previous agreements and understandings
between the parties with respect thereto.
12.2 Construction. This Agreement is the result of arms-length
negotiations between, and has been prepared and reviewed by, each party hereto
and its respective counsel. Accordingly, this Agreement shall be deemed to be
the product of each party hereto.
12.3 Governing Law. The validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties hereto
shall be governed by the substantive laws of the State of Delaware without
regard to the principles of conflict of laws of the State of Delaware or any
other jurisdiction (except those that cannot be waived) that would call for the
application of the substantive law of any jurisdiction other than the State of
Delaware.
12.4 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing, by facsimile, by overnight
courier or by registered or certified mail, postage prepaid and return receipt
requested, and shall be deemed to have been duly given or made upon: (i)
delivery by hand, (ii) one business day after being sent by overnight courier,
(iii) four business days after being deposited in the United States mail,
postage prepaid, or (iv) in the case of transmission by facsimile, when
confirmation of receipt is obtained. Such communications shall be addressed and
directed to the parties listed below as follows:
If to Seller or ARCO: Atlantic Richfield Company
515 South Flower Street
Los Angeles, CA 90071
Facsimile: 213-486-0170 (Treasurer)
Facsimile: 213-486-1544 (General Counsel)
Attention: Treasurer
Attention: General Counsel
If to Buyer: Arch Western Acquisition Corporation
c/o Arch Coal, Inc.
CityPlace One, Suite 300
St. Louis, Missouri 63141
Facsimile: 314-994-2734
Attention: Jeffry N. Quinn
If to Arch: Arch Coal, Inc.
CityPlace One, Suite 300
St. Louis, Missouri 63141
Facsimile: 314-994-2734
Attention: Jeffry N. Quinn
12.5 Waiver. Waivers of or consents to departures from the provisions
hereof may be given; provided, however, that the same shall be in writing and be
signed by each of the parties
42
hereto. No such waiver or consent shall be construed as a waiver of or consent
to any other departure from any such provisions or any other provisions hereof.
12.6 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. No assignment of this Agreement or of any rights or
obligations hereunder may be made, in whole or in part, by any party (by
operation of law or otherwise) without the prior written consent of the other
party hereto, and any purported assignment without consent shall be void.
12.7 Amendment. This Agreement may not be amended, modified or
supplemented unless the same shall be in writing and signed by each of the
parties hereto.
12.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same document.
12.9 No Third Party Beneficiaries. The terms, agreements and provisions
of the parties set forth in this Agreement are not intended for, nor shall they
be for the benefit of or enforceable by, any Person not a party hereto,
including each of the Companies.
12.10 Jurisdiction; Service of Process.
(a) Each party to this Agreement hereby irrevocably submits itself
to the non-exclusive jurisdiction of the Supreme Court for the State of New
York, sitting in the Borough of Manhattan, or the United States District Court
for the Southern District of New York, (i) for the purposes of any suit, action
or other proceeding brought by any other party, or its respective successors or
assigns arising out of this Agreement or transactions contemplated by this
Agreement or the Contribution Agreement, (ii) to enforce a resolution,
settlement, order or award made pursuant thereto, or any obligation for the
payment of money contained herein. To the extent permitted by applicable Law,
each party to the Agreement hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that (a) it is not personally subject to the jurisdiction of the
above-named courts, (b) the suit, action or proceeding is brought in an
inconvenient forum, (c) the venue of the suit, action or proceeding is improper,
or (d) a resolution, settlement or order made pursuant thereto, or such an
obligation for the payment of money, may not be enforced in or by such court.
Nothing contained herein shall be deemed to waive the right of a party to seek
removal of a matter from state court to Federal court if such removal is
otherwise permissible.
(b) Each party to this Agreement hereby consents to service of
process on it at the office for service of process set forth below as its office
for service of process and additionally irrevocably designates and appoints the
person named in Exhibit D as its "Agent" and attorney-in-fact to receive service
of process in any action, suit or proceeding with respect to any matter as to
which it submits to jurisdiction as set forth above, it being agreed that
service upon Agent shall constitute valid service upon the party or its
successors or assigns. Each party agrees that (x) the sole responsibilities of
the Agent shall be (i) to receive such process, (ii) to send a copy of any such
process so received to such party, by registered airmail, return receipt
requested, at the address for it set forth in Section 12.4, or at the last
address filled in writing by
43
it with the Agent, and (iii) to give prompt telecopied notice of receipt thereof
to it at such address (y) the Agent shall have no responsibility for the receipt
or nonreceipt by the respective party of such process, nor for any performance
or nonperformance by the respective party or its respective successors or
assigns, and (z) failure of the Agent to send a copy of any such process or
otherwise to give notice thereof to the respective party shall not affect the
validity of such service or any judgment in any action, suit or proceeding based
thereon. If service of process cannot be effected in the foregoing manner, each
party further irrevocably consents to the service of process in any action, suit
or proceeding by the mailing of copies thereof by registered or certified
airmail, postage prepaid, return receipt requested, to it at its address set
forth in Section 12.4 hereof. The foregoing, however, shall not limit the right
of the party to serve process in any other manner permitted by Law. Any judgment
against a party in any suit for which such party has no further right of appeal
shall be conclusive, and may be enforced in other jurisdictions by suit on the
judgment, a certified or true copy of which shall be conclusive evidence of the
fact and of the amount of any indebtedness or liability of such party therein
described; provided, however, that the plaintiff may at its option bring suit,
or institute other judicial proceedings, against such party or any of its assets
in the courts of any country or place where such party or such assets may be
found. Each party further covenants and agrees that for 3 years following the
Closing Date, it shall maintain a duly appointed agent for the service of
summonses and other legal processes in New York.
(c) For purposes of this Section 12.10, the Agent and offices for
service of process for each of the parties shall be as set forth on Exhibit D or
such other person or offices as shall be designated in writing by any party to
the other parties.
12.11 Disclaimer for Communications. Except as and to the extent set forth
in this Agreement ARCO, Seller and their respective Affiliates make no
representation, promise, covenant or warranty regarding any of the Companies,
their assets, business, operations, liabilities or obligations, or otherwise,
and disclaim all liability and responsibility for any representation, warranty,
disclosure or statement made or communicated (orally or in writing) to Arch,
Buyer or their respective Affiliates or to any officer, stockholder, director,
employee, agent, consultant or representative of Arch, Buyer or their respective
Affiliates, including any information provided by any investment banking firm or
other agent of ARCO or Seller, or any opinion, statement or advice which may
have been provided to Arch, Buyer or its respective Affiliates by any officer,
stockholder, director, employee, agent, consultant or representative of ARCO,
Seller or the Companies.
44
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the date first written above.
ATLANTIC RICHFIELD COMPANY
/s/ Terry G. Dallas
------------------------------------------
By: Terry G. Dallas
Title: Senior Vice President and Treasurer
ARCO UINTA COAL COMPANY
/s/ Charles P. Cooley
------------------------------------------
By: Charles P. Cooley
Title: Treasurer
ARCH COAL, INC.
/s/ David B. Peugh
------------------------------------------
By: David B. Peugh
--------------------------------------
Title: Vice President
-----------------------------------
ARCH WESTERN ACQUISITION
CORPORATION
/s/ Jeffry N. Quinn
------------------------------------------
By: Jeffry N. Quinn
--------------------------------------
Title: President
-----------------------------------
45
DISCLOSURE SCHEDULES TO
THE PURCHASE AND SALE AGREEMENT
I. DISCLOSURE SCHEDULE - Atlantic Richfield Company
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.8 Real Property
Schedule 4.11 Insurance Policies
Schedule 4.14 Litigation
Schedule 4.17 Employee Benefit Plans
Schedule 4.23 Assets
Schedule 6.8 Guarantees
Schedule 7.1 Retention of Employees and Continuation of Benefits
Schedule 7.2 Retention of Retirement Plans for Companies
Schedule 7.9(c) Employee Termination By Buyer
II. DISCLOSURE SCHEDULE - AU SUB
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.12 Taxes
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
III. DISCLOSURE SCHEDULE - Mountain Coal Company, L.L.C.
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.8 Real Property
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.11 Insurance Policies
Schedule 4.12 Taxes
Schedule 4.13 Licenses, Permits, Authorizations
Schedule 4.14 Litigation
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
Schedule 4.23 Assets
Schedule 6.8 Guarantees
Schedule 6.14 Environmental Matters/Properties
Schedule 7.1 Retention of Employees and Continuation of Benefits
Schedule 7.2 Retention of Retirement Plans for Companies
IV. DISCLOSURE SCHEDULE - Canyon Fuel Company, L.L.C.
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.8 Real Property
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.11 Insurance Policies
Schedule 4.12 Taxes
Schedule 4.13 Licenses, Permits, Authorizations
Schedule 4.14 Litigation
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
Schedule 4.23 Assets
Schedule 6.8 Guarantees
Schedule 6.14 Environmental Matters/Properties
Schedule 7.1 Retention of Employees and Continuation of Benefits
Schedule 7.2 Retention of Retirement Plans for Companies
V. DISCLOSURE SCHEDULE - Thunder Basin Coal Company, L.L.C.
Schedule 4.3 No Violations
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.7 Capitalization
Schedule 4.8 Real Property
Schedule 4.9 Buildings, Structures and Tangible Personal Property
Schedule 4.10 Material Contracts
Schedule 4.11 Insurance Policies
Schedule 4.12 Taxes
Schedule 4.13 Licenses, Permits, Authorizations
Schedule 4.14 Litigation
Schedule 4.15 Compliance with Laws
Schedule 4.16 Labor Matters
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Bank Accounts
Schedule 4.22 Conduct of Business
Schedule 4.23 Assets
Schedule 7.8 Guarantees
Schedule 7.14 Environmental Matters/Properties
Schedule 8.1 Retention of Employees and Continuation of Benefits
Schedule 8.2 Retention of Retirement Plans for Companies
VI. DISCLOSURE SCHEDULE - State Leases LLC
Schedule 4.4 Approvals, Consents and Other Actions
Schedule 4.8 Real Property
VII. DISCLOSURE SCHEDULE - Acquisition Corp.
Schedule 5.3 No Violations
Schedule 5.4 Approvals, Consents and Other Actions
Schedule 5.8 Title to Membership Interests
Schedule 5.9 Capitalization
Schedule 5.10 Real Property
Schedule 5.11 Buildings, Structures and Tangible Personal Property
Schedule 5.12 Material Contracts
Schedule 5.13 Insurance Policies
Schedule 5.14 Taxes
Schedule 5.15 Licenses, Permits, Authorizations
Schedule 5.16 Litigation
Schedule 5.17 Compliance with Laws
Schedule 5.18 Labor Matters
Schedule 5.19 Employee Benefit Plans
Schedule 5.20 Bank Accounts
Schedule 5.22 Absence of Undisclosed Liabilities
Schedule 5.23 Assets
EXHIBIT 2.2
CONTRIBUTION AGREEMENT
among
ARCH COAL, INC.
ARCH WESTERN ACQUISITION CORPORATION
ATLANTIC RICHFIELD COMPANY
DELTA HOUSING INC.
and
ARCH WESTERN RESOURCES LLC
Dated: MARCH 22, 1998
* Portions of this document have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 24b-2 under the U.S.
Securities Exchange Act of 1934, as amended. Such portions have been
filed separately with the Commission and are identified in this
document by the following legend: "[Confidential Treatment
Requested]*."
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.....................................................2
1.1 DEFINITIONS........................................................2
1.2 CROSS REFERENCES, INTERPRETATION..................................10
ARTICLE 2 CONTRIBUTIONS TO THE COMPANY...................................10
2.1 CONTRIBUTION OF CONTRIBUTED MEMBERSHIP INTERESTS..................10
2.2 CASH CONTRIBUTION.................................................11
2.3 MEMBERSHIP INTERESTS..............................................11
2.4 FURTHER ASSURANCES................................................11
2.5 TRANSFER TAXES....................................................11
2.6 ADJUSTMENT TO SPECIAL DISTRIBUTION................................12
2.7 LITTLE THUNDER LEASE..............................................13
ARTICLE 3 CLOSING........................................................14
3.1 ARCO PRE-CLOSING ACTIONS..........................................14
3.2 ARCH PRE-CLOSING ACTIONS..........................................14
3.3 CLOSING DATE......................................................15
3.4 CLOSING ACTIONS...................................................15
3.5 SIMULTANEOUS TRANSACTIONS.........................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ARCO AND DELTA HOUSING.......17
4.1 ORGANIZATION AND GOOD STANDING....................................17
4.2 AUTHORITY.........................................................17
4.3 NO VIOLATIONS.....................................................17
4.4 APPROVALS, CONSENTS AND OTHER ACTIONS.............................18
4.5 FORMATION AND GOOD STANDING OF TBCC AND SL........................18
4.6 TITLE TO THE MEMBERSHIP INTERESTS.................................18
4.7 CAPITALIZATION....................................................18
4.8 REAL PROPERTY.....................................................18
4.9 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY..............19
4.10 MATERIAL CONTRACTS................................................19
4.11 INSURANCE POLICIES................................................19
4.12 TAXES.............................................................20
4.13 LICENSES, PERMITS, AUTHORIZATIONS.................................20
4.14 LITIGATION........................................................20
4.15 COMPLIANCE WITH LAWS..............................................20
4.16 LABOR MATTERS.....................................................21
4.17 EMPLOYEE BENEFIT PLANS............................................21
4.18 BANK ACCOUNTS.....................................................22
4.19 BROKER LIABILITY..................................................22
4.20 FINANCIAL STATEMENTS..............................................22
4.21 BLACK LUNG DISCLOSURE.............................................23
4.22 CONDUCT OF BUSINESS...............................................23
4.23 ASSETS............................................................23
4.24 CERCLA............................................................23
4.25 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES..............23
4.26 NO OTHER COMMITMENT TO SELL LLC INTERESTS.........................24
4.27 ABSENCE OF UNDISCLOSED LIABILITIES................................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ARCH AND ACQUISITION CORP....24
5.1 ORGANIZATION AND GOOD STANDING....................................24
5.2 AUTHORITY.........................................................24
5.3 NO VIOLATIONS.....................................................24
5.4 APPROVALS, CONSENTS AND OTHER ACTIONS.............................24
5.5 FINANCIAL CAPABILITY..............................................25
5.6 ARCH'S AND ACQUISITION CORP.'S INQUIRY............................25
5.7 ORGANIZATION, QUALIFICATION AND GOOD STANDING OF AOW..............25
5.8 TITLE TO THE MEMBERSHIP INTERESTS.................................25
5.9 CAPITALIZATION....................................................25
5.10 REAL PROPERTY.....................................................25
5.11 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY..............26
5.12 MATERIAL CONTRACTS................................................26
5.13 INSURANCE POLICIES................................................26
5.14 TAXES.............................................................26
5.15 LICENSES, PERMITS, AUTHORIZATIONS.................................26
5.16 LITIGATION........................................................27
5.17 COMPLIANCE WITH LAWS..............................................27
5.18 LABOR MATTERS.....................................................27
5.19 EMPLOYEE BENEFIT PLANS............................................27
5.20 BANK ACCOUNTS.....................................................28
5.21 FINANCIAL STATEMENTS..............................................28
5.22 BROKER LIABILITY..................................................28
5.23 ASSETS............................................................28
5.24 QUALIFICATION, COMPLIANCE WITH ACREAGE LIMITATIONS................28
5.25 CERCLA............................................................28
5.26 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES..............28
5.27 BLACK LUNG DISCLOSURE.............................................28
5.28 ABSENCE OF UNDISCLOSED LIABILITIES................................29
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................29
6.1 DUE ORGANIZATION; GOOD STANDING AND POWER.........................29
6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT...........................29
6.3 NO CONSENTS REQUIRED; NO CONFLICT WITH INSTRUMENTS TO WHICH THE
COMPANY IS A PARTY................................................29
6.4 ACCREDITED INVESTOR...............................................29
6.5 INVESTMENT INTENT.................................................30
ARTICLE 7 COVENANTS AND AGREEMENTS OF THE PARTIES........................30
7.1 ACCESS TO INFORMATION.............................................30
7.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING.......................31
7.3 NOTIFICATION......................................................32
7.4 ANTITRUST NOTIFICATION............................................32
7.5 FEES AND EXPENSES.................................................32
7.6 PUBLICITY.........................................................32
7.7 POST-CLOSING ASSISTANCE...........................................32
7.8 GUARANTEES........................................................33
7.9 NAME CHANGES......................................................33
7.10 SURETY BONDS......................................................33
7.11 BLACK LUNG LIABILITY..............................................34
7.12 LITIGATION SUPPORT................................................34
7.13 INSURANCE.........................................................34
7.14 ARCH'S AND ACQUISITION CORP.'S ENVIRONMENTAL RESPONSIBILITIES.....34
7.15 ARCO'S AND DELTA HOUSING'S ENVIRONMENTAL RESPONSIBILITIES.........35
7.16 OTHER LIABILITIES.................................................35
7.17 DISCLOSURE SCHEDULES..............................................35
7.18 COMMERCIALLY REASONABLE EFFORTS...................................35
ARTICLE 8 EMPLOYEES AND EMPLOYEE BENEFITS................................36
8.1 RETENTION OF EMPLOYEES AND CONTINUATION OF BENEFITS...............36
8.2 RETENTION OF RETIREMENT PLANS FOR ARCO PARTIES....................36
8.3 ARCO'S PENSION PLAN...............................................36
8.4 THRIFT PLAN.......................................................37
8.5 OTHER EMPLOYEE BENEFITS...........................................37
8.6 FLEXIBLE SPENDING ACCOUNTS........................................37
8.7 COOPERATION.......................................................38
8.8 BLACK LUNG MATTERS................................................38
8.9 TRANSFEREE TERMINATION BY ARCH....................................38
ARTICLE 9 TAXES..........................................................39
9.1 ARCO TAX MATTERS..................................................39
9.2 ARCH TAX MATTERS..................................................40
ARTICLE 10 INDEMNIFICATION...............................................41
10.1 ARCH'S AND ACQUISITION CORP.'S INDEMNIFICATION....................41
10.2 ARCO'S AND DELTA HOUSING'S INDEMNIFICATION........................41
10.3 MONETARY LIMITATION...............................................43
10.4 NATURE AND SURVIVAL; TIME LIMITS..................................43
10.5 LIMITATION ON REMEDIES; MITIGATION................................43
10.6 GENERAL PROVISIONS................................................44
10.7 TAX TREATMENT.....................................................45
10.8 COOPERATION AND COMMUNICATION.....................................45
10.9 EFFECTING THE INDEMNITY...........................................46
ARTICLE 11 CONDITIONS TO CLOSING.........................................46
11.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCH AND ACQUISITION CORP..46
11.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCO AND DELTA HOUSING.....47
ARTICLE 12 TERMINATION OF AGREEMENT......................................48
12.1 TERMINATION BEFORE CLOSING........................................48
12.2 EFFECT OF TERMINATION.............................................49
ARTICLE 13 MISCELLANEOUS.................................................49
13.1 ENTIRE AGREEMENT..................................................49
13.2 CONSTRUCTION......................................................49
13.3 GOVERNING LAW.....................................................49
13.4 NOTICES...........................................................49
13.5 WAIVER............................................................50
13.6 BINDING EFFECT; ASSIGNMENT........................................50
13.7 AMENDMENT.........................................................50
13.8 COUNTERPARTS......................................................50
13.9 NO THIRD PARTY BENEFICIARIES......................................50
13.10 JURISDICTION; SERVICE OF PROCESS..................................50
13.11 DISCLAIMER FOR COMMUNICATIONS.....................................52
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
SCHEDULES
ARCO DISCLOSURE SCHEDULE
ARCH DISCLOSURE SCHEDULE
EXHIBITS
EXHIBIT 1.1 INDIVIDUALS WITH KNOWLEDGE
EXHIBIT 2.6 PRELIMINARY INTERIM DATE BALANCE SHEET
EXHIBIT 3.4(c)(1) COMPANY AGREEMENT
EXHIBIT 3.4(c)(2) TAX SHARING AGREEMENT
EXHIBIT 8.9(b) TERMINATION PLANS AND PROVISIONS
EXHIBIT 13.10(b) AGENT FOR SERVICE
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "AGREEMENT"), dated as of March 22,
1998 (the "EFFECTIVE DATE") among Arch Coal, Inc., a Delaware corporation
("ARCH"), Arch Western Acquisition Corporation, a Delaware corporation
("ACQUISITION CORP."), Atlantic Richfield Company, a Delaware corporation
("ARCO"), Delta Housing Inc., a Delaware corporation ("DELTA HOUSING"), and Arch
Western Resources LLC, a Delaware limited liability company (the "Company").
WHEREAS, ARCO currently owns all of the outstanding capital stock of
ARCO Uinta, and ARCO Uinta will own all of the outstanding membership interests
in AUS; and
WHEREAS, ARCO Uinta will sell all of its membership interests in MCC
LLC, CFC and AUS to Acquisition Corp. for the consideration and upon the terms
and conditions set forth in the Purchase Agreement; and
WHEREAS, ARCO will transfer its interest in TBCC to the Company in
exchange for a membership interest in the Company; and
WHEREAS, ARCO will contribute its membership interest in the Company to
Delta Housing; and
WHEREAS, Delta Housing will transfer to the Company its membership
interest in SL; and
WHEREAS, Acquisition Corp. will transfer its membership interests in
AOW, AUS, MCC LLC and CFC to the Company in exchange for membership interests in
the Company; and
WHEREAS, the Company desires to accept the assignment, conveyance and
transfer of the membership interests in TBCC, SL, AOW, AUS, MCC LLC and CFC upon
the terms and conditions hereinafter set forth; and
WHEREAS, Acquisition Corp. and Delta Housing desire to enter into the
Company Agreement to govern the conduct and operation of the Company and its
business after the Closing;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms shall have the
meanings set forth below:
"ACC" shall mean the United States assets of ARCO Coal Company, a
division of ARCO.
"ACQUISITION CORP." shall have the meaning set forth in the Preamble.
"ACT" shall mean ARCO Coal Terminal, a Delaware corporation.
"ADJUSTMENT" shall have the meaning set forth in Section 2.6(b).
"AFFILIATE" of any specified Person shall mean any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified Person, and the
term "affiliated with" shall have a correlative meaning. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement, or
otherwise. As used with respect to any Arch Party (except for purposes of
Section 10.2), "Affiliate" shall not include Ashland Inc., a Kentucky
corporation, or any of its subsidiaries other than Arch. As used with respect to
any ARCO Party, "Affiliate" shall not include ARCO Chemical Company, a Delaware
corporation, or Vastar Resources, Inc., a Delaware corporation.
"AGENT" shall have the meaning set forth in Section 13.10(b).
"AGREED RATE" shall mean six percent per annum.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ANTITRUST DIVISION" shall have the meaning set forth in Section 7.4.
"AOW" means Arch of Wyoming LLC, a Delaware limited liability company.
"AOW CLOSING DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.21.
"ARCH" shall have the meaning set forth in the Preamble.
"ARCH DISCLOSURE SCHEDULE" shall mean the document attached hereto
titled as such.
"ARCH INDEMNITEES" shall mean Arch and the Arch Parties.
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"ARCH OF WYOMING" shall mean Arch of Wyoming, Inc., a Delaware
corporation.
"ARCH PARTIES" shall mean Acquisition Corp., AOW, MCC LLC, AUS and CFC.
"ARCH PRE-CLOSING TAX PERIOD" shall have the meaning set forth in
Section 9.2(a).
"ARCH'S RETIREMENT PLAN" shall have the meaning set forth in Section
8.3.
"ARCH'S SAVINGS PLAN" shall have the meaning set forth in Section 8.4.
"ARK" shall mean Ark Land Company, a Delaware corporation and
wholly-owned subsidiary of Arch.
"ARCO" shall have the meaning set forth in the Preamble.
"ARCO ACCUMULATION AND SAVINGS PLANS" shall have the meaning set forth
in Section 8.4.
"ARCO DISCLOSURE SCHEDULE" shall mean the document attached hereto and
titled as such.
"ARCO INDEMNITEES" shall mean ARCO and the ARCO Parties.
"ARCO PARTIES" shall mean SL and TBCC.
"ARCO RETIREMENT PLAN" shall have the meaning set forth in Section 8.3.
"ARCO UINTA" shall mean ARCO Uinta Coal Company, a Delaware
corporation.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall have the meaning set forth
in Section 10.8(e).
"AUS" means a Delaware limited liability company to be formed by ARCO
Uinta.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 2.6(a).
"AUTHORITY" shall mean any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal (or any
commonwealth, territory or possession thereof), state, local or foreign, or any
agency, department or instrumentality thereof, or any court or arbitrator
(public or private).
"BANKRUPTCY" shall mean (i) the commencement of any voluntary or
involuntary bankruptcy case by or against a Person as debtor under Title 11 of
the United States Code or any successor or equivalent statute, (ii) the
insolvency or the inability of a Person to satisfy its obligations as they
become due or (iii) the general assignment by any Person for the benefit of
creditors under state Law.
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"BLACK LUNG DISCOUNT RATE" shall mean seven percent (7%) per annum.
"CERCLA" shall mean the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as amended by the Superfund Amendments
and Reauthorization Act of 1986).
"CFC" shall mean Canyon Fuel Company, LLC, a Delaware limited liability
company owned 65% by ARCO Uinta.
"CFC AGREEMENT" shall mean the Second Amended and Restated Limited
Liability Company Agreement of Canyon Fuel Company LLC, dated as of January 1,
1997, as in effect on the Closing Date.
"CH20" shall mean CH-Twenty, Inc., a Delaware corporation.
"CARBON BASIN RESERVES" shall have the meaning set forth in Section
3.2(c).
"CASH CONTRIBUTION" shall have the meaning set forth in Section 2.2.
"CATEGORY 4 (10-YEAR) EQUIPMENT" shall have the meaning set forth in
the Little Thunder Lease.
"CLOSING" shall have the meaning set forth in Section 3.3.
"CLOSING DATE" shall have the meaning set forth in Section 3.3.
"CLOSING DATE BALANCE SHEET" shall mean the unaudited, pro forma,
combined, consolidated balance sheet of TBCC (including the LTL Property and the
state coal leases to be owned by SL) as of the close of business on the Closing
Date, which shall be derived from the combined, consolidated unaudited balance
sheet of ACC as of the same date, prepared as though the Proposed Transactions
had not been consummated. The Closing Date Balance Sheet shall be prepared on a
basis consistent with the Interim Date Balance Sheet.
"CLOSING DATE MEMBERS' EQUITY" shall have the meaning set forth in
Section 2.6(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMBINED LOSSES" shall have the meaning set forth in Section 10.3(a).
"COMPANIES" shall mean CFC, AUS, TBCC, SL and MCC LLC.
"COMPANY" shall have the meaning set forth in the Preamble.
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"COMPANY AGREEMENT" shall mean that certain Limited Liability Company
Agreement of Arch Western Resources LLC, to be dated as of the Closing Date
between Acquisition Corp. and Delta Housing substantially in the form attached
hereto as Exhibit 3.4(c)(1).
"COMPANY DEBT" shall have the meaning set forth in Section 3.4(e).
"CONDITIONAL AGREEMENT" shall have the meaning set forth in Section
10.8(e).
"CONTRIBUTED ARCH INTERESTS" shall have the meaning set forth in
Section 2.1(a).
"CONTRIBUTED ARCO INTERESTS" shall have the meaning set forth in
Section 2.1(c).
"CONTRIBUTED LLCS" shall mean TBCC, SL, AUS, MCC LLC, CFC and AOW as
the context may require.
"CONTRIBUTED MEMBERSHIP INTERESTS" shall mean the Contributed Arch
Interests and the Contributed ARCO Interests.
"CONTRIBUTING MEMBERS" shall mean ARCO, Delta Housing and Acquisition
Corp., each of which may be referred to individually as a "Contributing Member,"
as the context may require.
"DELTA HOUSING" shall have the meaning set forth in the Preamble.
"DESIGNATED ARCO REPRESENTATIVE" shall mean an employee of Delta
Housing or an Affiliate designated by Delta Housing from time to time. The
initial Designated ARCO Representative will be designated at Closing. Delta
Housing may change such designation by giving Acquisition Corp. notice.
"DISAGREEMENT NOTICE" shall have the meaning set forth in Section
2.6(c).
"DISCLOSURE SCHEDULE" shall mean the ARCO Disclosure Schedule or the
Arch Disclosure Schedule, as the context requires.
"EFFECTIVE DATE" shall have the meaning set forth in the Preamble.
"EMPLOYEES" shall have the meaning set forth in Section 4.17(a).
"ENVIRONMENTAL LAWS" shall mean Laws aimed at abatement of pollution;
protection of the environment; ensuring public safety from environmental
hazards; management, storage or control of Hazardous Materials; releases or
threatened releases of Hazardous Materials into the environment, including,
ambient air, surface water and groundwater; and all other Laws relating to the
manufacturing, processing, distribution, use, treatment, storage, disposal,
handling or transportation of Hazardous Materials, including CERCLA, Clean Air
Act, Clean Water Act, Solid Wastes Disposal Act (as amended by the Resource
Conservation and Recovery Act), Toxic
5
Substances Control Act, Emergency Planning and Community Right to Know Act,
Surface Mining Control and Reclamation Act, Mine Safety and Health Act, Safe
Drinking Water Act and any regulations issued under each of such statutes, and
any state or local counterparts, and any other Laws to the extent relating to
reclamation of lands affected by mining.
"ENVIRONMENTAL LIABILITIES" shall mean any and all claims, actions,
causes of action, damages, losses, liabilities, obligations, penalties,
judgments, amounts paid in settlement, assessments, costs, disbursements or
expenses (including attorneys' fees and costs, experts' fees and costs and
consultants' fees and costs) of any kind or nature (including those absolute,
accrued or contingent, unknown or otherwise and including, further, liability
for study, testing or investigatory costs, cleanup costs, response costs,
removal costs, remediation costs, containment costs, restoration costs,
corrective action costs or business losses) arising out of, based on, resulting
from or alleging (i) the presence, release, threatened release, discharge or
emission into the environment of any Hazardous Materials existing or arising on,
beneath or above any property, including claims with respect to other properties
based upon claims relating to migration or emanation (or threatened migration or
emanation) of Hazardous Materials from the property to such other properties,
whether or not immediately adjacent to the property, (ii) the violation of any
Environmental Laws involving any property, including claims with respect to
other properties based upon claims relating to migration or emanation (or
threatened migration or emanation) of Hazardous Materials from the property to
such other properties, whether or not immediately adjacent to the property, and
(iii) natural resources damages, penalties or fines, or property damages or
personal injuries claimed by private (non-governmental) parties.
"ERISA" shall have the meaning set forth in Section 4.17(a).
"FINAL JUDGMENT" shall mean a judgment by a court of competent
jurisdiction or a binding award in arbitration from which no further appeal or
review may be taken, a settlement or a confession of judgment.
"FTC" shall have the meaning set forth in Section 7.4.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States, from time to time.
"HAZARDOUS MATERIALS" shall mean any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor, polychlorinated biphenyls
and asbestos or asbestos-containing materials.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
10.6(a).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
10.6(a).
6
"INDEPENDENT ACCOUNTANTS" shall have the meaning set forth in Section
2.6(d).
"INTERIM DATE" shall mean December 31, 1997.
"INTERIM DATE BALANCE SHEET" shall mean the unaudited, pro forma,
combined, consolidated balance sheet for TBCC (including the LTL Property and
the state coal leases to be owned by SL) which shall be derived from and
consistent with the combined, consolidated audited balance sheet of ACC as of
the close of business on the Interim Date. The Interim Date Balance Sheet shall
be prepared on a basis consistent with the Preliminary Interim Date Balance
Sheet and, except for changes with respect to corporate adjustments and income
tax calculations and the effect thereof on total member's equity in TBCC, will
be substantially identical to the Preliminary Interim Date Balance Sheet.
"INTERIM DATE MEMBERS' EQUITY" shall have the meaning set forth in
Section 2.6(b).
"KNOWLEDGE" shall mean the actual knowledge of the individuals
identified on Exhibit 1.1, without any duty of inquiry.
"LAWS" shall mean all existing Federal, state and local laws (statutory
or common), rules, ordinances, regulations, grants, leases, orders, directives,
judgments, decrees and other governmental restrictions of any kind or nature,
including permits and other similar requirements, whether legislative,
municipal, administrative or judicial in nature.
"LAXT" shall mean L. A. Export Terminal, a Delaware corporation.
"LITTLE THUNDER LEASE" shall mean that certain Master Lease dated
August 8, 1997 between LTLC and TBCC, as amended by Amendment to Master Lease
dated January 27, 1998.
"LOSSES" shall have the meaning set forth in Section 10.3(a).
"LTLC" shall mean Little Thunder Leasing Company, a Delaware
corporation.
"LTL PROPERTY" shall mean all of the property and equipment subject to
the Little Thunder Lease, except for the Category 4 (10-Year) Equipment.
"MATERIAL ADVERSE EFFECT" (i) as used in Sections 3.4(m), 7.17, 11.1(a)
and 12.1(b), shall mean a breach or breaches of the representations and
warranties of ARCO and/or Delta Housing under this Agreement and ARCO and/or
ARCO Uinta under the Purchase Agreement that in the aggregate, if the Proposed
Transactions were consummated, would give rise to indemnification obligations
owed to Arch Indemnitees by ARCO and/or Delta Housing under this Agreement and
ARCO and/or ARCO Uinta under the Purchase Agreement (without regard to any
applicable limits of Section 10.3 of this Agreement or Section 9.3 of the
Purchase Agreement), together totaling more than One Hundred and Ten Million
Dollars, and (ii) as used in Section 11.1(g), shall mean (without duplication)
the sum of (a) aggregate reductions in the actual value of the business of the
ARCO Parties, on a combined, consolidated basis and taken as a whole, resulting
7
from any events or occurrences referred to in Section 11.1(g), and (b) a breach
or breaches of the representations and warranties of ARCO and/or Delta Housing
under this Agreement and ARCO and/or ARCO Uinta under the Purchase Agreement
that in the aggregate, if the Proposed Transactions were consummated, would give
rise to indemnification obligations owed to Arch Indemnitees by ARCO and/or
Delta Housing under this Agreement and ARCO and ARCO Uinta under the Purchase
Agreement (without regard to any applicable limits in Section 10.3 of this
Agreement or Section 9.3 of the Purchase Agreement), together totaling more than
One Hundred and Ten Million Dollars.
"MCC" shall mean Mountain Coal Company, a Delaware corporation.
"MCC LLC" shall mean Mountain Coal Company L.L.C., a Delaware limited
liability company.
"OTHER LIABILITIES" shall have the meaning set forth in Section
7.16(b).
"OTHER LOSSES" shall have the meaning set forth in Section 10.3(a).
"OTHER PROPERTIES" shall have the meaning set forth in Section 7.15.
"PBGC" shall have the meaning set forth in Section 4.17(e).
"PARTICIPANTS" shall have the meaning set forth in Section 8.5.
"PERFORMANCE BONDS" shall have the meaning set forth in Section 7.10.
"PERSON" shall mean and include, any individual, partnership, joint
venture, corporation, limited liability company, trust, joint-stock company,
unincorporated entity or association, organization or other legal entity.
"PLANS" shall have the meaning set forth in Section 4.17(a).
"POST CLOSING SURETY BOND" shall have the meaning set forth in Section
7.10.
"PRE-CLOSING TAX PERIOD" shall have the meaning set forth in Section
9.1(a).
"PRELIMINARY INTERIM DATE BALANCE SHEET" shall mean the document
attached as Exhibit 2.6.
"PRESENT VALUE BENEFIT" shall mean the present value (based on a
discount rate equal to the short-term applicable federal rate as determined
under Section 1274(d) of the Code at the time of determination, and assuming
that the Indemnified Party will be liable for income taxes at all relevant times
at the maximum marginal rates) of any income tax benefit.
"PROPERTIES" shall have the meaning set forth in Section 7.14.
8
"PROPOSED TRANSACTIONS" shall have the meaning set forth in Section
3.3.
"PURCHASE AGREEMENT" shall mean the Purchase and Sale Agreement by and
among ARCO, ARCO Uinta, Arch and Acquisition Corp. dated as of the date of this
Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2 of the
Purchase Agreement.
"REPORT" shall have the meaning set forth in Section 2.6(d).
"SL" shall mean State Leases LLC, a Delaware limited liability company.
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended.
"SPECIAL DISTRIBUTION" shall have the meaning set forth in Section
3.4(f).
"STATE COAL LEASES" shall mean the ARCO state coal leases identified on
the ARCO Disclosure Schedule.
"STATEMENT" shall have the meaning set forth in Section 2.6(b).
"SUBSTITUTE SURETY BOND" shall have the meaning set forth in Section
7.10.
"SURETY BOND" shall have the meaning set forth in Section 7.10.
"TBCC" shall mean Thunder Basin Coal Company L.L.C., a Delaware limited
liability company.
"TAX" or "TAXES" shall mean any tax or taxes, similar charge, fee,
impost, levy or other assessment (including income taxes, severance taxes,
excise taxes, sales taxes, franchise taxes, real estate taxes, Transfer Taxes,
transfer gain taxes, value added taxes, use taxes, ad valorem taxes, withholding
taxes, payroll taxes, or minimum taxes), together with any related liabilities,
penalties, fines, additions to tax or interest imposed by the United States or
any state, county, local or foreign government, agency or taxing authority, or
any subdivision thereof.
"TAX RETURN" or "TAX RETURNS" shall mean all returns, reports,
estimates and information statements relating to, or required to be filed in
connection with, any Taxes pursuant to the statutes, rules and regulations of
the United States or any state, county, local or foreign government subdivision,
agency or taxing authority.
"TAX SHARING AGREEMENT" shall mean the Tax Sharing Agreement by and
among Arch, Acquisition Corp., Delta Housing and the Company, to be dated as of
the Closing Date substantially in the form attached hereto as Exhibit 3.4(c)(2).
9
"THUNDER CLOUD FEDERAL LEASE TRACT" shall mean that proposed federal
coal lease of the tract of land located in the State of Wyoming known as the
"Thunder Cloud Tract."
"TRANSFER TAXES" shall have the meaning set forth in Section 2.5.
"TRANSFEREES" shall have the meaning set forth in Section 8.1(a).
[Confidential Treatment Requested]*
[Confidential Treatment Requested]*
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.20.
"VEBA" shall have the meaning set forth in Section 4.17(a).
1.2 CROSS REFERENCES, INTERPRETATION. References to "Articles" refer
to Articles of this Agreement. References to "Sections" refer to Sections and
subsections of this Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa. Whenever the word "including" is used in this Agreement
it shall be read to mean "including without limitation." The headings in this
Agreement are inserted for convenience only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
ARTICLE 2
CONTRIBUTIONS TO THE COMPANY
2.1 CONTRIBUTION OF CONTRIBUTED MEMBERSHIP INTERESTS.
(a) On the terms and subject to the conditions set forth in
this Agreement, Acquisition Corp. shall cause its membership interests in AUS,
CFC, MCC LLC and AOW (collectively, the "CONTRIBUTED ARCH INTERESTS") to be
contributed, conveyed, transferred, assigned and delivered to the Company, and
the Company shall accept and acquire the Contributed Arch Interests in exchange
for 991/2% common membership interest of Acquisition Corp. in the Company.
(b) The contribution, conveyance, transfer and assignment of the
Contributed Arch Interests contemplated hereby shall be made by the delivery by
Acquisition Corp. of a duly executed assignment transferring the Contributed
Arch Interests to the Company.
(c) On the terms and subject to the conditions set forth in this
Agreement, (i) ARCO shall cause its interest in TBCC, and (ii) Delta Housing
shall cause its interest in SL (collectively the "CONTRIBUTED ARCO INTERESTS")
to be contributed, conveyed, transferred, assigned and delivered to the Company,
and the Company shall accept and acquire, the Contributed ARCO Interests in
exchange for 1/2% common and 1/2% preferred membership interests in the Company.
10
(d) The contribution, conveyance, transfer and assignment of the
Contributed ARCO Interests contemplated hereby shall be made by the delivery by
ARCO, with respect to TBCC, of a duly executed assignment transferring the TBCC
membership interest, and by the delivery by Delta Housing, with respect to SL,
of a duly executed assignment transferring the SL membership interest, in each
case to the Company. The assignment of ARCO's membership interest in the Company
to Delta Housing contemplated hereby shall be made by the delivery by ARCO of a
duly executed assignment transferring the membership interest in the Company to
Delta Housing.
2.2 CASH CONTRIBUTION. Acquisition Corp. shall also contribute
$25,000,000 in cash to the Company (the "CASH CONTRIBUTION").
2.3 MEMBERSHIP INTERESTS. In consideration of the respective
contributions by the Contributing Members of the Contributed Membership
Interests and the Cash Contribution to the Company as described in Sections 2.1
and 2.2, and in reliance upon the respective representations, warranties and
covenants made herein by each of the Contributing Members, the Company agrees to
grant to the Contributing Members all right, title and interest of a member in
the Company pursuant and subject to the terms of this Agreement and the Company
Agreement. The initial membership interest of each of the Contributing Members
in the Company after giving effect to all the transactions contemplated
hereunder and under the Purchase Agreement shall be as set forth in the Company
Agreement.
2.4 FURTHER ASSURANCES.
(a) On and from time to time after the Closing Date, the Contributing
Members and their respective Affiliates will execute and deliver, or cause to be
executed and delivered, such other instruments of conveyance, assignment,
transfer and delivery as the Company may reasonably request in order to fulfill
and implement the terms of this Agreement, to vest in the Company the membership
interests in the Contributed LLCs, or to otherwise enable the Company to realize
the benefits intended to be afforded hereby.
(b) On and from time to time after the Closing Date, the Company will
execute and deliver, or cause the Contributed LLCs to execute and deliver, such
other instruments of assumption, conveyance, assignment, transfer, power of
attorney or assurance as the Contributing Members may reasonably request in
order to enable the Contributing Members to realize the benefits intended to be
afforded hereby.
2.5 TRANSFER TAXES. The Company shall be solely liable for and shall
pay all applicable sales, transfer, use, stamp, conveyance, value-added, real
property transfer, recording, stock transfer and other similar taxes, if any,
together with all recording or filing fees, notarial fees and other similar
costs of Closing, that may be imposed upon, or payable, collectible or incurred
in connection with the transfer of the Contributed Membership Interests to the
Company (the "TRANSFER TAXES"). The Company shall indemnify and hold harmless
ARCO, Delta Housing or their Affiliates with respect to all Transfer Taxes.
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2.6 ADJUSTMENT TO SPECIAL DISTRIBUTION.
(a) ARCO shall deliver to Acquisition Corp. as soon as available, but
in no event later than 30 days after the Effective Date, the consolidated
balance sheet of ACC at December 31, 1997, and 1996, and its consolidated
statements of income, of equity investment and of cash flows for each of the
three years in the period ended December 31, 1997, together with the related
notes thereto and the respective audit opinion thereon of the independent
auditors of ACC (the "AUDITED FINANCIAL STATEMENTS"). Within 30 days after the
Effective Date, ARCO shall prepare and deliver to Acquisition Corp. a copy of
the Interim Date Balance Sheet. Within 90 days after the Closing Date, ARCO
shall prepare and deliver to the Company the Closing Date Balance Sheet.
(b) The Special Distribution shall be adjusted (the "ADJUSTMENT")
upwards or downwards on a dollar-for-dollar basis for the amount by which total
members' equity as reflected on the Closing Date Balance Sheet (the "CLOSING
DATE MEMBERS' EQUITY") exceeds or is less than total members' equity as
reflected on the Interim Date Balance Sheet (the "INTERIM DATE MEMBERS'
EQUITY"). For purposes of the preceding sentence, the change in total members'
equity will include the net change in intercompany accounts. During the period
from the Interim Date through the Closing Date, intercompany accounts will, in
part, (i) increase by contributions of cash for operating costs and capital by
ARCO, Delta Housing or any of their Affiliates, and (ii) decrease by cash
distributions to ARCO, Delta Housing or any of their Affiliates. In determining
the Adjustment, any change in deferred tax asset or deferred tax liability from
that reflected on the Interim Date Balance Sheet and the corresponding effect on
the Closing Date Members' Equity, except for provisions made in the ordinary
course related to income earned since the Interim Date, shall be ignored. If the
Closing Date Members' Equity exceeds the Interim Date Members' Equity, the
adjustment to the Special Distribution shall be effected by a payment from
Acquisition Corp. to Delta Housing of an amount equal to such excess as set
forth below. If the Interim Date Members' Equity exceeds the Closing Date
Members' Equity, the adjustment to the Special Distribution shall be effected by
a payment from Delta Housing to Acquisition Corp. of an amount equal to such
excess as set forth below. ARCO shall prepare and deliver to Acquisition Corp.,
simultaneously with the delivery of the Closing Date Balance Sheet, a statement
(the "STATEMENT") setting forth in reasonable detail ARCO's calculation of
Closing Date Members' Equity. A payment under this Section 2.6 shall for tax
purposes be treated as a contribution to the Company by the member making the
payment and a distribution from the Company to the member receiving it unless
otherwise required by law. Any payment received by either member is agreed to be
a reimbursement of capital expenditures under Section 1.707-4(d) of the Treasury
Regulations. No payment or receipt under this Section 2.6 shall have a net
effect on the capital accounts or percentage interests of the members in the
Company.
(c) If Acquisition Corp. disagrees with the Closing Date Balance Sheet
or the Statement, it shall, within 30 days after the receipt of the Closing Date
Balance Sheet and the Statement, deliver a notice to ARCO (the "DISAGREEMENT
NOTICE"), setting forth its calculation of the Adjustment and specifying, in
reasonable detail, those items or amounts in the Closing Date Balance Sheet
and/or the Statement as to which Acquisition Corp. disagrees and the reasons for
such disagreement. Acquisition Corp. shall be deemed to have agreed with all
items and amounts contained in the Closing Date Balance Sheet and the Statement
other than those
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specified in a timely Disagreement Notice. If Acquisition Corp. does not deliver
a Disagreement Notice to ARCO within such 30-day period, Acquisition Corp. shall
be deemed to have accepted the Closing Date Balance Sheet and the Statement,
whereupon the Closing Date Balance Sheet and the Statement shall become final
and binding.
(d) If a Disagreement Notice is timely delivered to ARCO pursuant to
this Section 2.6, the parties shall use their good faith efforts to reach
agreement on the disputed items or amounts in order to determine the Adjustment,
which in no event shall be more favorable to ARCO than reflected in the
Statement nor more favorable to Acquisition Corp. than shown in the calculations
delivered by Acquisition Corp. pursuant to the Disagreement Notice. If the
parties do not resolve all disputed items or amounts within ten business days
after delivery of the Disagreement Notice, this Agreement and the disputed items
and amounts will be submitted to an independent nationally recognized accounting
firm without any current material financial relationship to either Acquisition
Corp. or ARCO, or their respective Affiliates (the "INDEPENDENT ACCOUNTANTS"),
as mutually selected by ARCO and Acquisition Corp., or if ARCO and Acquisition
Corp. cannot agree, as recommended by the independent accountants regularly
employed to audit ARCO's and Acquisition Corp.'s financial statements, for
determination of the appropriate Adjustment pursuant to this Section 2.6. The
written report of the Independent Accountants (the "REPORT") shall be delivered
to ARCO and Acquisition Corp. promptly, but in no event later than 30 days after
such disputed items are submitted to the Independent Accountants, and shall be
final, conclusive and binding upon the parties. The procedures for resolution of
disputes concerning the Closing Date Balance Sheet and the Statement set forth
in Sections 2.6(c) and 2.6(d) shall be final and exclusive of any other
litigation, proceeding, contest, appeal or arbitration in relation thereto, so
that no party shall be entitled to subject any claim, controversy or dispute
with respect to the foregoing to arbitration or to any court or tribunal. The
fees and expenses of the Independent Accountants shall be borne equally by ARCO
and Acquisition Corp.
(e) Within five business days after the final determination of the
Adjustment, Acquisition Corp. shall pay ARCO or ARCO shall pay Acquisition
Corp., as the case may be, a sum of money equal to the Adjustment, plus interest
at the Agreed Rate from the Closing Date to the date the payment is made. Any
amount payable pursuant to this Section 2.6(e) will be made in immediately
available funds to an account or accounts designated by the party receiving such
payment.
(f) From the Closing Date until the final determination of the
Adjustment, ARCO or Delta Housing, including their officers, employees, agents
and representatives, and the Independent Accountants, shall have access to the
ARCO Parties and their respective books, records and employees who are
responsible for financial matters in order to assist in preparing the Closing
Date Balance Sheet and the Statement and in determining the Adjustment.
Acquisition Corp. shall provide and shall cause the ARCO Parties to provide any
assistance requested by Delta Housing in connection with the foregoing.
2.7 LITTLE THUNDER LEASE. Arch, Acquisition Corp. and the Company
agree not to take any action, or cause TBCC to take any action, to terminate the
Little Thunder Lease with respect
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to any Category (as defined in the Little Thunder Lease) of LTL Property prior
to one year following the Closing.
ARTICLE 3
CLOSING
3.1 ARCO PRE-CLOSING ACTIONS. Prior to the Closing, pursuant to
instruments and documents reasonably satisfactory to Arch:
(a) ARCO shall have contributed all the issued and outstanding stock
of MCC to ARCO Uinta and MCC shall have merged with and into MCC LLC.
(b) LTLC shall have transferred all of its assets to ARCO in exchange
for ARCO stock. LTLC shall be liquidated or merged into CH20.
(c) At the direction of ARCO, LTLC shall transfer to TBCC the
Category 4 (10-year) Equipment and ARCO's rights in such equipment, subject to
the terms of the Little Thunder Lease. The effect of such transfer will be to
terminate the Little Thunder Lease with respect to such Category 4 (10-year)
Equipment.
(d) ACT shall have merged into ARCO and the stock of LAXT owned by
ACT shall have transferred to ARCO by operation of Law.
(e) ARCO shall have formed AUS and ARCO shall have contributed the
headquarters assets identified on the ARCO Disclosure Schedule and all ARCO's
shares of the issued and outstanding stock in LAXT to AUS.
(f) ARCO shall transfer its membership interest in AUS to ARCO Uinta.
(g) ARCO shall have assigned its rights in the LTL Property (subject
to the Little Thunder Lease) to Delta Housing.
(h) ARCO shall have formed SL and ARCO shall have contributed the
State Coal Leases and other real and personal property relating to the coal
business to SL.
(i) ARCO shall have transferred its membership interest in SL to
Delta Housing.
(j) ARCO and ARCO Uinta shall have executed and delivered the
Purchase Agreement.
3.2 ARCH PRE-CLOSING ACTIONS. Prior to or concurrently with the
Closing, pursuant to instruments and documents reasonably satisfactory to ARCO:
(a) Arch and Acquisition Corp. shall have executed and delivered the
Purchase Agreement.
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(b) Arch shall have caused Arch of Wyoming to be merged with and into
AOW.
(c) The Carbon Basin Reserves as described on the Arch Disclosure
Schedule ("CARBON BASIN Reserves") shall have been contributed by Ark to
Acquisition Corp.
(d) All the issued and outstanding common stock of Acquisition Corp.
shall have been distributed by Ark to Arch.
(e) The Carbon Basin Reserves shall have been contributed by
Acquisition Corp. to AOW in exchange for the membership interests in AOW.
3.3 CLOSING DATE. The closing ("CLOSING") of the transactions
contemplated herein (the "PROPOSED TRANSACTIONS"), as well as the simultaneous
Closing of the transactions contemplated in the Purchase Agreement, shall take
place in New York, New York, at a mutually agreeable site, at 10:00 A.M., local
time, on the later of (a) 45 days after the date hereof, or (b) the third
business day after the satisfaction of all conditions to Closing set forth in
Sections 11.1 and 11.2 or at such other place or time as the parties may
mutually agree. The date upon which the Closing occurs is referred to in this
Agreement as the "CLOSING DATE."
3.4 CLOSING ACTIONS. At the Closing ARCO and Arch shall cause the
following to occur:
(a) CASH CONTRIBUTION. Acquisition Corp. shall make the Cash
Contribution;
(b) ASSIGNMENT OF MEMBERSHIP INTEREST. ARCO shall duly execute and
deliver assignments of its membership interest in the Company to Delta Housing;
(c) THE COMPANY AGREEMENT AND TAX SHARING AGREEMENT. Acquisition Corp.
and Delta Housing shall execute and deliver the Company Agreement substantially
in the form of Exhibit 3.4 and Arch, Acquisition Corp. Delta Housing and the
Company shall execute and deliver the Tax Sharing Agreement;
(d) FINANCING DOCUMENTS. The Company shall, and shall cause its
respective Affiliates to, execute and deliver all agreements, undertakings and
actions required to be delivered by them in connection with the issuance of the
Company Debt;
(e) COMPANY DEBT. The Company shall incur indebtedness of Six Hundred
Seventy-Five Million Dollars ($675,000,000) (the "COMPANY DEBT");
(f) SPECIAL DISTRIBUTION TO DELTA HOUSING. Contemporaneously with the
Closing, the Company and the other parties to the Company Agreement shall take
all steps necessary to cause the Company to make a special distribution to Delta
Housing in the amount of Seven Hundred Million Dollars ($700,000,000) (the
"SPECIAL DISTRIBUTION");
(g) ASSIGNMENT OF INDEMNITY PAYMENTS. Arch and Acquisition Corp. shall
assign to the Company their respective rights to any indemnity payment that
either Arch or Acquisition
15
Corp. may be entitled to receive pursuant to the Purchase Agreement except to
the extent that such payments are made (i) in order to make Arch or Acquisition
Corp. whole for out of pocket costs or (ii) with respect to assets purchased
from ARCO Uinta pursuant to the Purchase Agreement that Acquisition Corp. is not
contributing to the Company;
(h) MEMBERSHIP INTERESTS AFTER SPECIAL DISTRIBUTION. Upon the
completion of the Special Distribution and consummation of the other
transactions contemplated hereby, the membership interests of Acquisition Corp.
and Delta Housing in the Company shall be as set forth in the Company Agreement;
(i) ARCO BOARD RESOLUTIONS. ARCO shall deliver a copy, certified as of
the Closing Date by ARCO's and Delta Housing's Secretary or Assistant Secretary,
of the resolutions duly adopted by the Boards of Directors of ARCO, Delta
Housing, and LTLC authorizing the transactions contemplated by this Agreement;
(j) ARCO CERTIFICATES OF GOOD STANDING. ARCO shall deliver short form
certificates of existence and/or good standing for ARCO, Delta Housing, SL and
TBCC in their respective jurisdictions of incorporation or formation, as
certified as of a recent date by the Secretary of State or other appropriate
authority of such jurisdictions;
(k) ARCO OPINION OF COUNSEL. ARCO and Delta Housing shall deliver the
opinion of their counsel required by Section 11.1(d);
(l) ARCO INCUMBENCY CERTIFICATES. ARCO shall deliver a certificate of
the Secretary or an Assistant Secretary of ARCO and Delta Housing, certifying as
of the Closing Date as to the incumbency and signatures of the officer(s) or
representatives of ARCO and Delta Housing authorized to sign this Agreement and
the other documents to be delivered hereunder or pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;
(m) ARCO AND DELTA HOUSING OFFICER CERTIFICATES. ARCO and Delta
Housing shall each deliver a certificate dated the Closing Date stating that the
representations and warranties of ARCO and Delta Housing set forth herein,
including those with respect to TBCC, remain true and correct in all respects on
and as of the Closing Date as if made on and as of such date (except for
representations and warranties made as of a specified date, which shall be true
and correct in all respects as of such date), except for any breach of such
representations and warranties that would not individually or in the aggregate
have a Material Adverse Effect, and that all covenants and conditions to be
complied with and performed by ARCO and/or Delta Housing, as the case may be, on
or prior to the Closing Date, including notifications under Section 7.3 have
been substantially complied with or performed;
(n) ARCH BOARD RESOLUTIONS. Arch shall deliver a copy, certified as of
the Closing Date by Arch's, Acquisition Corp.'s, Ark's and Arch of Wyoming's
Secretary or Assistant Secretary, of the resolutions duly adopted by the Boards
of Directors of Arch, Acquisition Corp., Ark and Arch of Wyoming authorizing the
transactions contemplated by this Agreement;
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(o) ARCH CERTIFICATES OF GOOD STANDING. Arch shall deliver a current
short form certificate of good standing for Arch, Acquisition Corp., Ark and
Arch of Wyoming in their respective jurisdictions of incorporation, as certified
as of a recent date by the Secretary of State or other appropriate authority of
such jurisdiction;
(p) ARCH OPINION OF COUNSEL. Arch and Acquisition Corp. shall deliver
the opinion of their counsel required by Section 11.2(d);
(q) ARCH INCUMBENCY CERTIFICATES. Arch shall deliver a certificate of
the Secretary or Assistant Secretary of Arch, Acquisition Corp., Ark and Arch of
Wyoming certifying as of the Closing Date as to the incumbency and signatures of
the officer(s) of Arch and Acquisition Corp. authorized to sign this Agreement
and the other documents to be delivered hereunder or pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary; and
(r) ARCH OFFICER CERTIFICATE. Arch shall deliver a certificate dated
the Closing Date of an officer of Arch stating that the representations and
warranties of Arch and Acquisition Corp. set forth herein, remain true and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (except for representations and warranties made as of a
specified date, which shall be true and correct in all material respects as of
such date) and that all covenants and conditions to be complied with and
performed by Arch and/or Acquisition Corp. on or prior to the Closing Date have
been substantially complied with and performed.
3.5 SIMULTANEOUS TRANSACTIONS. All of the transactions and deliveries
identified in this Article 3 shall be deemed to occur simultaneously on the
Closing Date, and no one transaction shall be deemed completed until all are
completed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ARCO AND DELTA HOUSING
ARCO and Delta Housing represent and warrant, jointly and severally, to
the Company as of the Effective Date (or such other date as is specified
therein), as follows:
4.1 ORGANIZATION AND GOOD STANDING. ARCO and Delta Housing are
corporations duly incorporated, validly existing and in good standing under the
laws of their state of incorporation.
4.2 AUTHORITY. ARCO and Delta Housing have full corporate power and
authority to enter into this Agreement and to perform their respective
obligations hereunder. This Agreement constitutes a valid and binding obligation
of each of ARCO and Delta Housing, enforceable against ARCO and Delta Housing in
accordance with its terms, subject to applicable laws of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and to general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
4.3 NO VIOLATIONS. Except as set forth in Section 4.3 of the
Disclosure Schedule, the execution and delivery of this Agreement by each of
ARCO and Delta Housing do not, and the
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consummation of the transactions contemplated hereby will not, (i) violate any
provisions of the certificate of incorporation or bylaws of ARCO or Delta
Housing or of the limited liability company agreement of TBCC or, as of the
Closing, the limited liability company agreement of SL, (ii) result in the
breach of, or constitute a default under, any material agreement or other
material instrument to which Delta Housing, TBCC or SL is a party or to which
any of their respective properties or assets are bound, (iii) violate any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award applicable to ARCO, Delta Housing, TBCC, SL or their respective
properties or assets, or (iv) constitute an event that, with notice, lapse of
time or both, would result in any such violation, breach or default.
4.4 APPROVALS, CONSENTS AND OTHER ACTIONS. Except (i) with respect to
the filings required under the HSR Act, (ii) as contemplated by this Agreement,
or (iii) as set forth in Section 4.4 of the Disclosure Schedule, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission or
other governmental authority or instrumentality, or any third party is required
to be made or obtained by or with respect to ARCO or Delta Housing in connection
with the execution, delivery and performance of this Agreement by ARCO or Delta
Housing.
4.5 FORMATION AND GOOD STANDING OF TBCC AND SL. TBCC is, and, as of
the Closing Date, SL shall be, a limited liability company duly organized,
validly existing and in good standing under the laws of their states of
formation.
4.6 TITLE OF THE MEMBERSHIP INTERESTS. ARCO and Delta Housing hold or
will hold of record and own or will own beneficially, and will transfer or cause
to be transferred to the Company on the Closing Date, the Contributed ARCO
Interests, and, upon delivery to the Company at the Closing of assignment
documents, and the registration of the transfer of the Contributed ARCO
Interests on the books of the ARCO Parties will transfer to the Company the
Contributed Interests free and clear of any security interests, pledges, liens
and encumbrances, except as set forth in the limited liability company
agreements of the ARCO Parties.
4.7 CAPITALIZATION. Section 4.7 of the Disclosure Schedule sets forth
a list of the ARCO Parties and their respective jurisdictions of formation and
their respective ownership of outstanding membership interests as of the Closing
Date. As of the Closing Date, contributed ARCO Interests have been validly
issued in accordance with Laws of the applicable jurisdictions and the
respective formation agreements and constitute all of the issued and outstanding
membership interests of TBCC and SL. Except as set forth in the limited
liability company agreements of TBCC and SL and except as set forth in Section
4.7 as of the Closing Date, of the Disclosure Schedule, no ARCO Party has any
outstanding securities, subscriptions, options or other agreements or
commitments obligating it to issue additional membership interests, or any other
securities.
4.8 REAL PROPERTY. Section 4.8 of the Disclosure Schedule sets forth,
as of the Closing Date, a list of all material real property, leaseholds, water
rights and other material interests in real property or water held by the ARCO
Parties. Except as set forth in Section 4.8 of the Disclosure Schedule, each of
the ARCO Parties will hold, as of the Closing Date, an interest in the real
property described in Section 4.8 of the Disclosure Schedule sufficient to
permit each of
18
the ARCO Parties to operate its business in the ordinary course and consistent
with past practice, according to the terms of the instrument, conveyance or
document creating such interest, free and clear of all liens, encumbrances,
equities, claims, covenants, conditions, reservations, restrictions, easements,
rights of way and other agreements, except for (a) liens for Taxes not yet due
and payable, or that may hereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings or that are listed or
described in the Disclosure Schedule, (b) liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics, workmen and materialmen and construction or
similar liens arising by operation of law or in the ordinary course of business
in respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings, (c) liens to be released at or prior to
the Closing, (d) rights reserved to or vested in any Federal, state or local
governmental body, authority or agency to control or regulate any such real
property interests in any manner, and all Laws, (e) easements, reservations,
rights-of-way, restrictions, covenants, conditions and other similar
encumbrances, whether of record or apparent on the premises (including road,
highway, pipeline, railroad and utility easements, and defects in the chain of
title) that do not materially and adversely affect the present use of such real
property, and (f) other defects and irregularities in title or encumbrances that
are not substantial or material in character, amount or extent. Except as set
forth in Section 4.8 of the Disclosure Schedule, each of the material leases,
subleases, easements, licenses and agreements described in Section 4.8 of the
Disclosure Schedule is in full force and effect according to the terms of each
respective instrument, and to ARCO's Knowledge, with respect to TBCC, each
holder of such leases, subleases, easements, licenses and agreements has
complied with all material requirements in connection therewith, and there is
not under any such lease, sublease, easement, license or agreement, any existing
material breach or default (or event that, with notice, lapse of time or both,
would constitute a material breach or default) by TBCC or SL.
