Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report(Date of earliest event reported):
April 30, 2001
WESTMORELAND COAL COMPANY
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 001-11155 23-1128670
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or Number Identification No.)
organization)
2 North Cascade Avenue, 14th Floor, Colorado Springs, Colorado 80903
- -------------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: 719-442-2600
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SPECIAL NOTE REGARDING CERTAIN STATEMENTS AND REFERENCES
This Current Report on Form 8-K contains forward-looking statements which
reflect the current judgment of Westmoreland Coal Company, a Delaware
corporation (the "Registrant"), on certain issues, including the Registrant's
use of the businesses acquired by it in the Acquisition (as defined in this
Current Report on Form 8-K). Because these statements apply to future events,
they are subject to risks and uncertainties that could cause the actual results
to differ materially. Important factors which could cause actual results to
differ materially include the ability of the Registrant successfully to operate
the businesses of Western Energy Company, a Montana corporation ("WECO"), and
Northwestern Resources Co., a Montana corporation ("NWR"), through the
Registrant's separate subsidiary, Westmoreland Mining LLC ("Westmoreland
Mining"), the intense competition the Registrant faces, and the other risks
described in Item 1 and Item 7 of the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2000, on file with the Securities and Exchange
Commission, which factors are incorporated herein by reference.
Item 2. Acquisition or Disposition of Assets
On April 30, 2001, the Registrant completed its acquisition (the
"Acquisition") of the coal business of The Montana Power Company ("MPC")
pursuant to a Stock Purchase Agreement dated as of September 15, 2000 (the
"Stock Purchase Agreement") by and between the Registrant and Entech, Inc., a
Montana corporation and a subsidiary of MPC.
Immediately prior to the Acquisition, the Registrant assigned to
Westmoreland Mining the right to acquire all of the outstanding capital stock of
WECO and NWR. The Registrant retained the right to acquire all of the
outstanding capital stock of Basin Resources, Inc., a Colorado corporation
("Basin"), Horizon Coal Services, Inc., a Montana corporation ("Horizon"), and
North Central Energy Company, a Colorado corporation ("North Central"). As a
result of the Acquisition, the Registrant acquired all of the outstanding
capital stock of Basin, Horizon, and North Central, and Westmoreland Mining
acquired all of the outstanding capital stock of WECO and NWR. Simultaneous with
the Acquisition, WECO transferred all of the outstanding member interests in its
subsidiary, Western SynCoal LLC, a Colorado limited liability company
("SynCoal"), to the Registrant's subsidiary, Westmoreland Power, Inc., a
Delaware corporation ("WPI"). Prior to the Acquisition, the Registrant
contributed to Westmoreland Mining $30.8 million in cash, all of the outstanding
capital stock of Dakota Westmoreland Corporation, a Delaware corporation
formerly known as Westmoreland-Knife River Coal Acquisition Corp. ("DWC"), and
all of the outstanding capital stock of WCCO-KRC Acquisition Corp., a Delaware
corporation ("WCCO-KRC").
The Stock Purchase Agreement states that the purchase price for the
stock of WECO, NWR, Basin, Horizon, and North Central shall be $138 million. The
Stock Purchase Agreement also contains a mechanism to adjust the purchase price.
As a result of preliminary estimates of the purchase price adjustment,
Westmoreland Mining acquired the stock of NWR and WECO, and the Registrant
acquired the stock of Basin, Horizon, and North Central, for aggregate
consideration of approximately $133 million, which was paid by Westmoreland
Mining. The source of the funds used for such purchase was as follows: $30.8
million contributed as equity to Westmoreland Mining by the Registrant; $100
million borrowed by Westmoreland Mining under the Term Loan Agreement dated as
of April 27, 2001 (the "Term Loan Agreement") by and among Westmoreland Mining,
the other Obligors (as such term is defined below), and the purchasers of the
notes issued under the Term Loan Agreement, who are named in Schedule A thereto
(the "Purchasers"); and $2.2 million borrowed by Westmoreland Mining under the
Credit Agreement dated as of April 27, 2001 (the "Revolving Credit Agreement")
by and among Westmoreland Mining, the Guarantors (as such term is defined
below), the banks party thereto (the "Banks"), and PNC Bank, National
Association, in its capacity as agent for the Banks. The obligations of
Westmoreland Mining under the Term Loan Agreement and the Revolving Credit
Agreement were guaranteed by Westmoreland Mining's four subsidiaries, WECO, NWR,
DWC, and WCCO-KRC, each of which is an "Obligor" under the Term Loan Agreement
and a "Guarantor" under the Revolving Credit Agreement. As security for the
obligations under the Term Loan Agreement and the Revolving Credit Agreement,
the Registrant pledged to the Purchasers and the Banks all of the outstanding
member interests in Westmoreland Mining, and Westmoreland Mining pledged to the
Purchasers and the Banks all of the outstanding capital stock of WECO, NWR, DWC,
and WCCO-KRC. In addition, each of WECO, NWR, DWC, and WCCO-KRC granted to the
Purchasers and the Banks a security interest in substantially all of their
personal property, including all of the coal sales contracts (unless the grant
of a security interest therein was prohibited by the terms of such contracts),
and granted to the Purchasers and the Banks a security interest in substantially
all of their owned and leased real property (unless the grant of a mortgage or
security interest in such property was prohibited).
The Registrant expects to treat the Acquisition as a purchase for
accounting purposes.
The terms of the Stock Purchase Agreement and the Acquisition were
determined on the basis of "arm's-length" negotiations among the parties. Prior
to the execution of the Stock Purchase Agreement, none of the Registrant, its
officers or directors or any associate of any such officer or director, or its
affiliates had any material relationship with MPC.
Prior to the Acquisition, WECO mined coal from the Rosebud Mine near
Colstrip, Montana, and sold that coal, principally under long-term contracts to
Colstrip Station, a four-unit power plant with a 2,200 MW capacity located
adjacent to the mine, and NWR mined lignite (a type of coal with a lower BTU
content than other types of coal) from the Jewett Mine near Jewett, Texas, and
sold that coal under a long-term contract to Reliant Energy Corp. for use at
Limestone Station, a two-unit power plant with a 1,600 MW capacity located
adjacent to the mine. The Registrant intends to continue to use the WECO and NWR
assets purchased in the Acquisition substantially in the manner such assets were
used prior to the Acquisition.
Prior to the Acquisition, Basin, Horizon, and North Central were not
engaged in active operations, and the Registrant intends to continue to use the
Basin, Horizon, and North Central assets purchased in the Acquisition
substantially in the manner such assets were used prior to the Acquisition.
Prior to the Acquisition, SynCoal operated a coal processing and upgrading
facility that is located adjacent to the Rosebud Mine. The Registrant has
determined that it will not continue to operate this facility.
Westmoreland Mining, a wholly owned subsidiary of the Registrant, is a
special purpose Delaware limited liability company formed December 4, 2000 for
the purpose of facilitating the financing of the Acquisition and the acquisition
of the coal business of Knife River Corporation (the "Knife River Transaction")
and, through its subsidiaries, operating the businesses acquired in the
Acquisition and expected to be acquired in the Knife River Transaction. The Term
Loan Agreement and the Revolving Credit Agreement prohibit Westmoreland Mining
from assuming or guaranteeing the liabilities of any person or entity, including
the Registrant, except under certain limited circumstances. The Registrant has
not guaranteed the obligations of Westmoreland Mining under the Term Loan
Agreement or the Revolving Credit Agreement, and except for the pledge referred
to above and the Management Fee Subordination Agreement, pursuant to which the
Registrant agreed (among other things) not to accept payment of management fees
upon the occurrence and during the continuance of an event of default or
potential event of default under the Term Loan Agreement or the Revolving Credit
Agreement, the Registrant is not a party to the agreements executed in
connection with the Term Loan Agreement and the Revolving Credit Agreement.
The foregoing discussion of the Stock Purchase Agreement, the Term Loan
Agreement, and the Revolving Credit Agreement does not purport to be complete
and is qualified by reference to the full text of the Stock Purchase Agreement,
which was filed as Exhibit 99.1 to the Registrant's Current Report on Form 8-K
filed February 5, 2001 and is incorporated herein by reference, and by reference
to the full text of Term Loan Agreement, Revolving Credit Agreement, and the
pledge agreements executed in connection with the Term Loan Agreement and
Revolving Credit Agreement, which are filed as exhibits hereto and incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired
The Registrant has not included the financial statements of the
business acquired, as described in Item 2 of this Current Report on Form 8-K,
and will file such financial statements not later than 60 days after this
Current Report on Form 8-K is due by an amendment hereto.
(b) Pro Forma Financial Information
The Registrant has not included the pro forma financial information for
the transaction described in Item 2 of this Current Report on Form 8-K and will
file such pro forma financial information not later than 60 days after this
Current Report on Form 8-K is due by an amendment hereto.
(c) Exhibits
The Exhibits filed as part of this Current Report on Form 8-K are
listed on the Exhibit Index immediately preceding such Exhibits, which Exhibit
Index is incorporated herein by reference. Documents listed on such Exhibit
Index, except for documents identified by footnotes, are being filed as exhibits
herewith. Documents identified by footnotes are not being filed herewith and,
pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), reference is made to such documents as previously filed as
exhibits filed with the Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
WESTMORELAND COAL COMPANY
Date: May 15, 2001 By: /s/ Robert J. Jaeger
-----------------------
Name: Robert J. Jaeger
Title: Senior Vice President - Finance
EXHIBIT INDEX
Exhibit No. Description
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2.1 Stock Purchase Agreement dated as of September 15, 2000 by
and between Westmoreland Coal Company and Entech, Inc.
(incorporated herein by reference to exhibit 99.1 to the
Registrant's Current Report on Form 8-K filed February 5,
2001, file no. 001-11155)
99.1 Press Release dated April 30, 2001.
99.2 Term Loan Agreement dated as of April 27, 2001 by and among
Westmoreland Mining LLC, WCCO-KRC Acquisition Corp., Dakota
Westmoreland Corporation, Western Energy Company,
Northwestern Resources Co., the other entities from time to
time party thereto as guarantors, and the purchasers named
in Schedule A thereto
99.3 Credit Agreement dated as of April 27, 2001 by and among
Westmoreland Mining LLC, WCCO-KRC Acquisition Corp., Dakota
Westmoreland Corporation, Western Energy Company,
Northwestern Resources Co., the other entities from time to
time party thereto as guarantors, the banks party thereto,
and PNC Bank, National Association, in its capacity as agent
for the banks
99.4 Pledge Agreement (Noteholders) dated as of April 27, 2001 by
and among Westmoreland Coal Company, Westmoreland Mining
LLC, the other entities from time to time party thereto as
pledgors, and Firstar Bank, N.A., as collateral agent for
the purchasers in connection with the Term Loan Agreement
99.5 Pledge Agreement dated as of April 27, 2001 by and among
Westmoreland Coal Company, Westmoreland Mining LLC, the
other entities from time to time party thereto as pledgors,
and Firstar Bank, N.A., as collateral agent for the banks in
connection with the Credit Agreement
99.6 Continuing Agreement of Guaranty and Suretyship dated as of
April 27, 2001 by and among WCCO-KRC Acquisition Corp.,
Dakota Westmoreland Corporation, Western Energy Company,
Northwestern Resources Co., and each of the other persons
which becomes a guarantor thereunder, in favor of the
purchasers under the Term Loan Agreement
99.7 Continuing Agreement of Guaranty and Suretyship dated as of
April 27, 2001 by and among WCCO-KRC Acquisition Corp.,
Dakota Westmoreland Corporation, Western Energy Company,
Northwestern Resources Co., and each of the other persons
which becomes a guarantor thereunder, in favor of PNC Bank,
National Association, as agent for the banks in connection
with that Credit Agreement
99.8 Security Agreement dated as of April 27, 2001 by and among
Westmoreland Mining LLC, WCCO-KRC Acquisition Corp., Dakota
Westmoreland Corporation, Western Energy Company,
Northwestern Resources Co., and each of the other persons
which becomes a guarantor under the Term Loan Agreement and
Firstar Bank, N.A., as collateral agent for the purchasers
under the Term Loan Agreement
99.9 Security Agreement dated as of April 27, 2001 by and among
Westmoreland Mining LLC, WCCO-KRC Acquisition Corp., Dakota
Westmoreland Corporation, Western Energy Company,
Northwestern Resources Co., and each of the other persons
which becomes a guarantor under the Credit Agreement, and
Firstar Bank, N.A., as collateral agent for the banks under
the Credit Agreement
99.10 Collateral Assignment of Contract Rights dated as of April
27, 2001 by and among Westmoreland Mining LLC, WCCO-KRC
Acquisition Corp., Dakota Westmoreland Corporation, Western
Energy Company, Northwestern Resources Co., and each of the
persons that becomes a guarantor under the Term Loan
Agreement, in favor of Firstar Bank, N.A., as collateral
agent for the purchasers under the Term Loan Agreement
99.11 Collateral Assignment of Contract Rights dated as of April
27, 2001 by and among Westmoreland Mining LLC, WCCO-KRC
Acquisition Corp., Dakota Westmoreland Corporation, Western
Energy Company, Northwestern Resources Co., and each of the
persons that becomes a guarantor under the Credit Agreement,
in favor of Firstar Bank, N.A. as collateral agent
EXHIBIT 99.1
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----------------------------------
Westmoreland Completes Purchase Of
Montana Power Coal Business
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Colorado Springs, CO - April 30, 2001 -- Westmoreland Coal Company (AMEX: WLB)
("Westmoreland Coal") and Montana Power Company (NYSE: MTP) announced today the
closing of the purchase of the coal business of Montana Power by Westmoreland
Coal's wholly owned subsidiary, Westmoreland Mining LLC ("Westmoreland Mining")
for $138 million in cash, before closing adjustments. The coal operations
acquired from Montana Power include Western Energy Company, Colstrip, Montana
and Northwestern Resources Co., Jewett, Texas, which combined, produced
approximately 19 million tons of coal in 2000. Western Energy and Northwestern
Resources supply coal to adjacent, low-cost electrical generating units that
have the necessary pollution control technologies in place to meet today's
stringent environmental standards.
Western Energy owns and operates the Rosebud Mine located in the Northern Powder
River Basin. Approximately 90% of Western's current production is sold under
long-term contracts to the owners of the four-unit, mine-mouth Colstrip power
plant. In 2000, the Rosebud Mine produced and sold 10.4 million tons of coal.
Northwestern Resources, which owns and operates the Jewett Mine in Central
Texas, produced and sold 8.2 million tons of lignite last year. Production from
the Jewett Mine is sold under a long-term contract to Reliant Energy, the owner
of the two-unit Limestone power plant adjacent to the mine.
"We are delighted to close this transaction, particularly at this time of
increased attention to the energy needs of our country," said Christopher K.
Seglem, Westmoreland Coal Company's Chairman, President and CEO. "Northwestern
and Western Energy are outstanding operations which match attractive coal assets
with long-term sales contracts that we believe will produce sustainable,
long-term profits and highly attractive cash flows, especially given
Westmoreland's ability to apply its NOLs (tax loss carryforwards) to the
earnings that we expect from Westmoreland Mining. We welcome these employees and
look forward to serving the customers of Western Energy and Northwestern
Resources. Likewise, we have enormous respect for Montana Power Company's
decision to focus all its efforts on implementation of a forward-looking vision
in the telecommunications business. We wish them great success."
Bob Gannon, Montana Power and TOUCHAMERICA's chairman and chief executive said,
"We are three-quarters of the way toward transforming Montana Power into
TOUCHAMERICA, our growing broadband information transport company. We are
meeting our goals of receiving good, solid values for our energy businesses, and
of finalizing transactions with well-respected companies. We wish Westmoreland
every success in the future, as well."
In a separate transaction, Westmoreland Mining is acquiring the coal assets of
Knife River Corporation which include mining operations in Montana and North
Dakota. Westmoreland Coal's wholly owned power development subsidiary,
Westmoreland Power, Inc., is acquiring certain rights to the inactive Gascoyne
Mine in North Dakota. The Knife River Corp. closing is expected to be announced
shortly.
Westmoreland Coal Company, headquartered in Colorado Springs, is the oldest
independent coal company in the United States. Westmoreland has produced coal in
Montana since 1974 through its subsidiary, Westmoreland Resources, Inc., which
owns the Absaloka Mine in the Northern Powder River Basin. In addition to its
coal operations, the Company has interests in four operating independent power
projects held by its wholly owned subsidiary, Westmoreland Energy, Inc. The
Company also recently announced that it is pursuing the development of a new
500MW lignite-fired power project in North Dakota. The Company also holds a 20%
interest in Dominion Terminal Associates, a coal shipping and terminal facility
in Newport News, Virginia. Westmoreland is implementing a growth strategy
dedicated to meeting America's dual goals of low-cost power and a clean
environment through the acquisition and development of complementary, niche
opportunities in coal, power and other segments of the energy sector.
The Montana Power Company is a diversified investor-owned electric and natural
gas utility that is transforming itself into a national broadband information
transport company under TOUCHAMERICA, for now its telecommunications subsidiary.
TOUCHAMERICA's fiber-optic network, which will reach 26,000 route miles this
year, employs the most advanced telecommunications technology available today.
TOUCHAMERICA and The Montana Power Company are based in Butte, Montana.
As to Westmoreland Coal Company: Certain statements in this
press release which are not historical facts or information
are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, including, but not
limited to, the information set forth in Management's
Discussion and Analysis of Financial Condition and Results
of Operations. Any statements contained herein that are not
statements of historical fact may be deemed to be
forward-looking statements. For example, words such as
"may," "will," "should," "estimates," "predicts,"
"potential," "continue," "strategy," "believes,"
"anticipates," "plans," "expects," "intends," and similar
expressions are intended to identify forward-looking
statements. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may
cause the actual results, levels of activity, performance or
achievements of the Company, or industry results, to be
materially different from any future results, levels of
activity, performance or achievements expressed or implied
by such forward-looking statements. Such factors include,
among others, the following: general economic and business
conditions; the ability of the Company to implement its
business strategy; the Company's access to financing; the
Company's ability to successfully identify new business
opportunities; the Company's ability to achieve anticipated
cost savings and profitability targets; changes in the
industry; competition; the Company's ability to utilize its
tax net operating losses; the ability to reinvest excess
cash at an acceptable rate of return; weather conditions;
the availability of transportation; price of alternative
fuels; costs of coal produced by other countries; demand for
electricity; the effect of regulatory and legal proceedings,
the announced liquidity issues for Washington Group
International and other factors discussed in Item 1 and Item
7 of the Company's Form 10-K for the year ended December 31,
2000. As a result of the foregoing and other factors, no
assurance can be given as to the future results and
achievement of the Company. Neither the Company nor any
other person assumes responsibility for the accuracy and
completeness of these statements.
Contacts:
Westmoreland Coal Company Montana Power Company
Diane Jones Cort Freeman, Media Relations
(719) 442-2600 (406) 497-2368
Linda McGillen,
Investor Relations
(406) 496-5211
###
EXHIBIT 99.2
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Execution Copy
$20,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
WESTMORELAND MINING LLC
and
THE GUARANTORS PARTY HERETO
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, As Agent
Dated as of April 27, 2001
TABLE OF CONTENTS
Section Page
1. CERTAIN DEFINITIONS..................................................1
1.1 Certain Definitions.........................................1
1.2 Construction...............................................23
1.2.1. Number; Inclusion.................................24
1.2.2. Determination.....................................24
1.2.3. Agent's Discretion and Consent....................24
1.2.4. Documents Taken as a Whole........................24
1.2.5. Headings..........................................24
1.2.6. Implied References to this Agreement..............24
1.2.7. Persons...........................................24
1.2.8. Modifications to Documents........................25
1.2.9. From, To and Through..............................25
1.2.10. Shall; Will.......................................25
1.3 Accounting Principles......................................25
2. REVOLVING CREDIT FACILITY...........................................25
2.1 Revolving Credit Commitments...............................25
2.2 Nature of Banks' Obligations with Respect to
Revolving Credit Loans.....................................26
2.3 Commitment Fees............................................26
2.4 Intentionally Omitted......................................26
2.5 Revolving Credit Loan Requests.............................26
2.6 Making Revolving Credit Loans..............................27
2.7 Revolving Credit Notes.....................................27
2.8 Use of Proceeds............................................28
2.9 Letter of Credit Subfacility...............................28
2.9.1. Issuance of Letters of Credit.....................28
2.9.2. Letter of Credit Fees.............................28
2.9.3. Disbursements, Reimbursement......................28
2.9.4. Repayment of Participation Advances...............30
2.9.5. Documentation.....................................30
2.9.6. Determinations to Honor Drawing Requests..........30
2.9.7. Nature of Participation and Reimbursement
Obligations.......................................31
2.9.8. Indemnity.........................................32
2.9.9. Liability for Acts and Omissions..................32
3. INTENTIONALLY OMITTED...............................................33
4. INTEREST RATES......................................................33
4.1 Interest Rate Options......................................33
4.1.1. Revolving Credit Interest Rate Options............33
4.1.2. Intentionally Omitted.............................34
4.1.3. Rate Quotations...................................34
4.2 Interest Periods...........................................34
4.2.1. Amount of Borrowing Tranche.......................34
4.2.2. Renewals..........................................34
4.3 Interest After Default.....................................35
4.3.1. Letter of Credit Fees, Interest Rate..............35
4.3.2. Other Obligations.................................35
4.3.3. Acknowledgment....................................35
4.4 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available.....................................35
4.4.1. Unascertainable...................................35
4.4.2. Illegality; Increased Costs; Deposits Not
Available.........................................35
4.4.3. Agent's and Bank's Rights.........................36
4.5 Selection of Interest Rate Options.........................36
5. PAYMENTS............................................................37
5.1 Payments...................................................37
5.2 Pro Rata Treatment of Banks................................37
5.3 Interest Payment Dates.....................................37
5.4 Voluntary Prepayments......................................38
5.4.1. Right to Prepay...................................38
5.4.2. Replacement of a Bank.............................39
5.4.3. Change of Lending Office..........................39
5.5 Mandatory Prepayments......................................39
5.6 Additional Compensation in Certain Circumstances...........40
5.6.1. Increased Costs or Reduced Return Resulting from
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc.....................................40
5.6.2. Indemnity.........................................40
5.6.3. Borrowing Base Exceeded...........................41
6. REPRESENTATIONS AND WARRANTIES......................................41
6.1 Representations and Warranties.............................41
6.1.1. Organization and Qualification....................42
6.1.2. Capitalization and Ownership......................42
6.1.3. Subsidiaries......................................42
6.1.4. Power and Authority...............................43
6.1.5. Validity and Binding Effect.......................43
6.1.6. No Conflict.......................................43
6.1.7. Litigation........................................43
6.1.8. Title to Properties...............................44
6.1.9. Financial Statements..............................44
6.1.10. Use of Proceeds; Margin Stock; Section 20
Subsidiaries......................................45
6.1.11. Full Disclosure...................................46
6.1.12. Taxes.............................................46
6.1.13. Consents and Approvals............................46
6.1.14. No Event of Default; Compliance with Instruments..47
6.1.15. Patents, Trademarks, Copyrights, Licenses, Etc....47
6.1.16. Security Interests................................48
6.1.17. Mortgage Liens....................................48
6.1.18. Status of the Pledged Collateral..................49
6.1.19. Insurance.........................................49
6.1.20. Compliance with Laws..............................49
6.1.21. Material Contracts; Burdensome Restrictions.......49
6.1.22. Investment Companies; Regulated Entities..........50
6.1.23. Plans and Benefit Arrangements....................50
6.1.24. Employment Matters................................51
6.1.25. Environmental Matters.............................52
6.1.26. Senior Debt Status................................54
6.1.27. Permit Blocks.....................................54
6.1.28. Transactions with Affiliates......................54
6.1.29. Status under Certain Statutes.....................54
6.1.30. Coal Leases.......................................54
6.1.31. Qualifications as Lessee, Coal Acreage
Limitations.......................................55
6.1.32. Single Purpose Entities...........................55
6.1.33. Surface Mine Reclamation Bonds....................57
6.1.34. Foreign Assets Control Regulation, etc............57
6.1.35. Pari Passu Collateral.............................57
6.1.36. Additional Representations and Warranties.........58
6.2 Updates to Schedules.......................................58
7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT.............58
7.1 First Loans and Letters of Credit..........................58
7.1.1. Officer's Certificate.............................58
7.1.2. Secretary's Certificate...........................59
7.1.3. Delivery of Loan Documents........................59
7.1.4. Opinion of Counsel................................59
7.1.5. Legal Details.....................................60
7.1.6. Payment of Fees...................................60
7.1.7. Environmental Audit...............................60
7.1.8. Appraisals........................................61
7.1.9. Consents..........................................61
7.1.10. Officer's Certificate Regarding MACs..............61
7.1.11. No Violation of Laws..............................61
7.1.12. No Actions or Proceedings.........................61
7.1.13. Insurance Policies; Certificates of Insurance;
Endorsements......................................62
7.1.14. Title Insurance...................................62
7.1.15. Filing Receipts...................................62
7.1.16. Term Loan Agreement...............................62
7.1.17. Administrative Questionnaire......................62
7.1.18. Management Agreement..............................62
7.1.19. Solvency Certificate..............................63
7.1.20. Acquisitions; Equity Contribution.................63
7.1.21. Intercreditor Agreement...........................63
7.1.22. Coal Reserves.....................................63
7.1.23. Independent Director of Borrower an Subsidiaries..64
7.1.24. Bankruptcy Remote Entities, Separateness..........64
7.1.25. Changes in Corporate Structure....................64
7.2 Each Additional Loan or Letter of Credit...................64
8. COVENANTS...........................................................65
8.1 Affirmative Covenants......................................65
8.1.1. Preservation of Existence, Etc....................65
8.1.2. Payment of Liabilities, Including Taxes, Etc......65
8.1.3. Maintenance of Insurance..........................66
8.1.4. Maintenance of Properties and Leases..............66
8.1.5. Maintenance of Patents, Trademarks, Etc...........67
8.1.6. Visitation Rights.................................67
8.1.7. Operation of Mines................................67
8.1.8. Keeping of Records and Books of Account...........67
8.1.9. Plans and Benefit Arrangements....................68
8.1.10. Compliance with Laws..............................68
8.1.11. Use of Proceeds...................................68
8.1.12. Further Assurances................................68
8.1.13. Subordination of Intercompany Loans...............69
8.1.14. Compliance with Term Loan Agreement...............69
8.1.15. Maintenance of Prior Security Interest............69
8.1.16. Single Purpose Entities...........................69
8.1.17. Maintenance of Permits............................72
8.1.18. Transfer of Permits...............................72
8.1.19. Subordination of Management Fees; Payment of
Management Fees...................................72
8.1.20. Maintenance of Coal Supply Contracts, Coal Leases.73
8.1.21. Purchase Price adjustments........................73
8.2 Negative Covenants.........................................73
8.2.1. Indebtedness......................................74
8.2.2. Liens.............................................74
8.2.3. Guaranties........................................75
8.2.4. Loans and Investments.............................75
8.2.5. Dividends and Related Distributions...............75
8.2.6. Liquidations, Mergers, Consolidations,
Acquisitions......................................76
8.2.7. Dispositions of Assets or Subsidiaries............76
8.2.8. Affiliate Transactions............................77
8.2.9. Subsidiaries, Partnerships and Joint Ventures.....77
8.2.10. Continuation of or Change in Business.............77
8.2.11. Plans and Benefit Arrangements....................78
8.2.12. Fiscal Year.......................................78
8.2.13. Issuance of Stock.................................78
8.2.14. Changes in Organizational Documents...............79
8.2.15. Changes in Material Contracts, Performance under
Coal Supply Contracts.............................79
8.2.16. Capital Expenditures and Leases...................79
8.2.17. Minimum Debt Service Coverage Ratio...............79
8.2.18. Maximum Leverage Ratio............................80
8.2.19. Maximum Consolidated Total Indebtedness to
Consolidated Total Capitalization.................80
8.2.20. Operating Leases..................................80
8.3 Reporting Requirements.....................................80
8.3.1. Monthly Financial Statements, Borrowing Base
Certificate.......................................81
8.3.2. Quarterly Financial Statements....................81
8.3.3. Annual Financial Statements.......................81
8.3.4. Certificate of the Borrower.......................82
8.3.5. Notice of Default.................................82
8.3.6. Notice of Litigation..............................83
8.3.7. Certain Events....................................83
8.3.8. Budgets, Forecasts, Other Reports and Information.83
8.3.9. Notices Regarding Plans and Benefit Arrangements..84
8.3.10. Information as to certain Price Adjustments.......85
8.3.11. Single Purpose Entity Status......................85
9. DEFAULT.............................................................86
9.1 Events of Default..........................................86
9.1.1. Payments Under Loan Documents.....................86
9.1.2. Breach of Warranty................................86
9.1.3. Breach of Negative Covenants or Visitation Rights.86
9.1.4. Breach of Other Covenants.........................86
9.1.5. Defaults in Other Agreements or Indebtedness, or
Material Contracts................................87
9.1.6. Final Judgments or Orders.........................87
9.1.7. Events Relating to Plans and Benefit Arrangements.87
9.1.8. Change of Control.................................88
9.1.9. Involuntary Proceedings...........................89
9.1.10. Voluntary Proceedings.............................89
9.1.11. Default or Non-performance by Manager.............89
9.2 Consequences of Event of Default...........................89
9.2.1. Events of Default Other Than Bankruptcy,
Insolvency or Reorganization Proceedings..........89
9.2.2. Bankruptcy, Insolvency or Reorganization
Proceedings.......................................90
9.2.3. Set-off...........................................90
9.2.4. Suits, Actions, Proceedings.......................90
9.2.5. Application of Proceeds...........................91
9.2.6. Other Rights and Remedies.........................91
9.3 Notice of Sale.............................................92
10. THE AGENT...........................................................92
10.1 Appointment................................................92
10.2 Delegation of Duties.......................................92
10.3 Nature of Duties; Independent Credit Investigation.........92
10.4 Actions in Discretion of Agent; Instructions From
the Banks..................................................93
10.5 Reimbursement and Indemnification of Agent by the Borrower.93
10.6 Exculpatory Provisions; Limitation of Liability............94
10.7 Reimbursement and Indemnification of Agent by Banks........95
10.8 Reliance by Agent..........................................95
10.9 Notice of Default..........................................95
10.10 Notices....................................................96
10.11 Banks in Their Individual Capacities; Agent in its
Individual Capacity........................................96
10.12 Holders of Notes...........................................96
10.13 Equalization of Banks......................................96
10.14 Successor Agent............................................97
10.15 Agent's Fee................................................97
10.16 Availability of Funds......................................98
10.17 Calculations...............................................98
10.18 Beneficiaries..............................................98
11. MISCELLANEOUS.......................................................99
11.1 Modifications, Amendments or Waivers.......................99
11.1.1. Increase of Commitment; Extension of
Expiration Date...................................99
11.1.2. Extension of Payment; Reduction of Principal
Interest or Fees; Modification of Terms
of Payment........................................99
11.1.3. Release of Collateral or Guarantor................99
11.1.4. Miscellaneous.....................................99
11.2 No Implied Waivers; Cumulative Remedies; Writing Required.100
11.3 Reimbursement and Indemnification of Banks by the
Borrower; Taxes...........................................100
11.4 Holidays..................................................101
11.5 Funding by Branch, Subsidiary or Affiliate................101
11.5.1. Notional Funding.................................101
11.5.2. Actual Funding...................................102
11.6 Notices...................................................102
11.7 Severability..............................................103
11.8 Governing Law.............................................103
11.9 Prior Understanding.......................................103
11.10 Duration; Survival........................................103
11.11 Successors and Assigns....................................104
11.12 Confidentiality...........................................105
11.12.1. General..........................................105
11.12.2. Sharing Information With Affiliates of the Banks.105
11.13 Counterparts..............................................106
11.14 Agent's or Bank's Consent.................................106
11.15 Exceptions................................................106
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL....................106
11.17 Tax Withholding Clause....................................107
11.18 Joinder of Guarantors; Additional Security Arrangements...107
11.19 Environmental Indemnity...................................108
11.20 Finance Code Opt-Out......................................109
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(C) - COAL SUPPLY CONTRACTS
SCHEDULE 1.1(L) - COAL LEASES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 1.1(Q) - QUALIFIED ACCOUNTS
SCHEDULE 6.1.1 - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.2 - CAPITALIZATION
SCHEDULE 6.1.3 - SUBSIDIARIES
SCHEDULE 6.1.7 - LITIGATION
SCHEDULE 6.1.8 - OWNED AND LEASED REAL PROPERTY
SCHEDULE 6.1.9 - FINANCIAL STATEMENTS
SCHEDULE 6.1.12 - TAXES
SCHEDULE 6.1.13 - CONSENTS AND APPROVALS
SCHEDULE 6.1.15 - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 6.1.18 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 6.1.19 - INSURANCE POLICIES
SCHEDULE 6.1.21 - MATERIAL CONTRACTS
SCHEDULE 6.1.23 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.25 - ENVIRONMENTAL DISCLOSURES
SCHEDULE 6.1.28 - TRANSACTIONS WITH AFFILIATES
SCHEDULE 6.1.30 - ROYALTIES
SCHEDULE 6.1.31 - QUALIFICATIONS AS LESSEE, LEASE ACREAGE LIMITATIONS
SCHEDULE 8.1.6 - REQUIRED MINING PERMITS
SCHEDULE 8.2.1 - PERMITTED INDEBTEDNESS
SCHEDULE 8.2.16 - CAPITAL EXPENDITURES AND LEASES
SCHEDULE 8.2.20 - OPERATING LEASES
SCHEDULE 8.2.3 - EXISTING INDEBTEDNESS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C) - COLLATERAL ASSIGNMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER
EXHIBIT 1.1(G)(2) - GUARANTY AGREEMENT
EXHIBIT 1.1(I)(2) - INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(I)(3) - INTERCREDITOR AGREEMENT
EXHIBIT 1.1(M)(1) - MORTGAGE
EXHIBIT 1.1(M)(2) - MANAGEMENT FEE SUBORDINATION AGREEMENT
EXHIBIT 1.1(P)(1) - PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
EXHIBIT 1.1(P)(2) - PLEDGE AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1(S) - SECURITY AGREEMENT
EXHIBIT 2.5 - LOAN REQUEST
EXHIBIT 7.1.4 - OPINION OF COUNSEL
EXHIBIT 8.3.4 - QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 9.1.3 - BORROWING BASE CERTIFICATE
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of April 27, 2001 and is made by and
among WESTMORELAND MINING LLC, a Delaware limited liability company (the
"Borrower"), each of the Guarantors (as hereinafter defined), the BANKS (as
hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
agent for the Banks under this Agreement (hereinafter referred to in such
capacity as the "Agent").
WITNESSETH:
WHEREAS, (i) Dakota Westmoreland Corporation (f/k/a Westmoreland-Knife
River Coal Acquisition Corp.), a Delaware corporation ("Buyer") and Knife River
Corporation, a Delaware corporation are parties to that certain Asset Purchase
Agreement dated as of September 27, 2000, pursuant to which Buyer will acquire
and Buyer is a subsidiary of the Borrower and has assigned certain of its rights
under the Asset Purchase Agreement to WCCO-KRC Acquisition Corp., a Delaware
corporation and a subsidiary of the Borrower, and (ii) Westmoreland Coal Company
and Entech, Inc. are parties to that certain Stock Purchase Agreement dated as
of September 15, 2000, and Westmoreland Coal Company has assigned to the
Borrower its right to acquire all of the stock of Western Energy Company
("WECO") and Northwestern Resources Co. ("Northwestern");
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$20,000,000; and
WHEREAS, the revolving credit facility shall be used for working
capital and 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:
Account shall mean any account, contract right, general
intangible, chattel paper, instrument or document representing any right to
payment for goods sold or services rendered, whether or not earned by
performance and whether or not evidenced by a contract, instrument or document,
which is now owned or hereafter acquired by the Loan Parties. All Accounts,
whether Qualified Accounts or not, shall be subject to the Banks' Prior Security
Interest.
Adequately Funded shall mean a Plan's assets-to-liabilities
relationship described herein. A Plan is Adequately Funded if, as of the last
day of the Plan Year which has most recently ended (the "Valuation Date") and
based on an actuarial valuation made as of the first day of such Plan Year by
the Plan's regular actuarial consultant, the value of the Plan's assets as
determined under Section 412(c)(2) of the Internal Revenue Code, including any
contributions made to the Plan within eight and 1/2 months of the Valuation
Date, is not less than 90% of the Plan's Current Liability, as determined under
Section 412(l)(7) of the Code using the maximum allowable interest rate under
such subsection, and recognizing over three years any plan change, such as any
plan amendment or required statutory change in benefits, (but not changes in
actuarial assumption or normal plan experience).
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
or individuals holding similar positions of a corporation or trust or other
Person, as the case may be.
Agent shall mean PNC Bank, National Association, and its
successors and assigns.
Agent's Fee shall have the meaning assigned to that term in
Section 10.15.
Agent's Letter shall have the meaning assigned to that term
in Section 10.15.
Agreement shall mean this Credit Agreement, as the same may
be supplemented or amended from time to time, including all schedules and
exhibits.
Ancillary Interests shall mean the stock in Basin Resources,
Inc., Horizon Coal Services, Inc., North Central Energy Company and Western
SynCoal LLC being acquired pursuant to the Stock Purchase Agreement and the
Gascoyne Rights being acquired as part of the Asset Acquisition Agreement which
have been determined to be ancillary and unnecessary to the business operations
planned to be conducted by the Loan Parties.
Annual Statements shall have the meaning assigned to that
term in Section 6.1.9(i).
Asset Acquisition Agreement shall mean that certain Asset
Purchase Agreement dated as of September 27, 2000 between Knife River
Corporation and Westmoreland-Knife River Coal Acquisition Corp.
Asset Acquisition Document shall mean the Asset Acquisition
Agreement and all bills of sale relating thereto, documents regarding assignment
of contracts and assumption of liabilities pursuant to the terms of the Asset
Acquisition Agreement, and all documents executed and delivered in connection
with the foregoing.
Assignment and Assumption Agreement shall mean an Assignment
and Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and
the Agent, as Agent and on behalf of the remaining Banks, substantially in the
form of Exhibit 1.1(A).
Authorized Officer shall mean those individuals, designated
by written notice to the 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 Agent.
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 Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the 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 Agent, or (ii) the Federal Funds Effective Rate plus
0.50% per annum.
Base Rate Option shall mean the Revolving Credit Base Rate
Option.
Benefit Arrangement shall mean at any time an "employee
benefit plan," within the meaning of Section 3(3) of ERISA, which is neither a
Plan nor a Multiemployer Plan and which is maintained, sponsored or otherwise
contributed to by any member of the ERISA Group.
Borrower shall mean Westmoreland Mining LLC, a limited
liability company organized and existing under the laws of the State of
Delaware.
Borrowing Base shall mean at any time 80% of Qualified
Accounts.
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 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 Option applies shall
constitute one Borrowing Tranche.
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, New York, New York and
London, England.
Closing Date shall mean April 27, 2001 or, if all the
conditions specified in Section 7 have not been satisfied or waived by such
date, not later than April 30, 2001, as designated by the Borrower by at least 1
Business Days' advance notice to the Agent at its Principal Office, or such
other date as the parties agree. The closing shall take place at 10:00 a.m.,
Pittsburgh time, on the Closing Date at the offices of Buchanan Ingersoll
Professional Corporation, or at such other time and place as the parties agree.
Coal Act shall mean Internal Revenue Code Sections 9701
through 9722.
Coal Leases shall mean leases presently owned or hereafter
acquired by any Loan Party of mineral rights and real property interests related
to the right to mine or extract coal from the Coal Reserves (as identified by
the Borrower to the Collateral Agent from time to time as mineable reserves),
including without limitation, those leases set forth on Schedule 1.1(L).
Coal Reserves shall mean all coal deposits which the Borrower
by virtue of a deed or lease has the right to mine.
Coal Supply Contracts shall mean collectively and Coal Supply
Contract shall mean individually, all coal supply or sales agreements now or
hereafter entered into by the Borrower or any Loan Party which provide for the
sale or provision of coal by Borrower or any Loan Party, including without
limitation, those agreements listed on Schedule 1.1(C) hereto.
Collateral shall mean that portion of the UCC Collateral, the
Pledged Collateral, the Intellectual Property Collateral, Coal Supply Contracts
and the Real Property in or on which the Loan Parties have granted the
Collateral Agent for the benefit of the Banks a security interest in or lien on
pursuant to the Security Agreement, the Collateral Assignment, the Pledge
Agreement, the Patent, Trademark and Copyright Security Agreement and the
Mortgages respectively, such Collateral to include, to the extent provided in
the Security Documents, all Accounts, Inventory, coal reserves and related coal
lease rights, equipment, furniture, fixtures, real property, improvements and
general intangibles, leasehold interests, Coal Supply Contracts and all limited
liability company interests in the Borrower held by Parent.
Collateral Agency Agreement shall mean that certain
Collateral Agency Agreement among the Agent, the Collateral Agent and the Term
Lenders dated as of April 27, 2001.
Collateral Agent shall mean an institution which is holding
the Collateral on behalf of the Banks and the Term Lenders pursuant to the terms
of the Collateral Agency Agreement.
Collateral Assignment shall mean the Collateral Assignment in
the form of Exhibit 1.1(C) collaterally assigning the Borrower's or any
Subsidiary's rights under Coal Supply Contracts.
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 Commitments shall mean the aggregate of the
Revolving Credit Commitments of all of the Banks.
Commitment Fee shall have the meaning assigned to that term
in Section 2.3.
Compliance Certificate shall have the meaning assigned to
such term in Section 8.3.4.
Consolidated EBITDA shall mean for the period of
determination (i) the sum of net income, depreciation, amortization, other
nonrecurring or non-cash charges to net income, interest expense and income tax
expense minus (ii) nonrecurring or non-cash credits to net income, in each case
of the Borrower and its Subsidiaries for such period determined and consolidated
in accordance with GAAP.
Consolidated Net Worth shall mean as of any date of
determination consolidated stockholders' equity of the Borrower and its
Subsidiaries as of such date determined and consolidated in accordance with
GAAP.
Consolidated Total Capitalization shall mean as of the date
of determination the sum of (i) Consolidated Total Indebtedness and (ii)
Consolidated Net Worth.
Consolidated Total Indebtedness shall mean the principal
balance of the Loans and the Letters of Credit Outstanding and all Indebtedness
of the Borrower and its Subsidiaries for borrowed money, including without
limitation, Indebtedness evidenced by the Notes, capitalized leases and other
Indebtedness permitted under Section 8.2.1, as determined and consolidated in
accordance with GAAP less any funds maintained in the Debt Service Reserve
Account or the Series B Trust Account.
Contamination shall mean the presence or release or threat of
release of Regulated Substances in, on, under or emanating to or from the
Property, which pursuant to Environmental Laws requires notification or
reporting to an Official Body, or which pursuant to Environmental Laws requires
the investigation, cleanup, removal, remediation, containment, abatement of or
other response action or which otherwise constitutes a violation of
Environmental Laws.
Debt Service shall mean, as of any date of determination and
for any period, the sum of interest and regularly scheduled principal payments
on Indebtedness of the Loan Parties, plus the Collateral Agent's fees and
expenses.
Debt Service Coverage Ratio for any period shall mean as of
any date of determination, a fraction (i) the numerator of which is the amount
of Consolidated EBITDA less Capital Expenditures (excluding (A) assets acquired
by capital leases and (B) the amount of Indebtedness incurred in connection with
the acquisition of an asset securing a Purchase Money Security Interest) for
such period and (ii) the denominator of which is Debt Service for such period.
Debt Service Reserve Account shall have the meaning ascribed
to that term in the Term Loan Agreement.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean
lawful money of the United States of America.
Drawing Date shall have the meaning assigned to that term in
Section 2.9.3.2.
Environmental Complaint shall mean any written complaint by
any Person or Official Body setting forth a cause of action for personal injury
or property damage, natural resource damage, contribution or indemnity for
response costs, civil or administrative penalties, criminal fines or penalties,
or declaratory or equitable relief arising under any Environmental Laws or any
order, notice of violation, citation, subpoena, request for information or other
written notice or demand of any type issued by an Official Body pursuant to any
Environmental Laws.
Environmental Laws shall mean all federal, state, local and
foreign Laws and any consent decrees, settlement agreements, judgments, orders,
directives, policies or programs issued by or entered into with an Official
Body, which are applicable to the Borrower or any Loan Party, pertaining or
relating to: (i) pollution or pollution control; (ii) protection of human health
or the environment; (iii) employee safety in the workplace; (iv) the presence,
use, management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, collection,
distribution, disposal or release or threat of release of Regulated Substances;
(v) the presence of Contamination; (vi) the protection of endangered or
threatened species; and (vii) the protection of Environmentally Sensitive Areas.
Environmentally Sensitive Area shall mean (i) any wetland as
defined by applicable Environmental Laws; (ii) any area designated as a coastal
zone pursuant to applicable Laws, including Environmental Laws; (iii) any area
of historic or archeological significance or scenic area as defined or
designated by applicable Laws, including Environmental Laws; (iv) habitats of
endangered species or threatened species as designated by applicable Laws,
including Environmental Laws; or (v) a floodplain or other flood hazard area as
defined pursuant to any applicable Laws.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
ERISA Group shall mean, at any time, the Borrower and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with the Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.
Euro-Rate shall mean, with respect to the Loans comprising
any Borrowing Tranche to which the Euro-Rate Option applies for any Interest
Period, the interest rate per annum determined by the Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1%
per annum) (i) the rate of interest determined by the Agent in accordance with
its usual procedures (which determination shall be conclusive absent manifest
error) to be the average of the London interbank offered rates for U.S. Dollars
quoted by the British Bankers' Association as set forth on Dow Jones Markets
Service (formerly known as Telerate) (or appropriate successor or, if the
British Bankers' Association or its successor ceases to provide such quotes, a
comparable replacement determined by the Agent) display page 3750 (or such other
display page on the Dow Jones Markets Service system as may replace display page
3750) 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:
Average of London interbank offered rates quoted
by BBA or appropriate successor as shown on
Euro-Rate = Dow Jones Markets Service display page 3750
-------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate
Option applies that is outstanding on the effective date of any change in the
Euro-Rate Reserve Percentage as of such effective date. The Agent shall give
prompt notice to the Borrower of the Euro-Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.
Euro-Rate Option shall mean the Revolving Credit Euro-Rate
Option.
Euro-Rate Reserve Percentage shall mean as of any day the
maximum percentage in effect on such day, 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").
Event of Default shall mean any of the events described in
Section 9.1 and referred to therein as an "Event of Default."
Expiration Date shall mean, with respect to the Revolving
Credit Commitments, April 27, 2004.
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 6.1.9(ii).
GAAP shall mean generally accepted accounting principles as
are in effect from time to time in the United States of America, subject to the
provisions of Section 1.3, and applied on a consistent basis both as to
classification of items and amounts.
Gascoyne Rights shall mean all of the options and other
rights granted under Section 7.11 of the Asset Acquisition Agreement with
respect to coal reserves, facilities, and real property interests associated
with a coal mine previously operated by Knife River Corporation and generally
referred to as the Gascoyne mine.
Governmental Acts shall have the meaning assigned to that
term in Section 2.9.8.
Guarantor shall mean each of the parties to this Agreement
which is designated as a "Guarantor" on the signature page hereof and each other
Person which joins this Agreement as a Guarantor after the date hereof pursuant
to Section 11.18.
Guarantor Joinder shall mean a joinder by a Person as a
Guarantor under this Agreement, the Guaranty Agreement and the other Loan
Documents 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
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 Guaranty and Suretyship
Agreement in substantially the form of Exhibit 1.1(G)(2) executed and delivered
by each of the Guarantors to the Agent for the benefit of the Banks.
Historical Statements shall have the meaning assigned to that
term in Section 6.1.9(i).
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, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
futures contracts or similar financial arrangements the value of which is
dependent upon commodity rates or indices (including without limitation, any of
the foregoing used to hedge the price of coal), 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, if more than thirty (30) days past due, which are being contested
in good faith and adequate reserves are made for such debt), (v) all liabilities
for borrowed money secured by any lien with respect to property owned by such
Person (whether or not it has assumed or otherwise become liable for such
liabilities), or (vi) any Guaranty by such Person of Indebtedness of the type
described in clauses (i) through (v) hereof of any other Person.
Independent Director shall mean with respect to a Subsidiary
a member of the Board of Directors of the Subsidiary that is not at the time of
initial appointment to the Board of Directors or at any time while serving on
the Board of Directors or at any time within the preceding five (5) years, (a) a
stockholder, director (with the exception of serving as an independent director
of a Subsidiary or manager of the Borrower), officer, employee, member other
than as Special Member (as defined in the Borrower's Operating Agreement),
partner, attorney or counsel of the Subsidiary or of an Obligor or of any member
of the Parent Group (except that he or she may be or become an independent
director or manager of any other Single Purpose Entity formed in connection with
any financing by any member of the Parent Group or any of their respective
Affiliates); (b) a customer or supplier of the Subsidiary or any of its
Affiliates; or (c) any member of the immediate family of a Person described in
(a) or (b).
Independent Manager shall mean with respect to the Borrower a
member of the Board of Directors or Managers of the Borrower that is not at the
time of initial appointment to the Board of Directors or Managers or at any time
while serving on the Board of Directors or Managers or at any time within the
preceding five (5) years, (a) a stockholder, director (with the exception of
serving as an independent manager or director of the Company), officer,
employee, member other than as Special Member (as defined in the Borrower's
operating agreement), partner, attorney or counsel of the Borrower or of any
Loan Party or of any member of the Parent Group (except that he or she may be or
become an independent director or manager of any Single Purpose Entity formed in
connection with any financing by any member of the Parent Group or any of their
respective Affiliates); (b) a customer or supplier of the Borrower or any Loan
Party or any member of the Parent Group or any Affiliate of either of them; or
(c) a member of the immediate family of any such Person described in (a) or (b).
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.
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.
Intellectual Property Collateral shall mean all of the
property described in the Patent, Trademark and Copyright Security Agreement.
Intercompany Subordination Agreement shall mean an
Intercompany Subordination Agreement in the form of Exhibit 1.1(I)(2) hereto,
which is to be executed and delivered by the Loan Parties and any Subsidiaries.
Intercreditor Agreement shall mean an Intercreditor Agreement
in the form of Exhibit 1.1(I)(3) hereto which is to be executed and delivered by
the Collateral Agent and the Term Lenders.
Interest Period shall mean the period of time selected by the
Borrower in connection with (and to apply to) any election permitted hereunder
by the Borrower to have Revolving Credit Loans bear interest under the Euro-Rate
Option. Subject to the last sentence of this definition, such period shall be
one, two, three or six Months if Borrower selects the Euro-Rate Option. Such
Interest Period shall commence on the effective date of such Interest Rate
Option, which shall be (i) the Borrowing Date if the Borrower is requesting new
Loans, or (ii) the date of renewal of or conversion to the Euro-Rate Option if
the Borrower is renewing or converting to the Euro-Rate Option applicable to
outstanding Loans. Notwithstanding the second sentence hereof: (A) 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, and (B) the Borrower shall not select, convert to
or renew an Interest Period for any portion of the Loans that would end after
the Expiration Date.
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.
Inventory shall mean any and all goods, merchandise and other
personal property, including, without limitation, goods in transit, wheresoever
located and whether now owned or hereafter acquired by the Loan Parties which
are or may at any time be held as raw materials, finished goods,
work-in-process, supplies or materials used or consumed in any Loan Party's
business or held for sale or lease (but excluding all Coal Reserves in place),
including, without limitation, (a) all such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by such Loan Party, and (b) all packing,
shipping and advertising materials relating to all or any such property.