4.9 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY. Section 4.9
of the Disclosure Schedule lists all material buildings, structures and
improvements and all material items of machinery, equipment and other tangible
personal property owned or leased by ARCO, the ARCO Parties or any of their
Affiliates as of February 28, 1998, that will be owned or leased by ARCO or any
ARCO Party on the Closing Date. Since February 28, 1998, no such assets have
been acquired or disposed of except in the ordinary course of business.
4.10 MATERIAL CONTRACTS. Section 4.10 of the Disclosure Schedule lists
all material contracts and agreements and all documents evidencing rights of or
commitments by any of the ARCO Parties to which any ARCO Party is a party or its
property or assets are bound as of the Closing Date. Except as set forth in
Section 4.10 of the Disclosure Schedule, each such contract, agreement or
document is in full force and effect according to the terms of each respective
instrument, and each ARCO Party which is a party to such contracts, agreements
and documents has complied with all requirements in connection therewith, and
there is not under any such contract, agreement or document any existing
material breach or default (or event that, with notice, lapse of time or both,
would constitute a material breach or default) by an ARCO Party.
4.11 INSURANCE POLICIES. Section 4.11 of the Disclosure Schedule lists
all policies of insurance issued by third-party insurers for the 1998 policy
period, including amounts of coverage thereof, that are maintained by ARCO for
the benefit of the ARCO Parties or by an ARCO Party for which such ARCO Party is
named as an insured party, in each case as of the
19
Closing Date. Except as set forth in Section 4.11 of the Disclosure Schedule,
such policies are in full force and effect and all premiums due have been paid.
4.12 TAXES.
(a) Except as set forth in Section 4.12(a) of the Disclosure Schedule,
with respect to Tax Returns that relate to taxable periods that end before
January 1, 1997, TBCC has filed or caused to be filed with the appropriate
local, state, Federal and foreign governmental entities all Tax Returns required
to be filed by the ARCO Parties on or prior to the Closing Date (taking into
account all extensions of due dates), and has paid or caused to be paid or
adequately provided for all Taxes shown thereon as owing.
(b) Except as set forth in Section 4.12(b) of the Disclosure Schedule,
with respect to Tax Returns that relate to taxable periods that end on or after
January 1, 1997, TBCC has filed or caused to be filed with the appropriate
local, state, Federal and foreign governmental entities all Tax Returns required
to be filed by TBCC on or prior to the Closing Date (taking into account all
extensions of due dates), and has paid or caused to be paid or adequately
provided for all Taxes shown thereon as owing. For all taxable periods that
begin prior to the Closing Date for which a Tax Return is not due on or prior to
the Closing Date (whether or not such taxable period ends on or after the
Closing Date), the Closing Date Balance Sheet shall provide an adequate reserve
for Taxes to fully pay such Taxes up to and including the Closing Date (as if
the Taxable Period ended on the Closing Date).
4.13 LICENSES, PERMITS, AUTHORIZATIONS. Section 4.13 of the Disclosure
Schedule lists all of the material licenses, permits (including mining permits
and the amount of any bond or other surety for each mining permit),
certificates, bonds, consents, rights and other such authorizations issued or
granted as of the Closing Date to each of the ARCO Parties by local, state or
Federal governmental authorities or agencies. Except as set forth in Section
4.13 of the Disclosure Schedule, each of the licenses, permits, certificates,
bonds, consents, rights and other authorizations listed in Section 4.13 of the
Disclosure Schedule is in full force and effect according to the material terms
of each instrument, each holder of such licenses, permits, certificates, bonds,
consents, rights and other authorizations has complied with all material
requirements in connection therewith, and there is not under any such licenses,
permits, certificates, bonds, consents, rights and other authorizations any
existing material breach or default (or event that, with notice, lapse of time
or both, would constitute a material breach or default) by the ARCO Parties.
4.14 LITIGATION. Except as set forth in Section 4.14 of the Disclosure
Schedule, (i) none of the ARCO Parties is a party to any lawsuit, claim or
proceeding or, to ARCO's Knowledge, any investigation, and (ii) none of the ARCO
Parties are in default under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality applicable to them or any of their properties or assets.
4.15 COMPLIANCE WITH LAWS. Except as set forth in Section 4.15 of the
Disclosure Schedule, each of the ARCO Parties is in compliance in all material
respects with all applicable Laws.
20
4.16 LABOR MATTERS. Except as set forth in Section 4.16 of the
Disclosure Schedule, no ARCO Party is a party to any collective bargaining
agreement with any labor union or association, there are no formal negotiations,
demands or proposals that are pending or have been recently conducted or made
with or by any labor union or association, and there are no pending strikes,
work stoppages or material labor disputes involving the ARCO Parties.
4.17 EMPLOYEE BENEFIT PLANS.
(a) Section 4.17 of the Disclosure Schedule sets forth a list of all
"employee benefit plans" as defined in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other pension or
retirement, savings, profit sharing, deferred compensation, stock option
(including restricted or performance units), severance, vacation, medical,
vision, dental, long term disability, life insurance, group accident,
occupational death, business travel, long term care, educational assistance,
floating holiday, personal business, gainshare, bonus, financial counseling,
welfare or sick leave or other employee benefit plan, procedure, policy or
practice of any nature as well as any employment, consulting, engagement, or
retention agreement or agreements, and any trust or funding mechanism for each
plan or arrangement described above (collectively, the "PLANS") covering any
employees of TBCC and employees of ARCO whose employment is related primarily to
one or more businesses of the ARCO Parties (collectively, "EMPLOYEES"). With
respect to each Plan maintained by TBCC, ARCO has delivered to the Company true,
correct and complete copies of all documents and summary plan descriptions
creating or evidencing any such Plan, and, to the extent applicable, the most
recent (i) determination letter and any outstanding request for determination
letter for such Plan; (ii) Form 5500 and attached Schedule B (including any
related actuarial valuation report) for such Plan; and (iii) ruling letter and
any outstanding request for a ruling letter with respect to the tax-exempt
status of any Voluntary Employees' Beneficiary Association ("VEBA") as defined
in Code Section 501(c)(9).
(b) Except as set forth in Section 4.17 of the Disclosure Schedule,
each Plan complies with and has been administered, operated and maintained in
compliance with all applicable material provisions of ERISA, the Code and other
applicable laws. Except as set forth in Section 4.17 of the Disclosure Schedule,
the ARCO Parties have not engaged in a prohibited transaction that would subject
it to a material tax imposed under Section 4975 of the Code.
(c) No ARCO Party is or has within the preceding five years been a
party to or contributed to any "multi-employer plan," as defined in Section
4001(a)(3) of ERISA. Except as set forth in Section 4.17 of the Disclosure
Schedule, no ARCO Party has been a party to or contributed to any such
multi-employer plan since September 26, 1980.
(d) Each Plan that is intended to qualify under Code Sections 401(a)
and 501(a) is so qualified and has been determined by the Internal Revenue
Service to so qualify or has an outstanding determination letter request, and
nothing has occurred to cause the loss of the Plan's qualified status since the
issuance of the most recent favorable determination letter by the IRS with
respect to such Plan.
21
(e) No accumulated funding deficiency, except for annual minimum
contributions which are not yet due, within the meaning of ERISA Section 302 or
Code Section 412 has been incurred with respect to any Plan of the ARCO Parties.
The ARCO Parties do not have any liability for (i) any lien imposed under ERISA
Section 302(f) or Code Section 412(n), (ii) any interest payments required under
ERISA Section 302(e) or Code Section 412(m), or (iii) any excise tax imposed by
Code Section 4971. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted or threatened a proceeding to terminate any Plan pursuant to Subtitle
1 of Title IV of ERISA. No Plan has been the subject of a reportable event (as
defined in ERISA Section 4043) as to which a notice would be required to be
filed with the PBGC.
(f) With respect to each Plan, no action, suit, grievance, claim,
arbitration or other manner of litigation with respect to the assets of the Plan
(other than routine claims for benefits made in the ordinary course of Plan
administration for which Plan administrator review procedures have not been
exhausted) is pending, or to ARCO's Knowledge, threatened or imminent against or
with respect to the Plan or any Plan sponsor or fiduciary (as defined in ERISA
Section 3(21)).
(g) Except as otherwise provided in this Agreement, each Plan
(including any Plan covering former employees of TBCC) which is established and
maintained by TBCC may be amended or terminated by TBCC or Acquisition Corp. on
or at any time after the Closing Date.
(h) No payment under any Plan made within two years after the Closing
Date shall constitute an "excess parachute payment" under Section 280G of the
Code.
4.18 BANK ACCOUNTS. Section 4.18 of the Disclosure Schedule sets forth
the name of each bank, savings and loan or other financial institution in which
TBCC or SL has any account or safe deposit box.
4.19 BROKER LIABILITY. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of ARCO, Delta Housing or their
Affiliates, in connection with this Agreement or the transactions contemplated
hereby, ARCO and Delta Housing shall be solely responsible and liable for any
brokerage, finder's or similar consultant's fee or other commission in respect
of such broker, finder or similar consultant.
4.20 FINANCIAL STATEMENTS. The Audited Financial Statements to be
delivered in accordance with Section 2.6(a) shall have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities Exchange Act of 1934, as
amended. The audited balance sheets of ACC at December 31, 1997 and 1996
(including the notes thereto) present fairly the financial position of ACC at
such dates, and the consolidated statement of income, of equity investment and
of cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1997, fairly present the results of operations, equity
investment and cash flows of ACC for each of such years. The unaudited balance
sheets (if any) of ACC as of the last day of each calendar quarter ending
subsequent to December 31, 1997 and prior to the Closing Date, and consolidated
statements of income, of equity investment and of cash flows for the quarterly
periods then ended (the "UNAUDITED FINANCIAL STATEMENTS") have been prepared in
accordance with GAAP consistently applied during the periods involved and in
accordance with Regulation S-X under the Securities
22
Exchange Act of 1934, as amended. Each balance sheet (if any) included among the
Unaudited Financial Statements (including the notes thereto) fairly presents the
financial position of ACC as of the date thereof, and each consolidated
statement of income, of equity investment and of cash flows included among the
Unaudited Financial Statements (including the notes thereto) fairly presents the
results of operations, equity investment and cash flows of ACC for each period
presented. The Interim Date Balance Sheet and the Closing Date Balance Sheet
will be derived from the combined, consolidated balance sheets of ACC. The
Interim Date Balance Sheet (including the related notes) will fairly present
TBCC's financial position as of its date.
4.21 BLACK LUNG DISCLOSURE. The present actuarial value (determined
using the Black Lung Discount Rate) of TBCC's black lung liability as of the
Interim Date does not exceed that which has been reserved for by TBCC on the
Interim Date Balance Sheet.
4.22 CONDUCT OF BUSINESS. Except as set forth in Section 4.22 of the
Disclosure Schedule, since the Interim Date, the ARCO Parties have conducted
their respective businesses only in, and have not engaged in any transaction
other than in, the ordinary and usual course of such businesses or as described
in the Purchase Agreement and there has not been any change by the ARCO Parties
in accounting principles, practices or methods that is not required by GAAP.
Except as provided for herein and other than in the ordinary course consistent
with past practice, since the Interim Date there has not been (i) any increase
in the compensation payable or which could become payable by the ARCO Parties to
their respective officers or employees or (ii) any amendment of any of the ARCO
Parties' Plans.
4.23 ASSETS. Except (i) as set forth in Section 4.23 of the Disclosure
Schedule and (ii) for the LTL Property that will be owned by Delta Housing and
remain subject to the Little Thunder Lease, prior to the Closing Date, ARCO will
have transferred or caused to be transferred to the ARCO Parties all tangible
and intangible assets of every description therefor held by ARCO or any
Affiliate of ARCO under intercompany agreements and arrangements with ARCO and
its Affiliates or otherwise and used exclusively by the ARCO Parties in the
conduct of the ARCO Parties' respective businesses on and since the Interim
Date.
4.24 CERCLA. None of the Properties are listed on the National
Priority List pursuant to CERCLA or on any similar list pursuant to any state
Environmental Laws.
4.25 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES. ARCH AND
ACQUISITION CORP. ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, NONE OF ARCO, DELTA HOUSING OR ANY AFFILIATE, EMPLOYEE OR AGENT OF
ARCO OR DELTA HOUSING HAS MADE ANY REPRESENTATION, PROMISE, COVENANT OR WARRANTY
REGARDING ANY OF THE ARCO PARTIES, THEIR PROPERTIES, ASSETS, BUSINESS,
OPERATIONS, LIABILITIES OR OBLIGATIONS, OR OTHERWISE. ARCO AND DELTA HOUSING
HEREBY DISCLAIM ANY IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREIN.
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4.26 NO OTHER COMMITMENT TO SELL LLC INTERESTS. Neither ARCO nor Delta
Housing has sold or has committed to sell the membership interests of the ARCO
Parties to any other Person.
4.27 ABSENCE OF UNDISCLOSED LIABILITIES. To ARCO's and TBCC's
Knowledge, none of the ARCO Parties has any material liabilities, whether
accrued or contingent, other than (i) liabilities (or reserves therefor) set
forth in the Preliminary Interim Date Balance Sheet, (ii) liabilities set forth
in the ARCO Disclosure Schedule, and (iii) liabilities incurred since the date
of the Preliminary Interim Date Balance Sheet in connection with this Agreement
or in the ordinary course of business, consistent with past practices.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ARCH AND ACQUISITION CORP.
Arch and Acquisition Corp. represent and warrant, jointly and
severally, to ARCO, Delta Housing and the Company as of the Effective Date (or
such other date as is specified therein), as follows:
5.1 ORGANIZATION AND GOOD STANDING. Arch and Acquisition Corp. are
corporations duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.
5.2 AUTHORITY. Arch and Acquisition Corp. have full corporate power
and authority to enter into this Agreement and to perform their respective
obligations hereunder. This Agreement constitutes a valid and binding obligation
of each of Acquisition Corp. and Arch, enforceable against Acquisition Corp. and
Arch in accordance with its terms, subject to applicable laws of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and to general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
5.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Arch and Acquisition Corp. does not, and the consummation of the Proposed
Transactions will not, (a) violate any of the provisions of the certificates of
incorporation or bylaws of Arch or Acquisition Corp.; (b) result in the breach
of, or constitute a default under, any material agreement or other material
instrument to which Arch or Acquisition Corp. is a party or by which any of
their respective properties or assets are bound; (c) violate any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award
applicable to Arch, Acquisition Corp. or any of their respective properties or
assets; or (d) constitute an event that, with notice, lapse of time or both,
would result in any such violation, breach or default.
5.4 APPROVALS, CONSENTS AND OTHER ACTIONS. Except with respect to the
filings required under the HSR Act, no consent, approval, license, permit, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other governmental authority or
instrumentality, or any third party is required to be made or obtained by or
with respect to Arch or Acquisition Corp. in connection with the execution,
delivery and performance of this Agreement by Arch or Acquisition Corp.
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5.5 FINANCIAL CAPABILITY. Arch and Acquisition Corp. have the
financial capability to perform all of their obligations under this Agreement,
and Acquisition Corp. has available all funds necessary to pay the Special
Distribution, the Adjustment (if payable by Acquisition Corp.) and any other
amounts contemplated by this Agreement.
5.6 ARCH'S AND ACQUISITION CORP.'S INQUIRY. Arch and Acquisition Corp.
and their representatives have reviewed or received copies of, or had the
opportunity to review, including in a data room maintained by ARCO, such
information from ARCO and each of the ARCO Parties as they have requested, and
have had the opportunity to make such inquiry of representatives of ARCO, Delta
Housing and each of the ARCO Parties as they deem appropriate. Arch and
Acquisition Corp. acknowledge that there are no representations or warranties,
expressed or implied, except as expressly set forth in this Agreement.
5.7 ORGANIZATION, QUALIFICATION AND GOOD STANDING OF AOW. As of the
Closing, AOW shall be a limited liability company, duly organized, validly
existing and in good standing under the laws of its state of formation. AOW has
all requisite limited liability company power and authority to own and lease the
properties it currently owns and leases and to conduct its activities as such
activities are currently conducted. AOW is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a material adverse effect on the financial condition of AOW.
5.8 TITLE OF THE MEMBERSHIP INTERESTS. Acquisition Corp. holds or will
hold of record and owns beneficially, and will transfer or cause to be
transferred to the Company on the Closing Date, upon delivery to the Company at
the Closing of an assignment, the Contributed Arch Interests, free and clear of
any security interests, pledges, liens and encumbrances except as set forth in
Section 5.8 of the Disclosure Schedule.
5.9 CAPITALIZATION. Section 5.9 of the Disclosure Schedule sets forth
the form and jurisdiction of formation for AOW. Except as set forth in Section
5.9 of the Disclosure Schedule, AOW does not have any outstanding securities,
subscriptions, options or other agreements or commitments obligating it to issue
shares of its capital stock or membership interests.
5.10 REAL PROPERTY. Section 5.10 of the Disclosure Schedule sets forth
a list of all material real property, leaseholds, water rights and other
material interests in real property or water held by AOW. Except as set forth in
Section 5.10 of the Disclosure Schedule, AOW holds an interest in the real
property described in Section 5.10 of the Disclosure Schedule as held by it,
according to the terms of the instrument, conveyance or document creating such
interest, free and clear or all liens, encumbrances, equities, claims,
covenants, conditions, reservations, restrictions, easements, rights of way and
other agreements known to Arch and Acquisition Corp., except for (a) liens for
Taxes not yet due and payable, or which may hereafter be paid without penalty,
or that are being contested in good faith by appropriate proceedings or which
are listed or described in the Disclosure Schedule, (b) liens in favor of
vendors, carriers, warehousemen, repairmen, mechanics, workmen and materialmen
and construction or similar liens arising by operation of law or in the ordinary
course of business in respect of obligations that are not yet due or that are
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being contested in good faith by appropriate proceedings, (c) liens to be
released at or prior to the Closing, (d) rights reserved to or vested in any
Federal, state or local governmental body, authority or agency to control or
regulate any such real property interests in any manner, and all Laws, (e)
easements, reservations, rights-of-way, restrictions, covenants, conditions and
other similar encumbrances, whether of record or apparent on the premises,
including road, highway, pipeline, railroad and utility easements, and defects
in the chain of title that do not materially and adversely affect the present
use of such real property, and (f) other defects and irregularities in title or
encumbrances that are not material in character, amount or extent. Except as set
forth in Section 5.10 of the Disclosure Schedule, each of the material leases,
subleases, easements, licenses and agreements described in Section 5.10 of the
Disclosure Schedule is in full force and effect according to the terms of each
respective instrument, and, to Arch and Acquisition Corp.'s knowledge, each
holder of such lease, sublease, easement, license or agreements has complied
with all material requirements in connection therewith, and there is not under
any such lease, sublease, easement, license or agreement, any existing material
breach or default (or event that, with notice, lapse of time or both, would
constitute a material breach or default) by AOW.
5.11 BUILDINGS, STRUCTURES AND TANGIBLE PERSONAL PROPERTY. Section
5.11 of the Disclosure Schedule lists all material buildings, structures and
improvements and all material items of machinery, equipment and other tangible
personal property owned or leased by AOW.
5.12 MATERIAL CONTRACTS. Section 5.12 of the Disclosure Schedule lists
all material contracts and agreements and all documents evidencing rights of or
commitments to which AOW is a party or its property or assets are bound. Except
as set forth in Section 5.12 of the Disclosure Schedule, each such contract,
agreement or document is in full force and effect according to the terms of each
respective instrument, and AOW has complied with all requirements in connection
therewith, and there is not under any such contract, agreement or document any
existing material breach or default (or event that, with notice, lapse of time
or both, would constitute a material breach or default) by AOW.
5.13 INSURANCE POLICIES. Section 5.13 of the Disclosure Schedule lists
all material policies of insurance issued by third-party insurers for the 1998
policy period, including amounts of coverage thereof, that are maintained by
Arch for the benefit of AOW or by AOW for which AOW is named as an insured
party. Except as set forth in Section 5.13 of the Disclosure Schedule, such
policies are in full force and effect and all premiums due have been paid.
5.14 TAXES. Except as set forth in Section 5.14 of the Disclosure
Schedule, AOW has filed or caused to be filed with the appropriate local, state,
Federal and foreign governmental entities all material Tax Returns required to
be filed by AOW on or prior to the Closing Date (taking into account all
extensions of due dates), and have paid or caused to be paid or adequately
provided for all Taxes shown thereon as owing.
5.15 LICENSES, PERMITS, AUTHORIZATIONS. Section 5.15 of the Disclosure
Schedule lists all of the material licenses, permits (including mining permits
and the amount of any bond or other surety for each mining permit),
certificates, bonds, consents, rights and other such authorizations issued or
granted to AOW by local, state or Federal governmental authorities or agencies.
Except as set forth in Section 5.15 of the Disclosure Schedule, each of the
licenses,
26
permits, certificates, bonds, consents, rights and other authorizations listed
in Section 5.15 of the Disclosure Schedule is in full force and effect according
to the material terms of each instrument, each holder of such licenses, permits,
certificates, bonds, consents, rights and other authorizations has complied with
all material requirements in connection therewith, and there is not under any
such licenses, permits, certificates, bonds, consents, rights and other
authorizations any existing material breach or default (or event that, with
notice, lapse of time or both, would constitute a material breach or default) by
AOW.
5.16 LITIGATION. Except as set forth in Section 5.16 of the Disclosure
Schedule, (i) AOW is not a party to any lawsuit, claim, or other proceeding, or,
to Arch or Acquisition Corp.'s knowledge, any investigation, and (ii) AOW is not
in default under any judgment, order or decree of any court, administrative
agency or commission or other governmental authority or instrumentality
applicable to it or any of its property or assets.
5.17 COMPLIANCE WITH LAWS. Except as set forth in Section 5.17 of the
Disclosure Schedule, AOW is in compliance in all material respects with all
applicable Laws.
5.18 LABOR MATTERS. Except as set forth in Section 5.18 of the
Disclosure Schedule, AOW is not a party to any collective bargaining agreement
with any labor union or association, there are no formal negotiations, demands
or proposals that are pending or have been recently conducted or made with or by
any labor union or association, and there are not pending any strikes, work
stoppages or material labor disputes involving AOW.
5.19 EMPLOYEE BENEFIT PLANS.
(a) Section 5.19 of the Disclosure Schedule sets forth a list of all
"employee benefit plans" as defined in Section 3 of ERISA, and any other pension
or retirement, savings, profit sharing, deferred compensation, stock option
(including restricted or performance units), severance, vacation, medical,
vision, dental, long term disability, life insurance, group accident,
occupational death, business travel, long term care, educational assistance,
floating holiday, personal business, gain-share, bonus, financial counseling,
welfare or sick leave or other employee benefit plan, procedure, policy or
practice of any nature (collectively, the "PLANS") covering employees of AOW.
(b) Except as set forth in Section 5.19 of the Disclosure Schedule,
with respect to each Plan that is an "employee pension benefit plan" as defined
in Section 3(2) of ERISA and that is not a "multi employer plan" as defined in
Section 3(37) of ERISA, AOW is in compliance with all applicable provisions of
ERISA and the Code. Except as set forth in Section 5.19 of the Disclosure
Schedule, AOW has not engaged in a prohibited transaction that would subject it
to a material tax imposed under Section 4975 of the Code.
(c) Within the preceding five years, AOW has not been a party to or
contributed to any "multi employer plan," as defined in Section 4001(a)(3) or
ERISA.
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5.20 BANK ACCOUNTS. Section 5.20 of the Disclosure Schedule sets forth
the name of each bank, savings and loan or other financial institution in which
AOW has any account or safe deposit box, and the names of all Persons authorized
to draw thereon or have access thereto.
5.21 FINANCIAL STATEMENTS. A balance sheet (the "AOW CLOSING DATE
BALANCE SHEET") will be prepared as of the Closing Date for AOW in accordance
with AOW's historic accounting principles in each case as applied on a
consistent basis during the periods indicated (except as otherwise stated in
this Section 5.21), and will fairly present the combined financial position of
AOW as of the dates thereof.
5.22 BROKER LIABILITY. With respect to any broker, finder or similar
consultant, retained by, or acting on behalf of Arch or Acquisition Corp., in
connection with this Agreement or the transactions contemplated hereby, Arch or
Acquisition Corp., as the case may be, shall be solely responsible and liable
for any brokerage, finder's or similar consultant's fee or other commission in
respect of such broker, finder or similar consultant.
5.23 ASSETS. Except as set forth in Section 5.26 of the Disclosure
Schedule, prior to the Closing Date, Acquisition Corp. has transferred or caused
to be transferred to AOW all tangible and intangible assets of every description
therefor held by Acquisition Corp. or any Affiliate of Arch under intercompany
agreements and arrangements with Arch and its Affiliates or otherwise and used
exclusively by AOW in the conduct of AOW's business on and since December 31,
1997.
5.24 QUALIFICATION, COMPLIANCE WITH ACREAGE LIMITATIONS. Each of
Acquisition Corp. and the Company is qualified under all applicable Laws to hold
the interests in Federal and state coal leases it will acquire at the Closing.
Immediately after the consummation of the Proposed Transactions neither Arch nor
Acquisition Corp. will itself, directly or indirectly, or in combination with
any Person, own holdings of Federal or state coal leases in excess of any
applicable limitations.
5.25 CERCLA. None of the Carbon Basin Reserves are listed on the
National Priority List pursuant to CERCLA or any similar list pursuant to state
Environmental Laws.
5.26 DISCLAIMER OF CERTAIN REPRESENTATIONS AND WARRANTIES. ARCO AND
DELTA HOUSING ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
NONE OF ARCH, ACQUISITION CORP. NOR ANY AFFILIATE, EMPLOYEE OR AGENT OF ARCH OR
ACQUISITION CORP. HAS MADE ANY REPRESENTATION, PROMISE, COVENANT OR WARRANTY
REGARDING AOW, ITS PROPERTIES, ASSETS, BUSINESS, OPERATIONS, LIABILITIES OR
OBLIGATIONS, OR OTHERWISE. ARCH AND ACQUISITION CORP. HEREBY DISCLAIM ANY
IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
5.27 BLACK LUNG DISCLOSURE. Section 5.27 of the Disclosure Schedule
lists all pending claims against AOW for federal black lung liability.
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5.28 ABSENCE OF UNDISCLOSED LIABILITIES. To Arch's and Acquisition
Corp.'s knowledge, AOW has no material liabilities, whether accrued or
contingent, other than liabilities set forth in the Arch Disclosure Schedule and
liabilities incurred since the Effective Date in connection with this Agreement
or in the ordinary course of business, consistent with past practices.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Contributing Member as
follows:
6.1 DUE ORGANIZATION; GOOD STANDING AND POWER. The Company is a
limited liability company duly formed and validly existing under the laws of the
State of Delaware. The Company has all power and authority to enter into this
Agreement and to perform its obligations hereunder and thereunder. As of the
Closing, the Company will be duly authorized, qualified or licensed to do
business as a foreign limited liability company, in each of the jurisdictions in
which its right, title or interest in or to any asset, or the conduct of its
business, requires such authorization, qualification or licensing, except where
the failure to so qualify would not have a material adverse effect on the
ability of the Company to perform its obligations hereunder and under all
agreements delivered pursuant hereto.
6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary company action on the part of the Company. No other
Company action is necessary for the authorization, execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity regardless of whether
such enforceability is considered in a proceeding in equity or at law.
6.3 NO CONSENTS REQUIRED; NO CONFLICT WITH INSTRUMENTS TO WHICH THE
COMPANY IS A PARTY. The execution, delivery and performance of this Agreement by
the Company and the consummation by it of the transactions contemplated hereby
(i) will not require any consent and (ii) will not violate (with or without the
giving of notice or the lapse of time or both), conflict with, or result in the
breach or termination of any provision of, or constitute a default under, or
result in the acceleration of the performance of the obligations of the Company
under any agreement to which the Company is a party or by which the Company or
any of its assets or properties is bound.
6.4 ACCREDITED INVESTOR. The Company is an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act.
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6.5 INVESTMENT INTENT. The Company is acquiring the Contributed
Membership Interests for its own account for the purpose of investment and not
with a view to, or for sale in connection with, any distribution thereof in any
transaction that would be in violation of the securities laws of the United
States or any state thereof. The Company acknowledges that the Contributed
Member Interests have not been registered or qualified under, and are sold in
reliance upon an exemption from the registration requirements of, the Securities
Act and any applicable state securities or "Blue Sky" laws, and may not be
offered, sold, transferred, pledged, hypothecated or otherwise assigned unless
they are registered under the Securities Act and any applicable securities or
"Blue Sky" laws of any state or an exemption from such registration is
available.
ARTICLE 7
COVENANTS AND AGREEMENTS OF THE PARTIES
7.1 ACCESS TO INFORMATION.
(a) Arch and Acquisition Corp. acknowledge that prior to the Effective
Date, ARCO has caused each of the ARCO Parties to give Arch and its authorized
representatives reasonable access to the employees, offices, properties, and a
data room containing certain books and records of the ARCO Parties, has
permitted Arch and Acquisition Corp. to make inspections of and tour the ARCO
Parties' mines, and has furnished Arch with certain financial and operating data
and other information with respect to the business, assets, properties,
operations, liabilities and obligations of the ARCO Parties. Prior to the
Closing Date, Acquisition Corp. shall have reasonable access during normal
business hours to the operations, facilities, employees and representatives of
ARCO and the ARCO Parties as reasonably necessary to (i) verify the
representations and warranties given by ARCO and Delta Housing hereunder or ARCO
and ARCO Uinta under the Purchase Agreement, and (ii) begin planning for an
orderly transition process with respect to the Proposed Transactions; PROVIDED,
HOWEVER, Acquisition Corp. will not have access to any financial data or other
information relating to TBCC's bid on the Thunder Cloud Federal Lease Tract .
Except as set forth in the preceding sentence or otherwise provided in this
Agreement, from and after the Effective Date, neither Arch nor Acquisition Corp.
shall have the right to access the employees, offices, properties, books and
records of ARCO or the ARCO Parties, to inspect the ARCO Parties' mines or other
properties, or to inspect or have furnished financial or operating data or other
information with respect to the business, assets, properties, operations,
liabilities or obligations of ARCO or the ARCO Parties.
(b) Prior to the Closing, Arch shall keep (and shall cause its
directors, officers, employees, representatives, advisors and Affiliates to
keep) all information relating to ARCO and the ARCO Parties (including any such
information received prior to the date hereof) confidential, and shall use such
information only, on the terms and conditions as are set forth in the
confidentiality agreements between ARCO and Arch, together with any supplement
or amendment reasonably requested by ARCO from time to time. After the Closing,
each party hereto agrees to keep the terms and conditions of this Agreement
confidential, and to redact any provisions reasonably requested by any other
party (including Section 10.2(c)) from copies of this Agreement filed with the
Securities and Exchange Commission, except for such matters that may be required
to be disclosed by law or applicable stock exchange requirements or that are
30
generally available in the public domain other than as a result of a breach of
this Agreement by such party.
(c) After the Closing, Acquisition Corp. shall at its own expense or
at the expense of the ARCO Parties, cause the ARCO Parties to preserve and keep,
or transport to a storage site of its own selection where it shall preserve and
keep, the books and records of each of the ARCO Parties obtained by Acquisition
Corp. or retained by the ARCO Parties, including financial or business
transaction records, books of original entry, tax records and supporting
documents, for a period of seven years from the Closing Date or such longer
period if required under applicable Laws. Within 60 days after the Closing, ARCO
shall provide Acquisition Corp. with a list or inventory of the document types
and inclusive dates of the records transmitted to Acquisition Corp. or retained
by the ARCO Parties. Acquisition Corp. shall make or shall cause the ARCO
Parties to make such acquired or retained records as are dated up to the Closing
Date and included in the inventory provided by ARCO, including the general
ledger and mining reports, available to ARCO as may be reasonably requested by
ARCO in connection with, among other things, any of ARCO's financial reporting
or Tax filing obligations, for a period of seven years from the Closing Date or
such longer period if required under applicable Laws. For a period of 15 years
after the Closing Date, Acquisition Corp. shall notify ARCO in writing, on an
annual basis, of the document types and, if applicable, inclusive dates of any
such retained records, that it or the ARCO Parties intend to destroy during the
following one-year period. If ARCO desires access to such records for a period
of time longer than specified in Acquisition Corp.'s annual notice, ARCO shall
notify Acquisition Corp. in writing, not more than 60 days following ARCO's
receipt of Acquisition Corp.'s annual notice, of its desire to retain such
records, and Acquisition Corp. shall deliver, or cause the ARCO Parties to
deliver, such records to ARCO. If ARCO does not notify Acquisition Corp. of its
desire to retain records within such 60-day period, Acquisition Corp. or the
ARCO Parties may dispose of such records according to prudent records management
practices in the ordinary course of business.
(d) The parties hereby acknowledge that any in-house counsel of the
ARCO Parties or ARCO who are Employees and who participated in the preparation,
negotiation or consummation of this Agreement or the Proposed Transactions were
providing legal representation for ARCO and, notwithstanding any other provision
of this Agreement, neither the ARCO Parties or ARCO nor such counsel shall be
required to disclose under any circumstance any information or documents covered
by the attorney-client privilege or the work-product doctrine as such
information or documents were developed in the course of such representation.
All such information and documents shall remain the sole and exclusive property
of ARCO.
7.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING. From the Effective
Date to the Closing Date, except in connection with the transactions
contemplated by this Agreement and the Purchase Agreement, or as otherwise
consented to in writing by Acquisition Corp. (which consent shall not be
unreasonably withheld, conditioned or delayed), ARCO shall use commercially
reasonable efforts, and consistent with its obligations under the limited
liability company agreements of the ARCO Parties to cause each of the ARCO
Parties to (a) conduct its business in the ordinary course and consistent with
past practices, except that (i) none of the properties or assets listed in the
ARCO Disclosure Schedule valued at $250,000 or more may be transferred, disposed
of, encumbered or hypothecated, (ii) no individual capital expenditure by
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any ARCO Party in excess of $1 million or capital expenditures aggregating (for
all ARCO Parties) in excess of $25 million shall be made or committed, and (iii)
no ARCO Party shall enter into any coal supply agreement with a term in excess
of one year or materially amend any coal supply agreement disclosed in the
Disclosure Schedule having a term in excess of one year (but TBCC shall have the
right, but not the obligation, to bid on the Thunder Cloud Federal Lease Tract
on such terms and conditions, including the amount of any bonus bid, as it
elects in its sole discretion), (b) keep in full force and effect its limited
liability company existence, (c) comply in all material respects with all
Material Contracts set forth in Section 4.10 of the Disclosure Schedule to which
each is a party, (d) use commercially reasonable efforts to retain its employees
and maintain its business relationships with customers and suppliers, and (e)
maintain all facilities, equipment and other tangible assets in accordance with
past maintenance practices of the ARCO Parties.
7.3 NOTIFICATION. Between the Effective Date and the Closing Date,
ARCO and Arch will each, promptly upon becoming aware thereof, notify the other
in writing of any fact or condition that causes or constitutes a breach of any
of the other party's representations and warranties made as of the Effective
Date or any default in the other party's performance of its covenants and
agreements herein.
7.4 ANTITRUST NOTIFICATION. The appropriate parties hereto shall, as
promptly as practicable, but in no event later than ten business days after the
date of this Agreement, file with the Federal Trade Commission (the "FTC") and
the Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION")
the notification and report form required for the proposed transactions
contemplated hereby pursuant to the HSR Act. The appropriate parties hereto
shall furnish to each other such necessary information and reasonable assistance
as may be requested in connection with the preparation of any filing required to
be made under the HSR Act. The appropriate parties shall use all commercially
reasonable efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation and to obtain as promptly as practicable any clearance required
under the HSR Act for the contribution of the assets hereunder.
7.5 FEES AND EXPENSES. Except as otherwise specifically provided in
this Agreement, the parties shall bear their own fees and expenses incurred in
connection with this Agreement (including fees and expenses of their respective
investment bankers) and in connection with all obligations required to be
performed by each of them under this Agreement.
7.6 PUBLICITY. Except as otherwise required by law or applicable stock
exchange requirements, no party hereto shall issue any press release or public
statement relating to or concerning this Agreement or the matters contained
herein, without obtaining the prior approval of the other parties hereto of the
contents and the manner of presentation and publication thereof, which approval
shall not be unreasonably withheld, conditioned or delayed.
7.7 POST-CLOSING ASSISTANCE. From and after the Closing Date, upon the
request of Arch or Acquisition Corp., on the one hand, or ARCO and Delta
Housing, on the other, the parties hereto shall do, execute, acknowledge and
deliver all such further acts, assurances, deeds,
32
assignments, transfers, conveyances and other instruments and papers as may be
reasonably required or appropriate to carry out the transactions contemplated by
this Agreement.
7.8 GUARANTEES. ARCO and/or Delta Housing provided certain guarantees,
indemnities and similar obligations with respect to the ARCO Parties, which
guarantees, indemnities and obligations are set forth in Section 7.8 of the
Disclosure Schedule. Arch and Acquisition Corp. agree to cooperate with ARCO and
use its best efforts to cause the release of each such guarantee, indemnity and
obligation, including the substitution of Arch, Acquisition Corp. and/or an
Affiliate of Arch or Acquisition Corp. as the guarantor, indemnitor or
responsible party thereunder and the release of ARCO and Delta Housing on or as
soon as practicable after the Closing. Without limiting the foregoing, Arch and
Acquisition Corp. hereby undertake, assume and agree to perform, pay and
discharge all such guarantees, indemnities and obligations, and Arch and
Acquisition Corp. shall indemnify and hold harmless each of ARCO and Delta
Housing, including any officers, directors or Affiliates of ARCO and Delta
Housing with respect to all Losses arising out of or relating to any such
guarantee, indemnity or obligation.
7.9 NAME CHANGES. No later than 30 days following the Closing Date,
Acquisition Corp. shall cause the Company to amend the certificate of
incorporation of each of the ARCO Parties to remove the word "ARCO" or any
similarity or reference thereto. The new corporate name of the ARCO Parties
adopted by Acquisition Corp. shall not contain any word or words confusingly
similar to "ARCO" or the "Atlantic Richfield Company." No later than six months
following the Closing Date, Arch shall remove the marks and names "ARCO," "ARCO
COAL" and "ATLANTIC RICHFIELD" and the Spark Design and any other words, names
or symbols proprietary to ARCO, from all tangible and intangible properties,
real and personal, acquired by Acquisition Corp. and the Company hereunder.
7.10 SURETY BONDS. Acquisition Corp. will use commercially reasonable
efforts to submit surety bonds (collectively, "SUBSTITUTE SURETY BONDS" and
individually, a "SUBSTITUTE SURETY BOND"), effective as of the Closing, in
substitution for ARCO's or Delta Housing's surety bonds and self bonds listed in
Section 4.13 of the Disclosure Schedule (collectively, "SURETY BONDS" and
individually, a "SURETY BOND"). If all the Substitute Surety Bonds are not
effective 90 days after the Closing Date, Acquisition Corp. shall be required to
pay ARCO or Delta Housing, in consideration of ARCO or Delta Housing keeping in
effect those Surety Bonds for which a Substitute Surety Bond is not then
effective (collectively, the "POST-CLOSING SURETY BONDS" and individually, a
"POST-CLOSING SURETY BOND"), an amount equal to one-half of one percent of the
face value of the Post-Closing Surety Bonds per month (or pro rata portion
thereof) until such time as Substitute Surety Bonds are effective, it being
agreed that the aggregate face value of the Post-Closing Surety Bonds shall be
reduced dollar-for-dollar by the face value of Substitute Surety Bonds as such
Substitute Surety Bonds become effective after the Closing Date without regard
to or whether any of the Post-Closing Surety Bonds are released. In the event
Substitute Surety Bonds in substitution for all the Post-Closing Surety Bonds
are not effective within 180 days after the Closing Date, in lieu of Acquisition
Corp.'s payment obligation under the preceding sentence, Acquisition Corp. shall
obtain, for the benefit of ARCO performance bonds or other assurances, from such
surety providers and with such terms and conditions reasonably acceptable to
ARCO and Delta Housing (the "PERFORMANCE BONDS") in an
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aggregate face value equal to the aggregate face value of the Post-Closing
Surety Bonds on and after such 180th day, it being agreed that the aggregate
face value of the Performance Bonds shall be reduced dollar-for-dollar by the
face value of Substitute Surety Bonds as such Substitute Surety Bonds thereafter
become effective without respect to whether any of the Post-Closing Surety Bonds
secured by the Performance Bonds are released. Without limiting the foregoing,
Arch and Acquisition Corp. shall indemnify and hold harmless ARCO, Delta Housing
and their Affiliates with respect to all Losses arising under the Surety Bonds.
7.11 BLACK LUNG LIABILITY. Arch and Acquisition Corp. have reviewed
any reserves and accruals of the ARCO Parties, including those which are with
respect to potential liability under the Black Lung Benefits Act of 1972, as
amended, the Black Lung Benefits Reform Act of 1977, as amended, and other
applicable Federal and state black lung acts or laws designed to provide such
benefits to employees. Arch acknowledges that, except with respect to any breach
of the representation and warranty made by ARCO in Section 4.21 in respect of
black lung liabilities, any Loss in respect of black lung shall not form the
basis for any assertion of a breach of a representation or warranty contained in
this Agreement.
7.12 LITIGATION SUPPORT. From and after the Closing Date, Arch and
Acquisition Corp shall indemnify and hold harmless ARCO, Delta Housing and their
Affiliates with respect to all Losses arising out of or relating to any matter
set forth in Section 4.14 of the ARCO Disclosure Schedule. Without limiting the
foregoing, if and for so long as ARCO is defending or contesting any action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the ARCO Parties, Arch and Acquisition Corp. shall cooperate and shall cause the
ARCO Parties to cooperate (on and after the Closing Date) with ARCO or Delta
Housing and its counsel and agents in such defense or contest, make available
its and their personnel, and provide such testimony and access to its and their
books and records as shall be necessary in connection with such defense or
contest all at Acquisition Corp.'s cost.
7.13 INSURANCE. Arch has reviewed the insurance policies set forth in
Section 4.11 of the Disclosure Schedule. ARCO agrees that all such insurance
policies shall remain in full force and effect until the Closing. All coverage
and benefits under such insurance policies and any other insurance policies of
ARCO or its Affiliates, subject to the terms thereof, shall cease at the
Closing. On and after the Closing Date, Arch shall be solely responsible for
obtaining and maintaining any and all insurance coverage and protection relating
to the respective business, assets, properties, operations, liabilities and
obligations of the ARCO Parties.
7.14 ARCH'S AND ACQUISITION CORP.'S ENVIRONMENTAL RESPONSIBILITIES.
Arch and Acquisition Corp. hereby acknowledge and agree that all Environmental
Liabilities asserted against the ARCO Parties related to any property listed in
Section 7.14 of the Disclosure Schedule (the "PROPERTIES") shall be retained by
the ARCO Parties on and following the Closing Date and that all Environmental
Liabilities asserted against ARCO, Delta Housing or their Affiliates with
respect or related to the Properties shall be assumed by Arch and Acquisition
Corp. From and after the Closing Date, Arch and Acquisition Corp. shall perform,
pay and discharge, or cause the ARCO Parties to perform, pay and discharge all
retained and assumed
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Environmental Liabilities, and shall indemnify and hold harmless ARCO, Delta
Housing and their Affiliates with respect to such Environmental Liabilities.
7.15 ARCO'S AND DELTA HOUSING'S ENVIRONMENTAL RESPONSIBILITIES. ARCO
and Delta Housing hereby acknowledge and agree that all Environmental
Liabilities resulting from the ownership or operation of properties other than
the Properties (the "OTHER PROPERTIES") by the ARCO Parties or any of their
predecessors or Affiliates (unless caused by Acquisition Corp., Arch, the ARCO
Parties or any of their respective Affiliates on or after the Closing Date),
shall be assumed by ARCO and Delta Housing. From and after the Closing Date,
ARCO and Delta Housing shall perform, pay and discharge any such Environmental
Liabilities assumed pursuant to this Section 7.15, and shall indemnify and hold
harmless each Arch Indemnitee with respect to such Environmental Liabilities.
7.16 OTHER LIABILITIES.
(a) Except as otherwise expressly provided in this Agreement and
without limiting ARCO's or Delta Housing's liability for breaches of
representations and warranties and defaults of covenants and agreements under
this Agreement and the Purchase Agreement in addition to the Environmental
Liabilities, Arch and Acquisition Corp. hereby acknowledge and agree that, all
Other Liabilities shall be retained by the ARCO Parties on and following the
Closing Date. Except with respect to Other Liabilities retained by Delta Housing
or required to be indemnified by ARCO and Delta Housing, in each case as
expressly provided under this Agreement and the Purchase Agreement from and
after the Closing Date, Acquisition Corp. shall perform, pay or discharge or
cause the ARCO Parties to perform, pay or discharge such Other Liabilities, and
shall indemnify and hold harmless each of ARCO and Delta Housing and any
officer, director, employee, agent or Affiliate of ARCO or Delta Housing with
respect to such Other Liabilities.
(b) "OTHER LIABILITIES" shall mean any and all claims, actions, causes
of action, damages, losses, liabilities, obligations, penalties, judgments,
amounts paid in settlement, assessments, costs, disbursements or expenses
(including attorneys' fees and costs, experts' fees and costs and consultants'
fees and costs) of any kind or nature, whether existing on the Closing Date or
arising thereafter (including those absolute, accrued, contingent, unknown or
otherwise), that are asserted against an ARCO Party or ARCO, Delta Housing or
any of their Affiliates arising out of, based on or relating to the business,
assets, properties, operations, liabilities or obligations of any and all of the
ARCO Parties, other than Environmental Liabilities.
7.17 DISCLOSURE SCHEDULES. The parties hereto shall have ten (10) days
after the Effective Date to revise the Disclosure Schedules delivered hereunder
by written notice to the other party; provided, however, that no such revision
shall materially alter the nature or effect of the specific item so modified, or
alone or in the aggregate have a Material Adverse Effect. The revised Disclosure
Schedules shall become the Disclosure Schedules to the Agreement as if initially
attached hereto.
7.18 COMMERCIALLY REASONABLE EFFORTS. Each of Arch, Acquisition Corp.,
ARCO and Delta Housing will use commercially reasonable efforts to take all
actions and do all things necessary in order to consummate and make effective
the transactions contemplated by this
35
Agreement (including the satisfaction, but not the waiver, of the closing
conditions set forth in Sections 11.1 and 11.2).
ARTICLE 8
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 RETENTION OF EMPLOYEES AND CONTINUATION OF BENEFITS.
(a) Section 8.1(a) of the Disclosure Schedule sets forth a list of the
Employees who will be retained in employment by TBCC ("TRANSFEREES"), which list
shall be updated and supplemented by ARCO and agreed to by Acquisition Corp. on
and as of the Closing Date. Acquisition Corp. shall take such action as may be
necessary to provide that as of the Closing Date, the Transferees shall remain
employed by the ARCO Parties or shall be employed by Acquisition Corp. and the
Transferees shall, except as otherwise provided, participate in Acquisition
Corp.'s employee benefit plans offered to similarly situated employees.
(b) Without limiting the foregoing, for purposes of this Article 8,
Arch shall ensure that on and following the Closing Date, the Transferees shall
receive credit with respect to any benefit plan, arrangement or other right
whether contemplated in Section 4.17 of the Disclosure Schedule or otherwise,
for any period of employment with ARCO or the ARCO Parties (including any
applicable predecessors or Affiliates) prior to the Closing Date for eligibility
and vesting purposes under each employee benefit plan, arrangement or other
right; provided, however, that in no event shall any Transferees be given credit
for any such purpose for any period of employment that was not counted for such
purpose under any applicable plan, arrangement or Plan of ARCO or the ARCO
Parties prior to the Closing Date.
8.2 RETENTION OF RETIREMENT PLANS FOR ARCO PARTIES. Section 8.2 of the
Disclosure Schedule sets forth a list of any retirement plan established and
maintained by the ARCO Parties or ARCO (collectively, the "RETIREMENT PLANS").
Acquisition Corp. shall take such action as may be necessary to cause any
applicable ARCO Party to continue to administer and maintain its respective
Retirement Plan until December 31, 1998. On and following the Closing Date,
Acquisition Corp. shall be responsible for retaining the sponsorship and all
assets, accounts, liabilities and obligations of the Retirement Plans applicable
to Transferees or former employees of the applicable ARCO Party, and Acquisition
Corp. shall release, indemnify and hold harmless ARCO, Delta Housing and any of
their Affiliates with respect to all Losses arising out of or relating to the
Retirement Plans. Acquisition Corp. agrees that if, after December 31, 1998, the
defined benefit Retirement Plan is merged into the Arch's Retirement Plan, the
opening balance credits in the Arch's Retirement Plan with respect to
Transferees shall be no less than the assets of the merged Retirement Plan
allocable to the Transferees, and Transferees shall be entitled to the
transition credits, though not longer than December 31, 2012, based on their
years of Retirement Plan benefit accrual service, as provided by the Arch's
Retirement Plan as of the Closing Date.
8.3 ARCO'S PENSION PLAN. As of the Closing Date, any Transferees who
are participants in the Atlantic Richfield Retirement Plan II (the "ARCO
RETIREMENT PLAN") shall no longer participate in such plan. Arch shall take such
action as may be necessary to provide that
36
all such Transferees shall participate in Arch's cash balance defined benefit
retirement plan ("ARCH'S RETIREMENT PLAN"). Arch understands and agrees that the
accrued benefits of any Transferees under the ARCO Retirement Plan shall not
increase following the Closing Date and that any surplus under such plan with
respect to such Transferees shall be retained by ARCO. Arch agrees to provide
open balance credits in Arch's Retirement Plan with respect to Transferees based
on the Transferee's monthly accrued benefit under the ARCO Retirement Plan and
the conversion factor under Arch's Retirement Plan, as in effect on the Closing
Date. Such Transferee's open balance credits shall be reduced by the present
value of the Transferee's accrued benefit under the ARCO Retirement Plan. Arch
also agrees to provide Transferees with transition credits, though not longer
than December 31, 2012, based on their years of ARCO Retirement Plan benefit
accrual service, similar to the credits provided under Arch's Retirement Plan,
as in effect on the Closing Date.
8.4 THRIFT PLAN. As of the Closing Date, any Transferees who are
participants in the Atlantic Richfield Capital Accumulation Plan II and the
Atlantic Richfield Savings Plan II (collectively, "ARCO ACCUMULATION AND SAVINGS
PLANS") shall no longer participate in such plans. Arch shall take such action
as may be necessary to provide that all such Transferees shall participate in
Arch's defined contribution retirement plan(s) (collectively, the "ARCH'S
SAVINGS PLAN"). Arch shall allow Transferees to make direct rollovers under
Section 401(a)(31) of the Code or elective transfers under Treas. Reg.
1.411(d)-4, Q&A-3 of their account balances from the ARCO Accumulation and
Savings Plans to Arch's Savings Plan. Arch and ARCO understand and acknowledge
that Transferees who are participants in the ARCO Accumulation and Savings Plans
may at their election choose to leave their contributions in either or both of
the ARCO Accumulation and Savings Plans.
8.5 OTHER EMPLOYEE BENEFITS. Except as specifically set forth in
Sections 8.3 and 8.4, as of the Closing Date (i) Employees of the ARCO Parties
(and their respective beneficiaries and dependents) shall no longer participate
in any employee benefit plan or arrangement maintained by ARCO and (ii) Arch and
the Company shall assume or retain (as applicable) all liabilities relating to
Transferees or former employees of the ARCO Parties (and their respective
beneficiaries and dependents). Without limiting the provisions of Section 8.1,
Arch shall continue to provide until December 31, 1998 under plans comparable to
plans applicable to Transferees prior to the Closing, the following benefits:
(i) the group health coverage currently provided to the Transferees, former
employees and their dependents, or any sub-group thereof (collectively, the
"PARTICIPANTS"), or comparable group health coverage which shall (A) waive any
pre-existing condition limitations on benefits for the Participants, (B) waive
any eligibility waiting periods for the Participants, and (C) give effect, in
determining or applying any deductible and maximum out-of-pocket limitations, to
claims incurred, amounts paid by or on behalf of and amounts reimbursed to the
Participants under ARCO's or an ARCO Party's group health plan during the
calendar year in effect as of the Closing Date, and (ii) benefits under the
employee benefit plans described in Section 4.17 of the Disclosure Schedule.
Without limiting the foregoing, Arch agrees to provide coverage to the
Transferees as required by the Consolidated Omnibus Budget Reconciliation Act of
1985.
8.6 FLEXIBLE SPENDING ACCOUNTS. ARCO and Acquisition Corp. agree to
cooperate with each other in all reasonable respects to effect an orderly
transition for Employees from the
37
flexible spending account plans in which such Employees currently participate to
Arch's comparable plans as appropriate and to the extent permitted by applicable
law.
8.7 COOPERATION. ARCO and Acquisition Corp. agree to cooperate with
each other in all reasonable respects with respect to administrative issues
arising out of this Agreement that relate to the Plans of ARCO, Acquisition
Corp. or their respective Affiliates.
8.8 BLACK LUNG MATTERS. After the Closing, and subject to Arch's and
Acquisition Corp.'s right to indemnity for ARCO's and/or Delta Housing's breach
of its representation and warranty in Section 4.21 of this Agreement,
Acquisition Corp. shall pay or cause the ARCO Parties to pay all liabilities of
ARCO or Delta Housing under the Federal Mine Safety and Health Act of 1977, as
amended, and applicable Federal and state laws for claims for disability or
death due to "black lung" or pneumoconiosis, whenever created.
8.9 TRANSFEREE TERMINATION BY ARCH.
(a) In the event the employment of any Transferee is terminated for
any or no reason following the Closing Date, ARCO shall have no liability with
respect to any severance or other post-employment benefits applicable to such
termination, and Arch shall indemnify and hold harmless ARCO, Delta Housing or
their Affiliates for all losses, claims, damages, liabilities, costs and
expenses (including any attorney fees) arising out of or relating to any
termination of employment or any severance or other post-employment benefit with
respect to the Transferees following the Closing Date. Without limiting the
foregoing, Arch agrees to defend and indemnify ARCO, Delta Housing or their
Affiliates for any losses, claims, damages, liabilities, costs and expenses
(including any attorney fees) arising out of or relating to any claim for
severance benefits for whatever reason or basis, including, without limitation,
a change of a Transferee's terms and conditions of employment with Arch such as
a change in compensation or employee benefit plans.
(b) Without limiting the generality of the foregoing, in the event the
employment of any Transferee is terminated for any or no reason, other than for
cause in accordance with Arch's applicable disciplinary procedures, if any,
within one year following the Closing Date, Arch shall provide such Transferee
severance benefits, including, without limitation, the payment of an allowance
and the continuation of medical and dental coverage and the R-60, in accordance
with the provisions of the Atlantic Richfield Special Termination Allowance
Plan, as amended, and the Atlantic Richfield Termination Allowance Plan Policy
Provisions copies of which are attached hereto as Exhibit 8.9(b), and any
individual severance arrangement as set forth in Section 4.17 of the Disclosure
Schedule applicable to the Transferees prior to the Closing Date.
(c) Notwithstanding anything else in this Agreement, Acquisition Corp.
shall not be required to provide severance benefits for any of the individuals
set forth in Section 8.9(c) of the Disclosure Schedule.
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ARTICLE 9
TAXES
9.1 ARCO TAX MATTERS.
(a) ARCO will prepare and file or cause to be prepared and filed all
Tax Returns for the ARCO Parties required to be filed prior to the Closing Date
with the appropriate United States, state, local and foreign governmental
entities for any taxable period of the ARCO Parties that ends on or before the
Closing Date (the "PRE-CLOSING TAX PERIOD"). ARCO will make all payments shown
thereon as owing with respect to any such Tax Return. ARCO will prepare and, if
required to do so by applicable law, deliver to the Company for signing and
filing any state income Tax Returns of the ARCO Parties with respect to any
Pre-Closing Tax Period (including any short period) that have not been filed
prior to the Closing Date. The Company will make all payments shown thereon as
owing with respect to any such Tax Returns.
(b) Except as otherwise provided in Section 9.1(a) or (c), the Company
will prepare and file or cause to be prepared and filed all Tax Returns for the
ARCO Parties that are required to be filed with the appropriate United States,
state, local and foreign governmental entities for all periods as to which such
Tax Returns are due after the Closing Date. The Company will pay or cause to be
paid all taxes required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include
but not end on the Closing Date, to the extent permissible pursuant to
applicable law, ARCO will, and the Company will cause the ARCO Parties to, (i)
take all steps as are or may be reasonably necessary, including the filing of
elections or returns with applicable taxing authorities, to cause such period to
end on the Closing Date; or (ii) if clause (i) is inapplicable, report the
operations of the ARCO Parties only for the portion of such period ending on or
immediately before the Closing Date in a combined, consolidated, or unitary Tax
Return filed by ARCO, notwithstanding that such taxable period does not end on
the Closing Date. If clause (ii) applies to a taxable period of the ARCO
Parties, the portion of such taxable period included in such return filed by
ARCO will be treated as a Pre-Closing Tax Period described in Section 9.1(a) and
Arch will not be responsible for filing such return for such year pursuant to
Section 9.1(b).
(d) In order to assist ARCO in the preparation of all Tax Returns that
ARCO is required to prepare pursuant to Section 9.1(a), the Company will prepare
or cause the ARCO Parties to prepare and deliver within 60 days of receipt
ARCO's standard Federal and state tax return data gathering packages relating to
the ARCO Parties. In addition to providing such packages, the Company will
promptly provide or cause to be provided to ARCO such other information as ARCO
may reasonably request (including access to books, records and personnel) in
order for the operations of the ARCO Parties to be properly reported in such Tax
Returns, for the preparation for any Tax audit or for the prosecution or defense
of any claim, suit or proceeding relating to Taxes.
(e) To the extent refunds of Taxes are not recorded on the Closing
Date Balance Sheet, the Company will pay or cause to be paid to ARCO all refunds
or credits of Taxes (including any interest thereon) received by the Company
after the Closing Date and attributable to Taxes paid by ARCO with respect to
any Pre-Closing Tax Period. Such payment will be
39
made to ARCO within 30 days after receipt of any such refund from or allowance
of such credit by the relevant taxing authority.
(f) ARCO will indemnify and hold the Company harmless from and against
any and all liability for any taxable period as a result of Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law) for taxes
of any corporation or other entity, other than the ARCO Parties, which is or has
been affiliated with ARCO.
9.2 ARCH TAX MATTERS.
(a) Arch will prepare and file or cause to be prepared and filed all
Federal and state income Tax Returns for AOW required to be filed with the
appropriate United States, state, local and foreign governmental entities for
any taxable period of such member that ends on or before the Closing Date (the
"ARCH PRE-CLOSING TAX PERIOD"). Arch will prepare and, if required to do so by
applicable law, deliver to the Company for signing and filing any state income
Tax Returns of AOW with respect to any Arch Pre-Closing Tax Period (including
any short period) that have not been filed prior to the Closing Date. Arch will
make all payments shown thereon as owing with respect to any such Tax Returns.
(b) Except as otherwise provided in Section 9.2(a), the Company will
prepare and file or cause to be prepared and filed all Tax Returns for AOW that
are required to be filed with the appropriate United States, state, local and
foreign governmental entities for all periods as to which such Tax Returns are
due after the Closing Date. The Company will pay or cause to be paid all taxes
required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise include
but not end on the Closing Date, to the extent permissible pursuant to
applicable law, Arch will, and the Company will cause AOW to, (i) take all steps
as are or may be reasonably necessary, including the filing of elections or
returns with applicable taxing authorities, to cause such period to end on the
Closing Date; or (ii) if clause (i) is inapplicable, report the operations of
AOW only for the portion of such period ending on or immediately before the
Closing Date in a combined, consolidated, or unitary Tax Return filed by Arch,
notwithstanding that such taxable period does not end on the Closing Date. If
clause (ii) applies to a taxable period of AOW, the portion of such taxable
period included in such return filed by Arch will be treated as an Arch
Pre-Closing Tax Period described in Section 9.2(a) and the Company will not be
responsible for filing such return for such year pursuant to Section 9.2(b).
(d) In order to assist Arch in the preparation of all Tax Returns that
Arch is required to prepare pursuant to Section 9.2(a), the Company will prepare
or cause AOW to prepare and deliver within 60 days of receipt Arch's standard
Federal and state tax return data gathering packages relating to AOW. In
addition to providing such packages, the Company will promptly provide or cause
to be provided to Arch such other information as Arch may reasonably request
(including access to books, records and personnel) in order for the operations
of AOW to be properly reported in such Tax Returns, for the preparation for any
Tax audit or for the prosecution or defense of any claim, suit or proceeding
relating to Taxes.
40
(e) The Company will pay or cause to be paid to Arch all refunds or
credits of income taxes (including any interest thereon) received by the Company
after the Closing Date and attributable to income taxes paid by Arch with
respect to any Arch Pre-Closing Tax Period. Such payment will be made to Arch
within 30 days after receipt of any such refund from or allowance of such credit
by the relevant taxing authority.
(f) Arch will indemnify and hold the Company harmless from and against
any and all liability for any taxable period as a result of Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law) for taxes
of any corporation or other entity, other than AOW, which is or has been
affiliated with Arch.
ARTICLE 10
INDEMNIFICATION
10.1 ARCH'S AND ACQUISITION CORP.'S INDEMNIFICATION. Subject to the
limitations set forth in this Article 10, Arch and Acquisition Corp., jointly
and severally, shall indemnify and hold harmless each of ARCO, Delta Housing and
their respective officers, directors, employees, agents and Affiliates, other
than the ARCO Parties (collectively, the "ARCO INDEMNITEES") from and against
any and all Losses to which they or any of them may become subject, including as
a result of claims by third parties, to the extent caused by:
(a) any breach or default in performance by Arch, Acquisition Corp. or
the Company of any covenant, obligation or agreement of Acquisition Corp.
contained in this Agreement, including those obligations of Arch or Acquisition
Corp. set forth in Articles 3, 7, 8 and 9 hereof, specifically including any
covenant, obligation or agreement of Arch or Acquisition Corp. in respect of
Environmental Liabilities related to the Properties as provided in Section 7.14,
and in respect of the Other Liabilities as provided in Section 7.16(a);
(b) any breach of any representation or warranty made by Arch, any
Arch Parties or the Company in this Agreement, or in any certificate, instrument
or other document delivered by or on behalf of Arch or any Arch Party at the
Closing;
and as otherwise expressly provided for in this Agreement, including in respect
of Transfer Taxes as provided in Section 2.5.
10.2 ARCO'S AND DELTA HOUSING'S INDEMNIFICATION. Subject to the
limitations set forth in this Article 10, ARCO and Delta Housing, jointly and
severally, shall indemnify and hold harmless Arch, Acquisition Corp. and their
respective officers, directors, employees, agents and Affiliates, including
after the Closing the ARCO Parties and their officers, directors, employees,
agents and Affiliates, (collectively, the "ARCH INDEMNITEES") from and against
any and all Losses to which they or any of them may become subject, including as
a result of claims by third parties, to the extent caused by;
(a) any breach or default in performance by ARCO or Delta Housing of
any covenant, obligation or agreement of ARCO or Delta Housing contained in this
Agreement, including those obligations of ARCO and Delta Housing set forth in
Articles 3, 7, 8 and 9 hereof,
41
specifically including any covenant, obligation or agreement of ARCO or Delta
Housing in respect of Environmental Liabilities related to the ownership or
operation of the Other Properties, as provided in Section 7.15 and in respect of
certain Tax liabilities under Section 9.1(f);
(b) any breach of any representation or warranty made by ARCO or Delta
Housing in this Agreement or in any certificate, instrument or other document
delivered by or on behalf of ARCO or Delta Housing at the Closing;
(c) [Confidential Treatment Requested]*
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10.3 MONETARY LIMITATION.