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, bond, judgment, authorization or approval, lien or
award of or settlement agreement with any Official Body.
Letter of Credit shall have the meaning assigned to that term
in Section 2.9.1.
Letter of Credit Borrowing shall have the meaning assigned to
such term in Section 2.9.3.4.
Letter of Credit Fee shall have the meaning assigned to that
term in Section 2.9.2.
Letters of Credit Outstanding shall mean at any time the sum
of (i) the aggregate undrawn face amount of outstanding Letters of Credit and
(ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations and Letter of Credit Borrowings.
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 Interests shall have the meaning given to such term in
Section 6.1.3.
Loan Documents shall mean this Agreement, the Agent's Letter,
the Collateral Assignment, the Guaranty Agreement, the Intercompany
Subordination Agreement, the Intercreditor Agreement, the Mortgage, the Notes,
the Patent, Trademark and Copyright Security Agreement, the Pledge Agreement,
the Security Agreement, and any other instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented 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 have the meaning given to such term in
Section 2.5.
Loans shall mean collectively and Loan shall mean separately
all Revolving Credit Loans or any Revolving Credit Loan.
Management Agreement shall mean that certain agreement
between Parent and the Borrower, dated as of April 27, 2001, pursuant to which
Parent provides certain management services to the Borrower.
Management Fee shall mean the management fee under the terms
of the Management Agreement which amount shall not exceed $500,000 in the
aggregate in any fiscal quarter (provided that, in the event that the Borrower
fails to consummate the acquisition contemplated by the Asset Acquisition
Agreement on or before thirty (30) calendar days after the Closing Date, the
foregoing amount of $500,000 per fiscal quarter shall be reduced thereafter to
$416,667 per fiscal quarter).
Management Fee Subordination Agreement shall mean the
Management Fee Subordination Agreement in the form of Exhibit 1.1(M)(2) to be
executed and delivered by Parent and the Borrower, to the Collateral Agent for
the benefit of the Banks.
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
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Loan Parties taken as a whole, (c)
impairs materially or could reasonably be expected to impair materially the
ability of the Loan Parties taken as a whole to duly and punctually pay or
perform its Indebtedness, or (d) impairs materially or could reasonably be
expected to impair materially the ability of the Agent or any of the Banks, to
the extent permitted, to enforce their legal remedies pursuant to this Agreement
or any other Loan Document.
Member Interests shall have the meaning assigned to that term
in Section 6.1.2.
Memorandum shall have the meaning assigned to that term in
Section 6.1.11.
Moody's shall mean Moody's Investors Service, Inc.
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
Euro-Rate Interest Period 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.
Mortgages shall mean collectively, and Mortgage shall mean
separately, the mortgage or deed of trust in substantially the form of Exhibits
1.1(M)(1) with respect to the Real Property located in the States of Montana,
North Dakota and Texas, respectively, executed and delivered by certain of the
respective Guarantors to the Collateral Agent for the benefit of the Banks,
encumbering the Real Property.
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.
Northwestern shall mean Northwestern Resources Co., a Montana
corporation.
Notes shall mean the Revolving Credit Notes.
notices shall have the meaning assigned to that term in
Section 11.6.
Obligation shall mean any obligation or liability of any of
the Loan Parties to the Agent or any of the Banks or the Collateral Agent,
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, the Notes, the Letters of Credit, the Agent's
Letter or any other Loan Document.
Official Body shall mean any national, federal, state, local
or other government or political subdivision or any agency, authority, board,
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 Westmoreland Coal Company, the sole member
of the Borrower.
Parent Group shall mean the Parent and each entity in which
the Parent owns, directly or indirectly through one or more intermediaries, 5%
or more of any class of the voting or other equity interests of such Person,
including those entities now in existence and hereafter created, other than the
Loan Parties and all of their Subsidiaries.
Participation Advance shall mean, with respect to any Bank,
such Bank's payment in respect of its participation in a Letter of Credit
Borrowing according to its Ratable Share pursuant to Section 2.9.3.4.
Partnership Interests shall have the meaning given to such
term in Section 6.1.3.
Patent, Trademark and Copyright Security Agreement shall mean
the Patent, Trademark and Copyright Security Agreement in substantially the form
of Exhibit 1.1(P)(1) executed and delivered by each of the Loan Parties to the
Collateral Agent for the benefit of the Banks.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Affiliate Transactions means: (i) the services to
be provided and fees payable under the Management Agreement, (ii) upon the
occurrence and during the continuance of a force majeure event (which arises
through no fault of the Loan Parties) under any Coal Supply Contract and which
prevents the Loan Parties from supplying the buyers with the requested amount of
coal thereunder, sales of coal from any member of the Parent Group to any of the
Loan Parties to satisfy the requests of the buyers under such Coal Supply
Contract so long as the terms and conditions of the transaction are commercially
reasonable in all respects (including at a price which enables such Loan Party
to earn a reasonable profit from the transaction and otherwise on terms and
conditions no less favorable to such Loan Party than those offered by
independent third parties) and so long as such supply by the member of the
Parent Group is more favorable to the Borrower than supply of such coal by any
other Loan Party able to supply it, (iii) in the event that any buyer of coal
under a Coal Supply Contract increases its demands for coal under such agreement
beyond the ability of the Loan Party to the Coal Supply Contract to satisfy such
requirements, a member of the Parent Group shall be permitted to bid on and
supply coal to such buyer, provided that such action in no way reduces the
amount of coal that is to be supplied by the Loan Party under the Coal Supply
Contract at such time or in the future, (iv) in the event that the Loan Parties
have excess coal production (beyond the needs of the buyers under the Coal
Supply Contracts) available for sale to non-Affiliate third parties, a member of
the Parent Group shall be permitted to act as a broker for the Loan Parties in
such sales and shall be entitled to a brokerage fee which is typical in the
marketplace for providing such services (such brokerage fees at the time of
Closing would be in the range of $0.25 to $0.50 per ton of coal sold) and (v) to
the extent that any Coal Supply Contract permits the buyer of coal thereunder to
require that coal be obtained from a source other than the Loan Parties, a
member of the Parent Group shall be permitted to sell coal to such buyer so long
as the buyer pays the fee associated with such activity in accordance with the
Coal Supply Contract; provided, however, that no such transaction referred to in
any of the foregoing clauses (i) through (v) shall constitute a Permitted
Affiliate Transaction unless it is consummated on terms and conditions that are
commercially reasonable in light of prevailing market conditions relative to the
subject matter of such transaction and that, when considered as a whole, are
generally similar to the terms and conditions that would be obtained in a
comparable transaction consummated between unaffiliated parties.
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 or obligations of state or local
governments rated not lower than AAA/Aaa by Standard & Poor's or Moody's
maturing in twelve (12) months or less from the date of acquisition;
(ii) commercial paper maturing in 270 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 commercial banks organized under the laws of
the United States or any state thereof have capital, surplus and undivided
profits aggregating at least $500,000,000 and whose obligations are rated A- or
the equivalent or better by Standard & Poor's or A3 or better by Moody's on the
date of acquisition, provided that the Loan Parties shall be permitted to
maintain their operating accounts for administrative purposes with First
Interstate Bank located in Billings, Montana;
(iv) repurchase obligations entered into with a bank or trust
corporation meeting the standards set for in clause (iii) above; provided that
such repurchase agreements require the physical delivery of the investments
securing the repurchase agreement, except these delivered through the Federal
Reserve Book Entry System;
(v) money market funds having assets in excess of
$500,000,000 and which are restricted by their respective charters to investing
solely in securities of the type permitted in clauses (i) through (iv) above;
(vi) investments existing prior to the Closing Date.
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 workmen's compensation, or to participate in any
fund in connection with workmen's compensation, unemployment insurance, old-age
pensions or other social security programs (exclusive, however, of Liens arising
under ERISA);
(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, or bonds given, in
the ordinary course of business to secure performance of bids, tenders,
contracts (including any reclamation bond funds) (other than for the repayment
of borrowed money) or leases or other ordinary course obligations, not in excess
of the aggregate amount due or which may become due thereunder, or to secure
statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required 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, security interests and mortgages in favor of the
Collateral Agent for the benefit of the Banks and Liens and security interests
and mortgages for the benefit of the Term Lenders and which secure obligations
under the Term Loan Agreement;
(vii) Liens on property leased (or proceeds thereof) by any
Loan Party or Subsidiary of a Loan Party under capital and operating leases
permitted in Section 8.2.16 securing obligations of such Loan Party or
Subsidiary to the lessor under such leases;
(viii) Purchase Money Security Interests securing
Indebtedness permitted by Section 8.2.1(iv); and
(ix) 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 forty-five (45) days of entry, and in either case they do not affect the
Collateral or, in the aggregate, materially impair the ability of any Loan Party
to perform its Obligations hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments
or charges due and payable and subject to interest or
penalty, provided that the applicable Loan Party maintains
such reserves or other appropriate provisions as shall be
required by GAAP and pays all such taxes, assessments or
charges forthwith upon the commencement of proceedings to
foreclose any such Lien;
(2) Claims, Liens or encumbrances upon,
and defects of title to, real or personal property other than
the Collateral, including any attachment of personal or real
property or other legal process prior to adjudication of a
dispute on the merits;
(3) Claims or Liens of mechanics,
materialmen, warehousemen, carriers, or other statutory
nonconsensual Liens; or
Permitted Modifications shall mean amendments, modifications
or waivers of the Coal Supply Contracts or Coal Leases which are entered into in
the ordinary course of business by the Loan Parties from time to time so long as
such action does not (i) negatively impact the economics of the agreement from
the Loan Party's perspective (including changing any terms relating to price,
quantity or term), (ii) adversely affect the contemplated mining operations of
the Loan Parties or (iii) have any reasonable likelihood of resulting in a
Material Adverse Change.
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 shall mean the Pledge Agreement in
substantially the form of Exhibit 1.1(P)(2) executed and delivered by the
members of the Borrower, the Borrower and any Subsidiaries to the Collateral
Agent for the benefit of the Banks.
Pledged Collateral shall mean the property of the Loan
Parties in which security interests are to be granted under the Pledge
Agreement.
PNC Bank shall mean PNC Bank, National Association, its
successors and assigns.
Potential Default shall mean an event or condition the
occurrence or existence of which with the mere notice, passage of time, or any
combination of the foregoing, would become an Event of Default.
Principal Office shall mean the main banking office of the
Agent in Pittsburgh, Pennsylvania.
Prior Security Interest shall mean a valid and enforceable
perfected (i) with respect to the Revolver Primary Collateral, first-priority
security interest under the Uniform Commercial Code in the Revolver Primary
Collateral which is subject only to (i) Permitted Liens (other than Permitted
Liens of the types described in clauses (iv), (vii) and (viii) of the definition
of that term), or (ii) with respect to the Term Collateral, security interest
under the Uniform Commercial Code in the Term Collateral, the Pledged Collateral
and the Intellectual Property Collateral which is subject only to (a) Liens for
taxes not yet due and payable to the extent such prospective tax payments are
given priority to statute, (b) Purchase Money Security Interests as permitted
hereunder and (c) Liens in favor of the Term Lenders to secure the Term Loans.
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 Money Security Interest shall mean Liens upon
tangible personal property and proceeds thereof 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, provided that
(a) any such Lien attaches within 90 days of the acquisition of such personal
property, (b) such Lien attaches and is at all times confined solely to such
acquired personal property and proceeds thereof, and (c) the principal amount of
Indebtedness secured by such Lien does not exceed 100% of the acquisition cost
of such property.
Purchasing Bank shall mean a Bank which becomes a party to
this Agreement by executing an Assignment and Assumption Agreement.
Qualified Accounts shall mean any Accounts which the Agent in
its reasonable credit judgment determines to have met all of the minimum
requirements set forth on Schedule 1.1(Q).
Ratable Share shall mean the proportion that a Bank's
Commitment bears to the Commitments of all of the Banks.
Real Property shall mean the real estate owned by any of the
Loan Parties, which shall be encumbered by the Mortgages and described on
Schedule 6.1.8 hereto.
Regulated Substances shall mean, without limitation, any
substance, material or waste, regardless of its form or nature, defined under
Environmental Laws as a "hazardous substance," "pollutant," "pollution,"
"contaminant," "hazardous or toxic substance," "extremely hazardous substance,"
"toxic chemical," "toxic substance," "toxic waste," "hazardous waste," "special
handling waste," "industrial waste," "residual waste," "solid waste," "municipal
waste," "mixed waste," "infectious waste," "chemotherapeutic waste," "medical
waste," or "regulated substance" or any other material, substance or waste,
regardless of its form or nature, which otherwise is regulated by Environmental
Laws, which is the subject of an Environmental Law applicable to the Borrower or
any Subsidiary of any Loan Party.
Regulation U shall mean Regulation U, T or X as promulgated
by the Board of Governors of the Federal Reserve System, as amended from time to
time.
Reimbursement Obligation shall have the meaning assigned to
such term in Section 2.9.3.2.
Reportable Event shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan for which written notice thereof to the PBGC is required
under applicable regulations.
Required Banks shall mean
(i) if there are no Loans, Reimbursement Obligations or
Letter of Credit Borrowings outstanding, Banks whose Commitments aggregate at
least 51% of the Commitments of all of the Banks, or
(ii) if there are Loans, Reimbursement Obligations, or Letter
of Credit Borrowings outstanding, any Bank or group of Banks if the sum of the
Loans, Reimbursement Obligations and Letter of Credit Borrowings of such Banks
then outstanding aggregates at least 51% of the total principal amount of all of
the Loans, Reimbursement Obligations and Letter of Credit Borrowings then
outstanding. Reimbursement Obligations and Letter of Credit Borrowings shall be
deemed, for purposes of this definition, to be in favor of the Agent and not a
participating Bank if such Bank has not made its Participation Advance in
respect thereof and shall be deemed to be in favor of such Bank to the extent of
its Participation Advance if it has made its Participation Advance in respect
thereof.
Required Environmental Notices shall mean all notices,
reports, plans, forms or other filings which pursuant to Environmental Laws,
Required Environmental Permits or at the request or direction of an Official
Body either must be submitted to an Official Body or which otherwise must be
maintained.
Required Environmental Permits shall mean all permits,
licenses, bonds, consents, programs, approvals or authorizations required under
Environmental Laws to own, occupy or maintain the Property or which otherwise
are required for the operations and business activities of the Borrower or
Guarantors.
Required Mining Permits shall mean all permits, licenses,
authorizations, plans, approvals and bonds necessary under the Environmental
Laws for Borrower or any Subsidiary to continue to conduct coal mining and
related operations on, in or under the Real Property, the Property subject to
the Coal Leases and any and all other mining properties owned or leased by any
such Loan Party or Subsidiary (collectively "Mining Property") substantially in
the manner as such operations had been authorized immediately prior to
Borrower's or such Subsidiary's acquisition of its interests in the Real
Property and as may be necessary for Borrower or such Subsidiary to conduct coal
mining and related operations on, in or under the Mining Property as described
in any plan of operation.
Responsible Officer shall mean any Senior Financial Officer
and any other officer of the Borrower with responsibility for the administration
of the relevant portion of this Agreement.
Revolver Primary Collateral shall mean that portion of the
UCC Collateral in which the Banks are granted a first priority security interest
pursuant to the Security Agreement which shall include Accounts and Inventory.
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 4.1.1((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, 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 4.1.1((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 2.9.3.
Revolving Credit Notes shall mean collectively and Revolving
Credit Note shall mean separately all the Revolving Credit Notes of the Borrower
in the form of Exhibit 1.1(R) evidencing the Revolving Credit Loans together
with all amendments, extensions, renewals, replacements, refinancings or
refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time the sum of
the Revolving Credit Loans outstanding and the Letters of Credit Outstanding.
Section 20 Subsidiary shall mean the Subsidiary of the bank
holding company controlling any Bank, which Subsidiary has been granted
authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.
Security Agreement shall mean the Security Agreement in
substantially the form of Exhibit 1.1(S) executed and delivered by each of the
Loan Parties to the Collateral Agent for the benefit of the Banks.
Security Documents shall mean (i) the Security Agreement,
(ii) the Pledge Agreement, (iii) the Guaranty Agreement, (iv) the Patent,
Trademark and Copyright Security Agreement, (v) the Mortgages and (vi) the
Collateral Assignment.
Senior Financial Officer shall mean the chief financial
officer, principal accounting officer, treasurer or comptroller of the Borrower.
Series B Trust Account shall have the meaning ascribed to
that term in the Term Loan Agreement.
Single Purpose Entity shall mean with respect to the
Borrower, an organization which is organized solely for the purposes of carrying
out the activities described in it's operating agreement as of the Closing and
which does not engage in any business unrelated to such activities, does not
have any assets other than those related to its interest in the activities or
any indebtedness other than as permitted by this Agreement or the other Loan
Documents, has its own separate books and records and its own accounts, in each
case which are separate and apart from the books and records and accounts of any
other Person and holds itself out as being a Person separate and apart from any
other Person.
Standard & Poor's shall mean Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc.
Standby Letter of Credit shall mean a Letter of Credit issued
to support obligations of one or more of the Loan Parties, contingent or
otherwise, which finance the working capital and business needs of the Loan
Parties incurred in the ordinary course of business.
Stock Purchase Agreement shall mean that certain stock
purchase Agreement dated as of September 15, 2000 by and between Westmoreland
Coal Company and Entech, Inc. with respect to all outstanding capital stock of
Basin Resources, Inc., Horizon Coal Services, Inc., North Central Energy
Company, Northwestern Resources Co., and Western Energy Company.
Subsidiary of any Person at any time shall mean (i) any
corporation or trust of which 50% or more (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 50% or more 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 50% or more 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.
Subsidiary Shares shall have the meaning assigned to that
term in Section 6.1.3.
Surplus Cash Flow Letter shall have the meaning assigned to
that term in the Term Loan Agreement.
Term Collateral shall mean that portion of the Collateral, in
which the Collateral Agent is granted a first priority security interest for the
benefit of the Term Lenders which secures the Terms Loan Agreement.
Term Lenders shall mean those lenders party to the Term Loan
Agreement from time to time.
Term Loans shall mean collectively all of the advances made
under the notes issued by the Borrower pursuant to the Term Loan Agreement.
Term Loan Agreement shall mean that certain Term Loan
Agreement dated as of April 27, 2001 by and among Borrower, the Guarantors, the
banks party thereto and PNC Bank, National Association.
Term Loan Documents shall mean the Term Loan Agreement and
any other agreements, 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 Term Loan Document shall mean any of the
Term Loan Documents
Third Party Service Payments shall mean reimbursement of the
allocable share of the actual cost (without overhead) of the goods and services
procured by the Parent Group or any member thereof from a third-party (which is
not an Affiliate of the Parent) on behalf of the Borrower or any Loan Party for
services which are of a general administrative nature and not operating type
services.
Transaction Agreements shall have the meaning given that term
in Section 6.32(vii) of this Agreement.
Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
UCC Collateral shall mean the property of the Loan Parties in
which security interests are to be granted under the Security Agreement.
Uniform Commercial Code shall have the meaning assigned to
that term in Section 6.1.16.
WECO shall mean Western Energy Company, a Montana
corporation.
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 Agent or the Banks
shall be deemed to include good-faith estimates by the Agent or the Banks (in
the case of quantitative determinations) and good-faith beliefs by the Agent or
the Banks (in the case of qualitative determinations) and such determination
shall be conclusive absent manifest error;
1.2.3 Agent's Discretion and Consent.
whenever the 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;
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 8.2 [Negative Covenants] (and all defined terms used in
the definition of any accounting term used in Section 8.2 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 6.1.9((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 8.2 based upon the Borrower's regularly prepared financial
statements by reason of the preceding sentence, then the parties hereto agree to
endeavor, in good faith, to agree upon an amendment to this Agreement that would
adjust such financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in accordance
with the Borrower's financial statements at that time.
2. REVOLVING CREDIT FACILITY
2.1 Revolving Credit Commitments.
Subject to the terms and conditions hereof and relying upon
the representations and warranties herein set forth, each Bank severally agrees
to make Revolving Credit Loans to the Borrower at any time or from time to time
on or after the date hereof to the Expiration Date provided that after giving
effect to such Loan the aggregate amount of Loans from such Bank shall not
exceed such Bank's Revolving Credit Commitment minus such Bank's Ratable Share
of the Letters of Credit Outstanding. All advances to the Borrower shall be made
against Qualified Accounts of the Loan Parties, based upon the ratios stated in
the definition of Borrowing Base in Section 1.1 [Certain Definitions], as then
in effect, and the Revolving Facility Usage shall at no time exceed the lesser
of the Revolving Credit Commitments or the Borrowing Base. 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 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 2.5 [Revolving Credit Loan
Requests] in accordance with its Ratable Share. The aggregate of each Bank's
Revolving Credit Loans outstanding hereunder to the Borrower at any time shall
never exceed its Revolving Credit Commitment minus its Ratable Share of the
Letters of Credit Outstanding. The obligations of each Bank hereunder are
several. The failure of any Bank to perform its obligations hereunder shall not
affect the Obligations of the Borrower to any other party nor shall any other
party be liable for the failure of such Bank to perform its obligations
hereunder. The Banks shall have no obligation to make Revolving Credit Loans
hereunder on or after the Expiration Date.
2.3 Commitment Fees.
Accruing from the date hereof until the Expiration Date, the
Borrower agrees to pay to the Agent for the account of each Bank, as
consideration for such Bank's Revolving Credit Commitment hereunder, a
nonrefundable commitment fee (the "Commitment Fee") equal to .5% per annum
(computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed) on the average daily difference between the amount of (i)
such Bank's Revolving Credit Commitment as the same may be constituted from time
to time and the (ii) the sum of such Bank's Revolving Credit Loans outstanding
plus its Ratable Share of Letters of Credit Outstanding. All Commitment Fees
shall be payable in arrears on the first Business Day of each July, October,
January and April after the date hereof and on the Expiration Date or upon
acceleration of the Notes.
2.4 Intentionally Omitted.
2.5 Revolving Credit Loan Requests.
Except as otherwise provided herein, the Borrower may from
time to time prior to the Expiration Date request the Banks to make Revolving
Credit Loans, or renew or convert the Interest Rate Option applicable to
existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by
delivering to the Agent, not later than 10:00 a.m., Pittsburgh time, (i) three
(3) Business Days prior to the proposed Borrowing Date with respect to the
making of Revolving Credit Loans to which the Euro-Rate Option applies or the
conversion to or the renewal of the Euro-Rate Option for any Loans; and (ii) one
(1) Business Day prior to either the proposed Borrowing Date with respect to the
making of a Revolving Credit Loan to which the Base Rate Option applies or the
last day of the preceding Interest Period with respect to the conversion to the
Base Rate Option for any Loan, of a duly completed request therefor
substantially in the form of Exhibit 2.5 or a request by telephone immediately
confirmed in writing by letter, facsimile or telex in such form (each, a "Loan
Request"), it being understood that the Agent may rely on the authority of any
individual making such a telephonic request without the necessity of receipt of
such written confirmation. Each Loan Request shall be irrevocable and shall
specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the
proposed Loans comprising each Borrowing Tranche, which shall be in integral
multiples of $500,000 and not less than $500,000 for each Borrowing Tranche to
which the Euro-Rate Option applies and not less than the lesser of $500,000 or
the maximum amount available for Borrowing Tranches to which the Base Rate
Option applies; (iii) whether the Euro-Rate Option or Base Rate Option shall
apply to the proposed Loans comprising 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 Loans comprising such Borrowing Tranche.
2.6 Making Revolving Credit Loans.
The Agent shall, promptly after receipt by it of a Loan
Request pursuant to Section 2.5 [Revolving Credit 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 Agent in
accordance with Section 2.2 [Nature of Banks' Obligations]. Each Bank shall
remit the principal amount of each Revolving Credit Loan to the Agent such that
the Agent is able to, and the Agent shall, to the extent the Banks have made
funds available to it for such purpose and subject to Section 7.2 [Each
Additional Loan], 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 Agent in a timely manner, the 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 10.16 [Availability of Funds].
2.7 Revolving Credit Notes.
The Obligation of the Borrower to repay the aggregate unpaid
principal amount of the Revolving Credit Loans made to it by each Bank, together
with interest thereon, shall be evidenced by a Revolving Credit Note dated the
Closing Date payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank.
2.8 Use of Proceeds.
The proceeds of the Revolving Credit Loans shall be used for
(i) a portion of the purchase price relating to the acquisitions under the Stock
Purchase Agreement and the Asset Acquisition Agreement and (ii) working capital
and general corporate purposes and in accordance with Section 8.1.11 [Use of
Proceeds].
2.9 Letter of Credit Subfacility.
2.9.1 Issuance of Letters of Credit.
Borrower may request the issuance of a letter of credit (each
a "Letter of Credit") on behalf of itself or another Loan Party by delivering to
the Agent a completed application and agreement for letters of credit in such
form as the Agent may specify from time to time by no later than 10:00 a.m.,
Pittsburgh time, at least ten (10) Business Days, or such shorter period as may
be agreed to by the Agent, in advance of the proposed date of issuance. Each
Letter of Credit shall be either a Standby Letter of Credit or a Commercial
Letter of Credit. Subject to the terms and conditions hereof and in reliance on
the agreements of the other Banks set forth in this Section 2.9, the Agent 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
providing that in no event shall (i) the Letters of Credit Outstanding exceed,
at any one time, $2,000,000 or (ii) the Revolving Facility Usage exceed, at any
one time, the Revolving Credit Commitments or the Borrowing Base.
2.9.2 Letter of Credit Fees.
The Borrower shall pay (i) to the Agent for the ratable
account of the Banks a fee (the "Letter of Credit Fee") equal to the percentage
per annum equal to the Revolving Credit Euro Rate Option, and (ii) to the Agent
for its own account a fronting fee equal to 0.25% per annum (computed on the
basis of a year of 360 days and actual days elapsed), which fees shall be
computed on the daily average Letters of Credit Outstanding and shall be payable
quarterly in arrears commencing with the first Business Day of each April, July,
October and January following issuance of each Letter of Credit and on the
Expiration Date. The Borrower shall also pay to the Agent for the Agent's sole
account the Agent's then in effect customary fees and administrative expenses
payable with respect to the Letters of Credit as the Agent 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.
2.9.3 Disbursements, Reimbursement.
2.9.3.1 Immediately upon the Issuance of each Letter of Credit,
each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Agent a participation in
such Letter of Credit and each drawing thereunder in an amount equal
to such Bank's Ratable Share of the maximum amount available to be
drawn under such Letter of Credit and the amount of such drawing,
respectively.
2.9.3.2 In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Agent will
promptly notify the Borrower. Provided that it shall have received
such notice, the Borrower shall reimburse (such obligation to
reimburse the Agent shall sometimes be referred to as a "Reimbursement
Obligation") the Agent prior to 12:00 noon, Pittsburgh time on each
date that an amount is paid by the Agent under any Letter of Credit
(each such date, an "Drawing Date") in an amount equal to the amount
so paid by the Agent. In the event the Borrower fails to reimburse the
Agent for the full amount of any drawing under any Letter of Credit by
12:00 noon, Pittsburgh time, on the Drawing Date, the Agent will
promptly notify each Bank thereof, and the Borrower shall be deemed to
have requested that Revolving Credit Loans be made by the Banks under
the Base Rate Option to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of
the Revolving Credit Commitment and subject to the conditions set
forth in Section 7.2 [Each Additional Loan] other than any notice
requirements. Any notice given by the Agent pursuant to this Section
2.9.3.2 may be oral if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
2.9.3.3 Each Bank shall upon any notice pursuant to Section
2.9.3.2 make available to the Agent an amount in immediately available
funds equal to its Ratable Share of the amount of the drawing,
whereupon the participating Banks shall (subject to Section 2.9.3.4)
each be deemed to have made a Revolving Credit Loan under the Base
Rate Option to the Borrower in that amount. If any Bank so notified
fails to make available to the Agent for the account of the Agent the
amount of such Bank's 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 Loans under the Revolving Credit
Base Rate Option on and after the fourth day following the Drawing
Date. The Agent will promptly give notice of the occurrence of the
Drawing Date, but failure of the Agent to give any such notice on the
Drawing Date or in sufficient time to enable any Bank to effect such
payment on such date shall not relieve such Bank from its obligation
under this Section 2.9.3.3.
2.9.3.4 With respect to any unreimbursed drawing that is not
converted into Revolving Credit Loans under the Base Rate Option to
the Borrower in whole or in part as contemplated by Section 2.9.3.2,
because of the Borrower's failure to satisfy the conditions set forth
in Section 7.2 [Each Additional Loan] other than any notice
requirements or for any other reason, the Borrower shall be deemed to
have incurred from the Agent a borrowing (each a "Letter of Credit
Borrowing") in the amount of such drawing. Such Letter of Credit
Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at the rate per annum applicable to the
Revolving Credit Loans under the Base Rate Option. Each Bank's payment
to the Agent pursuant to Section 2.9.3.3 shall be deemed to be a
payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a "Participation Advance" from such
Bank in satisfaction of its participation obligation under this
Section 2.9.3.
2.9.4 Repayment of Participation Advances.
2.9.4.1 Upon (and only upon) receipt by the Agent for its account
of immediately available funds from the Borrower (i) in reimbursement
of any payment made by the Agent under the Letter of Credit with
respect to which any Bank has made a Participation Advance to the
Agent, or (ii) in payment of interest on such a payment made by the
Agent under such a Letter of Credit, the Agent will pay to each Bank,
in the same funds as those received by the Agent, the amount of such
Bank's Ratable Share of such funds, except the Agent shall retain the
amount of the Ratable Share of such funds of any Bank that did not
make a Participation Advance in respect of such payment by Agent.
2.9.4.2 If the Agent is required at any time to return to any
Loan Party, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments
made by any Loan Party to the Agent pursuant to Section 2.9.4.1 in
reimbursement of a payment made under the Letter of Credit or interest
or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent the amount of its Ratable Share of any amounts so
returned by the Agent plus interest thereon from the date such demand
is made to the date such amounts are returned by such Bank to the
Agent, at a rate per annum equal to the Federal Funds Effective Rate
in effect from time to time.
2.9.5 Documentation.
Each Loan Party agrees to be bound by the terms of the
Agent's application and agreement for letters of credit and the Agent'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, the Agent shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Loan Party's instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
2.9.6 Determinations to Honor Drawing Requests.
In determining whether to honor any request for drawing under
any Letter of Credit by the beneficiary thereof, the Agent shall be responsible
only to determine that the documents and certificates required to be delivered
under such Letter of Credit have been delivered and that they comply on their
face with the requirements of such Letter of Credit.
2.9.7 Nature of Participation and Reimbursement Obligations.
Each Bank's obligation in accordance with this Agreement to
make the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.9.3, as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.9 under all
circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right
which such Bank may have against the Agent, the Borrower or any other
Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply,
in connection with a Letter of Credit Borrowing, with the conditions
set forth in Section 2.1 [Revolving Credit Commitments], 2.5
[Revolving Credit Loan Requests], 2.6 [Making Revolving Credit Loans]
or 7.2 [Each Additional Loan] 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
Letter of Credit Borrowing and the obligation of the Banks to make
Participation Advances under Section 2.9.3;
(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 transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), the Agent 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 Agent has been notified
thereof;
(vi) payment by the Agent 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.
2.9.8 Indemnity.
In addition to amounts payable as provided in Section 10.5
[Reimbursement of Agent by Borrower, Etc.], the Borrower hereby agrees to
protect, indemnify, pay and save harmless the Agent from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated
costs of internal counsel) which the Agent may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit, other
than as a result of (A) the gross negligence or willful misconduct of the Agent
as determined by a final judgment of a court of competent jurisdiction or (B)
the wrongful dishonor by the Agent of a proper demand for payment made under any
Letter of Credit, except if such dishonor resulted from any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").
2.9.9 Liability for Acts and Omissions.
As between any Loan Party and the Agent, 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, the Agent shall not 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 Agent 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 the Agent,
including any Governmental Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of the Agent's rights or powers hereunder.
Nothing in the preceding sentence shall relieve the Agent from liability for the
Agent'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 the Agent
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 the Agent under any resulting liability to the Borrower or any Bank.
3. INTENTIONALLY OMITTED.
4. INTEREST RATES
4.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding
unpaid principal amount of the Loans as selected by it from the Base Rate Option
or Euro-Rate Option set forth below applicable to the 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 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 Loans comprising any Borrowing Tranche, provided that there shall
not be at any one time outstanding more than three (3) Borrowing Tranches in the
aggregate among all of the Loans. If at any time the designated rate applicable
to any Loan made by any Bank exceeds such Bank's highest lawful rate, the rate
of interest on such Bank's Loan shall be limited to such Bank's highest lawful
rate.
4.1.1 Revolving Credit Interest Rate Options.
The Borrower shall have the right to select from the
following Interest Rate Options applicable to the Revolving Credit 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 plus 1.60%,
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 3.10%.
Notwithstanding anything contained herein to the contrary, in
the event that the acquisition contemplated under the Asset Acquisition
Agreement is not consummated within the period thirty (30) calendar days next
following the Closing Date, the interest rate otherwise applicable under this
Section 4.1.1 shall, from and after the last day of such period, be increased by
.05% per annum.
4.1.2 Intentionally Omitted.
4.1.3 Rate Quotations.
The Borrower may call the Agent on or before the date on
which a Loan Request is to be delivered to receive an indication of the rates
then in effect, but it is acknowledged that such projection shall not be binding
on the Agent or the Banks nor affect the rate of interest which thereafter is
actually in effect when the election is made.
4.2 Interest Periods.
At any time when the Borrower shall select, convert to or
renew a Euro-Rate Option, the Borrower shall notify the 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 during
which such Interest Rate Option shall apply. Notwithstanding the preceding
sentence, the following provisions shall apply to any selection of, renewal of,
or conversion to a Euro-Rate Option:
4.2.1 Amount of Borrowing Tranche.
each Borrowing Tranche of Euro-Rate Loans shall be in
integral multiples of $500,000 and not less than $500,000;
4.2.2 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.
4.3 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:
4.3.1 Letter of Credit Fees, Interest Rate.
the Letter of Credit Fees and the rate of interest for each
Loan otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or
Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0%
per annum; and
4.3.2 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 Revolving Credit Base Rate Option plus an additional 2.0%
per annum from the time such Obligation becomes due and payable and until it is
paid in full.
4.3.3 Acknowledgment.
The Borrower acknowledges that the increase in rates referred
to in this Section 4.3 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 Agent.
4.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
4.4.1 Unascertainable.
If on any date on which a Euro-Rate would otherwise be
determined, the 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, the Agent shall have the rights specified in Section 4.4.3.
4.4.2 Illegality; Increased Costs; Deposits Not Available.
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any 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
Loan, or
(iii) after making all reasonable efforts, deposits of the
relevant amount in Dollars for the relevant Interest Period for a
Loan, or to banks generally, to which a Euro-Rate Option applies,
respectively, are not available to such Bank with respect to such
Loan, or to banks generally, in the interbank eurodollar market,
then the Agent shall have the rights specified in Section 4.4.3.
4.4.3 Agent's and Bank's Rights.
In the case of any event specified in Section 4.4.1 above,
the Agent shall promptly so notify the Banks and the Borrower thereof, and in
the case of an event specified in Section 4.4.2 above, such Bank shall promptly
so notify the Agent and endorse a certificate to such notice as to the specific
circumstances of such notice, and the 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 Agent, or (B) such Bank, in the case of such notice given by such
Bank, to allow the Borrower to select, convert to or renew a Euro-Rate Option
shall be suspended until the Agent shall have later notified the Borrower, or
such Bank shall have later notified the Agent, of the 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 Agent makes a
determination under Section 4.4.1 and the Borrower has previously notified the
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 selection of, conversion to or renewal of the Base Rate
Option otherwise available with respect to such Loans. If any Bank notifies the
Agent of a determination under Section 4.4.2, the Borrower shall, subject to the
Borrower's indemnification Obligations under Section 5.6.2 [Indemnity], as to
any Loan of the Bank 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 5.4 [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.
4.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to
apply to any Borrowing Tranche of 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 4.2 [Interest Periods], the
Borrower shall be deemed to have converted such Borrowing Tranche to the
Revolving Credit Base Rate Option, commencing upon the last day of the existing
Interest Period.
5. PAYMENTS
5.1 Payments.
All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Letter of Credit Fees, 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 Agent at the Principal Office for the ratable accounts of the Banks with
respect to the Loans in U.S. Dollars and in immediately available funds, and the
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 Agent with respect to the Loans and such payments are
not distributed to the Banks on the same day received by the Agent, the Agent
shall pay the Banks the Federal Funds Effective Rate with respect to the amount
of such payments for each day held by the Agent and not distributed to the
Banks. The 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 Loans and other
amounts owing under this Agreement and shall be deemed an "account stated."
5.2 Pro Rata Treatment of Banks.
Each borrowing shall be allocated to each Bank according to
its Ratable Share, and each selection of, conversion to or renewal of any
Interest Rate Option and each payment or prepayment by the Borrower with respect
to principal, interest, Commitment Fees, Letter of Credit Fees, or other fees
(except for the Agent's Fee) or amounts due from the Borrower hereunder to the
Banks with respect to the Loans, shall (except as provided in Section 4.4.3
[Agent's and Bank's Rights] in the case of an event specified in Section 4.4
[Euro-Rate Unascertainable; Etc.], 5.4.2 [Replacement of a Bank] or 5.6
[Additional Compensation in Certain Circumstances]) be made in proportion to the
applicable Loans outstanding from each Bank and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Bank.
5.3 Interest Payment Dates.
Interest on Loans to which the Base Rate Option applies shall
be due and payable in arrears on the last Business Day of each June, September,
December and March after the date hereof and on the Expiration Date or upon
acceleration of the Notes. Interest on 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 90th day of such Interest Period. Interest on mandatory prepayments of
principal under Section 5.5 [Mandatory Prepayments] shall be due on the date
such mandatory prepayment is due. 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).
5.4 Voluntary Prepayments.
5.4.1 Right to Prepay.
The Borrower shall have the right at its option from time to
time to prepay the Loans in whole or part without premium or penalty (except as
provided in Section 5.4.2 below or in Section 5.6 [Additional Compensation in
Certain Circumstances]):
(i) at any time with respect to any Loan to which the Base Rate
Option applies,
(ii) on the last day of the applicable Interest Period with
respect to Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Bank pursuant to
Section 4.4 [Euro-Rate Unascertainable, Etc.] with respect to any Loan
to which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the
Loans, it shall provide a prepayment notice to the Agent by 1:00 p.m. at least
one (1) Business Day prior to the date of prepayment of Loans (except with
respect to repayments under Section 4.4) setting forth the following
information:
(x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made; and
(y) the total principal amount of such prepayment, which
shall not be less than $500,000.
All prepayment notices shall be irrevocable. The principal
amount of the Loans for which a prepayment notice is given, together with
interest on such principal amount except with respect to Loans to which the Base
Rate Option applies, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be made.
Except as provided in Section 4.4.3 [Agent's and Bank's rights], if the Borrower
prepays a Loan but fails to specify the applicable Borrowing Tranche which the
Borrower is prepaying, the prepayment shall be applied first to Loans to which
the Base Rate Option applies, then to 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 5.6.2 [Indemnity].
5.4.2 Replacement of a Bank.
In the event any Bank (i) gives notice under Section 4.4
[Euro-Rate Unascertainable, Etc.] or Section 5.6.1 [Increased Costs, Etc.], (ii)
does not fund Revolving Credit Loans because the making of such Loans would
contravene any Law applicable to such Bank, 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 Agent,
which shall not be unreasonably withheld, to prepay the Loans of such Bank in
whole, together with all interest accrued thereon, and terminate such Bank's
Commitment within ninety (90) days after (x) receipt of such Bank's notice under
Section 4.4 [Euro-Rate Unascertainable, Etc.] or 5.6.1 [Increased Costs, Etc.],
(y) the date such Bank has failed to fund Revolving Credit Loans because the
making of such Loans would contravene Law applicable to such Bank, 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 5.6 [Additional Compensation in
Certain Circumstances] and any accrued interest due on such amount and any
related fees; provided, however, that the Commitment of such Bank shall be
provided by one or more of the remaining Banks or a replacement bank acceptable
to the Agent; provided, further, the remaining Banks shall have no obligation
hereunder to increase their Commitments. Notwithstanding the foregoing, the
Agent may only be replaced subject to the requirements of Section 10.14
[Successor Agent] and provided that all Letters of Credit have expired or been
terminated or replaced.
5.4.3 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 4.4.2
[Illegality, Etc.] or 5.6.1 [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
Loans or Letters of Credit 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, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 5.4.3 shall affect or postpone any of the Obligations of the
Borrower or any other Loan Party or the rights of the Agent or any Bank provided
in this Agreement.
5.5 Mandatory Prepayments.
Contemporaneously with, but in no event later than five (5)
Business Days after the receipt of any amounts on account of a post-closing
purchase price adjustment as contemplated by Section 8.1.21, the Borrower shall
make a mandatory prepayment of principal on the Revolving Credit Loans equal to
100% of such purchase price adjustment.
5.6 Additional Compensation in Certain Circumstances.
5.6.1 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, the Notes, the Loans or payments by
the Borrower of principal, interest, Commitment Fees, or other amounts
due from the Borrower hereunder or under the Notes (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, the Notes or the making, maintenance or
funding of any part of the 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 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.
5.6.2 Indemnity.
In addition to the compensation required by Section 5.6.1
[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
Loans subject to a Euro-Rate Option) which such Bank sustains or incurs as a
consequence of any
(i) payment, prepayment, conversion or renewal of any Loan to
which a Euro-Rate Option applies on a day other than the last day of
the corresponding Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not
such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Loan Requests
under Section 2.5 [Revolving Credit Loan Requests] or Section 4.2
[Interest Periods] or notice relating to prepayments under Section 5.4
[Voluntary Prepayments], or
(iii) default by the Borrower in the performance or observance of
any covenant or condition contained in this Agreement or any other
Loan Document, including any failure of the Borrower to pay when due
(by acceleration or otherwise) any principal, interest, Commitment Fee
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.
5.6.3 Borrowing Base Exceeded.
In the event that at any time the Revolving Facility Usage
shall exceed the Borrowing Base, the Borrower shall immediately make a mandatory
payment of principal to the Agent in an amount equal to or greater than such
amount as shall be necessary to cause the Revolving Facility Usage to be less
than the Borrowing Base, and the Agent shall apply such payment to the Revolving
Credit Loans of the Banks based upon their Revolving Credit Ratable Share.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties.
The Loan Parties, jointly and severally, represent and
warrant to the Agent and each of the Banks as follows:
6.1.1 Organization and Qualification.
The Borrower is a limited liability company, and each other
Loan Party is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. 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 is duly licensed or
qualified and in good standing in each jurisdiction listed on Schedule 6.1.1 and
in all other jurisdictions 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; provided, however, no Loan Party shall be in breach of
this Section in the event that it inadvertently failed to obtain or maintain a
qualification or license so long as such failure (i) either alone or when
considered together with all other such failures, has not resulted and could not
reasonably be expected to result in a Material Adverse Change, (ii) is promptly
remedied upon the Loan Party becoming aware of such failure and (iii) does not
adversely affect any material portion of the Collateral.
6.1.2 Capitalization and Ownership.
All of the member interests of the Borrower (the "Member
Interests") are owned as indicated on Schedule 6.1.2. All of the Member
Interests have been validly issued and are fully paid and are nonassessable.
There are no options, warrants or other rights outstanding to purchase any such
Member Interests except as indicated on Schedule 6.1.2.
6.1.3 Subsidiaries.
Schedule 6.1.3 states (i) the name of each of the Borrower's
Subsidiaries, (ii) each such Subsidiary's jurisdiction of incorporation, (iii)
its authorized capital stock, and the issued and outstanding shares (referred to
herein as the "Subsidiary Shares") if it is a corporation, its outstanding
partnership interests (the "Partnership Interests") if it is a partnership and
its outstanding limited liability company interests, interest assigned to
managers thereof and voting rights associated therewith (the "LLC Interests" and
together with the Subsidiary Shares and the Partnership Interests, the
"Subsidiary Ownership Interests") if it is a limited liability company, and (iv)
the owner of all such Subsidiary's Ownership Interests. The Borrower and each
Subsidiary of the Borrower has good and marketable title to all of the
Subsidiary Ownership Interests it purports to own, free and clear in each case
of any Lien. All Subsidiary Shares, Partnership Interests and LLC Interests have
been validly issued, and all Subsidiary Shares, Partnership Interests and LLC
Interests are fully paid and nonassessable. There are no options, warrants or
other rights outstanding to purchase any such Subsidiary Shares, Partnership
Interests or LLC Interests. No Subsidiary is a party to, or otherwise subject to
any legal restriction or any agreement (other than this Agreement and customary
limitations imposed by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Borrower or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of such
Subsidiary.
6.1.4 Power and Authority.
Each Loan Party has full power to enter into, execute,
deliver and carry out this Agreement and the other Loan Documents to which it is
a party, to incur the Indebtedness contemplated by the Loan Documents and to
perform its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on its part.
6.1.5 Validity and Binding Effect.
This Agreement has been duly and validly executed and
delivered by each Loan Party, and each other Loan Document which any Loan Party
is required to execute and deliver on or after the date hereof will have been
duly executed and delivered by such Loan Party on the required date of delivery
of such Loan Document. This Agreement and each other Loan Document constitutes,
or will constitute, legal, valid and binding obligations of each Loan Party
which is or will be a party thereto on and after its date of delivery thereof,
enforceable against such Loan Party in accordance with its terms, except to the
extent that enforceability of any of such Loan Document may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or by general
equitable principles limiting the availability of the right of specific
performance or other equitable remedies.
6.1.6 No Conflict.
Neither the execution and delivery of this Agreement or the
other Loan Documents by any Loan Party nor the consummation of the transactions
herein or therein contemplated or compliance with the terms and provisions
hereof or thereof by any of them will conflict with, constitute a default under
or result in any breach of (i) the terms and conditions of the certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents of any Loan Party or (ii) any Law or any material
lignite or coal supply agreement, coal lease, or other agreement or instrument
or order, writ, judgment, injunction or decree to which any Loan Party or any of
its Subsidiaries is a party or by which it or any of its Subsidiaries is bound
or to which it is subject, or result in the creation or enforcement of any Lien,
charge or encumbrance whatsoever upon any property (now or hereafter acquired)
of any Loan Party or any of its Subsidiaries (other than Liens granted under the
Loan Documents).
6.1.7 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, except those described on Schedule 6.1.7, none of which (other than the
litigation which is the subject of the Surplus Cash Flow Letter) individually or
in the aggregate may result in any Material Adverse Change. None of the Loan
Parties or any Subsidiaries of any Loan Party is in violation of any order,
writ, injunction or any decree of any Official Body which may result in any
Material Adverse Change.
6.1.8 Title to Properties.
Schedule 6.1.8 identifies all of the real property interests,
both owned or leased, of the Loan Parties which have been acquired by the Loan
Parties pursuant to the Stock Purchase Agreement and the Asset Acquisition
Agreement and is accurate in all material respects. Each Loan Party and each
Subsidiary of each Loan Party has good and marketable title to all real estate
owned by it and a valid leasehold interest in all properties, assets and other
rights which it purports to 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; provided, however, a Loan Party shall not be in breach of the foregoing
in the event that (i) it fails to own a valid leasehold interest which, either
considered alone or together with all other such valid leaseholds which it fails
to own, is not material to the continued operations of such Loan Party as
contemplated by the Financial Projections or its mining plan as in effect on the
Closing Date or (ii) the Loan Party's interest in a leasehold is less than fully
marketable because the consent of the lessor to future assignments has not been
obtained. All leases of property which are material to the continued operations
of each Loan Party as contemplated by the Financial Projections and its mining
plan as in effect on the Closing Date are in full force and effect without the
necessity for any consent which has not previously been obtained upon
consummation of the transactions contemplated hereby.
6.1.9 Financial Statements.
(i) Historical Statements. The Borrower has delivered to the
Agent copies of each of WECO's unaudited and Northwestern's audited,
consolidated year-end financial statements for and as of the end of
the fiscal year ended December 31, 1999 and copies of WECO's and
Northwestern's unaudited consolidated year-end financial statements
for and as of the end of the fiscal year ended December 31, 2000 (the
"Annual Statements"). In addition, the Borrower has delivered to the
Banks copies of each of WECO's and Northwestern's unaudited
consolidated interim financial statements for the fiscal year to date
and as of the month ended February 28, 2001 (the "Interim Statements")
(the Annual Statements and the Interim Statements being collectively
referred to as the "Historical Statements"). To the best of the
Borrower's knowledge, the Historical Statements were compiled from the
books and records maintained by each of WECO's and Northwestern's
management, are correct and complete and fairly represent the
financial condition of WECO and Northwestern 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
and the absence of footnotes.
(ii) Financial Projections. The Borrower has delivered to the
Agent financial projections of the Borrower and its Subsidiaries for
the period from 2001 to 2010 derived from various assumptions of the
Borrower's management and its advisors, including Norwest Mine
Services, Inc. (the "Financial Projections"). The Financial
Projections represent a reasonable range of possible results in light
of the history of the business, present and foreseeable conditions and
the intentions of the Borrower's management. The Financial Projections
have been prepared in reliance upon the Historical Statements and, to
the best knowledge of the Borrower, accurately reflect the liabilities
of the Borrower and its Subsidiaries upon consummation of the
transactions contemplated hereby as of the Closing Date.
(iii) Accuracy of Financial Statements. Except for liabilities
arising in the ordinary course of business since the date of the last
Historical Statement and the Indebtedness arising in connection with
the Notes and the Term Loan Documents, neither the Borrower nor any
Subsidiary of the Borrower has 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 may cause a Material Adverse Change. Since December 31, 2000, no
Material Adverse Change has occurred.
6.1.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.
6.1.10.1 General.
The Loan Parties intend to use the proceeds of the Loans in
accordance with Sections 2.8 and 8.1.11.
6.1.10.2 Margin Stock.
None of the Loan Parties or any Subsidiaries 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 or 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.
6.1.10.3 Section 20 Subsidiaries.
The Loan Parties do not intend to use and shall not use any
portion of the proceeds of the Loans, directly or indirectly, to purchase during
the underwriting period, or for thirty (30) days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
6.1.11 Full Disclosure.
The Borrower, through its agent, PNC Capital Markets, has
delivered to the Banks a copy of a Confidential Offering Memorandum, dated
March, 2001 (the "Memorandum"), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Borrower and its
Subsidiaries. This Agreement, the Memorandum, the documents, certificates or
other writings delivered to the Banks by or on behalf of any Loan Party in
connection with the transactions contemplated hereby and the financial
statements listed in Schedule 6.1.9, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. Except as disclosed in the Memorandum, or in one of the
documents, certificates or other writings identified therein, or described in
the Annual Statements or Interim Statements, since December 31, 2000, there has
been no change in the financial condition, operations, business, properties or
prospects of the Borrower or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to constitute or give rise to
a Material Adverse Change. There is no fact known to any Loan Party that could
reasonably be expected to constitute or give rise to a Material Adverse Change
that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to the Banks by or on
behalf of any Loan Party specifically for use in connection with the
transactions contemplated hereby.
6.1.12 Taxes.
Except as described on Schedule 6.1.12 with respect to tax
matters relating to WECO and Northwestern, 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
(such as adequate indemnities contained in the Stock Purchase Agreement), if
any, as shall be required by GAAP shall have been made. Except as described on
Schedule 6.1.12 with respect to tax matters relating to WECO and Northwestern,
as of the date hereof, 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.