(a) As used in this Agreement, "LOSSES" shall mean any losses, claims,
damages, liabilities, out-of-pocket costs and expenses (including judgment costs
of settlement and reasonable attorneys', consultants' and experts' fees). "OTHER
LOSSES" shall mean any Losses as defined in the Purchase Agreement. "COMBINED
Losses" shall mean the aggregate of all Losses of Arch Indemnitees and all Other
Losses of Arch Indemnitees that ARCO, ARCO Uinta or Delta Housing are obligated
to indemnify against pursuant to this Agreement or pursuant to the Purchase
Agreement. Notwithstanding the foregoing, the dollar amount of any Losses shall
be determined after taking into account the limitations set forth in Section
10.6(d).
(b) ARCO, ARCO Uinta and Delta Housing shall have no obligation to
indemnify any Arch Indemnitee pursuant to Section 10.2(a) or Section 10.2(b)
(other than for any breach of the representations, warranties or covenants set
forth in Sections 4.6, 4.12(b), 4.26 and 7.15) unless and until the Combined
Losses incurred or sustained by all Arch Indemnitees exceeds $25 million
(provided that no individual Loss or Other Loss of less than $500,000 shall be
counted against such $25 million), and then only for the excess over $25
million. In addition, the liability of ARCO, ARCO Uinta and Delta Housing to
indemnify the Arch Indemnitees for Combined Losses other than Losses arising
under Sections 4.6, 4.26, 7.15, 7.21 and 10.2(c) shall in no event exceed $500
million in the aggregate.
10.4 NATURE AND SURVIVAL; TIME LIMITS.
(a) All representations and warranties set forth in Articles 4, 5 and
6 shall survive the Closing and continue in effect until the first anniversary
of the Closing Date, at which time any and all liability arising out of or
relating to such representations and warranties shall terminate provided that
ARCO's and Delta Housing's representations and warranties set forth in Section
4.6 as to title of the Contributed ARCO Interests to which Acquisition Corp.'s
indemnification obligations apply shall survive the Closing for three years. Any
claim against any party hereto for indemnification pursuant to this Agreement as
a result of any breach of representation or warranty made by such party must be
made promptly, and in all events within the period of time during which such
representation or warranty survives the Closing pursuant to this Section
10.4(a), if any.
(b) Except for the representations and warranties described in Section
10.4(a), all covenants, obligations and agreements of the parties set forth in
this Agreement, including those obligations set forth in Articles 7, 8 and 9
hereof, shall survive indefinitely.
10.5 LIMITATION ON REMEDIES; MITIGATION. The indemnification provided
in this Agreement, subject to any applicable limitations thereto set forth in
this Agreement, shall be the sole and exclusive remedy available to a party for
any breach, default or violation of this Agreement by the other party. The
Indemnified Party shall use all reasonable efforts to mitigate any Losses.
43
10.6 GENERAL PROVISIONS. In the case of any claim for indemnification
brought pursuant to this Agreement:
(a) The party entitled to indemnification (the "INDEMNIFIED PARTY")
shall notify the party obligated to provide indemnification (the "INDEMNIFYING
PARTY") promptly upon (i) receipt of notice of the commencement of the claim by
a third party for which indemnification is sought pursuant to this Agreement;
(ii) becoming aware of a claim for indemnification not involving a claim by a
third party, and (iii) the occurrence of any material event or change with
respect to any ongoing claim in writing and in reasonable detail, and within any
applicable time limits specified in this Agreement.
(b) In case any such claim is brought against any Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, or in
respect of any ongoing action, the Indemnifying Party will be entitled to
participate therein and, to the extent it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense thereof. Subsequent
to such assumption of defense, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; PROVIDED, HOWEVER,
that the Indemnified Party shall thereafter have the right to participate in the
defense of such claim and to be represented, solely at its expense, by advisory
counsel selected by it. In all cases in which the Indemnifying Party assumes the
defense of such claim, the Indemnifying Party shall control such defense, and
any settlement of such claim shall require the consent of the Indemnified Party,
which consent may not be unreasonably withheld, conditioned or delayed.
Notwithstanding anything to the contrary contained in this Section 10.6, the
Indemnified Party shall have the right to employ separate counsel at its sole
cost and expense if there shall be available one or more defenses or one or more
counterclaims available to the Indemnified Party which conflicts with one or
more defenses or one or more claims or counterclaims available to the
Indemnifying Party. Whether or not the Indemnifying Party shall have assumed the
defense of a claim for which the Indemnified Party is entitled to be
indemnified, the Indemnified Party shall not admit any liability with respect
to, or settle, compromise or discharge, such claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed.
(c) The Indemnified Party will, at the expense of the Indemnifying
Party, cooperate and consult with the Indemnifying Party in the defense of any
such action and shall furnish any documents and endeavor to make available any
witnesses under its control.
(d) Any indemnification payment shall be (i) limited to the Losses
actually incurred (after giving effect to the Present Value Benefit, realized or
realizable by the Indemnified Party in connection with or as a result of the
incurrence of the Loss for which the indemnity payment is to be made) and shall
not include punitive damages, indirect damages, or consequential damages
(including lost profits) incurred by the Indemnified Party, (ii) net of
insurance proceeds received by the Indemnified Party (and the amount of
indemnification payable under this Agreement shall not include the amount of any
insurance proceeds actually recovered by the Indemnified Party with respect to a
Loss) and (iii) in the case of Arch Indemnitees net of any reserves of TBCC
reflected on the Interim Date Balance Sheet applicable thereto. The foregoing
limitations shall
44
apply before application of the monetary limitations specified in Section
10.3(b). If the amount to be netted hereunder from any payment by the
Indemnifying Party is determined after the Indemnifying Party has already paid
any amount required to be paid pursuant to this Agreement, the Indemnified Party
shall repay to the Indemnifying Party, promptly after such determination, any
amount that the Indemnifying Party would not have had to pay pursuant to this
Agreement had such determination been made at the time of such payment.
10.7 TAX TREATMENT. Any indemnity payment made under this Article
shall be treated for tax purposes as a contribution to the Company (and a
related increase in tax basis) by the member who makes, or is affiliated with
the party who makes, such payment unless otherwise required by law. No payment
under this Article 10 shall have a net effect on the capital accounts or
percentage interests of the members in the Company.
10.8 COOPERATION AND COMMUNICATION.
(a) The parties to this Agreement (i) acknowledge that they are
subject to a covenant of good faith and fair dealing with respect to this
Agreement and (ii) agree to use commercially reasonable efforts to communicate
with and cooperate with each other with respect to any dealings they may have
with other parties which could reasonably be expected to affect the obligations
of the parties under this Agreement.
(b) [Confidential Treatment Requested]*
(c) [Confidential Treatment Requested]*
45
(d) [Confidential Treatment Requested]*
(e) Acquisition Corp. and ARCO shall execute an Assignment and
Assumption Agreement (the "ASSIGNMENT AND ASSUMPTION AGREEMENT") in a form
acceptable to ARCO and Arch, whereby ARCO will assign, and TBCC will assume, all
rights and obligations of ARCO pursuant to the Conditional Agreement identified
in the Disclosure Schedule (the "CONDITIONAL AGREEMENT"). [Confidential
Treatment Requested]*
10.9 EFFECTING THE INDEMNITY. Any indemnity payment to be made by a
party hereto shall be made to the Company, except as set forth in the next
sentence, notwithstanding any other provision of the Agreement. Any indemnity
payment which is intended to make another party whole for out of pocket costs
incurred by that party shall be made to the member that incurred, or is
affiliated with the person that incurred, those costs.
ARTICLE 11
CONDITIONS TO CLOSING
11.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCH AND ACQUISITION CORP.
The obligations of Arch and Acquisition Corp. under this Agreement are subject
to the satisfaction (or waiver by Arch), prior to or on the Closing Date, of
each of the following conditions:
(a) Any breach or breaches of the representations and warranties of
ARCO or Delta Housing contained in this Agreement or of ARCO and ARCO Uinta in
the Purchase Agreement at and as of the Closing Date, after giving effect to
such representations and warranties as though made on and as of the Closing Date
(except for representations and warranties made as of a specific date, which
shall be given effect as of such date), that alone or in the aggregate do not
have a Material Adverse Effect.
(b) ARCO and Delta Housing shall have performed or complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by ARCO or Delta Housing prior to or at the
Closing, including notifications under Section 7.3.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any Federal laws,
any of the transactions contemplated by this Agreement.
(d) Arch shall have received an opinion, dated the Closing Date, of
counsel employed by ARCO, in form and substance reasonably acceptable to Arch
and Acquisition Corp.
46
(e) There shall not be in effect any injunction or order issued by any
court or administrative agency of competent jurisdiction preventing in any
material respect the consummation of the transactions contemplated by this
Agreement on the Closing Date.
(f) Arch shall have received such resignations of the officers and
directors of the ARCO Parties as shall have been requested by Arch in writing
not less than 30 days prior to the Closing Date, subject to the provisions of
Article 8.
(g) Since the Effective Date, there have been no adverse events or
occurrences other than adverse events or occurrences as a result of general
economic conditions or other conditions affecting the industry in which the ARCO
Parties operate (including fluctuations in coal prices and legislative or
regulatory conditions) that together with the total amount of claims of the Arch
Indemnitees for ARCO's or Delta Housing's breaches of their representation or
warranties contained in this Agreement or in the Purchase Agreement as of the
Closing Date, have a Material Adverse Effect.
(h) The transactions contemplated in the Purchase Agreement shall be
consummated concurrently with the Closing.
If the Closing occurs, nothing in this Section 11.1 shall be construed
to limit Arch's or Acquisition Corp.'s indemnification rights or the amount of
ARCO's or Delta Housing's indemnification obligations, and it is expressly
agreed that unless waived in writing by Arch or Acquisition Corp. at or prior to
the Closing, any remedy available to Arch or Acquisition Corp. for ARCO's or
Delta Housing's breach of its representations and warranties or substantial
failure to perform or comply with any obligation or covenant, including ARCO's
or Delta Housing's indemnification obligations after the Closing in respect of
such breaches and failures occurring on or prior to Closing, shall survive
Closing and be unaffected thereby.
11.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCO AND DELTA HOUSING.
The obligations of ARCO and Delta Housing under this Agreement are subject to
the satisfaction (or waiver by ARCO and Delta Housing), prior to or on the
Closing Date, of each of the following conditions:
(a) The representations and warranties of Arch or Acquisition Corp.
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, with the same effect as though made on and as of
the Closing Date (except for representations and warranties made as of a
specific date, which shall be true and correct in all material respects as of
such date).
(b) Arch and Acquisition Corp. shall have performed or complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Arch and Acquisition Corp. prior to or at
the Closing.
(c) The waiting period under the HSR Act shall have expired or been
terminated, and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to
47
challenge as violative of any Federal laws, any of the transactions contemplated
by this Agreement.
(d) ARCO shall have received an opinion, dated the Closing Date, of
Jeffry N. Quinn, counsel for Arch and Acquisition Corp., in form and substance
reasonably acceptable to ARCO and Delta Housing.
(e) There shall not be in effect any injunction or order issued by any
court or administrative agency of competent jurisdiction preventing the
consummation of the transactions contemplated by this Agreement on the Closing
Date.
(f) The transactions contemplated in the Purchase Agreement shall be
consummated concurrently with the Closing.
(g) Any consents necessary to transfer operating permits for mines
owned by either of the ARCO Parties shall have been obtained unless Arch and
Acquisition Corp. shall have agreed to indemnify ARCO and the ARCO Parties from
any Losses arising out of the failure to obtain such consents.
If the Closing occurs, nothing in this Section 11.2 shall be construed
to limit ARCO or Delta Housing's indemnification rights or the amount of Arch or
Acquisition Corp.'s indemnification obligations, and it is expressly agreed that
unless waived in writing by ARCO or Delta Housing at or prior to the Closing,
any remedy available to ARCO or Delta Housing in writing for Arch's or
Acquisition Corp.'s breach of their representations and warranties or
substantial failure to perform or comply with any obligation or covenant,
including Arch's and Acquisition Corp.'s indemnification obligations after the
Closing in respect of such breaches and failures occurring on or prior to
Closing, shall survive Closing and be unaffected hereby.
ARTICLE 12
TERMINATION OF AGREEMENT
12.1 TERMINATION BEFORE CLOSING. This Agreement may be terminated at
any time before Closing:
(a) by the mutual consent of ARCO, Delta Housing, Acquisition Corp.
and Arch in writing;
(b) by Arch (i) if there have been breaches by ARCO or Delta Housing
of any representations or warranties of ARCO and/or Delta Housing contained in
this Agreement or by ARCO and/or ARCO Uinta in the Purchase Agreement that alone
or in the aggregate have a Material Adverse Effect, and if the breaches have
continued for a period of 30 days following Arch's notification to ARCO of such
breaches, or (ii) if events have occurred which have made it impossible to
satisfy the conditions precedent to the obligations of Arch and Acquisition
Corp. set forth in Section 11.1;
48
(c) by ARCO (i) if there have been material breaches by Arch or
Acquisition Corp. of any representations or warranties of Arch and/or
Acquisition Corp. contained in this Agreement or in the Purchase Agreement, and
if the breaches have continued for a period of 30 days following ARCO's
notification to Arch of such breaches, or (ii) if events have occurred which
have made it impossible to satisfy the conditions precedent to the obligations
of ARCO and Delta Housing set forth in Section 10.2;
(d) by Arch if Closing has not occurred on or prior to 75 days after
the Effective Date other than primarily as a result of Arch's or Acquisition
Corp.'s breach or default of this Agreement; or
(e) by ARCO if the Closing has not occurred on or prior to 75 days
after the Effective Date other than primarily as a result of ARCO or Delta
Housing's breach or default of this Agreement.
12.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 12.1, all further obligations of the parties under this Agreement
will terminate and there shall be no liability on the part of any party to this
Agreement, except for material willful breaches of and intentional misstatements
in or pursuant to this Agreement prior to the time of such termination;
provided, however, that the obligations in Sections 7.1(b), 7.5, 7.6, 12.2, 13.3
and 13.10 shall survive the termination of this Agreement.
ARTICLE 13
MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Disclosure Schedule, the Company Agreement, Purchase Agreement and the Tax
Sharing Agreement, set forth the entire agreement and understanding of the
parties in respect of the transactions contemplated herein and supersedes any
previous agreements and understandings between the parties with respect thereto.
13.2 CONSTRUCTION. This Agreement is the result of arms-length
negotiations between, and has been prepared and reviewed by, each party hereto
and its respective counsel. Accordingly, this Agreement shall be deemed to be
the product of each party hereto.
13.3 GOVERNING LAW. The validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties
hereto shall be governed by the substantive laws of the State of Delaware
without regard to the principles of conflict of laws of the State of Delaware or
any other jurisdiction (except those that cannot be waived) that would call for
the application of the substantive law of any jurisdiction other than the State
of Delaware.
13.4 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing, by facsimile, by
overnight courier or by registered or certified mail, postage prepaid and return
receipt requested, and shall be deemed to have been duly given or made upon: (i)
delivery by hand, (ii) one business day after being sent by overnight courier,
(iii) four business days after being deposited in the United States mail,
postage prepaid,
49
or (iv) in the case of transmission by facsimile, when confirmation of receipt
is obtained. Such communications shall be addressed and directed to the parties
listed below as follows:
If to ARCO or Delta Housing: Atlantic Richfield Company
515 South Flower Street
Los Angeles, California 90071
Facsimile: (213) 486-0170 - Treasurer
Facsimile: (213) 486-1544 - General Counsel
Attention: Treasurer
Attention: General Counsel
If to Arch or Acquisition Corp.: Arch Coal, Inc.
CityPlace One, Suite 300
St. Louis, Missouri 63141
Facsimile: 314-994-2734
Attention: Jeffry N. Quinn
If to the Company: Arch Western Resources LLC
CityPlace One, Suite 300
St. Louis, Missouri 63141
Facsimile: 314-994-2734
Attention: Jeffry N. Quinn
13.5 WAIVER. Waivers of or consents to departures from the provisions
hereof may be given; PROVIDED, however, that the same shall be in writing and be
signed by the parties hereto. No such waiver or consent shall be construed as a
waiver of or consent to any other departure from any such provisions or any
other provisions hereof.
13.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. No assignment of this Agreement or of any rights or
obligations hereunder may be made, in whole or in part, by any party (by
operation of law or otherwise) without the prior written consent of the other
parties hereto, and any purported assignment without consent shall be void.
13.7 AMENDMENT. This Agreement may not be amended, modified or
supplemented unless the same shall be in writing and signed by the parties
hereto.
13.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same document.
13.9 NO THIRD PARTY BENEFICIARIES. The terms, agreements and
provisions of the parties set forth in this Agreement are not intended for, nor
shall they be for the benefit of or enforceable by, any Person not a party
hereto, including each of the ARCO Parties.
13.10 JURISDICTION; SERVICE OF PROCESS
50
(a) Each party to this Agreement hereby irrevocably submits itself to
the non-exclusive jurisdiction of the Supreme Court for the State of New York,
sitting in the Borough of Manhattan, or the United States District Court for the
Southern District of New York, (i) for the purposes of any suit, action or other
proceeding brought by any other party, or its respective successors or assigns
arising out of the transactions contemplated by this Agreement or the Purchase
Agreement, (ii) to enforce a resolution, settlement, order or award made
pursuant thereto, or any obligation for the payment of money contained herein.
To the extent permitted by applicable Law, each party to this Agreement hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that (a) it is not personally
subject to the jurisdiction of the above-named courts, (b) the suit, action or
proceeding is brought in an inconvenient forum, (c) the venue of the suit,
action or proceeding is improper, or (d) a resolution, settlement or order made
pursuant thereto, or such an obligation for the payment of money, may not be
enforced in or by such court. Nothing contained herein shall be deemed to waive
the right of a party to seek removal of a matter from state court to Federal
court if such removal is otherwise permissible.
(b) Each party to this Agreement hereby consents to service of process
on it at the office for service of process set forth below as its office for
service of process and additionally irrevocably designates and appoints the
person named in Exhibit 13.10(b) as its "Agent" and attorney-in-fact to receive
service of process in any action, suit or proceeding with respect to any matter
as to which it submits to jurisdiction as set forth above, it being agreed that
service upon Agent shall constitute valid service upon the party or its
successors or assigns. Each party agrees that (x) the sole responsibilities of
the Agent shall be (i) to receive such process, (ii) to send a copy of any such
process so received to such party, by registered airmail, return receipt
requested, at the address for it set forth in Section 13.4, or at the last
address filed in writing by it with the Agent, and (iii) to give prompt
telecopied notice of receipt thereof to it at such address (y) the Agent shall
have no responsibility for the receipt or nonreceipt by the respective party of
such process, nor for any performance or nonperformance by the respective party
or its respective successors or assigns, and (z) failure of the Agent to send a
copy of any such process or otherwise to give notice thereof to the respective
party shall not affect the validity of such service or any judgment in any
action, suit or proceeding based thereon. If service of process cannot be
effected in the foregoing manner, each party further irrevocably consents to the
service of process in any action, suit or proceeding by the mailing of copies
thereof by registered or certified airmail, postage prepaid, return receipt
requested, to it at its address set forth in Section 13.4 hereof. The foregoing,
however, shall not limit the right of the party to serve process in any other
manner permitted by Law. Any judgment against a party in any suit for which such
party has no further right of appeal shall be conclusive, and may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and of the amount of any indebtedness
or liability of such party therein described; PROVIDED, HOWEVER, that the
plaintiff may at its option bring suit, or institute other judicial proceedings,
against such party or any of its assets in the courts of any country or place
where such party or such assets may be found. Each party further covenants and
agrees that for three years following the Closing Date, it shall maintain a duly
appointed agent for the service of summonses and other legal processes in New
York.
51
For purposes of this Section 13.10, the Agent and offices for service
of process for each of the parties shall be as set forth in Exhibit 13.10(b) or
such other person or offices as shall be designated in writing by any party to
the other parties.
13.11 DISCLAIMER FOR COMMUNICATIONS. Except as and to the extent set
forth in this Agreement, ARCO, Delta Housing and their respective Affiliates
make no representations, promise, covenant or warranty regarding the ARCO
Parties, their assets, business, operations, liabilities or obligations, or
otherwise, and disclaim all liability and responsibility for any representation,
warranty, disclosure or statement made or communicated (orally or in writing) to
Arch, Acquisition Corp. or their respective Affiliates or to any officer,
stockholder, director, employee, agent, consultant or representative of Arch,
Acquisition Corp. or their respective Affiliates, including any information
provided by any investment banking firm or other agent of ARCO or Delta Housing,
or any opinion, statement or advice which may have been provided to Arch,
Acquisition Corp. or their respective Affiliates by any officer, stockholder,
director, employee, agent, consultant or representative of ARCO, Delta Housing
or the ARCO Parties.
52
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
ARCH COAL, INC.
/s/ David B. Peugh
----------------------------------------------
By: David B.Peugh
Title: Vice President
ARCH WESTERN ACQUISITION CORPORATION
/s/ Jeffry N. Quinn
----------------------------------------------
By: Jeffry N. Quinn
Title: President
ATLANTIC RICHFIELD COMPANY
/s/ Terry G. Dallas
----------------------------------------------
By: Terry G. Dallas
Title: Senior Vice President and Treasurer
DELTA HOUSING INC.
/s/ Charles P. Cooley
----------------------------------------------
By: Charles P. Cooley
Title: Treasurer
ARCH WESTERN RESOURCES LLC
/s/ Jeffry N. Quinn
----------------------------------------------
By: Jeffry N. Quinn
Title: President
53
EXHIBIT 2.3
LIMITED LIABILITY COMPANY AGREEMENT
OF
ARCH WESTERN RESOURCES LLC,
A DELAWARE LIMITED LIABILITY COMPANY
dated as of June 1, 1998
between
ARCH WESTERN ACQUISITION CORPORATION
and
DELTA HOUSING INC.
TABLE OF CONTENTS
Page
SECTION 1 GENERAL PROVISIONS.............................................. 2
1.1 Maintenance.................................................... 2
1.2 Name........................................................... 2
1.3 Purpose........................................................ 2
1.4 Principal Executive Office..................................... 3
1.5 Term........................................................... 3
1.6 Filings; Agent for Service of Process.......................... 3
1.7 Title to Property.............................................. 4
1.8 Payments of Individual Obligations............................. 4
1.9 Independent Activities......................................... 4
1.10 Definitions.................................................... 4
1.11 Additional Definitions........................................ 16
1.12 Terms Generally............................................... 17
SECTION 2 MEMBERS' CAPITAL CONTRIBUTIONS................................. 17
2.1 Members' Original Capital Contributions....................... 17
2.2 Capital Accounts.............................................. 18
2.3 Additional Capital Contributions; Preemptive Right............ 18
2.4 Company Funds................................................. 19
2.5 Other Borrowings; Member Loans................................ 19
2.6 Other Matters................................................. 20
SECTION 3 ALLOCATIONS.................................................... 20
3.1 Profits....................................................... 20
3.2 Losses........................................................ 21
3.3 Certain Allocations........................................... 21
3.4 Curative Allocations.......................................... 23
3.5 Other Allocation Rules........................................ 23
3.6 Tax Allocations: Code Section 704(c)......................... 24
SECTION 4 DISTRIBUTIONS.................................................. 24
4.1 Initial Distribution.......................................... 24
4.2 Available Cash................................................ 24
4.3 Tax Distributions............................................. 25
4.4 Amounts Withheld.............................................. 25
SECTION 5 MANAGEMENT..................................................... 25
5.1 Authority of the Managing Member.............................. 25
5.2 Officers...................................................... 26
5.3 Liability of Members.......................................... 27
5.4 Indemnification............................................... 28
5.5 Interested Party Transactions................................. 29
SECTION 6 ACCOUNTING, BOOKS AND RECORDS.................................. 29
6.1 Accounting, Books and Records................................. 29
6.2 Reports....................................................... 30
i
6.3 Tax Returns and Information................................... 31
SECTION 7 DISPOSITIONS OF INTERESTS...................................... 32
7.1 Restriction on Dispositions................................... 32
7.2 Permitted Transfers........................................... 33
7.3 Conditions to Permitted Transfers............................. 33
7.4 Put and Call Rights........................................... 35
7.5 Net Equity.................................................... 36
7.6 Gross Appraised Value......................................... 37
7.7 Extension of Time............................................. 38
7.8 Tagalong Rights............................................... 38
7.9 Prohibited Dispositions....................................... 39
7.10 Representations Regarding Acquisitions of Interests........... 39
7.11 Distributions and Allocations in Respect of Transferred
Interests..................................................... 39
SECTION 8 DISSOLUTION AND WINDING UP.................................... 40
8.1 Liquidating Events............................................ 40
8.2 Winding Up.................................................... 40
8.3 Deemed Distribution and Recontribution........................ 42
8.4 Rights of Members............................................. 42
8.5 Notice of Dissolution......................................... 43
8.6 Deemed Sale and Allocation.................................... 43
SECTION 9 DISPUTE RESOLUTION............................................ 43
9.1 Dispute Resolution; Arbitration............................... 43
9.2 Jurisdiction; Service of Process.............................. 44
SECTION 10 MISCELLANEOUS................................................. 45
10.1 Notices....................................................... 45
10.2 Binding Effect................................................ 46
10.3 Construction.................................................. 46
10.4 Time.......................................................... 46
10.5 Table of Contents; Headings................................... 46
10.6 Severability.................................................. 46
10.7 Confidentiality............................................... 46
10.8 Further Action................................................ 48
10.9 Governing Law................................................. 48
10.10 Waiver of Action for Partition................................ 48
10.11 Counterpart Execution......................................... 49
10.12 Specific Performance.......................................... 49
10.13 Entire Agreement.............................................. 49
10.14 Limitation on Rights of Others................................ 49
10.15 Waivers; Remedies............................................. 49
10.16 Amendment..................................................... 49
ii
SCHEDULES
2.1 Gross Asset Values of Capital Contributions; Address for Notice of
Members
9.2 Agent for Service of Process
iii
LIMITED LIABILITY COMPANY AGREEMENT
OF
ARCH WESTERN RESOURCES LLC,
A DELAWARE LIMITED LIABILITY COMPANY
This LIMITED LIABILITY COMPANY AGREEMENT of ARCH WESTERN RESOURCES LLC
(the "Company") is entered into as of the 1st day of June, 1998, by and between
Arch Western Acquisition Corporation, a Delaware corporation ("Arch Member")
directly or indirectly owned by Arch Coal, Inc., a Delaware corporation
("Arch"), and Delta Housing Inc., a Delaware corporation ("ARCO Member")
directly or indirectly owned by Atlantic Richfield Company, a Delaware
corporation ("ARCO").
WHEREAS, on March 17, 1998 (the "Formation Date"), Arch Member caused the
Company to be formed as a Delaware limited liability company; and
WHEREAS, on the date hereof, Arch Member has acquired for cash, among other
things (i) a 65% membership interest in Canyon Fuel Company, a Delaware limited
liability company ("Canyon Fuel"), (ii) all of the membership interests in
Mountain Coal Company L.L.C., a Delaware limited liability company ("MCC"), and
(iii) all of the membership interests in ARCO Uinta Sub, a Delaware limited
liability company ("AUS"), in each case from ARCO Uinta Coal Company, a Delaware
corporation ("ARCO Uinta"), pursuant to that certain Purchase and Sale Agreement
dated as of March 22, 1998 between Arch, Arch Member, ARCO and ARCO Uinta (the
"Purchase and Sale Agreement"), and contributed such assets, together with
membership interests owned by Arch Member in Arch of Wyoming LLC, a Delaware
limited liability company ("Arch Wyoming"), to the Company in exchange for
membership interests in the Company; and
WHEREAS, on the date hereof ARCO has (i) contributed certain assets to
Thunder Basin Coal Company L.L.C., a Delaware limited liability company
("TBCC"), and has contributed all of the membership interests in TBCC to the
Company in exchange for interests in the Company, (ii) contributed such
membership interests in the Company to ARCO Member, and (iii) contributed all of
the stock owned by it of L.A. Export Terminal Inc., a Delaware corporation
("LAXT"), and certain other assets, to AUS in exchange for interests in AUS, and
ARCO Member has contributed its membership interests in State Leases LLC, a
Delaware limited liability company ("SLLLC"), to the Company in exchange for
membership interests in the Company; and
WHEREAS, certain of the foregoing transactions have been effected pursuant
to a Limited Liability Contribution Agreement, dated as of March 22, 1998 (the
"Contribution Agreement"), among Arch, Arch Member, ARCO, ARCO Member and the
Company, providing for, among other things, additional capitalization of the
Company and the admission of each of Arch Member, ARCO and ARCO Member as
members or continuing members of the Company (each, a "Member");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
SECTION 1
GENERAL PROVISIONS
1.1 MAINTENANCE
The Members hereby agree to maintain the Company as a limited liability
company under and pursuant to the Act (as hereinafter defined) and this
Agreement. Except as provided in this Agreement, the rights, duties, liabilities
and obligations of the Members and the administration, dissolution, winding up
and termination of the Company shall be governed by the Act.
1.2 NAME
The name of the Company shall be Arch Western Resources LLC and all
business of the Company shall be conducted in such name or, in the discretion of
the Managing Member, under any other names (but excluding a name that includes
the name ARCO, Atlantic Richfield or any derivation thereof, unless ARCO Member
has consented thereto).
1.3 PURPOSE
(1) Subject to, and upon the terms and conditions of this Agreement,
the purposes and business of the Company shall be to manage and maintain a
business engaged in the production trading, marketing and sale of coal, to
acquire, hold, own, operate, manage, finance, encumber, sell, or otherwise
dispose of and otherwise use the Property, and to enter into any lawful
transaction and engage in any lawful activities in furtherance of the foregoing
purposes and as may be necessary, incidental or convenient to carry out the
business and purposes of the Company, including the issuance and performance of
the Company Debt and any Successor Debt.
(2) The Company shall have all the powers now or hereafter conferred
by the laws of the State of Delaware on limited liability companies formed under
the Act and, subject to the terms of this Agreement, may do any and all lawful
acts or things that are necessary, appropriate, incidental or convenient for the
furtherance and accomplishment of the purposes of the Company. Without limiting
the generality of the foregoing, the Company may enter into, deliver and perform
all contracts, agreements and other undertakings and engage in all activities
and transactions as may be necessary or appropriate to carry out its purposes
and conduct its business.
(3) Contemporaneously with the execution and delivery of this
Agreement, the transactions contemplated by the Purchase and Sale Agreement and
the Contribution Agreement shall have been consummated, pursuant to which, among
other things, Arch Member
- 2 -
has contributed to the Company the Arch Sub Membership Interests and the Cash
Contribution, and ARCO Member has contributed to the Company the ARCO Sub
Membership Interests and certain other assets and rights as provided in the
Contribution Agreement.
(4) Simultaneously with the execution and delivery of this
Agreement, the Company has issued the Company Debt and ARCO Member has executed
and delivered the ARCO Member Guarantee.
1.4 PRINCIPAL EXECUTIVE OFFICE
The principal executive office of the Company shall be located in such
place as determined by the Managing Member, and the Managing Member may change
the location of the principal executive office of the Company to any other
place, within or without the State of Delaware, upon ten Business Days' prior
notice to each of the Members, PROVIDED that such principal executive office
shall be located in the United States. The initial principal executive office of
the Company shall be located at Suite 300, CityPlace One, St. Louis, Missouri
63141. The Managing Member may establish and maintain such additional offices
and places of business of the Company, within or without the State of Delaware,
as it deems appropriate.
1.5 TERM
The term of the Company commenced on the Formation Date and shall continue
until the winding up and liquidation of the Company and its business is
completed following a Liquidating Event, as provided in Section 8.
1.6 FILINGS; AGENT FOR SERVICE OF PROCESS
(1) The Managing Member shall take any and all actions reasonably
necessary to perfect and maintain the status of the Company as a limited
liability company under the laws of Delaware. The Managing Member shall cause
amendments to the Certificate of Formation of the Company (the "Certificate") to
be filed whenever required by the Act. The Members shall be provided with copies
of each document filed or recorded as contemplated by this Section 1.6 promptly
following the filing or recording thereof.
(2) The Managing Member shall cause to be filed an original or
amended Certificate and shall take any and all other actions as may be
reasonably necessary to perfect and maintain the status of the Company as a
limited liability company or similar type of entity under the laws of any other
states or jurisdictions in which the Company engages in business.
(3) The registered agent for service of process on the Company shall
be CT Corporation or any successor as appointed by the Managing Member in
accordance with the Act. The registered office and statutory agent in Delaware
shall be as set forth in the Certificate until such time as the registered
office or statutory agent is changed in accordance with the Act.
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1.7 TITLE TO PROPERTY
No Member shall have any ownership interest in its individual name or
right in any Property owned, directly or indirectly, by the Company, and each
Member's Interest shall be personal property for all purposes. The Company shall
hold all of its Property in the name of the Company or its nominee and not in
the name of any Member. Members' Interests shall not be "securities" governed by
Article 8 of the Uniform Commercial Code of any jurisdiction, and the Members
will neither cause, suffer nor permit any action that would produce a contrary
result.
1.8 PAYMENTS OF INDIVIDUAL OBLIGATIONS
The Company's credit and Property shall be used solely for the benefit of
the Company, and no Property of the Company shall be transferred or encumbered
for, or in payment of, any individual obligation of any Member.
1.9 INDEPENDENT ACTIVITIES
Each Member and any of its Affiliates shall be required to devote only
such time to the affairs of the Company as such Member determines in its sole
discretion may be necessary to manage and operate the Company to the extent
contemplated by this Agreement, and nothing in this Agreement shall preclude any
Member from engaging in the coal business or any other business for its own
account, whether in the geographic area of any of the Property or otherwise;
PROVIDED that ARCO Member and its Affiliates shall not engage in the coal
business in the State of Wyoming or the State of Colorado for two years after
the date of this Agreement.
1.10 DEFINITIONS
Capitalized words and phrases used in this Agreement have the following
meanings:
"Act" means the Delaware Limited Liability Company Act, as the same
may be amended from time to time.
"Acceptable Debt Rating" means with respect to any Person, that such
Person's unsecured noncredit-enhanced Indebtedness has a rating of at least Ba3
from Moody's Investors Service or at least BB- from Standard & Poors Ratings
Group (a division of McGrall Hill, Inc.).
"Accountants" means, as of any time, such firm of nationally
recognized independent certified public accountants that, as of such time, has
been appointed by the Managing Member as the accountants for the Company.
"Additional Capital Contributions" means, with respect to each
Member, the Capital Contributions made by such Member pursuant to Section 2.3,
reduced by the amount of any liabilities of such Member assumed by the Company
in connection with such Capital
- 4 -
Contributions or which are secured by any Property contributed by such Member as
a part of such Capital Contributions.
"Additional Contribution Agreement" means a contribution agreement
providing for the contribution of Property or cash to the Company, the terms of
which have been approved by the Managing Member.
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Allocation Year, after giving effect to the following
adjustments: (i) credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or is deemed to
be obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account
the items described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6) of the Regulations. The foregoing definition of
Adjusted Capital Account Deficit is intended to comply with the provisions of
Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Affiliate" means, with respect to any Person, any other Person that
directly and/or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such Person. For purposes of this
definition, the term "controls" (including its correlative meanings "controlled
by" and "under common control with") shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, (i) neither the Company,
nor any Person controlled by the Company, shall be deemed to be an Affiliate of
any Member or of any Affiliate of any Member and (ii) no Member or any Affiliate
thereof shall be deemed to be an Affiliate of any other Member or any Affiliate
thereof solely by virtue of its Interest in the Company. As used with respect to
ARCO, "Affiliate" shall not include ARCO Chemical Company, a Delaware
corporation, or Vastar Resources, Inc., a Delaware corporation. As used with
respect to Arch, "Affiliate" shall not include Ashland Inc., a Kentucky
corporation.
"Agreement" means this Limited Liability Company Agreement,
including all Schedules hereto, as amended from time to time.
"Allocation Year" means (i) the period commencing on the Formation
Date and ending on December 31, 1998, (ii) any subsequent twelve (12) month
period commencing on January 1 and ending on December 31, or (iii) any portion
of the period described in clause (i) or (ii) for which the Company is required
to allocate Profits, Losses, and other items of Company income, gain, loss or
deduction pursuant to this Agreement.
"Arch Intercompany Loan" means each loan or advance made by the
Company to Arch or an Affiliate of Arch, which shall be evidenced by a demand
promissory note of Arch or such Affiliate, shall bear interest payable no less
frequently than quarterly from the date made
- 5 -
until paid in full at a rate per annum to be determined by the Managing Member
that is no less favorable to the Company than if such loan or advance had been
made to ARCH or such Affiliate by an unaffiliated financial institution.
"Arch Sub Membership Interests" means the membership interests owned
by Arch Member in Canyon Fuel, MCC, AUS and Arch Wyoming.
"ARCO Assets" shall mean the ARCO Sub Membership Interests (and the
assets, rights and properties of each of the entities whose membership interests
are included therein) and all other assets and rights contributed to the Company
by ARCO or any Affiliate of ARCO pursuant to the Contribution Agreement.
"ARCO Member Guarantee" means the Collection Guaranty Agreement,
dated as of even date herewith, executed and delivered by ARCO Member, pursuant
to which ARCO Member has guaranteed the Company's obligations under the Company
Debt and Successor Debt.**
"ARCO Sub Membership Interests" shall mean the entire membership
interest in TBCC, and certain other assets and interests described in the
Contribution Agreement.
"Available Cash" means as of any date the cash of the Company as of
such date less such portion thereof as the Managing Member determines to reserve
for Company expenses, debt payments, sinking fund provisions applicable to the
Company Debt, Successor Debt or other Indebtedness of the Company, capital
improvements, replacements, and contingencies.
"Base Credit Level" means, with respect to the Interest Ratio or the
Indebtedness Ratio, as the case may be, for each calendar year specified in the
table below, the applicable ratio set opposite such year:
YEAR INTEREST RATIO INDEBTEDNESS RATIO
1998 2.5 : 1 4.5 : 1
1999 2.5 : 1 4.5 : 1
2000 and thereafter 3.0 : 1 3.5 : 1
"Base Credit Level Compliance" means, as to any Person on any date,
that such Person (a) had, as of the last day of the fiscal quarter ended next
preceding such date, an Interest
- --------
** ARCO Member Guarantee shall provide that ARCO Member shall not be
required to extend such guarantee beyond the fifteenth anniversary
of the Closing Date.
- 6 -
Ratio not less than the Base Credit Level Interest Ratio applicable on such
date, and an Indebtedness Ratio not greater than the Base Credit Level
Indebtedness Ratio applicable on such date, or (b) has, on such date, an
Acceptable Debt Rating.
"Business Day" means a day of the year on which banks are not
required or authorized to close in the State of Missouri or the State of
California.
"Capital Account" means, with respect to any Member, the Capital
Account maintained for such Member in accordance with the following provisions:
(i) To each Member's Capital Account there shall be credited
such Member's respective Capital Contribution, such Member's distributive
share of Profits and any items in the nature of income or gain which are
allocated pursuant to Section 3.3 or Section 3.4, and the amount of any
Company liabilities which are assumed by such Member or secured by any
Property distributed to such Member as permitted by this Agreement.
(ii) To each Member's Capital Account there shall be debited
the amount of cash and the Gross Asset Value of any Property distributed
or deemed to be distributed to such Member pursuant to any provision of
this Agreement, such Member's distributive share of Losses and any items
in the nature of expenses or losses which are allocated pursuant to
Section 3.3 or Section 3.4, and the amount of any liabilities of such
Member assumed by the Company or which are secured by any property
contributed by such Member to the Company.
(iii) In the event all or a portion of an Interest is
transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent it
relates to the transferred Interest.
(iv) In determining the amount of any liability for purposes
of subparagraphs (i) and (ii) of this definition of "Capital Account,"
there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Regulations, and shall be interpreted and applied in a manner
consistent with such Regulations.
"Capital Contribution" means, with respect to any Member, the amount
of money and the initial Gross Asset Value of any Property (other than money)
contributed to the Company with respect to the Interests in the Company held or
purchased by such Member, including Additional Capital Contributions.
"Capitalized Lease Obligation" means, with respect to any Person,
the obligation of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the
-7-
right to use) real or personal property that is required to be classified and
accounted for as a capital lease obligation on a balance sheet of such Person
under GAAP and, for purposes of this Agreement, the amount of such obligation at
any date will be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Cash Contribution" shall mean the contribution by Arch Member to
the Company of cash in the amount of $25,000,000 to reimburse ARCO Member for
certain expenditures as permitted under Section 707 of the Code), which
contribution forms part of Arch Member's Original Capital Contribution.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Common Percentage Interest" means initially 99.5% for Arch Member
and 0.5% for ARCO Member, or such other percentage determined by dividing the
positive balance in the respective Member's Capital Account (less any Preferred
Amount included therein) by the aggregate of the positive capital account
balances of all Members Capital Accounts.
"Company" has the meaning specified in the preamble of this
Agreement.
"Company Debt" means that certain indebtedness of the Company in the
aggregate original principal amount of $675,000,000 incurred by the Company
concurrently with the execution and delivery of this Agreement.
"Consolidated EBITDA" means, for any Person whose Base Credit Level
Compliance is being determined for any Test Period, the Consolidated Net Income
of such Person and its Subsidiaries for such Test Period, increased (to the
extent deducted in determining such Consolidated Net Income) by the sum of (i)
all taxes of such Person and its Subsidiaries paid or accrued according to GAAP
for such Test Period; (ii) Consolidated Interest Expense of such Person and its
Subsidiaries for such Test Period; and (iii) depreciation, depletion and
amortization and similar non-cash cost recovery expenses (including, to the
extent not otherwise included, that percentage of the depreciation, depletion
and amortization and such expenses attributable to any Subsidiary of such Person
that is not wholly owned equal to the percentage of the equity in such
Subsidiary owned by such Person) of such Person and its Subsidiaries for such
Test Period determined in accordance with GAAP; PROVIDED, HOWEVER,
notwithstanding the foregoing, the Consolidated EBITDA of the Company for each
fiscal quarter of the fiscal year ended at December 31, 1997 and for the first
two fiscal quarters of the fiscal year ended at December 31, 1998 shall be
deemed to be $46,000,000.
"Consolidated Indebtedness" means, for any Person whose Base Credit
Level Compliance is being determined for any Test Period, Indebtedness of such
Person and its Subsidiaries determined on a consolidated basis in accordance
with GAAP as of the last day of such Test Period.
- 8 -
"Consolidated Interest Expense" means (without duplication), with
respect to any Person whose Base Credit Level Compliance is being determined for
any Test Period, the aggregate amount of interest expense of such Person during
such Test Period in respect of all Indebtedness of such Person and its
Subsidiaries, including (i) the interest portion of any deferred payment
obligation and (ii) the portion of any rental obligation in respect of any
Capitalized Lease Obligation allocable to interest expense, all determined on a
consolidated basis in accordance with GAAP; PROVIDED, HOWEVER, that for purposes
of calculating the Consolidated Interest Expense of the Company and its
Subsidiaries for any Test Period, Consolidated Interest Expense for such Test
Period shall be reduced by the sum of an amount equal to the interest paid in
cash to the Company during such Test Period and, without duplication, the amount
of accrued interest recorded by the Company in respect of Arch Intercompany
Loans if the obligor thereon is in Base Credit Level Compliance.
"Consolidated Net Income" means, with respect to any Person whose
Base Credit Level Compliance is being determined, for any Test Period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
Test Period, as determined in accordance with GAAP but without regard to any
lease payments to ARCO Member under the Little Thunder Lease, PROVIDED that
there shall be excluded (on an after-tax basis):
(i) the income (or loss) of any other Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with such
Person, or a Subsidiary of such Person, and the income (or loss) of any
other Person, substantially all of the assets of which have been acquired
in any manner, realized by such Person prior to the date of acquisition;
(ii) the income (or loss) of any other Person (other than a
Subsidiary) in which such Person, or any Subsidiary of such Person, has an
ownership interest, except to the extent that any such income has been
actually received by such Person, or such Subsidiary, in the form of cash
dividends or similar cash distributions;
(iii) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of income
accrued during such Test Period;
(iv) any aggregate gain (or any aggregate net loss) during such Test
Period arising from the sale, conversion, exchange or other disposition of
property (other than in the ordinary course of business);
(v) any gains (or losses) resulting from any writeup, writedown or
writeoff of any property;
(vi) any gain from the collection of the proceeds of life insurance
policies; and
(vii) any income or gain (or loss) during such Test Period
determined in accordance with GAAP resulting from (A) any change in
accounting principles, (B) any
- 9 -
prior Test Period adjustments resulting from any change in accounting
principles, (C) any other extraordinary items, or (D) any discontinued
operations or the disposition thereof.
"Controlled Affiliate" of any Person means the Parent of such Person
and each Subsidiary of such Parent.
"Credit Ratios" means, as to any Person, the Interest Ratio and the
Indebtedness Ratio of such Person.
"Damages" has the meaning specified in the Tax Sharing Agreement.
"Depreciation" means, for each Allocation Year, an amount equal to
the depreciation, amortization, cost depletion, or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such
Allocation Year, except that if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such
Allocation Year, Depreciation shall be an amount which bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation,
amortization, cost depletion or other cost recovery deduction for such
Allocation Year bears to such beginning adjusted tax basis; PROVIDED, HOWEVER,
that if the adjusted basis for federal income tax purposes of an asset at the
beginning of such Allocation Year is zero, subject to Section 3.6 of this
Agreement, Depreciation shall be determined with reference to such beginning
Gross Asset Value using the method selected by the Managing Member and agreed to
by ARCO Member.
"Dispose" (including its correlative meanings, "Disposed of",
"Disposition" and "Disposed"), with respect to any Interest, means to Transfer,
pledge, hypothecate or otherwise dispose of such Interest, in whole or in part,
voluntarily or involuntarily, except by operation of law in connection with a
merger, consolidation or other business combination of the Company and except
that such term shall not include any pledge or hypothecation of, or granting of
a security interest in, an Interest that is approved by the Managing Member in
connection with any financing obtained on behalf of the Company.
"Final Determination" means with respect to any issue or item (i)
the execution of a final and irrevocable closing agreement or other settlement
agreement with the Internal Revenue Service, (ii) the expiration of the time for
filing a claim for refund or, if a refund claim has been timely filed, the
expiration of the time for instigating suit in respect of such refund claim,
(iii) the expiration of the time for filing a petition with the Tax Court if no
such petition has been filed and no suit has been instigated in respect of the
subject matter of such petition, or (iv) a final, unappealable decision of any
court of competent jurisdiction.
"Fiscal Year" means (i) the period commencing on the Formation Date
and ending on December 31, 1998, (ii) any subsequent twelve (12) month period
commencing on January 1 and ending on December 31, or (iii) the period
commencing on the immediately preceding January 1 and ending on the date on
which all Property is distributed to the Members pursuant to Section 8.2.
- 10 -
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such asset
as set forth on Schedule 2.1 in the case of the Original Capital
Contributions, and otherwise as set forth in the Additional Contribution
Agreement;
(ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their gross fair market values (taking Code Section
7701(g) into account) as of the following times: (A) the acquisition of an
Interest by any new Member in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the Company to a Member of more than
a de minimis amount of Property as consideration for an Interest; and (C)
the liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Company asset distributed
to any Member shall be adjusted to equal the gross fair market value of
such asset on the date of distribution;
(iv) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis
of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of
the Regulations, subparagraph (v) of the definition of "Profits" and
"Losses" and Section 3.3(i), PROVIDED, HOWEVER, that Gross Asset Values
shall not be adjusted pursuant to this subparagaph (iv) to the extent that
an adjustment pursuant to subparagraph (ii) is required in connection with
a transaction that would otherwise result in an adjustment pursuant to
this subparagraph (iv); and
(v) If Gross Asset Value is required to be determined for the
purpose of Section 7, Gross Asset Value shall be determined in the manner
set forth in such Section.
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (i), (ii), (iii) or (iv) hereof, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
"Hypothetical Income Tax Amount" means for any Fiscal Year the
product of (i) the sum of 4% and the daily weighted average highest marginal
federal income tax rate
- 11 -
applicable to domestic corporations in effect for such Fiscal Year expressed
together as a percentage and (ii) the excess, if any, of (A) the cumulative
amount of net taxable income, gain, loss and deduction reported by the Company
on its Internal Revenue Service Forms 1065 over its life determined as of the
end of such Fiscal Year, over (B) the larger of zero (0) or the cumulative
amount of net taxable income, gain, loss and deduction reported by the Company
on its Internal Revenue Service Forms 1065 over its life determined as of the
beginning of such Fiscal Year.
"Indebtedness" means (without duplication), with respect to any
Person, (i) any liability of such Person (A) for borrowed money, or under any
reimbursement obligation relating to a letter of credit, bankers' acceptance or
note purchase facility, (B) evidenced by a bond, note, debenture or similar
instrument, (C) for the balance deferred and unpaid of the purchase price for
any Property or any obligation upon which interest charges are customarily paid
(except for trade payables arising in the ordinary course of business), or (D)
for any Capitalized Lease Obligation; (ii) any obligation (excluding landowner
royalty obligations) of any Person secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) a
consensual lien on property owned or acquired, whether or not any obligation
secured thereby has been assumed, by such Person; and (iii) all guarantees of
such Person of the indebtedness of any other Person of the type referred to in
clause (i), except for guarantee obligations of Arch, not exceeding $25,000,000,
of the reimbursement obligations of its Affiliates in respect of a letter of
credit supporting the outstanding bonds issued by Dominion Terminal Associates.
"Indebtedness Ratio" means, with respect to any Test Period for any
Person whose Base Credit Level Compliance is being determined, the ratio of
Consolidated Indebtedness of such Person, on the last day of such Test Period,
to Consolidated EBITDA for such Test Period; PROVIDED, HOWEVER, that for
purposes of calculating the Indebtedness Ratio of the Company for any Test
Period (i) Indebtedness of the Company on the last day of such Test Period shall
be reduced by (a) the outstanding principal amount of all Arch Intercompany
Loans if but only if, on the last day of such Test Period the obligor on such
Arch Intercompany Loans (or the guarantor of payment thereof) is in Base Credit
Level Compliance and (b) the cash balance of the Company and its Subsidiaries on
the last day of such Test Period, and (ii) Consolidated EBITDA of the Company
shall be increased by the amount of accrued interest recorded by the Company in
respect of Arch Intercompany Loans if the obligor thereon is in Base Credit
Level Compliance.
"Interest" means, as to any Member, all of the interests of such
Member in the Company, including any interest represented by the Preferred
Capital Amount and any and all benefits to which the holder of an interest in
the Company may be entitled as provided in this Agreement and under the Act,
together with all obligations of such Member to comply with the terms and
provisions of this Agreement.
"Interest Ratio" means, with respect to any Test Period for any
Person whose Base Credit Level Compliance is being determined, the ratio of
Consolidated EBITDA of such
- 12 -
Person, for such Test Period to Consolidated Interest Expense of such Person for
such Test Period.
"Involuntary Bankruptcy" means, with respect to any Person, without
the consent or acquiescence of such Person, the entering of an order for relief
or approving a petition for relief or reorganization or any other petition
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation, or the filing of any such
petition against such Person which petition shall not be dismissed within 60
days, or, without the consent or acquiescence of such Person, the entering of an
order appointing a trustee, custodian, receiver or liquidator of such Person or
of all or any substantial part of the property of such Person which order shall
not be dismissed within 60 days.
"Little Thunder Lease" means the Master Lease dated August 8, 1997
between LTLC as lessor and TBCC as lessee, as amended pursuant to an Amendment
to Master Lease dated January 27, 1998.
"LTLC" means Little Thunder Leasing Company, a Delaware
corporation.
"Major Actions" has the meaning specified in Section 5.1(c).
"Managing Member" means Arch Member.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Parent" means (i) with respect to Arch Member (and its Controlled
Affiliates), Arch, and (ii) with respect to ARCO Member (and its Controlled
Affiliates), ARCO. With respect to any other Person hereafter admitted to the
Company as a Member, the Parent with respect to such Member shall be the Person
identified as such in an Additional Contribution Agreement or in a Schedule to
be attached to this Agreement in connection with the admission of such Member.
In the event of a Permitted Transaction, the new Parent of the applicable Member
immediately following such Permitted Transaction will be the ultimate parent
entity (as determined in accordance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder
(the "HSR Act")) of such Member (or such Member if it is its own ultimate parent
entity); PROVIDED that if such ultimate parent entity is not a Publicly Held
Person then the next highest corporate entity in the ownership chain from such
ultimate parent entity through the Member which is a Publicly Held Person shall
be deemed to be the new Parent. If there is no intermediate Publicly Held Person
or if the ultimate parent entity is an individual, the Parent shall be the
highest entity in the ownership chain from the ultimate parent entity through
the Member which is not an individual.
- 13 -
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
"Partnership Minimum Gain" has the meaning set forth in Sections
1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"Permitted Transaction" with respect to a Member means a transaction
or series of related transactions in which the Parent or any Affiliate of a
Member Transfers its interest in any Affiliate that owns an Interest in the
Company to a Controlled Affiliate.
"Person" means any individual, partnership, corporation, limited
liability company, trust, or other entity.
"Preferred Capital Amount" means that portion of ARCO Member's
Original Capital Contribution equal to $2,399,000, for which capital ARCO Member
is entitled to a preferential distribution in accordance with this Agreement.
This Preferred Capital Amount will be reduced by any payments with respect to
the Preferred Capital Amount in excess of accrued Preferred Return.
"Preferred Return" means an amount equal to 4% per annum, compounded
annually, calculated on the Preferred Capital Amount balance.
"Profits" and "Losses" means, for each Allocation Year, an amount
equal to the Company's taxable income or loss for such Allocation Year,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition of "Profits" and "Losses" shall be
added to such taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this definition of
"Profits" and "Losses," shall be subtracted from such taxable income or
loss;
- 14 -
(iii) Gain or loss resulting from any disposition of Property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its Gross Asset Value;
(iv) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Allocation
Year, computed in accordance with the definition of Depreciation;
(v) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) or Code Section 743 is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member's Interest, the amount
of such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the
basis of the asset) from the disposition of the asset and shall be taken
into account for purposes of computing Profits or Losses; and
(vi) Notwithstanding any other provision of this definition of
"Profits" or Losses," any items which are allocated pursuant to Section
3.3 or Section 3.4 shall not be taken into account in computing Profits or
Losses.
The amounts of the items of income, gain, loss or deduction available to be
allocated pursuant to Sections 3.3 and 3.4 shall be determined by applying rules
analogous to those set forth in this definition of "Profits" and "Losses."
"Publicly Held" means, with respect to any Person, that such Person
has a class of equity securities registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended.
"Property" means all real and personal property owned, contributed
to or acquired by the Company and any improvements thereto, and shall include
both tangible and intangible property.
"Regulations" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code.
"Subsidiary" of any Person means a corporation, company or other
entity (i) more than 50% of whose outstanding shares or equity securities are,
as of the time of such determination, owned or controlled, directly or
indirectly through one or more Subsidiaries, by such Person, and the shares or
securities so owned entitle such person and/or its Subsidiaries to elect at
least a majority of the members of the board of directors or other managing
authority of such corporation, company or other entity notwithstanding the vote
of the holders of the
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remaining shares or equity securities so entitled to vote or (ii) which does not
have outstanding shares or securities, as may be the case in a partnership,
joint venture or unincorporated association, but more than 50% of whose
ownership interest is, as of the time of such determination, owned or
controlled, directly and/or indirectly through one or more Subsidiaries, by such
Person, or in which the ownership interest so owned entitles such Person and/or
Subsidiaries to make the decisions for such corporation, company or other
entity.
"Successor Debt" means indebtedness incurred by the Company to
refinance or repay the Company Debt or other Successor Debt; PROVIDED, however,
that the indebtedness incurred to refinance or repay any Company Debt or
Successor Debt shall not exceed the aggregate principal amount of such Company
Debt or Successor Debt outstanding immediately prior to such refinancing or
repayment.
"Tax Sharing Agreement" means that certain agreement of even date
herewith by and among Arch, Arch Member and ARCO Member.
"Test Period" means, in respect of any proposed Major Action, the
period of the most recent four consecutive fiscal quarters of the Person whose
Base Credit Level Compliance is being determined for which financial statements
of such Person are available on the date on which such Major Action is proposed
to be taken.
"Transfer" (including its correlative meaning, "Transferred") means,
as a noun, any sale, exchange, assignment or transfer and, as a verb, to sell,
exchange, assign or transfer.
1.11 ADDITIONAL DEFINITIONS
DEFINED TERM DEFINED IN
"Arch" Preamble
"Arch Member" Preamble
"Arch Member Original Capital Contribution" Section 2.1
"Arch Wyoming" Preamble
"ARCO" Preamble
"ARCO Member" Preamble
"ARCO Member Original Capital Contribution" Section 2.1
"ARCO Uinta" Preamble
"Agents" Section 10.7
"AUS" Preamble
"Call Notice" Section 7.4(b)
"Canyon Fuel" Preamble
"Certificate" Section 1.6
"Confidential Information" Section 10.7
"Contribution Agreement" Preamble
- 16 -
"Exchange Act" Section 6.2
"First Appraiser" Section 7.6
"Formation Date" Preamble
"Gross Appraised Value" Section 7.6
"Issuance Items" Section 3.3(h)
"LAXT" Preamble
"Liquidating Events" Section 8.1
"MCC" Preamble
"Member" Preamble
"Member Loan" Section 2.5
"Net Equity" Section 7.5
"Net Equity Notice" Section 7.5
"Original Capital Contributions" Section 2.1
"Permitted Transfer" Section 7.2
"Purchase and Sale Agreement" Preamble
"Put Notice" Section 7.4(a)
"Receiving Party" Section 10.7
"Regulatory Allocations" Section 3.4
"Restricted Party" Section 10.7
"Second Appraiser" Section 7.6
"Senior Credit Agreement" Section 2.5
"SLLLC" Preamble
"Tagalong Notice" Section 7.8
"Tagalong Offer" Section 7.8
"Tagalong Period" Section 7.8
"Tagalong Purchaser" Section 7.8
"Tagalong Transaction" Section 7.8
"Tax Matters Partner" Section 6.3
"TBCC" Preamble
"Third Appraiser" Section 7.6
"Transferring Member" Section 7.8
1.12 TERMS GENERALLY
The definitions in Sections 1.10 and 1.11 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Schedules) in its entirety and not to any part
hereof unless the context shall otherwise require. All references herein to
Sections and Schedules shall be deemed references to Sections of, and Schedules
to, this Agreement unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes
- 17 -
or regulations). Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
SECTION 2
MEMBERS' CAPITAL CONTRIBUTIONS
2.1 MEMBERS' ORIGINAL CAPITAL CONTRIBUTIONS
The transfer to the Company by Arch Member of the Arch Sub Membership
Interests and the Cash Contribution ("Arch Member Original Capital
Contribution") and the transfer to the Company by ARCO and ARCO Member of the
ARCO Sub Membership Interests in accordance with the Contribution Agreement
("ARCO Member Original Capital Contribution") shall constitute the Members'
Original Capital Contributions. Such Original Capital Contributions shall have
the respective Gross Asset Values set forth in Schedule 2.1 of this Agreement.
2.2 CAPITAL ACCOUNTS
(1) A single Capital Account shall be maintained for each Member
(regardless of the time or manner in which such interests were acquired) in
accordance with the capital accounting rules of Section 704(b) of the Code, and
the regulations thereunder (including particularly Section 1.704-1(b)(2)(iv) of
the Regulations).
(2) If the Gross Asset Value of any Company Property is adjusted,
the Capital Accounts of the Members shall first be adjusted to reflect the
manner in which the unrealized income, gain, loss and deduction inherent in such
Property (that has not been reflected in the Capital Account or Preferred
Capital Amount previously) would be allocated among the Members if there were a
taxable disposition of such Property for such Gross Asset Value.
(3) The Tax Matters Partner shall direct the Accountants to make
all necessary adjustments in each Member's Capital Account as required by the
capital accounting rules of Section 704(b) of the Code and the Regulations
thereunder.
2.3 ADDITIONAL CAPITAL CONTRIBUTIONS; PREEMPTIVE RIGHT
Arch Member may contribute to the Company from time to time cash or other
property, PROVIDED that:
(4) any Capital Contribution made pursuant to this Section 2.3
shall be subject to the terms and provisions of an Additional Contribution
Agreement;
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(5) in the event of any Additional Capital Contribution by Arch
Member or any other Person, ARCO Member shall have the preemptive right and
option to subscribe for and contribute, in cash or property (including
conversion of all or part of its Preferred Capital Amount for value based on the
principal amount thereof and any accrued but unpaid Preferred Return), all or
such portion of the contemplated Additional Capital Contribution as ARCO Member
desires and as is necessary to maintain ARCO Member's Common Percentage Interest
in the Company; and
(c) to the extent ARCO Member shall not agree with the Gross Asset
Values proposed by the Managing Member in connection with any Additional
Contribution Agreement involving non-cash contributions, ARCO Member shall be
entitled by notice to invoke the appraisal procedures in Section 7.6 for
determination of such Gross Asset Values.
2.4 COMPANY FUNDS
The funds of the Company shall be utilized for the Company's benefit as
the Managing Member shall determine, including being deposited in such bank
accounts, utilized in Company operations, contributed or loaned to Subsidiaries
of the Company, or, subject to Section 5.1(c) and any limitations imposed in
Senior Credit Agreements, invested in such investments or loaned, from time to
time, to the Managing Member on a demand basis, which loans shall bear interest
at a rate equal to the interest rate applicable to borrowings by Arch under its
primary bank credit facility.
2.5 OTHER BORROWINGS; MEMBER LOANS
(1) In order to satisfy the Company's financial needs, the Company
may, if so approved by the Managing Member and subject to Section 5.1(c), borrow
from (i) banks, lending institutions or other unrelated third parties, and may
pledge Company Property or the production of income therefrom to secure and
provide for the repayment of such loans and (ii) any Member or an Affiliate of a
Member. Loans made by a Member or an Affiliate of a Member (a "Member Loan")
shall be evidenced by a promissory note of the Company and, subject to the last
two sentences of Section 2.5(b), shall bear interest payable quarterly from the
date made until paid in full at a rate per annum to be determined by the
Managing Member that is no less favorable to the Company than if the loan had
been made by an independent third party.
(2) Unless otherwise determined by the Managing Member, all Member
Loans shall be unsecured and the promissory notes evidencing the same shall be
nonnegotiable and, except as otherwise provided in Section 2.5(c),
nontransferable. Repayment of the principal amount of and accrued interest on
all Member Loans shall be subordinated to the repayment of the principal of and
accrued interest on the Company Debt, the Successor Debt and any other
indebtedness for borrowed money of the Company to third party lenders to the
extent required by the applicable provisions of the instruments creating such
indebtedness to third party lenders
- 19 -
("Senior Credit Agreements"). All amounts required to be paid in accordance with
the terms of the Member Loans and all amounts permitted to be prepaid thereon
shall be applied to the notes held by the Members in accordance with the order
of payment contemplated by Section 8.2(b)(ii) and (iii). Subject to the terms of
applicable Senior Credit Agreements, Member Loans shall be repaid to the Members
at such times as the Company has sufficient funds to permit such repayment
without jeopardizing the Company's ability to meet its other obligations on a
timely basis. Nothing contained in this Agreement or in any promissory note
issued by the Company hereunder shall require the Company or any Member to pay
interest or any amount as a penalty at a rate exceeding the maximum amount of
interest permitted to be collected from time to time under applicable usury
laws. If the amount of interest or of such penalty payable by the Company or any
Member on any date would exceed the maximum permissible amount, it shall be
automatically reduced to such amount, and interest or the amount of the penalty
for any subsequent period, to the extent less than that permitted by applicable
usury laws, shall, to that extent, be increased by the amount of such reduction.
(3) An election by a Member to purchase all or any portion of
another Member's Interest pursuant to Section 7 shall also constitute an
election to purchase an equivalent portion of any outstanding Member Loans held
by such selling Member, and each purchasing Member shall be obligated to
purchase a percentage of such Member Loans equal to the percentage of the
selling Member's Interest such purchasing Member is obligated to purchase for a
price equal to the outstanding principal and accrued and unpaid interest on such
Member Loans through the date of the closing of such purchase (or such lesser
amount as shall be specified by the selling Member as the price for such Member
Loans).
2.6 OTHER MATTERS
(1) No Member shall have the right to demand or, except as
otherwise provided in Sections 4.2 and 8.2, receive a return of all or any part
of its Capital Account or its Capital Contributions or withdraw from the Company
without the consent of all Members. Subject to Section 8, under circumstances
requiring a return of all or any part of its Capital Account or Capital
Contributions, no Member shall have the right to receive Property other than
cash.
(2) No Member shall have any obligation to restore any portion of
any deficit balance in such Member's Capital Account, whether upon liquidation
of its interest in the Company, liquidation of the Company or otherwise.
(3) No other Member shall have any personal liability for the
repayment of any Capital Contributions of any Member.
(4) No Member shall be entitled to receive interest on its Capital
Contributions or Capital Account.
- 20 -
SECTION 3
ALLOCATIONS
3.1 PROFITS
After giving effect to the allocations set forth in Sections 3.3 and 3.4,
Profits for any Allocation Year shall be allocated in the following order and
priority: (a) first, to ARCO Member in an amount sufficient to cover the
aggregate amounts distributed pursuant to this Section 3.1 for the current and
all prior periods to equal the total amount of Preferred Return paid to ARCO
Member during the current and all prior periods, (b) second, to Members in
proportion to, and to the extent of, an amount equal to the excess, if any, of
(i) the cumulative losses allocated to each such Member pursuant to Section
3.2(b) for all prior Allocation Years, over (ii) the cumulative profits
allocated to such Member pursuant to this Section 3.1(b) for all prior
Allocation Years, and (c) thereafter, among the Members in proportion to their
respective Common Percentage Interests.
3.2 LOSSES
After giving effect to the allocations set forth in Sections 3.3 and 3.4,
Losses for any Allocation Year shall be allocated among the Members (a) first,
in proportion to their Common Percentage Interests to the extent of their
respective positive capital accounts, (b) second, to Members having positive
capital account balances in proportion to such positive capital account
balances, and (c) thereafter, in proportion to their respective Common
Percentage Interests.
3.3 CERTAIN ALLOCATIONS
The following allocations shall be made in the following order:
(1) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(f) of the Regulations, notwithstanding any other provision of
this Section 3, if there is a net decrease in Partnership Minimum Gain during
any Allocation Year, each Member shall be allocated items of Company income and
gain for such Allocation Year (and, if necessary, subsequent Allocation Years)
in an amount equal to such Member's share of the net decrease in Partnership
Minimum Gain, determined in accordance with Section 1.704-2(g) of the
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section
3.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Regulations and shall be interpreted consistently
therewith.
- 21 -
(2) PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided
in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision
of this Section 3, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to Partner Nonrecourse Debt during any Allocation
Year, each Member who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, shall be allocated items of Company
income and gain for such Allocation Year (and, if necessary, subsequent
Allocation Years) in an amount equal to such Member's share of the net decrease
in Partner Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(4) of the
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section
3.3(b) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith.
(3) QUALIFIED INCOME OFFSET. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company income and gain
shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Adjusted
Capital Account Deficit of such Member as quickly as possible, PROVIDED that an
allocation pursuant to this Section 3.3(c) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Section 3 have been tentatively made as
if this Section 3.3(c) were not in the Agreement.
(4) GROSS INCOME ALLOCATION. In the event any Member has a deficit
Capital Account at the end of any Allocation Year which is in excess of the sum
of (i) the amount such Member is obligated to restore pursuant to any provision
of this Agreement, and (ii) the amount such Member is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as
possible, PROVIDED that an allocation pursuant to this Section 3.3(d) shall be
made only if and to the extent that such Member would have a deficit Capital
Account in excess of such sum after all other allocations provided for in this
Section 3 have been made as if Section 3.3(c) hereof and this Section 3.3(d)
were not in the Agreement.
(5) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Allocation Year shall be allocated among the Members in proportion to their
respective Common Percentage Interests.
(6) NONRECOURSE DEBT ALLOCATION. To the extent necessary to
determine a Member's share of nonrecourse liabilities under Section
1.752-3(a)(3) of the Regulations, the Company Debt shall be allocated 100% to
ARCO Member and all other nonrecourse liabilities of
- 22 -
the Company shall be allocated to the Members in proportion to their respective
Common Percentage Interests.
(7) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
Deductions for any Allocation Year shall be allocated to the Member who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with Section
1.704-2(i)(1) of the Regulations.
(8) SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4) of the Regulations to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of its Interest, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be allocated to the Members in accordance with their
interests in the Company in the event Section 1.704-1(b)(2)(iv)(m)(2) of the
Regulations applies, or to the Member to whom such distribution was made in the
event Section 1.704-1(b)(2)(iv)(m)(4) of the Regulations applies.
(9) ALLOCATIONS RELATING TO TAXABLE ISSUANCE OF COMPANY INTERESTS.
Any income, gain, loss or deduction realized as a direct or indirect result of
the issuance of an Interest by the Company to a Member (the "Issuance Items")
shall be allocated among the Members so that, to the extent possible, the net
amount of such Issuance Items, together with all other allocations under this
Agreement to each Member, shall be equal to the net amount that would have been
allocated to each such Member if the Issuance Items had not been realized.
3.4 CURATIVE ALLOCATIONS
The allocations set forth in Sections 3.3(a), 3.3(b), 3.3(c), 3.3(d),
3.3(e), 3.3(g), 3.3(h) and 3.3(i) (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with allocations of other items of
Company income, gain, loss or deduction pursuant to this Section 3.4. Therefore,
notwithstanding any other provision of this Section 3 (other than the Regulatory
Allocations), the Managing Member shall make such offsetting allocations of
Company income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Member's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Member would have had if the Regulatory Allocations were not part
of the Agreement and all Company items were allocated pursuant to Sections 3.1,
3.2 and 3.3(i). In exercising its discretion under this Section 3.4, the
Managing Member shall take into account future Regulatory Allocations under
Sections 3.3(a) and 3.3(b) that, although not yet made, are likely to offset
other Regulatory Allocations previously made under Section 3.3(e) and 3.3(g).
- 23 -
3.5 OTHER ALLOCATION RULES
(1) For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the Managing
Member using any permissible method under Code Section 706 and the Regulations
thereunder.
(2) The Members are aware of the income tax consequences of the
allocations made by this Section 3 and hereby agree to be bound by the
provisions of this Section 3 in reporting their shares of Company income and
loss for income tax purposes.
3.6 TAX ALLOCATIONS: CODE SECTION 704(C)
In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss, and deduction with respect to any Property contributed to
the capital of the Company shall, solely for tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted basis of
such Property to the Company for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with the definition of Gross Asset
Value).
In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (ii) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder. With respect to the
allocations under this Section 3.6, for purposes of Code Section 704(c), the
Company shall employ the method prescribed in Section 1.704-3(b) of the
Regulations (the "traditional method") or any equivalent successor Regulations.
Any elections or other decisions relating to such allocations shall be
made by the Managing Member in any manner that reasonably reflects the purpose
and intention of this Agreement. Allocations pursuant to this Section 3.6 are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.
SECTION 4
DISTRIBUTIONS
4.1 INITIAL DISTRIBUTION
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As soon as is practicable after the issuance of the Company Debt, there
shall be distributed to ARCO Member cash in the amount of $700,000,000, of which
$25,000,000 is to reimburse ARCO Member for certain capital expenditures under
Section 1.707-4(d) of the Regulations.
4.2 AVAILABLE CASH
(1) Except as otherwise provided in Sections 4.3 and 8.2 and
subject to any applicable provisions of the Company Debt or Successor Debt,
distributions to the Members shall be made first to ARCO Member in an amount
equal to the accrued and unpaid cumulative Preferred Return, if any, and second,
to the Members pro rata in proportion to each Member's respective Common
Percentage Interests.
(2) Any such distributions may be made at such times and in such
amounts as the Managing Member shall determine. Except as otherwise provided in
Section 4.3, or as may be determined desirable by both the Managing Member and
the maker of any Member Loans, the Company shall pay in full all Member Loans
(in accordance with the order of payment contemplated by Section 8.2(b)) prior
to making any cash distributions to the Members.
4.3 TAX DISTRIBUTIONS
Subject to applicable provisions of the Company Debt or Successor Debt,
Available Cash shall be distributed to the Members in proportion to their Common
Percentage Interests within 135 days after the end of each Fiscal Year of the
Company in an aggregate amount equal to the Hypothetical Income Tax Amount for
such Fiscal Year.
4.4 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provision of any state or
local tax law from any payment or distribution to a Member shall be treated as
amounts paid or distributed to such Member pursuant to this Section 4 for all
purposes under this Agreement. The Managing Member is authorized to withhold
from payments and distributions to any Member and to pay over to any federal,
state, or local government any amounts required to be so withheld pursuant to
the Code or any provisions of any other federal, state, or local law.
SECTION 5
MANAGEMENT
5.1 AUTHORITY OF THE MANAGING MEMBER
(1) GENERAL AUTHORITY. Subject to Section 5.1(c), the Managing
Member shall conduct the business and affairs of the Company. Except where the
approval of the Members is
- 25 -
expressly required by this Agreement or non-waivable provisions of applicable
law, the Managing Member shall have full and complete authority, power and
discretion to manage and control the business, affairs and property of the
Company, to make all decisions regarding those matters and to perform any and
all other acts or activities customary or incident to the management of the
Company's business.
(2) DELEGATION. The Managing Member shall have the power to
delegate authority to such officers, employees, agents and representatives of
the Company as it may from time to time deem appropriate.
(3) ACTIONS REQUIRING CONSENT OF MEMBERS. Each of the following
actions (each such action, whether it constitutes a single and separate
transaction or part of a series of two or more related transactions, being
treated as a single and separate action and being herein referred to as a "Major
Action") shall require the prior written approval of all the Members if the
Company shall not on the date on which such Major Action is proposed to be taken
be in Base Credit Level Compliance:
(1) any distributions of cash or Property to, or any loans to
or other investments in, any Member or any Affiliate of any Member, except
for Required Tax Distributions as set forth in Section 4.3;
(2) incurrence by the Company of any Indebtedness other than
the Company Debt or any Successor Debt;
(3) the sale, lease, abandonment or other disposition of all
or any portion of the assets, properties and rights of the Company
otherwise than in the ordinary course of business; and
(4) the consolidation or merger of the Company with or into
any other Person.
(4) COVENANT. The Managing Member covenants and agrees that the
Company will treat the Company Debt and the Successor Debt as a "recourse
liability" as defined in Section 1.752-1(a)(1) of the Regulations with respect
to which ARCO Member bears the "economic risk of loss" for purposes of Section
1.752-2 of the Regulations unless such treatment is inconsistent with any Final
Determination with respect to this matter for the Company.
5.2 OFFICERS
(1) ENUMERATION. The Managing Member shall designate a President, a
Treasurer and a Secretary of the Company, and it may, if it so determines,
choose a Chairman of the Board and a Vice Chairman of the Board among its
members. The Managing Member may
- 26 -
also choose one or more Vice Presidents or other officers, one or more Assistant
Secretaries and one or more Assistant Treasurers. Each such officer shall hold
office until his successor is elected and qualified or until his earlier
resignation or removal. The Managing Member may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights, if any, of such officer with the Company.
(2) PRESIDENT. The President shall manage the day-to-day operations
of and the business of the Company, subject to the control, supervision and
oversight of the Managing Member.
(3) VICE PRESIDENT. The Vice President or if there shall be more
than one, the Vice Presidents, in the order of their seniority unless otherwise
specified by the Managing Member, shall have all of the powers and perform all
of the duties of the President during the absence or inability to act of the
President. Each Vice President shall also have such other powers and perform
such other duties as shall from time to time be prescribed by the Managing
Member, the Chairman or the President.
(4) SECRETARY. The Secretary shall have custody of the seal of the
Company, if any, and of all books, records, and papers of the Company, except
such as shall be in the charge of the Treasurer or of some other person
authorized to have custody and possession thereof by direction of the Managing
Member. The Secretary shall also have such other powers and perform such other
duties as are incident to the office of the Secretary of a corporation or as
shall from time to time be prescribed by, or pursuant to authority delegated by,
the Managing Member.
(5) TREASURER. The Treasurer shall keep full and accurate accounts
of the receipts and disbursements of the Company in books belonging to the
Company, shall deposit all moneys and other valuable effects of the Company in
the name and to the credit of the Company in such depositories as may be
designated by the Managing Member, and shall also have such other powers and
perform such other duties as are incident to the office of the Treasurer of a
corporation or as shall from time to time be prescribed by, or pursuant to
authority delegated by, the Managing Member.
(6) OTHER OFFICERS AND ASSISTANT OFFICERS. The powers and duties of
each other officer or assistant officer who may from time to time be chosen by
the Managing Member shall be as specified by, or pursuant to authority delegated
by, the Managing Member at the time of the appointment of such other officer or
assistant officer or from time to time thereafter. In addition, each officer
designated as an assistant shall assist in the performance of the duties of the
officer to which he or she is assistant and shall have the powers and perform
the duties of such officer during the absence or inability to act of such
officer.
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(7) CONTRACTS. Any contract to be entered into by the Company may
be signed by the President or any Vice President or by any person authorized to
do so by the Managing Member, the Chairman or the President.
5.3 LIABILITY OF MEMBERS
No Member, Managing Member, former Member, no Affiliate of any thereof,
nor any partner, shareholder, director, officer, employee or agent of any of the
foregoing, shall be liable in damages for any act or failure to act in such
Person's capacity as a Member, Managing Member or otherwise on behalf of the
Company unless such act or omission constituted bad faith, gross negligence,
fraud or willful misconduct of such Person or a violation by such Person of this
Agreement. Subject to Section 5.4, each Member, former Member, each Affiliate of
any thereof, and each partner, shareholder, director, officer, employee and
agent of any of the foregoing, shall be indemnified and held harmless by the
Company, its receiver or trustee from and against any liability for damages and
expenses, including reasonable attorneys' fees and disbursements and amounts
paid in settlement, resulting from any threatened, pending or completed action,
suit or proceeding relating to or arising out of such Person's acts or omissions
in such Person's capacity as a Member, Managing Member or otherwise involving
such Person's activities on behalf of the Company, except to the extent that
such damages or expenses result from the bad faith, gross negligence, fraud or
willful misconduct of such Person or a violation by such Person of this
Agreement. Any indemnity by the Company, its receiver or trustee under this
Section 5.3 shall be provided out of and to the extent of Company Property only.
5.4 INDEMNIFICATION
Any Person asserting a right to indemnification under Section 5.3 shall so
notify the Company in writing. If the facts giving rise to such indemnification
shall involve any actual or threatened claim or demand by or against a third
party, the indemnified Person shall give such notice promptly (but the failure
to so notify shall not relieve the indemnifying Person from any liability which
it otherwise may have to such indemnified Person hereunder except to the extent
the indemnifying Person is actually prejudiced by such failure to notify). The
indemnifying Person shall be entitled to control the defense or prosecution of
such claim or demand in the name of the indemnified Person, with counsel
satisfactory to the indemnified Person, if it notifies the indemnified Person in
writing of its intention to do so within 20 days of its receipt of such notice,
without prejudice, however, to the right of the indemnified Person to
participate therein through counsel of its own choosing, which participation
shall be at the indemnified Person's expense unless (i) the indemnified Person
shall have been advised by its counsel that use of the same counsel to represent
both the indemnifying Person and the indemnified Person would present a conflict
of interest (which shall be deemed to include any case where there may be a
legal defense or claim available to the indemnified Person which is different
from or additional to those available to the indemnifying Person), in which case
the indemnifying Person shall not have the right to direct the defense of such
action on behalf of the indemnified Person, or (ii) the indemnifying Person
shall fail vigorously to defend or prosecute such claim or demand within a
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reasonable time. Whether or not the indemnifying Person chooses to defend or
prosecute such claim, the Members shall cooperate in the prosecution or defense
of such claim and shall furnish such records, information and testimony and
attend such conferences, discovery proceedings, hearings, trials and appeals as
may reasonably be requested in connection therewith.
The indemnified Person shall not settle or permit the settlement of any
claim or action for which it is entitled to indemnification without the prior
written consent of the indemnifying Person, unless the indemnifying Person shall
have failed to assume the defense thereof after the notice and in the manner
provided above.
The indemnifying Person may not without the consent of the indemnified
Person agree to any settlement (i) that requires such indemnified Person to make
any payment that is not indemnified hereunder, (ii) does not grant a general
release to such indemnified Person with respect to the matters underlying such
claim or action, or (iii) that involves the sale, forfeiture or loss of, or the
creation of any lien on, any material property of such indemnified Person.
Notwithstanding the foregoing, the indemnifying Person may not in connection
with any such investigation, defense or settlement, without the consent of the
indemnified Person, take or refrain from taking any action which would
reasonably be expected to materially impair the indemnification of such
indemnified Person hereunder or would require such indemnified Person to take or
refrain from taking any action or to make any public statement, which such
indemnified Person reasonably considers to materially adversely affect its
interests.
Upon the request of any indemnified Person, the indemnifying Person shall
use reasonable efforts to keep such indemnified Person reasonably apprised of
the status of those aspects of such investigation and defense controlled by the
indemnifying Person and shall provide such information with respect thereto as
such indemnified Person may reasonably request.
5.5 INTERESTED PARTY TRANSACTIONS
Except for the Contribution Agreement and ARCO Member Guarantee, any
contract, agreement, relationship or transaction between the Company or any of
its Subsidiaries, on the one hand and any Member or any Person in which a Member
(including its Controlled Affiliates) has a direct or indirect material
financial interest or which has a direct or indirect material financial interest
in such Member (each, an "Interested Person") on the other hand, shall be (i) on
terms no less favorable to the Company than those generally being provided to or
available from unrelated third parties. Notwithstanding the foregoing, in no
event may any contract or agreement between the Company or any of its
Subsidiaries and Interested Persons involve any subject matter outside the
ordinary course of the Company's mining business (including within such business
the making of any Arch Intercompany Loans).
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SECTION 6
ACCOUNTING, BOOKS AND RECORDS
6.1 ACCOUNTING, BOOKS AND RECORDS
The Company shall maintain at its principal office separate books of
account for the Company which (i) shall fully and accurately reflect all
transactions of the Company, all costs and expenses incurred, all charges made,
all credits made and received, and all income derived in connection with the
conduct of the Company and the operation of its business in accordance with GAAP
or, to the extent inconsistent therewith, in accordance with this Agreement and
(ii) shall include all documents and other materials with respect to the
Company's business as are usually maintained by persons engaged in similar
businesses. The Company shall use the accrual method of accounting in
preparation of its annual reports and for tax purposes and shall keep its books
and records accordingly. Any Member or its designated representative shall have
the right, at any reasonable time and for any lawful purpose related to the
affairs of the Company or the investment in the Company by such Member, (i) to
have access to and to inspect and copy the contents of such books or records,
(ii) to visit the facilities of the Company and (iii) to discuss the affairs of
the Company with its officers, employees, attorneys, accountants, customers and
suppliers. The Company shall not charge such Member for such examination and
each Member shall bear its own expenses in connection with any examination made
for any such Member's account.
6.2 REPORTS
(1) IN GENERAL. The controller of the Company shall be responsible
for the preparation of financial reports of the Company and the coordination of
financial matters of the Company with the Accountants.
(2) PERIODIC AND OTHER REPORTS. The Company shall cause to be
delivered to each Member the financial statements listed in clauses (i) through
(iii) below, prepared, in each case, in accordance with GAAP (and, if required
by any Member for purposes of reporting under the Securities Exchange Act of
1934, as amended ("Exchange Act"), Regulation S-X), any of the reports and
information listed in subsection (d) below and such other reports as any Member
may reasonably request from time to time:
(1) As soon as practicable following the end of each Fiscal
Year (and in any event not later than 75 days after the end of such Fiscal
Year) and at such time as distributions are made to the Members pursuant
to Section 8.2 following the occurrence of a Liquidating Event, a balance
sheet of the Company as of the end of such Fiscal Year or at the time such
distributions are made and the related statements of operations, Members'
Capital Accounts and changes therein, and cash flows for such Fiscal Year,
together with appropriate notes to such financial statements and
supporting schedules, and, if audited, a copy of the audit report thereon
by the independent public accountants then serving the Company, and in
each case, to the extent the Company was in existence,
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setting forth in comparative form the corresponding figures for the
immediately preceding Fiscal Year (in the case of the balance sheet) and
the two immediately preceding Fiscal Years (in the case of the
statements).
(2) As soon as practicable following the end of each of the
first three fiscal quarters of each Fiscal Year (and in any event not
later than 45 days after the end of each such fiscal quarter), a balance
sheet of the Company as of the end of such fiscal quarter and the related
statements of operations, Members' Capital Accounts and changes therein,
and cash flows for such fiscal quarter and for the Fiscal Year to date, in
each case, to the extent the Company was in existence, setting forth in
comparative form the corresponding figures for the prior Fiscal Year's
fiscal quarter and interim period corresponding to the fiscal quarter and
interim period just completed.
(3) If the Company is a reporting company under the Exchange
Act, all annual and quarterly reports on Form 10-K and 10-Q, all current
reports on Form 8-K and all other reports or information required to be
filed under the Exchange Act or otherwise prepared and distributed by the
Company to any Member or other holders of equity in the Company.
(4) Together with the financial statements delivered pursuant
to the foregoing clauses (i) and (ii), a certificate of the chief
financial officer of the Managing Member, as to (a) compliance by the
Company, and by each other Person whose Base Credit Level Compliance
purports to be evidenced by such certificate, with the Credit Ratios as of
the last day of the Test Period ended on the last day of the reporting
period covered by such financial statements, and/or, in each case
containing calculations in reasonable detail demonstrating such
compliance, and/or (b) stating whether on the last day of the reporting
period covered by such financial statements, any other such Person, had an
Acceptable Debt Rating.
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6.3 TAX RETURNS AND INFORMATION
(1) The Managing Member shall act as the "Tax Matters Partner" of
the Company within the meaning of Section 6231(a)(7) of the Code (and in any
similar capacity under applicable state or local law) (the "Tax Matters
Partner"). If the Managing Member shall cease to be a Member, then the Member
with the greatest Common Percentage Interest shall thereafter act as the Tax
Matters Partner. The Tax Matters Partner shall take reasonable action to cause
each other Member to be treated as a "notice partner" within the meaning of
Section 6231(a)(8) of the Code. All reasonable expenses incurred by a Member
while acting in its capacity as Tax Matters Partner shall be paid or reimbursed
by the Company. Each Member shall have the right to have five Business Days
advance notice from the Tax Matters Partner of the time and place of, and to
participate in (i) any material aspect of any administrative proceeding relating
to the determination of Company items at the Company level and (ii) any material
discussions with the Internal Revenue Service relating to the allocations
pursuant to Section 3 of this Agreement. The Tax Matters Partner shall not
initiate any action or proceeding in any court, extend any statute of
limitations, or take any other action contemplated by Sections 6222 through 6232
of the Code that would legally bind any other Member other than indirectly
through the Company being bound by such action. The Company shall from time to
time upon request of any other Member confer, and cause the Company's tax
attorneys and Accountants to confer, with such other Member and its attorneys
and accountants on any matters relating to a Company tax return or any tax
election.
(2) The Company shall cause all federal, state, local and other tax
returns and reports (including amended returns) required to be filed by the
Company to be prepared and timely filed with the appropriate authorities and
shall cause all income or franchise tax returns or reports required to be filed
by the Company to be sent to each Member for review at least 15 Business Days
prior to filing. Unless otherwise determined by the Managing Member, all such
income or franchise tax returns of the Company shall be prepared by the
Accountants. The cost of preparation of any returns by the Accountants or other
outside preparers shall be borne by the Company. Except as otherwise expressly
provided herein, all elections required or permitted to be made by the Company
under the Code (or applicable state or local tax law) shall be made in such
manner as may be determined by the Managing Member to be in the best interests
of the Members as a group.
(3) The Company shall cause to be provided to each Member as soon
as possible after the close of each Fiscal Year (and, in any event, no later
than 135 days after the end of each Fiscal Year), a schedule setting forth such
Member's distributive share of the Company's income, gain, loss, deduction and
credit as determined for federal income tax purposes and any other information
relating to the Company that is reasonably required by such Member to prepare
its own federal, state, local and other tax returns. At any time after such
schedule and information have been provided, upon at LEAST five Business Days'
notice from a Member, the Company shall also provide each Member with a
reasonable opportunity during
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ordinary business hours to review and make copies of all work papers related to
such schedule and information or to any return prepared under paragraph (b)
above. The Tax Matters Partner shall also cause to be provided to each Member,
at the time that the quarterly financial statements are required to be delivered
pursuant to Section 6.2(b)(ii) above, an estimate of each Member's share of all
items of income, gain, loss, deduction and credit of the Company for the fiscal
quarter just completed and for the Fiscal Year to date for federal income tax
purposes.
(4) The Company, each Member and each Affiliate of a Member agrees
to take no action inconsistent with the tax-free nature of the reorganization of
LTLC, the contribution of the ARCO Assets to the Company, the contribution to
ARCO Member of an interest in the Company and the distributions to ARCO Member
pursuant to Section 4.1 except to the extent requested by ARCO Member in
writing. Each Member and each Affiliate of a Member agrees to take any action
pursuant to this Section 6.3(d) reasonably requested by ARCO Member. The Company
and each Member will not file any protective claim or election in connection
with these matters unless (i) directed to do so by ARCO or (ii) they receive
ARCO's prior written consent to such filing, which consent will not be
unreasonably withheld.
SECTION 7
DISPOSITIONS OF INTERESTS
7.1 RESTRICTION ON DISPOSITIONS
Except as otherwise permitted by this Agreement, no Member shall Dispose
of all or any portion of its Interest.
7.2 PERMITTED TRANSFERS
Subject to the conditions and restrictions set forth in Section 7.3, a
Member may at any time Transfer all or any portion of its Interest (a) to any
Controlled Affiliate of such Member, (b) in connection with a Permitted
Transaction, (c) to the administrator or trustee of such Member to whom such
Interest is transferred in an Involuntary Bankruptcy, (d) pursuant to and in
compliance with Section 7.4 or (e) with the prior written consent of the other
Members (each a "Permitted Transfer"), PROVIDED that unless approved by all
Members, no Transfer of a Member's Interest (other than pursuant to Section 7.4)
will be a Permitted Transfer if such Transfer would reasonably likely result in
(y) a breach of any covenant, representation or other agreement in any
instrument with respect to the Company Debt or any Successor Debt; or (z)
otherwise materially adversely affect the creditworthiness of the Company.
After any Permitted Transfer, the Transferred Interest shall continue to
be subject to all the provisions of this Agreement, including the provisions of
this Section 7 with respect to the Disposition of Interests. Except in the case
of a Transfer of a Member's entire Interest made in
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compliance herewith, no Member shall withdraw from the Company, except with the
consent of the Managing Member. The withdrawal of a Member, whether or not
permitted, shall not relieve the withdrawing Member of its obligations under
Section 10.7 and shall not relieve such Member or any of its Affiliates of its
obligations under, or result in a termination of or otherwise affect, any
agreement between the Company and such Member or Affiliate then in effect,
except to the extent provided therein.
7.3 CONDITIONS TO PERMITTED TRANSFERS
A Transfer shall not be treated as a Permitted Transfer unless and until
the following conditions are satisfied:
(1) Except in the case of a Transfer involuntarily by operation of
law, the transferor and transferee shall execute and deliver to the Company such
documents as may be necessary or appropriate in the opinion of counsel to the
Company to effect such Transfer. In the case of a Transfer of Interests
involuntarily by operation of law, the Transfer shall be confirmed by
presentation to the Company of legal evidence of such Transfer, in form and
substance satisfactory to counsel to the Company. In all cases, the Company
shall be reimbursed by the transferor and/or transferee for all costs and
expenses that it reasonably incurs in connection with such Transfer (including
reasonable attorneys' fees and expenses, but excluding the portion of the costs
of determining Net Equity that are to be borne by the Company as provided in
Section 7.4(d));
(2) Except in the case of a Transfer involuntarily by operation of
law, the transferee of an Interest (other than, with respect to clause (A)
below, a transferee that was a Member prior to the Transfer) shall, by written
instrument in form and substance reasonably satisfactory to the Managing Member
(and, in the case of clause (B) below, the transferor Member), (A) accept and
adopt the terms and provisions of this Agreement, including this Section 8, and
(B) assume the obligations of the transferor Member under this Agreement with
respect to the Transferred Interest. The transferor Member shall be released
from all such assumed obligations except (x) as otherwise provided in Section
10.7, (y) those obligations or liabilities of the transferor Member arising out
of a breach of this Agreement and (z) in the case of a transfer to any Person
other than a Member or any of its Controlled Affiliates, those obligations or
liabilities of the transferor Member based on events occurring, arising or
maturing prior to the date of Transfer;
(3) Except in the case of a Transfer involuntarily by operation of
law, the transferor and its Affiliates will be obligated to sell to the
transferee, and the transferee will be obligated to buy from the transferor and
its Affiliates, all Member Loans of the Company held directly or indirectly by
the transferor or an Affiliate thereof. If the transferee is a Member or a
Controlled Affiliate thereof, the terms of such purchase will include those
provided in Section 2.5;
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(4) Except in the case of a Transfer involuntarily by operation of
law, if required by the Managing Member, the transferee shall deliver to the
Company an opinion, satisfactory in form and substance to the Managing Member,
of counsel reasonably satisfactory to the Managing Member to the effect that the
Transfer of the Interest is in compliance with applicable state and federal
securities laws;
(5) Except in the case of a Transfer involuntarily by operation of
law, if required by the Managing Member, the transferee (other than a transferee
that was a Member prior to the Transfer) shall deliver to the Company evidence
of the authority of such Person to become a Member and to be bound by all of the
terms and conditions of this Agreement, and the transferee and transferor shall
each execute and deliver such other instruments as the Managing Member
reasonably deems necessary or appropriate to effect, and as a condition to, such
Transfer, including amendments to the Certificate or any other instrument filed
with the State of Delaware or any other state or governmental agency;
(6) Unless otherwise approved by the Managing Member, no Transfer
of an Interest shall be made except upon terms which would not, in the opinion
of counsel chosen by the Managing Member, result in the termination of the
Company within the meaning of Section 708 of the Code or cause the application
of the rules of Sections 168(g)(1)(B) and 168(h) of the Code or similar rules to
apply to the Company. If the immediate Transfer of such Interest would, in the
opinion of such counsel, cause a termination within the meaning of Section 708
of the Code, then if, in the opinion of such counsel, the following action would
not precipitate such termination, the transferor Member shall be entitled (or
required, as the case may be) (i) immediately to Transfer only that portion of
its Interest as may, in the opinion of counsel to the Company, be transferred
without causing such a termination and (ii) to enter into an agreement to
Transfer the remainder of its Interest, in one or more Transfers, at the
earliest date or dates on which such Transfer or Transfers may be effected
without causing such termination. The purchase price for the Interest shall be
allocated between the immediate Transfer and the deferred Transfer or Transfers
pro rata on the basis of the percentage of the aggregate Interest being
transferred, each portion to be payable when the respective Transfer is
consummated, unless otherwise agreed by the parties to the Transfer. In the case
of a Transfer by one Member to another Member, the deferred purchase price shall
be deposited in an interest-bearing escrow account unless another method of
securing the payment thereof is agreed upon by the transferor Member and the
transferee Member(s). In determining whether a particular proposed Transfer will
result in a termination of the Company, counsel to the Company shall take into
account the existence of prior written commitments to Transfer made pursuant to
this Agreement and such commitments shall always be given precedence over
subsequent proposed Transfers;
(7) The transferor or transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the Interest transferred, and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required
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information statements or returns. Without limiting the generality of the
foregoing, the Company shall not be required to make any distribution otherwise
provided for in this Agreement with respect to any transferred Interest until it
has received such information; and
(8) Except in the case of a Transfer of an Interest involuntarily
by operation of law, the transferor and transferee shall provide the Company
with an opinion of counsel, which opinion of counsel shall be reasonably
satisfactory to the other Members, to the effect that such Transfer will not
cause the Company to become taxable as a corporation for federal income tax
purposes.
Upon completion of any Permitted Transfer and compliance with the
provisions of this Section 7.3, the transferee of the Interest (if not already a
Member) shall be admitted as a Member without any further action.
7.4 PUT AND CALL RIGHTS
(1) ARCO MEMBER PUT RIGHT. At any time after the seventh
anniversary of the Closing Date (as defined in the Purchase and Sale Agreement),
ARCO Member shall have the right, upon providing at least 60 days' advance
written notice to Arch Member (a "Put Notice"), to require Arch Member to
purchase all or part of ARCO Member's Interest. The price at which ARCO Member's
Interest will be so purchased and sold shall be determined by mutual agreement
between Arch Member and ARCO Member. If such price is not so agreed upon within
60 days after the date of the Put Notice, such price shall be equal to the sum
of (x) if the Preferred Capital Amount or any part thereof is to be sold, an
amount equal to all or such portion of the Preferred Capital Amount and any
accrued and unpaid Preferred Return thereon, and (y) if the ARCO Member Common
Percentage Interest or any part thereof is to be sold, the Net Equity of such
Common Percentage Interest or part thereof determined as of the last day of the
fiscal quarter immediately preceding the fiscal quarter in which the Put Notice
was given. No Damages or other amounts shall be payable to ARCO Member under the
Tax Sharing Agreement in connection with the exercise by ARCO Member of its
rights under this Section 7.4(a).
(2) ARCH MEMBER CALL RIGHTS. At any time after the date hereof,
Arch Member shall have the right, upon providing at least 60 days' advance
written notice (a "Call Notice") to ARCO Member, to purchase or to cause another
person to purchase all, but not less than all, of the ARCO Member Interest at a
price equal to the sum of (i) the Preferred Capital Amount and any accrued and
unpaid Preferred Return thereon, and (ii) the Net Equity of the ARCO Member
Common Percentage Interest determined as of the last day of the fiscal quarter
immediately preceding the fiscal quarter in which the Call Notice was given,
together with Damages (if any) determined as set forth in the Tax Sharing
Agreement.
(3) POST 2013 CALL RIGHT. At any time after January 1, 2013, Arch
Member shall have the right, upon providing at least 60 days advance written
Call Notice to ARCO
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Member, to purchase all of the ARCO Member Interest and any Interest of ARCO
Member Transferred at a price equal to the Net Equity of the ARCO Member
Interest and/or Transferred Interest determined as of the last day of the fiscal
quarter immediately preceding the fiscal quarter in which the Call Notice was
given. No Damages or other amounts shall be payable to ARCO Member under the Tax
Sharing Agreement in connection with the exercise by Arch Member of its rights
under this Section 7.4(c).
(4) TERMS OF PURCHASE; CLOSING. Unless Arch Member and ARCO Member
otherwise agree, the closing of the purchase and sale of ARCO Member's Interest
shall occur at the principal office of the Company at 10:00 a.m. (local time at
the place of the closing) on the first Business Day occurring on or after the
60th day following the last day of the required advance written notice period
(subject to the provisions of Section 7.7). At the closing, Arch Member shall
pay to ARCO Member, by cash or other immediately available funds, the purchase
price for ARCO Member's Interest and ARCO Member shall deliver to Arch Member
good title, free and clear of any liens, claims, encumbrances, security
interests or options (other than those created by this Agreement and those
securing financing obtained by the Company), to the ARCO Member's Interest thus
purchased.
At the closing, the Members shall execute such documents and instruments
of conveyance as may be necessary or appropriate to effectuate the transactions
contemplated hereby, including the Transfer of the ARCO Member's Interest to
Arch Member and the assumption by Arch Member of ARCO Member's obligations with
respect to the ARCO Member's Interest Transferred to Arch Member. The Company
and each Member shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees. The cost of determining Net Equity shall be
borne by the Company.
7.5 NET EQUITY
The "Net Equity" of a Member's Interest, as of any day, shall be the
amount that would be distributed to such Member in liquidation of the Company
pursuant to Section 8 if (a) all of the Company's business and assets were sold
substantially as an entirety for Gross Appraised Value, (b) the Company paid its
accrued, but unpaid, liabilities and established reserves pursuant to Section
8.2 for the payment of reasonably anticipated contingent or unknown liabilities
and (c) the Company distributed the remaining proceeds to the Members in
liquidation, all as of such day, PROVIDED that in determining such Net Equity,
no reserve for contingent or unknown liabilities shall be taken into account if
such Member (or its successor in interest) agrees to indemnify the Company and
all other Members for that portion of any such reserve as would be treated as
having been withheld pursuant to Section 8.3 from the distribution such Member
would have received pursuant to Section 8.2 if no such reserve were established.
The Net Equity of a Member's Interest shall be determined, without audit
or certification, from the books and records of the Company by the Accountants.
The Net Equity of a Member's Interest shall be determined within 30 days of the
day upon which the Accountants are apprised
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in writing of the Gross Appraised Value of the Company's business and assets,
and the amount of such Net Equity shall be disclosed to the Company and each of
the Members by written notice ("Net Equity Notice"). The Net Equity
determination of the Accountants shall be final and binding in the absence of a
showing of manifest error.
7.6 GROSS APPRAISED VALUE
"Gross Appraised Value," as of any day, means the price at which a willing
seller would sell, and a willing buyer would buy, the business and assets of the
Company, free and clear of all liens and encumbrances, substantially as an
entirety and as a going concern in a single arm's-length transaction for cash,
without time constraints and without being under any compulsion to buy or sell.
In connection with provisions of this Agreement that require a
determination of Gross Appraised Value, the Managing Member shall appoint an
appraiser (the "First Appraiser") and the affected Member or Members shall
appoint a second appraiser (the "Second Appraiser"). If the Second Appraiser is
not timely designated, the determination of the Gross Appraised Value shall be
made by the First Appraiser. The First Appraiser, or each of the First Appraiser
and the Second Appraiser if the Second Appraiser is timely designated, shall
submit its determination of the Gross Appraised Value to the Company, the
Members and the Accountants within 45 days of the date of its selection (or the
selection of the Second Appraiser, as applicable). If there are two (2)
Appraisers and their respective determinations of the Gross Appraised Value vary
by less then ten percent of the higher determination, the Gross Appraised Value
shall be the average of the two determinations. If such determinations vary by
ten percent or more of the higher determination, the two Appraisers shall
promptly designate a third appraiser (the "Third Appraiser"). Neither the
Company nor any Member shall provide, and the First Appraiser and Second
Appraiser shall be instructed not to provide, any information to the Third
Appraiser as to the determinations of the First Appraiser and the Second
Appraiser or otherwise influence such Third Appraiser's determination in any
way. The Third Appraiser shall submit its determination of the Gross Appraised
Value to the Company, the Members and the Accountants within 45 days of the date
of its selection. The Gross Appraised Value shall be equal to the average of the
two closest of the three determinations, PROVIDED that, if the difference
between the highest and middle determinations is no more than 105% and no less
than 95% of the difference between the middle and lowest determinations, then
the Gross Appraised Value shall be equal to the middle determination. The
determination of the Gross Appraised Value in accordance with the foregoing
procedure shall be final and binding on the Company and each Member. If any
Appraiser is only able to provide a range in which Gross Appraised Value would
exist, the average of the highest and lowest value in such range shall be deemed
to be such Appraiser's determination of the Gross Appraised Value of the
Company's business and assets. The Third Appraiser selected pursuant to the
provisions of this Section shall be an investment banking firm or other
qualified Person with prior experience in appraising businesses comparable to
the business of the Company.
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7.7 EXTENSION OF TIME
If any transfer of a Member's Interest in accordance with this Section 7
requires the consent, approval, waiver, or authorization of any government
department, board, bureau, commission, agency or instrumentality as a condition
to the lawful and valid Transfer of such Member's Interest to the proposed
transferee thereof, then each of the time periods provided in this Section 7, as
applicable, for the closing of such Transfer shall be suspended for the period
of time during which any such consent, approval, waiver, or authorization is
being diligently pursued; PROVIDED, HOWEVER, that in no event shall the
suspension of any time period pursuant to this Section 7.7 extend for more than
365 days. Each Member agrees to use its diligent efforts to obtain, or to assist
the affected Member or the Managing Member in obtaining, any such consent,
approval, waiver, or authorization and shall cooperate and use its diligent
efforts to respond as promptly as practicable to all inquiries received by it,
by the affected Member or by the Managing Member from any government department,
board, bureau, commission, agency or instrumentality for initial or additional
information or documentation in connection therewith.
7.8 TAGALONG RIGHTS
In the event that the Managing Member proposes to Transfer all or any
portion of its Common Percentage Interest to any person other than a Controlled
Affiliate of the Managing Member (a "Tagalong Transaction"), the Tagalong
Transaction shall not be permitted hereunder unless the proposed transferee
("Tagalong Purchaser") offers to purchase the entire Interest of ARCO Member if
ARCO Member desires to sell such Interest to the Tagalong Purchaser at the same
price and on the same terms and conditions as the Tagalong Purchaser has offered
to the Managing Member (the "Transferring Member") for its Common Percentage
Interest, plus an amount equal to the Preferred Capital Amount and any accrued
but unpaid Preferred Return thereon to the date of purchase. Prior to effecting
any Tagalong Transaction, the Transferring Member shall deliver to ARCO Member a
binding, irrevocable offer (the "Tagalong Offer") by the Tagalong Purchaser to
purchase the entire Interest of ARCO Member at the same price and on the same
terms and conditions as the Tagalong Purchaser has offered to the Transferring
Member (the "Tagalong Notice") for its Common Percentage Interest, plus an
amount equal to the Preferred Capital Amount and any accrued but unpaid
Preferred Return thereon to the date of purchase. The "Tagalong Offer" shall be
irrevocable for a period (the "Tagalong Period") ending at 11:59 p.m., local
time at the Company's principal place of business on the 30th day following the
date of the Tagalong Notice. At any time during the Tagalong Period, ARCO Member
may accept the Tagalong Offer as to the entire amount of its Interest by giving
written notice of such acceptance to the Tagalong Purchaser. The Tagalong
Purchaser's purchase of the Interest of ARCO Member shall occur at the closing
of the Tagalong Transaction (PROVIDED such closing is not earlier than 30
Business Days after the Tagalong Notice), subject to Section 7.7.
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7.9 PROHIBITED DISPOSITIONS
Any purported Disposition of all or any part of an Interest that is not a
Permitted Transfer shall be null and void and of no force or effect whatever;
PROVIDED that, if the Company is required to recognize a Disposition that is not
a Permitted Transfer (or if the Managing Member, in its sole discretion, elects
to recognize a Disposition that is not a Permitted Transfer), the Interest
Disposed of shall be strictly limited to the transferor's rights to allocations
and distributions as provided by this Agreement with respect to the Transferred
Interest, which allocations and distributions may be applied (without limiting
any other legal or equitable rights of the Company) to satisfy any debts,
obligations, or liabilities for damages that the transferor or transferee of
such Interest may have to the Company.
7.10 REPRESENTATIONS REGARDING ACQUISITIONS OF INTERESTS
Each Member hereby represents and warrants to the Company and the other
Members that such Member's acquisition of Interests hereunder is made as
principal for such Member's own account and not for resale or distribution of
such Interests.
7.11 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTERESTS
If any Interest is Transferred during any Allocation Year in compliance
with the provisions of this Section 7, Profits, Losses, each item thereof, and
all other items attributable to the Transferred Interest for such Fiscal Year
shall be divided and allocated between the transferor and the transferee by
taking into account their varying Percentage Interests during the Fiscal Year in
accordance with Code Section 706(d), using any conventions permitted by law and
selected by the Managing Member. All distributions on or before the date of such
Transfer shall be made to the transferor, and all distributions thereafter shall
be made to the transferee. Solely for purposes of making such allocations and
distributions, the Company shall recognize such Transfer not later than the end
of the calendar month during which it is given notice of such Transfer, PROVIDED
that, if the Company is given notice of a Transfer at least ten Business Days
prior to the Transfer, the Company shall recognize such Transfer as of the date
of such Transfer, and PROVIDED FURTHER that if the Company does not receive a
notice stating the date such Interest was Transferred and such other information
as the Managing Member may reasonably require within 30 days after the end of
the Fiscal Year during which the Transfer occurs, then all such items shall be
allocated, and all distributions shall be made, to the Person who, according to
the books and records of the Company, was the owner of the Interest on the last
day of such Fiscal Year. Neither the Company nor the Managing Member shall incur
any liability for making allocations and distributions in accordance with the
provisions of this Section 7.11, whether or not the Managing Member or the
Company has knowledge of any Transfer of ownership of any Interest.
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SECTION 8
DISSOLUTION AND WINDING UP
8.1 LIQUIDATING EVENTS
The Company shall dissolve and commence winding up and liquidating upon
the first to occur of any of the following ("Liquidating Events"):
(i) The sale of all or substantially all of the Property;
and
(ii) The agreement of the Members to dissolve, wind up, and
liquidate the Company.
The Members hereby agree that, notwithstanding any provision of the Act,
the Company shall not dissolve prior to the occurrence of a Liquidating Event.
The event described in Section 8.1(ii) shall not constitute a Liquidating
Event until such time as the Company is otherwise required to dissolve, and
commence winding up and liquidating.
8.2 WINDING UP
Upon the occurrence of a Liquidating Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members
and no Member shall take any action that is inconsistent with, or not
appropriate for, the winding up of the Company's business and affairs. To the
extent not inconsistent with the foregoing, this Agreement shall continue in
full force and effect until such time as the Company's Property has been
distributed pursuant to this Section 8.2 and the Certificate has been canceled
in accordance with the Act. The Managing Member shall be responsible for
overseeing the winding up and dissolution of the Company, shall take full
account of the Company's liabilities and Property, shall cause the Company's
Property to be liquidated as promptly as is consistent with obtaining the fair
value thereof, and shall cause the proceeds therefrom, to the extent sufficient
therefor, to be applied and distributed in the following order:
(1) First, to the payment of all of the Company's debts and
liabilities (other than Member Loans) to creditors other than the Members and to
the payment of the expenses of liquidation;
(2) Second, to the payment of all Member Loans and all of the
Company's debts and liabilities to the Members in the following order and
priority:
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(1) first, to the payment of all debts and liabilities owed to
any Member other than in respect of Member Loans;
(2) second, to the payment of all accrued and unpaid interest
on Member Loans, such interest to be paid to each Member and its
Affiliates (considered as a group) pro rata in proportion to the interest
owed to each such group; and
(3) third, to the payment of the unpaid principal amount of
all Member Loans, such principal to be paid to each Member and its
Affiliates (considered as a group) pro rata in proportion to the
outstanding principal owed to each such group;
(3) Third, in an amount equal to the unpaid cumulative
Preferred Return;
(4) Fourth, in an amount equal to the Preferred Capital Amount;
(5) The balance, if any, to the Members in accordance with their
Capital Accounts, after giving effect to all contributions, distributions and
allocations for all periods;
(6) In the discretion of the Managing Member, a pro rata portion of
the distributions that would otherwise be made to the Members pursuant to this
Section 8.2 may be:
(1) distributed to a trust established for the benefit of the
Members for the purposes of liquidating Company assets, collecting amounts
owed to the Company, and paying any contingent or unforeseen liabilities
or obligations of the Company. The assets of any such trust shall be
distributed to the Members from time to time, in the reasonable discretion
of the Managing Member, in the same proportions as the amount distributed
to such trust by the Company would otherwise have been distributed to the
Members pursuant to this Section 8.2; or
(2) withheld to provide a reasonable reserve for Company
liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company, PROVIDED that
such withheld amounts shall be distributed to the Members as soon as
practicable; and
(7) Any such distributions to the Members in respect of their
Capital Accounts shall be made in accordance with the time requirements set
forth in Treas. Regs. ss.1.704-1(b)(2)(ii)(b)(2).
Each Member and each of its Affiliates (as to Member Loans only) agrees
that by accepting the provisions of this Section 8.2 setting forth the priority
of the distribution of the assets of the Company to be made upon its
liquidation, such Member or Affiliate expressly
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waives any right which it, as a creditor of the Company, might otherwise have
under the Act to receive distributions of assets pari passu with the other
creditors of the Company in connection with a distribution of assets of the
Company in satisfaction of any liability of the Company, and hereby subordinates
to said creditors any such right.
Notwithstanding the foregoing, in the event that the Managing Member shall
determine that an immediate sale of part of all the Property would cause undue
loss to the Members, or in the event that the Managing Member determines that it
would be in the best interests of the Members to distribute the Property to the
Members in-kind (which distributions do not, as to the in-kind portions, have to
be in the same proportions as they would be if cash were distributed, but all
such in-kind distributions shall be equalized, to the extent necessary, with
cash), then the Managing Member may either defer liquidation of, and withhold
from distribution for a reasonable time, any of the Property except that
necessary to satisfy the Company's debts and obligations, or distribute the
Property to the Members in-kind.
8.3 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Section 8, in the event the
Company is liquidated within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations but no Liquidating Event has occurred, the Property shall not be
liquidated, the Company's liabilities shall not be paid or discharged, and the
Company's affairs shall not be wound up. Instead, solely for federal income tax
purposes, the Company shall be deemed to have distributed the Property in kind
to the Members, who shall be deemed to have assumed and taken subject to all
Company liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the Members shall be deemed to have recontributed the
Property in kind to the Company, which shall be deemed to have assumed and taken
subject to all such liabilities.
8.4 RIGHTS OF MEMBERS
Except as otherwise provided in this Agreement, (a) each Member shall look
solely to the assets of the Company for the return of its Capital Contributions
and shall have no right or power to demand or receive property other than cash
from the Company, and (b) no Member shall have priority over any other Member as
to the return of its Capital Contributions, distributions, or allocations.
If, after the Company ceases to exist as a legal entity, a Member is
required to make a payment to any Person on account of any activity carried on
by the Company, such paying Member shall be entitled to reimbursement from each
other Member consistent with the manner in which the economic detriment of such
payment would have been borne had the amount been paid by the Company
immediately prior to its cessation.
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8.5 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs, the Managing Member shall, within
30 days thereafter, provide written notice thereof to each of the Members.
8.6 DEEMED SALE AND ALLOCATION
Upon a distribution in kind of Company Property, such Property shall be
deemed to be sold for the fair market value thereof for purposes of making
allocations hereunder.
SECTION 9
DISPUTE RESOLUTION
9.1 DISPUTE RESOLUTION; ARBITRATION
(1) DISPUTE RESOLUTION. Any claim, dispute, difference or
controversy between Members arising out of, or relating to, this Agreement, or
the subject matter hereof, which cannot be settled by mutual understanding
between or among such Members, shall be initially submitted to a panel
consisting of an executive management representative of each of the respective
Parents of the Members who are party to the claim, dispute, difference or
controversy (the "Parties"). The said representatives shall meet and use best
efforts to resolve the said claim, dispute, difference or controversy.
(2) ARBITRATION. In the event that the dispute resolution procedure
described in Section 9.1(a) does not result in a final resolution of the claim,
dispute, difference or controversy within 90 days of the date of submission
thereof for resolution, any Party may invoke the following arbitration rights.
(1) The claim, dispute, difference or controversy arising out
of or in relation to this Agreement or the interpretation or breach
thereof shall be referred to arbitration under the rules of the American
Arbitration Association ("AAA") to the extent such rules are not
inconsistent with these paragraphs. Judgment upon the award of the
arbitrators may be entered in any court having jurisdiction thereof or
application may be made to such court for a judicial confirmation of the
award and an order of enforcement, as the case may be. The demand for
arbitration shall be made within a reasonable time after the claim,
dispute, difference or controversy or other matter in question, has
arisen, but not before 90 days after submission thereof for resolution
pursuant to Section 9.1(a), and in any event shall not be made after the
date when institution of legal or equitable proceedings, based on such
claim, dispute, difference or controversy or other matter in question,
would be barred by the applicable statute of limitations.
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(2) The independent arbitration panel shall consist of three
independent arbitrators, one of whom shall be appointed by each of the
Parties, if there are no more than two such Parties, and by the two
Parties having the largest Percentage Interest, if there are more than two
Parties, with the third to be chosen by the two arbitrators thus
appointed. In the event that either Party entitled to do so does not
designate an arbitrator, the other may request a United States federal
judge or the Executive Secretary of the AAA to designate an arbitrator for
such party; and, if the two arbitrators appointed by the Parties are
unable to agree on the appointment of the third arbitrator, either
arbitrator may petition the AAA to make the appointment.
(3) The place of arbitration shall be Denver, Colorado, or
such other place as the parties may agree.
9.2 JURISDICTION; SERVICE OF PROCESS
(1) JURISDICTION. Each Member (a) hereby irrevocably submits itself
to the non-exclusive jurisdiction of (i) the Supreme Court for the State of New
York, sitting in the Borough of Manhattan, and (ii) the United States District
Court for the Southern District of New York, for the purposes of any suit,
action or other proceeding brought by the other, or its respective successors or
assigns, to compel submission to arbitration, in accordance with Section 9.1
hereof, or to enforce a resolution, settlement, order or award made pursuant
thereto, or to enforce any obligation for the payment of money contained herein,
and (iii) to the extent permitted by applicable law, hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of the above-named courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that the agreement to submit to arbitration, as
provided in Section 9.1 hereof, or a resolution, settlement, order or award made
pursuant thereto, or such an obligation for the payment of money, may not be
enforced in or by such court. Nothing contained herein shall be deemed to waive
the right of a Member to seek removal of a matter from state court to federal
court if such removal is otherwise permissible.
(2) SERVICE OF PROCESS. Each Member hereby consents to service of
process on it at the office for service of process set forth below as its office
for service of process and additionally irrevocably designates and appoints the
person named in Schedule 9.2 as its "Agent" and attorney-in-fact to receive
service of process in any action, suit or proceeding with respect to any matter
as to which it submits to jurisdiction as set forth above, it being agreed that
service upon such attorney-in-fact shall constitute valid service upon the
Member or its successors or assigns. Each Member agrees that (x) the sole
responsibilities of the Agent shall be (i) to receive such process, (ii) to send
a copy of any such process so received to such Member, by registered airmail,
return receipt requested, at the address for it set forth in Section 10.1, or at
the last address filled in writing by it with the Agent, and (iii) to give
prompt telecopied notice of receipt
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thereof to it at such address (y) the Agent shall have no responsibility for the
receipt or nonreceipt by the respective Member of such process, nor for any
performance or nonperformance by the respective Member or its respective
successors or assigns, and (z) failure of the Agent to send a copy of any such
process or otherwise to give notice thereof to the respective Member shall not
affect the validity of such service or any judgment in any action, suit or
proceeding based thereon. If service of process cannot be effected in the
foregoing manner, each Member further irrevocably consents to the service of
process in any action, suit or proceeding by the mailing of copies thereof by
registered or certified airmail, postage prepaid, return receipt requested, to
it at its address set forth in Section 10.1 hereof. The foregoing, however,
shall not limit the right of the Member to serve process in any other manner
permitted by law. Any judgment against a Member in any suit for which such
Member has no further right of appeal shall be conclusive, and may be enforced
in other jurisdictions by suit on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of such Member therein described; PROVIDED always that
the plaintiff may at its option bring suit, or institute other judicial
proceedings, against such Member or any of its assets in the courts of any
country or place where such party or such assets may be found. Each Member
further covenants and agrees that throughout the term of the Company, it shall
maintain a duly appointed agent for the service of summonses and other legal
processes in New York.
For purposes of this Section 9.2(b), the Agent and offices for service of
process for each of the Members shall be as set forth on Schedule 2.1 or such
other person or offices as shall be designated in writing by any Member to the
other Member.
SECTION 10
MISCELLANEOUS
10.1 NOTICES
Any notice, payment, demand, or communication required or permitted to be
given by any provision of this Agreement shall be in writing and mailed
(certified or registered mail, postage prepaid, return receipt requested) or
sent by hand or overnight courier, or by facsimile (with acknowledgment
received), charges prepaid and addressed as follows, or to such other address or
number as such Person may from time to time specify by notice to the Members:
(1) If to the Company, to the address or number set forth on
Schedule 2.1;
(2) If to a Member to the address or number set forth in Schedule
2.1.
All notices and other communications given to a Person in accordance with
the provisions of this Agreement shall be deemed to have been given and received
(i) four Business Days after the same are sent by certified or registered mail,
postage prepaid, return receipt requested, (ii) when delivered by hand or
transmitted by facsimile (with acknowledgment
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received and, in the case of a facsimile only, a copy of such notice is sent no
later than the next Business Day by a reliable overnight courier service, with
acknowledgment of receipt) or (iii) one Business Day after the same are sent by
a reliable overnight courier service, with acknowledgment of receipt.
10.2 BINDING EFFECT
Except as otherwise provided in this Agreement, this Agreement shall be
binding upon and inure to the benefit of the Members and their respective
successors, transferees, and assigns.
10.3 CONSTRUCTION
This Agreement shall be construed simply according to its fair meaning and
not strictly for or against any Member.
10.4 TIME
Time is of the essence with respect to this Agreement.
10.5 TABLE OF CONTENTS; HEADINGS
The table of contents and section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement.
10.6 SEVERABILITY
Every provision of this Agreement is intended to be severable. If any term
or provision hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the maximum extent
permissible so as to effect the intent of the Members, and such illegality,
invalidity or unenforceability shall not affect the validity or legality of the
remainder of this Agreement. If necessary to effect the intent of the Members,
the Members will negotiate in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as closely as possible
reflects such intent.
10.7 CONFIDENTIALITY
(a) Each Member and each of its Controlled Affiliates (each a
"Restricted Party") shall, and shall cause its respective officers, directors,
employees, attorneys, accountants, consultants and other agents and advisors
(collectively, "Agents") to, keep secret and maintain in confidence the terms of
this Agreement and all confidential and proprietary information and data of the
Company and the other Members or their Affiliates disclosed to it (in each case,
a "receiving party") in connection with the formation of the Company and the
conduct of the
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Company's business and in connection with the transactions contemplated by the
Contribution Agreement (the "Confidential Information") and shall not disclose
Confidential Information, and shall cause its respective Agents not to disclose
Confidential Information, to any Person other than the Members, their Controlled
Affiliates, their respective Agents that need to know such Confidential
Information, or the Company. Each Member further agrees that it shall not use
the Confidential Information for any purpose other than monitoring and
evaluating its investment, determining and performing its obligations and
exercising its rights under this Agreement. The Company and each Member shall
take all reasonable measures necessary to prevent any unauthorized disclosure of
the Confidential Information by any of their respective Controlled Affiliates or
any of their respective Agents.
(b) Nothing herein shall prevent the Company, any Restricted Party
or its Agents from using, disclosing or authorizing the disclosure of,
Confidential Information it receives in the course of the business of the
Company which:
(i) has been published or is in the public domain through
no fault of the receiving party;
(ii) prior to receipt hereunder was properly within the
legitimate possession of the receiving party or, subsequent to receipt
hereunder (or under such Agreement), is lawfully received from a third
party having rights therein without restriction of the third party's right
to disseminate the Confidential Information and without notice of any
restriction against its further disclosure;
(iii) is independently developed by the receiving party
through parties who have not had, either directly or indirectly, access to
or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the written approval
of the party originally disclosing such information, PROVIDED that such
Confidential Information shall cease to be confidential and proprietary
information covered by this Agreement only to the extent of the disclosure
so consented to;
(v) subject to the receiving party's compliance with paragraph
(d) below, is required to be produced under order of a court of competent
jurisdiction or other similar requirements of a governmental agency,
PROVIDED that such Confidential Information to the extent covered by a
protective order or equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purposes of this
Agreement; or
(vi) subject to the receiving party's compliance with
paragraph (d) below, is necessary or advisable to be disclosed under
applicable law or under the rules of a stock exchange or association on
which such receiving party's securities (or those of its Affiliate) are
listed.
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(c) Notwithstanding this Section 10.7, any Member may provide
Confidential Information (i) to other Persons considering the consummation of a
Permitted Transaction with respect to such Member or (ii) to any financial
institution in connection with the provision of funds by such financial
institution to such Member, so long as prior to any such disclosure such other
Person or financial institution executes a confidentiality agreement that
provides protection substantially equivalent to the protection provided the
Members and the Company in this Section 10.7.
(d) In the event that any receiving party (i) determines that it is
necessary or advisable to disclose Confidential Information under applicable law
(other than under the requirements of a stock exchange or association on which
such receiving party's securities or those of its Affiliates are listed) or (ii)
becomes legally compelled (by oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands or otherwise)
to disclose any Confidential Information, the receiving party shall provide the
disclosing party with prompt written notice so that in the case of clause (i),
the disclosing party can work with the receiving party to limit the disclosure
to the extent practicable, or in the case of clause (ii), the disclosing party
may seek a protective order or other appropriate remedy or waive compliance with
the provisions of this Agreement. In the case of said clause (ii) and in the
event that the disclosing party is unable to obtain a protective order or other
appropriate remedy, or if the disclosing party so directs, the receiving party
shall, and shall cause its employees to, exercise all commercially reasonable
efforts to obtain a protective order or other appropriate remedy at the
disclosing party's reasonable expense. Failing the entry of a protective order
or other appropriate remedy or receipt of a waiver hereunder, the receiving
party shall furnish only that portion of the Confidential Information which it
is advised by opinion of its counsel is legally required to be furnished and
shall exercise all commercially reasonable efforts to obtain reliable assurance
that confidential treatment shall be accorded such Confidential Information, it
being understood that such reasonable efforts shall be at the cost and expense
of the disclosing party whose Confidential Information has been sought.
10.8 FURTHER ACTION
Each Member, upon the reasonable request of the Managing Member, agrees to
perform all further acts and execute, acknowledge, and deliver any documents
which may be reasonably necessary, appropriate, or desirable to carry out the
intent and purposes of this Agreement.