6.1.13 Consents and Approvals.
Except for the filing of the financing statements and the
Mortgages (Noteholders) in the state and county filing offices and the filings
with the U.S. Patent and Trademark Office and the U.S. Copyright Office, 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 performance by any Loan
Party of this Agreement and the other Loan Documents, other than those which
shall have been obtained or made on or prior to the Closing Date, except as
listed on Schedule 6.1.13. No consent, approval, exemption, order or
authorization of, or registration or filing with, any Official Body or any other
Person, that has not been obtained or made is required by any Law or any
agreement for the closing on the Closing Date of the transactions contemplated
by the Stock Purchase Agreement and on the Deferred Closing Date (as defined in
the Term Loan Agreement) of the transactions contemplated by the Asset
Acquisition Documents. Except (i) with respect to the two permits listed on
Schedule 6.1.13, the failure to obtain a consent to the transfer of which is not
anticipated to materially affect the operations of WCCO-KRC Acquisition Corp.
and Dakota Westmoreland Corporation and the lead refund referred to in Schedule
5.13 which related to the Savage Mine and (ii) for consents, approvals,
exemptions, orders or authorizations, and registrations or filings that are
obtainable or made and will be obtained or made in the ordinary course of
business of the Loan Parties without significant expense or delay, no consent,
approval, exemption, order or authorization of, or registration or filing with,
any Official Body or any other Person is required by any Law or any agreement
material to the business of any Loan Party in connection with the conduct by
each Loan Party of its business after the completion of the transactions
contemplated by the Stock Purchase Agreement (in the case of WECO and
Northwestern) and the Asset Acquisition Documents (in the case of WCCO-KRC
Acquisition Corp. and Dakota Westmoreland Corporation).
6.1.14 No Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition
exists or will exist after giving effect to the issue and sale of the Notes and
the incurrence of Indebtedness evidenced thereby pursuant to the Term Loan
Agreement and the borrowings or other extensions of credit to be made on the
Closing Date under or pursuant to the Loan Documents and the Financing Documents
which constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiaries 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 would, either alone or together with all
other such violations, constitute or be reasonably likely to constitute a
Material Adverse Change. No default or event of default or basis for
acceleration exists or, after giving effect to the borrowing or other extensions
of credit made pursuant hereto, will exist under any instrument or agreement
evidencing, providing for the issuance or securing of or otherwise relating to
any Indebtedness of the Borrower or of any other Loan Party.
6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party and each Subsidiary of each Loan Party owns
or possesses all the material patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises, permits and rights necessary to
own and operate its properties and to carry on its business as presently
conducted and planned to be conducted by such Loan Party or Subsidiary, without
known possible, alleged or actual conflict with the rights of others. All
material patents, trademarks, service marks, trade names, copyrights, licenses,
registrations, franchises and permits of each Loan Party and each Subsidiary of
each Loan Party are listed and described on Schedule 6.1.15.
6.1.16 Security Interests.
Upon the due and proper filing of financing statements
relating to the following security interests in each office and in each
jurisdiction where required in order to perfect the security interests described
below, taking possession of any stock certificates or other certificates
evidencing the Pledged Collateral and recordation of the Patent, Trademark and
Copyright Security Agreement in the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, the Liens and security
interests granted to the Collateral Agent for the benefit of the Banks pursuant
to the Security Documents will constitute Prior Security Interests under the
Uniform Commercial Code as in effect in each applicable jurisdiction (the
"Uniform Commercial Code") to the extent such Liens and security interests can
be perfected by such filings or possession entitled to all the rights, benefits
and priorities provided by the Uniform Commercial Code except for the Prior
Security Interest granted by the Loan Parties in their assets other than
Accounts and Inventory in favor of the Term Lenders and except for other
Permitted Liens of the types described in clauses (i), (ii), (iii), (v), (vi)
and (ix) of the definition of that term. There will be upon execution and
delivery of the Security 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.
6.1.17 Mortgage Liens.
The Liens granted to the Collateral Agent for the benefit of
the Banks pursuant to the Mortgages will constitute, upon due and proper
recordation of such Mortgages, a valid first priority Lien, subject only to the
Lien in favor of the Term Lenders securing obligations under the Term Loan
Agreement and Permitted Liens of the types described in clauses (i), (ii),
(iii), (v), (vi) and (ix) of the definition of that term under applicable law,
but only to the extent that applicable law permits a mortgage to attach to the
property interest of the Loan Party. All such action as will be necessary or
advisable to establish such Lien of the Collateral Agent and its priority as
described in the preceding sentence will be taken at or prior to the time
required for such purpose, and there will be as of the date of execution and
delivery of the Mortgages no necessity for any further action in order to
protect, preserve and continue such Lien and such priority.
6.1.18 Status of the Pledged Collateral.
All the Subsidiary Shares, Member Interests, Partnership
Interests or LLC Interests included in the Pledged Collateral to be pledged
pursuant to the Pledge Agreement 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 for Permitted Liens of the types
described in clauses (i) and (vi) of the definition of that term or as otherwise
provided by the Pledge Agreement and except as the right of the Collateral Agent
to dispose of the Subsidiary Shares, Member Interests, Partnership Interests or
LLC Interests may be limited by the Securities Act of 1933, as amended, and the
regulations promulgated by the Securities and Exchange Commission thereunder and
by applicable state securities laws. There are no shareholder, partnership,
limited liability company or other agreements or understandings with respect to
the Subsidiary Shares, Member Interests, Partnership Interests or LLC Interests
included in the Pledged Collateral except for the partnership agreements and
limited liability company agreements described on Schedule 6.1.18. The Loan
Parties have delivered true and correct copies of such partnership agreements
and limited liability company agreements to the Agent and each Bank.
6.1.19 Insurance.
Schedule 6.1.19 lists all insurance policies and other bonds
to which any Loan Party or Subsidiary of any Loan Party is a party, all of which
are valid and in full force and effect. No notice has been given or claim made
and no grounds exist to cancel or avoid any of such policies or bonds 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.
6.1.20 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 6.1.25 [Environmental Matters]) in
all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is
presently or will be doing business except where the failure to do so would not,
either alone or together with all other such failures, constitute or be
reasonably likely to result in a Material Adverse Change.
6.1.21 Material Contracts; Burdensome Restrictions.
Schedule 6.1.21 lists all material contracts relating to the
business operations of each Loan Party and each Subsidiary of any Loan Party,
including, without limitation, all Coal Supply Contracts, and all employee
benefit plans and Labor Contracts. Except as set forth on Schedule 6.1.21, all
such material contracts are valid, binding and enforceable upon such Loan Party
or Subsidiary and each of the other parties thereto in accordance with their
respective terms, and there is no default thereunder, to the Loan Parties'
knowledge, with respect to parties other than such Loan Party or Subsidiary.
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, either alone or together with all other such
obligations, restriction and requirements, reasonably result in a Material
Adverse Change.
6.1.22 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 Subsidiaries of any Loan Party is subject to any other
federal or state statute or regulation limiting its ability to incur
Indebtedness for borrowed money.
6.1.23 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, except as set forth on Schedule 6.1.23(i). There
has been no Prohibited Transaction with respect to any Benefit
Arrangement or any Plan or, to the Borrower's knowledge, with respect
to any Multiemployer Plan or Multiple Employer Plan, which could
reasonably be expected to result in a substantial obligation to the
Borrower or any other member of the ERISA Group, except as set forth
on Schedule 6.1.23(i). The matters set forth on Schedule 6.1.23(i)
relate to members of the ERISA Group other than the Borrower and the
Loan Parties and will not result in a Material Adverse Change. 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 except where the failure to make any such payment
could not reasonably be expected to result in any substantial
obligation to the Borrower or any other members of the ERISA Group or
otherwise result in a Material Adverse Change. With respect to each
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.
(ii) To the Borrower's knowledge, each Multiemployer Plan and
Multiple Employer Plan is able to pay benefits thereunder when due.
(iii) Neither the Borrower nor any other member of the ERISA
Group has instituted or intends to institute proceedings to terminate
any Plan where such termination could reasonably be expected to result
in a substantial obligation to the Borrower or any member of the ERISA
Group or otherwise result in a Material Adverse Change.
(iv) 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.
(v) Each Plan is Adequately Funded.
(vi) Neither the Borrower nor any other member of the ERISA Group
(other than the obligations of the Parent described on Schedule
6.1.23, subparagraph (vi), for which Borrower and the Loan Parties are
not liable, or, if liable, would not result in a Material Adverse
Change) has incurred or reasonably expects to incur any substantial
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
Borrower's knowledge, no Multiemployer Plan or Multiple Employer Plan
is reasonably expected to be reorganized or terminated, within the
meaning of Title IV of ERISA.
(vii) To the extent that any Benefit Arrangement is insured, the
Borrower and all other members of the ERISA Group have paid when due
all premiums required to be paid for all periods through the Closing
Date except where the failure to do so could not reasonably be
expected to result in a substantial obligation to the Borrower or any
member of the ERISA Group or otherwise result in a Material Adverse
Change. To the extent that any Benefit Arrangement is funded other
than with insurance, the Borrower and all other members of the ERISA
Group have made when due all contributions required to be paid for all
periods through the Closing Date except where the failure to do so
could not reasonably be expected to result in a substantial obligation
to the Borrower or any member of the ERISA Group or otherwise result
in a Material Adverse Change.
(viii) All Plans and Benefit Arrangements have been administered,
in all material respects, in accordance with their terms and
applicable Law, except as set forth on Schedule 6.1.23(viii). The
matters set forth on Schedule 6.1.23(viii) relate to members of the
ERISA Group other than the Borrower and the Loan Parties and will not
result in a Material Adverse Change.
6.1.24 Employment Matters.
Each of the Loan Parties and each of their Subsidiaries is in
compliance with the Labor Contracts and all applicable federal, state and local
labor and employment Laws including those related to equal employment
opportunity and affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and worker and unemployment compensation, where
the failure to comply would constitute 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 would constitute a Material Adverse
Change. The Borrower has made available to the Agent true and correct copies of
each of the Labor Contracts.
6.1.25 Environmental Matters.
Except as disclosed on Schedule 6.1.25:
(i) Except for matters that, considered either individually or in
the aggregate, have no reasonable likelihood of materially disrupting
the projected mining operations of the Loan Parties or resulting in
any substantial obligation to the Loan Parties or otherwise resulting
in a Material Adverse Change, none of the Loan Parties has received
any Environmental Complaint, whether directed or issued to any Loan
Party or relating or pertaining to any prior owner, operator or
occupant of the Property, and has no reason to believe that it might
receive an Environmental Complaint.
(ii) No activity of any Loan Party at the Property is being or
has been conducted in violation of any Environmental Law or Required
Environmental Permit and to the knowledge of any Loan Party no
activity of any prior owner, operator or occupant of the Property was
conducted in violation of any Environmental Law, except for activities
that, considered either individually or in the aggregate, have no
reasonable likelihood of materially disrupting the projected mining
operations of the Loan Parties or resulting in any substantial
obligation to the Loan Parties or otherwise resulting in a Material
Adverse Change.
(iii) There are no Regulated Substances present on, in, under, or
emanating from, or to any Loan Party's knowledge emanating to, the
Property or any portion thereof which result in Contamination except
for such Regulated Substances that have no reasonable likelihood of
materially disrupting the projected mining operations of the Loan
Parties or resulting in any substantial obligation to the Loan Parties
or otherwise resulting in a Material Adverse Change.
(iv) Each Loan Party has all Required Environmental Permits and
all such Required Environmental Permits are in full force and effect,
except where the failure to have any Required Environmental Permits,
either in any one case or considered together with other such
failures, has no reasonable likelihood of materially disrupting the
projected mining operations of the Loan Parties or resulting in any
substantial obligation to the Loan Parties or otherwise resulting in a
Material Adverse Change.
(v) Each Loan Party has submitted to an Official Body and/or
maintains, as appropriate, all Required Environmental Notices, except
for Required Environmental Notices that have no reasonable likelihood
of materially disrupting the projected mining operations of the Loan
Parties or resulting in any substantial obligation to the Loan Parties
or otherwise resulting in a Material Adverse Change.
(vi) No structures, improvements, equipment, fixtures,
impoundments, pits, lagoons or aboveground or underground storage
tanks located on the Property contain or use Regulated Substances
except (1) in compliance with Environmental Laws and Required
Environmental Permits or (2) where the improper presence or use of
Regulated Substances have no reasonable likelihood of materially
disrupting the projected mining operations of the Loan Parties or
resulting in any substantial obligation to the Loan Parties or
otherwise resulting in a Material Adverse Change. To the knowledge of
each Loan Party, no structures, improvements, equipment, fixtures,
impoundments, pits, lagoons or aboveground or underground storage
tanks of prior owners, operators or occupants of the Property
contained or used, except in material compliance with Environmental
Laws, Regulated Substances or otherwise were operated or maintained by
any such prior owner, operator or occupant except in compliance in all
material respects with Environmental Laws.
(vii) To the knowledge of each Loan Party, no facility or site to
which any Loan Party, either directly or indirectly by a third party,
has sent Regulated Substances for storage, treatment, disposal or
other management has been or is being operated in violation of
Environmental Laws or pursuant to Environmental Laws is identified or
proposed to be identified on any list of contaminated properties or
other properties which pursuant to Environmental Laws are the subject
of an investigation, cleanup, removal, remediation or other response
action by an Official Body except where such violation, either alone
or considered together with all other such violations, has no
reasonable likelihood of materially disrupting the projected mining
operations of the Loan Parties or resulting in any substantial
obligation to the Loan Parties or otherwise resulting in a Material
Adverse Change.
(viii) No portion of the Property is identified or to the
knowledge of any Loan Party proposed to be identified on any list of
contaminated properties or other properties which pursuant to
Environmental Laws are the subject of an investigation or remediation
action by an Official Body, nor to the knowledge of any Loan Party is
any property adjoining or in the proximity of the Property identified
or proposed to be identified on any such list.
(ix) No portion of the Property constitutes an Environmentally
Sensitive Area, except for portions of the Property that have no
reasonable likelihood of materially disrupting the projected mining
operations of the Loan Parties or resulting in any substantial
obligation to the Loan Parties or otherwise resulting in a Material
Adverse Change.
(x) No Lien or other encumbrance authorized by Environmental Laws
exists against the Property and none of the Loan Parties has any
reason to believe that such a Lien or encumbrance may be imposed.
6.1.26 Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the
Notes, 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.
6.1.27 Permit Blocks.
No Loan Party has been barred for a period in excess of
fourteen (14) consecutive days from receiving surface mining or underground
mining permits pursuant to the permit block provisions of the Surface Mining
Control and Reclamation Act, 30 U.S.C.ss.ss. 1201 et seq., and the regulations
promulgated thereto, or any corresponding state laws or regulations.
6.1.28 Transactions with Affiliates.
Except as set forth on Schedule 6.1.28 or as permitted in
Section 8.2.8 herein, there are no loans, leases, royalty agreements or other
agreements, arrangements or other transactions between any of the Loan Parties
and any Affiliate.
6.1.29 Status under Certain Statutes.
Neither the Borrower nor any other Loan Party is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the ICC Termination Act of
1995, as amended, or the Federal Power Act, as amended.
6.1.30 Coal Leases.
The Coal Leases constitute all of the leases owned by the
Loan Parties pertaining to the extraction, mining or removal of coal. The Loan
Parties have made available to the Banks a true, correct and complete copy of
each of the Coal Leases. Each of the Coal Leases is in full force and effect,
and has not been amended or modified from the copy of the Coal Lease provided to
the Banks, except for Permitted Modifications. None of the Loan Parties is in
default of any of its obligations under any of the material Coal Leases, and, to
the best of each Loan Party's knowledge and belief, the lessors thereunder are
not in default under any of lessors' obligations under the Coal Leases. Except
as set forth on Schedule 6.1.30, to the Borrower's knowledge, no material amount
of royalties are currently past due under any of the Coal Leases.
6.1.31 Qualifications as Lessee, Coal Acreage Limitations.
Except as set forth on Schedule 6.1.31, each of the Loan
Parties are qualified in every material respect, including limitations and
parameters imposed in 43 C.F.R. Part 3400, to take, hold, own and control
federal coal and mineral leases. The acquisition, directly or indirectly, by
each Loan Party will not cause any Loan Party to violate any material
limitations or parameters imposed in 43 C.F.R. Part 3400.
6.1.32 Single Purpose Entities.
(i) The Borrower at all times since its formation has been a duly
formed and existing limited liability company.
(ii) The Borrower is presently a Single Purpose Entity.
(iii) The Borrower at all times since its formation has been duly
qualified as a limited liability company, in each jurisdiction in
which such qualification was necessary for the conduct of its
business.
(iv) Each Subsidiary of the Borrower is duly qualified as a
corporation in each jurisdiction in which such qualification is
necessary for the conduct of its business.
(v) The Borrower at all times since its formation has complied
with the provisions of its organizational documents and the laws of
its jurisdiction of formation relating to limited liability companies.
(vi) Each Subsidiary of the Borrower is in compliance with the
provisions of its organizational documents and the laws of its
jurisdiction of formation relating to corporations or other business
entities. All formalities regarding the existence of Borrower have
been observed since its formation.
(vii) The Borrower did not engage in any business until the
Closing Date except insofar as the acquisition of permits may be
construed as engaging in business and other matters related to the
preparation for the consummation of the transactions contemplated by
the Asset Acquisition Agreement, the Stock Purchase Agreement, the
Term Loan Documents and this Agreement and the other Loan Documents
(collectively, the "Transaction Agreements").
(viii) The Borrower did not incur any Indebtedness until the
Closing Date.
(ix) The Borrower has at all times since its formation accurately
maintained, its financial statements, accounting records and limited
liability company documents, separate from those of any other Person.
The Borrower has maintained separate books, records, resolutions and
agreements. Borrower has not at any time since its formation
commingled, its assets with those of any other Person. The Borrower
has at all times since its formation accurately maintained its own
bank accounts, payroll and separate books of account. The Borrower has
not commingled its funds or assets with those of any other entity, and
has held and will hold its assets in its own name.
(x) The Borrower is presently organized solely for the purpose
described in the definition of Single Purpose Entity and has not
engaged in any business unrelated to acting as the Borrower hereunder
and consummating the transactions contemplated by the Transaction
Agreements which is inconsistent with or in violation of this
Agreement.
(xi) No Subsidiary of the Borrower has any assets other than
those related to coal mining operations. The Borrower has not had any
assets other than those related to coal mining operations and its
interests in the Subsidiaries.
(xii) The Borrower has not engaged in, sought or consented to any
dissolution, winding up, liquidation, consolidation, merger, transfer
of partnership interest, membership interest or stock of a Subsidiary,
or amendment of the operating agreement of the Borrower (except for
the amended and restated operating agreement dated April [27], 2001)
and in connection with the Transaction Agreements.
(xiii) The Parent is the sole economic member of the Borrower.
(xiv) The Borrower has at all times since its formation
identified itself in all dealings with the public, under the
Borrower's own name and as a separate and distinct entity. The
Borrower has not at any time since its formation identified itself as
being a division of any other entity. The Borrower has not at any time
since its formation identified any other Person as being a division of
the Borrower. The Borrower has not failed to correct any known
misunderstanding regarding the separate identity of such entity. The
Borrower has conducted its business in its own name.
(xv) The Borrower has at all times since its formation been
adequately capitalized in light of the nature of its business. The
Subsidiaries of the Borrower and the Borrower, taken as a whole, are
presently adequately capitalized in light of the nature of their
business.
(xvi) The Borrower has not at any time since its formation
assumed or guaranteed the liabilities of any other Persons, except
Guaranties of the Indebtedness as permitted hereby. The Borrower has
not at any time since its formation acquired obligations or securities
of any other Persons except the obligations and/or securities of (a)
any Subsidiary of the Borrower or (b) any entity merged with the
Borrower or any Subsidiary of the Borrower in accordance with Section
8.2.6. The Borrower has not at any time since its formation made loans
or advances to any Person except as expressly permitted under this
Agreement. The Borrower has not pledged its assets for the benefit of
any other Person or entity, except in favor of the Collateral Agent
for the benefit of the Banks and the Term Lenders and Guarantees
permitted under this Agreement.
(xvii) The Borrower and each Subsidiary of the Borrower has not
at any time since its formation entered into and was not a party to
any transaction with any member of the Parent Group, except in the
ordinary course of business of the Borrower and each Subsidiary of the
Borrower on terms which are no less favorable to the Borrower and each
Subsidiary of the Borrower than would be obtained in a comparable
arm's length transaction with an unrelated third party.
(xviii) The Borrower has no Indebtedness other than the
Indebtedness to the Agent and the Banks under the Loan Documents and
to the Term Lenders under the Term Loan Agreement.
(xix) The Borrower represents and warrants that the "assumptions
of fact" contained in the non-consolidation opinion of Hale and Dorr
LLP of even date herewith are true and correct in all material
respects as of the date hereof.
6.1.33 Surface Mine Reclamation Bonds.
Each of the Loan Parties has a sufficient surface mining
bonding capacity to be able to replace the bonds currently in place for all the
Required Mining Permits, except the permit for the Jewett Mine (which is covered
by a self bond with a third party guarantee)
6.1.34 Foreign Assets Control Regulation, etc.
Neither the transactions made hereunder or the use of the
proceeds hereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
6.1.35 Pari Passu Collateral.
Each Loan Party represents and warrants that (excluding the
exercise of rights of set-off) no Guaranty, collateral, security or other credit
enhancement has been given, directly or indirectly, for the benefit of the Term
Lenders under the Term Loan Agreement or otherwise except for (i) Guarantees
from the Loan Parties, (ii) the security agreement, which provides the Term
Lenders with a prior security interest in the Loan Parties assets (other than
Accounts and Inventory), and (iii) a subordinated security interest in and Lien
on Accounts and Inventory. Complete and correct copies of the Financing
Documents have been delivered to the Banks.
6.1.36 Additional Representations and Warranties.
Each Loan Party represents and warrants that the
representations and warranties contained in the Term Loan Documents are true and
correct in all material respects as of the date given.
6.2 Updates to Schedules.
Should any of the information or disclosures provided on any
of the Schedules attached hereto become outdated or incorrect in any material
respect, the Borrower shall promptly provide the Agent in writing with such
revisions or updates to such Schedule as may be necessary or appropriate to
update or correct same; provided, however, that no Schedule shall be deemed to
have been amended, modified or superseded by any such correction or update, nor
shall any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Banks, in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule.
7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Bank to make Loans and of the Agent to
issue Letters of Credit hereunder is subject to the performance by each of the
Loan Parties 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:
7.1 First Loans and Letters of Credit.
On the Closing Date:
7.1.1 Officer's Certificate.
The representations and warranties of each of the Loan
Parties contained in Section 6 and in each of the other Loan Documents shall be
true and accurate on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties shall
have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent for the
benefit of each Bank a certificate of each of the Loan Parties, dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of each of the Loan Parties, to each such effect.
7.1.2 Secretary's Certificate.
There shall be delivered to the 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 Agent and each Bank
may conclusively rely; and
(iii) copies of its organizational documents, including its
certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, and
limited liability company agreement, as the case may be, as in effect
on the Closing Date 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 each state where organized or
qualified to do business and a bring-down certificate by facsimile
dated the Closing Date.
7.1.3 Delivery of Loan Documents.
This Agreement, the Collateral Assignment, Guaranty
Agreement, Mortgage, Notes, Patent, Trademark and Copyright Security Agreement,
Pledge Agreement, Intercompany Subordination Agreement, Security Agreement, the
Management Agreement, and the Management Fee Subordination Agreement shall have
been duly executed and delivered to the Collateral Agent or Agent, as the case
may be, 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.
7.1.4 Opinion of Counsel.
There shall be delivered to the Agent for the benefit of each
Bank a written opinions of Hale and Dorr LLP, as counsel for the Loan Parties,
and other counsel acceptable to the Agent (who may rely on the opinions of such
other counsel as may be acceptable to the Agent), dated the Closing Date and in
form and substance satisfactory to the Agent and its counsel:
(i) as to the matters set forth in Exhibit 7.1.4;
(ii) as to substantive non-consolidation of the Borrower with any
member of the Parent Group;
(iii) as to the enforceability and application by a bankruptcy
court of the provisions of the operating agreement of the Borrower and
the articles of incorporation or other organizational documents of
each Subsidiary, as the case may be, requiring the vote of an
Independent Manager or Director, as the case may be, to file a
voluntary bankruptcy petition;
(iv) as to the enforceability of the provision of the operating
agreement of the Borrower that if the economic member of the Borrower
ceases to be a member, the Independent Manager becomes a member
without further active vote or approval;
(v) as to the fact that the bankruptcy or insolvency of a member
of the borrower will not, by itself cause a dissolution or winding up
of the Borrower; and
(vi) as to such other matters incident to the transactions
contemplated herein as the Agent may reasonably request.
There shall also be delivered to the Agent for the benefit of
each Bank a written opinion of Crowell & Moring LLP, the Loan Parties' Coal Act
counsel, dated as of the Closing Date and in form and substance satisfactory to
the Agent and its counsel, that any Coal Act liability of the Parent will not be
attributed to the Borrower or any Subsidiary of the Borrower.
7.1.5 Legal Details.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be in form and substance satisfactory to the Agent and counsel for the Agent,
and the 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 Agent and said
counsel, as the Agent or said counsel may reasonably request.
7.1.6 Payment of Fees.
The Borrower shall have paid or caused to be paid to the
Agent for itself and for the account of the Banks to the extent not previously
paid the all commitment and other fees accrued through the Closing Date and the
costs and expenses for which the Agent and the Banks are entitled to be
reimbursed.
7.1.7 Environmental Audit.
The Loan Parties shall cause to be performed and completed an
environmental audit with respect to the Real Property by consultants
satisfactory to the Agent and shall provide all reports and results of such
audit in writing to the Agent. Such reports shall meet the Agent's minimum
requirements for phase I environmental assessments and any other requirements of
the Agent or the Banks. The environmental condition of the Loan Parties' and
their Subsidiaries' assets, as substantiated by such audit, shall be
satisfactory to the Agent in all respects. On the Closing Date the appropriate
officers of the applicable Loan Parties shall have delivered to the Agent in
form and substance satisfactory to the Agent a certificate to the effect that
the Loan Parties have made known to the Agent 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 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.
7.1.8 Appraisals.
The Agent shall have received appraisals or valuations of the
Loan Parties' and their Subsidiaries' assets as the Agent may require in form
and substance satisfactory to the Agent in all respects.
7.1.9 Consents.
All material consents and governmental approvals required to
effectuate the transactions contemplated hereby as set forth on Schedule 6.1.13
shall have been obtained, in form and substance satisfactory to the Banks.
7.1.10 Officer's Certificate Regarding MACs.
Since December 31, 2000 no Material Adverse Change shall have
occurred; and there shall have been delivered to the Agent for the benefit of
each Bank a certificate dated the Closing Date and signed by the Chief Executive
Officer, President or Chief Financial Officer of each Loan Party to each such
effect.
7.1.11 No Violation of Laws.
The making of the Loans and the issuance of the Letters of
Credit shall not contravene any Law applicable to any Loan Party or any of the
Banks.
7.1.12 No Actions or Proceedings.
No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in the
Agent's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
7.1.13 Insurance Policies; Certificates of Insurance; Endorsements.
The Loan Parties shall have delivered evidence acceptable to
the Agent that adequate insurance in compliance with Section 8.1.3 [Maintenance
of Insurance] is in full force and effect and that all premiums then due thereon
have been paid, together with a certified copy of each Loan Party's casualty
insurance policy or policies evidencing coverage satisfactory to the Agent, with
additional insured, mortgagee and lender loss payable special endorsements
attached thereto in form and substance satisfactory to the Agent and its counsel
naming the Agent as additional insured, mortgagee and lender loss payee.
7.1.14 Title Insurance.
The Loan Parties shall deliver a title insurance policy or
policies or other evidence of title satisfactory to the Agent.
7.1.15 Filing Receipts.
The Agent shall have received (1) 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 and (2)
evidence in a form acceptable to the Agent that such Lien constitutes a Prior
Security Interest in favor of the Banks and, in the case of the Mortgages, a
valid and perfected first priority Lien, subject only to the Lien in favor of
the Term Lenders in connection with the Term Loan Agreement.
7.1.16 Term Loan Agreement.
The Loan Parties shall have delivered an executed Term Loan
Agreement and shall have satisfied the conditions in Section 4.1 of the Term
Loan Agreement to the satisfaction of the Agent.
7.1.17 Administrative Questionnaire.
Each of the Banks and the Borrower shall have completed and
delivered to the Agent the Agent's form of administrative questionnaire.
7.1.18 Management Agreement.
The Borrower and the Parent shall have entered into the
Management Agreement, in form and substance satisfactory to the Banks.
7.1.19 Solvency Certificate.
An Authorized Officer of the Borrower shall have delivered a
certificate in form and substance satisfactory to the Agent as to the capital
adequacy and solvency of the Borrower and its Subsidiaries after giving effect
to the transactions contemplated hereby.
7.1.20 Acquisitions; Equity Contribution.
The acquisitions contemplated by the Stock Purchase Agreement
shall be consummated by (1) the Borrower having been designated by the Parent as
the acquirer of the stock of Northwestern and WECO, and (2) acquiring all of the
stock of Northwestern and WECO pursuant to the terms and conditions of the Stock
Purchase Agreement as heretofore reviewed by the Agent and as certified by the
Borrower without any amendment or waiver (including, without limitation, any
waiver of any closing condition) by the Loan Parties not consented to by the
Agent, including, without limitation, for the purchase price indicated therein
(as the same is adjusted in accordance with the terms of the Stock Purchase
Agreement) and without any material adverse changes in such companies occurring
from the date of the Stock Purchase Agreement. It is understood that the stock
in the Ancillary Interests being acquired as part of the Stock Purchase
Agreement will be transferred on the Closing Date to the Parent or other members
of the Parent Group for nominal or no consideration. The Loan Parties shall
evidence to the satisfaction of the Agent the receipt by Borrower of a cash
capital contribution in an amount equal to or greater than 24.15% of the total
net purchase price after projected post-closing adjustments for the contemplated
acquisitions under the Stock Purchase Agreement, as the same may be further
adjusted in accordance with the terms thereof (the foregoing cash equity
contributions made hereunder shall be supplemented with an additional cash
equity contribution to the extent provided in Section 8.1.21 hereof). Such net
purchase price and projected adjustments shall be set forth in an Officer's
Certificate of the Borrower, dated the Closing Date and delivered to each Bank.
7.1.21 Intercreditor Agreement.
The Term Lenders or Collateral Agent on behalf of the Term
Lenders and the Borrower shall have executed and delivered to the Agent the
Intercreditor Agreement in form and substance acceptable to the Agent.
7.1.22 Coal Reserves.
The Borrower shall have made available to the Banks all
existing material geological data, reserve data, mine maps, core hole logs and
associated data, coal measurements, coal samples, lithologic data, coal reserve
calculations or reports, washability analyses or reports, mine plans, mining
feasibility studies or analyses, mining permit applications and supporting data,
preparation plant flowcharts, preparation plant efficiency reports or analyses,
engineering studies and all other information, maps, material, reports and data
in the possession or under the control of Borrower relating to or affecting the
coal reserves, coal ownership, coal leases, mining conditions, mines,
preparation plant(s) and mining plans of Borrower (collectively the "Mining
Data"). True, correct and complete copies of the Mining Data, together with all
exhibits, maps or supporting appendices thereto, have been provided to the
Banks.
7.1.23 Independent Director of Borrower an Subsidiaries.
The Borrower and each Subsidiary shall have provided evidence
that its articles or incorporation, operating agreement or other relevant
organizational documents provide for an Independent Manager or Director, as the
case may be, and require the vote of an Independent Manager or Director, as the
case may be, to file a voluntary bankruptcy petition.
7.1.24 Bankruptcy Remote Entities, Separateness.
The terms and conditions of the Borrower's formation
documents, as well as the terms and conditions of each Subsidiary's formation
documents, shall be effective to provide for appropriate protections from the
commencement of a bankruptcy based upon the bankruptcy of a member of the Parent
Group. Each of the Loan Parties shall satisfy the Agent that such entities are
not reasonably subject to substantive consolidation with any member of the
Parent Group. The Borrower shall cause the articles of incorporation of WECO and
Northwestern to be amended, prior to or immediately after the acquisition of
such entities, to satisfy the preceding sentence. Additionally, the Agent shall
be satisfied with the Independent Manager and Director selected by each of the
Loan Parties.
7.1.25 Changes in Corporate Structure.
The Loan Parties shall not have changed their respective
jurisdictions of incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any part of the liabilities of any other
entity, at any time following the date of the most recent financial statement
referred to in Section 6.1.9, except for the Borrower's acquisition of
Northwestern and WECO pursuant to the Stock Purchase Agreement.
7.2 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 Loan Parties contained in Section 6 and 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 Loan Parties 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 any
Loan Party or Subsidiary of any Loan Party or any of the Banks; and the Borrower
shall have delivered to the Agent a duly executed and completed Loan Request or
application for a Letter of Credit as the case may be.
8. COVENANTS
8.1 Affirmative Covenants.
The Loan Parties, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings, and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties' other Obligations
under the Loan Documents and termination of the Commitments, the Loan Parties
shall comply at all times with the following affirmative covenants:
8.1.1 Preservation of Existence, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain its legal existence as a corporation, limited
partnership or limited liability company and 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 as otherwise expressly permitted in Section 8.2.6 [Liquidations, Mergers,
Etc.] or where a Loan Party shall be in breach of this Section inadvertently
because it failed to obtain or maintain a qualification or license provided that
such failure is promptly remedied upon the Loan Party becoming aware of such
failure and the failure does not adversely affect the rights of the Loan
Parties.
8.1.2 Payment of Liabilities, Including Taxes, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, duly pay and discharge all liabilities to which it is subject
or which are asserted against it, promptly as and when the same shall become due
and payable, including all taxes, assessments and governmental charges upon it
or any of its properties, assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such liabilities, including
taxes, assessments or charges, are being contested in good faith and by
appropriate and lawful proceedings diligently conducted and for which such
reserve or other appropriate provisions, if any, as shall be required by GAAP
shall have been made, but only to the extent that failure to discharge any such
liabilities would not result in any additional liability which would adversely
affect to a material extent the financial condition of any Loan Party or
Subsidiary of any Loan Party or which would affect a material portion of the
Collateral, provided that the Loan Parties and their Subsidiaries will pay all
such liabilities forthwith upon the commencement of proceedings to foreclose any
Lien which may have attached as security therefor.
8.1.3 Maintenance of Insurance.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, insure its properties and assets against loss or damage by fire
and such other insurable hazards as such assets are commonly insured (including
fire, extended coverage, property damage, workers' compensation, public
liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers, including
self-insurance to the extent customary, all as reasonably determined by the
Agent. For policies which cover Persons in addition to the Borrower and the Loan
Parties, the policies shall provide that the required limits per occurrence will
continue to be in effect for the Borrower and the other Loan Parties
notwithstanding losses which may occur with respect to such other Persons. The
Loan Parties shall deliver to the Agent (x) on the Closing Date and annually
thereafter an original certificate of insurance signed by the Loan Parties'
independent insurance broker describing and certifying as to the existence of
the insurance on the Collateral required to be maintained by this Agreement and
the other Loan Documents including without limitation business interruption
insurance in an amount of $50,000,000 or more in the aggregate among all
Obligors, together with a copy of the endorsements attached to such certificate
in form and substance reasonably acceptable to the Agent, which shall (i)
specify the Agent as an additional insured, mortgagee and lender loss payee as
its interests may appear, with the understanding that any obligation imposed
upon the insured (including the liability to pay premiums) shall be the sole
obligation of the applicable Loan Parties and not that of the insured, (ii)
provide that the interest of the Banks shall be insured regardless of any breach
or violation by the applicable Loan Parties of any warranties, declarations or
conditions contained in such policies or any action or inaction of the
applicable Loan Parties or others insured under such policies, (iii) include
effective waivers by the insurer of all claims for insurance premiums against
the Agent, and (iv) provide that no cancellation of such policies for any reason
(including non-payment of premium) nor any change therein shall be effective
until at least thirty (30) days after receipt by the Agent of written notice of
such cancellation or change. The business interruption insurance required
hereunder shall include without limitation coverage in respect of outages at
power plants serviced under any material Coal Supply Contract.
8.1.4 Maintenance of Properties and Leases.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in good repair, working order and condition (ordinary
wear and tear excepted) in accordance with the general practice of other
businesses of similar character and size, all of those properties useful or
necessary to its business, and from time to time, such Loan Party will make or
cause to be made all appropriate repairs, renewals or replacements thereof.
8.1.5 Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in full force and effect all patents, trademarks,
service marks, trade names, copyrights, licenses, franchises, permits and other
authorizations necessary for the ownership and operation of its properties and
business if the failure so to maintain the same would constitute a Material
Adverse Change.
8.1.6 Visitation Rights.
The Loan Parties shall permit the representatives of each of
the Banks:
No Default -- if no Potential Default or Event of Default
then exists, at the expense of such holder and upon reasonable prior notice to
the Borrower, to visit and inspect any of the offices or properties of the
Borrower or any Subsidiaries, to discuss the affairs, finances and accounts of
the Borrower and its Subsidiaries with the Borrower's officers, and (with the
consent of the Borrower, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Borrower, which
consent will not be unreasonably withheld) to visit the other offices and
properties of the Borrower and each Subsidiary, all at such reasonable times
(which shall be normal business hours) and as often as may be reasonably
requested; and
Default -- if a Potential Default or Event of Default then
exists, at the expense of the Borrower to visit and inspect any of the offices
or properties of the Borrower or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Borrower authorizes said accountants to discuss the affairs,
finances and accounts of the Borrower and its Subsidiaries), all at such times
and as often as may be requested.
8.1.7 Operation of Mines.
The Loan Parties shall have in place all Required Mining
Permits, surface mining reclamation bonds, and such other consents and approvals
as are necessary for continuing and uninterrupted coal mining and related
operations on, in or under the Real Property substantially in the manner as such
operations had been authorized immediately prior to such Loan Party's
acquisition of its interests in the Real Property or as described in any plan of
operation.
8.1.8 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.
8.1.9 Plans and Benefit Arrangements.
After the Closing Date, 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 the failure to comply herewith, alone or in conjunction with any
other failure, would not result in any substantial obligation to the Borrower or
any of its Subsidiaries or otherwise 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, except
where such failure, alone or in conjunction with any other failure, would result
in a substantial obligation to the Borrower or any of its Subsidiaries or
otherwise result in a Material Adverse Change.
8.1.10 Compliance with Laws.
Each Loan Party 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 8.1.10 if any failure to comply with any Law would not constitute a
Material Adverse Change, including without limitation, if such failure to comply
would not result in fines, penalties, remediation costs, other similar
liabilities or injunctive relief which in the aggregate would not constitute a
Material Adverse Change.
8.1.11 Use of Proceeds.
The Loan Parties will use the Letters of Credit and the
proceeds of the Loans only for (i) a portion of the purchase price relating to
the acquisition under the Stock Purchase Agreement and the Asset Acquisition
Agreement, and (ii) general corporate purposes and for working capital. The Loan
Parties shall not use the Letters of Credit or the proceeds of the Loans for any
purposes which contravenes any applicable Law or any provision hereof.
8.1.12 Further Assurances.
Each Loan Party shall, from time to time, at its expense,
faithfully preserve and protect the Agent's Lien on and Prior Security Interest
in the Collateral as a continuing (i) first priority perfected Lien with respect
to the Revolver Primary Collateral and (ii) junior priority perfected Lien with
respect to the Term Collateral, in each case subject only to Permitted Liens,
and shall do such other acts and things as the 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.
8.1.13 Subordination of Intercompany Loans.
Except as otherwise provided in the Intercompany
Subordination Agreement, each Loan Party agrees that any and all Indebtedness,
loans or advances now owed or hereafter incurred by any Loan Party to any other
Loan Party is subordinated to the prior payment in full of the Loans and that
all rights to receive any payments on such Indebtedness in bankruptcy or
otherwise shall constitute collateral security for the Loans and the Banks shall
be entitled to vote any and all rights associated with such Indebtedness.
8.1.14 Compliance with Term Loan Agreement.
The Loan Parties shall comply with each of the terms of the
Term Loan Agreement.
8.1.15 Maintenance of Prior Security Interest.
The Loan Parties shall cause the Collateral Agent for the
benefit of the Banks to have a first priority security interest in all of the
Collateral of each Loan Party, subject only to Permitted Liens and agree to
cooperate with the Banks and perform all acts reasonably requested by the Banks
to maintain and perfect such first priority security interest subject to
Permitted Liens.
8.1.16 Single Purpose Entities.
(i) The Borrower will continue to be a duly formed and existing
limited liability company and a Single Purpose Entity. The Borrower
will continue to be, duly qualified as a limited liability company, in
each jurisdiction in which such qualification may be necessary for the
conduct of its business. Each Subsidiary of the Borrower at all times
will continue to be duly qualified as a limited liability company,
partnership or corporation in each jurisdiction in which such
qualification is necessary for the conduct of its business.
(ii) The Borrower will continue to comply and each other Loan
Party will comply with the provisions of its organizational documents
and the laws of its jurisdiction of formation relating to limited
liability companies (or other business entities).
(iii) All formalities regarding the existence of the Borrower as
a Single Purpose Entity will be observed and all formalities regarding
the existence of each other Loan Party will be observed.
(iv) The Borrower will accurately maintain, and each other Loan
Party will accurately maintain its financial statements, accounting
records and limited liability company documents, separate from those
of any other Person. The Borrower and the other Loan Parties, taken as
a whole, will maintain separate books, records, resolutions and
agreements. Borrower and each other Loan Party will not commingle its
assets with those of any member of the Parent Group. The Borrower and
each other Loan Party will continue to accurately maintain, its own
bank accounts, payroll and separate books of account. The Borrower and
each other Loan Party will not commingle its funds or assets with
those of any other entity, other than each other, and will hold its
assets in its own name.
(v) The Borrower and the other Loan Parties, taken as a whole,
will continue to pay, their own liabilities from their own separate
assets.
(vi) The Borrower will not engage in any business unrelated to
acting as the Borrower hereunder which is inconsistent with or in
violation of this Agreement.
(vii) No Loan Party other than the Borrower will have any assets
other than those related to coal mining operations. The Borrower will
not have any assets other than those related to coal mining operations
and its interests in the Subsidiaries. The Borrower and each other
Loan Party will not engage in, seek or consent to any dissolution,
winding up, liquidation, consolidation, merger (other than as
contemplated in this Agreement), asset sale (other than as
contemplated in this Agreement), transfer of membership interest of
the Borrower or transfer partnership interest, membership interest or
stock of a Loan Party, or amendment of the operating agreement or
articles of incorporation of the Borrower or any other Loan Party
(other than as expressly permitted by this Agreement).
(viii) The Parent shall remain the sole economic member of the
Borrower.
(ix) The Borrower, without the unanimous consent of all holders
of all limited liability interests in the Borrower and all members of
the board of managers of the Borrower including the Independent
Manager, shall not file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings with respect to itself or
to any other entity in which it has a direct or indirect legal or
beneficial ownership interest, dissolve, liquidate, consolidate,
merge, or sell all or substantially all of its assets or any other
entity in which it has a direct or indirect legal or beneficial
ownership interest, engage in any other business activity, or amend
its organizational documents
(x) No Loan Party other than the Borrower, without the unanimous
consent of all directors (including at least one Independent Director)
of such Loan Party, shall file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings with respect to itself or
to any other entity in which it has a direct or indirect legal or
beneficial ownership interest, dissolve, liquidate, consolidate,
merge, or sell all or substantially all of its assets or any other
entity in which it has a direct or indirect legal or beneficial
ownership interest, engage in any business activity other than its
mining-related business, or amend its organizational documents.
(xi) The Borrower and each other Loan Party will identify itself,
in all dealings with the public, under the Borrower's or such other
Loan Party's own name and as a separate and distinct entity other than
in connection with any other Loan Party. The Borrower and each other
Loan Party will not identify itself, as being a division of any member
of the Parent Group. The Borrower and each of the other Loan Parties
will not identify, any member of the Parent Group as being a division
of the Borrower or such other Loan Party. The Borrower and each other
Loan Party will not fail to correct any known misunderstanding
regarding the separate identity of such entity. The Borrower and each
other Loan Party will conduct its business in its own name.
(xii) The Borrower and the Loan Parties, taken as a whole, will
continue to be adequately capitalized in light of the nature of their
business.
(xiii) Except as expressly permitted by Section 8.2.1 and 8.2.3,
neither the Borrower nor any other Loan Party will assume or
guarantee, the liabilities of any other Persons, except Guaranties of
the Indebtedness hereunder and under the Term Loan Agreement. Neither
the Borrower nor any other Loan Party will acquire obligations or
securities of any other Persons except the obligations and/or
securities of (a) any Subsidiary of the Borrower or (b) any entity
merged with the Borrower or any Subsidiary of the Borrower. Except as
expressly permitted by Section 8.2.4, neither the Borrower nor any
other Loan Party will make, loans or advances to any Person. The
Borrower will not pledge its assets for the benefit of any other
Person or entity, except (i) in favor of the Collateral Agent for the
benefit of the Banks and the Term Lenders and (ii) Permitted Liens.
(xiv) Except for the Management Agreement and as expressly
permitted by Section 8.2.8, neither the Borrower nor any other Loan
Party will enter into or be a party to any transaction with any member
of the Parent Group, except in the ordinary course of business of and
on terms which are no less favorable to the Borrower and/or such other
Loan Party than would be obtained in a comparable arm's length
transaction with an unrelated third party. The exception of the
Management Agreement from the preceding sentence shall not be deemed
to imply that the Management Agreement does not comply with the
requirements of the sentence.
(xv) Except as expressly permitted by Sections 8.2.1 and 8.2.3,
the Borrower will not incur any Indebtedness other than the
Indebtedness to the Agent and the Banks under the Loan Documents and
to the Term Lenders under the Term Loan Agreement.
(xvi) The Borrower and each other Loan Party will allocate fairly
and reasonably any overhead for shared office space and use separate
stationery, invoices and checks.
(xvii) The Borrower and each other Loan Party will act and
refrain from acting in such a way that each of the "assumptions of
fact" made in the non-consolidation opinion of Hale and Dorr LLP of
even date herewith will continue to be true and correct in all
material respects.
8.1.17 Maintenance of Permits.
The Borrower shall maintain all the Required Mining Permits
in full force and effect in accordance with their terms.
8.1.18 Transfer of Permits.
With respect to WECO and Northwestern, the Loan Parties shall
assure the continuing full force and effect of all material permits, and with
respect to the asset purchase, the Loan Parties shall assure continuing coal
mining and related operations of the former Knife River Corporation coal mining
operations as authorized immediately prior to the Loan Parties' acquisition of
its interests in the Real Property either under the existing material permits or
pursuant to transfer of the existing material permits or issuance of new
permits, and in that regard, to the extent any material permit has not been
transferred to the Borrower by the Closing Date, the Borrower shall use its best
efforts to obtain the transfer of all such permits as soon as possible. In the
event any of the permits cannot be transferred or assigned to the Borrower, the
Borrower or such Loan Party shall promptly apply for and diligently pursue its
own permits to replace the non-transferable permits. Schedule 8.1.18 sets forth
a true and complete list of all material permits not transferred to the Borrower
or the appropriate Loan Party on or before the Closing Date.
8.1.19 Subordination of Management Fees; Payment of Management Fees.
The Borrower shall cause any fees or charges, of whatever
nature, payable by the Loan Parties to any member of the Parent Group, including
without limitation, in connection with the management of the operations of the
Borrower to be subordinated to the payment of the Loans, with the subordination
in the case of payments to the Parent to be pursuant to the Management Fee
Subordination Agreement and with the subordination in the case of payments to
any other Affiliate of the Borrower to be subordinated to the Obligations, with
the terms of such subordination to be satisfactory to the Required Banks. The
Loan Parties agree that the payment of any fees or charges to the Parent or any
other member of the Parent Group and subordinated in accordance with the
preceding sentence may be made by the Loan Parties only if such payments are in
accordance with the following: (i) prior to and after giving effect to the
payment thereof, no Event of Default or Potential Default is in existence; (ii)
the payments consist solely of Management Fee plus Third Party Services
Payments; and (iii) such payments shall be otherwise permitted by and in
accordance with the Management Fee Subordination Agreement.
8.1.20 Maintenance of Coal Supply Contracts, Coal Leases.
Except for Permitted Modifications, the Borrower shall
maintain and be in compliance at all times with the Coal Supply Contracts and
the Coal Leases which are in effect from time to time and shall (i) perform all
of its obligations under the Coal Supply Contracts and the Coal Leases and will
enforce the performance by the other parties thereto of all of their obligations
under the Coal Supply Contracts and Coal Leases or any other document or
agreement related thereto and (ii) not terminate, amend, or modify, or waive
compliance with the terms and conditions of, any of the Coal Supply Contracts or
Coal Leases. All Permitted Modifications shall be disclosed in writing to the
Banks promptly upon the occurrence thereof.
8.1.21 Purchase Price adjustments.
On the closing under the Acquisition Documents, which shall
occurred on or before May 30, 2001, unless extended by the Banks in their sole
discretion, the Company shall have received a cash equity contribution of at
least 24.15% of the total net purchase price after projected post-closing
adjustments for the contemplated acquisitions under the Asset Acquisition
Agreement, as the same may be further adjusted in accordance with the terms
thereof.
If after the final determination of the post-closing purchase
price adjustment (as opposed to the projected post-closing adjustments) it is
determined that the final net purchase price after taking into account the final
post-closing purchase price adjustments, is greater than (i) $127,500,000 under
the Stock Purchase Agreement or (ii) $26,500,000 under the Asset Acquisition
Agreement, the amount that the final net purchase price exceeds the limits set
forth in (i) or (ii) above shall be immediately paid by the Parent to the
Borrower as an additional cash equity contribution; provided, however that if
the Parent does not immediately pay such amount to the Borrower the amount will
be deducted from the Company's Share of the Surplus Cash Flow (as such term is
defined in the Term Loan Agreement). Notwithstanding anything contained herein
to the contrary, all monies remitted by Entech, Inc. under the Stock Purchase
Agreement as a post-closing purchase price adjustment shall be paid to directly
to the Borrower and together with any amounts received by the Borrower and
representing payment by the seller under the Asset Acquisition Agreement or the
Stock Purchase Agreement of a purchase price adjustment shall be promptly
applied to reduce the principal balance of the Revolving Credit Loans then
outstanding.
8.2 Negative Covenants.
The Loan Parties, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings 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 Loan Parties shall comply with the
following negative covenants:
8.2.1 Indebtedness.
Each of the Loan Parties 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) Indebtedness under the Term Loan Agreement, provided that
the maximum principal amount of loans and extensions of credit
provided therein shall be limited to $120,000,000 outstanding at any
time;
(iii) Existing Indebtedness as set forth on Schedule 8.2.1
(including any extensions or renewals thereof), provided there is no
increase in the amount thereof or other significant change in the
terms thereof unless otherwise specified on Schedule 8.2.1;
(iv) Indebtedness of the Loan Parties (a) secured by Purchase
Money Security Interests or (b) consisting of capital leases, provided
that the maximum amount of Indebtedness under this subclause (iv)
shall not exceed at one time outstanding the aggregate principal
amount of $5,000,000 through the period ending December 31, 2002;
$7,500,000 through the period ending December 31, 2003; and
$10,000,000 through the period ending December 31, 2004 and, in the
event the Revolving Credit Commitments are extended without any
further amendment to this Section 8.2.1, $12,500,000 thereafter;
(v) Indebtedness of a Loan Party to another Loan Party which is
subordinated in accordance with the provisions of Section 8.1.13
[Subordination of Intercompany Loans];
(vi) Guaranties by the Borrower or any Subsidiary of the Borrower
permitted pursuant to Section 8.2.3 hereof;
(vii) Indebtedness secured by Permitted Liens; and
(viii) Indebtedness with respect to deposits or reclamation or
other bonds incurred in the ordinary course.
8.2.2 Liens.
Each of the Loan Parties 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 property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except Permitted Liens.
8.2.3 Guaranties.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time, directly or indirectly, become or be liable
in respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except for
Guaranties of Indebtedness of the Loan Parties permitted hereunder including
Guaranties by the Loan Parties of Indebtedness arising under the Term Loan
Agreement and for Guaranties of obligations not prohibited hereunder.
8.2.4 Loans and Investments.
Each of the Loan Parties 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, 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 such Loan Party's or such Subsidiary's business;
(ii) advances to employees to meet expenses incurred by such
employees in the ordinary course of business;
(iii) Permitted Investments; and
(iv) loans, advances and investments in or to other Loan Parties.
8.2.5 Dividends and Related Distributions.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, make or pay, or agree to become or remain liable to make
or pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its shares of
capital stock, partnership interests or limited liability company interests on
account of the purchase, redemption, retirement or acquisition of its shares of
capital stock, partnership interests or limited liability company interests (or
warrants, options or rights therefor), partnership interests or limited
liability company interests, except that, so long as no Potential Default or
Event of Default is in existence or would result therefrom, the Borrower may (a)
make distributions to the Parent as and to the extent permitted in Section
9.1(m) of the Term Loan Agreement, and (b) pay the Management Fee to the Parent
to the extent permitted under Section 8.1.19. The Borrower shall not and shall
not permit any of its Subsidiaries to enter into any contract or agreement which
restricts in any manner the payment by Borrower's Subsidiaries of dividends and
distributions to the Borrower or any other Loan Party.
8.2.6 Liquidations, Mergers, Consolidations, Acquisitions.
Except for the acquisition of Northwestern and WECO pursuant
to the Stock Purchase Agreement and the acquisitions by WCCO-KRC Acquisition
Corp. and Dakota Westmoreland Corporation pursuant to the Asset Acquisition
Documents, each of the Loan Parties 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 any Loan Party other than the Borrower may consolidate or merge
into another Loan Party which is wholly-owned by one or more of the other Loan
Parties.
8.2.7 Dispositions of Assets or Subsidiaries.
Each of the Loan Parties 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 or 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 such Loan Party), except:
(i) transactions involving the sale of inventory in the ordinary
course of business;
(ii) any sale, transfer or lease of assets in the ordinary course
of business which are no longer necessary or required in the conduct
of such Loan Party's or such Subsidiary's business and so long as such
assets do not comprise more than 5% in any calendar year of the assets
of the Borrower and its Subsidiaries taken as a whole;
(iii) any sale, transfer or lease of assets by any wholly owned
Subsidiary of such Loan Party to another Loan Party;
(iv) any sale, transfer or lease of assets in the ordinary course
of business which are replaced by substitute assets acquired or leased
within the parameters of Section 8.2.16 [Capital Expenditures and
Leases], provided such substitute assets are subject to the Banks'
Prior Security Interest;
(v) any sale, transfer or lease of assets, other than those
specifically excepted pursuant to clauses (i) through (iv) above,
which is approved by the Required Banks if such assets are not subject
to a first priority Lien in favor of the Term Lenders;
(vi) the transfer of the Ancillary Interests on or before the
date of closing of the Stock Purchase Agreement and the Asset
Acquisition Agreement, as the case may be, to one or more members of
the Parent Group; or
(vii) assets sold, transferred or leased during the term of this
Agreement in an amount up to 10% of the Loan Parties' Net Tangible
Assets (as defined under GAAP) as reflected on the opening balance
sheet of Loan Parties prepared in accordance with GAAP and in
connection with the filing by the Parent of a current report on Form
8-K relating to the completion of the transactions under the Stock
Purchase Agreement and/or Asset Acquisition Agreement.
8.2.8 Affiliate Transactions.
Each of the Loan Parties 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 any
Affiliate of any Loan Party or other Person) without the prior written consent
of the Required Banks, unless such transaction (i) is not otherwise prohibited
by this Agreement, (ii) is entered into upon fair and reasonable arm's-length
terms and conditions which are fully disclosed to the Agent, (iii) constitutes a
Permitted Affiliate Transaction, and (iv) is in accordance with all applicable
Law.
8.2.9 Subsidiaries, Partnerships and Joint Ventures.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, own or create directly or indirectly any Subsidiaries
other than (i) any Subsidiary which has joined this Agreement as Guarantor on
the Closing Date; and (ii) any Subsidiary formed after the Closing Date which
joins this Agreement as a Guarantor pursuant to Section 11.18 [Joinder of
Guarantors], provided that the Required Banks shall have consented to such
formation and joinder and that such Subsidiary and the Loan Parties, as
applicable, shall grant and cause to be perfected first priority Liens to the
Collateral Agent for the benefit of the Banks in the assets held by, and stock
of or other ownership interests in, such Subsidiary. Each of the Loan Parties
shall not become or agree to (1) become 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, (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, or (3) become a joint
venturer or hold a joint venture interest in any joint venture.
8.2.10 Continuation of or Change in Business.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, engage in any material business other than its business
of owning and operating coal mine facilities associated with the Coal Reserves
(as the same may be extended or expanded or changes from time to time).
8.2.11 Plans and Benefit Arrangements.
After the Closing, each of the Loan Parties shall not, and
shall not permit any of its Subsidiaries, to do any of the following if the same
could reasonably be expected to result in any substantial obligation to the
Borrower or any of its Subsidiaries or otherwise result in a Material Adverse
Change:
(i) fail to satisfy the minimum funding requirements of ERISA and
the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the Internal Revenue
Service with respect to any Plan;
(iii) engage in a Prohibited Transaction with any Plan, Benefit
Arrangement or Multiemployer Plan;
(iv) permit any Plan to be less than Adequately Funded;
(v) fail to make when due any contribution to any Multiemployer
Plan that the Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer
Plan, or any Law pertaining thereto;
(vi) withdraw (completely or partially) from any Multiemployer
Plan or withdraw (or be deemed under Section 4062(e) of ERISA to
withdraw) from any Multiple Employer Plan;
(vii) terminate, or institute proceedings to terminate, any Plan;
(viii) make any amendment to any Plan with respect to which
security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make all disclosures
and governmental filings required under ERISA or the Internal Revenue
Code.
8.2.12 Fiscal Year.
The Borrower shall not, and shall not permit any Subsidiary
of the Borrower to, change its fiscal year from the twelve-month period
beginning January 1 and ending December 31.
8.2.13 Issuance of Stock.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, issue any additional shares of its capital stock, shares
of beneficial interest, partnership interests, limited liability company
interests or similar ownership interests, or any options, warrants or other
rights in respect thereof.
8.2.14 Changes in Organizational Documents.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, amend in any respect its certificate of incorporation
(including any provisions or resolutions relating to capital stock), certificate
of limited partnership, certificate of formation, limited liability company
agreement or other organizational documents without providing at least twenty
(20) calendar days' prior written notice to the Agent and the Banks and, in the
event such change would be material and adverse to the Banks as determined by
the Agent in its sole discretion, obtaining the prior written consent of the
Banks.
8.2.15 Changes in Material Contracts, Performance under Coal Supply
Contracts.
Each of the Loan Parties shall not and shall not permit any
of its Subsidiaries to materially amend (except for Permitted Modifications),
cancel, terminate, waive or give any consent to any material violation of, or
release any party from its obligations under any of the Coal Supply Contracts or
any of the other material contracts to which it is a party. Each of the Loan
Parties shall supply coal under its respective Coal Supply Contracts solely with
coal mined from the Loan Parties' coal mines and shall not purchase coal or
permit any other Person to supply coal under or service its Coal Supply
Contracts, except for (i) Permitted Affiliate Transactions, and (ii) for the
procurement of coal at the request of a buyer in accordance with the explicit
provisions of the Coal Supply Contract for Colstrip 3 & 4.
8.2.16 Capital Expenditures and Leases.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, make any payments exceeding the amounts indicated on
Schedule 8.2.16 in the aggregate in any fiscal year on account of the purchase
or lease of any assets which are required to be capitalized on the financial
statements of such Loan Party in accordance with GAAP (all such payments
"Capital Expenditures"), and all such Capital Expenditures shall be made under
usual and customary terms and in the ordinary course of business; provided that,
any amounts not expended by the Loan Parties for Capital Expenditures may be
carried forward and used in a subsequent fiscal year.
8.2.17 Minimum Debt Service Coverage Ratio.
The Loan Parties shall not permit the Debt Service Coverage
Ratio, calculated as of the end of each fiscal quarter after the Closing Date
based upon the immediately preceding four fiscal quarters (provided, however,
for periods ending on or before March 31, 2002, in lieu of using the preceding
four fiscal quarters, the above computation shall be determined by annualizing
the Consolidated EBITDA for the period from the Closing Date through the date of
determination), to be less than 1.15 to 1.0.
8.2.18 Maximum Leverage Ratio.
The Loan Parties shall not permit the ratio of Consolidated
Total Indebtedness of the Borrower and its Subsidiaries to Consolidated EBITDA
to exceed the ratio set forth below for the periods specified below, calculated
at the end of each fiscal quarter specified during such period based upon the
immediately preceding four fiscal quarters (provided, however, for periods
ending on or before March 31, 2002, in lieu of using the preceding four fiscal
quarters, the above computation shall be determined by annualizing the
Consolidated EBITDA the period from the Closing Date through the date of
determination):
- ------------------------------------------------------------ -------------------
Period Ratio
- ------------------------------------------------------------ -------------------
Closing Date through December 31, 2001 2.25 to 1.00
- ------------------------------------------------------------ -------------------
January 1, 2002 through December 31, 2003 1.50 to 1.00
- ------------------------------------------------------------ -------------------
January 1, 2004 and thereafter 1.25 to 1.00
- ------------------------------------------------------------ -------------------
8.2.19 Maximum Consolidated Total Indebtedness to Consolidated Total
Capitalization.
The Loan Parties shall not permit the ratio of Consolidated
Total Indebtedness to Consolidated Total Capitalization of the Borrower and its
Subsidiaries, as determined at the end of each fiscal quarter, to exceed the
ratio set forth below.
- ------------------------------------------------------------ -------------------
December 31, 2001 through the fiscal quarter ending .75 to 1.00
September 30, 2002
- ------------------------------------------------------------ -------------------
December 31, 2002 through the fiscal quarter ending .60 to 1.00
September 30, 2003
- ------------------------------------------------------------ -------------------
December 31, 2003 through the fiscal quarter ending .50 to 1.00
September 30, 2004
- ------------------------------------------------------------ -------------------
December 31, 2004 and thereafter .40 to 1.00
- ------------------------------------------------------------ -------------------
8.2.20 Operating Leases.
The Loan Parties shall not enter into or be obligated under
operating leases have aggregate payments per year in excess of the amounts set
forth on Schedule 8.2.20.
8.3 Reporting Requirements.
The Loan Parties, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings 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 Loan
Parties will furnish or cause to be furnished to the Agent and each of the
Banks:
8.3.1 Monthly Financial Statements, Borrowing Base Certificate.
As soon as available and in any event within thirty (30)
calendar days after the end of each calendar month, the Borrower's financial
statements, consisting of a consolidated and consolidating balance sheet as of
the end of such month and related consolidated and consolidating statements of
income, stockholders' equity and cash flows for the month then ended and the
fiscal year through that date, all in reasonable detail and certified (subject
to normal year-end adjustments) by the Chief Executive Officer, President or
Chief Financial Officer of the Borrower as having been prepared in accordance
with GAAP (provided that the failure to provide footnotes shall not be violative
of this Section), consistently applied, and setting forth in comparative form on
a consolidated basis the respective financial statements for the corresponding
date and period in the previous fiscal year. Within ten (10) calendar days after
the end of each month, a Borrowing Base Certificate as of the end of the
immediately preceding month in the form of Exhibit 9.3.1 hereto, appropriately
completed, executed and delivered by an Authorized Officer.
8.3.2 Quarterly Financial Statements.
As soon as available and in any event within fifty (50)
calendar days after the end of each of the first three fiscal quarters in each
fiscal year, financial statements of the Borrower, consisting of a consolidated
and consolidating balance sheet as of the end of such fiscal quarter and related
consolidated and consolidating statements of income, stockholders' equity and
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
(provided that the failure to provide footnotes shall not be violative of this
Section), consistently applied, and setting forth in comparative form on a
consolidated basis the respective financial statements for the corresponding
date and period in the previous fiscal year.
8.3.3 Annual Financial Statements.
As soon as available and in any event within one hundred
thirty-five (135) days after the end of each fiscal year of the Borrower,
financial statements of the Borrower consisting of a consolidated and
consolidating balance sheet as of the end of such fiscal year, and related
consolidated and consolidating statements of income, stockholders' equity and
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 by independent certified public accountants
of nationally recognized standing. The certificate or report of such 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 Loan Parties shall deliver with
such financial statements and certification or report by such independent
certified public accountants a letter of such accountants to the Agent and the
Banks substantially (i) to the effect that, based upon their ordinary and
customary examination of the affairs of the Borrower, performed in connection
with the preparation of such consolidated financial statements, and in
accordance with generally accepted auditing standards, such accountants are not
aware of the existence of any condition or event which constitutes an Event of
Default or Potential Default or, if they are aware of such condition or event,
stating the nature thereof and confirming the Borrower's calculations with
respect to the certificate to be delivered pursuant to Section 8.3.4
[Certificate of the Borrower] with respect to such financial statements and (ii)
to the effect that the Banks are intended to rely upon such accountant's
certification of the annual financial statements and that such accountants
authorize the Loan Parties to deliver such reports and certificate to the Banks
on such accountants' behalf.
8.3.4 Certificate of the Borrower.
Concurrently with the financial statements of the Borrower
furnished to the Agent and to the Banks pursuant to Sections 8.3.2 [Quarterly
Financial Statements] and 8.3.3 [Annual Financial Statements], a certificate
(each a "Compliance Certificate") of the Borrower signed by the Chief Executive
Officer, President or Chief Financial Officer or other responsible officer
(whose position shall be reasonably satisfactory to the Banks) of the Borrower,
in the form of Exhibit 8.3.4, to the effect that, except as described pursuant
to Section 8.3.5 [Notice of Default], (i) the representations and warranties of
the Borrower contained in Section 6 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) and the Loan Parties have performed and complied with all covenants and
conditions hereof, (ii) no Event of Default or Potential Default exists and is
continuing on the date of such certificate, (iii) containing calculations in
sufficient detail to demonstrate compliance as of the date of such financial
statements with all financial covenants contained in Section 8.2 [Negative
Covenants], and (iv) containing a written discussion of management comparing the
financial performance of the Loan Parties against both the annual budget and the
results of operations from the corresponding fiscal quarter in the immediately
preceding fiscal year.
8.3.5 Notice of Default.
Promptly after any officer of any Loan Party has learned of
the occurrence of an Event of Default or Potential Default or that any Person
has given any notice or taken any action with respect to a claimed default
hereunder or under any other Loan Document or that any Person has given any
notice or taken any action with respect to a claimed default of the type
referred to in Section 9.1.5, a certificate signed by the Chief Executive
Officer, President or Chief Financial Officer of such Loan Party setting forth
the details of such Event of Default or Potential Default and the action which
the such Loan Party proposes to take with respect thereto.
8.3.6 Notice of Litigation.
Promptly after any Loan Party has notice of the commencement
thereof, notice of all actions, suits, proceedings or investigations before or
by any Official Body or any other Person against any Loan Party or Subsidiary of
any Loan Party which relate to any material portion of the Collateral, involve a
claim or series of claims in excess of $1,000,000 or which if adversely
determined would constitute a Material Adverse Change.
8.3.7 Certain Events.
Written notice to the Agent:
(i) at least thirty (30) calendar days prior thereto, with
respect to any change in any Loan Party's location of its assets or
principal office from the states and locations set forth in Schedule A
to the Security Agreement.
8.3.8 Budgets, Forecasts, Other Reports and Information.
Promptly upon their becoming available to the Borrower, but
in no event later than the specific time period specified below, if any,:
(i) the annual forecasts or projections of the Borrower and its
Subsidiaries for each fiscal year, to be supplied not later than
January 1 of such fiscal year to which any of the foregoing may be
applicable, and the budget as soon as available,
(ii) all reports including management letters submitted to the
Borrower by independent accountants in connection with any annual,
interim or special audit,]
(iii) all reports, notices or proxy statements generally
distributed by the Borrower to its members on a date no later than the
date supplied to such members,
(iv) all regular, periodic and other reports, including Forms
10-K, 10-Q and 8-K, registration statements and prospectuses, filed by
the Borrower with the Securities and Exchange Commission,
(v) a copy of any order in any proceeding to which the Borrower
or any of its Subsidiaries is a party issued by any Official Body,
except for orders of the type that are typically received by mining
companies with respect to violations of the Law occurring in
connection with mining activities which have no likelihood of
materially disrupting the projected mining operations of the Loan
Parties or resulting in any substantial obligation to the Loan Parties
or of otherwise constituting or giving rise to a Material Adverse
Change,
(vi) within 10 Business Days of the end of each calendar month, a
report signed by an Authorized Officer which discloses for each Loan
Party for such immediately preceding calendar month (a) the volume of
coal produced (in tons) by such Loan Party, (b) the volume of coal
sole by such Loan Party, and (c) the price per ton obtained for such
coal sold, and
(vii) such other reports and information as any of the Banks may
from time to time reasonably request. The Borrower shall also notify
the Banks promptly of the enactment or adoption of any Law which may
result in a Material Adverse Change.
8.3.9 Notices Regarding Plans and Benefit Arrangements.
8.3.9.1 Certain Events.
Promptly after a Responsible Officer becoming aware of any of
the following, a written notice setting forth the nature of the event; when
known, any action taken or threatened by a governmental agency or other adverse
party; and the action, if any, that the Borrower or an other member of the ERISA
Group proposes to take with respect thereto:
(i) with respect to any Plan, any Reportable Event; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Borrower or any member of the ERISA Group of a notice from a
Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
reasonably be expected to result in the incurrence of any
liability by the Borrower or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of
the Internal Revenue Code relating to employee benefit plans, or
in the imposition of any Lien on any of the rights, properties or
assets of the Borrower or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities
or Liens then existing, could reasonably be expected to
constitute or result in a substantial obligation to the Borrower
or other member of the ERISA Group or otherwise result in a
Material Adverse Change.
8.3.9.2 Annual Reports.
Promptly after receipt thereof, at the request of the Agent
or any Bank, copies of 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.
8.3.9.3 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.
8.3.10 Information as to certain Price Adjustments.
If any Price Determination Event shall arise under any
material Coal Supply Contract, the Borrower or the relevant Loan Party shall
provide (i) notice thereof at least 30 days prior to the effectiveness of any
adjustment or potential adjustment under such contract to each holder,
identifying such contract and setting forth the price currently payable
thereunder and the basis on which such adjustment is or may be made, (ii) such
pertinent information as any such holder may reasonably request as to the
computation of such price adjustment or potential price adjustment and the
impact thereof on the business and cash flows of the Borrower and the other Loan
Parties, and (iii) not later than the third Business Day following the
effectiveness of any such adjustment, confirmation of the amount thereof and the
manner in which it was determined; provided, however that nominal price
adjustments in the ordinary course of business based on the quality of the coal
furnished pursuant to such contracts need not be disclosed under this Section .
The term "Price Determination Event" shall mean, with respect to any Coal Supply
Contract, (i) any scheduled "re-opener" of the price payable under such contract
(other than the quarterly price adjustment under the Coyote Plant coal sales
contract), (ii) any amendment to or interpretation of such contract that could
reasonably be expected to alter negatively, from the Loan Party's perspective,
and substantially the price payable to the Loan Party thereunder, and (iii) any
arbitration or judicial proceeding involving the price payable under such
contract.
8.3.11 Single Purpose Entity Status.
Concurrently with the annual financial statements required to
be furnished pursuant to Section 8.3.3 in respect of each fiscal year, a written
report substantially in the format of Exhibit 7.1(1) hereto, signed by the
Secretary and a Senior Financial Officer of the Borrower, discussing the actions
taken by the Borrower and its Subsidiaries during such fiscal year in order to
assure compliance with Section 8.1.16 [Single Purpose Entities], setting forth,
with respect to each of subdivisions (i) through (xvi) of such Section, that its
and their businesses, affairs, books and records have been conducted and
maintained during such fiscal year in compliance with the separateness
covenants, agreements, terms and conditions set forth in each such subdivision,
and, in the event of any failure to have complied with any such covenant,
agreement, term or condition, specifying in reasonable detail the control
imposed or other actions taken or to be taken by the Borrower with respect
thereto.
9. DEFAULT
9.1 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):
9.1.1 Payments Under Loan Documents.
The Borrower (i) shall fail to pay any principal of any Loan
(including scheduled installments, mandatory prepayments or the payment due at
maturity), Reimbursement Obligation or Letter of Credit Borrowing after such
principal amount becomes due or (ii) shall fail to pay for more than five (5)
Business Days any interest on any Loan , Reimbursement Obligation or Letter of
Credit Borrowing or any other amount owing hereunder or under the other Loan
Documents after such interest or other amount becomes due in accordance with the
terms hereof or thereof;
9.1.2 Breach of Warranty.
Any representation or warranty made in writing by or on
behalf of a Loan Party or by any officer of a Loan Party in any Loan Document or
in any writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date as of
which made;
9.1.3 Breach of Negative Covenants or Visitation Rights.
Any of the Loan Parties shall default in the compliance with
or performance of any covenant contained in Section 8.1.6 [Visitation Rights] or
Section 8.2 [Negative Covenants];
9.1.4 Breach of Other Covenants.
A Loan Party defaults in the performance of or compliance
with any term contained herein (other than those referred to in Sections 9.1.1,
9.1.2 and 9.1.3 of this Section 9) or in any other term of any Loan Documents
and such default is not remedied within 30 days after the earlier of (i) a
Responsible Officer obtaining actual knowledge of such default or (ii) the
Company receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to refer
specifically to this paragraph (d) of Section 11), or the Guaranty Agreement or
any other Security Document fails to be in full force and effect;
9.1.5 Defaults in Other Agreements or Indebtedness, or Material
Contracts.
(i) (i) any "Event of Default" shall occur or exist under the
Term Agreement or any of the other Term Loan Documents, or (ii) the
Borrower or any Subsidiary of the Borrower is in default (as principal
or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount of at least $500,000
beyond any period of grace provided with respect thereto, or (iii) the
Borrower or any Subsidiary of the Borrower is in default in the
performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$500,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness described in clauses (ii) and
(iii) has been declared due and payable before its stated maturity or
before its regularly scheduled dates of payment, or (iv) as a
consequence of the occurrence or continuation of any event or
condition (other than the passage of time or the right of the holder
of Indebtedness to convert such Indebtedness into equity interests),
the Borrower or any Subsidiary of the Borrower has become obligated to
purchase or repay Indebtedness before its regular maturity or before
its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $500,000, or (v) the earlier to occur of
(1) a default or event of default (or right to cancel or terminate
such agreement prior to its stated term) by any of the Loan Parties
shall occur at any time under the terms of any Coal Supply Contract
(upon occurrence of any such event, a "Defaulted Agreement") and such
breach, default or event of default could result in cancellation or
termination of the Defaulted Agreement prior to its stated term, or
(2) the cancellation or termination of any Defaulted Agreement or (vi)
a default or event of default (or a right to cancel or terminate such
agreement prior to its stated term) shall occur at any time under the
terms of any one or more of the Coal Leases which is reasonably likely
to cause a Material Adverse Change;
9.1.6 Final Judgments or Orders.
A final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 (net of insurance coverage, provided, that
(i) the insurance carrier has acknowledged in writing its obligation to satisfy
such judgment or judgments and (ii) such insurance carrier is solvent and has a
long term debt rating which is at least "A2" by Moody's or Standard & Poor's)
are rendered against one or more of the Borrower and its Subsidiaries and which
judgments are not, within 45 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 45 days after the expiration
of such stay, and in either case they do not affect the Collateral or, in the
aggregate, materially impair the ability of any Loan Party to perform its
Obligations hereunder or under the other Term Loan Documents; or
9.1.7 Events Relating to Plans and Benefit Arrangements.
Any of the following events occur, involving the Borrower or
any member of the ERISA Group, which event, alone or together with any other
such event(s), would, or would reasonably be expected to, result in a
substantial obligation to the Borrower or any of its Subsidiaries or otherwise
result in a Material Adverse Change: (i) any Plan shall fail to satisfy the
minimum funding standards of ERISA or the Internal Revenue Code for any plan
year or part thereof or a waiver of such standards or extension of any
amortization period is sought to be granted under section 412 of the Internal
Revenue Code; (ii) the Plans, considered in the aggregate, shall cease to be
Adequately Funded; (iii) failure to make any contribution when due to a
Multiemployer Plan; (iv) a notice of intent to terminate shall have been or is
reasonably expected to be filed with the PBGC with respect to any Plan; (v) a
Reportable Event which the Agent determines in good faith to constitute grounds
under which the PBGC is reasonably expected to terminate a Plan; (vi) the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have given notice
that a Plan may become the subject of such proceedings; (vii) adoption of an
amendment to a Plan with respect to which security is required under ERISA
section 307; (viii) partial or complete withdrawal under ERISA section 4062(e),
from a Multiple Employer Plan or (ix) partial or complete withdrawal from a
Multiemployer Plan.
9.1.8 Change of Control.
There shall have occurred (a) any Loan Parties' Change in
Control or Control Event with respect to the Borrower or any of the Loan Parties
or (b) any Parent Change in Control with respect to the Parent.
(i) "Loan Parties' Change in Control" shall be deemed to have
occurred if there is any change subsequent to the Closing in the
persons (as such term is used in section 13(d) and section 14(d)(2) of
the Exchange Act as in effect on the date of the Closing) who are
direct owners of an equity interest in the Company or any of the Loan
Parties, subsequent to the Closing Date.
(ii) "Control Event" means (A) the execution by the Borrower or
any of its Subsidiaries or Affiliates of any agreement with respect to
any proposed transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be expected to
result in an Loan Parties' Change in Control, or (B) the execution of
any written agreement which, when fully performed by the parties
thereto, would result in an Loan Parties' Change in Control.
(iii) "Parent Change in Control" shall be deemed to have occurred
if (A) any person or group of persons (within the meaning of Sections
13(d) or 14(a) of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of capital stock or other securities of the Parent which are
entitled to cast more than 40% of the total votes which may be cast in
an election of directors of the Parent; or (B) within any period of
twelve (12) consecutive calendar months, a majority of the board of
directors of the Parent shall be comprised of persons other than those
individuals who were directors of the Parent on the first day of such
period together with any individuals who were nominated for election
as directors of the Parent by those individuals who were directors of
the Parent on the first day of such period.
9.1.9 Involuntary Proceedings.
a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Borrower or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Borrower or any of
its Subsidiaries, or any such petition shall be filed against the Borrower or
any of its Subsidiaries and such order or petition shall not be dismissed within
60 days; or
9.1.10 Voluntary Proceedings.
the Borrower or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing.
9.1.11 Default or Non-performance by Manager.
The manager shall default under or otherwise fail to perform
any of its obligations or duties under the Management Agreement.
9.2 Consequences of Event of Default.
9.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings.
If an Event of Default specified under Sections 9.1.1 through
9.1.8 shall occur and be continuing, the Banks and the Agent shall be under no
further obligation to make Loans or issue Letters of Credit, as the case may be,
and the Agent may, and upon the request of the Required Banks, shall (i) by
written notice to the Borrower, declare the unpaid principal amount of the Notes
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 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 (ii) require the Borrower to, and the Borrower
shall thereupon, deposit in a non-interest-bearing account with the 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 Agent
and the Banks, and grants to the 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 Agent shall
return such cash Collateral to the Borrower; and
9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section 9.1.9
[Involuntary Proceedings] or 9.1.10 [Voluntary Proceedings] shall occur, the
Banks shall be under no further obligations 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
9.2.3 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 10.13 [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 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 Agent; and
9.2.4 Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing, and
whether or not the Agent shall have accelerated the maturity of Loans pursuant
to any of the foregoing provisions of this Section 9.2, the Agent or any Bank,
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 the Agent or such Bank;
and
9.2.5 Application of Proceeds.
From and after the date on which the Agent has taken any
action pursuant to this Section 9.2 and until all Obligations of the Loan
Parties have been paid in full, any and all proceeds received by the Agent from
any sale or other disposition of the Collateral, or any part thereof, or the
exercise of any other remedy by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the Banks for out-of-pocket
costs, expenses and disbursements, including reasonable attorneys' and
paralegals' fees and legal expenses, incurred by the 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 made by the Banks or any one of them or
the Agent for the reasonable maintenance, preservation, protection or
enforcement of, or realization upon, the Collateral, 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 Agent may determine
in its discretion; and
(iii) the balance, if any, as required by Law.
9.2.6 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 (including the Mortgage),
the Agent shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by Law.
The Agent may, and upon the request of the Required Banks shall, exercise all
post-default rights granted to the Agent and the Banks under the Loan Documents
or applicable Law.
9.3 Notice of Sale.
Any notice required to be given by the Agent of a sale,
lease, or other disposition of the Collateral or any other intended action by
the Agent, if given ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to the Borrower.
10. THE AGENT
10.1 Appointment.
Each Bank hereby irrevocably designates, appoints and
authorizes PNC Bank to act as Agent for such Bank under this Agreement and to
execute and deliver or accept on behalf of each of the Banks the other Loan
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of a Note shall be deemed irrevocably to authorize, the 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 Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. PNC Bank agrees to act as
the Agent on behalf of the Banks to the extent provided in this Agreement.
10.2 Delegation of Duties.
The Agent may perform any of its duties hereunder by or
through agents or employees (provided such delegation does not constitute a
relinquishment of its duties as Agent) and, subject to Sections 10.5
[Reimbursement of Agent by Borrower, Etc.] and 10.6, 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.
10.3 Nature of Duties; Independent Credit Investigation.
The Agent shall have no 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 Agent shall be mechanical and
administrative in nature; the Agent shall not 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 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 "agent" in this Agreement with reference to the Agent 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 the Agent has not made any representations
or warranties to it and that no act by the 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 Agent to any Bank; (ii) that it has made
and will continue to make, without reliance upon the 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 the Agent shall have no 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 or at any time or times thereafter.
10.4 Actions in Discretion of Agent; Instructions From the Banks.
The 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 Agent's rights, powers or discretion herein, provided that the Agent
shall not be required to take any action which exposes the 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 Agent
shall have authority, in its 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
10.6 [Exculpatory Provisions, Etc.]. Subject to the provisions of Section 10.6,
no Bank shall have any right of action whatsoever against the Agent as a result
of the 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 Agent.
10.5 Reimbursement and Indemnification of Agent by the Borrower.
The Borrower unconditionally agrees to pay or reimburse the
Agent and hold the Agent harmless against (a) liability for the payment of all
reasonable out-of-pocket costs, expenses and disbursements, including fees and
expenses of counsel (including the allocated costs of staff counsel), appraisers
and environmental consultants, incurred by the 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 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 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
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.
In addition, the Borrower agrees to reimburse and pay all reasonable
out-of-pocket expenses of the Agent's regular employees and agents engaged
periodically to perform audits of the Loan Parties' books, records and business
properties.
10.6 Exculpatory Provisions; Limitation of Liability.
Neither the Agent nor any of its 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 Agent or any of their respective
Subsidiaries against the 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 each of the Loan Parties, (for itself and on behalf
of each of its Subsidiaries), the Agent and each Bank hereby waive, releases and
agree 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 Agent hereunder
or given to the Agent for the account of or with copies for the Banks, the Agent
and each of its directors, officers, employees, agents, attorneys or Affiliates
shall not have any duty or responsibility to provide any Bank with an 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 Agent or any of its directors,
officers, employees, agents, attorneys or Affiliates.
10.7 Reimbursement and Indemnification of Agent by Banks.
Each Bank agrees to reimburse and indemnify the 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,
costs, expenses or disbursements, including attorneys' fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the 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 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 Agent's gross negligence or
willful misconduct, 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 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 Agent in connection with the Agent's periodic audit of the Loan Parties'
books, records and business properties.
10.8 Reliance by Agent.
The 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 Agent. The
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.
10.9 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Potential Default or Event of Default unless the Agent 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."
10.10 Notices.
The Agent shall 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 Agent shall
promptly notify the Borrower and the other Banks of each change in the Base Rate
and the effective date thereof.
10.11 Banks in Their Individual Capacities; Agent in its Individual
Capacity.
With respect to its Revolving Credit Commitment, and the
Revolving Credit 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 Agent shall have
the same rights and powers hereunder as any other Bank and may exercise the same
as though it were not the Agent, and the term "Bank" and "Banks" shall, unless
the context otherwise indicates, include the Agent in its individual capacity.
PNC Bank and its Affiliates and each of the Banks and their respective
Affiliates may, without liability to account, except as prohibited herein, make
loans to, issue letters of credit for the account of, acquire equity interests
in, accept deposits from, discount drafts for, act as trustee under indentures
of, and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with, the Loan Parties and their Affiliates, in
the case of the Agent, as though it were not acting as Agent hereunder and in
the case of each Bank, as though such Bank were not a Bank hereunder, in each
case without notice to or consent of the other Banks. The Banks acknowledge
that, pursuant to such activities, the Agent or its Affiliates may (i) receive
information regarding the Loan Parties or any of their Subsidiaries or
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Loan Parties or such Subsidiary or Affiliate) and
acknowledge that the Agent shall be under no 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.
10.12 Holders of Notes.
The 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 Agent. 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.
10.13 Equalization of Banks.
The Banks and the holders of any participations in any Notes
agree among themselves that, with respect to all amounts received by any Bank or
any such holder for application on any Obligation hereunder or under any Note 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 Banks and such holders
in proportion to their interests in payments under the Notes, except as
otherwise provided in Section 4.4.3 [Agent's and Bank's Rights], 5.4.2
[Replacement of a Bank] or 5.6 [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 under the Notes, 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.
10.14 Successor Agent.
The Agent (i) may resign as Agent or (ii) shall resign if
such resignation is requested by the Required Banks (if the Agent is a Bank, the
Agent's Loans and its Commitment shall be considered in determining whether the
Required Banks have requested such resignation) or required by Section 5.4.2
[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 the Agent shall
resign under this Agreement, then either (a) the Required Banks shall appoint
from among the Banks a successor agent for the Banks, subject to the consent of
the Borrower, such consent not to be unreasonably withheld, or (b) if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following the Agent's notice to the Banks of its resignation, then
the Agent shall appoint, with the consent of the Borrower, such consent not to
be unreasonably withheld, a successor agent who shall serve as Agent until such
time as the Required Banks appoint and the Borrower consents to the appointment
of a successor agent. Upon its appointment pursuant to either clause (a) or (b)
above, such successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent, effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Section 10 shall inure to the
benefit of such former Agent and such 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 an Agent under this Agreement.
10.15 Agent's Fee.
The Borrower shall pay to the Agent a nonrefundable fee (the
"Agent's Fee") under the terms of a letter (the "Agent's Letter") between the
Borrower and Agent, as amended from time to time.
10.16 Availability of Funds.
The Agent may assume that each Bank has made or will make the
proceeds of a Loan available to the Agent unless the 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 Agent actually funds the proceeds of such
Loan to the Borrower (whether using its own funds pursuant to this Section 10.16
or using proceeds deposited with the 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 Agent). The 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 Agent by such Bank, the 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 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.
10.17 Calculations.
In the absence of gross negligence or willful misconduct, the
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 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.
10.18 Beneficiaries.
Except as expressly provided herein, the provisions of this
Section 10 are solely for the benefit of the Agent and the Banks, 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 Agent
shall act solely as agent of the Banks and does 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.
11. MISCELLANEOUS
11.1 Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the 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:
11.1.1 Increase of Commitment; Extension of Expiration Date.
Increase the amount of the Revolving Credit Commitment of any
Bank hereunder or extend the Expiration Date;
11.1.2 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 (excluding the due date of any
mandatory prepayment of a Loan or any mandatory Commitment reduction in
connection with such a mandatory prepayment hereunder except for mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any
other fee payable to any Bank, or reduce the principal amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee payable
to any Bank, or otherwise affect the terms of payment of the principal of or
interest of any Loan, the Commitment Fee or any other fee payable to any Bank;
11.1.3 Release of Collateral or Guarantor.
Except for sales of assets permitted by Section 8.2.7
[Disposition of Assets or Subsidiaries], release any Collateral consisting of
capital stock or other ownership interests of any Loan Party or its Subsidiary
or substantially all of the assets of any Loan Party, any Guarantor from its
Obligations under the Guaranty Agreement or any other security for any of the
Loan Parties' Obligations; or
11.1.4 Miscellaneous.
Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6
[Exculpatory Provisions, Etc.] or 10.13 [Equalization of Banks] or this Section
11.1, 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 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 the Agent in its capacity as Agent or as the
issuer of Letters of Credit shall be effective without the written consent of
the Agent.
11.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the 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 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.
11.3 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 Agent, as to which the Borrower's
Obligations are set forth in Section 10.5 [Reimbursement of Agent By Borrower,
Etc.]) 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 counsel (including allocated costs of staff 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 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 usage of one law firm to represent
the Banks and the Agent 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 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 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.
11.4 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 (except as provided in Section 4.2 [Interest Periods] with
respect to Interest Periods under the Euro-Rate Option) 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, and such extension of time shall not be
included in computing interest or fees, if any, in connection with such payment
or action.
11.5 Funding by Branch, Subsidiary or Affiliate.
11.5.1 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 11.5 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 5.6 [Additional
Compensation in Certain Circumstances] than it would have 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.
11.5.2 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
11.5.2. 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 5.6 [Additional Compensation in Certain Circumstances])
which would otherwise not be incurred.
11.6 Notices.
Any notice, request, demand, direction or other communication
(for purposes of this Section 11.6 only, a "Notice") to be given to or made upon
any party hereto under any provision of this Agreement shall be given or made by
telephone or in writing (which includes means of electronic transmission (i.e.,
"e-mail") or facsimile transmission or by setting forth such Notice on a site on
the World Wide Web (a "Website Posting") if Notice of such Website Posting
(including the information necessary to access such site) has previously been
delivered to the applicable parties hereto by another means set forth in this
Section 11.6) in accordance with this Section 11.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Schedule 1.1(B) hereof or in accordance
with any subsequent unrevoked Notice from any such party that is given in
accordance with this Section 11.6. Any Notice shall be effective:
(i) In the case of hand-delivery, when delivered;
(ii) If given by mail, four days after such Notice is deposited with
the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(iii) In the case of a telephonic Notice, when a party is contacted by
telephone, if delivery of such telephonic Notice is confirmed no later than
the next Business Day by hand delivery, a facsimile or electronic
transmission, a Website Posting or overnight courier delivery of a
confirmatory notice (received at or before noon on such next Business Day);
(iv) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number if the party
sending such Notice receives confirmation of the delivery thereof from its
own facsimile machine;
(v) In the case of electronic transmission, when actually received;
(vi) In the case of a Website Posting, upon delivery of a Notice of
such posting (including the information necessary to access such web site)
by another means set forth in this Section 11.6; and
(vii) If given by any other means (including by overnight courier),
when actually received.
Any Bank giving a Notice to a Loan Party shall concurrently send a copy thereof
to the Agent, and the Agent shall promptly notify the other Banks of its receipt
of such Notice.
11.7 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.
11.8 Governing Law.
Each Letter of Credit and Section 2.9 [Letter of Credit
Subfacility] shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised or amended from time to time,
and to the extent not inconsistent therewith, the internal laws of the State of
New York 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 State of
New York 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.
11.9 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.
11.10 Duration; Survival.
All representations and warranties of the Loan Parties
contained herein or made 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 Agent or the Banks, the
making of Loans, issuance of Letters of Credit, or payment in full of the Loans.
All covenants and agreements of the Loan Parties contained in Sections 8.1
[Affirmative Covenants], 8.2 [Negative Covenants] and 8.3 [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 the Notes, Section 5 [Payments]
and Sections 10.5 [Reimbursement of Agent by Borrower, Etc.], 10.7
[Reimbursement of Agent by Banks, Etc.] and 11.3 [Reimbursement of Banks by
Borrower; Etc.], shall survive payment in full of the Loans, expiration or
termination of the Letters of Credit and termination of the Commitments.
11.11 Successors and Assigns.
(i) This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Agent, the Loan Parties and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights and Obligations hereunder or any interest
herein. Each Bank may, at its own cost, make assignments of or sell
participations in all or any part of its Commitments and the Loans made by
it to one or more banks or other entities, subject to the consent of the
Borrower and the Agent with respect to any assignee, such consent not to be
unreasonably withheld, provided that (1) no consent of the Borrower shall
be required (A) if an Event of Default exists and is continuing, or (B) in
the case of an assignment by a Bank to an Affiliate of such Bank, and (2)
any assignment by a Bank to a Person other than an Affiliate of such Bank
may not be made in amounts less than the lesser of $1,000,000 or the amount
of the assigning Bank's Commitment. In the case of an assignment, upon
receipt by the 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 shall be
adjusted accordingly, and upon surrender of any Note subject to such
assignment, the Borrower shall execute and deliver a new Note to the
assignee in an amount equal to the amount of the Revolving Credit
Commitment assumed by it and a new Revolving Credit Note to the assigning
Bank in an amount equal to the Revolving Credit Commitment retained by it
hereunder. Any Bank which assigns any or all of its Commitment or Loans to
a Person other than an Affiliate of such Bank shall pay to the Agent a
service fee in the amount of $3,500 for each assignment. In the case of a
participation, the participant shall only have the rights specified in
Section 9.2.3 [Set-off] (the participant's rights against such 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 11.1.1 [Increase of Commitment, Etc.], 11.1.2
[Extension of Payment, Etc.], or 11.1.3 [Release of Collateral or
Guarantor]), 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.
(ii) 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 Agent the form of certificate described in Section
11.17 [Tax Withholding Clause] 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 11.12 [Confidentiality].
(iii) 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 Note 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 or the 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.
11.12 Confidentiality.
11.12.1 General.
The 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 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 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 11.11, and
prospective assignees and participants, (iii) to the extent requested by any
bank regulatory authority or, with notice to the Borrower, 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.
11.12.2 Sharing Information With Affiliates of the Banks.
Each Loan Party 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 each of the Loan Parties hereby authorizes each Bank to share any
information delivered to such Bank by such Loan
.Party 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 11.12.1 as if it were a Bank hereunder. Such
Authorization shall survive the repayment of the Loans and other Obligations and
the termination of the Commitments.
11.13 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.
11.14 Agent's or Bank's Consent.
Whenever the 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 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.
11.15 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.
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF NEW YORK COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, 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 SUCH LOAN PARTY AT
THE ADDRESSES PROVIDED FOR IN SECTION 11.6 AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY 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. EACH LOAN PARTY, THE 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.
11.17 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 Agent two (2) duly
completed copies of the following: (i) if any lending office of such Bank is
located in the United States, Internal Revenue Service Form W-8ECI ("Form
W-8ECI"), and Internal Revenue Service Form W-9 ("Form W-9"), or other
applicable form prescribed by the Internal Revenue Service, and/or (ii) if any
lending office of such Bank is located outside the United States Internal
Revenue Service Form W-8BEN ("Form W-8BEN") and Internal Revenue Service Form
W-8 or any successor thereto, 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 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 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 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 Agent). Each Bank, assignee or participant which so delivers a
Form W-8ECI, Form W-9, Form W-8BEN or Form W-8 or any applicable successor
thereto further undertakes to deliver to each of the Borrower and the 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 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 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.
11.18 Joinder of Guarantors; Additional Security Arrangements.
Any Subsidiary of the Borrower which is required to join this
Agreement as a Guarantor pursuant to Section 8.2.9 [Subsidiaries, Partnerships
and Joint Ventures] shall execute and deliver to the 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 7.1
[First Loans] modified as appropriate to relate to such Subsidiary; and (iii)
documents necessary to grant and perfect Prior Security Interests to the Agent
for the benefit of the Banks in all Collateral held by such Subsidiary. The Loan
Parties shall deliver such Guarantor Joinder and related documents to the Agent
within five (5) Business Days after the date of the filing of such Subsidiary's
articles of incorporation if the Subsidiary is a corporation, the date of the
filing of its certificate of limited partnership if it is a limited partnership
or the date of its organization if it is an entity other than a limited
partnership or corporation. In addition to and not in limitation of the
foregoing, the Loan Parties will not deliver any Guaranty, collateral, security
or other credit enhancement in respect of the Term Loan Agreement (excluding
Term Collateral) unless, concurrently therewith, such credit enhancement is also
delivered to or for the benefit of the Banks on a pari passu basis.
11.19 Environmental Indemnity.
The Loan Parties, jointly and severally, will indemnify,
protect, hold harmless and defend each Purchaser and each holder from time to
time of any Note, and their respective officers, directors, trustees, employees
and agents (collectively, "Indemnitees"), from and against any and all
liabilities, costs (including, without limitation, reasonable fees and
disbursements of attorneys, consultants and experts, and costs of investigation,
clean up, response, removal, remediation, containment, restoration, treatment
and disposal), claims, damages, demands, litigation, suits, proceedings,
actions, losses, obligations, penalties, fines, judgments, sums paid in
settlement of any of the above, and reasonable disbursements actually incurred
by any Indemnitee arising from or out of, or in any way connected with, (i) any
failure of any representation or warranty set forth in Section 6.1.25 to be true
and correct when made or any failure by the Loan Parties (or any of them) to
comply with any of the covenants, agreements, terms and conditions set forth in
Section 8.1.10 or to comply with any Environmental Law, (ii) the manufacture,
generation, refining, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport, arranging for transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
Regulated Substance at any time on, in, under or above the Property or any part
thereof, (iii) the presence or suspected presence of any Regulated Substances
manufactured, generated, refined, processed, distributed, sold, treated,
received, stored, disposed of, transported, arranged to be transported or
handled by the Loan Parties (or any of them) or any of their respective
Subsidiaries, or (iv) the migration, leaking, leaching, flowing, emitting or
other movement of any Regulated Substance from the Property, or any location
containing Regulated Substances manufactured, generated, refined, processed,
distributed, sold, treated, received, stored, disposed of, transported, arranged
to be transported or handled by the Loan Parties (or any of them) or any of
their respective Subsidiaries to any other property; provided, however, that any
obligation of any of the Loan Parties under this Section 11.19 to any Indemnitee
shall not apply to and no obligation shall exist with respect to, any of the
forgoing which arises: (x) from and after the exercise by any of the Indemnitees
(or any of their agents) of any foreclosure right or control with respect to the
Collateral, but only to the extent of obligations arising from the activities of
the successor or its agent or (y) from the gross negligence or willful
misconduct of any of the Indemnitees (or any of their agents). If at any time a
responsible officer of any Indemnitee shall have actual knowledge of an asserted
liability for which such Indemnitee would be entitled to indemnification
hereunder, such Indemnitee shall give written notice thereof to the Loan Parties
; provided, however, that no failure to give any such notice shall relieve the
Loan Parties (or any of them) of the obligation to provide indemnification
hereunder to such Indemnitee except to the extent that the Loan Parties shall
have been prevented as a consequence from assuming responsibility for the
defense against or settlement of such liability as hereinafter required. Upon
receipt of such notice, the Loan Parties shall assume full responsibility for
the defense against or settlement of any such liability, and shall consult with
such Indemnitee and advise such Indemnitee of significant developments in
connection therewith; provided, however, that (A) such Indemnitee shall be
consulted as to the legal counsel and other consultants to be employed in
respect thereof and may in its reasonable judgment veto the employment of any
legal counsel or consultant not reasonably acceptable to it and (B) if such
Indemnitee shall give to the Loan Parties notice that in its good faith judgment
an important general interest of such Indemnitee is involved in any such
liability or potential liability, such Indemnitee shall have the right to
control, in consultation with the Loan Parties, the defense against such
liability. The obligations of the Loan Parties under this Section shall survive
payment of any Notes and transfer of any Notes and shall be enforceable by each
Indemnitee hereunder separately or together, without necessity of accelerating
the maturity of any Notes; and any such Indemnitee seeking to enforce the
indemnification provided for hereunder may initially proceed directly against
the Loan Parties (or any of them) without first resorting to any other rights of
indemnification or otherwise that it may have.
11.20 Finance Code Opt-Out.
Each of the Loan Parties and the Banks each hereby agree that
Chapter 346 of the Texas Finance Code doe not apply to this Credit Agreement, to
the Notes issued pursuant to this Credit Agreement, or to the account or
arrangement evidenced by or provided for in this Credit Agreement.
[SIGNATURE PAGES FOLLOW]
[SIGNATURE PAGE 1 OF 2 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.
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger
-----------------------------------------
Title: President
---------------------------------------
WESTERN ENERGY COMPANY, a Guarantor
By: /s/ Robert J. Jaeger
-----------------------------------------
Title: Vice President
---------------------------------------
NORTHWESTERN RESOURCES CO., a Guarantor
By: /s/ Robert J. Jaeger
-----------------------------------------
Title: Vice President
---------------------------------------
DAKOTA WESTMORELAND CORPORATION, a Guarantor
By: /s/ Robert J. Jaeger
-----------------------------------------
Title: Vice President
---------------------------------------
WCCO-KRC ACQUISITION CORP., a Guarantor
By: /s/ Robert J. Jaeger
-----------------------------------------
Title: Vice President
---------------------------------------
[SIGNATURE PAGE 2 OF 2 TO CREDIT AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By: /s/ Christopher Moravec
-----------------------------------------
Title: Sr. Vice President
---------------------------------------
FIRSTAR BANK, N.A.
By: /s/ Eric Hartman
-----------------------------------------
Title: VP
---------------------------------------
NATIONAL CITY BANK
By: /s/ Wilmer J. Jacobs
-----------------------------------------
Title: Vice President
---------------------------------------
SCHEDULE 1.1(B) - 2
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 1 of 2
Part 1 - Commitments of Banks and Addresses for Notices to Banks
Amount of
Commitment for
Revolving Credit
Bank Loans Ratable Share
Name: PNC Bank, National Association
Address: 249 Fifth Avenue
Pittsburgh, PA 15222
Attention: Christopher Moravec
Telephone (412) 762-2540
Telecopy: (412) 762-2571 $10,000,000 50.0%
Name: Firstar Bank, N.A.