10.9 GOVERNING LAW
The validity of this Agreement, the construction of its terms and the
interpretation of the rights and duties of the Members hereunder shall be
governed by the substantive laws of the State of Delaware without regard to the
principles of conflict of laws of the State of Delaware or any other
jurisdiction (except those that cannot be waived) that would call for the
application of the substantive law of any jurisdiction other than the State of
Delaware.
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10.10 WAIVER OF ACTION FOR PARTITION
Each Member irrevocably waives any right that it may have to maintain any
action for partition with respect to any of the Property; PROVIDED that the
foregoing shall not be construed to apply to any action by a Member for the
enforcement of its rights under this Agreement. Each Member waives its right to
seek a court decree of dissolution (other than a dissolution in accordance with
Section 8) or to seek appointment of a court receiver for the Company as now or
hereafter permitted under applicable law.
10.11 COUNTERPART EXECUTION
This Agreement may be executed in any number of counterparts with the same
effect as if all the Members had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.
10.12 SPECIFIC PERFORMANCE
Each Member agrees with the other Members that the other Members would be
irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that monetary damages would not
provide an adequate remedy in such event. Accordingly, in addition to any other
remedy to which the nonbreaching Members may be entitled, at law or in equity,
the nonbreaching Members shall be entitled to injunctive relief to prevent
breaches of this Agreement and specifically to enforce the terms and provisions
hereof.
10.13 ENTIRE AGREEMENT
The provisions of this Agreement set forth the entire agreement and
understanding between the Members pertaining to the subject matter hereof and
supersede all prior agreements, oral or written, representations, discussions,
negotiations and other communications between the Members pertaining to the
subject matter hereof.
10.14 LIMITATION ON RIGHTS OF OTHERS
Nothing in this Agreement, whether express or implied, shall be construed
to give any Person other than the Members and their respective successors and
permitted assigns any legal or equitable right, remedy or claim under or in
respect of this Agreement.
10.15 WAIVERS; REMEDIES
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party or parties entitled to enforce such term, but any such waiver shall
be effective only if in a writing signed by the party or parties against which
such waiver is to be asserted. Except as otherwise provided herein, no failure
or delay of any Member in exercising any power or right under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or
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any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.
10.16 AMENDMENT
This Agreement may be amended only in a writing signed by all Members
expressly stating that it is an amendment to this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Limited Liability
Company Agreement as of the day first above set forth.
ARCH WESTERN ACQUISITION CORPORATION
By: /s/ Jeffry N. Quinn
-------------------------------------
Name: Jeffry N. Quinn
Title: President
DELTA HOUSING INC.
By: Terry G. Dallas
-------------------------------------
Name: Terry G. Dallas
Title: Vice President
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EXHIBIT 2.4
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT ("Agreement") is entered into as of the 1st day
of June, 1998, by and among Arch Coal, Inc., a Delaware corporation ("Arch"),
Arch Western Acquisition Corporation, a Delaware corporation ("Arch Member"),
Arch Western Resources LLC, a Delaware limited liability company ("Company"),
and Delta Housing Inc., a Delaware corporation ("ARCO Member").
WHEREAS, with the execution and delivery of this Agreement, Arch Member
and ARCO Member have entered into a Limited Liability Company Agreement (the
"Company Agreement") with respect to the formation and capitalization of the
Company pursuant to a Contribution Agreement among (among others) the parties
hereto (the "Contribution Agreement"); and
WHEREAS, Arch, Arch Member and ARCO Member desire to evidence their
agreement regarding amounts that may be payable as a result of certain actions
being taken, or a failure to take certain actions, regarding the Company, its
assets and membership interests or upon the receipt of any unintended benefit.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1
CERTAIN DEFINITIONS
1.1 DEFINITIONS.
The following capitalized terms used in this Agreement have the following
meanings:
"Allocable Indemnified Debt" means the amount of Company Debt and
Successor Debt allocable to the ARCO Member under Section 752 of the Code and
includible in the ARCO Member's basis in its Membership Interest determined at
the date of original issuance or substantial modification within the meaning of
Treas. Reg. section 1.1001-3, in each case as in effect on the date hereof and
otherwise based on applicable law on the date hereof.
"Arch Indemnifiable Event" means any of the following actions
undertaken (except as otherwise provided in (7) below) by Arch, Arch Member,
Arch Affiliate, the Managing Member, or the Company (except to the extent that
the ARCO Member has consented
to such action and executed a written waiver of its rights to collect payment
for such event under this Agreement):
(1) A repayment, acceleration that results in a reduction in
principal amount (either actual or as determined under federal income tax
principles) or other reduction in principal amount of all or part of the Company
Debt or Successor Debt (except by means of refunding of the Company Debt with
Successor Debt with a principal amount equal to the principal amount of the
Company Debt immediately prior to such refunding);
(2) An express guarantee, indemnification, reimbursement agreement,
pledge of collateral or any other payment or payment related obligation for the
direct benefit of creditors of the Company by Arch, an Arch Affiliate, an Arch
Transferee or Arch Member with respect to the Company Debt or Successor Debt,
except to the extent set forth in the Company Agreement or Contribution
Agreement (including the making or repayment of Arch Intercompany Loans, as
defined in the Company Agreement);
(3) A refinancing of all or part of the Company Debt or Successor
Debt if the principal amount of the Successor Debt (either actual or as
determined under federal income tax principles) is less than the principal
amount of the Company Debt immediately prior to such refinancing;
(4) A classification of the Company as a corporation for federal
income tax purposes or a merger or consolidation of the Company into a
corporation or the transfer of substantially all of the assets of the Company to
a corporation;
(5) The Dissolution or liquidation of the Company;
(6) An amendment or modification of the terms of the Company Debt or
Successor Debt or other agreement with an obligee thereof pursuant to which
Arch, Arch Member, the Company and such obligee agree (i) no Member will be
liable for the Company Debt or Successor Debt (including pursuant to the ARCO
Member Guarantee) or (ii) that any Member (or Affiliate of any Member) other
than the ARCO Member (or Affiliate of the ARCO Member) is liable, pursuant to a
guarantee or otherwise, for satisfaction of the Company Debt or Successor Debt;
or
(7) A repayment or other reduction in principal amount of all or
part of the Company Debt or Successor Debt arising upon the insolvency or
bankruptcy (including an Involuntary Bankruptcy) of the Company, Arch Member or
Arch (except by means of refunding of the Company Debt with Successor Debt with
a principal amount equal to the principal amount (either actual or as determined
under federal income tax principles) of the Company Debt immediately prior to
such refunding in bankruptcy or insolvency).
"Arch Transferee" means any person, or affiliate of any person, who
becomes a member of the Company as a result of being a successor in interest to
all or any part of the Arch Member's interest or by action of Arch, an Arch
Affiliate, the Managing Member or Arch Member.
2
"ARCO Contributed Assets" means the assets, properties, and rights of
the entities contributed to the Company by ARCO or the ARCO Member, including
the interests in the contributed entities.
"Current Tax Excess" means an amount equal to the product of (i) the
excess of any taxable income or gain of the ARCO Member resulting solely from
the occurrence of an event set forth in Section 2(a) of this Agreement over the
Remaining Gain Recognition Amount and (ii) the Tax Rate. For purposes of the
foregoing calculations, the gain on sale or taxable disposition of an ARCO
Contributed Asset will be limited to the amount of gain or income allocated to
the ARCO Member pursuant Section 704(c) of the Code.
"Damages" means an amount equal to the Current Tax Excess divided by
one minus the Tax Rate (calculated in accordance with the method set out in the
example (which assumes current tax rates) on Schedule A, attached hereto) and
all interest, penalties, and additions to the tax as well as all reasonable out
of pocket costs incurred by the ARCO Member in connection with the
determination, receipt or collection of Damages to the extent that such
interest, penalties or additions to tax reasonably relate to a failure by the
Arch Member to provide timely notice to ARCO Member of an event described in
Section 2(a) of this Agreement or to make timely payment of Damages in
accordance with this Agreement.
"Discount Rate" means two percent (2%) per quarter.
"Federal Rate" means the highest marginal federal income tax rate or
rates applicable to ordinary income or capital gain, as the case may be,
applicable to domestic corporate taxpayers in effect for the year in issue.
"Final Determination" means with respect to any issue or item (i) the
execution of a final and irrevocable closing agreement or other settlement
agreement with the Internal Revenue Service or the relevant state or local
taxing authorities, (ii) the expiration of the time for filing a claim for
refund or, if a refund claim has been timely filed, the expiration of the time
for instigating suit in respect of such refund claim, (iii) the expiration of
the time for filing a petition with the Tax Court or the relevant state or local
tribunal if no such petition has been filed and no suit has been instigated in
respect of the subject matter of such petition, or (iv) a final, unappealable
decision of any court of competent jurisdiction.
"Remaining Gain Recognition Amount" means (a) in the case of an asset
sale, the present value (computed by using a discount rate equal to the Discount
Rate) of the taxable income or gain attributable to the assets sold and
recognized by the ARCO Member as a result of allocations under Section 704(c) of
the Code as if such income or gain had been recognized on the 15th anniversary
of the Closing Date and (b) in the case of a reduction in Allocable Indemnified
Debt, the present value (computed by using a discount rate equal to the Discount
Rate) of the income or gain recognized by the ARCO Member as if such income or
gain had been recognized on the 15th anniversary of the Closing Date.
3
"Section 7.4(b) Call Event" means the consummation of a purchase and
sale of the ARCO Member Interest effected pursuant to the exercise by Arch
Member of its right to purchase the ARCO Member Interest under Section 7.4(b) of
the Company Agreement.
"Tax Rate" means the sum of (i) 4% plus (ii) the Federal Rate.
1.2 ADDITIONAL DEFINITIONS.
Capitalized terms used in this Agreement and not defined in Section 1.1 or
elsewhere in this Agreement shall have the respective meanings ascribed to such
terms in the Company Agreement and the Contribution Agreement.
1.3 TERMS GENERALLY.
The definitions in Sections 1.1 and 1.2 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Schedules) in its entirety and not to any part
hereof unless the context shall otherwise require. All references herein to
Sections shall be deemed references to Sections of this Agreement unless the
context shall otherwise require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or regulation are to
it as amended and supplemented from time to time (and, in the case of a statute
or regulation, to any corresponding provisions of successor statutes or
regulations). Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
SECTION 2
DAMAGES
(a) If any of the following events occur: (i) the sale or other
taxable disposition prior to the 15th anniversary of the Closing Date of all or
any part of the ARCO Contributed Assets, (ii) a Section 7.4(b) Call Event, or
(iii) a reduction in the amount of Allocable Indemnified Debt due to an Arch
Indemnifiable Event, then Arch or Arch Member jointly and severally agree to pay
to the ARCO Member in accordance with Section 2(b) below an amount equal to the
Damages, if any, incurred by ARCO or the ARCO Member as a result of the
occurrence of any such event.
4
(b) Within ninety (90) days after the occurrence of any event
specified in Section 2(a), Arch or Arch Member will (i) pay Damages to the ARCO
Member and (ii) provide sufficient documentation to support the calculation of
amounts paid.
(c) The making of a payment by Arch and Arch Member under this
Section 2 shall be the sole and exclusive remedy of ARCO Member and its
Affiliates with respect to any tax liability incurred in connection with this
Agreement, the Company Agreement or the transactions contemplated hereby or
thereby, other than with respect to any damages arising out of a breach of
Sections 2.5 and 2.7 of the Contribution Agreement.
(d) ARCO Member shall have the right to audit (i) the balance sheets
of the Company and its controlled affiliates, (ii) Company records of asset
sales or disposition, (iii) all modifications of the Company contracts, and (iv)
the calculation of Damages or Tax Benefit True-Up by the Company or Arch Member
pursuant to this Tax Sharing Agreement. ARCO Member shall also have the right to
audit the calculation of the tax basis of its Membership interest.
(e) ARCO Member or the Company or the Arch Member, as the case may
be, shall take such reasonable steps as requested by Arch or Arch Member, on the
one hand, or ARCO or ARCO Member, on the other hand, to avoid a reduction in the
Allocable Indemnified Debt.
(f) Notwithstanding any other provision of this Agreement (other
than Section 2(e) of this Agreement) or any provision of the Company Agreement,
neither Arch nor Arch Member shall be liable for Damages to the extent (i) such
Damages are incurred as a direct result of the ARCO Guarantee having been
refuted, repudiated, withdrawn in a manner that is legally effective to
extinguish such guarantee, or having been found unenforceable, or otherwise
being inapplicable or ineffective to guarantee the Company Debt or Successor
Debt, or non-recourse as to the ARCO Member, in whole or in part, other than as
a direct result of an action by Arch, Arch Member, an Arch Affiliate, an Arch
Transferee, or the Company, (ii) such Damages relate to transactions
contemplated by the Contribution Agreement or Company Agreement that occur on or
before the Closing Date, or (iii) such Damages are incurred as a direct result
of a change in applicable law.
(g) If at any time on or before the 15th anniversary of the Closing
Date, ARCO or ARCO Member receives a refund of Damages or a tax benefit giving
rise to cash tax savings with respect to such Damages, ARCO Member, within 90
days after receipt of any such refund or realization of any such cash tax
savings, shall pay an amount to Arch Member equal to such refund or savings.
(h) Nothing contained in this Agreement shall be construed to permit
a party to receive a double benefit or compensation with respect to Damages or
payments described in Section 3.
5
(i) The section 704(c) gain amount as of the Closing Date
attributable to the ARCO Contributed Assets will be reduced by any positive
basis adjustments resulting from a Final Determination described in Section 3.
SECTION 3
TAX BENEFIT TRUE-UP
If there is a Final Determination of a federal income tax liability of
ARCO or an ARCO Affiliate arising from the contribution of the ARCO Contributed
Assets or the distribution to the ARCO Member pursuant to Section 4.1 of the
Company Agreement and Arch Member or an Arch Affiliate receives an actual cash
tax benefit as a result of such determination, Arch shall pay to ARCO an amount
equal to the ARCO Tax Benefit Amount (as defined below).
Any deduction or credit not resulting in actual cash tax savings for the
taxable period shall be carried forward to succeeding taxable years, provided,
however, no ARCO Tax Benefit Amount shall accrue with respect to tax savings for
Arch or Arch Member in a tax year beginning after the 15th anniversary of the
Closing Date. Any actual cash tax benefit shall be deemed realized in the year
that such deduction or credit (including a carryforward of such deduction or
credit in the form of a net operating loss or otherwise) gives rise to an actual
reduction in the amount of income tax paid by Arch Member or Arch for such year.
All payments pursuant to this Section 3 shall be made within 30 days after the
filing of the applicable tax return for the period in which such deduction or
credit results in a cash tax benefit.
"ARCO Tax Benefit Amount" means an amount equal to (i) the actual tax
savings produced by such deduction or credit less (ii) the present value
(calculated using a discount rate equal to the Discount Rate) of the cash tax
savings that would have been realized if such deduction or credit had been
realized on the 15th anniversary of the Closing Date and (iii) further reduced
by the present value (calculated using a discount rate equal to the Discount
Rate) of lost tax savings to Arch or Arch Member that is directly attributable a
deduction or credit that Arch or Arch Member is prevented from utilizing due to
the expiration of the applicable statute of limitations. The amount of any such
tax savings for any given period shall be the amount of the federal income taxes
reflected on such return for such period or, in the case of a future tax savings
amount, the amount of federal income taxes that would have been reflected on
such return, as compared to the federal income taxes that would have been
reflected on such return in the absence of such deduction or credit.
6
SECTION 4
DISPUTE RESOLUTION
4.1 DISPUTE RESOLUTION: ARBITRATION.
(a) Dispute Resolution. Any claim, dispute, difference or controversy
between the parties hereto (individually "Party" or collectively "Parties")
arising out of, or relating to, this Agreement, or the subject matter hereof,
which cannot be settled by mutual understanding between or among the Parties,
shall be initially submitted to a panel consisting of an executive management
representative of each of the respective Parents of the Parties who are party to
the claim, dispute, difference or controversy. The said representatives shall
meet and use best efforts to resolve the said claim, dispute, difference or
controversy.
(b) Arbitration. In the event that the dispute resolution procedure
described in Section 4.1(a) does not result in a final resolution of the claim,
dispute, difference or controversy within 90 days of the date of submission
thereof for resolution, any Party may invoke the following arbitration rights.
(i) The claim, dispute, difference or controversy arising out of
or in relation to this Agreement or the interpretation or breach thereof shall
be referred to arbitration under the rules of the American Arbitration
Association ("AAA") to the extent such rules are not inconsistent with these
paragraphs. Judgment upon the award of the arbitrators may be entered in any
court having jurisdiction thereof or application may be made to such court for a
judicial confirmation of the award and an order of enforcement, as the case may
be. The demand for arbitration shall be made within a reasonable time after the
claim, dispute, difference or controversy or other matter in question, has
arisen, but not before 90 days after submission thereof for resolution pursuant
to Section 4.1(a), and in any event shall not be made after the date when
institution of legal or equitable proceedings, based on such claim, dispute,
difference or controversy or other matter in question, would be barred by the
applicable statute of limitations.
(ii) The independent arbitration panel shall consist of three
independent arbitrators, one of whom shall be appointed by each of the Parties,
if there are no more than two such Parties, and by the two Parties having the
largest Percentage Interest, if there are more than two Parties, with the third
to be chosen by the two arbitrators thus appointed. In the event that either
Party entitled to do so does not designate an arbitrator, the other may request
a United States federal judge or the Executive Secretary of the AAA to designate
an arbitrator for such party; and, if the two arbitrators appointed by the
Parties are unable to agree on the appointment of the third arbitrator, either
arbitrator may petition the AAA to make the appointment.
(iii) The place of arbitration shall be New York, New York.
7
4.2 JURISDICTION; SERVICE OF PROCESS.
(a) Jurisdiction. Each Party (a) hereby irrevocably submits itself to
the nonexclusive jurisdiction of (a) the Supreme Court for the State of New
York, situated in the Borough of Manhattan, and (b) the United States District
Court for the Southern District of New York for the purposes of any suit, action
or other proceeding brought by the other, or its respective successors or
assigns, to compel submission to arbitration, in accordance with Section 4.1
hereof, or to enforce a resolution, settlement, order or award made pursuant
thereto, or to enforce any obligation for the payment of money contained herein,
and (ii) to the extent permitted by applicable law, hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of the above-named courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that the agreement to submit to arbitration, as
provided in Section 3.1 hereof, or a resolution, settlement, order or award made
pursuant thereto, or such an obligation for the payment of money, may not be
enforced in or by such court. Nothing contained herein shall be deemed to waive
the right of a Party to seek removal of a matter from state court to federal
court if such removal is otherwise permissible.
(b) Service of Process. Each Party hereby consents to service of
process on it at the office for service of process set forth below as its office
for service of process and additionally irrevocably designates and will appoint
a person as its Agent and attorney-in-fact to receive service of process in any
action, suit or proceeding with respect to any matter as to which it submits to
jurisdiction as set forth above, it being agreed that service upon such
attorney-in-fact shall constitute valid service upon the Party or its successors
or assigns. Each Party agrees that (x) the sole responsibilities of the Agent
shall be (i) to receive such process, (ii) to send a copy of any such process so
received to such Party, by registered airmail, return receipt requested, at the
address for it set forth in Section 5.1 of the Company Agreement, or at the last
address filed in writing by it with the Agent, and (iii) to give prompt
telecopied notice of receipt thereof to it at such address (y) the Agent shall
have no responsibility for the receipt or nonreceipt of the respective Party of
such process, nor for any performance or nonperformance by the respective Party
or its respective successors or assigns, and (z) failure of the Agent to send a
copy of any such process or otherwise to give notice thereof to the respective
Party shall not affect the validity of such service or any judgment in any
action, suit or proceeding based thereon. If service of process cannot be
effected in the foregoing manner, each Party further irrevocably consents to the
service of process in any action, suit or proceeding by the mailing of copies
thereof by registered or certified airmail, postage prepaid, return receipt
requested, to it at its address set forth in Section 5.1 hereof. The foregoing,
however, shall not limit the right of the Parties to serve process in any other
manner permitted by law. Any judgment against a Party in any suit for which such
Party has no further right of appeal shall be conclusive, and may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and of the amount of any indebtedness
or liability of such Party therein described; provided always that the plaintiff
may at its option bring suit, or institute other judicial proceedings, against
such Party or any of its assets in the courts of any country or place
8
where such Party or such assets may be found. Each Party further covenants and
agrees that throughout the term of the Company, it shall maintain a duly
appointed agent for the service of summonses and other legal processes in the
State of New York.
For purposes of this Section 4.2(b), the Agent and offices for service of
process for each of the Parties shall be as set forth on Schedule 9.2 to the
Company Agreement or such other Person or offices as shall be designated in
writing by any Party to the other Parties.
4.3 CONDUCT OF AUDITS, LITIGATION.
(a) CONTROL OF AUDITS AND JUDICIAL PROCEEDINGS. ARCO shall have the
exclusive right (i) to control any audit, conference or other proceeding with
the Internal Revenue Service or the relevant state or local authorities, or any
judicial proceedings concerning the determination of the ARCO Group tax
liability, (ii) pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and (iii) to compromise or settle any adjustment or deficiency
proposed, asserted or assessed as a result of any such proceeding. ARCO shall
bear any costs relating to any proceedings described in this Section 4.3(a).
(b) SETTLEMENTS INVOLVING MATERIAL SECTION 3 CLAIMS. ARCO may not
pay, settle, compromise or concede any adjustments at the examination level, at
appeals or in any judicial proceeding that are reasonably likely to give rise to
a material claim under Section 3 of this Agreement without giving written notice
to Arch to that effect. Such notice shall include the material terms of the
settlement and the projected dollar amount of the aggregate basis adjustment.
ARCO may settle, compromise or concede any such adjustment, after providing such
notice, unless Arch delivers, at Arch's expense, within 15 days following the
date that ARCO provides such notice, a written opinion from an independent
nationally recognized law firm to the effect that such settlement is
unreasonable on the merits as a stand alone issue. In the event that Arch
provides such opinion, ARCO may not settle the issue on the proposed terms
unless it provides Arch with a written opinion from an independent nationally
recognized law firm that such payment, settlement, compromise or concession is
as favorable a result on that issue as is predicted to be the result that would
be obtained in further administrative proceedings or litigation as a stand alone
issue.
(c) Notwithstanding the foregoing, ARCO shall not be precluded in its
sole and absolute discretion from paying, settling, compromising or conceding
any proposed adjustment or determination with respect to which ARCO agrees to
waive any claims that it may have under Section 3 of this Agreement with respect
to such claims.
9
SECTION 5
MISCELLANEOUS
5.1 INTEREST ON DELINQUENT PAYMENTS.
Any payment required by this Agreement that is not made on or before the
date provided herein shall bear interest after such date at the interest rate
per annum announced publicly by Citibank, N.A. in New York, New York from time
to time as Citibank, N.A.'s base rate.
5.2 NOTICES.
Any notice, payment, demand, or communication required or permitted to be
given by any provision of this Agreement shall be in writing and mailed
(certified or registered mail, postage prepaid, return receipt requested) or
sent by hand or overnight courier, or by facsimile (with acknowledgment
received), charges prepaid and addressed as provided in Section 10.1 of the
Company Agreement, or to such other address or number as any Party may from time
to time specify by notice to the other.
All notices and other communications given to a Person in accordance with
the provisions of this Agreement shall be deemed to have been given and received
(i) four (4) Business Days after the same are sent by certified or registered
mail, postage prepaid, return receipt requested, (ii) when delivered by hand or
transmitted by facsimile (with acknowledgment received and, in the case of a
facsimile only, a copy of such notice is sent no later than the next Business
Day by a reliable overnight courier service, with acknowledgment of receipt) or
(iii) one (1) Business Day after the same are sent by a reliable overnight
courier service, with acknowledgment of receipt.
5.3 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, transferees, and assigns.
5.4 CONSTRUCTION.
This Agreement shall be construed simply according to its fair meaning and
not strictly for or against any Party.
5.5 TIME.
Time is of the essence with respect to this Agreement.
10
5.6 HEADINGS.
The section and other headings contained in this Agreement are for
reference purposes only and are not intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement.
5.7 SEVERABILITY.
Every provision of this Agreement is intended to be severable. If any term
or provision hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the maximum extent
permissible so as to effect the intent of the Parties, and such illegality,
invalidity or unenforceability shall not affect the validity or legality of the
remainder of this Agreement. If necessary to effect the intent of the Parties,
the Parties will negotiate in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as closely as possible
reflects such intent.
5.8 CONFIDENTIALITY.
Each Party and its Controlled Affiliates shall, and shall cause their
respective Agents to, keep secret and maintain in confidence the terms of this
Agreement and all confidential and proprietary information and data of the other
Party disclosed to it in connection with the transactions contemplated by this
Agreement, all as provided in Section 10.1 of the Company Agreement.
5.9 GOVERNING LAW.
The internal laws of the State of Delaware (without regard to principles
of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the Parties.
5.10 COUNTERPART EXECUTION.
This Agreement may be executed in any number of counterparts with the same
effect as if all the Parties had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.
5.11 LIMITATION ON RIGHTS OF OTHERS.
Nothing in this Agreement, whether express or implied, shall be construed
to give any Person other than the Parties and their respective successors and
permitted assigns any legal or equitable right, remedy or claim under or in
respect of this Agreement.
11
5.12 WAIVERS; REMEDIES.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the Party or Parties entitled to enforce such term, but any such waiver shall
be effective only if in a writing signed by the Party or Parties against which
such waiver is to be asserted. Except as otherwise provided herein, no failure
or delay of any Party in exercising any power or right under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such right or power, preclude any other or further exercise thereof or
the exercise of any other right or power.
5.13 AMENDMENT.
This Agreement may be amended only in writing signed by each Party
expressly stating that it is an amendment to this Agreement.
12
IN WITNESS WHEREOF, the parties have entered into this Tax Sharing
Agreement as of the day first above set forth.
ARCH COAL, INC.
/s/ David B. Peugh
------------------------------------
By: David B. Peugh
Title: Vice President
ARCH WESTERN ACQUISITION CORPORATION
/s/ Jeffry N. Quinn
------------------------------------
By: Jeffry N. Quinn
Title: President
DELTA HOUSING INC.
/s/ Terry G. Dallas
------------------------------------
By: Terry G. Dallas
Title: Vice President
EXHIBIT 4.1
$600,000,000 REVOLVING CREDIT FACILITY
$300,000,000 TERM LOAN
CREDIT AGREEMENT
by and among
ARCH COAL, INC.
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as
Administrative Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as
Syndication Agent
and
FIRST UNION NATIONAL BANK,
as Documentation Agent
Dated as of June 1, 1998
TABLE OF CONTENTS
SECTION PAGE
1. CERTAIN DEFINITIONS........................................................1
1.1 Certain Definitions.................................................1
1.2 Construction.......................................................28
1.2.1 Number; Inclusion.........................................28
1.2.2 Determination.............................................28
1.2.3 Administrative Agent's Discretion and Consent.............28
1.2.4 Documents Taken as a Whole................................28
1.2.5 Headings..................................................29
1.2.6 Implied References to This Agreement......................29
1.2.7 Persons...................................................29
1.2.8 Modifications to Documents................................29
1.2.9 From, To and Through......................................29
1.2.10 Shall; Will...............................................29
1.3 Accounting Principles..............................................29
2. REVOLVING CREDIT, SWING LOAN AND TERM LOAN FACILITIES.....................30
2.1 Revolving Credit Commitments.......................................30
2.1.1 Revolving Credit Loans....................................30
2.1.2 Swing Loan Commitment.....................................30
2.2 Nature of Banks' Obligations With Respect to Revolving Credit
Loans............................................................30
2.3 Revolving Credit Facility Fee......................................31
2.4 Loan Requests......................................................31
2.4.1 Committed Loan Requests...................................31
2.4.2 Swing Loan Requests.......................................32
2.5 Making Revolving Credit Loans and Swing Loans......................32
2.5.1 Making Swing Loans........................................32
2.6 Swing Loan Note....................................................33
2.7 Use of Proceeds....................................................33
2.8 Borrowings to Repay Swing Loans....................................33
2.9 Bid Loan Facility..................................................33
2.9.1 Bid Loan Requests.........................................33
2.9.2 Bidding...................................................34
2.9.3 Accepting Bids............................................35
2.9.4 Funding Bid Loans.........................................35
2.9.5 Several Obligations.......................................36
2.9.6 Bid Notes.................................................36
2.9.7 Payments and Prepayments..................................36
2.10 Letter of Credit Subfacility......................................36
2.10.1 Issuance of Letters of Credit.............................36
2.10.2 Letter of Credit Fees.....................................37
2.10.3 Participations in Letters of Credit; Disbursements,
Reimbursement............................................37
2.10.4 [Intentionally Omitted]...................................38
2.10.5 Documentation.............................................39
2.10.6 Determinations to Honor Drawing Requests..................39
2.10.7 Nature of Participation and Reimbursement
Obligations..............................................39
2.10.8 Indemnity.................................................40
- i -
2.10.9 Liability for Acts and Omissions..........................41
2.11 [Intentionally Omitted]...........................................41
2.12 Term Loan Commitments.............................................42
2.13 Nature of Banks' Obligations with Respect to Term Loans...........42
2.14 Term Loan Notes...................................................42
2.15 Use of Proceeds...................................................42
3. INTEREST RATES............................................................42
3.1 Interest Rate Options..............................................42
3.1.1 Interest Rate Options.....................................43
3.1.2 Rate Quotations...........................................44
3.1.3 Change in Fees or Interest Rates..........................44
3.2 Interest Periods...................................................44
3.2.1 Ending Date and Business Day..............................45
3.2.2 Amount of Borrowing Tranche...............................45
3.2.3 Termination Before Applicable Expiration Date............45
3.2.4 Renewals..................................................45
3.3 Interest After Default.............................................45
3.3.1 Letter of Credit Fees, Interest Rate......................45
3.3.2 Other Obligations.........................................45
3.3.3 Acknowledgment............................................46
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available...........................................46
3.4.1 Unascertainable...........................................46
3.4.2 Illegality; Increased Costs; Deposits Not Available.......46
3.4.3 Administrative Agent's and Lender's Rights................47
3.5 Selection of Interest Rate Options.................................47
4. PAYMENTS..................................................................48
4.1 Payments...........................................................48
4.2 Pro Rata Treatment of Banks........................................48
4.3 Interest Payment Dates.............................................49
4.4 Prepayments........................................................49
4.4.1 Voluntary Prepayments.....................................49
4.4.2 Replacement of a Lender...................................50
4.4.3 Change of Lending Office..................................51
4.4.4 Voluntary Reduction of Commitments........................51
4.4.5 Mandatory Prepayment Upon Issuance of Certain Debt
and Certain Equity.......................................52
4.4.6 Mandatory Prepayment Upon Sale of Assets..................52
4.5 Additional Compensation in Certain Circumstances...................53
4.5.1 Increased Costs or Reduced Return Resulting From
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc............................................53
4.5.2 Indemnity.................................................53
4.6 Notes..............................................................54
4.7 Settlement Date Procedures.........................................54
4.8 Taxes..............................................................55
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4.8.1 No Deductions.............................................55
4.8.2 Stamp Taxes...............................................55
4.8.3 Indemnification for Taxes Paid by Lenders.................55
4.8.4 Certificate...............................................56
4.8.5 Survival..................................................56
4.8.6 Refund and Contest........................................56
5. REPRESENTATIONS AND WARRANTIES............................................56
5.1 Representations and Warranties.....................................56
5.1.1 Organization and Qualification............................57
5.1.2 Shares of Borrower; Subsidiaries; and Subsidiary
Shares...................................................57
5.1.3 Power and Authority.......................................57
5.1.4 Validity and Binding Effect...............................58
5.1.5 No Conflict...............................................58
5.1.6 Litigation................................................59
5.1.7 Financial Statements......................................59
5.1.8 Use of Proceeds; Margin Stock.............................61
5.1.9 Full Disclosure...........................................61
5.1.10 Taxes.....................................................61
5.1.11 Consents and Approvals....................................62
5.1.12 No Event of Default; Compliance With Instruments and
Material Contracts.......................................62
5.1.13 Insurance.................................................63
5.1.14 Compliance With Laws......................................63
5.1.15 Investment Companies; Regulated Entities..................63
5.1.16 Plans and Benefit Arrangements............................63
5.1.17 Employment Matters........................................64
5.1.18 Environmental Matters.....................................64
5.1.19 Senior Debt Status........................................65
5.1.20 Title to Properties.......................................65
5.1.21 Black Lung................................................65
5.1.22 Coastal Agreement.........................................65
5.2 Continuation of Representations....................................65
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT...................66
6.1 First Loans and Letters of Credit..................................66
6.1.1 Officer's Certificate.....................................66
6.1.2 Secretary's Certificate...................................66
6.1.3 Delivery of Guaranty Agreement............................67
6.1.4 Opinion of Counsel........................................67
6.1.5 Legal Details.............................................67
6.1.6 Payment of Fees...........................................67
6.1.7 Consents..................................................68
6.1.8 Officer's Certificate Regarding No Material Adverse
Change and Solvency.....................................68
6.1.9 No Violation of Laws......................................68
6.1.10 No Actions or Proceedings.................................68
6.1.11 Acquisition...............................................68
6.1.12 Financial Projections.....................................69
6.1.13 Arch Western Capital and Financing........................69
6.1.14 Insurance.................................................69
6.1.15 Payoff of Existing Credit Facility........................69
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6.1.16 Non-Occurrence of Certain Events..........................69
6.2 Each Additional Loan or Letter of Credit...........................69
6.3 Syndication........................................................70
6.3.1 Syndication Date Representations and Warranties...........70
6.3.2 Syndication Cooperation...................................70
7. COVENANTS.................................................................70
7.1 Affirmative Covenants..............................................70
7.1.1 Preservation of Existence, Etc............................71
7.1.2 Payment of Liabilities, Including Taxes, Etc..............71
7.1.3 Maintenance of Insurance..................................71
7.1.4 Maintenance of Properties and Leases......................71
7.1.5 Visitation Rights.........................................72
7.1.6 Keeping of Records and Books of Account...................72
7.1.7 Plans and Benefit Arrangements............................72
7.1.8 Compliance With Laws......................................72
7.1.9 Use of Proceeds...........................................73
7.1.10 Operation of Mines........................................73
7.1.11 Maintenance of Material Contracts.........................73
7.2 Negative Covenants.................................................73
7.2.1 Indebtedness..............................................73
7.2.2 Liens.....................................................74
7.2.3 Liquidations, Mergers, Consolidations, Acquisitions.......75
7.2.4 Dispositions of Assets or Subsidiaries....................75
7.2.5 Affiliate Transactions....................................77
7.2.6 Subsidiaries, Partnerships and Joint Ventures.............77
7.2.7 Continuation of or Change in Business.....................77
7.2.8 Plans and Benefit Arrangements............................77
7.2.9 Off-Balance Sheet Financing...............................78
7.2.10 Maximum Leverage Ratio....................................78
7.2.11 Minimum Fixed Charge Coverage Ratio.......................78
7.2.12 Minimum Net Worth.........................................79
7.2.13 No Restriction on Dividends...............................79
7.2.14 Loans and Investments.....................................79
7.2.15 No Amendments to Acquisition Documents....................80
7.3 Reporting Requirements.............................................80
7.3.1 Quarterly Financial Statements............................80
7.3.2 Annual Financial Statements...............................81
7.3.3 Certificate of the Borrower...............................81
7.3.4 Notice of Default.........................................81
7.3.5 Notice of Litigation......................................82
7.3.6 Notice of Change in Debt Rating...........................82
7.3.7 Notices Regarding Plans and Benefit Arrangements..........82
7.3.8 Other Information.........................................84
8. DEFAULT...................................................................84
8.1 Events of Default..................................................84
8.1.1 Payments Under Loan Documents.............................84
8.1.2 Breach of Warranty........................................84
8.1.3 Breach of Negative Covenants or Visitation Rights.........84
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8.1.4 Breach of Other Covenants.................................84
8.1.5 Defaults in Other Agreements or Indebtedness..............85
8.1.6 Judgments or Orders.......................................85
8.1.7 Loan Document Unenforceable...............................85
8.1.8 Uninsured Losses; Proceedings Against Assets..............86
8.1.9 Notice of Lien or Assessment..............................86
8.1.10 Insolvency................................................86
8.1.11 Events Relating to Plans and Benefit Arrangements.........86
8.1.12 Cessation of Business.....................................87
8.1.13 Change of Control.........................................87
8.1.14 Involuntary Proceedings...................................87
8.1.15 Voluntary Proceedings.....................................87
8.2 Consequences of Event of Default...................................88
8.2.1 Events of Default Other Than Bankruptcy, Insolvency
or Reorganization Proceedings............................88
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings......88
8.2.3 Set-off...................................................88
8.2.4 Suits, Actions, Proceedings...............................89
8.2.5 Application of Proceeds...................................89
8.2.6 Other Rights and Remedies.................................90
8.3 Right of Competitive Bid Loan Lenders..............................90
9. THE AGENTS................................................................90
9.1 Appointment......................................................90
9.2 Delegation of Duties.............................................90
9.3 Nature of Duties; Independent Credit Investigation...............91
9.4 Actions in Discretion of Agents; Instructions From the Banks.....91
9.5 Reimbursement and Indemnification of Agents by the Borrower......92
9.6 Exculpatory Provisions; Limitation of Liability..................92
9.7 Reimbursement and Indemnification of Agents by the Lenders.......93
9.8 Reliance by Agents...............................................94
9.9 Notice of Default................................................94
9.10 Notices..........................................................94
9.11 Banks in Their Individual Capacities.............................94
9.12 Holders of Notes.................................................95
9.13 Equalization of Lenders..........................................95
9.14 Successor Agents.................................................95
9.15 Administrative Agent's Fees......................................96
9.16 Availability of Funds............................................96
9.17 Calculations.....................................................97
9.18 Beneficiaries....................................................97
10. MISCELLANEOUS............................................................97
10.1 Modifications, Amendments or Waivers.............................97
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10.1.1 Increase of Revolving Credit Commitments; Extension
of Expiration Date; Modification of Terms of
Payment.................................................98
10.1.2 Increase of Term Loan Commitments; Extension of Term
Loan Expiration Date; Modification of Terms of
Payment.................................................98
10.1.3 Release of Guarantor.....................................98
10.1.4 Miscellaneous............................................98
10.2 No Implied Waivers; Cumulative Remedies; Writing Required........99
10.3 Reimbursement and Indemnification of Lenders by the
Borrower; Taxes..................................................99
10.4 Holidays........................................................100
10.5 Funding by Branch, Subsidiary or Affiliate......................100
10.5.1 Notional Funding........................................100
10.5.2 Actual Funding..........................................101
10.6 Notices.........................................................101
10.7 Severability....................................................101
10.8 Governing Law...................................................102
10.9 Prior Understanding.............................................102
10.10 Duration; Survival..............................................102
10.11 Successors and Assigns..........................................102
10.11.1 Binding Effect; Assignments by Borrower................102
10.11.2 Assignments and Participations by Banks Other Than
Assignments of Bid Loans Among Designating Banks
and Designated Lenders................................103
10.11.3 Assignments of Bid Loans Among Designating Banks
and Designated Lenders................................104
10.11.4 Foreign Assignees and Participants.....................105
10.11.5 Assignments by Lenders to Federal Reserve Banks........105
10.12 Confidentiality.................................................106
10.12.1 General................................................106
10.12.2 Sharing Information With Affiliates of the Lenders.....106
10.13 Counterparts....................................................106
10.14 Agent's or Lender's Consent.....................................106
10.15 Exceptions......................................................107
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL..........................107
10.17 Tax Withholding Clause..........................................107
10.18 Joinder of Guarantors...........................................108
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 5.1.2 - CERTAIN INFORMATION REGARDING CAPITALIZATION OF
BORROWER AND ITS SUBSIDIARIES
SCHEDULE 5.1.11 - CONSENTS AND APPROVALS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(B) - BID NOTE
EXHIBIT 1.1(D) - DESIGNATION AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(2) - CONTINUING GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1(S) - SWING LOAN NOTE
EXHIBIT 1.1(T) - TERM NOTE
EXHIBIT 2.4.1 - COMMITTED LOAN REQUEST
EXHIBIT 2.4.2 - SWING LOAN REQUEST
EXHIBIT 2.9.1 - BID LOAN REQUEST
EXHIBIT 4.4.4 - COMMITMENT REDUCTION NOTICE
EXHIBIT 6.1.4 - OPINION OF COUNSEL
EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
- vii -
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of June 1, 1998, and is made by and
among ARCH COAL, INC., a Delaware corporation (the "Borrower"), the LENDERS (as
hereinafter defined), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, in its capacity
as syndication agent, FIRST UNION NATIONAL BANK, in its capacity as
documentation agent, and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
administrative agent for the Banks under this Agreement.
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$600,000,000 and a $300,000,000 term loan facility;
WHEREAS, the revolving credit and term loan facilities shall be used to
finance the Acquisition Transactions (as hereinafter defined), to refinance the
Existing Credit Facility and for general corporate purposes; and
WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;
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.
ACC ANNUAL STATEMENTS shall have the meaning assigned to such
term in Section 5.1.7(i).
ACC BALANCE SHEET shall mean the audited, consolidated balance
sheet of ACC as of December 31, 1997.
ACC GROUP shall mean collectively, ARCO and each Affiliate of
ARCO party to any Acquisition Document.
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.
ACQUISITION TRANSACTIONS shall mean transactions contemplated
by the Purchase Agreement.
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, the
Documentation Agent and the Syndication Agent, and Agent shall mean any one of
the Agents, individually.
AGREEMENT shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and exhibits.
ANNUAL STATEMENTS shall have the meaning assigned to that term
in Section 5.1.7(i).
APPLICABLE FACILITY FEE RATE shall mean the percentage rate
per annum at the indicated level (i) of Leverage Ratio for any period during
which a Debt Rating is not in
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effect as set forth in the pricing grid on SCHEDULE 1.1(A) PART (A) below the
heading "Facility Fee"; or (ii) of Debt Rating for any period a Debt Rating is
in effect as set forth in the pricing grid on SCHEDULE 1.1(A) PART (B) below the
heading "Facility Fee." The Applicable Facility Fee Rate shall be computed in
accordance with the parameters set forth on SCHEDULE 1.1(A). Notwithstanding the
foregoing, it is expressly agreed that through and including the Initial
Delivery Date, the Applicable Facility 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 IV of PART (A) of SCHEDULE
1.1(A). For periods after the Initial Delivery Date until such time as the
Borrower's senior unsecured long-term debt, on a consolidated basis, has been
rated Investment Grade, the Applicable Facility Fee Rate shall be the amount
determined under Part (A) of SCHEDULE 1.1(A) (based upon the Leverage Ratio),
and for any period thereafter when a Debt Rating is in effect the Applicable
Facility Fee Rate shall be the amount determined under Part (B) of SCHEDULE
1.1(A).
APPLICABLE LETTER OF CREDIT FEE RATE shall mean the rate per
annum at the indicated level (i) of Leverage Ratio for any period during which a
Debt Rating is not in effect as set forth in the pricing grid on SCHEDULE 1.1(A)
PART (A) below the heading "Letter of Credit Fee," or (ii) of Debt Rating, for
any period a Debt Rating is in effect as set forth in the pricing grid on
SCHEDULE 1.1(A) PART (B) 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). Notwithstanding the foregoing, it is
expressly agreed that through and including the Initial Delivery 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 IV of PART (A) of SCHEDULE 1.1(A).
For periods after the Initial Delivery Date until such time as the Borrower's
senior unsecured long-term debt, on a consolidated basis, has been rated
Investment Grade, the Applicable Letter of Credit Fee Rate shall be the amount
determined under PART (A) of SCHEDULE 1.1(A) (based upon the Leverage Ratio),
and for any period thereafter when a Debt Rating is in effect, the Applicable
Letter of Credit Fee Rate shall be the amount determined under PART (B) of
SCHEDULE 1.1(A).
APPLICABLE MARGIN shall mean, as applicable:
(A) the percentage spread to be added to Euro-Rate under the
Revolving Credit Euro-Rate Option at the indicated level of Leverage Ratio for
any period during which a Debt Rating is not in effect as set forth in the
pricing grid on SCHEDULE 1.1(A) PART (A) below the heading "Revolving Credit
Euro-Rate Spread,"
(B) the percentage spread to be added to Euro-Rate under the
Revolving Credit Euro-Rate Option at the indicated level of Debt Rating for any
period during which a Debt Rating is in effect as set forth in the pricing grid
on SCHEDULE 1.1(A) PART (B) below the heading "Revolving Credit Euro-Rate
Spread,"
(C) the percentage spread to be added to Euro-Rate under the
Term Loan Euro-Rate Option at the indicated level of Leverage Ratio for any
period during which a
- 3 -
Debt Rating is not in effect as set forth in the pricing grid on SCHEDULE 1.1(A)
PART (A) below the heading "Term Loan Euro-Rate Spread," or
(D) the percentage spread to be added to Euro-Rate under the
Term Loan Euro-Rate Option at the indicated level of Debt Rating for any period
during which a Debt Rating is in effect as set forth in the pricing grid on
SCHEDULE 1.1(A) PART (B) below the heading "Term Loan Euro-Rate Spread."
The Applicable Margin shall be computed in accordance with the parameters set
forth on SCHEDULE 1.1(A). Notwithstanding the foregoing, it is expressly agreed
that following the Closing Date through and including the Initial Delivery 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 IV of PART (A) of SCHEDULE 1.1(A). For periods after the Initial Delivery
Date, until such time as the Borrower's senior unsecured long-term debt, on a
consolidated basis, has been rated Investment Grade, the Applicable Margin shall
be the amount determined under clause (A) or clause (C) above, and for any
period thereafter when a Debt Rating is in effect the Applicable Margin shall be
the amount determined under clause (B) or clause (D) 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).
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, Morgan as
syndication agent and NationsBank N.A. as documentation agent, providing for a
$675,000,000 term loan facility to Arch Western, as the same may be amended,
restated, modified or supplemented from time to time after the date hereof.
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,
- 4 -
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.
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 $500,000,000, 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 80% 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, 1998 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 either the Revolving Credit Base
Rate Option or the Term Loan Base Rate Option.
- 5 -
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.
BID shall have the meaning assigned to such term in Section
2.9.2.
BID LOAN BORROWING DATE shall mean, with respect to any Bid
Loan, the date for the making thereof which shall be a Business Day.
BID LOAN EURO-RATE RATE OPTION shall mean the option of the
Borrower to request that the Banks submit Bids to make Bid Loans bearing
interest at a rate per annum quoted by such Banks at the Euro-Rate in effect two
Business Days before the Borrowing Date of such Bid Loan plus a Euro-Rate Bid
Loan Spread.
BID LOAN FIXED RATE OPTION shall mean the option of the
Borrower to request that the Banks submit Bids to make Bid Loans bearing
interest at a fixed rate per annum quoted by such Banks as a numerical
percentage (and not as a spread over another rate such as the Euro-Rate).
BID LOAN INTEREST PERIOD shall have the meaning assigned to
such term in Section 2.9.1.
BID LOAN LENDERS shall have the meaning assigned to such term
in Section 8.3.
BID LOAN PROCESSING FEE shall have the meaning assigned to
such term in Section 9.15.
BID LOAN REQUEST shall have the meaning assigned to such term
in Section 2.9.1.
BID LOANS shall mean collectively and Bid Loan shall mean
separately all of the Bid Loans or any Bid Loan made by any of the Lenders to
the Borrower pursuant to Section 2.9.
BID NOTES shall mean collectively and Bid Note shall mean
separately all of the Bid Notes of the Borrower in the form of EXHIBIT 1.1(B)
evidencing the Bid Loans, together with all amendments, extensions, renewals,
replacements, refinancings or refunds thereof in whole or in part.
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.
- 6 -
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 either a Euro-Rate Option or a
Bid Loan Fixed Rate Option applies which become subject to the same Interest
Rate Option under the same 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,.
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.
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 Term Loan Commitment and, in the case of PNC
Bank, its Swing Loan Commitment, and Commitments shall mean the aggregate of the
Revolving Credit Commitments, Term Loan Commitments and Swing Loan Commitment of
all of the Banks.
- 7 -
COMMITMENT REDUCTION NOTICE shall have the meaning set forth
in Section 4.4.4.
COMMITTED LOAN shall mean either a Revolving Credit Loan, a
Swing Loan or a Term Loan.
COMMITTED LOAN INTEREST PERIOD shall have the meaning set
forth in Section 3.2.
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 or Term Loan in accordance with Sections 2.4, 3.1 and 3.2.
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 March 31, 1998.
CONTRIBUTION AGREEMENT shall mean that certain Contribution
Agreement among the Borrower, AWAC, ARCO, Delta Housing, Inc., a Delaware
corporation, and Arch Western.
DEBT shall mean for any Person as of any date of determination
the aggregate 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 but excluding obligations
under any interest rate swap, cap, collar or floor agreement or other interest
rate management device), (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 $10,000,000 and other than contingent
reimbursement obligations in respect of the letter of credit issued to support
the Port Bond) and (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 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). It is expressly
agreed that the amount of the indebtedness in respect of
- 8 -
the Guaranty by the Borrower of the Port Bond, shall be excluded from the amount
determined under clause (v) 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 Accounting
Principles Board Opinion No. 16 (as in effect on the Closing Date) will be
excluded from indebtedness in the determination of Debt.
DEBT RATING shall mean the rating of the Borrower's senior
unsecured long-term debt by either of Standard & Poor's or Moody's.
DELIVERY DATE shall mean the earlier of (i) the date on which
the Borrower delivers its consolidated financial statements pursuant to Sections
7.3.1 and 7.3.2, together with the duly executed compliance certificate required
by Section 7.3.3 or (ii) one Business Day following the date on which such
financial statements are due to be delivered pursuant to such Sections.
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.
DESIGNATED LENDER shall mean any Person who has been
designated by a Bank to fund Bid Loans and has executed a Designation Agreement
and thereby becomes a party to this Agreement pursuant to Section 10.11.3.1.
DESIGNATING BANK shall have the meaning assigned to such term
in Section 10.11.3.1.
DESIGNATION AGREEMENT shall mean a designation agreement
entered into by a Bank and a Designated Lender and accepted by the
Administrative Agent, in substantially the form of EXHIBIT 1.1(D).
DOCUMENTATION AGENT shall mean First Union National 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 2.10.3.2.
EBITDDA for any period of determination shall mean with
respect to any Person the sum of income from operations before the effect of
changes in accounting principles, nonrecurring charges and extraordinary items,
net interest expense, income taxes, depreciation,
- 9 -
depletion and amortization for such period determined in accordance with GAAP.
For purposes of calculating the Fixed Charge Coverage Ratio and the Leverage
Ratio: (i) EBITDDA of Arch Western and its Subsidiaries, including the
Appropriate Percentage of EBITDDA of Canyon Fuel, shall be assumed to be
$39,200,000 for the fiscal quarter ended March 31, 1998, and (ii) EBITDDA for
Arch Western and its Subsidiaries, including the Appropriate Percentage of
EBITDDA of Canyon Fuel for the months of April and May, 1998, shall be
determined based upon the results from the operations of the business of such
Persons for such months by ARCO as set forth in an income statement with respect
to such months prepared by ARCO and reasonably acceptable to the Agents, shall
take into account the $1,000,000 per month reduction in overhead resulting from
the consummation of the Acquisition, shall assume that operating lease expense
of Arch Western and its Subsidiaries, including Canyon Fuel, shall be $970,000
per month and shall assume that interest expense for such Persons for such
months shall be zero, with such calculation of EBITDDA for Arch Western and its
Subsidiaries for such months to be reasonably acceptable to the Agents. Further,
for purposes of calculating the Fixed Charge Coverage Ratio and the Leverage
Ratio for the fiscal quarters ended June 30, 1998, and September 30, 1998,
EBITDDA of Arch Western and its Subsidiaries, including the Appropriate
Percentage of EBITDDA of Canyon Fuel, shall be deemed to be an amount equal to:
(i) for the fiscal quarter ended June 30, 1998, the product of, (x) without
duplication, EBITDDA of Arch Western and its Subsidiaries for the two fiscal
quarters then ended determined on a consolidated basis in accordance with GAAP,
plus the Appropriate Percentage of EBITDDA of Canyon Fuel, for the two fiscal
quarters then ended, determined on a consolidated basis in accordance with GAAP,
multiplied by (y) two (2); and (ii) for the fiscal quarter ended September 30,
1998, the product of, (x) without duplication, EBITDDA of Arch Western and its
Subsidiaries for the three fiscal quarters then ended determined on a
consolidated basis in accordance with GAAP, plus the Appropriate Percentage of
EBITDDA of Canyon Fuel for the three fiscal quarters then ended determined on a
consolidated basis in accordance with GAAP, multiplied by (y) four-thirds (4/3).
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 or Hazardous Substances or arising from alleged injury or
threat of injury to the environment.
ENVIRONMENTAL LAW shall mean any federal, state, local or
foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree
or judicial or agency interpretation, policy or guidance relating to the
environment or any release or disposal of or contamination by Hazardous
Substances.
ENVIRONMENTAL PERMIT shall mean any permit, approval, license
or other authorization required under any Environmental Law.
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.
- 10 -
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 BID LOAN shall mean any Bid Loan that bears interest
under the Bid Loan Euro-Rate Option.
EURO-RATE BID LOAN SPREAD shall mean the spread quoted by a
Bank in its Bid to apply to such Bank's Bid Loan if such Bank's Bid is accepted.
The Euro-Rate Bid Loan Spread shall be quoted as a percentage rate per annum and
expressed in multiples of 1/1000 of one percentage point to be either added to
(if it is positive) or subtracted from (if it is negative) the Euro-Rate in
effect two (2) Business Days before the Borrowing Date with respect to such Bid
Loan. Interest on Euro-Rate Bid Loans shall be computed based on a year of 360
days and actual days elapsed.
EURO-RATE INTEREST PERIOD shall mean the Interest Period
applicable to a Loan subject to the Euro-Rate Option.
- 11 -
EURO-RATE OPTION shall mean either the Revolving Credit
Euro-Rate Option, the Bid Loan Euro-Rate Option or the Term Loan 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 and referred to therein as an "Event of Default."
EXCLUDED SUBSIDIARIES shall mean, collectively, AWAC, Arch
Western and the Subsidiaries of Arch Western.
EXISTING CREDIT FACILITY shall mean collectively all interest,
principal, fees and other amounts due and owing by the Borrower and its
Significant Subsidiaries under that certain Credit Agreement by and among the
Borrower, certain of its Subsidiaries, Morgan Guaranty Trust Company of New York
as Documentation and Syndication Agent and PNC Bank, National Association, as
Administrative and Syndication Agent, dated July 1, 1997, as amended, providing
for a $500,000,000 credit facility.
EXPIRATION DATE shall mean, with respect to the Revolving
Credit Commitments and Swing Loan Commitment, and as applicable to the Bid
Loans, May 31, 2003.
FACILITY FEE shall mean the fee referred to in Section 2.3.
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, without duplication, of EBITDDA of the Borrower and its Subsidiaries, plus
the Appropriate Percentage of each Special Subsidiary's EBITDDA, each on a
consolidated basis in accordance with GAAP,
- 12 -
plus operating lease expense of the Borrower and its Subsidiaries, plus 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 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 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. It
is assumed that operating lease expense of Arch Western and its Subsidiaries,
including Canyon Fuel, shall be $970,000 per month for the months of April and
May, 1998 and that interest expense for such Persons for such months shall be
zero. For purposes of calculating the Fixed Charge Coverage Ratio for the fiscal
quarters ended June 30, 1998, September 30, 1998 and December 31, 1998,
operating lease expense of Arch Western and its Subsidiaries, including the
Appropriate Percentage of operating lease expense of Canyon Fuel, shall be
deemed to be an amount equal to: (i) for the fiscal quarter ended June 30, 1998,
the product of, (x) without duplication, operating lease expense of Arch Western
and its Subsidiaries for such fiscal quarter determined and consolidated in
accordance with GAAP, plus the Appropriate Percentage of operating lease expense
of Canyon Fuel for such fiscal quarter determined in accordance with GAAP,
multiplied by (y) four (4); (ii) for the fiscal quarter ended September 30,
1998, the product of, (x) without duplication, operating lease expense of Arch
Western and its Subsidiaries for the two fiscal quarters then ended determined
and consolidated in accordance with GAAP, plus the Appropriate Percentage of
operating lease expense of Canyon Fuel for the two fiscal quarters then ended
determined in accordance with GAAP, multiplied by (y) two (2); and (iii) for the
fiscal quarter ended December 31, 1998, the product of, (x) without duplication,
operating lease expense of Arch Western and its Subsidiaries for the three
fiscal quarters then ended determined and consolidated in accordance with GAAP,
plus the Appropriate Percentage of operating lease expense of Canyon Fuel for
the three fiscal quarters then ended determined in accordance with GAAP,
multiplied by (y) four-thirds (4/3). For purposes of calculating the Fixed
Charge Coverage Ratio for the fiscal quarters ended June 30, 1998, September 30,
1998 and December 31, 1998, interest expense of Arch Western and its
Subsidiaries, including the Appropriate Percentage of interest expense of Canyon
Fuel, shall be deemed to be an amount equal to: (i) for the fiscal quarter ended
June 30, 1998, the product of, (x) without duplication, interest expense of Arch
Western and its Subsidiaries for such fiscal quarter determined and consolidated
in accordance with GAAP, plus the Appropriate Percentage of interest expense of
Canyon Fuel for such fiscal quarter determined in accordance with GAAP,
multiplied by (y) four (4); (ii) for the fiscal quarter ended September 30,
1998, the product of, (x) without duplication, interest expense of Arch Western
and its Subsidiaries for the two fiscal quarters then ended determined and
consolidated in accordance with GAAP, plus the Appropriate Percentage of
interest expense of Canyon Fuel for the two fiscal quarters then ended
determined in accordance with GAAP, multiplied by (y) two (2); and (iii) for the
fiscal quarter ended December 31, 1998, the product of, (x) without duplication,
interest expense of Arch Western and its Subsidiaries for the three fiscal
quarters then ended determined and consolidated in accordance with GAAP, plus
the Appropriate Percentage of interest expense of Canyon Fuel for
- 13 -
the three fiscal quarters then ended determined in accordance with GAAP,
multiplied by (y) four-thirds (4/3).
FIXED RATE shall mean a fixed interest rate quoted by a Bank
in its Bid to apply to such Bank's Bid Loan over the term of such Bid Loan if
such Bank's Bid is accepted.
FIXED RATE BID LOAN shall mean a Bid Loan that bears interest
under the Bid Loan Fixed Rate Option.
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 2.10.8.
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 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 Banks.
HAZARDOUS SUBSTANCES shall mean petroleum and petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials, radon gas and any hazardous or solid waste,
hazardous substance or chemical substance, as such terms are defined under the
Resource Conservation and Recovery Act (42 U.S.C. Sections 4901 et seq.), the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Sections 9601 et seq.), the Toxic Substances Control Act (15 U.S.C. Sections
2601 et seq.) or any similar state law.
HISTORICAL STATEMENTS shall have the meaning assigned to that
term in Section 5.1.7(i).
- 14 -
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.
INELIGIBLE SECURITY shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
INITIAL ANNUAL STATEMENTS AND COMPLIANCE CERTIFICATE shall
mean collectively with respect to the fiscal year of the Borrower ended December
31, 1998, the annual financial statements of the Borrower and its Subsidiaries
consisting of the unaudited 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, together with the duly executed related
compliance certificate required to be delivered to the Administrative Agent and
the Banks pursuant to Section 7.3.3. It is acknowledged and agreed that the
Initial Annual Statements and Compliance Certificate are to be delivered by the
Borrower for purposes of calculating the Leverage Ratio as of December 31, 1998
in order to determine the Applicable Margin, the Applicable Facility Fee Rate
and the Applicable Letter of Credit Fee Ratio. Notwithstanding the delivery of
the Initial Annual Statements and Compliance Certificate, the Borrower shall
still be required to comply with the provisions of Section 7.3.2 and deliver the
audited financial statements required thereby, together with the related
Compliance Certificate required to be delivered under Section 7.3.3.
INITIAL DELIVERY DATE shall mean the date the Borrower
delivers to the Administrative Agent and the Banks the Initial Annual Statements
and Compliance Certificate.
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.
- 15 -
INTEREST PERIOD shall mean either a Committed Loan Interest
Period or a Bid Loan Interest Period.
INTEREST RATE OPTION shall mean any Revolving Credit Euro-Rate
Option, Term Loan Euro-Rate Option, Bid Loan Euro-Rate Option, Bid Loan Fixed
Rate Option, Term Loan Base Rate Option, Revolving Credit Base Rate Option or
Offered Rate Option.
INTERIM STATEMENTS shall have the meaning assigned to that
term in Section 5.1.7(i).
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.
INVESTMENT GRADE shall mean the rating of the Borrower's
senior unsecured long-term debt, on a consolidated basis, of BBB- or better by
Standard & Poor's AND Baa3 or better by Moody's.
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.
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 or award of any Official Body.
LENDER shall mean each of the Banks and each of the Designated
Lenders.
- 16 -
LETTER OF CREDIT shall have the meaning assigned to that term
in Section 2.10.1.
LETTER OF CREDIT FEE shall have the meaning assigned to that
term in Section 2.10.2.
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.
LEVERAGE RATIO shall mean the ratio of the sum of, without
duplication, Debt of the Borrower and its Subsidiaries, plus 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 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, 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 or amended 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.
LOAN REQUEST shall mean either a Bid Loan Request or a
Committed Loan Request.
- 17 -
LOANS shall mean collectively and Loan shall mean separately
all Revolving Credit Loans, Term Loans, Swing Loans and Bid Loans or any
Revolving Credit Loan, Term Loan, Swing Loan or Bid Loan.
MANDATORY PREPAYMENT shall have the meaning assigned to such
term in Section 4.4.5.
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: (i) the
Acquisition Documents, (ii) all other 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, and (iii)
all coal supply agreements or contracts (or related coal supply agreements or
contracts) under which the Borrower or any Subsidiary of the Borrower is
required, over the remaining term of such agreement or contract as of the
Closing Date, to deliver one million (1,000,000) tons or more of coal.
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.
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 Morgan Guaranty Trust Company of New York.
MOUNTAIN COAL LLC AGREEMENT shall mean that certain Limited
Liability Company Agreement, dated as of March 6, 1998, as amended, of Mountain
Coal Company,
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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(v), 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 the Term Loans in accordance with Section 4.4.6.
NOTES shall mean the Revolving Credit Notes, Term Notes, Swing
Loan Notes and Bid Notes, if any.
NOTICES shall have the meaning assigned to that term in
Section 10.6.
OBLIGATION shall mean any obligation 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.
OFFERED AMOUNT shall have the meaning assigned to such term in
Section 2.9.2.
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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.
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.
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 not
lower than A-1 by Standard & Poor's or P-1 by 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.
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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 on property leased by any Loan Party or Subsidiary
of a Loan Party under capital or operating leases (in either case, as the nature
of such lease is determined in accordance with GAAP) securing obligations of
such Loan Party or Subsidiary to the lessor under such leases;
(vii) 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
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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;
(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: and
(xii) 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.