Address: One Firstar Plaza
7th & Washington, Tram 12-3
St. Louis, MO 63101
Attention: Eric Hartman
Telephone (314) 418-2336 $5,000,000 25.0%
Telecopy: (314) 418-3859
Name: National City Bank
Address: 1900 East 9th Street
Locator 2077
Cleveland, OH 4414
Attention: Will Jacobs
Telephone (216) 575-2562 $5,000,000 25.0%
Telecopy: (216) 222-0003
Total $20,000,000 100%
========== ====
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 2 of 2
Part 2 - Addresses for Notices to Borrower and Guarantors:
AGENT
Name: PNC Bank, National Association
Address: 249 Fifth Avenue
Pittsburgh, PA 15222
Attention: Christopher Moravec
Telephone: (412) 762-2540
Telecopy: (412) 762-2571
BORROWER:
Name:
----
Address: 490 North 31st Street
Suite 308
Billings, Montana 59101
Attention: Robert J. Jaeger
Telephone: (719) 448-5803
Telecopy: (719) 448-5825
EACH OF THE GUARANTORS:
Name: c/o Westmoreland Mining LLC
Address: 490 North 31st Street
Suite 308
Billings, Montana 59101
Attention: Robert J. Jaeger
Telephone: (719) 448-5803
Telecopy: (719) 448-5825
SCHEDULE 1.1(Q)
Qualified Account shall mean any Account which the Agent, in
its discretion, determines to have met all of the following minimum
requirements:
(i) the Account represents a complete bona fide transaction
for goods sold and delivered or services rendered (but excluding any amount in
the nature of a service charge added to the amount due on an invoice because the
invoice has not been paid when due) which requires no further act under any
circumstances on the part of the Loan Party to make such Account payable by the
account debtor; and the Account arises from an arm's length transaction in the
ordinary course of the Loan Party's business between the Loan Party and an
account debtor which is not an affiliate, officer, stockholder or employee of
the Loan Party, or a member of the family of an affiliate, officer, stockholder
or employee of the Loan Party;
(ii) the Account shall not (a) be or have been unpaid more
than ninety (90) days from the invoice date, (b) be delinquent more than sixty
(60) days, or (c) be payable by an account debtor more than fifty percent (50%)
of whose Accounts have remained unpaid for more than ninety (90) days from the
invoice date or are delinquent more than sixty (60) days;
(iii) the goods the sale of which gave rise to the Account
were shipped or delivered or provided to the account debtor on an absolute sale
basis and not on a bill-and-hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale-or-return basis, or on the basis of any other
similar understanding, and no part of such goods has been returned or rejected;
(iv) the Account is not evidenced by chattel paper or an
instrument of any kind;
(v) the account debtor with respect to the Account (a) is not
insolvent, and (b) is not the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action, known to be
threatened or pending, which might have a materially adverse effect on its
business;
(vi) (a) the account debtor is not located outside of the
continental United States of America, or (b) if the account debtor is located
outside of the continental United States, the Loan Party has given the Agent
prior written notice thereof and has provided Agent with such security as shall
be acceptable to the Agent;
(vii) (a) the account debtor is not the government of the
United States of America, or any department, agency or instrumentality thereof,
or (b) if the account debtor is an entity mentioned in clause (vii)(a), the
Federal Assignment of Claims Act (or applicable similar legislation) has been
fully complied with so as to validly perfect the Agent's Prior Security Interest
to the Agent's satisfaction;
(viii) the Account is a valid, legally enforceable obligation
of the account debtor with respect thereto and is not pursuant to any progress
billing or warranty billing arrangement or subject to any dispute, condition,
contingency, offset, recoupment, reduction, claim for credit, allowance,
adjustment, counterclaim or defense on the part of such account debtor, and no
facts exist which may provide a basis for any of the foregoing in the present or
future;
(ix) the Account is subject to the Banks' first priority
security interest and is not subject to any other lien, claim, encumbrance or
security interest whatsoever, other than a junior security interest in favor of
the Term Lenders;
(x) the Account is evidenced by an invoice or other
documentation in form acceptable to the Agent and arises from a contract which
is in form and substance reasonably satisfactory to the Agent;
(xi) the Account is not subject to any provision prohibiting
its assignment or requiring notice of or consent to such assignment;
(xii) the goods giving rise to the Account were not, at the
time of sale thereof, subject to any lien or encumbrance except the Agent's
first priority security interest and a junior security interest in favor of the
Term Lenders, and other junior liens; and
(xiii) the Account is payable in freely transferable United
States Dollars.
In addition to the foregoing requirements, Accounts of any account debtor which
are otherwise qualified shall be reduced to the extent of any accounts payable
(including, without limitation, the Agent's good faith estimate of any
contingent liabilities) by the Loan Party to such account debtor ("Contras").
EXHIBIT 99.3
- ------------
================================================================================
Westmoreland Mining LLC
$20,000,000 Floating Rate Senior Guaranteed Secured Notes,
Series A, due June 30, 2002
and
$100,000,000 9.39% Senior Guaranteed Secured Notes,
Series B, due December 31, 2008
PNC Capital Markets, Lead Arranger
--------------------------
Term Loan Agreement
--------------------------
Dated April 27, 2001
================================================================================
Table of Contents
(Not a part of the Agreement)
Section Heading Page
Section 1. Authorization of Notes......................................1
Section 2. Sale and Purchase of Notes..................................1
Section 3. Closing; Deferred Closing...................................2
3.1 Closing.....................................................2
3.2 Deferred Closing............................................2
Section 4. Conditions to Closing and Deferred Closing..................3
4.1 Closing Conditions..........................................3
4.2 Deferred Closing............................................8
Section 5. Representations and Warranties of the Obligors.............12
5.1 Organization and Qualification.............................12
5.2 Capitalization and Ownership...............................12
5.3 Subsidiaries...............................................12
5.4 Power and Authority........................................13
5.5 Validity and Binding Effect................................13
5.6 No Conflict................................................13
5.7 Litigation.................................................13
5.8 Title to Properties........................................14
5.9 Financial Statements.......................................14
5.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.....15
5.11 Disclosure.................................................16
5.12 Taxes......................................................16
5.13 Consents and Approvals.....................................16
5.14 No Event of Default; Compliance with Instruments...........17
5.15 Patents, Trademarks, Copyrights, Licenses, Etc.............17
5.16 Security Interests.........................................18
5.17 Mortgage Liens.............................................18
5.18 Status of the Pledged Collateral...........................18
5.19 Insurance..................................................19
5.20 Compliance with Laws.......................................19
5.21 Material Contracts; Burdensome Restrictions................19
5.22 Investment Companies; Regulated Entities...................19
5.23 Plans and Benefit Arrangements.............................20
5.24 Employment Matters.........................................21
5.25 Environmental Matters......................................21
5.26 Senior Debt Status.........................................23
5.27 Coal Leases................................................23
5.28 Transactions with Affiliates...............................24
5.29 Permit Blocks..............................................24
5.30 Qualifications as Lessee, Coal Acreage Limitations.........24
5.31 Private Offering by the Company............................24
5.32 Foreign Assets Control Regulations, etc....................24
5.33 Status under Certain Statutes..............................24
5.34 Additional Representations and Warranties..................25
5.35 Pari Passu Collateral......................................25
5.36 Single Purpose Entities....................................25
5.37 Surface Mine Reclamation Bonds.............................27
Section 6. Representations of the Purchasers..........................27
6.1 Purchase For Investment....................................27
6.2 Source of Funds............................................28
6.3 Exemption from Withholding.................................29
Section 7. Information as to the Obligors.............................29
7.1 Reporting..................................................29
7.2 Inspection.................................................34
Section 8. Payment and Prepayment of the Notes........................34
8.1 Regularly Scheduled Prepayments; Payment at Final Maturity.34
8.2 Mandatory Prepayment with Surplus Cash Flow; Optional
Prepayments................................................35
8.3 Change in Control..........................................37
8.4 Maturity; Surrender, etc...................................38
8.5 Purchase of Notes..........................................38
Section 9. Affirmative Covenants......................................38
9.1 The Obligors covenant that so long as any of the Notes
are outstanding:...........................................38
9.2 Additional Security Arrangements...........................49
Section 10. Negative and Financial Covenants...........................49
10.1 Indebtedness...............................................49
10.2 Liens......................................................50
10.3 Guaranties.................................................50
10.4 Loans and Investments......................................50
10.5 Dividends and Related Distributions........................51
10.6 Liquidations, Mergers, Consolidations, Acquisitions........51
10.7 Dispositions of Assets or Subsidiaries.....................51
10.8 Affiliate Transactions.....................................52
10.9 Subsidiaries, Partnerships and Joint Ventures..............52
10.10 Continuation of or Change in Business......................53
10.11 Plans and Benefit Arrangements.............................53
10.12 Fiscal Year................................................54
10.13 Issuance of Stock..........................................54
10.14 Changes in Organizational Documents........................54
10.15 Changes in Material Contracts, Performance under Coal
Supply Contracts...........................................54
10.16 Capital Expenditures and Leases............................54
10.17 Operating Leases...........................................55
10.18 Minimum Debt Service Coverage Ratio........................55
10.19 Maximum Leverage Ratio.....................................55
10.20 Maximum Consolidated Total Indebtedness to Consolidated
Total Capitalization.......................................55
Section 11. Events of Default..........................................56
Section 12. Remedies on Default, etc...................................58
12.1 Acceleration...............................................58
12.2 Other Remedies.............................................58
12.3 Rescission.................................................59
12.4 No Waivers or Election of Remedies, Expenses, etc..........59
Section 13. Registration; Exchange; Substitution of Notes..............59
13.1 Registration of Notes......................................59
13.2 Transfer and Exchange of Notes.............................60
13.3 Replacement of Notes.......................................60
Section 14. Payments on Notes..........................................61
14.1 Place of Payment...........................................61
14.2 Home Office Payment........................................61
Section 15. Expenses, Etc..............................................61
15.1 Transaction Expenses.......................................61
15.2 Survival...................................................62
Section 16. Survival of Representations and Warranties; Entire
Agreement..................................................62
Section 17. Amendment and Waiver.......................................62
17.1 Requirements...............................................62
17.2 Solicitation of Holders of Notes...........................63
17.3 Binding Effect, etc........................................63
17.4 Notes Held by an Obligor, etc..............................63
Section 18. Notices....................................................64
Section 19. Reproduction of Documents..................................64
Section 20. Confidential Information...................................64
Section 21. Substitution of a Purchaser................................65
Section 22. Miscellaneous..............................................66
22.1 Successors and Assigns.....................................66
22.2 Sharing Provisions.........................................66
22.3 Set Off....................................................67
22.4 Payments Due on Non-Business Days..........................67
22.5 Severability...............................................67
22.6 Construction...............................................67
22.7 Counterparts...............................................68
22.8 Governing Law..............................................68
22.9 Withholding................................................68
22.10 Environmental Indemnity....................................69
22.11 Jurisdiction And Process...................................70
22.12 Waiver Of Jury Trial.......................................71
Signatures...................................................................67
Schedule A........-........Information Relating to Purchasers
Schedule B........-........Definitions
Schedule C........-........Administrative Note Agent
Schedule 1.1(L)...-........Coal Leases
Schedule 5.1......-........Organization and Qualification
Schedule 5.2......-........Capitalization and Ownership
Schedule 5.3......-........Subsidiaries
Schedule 5.7......-........Litigation
Schedule 5.8......-........Owned and Leased Real Property
Schedule 5.12.....-........Taxes
Schedule 5.13.....-........Consents and Approvals
Schedule 5.15.....-........Patents, Trademarks, Copyrights, Licenses, Etc.
Schedule 5.18.....-........Status of the Pledged Collateral
Schedule 5.19.....-........Insurance Policies
Schedule 5.21.....-........Material Leases, Contracts, Etc.
Schedule 5.23.....-........Employee Benefit Plan Disclosures
Schedule 5.25.....-........Environmental Disclosures
Schedule 5.27.....-........Coal Lease Royalties
Schedule 5.28.....-........Transactions with Affiliates
Schedule 5.30.....-........Qualifications as Lessee; Coal Acreage Limitations
Schedule 8.1......-........Regularly Scheduled Prepayments
Schedule 8.1.6....-........Required Mining Permits
Schedule 10.1.....-........Existing Indebtedness
Schedule 10.16....-........Capital Expenditures and Leases
Schedule 10.17....-........Operating Leases
Exhibit 1A........-........Form of Floating Rate Senior Guaranteed Secured Note,
Series A, due June 30, 2002
Exhibit 1B........-........Form of Senior Guaranteed Secured Note, Series B,
due December 31, 2008
Exhibit 4.1(d)....-........Matters for Opinion of Counsel
Exhibit 7.1(l)....-........Form of Single Purpose Entity Status Report
Exhibit 7.1(d)....-........Form of Compliance Certificate
Exhibit (C)(1)....-........Form of Collateral Assignment
Exhibit (G)(1)....-........Form of Guarantor Joinder
Exhibit (G)(2)....-........Form of Guaranty Agreement
Exhibit (I)(1)....-........Form of Interest Rate Request
Exhibit (I)(2)....-........Form of Intercompany Subordination Agreement
Exhibit (I)(3)....-........Form of Intercreditor Agreement
Exhibit (M)(1)....-........Form of Management Fee Subordination Agreement
Exhibit (M)(2)....-........Form of Mortgage (Noteholders)
Exhibit (M)(3)....-........Form of Deed of Trust (Noteholders)
Exhibit (P)(1)....-........Patent, Trademark and Copyright Security Agreement
(Noteholders)
Exhibit (P)(2)....-........Pledge Agreement (Noteholders)
Exhibit (S)(1)....-........Security Agreement (Noteholders)
WESTMORELAND MINING LLC
$20,000,000 Floating Rate Senior Guaranteed Secured Notes,
Series A, due June 30, 2002
and
$100,000,000 9.39% Senior Guaranteed Secured Notes,
Series B, due December 31, 2008
As of April 27, 2001
To Each of the Purchasers Named in
Schedule A Attached Hereto
Ladies and Gentlemen:
Westmoreland Mining LLC, a Delaware limited liability company (the
"Company"), and the other Obligors (defined below) parties hereto, jointly and
severally, in consideration of the mutual representations, warranties, covenants
and agreements set forth herein and for other good and valuable consideration,
agree with each of the undersigned purchasers (each, a "Purchaser"), for their
benefit and the benefit of each holder from time to time of any of the Notes
referred to below, as follows:
Section 1. Authorization of Notes.
The Company will authorize the issue and sale of (i) $20,000,000
aggregate principal amount of its Floating Rate Senior Guaranteed Secured Notes,
Series A, due June 30, 2002 (the "Series A Notes") and (ii) $100,000,000
aggregate principal amount of its 9.39% Senior Guaranteed Secured Notes, Series
B, due December 31, 2008 (the "Series B Notes" and, together with the Series A
Notes, the "Notes") such term to include any such Notes issued in substitution
therefor pursuant to Section 13 of this Agreement. The Series A Notes and Series
B Notes shall be substantially in the respective forms set out in Exhibits 1A
and 1B, with such changes therefrom, if any, as may be approved by each
Purchaser and the Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement. The
Notes shall be unconditionally guaranteed pursuant to the Guaranty Agreement and
shall be secured pursuant to the provisions of the Security Documents. The
Company and the Guarantors are referred to, individually, as an "Obligor" and,
collectively, as "Obligors." Notwithstanding anything herein or in the Notes to
the contrary, in the event that the acquisition contemplated under the Asset
Acquisition Agreement is not consummated within the period of thirty (30)
calendar days next following the Closing Date referred to below, the rate of
interest otherwise provided herein to be borne by the Notes of each Series
shall, from and after the last day of such period, be increased by 0.05% per
annum, all as provided in the Notes.
Section 2. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to the Purchasers and each Purchaser will purchase from the
Company, (1) at the Closing provided for in Section 3.1, Notes in the Series and
in the principal amount specified opposite such Purchaser's name in Schedule A
at the purchase price of 100% of the principal amount thereof with an aggregate
principal amount of Notes being sold at the Closing of $100,000,000 and (2) at
the Deferred Closing provided for in Section 3.2, Notes in the Series and in the
principal amount specified opposite such Purchaser's name in Schedule A at the
purchase price of 100% of the principal amount thereof with an aggregate
principal amount of Notes being sold at the Deferred Closing of $20,000,000.
Each Purchaser's obligations hereunder are several and not joint obligations,
and no Purchaser shall have any liability to any Person for the performance or
nonperformance by any other Purchaser hereunder.
Section 3. Closing; Deferred Closing.
3.1 Closing.
The sale and purchase of the Notes to be purchased by the Purchasers at
the Closing shall occur at the offices of Buchanan Ingersoll Professional
Corporation, 301 Grant Street, One Oxford Centre, 20th Floor, Pittsburgh,
Pennsylvania 15219, at 10:00 a.m., Pittsburgh time, at a closing on April 27,
2001 or on such other Business Day on or prior to April 30, 2001 as may be
agreed upon by the Company and the Purchasers (the "Closing"). At the Closing,
the Company will deliver to each Purchaser the Notes to be purchased by such
Purchaser on such date in the form of a single Note (or such greater number of
Notes in denominations of at least $100,000 as such Purchaser may request) dated
the date of the Closing and registered in such Purchaser's name (or in the name
of such Purchaser's nominee), against delivery by such Purchaser to the Company
or its order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account name: Westmoreland Mining LLC Concentration, account number
1013637582 at PNC Bank National Association, ABA# 043000096, Contact
Westmoreland: Robert J. Jaeger. If at the Closing the Company shall fail to
tender such Notes to any Purchaser as provided above in this Section 3.1, or any
of the conditions specified in Section 4.1 shall not have been fulfilled to such
Purchaser's satisfaction, such Purchaser shall, at such Purchaser's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.
3.2 Deferred Closing.
The sale and purchase of the Notes to be purchased by the Purchasers at
the Deferred Closing shall occur at the offices of Buchanan Ingersoll
Professional Corporation, 301 Grant Street, One Oxford Centre, 20th Floor,
Pittsburgh, Pennsylvania 15219, at 10:00 a.m., Pittsburgh time, at a closing on
May 11, 2001 or on such other Business Day on or prior to May 30, 2001 as may be
agreed upon by the Company and the Purchasers (the "Deferred Closing"). At the
Deferred Closing, the Company will deliver to each Purchaser the Notes to be
purchased by such Purchaser on such date in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as such Purchaser
may request) dated the date of the Deferred Closing and registered in such
Purchaser's name (or in the name of such Purchaser's nominee), against delivery
by such Purchaser to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account name: Westmoreland
Mining LLC Concentration, account number 1013637582 at PNC Bank National
Association, ABA# 043000096, Contact Westmoreland: Robert J. Jaeger. If the
Deferred Closing fails to occur on or before the date specified above or if at
the Deferred Closing the Company shall fail to tender such Notes to any
Purchaser as provided above in this Section 3.2, or any of the conditions
specified in Section 4.1 or Section 4.2 shall not have been fulfilled to such
Purchaser's satisfaction, such Purchaser shall, at such Purchaser's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.
Section 4. Conditions to Closing and Deferred Closing.
4.1 Closing Conditions.
The Company's obligation to issue and sell the Notes are conditioned
upon each Purchaser being in compliance with each of its representations and
warranties set forth herein and the tender by each Purchaser of the applicable
purchase price. Each Purchaser's obligation to purchase and pay for the Notes to
be sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's satisfaction, prior to or at the Closing, of the following
conditions:
(a) Representations and Warranties.
The representations and warranties of each of the Obligors in this
Agreement and in the other Financing Documents shall be correct when made and at
the time of the Closing.
(b) Performance; No Default.
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing, and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Section 5.10) no Potential Default or Event of Default shall have occurred and
be continuing.
(c) Compliance Certificates.
(i) Officer's Certificate. Each Obligor shall have delivered to
each Purchaser an Officer's Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections 4.1(a),
(b), (h) and (i) (which shall be limited to the matters contained in
the first and third sentence thereof) have been fulfilled.
(ii) Secretary's Certificate. Each Obligor shall have delivered
to each Purchaser a certificate certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Financing Documents
including:
1) all action taken by such Obligor in connection with this
Agreement and the other Financing Documents;
2) the names of the officer or officers authorized to sign
this Agreement and the other Financing Documents and the true
signatures of such officer or officers and specifying the
Authorized Officers permitted to act on behalf of such Obligor
for purposes of this Agreement and the true signatures of such
officers, on which each Purchaser may conclusively rely; and
3) copies of its organizational documents, including its
certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, and
limited liability company agreement, as the case may be, as in
effect on the Closing Date 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 Obligor
in each state where organized or qualified to do business and a
bring-down certificate by facsimile dated the Closing Date.
(d) Opinions of Counsel.
There shall be delivered to the Purchasers written opinions of Hale and
Dorr LLP, as counsel for the Obligors, and other counsel acceptable to the
Purchasers (who may rely on the opinions of such other counsel as may be
acceptable to the Purchasers), dated the Closing Date and in form and substance
satisfactory to the Purchasers and Buchanan Ingersoll Professional Corporation:
(i) as to the matters set forth in Exhibit 4.1(d);
(ii) as to substantive non-consolidation of the Company and each
other Obligor with any member of the Parent Group;
(iii) as to the enforceability and application by a bankruptcy
court of the provisions of the operating agreement of the Company and
its Subsidiaries requiring the vote of an Independent Manager or
Director, as the case may be, to file a voluntary bankruptcy petition;
(iv) as to the enforceability of the provision of the operating
agreement of the Company that if the economic member of the Company
ceases to be a member, the Independent Manager becomes a member
without further active vote or approval;
(v) as to the fact that the bankruptcy or insolvency of a member
of the Company will not, by itself, cause a dissolution or winding up
of the Company; and
(vi) as to such other matters incident to the transactions
contemplated herein as the Purchasers may reasonably request.
There shall also be delivered to the Purchasers a written opinion (a)
of Crowell & Moring LLP, the Parent's Coal Act counsel, dated as of the Closing
Date and in form and substance satisfactory to the Purchasers and their counsel,
that any Coal Act liability of the Parent will not be attributed to the Company
or any Subsidiary of the Company and (b) from Coudert Brothers, each Purchaser's
special counsel in connection with such transactions, substantially in the form
set forth in Exhibit 4.1(d) and covering such other matters incident to such
transactions as such Purchaser may reasonably request. In addition to and not in
limitation of the foregoing, each Purchaser shall have received such opinions
from local counsel as such Purchaser may reasonably request, satisfactory to
such Purchaser in form and substance, covering such matters in respect of the
Security Documents as such Purchaser may reasonably request.
(e) Purchase Permitted By Applicable Law, etc.
On the date of the Closing each Purchaser's purchase of Notes shall (i)
be permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(ii) not violate any applicable law or regulation (including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject such Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by any Purchaser,
such Purchaser shall have received an Officer's Certificate certifying as to
such matters of fact as such Purchaser may reasonably specify to enable such
Purchaser to determine whether such purchase is so permitted.
(f) Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Obligors shall
have paid on or before the Closing the reasonable fees, charges and
disbursements of each Purchaser's special counsel referred to in Section
4.1(d)to the extent reflected in a statement of such counsel rendered to the
Company at least one Business Day prior to the Closing.
(g) Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for each Series
of Notes.
(h) Changes in Corporate Structure.
The Obligors shall not have changed their respective jurisdictions of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Section 5.9, except for the Company's acquisition of Northwestern and WECO
pursuant to the Stock Purchase Agreement.
(i) Bankruptcy Remote Entities; Separateness.
The terms and conditions of the Company's formation documents, as well
as the terms and conditions of each other Obligor's formation documents, shall
be effective to provide for appropriate protections from the commencement of a
bankruptcy based upon the bankruptcy of any member of the Parent Group. Each of
the Obligors shall satisfy the Purchasers that such entities are not reasonably
subject to substantive consolidation with any member of the Parent Group. The
Company shall cause the articles of incorporation for both WECO and Northwestern
to be amended, prior to or immediately after the acquisition of such entities,
to satisfy the preceding sentence. Additionally, the Purchasers shall be
satisfied with the Independent Manager and Director selected by each of the
Obligors.
(j) Management Fee Subordination Agreement.
The Management Fee Subordination Agreement shall have been executed and
delivered by the Parent and the Company and shall be in full force and effect.
(k) Security Documents; Recording; Delivery of Pledged Collateral.
The Security Documents and all mortgages, financing statements and/or
instruments shall have been delivered for recording or filing in public offices
as may be necessary or desirable in order to perfect the Liens granted thereby
as against creditors of and purchasers from the Obligors. The Pledged Collateral
shall have been pledged to and, if certificated, deposited with the Collateral
Agent and, if certificated, duly endorsed in blank sufficient in the reasonable
opinion of the Required Combined Holders to enable the Collateral Agent to
transfer, upon the exercise of remedies, the Pledged Collateral.
(l) Delivery of Pledged Collateral.
The Parent, the Company, each of the Guarantors and the Collateral
Agent shall have executed and delivered the Pledge Agreement (Noteholders), the
Pledge Agreement (Noteholders) shall be in full force and effect and any Pledged
Collateral evidenced by certificates shall have been delivered to the Collateral
Agent under the Pledge Agreement (Noteholders).
(m) Equity Contributions.
The Company shall have received cash equity contributions in an amount
equal to or greater than 24.15% of the total net purchase price after projected
post-closing adjustments for the contemplated acquisitions under the Stock
Purchase Agreement, as the same may be further adjusted in accordance with the
terms thereof (the foregoing cash equity contributions made hereunder shall be
supplemented with an additional cash equity contribution to the extent provided
in Section 9.1(t) hereof.) Such net purchase price and projected adjustments
shall be set forth in an Officer's Certificate of the Company, dated the Closing
Date and delivered to each Purchaser.
(n) Stock Purchase Agreement.
The Company shall have been designated as the acquirer of the stock of
Northwestern and WECO and the acquisitions contemplated by the Stock Purchase
Agreement shall be consummated pursuant to the terms and conditions of the Stock
Purchase Agreement as heretofore reviewed by the Purchasers and as certified by
the Company without any amendment or waiver (including, without limitation, any
waiver of any closing condition) by the Company or any other party not consented
to by the Purchasers, including without limitation, for the purchase price
indicated therein (as the same is adjusted in accordance with the terms of the
Stock Purchase Agreement) and without any material adverse changes in such
companies occurring from the date of the Stock Purchase Agreement. It is
understood that the stock in the Ancillary Interests being acquired as part of
the Stock Purchase Agreement will be transferred on the Closing Date to the
Parent or other members of the Parent Group for nominal or no consideration.
(o) Bank Financing Documents.
The Obligors shall have executed and delivered the Bank Financing
Documents, all of which shall be in full force and effect, and the Company shall
be entitled to borrow thereunder not less than $5,000,000. Each Purchaser shall
have received executed counterparts, or copies, certified by the Company as true
and correct, of the Bank Financing Documents and the same shall be reasonably
satisfactory to the Purchasers.
(p) Intercreditor Agreement.
The Bank Lenders and the Purchasers shall have executed and delivered
the Intercreditor Agreement in a form acceptable to the Purchasers.
(q) Insurance; Certificates of Insurance; Endorsements.
The Obligors shall have delivered evidence acceptable to the Purchasers
that adequate insurance in compliance with Section 9.1(c) [Insurance] is in full
force and effect and that all premiums then due thereon have been paid, together
with one or more certificates of insurance evidencing coverage satisfactory to
the Purchasers, with additional insured, mortgagee and lender loss payable
special endorsements attached thereto in form and substance satisfactory to the
Purchasers and their counsel naming the Collateral Agent as additional insured,
mortgagee and lender loss payee.
(r) Solvency Certificate.
An Authorized Officer of each Obligor shall have delivered a
certificate in form and substance satisfactory to the Purchasers as to the
capital adequacy and solvency of the Company and its Subsidiaries after giving
effect to the transactions contemplated hereby.
(s) Coal Reserves.
The Company shall have made available to the Purchasers all existing
material geological data, reserve data, mine maps, core hole logs and associated
data, coal measurements, coal samples, lithologic data, coal reserve
calculations or reports, washability analyses or reports, mine plans, mining
feasibility studies or analyses, mining permit applications and supporting data,
preparation plant flowcharts, preparation plant efficiency reports or analyses,
engineering studies and all other information, maps, material, reports and data
in the possession or under the control of Company relating to or affecting the
coal reserves, coal ownership, coal leases, mining conditions, mines,
preparation plant(s) and mining plans of Company or the other Obligors
(collectively the "Mining Data"). The Company shall have made available to the
Purchasers true, correct and complete copies of the Mining Data, together with
all exhibits, maps or supporting appendices thereto.
(t) Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory to the Purchasers and each
Purchaser's counsel, and the Purchasers and each Purchaser's counsel shall have
received all certified or other copies of such documents as the Purchasers or
they may reasonably request.
(u) Contemporaneous Sales.
The Company shall sell to the Purchasers and the Purchasers shall
purchase the Notes contemplated herein to be purchased by the Purchasers at the
Closing, on a substantially contemporaneous basis.
(v) Management Agreement.
The Company and Parent shall have entered into a management agreement,
in form and substance satisfactory to the Purchasers, providing for the
provision by the Parent to the Company of advice regarding, among other things,
corporate and strategic planning, development, evaluation and marketing of the
Company's products and services, potential acquisition candidates and business
opportunities; such management agreement shall be in full force and effect; and
each Purchaser shall have received an original executed counterpart or certified
copy thereof.
(w) Consents.
All material consents and governmental approvals to effectuate the
transactions contemplated hereby as set forth on Schedule 5.13 shall have been
obtained in form and substance satisfactory to the Purchasers.
4.2 Deferred Closing.
Each Purchaser's obligation to purchase and pay for the Notes to be
sold to such Purchaser at the Deferred Closing is subject to the fulfillment to
such Purchaser's satisfaction, prior to or at the Deferred Closing, of all of
the conditions set forth in Section 4.1 (which shall for purposes of this
Section be effective as of the date of the Deferred Closing) and the following
additional conditions:
(a) Deferred Closing Date.
The Closing shall have been consummated in accordance with the terms
hereof upon the fulfillment, or waiver by the Purchasers, of the conditions set
forth in Section 4.1. The Deferred Closing shall have occurred on or before
thirty (30) calendar days after the Closing, unless extended by the Purchasers
in their sole discretion.
(b) Additional Equity Contribution.
At such time, the Company shall have received cash equity contributions
of at least 24.15% of the total net purchase price after projected post-closing
adjustments for the contemplated acquisitions under the Asset Acquisition
Agreement, as the same may be further adjusted in accordance with the terms
thereof (the foregoing cash equity contributions made hereunder shall be
supplemented with an additional cash equity contribution to the extent provided
in Section 9.1(t) hereof.) Such net purchase price and projected adjustments
shall be set forth in an Officer's Certificate of the Company, dated the
Deferred Closing Date and delivered to each Purchaser.
(c) Acquisition of Knife River Assets.
The Company or its wholly owned Subsidiaries shall have acquired the
assets (except for the Gascoyne Rights which comprise part of the Ancillary
Interests and which will be assigned contemporaneously with the acquisition to
one or more of the members of the Parent Group) identified in, and pursuant to
the terms and conditions of, the Asset Acquisition Agreement and pursuant to
Asset Acquisition Documents which are reasonably satisfactory to the holders of
the Notes.
(d) Title Insurance.
The Obligors shall deliver a title insurance policy or policies or
other evidence of title satisfactory to the Purchasers, insuring the real estate
interests being acquired pursuant to the Asset Acquisition Agreement.
(e) Consents.
All material consent and governmental approvals to effectuate the
transactions contemplated hereby as set forth on Schedule 5.13 shall have been
obtained in form and substance satisfactory to the Purchasers.
(f) Contemporaneous Sales.
The Company shall sell to the Purchasers and the Purchasers shall
purchase the Notes contemplated herein to be purchased by the Purchasers at the
Deferred Closing, on a substantially contemporaneous basis.
(g) Representations and Warranties.
The representations and warranties of each of the Obligors in this
Agreement and in the other Financing Documents shall be correct when made and at
the time of the Deferred Closing.
(h) Performance; No Default.
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Deferred Closing, and after giving effect to the issue
and sale of the Notes (and the application of the proceeds thereof as
contemplated by Section 5.10) no Potential Default or Event of Default shall
have occurred and be continuing.
(i) Compliance Certificates.
(i) Officer's Certificate. Each Obligor shall have delivered to
each Purchaser an Officer's Certificate, dated the date of the
Deferred Closing, certifying that the conditions specified in Sections
4.1(a), (b), (h) and (i) (which shall be limited to the matters
contained in the first and third sentence thereof) have been
fulfilled.
(ii) Secretary's Certificate. Each Obligor shall have delivered
to each Purchaser a certificate certifying as to the following:
1) all action taken by such Obligor in connection with this
Agreement and the other Financing Documents has been and
continues to be duly authorized pursuant to the resolutions
certified and delivered to the Purchasers under Section
4.1(c)(ii) of this Agreement;
2) the Authorized Officers specified in the certificate
delivered under Section 4.1(c)(ii) of this Agreement have not
changed; and
3) there has been no change in such Obligor's organizational
documents, including its certificate of incorporation, bylaws,
certificate of limited partnership, partnership agreement,
certificate of formation, and limited liability company
agreement, as the case may be, since the Closing Date and such
Obligor continues to exist and is in good standing in each state
where organized or qualified to do business.
(j) Opinions of Counsel.
There shall be delivered to the Purchasers written opinions of Hale and
Dorr LLP, as counsel for the Obligors, and other counsel acceptable to the
Purchasers (who may rely on the opinions of such other counsel as may be
acceptable to the Purchasers), dated the Deferred Closing Date and in form and
substance satisfactory to the Purchasers and Coudert Brothers:
(i) as to the matters set forth in Exhibit 4.1(d);
(ii) as to substantive non-consolidation of the Company and each
other Obligor with any member of the Parent Group;
(iii) as to the enforceability and application by a bankruptcy
court of the provisions of the operating agreement of the Company and
its Subsidiaries requiring the vote of an Independent Manager or
Director, as the case may be, to file a voluntary bankruptcy petition;
(iv) as to the enforceability of the provision of the operating
agreement of the Company that if the economic member of the Company
ceases to be a member, the Independent Manager becomes a member
without further active vote or approval;
(v) as to the fact that the bankruptcy or insolvency of a member
of the Company will not, by itself, cause a dissolution or winding up
of the Company; and
(vi) as to such other matters incident to the transactions
contemplated herein as the Purchasers may reasonably request.
There shall also be delivered to the Purchasers a written opinion (a)
of Crowell & Moring LLP, the Parent's Coal Act counsel, dated as of the Deferred
Closing Date and in form and substance satisfactory to the Purchasers and their
counsel, that any Coal Act liability of the Parent will not be attributed to the
Company or any Subsidiary of the Company and (b) from Coudert Brothers, each
Purchaser's special counsel in connection with such transactions, substantially
in the form set forth in Exhibit 4.1(d) and covering such other matters incident
to such transactions as such Purchaser may reasonably request. In addition to
and not in limitation of the foregoing, each Purchaser shall have received such
opinions from local counsel as such Purchaser may reasonably request,
satisfactory to such Purchaser in form and substance, covering such matters in
respect of the Security Documents as such Purchaser may reasonably request.
(k) Security Documents, etc.
The respective appropriate Obligors and the Collateral Agent shall have
duly entered into (i) an amendment or joinder to the Guaranty Agreements, in a
form satisfactory to the Purchasers, confirming that the Guarantors will be
liable for the Obligations as increased by the Notes being issued and sold at
the Deferred Closing, (ii) Mortgages (Noteholders) with respect to the real
estate interests being acquired pursuant to the Asset Acquisition Agreement and
located in the States of North Dakota and Montana and (iii) to the extent
required, or reasonably requested by the Purchasers, in order reflect the
issuance of, and extend the Lien of the Security Documents theretofore delivered
to secure, the Notes to be issued and sold at the Deferred Closing, amendments
to the Mortgages (Noteholders) with respect to the real estate interests of WECO
and Northwestern and to each other such Security Document. Each such Mortgage
(Noteholders), each such amendment and all financing statements and/or
instruments shall have been executed and delivered for recording or filing in
public offices as may be necessary or desirable in order to perfect the Liens
granted or extended thereby as against creditors of and purchasers from the
Obligors. The Purchasers shall have received such evidence as they may
reasonably request as to the absence of any intervening Liens since the Closing
Date that would affect the priority of the Lien of the Security Documents
theretofore delivered as such Security Documents are amended by the amendments
referred to in the preceding sentence.
Section 5. Representations and Warranties of the Obligors.
Each Obligor, jointly and severally, represents and warrants to the
Purchasers that:
5.1 Organization and Qualification.
The Company is a limited liability company, and each other Obligor is a
corporation, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each Obligor has the lawful power to
own or lease its properties and to engage in the business it presently conducts
or proposes to conduct. Each Obligor is duly licensed or qualified and in good
standing in each jurisdiction listed on Schedule 5.1 and in all other
jurisdictions 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; provided, however, no Obligor shall be in breach of this Section in
the event that it inadvertently failed to obtain or maintain a qualification or
license so long as such failure (i) either alone or when considered together
with all other such failures, has not resulted and could not reasonably be
expected to result in a Material Adverse Change, (ii) is promptly remedied upon
the Obligor becoming aware of such failure and (iii) does not adversely affect
any material portion of the Collateral.
5.2 Capitalization and Ownership.
All of the member interests in the Company (the "Member Interests") are
owned as indicated on Schedule 5.2. All of the Member Interests have
been validly issued and are fully paid and are nonassessable. There are no
options, warrants or other rights outstanding to purchase any such Member
Interests except as indicated on Schedule 5.2.
5.3 Subsidiaries.
Schedule 5.3 states (i) the name of each of the Company's Subsidiaries,
(ii) each such Subsidiary's jurisdiction of incorporation or formation, (iii)
its authorized capital stock and the issued and outstanding shares (referred to
herein as the "Subsidiary Shares") if it is a corporation, its outstanding
partnership interests (the "Partnership Interests") if it is a partnership and
its outstanding limited liability company interests, interest assigned to
managers thereof and the voting rights associated therewith (the "LLC Interests"
and together with the Subsidiary Shares and the Partnership Interests, the
"Subsidiary Ownership Interests") if it is a limited liability company, and (iv)
the owner of all such Subsidiary's Ownership Interests. The Company and each
Subsidiary of the Company has good and marketable title to all of the Subsidiary
Ownership Interests it purports to own, free and clear in each case of any Lien.
All Subsidiary Shares, Partnership Interests and LLC Interests have been validly
issued, and all Subsidiary Shares, Partnership Interests and LLC Interests are
fully paid and nonassessable. There are no options, warrants or other rights
outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC
Interests. No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement and customary
limitations imposed by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of such
Subsidiary.
5.4 Power and Authority.
Each Obligor has full power to enter into, execute, deliver and carry
out this Agreement and the Security Documents to which it is a party, to incur
the Indebtedness contemplated by the Financing Documents and to perform its
Obligations under the Financing Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part.
5.5 Validity and Binding Effect.
This Agreement has been duly and validly executed and delivered by each
Obligor, and each other Financing Document which any Obligor is required to
execute and deliver on or after the date hereof will have been duly executed and
delivered by such Obligor on the required date of delivery of such Financing
Document. This Agreement and each other Financing Document constitutes, or will
constitute, legal, valid and binding obligations of each Obligor which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Obligor in accordance with its terms, except to the extent that
enforceability of any of such Financing Documents may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or by general equitable principles
limiting the availability of the right of specific performance or other
equitable remedies.
5.6 No Conflict.
Neither the execution and delivery of this Agreement or the other
Financing Documents by any Obligor 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 Obligor or (ii) any Law or any material
lignite or coal supply agreement, coal lease, or other agreement or instrument
or order, writ, judgment, injunction or decree to which any Obligor or any of
its Subsidiaries is a party or by which it or any of its Subsidiaries is bound
or to which it 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 Obligor or any of its Subsidiaries (other than Liens granted under the
Security Documents).
5.7 Litigation.
There are no actions, suits, proceedings or investigations pending or,
to the knowledge of any Obligor, threatened against such Obligor or any
Subsidiary of such Obligor at law or equity before any Official Body, except
those described on Schedule 5.7, none of which (other than the litigation which
is the subject of the Surplus Cash Flow Letter) individually or in the aggregate
may result in any Material Adverse Change. None of the Obligors or any
Subsidiaries of any Obligor is in violation of any order, writ, injunction or
any decree of any Official Body which may result in any Material Adverse Change.
5.8 Title to Properties.
Schedule 5.8 identifies all of the real property interests, both owned
or leased, of the Obligors which have been acquired by the Obligors pursuant to
the Stock Purchase Agreement and the Asset Acquisition Agreement and is accurate
in all material respects. Each Obligor and each Subsidiary of each Obligor has
good and marketable title to all real estate owned by it and a valid leasehold
interest in all properties, assets and other rights which it purports to lease
or which are reflected as owned or leased on its books and records or Schedule
5.8, free and clear of all Liens and encumbrances except Permitted Liens, and
subject to the terms and conditions of the applicable leases; provided however,
an Obligor shall not be in breach of the foregoing in the event that (i) it
fails to own a valid leasehold interest which, either considered alone or
together with all other such valid leaseholds which it fails to own, is not
material to the continued operations of such Obligor as contemplated by the
Financial Projections or its mining plan as in effect on the Closing Date or
(ii) the Obligor's interest in a leasehold is less than fully marketable because
the consent of the lessor to future assignments has not been obtained. All
leases of property which are material to the continued operations of each
Obligor as contemplated by the Financial Projections and its mining plan as in
effect on the Closing Date are in full force and effect without the necessity
for any consent which has not previously been obtained or will be obtained upon
consummation of the transactions contemplated hereby.
5.9 Financial Statements.
(a) Historical Statements.
The Company has delivered to the Purchasers copies of each of WECO's
unaudited and Northwestern's audited consolidated year-end financial statements
for and as of the end of the fiscal year ended December 31, 1999 and copies of
WECO's and Northwestern's unaudited consolidated year-end financial statements
for and as of the end of the fiscal year ended December 31, 2000 (the "Annual
Statements"). In addition, the Company has delivered to the Purchasers copies of
each of WECO's and Northwestern's unaudited consolidated interim financial
statements for the fiscal year to date and as of the end of the month ended
February 28, 2001 (the "Interim Statements") (the Annual and Interim Statements
being collectively referred to as the "Historical Statements"). To the best of
the Company's knowledge, the Historical Statements were compiled from the books
and records maintained by WECO's and Northwestern's management, are correct and
complete, and fairly represent the financial condition of each of WECO and
Northwestern 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 and the absence of footnotes.
(b) Financial Projections.
The Company has delivered to the Purchasers financial projections of
the Company and its Subsidiaries for the period from 2001 through 2010 derived
from various assumptions of the Company's management and its advisors, including
Norwest Mine Services, Inc. (the "Financial Projections"). The Financial
Projections represent a reasonable range of possible results in light of the
history of the business, present and foreseeable conditions and the intentions
of the Company's management. The Financial Projections have been prepared in
reliance upon the Historical Statements and, to the best of the knowledge of the
Company, accurately reflect the liabilities of the Company and its Subsidiaries
upon consummation of the transactions contemplated hereby as of the date of the
Closing.
(c) Accuracy of Financial Statements.
Except for liabilities arising in the ordinary course of business,
since the date of the last Historical Statement and the Indebtedness arising in
connection with the Notes and the Bank Financing Documents, neither the Company
nor any Subsidiary of the Company has 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 Company or any
Subsidiary of the Company which may cause a Material Adverse Change. Since
December 31, 2000, no Material Adverse Change has occurred.
5.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.
(a) General.
The Obligors will apply the proceeds of the sale of the Notes, together
with other funds of the Company, to consummate the acquisitions contemplated by
the Asset Acquisition Agreement and the Stock Purchase Agreement.
(b) Margin Stock.
None of the Obligors or any Subsidiaries of any Obligor 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 sale of Notes 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 Obligors or any Subsidiary of any Obligor holds or
intends to hold margin stock in such amounts that more than 25% of the
reasonable value of the assets of any Obligor or Subsidiary of any Obligor are
or will be represented by margin stock.
(c) Section 20 Subsidiaries.
The Obligors do not intend to use and shall not use any portion of the
proceeds from the sale of the Notes, directly or indirectly, to purchase during
the underwriting period, or for thirty (30) days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
5.11 Disclosure.
The Company, through its agent, PNC Capital Markets, has delivered to
the Purchasers a copy of a Confidential Offering Memorandum, dated March, 2001
(the "Memorandum"), relating to the transactions contemplated hereby. The
Memorandum fairly describes, in all material respects, the general nature of the
business and principal properties of the Company and its Subsidiaries. This
Agreement, the Memorandum, the documents, certificates or other writings
delivered to the Purchasers by or on behalf of any Obligor in connection with
the transactions contemplated hereby and the financial statements listed in
Section 5.9, taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they were made. Except
as disclosed in the Memorandum, or in one of the documents, certificates or
other writings identified therein, or described in the Annual Statements or
Interim Statements, since December 31, 2000, there has been no change in the
financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to constitute or give rise to a Material
Adverse Change. There is no fact known to any Obligor that could reasonably be
expected to constitute or give rise to a Material Adverse Change that has not
been set forth herein or in the Memorandum or in the other documents,
certificates and other writings delivered to the Purchasers by or on behalf of
any Obligor specifically for use in connection with the transactions
contemplated hereby.
5.12 Taxes.
Except as described on Schedule 5.12 with respect to tax matters
relating to WECO and Northwestern, all federal, state, local and other tax
returns required to have been filed with respect to each Obligor and each
Subsidiary of each Obligor have been filed, and payment or adequate provision
has been made for the payment of all taxes, 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
(such as adequate indemnities contained in the Stock Purchase Agreement), if
any, as shall be required by GAAP shall have been made. Except as described on
Schedule 5.12 with respect to tax matters relating to WECO and Northwestern, as
of the date hereof, there are no agreements or waivers extending the statutory
period of limitations applicable to any federal income tax return of any Obligor
or Subsidiary of any Obligor for any period.
5.13 Consents and Approvals.
Except for the filing of the financing statements and the Mortgages
(Noteholders) in the state and county filing offices and the filings with the
U.S. Patent and Trademark Office and the U.S. Copyright Office, no consent,
approval, exemption, order or authorization of, or 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 performance by any Obligor of this
Agreement and the other Financing Documents, other than those which shall have
been obtained or made on or prior to the Closing Date, except as listed on
Schedule 5.13. No consent, approval, exemption, order or authorization of, or
registration or filing with, any Official Body or any other Person, that has not
been obtained or made, is required by any Law or any agreement for the closing
on the Closing Date of the transactions contemplated by the Stock Purchase
Agreement and the closing on the Deferred Closing Date of the transactions
contemplated by the Asset Acquisition Documents. Except (i) with respect to the
two permits listed on Schedule 5.13, the failure to obtain a consent to the
transfer of which is not anticipated to materially affect the operations of
WCCO-KRC Acquisition Corp. and Dakota Westmoreland Corporation, and (ii) for
consents, approvals, exemptions, orders or authorizations, and registrations or
filings that are obtainable or made in the ordinary course of business of the
Obligors without significant expense or delay, no consent, approval, exemption,
order or authorization of, or registration or filing with, any Official Body or
any other Person is required by any Law or any agreement material to the
business of any Obligor in connection with the conduct by each Obligor of its
business after the completion of the transactions contemplated by the Stock
Purchase Agreement (in the case of WECO and Northwestern) and the Asset
Acquisition Documents (in the case of WCCO-KRC Acquisition Corp. and Dakota
Westmoreland Corporation).
5.14 No Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition exists or will
exist after giving effect to the issue and sale of the Notes and the incurrence
of the Indebtedness evidenced thereby, and to the borrowings or other extensions
of credit to be made on the Closing Date and the Deferred Closing Date under or
pursuant to the Financing Documents and the Bank Financing Documents which
constitutes an Event of Default or Potential Default. None of the Obligors or
any Subsidiaries of any Obligor 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 would, either alone or together with all
other such violations, constitute or be reasonably likely to constitute a
Material Adverse Change. No default or event of default or basis for
acceleration exists or, after giving effect to the issuance and sale of the
Notes pursuant hereto, will exist under any instrument or agreement evidencing,
providing for the issuance or securing of or otherwise relating to any
Indebtedness of the Company or of any other Obligor.
5.15 Patents, Trademarks, Copyrights, Licenses, Etc.
Each Obligor and each Subsidiary of each Obligor owns or possesses all
the material patents, trademarks, service marks, trade names, copyrights,
licenses, registrations, franchises, permits and rights necessary to own and
operate its properties and to carry on its business as presently conducted and
planned to be conducted by such Obligor or Subsidiary, without known possible,
alleged or actual conflict with the rights of others. All material patents,
trademarks, service marks, trade names, copyrights, licenses, registrations,
franchises and permits of each Obligor and each Subsidiary of each Obligor are
listed and described on Schedule 5.15.
5.16 Security Interests.
Upon the due and proper filing of financing statements relating to the
following security interests in each office and in each jurisdiction where
required in order to perfect the security interests described below, taking
possession of any stock certificates or other certificates evidencing the
Pledged Collateral and recordation of the Patent, Trademark and Copyright
Security Agreement in the United States Patent and Trademark Office and United
States Copyright Office, as applicable, the Liens and security interests granted
to the Collateral Agent for the benefit of the Purchasers pursuant to the
Security Documents will constitute Prior Security Interests under the Uniform
Commercial Code as in effect in each applicable jurisdiction (the "Uniform
Commercial Code") to the extent such Liens and security interests can be
perfected by such filings or possession, entitled to all the rights, benefits
and priorities provided by the Uniform Commercial Code except for the Prior
Security Interest granted by the Obligors in their Accounts and Inventory in
favor of the Bank Lenders and except for other Permitted Liens of the types
described in clauses (i), (ii), (iii), (v), (vi) and (ix) of the definition of
that term set forth in Schedule B. There will be upon execution and delivery of
the Security 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 Company.
5.17 Mortgage Liens.
The Liens granted to the Collateral Agent for the benefit of the
Purchasers pursuant to the Mortgages (Noteholders) will constitute, upon due and
proper recordation of such Mortgages (Noteholders), a valid first priority Lien
(subject only to Permitted Liens of the types described in clauses (i), (ii),
(iii), (v), (vi) and (ix) of the definition of that term set forth in Schedule
B) under applicable law, but only to the extent that applicable law permits a
mortgage to attach to the property interest of the Obligor. All such action as
will be necessary or advisable to establish such Lien of the Collateral Agent
and its priority as described in the preceding sentence will be taken at or
prior to the time required for such purpose, and there will be as of the date of
execution and delivery of the Mortgages (Noteholders) no necessity for any
further action in order to protect, preserve and continue such Lien and such
priority.
5.18 Status of the Pledged Collateral.
All the Subsidiary Shares, Member Interests, Partnership Interests or
LLC Interests included in the Pledged Collateral to be pledged pursuant to the
Pledge Agreement (Noteholders) are or will be upon issuance validly issued and
nonassessable and owned beneficially and of record by the pledgor thereof free
and clear of any Lien or restriction on transfer, except for Permitted Liens of
the types described in clauses (i) and (vi) of the definition of that term set
forth in Schedule B or as otherwise provided by the Pledge Agreement
(Noteholders) except as the right of the Collateral Agent to dispose of such
Subsidiary Shares, Member Interests, Partnership Interests or LLC Interests may
be limited by the Securities Act and the regulations promulgated by the
Securities and Exchange Commission thereunder and by applicable state securities
laws. There are no shareholder, partnership, limited liability company or other
agreements or understandings with respect to the Subsidiary Shares, Member
Interests, Partnership Interests or LLC Interests included in the Pledged
Collateral except for the partnership agreements and limited liability company
agreements described on Schedule 5.18. The Obligors have delivered true and
correct copies of such partnership agreements and limited liability company
agreements to the Collateral Agent and each Purchaser.
5.19 Insurance.
Schedule 5.19 lists all insurance policies and other bonds to which any
Obligor or Subsidiary of any Obligor is a party, all of which are valid and in
full force and effect. No notice has been given or claim made and no grounds
exist to cancel or avoid any of such policies or bonds 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 Obligor and each Subsidiary of each Obligor in
accordance with prudent business practice in the industry of the Obligors and
their Subsidiaries.
5.20 Compliance with Laws.
The Obligors and their Subsidiaries are in compliance in all material
respects with all applicable Laws (other than Environmental Laws which are
specifically addressed in Section 5.25 [Environmental Matters]) in all
jurisdictions in which any Obligor or Subsidiary of any Obligor is presently or
will be doing business except where the failure to do so would not, either alone
or together with all other such failures, constitute or be reasonably likely to
result in a Material Adverse Change.
5.21 Material Contracts; Burdensome Restrictions.
Schedule 5.21 lists all material contracts relating to the business
operations of each Obligor and each Subsidiary of any Obligor, including,
without limitation, all Coal Supply Contracts, and all employee benefit plans
and Labor Contracts. Except as set forth on Schedule 5.21, all such material
contracts are valid, binding and enforceable upon such Obligor or Subsidiary and
each of the other parties thereto in accordance with their respective terms, and
there is no default thereunder, to the Obligors' knowledge, with respect to
parties other than such Obligor or Subsidiary. None of the Obligors 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,
either alone or together with all other such obligations, restrictions and
requirements, reasonably result in a Material Adverse Change.
5.22 Investment Companies; Regulated Entities.
None of the Obligors or any Subsidiaries of any Obligor 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
Obligors or any Subsidiaries of any Obligor is subject to any other federal or
state statute or regulation limiting its ability to incur Indebtedness for
borrowed money.
5.23 Plans and Benefit Arrangements.
(a) The Company and each other member of the ERISA Group are in
compliance in all material respects with all applicable provisions of ERISA
with respect to all Benefit Arrangements, Plans and Multiemployer Plans,
except as set forth on Schedule 5.23(a). There has been no Prohibited
Transaction with respect to any Benefit Arrangement or any Plan or, to the
Company's knowledge, with respect to any Multiemployer Plan or Multiple
Employer Plan, which could reasonably be expected to result in any
substantial obligation to the Company or any other member of the ERISA
Group, except as set forth on Schedule 5.23(a). The matters set forth on
Schedule 5.23(a) relate to members of the ERISA Group other than the
Company and the Obligors and will not result in a Material Adverse Change.
The Company 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, except where the failure to make any such payment could not
reasonably be expected to result in any substantial obligation to the
Company or any member of the ERISA Group or otherwise result in a Material
Adverse Change. With respect to each Plan and Multiemployer Plan, the
Company 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.
(b) To the Company's knowledge, each Multiemployer Plan and Multiple
Employer Plan is able to pay benefits thereunder when due.
(c) Neither the Company nor any other member of the ERISA Group has
instituted or intends to institute proceedings to terminate any Plan where
such termination would result in any substantial obligation to the Company
or any member of the ERISA Group or otherwise result in a Material Adverse
Change.
(d) 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.
(e) Each Plan is Adequately Funded.
(f) Neither the Company nor any other member of the ERISA Group (other
than the obligations of the Parent described on Schedule 5.23, subparagraph
f, for which Company and Obligors are not liable, or, if liable, would not
result in a Material Adverse Change) has incurred or reasonably expects to
incur any substantial withdrawal obligation under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Company 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 Company's knowledge, no Multiemployer Plan or Multiple Employer Plan is
reasonably expected to be reorganized or terminated, within the meaning of
Title IV of ERISA.
(g) To the extent that any Benefit Arrangement is insured, the Company
and all other members of the ERISA Group have paid when due all premiums
required to be paid for all periods through the Closing Date, except where
the failure to do so could not reasonably be expected to result in any
substantial obligation to the Company or any member of the ERISA Group or
otherwise result in a Material Adverse Change. To the extent that any
Benefit Arrangement is funded other than with insurance, the Company and
all other members of the ERISA Group have made when due all contributions
required to be paid for all periods through the Closing Date, except where
the failure to do so could not reasonably be expected to result in any
substantial obligation to the Company or any member of the ERISA Group or
otherwise result in a Material Adverse Change.
(h) All Plans and Benefit Arrangements have been administered, in all
material respects, in accordance with their terms and applicable Law,
except as set forth on Schedule 5.23(h). The matters set forth on Schedule
5.23(h) relate to members of the ERISA Group other than the Company and the
Obligors and will not result in a Material Adverse Change.
(i) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the
Internal Revenue Code. The representation by the Company in the immediately
preceding sentence is made in reliance upon and subject to the accuracy of
the representations of the respective Purchasers in Section 6.2 as to the
source of the funds used to pay the purchase price of the Notes to be
purchased by such Purchasers.
5.24 Employment Matters.
Each of the Obligors and each of their Subsidiaries is in compliance
with the Labor Contracts and all applicable federal, state and local labor and
employment Laws including those related to equal employment opportunity and
affirmative action, labor relations, minimum wage, overtime, child labor,
medical insurance continuation, worker adjustment and relocation notices,
immigration controls and worker and unemployment compensation, where the failure
to comply would constitute 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 Obligors or any of their
Subsidiaries which in any case would constitute a Material Adverse Change. The
Company has made available to the Purchasers true and correct copies of each of
the Labor Contracts.
5.25 Environmental Matters.
Except as disclosed on Schedule 5.25:
(a) Except for matters that, considered either individually or in the
aggregate, have no reasonable likelihood of materially disrupting the
projected mining operations of the Obligors or resulting in any substantial
obligation to the Obligors or otherwise resulting in a Material Adverse
Change, none of the Obligors has received any Environmental Complaint,
whether directed or issued to any Obligor or relating or pertaining to any
prior owner, operator or occupant of the Property, and has no reason to
believe that it might receive an Environmental Complaint.
(b) No activity of any Obligor at the Property is being or has been
conducted in violation of any Environmental Law or Required Environmental
Permit and to the knowledge of any Obligor no activity of any prior owner,
operator or occupant of the Property was conducted in violation of any
Environmental Law, except for activities that, considered either
individually or in the aggregate, have no reasonable likelihood of
materially disrupting the projected mining operations of the Obligors or
resulting in any substantial obligation to the Obligors or otherwise
resulting in a Material Adverse Change.
(c) There are no Regulated Substances present on, in, under, or
emanating from, or to any Obligor's knowledge emanating to, the Property or
any portion thereof which result in Contamination except for such Regulated
Substances that have no reasonable likelihood of materially disrupting the
projected mining operations of the Obligors or resulting in any substantial
obligation to the Obligors or otherwise resulting in a Material Adverse
Change.
(d) Each Obligor has all Required Environmental Permits and all such
Required Environmental Permits are in full force and effect, except where
the failure to have any Required Environmental Permits, either in any one
case or considered together with other such failures, has no reasonable
likelihood of materially disrupting the projected mining operations of the
Obligors or resulting in any substantial obligation to the Obligors or
otherwise resulting in a Material Adverse Change.
(e) Each Obligor has submitted to an Official Body and/or maintains,
as appropriate, all Required Environmental Notices, except for Required
Environmental Notices that have no reasonable likelihood of materially
disrupting the projected mining operations of the Obligors or resulting in
any substantial obligation to the Obligors or otherwise resulting in a
Material Adverse Change.
(f) No structures, improvements, equipment, fixtures, impoundments,
pits, lagoons or aboveground or underground storage tanks located on the
Property contain or use Regulated Substances except (1) in compliance with
Environmental Laws and Required Environmental Permits or (2) where the
improper presence or use of Regulated Substances have no reasonable
likelihood of materially disrupting the projected mining operations of the
Obligors or resulting in any substantial obligation to the Obligors or
otherwise resulting in a Material Adverse Change. To the knowledge of each
Obligor, no structures, improvements, equipment, fixtures, impoundments,
pits, lagoons or aboveground or underground storage tanks of prior owners,
operators or occupants of the Property contained or used, except in
material compliance with Environmental Laws, Regulated Substances or
otherwise were operated or maintained by any such prior owner, operator or
occupant except in compliance in all material respects with Environmental
Laws.
(g) To the knowledge of each Obligor, no facility or site to which any
Obligor, either directly or indirectly by a third party, has sent Regulated
Substances for storage, treatment, disposal or other management has been or
is being operated in violation of Environmental Laws or pursuant to
Environmental Laws is identified or proposed to be identified on any list
of contaminated properties or other properties which pursuant to
Environmental Laws are the subject of an investigation, cleanup, removal,
remediation or other response action by an Official Body except where such
violation, either alone or considered together with all other such
violations, has no reasonable likelihood of materially disrupting the
projected mining operations of the Obligors or resulting in any substantial
obligation to the Obligors or otherwise resulting in a Material Adverse
Change.
(h) No portion of the Property is identified or to the knowledge of
any Obligor proposed to be identified on any list of contaminated
properties or other properties which pursuant to Environmental Laws are the
subject of an investigation or remediation action by an Official Body, nor
to the knowledge of any Obligor is any property adjoining or in the
proximity of the Property identified or proposed to be identified on any
such list.
(i) No portion of the Property constitutes an Environmentally
Sensitive Area, except for portions of the Property that have no reasonable
likelihood of materially disrupting the projected mining operations of the
Obligors or resulting in any substantial obligation to the Obligors or
otherwise resulting in a Material Adverse Change.
(j) No Lien or other encumbrance authorized by Environmental Laws
exists against the Property and none of the Obligors has any reason to
believe that such a Lien or encumbrance may be imposed.
5.26 Senior Debt Status.
The Obligations of each Obligor under this Agreement, the Notes, the
Guaranty Agreement and each of the other Financing 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 Obligor except Indebtedness of such Obligor to the
extent secured by Permitted Liens. There is no Lien upon or with respect to any
of the properties or income of any Obligor or Subsidiary of any Obligor which
secures indebtedness or other obligations of any Person except for Permitted
Liens.
5.27 Coal Leases.
The Coal Leases constitute all of the leases owned by the Obligors
pertaining to the extraction, mining or removal of coal. The Obligors have made
available to the Purchasers a true, correct and complete copy of each of the
Coal Leases. Each of the Coal Leases is in full force and effect, and has not
been amended or modified from the copy of the Coal Lease provided to the
Purchasers, except for Permitted Modifications. None of the Obligors is in
default of any of its obligations under any of the material Coal Leases, and, to
the best of each Obligor's knowledge and belief, the lessors thereunder are not
in default under any such lessors' obligations under the Coal Leases. Except as
set forth on Schedule 5.27, to the Company's knowledge, no material amount of
royalties are currently past due under any of the Coal Leases.
5.28 Transactions with Affiliates.
Except as set forth in Schedule 5.28 or as permitted in Section 10.8
herein, there are no loans, leases, royalty agreements or other agreements,
arrangements or other transactions between any of the Obligors and any
Affiliate.
5.29 Permit Blocks.
No Obligor has been barred for a period in excess of fourteen (14)
consecutive days from receiving surface mining or underground mining permits
pursuant to the permit block provisions of the Surface Mining Control and
Reclamation Act, 30 U.S.C.ss.ss. 1201 et seq., and the regulations promulgated
thereto, or any corresponding state laws or regulations.
5.30 Qualifications as Lessee, Coal Acreage Limitations.
Except as disclosed on Schedule 5.30, each of the Obligors is qualified
in every material respect, including limitations and parameters imposed in 43
C.F.R. Part 3400, to take, hold, own and control federal coal and mineral
leases. The acquisition, directly or indirectly, by each Obligor will not cause
any Obligor to violate any material limitations or parameters imposed in 43
C.F.R. Part 3400.
5.31 Private Offering by the Company.
Neither any Obligor nor PNC Capital Markets, Inc. (the only Person
authorized or employed by the Company or the other Obligors in connection with
the offer and sale of the Notes or any similar securities) has offered the Notes
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Purchasers and not more than 60 other Institutional
Investors, each of which has been offered the Notes and the Guaranty Agreement
at a private sale for investment. Neither any Obligor nor anyone acting on
behalf of an Obligor has taken, or will take, any action that would subject the
issuance or sale of the Notes or the Guaranty Agreement to the registration
requirements of Section 5 of the Securities Act.
5.32 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.33 Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under
the Public Utility Holding Company Act of 1935, as amended, the ICC Termination
Act of 1995, as amended, or the Federal Power Act, as amended.
5.34 Additional Representations and Warranties.
Each Obligor represents and warrants that the representations and
warranties contained in the Bank Financing Documents are true and correct in all
material respects as of the date given.
5.35 Pari Passu Collateral.
Each Obligor represents and warrants that (excluding the exercise of
rights of set-off) no Guaranty, collateral, security or other credit enhancement
has been given, directly or indirectly, for the benefit of Bank Lenders under
the Bank Financing Documents or otherwise except for (i) Guarantees from the
Obligors, (ii) the security agreement, which provides the Bank Lenders with a
prior security interest in the Obligors, Accounts and Inventory, and (iii) a
subordinated security interest in and Lien on the other Collateral described in
the Security Documents. Complete and correct copies of the Bank Financing
Documents have been delivered to each of the Purchasers.
5.36 Single Purpose Entities.
(a) The Company at all times since its formation has been a duly
formed and existing limited liability company.
(b) The Company is presently a Single Purpose Entity.
(c) The Company at all times since its formation has been duly
qualified as a limited liability company in each jurisdiction in which such
qualification was necessary for the conduct of its business.
(d) Each Subsidiary of the Company is duly qualified as a corporation
in each jurisdiction in which such qualification is necessary for the
conduct of its business.
(e) The Company at all times since its formation has complied with the
provisions of its organizational documents and the laws of its jurisdiction
of formation relating to limited liability companies.
(f) Each Subsidiary of the Company is in compliance with the
provisions of its organizational documents and the laws of its jurisdiction
of formation relating to corporations or other business entities. All
formalities regarding the existence of Company have been observed since its
formation.
(g) The Company did not engage in any business until the Closing Date
except insofar as the acquisition of permits may be construed as engaging
in business and other matters related to the preparation for the
consummation of the transactions contemplated by the Asset Acquisition
Agreement, the Stock Purchase Agreement, the Bank Financing Documents, this
Agreement and the other Financing Documents (collectively, the "Transaction
Agreements").
(h) The Company did not incur any Indebtedness until the Closing Date.
(i) The Company has at all times since its formation accurately
maintained its financial statements, accounting records and limited
liability company documents, separate from those of any other Person. The
Company has maintained separate books, records, resolutions and agreements.
The Company has not at any time since its formation commingled its assets
with those of any other Person. The Company has at all times since its
formation accurately maintained its own bank accounts, payroll and separate
books of account. The Company has not commingled its funds or assets with
those of any other entity, and has held and will hold its assets in its own
name.
(j) The Company is presently organized solely for the purpose
described in the definition of Single Purpose Entity and has not engaged in
any business unrelated to acting as the Company hereunder and consummating
the transactions contemplated by the Transaction Agreements which is
inconsistent with or in violation of this Agreement.
(k) No Subsidiary of the Company has any assets other than those
related to coal mining operations. The Company has not had any assets other
than those related to coal mining operations and its interests in the
Subsidiaries.
(l) The Company has not engaged in, sought or consented to any
dissolution, winding up, liquidation, consolidation, merger, transfer of
partnership interest, membership interest or stock of a Subsidiary, or
amendment of the operating agreement of the Company (except for the amended
and restated operating agreement dated April 27, 2001 and in connection
with the Transaction Agreements).
(m) The Parent is the sole economic member of the Company.
(n) The Company has at all times since its formation identified itself
in all dealings with the public, under the Company's own name and as a
separate and distinct entity. Company has not at any time since its
formation identified itself as being a division of any other entity. The
Company has not at any time since its formation identified any other Person
as being a division or part of the Company. The Company has not failed to
correct any known misunderstanding regarding the separate identity of such
entity. The Company has conducted its business in its own name.
(o) The Company has at all times since its formation been adequately
capitalized in light of the nature of its business. The Subsidiaries of the
Company and the Company, taken as a whole, are presently adequately
capitalized in light of the nature of their business.
(p) The Company has not at any time since its formation assumed or
guaranteed the liabilities of any other Persons, except Guaranties of the
Indebtedness as permitted hereby. The Company has not at any time since its
formation acquired obligations or securities of any other Persons except
the obligations and/or securities of (a) any Subsidiary of the Company or
(b) any entity merged with the Company or any Subsidiary of the Company in
accordance with Section 10.6. The Company has not at any time since its
formation made loans or advances to any Person except as expressly
permitted under this Agreement. The Company has not pledged its assets for
the benefit of any other Person or entity, except in favor of the
Collateral Agent for the benefit of the Bank Lenders and the holders from
time to time of the Notes and Guaranties permitted under this Agreement.
(q) Except as expressly permitted in this Agreement, the Company and
each Subsidiary of the Company has not at any time since its formation
entered into or been a party to any transaction with any member of the
Parent Group, except in the ordinary course of business of the Company and
each Subsidiary of the Company on terms which are no less favorable to the
Company and each Subsidiary of the Company than would be obtained in a
comparable arm's length transaction with an unrelated third party.
(r) The Company has no Indebtedness other than the Indebtedness to the
Bank Lenders under the Bank Financing Documents and to the Purchasers under
this Agreement.
(s) The Company represents and warrants that the "assumptions of fact"
contained in the non-consolidation opinion of Hale and Dorr LLP of even
date herewith are true and correct in all material respects as of the date
hereof.
5.37 Surface Mine Reclamation Bonds.
Each of the Obligors has a sufficient surface mining bonding capacity
to be able to replace the bonds currently in place for all the Required Mining
Permits, except the permit for the Jewett Mine (which is covered by a self bond
with a third party guarantee).
Section 6. Representations of the Purchasers.
Each Purchaser represents as to itself as follows:
6.1 Purchase For Investment.
Such Purchaser represents that such Purchaser is purchasing the Notes
to be purchased by it hereunder for such Purchaser's own account or for one or
more separate accounts maintained by such Purchaser or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of such Purchaser's or their property shall at all
times be within such Purchaser's or their control. Such Purchaser understands
that the sales of securities contemplated hereunder (the "Securities") are
exempt from registration under the Securities Act and that the Obligors'
reliance upon such exemption is predicated upon such Purchaser's representations
set forth herein. Such Purchaser further understands that the Notes and the
Guaranty Agreement have not been registered under the Securities Act or any
state securities laws and may be resold only if registered pursuant to the
provisions of the Securities Act and any applicable state securities laws or if
an exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Obligors are not required to register the Notes or the Guaranty Agreement under
the Securities Act or any state securities laws. Such Purchaser represents that
it is an accredited investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.
6.2 Source of Funds.
Such Purchaser represents that at least one of the following statements
is an accurate representation as to each source of funds (a "Source") to be used
by such Purchaser to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder:
(a) the Source is an "insurance company general account" within the
meaning of the Department of Labor Prohibited Transactions Exemption
("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan, all plans maintained by the same employer or
employee organization, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf of
such plan, exceeds ten percent (10%) of the total reserves and liabilities
of such general account (exclusive of separate account liabilities) plus
surplus, as set forth in the NAIC Annual Statement filed with such
Purchaser's state or domicile; or
(b) the Source is either (i) an "insurance company pooled separate
account," within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a "bank collective investment fund," within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as such Purchaser has disclosed to the
Company in writing pursuant to this paragraph (b) at least three (3)
business days before the Closing, no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially
owns more than 10% of all assets in such pooled separate account or
collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part l(c), (e), (f), and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c) at least three (3) business days
before the Closing; or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (e) at least three (3) business days before the Closing; or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
6.3 Exemption from Withholding.
Each Purchaser or assignee of a Purchaser that is not incorporated
under the Laws of the United States of America or a state thereof represents
that it is exempt from deduction or withholding of any United States federal
income taxes and is entitled to receive payments under this Agreement and the
other Financing 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 is subject to no such exemption or reduced rate with
respect to such payments and is in compliance with Section 22.7 [Withholding].
Section 7. Information as to the Obligors.
7.1 Reporting.
The Obligors, jointly and severally, covenant and agree that until
payment in full of the Notes and interest thereon, and satisfaction of all of
the Obligors' other Obligations hereunder and under the other Financing
Documents, the Obligors will furnish or cause to be furnished to each holder of
Notes that is an Institutional Investor:
(a) Collateral Agent Report.
As soon as available and in any event within fifteen (15) Business Days
after the end of each fiscal quarter, a Collateral Agent Report in a form
reasonably acceptable to the Purchasers, stating the value of the investments
maintained in the Debt Service Reserve Account and the Series B Trust Account as
of the end of the preceding fiscal quarter.
(b) Quarterly Financial Statements.
As soon as available and in any event within fifty (50) calendar days
after the end of each of the first three fiscal quarters in each fiscal year,
financial statements of the Company, consisting of a consolidated and
consolidating balance sheet as of the end of such fiscal quarter and related
consolidated and consolidating statements of income, stockholders' equity and
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 Company as having been prepared in accordance with GAAP (provided
that the failure to include footnotes will not be violative of this Section),
consistently applied, and setting forth in comparative form on a consolidated
basis the respective financial statements for the corresponding date and period
in the previous fiscal year.
(c) Annual Financial Statements.
As soon as available and in any event within one hundred thirty five
(135) days after the end of each fiscal year of the Company, financial
statements of the Company consisting of a consolidated and consolidating balance
sheet as of the end of such fiscal year, and related consolidated and
consolidating statements of income, stockholders' equity and 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 by independent certified public accountants of
nationally recognized standing. The certificate or report of such 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
Obligor under any of the Financing Documents. The Obligors shall deliver with
such financial statements and certification or report by such independent
certified public accountants a letter of such accountants to the holders of the
Notes substantially (i) to the effect that, based upon their ordinary and
customary examination of the affairs of the Company, performed in connection
with the preparation of such consolidated financial statements, and in
accordance with generally accepted auditing standards, such accountants are not
aware of the existence of any condition or event which constitutes an Event of
Default or Potential Default or, if they are aware of such condition or event,
stating the nature thereof, and confirming the Company's calculations with
respect to the certificate to be delivered pursuant to Section 7.1(d)
[Certificate of the Company] with respect to such financial statements and (ii)
to the effect that the holders of the Notes are intended to rely upon such
accountant's certification of the annual financial statements and that such
accountants authorize the Obligors to deliver such reports and certificate to
the holders of the Notes on such accountants' behalf.
(d) Certificate of the Company.
Concurrently with the financial statements of the Company furnished to
the holders of the Notes pursuant to Sections 7.1(b) [Quarterly Financial
Statements] and 7.1(c) [Annual Financial Statements], a certificate (each a
"Compliance Certificate") of the Company signed by the Chief Executive Officer,
President, Chief Financial Officer or other responsible officer (whose position
shall be reasonably satisfactory to the Purchasers) of the Company , in the form
of Exhibit 7.1(d), (i) to the effect that, except as described pursuant to
Section 7.1(e) [Notice of Default], (x) the representations and warranties of
the Company contained in Section 5 and in the other Financing 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) and the Obligors have performed and complied with all covenants and
conditions hereof, and (y) no Event of Default or Potential Default exists and
is continuing on the date of such certificate, and (ii) containing (x)
calculations in sufficient detail to demonstrate compliance as of the date of
such financial statements with all financial covenants contained in Section 10
[Negative and Financial Covenants], and (y) a written discussion of management
comparing the financial performance of the Obligors against both the annual
budget and the results of operations from the corresponding fiscal quarter in
the immediately preceding fiscal year. The certificate delivered with the
financial statements pursuant to Sections 7.1(b) and 7.1(c) shall include a
determination in reasonable detail of the Available Cash (as used in Section
9.1(m)) and the amount of the Mandatory Prepayment with Surplus Cash Flow
applicable as of the fiscal quarter then ended.
(e) Notice of Default.
Promptly after any officer of any Obligor has learned of the occurrence
of an Event of Default or Potential Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or under
any other Financing Document or that any Person has given any notice or taken
any action with respect to a claimed default of the type referred to in Section
11(f), a certificate signed by the Chief Executive Officer, President or Chief
Financial Officer of such Obligor setting forth the details of such Event of
Default or Potential Default or other event and the action which the such
Obligor proposes to take with respect thereto.
(f) Notice of Litigation.
Promptly after any Obligor having notice of the commencement thereof,
notice of all actions, suits, proceedings or investigations before or by any
Official Body or any other Person against any Obligor which relate to any
material portion of the Collateral, involve a claim or series of claims in
excess of $1,000,000 or which if adversely determined would constitute a
Material Adverse Change.
(g) Notices of Change in Location or Formation.
Written notice to the holders of Notes at least thirty (30) calendar
days prior thereto, with respect to any change in any Obligor's state of
formation or the location of its assets or principal office from the states and
locations set forth in Schedule A to the Security Agreement (Noteholders).
(h) Budgets; Other Reports and Information.
Promptly upon their becoming available to the Company:
(i) the annual forecasts or projections of the Company and its
Subsidiaries for each fiscal year, to be supplied not later than
January 1 of such fiscal year and the budget as soon as available,
(ii) all reports, notices or proxy statements generally
distributed by the Company to its members on a date no later than the
date supplied to such members,
(iii) all regular, periodic and other reports, including Forms
10-K, 10-Q and 8-K, registration statements and prospectuses, filed by
the Company with the Securities and Exchange Commission,
(iv) a copy of any order in any proceeding to which the Company
or any of its Subsidiaries is a party issued by any Official Body,
except for orders of the type that are typically received by mining
companies with respect to violations of Law occurring in connection
with mining activities which have no reasonable likelihood of
materially disrupting the projected mining operations of the Obligors
or resulting in any substantial obligation to the Obligors or of
otherwise constituting or giving rise to a Material Adverse Change,
and
(v) such other reports and information as any of the holders of
the Notes may from time to time reasonably request. The Company shall
also notify the holders of the Notes promptly of the enactment or
adoption of any Law which may result in a Material Adverse Change.
(i) Notices Regarding Plans and Benefit Arrangements.
Promptly after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature of the event; when known,
any action taken or threatened by a governmental agency or other adverse party;
and the action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
1) with respect to any Plan, any reportable event, as defined in
Section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
2) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
3) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Internal Revenue Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any member of the ERISA Group
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other
such liabilities or Liens then existing, could reasonably be expected
to constitute or result in a Material Adverse Change.
(j) Notices from Governmental Authority.
Promptly, and in any event within 30 days of receipt thereof, copies of
any notice to the Company or any Subsidiary from any federal or state
governmental authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to constitute or result in a
Material Adverse Change.
(k) Information as to certain Price Adjustments.
If any Price Determination Event shall arise under any material Coal
Supply Contract, the Company or the relevant Obligor shall provide (i) notice
thereof at least 30 days prior to the effectiveness of any adjustment or
potential adjustment under such contract to each holder, identifying such
contract and setting forth the price currently payable thereunder and the basis
on which such adjustment is or may be made, (ii) such pertinent information as
any such holder may reasonably request as to the computation of such price
adjustment or potential price adjustment and the impact thereof on the business
and cash flows of the Company and the other Obligors, and (iii) not later than
the third Business Day following the effectiveness of any such adjustment,
confirmation of the amount thereof and the manner in which it was determined;
provided, however that nominal price adjustments in the ordinary course of
business based on the quality of the coal furnished pursuant to such contracts
need not be disclosed under this Section . The term "Price Determination Event"
shall mean, with respect to any Coal Supply Contract, (i) any scheduled
"re-opener" of the price payable under such contract (other than the quarterly
price adjustment under the Coyote Plant coal sales contract), (ii) any amendment
to or interpretation of such contract that could reasonably be expected to alter
negatively, from the Obligor's perspective, and substantially the price payable
to the Obligor thereunder, and (iii) any arbitration or judicial proceeding
involving the price payable under such contract.
(l) Single Purpose Entity Status.
Concurrently with the annual financial statements required to be
furnished pursuant to Section 9.1(c) in respect of each fiscal year, a written
report substantially in the format of Exhibit 7.1(l) hereto, signed by the
Secretary and a Senior Financial Officer of the Company, discussing the actions
taken by the Company and its Subsidiaries during such fiscal year in order to
assure compliance with Section 9.1(o) [Single Purpose Entities], setting forth,
with respect to each of subdivisions (i) through (xvi) of such Section, that its
and their businesses, affairs, books and records have been conducted and
maintained during such fiscal year in compliance with the separate covenants,
agreements, terms and conditions set forth in each such subdivision, and, in the
event of any failure to have complied with any such covenant, agreement, term or
condition, specifying in reasonable detail the controls imposed or other actions
taken or to be taken by the Company with respect thereto.
(m) Monthly Production Report.
Within 10 Business Days of the end of each calendar month, a report
signed by an Authorized Officer which discloses for each Obligor for such
immediately preceding calendar month (i) the volume of coal produced (in tons)
by such Obligor, (ii) the volume of coal sold by such Obligor, and (iii) the
price per ton obtained for such coal sold.
(n) Requested Information.
With reasonable promptness, such other data and information relating to
the business, operations, affairs, financial condition, assets or properties of
the Company or any of its Subsidiaries or relating to the ability of any Obligor
to perform its obligations under the Financing Documents as from time to time
may be reasonably requested by any such holder of Notes.
7.2 Inspection.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Potential Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice to
the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiaries, to discuss the affairs, finances and accounts
of the Company and its Subsidiaries with the Company's officers, and (with
the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the
other offices and properties of the Company and each Subsidiary, all at
such reasonable times (which shall be normal business hours) and as often
as may be reasonably requested; and
(b) Default -- if a Potential Default or Event of Default then exists,
at the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said accountants
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.
Section 8. Payment and Prepayment of the Notes.
8.1 Regularly Scheduled Prepayments; Payment at Final Maturity.
(a) The Notes are subject to regularly scheduled prepayments of
principal in accordance with Schedule 8.1. On each Payment Date, the
Company shall prepay the principal amount indicated opposite such Payment
Date on Schedule 8.1 (or such lesser principal amount as shall then be
outstanding) of the Notes at par and without payment of the Make-Whole
Amount or any premium except for breakage fees, if any, associated with
prepaying any Borrowing Tranche of the Series A Notes bearing interest at a
Euro-Rate Option in accordance with Schedule 1 annexed to the form of
Series A Note set forth in Exhibit 1A. No prepayment of less than the
entire outstanding principal amount of the Notes pursuant to Section 8.2 or
8.3 shall relieve the Company of its obligation to make (nor shall it
reduce the amount of) the prepayments of principal on Notes required by
this Section 8.1. For so long as any Series A Notes shall remain
outstanding, the principal amount of Notes to be prepaid on each Payment
Date pursuant to this Section 8.1 shall be allocated first to the Series A
Notes, until no Series A Notes shall remain outstanding, and then to the
Series B Notes.
(b) On June 30, 2002, the Company will pay the entire remaining unpaid
principal amount of Series A Notes, together with all interest accrued
thereon.
(c) On December 31, 2008, the Company will pay the entire remaining
unpaid principal balance of the Series B Notes, together with all interest
accrued thereon.
8.2 Mandatory Prepayment with Surplus Cash Flow; Optional Prepayments.
(a) Mandatory Prepayments with Surplus Cash Flow.
For so long as any Series A Notes shall remain outstanding (and to the
extent necessary to prepay the Series A Notes in full), on the fifteenth
Business Day following each Payment Date, (each a "Mandatory Prepayment Date")
the Company shall make a Mandatory Prepayment with Surplus Cash Flow, as and to
the extent required by Section 8.2(d), to the prepayment of the principal amount
of Series A Notes equal to such amount of the Noteholder Share of Surplus Cash
Flow (or applicable portion thereof) required to be applied to such prepayment
pursuant to Section 8.2(d), each such prepayment to be made at 100% of the
principal amount to be prepaid, together with interest accrued and unpaid on
such principal amount to the date of prepayment, and without payment of the
Make-Whole Amount or any premium except for breakage fees, if any, associated
with prepaying any Borrowing Tranche of the Series A Notes bearing interest at a
Euro-Rate Option in accordance with Schedule 1 annexed to the form of Series A
Note set forth in Exhibit 1A.
(b) Optional Prepayments.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in a principal
amount not less than $2,000,000 of the aggregate principal amount of the Notes
then outstanding in the case of a partial prepayment, plus, in the case of a
prepayment of Series B Notes, the Make-Whole Amount determined for the
prepayment date with respect to the principal amount of Series B Notes being
prepaid. The Company will give each holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than thirty (30) days and
not more than sixty (60) days prior to the date fixed for such prepayment. Each
such notice shall specify such date, the aggregate principal amount of the Notes
to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with Section 8.3(c)), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and, in the case of a prepayment of Series B Notes, shall be
accompanied by a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details
of such computation. Two (2) Business Days prior to any such prepayment of
Series B Notes, the Company shall deliver to each holder of Series B Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date of principal. Each
determination by the Company set forth in any such notice of the Make-Whole
Amount applicable in respect of a prepayment of Series B Notes held by any such
holder shall be subject to verification by such holder.
(c) Application of Prepayments.
In the case of each partial prepayment of Notes of either Series
pursuant to Section 8.1, 8.2(a) or 8.2(b), the principal amount of Notes of such
Series to be prepaid shall be allocated among all of the Notes of such Series at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
(d) Application of Noteholder Share of Surplus Cash Flow.
For so long as any Series A Notes remain outstanding, but only to the
extent necessary to prepay the Series A Notes in full, and provided that no
Event of Default shall have occurred and be continuing, all of the Noteholder
Share of Surplus Cash Flow determined as of any Payment Date shall be applied to
the prepayment of Series A Notes pursuant to Section 8.2(a) (each such
prepayment constituting a Mandatory Prepayment with Surplus Cash Flow).
If an Event of Default shall have occurred and be continuing, the Noteholder
Share of Surplus Cash Flow shall be ratably allocated between the Series A Notes
and the Series B Notes in relation to the aggregate unpaid principal amount of
each Series of Notes then outstanding and shall be applied as follows:
(i) With respect to the Series A Notes, the Series A portion of
the Noteholder Share of Surplus Cash Flow shall be applied to the
prepayment of Series A Notes pursuant to Section 8.2(a) (each such
prepayment constituting a Mandatory Prepayment with Surplus Cash
Flow); and
(ii) With respect to the Series B Notes, the Series B portion of
the Noteholder Share of Surplus Cash Flow shall be applied as a
deposit into the Series B Trust Account established pursuant to the
Collateral Agency Agreement and applied in accordance with the
applicable provisions thereof and the following Section 8.2(e).
At any time during which no Series A Notes shall remain outstanding, all of the
Noteholder Share of Surplus Cash Flow shall be deposited into the Series B Trust
Account and applied in accordance with the applicable provisions of the
Collateral Agency Agreement and the following Section 8.2(e).
(e) Series B Trust Account. Upon the occurrence and during the
existence of any Event of Default, the holders of the Series B Notes shall
be entitled to demand the application from the Series B Trust Account and
the Collateral Agent shall be required to apply the full amount on deposit
therein, including any investment earnings, to the pro rata payment of the
outstanding Series B Notes based upon the unpaid principal balance thereof
at such time. The Company shall not be permitted to withdraw any amount
from the Series B Trust Account except that, so long as no Potential
Default or Event of Default shall have occurred and be continuing, if the
Company shall have given notice of the prepayment of the Series B Notes
pursuant to Section 8.2(b), the Company may, on the date of such
prepayment, require the application of the amounts then on deposit in the
Series B Trust Account to the payment of the prepayment price of the Series
B Notes to be prepaid on such prepayment date. Amounts from time to time on
deposit in the Series B Trust Account may be invested as and to the extent
provided in the Collateral Agency Agreement only in obligations of the type
described in subdivision (i) of the definition of Permitted Investments
which are entitled to the full faith and credit of the United States of
America.
8.3 Change in Control.
(a) No Change in Control or Control Event. The Company shall
mandatorily prepay the Notes of each Series in full (at par, together with,
in the case of the prepayment of the Series B Notes, the Make-Whole Amount
determined for the prepayment date in respect of the outstanding principal
amount of the Series B Notes) in the event that there shall occur (i) any
Obligors' Change in Control or Control Event with respect to the Company or
any of the other Obligors or (ii) any Parent Change in Control with respect
to the Parent. Any prepayment pursuant to this Section 8.3 shall (A) be
made in accordance with the terms of Section 8.2(b) (and at the prepayment
price provided for therein) and (B) notwithstanding any provision hereof to
the contrary, shall be made not later than the effectiveness of the
Obligors' Change of Control or Parent Change of Control in respect of
which, or contemplated by the Control Event in respect of which, such
prepayment is required.
(b) "Obligors' Change in Control" shall be deemed to have occurred if
there is any change subsequent to the Closing in the persons (as such term
is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in
effect on the date of the Closing) who are direct owners of an equity
interest in the Company or any of the other Obligors, subsequent to the
Closing Date.
(c) "Control Event" means:
(i) the execution by the Parent or any of its Subsidiaries or
Affiliates, or the Company or any of its Subsidiaries or Affiliates,
of any agreement with respect to any proposed transaction or event or
series of transactions or events which, individually or in the
aggregate, may reasonably be expected to result in a Parent Change in
Control or an Obligors' Change in Control, or
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Parent Change in
Control or an Obligors' Change in Control.
(d) "Parent Change in Control" shall be deemed to have occurred if (i)
any person or group of persons (within the meaning of Sections 13(d) or
14(a) of the Exchange Act) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of capital stock or other securities of the
Parent which are entitled to cast more than 40% of the total votes which
may be cast in an election of directors of the Parent; or (ii) within any
period of twelve (12) consecutive calendar months, a majority of the board
of directors of the Parent shall be comprised of persons other than those
individuals who were directors of the Parent on the first day of such
period together with any individuals who were nominated for election as
directors of the Parent by those individuals who were directors of the
Parent on the first day of such period.
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5 Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
Section 9. Affirmative Covenants.
9.1 The Obligors covenant that so long as any of the Notes are outstanding:
(a) Preservation of Existence, Etc.
Each Obligor shall, and shall cause each of its Subsidiaries to,
maintain its legal existence as a corporation, limited partnership or limited
liability company and 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 as otherwise
expressly permitted in Section 10.6 [Liquidations, Mergers, Etc.] or where an
Obligor shall be in breach of this Section inadvertently because it failed to
obtain or maintain a qualification or license provided that such failure is
promptly remedied upon the Obligor becoming aware of such failure and the
failure does not adversely affect the rights of the Obligors.
(b) Payment of Liabilities, Including Taxes, Etc.
Each Obligor shall, and shall cause each of its Subsidiaries to, duly
pay and discharge all liabilities to which it is subject or which are asserted
against it, promptly as and when the same shall become due and payable,
including all taxes, assessments and governmental charges upon it or any of its
properties, assets, income or profits, prior to the date on which penalties
attach thereto, except to the extent that such liabilities, including taxes,
assessments or charges, are being contested in good faith and by appropriate and
lawful proceedings diligently conducted and for which such reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made, but only to the extent that failure to discharge any such liabilities
would not result in any additional liability which would adversely affect to a
material extent the financial condition of any Obligor or Subsidiary of any
Obligor or which would affect a material portion of the Collateral, provided
that the Obligors and their Subsidiaries will pay all such liabilities forthwith
upon the commencement of proceedings to foreclose any Lien which may have
attached as security therefor.
(c) Maintenance of Insurance.
Each Obligor 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, all as reasonably determined by the Required Combined Holders. For
policies which cover Persons in addition to the Company and the other Obligors,
the policies shall provide that the required limits per occurrence will continue
to be in effect for the Company and the other Obligors notwithstanding losses
which may occur with respect to such other Persons. The Obligors shall deliver
to the Collateral Agent (x) on the Closing Date and annually thereafter an
original certificate of insurance signed by the Obligors' independent insurance
broker describing and certifying as to the existence of the insurance on the
Collateral required to be maintained by this Agreement and the other Financing
Documents, including without limitation, business interruption insurance in an
amount of $50,000,000 or more in the aggregate among all Obligors, together with
a copy of the endorsements described in the next sentence attached to such
certificate and (y) at the request of the Required Combined Holders, from time
to time a summary schedule indicating all insurance then in force with respect
to each of the Obligors. Such policies of insurance shall contain special
endorsements, in form and substance reasonably acceptable to the Collateral
Agent, which shall (i) specify the Collateral Agent as an additional insured,
mortgagee and lender loss payee as its interests may appear, with the
understanding that any obligation imposed upon the insured (including the
liability to pay premiums) shall be the sole obligation of the applicable
Obligors and not that of the insured, (ii) provide that the interest of the
holders of the Notes shall be insured regardless of any breach or violation by
the applicable Obligors of any warranties, declarations or conditions contained
in such policies or any action or inaction of the applicable Obligors or others
insured under such policies, (iii) provide a waiver of any right of the insurers
to set off or counterclaim or any other deduction, whether by attachment or
otherwise, (iv) provide that any and all rights of subrogation which the
insurers may have or acquire shall be, at all times and in all respects, junior
and subordinate to the prior payment in full of the Indebtedness hereunder and
that no insurer shall exercise or assert any right of subrogation until such
time as the Indebtedness hereunder has been paid in full, (v) include effective
waivers by the insurer of all claims for insurance premiums against the
Collateral Agent, (vi) provide that no cancellation of such policies for any
reason (including non-payment of premium) nor any change therein shall be
effective until at least thirty (30) days after receipt by the Collateral Agent
of written notice of such cancellation or change, (vii) be primary without right
of contribution of any other insurance carried by or on behalf of any additional
insureds with respect to their respective interests in the Collateral, and
(viii) provide that inasmuch as the policy covers more than one insured, all
terms, conditions, insuring agreements and endorsements (except limits of
liability) shall operate as if there were a separate policy covering each
insured. The business interruption insurance required hereunder shall include
without limitation coverage in respect of outages at power plants serviced under
any material Coal Supply Contract. The applicable Obligors shall notify the
Collateral Agent and each holder of Notes promptly of any occurrence causing a
material loss or decline in value of the Collateral and the estimated (or
actual, if available) amount of such loss or decline. With respect to any
casualty or property insurance for damage or destruction of any Collateral, such
losses may be adjusted by and be payable to the Obligors if (i) the Obligors
promptly certify in writing that the proceeds shall be used for the repair,
restoration and/or replacement of property in respect of which such proceeds
were received and continue such course of action or (ii) the amount of the
proceeds from the losses is $500,000 or less. Any and all proceeds for losses
not addressed in the preceding sentence shall be, at the option of the Required
Combined Holders, and upon notice thereof to the Company, adjusted by and
payable to the Collateral Agent. Any monies received by the Collateral Agent in
accordance with the preceding sentence constituting insurance proceeds or
condemnation proceeds (pursuant to any of the Mortgages (Noteholders)) may, at
the option of the Required Combined Holders, (i) be applied by the Collateral
Agent to the pro rata payment of the Notes, or (ii) be disbursed to the
applicable Obligors on such terms as are deemed appropriate by the Required
Combined Holders for the repair, restoration and/or replacement of property in
respect of which such proceeds were received.
(d) Maintenance of Properties and Leases.
Each Obligor shall, and shall cause each of its Subsidiaries to,
maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of similar
character and size, all of those properties useful or necessary to its business,
and from time to time, such Obligor will make or cause to be made all
appropriate repairs, renewals or replacements thereof.
(e) Maintenance of Patents, Trademarks, Etc.
Each Obligor shall, and shall cause each of its Subsidiaries to,
maintain in full force and effect all patents, trademarks, service marks, trade
names, copyrights, licenses, franchises, permits and other authorizations
necessary for the ownership and operation of its properties and business if the
failure so to maintain the same would constitute a Material Adverse Change.
(f) Operation of Mines.
Each Obligor shall have in place all Required Mining Permits, surface
mining reclamation bonds, and such other consents and approvals as are necessary
for continuing and uninterpreted coal mining and related operations on, in or
under the Real Property substantially in the manner as such operations had been
authorized immediately prior to such Obligor's acquisition of its interests in
the Real Property or as described in any plan of operation.
(g) Keeping of Records and Books of Account.
The Company shall, and shall cause each Subsidiary of the Company to,
maintain and keep proper books of record and account which enable the Company
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 Company or any Subsidiary of the Company, and in which
full, true and correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
(h) Plans and Benefit Arrangements.
After the Closing Date, the Company 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
the failure to comply therewith, alone or in conjunction with any other failure,
would not result in any substantial obligation to the Company or any of its
Subsidiaries or otherwise result in a Material Adverse Change. Without limiting
the generality of the foregoing, the Company 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 except where such failure,
alone or in conjunction with any other failure, would not result in any
substantial obligation to the Company or any of its Subsidiaries or otherwise
result in a Material Adverse Change.
(i) Compliance with Laws.
Each Obligor 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 9.1(i) if
any failure to comply with any Law would not constitute a Material Adverse
Change, including, without limitation, if such failure to comply would result in
fines, penalties, remediation costs, other similar liabilities or injunctive
relief which in the aggregate would not constitute a Material Adverse Change.
(j) Further Assurances.
Each Obligor shall, from time to time, at its expense, faithfully
preserve and protect the Collateral Agent's Lien on and Prior Security Interest
in the Collateral as a continuing (i) first priority perfected Lien with respect
to the Collateral and (ii) junior priority perfected Lien with respect to the
Obligors' Accounts and Inventory pledged to the Bank Lenders, the Bank Financing
Documents, in each case subject only to Permitted Liens, and shall do such other
acts and things as the Collateral 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 Financing Documents and to exercise and
enforce its rights and remedies thereunder with respect to the Collateral.
(k) Subordination of Intercompany Loans.
Except as otherwise provided in the Intercompany Subordination
Agreement, each Obligor agrees that any and all Indebtedness, loan or advance
now owed or hereinafter incurred by any Obligor to any other Obligor is
subordinated to the prior payment in full of the Notes and that all rights to
receive any payments on such Indebtedness in bankruptcy or otherwise shall
constitute collateral security for the Notes and the holders of the Notes shall
be entitled to vote any and all rights associated with such Indebtedness.
(l) Debt Service Reserve Account.
For the purpose of providing additional collateral for the Notes, the
Company shall establish a Debt Service Reserve Account with the Collateral Agent
which is to be funded over time in accordance with this Section by cash or other
Permitted Investments in an amount equal to or greater than the Debt Service
Reserve Requirement as the same changes from time to time. On or before each
Payment Date during the term of this Agreement, the Company shall calculate the
Debt Service Reserve Requirement, which is the sum of the following:
(i) scheduled principal payment on the Notes to become due within
the next succeeding six (6) month period;
(ii) interest payments on the Notes to become due and payable
within the next succeeding six (6) month period; provided, however
that due to the variable interest rate provisions with respect to the
Series A Notes the interest payments under such Notes shall be
estimated interest payments for such six (6) month period; and
(iii) billed and unpaid fees and expenses of the Collateral Agent
as of the date of determination or anticipated to be payable within
the next six (6) month period.
In lieu of depositing or maintaining part or all of the cash or other
Permitted Investments required to be maintained in the Debt Service Reserve
Account, the Company may provide as collateral for the Notes an acceptable
letter of credit in favor of the Collateral Agent from a financial institution
having combined capital and surplus of not less than $500,000,000 and a
long-term debt rating of 'A2' or better from Moody's or 'A' or better from S&P,
and otherwise reasonably satisfactory to the Collateral Agent and the Required
Combined Noteholders (a "Debt Service Letter of Credit") in an amount equal to
that part of the amount of cash or Permitted Investments to be maintained in the
Debt Service Reserve Account for which substitution is desired. Each Debt
Service Letter of Credit shall have a term of at least 364 days and shall be
subject to a drawing in full by the Collateral Agent (x) if not replaced with a
further Debt Service Letter of Credit at least 90 days prior to its stated
expiration or replaced by cash or other Permitted Investments and (y) upon the
occurrence of an Event of Default. The proceeds from any drawing under a Debt
Service Letter of Credit shall be deposited into the Debt Service Reserve
Account and be held and applied by the Collateral Agent in accordance with the
applicable provisions of this Agreement and the other Financing Documents.
(m) Payments from the Company.
On each Payment Date during the term of this Agreement, the Company
shall pay the line items below from Consolidated EBITDA (for purposes of this
sentence, Consolidated EBITDA shall not include any deductions for Management
Fees) less Capital Expenditures ("Available Cash"), each determined as of the
fiscal quarter of the Company ended on or closest to the most recent prior
Payment Date (except for each annual reconciliation described below and for the
period from the Closing Date through June 30, 2001), in the following order of
priority:
(i) to the Collateral Agent in the amount of its accrued fees and
expenses for such period;
(ii) to the payment of interest expense on the Consolidated Total
Indebtedness, determined in accordance with GAAP for such period;
(iii) to the payment of accrued and unpaid Debt Service Letter of
Credit fees for such period;
(iv) to the payment of income tax expense for such period;
(v) to the payment of scheduled principal due on the Consolidated
Total Indebtedness for such period;
(vi) to the payment of accrued Management Fees for such period if
and to the extent payment thereof is at the time permitted by Section
9.1(r);
(vii) to fund (to the extent of Available Cash remaining after
payment of items (i) through (vi) above) the Debt Service Reserve
Account until it reaches the Debt Service Reserve Requirement;
provided, however, for fiscal quarters ending on or before December
31, 2001, in lieu of paying all of the remaining Available Cash into
the Debt Service Reserve Account as required by this line item, so
long as no Potential Default or Event of Default is then in existence
or likely to result therefrom, 50% of the Available Cash otherwise
designated for payment into the Debt Service Reserve Account, but in
no event more than $1,250,000 with respect to any fiscal quarter, may
be retained by the Company (and may be distributed by the Company to
the Parent after making payment to the Debt Service Reserve Account in
accordance with this line item).
The balance, if any, of the Available Cash remaining after payment of
the above items (i) through (vii) shall be referred to herein as the
"Surplus Cash Flow." In accordance with the following formula, the
Surplus Cash Flow shall be divided into two components, one of which is
referred to as the "Noteholder Share" and the other of which is
referred to as the "Company Share":
(1) if the Debt Service Coverage Ratio as of such date is
less than 1.25 to 1.00, the Noteholder Share thereof shall be
equal to 100% of such Surplus Cash Flow; or
(2) if the Debt Service Coverage Ratio as of such date is
greater than or equal to 1.25 to 1.00, the Noteholder Share
thereof shall be equal to 25% of such Surplus Cash Flow.
Notwithstanding anything contained in this Section to the contrary, the
Company Share of Surplus Cash Flow shall from time to time be reduced and the
amount of the Noteholder Share of Surplus Cash Flow increased in accordance with
the terms of the Surplus Cash Flow Letter.
The Noteholder Share of Surplus Cash Flow determined as of any Payment
Date shall be applied by the Company in accordance with Section 8.2(d) herein.
Each payment to the Debt Service Reserve Account and application of the
Noteholder Share of Surplus Cash Flow shall be made within fifteen (15) Business
Days of the corresponding Payment Date. So long as the Noteholder Share of
Surplus Cash Flow has been applied in accordance with Section 8.2(d), the
Company Share of Surplus Cash Flow for such period may be retained by the
Company (and, so long as no Potential Default or Event of Default is in
existence or likely to result therefrom, may be distributed by the Company to
the Parent).
All of the foregoing computations pursuant to this Section 9.1(m) in
respect of each fiscal quarter in any fiscal year shall be subject to adjustment
based upon the annual audited financial statements of the Obligors in respect of
such fiscal year. The computations made pursuant to this Section 9.1(m) shall be
recalculated each year in the same manner as described in this Section, but
using the actual numbers from the audited financial statements. Based on such
computations, as promptly as practicable, but in any event contemporaneously
with the Company's delivery to the holders of the Notes of its audited financial
statements in accordance with this Agreement, the Company shall inform the
holders of the Notes in writing, of the amount of any adjustments under this
Section based upon such audit. All adjustments necessary to reconcile the
computations made in this Section in light of such audit shall be made within
ten (10) Business Days after each June 30 hereafter. The adjustments based on
the audited information shall be made as follows:
1. In the event that the audited information demonstrates that the Parent
received monies in excess of that which it should have received for such
period, all such excess monies shall be paid from the Parent to the
Company; provided, however, that if the Parent shall not have paid the
amount of any such excess monies to the Company in full, the amount of such
excess monies (or the portion thereof not so paid) shall be deducted from
the Company Share of Surplus Cash Flow as determined hereunder for
succeeding fiscal quarters until the full amount of such unpaid excess
monies shall have been so deducted.