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 under this Agreement and under the Arch Western
Credit Facility which are required to be capitalized in accordance with GAAP.
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.
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.
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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.
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 any substance, the generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport, recycling, reclamation, use, reuse, spilling, leaking, dumping,
injection, pumping, leaching, emptying, discharge, escape, release or other
management or mismanagement of which is regulated by the Environmental Laws.
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 2.10.3.2.
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.
REQUESTED AMOUNT shall have the meaning assigned to such term
in Section 2.9.1.
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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 at least 51% 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 Term Loans then outstanding and Revolving Credit Commitments of such
Banks aggregates at least 51% of the sum of the total principal amount of all of
the Term Loans then outstanding plus 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 at least 51% 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.
REVOLVING CREDIT 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).
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 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).
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 2.10.3. A Bid Loan is not a Revolving Credit Loan, except that it
will be treated as a Revolving Credit Loan following a termination of the
Commitments hereunder pursuant to Section 8.2.1 or 8.2.2 as provided in Section
8.3.
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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, together with all amendments, extensions, renewals, replacements,
refinancings or refundings thereof 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 Bid 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.
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) 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.
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.
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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.
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 for purposes of calculating
the Leverage Ratio, the Fixed Charge Coverage Ratio and inclusion in Section
7.2.9 [OFF-BALANCE SHEET FINANCING], 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 $50,000,000.
SWING LOAN NOTE shall mean the Swing Loan Note of the Borrower
in the form of EXHIBIT 1.1(S) evidencing the Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
SWING LOAN REQUEST shall mean a request for Swing Loans made
in accordance with Section 2.4.2 hereof.
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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 Morgan in its capacity as
syndication agent for the Banks under this Agreement and its successors in such
capacity.
SYNDICATION DATE shall mean the earlier of (i) a date after
the Closing Date which is selected by the Arrangers and notice of which is given
by the Arrangers to the Borrower at least five (5) Business Days prior thereto
and (ii) the 90th day following the Closing Date.
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.
TERM LOAN shall have the meaning given to such term in Section
2.12; Term Loans shall mean collectively all of the Term Loans.
TERM LOAN 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(b)(i). TERM LOAN 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 Term Loans," and
thereafter on Schedule I to the most recent Assignment and Assumption Agreement
executed by such Bank, and Term Loan Commitments shall mean the aggregate Term
Loan Commitments of all of the Banks.
TERM LOAN EURO-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(b)(ii).
TERM LOAN EXPIRATION DATE shall mean, with respect to the Term
Loan Commitments, May 31, 2003.
TERM LOAN RATABLE SHARE shall mean the proportion that a
Bank's Term Loan Commitment bears to the Term Loan Commitments of all of the
Banks.
TERM NOTES shall mean collectively and Term Note shall mean
separately all of the Term Notes of the Borrower in the form of EXHIBIT 1.1(T)
issued by the Borrower at the request of a Bank pursuant to Section 2.14
evidencing the Term Loans, together with all
- 27 -
amendments, extensions, renewals, replacements, refinancings or refunds thereof
in whole or in part.
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.
U.S. shall mean the United States of America.
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;
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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 date hereof applied on a basis
consistent with those used in preparing the Annual Statements referred to in
- 29 -
Section 5.1.7(i) [Historical Statements]. In the event of any change after the
date hereof 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. Nothing in this Section 1.3 will require the
Borrower or any of its Subsidiaries to continue accounting methods used by ACC
in preparing the ACC Annual Statements.
2. REVOLVING CREDIT, SWING LOAN AND TERM 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 (subject to
Section 2.9.1 with respect to taking into account outstanding Bid Loans) 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 $50,000,000 (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. Subject to Section 2.9.1 with respect
to taking into account outstanding Bid Loans, 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
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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 REVOLVING CREDIT FACILITY 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 facility fee (the "Facility Fee") equal to the Applicable Facility
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 amount of such Bank's Revolving Credit
Commitment as the same may be constituted from time to time. All Facility 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 or 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 Closing Date or 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 or Term Loans; and (ii) one (1) Business Day prior to either the proposed
Borrowing Date with respect to the making of the Term Loans on the Closing Date
or the making of a Revolving Credit Loan to which the Base Rate Option applies
or the last day of the preceding Committed Loan Interest Period with respect to
the conversion to the Base Rate Option for any Revolving Credit Loan or Term
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 and Term 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 Revolving Credit Euro-Rate
Option or Term Loan Euro-Rate Option, as the case may be, 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 Revolving Credit Euro-Rate Option or Revolving
Credit Base Rate Option shall apply to the proposed Revolving Credit Loans
comprising an applicable Borrowing Tranche; and
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(iv) in the case of a Borrowing Tranche to which the applicable Euro-Rate Option
applies, an appropriate Committed Loan 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
Loan Request pursuant to Section 2.4.1 [Committed Loan Requests], notify the
Banks of its receipt of such 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.
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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.
The proceeds of the Loans shall be used to finance the Acquisition
Transactions, to refinance the Existing Credit Facility, 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 BID LOAN FACILITY.
2.9.1 BID LOAN REQUESTS.
Except as otherwise provided herein, beginning on the date
that the Borrower's senior unsecured long-term debt, on a consolidated basis,
has been rated Investment Grade and during any period thereafter when the
Borrower's senior unsecured long-term debt, on a consolidated basis, is rated
BBB- or better by Standard & Poor's or Baa3 or better by Moody's,
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the Borrower may from time to time prior to the Expiration Date request that the
Banks make Bid Loans by delivery to the Administrative Agent not later than
10:00 a.m., Pittsburgh time, of a duly completed request therefor substantially
in the form of EXHIBIT 2.9.1 hereto or a request by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a "Bid Loan Request")
at least one (1) Business Day prior to the proposed Bid Loan Borrowing Date if
Borrower is requesting Fixed Rate Bid Loans and four (4) Business Days prior to
the proposed Bid Loan Borrowing Date if Borrower is requesting Euro-Rate Bid
Loans. The Administrative Agent may rely on the authority of any individual
making a telephonic request referred to in the preceding sentence without the
necessity of receipt of written confirmation. Each Bid Loan Request shall be
irrevocable and shall specify (i) the proposed Bid Loan Borrowing Date, (ii)
whether Borrower is electing the Bid Loan Fixed Rate Option or the Bid Loan
Euro-Rate Option, (iii) the term of the proposed Bid Loan (the "Bid Loan
Interest Period"), which may be no less than 7 days and no longer than 270 days
if Borrower is requesting a Fixed Rate Bid Loan and one, two, three or six
Months if Borrower is requesting a Euro-Rate Bid Loan, and (iv) the maximum
principal amount (the "Requested Amount") of such Bid Loan (provided that a Bid
Loan Interest Period shall in no event expire later than one (1) Business Days
prior to the Expiration Date), which shall be not less than $10,000,000 and
shall be an integral multiple of $5,000,000. After giving effect to such Bid
Loan and any other Loan made on or before the Bid Loan Borrowing Date, the
aggregate amount of all Revolving Credit Loans, Swing Loans and Bid Loans
outstanding plus the Letters of Credit Outstanding shall not exceed the
aggregate amount of the Revolving Credit Commitments of the Banks. There shall
be at least one Business Day between each Bid Loan Borrowing Date. There shall
be no requests for Bid Loans nor any Bid Loans made until the Business Day
following the Syndication Date.
2.9.2 BIDDING.
The Administrative Agent shall promptly after receipt by it of
a Bid Loan Request pursuant to Section 2.9.1 notify the Banks of its receipt of
such Bid Loan Request specifying (i) the proposed Bid Loan Borrowing Date, (ii)
whether the proposed Bid Loan shall be a Fixed Rate Bid Loan or a Euro-Rate Bid
Loan, (iii) the Bid Loan Interest Period and (iv) the principal amount of the
proposed Bid Loan. Each Bank may submit a bid (a "Bid") to the Administrative
Agent not later than 10:00 a.m., Pittsburgh time, on the proposed Bid Loan
Borrowing Date if Borrower is requesting a Fixed Rate Bid Loan or three (3)
Business Days before the proposed Bid Loan Borrowing Date if Borrower is
requesting a Euro-Rate Bid Loan by telephone (immediately confirmed in writing
by letter, facsimile or telex). Each Bid shall specify: (A) the principal amount
of proposed Bid Loans offered by such Bank (the "Offered Amount") (such Bid
Loans may be funded by such Bank's Designated Lender as provided in Section
2.9.4; however, such Bank shall not be required to specify in its Bid whether
such Bid Loans will be funded by such Designated Lender) which (i) may be less
than, but shall not exceed, the Requested Amount, (ii) shall be at least
$10,000,000 and shall be an integral multiple of $5,000,000 and (iii) may exceed
such Bank's Revolving Credit Commitment, and (B) the Fixed Rate which shall
apply to such proposed Bid Loan if Borrower has requested a Fixed Rate Bid Loan
or the Euro-Rate Bid Loan Spread which shall apply to such proposed Bid Loan if
Borrower has requested a Euro-Rate Bid Loan. If any Bid omits information
required hereunder, the Administrative Agent may in its sole discretion attempt
to notify the Bank submitting such
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Bid. If the Administrative Agent so notifies a Bank, such Bank may resubmit its
Bid provided that it does so prior to time set forth in this Section 2.9.2 above
by which such Bank is required to submit its Bid to the Administrative Agent.
The Administrative Agent shall promptly notify the Borrower of the Bids which it
timely received from the Banks. If the Administrative Agent in its capacity as a
Bank shall, in its sole discretion, make a Bid, it shall notify the Borrower of
such Bid before 9:00 a.m., Pittsburgh time, on the proposed Bid Loan Borrowing
Date if Borrower is requesting a Fixed Rate Bid Loan and three (3) Business Days
before the proposed Borrowing Date if Borrower is requesting a Euro-Rate Bid
Loan.
2.9.3 ACCEPTING BIDS.
The Borrower shall irrevocably accept or reject Bids by
notifying the Administrative Agent of such acceptance or rejection by telephone
(immediately confirmed in writing by letter, facsimile or telex) not later than
11:00 a.m., Pittsburgh time, on the proposed Bid Loan Borrowing Date if Borrower
is requesting a Fixed Rate Bid Loan and three (3) Business Days before the
proposed Borrowing Date if Borrower is requesting a Euro-Rate Bid Loan. If the
Borrower elects to accept any Bids, its acceptance must meet the following
conditions: (1) the total amount which Borrower accepts from all Banks must not
be less than $10,000,000 and be in integral multiples of $5,000,000 and may not
exceed the aggregate Requested Amount; (2) the Borrower must accept Bids based
solely on the amount of the Fixed Rates or Euro-Rate Bid Loan Spreads, as the
case may be, which each of the Banks quoted in their Bids in ascending order of
the amount of Fixed Rates or Euro-Rate Bid Loan Spreads; (3) the Borrower may
not borrow Bid Loans from any Bank (or such Bank's Designated Lender) on the Bid
Loan Borrowing Date in an amount exceeding such Bank's Offered Amount; (4) if
two or more Lenders make Bids at the same Fixed Rate (if Borrower Requested a
Fixed Rate Bid Loan) or Euro-Rate Bid Loan Spread (if Borrower Requested a
Euro-Rate Bid Loan) and the Borrower desires to accept a portion but not all of
the Bids at such Fixed Rate or Euro-Rate Bid Loan Spread, as the case may be,
the Borrower shall accept a portion of each Bid equal to the product of the
Offered Amount of such Bid times the fraction obtained by dividing the total
amount of Bids which Borrower is accepting at such Fixed Rate or Euro-Rate Bid
Loan Spread, as the case may be, by the sum of the Offered Amounts of the Bids
at such Fixed Rate or Euro-Rate Bid Loan Spread, PROVIDED that the Borrower
shall round the Bid Loans allocated to each such Lender upward or downward as
the Borrower may select to integral multiples of $5,000,000. The Administrative
Agent shall (i) promptly notify a Bank that has made a Bid of the amount of its
Bid that was accepted or rejected by the Borrower and (ii) as promptly as
practical notify all of the Banks which submitted Bids of all Bids submitted and
those which have been accepted.
2.9.4 FUNDING BID LOANS.
Each Bank whose Bid or portion thereof is accepted shall, or
at its option shall cause its Designated Lender to, remit the principal amount
of its Bid Loan to the Administrative Agent by 12:00 noon, Pittsburgh time, on
the Borrowing Date. The Administrative Agent shall make such funds available to
the Borrower on or before 1:00 p.m., Pittsburgh time, on the Borrowing Date
PROVIDED that the conditions precedent to the making of
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such Bid Loan set forth in Section 6.2 [Each Additional Loan or Letter of
Credit] have been satisfied not later than 10:00 a.m., Pittsburgh time, on the
proposed Borrowing Date. If such conditions precedent have not been satisfied
prior to such time, then (i) the Administrative Agent shall not make such funds
available to the Borrower, (ii) the Bid Loan Request shall be deemed to be
canceled, and (iii) the Administrative Agent shall return the amount previously
funded to the Administrative Agent by each applicable Lender no later than the
next following Business Day. The Borrower shall immediately notify the
Administrative Agent of any failure to satisfy the conditions precedent to the
making of Bid Loans under Section 6.2. The Administrative Agent may assume that
Borrower has satisfied such conditions precedent if (i) the Borrower has
delivered to the Administrative Agent the documents required to be delivered
under Section 6.2, (ii) the Borrower has not notified the Administrative Agent
that the Loan Parties have not satisfied any other conditions precedent, and
(iii) the Administrative Agent has no actual notice of such a failure. Any
Designated Lender which funds a Bid Loan shall on and after the time of such
funding become the obligee under such Bid Loan and be entitled to receive
payment thereof when due. A Bank shall be relieved of its obligation to fund a
Bid Loan upon the funding of such Bid Loan by its Designated Lender and not
prior to such time.
2.9.5 SEVERAL OBLIGATIONS.
The obligations of the Banks to make Bid Loans after their
Bids have been accepted are several. No Bank shall be responsible for the
failure of any other Lender to make any Bid Loan which another Lender has agreed
to make.
2.9.6 BID NOTES.
The obligation of the Borrower to repay the aggregate unpaid
principal amount of the Bid Loans made to it by each Bank or its Designated
Lender, as the case may be, together with interest thereon, shall be evidenced
by a Bid Note dated as of the Closing Date payable to the order of such Bank and
a Bid Note dated as of the date of the applicable Designation Agreement in favor
of the Designated Lender named in such Designation Agreement in a face amount
equal to the aggregate Revolving Credit Commitments of all of the Banks.
2.9.7 PAYMENTS AND PREPAYMENTS.
The Borrower shall repay each Bid Loan on the last day of the
Interest Period with respect to such Bid Loan. The Borrower may not voluntarily
prepay the Bid Loans.
2.10 LETTER OF CREDIT SUBFACILITY.
2.10.1 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 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
- 36 -
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 2.10, 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 or
(ii) 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].
2.10.2 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 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), which fee
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.
2.10.3 PARTICIPATIONS IN LETTERS OF CREDIT; DISBURSEMENTS,
REIMBURSEMENT.
2.10.3.1 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 2.10.3.2 by making its Revolving Credit
Ratable Share of the Revolving Credit Loans referred to in Section 2.10.3.3
available to the Administrative Agent for the account of the Issuing Bank. Upon
the
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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.
2.10.3.2 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 Revolving Credit 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 2.10.3.2 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.
2.10.3.3 Each Bank shall upon any notice pursuant to
Section 2.10.3.2 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
Revolving Credit 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 Revolving Credit 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 2.10.3.3.
2.10.4 [INTENTIONALLY OMITTED]
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2.10.5 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.
2.10.6 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.
2.10.7 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 2.10.3 [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
2.10.7 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 2.10.3 [Participations in Letters of Credit;
Disbursements; Reimbursement];
(iii) any lack of validity or enforceability of any
Letter of Credit;
(iv) the existence of any claim, set-off, defense or
other right which any Loan Party or any Bank may have at any time against a
beneficiary or any
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transferee of any Letter of Credit (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) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect 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) 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;
(viii) any breach of this Agreement or any other
Loan Document by any party thereto;
(ix) the occurrence or continuance of an
Insolvency Proceeding with respect to any Loan Party;
(x) the fact that an Event of Default or a
Potential Default shall have occurred and be continuing;
(xi) the fact that the Expiration Date shall have
passed or this Agreement or the Commitments hereunder shall have been
terminated; and
(xii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
2.10.8 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,
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
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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").
2.10.9 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: (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 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.
2.11 [INTENTIONALLY OMITTED].
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2.12 TERM LOAN COMMITMENTS.
Subject to the terms and conditions hereof, and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make a term loan (the "Term Loan") to the Borrower on the Closing Date in such
principal amount as the Borrower shall request up to, but not exceeding such
Bank's Term Loan Commitment.
2.13 NATURE OF BANKS' OBLIGATIONS WITH RESPECT TO TERM LOANS.
The obligations of each Bank to make Term Loans to the Borrower
shall be in the proportion that such Bank's Term Loan Commitment bears to the
Term Loan Commitments of all Banks to the Borrower, but each Bank's Term Loan to
the Borrower shall never exceed its Term Loan Commitment. The failure of any
Bank to make a Term Loan shall not relieve any other Bank of its obligations to
make a Term Loan nor shall it impose any additional liability on any other Bank
hereunder. The Banks shall have no obligation to make Term Loans hereunder after
the Closing Date. The Term Loan Commitments are not revolving credit
commitments, and the Borrower shall not have the right to borrow, repay and
reborrow under Section 2.12 [Term Loan Commitments].
2.14 TERM LOAN NOTES.
The Obligation of the Borrower to repay the unpaid principal amount
of the Term Loans made to it by each Bank, together with interest thereon, shall
be evidenced by a Term Note dated the Closing Date payable to the order of each
Bank in a face amount equal to the Term Loan of such Bank. The principal amount
as provided therein of the Term Notes shall be payable quarterly in arrears in
installments of $15,000,000 each on the first day of each January, April, July
and October after the Closing Date, commencing October 1, 1998 and the entire
outstanding principal amount of the Term Notes shall be due and payable on the
Term Loan Expiration Date.
2.15 USE OF PROCEEDS.
The proceeds of the Term Loans shall be used to finance the
Acquisition Transaction, to refinance the Existing Credit Facility, for general
corporate purposes and in accordance with Section 7.1.9 [Use of Proceeds].
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 and Term Loans as selected by it
from the Base Rate Option, Revolving Credit Euro-Rate Option or Term Loan
Euro-Rate Option set forth below applicable to the Revolving Credit Loans or
Term 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 and Term
Loans
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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 or Term 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 and Term Loans accruing
interest at a Revolving Credit Euro-Rate Option or Term Loan Euro-Rate Option,
and PROVIDED further that only the Offered Rate Option shall apply to the Swing
Loans. The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of each Bid Loan at the rate specified in the related Bid
accepted by the Borrower with respect to which a Bid Loan is made. 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.
(a) 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) REVOLVING CREDIT 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, 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) REVOLVING CREDIT 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.
(b) The Borrower shall have the right to select from the
following Interest Rate Options applicable to the Term Loans:
(i) TERM LOAN 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, 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) TERM LOAN 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, through and including the Initial Delivery 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 IV of PART (A) of SCHEDULE 1.1(A). It is
expressly agreed that after the Initial Delivery Date until such time as the
Borrower's senior unsecured long-term debt, on a consolidated basis, has been
rated Investment Grade, the Applicable Margin shall be determined based upon
PART (A) of
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SCHEDULE 1.1(A), and for any period thereafter when a Debt Rating is in effect
the Applicable Margin shall be the amount determined under PART (B) of 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 or Term
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 Facility Fee Rate is
increased or reduced with respect to any period for which the Borrower has
already paid interest or Facility Fees, the Administrative Agent shall
recalculate the additional interest or Facility 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 Facility 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 Facility Fees shall be paid promptly after
receipt of written request for payment from the Administrative Agent.
3.1.3.2 Any interest or Facility 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 Facility 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
Revolving Credit Euro-Rate Option or Term Loan 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 Loan
Request. The notice shall specify an interest period (the "Committed Loan
Interest Period") during which such Interest Rate Option shall apply, such
Committed Loan Interest Period to be one, two, three or six Months; PROVIDED,
however, that prior to the date which is the Business Day following the
Syndication Date, only such periods as the Administrative Agent and the Borrower
mutually agree, not to exceed a period of one Month, shall be available.
Notwithstanding the preceding sentence, the following provisions shall apply to
any selection of, renewal of, or conversion to a Revolving Credit Euro-Rate
Option or Term Loan Euro-Rate Option:
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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 or Term Loans
to which the Revolving Credit Euro-Rate Option or Term Loan 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 or Bid Loans after the Expiration Date, or in the case of Term
Loans, after the Term Loan Expiration Date; and
3.2.4 RENEWALS.
in the case of the renewal of a Revolving Credit Euro-Rate
Option or Term Loan 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 2.10.2 [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.
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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 or Bid 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.
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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 termination of Borrower's
Bid Loan Request (without penalty) for such Loans if the Borrower has requested
Bid Loans under the Bid Loan Euro-Rate Option and 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 or
Term Loans if the Borrower has requested the Euro-Rate Option with respect to
such Revolving Credit Loans or 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 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 Revolving Credit
Euro-Rate Option or of Term Loans under the Term Loan 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
Revolving Credit Base Rate Option in the case of Revolving Credit Loans or Term
Loan Base Rate Option in the case of Term Loans commencing upon the last day of
the existing Interest Period.
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4. PAYMENTS
4.1 PAYMENTS.
All payments and prepayments to be made in respect of principal,
interest, Facility 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 and Term Loans and for the account of the
lending Lender with respect to the Bid 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."
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 (irrespective of the amount
of Bid Loans outstanding), the Term Loans shall be allocated to each Bank
according to its Term Loan Ratable Share and each selection of, conversion to or
renewal of any Interest Rate Option applicable to Revolving Credit Loans or Term
Loans and each payment or prepayment by the Borrower with respect to principal
or interest on the Revolving Credit Loans or Term Loans or Facility 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 or 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 applicable Revolving Credit Loans or Term Loans outstanding
from each Bank and, if no such Loans are then outstanding, in proportion, as
applicable, to the Revolving Credit Ratable Share or Term Loan Ratable Share, as
the case may be, of each Bank. Each borrowing of a Bid Loan shall be made
according to the provisions in Section 2.9 hereof and each payment or prepayment
by the Borrower of principal, interest, fees or other amounts from the Borrower
with respect to Bid Loans shall be made to the Lenders in proportion to the
amounts of such items due to such Lenders. Notwithstanding any of the foregoing,
each
- 48 -
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 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 and on the Term Loan Expiration Date or upon acceleration of the Loans.
Interest on Committed Loans (other than Swing Loans) and Bid Loans to which the
Euro-Rate Option applies and Bid Loans to which the Bid Loan Fixed 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:
- 49 -
(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, Term 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, not less than $10,000,000 for Term
Loans 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 Revolving Credit 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. All Term Loan prepayments
permitted by this Section 4.4.1 shall be applied to the unpaid installments of
principal of the Term Loans in the inverse order of scheduled maturities. 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 Revolving Credit Base Rate Option applies, then (iii) third to Term
Loans to which the Term Loan Base Rate Option applies, then (iv) fourth to
Revolving Credit Loans to which the Revolving Credit Euro-Rate Option applies,
and then (v) finally to Term Loans to which the Term Loan 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]. Bid Loans can not be
voluntarily prepaid by the Borrower.
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, Term Loans or Bid 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 accrued thereon, 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 or Bid 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
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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 or Bid Loan Fixed 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, any Term Loan and any Bid
Loan 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 or provide the Bid Loan of such Lender.
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.
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4.4.5 MANDATORY PREPAYMENT UPON ISSUANCE OF CERTAIN DEBT AND
CERTAIN EQUITY.
Within five (5) Business Days of the issuance by the Borrower
or any Subsidiary of the Borrower (other than Excluded Subsidiaries), of any
debt or equity securities for cash proceeds (including any hybrid equity
securities), the Borrower shall make a mandatory prepayment of principal on the
Term Loans equal to 75% of the Net Cash Proceeds of any debt securities and
equal to 50% of the Net Cash Proceeds of any equity securities (each a
"Mandatory Prepayment") (PROVIDED that no mandatory prepayment shall be required
with respect to the issuance of debt or equity securities by such Persons
following the Closing Date of up to $300,000,000 in the aggregate of such
securities). Each Mandatory Prepayment shall be applied to payment in full of
the principal amount of the Term Loans by application to the unpaid installments
of principal in the inverse order of scheduled maturities. Any prepayment
hereunder shall be subject to the Borrower's Obligation to indemnify the Banks
under Section 4.5.2 [Indemnity]. To the extent that a Mandatory Prepayment
exceeds the outstanding principal amount of the Term Loans, such prepayment
shall be limited to the amount necessary to prepay the Term Loans in full. If
the Borrower's senior unsecured long-term debt, on a consolidated basis, is
rated Investment Grade, then at any time thereafter when the Borrower issues
debt or equity securities if the senior unsecured long-term debt of the Borrower
is rated, as of the date of issuance of such debt or equity securities, by
either Moody's at Baa3 or better or Standard & Poor's at BBB- or better, no
Mandatory Prepayment pursuant to this Section 4.4.5 will be required to be made.
4.4.6 MANDATORY PREPAYMENT UPON SALE OF ASSETS.
Within five (5) Business Days of any sale of assets by any
member of the Arch Coal Group authorized by Section 7.2.4(v) [Disposition of
Assets or Subsidiaries], the Borrower shall make a mandatory prepayment of
principal on the Term Loans equal to the Net Cash Proceeds of such sale (as
estimated in good faith by the Borrower), together with accrued interest on such
principal amount. All prepayments pursuant to this Section 4.4.6 shall be
applied to payment in full of the principal amount of the Term Loans by
application to the unpaid installments of principal in the inverse order of
scheduled maturities. Any prepayment hereunder shall be subject to the
Borrower's Obligation to indemnify the Banks under Section 4.5.2 [Indemnity]. If
the Borrower's senior unsecured long-term debt, on a consolidated basis, is
rated Investment Grade, then at any time thereafter when any member of the Arch
Coal Group sells assets in accordance with Section 7.2.4(v), if the senior
unsecured long-term debt of the Borrower is rated, as of the date of such asset
sale, by either Moody's at Baa3 or better or by Standards & Poor's at BBB- or
better, no prepayment pursuant to this Section 4.4.6 will be required to be
made.
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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 the Bid
Loans or payments by the Borrower of principal, interest, Facility 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 the Bid 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
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fund or maintain Loans subject to a Euro-Rate Option or the Bid Loan Fixed 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 or the Bid Loan Fixed 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 Loan Requests
under Section 2.4.1 [Committed Loan Requests], Section 2.4.2 [Swing Loan
Requests], Section 2.9 [Bid Loan Facility] or Section 3.2 [Interest Periods] or
notice relating to prepayments under Section 4.4.1 [Voluntary Prepayments];
(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
or the Bid Loans, Facility Fees or any other amount due hereunder; or
(iv) payment or prepayment of any Bid Loan on a day
other than the maturity date thereof (whether or not such payment or prepayment
is mandatory or voluntary).
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 or Term
Loans made by such Bank may be evidenced by a Revolving Credit Note in the form
of EXHIBIT 1.1(R) or a Term Note in the form of EXHIBIT 1.1(T).
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
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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
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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:
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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 Closing 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 Closing Date,
SCHEDULE 5.1.2 also sets forth the jurisdiction of incorporation of the
Borrower, its authorized capital stock (the "Borrower Shares") and the voting
rights associated therewith. 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 Closing 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.
(a) 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.
(b) To the knowledge of the Borrower on the Closing
Date, based on representations made to it by or on behalf of the ACC Group in
the Acquisition
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Documents, each member of the ACC Group 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.
(a) 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. On the Closing Date, the Acquisition shall be consummated in
accordance with the terms of the Acquisition Documents. 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.
(b) To the knowledge of the Borrower on the Closing Date,
based on representations made to it by or on behalf of the ACC Group in the
Acquisition Documents, each of the Acquisition Documents has been duly and
validly executed and delivered by each member of the ACC Group party thereto. To
the knowledge of the Borrower on the Closing Date, based on representations made
to it by or on behalf of the ACC Group in the Acquisition Documents, each
Acquisition Document constitutes the legal, valid and binding obligation of each
member of the ACC Group party thereto, enforceable against each such member of
the ACC Group 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.
5.1.5 NO CONFLICT.
(a) Neither the execution and delivery of this Agreement or
the other Loan Documents by any Loan Party or the Acquisition Documents by the
Borrower or any Subsidiary of the Borrower party thereto, 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
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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, in the
case of the Acquisition Documents, of the Borrower or any Subsidiary of the
Borrower party thereto or (ii) any Law or any material agreement or instrument
or order, writ, judgment, injunction or decree to which the Borrower or any
Subsidiary of the Borrower party to the Acquisition Documents, or 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 the Borrower or any Subsidiary
of the Borrower party to the Acquisition Documents or of any Loan Party or any
Subsidiary of any Loan Party (other than Liens granted under the Loan
Documents).
(b) To the knowledge of the Borrower on the Closing Date,
based on representations made to it by or on behalf of the ACC Group in the
Acquisition Documents, neither the execution and delivery of the Acquisition
Documents by any member of the ACC Group, nor the consummation of the
transactions therein contemplated or compliance with the terms and provisions
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 such Person or (ii) any Law or any
material agreement or instrument or order, writ, judgment, injunction or decree
to which any such Person 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 such Person.
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) HISTORICAL STATEMENTS.
(a) 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, 1997 (the "Annual
Statements"). In addition, the Borrower has delivered to the Administrative
Agent copies of its unaudited consolidated interim financial statements for the
fiscal year to date and as of the end of the fiscal quarter ended March 31, 1998
(the "Interim Statements") (the Annual and Interim Statements being collectively
referred to as 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
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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, subject (in the
case of the Interim Statements) to normal year-end audit adjustments. The
Borrower has delivered to the Administrative Agent copies of the audited
consolidated year-end balance sheet for ACC as of the end of the fiscal years
ended December 31, 1996 and December 31, 1997 and copies of the audited
consolidated statements of income, of equity investment and of cash flows for
each of the three years in the period ended December 31, 1997 (collectively, the
"ACC Annual Statements").
(b) To the knowledge of the Borrower, as of the Closing
Date, based on representations made to it by or on behalf of the ACC Group in
the Acquisition Documents, the ACC Annual Statements were compiled from the
books and records maintained by ACC's management, are correct and complete and
fairly represent the consolidated financial condition of ACC 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.
(a) Neither the Borrower nor any Subsidiary of the
Borrower has on the Closing 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, 1997, no Material Adverse Change has
occurred.
(b) To the knowledge of the Borrower, as of the Closing
Date, based on representations made to it by or on behalf of the ACC Group in
the Acquisition Documents, ACC has no liabilities, contingent or otherwise, or
forward or long-term commitments that are not disclosed in the ACC Annual
Statements or in the notes thereto, and there are no unrealized or anticipated
losses from any commitments of ACC which could reasonably be expected to result
in a Material Adverse Change.
(iii) FINANCIAL PROJECTIONS. The Borrower has delivered to the
Agents financial projections of the Borrower and its Subsidiaries for the period
January 1, 1998 through and including December 31, 2002 derived from various
assumptions of the Borrower's management (the "Financial Projections"). On the
Closing Date, the Financial Projections represent a reasonable range of possible
results in light of the history of the business (in the case of Arch Western,
taking into consideration the ACC Annual Statements and the history of
performance of Arch of Wyoming LLC), 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 Acquisition and of the transactions contemplated hereby as of the Closing
Date.
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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, 2.15 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.
5.1.8.3 [INTENTIONALLY OMITTED].
5.1.9 FULL DISCLOSURE.
On the Closing Date, 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 and to the knowledge of the Borrower with respect to the ACC
Group based on representations made to it by or on behalf of the ACC Group in
the Acquisition Documents, 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. On the Closing Date, 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
Banks 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
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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 Closing Date except as otherwise indicated on SCHEDULE
5.1.11. All material consents, approvals, exemptions, orders or authorization
of, or registration or filing with, any Official Body or any other Person as
required by any Law or any agreement in connection with the execution, delivery
and carrying out of the Acquisition in accordance with the Acquisition Documents
have been obtained or made on or prior to the Closing 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 Closing 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 clauses (ii) or
(iii) of 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.
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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.
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(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.
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. 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 . There are no threatened or pending
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.
Neither any Loan Party nor any Subsidiary of any Loan Party has received any
notice from any governmental or regulatory authority regarding actual or
contingent liability in connection with any release or threatened release of any
Hazardous Substance into the environment which actual or contingent liability
could reasonably be expected to result in a Material Adverse Change.
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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. On the Closing Date, Arch Western, in
accordance with the Purchase Agreement and the Contribution Agreement, shall
have received as a contribution to its capital such assets as are necessary for
the operation of the Business, including, without limitation, all material
assets set forth in the ACC Balance Sheet (other than assets permitted to
otherwise be sold or transferred by ACC in accordance with the Purchase
Agreement or Contribution Agreement prior to the Closing Date and other than
those assets which, in accordance with the Purchase Agreement or Contribution
Agreement, are not to be transferred by ACC to Arch Western).
5.1.21 BLACK LUNG.
As of the Closing Date, the Historical Statements, in the case
of the Borrower and its Subsidiaries, and to the knowledge of the Borrower, on
the Closing Date, based on representations made to it by or on behalf of the ACC
Group in the Acquisition Documents, the ACC Annual Statements in the case of
ACC, contain reasonably adequate reserves in accordance with GAAP for the
respective black lung liabilities of the Borrower and its Subsidiaries and for
ACC.
5.1.22 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 will not alter the rights of
Canyon Fuel under the Coastal Agreement.
5.2 CONTINUATION OF REPRESENTATIONS.
Except as to those representations and warranties limited by their
terms to the Closing Date, the Borrower makes the representations and warranties
in this Section 5 on the date hereof and on the Closing Date, 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
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6.2 [Each Additional Loan or Letter of Credit] and on the Syndication Date as
provided in and subject to Section 6.3 [Syndication].
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to 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 Closing 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 Closing Date (with each such representation
and warranty to be made after giving effect to the consummation of the
Acquisition) 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 Closing 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 Closing 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 Closing Date
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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 GUARANTY AGREEMENT.
The Guaranty Agreement shall have been duly executed and
delivered to the Administrative Agent for the benefit of the Lenders.
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
Jeffry Quinn, 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.
There shall also be delivered to the Administrative Agent a copy of the opinion
of John R. Lucas, Associate General Counsel to ARCO.
6.1.5 LEGAL DETAILS.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents and the
Acquisition 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 the Facility Fees, all other commitment and other fees
accrued through the Closing Date and the costs and expenses for which the
Arrangers and the Lenders are entitled to be reimbursed.
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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.
6.1.8 OFFICER'S CERTIFICATE REGARDING NO MATERIAL ADVERSE
CHANGE AND SOLVENCY.
Since December 31, 1997, no Material Adverse Change shall have
occurred; since December 31, 1997 and through the Closing 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 Closing 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 and 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, with all
certifications after giving effect to the Acquisition.
6.1.9 NO VIOLATION OF LAWS.
The making of the Loans, the issuance of the Letters of Credit
and the consummation of the Acquisition and of the transactions contemplated by
the Acquisition Documents 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, the
Acquisition, the Acquisition 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 or which in
the good faith judgment of the Agents could adversely affect the syndication of
the Loans.
6.1.11 ACQUISITION.
Any material changes to the Contribution Agreement or the
Purchase Agreement, and any changes to the forms of the Tax Sharing Agreement or
the LLC Agreements delivered to the Arrangers at or about the time of execution
of the Purchase Agreement, shall be reasonably satisfactory to the Arrangers in
their sole discretion. The organization and capital structure of Arch Western
shall be satisfactory to the Agents in their sole discretion. All conditions to
closing shall have been satisfied under the Acquisition Documents or waived to
the satisfaction of the Agents. The Acquisition shall have been consummated in
accordance with the
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terms of the Acquisition Documents, and an Authorized Officer of the Borrower
shall certify the foregoing to the Administrative Agent for the benefit of each
Lender.
6.1.12 FINANCIAL PROJECTIONS.
The Financial Projections shall be satisfactory in form and
substance to the Agents.
6.1.13 ARCH WESTERN CAPITAL AND FINANCING.
Contributions to the equity of Arch Western shall have been
consummated on terms and conditions and in the amounts required by the
Acquisition Documents. All conditions to closing shall have been satisfied under
the Arch Western Credit Facility.
6.1.14 INSURANCE.
The Borrower shall have delivered to the Agents evidence of
the insurance required under the Loan Documents.
6.1.15 PAYOFF OF EXISTING CREDIT FACILITY.
On or before the Closing Date, the Borrower shall have repaid
the Existing Credit Facility and shall have terminated the Existing Credit
Facility and all commitments to make loans or issue letters of credit
thereunder, and the Borrower shall have provided evidence of all of the
foregoing to the Agents to the satisfaction of the Agents.
6.1.16 NON-OCCURRENCE OF CERTAIN EVENTS.
No disruption or change in the financial, banking or capital
markets shall have occurred or shall be pending which, in the good faith
judgment of the Agents, could adversely affect the syndication of the Loans.
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,
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and PNC Bank in the case of a request for a Swing Loan) a duly executed and
completed Loan Request or application for a Letter of Credit as the case may be.
6.3 SYNDICATION.
6.3.1 SYNDICATION DATE REPRESENTATIONS AND WARRANTIES.
(a) On the Syndication Date, the representations and
warranties of the Borrower contained in Section 5 and of the Loan Parties in the
other Loan Documents shall be true with the same effect as though such
representations and warranties had been made on 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, and no
Event of Default or Potential Default shall have occurred and be continuing or
shall exist.
(b) On the Syndication Date, the Loan Parties shall deliver
to the Administrative Agent for the benefit of the Lenders (i) an Officer's
Certificate dated as of the Syndication Date with respect to the matters set
forth in Sections 6.3.1(a), (ii) a Secretary's Certificate dated as of the
Syndication Date with respect to the matters set forth in Section 6.1.2 and
stating that there have been no changes in the charter documents or bylaws of
the Borrower or any other Loan Party since the Closing Date, (iii) Revolving
Credit Notes, Term Notes and Bid Notes dated as of the Syndication Date which
give effect to the syndication on the Syndication Date of the Commitments of the
Banks which originally executed the Credit Agreement in exchange for the
original Revolving Credit Notes, Term Notes and Bid Notes issued to such
Lenders, (iv) written opinions of the counsel to the Loan Parties identified in
Section 6.1.4 with respect to such matters as the Administrative Agent may
request, and (v) acknowledgments dated as of the Syndication Date to the Loan
Documents in form and substance satisfactory to the Administrative Agent.
6.3.2 SYNDICATION COOPERATION.
The Borrower will use all reasonable efforts to assist the
Agents in syndicating the credit facilities, including participating in meetings
with potential syndicate members. The Borrower agrees that it will cooperate
with the Agents in syndicating the credit facilities, including, without
limitation, by consenting to reasonable amendments to this Agreement (other than
changes in pricing) and the other Loan Documents which may be required by
potential syndicate members.
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
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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.
The Borrower 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.
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
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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 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 and renew all Environmental Permits necessary for their respective
operations
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and properties; and manage, use and handle all Hazardous 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.
The Borrower will use the Letters of Credit and the proceeds
of the Loans only for (i) general corporate purposes and for working capital for
the Borrower and its Subsidiaries, (ii) to finance the Acquisition Transactions
or (iii) to refinance the Existing Credit Facility. 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 and all applicable Federal, state and local laws, rules and
regulations, including, without limitation, laws and regulations relating to
land reclamation, pollution control and mine safety.
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 Contracts to which any such Person is a party, except where the failure
to so maintain in full force and effect a license, permit or a Material Contract
could not be reasonably expected to result in a Material Adverse Change.
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 Indebtedness of the Borrower or any
other Loan Party incurred after the Closing Date (not to exceed $300,000,000 in
the aggregate outstanding for all Loan Parties at any time during any period
prior to the date on which the senior unsecured long-term debt of the Borrower,
on a consolidated basis, has been rated
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Investment Grade) 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;
(vi) Indebtedness of the Borrower payable to Arch
Western; and
(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.
7.2.2 LIENS.
The Borrower shall not, and shall not permit 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
Permitted Liens so long as the aggregate amount of all payments by any such
Person in respect of all Indebtedness secured by such Permitted Liens does not
at any time exceed seven and one-half percent (7 1/2%) of the total assets of
the Arch Coal Group (exclusive of Investment in the Arch Western Group), as
determined and consolidated in accordance with GAAP.
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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),
(2) the Borrower and Arch Western may complete the Acquisition
in accordance with the Acquisition Documents, and
(3) 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];
(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).
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 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:
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(i) transactions involving the sale of inventory in
the ordinary course of business;
(ii) 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) any sale of assets if and to the extent the Net
Cash Proceeds thereof are applied within 90 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 90 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 90-day period, such sale shall be deemed to have been made on the last day
of such period pursuant to clause (v) below;
(iv) any sale, transfer or lease (including any lease
transaction under Section 7.2.9 [Off Balance Sheet Financing]) of assets, other
than those specifically excepted pursuant to clauses (i) through (iii) above,
PROVIDED that (a) at the time of any 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 of all assets so sold by the Borrower and its Subsidiaries shall not
exceed in any calendar year the greater of (x) $100,000,000 or (y) 5% of the
total assets of the Arch Coal Group (exclusive of investment in the Arch Western
Group) (as of the last day of such calendar year), determined and consolidated
in accordance with GAAP; (v) any sale, transfer or lease of assets, other than
those specifically excepted pursuant to clauses (i) through (iv) above or clause
(vi) below, so long as the Net Cash Proceeds are applied as a mandatory
prepayment of the Term Loans in accordance with the provisions of Section 4.4.6;
(vi) any transfer of assets by the Borrower to Arch
Western as contemplated by the Contribution Agreement; or
(vii) 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.
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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) the Excluded Subsidiaries, (ii) any Significant Subsidiary which has
joined the Guaranty Agreement as Guarantor on the Closing Date; (iii) any
Significant Subsidiary formed or acquired after the Closing Date which becomes a
Guarantor in accordance with Section 10.18 [Joinder of Guarantors]; (iv) 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 (v) 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 [Joinder of Guarantors]. 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 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, or (2) become
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
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 date of
consummation of the Acquisition 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.
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7.2.9 OFF-BALANCE SHEET FINANCING.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, 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
asset securitizations [other than accounts receivable or inventory
securitizations], sale/leasebacks, or Synthetic Leases), in excess, in the
aggregate for the Borrower and its Subsidiaries as of any date of determination,
of 7.5% of the sum, without duplication, of (y) the total assets of the Borrower
and its Subsidiaries, determined and consolidated in accordance with GAAP as of
the date of determination, and (z) with respect to each Special Subsidiary, an
amount equal to the Appropriate Percentage multiplied by the total assets of
such Person, determined in accordance with GAAP. 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
Closing Date through and including
December 31, 1998 4.50 TO 1.00
------------
January 1, 1999 through and
including December 31, 1999 4.25 TO 1.00
------------
January 1, 2000 through and
including December 31, 2000 4.00 TO 1.00
------------
January 1, 2001 through and
including December 31, 2001 3.50 TO 1.00
------------
January 1, 2002 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:
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PERIOD RATIO
Closing Date through and including
December 31, 1998 2.50 TO 1.00
------------
January 1, 1999 through and
including December 31, 1999 2.75 TO 1.00
------------
January 1, 2000 through and
including December 31, 2000 3.00 TO 1.00
------------
January 1, 2001 and thereafter 3.25 TO 1.00
------------
7.2.12 MINIMUM NET WORTH.
The Borrower shall not at any time permit Consolidated
Tangible Net Worth 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;
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(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; and
(vi) loans and advances permitted by Section 7.2.1(v).
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.
7.3 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 Agents 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.
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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 and (iii) 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
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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,
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(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 4060 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 termination with the PBGC, or any successor or equivalent form,
filed with the PBGC in connection with the termination of any Plan.
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7.3.8 OTHER INFORMATION.
Promptly following request therefor, such other information as
any Agent or Lender may reasonably request.
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.
(a) Any representation or warranty made by the Borrower in
Sections 5.1.3(b), 5.1.4(b), 5.1.5(b), 5.1.7(i)(b), 5.1.7(ii)(b) or, with
respect to the ACC Group, in Section 5.1.9 hereof shall prove to have been false
or misleading as of the time it was made by the Borrower without giving effect
to the qualification in each such Section that the Borrower was making such
representation or warranty "to the knowledge of the Borrower", to an extent that
could reasonably be expected to result in a Material Adverse Change;
(b) Any other 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
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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 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 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;
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;
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8.1.8 UNINSURED LOSSES; 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;
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;
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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.
(i) 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)
other than Ashland Inc. 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 were directors of the Borrower on
the first day of such period 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.
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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, Swing Loans or Bid 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, Term Loans, Bid 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,
Swing Loans or Bid 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
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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 any Lender, if owed any amount with respect to the Loans, may
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
shall have taken any action pursuant to this Section 8.2 and until all
Obligations of the Loan Parties have been paid in full, any and all proceeds
received by the Administrative Agent from the exercise of any remedy by the
Administrative Agent 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.
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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.
8.3 RIGHT OF COMPETITIVE BID LOAN LENDERS.
If any Event of Default shall occur and be continuing, the Lenders
which have any Bid Loans then outstanding to the Borrower (the "Bid Loan
Lenders") shall not be entitled to accelerate payment of the Bid Loans or to
exercise any right or remedy related to the collection of the Bid Loans until
the Commitments shall be terminated hereunder pursuant to Section 8.2. Upon such
a termination of the Commitments, references to Revolving Credit Loans in
Section 8.2 shall be deemed to apply also to the Bid Loans and the Bid Loan
Lenders shall be entitled to all enforcement rights given to a holder of a
Revolving Credit Loan in Section 8.2.
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 Morgan 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 Morgan 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.
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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
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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
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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 and/or Term Loan Ratable Share, as applicable, 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
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proportion to its Revolving Credit Ratable Share and its Term Loan Ratable
Share, as applicable, 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, Term Loan
Commitment, the Revolving Credit Loans, the Term Loans, the Swing Loans, the
issuance of any Letter of Credit and any Bid Loans 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, Morgan 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
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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
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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 "Bid Loan Processing Fee") in connection with processing Bid Loans and
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
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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 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:
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10.1.1 INCREASE OF REVOLVING CREDIT COMMITMENTS; EXTENSION
OF EXPIRATION DATE; MODIFICATION OF TERMS OF PAYMENT.
Without the written consent of the Required Banks and all
Banks which have a Revolving Credit Commitment, 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 Facility 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 Facility Fee or any other fee payable to any
Bank which has a Revolving Credit Commitment;
10.1.2 INCREASE OF TERM LOAN COMMITMENTS; EXTENSION OF TERM
LOAN EXPIRATION DATE; MODIFICATION OF TERMS OF PAYMENT.
Without the written consent of the Required Banks and all
Banks which have a Term Loan Commitment, increase the amount of the Term Loan
Commitment of any Bank hereunder, extend the Term Loan Expiration Date, 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 Bank which has a Term
Loan Commitment, reduce the principal amount of or the rate of interest borne by
any Term Loan, reduce the rate of the Facility Fee or any other fee payable to
any Bank which has a Term Loan Commitment;
10.1.3 RELEASE OF GUARANTOR.
Without the written consent of all Banks, release any
Guarantor from its Obligations under the Guaranty Agreement or any other
security for any of the Loan Parties' Obligations, other than, prior to an Event
of Default upon the request by the Borrower to the Administrative Agent, release
from the Guaranty Agreement of any Subsidiary which is no longer a Significant
Subsidiary (which request shall be accompanied by evidence satisfactory to the
Administrative Agent in its sole discretion that the Subsidiary which the
Borrower is requesting be so released from the Guaranty Agreement is no longer a
Significant Subsidiary and that at the time of the requested release no Letters
of Credit are outstanding directly or indirectly for the benefit of such
Subsidiary nor are any Reimbursement Obligations due and owing by such
Subsidiary), which release from the Guaranty Agreement of a non Significant
Subsidiary may be granted solely by the Administrative Agent without the
approval of any Bank; or
10.1.4 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
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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,
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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. 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, Bid Loans and Swing Loans
shall be due on the Business Day preceding the Expiration Date if the Expiration
Date is not a Business Day and the Term Loans shall be due on the Business Day
preceding the Term Loan Expiration Date if the Term Loan 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.
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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. Each Designated Lender appoints its Designating Bank as
its agent for the purpose of delivering and receiving all notices hereunder as
more fully set forth in Section 10.11 [Successors and Assigns] and in its
Designation Agreement with such Designating Bank. 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.
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10.8 GOVERNING LAW.
Each Letter of Credit and Section 2.10 [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
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consent of all of the Banks (each on its own behalf and on behalf of any
Designated Lenders of such Bank).
10.11.2 ASSIGNMENTS AND PARTICIPATIONS BY BANKS OTHER THAN
ASSIGNMENTS OF BID LOANS AMONG DESIGNATING BANKS AND
DESIGNATED LENDERS.
This Section shall apply to any assignment or participation by
a Lender of its Loans, Letters of Credit Outstanding or Commitments except for
assignments or designations of Bid Loans among Designating Banks or Designated
Lenders described in Section 10.11.3. Each Bank may, at its own cost, make
assignments of all or any part of its Revolving Credit Commitment and Revolving
Credit Loans, Term Loan Commitment and Term Loans, Bid 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, and PROVIDED that
assignments may not be made in amounts less than $5,000,000 (unless such
assignment is an assignment of all of a Banks Loans or Commitments) and a Lender
may assign a Bid Loan to another Person only if either such Lender is a Bank and
is simultaneously assigning all or a portion of its Revolving Credit Commitment
to such Person, or the assignee is already a Bank hereunder. Each Lender may, at
its own cost, grant participations in all or any part of its Revolving Credit
Commitment and the Revolving Credit Loans, Term Loan Commitment and Term Loans,
and Bid 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
Term Loan Commitment or 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 or Term
Note subject to such assignment, the Borrower shall execute and deliver a new
Revolving Credit Note or Term Note to the assignee in an amount equal to the
amount of the Revolving Credit Commitment or Term Loan Commitment assumed by it
and a new Revolving Credit Note or Term Note to the assigning Bank in an amount
equal to the Revolving Credit Commitment or Term Loan Commitment retained by it
hereunder. The assigning Lender shall surrender its Bid Note if it is assigning
all of its Revolving Credit Commitment. The Borrower shall execute and deliver
to the assignee a Bid Note in the form of EXHIBIT 1.1(B). 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
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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 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.
10.11.3 ASSIGNMENTS OF BID LOANS AMONG DESIGNATING
BANKS AND DESIGNATED LENDERS.
10.11.3.1 ASSIGNMENTS TO DESIGNATED LENDERS.
Any Bank (each a "Designating Bank") may at any time,
subject to the consent of the Borrower, which consent shall not be unreasonably
withheld, and subject to the terms of this Section 10.11.3.1, designate one or
more Designated Lenders to fund Bid Loans which the Designating Bank is required
to fund. The provisions of Section 10.11.2 [Assignments and Participations,
etc.] shall not apply to any such designation. No Bank shall be entitled to make
more than two such designations. The parties to each such designation shall
execute and deliver to the Administrative Agent, for its acceptance, a
Designation Agreement. Upon its receipt of an appropriately completed
Designation Agreement executed by a Designating Bank, a designee representing
that it is a Designated Lender and the Borrower, the Administrative Agent will
accept such Designation Agreement. From and after the later of the date on which
the Administrative Agent receives the executed Designation Agreement and the
effective date specified in the Designation Agreement, the Designated Lender
shall become a party to this Agreement with a right to make any Bid Loan on
behalf of its Designating Bank pursuant to Section 2.9 after the Borrower has
accepted a Bid (or a portion thereof) of the Designating Bank. The Designating
Bank shall not be obligated to designate its Designated Lender to fund any Bid
Loan, and such Designated Lender shall not be obligated to fund any Bid Loan,
each such designation being subject to the agreement of the Designating Bank and
its Designated Lender and to be made at the time that such Bid Loan is made.
Each Designating Bank shall serve as the agent of the Designated Lender for
purposes of giving and receiving all communications and notices and taking all
actions hereunder, including without limitation votes, approvals, waivers,
consents and amendments under or relating to this Agreement or the other Loan
Documents. Any such notice, communication, vote, approval, waiver, consent or
amendment shall be signed by the Designating Bank as agent for the Designated
Lender and shall not be signed by the Designated Lender. The Borrower, the
Agents, the Administrative Agent and the Lenders may rely thereon without any
requirement that the Designated Lender sign or acknowledge the same. Any
Designated Lender 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 Clause] relating to federal income tax withholding.
- 104 -
10.11.3.2 ASSIGNMENTS BY DESIGNATED LENDERS.
Any Designated Lender may assign its Bid Loan to its
Designating Bank or to another Designated Lender designated by such Designating
Bank and such assignment shall not be subject to the requirements of Section
10.11.2 [Assignments and Participations, etc.], PROVIDED that the Designated
Lender and Designating Bank shall notify the Administrative Agent promptly of
such assignment.
10.11.3.3 WAIVERS AND CERTAIN MATTERS REGARDING
CONDUITS AS DESIGNATING BANKS.
Notwithstanding any provision of this Agreement or
any other Loan Document to the contrary, neither the Administrative Agent, any
Agent, the Borrower nor any Lender shall institute or join any other person in
instituting against Wood Street Funding Corporation, a Delaware corporation (and
a Designating Bank, designated by PNC Bank) or against any similar conduit
established by any other Designated Lender which has been designated by such
Designated Lender as a Designating Bank, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, for one year and a day after the
later to occur of the Expiration Date or the Term Loan Expiration Date.
10.11.4 FOREIGN 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].
10.11.5 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 in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14 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.
- 105 -
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 administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii) to assignees and participants as contemplated by Section 10.11 [Successors
and Assigns], (iii) 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, (iv) 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, or (v) 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
- 106 -
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 CLAUSE.
Each Lender or assignee or participant of a Lender that is not
incorporated under the Laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the Administrative Agent
two (2) duly completed copies of the following: (i) Internal Revenue Service
Form W-9, 4224 or 1001, or other applicable form prescribed by the Internal
Revenue Service, certifying that such Lender, assignee or participant is
entitled to receive payments under this Agreement and the other Loan Documents
without deduction or withholding of any United States federal income taxes, or
is subject to such tax at a reduced rate under an applicable tax treaty, or (ii)
Internal Revenue Service Form W-8 or other applicable form or a certificate of
such Lender, assignee or participant indicating that no such exemption or
reduced rate is allowable with respect to such payments. Each Lender, assignee
or participant required to deliver to the Borrower and the Administrative Agent
a form or certificate pursuant to the preceding sentence shall deliver such form
or certificate as follows: (A) each Lender which is
- 107 -
a party hereto on the Closing Date shall deliver such form or 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 form or 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 form or 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 Form W-8, W-9, 4224 or 1001 further undertakes
to deliver to each of the Borrower and the Administrative Agent two (2)
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form 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, either certifying that
such Lender, assignee or participant is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of any
United States federal income taxes or is subject to such tax at a reduced rate
under an applicable tax treaty or stating that no such exemption or reduced rate
is allowable. The Administrative Agent shall be entitled to withhold United
States federal income taxes at the full withholding rate unless the Lender,
assignee or participant establishes an exemption or that it is subject to a
reduced rate as established pursuant to the above provisions.
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] or any Subsidiary of the Borrower which is a member of the Arch
Coal Group which has not previously executed a Guarantor Joinder but which
desires to have a Letter of Credit issued for its benefit pursuant to Section
2.10.1 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; and (ii) documents in the forms described in Section 6.1
[First Loans and Letters of Credit] modified as appropriate to relate to such
Subsidiary. With respect to Subsidiaries (other than Excluded Subsidiaries)
which become Significant Subsidiaries, 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.
[SIGNATURE PAGES FOLLOW]
- 108 -
[SIGNATURE PAGE 1 OF 22 TO CREDIT AGREEMENT]
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.
By: /s/ Miriam Rogers Singer By: /s/ Patrick A. Kriegshauser
-------------------------- ------------------------------------
Miriam Rogers Singer Patrick A. Kriegshauser
Assistant Secretary Senior Vice President/Chief Financial
Officer/Treasurer
[Seal]
[SIGNATURE PAGE 2 OF 22 TO CREDIT AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION,
individually and as Administrative Agent
and Agent
By: /s/ Richard L. Munsick
--------------------------------
Title: Vice President
--------------------------------
SIGNATURE PAGE 3 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, individually and as
Syndication Agent
By: /s/ John M. Mikolay
--------------------------------
Title: John M. Mikolay, Vice President
--------------------------------
[SIGNATURE PAGE 4 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
FIRST UNION NATIONAL BANK,
individually and as Documentation Agent
By: /s/ Laurence M. Levy
--------------------------------
Title: Vice President
--------------------------------
[SIGNATURE PAGE 5 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
NATIONSBANK, N.A.
By: /s/ Denise A. Smith
--------------------------------
Title: Senior Vice President
--------------------------------
[SIGNATURE PAGE 6 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
BANK OF MONTREAL
By: /s/ Ian M. Plester
--------------------------------
Title: Ian M. Plester
--------------------------------
Director
--------------------------------
[SIGNATURE PAGE 7 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE BANK OF NEW YORK
By: /s/ Nathan S. Howard
--------------------------------
Title: Nathan S. Howard
--------------------------------
Vice President
--------------------------------
[SIGNATURE PAGE 8 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
--------------------------------
Title: F.C.H. Ashby
--------------------------------
Senior Manager Loan Operations
--------------------------------
[SIGNATURE PAGE 9 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
BARCLAYS BANK PLC
By: /s/ Carol A. Cowan
--------------------------------
Title: Carol A. Cowan
--------------------------------
Director
--------------------------------
[SIGNATURE PAGE 10 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE CHASE MANHATTAN BANK
By: /s/ Michael D. Feist
--------------------------------
Title: Michael D. Feist
--------------------------------
Vice President
--------------------------------
[SIGNATURE PAGE 11 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By: /s/ Hajime Watanabe
--------------------------------
Title: Hajime Watanabe
--------------------------------
Deputy General Manager
--------------------------------
[SIGNATURE PAGE 12 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Sandra E. Horwitz
--------------------------------
Title: Sandra E. Horwitz
--------------------------------
Senior Vice President
--------------------------------
Midwest Regional Manager
--------------------------------
[SIGNATURE PAGE 13 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ William V. Clifford
--------------------------------
Title: William V. Clifford
--------------------------------
Vice President
--------------------------------
[SIGNATURE PAGE 14 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
INTENTIONALLY OMITTED
[SIGNATURE PAGE 15 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
BANK ONE, KENTUCKY, NA
By: /s/ James A. Tutt
--------------------------------
Title: James A. Tutt
--------------------------------
Senior Vice President
--------------------------------
[SIGNATURE PAGE 16 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
--------------------------------
Title: Peter L. Chinnici
--------------------------------
Joint General Manager
--------------------------------
[SIGNATURE PAGE 17 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ Walter Wolff
--------------------------------
Title: Senior Vice President
--------------------------------
Deputy General Manager
--------------------------------
[SIGNATURE PAGE 18 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ Stephen M. Reese
--------------------------------
Title: Stephen M. Reese
--------------------------------
Vice President
--------------------------------
[SIGNATURE PAGE 19 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
ABN AMRO BANK, N.V.
By: /s/ Gregory D. Amoroso
--------------------------------
Title: Group Vice President
--------------------------------
/s/ Carrie A. Pence
--------------------------------
Carrie A. Pence, Vice President
--------------------------------
[SIGNATURE PAGE 20 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
DRESDNER BANK AG NEW YORK BRANCH
By: /s/ Wayde Colquhoun
----------------------------------
Title: Wayde Colquhoun, Vice President
----------------------------------
By: /s/ P. Douglas Sherrod
----------------------------------
By: P. Douglas Sherrod
----------------------------------
Title: P. Douglas Sherrod, Vice President
----------------------------------
[SIGNATURE PAGE 21 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
BANK HAPOALIM B.M. PHILADELPHIA BRANCH
By: /s/ Carl Hopfinger
--------------------------------
Title: Vice President
--------------------------------
By: /s/ F. J. McEntee
--------------------------------
Title: Vice President/Controller
--------------------------------
[SIGNATURE PAGE 22 OF 22 TO THE ARCH COAL, INC. CREDIT AGREEMENT]
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/ Richard E. Stahl
--------------------------------
Title: Executive Vice President
--------------------------------
EXHIBIT 4.2
$675,000,000 TERM LOAN
CREDIT AGREEMENT
by and among
ARCH WESTERN RESOURCES, LLC
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Syndication Agent
and
NATIONSBANK, N.A.,
as Documentation Agent
Dated as of June 1, 1998
TABLE OF CONTENTS
SECTION PAGE
1. CERTAIN DEFINITIONS....................................................1
1.1 Certain Definitions..............................................1
1.2 Construction....................................................23
1.3 Accounting Principles...........................................25
2. TERM LOAN FACILITY....................................................25
2.1 Term Loan Commitments...........................................25
2.2 Nature of Banks' Obligations with Respect to Term Loans.........25
2.3 Term Loan Notes.................................................26
2.4 Use of Proceeds.................................................26
2.5 Request to Select Interest Rate Options.........................26
3. INTEREST RATES........................................................26
3.1 Interest Rate Options...........................................26
3.2 Interest Periods................................................28
3.3 Interest After Default..........................................29
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available..........................................29
3.5 Selection of Interest Rate Options..............................31
4. PAYMENTS..............................................................31
4.1 Payments........................................................31
4.2 Pro Rata Treatment of Banks.....................................31
4.3 Interest Payment Dates..........................................32
4.4 Prepayments.....................................................32
4.5 Additional Compensation in Certain Circumstances................34
4.6 Notes...........................................................35
4.7 Taxes...........................................................35
5. REPRESENTATIONS AND WARRANTIES........................................37
5.1 Representations and Warranties..................................37
5.2 Continuation of Representations.................................46
6. CONDITIONS OF LENDING.................................................46
6.1 Conditions to Closing...........................................46
6.2 Syndication.....................................................50
7. COVENANTS.............................................................51
7.1 Affirmative Covenants...........................................51
7.2 Negative Covenants..............................................54
7.3 Reporting Requirements..........................................60
- i -
8. DEFAULT...............................................................63
8.1 Events of Default...............................................63
8.2 Consequences of Event of Default................................67
9. THE AGENTS............................................................69
9.1 Appointment.....................................................69
9.2 Delegation of Duties............................................70
9.3 Nature of Duties; Independent Credit Investigation..............70
9.4 Actions in Discretion of Agents; Instructions From the
Banks...........................................................71
9.5 Reimbursement and Indemnification of Agents by the Borrower.....71
9.6 Exculpatory Provisions; Limitation of Liability.................72
9.7 Reimbursement and Indemnification of Agents by the Banks........73
9.8 Reliance by Agents..............................................73
9.9 Notice of Default...............................................73
9.10 Notices.........................................................74
9.11 Banks in Their Individual Capacities............................74
9.12 Holders of Notes................................................74
9.13 Equalization of Banks...........................................74
9.14 Successor Agents................................................75
9.15 Administrative Agent's Fee......................................76
9.16 Availability of Funds...........................................76
9.17 Calculations....................................................76
9.18 Beneficiaries...................................................76
10. MISCELLANEOUS.........................................................77
10.1 Modifications, Amendments or Waivers............................77
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.......78
10.3 Reimbursement and Indemnification of Banks by the Borrower;
Taxes...........................................................78
10.4 Holidays........................................................79
10.5 Funding by Branch, Subsidiary or Affiliate......................79
10.6 Notices.........................................................80
10.7 Severability....................................................80
10.8 Governing Law...................................................81
10.9 Prior Understanding.............................................81
10.10 Duration; Survival..............................................81
10.11 Successors and Assigns..........................................81
10.12 Confidentiality.................................................83
10.13 Counterparts....................................................84
10.14 Agent's or Bank's Consent.......................................84
10.15 Exceptions......................................................84
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL..........................84
10.17 Tax Withholding Clause..........................................85
10.18 Joinder of Guarantors...........................................85
- ii -
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS 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 5.1.22 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 7.2.6 - CERTAIN MATTERS REGARDING SUBSIDIARIES,
PARTNERSHIPS AND JOINT VENTURES
EXHIBITS
EXHIBIT 1.1(A)(1) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C)(2) - COLLATERAL AGENCY AND SHARING AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER AND ASSUMPTION
EXHIBIT 1.1(G)(2) - CONTINUING GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT 1.1(N) - NOTE PLEDGE AGREEMENT
EXHIBIT 1.1(P)(1) - PLEDGE AGREEMENT (INVESTMENT PROPERTY)
EXHIBIT 1.1(P)(2) - PLEDGE AGREEMENT (SUBSIDIARY EQUITY INTERESTS)
EXHIBIT 1.1(T) - TERM NOTE
EXHIBIT 2.5 - RATE REQUEST
EXHIBIT 6.1.4 - OPINION OF COUNSEL
EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
- iii -
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of June 1, 1998, and is made by and
among ARCH WESTERN RESOURCES, LLC, a Delaware limited liability company (the
"Borrower"), the BANKS (as hereinafter defined), MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, in its capacity as syndication agent, NATIONSBANK, N.A., in its
capacity as documentation agent, and PNC BANK, NATIONAL ASSOCIATION, in its
capacity as administrative agent for the Banks under this Agreement.