2. In the event that the audited information demonstrates that Company should
have been permitted to pay its Management Fee or had a larger Company Share
of Surplus Cash Flow for such period, so long as no Potential Default or
Event of Default is in existence or likely to result therefrom, the Company
shall be permitted to pay such underpaid Management Fees or distribute such
additional amount of Company Share of Surplus Cash Flow to the Parent so
long as the Debt Service Reserve Requirement has been satisfied as of date
of payment.
3. In the event that the audited information demonstrates that the Noteholder
Share of Surplus Cash Flow was understated for the period, the amount by
which such Noteholder Share of Surplus Cash Flow was understated shall be
applied by the Company in accordance with Section 8.2(d).
4. In the event that the audited information demonstrates that the Noteholder
Share of Surplus Cash Flow was overstated for the period, no adjustments
shall be made to the payments applied by the Company in accordance with
Section 8.2(d).
(n) Maintenance of Prior Security Interest.
The Obligors shall cause the Collateral Agent to have a first priority
security interest in all of the Collateral of the Obligors, subject only to
Permitted Liens and agree to cooperate with the Required Combined Holders and
perform all acts reasonably requested by the Required Combined Holders to
maintain and perfect such first priority security interest subject to Permitted
Liens.
(o) Single Purpose Entities.
(i) The Company will continue to be a duly formed and existing
limited liability company and a Single Purpose Entity. The Company
will continue to be duly qualified as a limited liability company in
each jurisdiction in which such qualification was or may be necessary
for the conduct of its business. Each Subsidiary of the Company at all
times will continue to be duly qualified as a limited liability
company, partnership or corporation in each jurisdiction in which such
qualification is necessary for the conduct of its business.
(ii) The Company will continue to comply and each other Obligor
will comply with the provisions of its organizational documents and
the laws of its jurisdiction of formation relating to limited
liability companies (or other business entities).
(iii) All formalities regarding the existence of the Company as a
Single Purpose Entity will be observed and all formalities regarding
the existence of each other Obligor will be observed.
(iv) The Company will accurately maintain, and each other Obligor
will accurately maintain its financial statements, accounting records
and limited liability company documents, separate from those of any
other Person. The Company and the other Obligors, taken as a whole,
will maintain separate books, records, resolutions and agreements. The
Company and each other Obligor will not commingle its assets with
those of any member of the Parent Group. The Company and each Obligor
will continue to accurately maintain its own bank accounts, payroll
and separate books of account. The Company and each other Obligor will
not commingle its funds or assets with those of any other entity,
other than each other, and will hold its assets in its own name.
(v) The Company and the other Obligors, taken as a whole, will
continue to pay their own liabilities from their own separate assets.
(vi) The Company will not engage in any business unrelated to
acting as the Company hereunder which is inconsistent with or in
violation of this Agreement.
(vii) No Obligor other than the Company will have any assets
other than those related to coal mining operations. The Company will
not have any assets other than those related to coal mining operations
and its interests in the Subsidiaries. The Company and each other
Obligor will not engage in, seek or consent to any dissolution,
winding up, liquidation, consolidation, merger (other than as
contemplated in this Agreement), asset sale (other than as
contemplated in this Agreement), transfer of membership interest of
the Company or transfer partnership interest, membership interest or
stock of a an Obligor, or amendment of the operating agreement or
articles of incorporation of the Company or any other Obligor (other
than as expressly permitted by this Agreement).
(viii) The Parent shall remain the sole economic member of the
Company.
(ix) The Company, without the unanimous consent of all holders of
all limited liability interests in the Company and all members of the
board of managers of the Company, including the Independent Manager,
shall not file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial
ownership interest, dissolve, liquidate, consolidate, merge, or sell
all or substantially all of its assets or any other entity in which it
has a direct or indirect legal or beneficial ownership interest,
engage in any other business activity, or amend its organizational
documents.
(x) No Obligor other than the Company, without the unanimous
consent of all directors (including at least one Independent Director)
of such Obligor, shall file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings with respect to itself or
to any other entity in which it has a direct or indirect legal or
beneficial ownership interest, dissolve, liquidate, consolidate,
merge, or sell all or substantially all of its assets or any other
entity in which it has a direct or indirect legal or beneficial
ownership interest, engage in any business activity other than its
mining-related business, or amend its organizational documents.
(xi) The Company and each other Obligor will identify itself, in
all dealings with the public, under the Company's or such other
Obligor's own name and as a separate and distinct entity other than in
connection with any other Obligor. The Company and each other Obligor
will not identify itself, as being a division of any member of the
Parent Group. The Company and each other Obligor will not identify,
any member of the Parent Group as being a division or part of the
Company or such other Obligor. The Company and each other Obligor will
not fail to correct any known misunderstanding regarding the separate
identity of such entity. The Company and each other Obligor will
conduct its business in its own name.
(xii) The Company and the Obligors, taken as a whole, will
continue to be, adequately capitalized in light of the nature of their
business.
(xiii) Except as expressly permitted by Sections 10.1 and 10.3,
neither the Company nor any other Obligor will assume or guarantee the
liabilities of any other Persons, except Guaranties of the
Indebtedness hereunder and under the Bank Financing Documents. Neither
the Company nor any other Obligor will acquire obligations or
securities of any other Persons except the obligations and/or
securities of (a) any Subsidiary of the Company or (b) any entity
merged with the Company or any Subsidiary of the Company. Except as
expressly permitted by Section 10.4, neither the Company nor any other
Obligor will make loans or advances to any Person. The Company will
not pledge its assets for the benefit of any other Person or entity,
except (i) in favor of the Collateral Agent for the benefit of the
holders of the Notes and the Bank Lenders and (ii) Permitted Liens.
(xiv) Except for the Management Agreement and as expressly
permitted by Section 10.8, neither the Company nor any other Obligor
will enter into or be a party to any transaction with any member of
the Parent Group, except in the ordinary course of business and on
terms which are no less favorable to the Company and/or such other
Obligor than would be obtained in a comparable arm's length
transaction with an unrelated third party. The exception of the
Management Agreement from the preceding sentence shall not be deemed
to imply that the Management Agreement does not comply with the
requirements of the sentence.
(xv) Except as expressly permitted by Sections 10.1 and 10.3, the
Company will not incur any Indebtedness other than the Indebtedness to
the holders of the Notes and the Bank Lenders under the Bank Financing
Documents.
(xvi) The Company and each other Obligor will allocate fairly and
reasonably any overhead for shared office space and use separate
stationery, invoices and checks.
(xvii) The Company and each other Obligor will act and refrain
from acting in such a way that each of the "assumptions of fact" made
in the non-consolidation opinion of Hale and Dorr LLP of even date
herewith will continue to be true and correct in all material
respects.
(p) Maintenance of Permits.
The Company shall maintain all the Required Mining Permits in full
force and effect in accordance with their terms.
(q) Transfer of Permits.
With respect to WECO and Northwestern, the Obligors shall assure the
continuing full force and effect of all material permits, and with respect to
the asset purchase, the Obligors shall assure continuing coal mining and related
operations of the former Knife River Corporation coal mining operations as
authorized immediately prior to the Obligors' acquisition of its interests in
the Real Property either under the existing material permits or pursuant to
transfer of the existing material permits or issuance of new permits, and in
that regard, to the extent any material permit has not been transferred to the
Company by the Closing Date, the Company shall use its best efforts to obtain
the transfer of all such permits as soon as possible. In the event any of the
material permits cannot be transferred or assigned to the Company, the Company
shall promptly apply for and diligently pursue its own permits to replace the
non-transferable permits. Schedule 8.1.6 sets forth a true and complete list of
all material permits not transferred to the Company or the appropriate Obligor
on or before the Closing.
(r) Subordination of Management Fees; Payment of Management Fees.
The Company shall cause any fees or charges, of whatever nature,
payable by the Obligors to any member of the Parent Group, including without
limitation, in connection with the management of the operations of the Company,
to be subordinated to the payment of the Notes, with the subordination in the
case of payments to the Parent to be pursuant to the Management Fee
Subordination Agreement and with the subordination in the case of payments to
any other Affiliate of the Company to be subordinated to the Obligations, with
the terms of such subordination to be satisfactory to the Required Combined
Holders. The Obligors agree that the payment of any fees or charges to the
Parent or any other member of the Parent Group and subordinated in accordance
with the preceding sentence may be made by the Obligors only if such payments
are in accordance with the following: (i) prior to and after giving effect to
the payment thereof, no Event of Default or Potential Default is in existence;
(ii) the payments consist solely of the Management Fee, plus Third Party
Services Payments; and (iii) such payments shall be otherwise permitted by and
in accordance with the Management Fee Subordination Agreement.
(s) Maintenance of Coal Supply Contracts, Coal Leases.
Except for Permitted Modifications, the Company shall maintain and be
in compliance at all times with the Coal Supply Contracts and the Coal Leases
which are in effect from time to time and shall (i) perform all of its
obligations under the Coal Supply Contracts and the Coal Leases and will enforce
the performance by the other parties thereto of all of their obligations under
the Coal Supply Contracts and Coal Leases or any other document or agreement
related thereto and (ii) not terminate, amend, or modify, or waive compliance
with the terms and conditions of, any of the Coal Supply Contracts or Coal
Leases. All Permitted Modifications shall be disclosed in writing to the holders
of the Notes promptly upon the occurrence thereof.
(t) Purchase Price Adjustments.
If after the final determination of the post-closing purchase price
adjustment (as opposed to the projected post-closing adjustments) it is
determined that the final net purchase price after taking into account the final
post-closing purchase price adjustments is greater than (i) $127,500,000 under
the Stock Purchase Agreement or (ii) $26,500,000 under the Asset Acquisition
Agreement, the amount that the final net purchase price exceeds the limits set
forth in (i) or (ii) above shall be immediately paid by the Parent to the
Company as an additional cash equity contribution; provided, however that if the
Parent does not immediately pay such amount to the Company the amount will be
deducted from the Company's Share of the Surplus Cash Flow. Any amount so paid
by the Parent to the Company as contemplated by the preceding sentence, or
received by the Company and representing payment by the seller under the Asset
Acquisition Agreement or the Stock Purchase Agreement of a purchase price
adjustment, shall be applied by the Company to repay an equivalent principal
amount of borrowings then outstanding under the Bank Credit Agreement (or such
lesser principal amount of such borrowings as shall then be outstanding).
(u) Updates to Schedules.
Should any of the information or disclosures provided on any of the
Schedules attached hereto become outdated or incorrect in any material respect,
the Company shall promptly provide the Purchasers in writing with such revisions
or updates to such Schedule as may be necessary or appropriate to update or
correct same; provided, however, that no Schedule shall be deemed to have been
amended, modified or superseded by any such correction or update, nor shall any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Combined Holders, in their sole and absolute discretion,
shall have accepted in writing such revisions or updates to such Schedule.
9.2 Additional Security Arrangements.
The Company will cause each Person which becomes a Subsidiary
subsequent to the date of Closing and, in addition, each newly acquired
Subsidiary, to execute and deliver, as of the Closing Date in the case of a
newly acquired Subsidiary and within 60 days in the case of any other Person
becoming a Subsidiary, to the holders of the Notes, a Guarantor Joinder to the
Guaranty Agreement and to the Security Documents reasonably satisfactory in form
and substance to the Required Combined Holders, whereunder each such Subsidiary
and, in addition, each newly acquired Subsidiary, becomes a party to the
Guaranty Agreement and the Security Documents as if it were an original
signatory thereto and after the date of the Closing, to the Collateral Agent,
and the Company will, or will cause its appropriate subsidiaries to, execute and
deliver a pledge agreement reasonably satisfactory in form and substance to the
Required Combined Holders to the end that all shares of capital stock or other
equity interests of such new Subsidiary become subject to the Lien of the Pledge
Agreement (Noteholders). In addition to, and not in limitation of, the
foregoing, the Obligors will not deliver any Guaranty, collateral, security or
other credit enhancement in respect of the Bank Financing Documents (excluding
the exercise of any right of set-off and excluding Bank Primary Collateral)
unless, concurrently therewith, such credit enhancement is also delivered to or
for the benefit of the holders of the Notes on a pari passu basis, it being
agreed that any credit enhancement subject to the sharing arrangements set forth
in Section 22.2 shall be deemed to be on a pari passu basis.
Section 10. Negative and Financial Covenants.
The Obligors covenant that so long as any of the Notes are outstanding:
10.1 Indebtedness.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Financing Documents;
(b) Indebtedness under the Bank Financing Documents, provided that the
maximum principal amount of loans and extensions of credit provided therein
shall be limited to $20,000,000 outstanding at any time;
(c) Existing Indebtedness as set forth on Schedule 10.1 (including any
extensions or renewals thereof), provided there is no increase in the
amount thereof or other significant change in the terms thereof unless
otherwise specified on Schedule 10.1;
(d) Indebtedness of the Obligors (i) secured by Purchase Money
Security Interests or (ii) consisting of capital leases, provided that the
maximum amount of Indebtedness under this subclause (d) shall not exceed at
any one time outstanding the aggregate principal amount of $5,000,000
through the period ending December 31, 2002; $7,500,000 through the period
ending December 31, 2003; $10,000,000 through the period ending December
31, 2006; and $12,500,000 thereafter.
(e) Indebtedness of any Subsidiary wholly owned by the Company to the
Company or to any other Subsidiary which is wholly owned by the Company,
and Indebtedness of the Company to any Subsidiary of the Company;
(f) Guaranties by the Company or any Subsidiary of the Company
permitted pursuant to Section 10.3 hereof;
(g) Indebtedness secured by Permitted Liens; and
(h) Indebtedness with respect to deposits or reclamation or other
bonds incurred in the ordinary course.
10.2 Liens.
Each of the Obligors 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 property or assets, tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except Permitted Liens.
10.3 Guaranties.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except for
Guaranties of Indebtedness of the Obligors permitted hereunder including
Guaranties by the Obligors of Indebtedness arising under the Bank Financing
Documents, and for Guaranties of obligations not prohibited hereunder.
10.4 Loans and Investments.
Each of the Obligors 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, 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:
(a) trade credit extended on usual and customary terms in the ordinary
course of such Obligor's or such Subsidiaries' business;
(b) advances to employees to meet expenses incurred by such employees
in the ordinary course of business;
(c) Permitted Investments; and
(d) loans, advances and investments in or to other Obligors.
10.5 Dividends and Related Distributions.
The Company shall not, and shall not permit any of its Subsidiaries to,
make or pay, or agree to become or remain liable to make or pay, any dividend or
other distribution of any nature (whether in cash, property, securities or
otherwise) on account of or in respect of its shares of capital stock,
partnership interests or limited liability company interests on account of the
purchase, redemption, retirement or acquisition of its shares of capital stock,
partnership interests or limited liability company interests (or warrants,
options or rights therefor), except that, so long as no Potential Default or
Event of Default is in existence or would result therefrom, the Company may (a)
make distributions to the Parent out of the Company Share of Surplus Cash Flow
as and to the extent permitted by Section 9.1(m) or distributions as permitted
by line item (vii) of Section 9.1(m) and (b) pay the Management Fee to the
Parent as and to the extent permitted by Section 9.1(r) and subject to Section
9.1(m). The Company shall not and shall not permit any of its Subsidiaries to
enter into any contract or agreement which restricts in any manner the payment
by Company's Subsidiaries of dividends and distributions to the Company or any
other Obligor.
10.6 Liquidations, Mergers, Consolidations, Acquisitions.
Except for the acquisition of Northwestern and WECO pursuant to the
Stock Purchase Agreement and the acquisitions by WCCO-KRC Acquisition Corp. and
Dakota Westmoreland Corporation pursuant to the Asset Acquisition Documents,
each of the Obligors 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 any
Obligor other than the Company may consolidate or merge into another Obligor
which is wholly-owned by one or more of the other Obligors.
10.7 Dispositions of Assets or Subsidiaries.
Each of the Obligors 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 or 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 such Obligor), except:
(a) transactions involving the sale of inventory in the ordinary
course of business;
(b) any sale, transfer or lease of assets in the ordinary course of
business which are no longer necessary or required in the conduct of such
Obligor's or such Subsidiary's business and so long as such assets do not
comprise more than 5% in any calendar year of the assets of the Company and
its Subsidiaries taken as a whole;
(c) any sale, transfer or lease of assets by any wholly owned
Subsidiary of such Obligor to another Obligor;
(d) any sale, transfer or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired or leased within
the parameters of Section 10.16 [Capital Expenditures and Leases], provided
such substitute assets are subject to the Collateral Agent's Prior Security
Interest;
(e) any sale, transfer or lease of assets, other than those
specifically excepted pursuant to clauses (a) through (d) above, which is
approved by the Required Combined Holders;
(f) the transfer of the Ancillary Interests on or before the date of
closing of the Stock Purchase Agreement and the Asset Acquisition
Agreement, as the case may be, to one or more members of the Parent Group;
or
(g) assets sold, transferred, or leased during the term of this
Agreement in an amount up to 10% of the Obligors' Net Tangible Assets (as
defined under GAAP) as reflected on the opening balance sheet of Obligors
prepared in accordance with GAAP and in connection with the filing by the
Parent of a current report on Form 8-K relating to the completion of the
transactions under the Stock Purchase Agreement and/or Asset Acquisition
Agreement.
10.8 Affiliate Transactions.
Each of the Obligors 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 any Affiliate of
any Obligor or other Person) without the prior written consent of the Required
Combined Holders, unless such transaction (i) is not otherwise prohibited by
this Agreement, (ii) is entered into upon fair and reasonable arm's-length terms
and conditions which are fully disclosed to the holders of the Notes, (iii)
constitutes a Permitted Affiliate Transaction and (iv) is in accordance with all
applicable Law.
10.9 Subsidiaries, Partnerships and Joint Ventures.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, own or create directly or indirectly any Subsidiaries other
than (i) any Subsidiary which has joined this Agreement as Guarantor on the
Closing Date; and (ii) any Subsidiary formed after the Closing Date which joins
this Agreement as a Guarantor pursuant to Section 9.2 [Additional Security
Arrangements], provided that the Required Combined Holders shall have consented
to such formation and joinder and that such Subsidiary and the Obligors, as
applicable, shall grant and cause to be perfected first priority Liens to the
Collateral Agent for the benefit of the holders of the Notes in the assets held
by, and stock of or other ownership interests in, such Subsidiary. Each of the
Obligors shall not become or agree to (1) become a general or limited partner in
any general or limited partnership, except that the Obligors may be general or
limited partners in other Obligors, (2) become a member or manager of, or hold a
limited liability company interest in, a limited liability company, except that
the Obligors may be members or managers of, or hold limited liability company
interests in, other Obligors, or (3) become a joint venturer or hold a joint
venture interest in any joint venture.
10.10 Continuation of or Change in Business.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, engage in any material business other than its business of
owning and operating coal mine facilities associated with the Coal Reserves (as
the same may be extended or expanded or changed from time to time).
10.11 Plans and Benefit Arrangements.
After the Closing, each of the Obligors shall not, and shall not permit
any of its Subsidiaries to do any of the following if the same could reasonably
be expected to result in any substantial obligation to the Company or any of its
Subsidiaries or otherwise result in a Material Adverse Change:
(a) fail to satisfy the minimum funding requirements of ERISA and the
Internal Revenue Code with respect to any Plan;
(b) request a minimum funding waiver from the Internal Revenue Service
with respect to any Plan;
(c) engage in a Prohibited Transaction with any Plan, Benefit
Arrangement or Multiemployer Plan;
(d) permit any Plan to be less than Adequately Funded;
(e) fail to make when due any contribution to any Multiemployer Plan
that the Company or any member of the ERISA Group may be required to make
under any agreement relating to such Multiemployer Plan, or any Law
pertaining thereto;
(f) withdraw (completely or partially) from any Multiemployer Plan or
withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from any
Multiple Employer Plan;
(g) terminate, or institute proceedings to terminate, any Plan;
(h) make any amendment to any Plan with respect to which security is
required under Section 307 of ERISA; or
(i) fail to give any and all notices and make all disclosures and
governmental filings required under ERISA or the Internal Revenue Code.
10.12 Fiscal Year.
The Company shall not, and shall not permit any Subsidiary of the
Company to, change its fiscal year from the twelve-month period beginning
January 1 and ending December 31.
10.13 Issuance of Stock.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, issue any additional shares of its capital stock, shares of
beneficial interest, partnership interests, limited liability company interests
or similar ownership interests, or any options, warrants or other rights in
respect thereof.
10.14 Changes in Organizational Documents.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, amend in any respect its certificate of incorporation
(including any provisions or resolutions relating to capital stock), certificate
of limited partnership, certificate of formation, limited liability company
agreement or other organizational documents without providing at least twenty
(20) calendar days' prior written notice to the holders of the Notes and, in the
event such change would be material and adverse to the holders of the Notes as
determined by the Required Combined Holders in their sole discretion, obtaining
the prior written consent of the holders of the Notes.
10.15 Changes in Material Contracts, Performance under Coal Supply
Contracts.
Each of the Obligors shall not and shall not permit any of its
Subsidiaries to materially amend (except for Permitted Modifications), cancel,
terminate, waive or give any consent to any material violation of or release any
party from its obligations under any of the Coal Supply Contracts or any of the
other material contracts to which it is a party. Each of the Obligors shall
supply coal under its respective Coal Supply Contracts solely with coal mined
from the Obligors' coal mines and shall not purchase coal or permit any other
Person to supply coal under or service its Coal Supply Contracts, except for (i)
Permitted Affiliate Transactions, and (ii) for the procurement of coal at the
request of a buyer in accordance with the explicit provisions of the Coal Supply
Contract for Colstrip 3 & 4.
10.16 Capital Expenditures and Leases.
Each of the Obligors shall not, and shall not permit any of its
Subsidiaries to, make any payments exceeding the amounts indicated on Schedule
10.16 hereto in the aggregate in any fiscal year on account of the purchase or
lease of any assets which are required to be capitalized on the financial
statements of such Obligor in accordance with GAAP (all such payments "Capital
Expenditures"), and all such Capital Expenditures and leases shall be made under
usual and customary terms and in the ordinary course of business; provided that,
any amounts not expended by the Obligors for Capital Expenditures may be carried
forward and used in a subsequent fiscal year.
10.17 Operating Leases.
The Obligors shall not enter into or be obligated under operating
leases having aggregate payments per year in excess of the amounts set forth on
Schedule 10.17.
10.18 Minimum Debt Service Coverage Ratio.
The Obligors shall not permit the Debt Service Coverage Ratio,
calculated as of the end of each fiscal quarter after the Closing Date based
upon the immediately preceding four fiscal quarters (provided, however, for
periods ending on or before March 31, 2002, in lieu of using the preceding four
fiscal quarters, the above computation shall be determined by annualizing the
Consolidated EBITDA for the period from the Closing Date through the date of
determination), to be less than 1.15 to 1.0.
10.19 Maximum Leverage Ratio.
The Obligors shall not permit the ratio of Consolidated Total
Indebtedness of the Company and its Subsidiaries to Consolidated EBITDA to
exceed the ratio set forth below for the periods specified below, calculated as
of the end of each fiscal quarter during each such period based upon the
immediately preceding four fiscal quarters (provided, however, for periods
ending on or before March 31, 2002, in lieu of using the preceding four fiscal
quarters, the above computation shall be determined by annualizing the
Consolidated EBITDA for the period from the Closing Date through the date of
determination):
- ---------------------------------------------------- ------------------------
Period Ratio
- ---------------------------------------------------- ------------------------
Closing Date through December 31, 2001 2.25 to 1.00
- ---------------------------------------------------- ------------------------
January 1, 2002 through December 31, 2003 1.50 to 1.00
- ---------------------------------------------------- ------------------------
January 1, 2004 through December 31, 2005 1.25 to 1.00
- ---------------------------------------------------- ------------------------
January 1, 2006 and thereafter 1.00 to 1.00
- ---------------------------------------------------- ------------------------
10.20 Maximum Consolidated Total Indebtedness to Consolidated Total
Capitalization.
The Obligors shall not permit the ratio of Consolidated Total
Indebtedness to Consolidated Total Capitalization of the Company and its
Subsidiaries, as determined at the end of each fiscal quarter, to exceed the
ratio set forth below:
- ------------------------------------------------------- ------------------------
Testing Date Ratio
- ------------------------------------------------------- ------------------------
December 31, 2001 through the fiscal
quarter ending September 30, 2002 .75 to 1.00
- ------------------------------------------------------- ------------------------
December 31, 2002 through the fiscal
quarter ending September 30, 2003 .60 to 1.00
- ------------------------------------------------------- ------------------------
December 31, 2003 through the fiscal
quarter ending September 30, 2004 .50 to 1.00
- ------------------------------------------------------- ------------------------
December 31, 2004 and thereafter .40 to 1.00
- ------------------------------------------------------- ------------------------
Section 11. Events of Default.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) default in the payment or prepayment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and/or payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) default in the payment of any interest on any Note for more than five
Business Days after the same becomes due and payable; or
(c) default in the performance of or compliance with any term contained in
Section 7.1(e) or Section 10; or
(d) an Obligor defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b) and (c) of
this Section 11) or in any other term of any Financing Document and such default
is not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default or (ii) the Company receiving written
notice of such default from any holder of a Note (any such written notice to be
identified as a "notice of default" and to refer specifically to this paragraph
(d) of Section 11), or the Guaranty Agreement or any Security Document fails to
be in full force and effect; or
(e) any representation or warranty made in writing by or on behalf of an
Obligor or by any officer of an Obligor in any Financing Document or in any
writing furnished in connection with the transactions contemplated hereby proves
to have been false or incorrect in any material respect on the date as of which
made; or
(f) (i) any "Event of Default" shall occur or exist under the Bank Credit
Agreement or any of the other Bank Financing Documents, or (ii) the Company or
any Subsidiary of the Company is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole amount
or interest on any Indebtedness that is outstanding in an aggregate principal
amount of at least $500,000 beyond any period of grace provided with respect
thereto, or (iii) the Company or any Subsidiary of the Company is in default in
the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least $500,000
or of any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Indebtedness described in clauses (ii) and (iii) has been declared due and
payable before its stated maturity or before its regularly scheduled dates of
payment, or (iv) as a consequence of the occurrence or continuation of any event
or condition (other than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity interests), the Company or
any Subsidiary of the Company has become obligated to purchase or repay
Indebtedness before its regular maturity or before its regularly scheduled dates
of payment in an aggregate outstanding principal amount of at least $500,000, or
(v) the earlier to occur of (1) an event of default (or right to cancel or
terminate such agreement prior to its stated term) by any of the Obligors shall
occur at any time under the terms of any Coal Supply Contract (upon occurrence
of any such event, a "Defaulted Agreement") and such event of default could
result in cancellation or termination of the Defaulted Agreement prior to its
stated term, or (2) the cancellation or termination of any Defaulted Agreement
or (vi) an event of default (or a right to cancel or terminate such agreement
prior to its stated term) shall occur at any time under the terms of any one or
more of the Coal Leases which is reasonably likely to cause a Material Adverse
Change; or
(g) the Company or any Subsidiary of the Company (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company or any of its Subsidiaries, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
order or petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating in
excess of $1,000,000 (net of insurance coverage, provided, that (i) the
insurance carrier has acknowledged in writing its obligation to satisfy such
judgment or judgments and (ii) such insurance carrier is solvent and has a long
term debt rating which is at least 'A2' by Moody's or 'A' by Standard & Poor's)
are rendered against one or more of the Company and its Subsidiaries and which
judgments are not, within 45 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 45 days after the expiration
of such stay, and in either case they do not affect the Collateral or, in the
aggregate, materially impair the ability of any Obligor to perform its
Obligations hereunder or under the other Financing Documents or the Bank
Financing Documents; or
(j) Any of the following events occur, involving the Company or any member
of the ERISA Group, which event, alone or together with any other such event(s),
would, or would reasonably be expected to, result in a substantial obligation to
the Company or any of its Subsidiaries or otherwise result in a Material Adverse
Change: (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Internal Revenue Code for any plan year or part thereof or a waiver
of such standards or extension of any amortization period is sought to be
granted under section 412 of the Internal Revenue Code; (ii) the Plans,
considered in the aggregate, shall cease to be Adequately Funded; (iii) failure
to make any contribution when due to a Multiemployer Plan; (iv) a notice of
intent to terminate shall have been or is reasonably expected to be filed with
the PBGC with respect to any Plan; (v) a Reportable Event which the
Administrative Note Agent determines in good faith to constitute grounds under
which the PBGC is reasonably expected to terminate any Plan; (vi) the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have given notice that a Plan
may become the subject of such proceedings; (vii) adoption of an amendment to a
Plan with respect to which security is required under ERISA section 307; (viii)
partial or complete withdrawal under ERISA section 4062(e), from a Multiple
Employer Plan; or (ix) partial or complete withdrawal from a Multiemployer Plan.
(k) The manager shall default under or otherwise fail to perform any of its
obligations or duties under the Management Agreement.
Section 12. Remedies on Default, etc.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
(c) If any other Event of Default has occurred and is continuing, the
Required Combined Holders may at any time at its or their option, by notice
or notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) in the case of the Series B Notes, the
Make-Whole Amount determined in respect of the principal amount thereof (to the
full extent permitted by applicable law), shall all be immediately due and
payable, in each and every case without presentment, demand, protest or further
notice, all of which are hereby waived. The Company acknowledges, and the
parties hereto agree, that each holder of a Series B Note has the right to
maintain its investment in the Series B Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Series B Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
12.2 Other Remedies.
If any Potential Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and preserve the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note or in any other Financing Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the holders of not less than 51% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Potential Defaults, other than non-payment
of amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Potential Default or impair any right
consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all reasonable costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
Section 13. Registration; Exchange; Substitution of Notes.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for and registration of transfer, the Person in whose
name any Note shall be registered shall be deemed and treated as the owner and
holder thereof for all purposes hereof, and the Company shall not be affected by
any notice or knowledge to the contrary. The Company shall give to any holder of
a Note that is an Institutional Investor and/or the Collateral Agent promptly
upon request therefor, a complete and correct copy of the names and addresses of
all registered holders of Notes, and all holders of Notes consent thereto.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver within five Business Days of such surrender, at the
Company's expense (except as provided below), one or more new Notes of the
appropriate series (as requested by the holder thereof) in exchange therefor, in
an aggregate principal amount equal to the unpaid principal amount of the
surrendered Note provided, however, that the Company shall not be obligated to
effect a transfer of Notes which would constitute a public distribution
requiring registration of such Notes under applicable federal or state
securities laws or a transaction prohibited under Section 406 of ERISA or
Section 4975 of the Internal Revenue Code. Each such new Note shall be payable
to such Person as such holder may request and shall be substantially in the form
of Exhibit 1A or 1B, as appropriate. Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall have been
paid thereon. The Company may require payment of a sum sufficient to cover any
stamp tax or governmental charge imposed in respect of any such transfer of
Notes. Notes shall not be transferred in denominations of less than $100,000,
provided that if necessary to enable the registration of transfer by a holder of
its entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representations set
forth in Section 6.1 and 6.2.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a
nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $10,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense and within five Business Days shall execute and
deliver, in lieu thereof, a new Note of the appropriate series, in the same
principal amount as the lost, stolen, destroyed or mutilated Note, and dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
Section 14. Payments on Notes.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York, at the principal office of The Chase Manhattan Bank, in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
14.2 Home Office Payment.
So long as a Purchaser or a Purchaser's nominee shall be the holder of
any Note, and notwithstanding anything contained in Section 14.1 or in such Note
to the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below such Purchaser's name in Schedule A, or
by such other method or at such other address as such Purchaser shall have from
time to time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by such Purchaser
or such Purchaser's nominee such Purchaser will, at such Purchaser's election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 13.2. The Company will
afford the benefits of this Section 14.2 to any Institutional Investor that is
the direct or indirect transferee of any Note purchased by a Purchaser under
this Agreement and that has made the same agreement relating to such Note as
such Purchaser has made in this Section 14.2.
Section 15. Expenses, Etc.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Obligors, jointly and severally, will pay all reasonable costs and expenses
(provided that the fees and costs incurred by the Purchasers pre-Closing shall
be limited to reasonable attorneys' fees of a special counsel) incurred by the
Purchasers or any holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes or any other Financing Document (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the reasonable costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or any other Financing Document or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes or any other Financing Document, or by reason of
being a holder of any Note, and (b) the reasonable costs and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work- out
or restructuring of the transactions contemplated hereby and by the Notes or any
other Financing Document. The Obligors, jointly and severally, will pay, and
will save the Purchasers and each other holder of a Note harmless from, all
claims in respect of any reasonable fees, costs or expenses, if any, of brokers
and finders (other than those retained by any Purchaser).
15.2 Survival.
The obligations of the Obligors under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes or any other Financing Document, and
the termination of this Agreement or any other Financing Document.
Section 16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein and in the other
Financing Documents shall survive the execution and delivery of this Agreement
and the other Financing Documents, the purchase or transfer by any Purchaser of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of any Purchaser or any other
holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to any Financing
Document shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, the Financing Documents
embody the entire agreement and understanding between the Purchasers and the
Obligors and supersede all prior agreements and understandings relating to the
subject matter hereof.
Section 17. Amendment and Waiver.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Obligors and the
Required Combined Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to a Purchaser unless consented to by
such Purchaser in writing, and (b) no such amendment or waiver may, without the
written consent of the holder of each Note at the time outstanding, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. The Company will deliver executed
or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of outstanding
Notes promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.
(b) Payment. No Obligor will directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes
as consideration for or as an inducement to the entering into by any holder
of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes
then outstanding even if such holder did not consent to such waiver or
amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Obligors without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Potential
Default or Event of Default not expressly amended or waived or impair any right
consequent thereon. Any consent to an amendment or waiver which is given
pursuant to this Section 17 by a holder of a Note which shall have (i)
transferred at any time thereafter or agreed to transfer all or a portion of its
Notes to any Obligor or any Affiliate of any Obligor and (ii) provided such
consent as a condition to such transfer, shall be valid and binding only upon
such holder. No course of dealing between an Obligor and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4 Notes Held by an Obligor, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by an Obligor or any of its
Affiliates shall be deemed not to be outstanding.
Section 18. Notices.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(a) if to a Purchaser or a Purchaser's nominee, to such Purchaser or
nominee at the address specified for such communications in Schedule A, or at
such other address as such Purchaser or nominee shall have specified to the
Company in writing,
(b) if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing, or
(c) if to an Obligor, to the Company at its address set forth at the
beginning hereof to the attention of Chief Financial Officer, with a copy to
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, Attn: Michael
Levitin, Esq., or at such other address as the Company shall have specified to
the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
Section 19. Reproduction of Documents.
The Financing Documents and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by the Purchasers at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to the Purchasers, may be
reproduced by the Purchasers by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and the Purchasers
may destroy any original document so reproduced. Each Obligor agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by any Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit an Obligor or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
Section 20. Confidential Information.
For the purposes of this Section 20, "Confidential Information" means
information delivered to each Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to the Financing Documents that is proprietary in nature and that was
clearly marked or labeled or otherwise identified when received by such
Purchaser as being confidential information, provided that such term does not
include information that (a) was publicly known or otherwise known to such
Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Purchaser or any Person acting
on such Purchaser's behalf, (c) otherwise becomes known to such Purchaser other
than through disclosure by the Company or any Subsidiary or (d) constitutes
financial statements delivered to such Purchaser under Section 7.1 that are
otherwise publicly available. Each Purchaser will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to such Purchaser, provided that such Purchaser may deliver or
disclose Confidential Information to (i) such Purchaser's directors, officers,
employees, agents, attorneys and Affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
Purchaser's Notes) and they agree to maintain such confidentiality in accordance
with this Section 20, (ii) such Purchaser's financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information in accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which such Purchaser
sells or offers to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (v)
any Person from which such Purchaser offers to purchase any security of the
Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (vi)
any federal or state regulatory authority having jurisdiction over such
Purchaser, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Purchaser's investment portfolio or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser's Notes and the Financing Documents.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
Section 21. Substitution of a Purchaser.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, wherever
the word "Purchaser" is used in this Agreement (other than in this Section 21),
such word shall be deemed to refer to such Affiliate in lieu of such Purchaser.
In the event that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to such Purchaser all of the Notes then held
by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to such Purchaser, and such Purchaser shall have all the rights of
an original holder of the Notes under this Agreement.
Section 22. Miscellaneous.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not. In the event of any sale or
transfer of the Notes, the holder selling its Notes specifically acknowledges
and agrees that it is assigning its right title and interest in the Notes and
the other Financing Documents to the transferee thereof and the transferee or
purchaser of such Notes specifically accepts the assignment by the selling or
transferring holder of all of its right title and interest under the Notes and
the other Financing Documents.
Section 22.2 Sharing Provisions.
The Purchasers agree among themselves that with respect to all amounts
received by any Purchaser for application against the Notes or any other
Obligation, whether received by voluntary payment, by realization upon security,
by the exercise of any right afforded pursuant to Section 22.3, 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
holders of the Notes in proportion to their unpaid principal amount of the Notes
immediately prior to the application of such amount, except for payments which
may from time to time be (1) made in a disproportional amount as between the
Series of Notes due to the specific amortization provisions of each Series,
different interest rates accruing on each Series of Notes or the application of
prepayments differently between the Series of Notes in accordance with the terms
of this Agreement, (2) made in connection with the prepayment of a principal
amount of Series B Notes and consisting of the Make-Whole Amount determined in
respect of such principal amount or (3) paid to a particular holder of the
Series A Notes in accordance with Section (o) [Additional Compensation in
Certain Circumstances] or Section (i) [Euro-Rate Unascertainability] of Schedule
A to the form of Series A Note set forth in Exhibit 1A. Each Purchaser and each
such holder of a Note receiving any such amount shall purchase for cash from
each other holder of a Note an interest in such other holder's Note(s) in such
amount as shall result in a ratable participation by all holders of Notes in
accordance with the unpaid principal amount of the Notes held by each of them,
provided that if all or any portion of such excess amount is thereafter
recovered from the Purchaser 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 Purchaser or the holder making such
purchase in respect of such recovered amount, but less any interest or other
amounts received by the Purchaser or holder making such purchase, in respect of
the period for which such Purchaser or holder owes any such interest or other
amounts, on account of the participations which were purchased with such
recovered amount. In the absence of the written consent of all of the
Purchasers, the provisions set forth in this section shall not be amended,
modified or rescinded.
22.3 Set Off.
If an Event of Default shall occur and be continuing, any Purchaser to
whom any Obligation is owed by any Obligor hereunder or under any other
Financing Document and any branch, Subsidiary or Affiliate of such Purchaser
anywhere in the world shall have the right, in addition to all other rights and
remedies available to it, without notice to such Obligor, to set-off against and
apply to the then unpaid balance of all the Notes and all other Obligations of
the Company and the other Obligors hereunder or under any other Financing
Document any debt owing to, and any other funds held in any manner for the
account of, the Company or such other Obligor by such Purchaser 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 Company or such other
Obligor for its own account (but not including funds held in custodian or trust
accounts) with such Purchaser or such branch, Subsidiary or Affiliate. Such
right shall exist whether or not any Purchaser or the Agent shall have made any
demand under this Agreement or any other Financing Document, whether or not such
debt owing to or funds held for the account of the Company or such other Obligor
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
Purchaser or the Agent. In the absence of the written consent of all of the
Purchasers, the provisions set forth in this section shall not be amended,
modified or rescinded.
22.4 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, but subject to the last sentence of this Section 22.4, any
payment of principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the immediately preceding
Business Day. Notwithstanding the first sentence hereof, any Interest Period (as
that term is defined in Schedule 1 to the form of Series A Note set forth in
Exhibit 1A) 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 immediately preceding Business Day.
22.5 Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.6 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.7 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.8 Governing Law.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
applicable to contracts made and to be performed in said State.
22.9 Withholding.
If any Purchaser is a "foreign corporation, partnership or trust"
within the meaning of the Internal Revenue Code and such Purchaser claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Internal Revenue Code, such Purchaser (a "Foreign Purchaser") agrees
with and in favor of the Company to deliver to the Company:
(a) if such Purchaser claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Form W-8BEN before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(b) if such Purchaser claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Purchaser, two
properly completed and executed copies of IRS Form W-8ECI before the
payment of any interest is due in the first taxable year of such Purchaser
and in each succeeding taxable year of such Purchaser during which interest
may be paid under this Agreement, and IRS Form W-9; and
(c) such other form or forms as may be required under the Internal
Revenue Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Foreign Purchaser agrees promptly to notify the Company of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
If any Foreign Purchaser claiming exemption from United States
withholding tax by filing IRS Form W-8ECI with Company sells, assigns, grants a
participation in, or otherwise transfers all or part of the Notes, such
Purchaser agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Internal
Revenue Code.
If the IRS or any other governmental authority of the United States or
other jurisdiction asserts a claim that the Company or any other Obligor did not
properly withhold tax from amounts paid to or for the account of any Foreign
Purchaser (because the appropriate form was not delivered, was not properly
executed, or because such Foreign Purchaser failed to notify the Company of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Foreign Purchaser
shall indemnify the Company and each Obligor fully for all amounts paid,
directly or indirectly, by the Company as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Company, as applicable, under this Section, together with all
costs and expenses (including attorneys fees and expenses). The obligation of
each Foreign Purchaser under this Section shall survive the payment of all
Notes.
22.10 Environmental Indemnity.
The Obligors, jointly and severally, will indemnify, protect, hold
harmless and defend each Purchaser and each holder from time to time of any
Note, and their respective officers, directors, trustees, employees and agents
(collectively, "Indemnitees"), from and against any and all liabilities, costs
(including, without limitation, reasonable fees and disbursements of attorneys,
consultants and experts, and costs of investigation, clean up, response,
removal, remediation, containment, restoration, treatment and disposal), claims,
damages, demands, litigation, suits, proceedings, actions, losses, obligations,
penalties, fines, judgments, sums paid in settlement of any of the above, and
reasonable disbursements actually incurred by any Indemnitee arising from or out
of, or in any way connected with, (i) any failure of any representation or
warranty set forth in Section 5.25 to be true and correct when made or any
failure by the Obligors (or any of them) to comply with any of the covenants,
agreements, terms and conditions set forth in Section 9.1(i) or to comply with
any Environmental Law, (ii) the manufacture, generation, refining, processing,
distribution, use, sale, treatment, receipt, storage, disposal, transport,
arranging for transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Regulated Substance at any time
on, in, under or above the Property or any part thereof, (iii) the presence or
suspected presence of any Regulated Substances manufactured, generated, refined,
processed, distributed, sold, treated, received, stored, disposed of,
transported, arranged to be transported or handled by the Obligors (or any of
them) or any of their respective Subsidiaries, or (iv) the migration, leaking,
leaching, flowing, emitting or other movement of any Regulated Substance from
the Property, or any location containing Regulated Substances manufactured,
generated, refined, processed, distributed, sold, treated, received, stored,
disposed of, transported, arranged to be transported or handled by the Obligors
(or any of them) or any of their respective Subsidiaries to any other property;
provided, however, that any obligation of any of the Obligors under this Section
22.10 to any Indemnitee shall not apply to, and no obligation shall exist with
respect to, any of the foregoing which arises: (x) from and after the exercise
by any of the Indemnitees (or any of their agents) of any foreclosure right or
control with respect to the Collateral, but only to the extent of obligations
arising from activities of the successor or its agent or (y) from the gross
negligence or willful misconduct of any of the Indemnitees (or any of their
agents). If at any time a responsible officer of any Indemnitee shall have
actual knowledge of an asserted liability for which such Indemnitee would be
entitled to indemnification hereunder, such Indemnitee shall give written notice
thereof to the Obligors ; provided, however, that no failure to give any such
notice shall relieve the Obligors (or any of them) of the obligation to provide
indemnification hereunder to such Indemnitee except to the extent that the
Obligors shall have been prevented as a consequence from defending against or
settlement of any such liability as hereinafter required. Upon receipt of such
notice, the Obligors shall assume full responsibility for the defense against or
settlement of any such liability, and shall consult with such Indemnitee and
advise such Indemnitee of significant developments in connection therewith;
provided, however, that (A) such Indemnitee shall be consulted as to the legal
counsel and other consultants to be employed in respect thereof and may in its
reasonable judgment veto the employment of any legal counsel or consultant not
reasonably acceptable to it and (B) if such Indemnitee shall give to the
Obligors notice that in its good faith judgment an important business (whether
such interest is economic, reputable or otherwise) interest of such Indemnitee
is involved in any such liability or potential liability, such Indemnitee shall
have the right to control, in consultation with the Obligors, the defense
against such liability provided such defense is reasonable and does not impose
any excessive burden or cost (monetary or otherwise) on any of the Obligors. The
obligations of the Obligors under this Section shall survive payment of any
Notes and transfer of any Notes and shall be enforceable by each Indemnitee
hereunder separately or together, without necessity of accelerating the maturity
of any Notes; and any such Indemnitee seeking to enforce the indemnification
provided for hereunder may initially proceed directly against the Obligors (or
any of them) without first resorting to any other rights of indemnification or
otherwise that it may have.
22.11 Jurisdiction And Process.
EACH OF THE OBLIGORS AGREES THAT ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR
ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH, OR ANY LEGAL
ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT OBTAINED
AGAINST THE OBLIGORS, OR ANY OF THEM, FOR BREACH HEREOF OR THEREOF, OR AGAINST
ANY OF THEIR PROPERTIES, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY ANY
PURCHASER OR NOTEHOLDER OR THE COLLATERAL AGENT OR ON BEHALF OF ANY PURCHASER OR
NOTEHOLDER OR THE COLLATERAL AGENT, AS SUCH NOTEHOLDER, PURCHASER OR THE
COLLATERAL AGENT MAY ELECT, AND EACH OF THE OBLIGORS HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR
PURPOSES OF ANY SUCH LEGAL ACTION OR PROCEEDING. THE OBLIGORS HEREBY AGREE THAT
SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THEM AT THEIR ADDRESS SPECIFIED IN SECTION 18 OR AT
SUCH OTHER ADDRESS OF WHICH EACH PURCHASER AND EACH HOLDER OF A NOTE SHALL HAVE
BEEN NOTIFIED PURSUANT THERETO. IN ADDITION, EACH OF THE OBLIGORS HEREBY
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING
DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
22.12 Waiver Of Jury Trial.
EACH OBLIGOR AND EACH HOLDER OF NOTES HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Execution by a Purchaser of this Agreement and its return to the
Company shall bind such Purchaser and each of the respective Obligors to this
Agreement.
Very truly yours,
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger
---------------------------------
Title: President
Name: Robert J. Jaeger
WESTERN ENERGY COMPANY, an Obligor and Guarantor
By: /s/ Robert J. Jaeger
---------------------------------
Title: Vice President
Name: Robert J. Jaeger
NORTHWESTERN RESOURCES CO., an Obligor and Guarantor
By: /s/ Robert J. Jaeger
---------------------------------
Title: Vice President
Name: Robert J. Jaeger
DAKOTA WESTMORELAND CORPORATION, an Obligor and Guarantor
By: /s/ Robert J. Jaeger
---------------------------------
Title: Vice President
Name: Robert J. Jaeger
WCCO-KRC ACQUISITION CORP., an Obligor and Guarantor
By: /s/ Robert J. Jaeger
---------------------------------
Title: Vice President
Name: Robert J. Jaeger
The foregoing is hereby agreed to as of the date thereof.
PNC BANK, NATIONAL ASSOCIATION TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By: /s/ Christopher Moravec By: /s/ Estelle Simsolo
--------------------------- -------------------------------
Name: Christopher Moravec Name: Estelle Simsolo
Title Senior Vice President Title Director- Private Placements
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Violet Osterberg / By: /s/ Audrey L. Milfs
-------------------------------------------------
Name: Violet Osterberg Audrey L. Milfs
Title AVP Secretary
NATIONAL CITY BANK
By: /s/ Wilmer J. Jacobs
-----------------------------
Name: Wilmer J. Jacobs
Title Vice President
FIRSTAR BANK, N.A. THE TRAVELERS INSURANCE COMPANY
By: /s/ Eric Hartman By: /s/ Robert M. Mills
---------------------------- ---------------------------
Name: Eric Hartman Name: Robert M. Mills
Title VP Title Title Investment Officer
AMERICAN GENERAL INTERNATIONAL NATIONWIDE INDEMNITY COMPANY
INVESTMENTS, INC.
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
AMERICAN GENERAL LIFE AND
ACCIDENT INSURANCE COMPANY NATIONWIDE MUTUAL INSURANCE COMPANY
By: /s/ C. Scott Inglis
--------------------------- By: /s/ Mark W. Poeppelman
Name: C. Scott Inglis ----------------------------
Title Investment Officer Name: Mark W. Poeppelman
Title Associate Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Eric V. Savi
-----------------------------------
Name: Eric V. Savi
Title Director
SCHEDULE A
NOTES TO BE PURCHASED
SERIES A FLOATING RATE SENIOR GUARANTEED NOTE PURCHASERS
- --------------------------------------------------------- --------------------------- --------------------------------
NAME OF PURCHASER NOTE AT CLOSING DEFERRED NOTE
- --------------------------------------------------------- --------------------------- --------------------------------
- --------------------------------------------------------- --------------------------- --------------------------------
FIRSTAR BANK, N.A. $4,171,875 $828,125
- --------------------------------------------------------- --------------------------- --------------------------------
PNC BANK, NATIONAL ASSOCIATION $8,343,750 $1,656,250
- --------------------------------------------------------- --------------------------- --------------------------------
NATIONAL CITY BANK $4,171,875 $828,125
- --------------------------------------------------------- --------------------------- --------------------------------
SERIES B FLOATING RATE SENIOR GUARANTEED NOTE PURCHASERS
- -------------------------------------------------------- ---------------------------- --------------------------------
NAME OF PURCHASER NOTE AT CLOSING DEFERRED NOTE
- -------------------------------------------------------- ---------------------------- --------------------------------
AMERICAN GENERAL ANNUITY INSURANCE COMPANY $8,331,250 $1,668,750
- -------------------------------------------------------- ---------------------------- --------------------------------
AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC. $4,165,625 $834,375
- -------------------------------------------------------- ---------------------------- --------------------------------
METROPOLITAN LIFE INSURANCE COMPANY $8,331,250 $1,668,750
- -------------------------------------------------------- ---------------------------- --------------------------------
NATIONWIDE INDEMNITY COMPANY $2,499,375 $500,625
- -------------------------------------------------------- ---------------------------- --------------------------------
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY $2,499,375 $500,625
- -------------------------------------------------------- ---------------------------- --------------------------------
NATIONWIDE MUTUAL INSURANCE COMPANY $3,332,500 $667,500
- -------------------------------------------------------- ---------------------------- --------------------------------
PACIFIC LIFE INSURANCE COMPANY $12,496,875 $2,503,125
- -------------------------------------------------------- ---------------------------- --------------------------------
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF $29,159,375 $5,840,625
AMERICA
- -------------------------------------------------------- ---------------------------- --------------------------------
THE TRAVELERS INSURANCE COMPANY $12,496,875 $2,503,125
- -------------------------------------------------------- ---------------------------- --------------------------------
FURTHER INFORMATION RELATING TO PURCHASERS:
Series A Floating Rate Senior Guaranteed Note Purchasers
PNC BANK, NATIONAL ASSOCIATION
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
PNC Bank, National Association
ABA 043000096
Credit: Agency Services
A/C: GL130-76-001-7005
Ref: Westmoreland Mining LLC
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Christopher Moravec, Senior Vice President
One PNC Plaza, 3rd Floor
Pittsburgh, PA 15222
Telephone: 412-762-2540
Facsimile: 412-762-7568
(3) All other communications shall be delivered or mailed to the following:
(i) for business matters:
Christopher Moravec, Senior Vice President
One PNC Plaza, 3rd Floor
Pittsburgh, PA 15222
Telephone: 412-762-2540
Facsimile: 412-762-7568
NATIONAL CITY BANK
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
National City Bank
ABA 041000124
A/C Name: Commercial Loan Operations
A/C #: 151804
Ref: Westmoreland Mining LLC
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Wilmer J. Jacobs
1900 East Ninth Street
Loc# 2077
Cleveland, OH 44114
Telephone: 216-575-2562
Facsimile: 216-222-0003
(3) All other communications shall be delivered or mailed to the following:
(i) for business matters:
Wilmer J. Jacobs
1900 East Ninth Street
Loc# 2077
Cleveland, OH 44114
Telephone: 216-575-2562
Facsimile: 216-222-0003
FIRSTAR BANK, N.A.