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide to the Borrower a
$675,000,000 term loan facility;
WHEREAS, the term loan facility shall be used to finance the Distribution
(as hereinafter defined); and
WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;
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.
ACC ANNUAL STATEMENTS shall have the meaning assigned to such
term in Section 5.1.7(i).
ACC BALANCE SHEET shall mean the audited, consolidated balance
sheet of ACC as of December 31, 1997.
ACC GROUP shall mean collectively, ARCO and each Affiliate of
ARCO party to any Acquisition Document.
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 7.2.14.
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 7.2.14.
ADJUSTED EBITDDA for any period of determination shall mean
with respect to any Person the sum of 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 in each case for such period determined in accordance with GAAP.
For purposes of calculating the Fixed Charge Coverage Ratio (i) Adjusted EBITDDA
of the Borrower and its Subsidiaries, including the Appropriate Percentage of
Adjusted EBITDDA of Canyon Fuel, shall be assumed to be $39,200,000 for the
fiscal quarter ended March 31, 1998, and (ii) Adjusted EBITDDA for the Borrower
and its Subsidiaries, including the Appropriate Percentage of Adjusted EBITDDA
of Canyon Fuel for the months of April and May, 1998, shall be determined based
upon the results from the operations of the business of such Persons for such
months by ARCO as set forth in an income statement with respect to such months
prepared by ARCO and reasonably acceptable to the Agents, shall take into
account the $1 million per month reduction in overhead resulting from the
consummation of the Acquisition, shall assume that operating lease expense of
the Borrower and its Subsidiaries, including Canyon Fuel, shall be $970,000 per
month and shall assume that interest expense for such Persons for such months
shall be zero, with such calculation of Adjusted EBITDDA for the Borrower and
its Subsidiaries for such months to be reasonably acceptable to the Agents.
Further, for purposes of calculating the Fixed Charge Coverage Ratio for the
fiscal quarters ended June 30, 1998, and September 30, 1998, Adjusted EBITDDA of
the Borrower and its Subsidiaries, including the Appropriate Percentage of
Adjusted EBITDDA of Canyon Fuel, shall be deemed to be an amount equal to: (i)
for the fiscal quarter ended June 30, 1998 the product of, (x) without
duplication, Adjusted EBITDDA of the Borrower and its Subsidiaries for the two
fiscal quarters then ended determined on a consolidated basis in accordance with
GAAP, plus the Appropriate Percentage of Adjusted EBITDDA of Canyon Fuel, for
the two fiscal quarters then ended, determined on a consolidated basis in
accordance with GAAP, multiplied by (y) two (2); and (ii) for the fiscal quarter
ended September 30, 1998 the product of, (x) without duplication, Adjusted
EBITDDA of the Borrower and its Subsidiaries for the three fiscal quarters then
ended determined on a consolidated basis in accordance with GAAP, plus the
Appropriate Percentage of Adjusted EBITDDA of Canyon Fuel for the three fiscal
quarters then ended determined on a consolidated basis in accordance with GAAP,
multiplied by (y) four-thirds (4/3).
ADMINISTRATIVE AGENT shall mean PNC Bank, National
Association, in its capacity as administrative agent for the Banks 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.
- 2 -
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 shall not be deemed an Affiliate of the Borrower.
AGENTS shall mean collectively the Administrative Agent, the
Documentation Agent and the Syndication Agent, and AGENT shall mean any one of
the Agents, individually.
AGREEMENT shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and exhibits.
APPLICABLE MARGIN shall mean, as applicable:
(A) the percentage spread to be added to Base Rate under the
Base Rate Option at the indicated level of Leverage Ratio for any period during
which a Debt Rating is not in effect as set forth in the pricing grid on
SCHEDULE 1.1(A) PART (A) below the heading "Term Loan Base Rate Spread,"
(B) the percentage spread to be added to Base Rate under the
Base Rate Option at the indicated level of Leverage Ratio for any period during
which a Debt Rating is in effect as set forth in the pricing grid on SCHEDULE
1.1(A) PART (B) below the heading "Term Loan Base Rate Spread,"
(C) the percentage spread to be added to Euro-Rate under the
Euro-Rate Option at the indicated level of Leverage Ratio for any period during
which a Debt Rating is not in effect as set forth in the pricing grid on
SCHEDULE 1.1(A) PART (A) below the heading "Term Loan Euro-Rate Spread," or
(D) the percentage spread to be added to Euro-Rate under the
Euro-Rate Option at the indicated level of Leverage Ratio for any period during
which a Debt Rating is in effect as set forth in the pricing grid on SCHEDULE
1.1(A) PART (B) below the heading "Term Loan Euro-Rate Spread."
The Applicable Margin shall be computed in accordance with the parameters set
forth on SCHEDULE 1.1(A). Notwithstanding the foregoing, it is expressly agreed
that following the Closing Date through and including the Initial Delivery Date,
the Applicable Margin shall be
- 3 -
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 V of PART(A) of SCHEDULE
1.1(A). For periods after the Initial Delivery Date, until such time as the
Parent's senior unsecured long-term debt, on a consolidated basis, has been
rated Investment Grade, the Applicable Margin shall be the amount determined
under clause (A) or clause (C) above, and for any period thereafter when a Debt
Rating is in effect the Applicable Margin shall be the amount determined under
clause (B) or clause (D) 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 CREDIT FACILITY shall mean that certain Credit Agreement
by and among Parent, PNC Bank as administrative agent, Morgan as syndication
agent and First Union National Bank of Virginia as documentation agent,
providing for a $600,000,000 revolving credit facility and a $300,000,000 term
loan facility to Parent, as the same may be amended, restated, modified or
supplemented from time to time after the date hereof.
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.
ARRANGERS shall mean PNC Bank 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)(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
- 4 -
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 daily average outstanding principal amount
of the Eligible Note Receivable during such period.
AVERAGE PLEDGED ACCOUNT BALANCE shall mean, for any period of
determination, the daily average 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
Banks 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.
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 $375,000,000 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 the Closing Date 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.
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.
- 5 -
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 Rate 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 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 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 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.
CLOSING DATE shall mean the Business Day on which the Term
Loans 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 collectively the property of the
Borrower in which security interests are granted or purported to be granted to
the Administrative Agent for the benefit of the Banks under the Collateral
Documents.
COLLATERAL DOCUMENTS shall mean collectively, the Pledge
Agreement (Subsidiary Equity Interests), the Pledge Agreement (Investment
Property), the Collateral Sharing Agreement, and the Note Pledge Agreement, as
the same may be supplemented or amended from time to time in accordance herewith
or therewith and Collateral Document shall mean any of the Collateral Documents.
- 6 -
COLLATERAL SHARING AGREEMENT shall mean the Collateral Agency
and Sharing Agreement among the Borrower, the Guarantors, the Banks, the Swap
Parties (as defined therein) and the Collateral Agent (as defined therein),
substantially in the form of EXHIBIT 1.1(C)(2) hereto.
COMMITMENT shall mean as to any Bank its Term Loan Commitment
and Commitments shall mean the aggregate of the Term Loan Commitments of all of
the Banks.
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 Closing Date.
CONTRIBUTION AGREEMENT shall mean that certain Contribution
Agreement among the Borrower, AWAC, ARCO, Delta Housing and the Parent.
DEBT shall mean for any Person as of any date of determination
the difference between the following (a) and (b): (a) the sum 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 but excluding obligations under any interest rate swap, cap, collar
or floor agreement or other interest rate management device), (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,
and (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 Permitted Reduction Amount.
DEBT RATING shall mean the rating of the Parent's senior
unsecured long-term debt 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
- 7 -
any other similar transaction (including any option with respect to any of the
foregoing transactions) or any combination of the foregoing transactions.
DISTRIBUTION shall mean a Special Distribution (as defined in
the Contribution Agreement) of $700,000,000 to be paid by the Borrower to Delta
Housing pursuant to the Contribution Agreement, the proceeds of which will be
further distributed by Delta Housing to ARCO on or about the date of this
Agreement, in accordance with, and subject to adjustment as provided in, the
Contribution Agreement.
DOCUMENTATION AGENT shall mean NationsBank, N.A. 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 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.
For purposes of calculating the Leverage Ratio, (i) EBITDDA of the Borrower and
its Subsidiaries, including the Appropriate Percentage of EBITDDA of Canyon
Fuel, shall be assumed to be $39,200,000 for the fiscal quarter ended March 31,
1998, and (ii) EBITDDA for the Borrower and its Subsidiaries, including the
Appropriate Percentage of EBITDDA of Canyon Fuel for the months of April and
May, 1998, shall be determined based upon the results from the operations of the
business of such Persons for such months by ARCO as set forth in an income
statement with respect to such months prepared by ARCO and reasonably acceptable
to the Agents, shall take into account the $1,000,000 per month reduction in
overhead resulting from the consummation of the Acquisition, shall assume that
operating lease expense of the Borrower and its Subsidiaries, including Canyon
Fuel, shall be $970,000 per month and shall assume that interest expense for
such Persons for such months shall be zero, with such calculation of EBITDDA for
the Borrower and its Subsidiaries for such months to be reasonably acceptable to
the Agents. Further, for purposes of calculating the Leverage Ratio for the
fiscal quarters ended June 30, 1998, and September 30, 1998, EBITDDA of the
Borrower and its Subsidiaries, including the Appropriate Percentage of EBITDDA
of Canyon Fuel, shall be deemed to be an amount equal to: (i) for the fiscal
quarter ended June 30, 1998 the product of, (x) without duplication, EBITDDA of
the Borrower and its Subsidiaries for the two fiscal quarters then ended
determined on a consolidated basis in accordance with GAAP, plus the Appropriate
Percentage of EBITDDA of Canyon Fuel, for the two fiscal quarters then ended,
determined on a consolidated basis in accordance with GAAP, multiplied by (y)
two (2); and (ii) for the fiscal quarter ended September 30, 1998 the product
of, (x) without duplication, EBITDDA of the Borrower and its Subsidiaries for
the three fiscal quarters then ended determined on a consolidated basis in
accordance with GAAP, plus the Appropriate Percentage of EBITDDA of Canyon Fuel
for the three fiscal quarters then ended determined on a consolidated basis in
accordance with GAAP, multiplied by (y) four-thirds (4/3).
- 8 -
ELIGIBLE NOTE RECEIVABLE shall mean that certain note payable
by the Parent to the Borrower, as the same may be amended, restated or modified
from time to time, 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 Banks pursuant to the
Note Pledge Agreement.
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 Hazardous Substances or arising from alleged injury or threat of
injury to the environment.
ENVIRONMENTAL COMPLAINT shall mean any written complaint
setting forth 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 CONDITIONS shall mean the presence 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 or remediation of such Regulated Substances or which otherwise
constitutes a violation of Environmental Laws.
ENVIRONMENTAL LAW shall mean any federal, state, local or
foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree
or judicial or agency interpretation, policy or guidance relating to the
environment or any release or disposal of or contamination by Hazardous
Substances.
ENVIRONMENTAL PERMIT shall mean any permit, approval, license
or other authorization required under any Environmental Law.
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
- 9 -
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 INTEREST PERIOD shall mean the Interest Period
applicable to a Loan subject to the Euro-Rate Option.
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.
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."
EXPIRATION DATE shall mean, with respect to the Commitments,
May 31, 2003.
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
- 10 -
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, without duplication, of Adjusted EBITDDA of the Borrower and its
Subsidiaries, plus 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 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 Net
Interest Expense (other than Permitted Loan Origination Expense) of the Borrower
and its Subsidiaries plus the Appropriate Percentage of Net 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 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. It is assumed that operating lease expense of the Borrower and its
Subsidiaries, including Canyon Fuel shall be $970,000 per month for the months
of April and May, 1998 and that interest expense for such Persons for such
months shall be zero. For purposes of calculating the Fixed Charge Coverage
Ratio for the fiscal quarters ended June 30, 1998, September 30, 1998 and
December 31, 1998, operating lease expense of the Borrower and its Subsidiaries,
including the Appropriate Percentage of operating lease expense of Canyon Fuel,
shall be deemed to be an amount equal to: (i) for the fiscal quarter ended June
30, 1998, the product of, (x) without duplication, operating lease expense of
the Borrower and its Subsidiaries determined and consolidated in accordance with
GAAP for such fiscal quarter, plus the Appropriate Percentage of operating lease
expense of Canyon Fuel for such fiscal quarter determined in accordance with
GAAP, multiplied by (y) four (4); (ii) for the fiscal quarter ended September
30, 1998, the product of, (x) without duplication, operating lease expense of
the Borrower and its Subsidiaries for the two fiscal quarters then ended
determined and consolidated in accordance with GAAP, plus the Appropriate
Percentage of operating lease expense of Canyon Fuel for the two fiscal quarters
then ended determined in accordance with GAAP, multiplied by (y) two (2); and
(iii) for the fiscal quarter ended December 31, 1998, the product of, (x)
without duplication, operating lease expense of the Borrower and its
Subsidiaries for the three fiscal quarters then ended determined and
consolidated in accordance with GAAP, plus the Appropriate Percentage of
operating lease expense of Canyon Fuel for the three fiscal quarters then ended,
determined in accordance with GAAP, multiplied by (y) four-thirds (4/3). For
purposes of calculating the Fixed Charge Coverage Ratio for the fiscal quarters
ended June 30, 1998, September 30, 1998 and December 31, 1998, Net Interest
Expense of the Borrower and its Subsidiaries, including the
- 11 -
Appropriate Percentage of Net Interest Expense of Canyon Fuel, shall be deemed
to be an amount equal to: (i) for the fiscal quarter ended June 30, 1998, the
product of, (x) without duplication, Net Interest Expense of the Borrower and
its Subsidiaries determined and consolidated in accordance with GAAP for such
fiscal quarter, plus the Appropriate Percentage of Net Interest Expense of
Canyon Fuel for such fiscal quarter determined in accordance with GAAP,
multiplied by (y) four (4); (ii) for the fiscal quarter ended September 30,
1998, the product of, (x) without duplication, Net Interest Expense of the
Borrower and its Subsidiaries for the two fiscal quarters then ended determined
and consolidated in accordance with GAAP, plus the Appropriate Percentage of Net
Interest Expense of Canyon Fuel for the two fiscal quarters then ended
determined in accordance with GAAP, multiplied by (y) two (2); and (iii) for the
fiscal quarter ended December 31, 1998, the product of, (x) without duplication,
Net Interest Expense of the Borrower and its Subsidiaries for the three fiscal
quarters then ended determined and consolidated in accordance with GAAP, plus
the Appropriate Percentage of Net Interest Expense of Canyon Fuel for the three
fiscal quarters then ended, determined in accordance with GAAP, multiplied by
(y) four-thirds (4/3).
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.
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 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 Banks.
HAZARDOUS SUBSTANCES shall mean petroleum and petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials, radon gas and any hazardous or solid waste,
hazardous substance or chemical substance, as such terms are defined under the
Resource Conservation and Recovery Act (42 U.S.C. Sections 4901 ET SEQ.), the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Sections 9601 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
Sections 2601 ET SEQ.) or any similar state law.
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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 and agreed that Derivatives Obligations
shall not be deemed to be Indebtedness.
INELIGIBLE SECURITY shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
INITIAL ANNUAL STATEMENTS AND COMPLIANCE CERTIFICATE shall
mean collectively with respect to the fiscal year of the Borrower ended December
31, 1998, the annual financial statements of the Borrower and its Subsidiaries
consisting of the unaudited consolidated and consolidating balance sheet as of
the end of such fiscal year, related consolidated statements of income and
equity and related consolidated statement of cash flows for the fiscal year then
ended, together with the duly executed related compliance certificate required
to be delivered to the Administrative Agent and the Banks pursuant to Section
7.3.3. It is acknowledged and agreed that the Initial Annual Statements and
Compliance Certificate are to be delivered by the Borrower for purposes of
calculating the Leverage Ratio as of December 31, 1998 in order to determine the
Applicable Margin. Notwithstanding the delivery of the Initial Annual Statements
and Compliance Certificate, the Borrower shall still be required to comply with
the provisions of Section 7.3.2 and deliver the audited financial statements
required thereby, together with the related Compliance Certificate required to
be delivered under Section 7.3.3.
INITIAL DELIVERY DATE shall mean the date the Borrower
delivers to the Administrative Agent and the Banks the Initial Annual Statements
and Compliance Certificate.
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.
- 13 -
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.
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.
INVESTMENT GRADE shall mean the rating of the Parent's senior
unsecured long-term debt, on a consolidated basis, of BBB- or better by Standard
& Poor's AND Baa3 or better by Moody's.
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.
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 or award of any Official Body.
LEVERAGE RATIO shall mean the ratio of the sum of, without
duplication, Debt of the Borrower and its Subsidiaries, plus 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 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
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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.
LOAN DOCUMENTS shall mean this Agreement, the Administrative
Agent's Letter, the Collateral Sharing Agreement, the Guaranty Agreement, the
Pledge Agreement (Subsidiary Equity Interests), the Pledge Agreement (Investment
Property), the Note Pledge Agreement, the 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 be
supplemented or amended 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 Term Loans or any Term Loan.
MANDATORY PREPAYMENT shall have the meaning assigned to such
term in Section 4.4.4.
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 Banks, to the extent permitted, to enforce their legal remedies
pursuant to this Agreement or any other Loan Document.
MATERIAL CONTRACTS shall mean collectively (i) the Acquisition
Documents, (ii) all other 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, and (iii) all coal
supply agreements or contracts (or related coal supply agreements or contracts)
under which the Borrower or any Subsidiary of the Borrower is required, over the
remaining term of such agreement or contract as of the Closing Date, to deliver
one million (1,000,000) tons or more of coal.
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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 Morgan Guaranty Trust Company of New York.
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 INTEREST EXPENSE shall mean, for any period of
determination, for any Person, interest expense of such Person for such period
determined in accordance with GAAP, if applicable, reduced by the Permitted
Adjustment Amount.
NOTE PLEDGE AGREEMENT shall mean the 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 Banks.
NOTES shall mean the Term Notes.
NOTICES shall have the meaning assigned to that term in
Section 10.6.
OBLIGATION shall mean any obligation or liability of any of
the Loan Parties to any Agent or any of the Banks, 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 Administrative Agent's Letter or any other Loan Document.
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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.
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.
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.
PERMITTED ADJUSTMENT AMOUNT shall mean for any period of
determination, if throughout such period either (i) the Parent's senior
unsecured long-term debt, on a consolidated basis, is rated 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 4.0 to 1.0, the
amount of interest income of the Borrower determined in accordance with GAAP
with respect to the Eligible Note Receivable for such period.
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 not
lower than A-1, by Standard & Poor's or P-1 by 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;
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(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 Bank providing the Interest Rate Protection
Agreement required by Section 7.1.13 [Interest Rate Protection];
(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 Banks 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;
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(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) Liens granted in the Collateral under the Collateral
Documents to the Administrative Agent for the benefit of the Banks; and
(x) 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 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 Parent's senior unsecured long-term debt, on a consolidated
basis, is rated 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 4.0 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.
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 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 Banks, as the same may be
supplemented, replaced, restated or amended from time to time in accordance
herewith or therewith.
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PLEDGE AGREEMENT (SUBSIDIARY EQUITY INTERESTS) shall mean the
Pledge Agreement (Subsidiary Equity Interests) substantially in the form of
EXHIBIT 1.1(P)(2) 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 Banks, as the
same may be supplemented, replaced, restated or amended from time to time in
accordance herewith or therewith.
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 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 or
other applicable Law in the Collateral.
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
Parent 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.
RATABLE SHARE shall mean the proportion that a Bank's
Commitment bears to the Commitments of all of the Banks.
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.
REGULATED SUBSTANCES shall mean any substance, the generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport,
- 20 -
recycling, reclamation, use, reuse, spilling, leaking, dumping, injection,
pumping, leaching, emptying, discharge, escape, release or other management or
mismanagement of which is regulated by the Environmental Laws.
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.
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
(i) if there are no Term Loans outstanding, Banks whose
Commitments aggregate at least 51% of the Commitments of all of the Banks, or
(ii) if there are Term Loans outstanding, Banks whose
outstanding Term Loans aggregate at least 51% of the total principal amount of
all of the Term Loans then outstanding.
SEC shall mean the Securities and Exchange Commission or any
governmental agencies substituted therefor.
SIGNIFICANT 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.
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 (i) with respect to which the ownership of equity interests thereof by
the Borrower or any Subsidiary of
- 21 -
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 for purposes of
calculating the Leverage Ratio and the Fixed Charge Coverage Ratio as described
more fully in the definitions of "Adjusted EBITDDA," "EBITDDA," "Leverage Ratio"
and "Fixed Charge Coverage Ratio."
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.
SYNDICATION AGENT shall mean Morgan in its capacity as
syndication agent for the Banks under this Agreement and its successors in such
capacity.
SYNDICATION DATE shall mean the earlier of (i) a date after
the Closing Date which is selected by the Arrangers and notice of which is given
by the Arrangers to the Borrower at least five (5) Business Days prior thereto
and (ii) or the 90th day following the Closing Date.
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.
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TERM LOAN shall have the meaning given to such term in Section
2.1; Term Loans shall mean collectively all of the Term Loans.
TERM LOAN 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 Term Loans," and thereafter on Schedule
I to the most recent Assignment and Assumption Agreement executed by such Bank,
and Term Loan Commitments shall mean the aggregate Term Loan Commitments of all
of the Banks.
TERM NOTES shall mean collectively and Term Note shall mean
separately all of the Term Notes of the Borrower in the form of EXHIBIT 1.1(T)
issued by the Borrower at the request of a Bank pursuant to Section 2.3
evidencing the Term Loans, together with all amendments, extensions, renewals,
replacements, refinancings or refunds thereof in whole or in part.
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.
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 5.1.21.
U.S. shall mean the United States of America.
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 Banks shall be deemed to include good-faith estimates by the
Administrative Agent or the Banks (in the case of quantitative determinations)
and good-faith beliefs by the Administrative Agent or the Banks (in the case of
qualitative determinations) and such determination shall be conclusive absent
manifest error;
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1.2.3 ADMINISTRATIVE AGENT'S DISCRETION AND CONSENT.
whenever the Administrative Agent or the Banks 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
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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 date hereof applied on a basis
consistent with those used in preparing the Annual Statements referred to in
Section 5.1.7(i) [Historical Statements]. In the event of any change after the
date hereof 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. Nothing in this Section 1.3 will require the
Borrower or any of its Subsidiaries to continue accounting methods used by ACC
in preparing the ACC Annual Statements.
2. TERM LOAN FACILITY
2.1 TERM LOAN COMMITMENTS.
Subject to the terms and conditions hereof, and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make a term loan (the "Term Loan") to the Borrower on the Closing Date in such
principal amount as the Borrower shall request up to, but not exceeding, such
Bank's Term Loan Commitment.
2.2 NATURE OF BANKS' OBLIGATIONS WITH RESPECT TO TERM LOANS.
The obligations of each Bank to make a Term Loan to the Borrower
shall be in the proportion that such Bank's Term Loan Commitment bears to the
Term Loan Commitments of all Banks to the Borrower, but each Bank's Term Loan to
the Borrower shall never exceed its Term Loan Commitment. The failure of any
Bank to make a Term Loan shall not relieve any other Bank of its obligations to
make a Term Loan nor shall it impose any additional liability on any other Bank
hereunder. The Banks shall have no obligation to make Term Loans hereunder after
the Closing Date. The Term Loan Commitments are not revolving credit
commitments, and the Borrower shall not have the right to borrow, repay and
reborrow the Term Loans.
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2.3 TERM LOAN NOTES.
The Obligation of the Borrower to repay the unpaid principal amount
of the Term Loan made to it by each Bank, together with interest thereon, shall
be evidenced by a Term Note dated the Closing Date, payable to the order of each
Bank in a face amount equal to the Term Loan of such Bank. The principal amount
of each Term Note as provided therein shall be due and payable on the Expiration
Date.
2.4 USE OF PROCEEDS.
The proceeds of the Term Loans shall be used to finance a portion of
the Distribution 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 Closing
Date select the initial Interest Rate Option applicable to the Term Loans and
thereafter from time to time prior to the Expiration Date request the Banks 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 Closing 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 Closing 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 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.
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
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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 four (4) 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 Bank's highest lawful rate, the rate of interest on such Term Loan
shall be limited to such Bank'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 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, it is expressly agreed that through and including
the Initial Delivery 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 on the pricing grid under Level V of PART (A) of
SCHEDULE 1.1(A). It is expressly agreed that for periods after the Initial
Delivery Date until such time as the Parent's senior unsecured long-term debt,
on a consolidated basis, has been rated Investment Grade, the Applicable Margin
shall be determined based upon PART (A) of SCHEDULE 1.1(A), and for any period
thereafter when a Debt Rating is in effect the Applicable Margin shall be the
amount determined under PART (B) of SCHEDULE 1.1(A).
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 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 is increased or reduced with respect
to any period for which the Borrower has already paid interest, the
Administrative Agent shall recalculate the additional interest due from or to
the Borrower and shall, within fifteen (15) Business Days after
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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 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 Term Loans outstanding or if the Term Loans are due and
payable, such additional interest shall be paid promptly after receipt of
written request for payment from the Administrative Agent.
3.1.3.2 Any interest 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 Term Loans have been
repaid, the Banks shall pay the Administrative Agent for the account of the
Borrower such interest 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 Rate Request. The notice shall specify an interest period
(the "Interest Period") during which such Interest Rate Option shall apply, such
Interest Period to be one, two, three or six Months; PROVIDED, HOWEVER, that
prior to the date which is the Business Day following the Syndication Date, only
such periods as the Administrative Agent and the Borrowers mutually agree, not
to exceed a period of one Month, shall be available. 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 after the Expiration
Date; and
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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 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 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.
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3.4.2 ILLEGALITY; INCREASED COSTS; DEPOSITS NOT AVAILABLE.
If at any time any Bank 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 Bank 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 Bank 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 Bank with respect
to such Term Loan in the London interbank market,
then the Administrative Agent and the Banks shall have the rights specified in
Section 3.4.3.
3.4.3 ADMINISTRATIVE AGENT'S AND BANK'S RIGHTS.
In the case of any event specified in Section 3.4.1 above, the
Administrative Agent shall promptly so notify the Banks and the Borrower
thereof, and in the case of an event specified in Section 3.4.2 above, such Bank
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 Banks 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 Banks, in the case of such notice given by the
Administrative Agent, or (B) such Bank, in the case of such notice given by such
Bank, 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 Bank shall have later notified the Administrative Agent, of the
Administrative Agent's or such Bank'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 Bank 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 Bank 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
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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 Banks 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 Banks 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 Banks on the same day received by the Administrative
Agent, the Administrative Agent shall pay the Banks 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 Banks. The Administrative
Agent's and each Bank'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 BANKS.
The Term Loans shall be allocated to each Bank according to its
Ratable Share, and each selection of, conversion to or renewal of any Interest
Rate Option applicable to Term Loans and each payment or prepayment by the
Borrower with respect to principal or interest on the Term Loans or other fees
(except for the Administrative Agent's Fee) or amounts due from the Borrower
hereunder to the Banks with respect to the Term Loans, shall (except as provided
in Section 3.4.3 [Administrative Agent's and Bank's Rights] in the case of an
event specified in Sections 3.4 [Euro-Rate Unascertainable, etc.], 4.4.2
[Replacement of a Bank] or 4.5 [Additional Compensation in Certain
Circumstances]) be made in proportion to the applicable Term Loans outstanding
from each Bank and, if no Term Loans are then outstanding, in proportion to the
Ratable Share of each Bank.
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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 and on the 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 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 the Term 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 Term 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 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 Bank
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 one (1) Business Day prior to the date of
prepayment of the Term Loans, setting forth the following information:
(y) the date, which shall be a Business Day, on which the
proposed prepayment is to be made; and
(z) the total principal amount of such prepayment, which shall
not be less than $10,000,000 and in increments of $1,000,000 above
$10,000,000.
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. All Term Loan prepayments permitted by this
- 32 -
Section 4.4.1 shall be applied to the unpaid principal of the Term Loans. Except
as provided in Section 3.4.3 [Administrative Agent's and Bank's Rights], if the
Borrower prepays the Term Loan 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 Banks under Section 4.5.2
[Indemnity].
4.4.2 REPLACEMENT OF A BANK.
In the event any Bank (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 Bank in whole, together with all
interest accrued thereon, and terminate such Bank's Commitment within ninety
(90) days after (y) receipt of such Bank's notice under Section 3.4 [Euro-Rate
Unascertainable, etc.] or 4.5.1 [Increased Costs, etc.], or (z) the date such
Bank became subject to the control of an Official Body, as applicable; PROVIDED
that the Borrower shall also pay to such Bank 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 Bank as a consequence of the prepayment of the Loans of such Bank 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 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 Bank shall be provided by one or more of the remaining
Banks or a replacement bank 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 Bank 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 Bank,
it will if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Bank) to designate another lending office for any
Term Loans affected by such event, PROVIDED that such designation is made on
such terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, in such Bank'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 Bank provided in this Agreement.
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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 Bank 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 Bank),
(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 Bank, 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 Bank, or (B) otherwise applicable to the obligations of any Bank 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
Bank 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 Bank's
capital, taking into consideration such Bank's customary policies with respect
to capital adequacy) by an amount which such Bank in its sole discretion deems
to be material, such Bank 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 Bank to be necessary to
compensate such Bank 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 Bank 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 Bank 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 Bank to fund or maintain
Term Loans subject to a Euro-Rate Option) which such Bank sustains or incurs as
a consequence of any
- 34 -
(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 Requests
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 Bank 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 Bank (which determination may include such assumptions,
allocations of costs and expenses and averaging or attribution methods as such
Bank shall deem reasonable) to be necessary to indemnify such Bank 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 Bank
ten (10) Business Days after such notice is given.
4.6 NOTES.
Upon the request of any Bank, the Term Loans made by such Bank may
be evidenced by a Term Note in the form of EXHIBIT 1.1(T).
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 Banks and all income
and franchise taxes of the United States applicable to the Banks (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.
- 35 -
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 BANKS.
The Borrower shall indemnify the Banks 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 Bank 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 Bank 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 Banks 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 Bank, 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 through 4.7.4 shall survive the payment in full of
principal and interest under any promissory note made by Borrower to any Bank
under the Credit 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, the relevant Bank (to the extent such Bank 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 Bank 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 Bank is attributable to the Borrower, then
such Bank shall reimburse the Borrower for such amount as such Bank 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 Bank nor any Agent shall be obliged to disclose information
regarding its tax affairs or
- 36 -
computations to Borrower in connection with this Section 4.7.6 or any other
provision of Section 4.7.
5. REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agents and each of the
Banks 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, 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 Banks 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
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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.
(a) 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.
(b) To the knowledge of the Borrower on the Closing Date,
based on representations made to it by or on behalf of the ACC Group in the
Acquisition Documents, each member of the ACC Group 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.
(a) 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. On the Closing Date the Acquisition Transactions shall
be consummated in accordance with the terms of the Acquisition Documents. 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.
(b) To the knowledge of the Borrower on the Closing Date,
based on representations made to it by or on behalf of the ACC Group in the
Acquisition Documents, each of the Acquisition Documents has been duly and
validly executed and delivered by each member of the ACC Group party thereto. To
the knowledge of the Borrower on the Closing Date, based
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on representations made to it by or on behalf of the ACC Group in the
Acquisition Documents, each Acquisition Document constitutes the legal, valid
and binding obligation of each member of the ACC Group party thereto,
enforceable against each such member of the ACC Group 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.
5.1.5 NO CONFLICT.
(a) Neither the execution and delivery of this Agreement or
the other Loan Documents by any Loan Party or the Acquisition Documents by the
Borrower or any Subsidiary of the Borrower party thereto, 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 in the case of
the Acquisition Documents, of the Borrower or any Subsidiary of the Borrower
party thereto or (ii) any Law or any material agreement or instrument or order,
writ, judgment, injunction or decree to which the Borrower or any Subsidiary of
the Borrower party to the Acquisition Documents, or 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 the Borrower or any Subsidiary
of the Borrower party to the Acquisition Documents or of any Loan Party or any
Subsidiary of any Loan Party (other than Liens granted under the Loan
Documents).
(b) To the knowledge of the Borrower on the Closing Date,
based on representations made to it by or on behalf of the ACC Group in the
Acquisition Documents, neither the execution and delivery of the Acquisition
Documents by any member of the ACC Group, nor the consummation of the
transactions therein contemplated or compliance with the terms and provisions
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 such Person or (ii) any Law or any
material agreement or instrument or order, writ, judgment, injunction or decree
to which any such Person 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 such Person.
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
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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) ACC HISTORICAL STATEMENTS. The Borrower has
delivered to the Administrative Agent copies of the audited consolidated
year-end balance sheet for ACC as of the end of the fiscal years ended December
31, 1996 and December 31, 1997 and copies of the audited consolidated statements
of income, of equity investment and of cash flow for each of the three years in
the period ended December 31, 1997 (collectively, the "ACC Annual Statements").
To the knowledge of the Borrower based on representations made to it by or on
behalf of the ACC Group in the Acquisition Documents, the ACC Annual Statements
were compiled from the books and records maintained by ACC's management, are
correct and complete and fairly represent the consolidated financial condition
of ACC 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. To the
knowledge of the Borrower based on representations made to it by or on behalf of
the ACC Group in the Acquisition Documents, ACC has no liabilities, contingent
or otherwise, or forward or long-term commitments that are not disclosed in the
ACC Annual Statements or in the notes thereto, and there are no unrealized or
anticipated losses from any commitments of ACC which could reasonably be
expected to result in a Material Adverse Change. Since December 31, 1997, no
Material Adverse Change has occurred.
(iii) FINANCIAL PROJECTIONS. The Borrower has delivered
to the Agents financial projections of the Borrower and its Subsidiaries for the
period January 1, 1998 through and including December 31, 2002 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 ACC Annual Statements, the historical performance of Arch of
Wyoming LLC, 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 Acquisition Transactions and of the
transactions contemplated hereby as of the Closing 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 2.4 and 7.1.9.
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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 Bank in connection
herewith or therewith, contains with respect to the Borrower and its
Subsidiaries, and to the knowledge of the Borrower with respect to the ACC Group
on the Closing Date, based on representations made to it by or on behalf of the
ACC Group in the Acquisition Documents, 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
Banks 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.
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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 Closing Date except as otherwise indicated on SCHEDULE
5.1.11. All material consents, approvals, exemptions, orders or authorization
of, or registration or filing with, any Official Body or any other Person as
required by any Law or any agreement in connection with the execution, delivery
and carrying out of the Acquisition Transactions in accordance with the
Acquisition Documents have been obtained or made on or prior to the Closing
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 Closing 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 clauses (ii) or
(iii) of 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
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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
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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.
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. 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. There are no threatened or pending
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.
Neither any Loan Party nor any Subsidiary of any Loan Party has received any
notice from any governmental or regulatory authority regarding actual or
contingent liability in connection with any release or threatened release of any
Hazardous Substance into the environment which actual or contingent liability
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.
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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. On the Closing Date, the Borrower, in
accordance with the Purchase Agreement and the Contribution Agreement, shall
have received as a contribution to its capital such assets as are necessary for
the operation of the Business, including, without limitation, all material
assets set forth in the ACC Balance Sheet (other than assets permitted to
otherwise be sold or transferred by ACC in accordance with the Purchase
Agreement or Contribution Agreement prior to the Closing Date and other than
those assets which, in accordance with the Purchase Agreement or Contribution
Agreement, are not to be transferred by ACC to the Borrower).
5.1.21 SECURITY INTERESTS.
The Liens and security interests granted to the Administrative
Agent for the benefit of the Banks 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.
Upon the filing of financing statements relating to said security interests in
each office and, in each jurisdiction where required in order to perfect the
security interests described above, taking possession of any certificates or
instruments evidencing the Collateral, all such action as is necessary or
advisable to establish such rights of the Administrative Agent will have been
taken, and there will be, upon execution and delivery of the Collateral
Documents, such filings and such taking of possession, 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 Banks 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
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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 BLACK LUNG.
As of the Closing Date, to the knowledge of the Borrower on
the Closing Date, based on representations made to it by or on behalf of the ACC
Group in the Acquisition Documents, the ACC Annual Statements contain reasonably
adequate reserves in accordance with GAAP for the black lung liability of ACC.
5.1.24 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 will not alter
the rights of Canyon Fuel under the Coastal Agreement.
5.2 CONTINUATION OF REPRESENTATIONS.
Except as to those representations and warranties limited by their
terms to the Closing Date, the Borrower makes the representations and warranties
in this Section 5 on the date hereof, on the Closing Date and on the Syndication
Date as provided in and subject to Section 6.2.
6. CONDITIONS OF LENDING
The obligation of each Bank to 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 CLOSING.
On the Closing 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 Closing Date (with each such representation
and warranty to be made after giving effect to the consummation of the
Acquisition Transactions and the making of the Distribution) 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
- 46 -
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 Bank a certificate of the Borrower dated the Closing 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 Bank a certificate dated the Closing 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 Bank 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 Closing 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 and the other Loan Documents shall have been
duly executed and delivered to the Administrative Agent for the benefit of the
Banks, 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
Banks 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
perfect the Lien of the Banks on the Collateral or other satisfactory evidence
of such recordation and filing.
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6.1.4 OPINION OF COUNSEL.
There shall be delivered to the Administrative Agent for the
benefit of each Bank a written opinion of Kirkpatrick & Lockhart LLP and of
Jeffry Quinn, 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.
There shall also be delivered to the Administrative Agent a copy of the opinion
of John R. Lucas, Associate Counsel to ARCO, in connection with the Acquisition
Transactions.
6.1.5 LEGAL DETAILS.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents and by
the Acquisition 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, and all
other commitment and other fees accrued through the Closing Date and the costs
and expenses for which the Arrangers and the Banks 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.
6.1.8 OFFICER'S CERTIFICATE REGARDING NO MATERIAL ADVERSE
CHANGE.
Since December 31, 1997, to the Borrower's knowledge, no event
shall have occurred with respect to ACC which could reasonably be expected to
result in a Material Adverse Change; since December 31, 1997, 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 Bank a
certificate dated the Closing 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
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and its Subsidiaries on a consolidated basis are Solvent, 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, with all certifications after giving
effect to the Acquisition Transactions and the making of the Distribution.
6.1.9 NO VIOLATION OF LAWS.
The making of the Loans, the making of the Distribution and
the consummation of the Acquisition Transactions and of the transactions
contemplated by the Acquisition Documents and the Contribution Agreement shall
not contravene any Law applicable to any Loan Party or any of the Banks.
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, the
Acquisition Transactions, the Acquisition Documents and the Contribution
Agreement 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 or which in the good faith judgment of the Agents
could adversely affect the syndication of the Loans.
6.1.11 ACQUISITION.
Any material change to the Contribution Agreement or the
Purchase Agreement, and any changes to the forms of the Tax Sharing Agreement or
the LLC Agreements delivered to the Arrangers at or about the time of execution
of the Purchase Agreement shall be reasonably satisfactory to the Arrangers. The
amount of and the terms of payment of the Distribution shall be not greater than
$700,000,000. All conditions to closing under the Acquisition Documents shall
have been satisfied or waived to the satisfaction of the Agents. The Acquisition
Transactions shall have been consummated in accordance with the terms of the
Acquisition Documents, and an Authorized Officer of the Borrower shall certify
the foregoing to the Administrative Agent for the benefit of each Bank.
6.1.12 BORROWER CAPITAL AND FINANCING.
Contributions to the equity of the Borrower shall have been
consummated on terms and conditions and in the amounts required by the
Acquisition Documents.
6.1.13 INSURANCE.
The Borrower shall have delivered to the Agents evidence of
the insurance required under the Loan Documents.
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6.1.14 REPORT OF INDEPENDENT ENGINEER.
The report of Weir International, independent engineers, shall
have been provided to the Agents with respect to the coal reserves, coal supply
contracts, mining conditions and related matters for the properties to be
acquired by or contributed to Borrower as part of the Acquisition Transactions,
and such report shall be satisfactory in form, substance and scope to the
Agents.
6.1.15 CREDIT FACILITY FOR THE PARENT.
All conditions to closing shall have been satisfied under the
Arch Credit Facility.
6.1.16 SATISFACTORY ENVIRONMENTAL REVIEW.
The Loan Parties shall cause to be performed and completed an
environmental audit with respect to the owned and leased real property of the
Loan Parties (collectively, the "Reviewed Property") by consultants satisfactory
to the Agents and shall provide all reports and results of such audit in writing
to the Agents. Such reports shall meet the Agents' minimum requirements for
phase I environmental assessments and any other requirements of the Agents. The
environmental condition of the Loan Parties' and their Subsidiaries' assets, as
substantiated by such audit, shall be satisfactory to the Agents in all
respects. On the Closing Date the appropriate officers of the applicable Loan
Parties shall have delivered to the Agents in form and substance satisfactory to
the Agents a certificate to the effect that the Loan Parties have made known to
the Agents all information known to them and their Subsidiaries concerning
Environmental Conditions and Environmental Complaints and the Loan Parties' and
their Subsidiaries' compliance with the Environmental Laws relating to any of
the Reviewed Property and any other site for which any Loan Party or Subsidiary
of a Loan Party has received notice that it is potentially responsible for
Environmental Conditions.
6.1.17 NON-OCCURRENCE OF CERTAIN EVENTS.
No disruption or change in the financial, banking or capital
markets shall have occurred or shall be pending which, in the good faith
judgment of the Agents, could adversely affect the syndication of the Loans.
6.1.18 DELTA HOUSING GUARANTY.
An original, executed counterpart of the Delta Housing
Guaranty shall have been delivered to the Administrative Agent.
6.2 SYNDICATION.
6.2.1 SYNDICATION DATE REPRESENTATIONS AND WARRANTIES.
(a) On the Syndication Date, the representations
and warranties of the Borrower contained in Section 5 and in the other Loan
Documents shall be true with the
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same effect as though such representations and warranties had been made on 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, and no Event of Default or Potential Default shall have occurred and be
continuing or shall exist.
(b) On the Syndication Date, the Loan Parties shall
deliver to the Administrative Agent for the benefit of the Banks (i) an
Officer's Certificate dated as of the Syndication Date with respect to the
matters set forth in Sections 6.2.1(a), (ii) a Secretary's Certificate dated as
of the Syndication Date with respect to the matters set forth in Section 6.1.2
and stating that there have been no changes in the charter documents or bylaws
of the Borrower or any other Loan Party since the Closing Date, (iii) Term Notes
dated as of the Syndication Date which give effect to the syndication on the
Syndication Date of the Commitments of the Banks which originally executed the
Credit Agreement in exchange for the original Term Notes issued to such Banks,
(iv) written opinions of the counsel to the Loan Parties identified in Section
6.1.4 with respect to such matters as the Administrative Agent may request, and
(v) acknowledgments dated as of the Syndication Date to the Loan Documents in
form and substance satisfactory to the Administrative Agent.
6.2.2 SYNDICATION COOPERATION.
The Borrower will use all reasonable efforts to assist the
Agents in syndicating the credit facilities, including participating in meetings
with potential syndicate members. The Borrower agrees that it will cooperate
with the Agents in syndicating the Term Loans, including, without limitation, by
consenting to reasonable amendments to this Agreement (other than changes in
pricing) and the other Loan Documents which may be required by potential
syndicate members.
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
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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 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
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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 and
renew all Environmental Permits necessary for their respective operations and
properties; and manage, use and handle all Hazardous 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.
The Borrower will use the proceeds of the Loans only to
finance the making of a portion of the Distribution. The Borrower's use of the
proceeds of the Loans shall not be for any purpose which contravenes any
applicable Law or any provision hereof.
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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 and all applicable Federal, state and local laws, rules and
regulations, including, without limitation, laws and regulations relating to
land reclamation, pollution control and mine safety.
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
licenses and permits required for the lawful operation of the Borrower and each
of its Subsidiaries 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
license, 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 INTEREST RATE PROTECTION.
The Borrower shall have entered into, within ninety (90) days
following the Closing Date, interest rate protection agreements with financial
institutions acceptable to the Administrative Agent (it being understood that
any Bank will be acceptable to the Administrative Agent) for a period of at
least three (3) years (y) priced with a strike price not to exceed two percent
(2%) over the rate of interest otherwise applicable to the Term Loans as of the
Closing Date, and (z) in an amount equal to at least 50% of the Term Loans
funded on the Closing Date (the "Interest Rate Protection Agreement").
Documentation for the Interest Rate Protection Agreement shall be in a standard
International Swap Dealer Association Agreement, shall provide for the method of
calculating the reimbursable amount of the provider's credit exposure in a
reasonable and customary manner, and shall not require that any collateral,
other than Collateral pledged to the Administrative Agent for the benefit of the
Banks, be provided as security for such agreement.
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:
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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,
$25,000,000; and
(iv) Indebtedness of any Subsidiary of the Borrower
payable to the Borrower.
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];
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(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], 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
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 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 90 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 90 days after 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] and 7.2.12 [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
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(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 Banks 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
[Joinder of Guarantors] and shall cause each owner of the equity interests
thereof to pledge such equity interests to the Administrative Agent for the
benefit of the Banks 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.
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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, resulting in liability under ERISA or
otherwise violate ERISA.
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
Closing Date through and
including December 31,
1998 5.50 TO 1.00
------------
January 1, 1999 through and
including December 31,
1999 5.25 TO 1.00
------------
January 1, 2000 through and
including December 31,
2000 4.50 TO 1.00
------------
January 1, 2001 through and
including December 31,
2001 3.50 TO 1.00
------------
January 1, 2002 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 specified below for the periods specified below:
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PERIOD RATIO
Closing Date through and
including December 31,
1998 2.00 TO 1.00
------------
January 1, 1999 through and
including December 31,
1999 2.25 TO 1.00
------------
January 1, 2000 through and
including December 31,
2000 2.75 TO 1.00
------------
January 1, 2001 through and
including December 31,
2001 3.50 TO 1.00
------------
January 1, 2002 and
thereafter 4.50 TO 1.00
-------------
7.2.12 MINIMUM NET WORTH.
The Borrower shall not at any time permit Consolidated
Tangible Net Worth to be less than the Base Net Worth.
7.2.13 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 to the Parent so long as any such loan is
evidenced by the Eligible Note Receivable which is pledged to the Administrative
Agent for the benefit of the Banks pursuant to the Note Pledge Agreement; and
(iv) the investment by the Borrower in its Subsidiaries.
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7.2.14 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.
7.2.15 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
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 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 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
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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 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,
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 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 and (iii) 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 $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 Parent's Debt Rating, notice of such change.
Borrower will deliver
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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 (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.
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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 Bank 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 Form
5310, or any successor or equivalent form to Form 5310, 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 Bank may reasonably request.
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) when such principal is due hereunder or (ii) any interest on any 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;
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8.1.2 BREACH OF WARRANTY.
(a) Any representation or warranty made by the Borrower in
Sections 5.1.3(b), 5.1.4(b), 5.1.5(b), or 5.1.7(i) or (ii) or, with respect to
the ACC Group, in Section 5.1.9 hereof, shall prove to have been false or
misleading as of the time it was made by the Borrower without giving effect to
the qualification in each such Section that the Borrower was making such
representation or warranty "to the knowledge of the Borrower", to an extent that
could reasonably be expected to result in a Material Adverse Change;
(b) Any other 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 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, 7.3.2 or 7.3.3 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 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;
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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 UNINSURED LOSSES; 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;
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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) other than Ashland Inc. 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 were
directors of the Parent on the first day of such period shall cease to
constitute a majority of the board of directors of the Parent;
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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 through
8.1.13 shall occur and be continuing, the Banks and the Administrative Agent
shall be under no further
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obligation to make Loans, 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, and (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 Banks 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
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 Banks shall be under no further obligation to make Loans hereunder 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 Banks
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 Bank
to whom any Obligation is owed by any Loan Party hereunder or under any other
Loan Document or any participant of such Bank which has agreed in writing to be
bound by the provisions of Section 9.13 [Equalization of Banks] and any branch,
Subsidiary or Affiliate of such Bank 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 Bank 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 Bank or participant or such branch, Subsidiary or Affiliate.
Such right shall exist whether or not any Bank 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 Bank 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 any Bank, if owed any amount with respect to the Term Loans, may
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
shall have taken any action pursuant to this Section 8.2 and until all
Obligations of the Loan Parties have been paid in full, any and all proceeds
received by the Administrative Agent from any sale or
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other disposition of the Collateral, or any part thereof, or the exercise of any
remedy by the Administrative Agent shall be applied as follows:
(i) first, to reimburse the Administrative Agent and
the Banks for out-of-pocket costs, expenses and disbursements, including
reasonable attorneys' and paralegals' fees and legal expenses, incurred by the
Administrative Agent or the Banks 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 Banks 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 Banks 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 Bank hereby designates, appoints and authorizes: (i) PNC Bank
to act as Administrative Agent for such Bank under this Agreement and the other
Loan Documents for such Bank under this Agreement and to execute and deliver or
accept on behalf of each of the Banks the other Loan Documents, and (ii)
authorizes each of PNC Bank and Morgan to act as Agent for such Bank under this
Agreement. Each Bank 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
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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 Banks to the extent
provided in this Agreement, and each of PNC Bank and Morgan 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 NationsBank,
N.A. has received the title of Documentation Agent under this Agreement,
however, such designation is solely to give NationsBank, N.A. such title and
NationsBank, N.A. 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 Bank; 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 Bank 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 Bank; (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
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nor any Agent shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Bank 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
Bank 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,
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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 Bank 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 Banks 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 Banks 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 Bank,
the Administrative Agent or any Agent or any of their respective Subsidiaries
against the Administrative Agent, any Agent, any Bank 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 Bank 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 Bank agrees that, except for
notices, reports and other documents expressly required to be furnished to the
Banks 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
Banks, 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 Bank 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.
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9.7 REIMBURSEMENT AND INDEMNIFICATION OF AGENTS BY THE BANKS.
Each Bank 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 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 Bank 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 Bank was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense (except that
such Bank shall remain liable to the extent such failure to give notice does not
result in a loss to the Bank), or (c) if the same results from a compromise and
settlement agreement entered into without the consent of such Bank, which shall
not be unreasonably withheld. In addition, each Bank 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 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 Banks 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."
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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 Commitment and the Term Loans 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, Morgan and its Affiliates, each other Agent and its Affiliates and
each of the Banks 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 Bank, as though such Bank were not a Bank hereunder. The
Banks 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 Banks.
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 BANKS.
The Banks and the holders of any participations in any Commitments
or Loans or other rights or obligations of a Bank hereunder agree among
themselves that, with respect to all amounts received by any Bank or any such
holder for application on any Obligation hereunder or
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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 Banks 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 Bank's Rights], 4.4.2
[Replacement of a Bank] or 4.5 [Additional Compensation in Certain
Circumstances]. The Banks or any such holder receiving any such amount shall
purchase for cash from each of the other Banks an interest in such Bank's Loans
in such amount as shall result in a ratable participation by the Banks 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 Bank 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 Bank
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 Bank], 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
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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 Bank 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 Bank 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 Banks and whether such funding
occurs before or after the time on which Banks 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 Bank, the
Administrative Agent shall be entitled to recover such amount on demand from
such Bank (or, if such Bank 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 Bank whether in respect of the Loans, fees or any other amounts
due to the Banks under this Agreement. In the event an error in computing any
amount payable to any Bank is made, the Administrative Agent, the Borrower and
each affected Bank 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 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
Banks, and the Loan Parties shall not
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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 Banks 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 Banks, 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 Banks 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 Banks and the Loan Parties; PROVIDED, that, without the written consent of
all the Banks, 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 Term Loan Commitment of any Bank
hereunder or extend the Expiration Date;
10.1.2 EXTENSION OF PAYMENT; REDUCTION OF PRINCIPAL,
INTEREST OR FEES; MODIFICATION OF TERMS OF
PAYMENT.
Whether or not any Loans are outstanding, extend the time for
payment of principal or interest of any Loan or any fee payable to any Bank, or
reduce the principal amount of or the rate of interest borne by any Loan or
reduce the rate of any fee payable to any Bank;
10.1.3 RELEASE OF COLLATERAL OR GUARANTOR.
Release any Collateral or release any Guarantor from its
Obligations under the Guaranty Agreement or any other security for any of the
Loan Parties' Obligations, other than, prior to an Event of Default, upon the
request by the Borrower to the Administrative Agent, release from the Guaranty
Agreement of any Subsidiary which is no longer a Significant Subsidiary (which
request shall be accompanied by evidence satisfactory to the Administrative
Agent in its sole discretion that the Subsidiary which the Borrower is
requesting be so released from the Guaranty Agreement is no longer a Significant
Subsidiary), which release from the Guaranty Agreement of a non Significant
Subsidiary may be granted solely by the Administrative Agent without the
approval of any Bank; or
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10.1.4 MISCELLANEOUS
Amend Sections 4.2 [Pro Rata Treatment of Banks], 9.6
[Exculpatory Provisions, etc.] or 9.13 [Equalization of Banks] or this Section
10.1, alter any provision regarding the pro rata treatment of the Banks, change
the definition of Required Banks, or change any requirement providing for the
Banks, the Required Banks or all the 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 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 Bank 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 Banks 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 Bank 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 BANKS BY THE BORROWER;
TAXES.
The Borrower agrees unconditionally upon demand to pay or reimburse
to each Bank (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 Bank 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 Bank (except with respect to (A) and (B) below), incurred by such Bank (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 Bank, in its
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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 Bank 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 Bank'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. The Banks will attempt to minimize the fees and expenses of legal
counsel for the Banks which are subject to reimbursement by the Borrower
hereunder by considering the use of one law firm to represent the Banks, 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 Bank 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 Banks
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 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 Bank 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 Bank) of such Bank 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
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been in the absence of such change. Notional funding offices may be selected by
each Bank without regard to such Bank's actual methods of making, maintaining or
funding the Loans or any sources of funding actually used by or available to
such Bank.
10.5.2 ACTUAL FUNDING.
Each Bank shall have the right from time to time to make or
maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such
Bank to make or maintain such Loan subject to the last sentence of this Section
10.5.2. If any Bank 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 Bank, but in no event shall any Bank's use of such a branch,
Subsidiary or Affiliate to make or maintain any part of the Loans hereunder
cause such Bank 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 Bank (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 Bank 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 Banks 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.
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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
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 Banks, the making of Loans 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 hereunder and until termination of the Commitments
and payment in full of the 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 Banks] and 10.3 [Reimbursement and
Indemnification of Banks by the Borrower, etc.], shall survive payment in full
of the 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 Banks, 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.
This Section shall apply to any assignment or participation by
a Bank of its Loans or Commitments. Each Bank 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
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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, and PROVIDED 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 Commitment or Term Loans. Each
Bank 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 Term Loan 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 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 Term Loan Commitment assumed by it and a new Term Note to the
assigning Bank in an amount equal to the Term Loan Commitment retained by it
hereunder. Any assigning Bank 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 Bank in respect of
such participation to be those set forth in the agreement executed by such Bank
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 Bank'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 Bank 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 relating to federal income tax withholding. Each Bank 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 Bank 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].
10.11.3 FOREIGN 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 Bank 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 Bank 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].
- 82 -
10.11.4 ASSIGNMENTS BY BANKS TO FEDERAL RESERVE BANKS.
Notwithstanding any other provision in this Agreement, any
Bank 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 in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14 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 Bank of its obligations hereunder
or under any other Loan Document.
10.12 CONFIDENTIALITY.
10.12.1 GENERAL.
The Agents, the Administrative Agent and the Banks 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 Banks
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 administration and enforcement of this Agreement, subject to
agreement of such Persons to maintain the confidentiality, (ii) to assignees and
participants as contemplated by Section 10.11 [Successors and Assigns], (iii) 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, (iv) 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,
(v) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about the Bank's investment portfolio or (vi) if the Borrower shall
have consented to such disclosure.
10.12.2 SHARING INFORMATION WITH AFFILIATES OF THE BANKS.
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 Bank or by one or more Subsidiaries or Affiliates of such
Bank and the Borrower (on its own behalf and on behalf of its Subsidiaries)
hereby authorizes each Bank to share any information delivered to such Bank by
the Borrower and its Subsidiaries pursuant to this Agreement, or in connection
with the decision of such Bank to enter into this Agreement, to any such
Subsidiary or Affiliate of such Bank, it being understood that any such
Subsidiary or Affiliate of any Bank receiving such information shall be bound by
the provisions of Section 10.12.1 above as if it were a Bank
- 83 -
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 BANK'S CONSENT.
Whenever the Administrative Agent's, any Agent's or any Bank'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 Bank 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 BANKS 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.
- 84 -
10.17 TAX WITHHOLDING CLAUSE.
Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the Administrative Agent
two (2) duly completed copies of the following: (i) Internal Revenue Service
Form W-9, 4224 or 1001, or other applicable form prescribed by the Internal
Revenue Service, certifying that such Bank, assignee or participant is entitled
to receive payments under this Agreement and the other Loan Documents without
deduction or withholding of any United States federal income taxes, or is
subject to such tax at a reduced rate under an applicable tax treaty, or (ii)
Internal Revenue Service Form W-8 or other applicable form or a certificate of
such Bank, assignee or participant indicating that no such exemption or reduced
rate is allowable with respect to such payments. Each Bank, assignee or
participant required to deliver to the Borrower and the Administrative Agent a
form or certificate pursuant to the preceding sentence shall deliver such form
or certificate as follows: (A) each Bank which is a party hereto on the Closing
Date shall deliver such form or 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 Bank; (B) each assignee or
participant shall deliver such form or 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 form or 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 Bank, assignee or participant which so delivers a
Form W-8, W-9, 4224 or 1001 further undertakes to deliver to each of the
Borrower and the Administrative Agent two (2) additional copies of such form (or
a successor form) on or before the date that such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form 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, either certifying that such Bank, assignee or participant
is entitled to receive payments under this Agreement and the other Loan
Documents without deduction or withholding of any United States federal income
taxes or is subject to such tax at a reduced rate under an applicable tax treaty
or stating that no such exemption or reduced rate is allowable. The
Administrative Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Bank, assignee or participant
establishes an exemption or that it is subject to a reduced rate as established
pursuant to the above provisions.
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 Banks 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
- 85 -
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.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
- 86 -
[SIGNATURE PAGE 1 OF 24 TO THE CREDIT AGREEMENT]
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/ Miriam Rogers Singer By: /s/ Patrick A. Kriegshauser
- -------------------------------- -----------------------------------
Miriam Rogers Singer, Secretary Patrick A. Kriegshauser
Vice President and Treasurer
[Seal]
[SIGNATURE PAGE 2 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION,
individually and as Administrative
Agent
By: /s/ Richard L. Munsick
---------------------------------
Title: Vice President
------------------------------
[SIGNATURE PAGE 3 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, individually and as
Syndication Agent
By: /s/ John M. Mikolay
----------------------------------
John M. Mikolay
Title: Vice President
------------------------------
[SIGNATURE PAGE 4 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
NATIONSBANK, N.A., individually and
as Documentation Agent
By: /s/ Denise A. Smith
---------------------------------
Title: Senior Vice President
------------------------------
[SIGNATURE PAGE 5 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
BANK OF MONTREAL
By: /s/ Ian M. Plester
---------------------------------
Ian M. Plester
Title: Director
------------------------------
[SIGNATURE PAGE 6 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE BANK OF NEW YORK
By: /s/ Nathan S. Howard
---------------------------------
Nathan S. Howard
Title: Vice President
------------------------------
[SIGNATURE PAGE 7 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------------
F.C.H. Ashby
Title: Senior Manager Loan Operations
-------------------------------
[SIGNATURE PAGE 8 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
BARCLAYS BANK PLC
By: /s/ Carol A. Cowan
---------------------------------
Carol A. Cowan
Title: Director
------------------------------
[SIGNATURE PAGE 9 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE CHASE MANHATTAN BANK
By: /s/ Michael D. Feist
---------------------------------
Michael D. Feist
Title: Vice President
------------------------------
[SIGNATURE PAGE 10 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By: /s/ Hajime Watanabe
---------------------------------
Hajime Watanabe
Title: Deputy General Manager
------------------------------
[SIGNATURE PAGE 11 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Sandra E. Horwitz
----------------------------------
Sandra E. Horwitz
Title: Senior Vice President
Midwest Regional Manager
-------------------------------
[SIGNATURE PAGE 12 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ William V. Clifford
---------------------------------
William V. Clifford
Title: Vice President
------------------------------
[SIGNATURE PAGE 13 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
INTENTIONALLY OMITTED
[SIGNATURE PAGE 14 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
BANK ONE, KENTUCKY, NA
By: /s/ James A. Tutt
---------------------------------
Title: Senior Vice President
------------------------------
[SIGNATURE PAGE 15 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE FUJI BANK, LIMITED
By: /s/ Peter T. Chinnici
---------------------------------
Peter T. Chinnici
Title: Joint General Manager
------------------------------
[SIGNATURE PAGE 16 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ Walter Wolff
--------------------------------
Title: Senior Vice President/Deputy
General Manager
------------------------------
[SIGNATURE PAGE 17 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ Stephen M. Reese
---------------------------------
Title: Vice President
------------------------------
[SIGNATURE PAGE 18 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: /s/ Randall M. Kob
----------------------------------
Randall M. Kob
Title: Vice President
-------------------------------
[SIGNATURE PAGE 19 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By: /s/ John Casparian
-----------------------------------
Title: Investment Officer
--------------------------------
[SIGNATURE PAGE 20 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
ABN AMRO BANK, N.V.
By: /s/ Gregory D. Amoroso
----------------------------------
Title: Group Vice President
-------------------------------
/s/ Carrie A. Pence
----------------------------------
Carrie A. Pence
Vice President
-------------------------------
[SIGNATURE PAGE 21 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
DRESDNER BANK AG NEW YORK BRANCH
By: /s/ Wayde Colquhoun
---------------------------------
Wayde Colquhoun
Title: Vice President
------------------------------
By: /s/ P. Douglas Sherrod
---------------------------------
P. Douglas Sherrod
Title: Vice President
------------------------------
[SIGNATURE PAGE 22 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
FIRST UNION NATIONAL BANK
By: /s/ Laurence M. Levy
----------------------------------
Title: Vice President
------------------------------
[SIGNATURE PAGE 23 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
BANK HAPOALIM B.M. PHILADELPHIA
BRANCH
By: /s/ Carl Kopfinger
---------------------------------
Title: Vice President
-----------------------------
By: /s/ F.J. McEntee
---------------------------------
Title: Vice President/Controller
------------------------------
[SIGNATURE PAGE 24 OF 24 TO THE ARCH WESTERN RESOURCES, LLC CREDIT AGREEMENT]
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By: /s/ Richard E. Stahl
---------------------------------
Title: Executive Vice President
------------------------------
================================================================================
EXHIBIT 4.3
-----------------------------------
OMNIBUS AMENDMENT AGREEMENT
Dated as of June 1, 1998
in respect of
ARCH COAL TRUST NO. 1998-1
PARENT GUARANTY AND SURETYSHIP AGREEMENT
LEASE INTENDED AS SECURITY
SUBSIDIARY GUARANTY AND SURETYSHIP AGREEMENT
Each dated as of January 15, 1998
-----------------------------------
================================================================================
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AMENDMENT OF ORIGINAL AGREEMENTS....................... 2
Section 1.1. Amendments to Parent Guaranty....................... 2
Section 1.2. Amendments to Lease................................. 15
SECTION 2. RELEASE................................................ 27
SECTION 3. REPRESENTATIONS OF PARENT GUARANTOR, THE SUBSIDIARY
GUARANTORS AND THE LESSEES.......................... 27
SECTION 4. ACKNOWLEDGMENT BY GUARANTORS........................... 28
SECTION 5. AUTHORIZATION AND DIRECTION............................ 28
SECTION 6. CONDITIONS PRECEDENT................................... 28
SECTION 7. FEES AND EXPENSES...................................... 29
SECTION 8. MISCELLANEOUS.......................................... 29
Section 8.1. Construction........................................ 29
Section 8.2. References.......................................... 29
Section 8.3. Headings and Table of Contents...................... 29
Section 8.4. Counterparts........................................ 29
Section 8.5. Governing Law....................................... 29
OMNIBUS AMENDMENT AGREEMENT
THIS OMNIBUS AMENDMENT AGREEMENT dated as of June 1, 1998 (this "Amendment") is
among APOGEE COAL COMPANY, a Delaware corporation, CATENARY COAL COMPANY, a
Delaware corporation, and HOBET MINING, INC., a West Virginia corporation (each
a "Lessee" and collectively the "Lessees"), ARCH COAL, INC., a Delaware
corporation ("Parent Guarantor"), GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY,
BANK OF MONTREAL, BARCLAYS BANK PLC, FIRST UNION NATIONAL BANK AND BA LEASING &
CAPITAL CORPORATION (the "Certificate Purchasers" ), ARCH COAL SALES COMPANY,
INC., ARK LAND COMPANY AND MINGO LOGAN COAL COMPANY (each a "Subsidiary
Guarantor" and collectively the "Subsidiary Guarantors") and FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as
certificate trustee under the Trust Agreement referred to below ("Certificate
Trustee" ) and lessor under the Lease referred to below ("Lessor").
RECITALS:
A. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Lease (as hereinafter defined and
as amended hereby).
B. The Certificate Purchasers and First Security Bank, National
Association, in its individual capacity and as Certificate Trustee have
heretofore entered into that certain Trust Agreement dated as of January 15,
1998 (the "Trust Agreement").
C. The Lessees, the Certificate Purchasers and Lessor have heretofore
entered into that certain Lease Intended as Security dated as of January 15,
1998 (the "Lease").
D. Parent Guarantor has heretofore entered into that certain Parent
Guaranty and Suretyship Agreement dated as of January 15, 1998 (the "Parent
Guaranty") in favor of Lessor for the benefit of the Certificate Purchasers.
E. The Subsidiary Guarantors have entered into that Subsidiary Guaranty
and Suretyship Agreement dated as of January 15, 1998 (the "Subsidiary
Guaranty") in favor of Lessor for the benefit of the Certificate Purchasers.
F. Arch Coal, Inc. is also party to that certain $600,000,000 Revolving
Credit Facility and $300,000,000 Term Loan Credit Agreement dated as of June 1,
1998 among Parent Guarantor, as borrower, PNC Bank, National Association, as
Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication
Agent and First Union Bank, as Documentation Agent and the Lenders listed
therein (the "Revolving Credit Facility").
G. The Lessees, Parent Guarantor, the Certificate Purchasers and
Certificate Trustee now desire to amend the Lease and Parent Guaranty
(collectively, the "Original Agreements") in the respects, but only in the
respects, hereinafter set forth.
NOW, THEREFORE, the Lessees, Parent Guarantor, the Certificate Purchasers and
Certificate Trustee, in consideration of good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, do hereby agree as
follows:
SECTION 1. AMENDMENT OF ORIGINAL AGREEMENTS.
Section 1.1.Amendments to Parent Guaranty. Article IV of the Parent Guaranty
shall be and is hereby amended in its entirety to read as follows:
ARTICLE IV
COVENANTS
"Parent Guarantor covenants that so long as this Agreement is in effect:
(a) Corporate Existence, Etc. Parent Guarantor shall, and shall cause Arch
Western to, maintain its legal existence as a corporation, limited partnership
or limited liability company, as the case may be. Parent Guarantor 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 or limited
liability company, as the case may be, except as otherwise expressly permitted
in clause (e) of this Article IV. Parent Guarantor 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 Parent Guarantor or Arch Western. Parent Guarantor
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 where a Unit is located and in each other
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 have a Material Adverse
Effect.
(b) Compliance With Laws. Parent Guarantor 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 clause (b) of this Article IV 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 Effect. Without limiting the generality
of the foregoing, Parent Guarantor shall, and shall cause each of its
Subsidiaries to, comply with all Environmental Permits applicable to their
respective operations and properties; obtain and renew all Environmental Permits
necessary for their respective operations and properties; and manage, use and
handle all Hazardous Material 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 have a Material Adverse Effect.
2
(c) Indebtedness. Parent Guarantor 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 Indebtedness of Parent Guarantor or any Subsidiary
incurred after the Effective Date (not to exceed $300,000,000 in the aggregate
outstanding for Parent Guarantor and all Significant Subsidiaries at any time
during any period prior to the date on which the senior unsecured long-term debt
of Parent Guarantor, on a consolidated basis, has been rated Investment Grade)
so long as, both before and after giving effect to any proposed additional
Indebtedness:
(y) Parent Guarantor and its Subsidiaries shall be in compliance with
clauses (l), (m) and (n) of this Article IV 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 (other than the financial covenants included in the
Private Placement Agreement on the Effective Date; without further amendment
thereto to make such covenants more restrictive, which amendment is expressly
prohibited) are not, taken as a whole, materially more restrictive with respect
to Parent Guarantor and its Subsidiaries than the covenants and defaults under
this Parent Guaranty;
(iii) Indebtedness of Arch Western payable to Parent Guarantor, subject to
the limitations of clause (s)(vii) of this Article IV);
(iv) Indebtedness of Arch Western and its Subsidiaries pursuant to the
Arch Western Credit Facility;
(v) Indebtedness of any Subsidiary of Parent Guarantor which is a member
of the Arch Coal Group payable to Parent Guarantor or to any other member of the
Arch Coal Group;
(vi) Indebtedness of Parent Guarantor payable to Arch Western; and
(vii) Indebtedness of Parent Guarantor 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 Parent Guaranty.
(d) Liens. Parent Guarantor shall not, and shall not permit 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 (other than the Units which,
with respect to Liens, are covered by
3
Section 5.5. of the Lease), tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except Permitted Encumbrances so
long as the aggregate amount of Parent Guarantor payments by any such Person in
respect of all operating leases which subject the assets of Parent Guarantor or
any of its Subsidiaries to any Permitted Encumbrance (as the type of such lease
and the amount of such payments would be determined under GAAP) and all
Indebtedness secured by such Permitted Encumbrances does not at any time exceed
seven and one-half percent (71/2%) of the total assets of the Arch Coal Group
(exclusive of Investment in the Arch Western Group), as determined and
consolidated in accordance with GAAP.
(e) Liquidations, Mergers, Consolidations, Acquisitions. Parent Guarantor
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 Parent Guarantor may consolidate or merge into any
other Subsidiary of Parent Guarantor (except for the Excluded Subsidiaries),
provided that each of the following requirements is met:
(i) no Incipient Default or Event of Default shall exist immediately
prior to and after giving effect to such transaction;
(ii) immediately after such transaction, Lessor, on behalf of the
Certificate Purchasers shall have an enforceable, perfected first priority Lien
of record in all Collateral, free and clear of all Liens other than Permitted
Liens;
(iii) promptly upon the consummation of such transaction, the survivor of
such transaction shall have executed and delivered to Lessor and the Certificate
Purchasers an assumption agreement in form and substance reasonably satisfactory
to Lessor whereby such survivor assumes all of the obligations of such
Subsidiary under the Operative Documents, if any; and
(iv) promptly upon the consummation of such transaction, each Certificate
Purchaser and Lessor shall have received an opinion of counsel to such
Subsidiary with respect to the validity of such transaction and as to the
enforceability of the assumption agreement referred to in clause (iii) above and
the Operative Documents against the survivor of such transaction, and
(2) Parent Guarantor and Arch Western may complete the Acquisition in
accordance with the Acquisition Documents, and
(3) Parent Guarantor, any Subsidiary Guarantor or any Lessee 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:
4
(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 Parent Guarantor
and shall comply with clause (i) of this Article IV;
(iii) no Incipient Default or Event of Default shall exist immediately
prior to and after giving effect to such Permitted Acquisition;
(iv) Parent Guarantor and its Subsidiaries shall be in compliance with the
covenants contained in clauses (l), (m), and (n) of this Article IV 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).
(v) immediately after such transaction, Lessor, on behalf of the
Certificate Purchasers shall have an enforceable, perfected first priority Lien
of record in all Collateral, free and clear of all Liens other than Permitted
Liens;
(vi) promptly upon the consummation of such transaction, the survivor of
such Permitted Acquisition shall have executed and delivered to Lessor and the
Certificate Purchasers an assumption agreement in form and substance reasonably
satisfactory to the Required Certificate Purchasers whereby such survivor
assumes all of the obligations of Parent Guarantor, such Subsidiary Guarantor or
such Lessee, as the case may be, under the Operative Documents; and
(vii) promptly upon the consummation of such transaction, each Certificate
Purchaser and Lessor shall have received an opinion of counsel to Parent
Guarantor, such Subsidiary Guarantor or such Lessee with respect to the validity
of such transaction and as to the enforceability of the assumption agreement
referred to in clause (vi) above and the Operative Documents against the
survivor of such Permitted Acquisition.
(f) Dispositions of Assets or Subsidiaries. Parent Guarantor 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 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 Parent Guarantor), except:
(i) transactions involving the sale of inventory in the ordinary course
of business;
5
(ii) any sale, transfer or lease of assets (other than the Units) by any
Subsidiary of Parent Guarantor 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
(other than the Units) 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) any sale of assets (other than the Units) if and to the extent the
Net Cash Proceeds thereof are applied within 90 days of the consummation of such
sale to the purchase by Parent Guarantor or a Subsidiary of substitute assets;
provided that Parent Guarantor shall have delivered to Certificate Trustee,
Lessor and each Certificate Purchaser a certificate (a "Replacement Sales
Certificate") of the chief financial officer or the treasurer of Parent
Guarantor, certifying as to (x) the amount of such Net Cash Proceeds and (y) the
fact that Parent Guarantor or a Subsidiary shall invest such Net Cash Proceeds
in substitute assets within 90 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 90-day period, such
sale shall be deemed to have been made on the last day of such period pursuant
to clause (v) below;
(iv) any sale, transfer or lease (including any lease transaction under
clause (k) of this Article IV) of assets (other than the Units), other than
those specifically excepted pursuant to subparagraphs (i) through (iii) above,
provided that (a) at the time of any disposition, no Event of Default shall
exist or shall result from such disposition, (b) Parent Guarantor and its
Subsidiaries shall be in compliance with the covenants contained in clauses (l),
(m) and (n) of this Article IV 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 of all assets so sold by Parent Guarantor and its Subsidiaries shall
not exceed in any calendar year the greater of (x) $100,000,000 or (y) 5% of the
total assets of the Arch Coal Group (exclusive of investment in the Arch Western
Group) (as of the last day of such calendar year), determined and consolidated
in accordance with GAAP;
(v) any sale, transfer or lease of assets (other than the Units), other
than those specifically excepted pursuant to subparagraphs (i) through (iv)
above or subparagraph (vi) below, so long as (A) if any principal and interest
is outstanding under the Term Loans, Guarantor shall, simultaneously with the
application of the Net Cash Proceeds to a mandatory prepayment of the Term Loans
in accordance with the provisions of Section 4.4.6 of the Revolving Credit
Facility, purchase a Unit or Units in accordance with the provisions of Section
11.5 of the Lease so that the Lease Balance is reduced in the same proportion
that the Term Loans were reduced by the application of the Net Cash Proceeds or
(B) if no principal and interest is outstanding under the Term Loans, Guarantor
shall apply the Net Cash Proceeds to the purchase of a Unit or Units in
accordance with the provisions of Section 11.5 of the Lease;
(vi) any transfer of assets by Parent Guarantor to Arch Western as
contemplated by the Contribution Agreement; or
(vii) any transfer of assets by any member of the Arch Western Group
permitted by the Arch Western Credit Facility, as in effect on the Effective
Date.
6
(g) Affiliate Transactions. Parent Guarantor 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 Parent Guarantor unless such transaction is not
otherwise prohibited by this Parent Guaranty and is entered into in the ordinary
course of business upon fair and reasonable arm's length terms and conditions.
(h) Subsidiaries, Partnerships and Joint Ventures. Parent Guarantor shall
not, and shall not permit any of its Subsidiaries to, own or create directly or
indirectly any Subsidiaries other than (i) the Excluded Subsidiaries, (ii) any
Significant Subsidiary which has joined the Subsidiary Guaranty as a Subsidiary
Guarantor on the Delivery Date; (iii) any Significant Subsidiary formed or
acquired after the Delivery Date which becomes a Subsidiary Guarantor in
accordance with clause (w) of this Article IV; (iv) any Subsidiary which after
the Delivery Date becomes a Significant Subsidiary and which upon becoming a
Significant Subsidiary becomes a Subsidiary Guarantor in accordance with clause
(w) of this Article IV and (v) any Subsidiary which is not a Significant
Subsidiary. Parent Guarantor shall cause any of its Subsidiaries which at any
time becomes a Significant Subsidiary to become a Subsidiary Guarantor in
accordance with clause (w) of this Article IV. Neither Parent Guarantor nor any
Subsidiary of Parent Guarantor shall become or agree to become (1) a general or
limited partner in any general or limited partnership, except that Parent
Guarantor, the Subsidiary Guarantors and Lessees may be general or limited
partners in other Subsidiary Guarantors or Lessees or 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
Parent Guarantor, all Subsidiary Guarantors and Lessees and their Subsidiaries,
$50,000,000, or (2) become a member or manager of, or hold a limited liability
company interest in, a limited liability company, except that Parent Guarantor,
Subsidiary Guarantors and Lessees may be members or managers of, or hold limited
liability company interests in, other Subsidiary Guarantors and Lessees and
except that Parent Guarantor 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.
(i) Continuation of or Change in Business. Parent Guarantor 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 Parent Guarantor or such
Subsidiary as of the date hereof and any business substantially related thereto,
and neither Parent Guarantor nor any Subsidiary of Parent Guarantor shall permit
any material change in such business.
(j) Plans and Benefit Arrangements. Parent Guarantor 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 have a Material
Adverse Effect. Without limiting the generality of the foregoing, Parent
Guarantor shall cause all of its Plans and all Plans maintained by any ERISA
Affiliate to be funded in accordance with the minimum funding requirements of
ERISA and shall make, and cause each ERISA Affiliate to make, in a timely
manner, all contributions due to Plans, Benefit Arrangements and Multiemployer
Plans.
7
(k) Off-Balance Sheet Financing. Parent Guarantor shall not, and shall not
permit any of its Subsidiaries to, 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 asset securitizations (other than accounts receivable or inventory
securitizations), sale/leasebacks, or Synthetic Leases), in excess, in the
aggregate for Parent Guarantor and its Subsidiaries as of any date of
determination, of 7.5% of the sum, without duplication, of (y) the total assets
of Parent Guarantor and its Subsidiaries, determined and consolidated in
accordance with GAAP as of the date of determination, and (z) with respect to
each Special Subsidiary, an amount equal to the Appropriate Percentage
multiplied by the total assets of such Person, determined in accordance with
GAAP. For purposes of this clause (k), (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.
(l) Maximum Leverage Ratio. Parent Guarantor shall not at any time permit
the Leverage Ratio to exceed the ratio set forth below for the periods specified
below:
Period Ratio
Effective Date through and
including December 31, 1998 4.50 to 1.00
January 1, 1999 through and
including December 31, 1999 4.25 to 1.00
January 1, 2000 through and
including December 31, 2000 4.00 to 1.00
January 1, 2001 through and
including December 31, 2001 3.50 to 1.00
January 1, 2002 and thereafter 3.00 to 1.00
(m) Minimum Fixed Charge Coverage Ratio. Parent Guarantor shall not permit
the Fixed Charge Coverage Ratio to be less than the ratio set forth below for
the periods specified below:
Period Ratio
Effective Date through and
including December 31, 1998 2.50 to 1.00
8
January 1, 1999 through and
including December 31, 1999 2.75 to 1.00
January 1, 2000 through and
including December 31, 2000 3.00 to 1.00
January 1, 2001 and thereafter 3.25 to 1.00
(n) Minimum Net Worth. Parent Guarantor shall not at any time permit
Consolidated Tangible Net Worth to be less than the Base Net Worth.
(o) No Restriction on Dividends. Parent Guarantor 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.
(p) Change of Name or Location. Parent Guarantor shall furnish to Lessor
notice on or before the 30th day prior to any relocation of its chief executive
office or principal place of business, or change of its name.
(q) Keeping of Records and Books of Account. Parent Guarantor shall, and
shall cause each Subsidiary of Parent Guarantor to, maintain and keep proper
books of record and account which enable Parent Guarantor and its Subsidiaries
to issue financial statements in accordance with GAAP and as otherwise required
by applicable Laws of any Authority having jurisdiction over Parent Guarantor or
any Subsidiary of Parent Guarantor, and in which full, true and correct entries
shall be made in all material respects of all its dealings and business and
financial affairs.
(r) Visitation Rights. Parent Guarantor shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized employees or
representatives of Lessor or any of the Certificate Purchasers to visit and
inspect during normal business hours any of its properties (including, without
limitation, the Units) and to examine and make excerpts from its books and
records (including, without limitation, any Lessee's records pertaining to the
Units), and discuss its business affairs, finances and accounts with the
officers and accountants of Parent Guarantor or any of its Subsidiaries
(including, but not limited to, any independent public accountants), all in such
detail and at such times and as often as any of the Certificate Purchasers may
reasonably request, provided that each Certificate Purchaser and Lessor shall
provide Parent Guarantor and each Subsidiary of Parent Guarantor with reasonable
notice prior to any visit or inspection. Parent Guarantor will pay the
reasonable expenses of Lessor and the Certificate Purchasers incurred in the
exercise of the rights granted pursuant to this clause (r).
9
(s) Loans and Investments. Parent Guarantor 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 Parent Guarantor or a Subsidiary of Parent Guarantor 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 Parent Guarantor in its Subsidiaries which are members
of the Arch Coal Group;
(iii) 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;
(iv) commercial paper maturing in 180 days or less rated not lower than
A-1 by Standard & Poor's or P-1 by Moody's on the date of acquisition;
(v) 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;
(vi) investments in Permitted Joint Ventures in accordance with clause (h)
of this Article IV;
(vii) investments by Parent Guarantor in, or reimbursement obligations by
Parent Guarantor 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 Parent Guarantor 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; and
(viii) loans and advances permitted by clause (c)(v).
(t) Reporting Requirements. Parent Guarantor covenants and agrees that
it will furnish or cause to be furnished to Lessor and each of the Certificate
Purchasers:
(i) 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
10
year, financial statements of Parent Guarantor 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 Parent
Guarantor 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. Parent Guarantor
will be deemed to have complied with the delivery requirements with respect to
the consolidated financial statements required to be delivered under this clause
(t) if within forty-five (45) days after the end of its fiscal quarter, Parent
Guarantor delivers to Lessor and each Certificate Purchaser a copy of Parent
Guarantor's Form 10-Q as filed with the SEC and the financial statements
contained therein meet the requirements described in this clause (t).
(ii) Annual Financial Statements. As soon as available and in any event
within ninety (90) days after the end of each fiscal year of Parent Guarantor,
financial statements of Parent Guarantor 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
Lessor. 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 Parent Guarantor or any
of its Subsidiaries under any of the Operative Documents. Parent Guarantor will
be deemed to have complied with the delivery requirements with respect to the
consolidated financial statements required to be delivered under this clause
(ii) if within ninety (90) days after the end of its fiscal year, Parent
Guarantor delivers to Lessor and each Certificate Purchaser a copy of Parent
Guarantor'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 clause (ii).
(iii) Certificate of Parent Guarantor. Concurrently with the financial
statements of Parent Guarantor furnished to Lessor and each Certificate
Purchaser pursuant to clause (t)(i) and clause (t)(ii) a certificate of Parent
Guarantor signed by the Chief Executive Officer, President or Chief Financial
Officer of Parent Guarantor to the effect that, except as described pursuant to
clause (t)(iv), (A) the representations and warranties of Parent Guarantor
contained in the Operative 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 Parent
Guarantor and its Subsidiaries have performed and complied with all covenants
and conditions
11
contained in the Operative Documents, (B) no Event of Default, Incipient Default
or Casualty exists and is continuing on the date of such certificate and (C)
containing calculations in sufficient detail to demonstrate compliance as of the
date of such financial statements with all financial covenants contained in the
Operative Documents.
(iv) Notice of Defaults. Promptly after any officer of Parent Guarantor
has learned of the occurrence of an Event of Default or Incipient Default, a
certificate signed by the Chief Executive Officer, President or Chief Financial
Officer of Parent Guarantor setting forth the details of such Event of Default
or Incipient Default and the action which Parent Guarantor proposes to take with
respect thereto.
(v) 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 Authority or any other Person
against Parent Guarantor or any Subsidiary of Parent Guarantor or, which (x)
involve or could be reasonably expected to involve assessments against Parent
Guarantor or any Subsidiary of Parent Guarantor 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 constitute a
Material Adverse Effect.
(vi) Notice of Change in Debt Rating. Within five (5) Business Days after
Standard & Poor's or Moody's announces a change in Parent Guarantor's Debt
Rating, notice of such change. Parent Guarantor will deliver together with such
notice a copy of any written notification which Parent Guarantor received from
the applicable rating agency regarding such change of Debt Rating.
(vii) Notices Regarding Plans and Benefit Arrangements.
(A) 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 Parent Guarantor or any
other member of the ERISA Group which has been waived by the PBGC),
(II) any Prohibited Transaction which could subject Parent Guarantor
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 (iv) penalty or tax could
reasonably be expected to have a Material Adverse Effect,
(III) any assertion of material withdrawal liability with respect to
any Multiemployer Plan,
12
(IV) any partial or complete withdrawal from a Multiemployer Plan by
Parent Guarantor 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 Parent Guarantor 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 material liability under ERISA Sections 4060 or 4064,
(VI) withdrawal by Parent Guarantor 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 Parent Guarantor 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.
(viii) 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 Parent Guarantor or any other member of the ERISA Group of
the PBGC's intent to terminate any Plan administered or maintained by Parent
Guarantor or any member of the ERISA Group, or to have a trustee appointed to
administer any such Plan; and (b) at the request of Lessor or any Certificate
Purchaser, 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 Parent Guarantor or any other member of the ERISA Group, and
schedules showing the amounts contributed to each such Plan by or on behalf of
Parent Guarantor 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 Parent
Guarantor or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
(ix) Notices of Voluntary Termination. Promptly upon the filing thereof,
copies of any notice of standard termination with the PBGC, or any successor or
equivalent form, filed with the PBGC in connection with the termination of any
Plan.
(x) SEC Information. As soon as practicable, copies of all such
financial statements, proxy statements, notices and reports as Parent Guarantor
shall send to its public stockholders, if
13
any, and copies of any registration statements (without exhibits) and any
regular or periodic reports which it files with the SEC (or any Authority
succeeding to the function of the SEC).
(xi) Rule 144A Information. At any time when Parent Guarantor is not
subject to Section 13 or 15(d) of the Exchange Act, if Lessor or any Certificate
Purchaser shall request that Parent Guarantor deliver to Lessor, or to such
Certificate Purchaser, information with respect to Parent Guarantor that meets
the requirements of Rule 144A(d)(4)(i) of the Exchange Act (or any successor
provision), then: (x) promptly following the receipt by Parent Guarantor of that
request, Parent Guarantor shall deliver such information to Lessor, or to such
Certificate Purchaser, and (y) such information shall, at the time of such
delivery, be as of a date so as to be entitled to the presumption that such
information is "reasonably current" within the meaning of Rule 144A(d)(4)(ii) of
the Exchange Act (or any successor provision; provided that Parent Guarantor (i)
shall not be so obligated to the extent that any amendment to Rule 144A after
the date hereof expands or makes more onerous the provisions of Rule 144A, and
(ii) shall in no event be obligated to provide more information pursuant to this
clause (t) of Article IV with respect to the nature of its business and the
products and services that it offers than it is providing to its commercial
lenders at such time.
(xii) Other Information. With reasonable promptness, such other data and
information with respect to the business, affairs and conditions of Parent
Guarantor or its Subsidiaries as from time to time Lessor or any Certificate
Purchaser or each Assignee may reasonably request.
(u) Reports to Certificate Purchasers. Parent Guarantor shall,
concurrently with any notice, delivery or other communication to Lessor pursuant
to any Operative Document, deliver a copy of such notice, delivery or other
communication to each Certificate Purchaser at such Certificate Purchaser's
current address.
(v) Securities. Parent Guarantor shall not, nor shall it permit any
Subsidiary or anyone authorized to act on its or such Subsidiary's behalf to,
take any action which would subject the issuance or sale of the Certificates,
any of the Units or the Lease, or any security or lease the offering of which,
for purposes of the Securities Act or any state securities laws, would be deemed
to be part of the same offering as the offering of the aforementioned items, to
the registration requirements of Section 5 of the Securities Act or any state
securities laws.
(w) Guarantor Joinder. Parent Guarantor shall cause any Significant
Subsidiary of Parent Guarantor to execute and deliver to Lessor and each
Certificate Purchaser (i) a Guarantor Joinder in substantially the form attached
as Exhibit A to the Subsidiary Guaranty pursuant to which it shall join as a
Subsidiary Guarantor each of the documents to which the Subsidiary Guarantors
are parties; and (ii) the applicable documents in the forms described in Section
3.11 to the Lease modified as appropriate to relate to such Significant
Subsidiary. Parent Guarantor shall deliver such Guarantor Joinder and related
documents to Lessor and each Certificate Purchaser with five (5) Business Days
after any Subsidiary of Parent Guarantor becomes a Significant Subsidiary.
14
(x) Operation of Mines. Parent Guarantor shall, and shall cause each of its
Subsidiaries to, operate their mines in all material respects in accordance with
sound coal mining practices and all applicable Federal, state and local laws,
rules and regulations, including, without limitation, laws and regulations
relating to land reclamation, pollution control and mine safety.
(y) No Amendments to Acquisition Documents. Parent Guarantor 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
Certificate Purchasers without the prior written consent of Lessor.
Section 1.2.Amendments to Lease. (a) Article I of the Lease is hereby amended by
adding or amending, as the case may be, the following definitions:
"Acquisition" means the transactions contemplated by the Purchase Agreement and
the Contribution Agreement, as such documents may be amended, modified or
supplemented after June 1, 1998 as permitted by clause (y) of Article IV of the
Parent Guaranty.
"Acquisition Documents" means 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 June 1, 1998 as permitted by clause (y) of Article IV of the
Parent Guaranty.
"Affiliate" as to any Person means 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 Parent
Guarantor (other than an Excluded Subsidiary) shall not be deemed to be an
Affiliate of Parent Guarantor.
"Applicable Margin" shall mean, as applicable:
(A) the percentage spread to be added to the LIBO Rate at the indicated level of
Leverage Ratio for any period during which a Debt Rating is not in effect as set
forth in the pricing grid on Schedule V.1(A) Part (A) below the heading
"Spread", or
(B) the percentage spread to be added to the LIBO Rate at the indicated level of
Debt Rating for any period during which a Debt Rating is in effect as set forth
in the pricing grid on Schedule V.1(A) Part (B) below the heading "Spread".
15
"Amendment" means that certain Omnibus Amendment Agreement dated as of June 1,
1998 among Lessees, Parent Guarantor, the Certificate Purchasers, the Subsidiary
Guarantors and Certificate Trustee/Lessor.
"Appropriate Percentage" means, with respect to each Special Subsidiary, the
percentage of the equity of such Person owned by Parent Guarantor or any
Subsidiary of Parent Guarantor.
"Arch Coal Group" means, as of any date of determination, Parent Guarantor and
its Subsidiaries (other than the Excluded Subsidiaries).
"Arch of Wyoming LLC Agreement" means that certain Limited Liability Agreement,
dated as of April 15, 1998, of Arch of Wyoming LLC.
"Arch Western" means Arch Western Resources, LLC, a limited liability company
organized and existing under the laws of the State of Delaware.
"Arch Western Credit Facility" means that certain Credit Agreement by and among
Arch Western, PNC Bank as administrative agent, Morgan Guaranty Trust Company of
New York, as syndication agent and NationsBank N.A. as documentation agent,
providing for a $675,000,000 term loan facility to Arch Western, as the same may
be amended, restated, modified or supplemented from time to time after the date
hereof.
"Arch Western Group" means, as of any date of determination, AWAC, Arch Western
and the Subsidiaries of Arch Western.
"Arch Western LLC Agreement" means 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" means Atlantic Richfield Company, a corporation organized and existing
under the laws of the State of Delaware.
"AU Sub LLC Agreement" means 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.
"AWAC" means Arch Western Acquisition Corporation, a corporation organized and
existing under the laws of the State of Delaware.
"Banks" means the financial institutions named on Schedule 1.1(B) to the
Revolving Credit Facility and their respective successors and assigns as
permitted hereunder, each of which is referred to herein as a Bank.
16
"Base Net Worth" means the sum of $500,000,000, plus 50% of consolidated net
income of Parent Guarantor and its Subsidiaries (before the after-tax effect of
changes in accounting principles) for each fiscal quarter in which net income
was earned plus 80% of the net increase in Consolidated Tangible Net Worth
resulting from the issuance of any equity securities by Parent Guarantor, for
the period from April 1, 1998 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.
"Bid Loans" means collectively and Bid Loan means separately all of the Bid
Loans or any Bid Loan made by any of the Lenders to Parent Guarantor pursuant to
Section 2.9 of the Arch Western Credit Facility.
"Canyon Fuel" means Canyon Fuel Company, LLC, a limited liability company
organized and existing under the laws of the State of Delaware
"Canyon Fuel LLC Agreement" means 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.
"Consolidated Tangible Net Worth" means as of any date of determination total
stockholders' equity less intangible assets of Parent Guarantor 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
Parent Guarantor 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 March 31, 1998.
"Contribution Agreement" means that certain Contribution Agreement among Parent
Guarantor, AWAC, ARCO, Delta Housing, Inc., a Delaware corporation, and Arch
Western.
"Debt" shall mean for any Person as of any date of determination the aggregate
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 but excluding obligations under any interest rate
swap, cap, collar or floor agreement or other interest rate management device),
(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 Parent Guarantor and its
Subsidiaries, contingent reimbursement obligations aggregating at any time up to
$10,000,000 and other than contingent reimbursement obligations in respect of
the letter of credit issued to support the Port Bond) and (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 by such Person (the
17
"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). 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 (v) 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 Accounting Principles Board Opinion
No. 16 (as in effect on the Effective Date) will be excluded from indebtedness
in the determination of Debt.
"Debt Rating" shall mean the rating of Parent Guarantor's senior unsecured
long-term debt 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.
"EBITDDA" for any period of determination means with respect to any Person the
sum of 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 for such period
determined in accordance with GAAP. For purposes of calculating the Fixed Charge
Coverage Ratio and the Leverage Ratio: (i) EBITDDA of Arch Western and its
Subsidiaries, including the Appropriate Percentage of EBITDDA of Canyon Fuel,
shall be assumed to be $39,200,000 for the fiscal quarter ended March 31, 1998,
and (ii) EBITDDA for Arch Western and its Subsidiaries, including the
Appropriate Percentage of EBITDDA of Canyon Fuel for the months of April and
May, 1998, shall be determined based upon the results from the operations of the
business of such Persons for such months by ARCO as set forth in an income
statement with respect to such months prepared by ARCO and reasonably acceptable
to Lessor and each Certificate Purchaser, shall take into account the $1,000,000
per month reduction in overhead resulting from the consummation of the
Acquisition, shall assume that operating lease expense of Arch Western and its
Subsidiaries, including Canyon Fuel, shall be $970,000 per month and shall
assume that interest expense for such Persons for such months shall be zero,
with such calculation of EBITDDA for Arch Western and its Subsidiaries for such
months to be reasonably acceptable to the Agents. Further, for purposes of
calculating the Fixed Charge Coverage Ratio and the Leverage Ratio for the
fiscal quarters ended June 30, 1998, and September 30, 1998, EBITDDA of Arch
Western and its Subsidiaries, including the Appropriate Percentage of EBITDDA of
Canyon Fuel, shall be deemed to be an amount equal to: (i) for the fiscal
quarter ended June 30, 1998, the product of, (x) without duplication, EBITDDA of
Arch Western and its Subsidiaries for the two fiscal quarters then ended
determined on a consolidated
18
basis in accordance with GAAP, plus the Appropriate Percentage of EBITDDA of
Canyon Fuel, for the two fiscal quarters then ended, determined on a
consolidated basis in accordance with GAAP, multiplied by (y) two (2); and (ii)
for the fiscal quarter ended September 30, 1998, the product of, (x) without
duplication, EBITDDA of Arch Western and its Subsidiaries for the three fiscal
quarters then ended determined on a consolidated basis in accordance with GAAP,
plus the Appropriate Percentage of EBITDDA of Canyon Fuel for the three fiscal
quarters then ended determined on a consolidated basis in accordance with GAAP,
multiplied by (y) four-thirds (4/3).
"Effective Date" shall mean June 1, 1998.
"Environmental Permit" means any permit, approval, license or other
authorization required under any Environmental Law.
"Excluded Subsidiaries" means, collectively, AWAC, Arch Western and the
Subsidiaries of Arch Western.
"Fixed Charge Coverage Ratio" means the ratio of (a) the sum, without
duplication, of EBITDDA of Parent Guarantor and its Subsidiaries, plus the
Appropriate Percentage of each Special Subsidiary's EBITDDA, each on a
consolidated basis in accordance with GAAP, plus operating lease expense of
Parent Guarantor and its Subsidiaries, plus 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 Parent Guarantor and its Subsidiaries, plus the
Appropriate Percentage of interest expense of each Special Subsidiary, each on a
consolidated basis in accordance with GAAP, plus operating lease expense of
Parent Guarantor and its Subsidiaries, plus 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 Parent Guarantor then ended. It is assumed that operating
lease expense of Arch Western and its Subsidiaries, including Canyon Fuel, shall
be $970,000 per month for the months of April and May, 1998 and that interest
expense for such Persons for such months shall be zero. For purposes of
calculating the Fixed Charge Coverage Ratio for the fiscal quarters ended June
30, 1998, September 30, 1998 and December 31, 1998, operating lease expense of
Arch Western and its Subsidiaries, including the Appropriate Percentage of
operating lease expense of Canyon Fuel, shall be deemed to be an amount equal
to: (i) for the fiscal quarter ended June 30, 1998, the product of, (x) without
duplication, operating lease expense of Arch Western and its Subsidiaries for
such fiscal quarter determined and consolidated in accordance with GAAP, plus
the Appropriate Percentage of operating lease expense of Canyon Fuel for such
fiscal quarter determined in accordance with GAAP, multiplied by (y) four (4);
(ii) for the fiscal quarter ended September 30, 1998, the product of, (x)
without duplication, operating lease expense of Arch Western and its
Subsidiaries for the two fiscal quarters then ended determined and consolidated
in accordance with GAAP, plus the Appropriate Percentage of operating lease
expense of Canyon Fuel for the two fiscal quarters then ended determined in
accordance with GAAP, multiplied by (y) two (2); and (iii) for the fiscal
quarter ended December 31, 1998, the product of, (x) without duplication,
operating lease expense of Arch Western and its Subsidiaries for the three
fiscal quarters then
19
ended determined and consolidated in accordance with GAAP, plus the Appropriate
Percentage of operating lease expense of Canyon Fuel for the three fiscal
quarters then ended determined in accordance with GAAP, multiplied by (y)
four-thirds (4/3). For purposes of calculating the Fixed Charge Coverage Ratio
for the fiscal quarters ended June 30, 1998, September 30, 1998 and December 31,
1998, interest expense of Arch Western and its Subsidiaries, including the
Appropriate Percentage of interest expense of Canyon Fuel, shall be deemed to be
an amount equal to: (i) for the fiscal quarter ended June 30, 1998, the product
of, (x) without duplication, interest expense of Arch Western and its
Subsidiaries for such fiscal quarter determined and consolidated in accordance
with GAAP, plus the Appropriate Percentage of interest expense of Canyon Fuel
for such fiscal quarter determined in accordance with GAAP, multiplied by (y)
four (4); (ii) for the fiscal quarter ended September 30, 1998, the product of,
(x) without duplication, interest expense of Arch Western and its Subsidiaries
for the two fiscal quarters then ended determined and consolidated in accordance
with GAAP, plus the Appropriate Percentage of interest expense of Canyon Fuel
for the two fiscal quarters then ended determined in accordance with GAAP,
multiplied by (y) two (2); and (iii) for the fiscal quarter ended December 31,
1998, the product of, (x) without duplication, interest expense of Arch Western
and its Subsidiaries for the three fiscal quarters then ended determined and
consolidated in accordance with GAAP, plus the Appropriate Percentage of
interest expense of Canyon Fuel for the three fiscal quarters then ended
determined in accordance with GAAP, multiplied by (y) four-thirds (4/3).
"Historical Statements" shall have the meaning assigned to that term in Section
5.1.7(i) of the Revolving Credit Facility.
"Indebtedness" means, 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, currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management device, (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.
"Initial Annual Statements and Compliance Certificate" shall mean collectively
with respect to the fiscal year of the Borrower ended December 31, 1998, the
annual financial statements of the Borrower and its Subsidiaries consisting of
the unaudited 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, together with the duly executed related compliance
certificate required to be delivered to Lessor and each Certificate Purchaser
pursuant to clause (t)(iii) of Article IV of the
20
Parent Guaranty. It is acknowledged and agreed that the Initial Annual
Statements and Compliance Certificate are to be delivered by the Borrower for
purposes of calculating the Leverage Ratio as of December 31, 1998 in order to
determine the Applicable Margin. Notwithstanding the delivery of the Initial
Annual Statements and Compliance Certificate, the Borrower shall still be
required to comply with the provisions of clause (t)(ii) of Article IV of the
Parent Guaranty and deliver the audited financial statements required thereby,
together with the related Compliance Certificate required to be delivered under
clause (t)(iii) of Article IV of the Parent Guaranty.
"Initial Delivery Date" shall mean the date the Borrower delivers to Lessor and
the Certificate Purchasers the Initial Annual Statements and Compliance
Certificate.
"Interest Rate" means, with respect to any Rent Period or portion thereof, the
rate per annum equal to (a) unless, per the terms of Section 2.9(c) or Section
7.6 hereof, the Base Rate is in effect, the sum of the LIBO Rate plus the
Applicable Margin or (b) if the Base Rate is in effect, the Base Rate, in each
case, for such Rent Period.
"Investment Grade" means the rating of Parent Guarantor's senior unsecured
long-term debt, on a consolidated basis, of BBB- or better by Standard & Poor's
and Baa3 or better by Moody's.
"Issuing Banks" shall have the meaning set forth in the Revolving Credit
Facility.
"Leverage Ratio" means the ratio of the sum of, without duplication, Debt of
Parent Guarantor and its Subsidiaries, plus the Appropriate Percentage of Debt
of each Special Subsidiary, each on a consolidated basis in accordance with GAAP
(as the numerator) to EBITDDA of Parent Guarantor and its Subsidiaries, plus 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 Parent Guarantor and EBITDDA shall be determined as of the end
of each fiscal quarter of Parent Guarantor for the four fiscal quarters then
ended.
"LLC Agreements" means 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 the Thunder Basin LLC
Agreement.
"Loans" means collectively and Loan means separately all Revolving Credit Loans,
Term Loans, Swing Loans and Bid Loans or any Revolving Credit Loan, Term Loan,
Swing Loan or Bid Loan.
"Moody's" means Moody's Investors Service, Inc.
"Mountain Coal LLC Agreement" means that certain Limited Liability Company
Agreement, dated as of March 6, 1998, as amended, creating Mountain Coal
Company, L.L.C., a limited liability company organized and existing under the
laws of the State of Delaware.
21
"Net Cash Proceeds" means, with respect to any transaction, an amount equal to
the cash proceeds received by Parent Guarantor 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 Parent Guarantor 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 clause (f)(v) of Article IV of the Parent
Guaranty, 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 Parent Guarantor and such estimated amounts shall
be deducted.
"Parent Guaranty" means that certain Guaranty and Suretyship Agreement dated as
of January 15, 1998 by Parent Guarantor for the benefit of Lessor and
Certificate Purchasers, as amended by the Amendment and as the same may be
further amended, modified, waived or supplemented from time to time, pursuant to
the terms thereof.
"Permitted Encumbrances" means:
(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, 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 Laws and Regulations to secure
in the ordinary course payment of worker's compensation or reclamation
liabilities) in an amount exceeding $50,000,000 shall not be in the ordinary
course of business);
22
(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 on property leased by Parent Guarantor or
any of its Subsidiaries under capital or operating leases (in either case, as
the nature of such lease is determined in accordance with GAAP) securing
obligations of Parent Guarantor or such Subsidiary to the lessor under such
leases;
(vii) Purchase Money Security Interests; and
(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 Lessee, Parent Guarantor or any Subsidiary
Guarantor to perform its Obligations hereunder or under the Operative Documents:
(1) Claims or Liens for taxes, assessments or
charges due and payable and subject to interest or penalty, provided that such
Lessee, Parent Guarantor or such Subsidiary Guarantor 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(j); and
(ix) Any Lien or restriction resulting from ownership,
by an entity other than an Affiliate of Parent Guarantor, of a minority interest
in Canyon Fuel;
(x) 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
(xi) Liens granted under the Arch Western Credit
Facility.
23
provided, however, that no such Permitted Encumbrance shall attach or extend to
any Collateral.
"Permitted Joint Venture" means any Person (i) with respect to which the
ownership of equity interests thereof by Parent Guarantor or any Subsidiary of
Parent Guarantor is accounted for in accordance with the "equity method" in
accordance with GAAP; (ii) engaged in a line of business permitted by clause (i)
of Article IV of the Parent Guaranty; and (iii) with respect to which the equity
interests thereof were acquired by Parent Guarantor or Subsidiary of Parent
Guarantor 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) Parent Guarantor has management control over the operations of
such Person and (B) Parent Guarantor owns directly or indirectly a majority of
the economic equity interest in such Person.
"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.
"Purchase Agreement" means that certain Purchase and Sale Agreement among ARCO,
ARCO Uinta Coal Company, a Delaware corporation, Parent Guarantor and AWAC,
dated as of March 22, 1998, together with all schedules and exhibits thereto.
"Revolving Credit Facility" means that certain $600,000,000 Revolving Credit
Facility and $300,000,000 Term Loan Credit Agreement dated as of June 1, 1998
among Parent Guarantor, as borrower, PNC Bank, National Association, as
Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication
Agent and First Union Bank, as Documentation Agent and the lenders listed
therein.
"Revolving Credit Loans" means collectively and Revolving Credit Loan means
separately all Revolving Credit Loans or any Revolving Credit Loan made by the
Banks or one of the Banks to Parent Guarantor pursuant to Section 2.1 or 2.10.3
of the Revolving Credit Facility. A Bid Loan is not a Revolving Credit Loan,
except that it will be treated as a Revolving Credit Loan following a
termination of the Commitments under the Revolving Credit Facility pursuant to
Section 8.2.1 or 8.2.2 of the Revolving Credit Facility as provided in Section
8.3 of the Revolving Credit Facility.
"Significant Subsidiary" shall mean any Subsidiary of Parent Guarantor (other
than the Excluded Subsidiaries) which at any time (i) has gross revenues equal
to or in excess of five percent (5%) of the gross revenues of Parent Guarantor
and its Subsidiaries on a consolidated basis, or (ii) has total assets equal to
or in excess of five percent (5%) of the total assets of Parent Guarantor and
its Subsidiaries, in either case, as determined and consolidated in accordance
with GAAP.
"Special Subsidiary" means Canyon Fuel and each other Person to be treated as a
Subsidiary in accordance with the proviso to the definition of Permitted Joint
Venture.
24
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. and its successors.
"State Leases LLC Agreement" means 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 Guarantors" means Arch Coal Sales Company, Inc., Ark Land Company
and Mingo Logan Coal Company and each other Person that joins the Subsidiary
Guaranty as a Subsidiary Guarantor.
"Subsidiary Guaranty" means that certain Guaranty and Suretyship Agreement dated
as of January 15, 1998 made by the Subsidiary Guarantors for the benefit of
Lessor and Certificate Purchasers, as amended by the Amendment and as the same
may be further amended, modified, waived or supplemented from time to time,
pursuant to the terms thereof.
"Swing Loans" means collectively and Swing Loan means separately all Swing Loans
or any Swing Loan made by PNC Bank to Parent Guarantor pursuant to Section 2.5
of the Revolving Credit Facility.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement dated as of
June 1, 1998 by and among Parent Guarantor, AWAC, Arch Western and Delta
Housing, Inc., a Delaware corporation.
"Term Loan" shall have the meaning given to such term in Section 2.12 of the
Revolving Credit Facility; Term Loans means collectively all of the Term Loans.
"Thunder Basin LLC Agreement" means that certain Limited Liability Company
Agreement, dated as of July 10, 1997, as amended, creating Thunder Basin Coal
Company, L.L.C., a limited liability company organized and existing under the
laws of the State of Delaware.
(b) Section 8.1 clause (d) of the Lease shall be and is hereby amended in
is entirety to read as follows:
"(d) Parent Guarantor shall default in the performance or observance of any
term, covenant, condition or agreement on its part to be performed or observed
under clauses (c) through (o) and clause (s) of Article IV of the Parent
Guaranty."
(c) Section 8.1 clause (h) of the Lease shall be and is hereby amended by
deleting the number $10,000,000 wherever such number appears in the
aforementioned clause (h) and replacing it with the number $20,000,000.
25
(d) Section 8.1 clause (k) of the Lease shall be and is hereby amended by
deleting the number $10,000,000 wherever such number appears in the
afore-mentioned clause (k) and replacing it with the number $20,000,000.
(e) Section 11.5 of the Lease shall be and is hereby amended in its
entirety to read as follows:
"Section 11.5. Early Termination.
(a) Early Termination. If no Incipient Default or Event of Default shall
exist, on any scheduled Payment Date (the "Early Termination Date"), if any
Lessee (I) has made a good faith determination that any Unit leased by such
Lessee should be replaced or removed from this Lease for operational reasons (as
evidenced by a resolution of the Board of Directors of such Lessee) or (II)
pursuant to Section IV(f)(v) of the Parent Guaranty, has elected to apply Net
Cash Proceeds to a purchase of a Unit or Units selected by Lessor and the
Certificate Purchasers in their sole discretion, upon at least 30 days' advance
written notice to Lessor and the Certificate Purchasers, such Lessee may:
(i) purchase such Unit for a purchase price equal to the Casualty Amount
of such Unit; or in the case of clause (I) above only
(ii) replace such Unit pursuant to the following provisions of this Section
11.5.
If such Lessee has elected to pay the Casualty Amount pursuant to clause (i)
above, Lessees shall continue to make all payments of Rent with respect to such
Unit due under this Lease until and including the Early Termination Date. Upon
payment of the Casualty Amount in respect of such Unit on such Early Termination
Date, (x) the remaining scheduled payments of Capital Rent shall be
proportionately reduced by an amount equal to the product of the scheduled
amount of such Capital Rent payment (determined in each case prior to the
receipt of such Casualty Amount), multiplied by the Unit Value Fraction of such
Unit and the Lease Balance shall be appropriately adjusted to reflect such
reduction in the remaining scheduled payments of Capital Rent.
If any Lessee has given notice that it intends to replace such Unit on or before
the Early Termination Date, then such Lessee shall make subject to this Lease, a
replacement for such Unit meeting the suitability standards hereinafter set
forth. To be suitable as a replacement Unit, an item must be of the same general
type, year of construction (or a later year of construction), function, utility,
state of repair and operating condition (immediately preceding such termination
assuming that such Unit had been maintained in accordance with the terms of
Section 5.3) as the Unit being replaced, must have a Fair Market Value of not
less than the Fair Market Value (immediately preceding such replacement assuming
that such Unit had been maintained in accordance with the terms of Section 5.3)
of the Unit being replaced and be free and clear of any Liens other than
Permitted Liens. Such Lessee shall cause a Bill of Sale and an Acceptance
Certificate to be executed and delivered to Lessor and the Certificate
Purchasers in order to subject such replacement item to this Lease, and upon
such execution and delivery and the
26
receipt by Lessor and the Certificate Purchasers of (i) evidence reasonably
satisfactory to them of such Lessee's compliance with the insurance provisions
of Section 6.2 with respect to such replacement item, and (ii) an opinion of
counsel to such Lessee in form and substance reasonably satisfactory to Lessor
and the Certificate Purchasers opining, among other things, to the effect that
all appropriate filings, recordings and other acts have been taken to protect
the right, title and interest of Lessor, on behalf of the Certificate
Purchasers, in such replacement item and that no other filing, recording,
deposit, or giving of notice with or to any Authority is necessary to protect
such right, title and interest in such replacement item, such replacement item
shall be deemed a "Unit" for all purposes hereof.
Notwithstanding anything contained herein to the contrary, Lessees' right to
purchase a Unit pursuant to clause (I) of the first paragraph of this Section
11.5 is limited in the aggregate to Units having a Purchase Price equal to or
less than 10% of the Purchase Price for all Units.
(b) Early Purchase Option. If no Incipient Default or Event of Default
shall exist on any Payment Date (the "Early Purchase Date"), upon at least 30
days' advance written notice from Lessees' Agent to Lessor and the Certificate
Purchasers, Lessees may purchase all but not less than all of the Units subject
to this Lease for a purchase price equal to the entire outstanding Lease
Balance, plus all Accrual Rent accrued on the Lease Balance, plus the Applicable
Administrative Charge on the Lease Balance, plus all other sums then due and
payable under the Operative Documents by Lessees, Parent Guarantor or any
Subsidiary Guarantor."
SECTION 2. RELEASE.
Upon and by virtue of this Amendment becoming effective as herein contemplated,
Allegheny Land Company and Cumberland River Coal Company shall be deemed to be
released from their obligations under the Subsidiary Guaranty and the Subsidiary
Guaranty is hereby amended to evidence such release.
SECTION 3. REPRESENTATIONS OF PARENT GUARANTOR, THE SUBSIDIARY
GUARANTORS AND THE LESSEES.
Parent Guarantor represents and warrants that (i) all representations and
warranties set forth in the Parent Guaranty, as amended, are true and correct as
of the date hereof and are incorporated herein by reference with the same force
and effect as though herein set forth in full, (ii) no Incipient Default or
Event of Default exists, (iii) the consolidated balance sheet of Parent
Guarantor and its Subsidiaries as of December 31, 1997 and the related
consolidated statements of income, cash flows and common shareholders' equity
for the fiscal year then ended, audited by Ernst & Young LLP, a copy of which
has been delivered to each of the Certificate Purchasers, fairly present, in
conformity with GAAP, the consolidated financial position of Parent Guarantor
and its Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such fiscal year, and (iv)
since December 31, 1997 there has been no Material Adverse Effect. The Lessees
represent and warrant that (i) all representations and warranties set forth in
the Lease, as amended, are true and correct as of the date hereof and are
27
incorporated herein by reference with the same force and effect as though herein
set forth in full and (ii) no Incipient Default or Event of Default exists. The
Subsidiary Guarantors represent and warrant that (i) all representations and
warranties set forth in the Subsidiary Guaranty, as amended, are true and
correct as of the date hereof and are incorporated herein by reference with the
same force and effect as though herein set forth in full and (ii) no Incipient
Default or Event of Default exists.
SECTION 4. ACKNOWLEDGMENT BY GUARANTORS.
The Subsidiary Guarantors and Parent Guarantor hereby acknowledge and agree to
the amendments of the Original Agreements effected hereby and hereby ratify and
re-affirm the Subsidiary Guaranty and the Parent Guaranty, as the case may be.
SECTION 5. AUTHORIZATION AND DIRECTION.
The Certificate Purchasers, by their execution hereof, authorize Certificate
Trustee to execute and deliver this Amendment.
SECTION 6. CONDITIONS PRECEDENT
The effectiveness of the First Amendment shall be subject to the fulfillment by
Parent Guarantor, Subsidiary Guarantors and the Lessees of the following
conditions precedent:
Section 6.1. Lessees, Parent Guarantor, each Certificate Purchaser and
Lessor shall have executed this Amendment and each Subsidiary Guarantor shall
have acknowledged this Amendment.
Section 6.2. Lessor and each Certificate Purchaser shall have received
evidence satisfactory to them that the Revolving Credit Facility has been duly
executed.
Section 6.3. On or prior to June 1, 1998 (the "Effective Date"), Lessor and
each Certificate Purchaser shall have received a Certificate of the Secretary or
Assistant Secretary of each Lessee, dated the Effective Date, with respect to
such Lessee's governing documents, resolutions and incumbent officers.
Section 6.4. On or prior to the Effective Date, Lessor and each Certificate
Purchaser shall have received a certificate of the Secretary or Assistant
Secretary of Parent Guarantor and each Subsidiary Guarantor, dated the Effective
Date, with respect to Parent Guarantor's or such Subsidiary Guarantor's, as the
case may be, governing documents, resolutions and incumbent officers.
Section 6.5. On or prior to the Effective Date, Lessor and each Certificate
Purchaser shall have received the opinions of (a) General Counsel of Lessees,
Parent Guarantor and
28
Subsidiary Guarantors, satisfactory in form and substance to Lessor and each
Certificate Purchaser, and (b) Chapman and Cutler, special counsel to the
Certificate Purchasers.
SECTION 7. FEES AND EXPENSES
Parent Guarantor agrees to pay all the reasonable fees and expenses of the
Certificate Purchasers in connection with the negotiation, preparation,
approval, execution and delivery of this Amendment (including the fees and
expenses of their special counsel).
SECTION 8. MISCELLANEOUS.
Section 8.1.Construction. This Amendment shall be construed in connection with
and as part of the Original Agreements, and except as modified and expressly
amended by this Amendment, all terms, conditions and covenants contained in the
Original Agreements are hereby ratified and shall be and remain in full force
and effect.
Section 8.2.References. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Amendment may refer to the Original Agreements without making specific reference
to this Amendment but nevertheless all such references shall be deemed to
include this Amendment unless the context otherwise requires.
Section 8.3.Headings and Table of Contents. The headings of the Sections of this
Amendment and the Table of Contents are inserted for purposes of convenience
only and shall not be construed to affect the meaning or construction of any of
the provisions hereof and any reference to numbered Sections, unless otherwise
indicated, are to Sections of this Amendment.
Section 8.4.Counterparts. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Amendment.
SECTION 8.5.GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS (EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE).
29
SCHEDULE V.1(A)
PART (A)
PRICING GRID
Level Applicable Leverage Ratio Spread
I Less than or equal to .50%
2.0 to 1.0
II Greater than .60%
2.0 to 1.0 but less than or
equal to 2.5 to 1.0
III Greater than .65%
2.5 to 1.0 but less than or
equal to 3.0 to 1.0
IV Greater than .875%
3.0 to 1.0 but less than or
equal to 3.5 to 1.0
V Greater than 1.125%
3.5 to 1.0 but less than or
equal to 4.0 to 1.0
VI Greater than 4.0 to 1.0 1.375%
(a) Applicable Leverage Ratio means, at any date, the Leverage Ratio as at
the last day of the fiscal quarter of Parent Guarantor most recently ended prior
to such date, for which Parent Guarantor has delivered financial statements
pursuant to clause (t)(i) or (t)(ii) of Article IV of the Parent Guaranty, as
the case may be, together with the duly executed compliance certificate required
by clause (t)(3) of Article IV; provided that if Parent Guarantor shall fail to
timely deliver the financial statements required to be delivered by it pursuant
to clause (t)(i) or (t)(ii) of Article IV of the Parent Guaranty, as the case
may be, together with the duly executed compliance certificate required by
clause (t)(3) of Article IV of the Parent Guaranty, the Applicable Leverage
Ratio for each date from and including the date on which such statements are
required to be delivered until the date on which such statements are delivered
shall be deemed to be greater than 4.0:1.
(b) It is expressly agreed that through and including the Initial Delivery
Date, the Applicable Margin Rate shall be such rates as determined in accordance
with paragraph (a) above but shall be no less than the respective amounts set
forth under Level IV of Part (A) of Schedule V.1(A) to the Lease. It is
expressly agreed that after the Initial Delivery Date until such time as Parent
Guarantor's senior unsecured long-term debt, on a consolidated basis, has been
rated Investment Grade, the Applicable Margin shall be determined based upon
Part (A) of
SCHEDULE V.1(A) - Part (A) - 1
Schedule V.1(A) to the Lease, and for the period thereafter when a Debt Rating
is in effect, the Applicable Margin shall be the respective amounts determined
under Part (B) of Schedule V.1(A) to the Lease.
SCHEDULE V.1(A) - Part (A) - 2
SCHEDULE V.1(A) - Part (B) - 1
SCHEDULE V.1(A)
PART (B)
PRICING GRID
Level Debt Rating Spread
[S&P and Moody's, respectively]
I A- or above .275%
or A3 or above
II BBB+ or Baa1 .325%
III BBB or Baa2 .375%
IV BBB- or Baa3 .500%
V BB+ or Ba1 .65%
VI BB or below .950%
or Ba2 or below
For purposes of determining the Applicable Margin:
(a) Through and including the Initial Delivery Date, the Applicable Margin
shall be such rates as determined in accordance with paragraph (b) below but
shall be no less than the respective amounts set forth under Level IV of Part
(A) of Schedule V.1(A) to the Lease. It is expressly agreed that after the
Initial Delivery Date until such time as Parent Guarantor's senior unsecured
long-term debt, on a consolidated basis, has been rated Investment Grade, the
Applicable Margin shall be determined based upon Part (A) of Schedule V.1(A) to
the Lease, and for the period thereafter when a Debt Rating is in effect, the
Applicable Margin shall be the indicated percentage set forth in the Pricing
Grid above for the higher of the Moody's rating or the Standard & Poor's rating
then in effect for Parent Guarantor; provided, however, that if the Moody's and
Standard & Poor's ratings, respectively, differ by more than two levels, then
the pricing level shall be the average of the pricing determined at each such
Debt Rating Level.
(b) If this Part (B) of Schedule V.1(A) to the Lease is applicable, any
change in the Applicable Margin shall become effective five (5) Business Days
after any public announcement of the change in the Debt Rating requiring such an
increase or decrease.
SCHEDULE V.1(A) - Part (B) - 1
IN WITNESS WHEREOF, the Lessees, Parent Guarantor, the Subsidiary Guarantors,
Certificate Trustee and the Certificate Purchasers have caused this instrument
to be executed, all as of the day and year first above written.
LESSEES
APOGEE COAL COMPANY
By /s/ Mark A. Luzecky
---------------------------
Its Attorney-In-Fact
CATENARY COAL COMPANY
By /s/ Mark A. Luzecky
------------------------------
Its Vice President and Treasurer
HOBET MINING, INC.
By /s/ Mark A. Luzecky
------------------------------
Its Vice President and Treasurer
PARENT GUARANTOR
ARCH COAL, INC.
By /s/ Patrick A. Kriegshauser
------------------------------
Its Senior Vice President
CERTIFICATE PURCHASERS
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By /s/ James G. Lowery
------------------------------
Its Assistant Vice President
Investments
By /s/ Wayne T. Hoffmann
------------------------------
Its Vice President
Investments
BANK OF MONTREAL
By /s/ Ian M. Plester
------------------------------
Its Director
BARCLAYS BANK PLC
By /s/ Carol A. Cowan
------------------------------
Its Director
FIRST UNION NATIONAL BANK
By /s/ Laurence M. Levy
------------------------------
Its Vice President
BA LEASING & CAPITAL CORPORATION
By /s/ Albert Z. Norona
------------------------------
Its Vice President
CERTIFICATE TRUSTEE/
LESSOR
FIRST SECURITY BANK NATIONAL
ASSOCIATION, not in its
individual capacity except as
solely provided herein, but
solely as Certificate Trustee,
as Lessor
By /s/ Nancy M. Dahl
------------------------------
Its Vice President
SUBSIDIARY GUARANTORS
ARCH COAL SALES COMPANY, INC.
By /s/ Mark A. Luzecky
------------------------------
Its Treasuer
ARK LAND COMPANY
By /s/ Mark A. Luzecky
------------------------------
Its Attorney-In-Fact
MINGO LOGAN COAL COMPANY
By /s/ Mark A. Luzecky
------------------------------
Its Vice President and Treasurer