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
Firstar Bank, N.A. (St. Louis, Missouri)
ABA 081000210
Commercial Exceptions
A/C: 3811005184
Ref: Westmoreland Mining LLC
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Eric Hartman
7th & Washington St.
TRAM 12-3
St. Louis, MO 63101
Telephone: 314-418-2336
Facsimile: 314-418-3859
(3) All other communications shall be delivered or mailed to the following:
(i) for business matters:
Eric Hartman
7th & Washington St.
TRAM 12-3
St. Louis, MO 63101
Telephone: 314-418-2336
Facsimile: 314-418-3859
TRAVELERS CORPORATE LOAN FUND INC.1
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
Travelers Corporate Loan Fund Inc.
Account Number 85-110-88160
Further reference 34340120369977
PNC Bank
New York, New York
ABA No. 031000053
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Travelers Corporate Loan Fund Inc.
One Tower Square, 9 PB
Hartford, Connecticut 06183-2030
Attn: Robert M. Mills, Investment Officer
Telephone: (860) 277-7804
Facsimile: (860) 954-5243
(3) All other communications shall be delivered or mailed to the following:
(i) for business matters:
Robert M. Mills, Investment Officer
Travelers Corporate Loan Fund Inc.
One Tower Square, 9 PB
Hartford, Connecticut 06183-2030
Telephone: (860) 277-7804
Facsimile: (860) 954-5243
With a copy of all notices to:
Travelers Corporate Loan Fund Inc.
c/o Smith Barney
388 Greenwich Street, 22nd Floor
New York, New York 10013
(ii) for administrative/operations matters:
John J. Console/James A. DeLuca
Citigroup Investments Inc.
One Tower Square
Hartford, Connecticut 06183-2030
Telephone: (860) 277-0940 / (860) 954-3832
Facsimile: (860) 277-7941
(4) Tax I.D. Number: 13-4022241
1 Information provided due to potential acquisition of Notes by Travelers
Corporate Loan Fund, Inc.
COLUMBUS LOAN FUNDING LTD.2
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
Chase Bank of Texas, National Association
ABA No. 113000609
BNF Name: Wire Clearing -- Asset Backed Securities
Chase Tower Houston, 9th Floor
Houston, Texas
Account No. 00102619468
FFC: Columbus Loan Funding Ltd.
55030012339100
Attn: Cliff Harris
Telephone: (713) 216-4629
Facsimile: (713) 577-5266
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Columbus Loan Funding Ltd.
One Tower Square
Hartford, Connecticut 06183-2030
Attn: Robert M. Mills, Investment Officer
Telephone: (860) 277-7804
Facsimile: (860) 954-5243
(3) All other communications shall be delivered or mailed to the following:
(i) for business matters:
Robert M. Mills, Investment Officer
Columbus Loan Funding Ltd.
One Tower Square
Hartford, Connecticut 06183-2030
Telephone: (860) 277-7804
Facsimile: (860) 954-5243
(ii) for administrative/operations matters:
John J. Console/James A. DeLuca
Citigroup Investments Inc.
One Tower Square
Hartford, Connecticut 06183-2030
Telephone: (860) 277-0940 / (860) 954-3832
Facsimile: (860) 277-7941
2 Information provided due to potential acquisition of Notes by Columbus
Loan Funding Ltd..
Series B Senior Guaranteed Note Purchasers
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Annuity Insurance Company
AC-7215-132-7
OBI=PPN # and description of payment
Fund Number PA WE1B
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
American General Annuity Insurance Company and PA WE1B
c/o State Street Bank Corporation
Insurance Services
801 Pennsylvania
Kansas City, MO 64105
Facsimile: (816) 691-3619
(3) Duplicate payment notices and all other communications shall be delivered
or mailed to:
American General Annuity Insurance Company and PA WE1B
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight mail address:
2929 Allen Parkway, A37-01
Houston, TX 77019-2155
Facsimile: (713) 831-1072
With a copy to:
American General Enterprise Services, Inc.
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Facsimile: (713) 831-2328
(4) Tax I.D. Number: 75-0770838
AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC.
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General International Investments Inc.
AC-0125-963-9
OBI=PPN # and description of payment
Fund Number PA 9F
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
American General International Investments Inc. and PA 9F
c/o State Street Bank Corporation
Insurance Services
801 Pennsylvania
Kansas City, MO 64105
Facsimile: (816) 691-3619
(3) Duplicate payment notices and all other communications shall be delivered
or mailed to:
American General International Investments Inc.
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight mail address:
2929 Allen Parkway, A37-01
Houston, Texas 77019-2155
Facsimile: (713) 831-1072
With a copy to:
American General Enterprise Services, Inc.
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Facsimile: (713) 831-2328
(4) Tax I.D. Number: 76-0670714
METROPOLITAN LIFE INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
The Chase Manhattan Bank
ABA# 021-000-021
New York, New York
For credit to: Metropolitan Life Insurance Company
Account No. 002-2-410591
With reference to PPN 96106@ AB5
with sufficient information (including PPN
96106@ AB5) to identify the source and application of such funds.
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Metropolitan Life Insurance Company
Project Placement Unit
334 Madison Avenue
Convent Station, NJ 07961-0633
Attn: Thomas A. Brownsword, Director
Telephone: (973) 254-3321
Facsimile: (973) 254-3032
(3) All other communications shall be delivered or mailed to:
Metropolitan Life Insurance Company
Project Placement Unit
334 Madison Avenue
Convent Station, NJ 07961-0633
Attn: Thomas A. Brownsword, Director
Telephone: (973) 254-3321
Facsimile: (973) 254-3032
With a copy to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010-3690
Attn: Lisa Korsten, Esq. (Area 6-H)
Facsimile: (212) 251-1640
(4) Tax I.D. Number: 13-5581829
NATIONWIDE INDEMNITY COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
The Bank of New York
ABA #021-00-018
BNF: IOC566
F/A/O Nationwide Indemnity Company
Attn: P & I Department
PPN#: 96106@ AB5
Security Description: [ ]
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Nationwide Indemnity Company
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
With a copy to:
Nationwide Indemnity Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
(3) All other communications shall be delivered or mailed to:
Nationwide Indemnity Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
(4) Tax I.D. Number: 31-1399201
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Mutual Fire Insurance Company
Attn: P&I Department
PPN# [ ]
Security Description [ ]
(2) Contemporaneous with the above electronic funds transfer, mail or fax
the following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Nationwide Mutual Fire Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
With a copy to:
Nationwide Mutual Fire Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
(3) All other communications shall be delivered or mailed to:
Nationwide Mutual Fire Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
(4) Tax I.D. Number: 31-4177110
NATIONWIDE MUTUAL INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Mutual Insurance Company
Attn: P&I Department
PPN# 96106@ AB5
Security Description [ ]
(2) Contemporaneous with the above electronic funds transfer, mail or fax
the following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Nationwide Mutual Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
With a copy to:
Nationwide Mutual Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
(3) All other communications shall be delivered or mailed to:
Nationwide Mutual Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
(4) Tax I.D. Number: 31-4177100
PACIFIC LIFE INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds not later than 12 noon, New York
City time, identifying the name of the issuer, a description of the
Note(s) in respect of which payment is being made and the PPN number of
such Note(s) to:
Federal Reserve Bank of Boston
ABA # 0110-123-41 BOS SAFE DEP
DDA 125261
Attn: MBS Income CC: 1253
A/C Name: Pacific Life General Account/PLCF1810132
Regarding: [Security Description] and PPN 96106@ AB5
(2) All notices of payments and written confirmations of such wire transfers
shall be made to:
Mellon Trust
Attn: Pacific Life Accounting Team
One Mellon Bank Center - Room 0930
Pittsburgh, PA 15258-0001
Facsimile: (412) 236-7529
With a copy to:
Pacific Life Insurance Company
Attn: Securities Administration - Cash Team
700 Newport Center Drive
Newport Beach, CA 92660-6397
Facsimile: (949) 640-4013
(3) All other communications shall be delivered or mailed to:
Pacific Life Insurance Company
Attn: Securities Administration
700 Newport Center Drive
Newport Beach, California 92660-6397
Facsimile: (949) 219-5406
(4) Tax I.D. Number: 95-1079000
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
(1) All payment on account of the Notes shall be made in immediately available
funds to:
Chase Manhattan Bank
ABA No.: 021-000-021
New York, New York
Account of: Teachers Insurance and Annuity Association of America
Account No: 900-9-000200
for further credit to TIAA Account Number
[ ]
On Order of: Westmoreland Mining LLC
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, NY 10017
Attn: Securities Accounting Division
Telephone: (212) 916-4188
Facsimile: (212) 916-6955
(3) All other communications shall be delivered or mailed to:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, NY 10017
Attn: Securities Division
Telephone: (212) 916-6298 (Attn: Elizabeth Schultz) or
(212) 490-9000 (general number)
Facsimile: (212) 916-4092
(4) Tax I.D. Number: 13-1624203
THE TRAVELERS INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
The Travelers Insurance Company - Consolidated Private
Placement Account No. 910-2-587434
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attn: Investment Group -Cashier 10-PB
Facsimile: (860) 277-7941
(3) All other communications shall be delivered or mailed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attn: Investment Group - Private Placements 9 PB
Facsimile: (860) 954-5243
(4) Tax I.D. Number: 06-0566090
THE TRAVELERS INSURANCE COMPANY,
for one of its separate accounts
(1) All payments on account of the Notes shall be made by federal wire
transfer of immediately available funds to:
The Travelers Insurance Company - Separate Account TLAC
Account No. 910-2-739365
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
(2) Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth:
(i) the full name, private placement number, interest rate and maturity
date of the Notes or other obligations; (ii) the allocation of payment
between principal, interest, premium and any special payment; and (iii)
the name and address of the Bank (or Trustee) from which such transfer was
sent, to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attn: Investment Group - Cashier 10 PB
Telephone: (860) 277-7941
(3) All other communications shall be delivered or mailed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attn: Investment Group - Private Placements 9 PB
Facsimile: (860) 954-5243
(4) Tax I.D. Number: 06-0566090
SCHEDULE B
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:
Account shall mean any account, contract right, general intangible,
chattel paper, instrument or document representing any right to payment for
goods sold or services rendered, whether or not earned by performance and
whether or not evidenced by a contract, instrument or document, which is now
owned or hereafter acquired by the Obligors.
Adequately Funded shall mean a Plan's assets-to-liabilities
relationship described herein. A Plan is Adequately Funded if, as of the last
day of the Plan Year which has most recently ended (the "Valuation Date") and
based on an actuarial valuation made as of the first day of such Plan Year by
the Plan's regular actuarial consultant, the value of the Plan's assets as
determined under Section 412(c)(2) of the Internal Revenue Code, including any
contributions made to the Plan within eight and 1/2 months of the Valuation
Date, is not less than 90% of the Plan's Current Liability, as determined under
Section 412(l)(7) of the Internal Revenue Code using the maximum allowable
interest rate under such subsection, and recognizing over three years any plan
change, such as any plan amendment or required statutory change in benefits,
(but not changes in actuarial assumption or normal plan experience).
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 or individuals
holding similar positions of a corporation or trust or other Person, as the case
may be.
Ancillary Interests shall mean the stock in Basin Resources, Inc.,
Horizon Coal Services, Inc., and North Central Energy Company and the member
interests in Western SynCoal LLC pursuant to the Stock Purchase Agreement and
the Gascoyne Rights being acquired as part of the Asset Acquisition Agreement,
which have been determined to be of nominal value and ancillary and unnecessary
to the business operations planned to be conducted by the Obligors.
Annual Statements shall have the meaning assigned to that term in
Section 5.9(a).
Asset Acquisition Agreement shall mean that certain Asset Purchase
Agreement dated as of September 27, 2000 by and between Knife River Corporation
and Westmoreland-Knife River Coal Acquisition Corp.
Asset Acquisition Documents shall mean the Asset Acquisition Agreement
and all bills of sale relating thereto, documents regarding assignment of
contracts and assumption of liabilities pursuant to the terms of the Asset
Acquisition Agreement, and all documents executed and delivered in connection
with the foregoing.
Available Cash is defined in Section 9.1(m).
Authorized Officer shall mean those individuals, designated by the
Company, authorized to execute notices, reports and other documents on behalf of
the Obligors required hereunder. The Company may amend such list of individuals
from time to time by giving written notice of such amendment to the holders of
the Notes.
Bank Credit Agreement means the Revolving Credit Agreement between the
Company, PNC Bank, National Association, as Agent, and its Bank Lenders, dated
of even date herewith, as amended, restated, refinanced, replaced, increased or
reduced from time to time, and any successor bank credit agreement.
Bank Financing Documents shall mean the Bank Credit Agreement and any
other agreements, 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 Bank Financing Document shall mean any of
the Bank Financing Documents.
Bank Lenders means the banks or other lenders which are from time to
time party to the Bank Credit Agreement.
Bank Primary Collateral shall mean that portion of the UCC Collateral
in which the Bank Lenders are granted a first priority security interest
pursuant to the Intercreditor Agreement in Accounts and Inventory.
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.
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 or New York, New York and London,
England.
Capital Expenditures shall have the meaning set forth in Section 10.16.
Closing is defined in Section 3.
Coal Act shall mean Internal Revenue Code Sections 9701 through 9722.
Coal Leases shall mean leases presently owned or hereafter acquired by
any Obligor of mineral rights and real property interests related to the right
to mine or extract coal from the Coal Reserves (as identified by the Company to
the Collateral Agent and the holders of the Notes from time to time as mineable
reserves), including without limitation, those leases set forth on Schedule
1.1(L).
Coal Reserves shall mean all coal deposits which the Company by virtue
of a deed or lease has the right to mine.
Coal Supply Contracts shall mean collectively and Coal Supply Contract
shall mean individually, all coal supply or sales agreements now or hereafter
entered into by the Company or any Obligor which provide for the sale or
provision of coal by Company or any Obligor, including without limitation, those
agreements listed on Schedule 5.21 hereto.
Collateral Agency Agreement shall mean that certain Collateral Agency
Agreement among the Collateral Agent, the holders of the Notes dated as of April
27, 2001.
Collateral Agent shall mean an institution which is holding the
Collateral on behalf of the holders of the Notes pursuant to the terms of the
Collateral Agency Agreement.
Collateral Assignment shall mean the Collateral Assignment in the form
of Exhibit (C)(1), collaterally assigning to the extent provided for therein the
Company's or any Subsidiary's rights under Coal Supply Contracts.
Collateral shall mean that portion of the UCC Collateral, Pledged
Collateral, the Intellectual Property Collateral, Coal Supply Contracts and Real
Property in or on which the Company or the other Obligors has granted the
Collateral Agent for the benefit of the Noteholders a security interest in or
lien on pursuant to the Security Agreement (Noteholders), the Collateral
Assignment and the Pledge Agreement (Noteholders), the Patent Trademark and
Copyright Security Agreement and the Mortgages (Noteholders), such Collateral to
include, to the extent provided in the Security Documents, all coal reserves and
related coal lease rights , equipment, furniture, fixtures, real property and
improvements and general intangibles, leasehold interests, Coal Supply
Contracts, the Debt Service Reserve Account, any Debt Service Letter of Credit,
the Series B Trust Account and all limited liability company interests in the
Company held by Parent.
Company means Westmoreland Mining LLC, a Delaware limited liability
company.
Compliance Certificate shall have the meaning assigned to such term in
7.1(d).
Confidential Information is defined in Section 20.
Consolidated EBITDA shall mean for the period of determination (i) the
sum of net income, depreciation, amortization, other nonrecurring or non-cash
charges to net income, interest expense and income tax expense minus (ii)
nonrecurring or non-cash credits to net income, in each case of the Company and
its Subsidiaries for such period determined and consolidated in accordance with
GAAP.
Consolidated Net Worth shall mean as of any date of determination
consolidated stockholders' equity of the Company and its Subsidiaries as of such
date determined and consolidated in accordance with GAAP.
Consolidated Total Capitalization shall mean as of the date of
determination the sum of (i) Consolidated Total Indebtedness and (ii)
Consolidated Net Worth.
Consolidated Total Indebtedness shall mean the principal balance of the
loans and the letters of credit arising out of or under the Bank Credit
Agreement and all other Indebtedness of the Company and its Subsidiaries for
borrowed money, including without limitation, Indebtedness evidenced by the
Notes, capitalized leases and other Indebtedness as determined and consolidated
in accordance with GAAP less any funds maintained in the Debt Service Reserve
Account and the Series B Trust Account.
Contamination shall mean the presence or release or threat of release
of Regulated Substances in, on, under or emanating to or from the Property,
which pursuant to Environmental Laws requires notification or reporting to an
Official Body, or which pursuant to Environmental Laws requires the
investigation, cleanup, removal, remediation, containment, abatement of or other
response action or which otherwise constitutes a violation of Environmental
Laws.
Debt Service Coverage Ratio for any period shall mean, as of any date
of determination, a fraction (i) the numerator of which is the amount of
Consolidated EBITDA less Capital Expenditures (excluding (A) assets acquired by
capital leases and (B) the amount of Indebtedness incurred in connection with
the acquisition of an asset securing a Purchase Money Security Interest) for
such period and (ii) the denominator of which is Debt Service for such period.
Debt Service Reserve Account shall have the meaning ascribed to that
term in the Collateral Agency Agreement.
Debt Service Reserve Letter of Credit shall have the meaning ascribed
to such term in Section 9.1(l).
Debt Service Reserve Requirement shall have the meaning ascribed to
such term in Section 9.1(l).
Debt Service shall mean, as of any date of determination and for any
period, the sum of interest and regularly scheduled principal payments on
Indebtedness of the Obligors, plus the Collateral Agent's fees and expenses
during such period.
Default Rate means (a) for purposes of any Series A Notes, a rate of
interest that is 2% per annum above the Base Rate Option (as defined and
computed in accordance with Schedule C below, as such rate changes from time to
time or (b) for purposes of any Series B Notes, the greater of (i) the rate
described in the foregoing clause (a) and (ii) 11.29%.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money
of the United States of America.
Environmental Complaint shall mean any written complaint by any Person
or Official Body setting forth a cause of action for personal injury or property
damage, natural resource damage, contribution or indemnity for response costs,
civil or administrative penalties, criminal fines or penalties, or declaratory
or equitable relief arising under any Environmental Laws or any order, notice of
violation, citation, subpoena, request for information or other written notice
or demand of any type issued by an Official Body pursuant to any Environmental
Laws.
Environmental Laws shall mean all federal, state, local and foreign
Laws and any consent decrees, settlement agreements, judgments, orders,
directives, policies or programs issued by or entered into with an Official
Body, which are applicable to Company or any Obligor, pertaining or relating to:
(i) pollution or pollution control; (ii) protection of human health or the
environment; (iii) employee safety in the workplace; (iv) the presence, use,
management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, collection,
distribution, disposal or release or threat of release of Regulated Substances;
(v) the presence of Contamination; (vi) the protection of endangered or
threatened species; and (vii) the protection of Environmentally Sensitive Areas.
Environmentally Sensitive Area shall mean (i) any wetland as defined by
applicable Environmental Laws; (ii) any area designated as a coastal zone
pursuant to applicable Laws, including Environmental Laws; (iii) any area of
historic or archeological significance or scenic area as defined or designated
by applicable Laws, including Environmental Laws; (iv) habitats of endangered
species or threatened species as designated by applicable Laws, including
Environmental Laws; or (v) a floodplain or other flood hazard area as defined
pursuant to any applicable Laws.
ERISA Group shall mean, at any time, the Company 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 Company, are treated as a single employer under Section 414 of the Internal
Revenue Code.
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.
Event of Default shall mean any of the events described in Section 11
and referred to therein as an "Event of Default."
Exchange Act means the Securities Exchange Act of 1934, as amended.
Financial Projections shall have the meaning assigned to that term in
Section 5.9(b).
Financing Documents means this Agreement, the Security Documents, the
Intercompany Subordination Agreement, the Intercreditor 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 Financing Document shall mean any of the Financing Documents.
GAAP shall mean generally accepted accounting principles as are in
effect from time to time in the United States of America, and applied on a
consistent basis both as to classification of items and amounts.
Gascoyne Rights shall mean all of the options and other rights granted
under Section 7.11 of the Asset Acquisition Agreement with respect to coal
reserves, facilities, and real property interests associated with a coal mine
previously operated by Knife River Corporation and generally referred to as the
Gascoyne mine.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor under
this Agreement, the Guaranty Agreement and the other Financing Documents in the
form of Exhibit (G)(1).
Guarantor shall mean each of the parties to this Agreement which is
designated as a "Guarantor" on the signature page hereof and each other Person
which joins this Agreement as a Guarantor after the date hereof pursuant to
Section 9.2.
Guaranty Agreement shall mean the Guaranty and Suretyship Agreement
referred to in Section 4.1(j) in substantially the form of Exhibit (G)(2)
executed and delivered by each of the Guarantors to the holders of the Notes.
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 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.
Historical Statements shall have the meaning assigned to that term in
Section 5.9(a).
holder means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
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, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
futures contracts or similar financial arrangements the value of which is
dependent upon commodity rates or indices (including without limitation, any of
the foregoing used to hedge the price of coal), 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, if more than thirty (30) days past due, which are being contested
in good faith and adequate reserves are made for such debt), (v) all liabilities
for borrowed money secured by any lien with respect to property owned by such
Person (whether or not it has assumed or otherwise become liable for such
liabilities), or (vi) any Guaranty by such Person of Indebtedness of a type
described in clause (i) through (v) hereof of another Person.
Independent Director shall mean with respect to a Subsidiary a member
of the Board of Directors of the Subsidiary that is not at the time of initial
appointment to the Board of Directors or at any time while serving on the Board
of Directors or at any time within the preceding five (5) years, (a) a
stockholder, director (with the exception of serving as an independent director
of a Subsidiary or manager of the Company), officer, employee, member other than
as Special Member (as defined in the Company's operating agreement), partner,
attorney or counsel of the Subsidiary or of an Obligor or of any member of the
Parent Group (except that he or she may be or become an independent director or
manager of any other Single Purpose Entity formed in connection with any
financing by any member of the Parent Group or any of their respective
Affiliates); (b) a customer or supplier of the Subsidiary or any of its
Affiliates; or (c) any member of the immediate family of a Person described in
(a) or (b).
Independent Manager shall mean with respect to the Company a member of
the Board of Directors or Managers of the Company that is not at the time of
initial appointment to the Board of Directors or Managers or at any time while
serving on the Board of Directors or Managers or at any time within the
preceding five (5) years, (a) a stockholder, director (with the exception of
serving as an independent manager or director of the Company), officer,
employee, member other than as Special Member (as defined in the Company's
operating agreement), partner, attorney or counsel of the Company or of any
Obligor or of any member of the Parent Group (except that he or she may be or
become an independent director or manager of any Single Purpose Entity formed in
connection with any financing by any member of the Parent Group or any of their
respective Affiliates); (b) a customer or supplier of the Company or any Obligor
or any member of the Parent Group or any Affiliate of either of them; or (c) a
member of the immediate family of any such Person described in (a) or (b).
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.
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 Obligor 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.
Institutional Investor means (a) any original purchaser of a Note, and
(b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
Intellectual Property Collateral shall mean all of the property
described in the Patent, Trademark and Copyright Security Agreement.
Intercompany Subordination Agreement shall mean an Intercompany
Subordination Agreement in the form of Exhibit (I)(2) hereto, which is to be
executed and delivered by the Obligors and any Subsidiaries.
Intercreditor Agreement shall mean an Intercreditor Agreement in the
form of Exhibit (I)(3) hereto, which is to be executed and delivered by the
Collateral Agent, the Bank Lenders and the holders of the Notes.
Interim Statements shall have the meaning assigned to that term in
Section 5.9(a).
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.
Inventory shall mean any and all goods, merchandise and other personal
property, including, without limitation, goods in transit, wheresoever located
and whether now owned or hereafter acquired by the Obligors which are or may at
any time be held as raw materials, finished goods, work-in-process, supplies or
materials used or consumed in any Obligor's business or held for sale or lease
(but excluding all Coal Reserves in place), including, without limitation, (a)
all such property the sale or other disposition of which has given rise to
Accounts and which has been returned to or repossessed or stopped in transit by
such Obligor, and (b) all packing, shipping and advertising materials relating
to all or any such property.
Labor Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among any
Obligor or Subsidiary of a Obligor and its employees.
Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization or approval, lien or
award of or settlement agreement with any Official Body.
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 Interests shall have the meaning given to such term in Section 5.3.
Make-Whole Amount shall have the meaning given such term in the form of
Series B Notes set forth in Exhibit 1B.
Management Agreement shall mean that certain agreement between Parent
and the Company, dated as of April 27, 2001, pursuant to which Parent provides
certain management services to the Obligors.
Management Fee means the management fee under the terms of the
Management Agreement which amount shall not exceed $500,000 in the aggregate in
any fiscal quarter (provided that, in the event that the Company fails to
consummate the acquisition contemplated by the Asset Acquisition Agreement on or
before thirty (30) calendar days after the Closing Date, the foregoing amount of
$500,000 per fiscal quarter shall be reduced thereafter to $416,667 per fiscal
quarter).
Management Fee Subordination Agreement means the Management Fee
Subordination Agreement in the form of Exhibit (M)(1) to be executed and
delivered by Parent and Company for the benefit of the holders of the Notes.
Mandatory Prepayment Date shall have the meaning assigned to that term
in Section 8.2(a).
Mandatory Prepayment with Surplus Cash Flow shall mean the prepayments
from time to time required to be made on the Series A Notes pursuant to Section
8.2(d).
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 Bank Financing Document, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Obligors taken as a whole, (c) impairs
materially or could reasonably be expected to impair materially the ability of
the Obligors taken as a whole to duly and punctually pay or perform its
Indebtedness, or (d) impairs materially or could reasonably be expected to
impair materially the ability of the Collateral Agent or any of the holders of
the Notes, to the extent permitted, to enforce their legal remedies pursuant to
this Agreement or any other Financing Documents.
Memorandum is defined in Section 5.11.
Moody's means Moody's Investors Service, Inc.
Mortgages (Noteholders) shall mean collectively, and Mortgage
(Noteholders) shall mean separately, the mortgages or deed of trust in
substantially the form of Exhibits M(2) and (M)(3) with respect to the Real
Property located in the States of Montana, North Dakota and Texas, respectively,
executed and delivered by certain of the respective Obligors to the Collateral
Agent for the benefit of the holders of the Notes, encumbering the Real
Property.
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 Company 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 Company 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.
Northwestern means Northwestern Resources Company, a Montana
corporation.
Noteholder Share shall have the meaning assigned to that term in
Section 9.1(m).
Notes is defined in Section 1.
notices shall have the meaning assigned to that term in Section 18.
Obligation shall mean any obligation or liability of any of the
Obligors to any of the holders of the Notes or the Collateral Agent, 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, or any other Financing Document.
Obligors shall mean the Company and the Guarantors.
Officer's Certificate means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
Official Body shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, board, 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 Westmoreland Coal Company, a Delaware corporation,
the sole member of the Company.
Parent Group shall mean the Parent and each entity in which the Parent
owns, directly or indirectly through one or more intermediaries, 5% or more of
any class of the voting or other equity interests of such Person, including
those entities now in existence and hereafter created, other than the Obligors
and all of their Subsidiaries.
Partnership Interests shall have the meaning given to such term in
Section 5.3.
Patent, Trademark and Copyright Security Agreement shall mean the
Patent, Trademark and Copyright Security Agreement in substantially the form of
Exhibit (P)(1) executed and delivered by each of the Obligors to the Collateral
Agent for the benefit of the holders of the Notes.
Payment Date shall mean each March 31, June 30, September 30 and
December 31 hereafter, provided that if such date is not a Business Day, then on
the Business Day immediately following such date.
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Affiliate Transactions means: (i) the services to be provided
and fees payable under the Management Agreement, (ii) upon the occurrence and
during the continuance of a force majeure event (which arises through no fault
of the Obligors) under any Coal Supply Contract and which prevents the Obligors
from supplying the buyers with the requested amount of coal thereunder, sales of
coal from any member of the Parent Group to any of the Obligors to satisfy the
requests of the buyers under such Coal Supply Contract so long as the terms and
conditions of the transaction are commercially reasonable in all respects
(including at a price which enables the Obligor to earn a reasonable profit from
the transaction and otherwise on terms and conditions no less favorable to the
Obligor than those offered by independent third parties) and so long as such
supply by the member of the Parent Group is more favorable to the Company than
supply of such coal by any other Obligor able to supply it, (iii) in the event
that any buyer of coal under a Coal Supply Contract increases its demands for
coal under such agreement beyond the ability of the Obligor to the Coal Supply
Contract to satisfy such requirements, a member of the Parent Group shall be
permitted to bid on and supply coal to such buyer, provided that such action in
no way reduces the amount of coal that is to be supplied by the Obligor under
the Coal Supply Contract at such time or in the future, (iv) in the event that
the Obligors have excess coal production (beyond the needs of the buyers under
the Coal Supply Contracts) available for sale to non-Affiliate third parties, a
member of the Parent Group shall be permitted to act as a broker for the
Obligors in such sales and shall be entitled to a brokerage fee which is typical
in the marketplace for providing such services (such brokerage fees at the time
of Closing would be in the range of $0.25 to $0.50 per ton of coal sold) and (v)
to the extent that any Coal Supply Contract permits the buyer of coal thereunder
to require that coal be obtained from a source other than the Obligors, a member
of the Parent Group shall be permitted to sell coal to such buyer so long as the
buyer pays the fee associated with such activity in accordance with the Coal
Supply Contract; provided, however, that no such transaction referred to in any
of the foregoing clauses (i) through (v) shall constitute a Permitted Affiliate
Transaction unless it is consummated on terms and conditions that are
commercially reasonable in light of prevailing market conditions relative to the
subject matter of such transaction and that, when considered as a whole, are
generally similar to the terms and conditions that would obtain in a comparable
transaction consummated between unaffiliated parties.
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 or obligations of state or local governments rated
not lower than AAA/Aaa by Standard & Poor's or Moody's maturing in twelve (12)
months or less from the date of acquisition;
(ii) commercial paper maturing in 270 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 commercial banks organized under the laws of the
United States or any state thereof have capital, surplus and undivided profits
aggregating at least $500,000,000 and whose obligations are rated A- or the
equivalent or better by Standard & Poor's or A3 or better by Moody's on the date
of acquisition, provided that the Obligors shall be permitted to maintain its
operating accounts for administrative purposes with First Interstate Bank
located in Billings, Montana;
(iv) repurchase obligations entered into with a bank or trust
corporation meeting the standards set for in clause (iii) above; provided that
such repurchase agreements require the physical delivery of the investments
securing the repurchase agreement, except these delivered through the Federal
Reserve Book Entry System;
(v) money market funds having assets in excess of $500,000,000 and
which are restricted by their respective charters to investing solely in
securities of the type permitted in clauses (i) through (iv) above;
(vi) investments existing prior to the date of the Closing.
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 workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs (exclusive, however, of Liens arising under
ERISA);
(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, or bonds given, in the
ordinary course of business to secure performance of bids, tenders, contracts
(including any reclamation bond funds) (other than for the repayment of borrowed
money) or leases or other ordinary course obligations, not in excess of the
aggregate amount due or which may become due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required 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, security interests and mortgages in favor of the Collateral
Agent for the benefit of the holders of the Notes and Liens and security
interests and mortgages for the benefit of the Bank Lenders and which secure
obligations under the Bank Financing Documents;
(vii) Liens on property leased (and proceeds thereof) by any Obligor or
Subsidiary of a Obligor under capital and operating leases permitted in Section
10.16 securing obligations of such Obligor or Subsidiary to the lessor under
such leases;
(viii) Purchase Money Security Interests securing Indebtedness
permitted by Section 10.1(d); and
(ix) 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 forty-five (45) days of entry, and in either case they do not affect the
Collateral or, in the aggregate, materially impair the ability of any Obligor to
perform its Obligations hereunder or under the other Financing Documents:
(1) Claims or Liens for taxes, assessments or charges due and payable
and subject to interest or penalty, provided that the applicable Obligor
maintains such reserves or other appropriate provisions as shall be required by
GAAP and pays all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to, real
or personal property other than the Collateral, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen, carriers,
or other statutory nonconsensual Liens.
Permitted Modifications shall mean amendments, modifications or waivers
of Coal Supply Contracts or Coal Leases which are entered into in the ordinary
course of business by the Obligors from time to time so long as such action does
not (i) negatively impact the economics of the agreement from the Obligors
perspective (including changing any terms relating to price, quantity or term),
(ii) adversely affect the contemplated mining operations of the Obligors or
(iii) have any reasonable likelihood of resulting in a Material Adverse Change.
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 (Noteholders) shall mean the Pledge Agreement in
substantially the form of Exhibit (P)(2) executed and delivered by the members
of the Company, the Company and any Subsidiaries to the Collateral Agent for the
benefit of the holders of the Notes.
Pledged Collateral shall mean the property of the Obligors in which
security interests are to be granted under the Pledge Agreement (Noteholders).
Potential Default shall mean an event or condition the occurrence or
existence of which would with the mere notice, passage of time, or any
combination of the foregoing, become an Event of Default.
Prior Security Interest shall mean a valid and enforceable perfected
prior security interest under the Uniform Commercial Code in the Collateral
which is subject only to (i) Permitted Liens (other than Permitted Liens of the
types described in clauses (iv), (vii) and (viii) of the definition of that
term) and (ii) the prior security interest under the Uniform Commercial Code in
the Accounts and Inventory of the Obligors securing the Bank Financing
Documents.
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
Obligor or Subsidiary of a Obligor.
Purchase Money Security Interest shall mean Liens upon tangible
personal property and proceeds thereof securing loans to any Obligor or
Subsidiary of an Obligor or deferred payments by such Obligor or Subsidiary
securing not more than one hundred percent (100%) of the purchase price of such
tangible personal property, provided that (a) any such Lien attaches within 90
days of the acquisition of such personal property, (b) such Lien attaches and is
at all times confined solely to such acquired personal property and proceeds
thereof, and (c) the principal amount of Indebtedness secured by such Lien does
not exceed 100% of the acquisition cost of such property.
Purchasers means the purchasers of the Notes named on Schedule A hereto
and their registered assigns.
QPAM Exemption means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
Real Property shall mean the real estate owned by any of the Obligors,
which shall be encumbered by the Mortgages (Noteholders) and described on
Schedule 5.8 hereto.
Regulated Substances shall mean, without limitation, any substance,
material or waste, regardless of its form or nature, defined under Environmental
Laws as a "hazardous substance," "pollutant," "pollution," "contaminant,"
"hazardous or toxic substance," "extremely hazardous substance," "toxic
chemical," "toxic substance," "toxic waste," "hazardous waste," "special
handling waste," "industrial waste," "residual waste," "solid waste," "municipal
waste," "mixed waste," "infectious waste," "chemotherapeutic waste," "medical
waste," or "regulated substance" or any other material, substance or waste,
regardless of its form or nature, which otherwise is regulated by Environmental
Laws, which is the subject of an Environmental Law applicable to the Obligors or
any Subsidiary.
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 ERISA
section 4043 and regulations thereunder with respect to a Plan or Multiemployer
Plan for which written notice thereof to the PBGC is required under applicable
regulations.
Required Combined Holders means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
Required Environmental Notices shall mean all notices, reports, plans,
forms or other filings which pursuant to Environmental Laws, Required
Environmental Permits or at the request or direction of an Official Body either
must be submitted to an Official Body or which otherwise must be maintained.
Required Environmental Permits shall mean all permits, licenses, bonds,
consents, programs, approvals or authorizations required under Environmental
Laws to own, occupy or maintain the Property or which otherwise are required for
the operations and business activities of the Company or the other Obligors.
Required Mining Permits shall mean all permits, licenses,
authorizations, plans, approvals and bonds necessary under the Environmental
Laws for Obligors or any Subsidiary to continue to conduct coal mining and
related operations on, in or under the Real Property, the Property subject to
the Coal Leases and any and all other mining properties owned or leased by any
such Obligor or Subsidiary (collectively, "Mining Property") substantially in
the manner as such operations had been authorized immediately prior to such
Obligor's or such Subsidiary's acquisition of its interests in the Real Property
and as may be necessary for such Obligor such Subsidiary to conduct coal mining
and related operations on, in or under the Mining Property as described in any
plan of operation.
Required Series A Holders means, at any time, the holders of at least
51% in principal amount of the Series A Notes (exclusive of Series A Notes then
owned by the Company or any of its Affiliates).
Required Series B Holders means, at any time, the holders of at least
51% in principal amount of the Series B Notes (exclusive of Series B Notes then
owned by the Company or any of its Affiliates)
Responsible Officer means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
Section 20 Subsidiary shall mean a Subsidiary of the bank holding
company controlling any bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
Securities Act means the Securities Act of 1933, as amended from time
to time.
Security Agreement (Noteholders) shall mean the Security Agreement in
substantially the form of Exhibit (S)(1) executed and delivered by each of the
Obligors to the Collateral Agent for the benefit of the holders of the Notes.
Security Documents means (i) the Security Agreement (Noteholders), (ii)
Pledge Agreement (Noteholders), (iii) the Guaranty Agreement, (iv) the Mortgages
(Noteholders), (v) the Collateral Assignment, and (vi) the Patent, Trademark and
Copyright Security Agreement.
Senior Financial Officer means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
Series A Notes shall mean all Notes issued under this Agreement and
designated as Series A Notes, which, among other things, have a maturity date of
June 30, 2002.
Series B Notes means all Notes issued under this Agreement and
designated as Series B Notes, which, among other things, have a maturity date of
December 31, 2008, and have a fixed stated interest rate (subject to adjustment
as provided therein) of 9.39% per annum.
Series means any series of Notes issued pursuant to this Agreement or
any Supplement hereto.
Series B Trust Account shall have the meaning ascribed to such term in
the Collateral Agency Agreement.
Single Purpose Entity shall mean with respect to the Company, an
organization which is organized solely for the purposes of carrying out the
activities described in its operating agreement as of the date of Closing and
which does not engage in any business unrelated to such activities, does not
have any assets other than those related to its interest in the activities or
any indebtedness other than as permitted by this Agreement or the other
Financing Documents, has its own separate books and records and its own
accounts, in each case which are separate and apart from the books and records
and accounts of any other Person and holds itself out as being a Person separate
and apart from any other Person.
Standard & Poor's shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.
Stock Purchase Agreement means that certain stock purchase Agreement
dated as of September 15, 2000 by and between Westmoreland Coal Company and
Entech, Inc. with respect to all outstanding capital stock of Basin Resources,
Inc., Horizon Coal Services, Inc., North Central Energy Company, Northwestern
Resources Co., and Western Energy Company.
Subsidiary of any Person at any time shall mean (i) any corporation or
trust of which 50% or more (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 50% or more 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
50% or more 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.
Subsidiary Shares shall have the meaning assigned to that term in
Section 5.3.
Surplus Cash Flow Letter shall mean the side letter between the
Obligors, dated as of the Closing Date and delivered at the Closing to the
Purchasers, which reduces, upon the happening of designated events, that portion
of Surplus Cash Flow as of any Payment Date which may be retained by the Company
pursuant to the terms hereof.
Surplus Cash Flow shall have the meaning assigned to that term in
Section 9.1(m).
Third Party Services Payments shall mean reimbursement of the allocable
share of the actual cost (without overhead) of the goods and services procured
by the Parent Group or any member thereof from a third-party (which is not an
Affiliate of the Parent) on behalf of the Company or any Obligor for services
which are of a general administrative nature and not operating type services.
Transaction Agreement shall have the meaning assigned to that term in
Section 5.36(g).
UCC Collateral shall mean the property of the Obligors in which
security interests are to be granted under the Security Agreements
(Noteholders).
Uniform Commercial Code shall have the meaning assigned to that term in
Section 5.16.
WECO means Western Energy Company, a Montana corporation.
Schedule C
ADMINISTRATIVE NOTE Agent
1. Appointment.
-----------
Each of holders of the Series A Notes hereby irrevocably
designates, appoints and authorizes PNC Bank National Association (the
"Administrative Note Agent") to act as agent for such Note holder in accordance
with the provisions of this Agreement. Each holder of a Series A Note hereby
irrevocably authorizes, and each holder of any Series A Note by the acceptance
of a Series A Note shall be deemed irrevocably to authorize, the Administrative
Note Agent to take such action on its behalf under the provisions of this
Agreement and the other Financing 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
Administrative Note Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. The Administrative Note Agent agrees to act as
the agent on behalf of the holders of the Series A Notes to the extent provided
in this Agreement.
2. Delegation of Duties.
--------------------
The Administrative Note Agent may perform any of its duties
hereunder by or through agents or employees (provided such delegation does not
constitute a relinquishment of its duties as Administrative Note Agent) and,
subject to Paragraphs 5 and 6 of this Schedule C, 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.
3. Nature of Duties; Independent Credit Investigation.
--------------------------------------------------
The Administrative Note Agent shall have no 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 Note Agent shall be mechanical and administrative in nature;
the Administrative Note Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any holder of the Notes; and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Administrative Note 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 "agent" in this Agreement
with reference to the Administrative Note Agent 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 holder of a Series A
Note expressly acknowledges (i) that the Administrative Note Agent has not made
any representations or warranties to it and that no act by the Administrative
Note Agent hereafter taken, including any review of the affairs of any of the
Obligors, shall be deemed to constitute any representation or warranty by the
Administrative Note Agent to any Note holder; (ii) that it has made and will
continue to make, without reliance upon the Administrative Note Agent, its own
independent investigation of the financial condition and affairs and its own
appraisal of the creditworthiness of each of the Obligors in connection with
this Agreement and the making and purchasing of the Notes hereunder; and (iii)
except as expressly provided herein, that the Administrative Note Agent shall
have no duty or responsibility, either initially or on a continuing basis, to
provide any Note holder with any credit or other information with respect
thereto, whether coming into its possession prior to the date of this Agreement
or at any time or times thereafter.
4. Actions in Discretion of Agent; Instructions From the Note Holders.
------------------------------------------------------------------
The Administrative Note Agent agrees, upon the written request
of the Required Series A Holders, to take or refrain from taking any action of
the type specified as being within the Administrative Note Agent 's rights,
powers or discretion herein, provided that the Administrative Note Agent shall
not be required to take any action which exposes the Administrative Note Agent
to personal liability or which is contrary to this Agreement or any other
Financing Document or applicable Law. In the absence of a request by the
Required Series A Holders the Administrative Note Agent shall have authority, in
its sole discretion, to take or not to take any such action, unless this
Agreement specifically requires the consent of the Required Series A Holders or
all of the Series A Note holders. Any action taken or failure to act pursuant to
such instructions or discretion shall be binding on the Series A Note holders,
subject to Paragraph 6 of this Schedule C. Subject to the provisions of
Paragraph 6 of this Schedule, no holder of a Series A Note shall have any right
of action whatsoever against the Administrative Note Agent as a result of the
Administrative Note Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Series A Holders, or in the
absence of such instructions, in the absolute discretion of the Administrative
Note Agent.
5. Reimbursement and Indemnification of Agent by the Company.
---------------------------------------------------------
The Company unconditionally agrees to pay or reimburse the
Administrative Note Agent and hold the Administrative Note Agent harmless
against (a) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements, including fees and expenses of counsel (including
the allocated costs of staff counsel), appraisers and environmental consultants,
incurred by the Administrative Note Agent (i) in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other
Financing 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 Financing Document or collection of
amounts due hereunder or thereunder or the proof and allowability of any claim
arising under this Agreement or any other Financing 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 Financing 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 Note Agent, in its capacity as such, in any way
relating to or arising out of this Agreement or any other Financing Documents or
any action taken or omitted by the Administrative Note Agent hereunder or
thereunder, provided that the Company 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 Note Agent's gross negligence or willful misconduct, or if the
Company was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the Company
shall remain liable to the extent such failure to give notice does not result in
a loss to the Company), or if the same results from a compromise or settlement
agreement entered into without the consent of the Company, which shall not be
unreasonably withheld. In addition, the Company agrees to reimburse and pay all
reasonable out-of-pocket expenses of the Administrative Note Agent's regular
employees and agents engaged periodically to perform audits of the Obligors'
books, records and business properties.
6. Exculpatory Provisions; Limitation of Liability.
-----------------------------------------------
Neither the Administrative Note Agent nor any of its
directors, officers, employees, agents, attorneys or Affiliates shall (a) be
liable to any holder of a Series A Note for any action taken or omitted to be
taken by it or them hereunder, or in connection herewith including pursuant to
any Financing Document, unless caused by its or their own gross negligence or
willful misconduct, (b) be responsible in any manner to any of the holders of
the Notes for the effectiveness, enforceability, genuineness, validity or the
due execution of this Agreement or any other Financing 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 Financing Documents, or (c) be under any obligation to any of the holders
of the Notes 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
Obligors, or the financial condition of the Obligors, or the existence or
possible existence of any Event of Default or Potential Default. No claim may be
made by any of the Obligors, any holder of the Notes, the Administrative Note
Agent or any of their respective Subsidiaries against the Administrative Note
Agent, any holder of a Note 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 Financing 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 Series A Notes, and each of the Obligors, (for itself and on
behalf of each of its Subsidiaries), the Administrative Note Agent and each
holder of a Series A Note 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 holder of a Series A Note agrees that, except for notices, reports and
other documents expressly required to be furnished to the holder of the Notes by
the Administrative Note Agent hereunder or given to the Administrative Note
Agent for the account of or with copies for each holder of the Series A Notes,
the Administrative Note Agent and each of its directors, officers, employees,
agents, attorneys or Affiliates shall not have any duty or responsibility to
provide any holder of the Notes with any credit or other information concerning
the business, operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Obligors which may come into the possession
of the Administrative Note Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
7. Reimbursement and Indemnification of Agent by Holders of the Series
A Notes.
-----------------------------------------------------------------------
Each of the holders of the Series A Notes agrees to reimburse
and indemnify the Administrative Note Agent (to the extent not reimbursed by the
Company and without limiting the obligation of the Company to do so) in
proportion to its ratable share from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, including attorneys' fees and disbursements (including the
allocated costs of staff counsel), 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 Note Agent, in its capacity as such,
in any way relating to or arising out of this Agreement or any other Financing
Documents or any action taken or omitted by the Administrative Note Agent
hereunder or thereunder, provided that no holder of a Series A Note 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 Note Agent's gross negligence or
willful misconduct, or (b) if such holder of the Note was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense (except that such holder of the Note shall remain liable to the
extent such failure to give notice does not result in a loss to the holder of
the Note), or (c) if the same results from a compromise and settlement agreement
entered into without the consent of such holder of the Note, which shall not be
unreasonably withheld. In addition, each holder of a Series A Note agrees
promptly upon demand to reimburse the Administrative Note Agent (to the extent
not reimbursed by the Company and without limiting the obligation of the Company
to do so) in proportion to its ratable share for all amounts due and payable by
the Company to the Administrative Note Agent in connection with the
Administrative Note Agent's audit of the Obligors' books, records and business
properties.
8. Reliance by Administrative Note Agent.
-------------------------------------
The Administrative Note 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 Note Agent. The Administrative Note 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 Obligors 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. Notice of Default.
-----------------
The Administrative Note Agent shall not be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default unless the Administrative Note Agent has received written notice from a
holder of a Series A Note or the Company referring to this Agreement, describing
such Potential Default or Event of Default and stating that such notice is a
"notice of default."
10. Notices.
-------
The Administrative Note Agent shall promptly send to each
holder of a Series A Note a copy of all notices received from the Company or any
other Obligor pursuant to the provisions of this Agreement or the other
Financing Documents promptly upon receipt thereof. The Administrative Note Agent
shall promptly notify the Company and the holders of the Series A Notes of each
change in the Base Rate and the effective date thereof.
11. Holders of Series A Notes in Their Individual Capacities.
--------------------------------------------------------
With respect to the Series A Note purchase by it and any other
rights and powers given to it as a holder of a Series A Note hereunder or under
any of the other Financing Documents, the Administrative Note Agent shall have
the same rights and powers hereunder as any other holder of a Series A Note and
may exercise the same as though it were not the Administrative Note Agent, and
the term "holder of a Series A Note" shall, unless the context otherwise
indicates, include the Administrative Note Agent in its individual capacity.
Administrative Note Agent and its 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 Obligors and their Affiliates, in the
case of the Administrative Note Agent, as though it were not acting as
Administrative Note Agent hereunder and in the case of each holder of a Series A
Note, as though such holder were not a purchaser hereunder. The holders of the
Series A Notes acknowledge that, pursuant to such activities, the Administrative
Note Agent or its Affiliates may (i) receive information regarding the Obligors
(including information that may be subject to confidentiality obligations in
favor of the Obligors) and acknowledge that the Administrative Note Agent shall
be under no obligation to provide such information to them, and (ii) accept fees
and other consideration from the Obligors for services in connection with this
Agreement and otherwise without having to account for the same to the holders of
the Series A Note.
12. Holders of Notes.
----------------
The Administrative Note Agent may deem and treat any payee of
any Series A 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 Note Agent. 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.
13. [Intentionally Omitted.]
---------------------
14. Successor Administrative Note Agent.
-----------------------------------
The Administrative Note Agent (i) may resign as Administrative
Note Agent or (ii) shall resign if such resignation is requested by the Required
Holders of the Series A Notes (if the Administrative Note Agent is a holder of
the Series A Note, the Administrative Note Agent's Note shall be considered in
determining whether the Required Holders of Series A Notes have requested such
resignation), in either case of (i) or (ii) by giving not less than thirty (30)
days' prior written notice to the Company. If the Administrative Note Agent
shall resign under this Agreement, then either (a) the Required Holders of
Series A Notes shall appoint from among the holders of the Series A Notes a
successor agent for the Series A Notes, subject to the consent of the Company,
such consent not to be unreasonably withheld, or (b) if a successor agent shall
not be so appointed and approved within the thirty (30) day period following the
Administrative Note Agent's notice to the holders of the Series A Notes of its
resignation, then the Administrative Note Agent shall appoint, with the consent
of the Company, such consent not to be unreasonably withheld, a successor agent
who shall serve as Administrative Note Agent until such time as the Required
Holders of Series A Notes appoint and the Company consents to the appointment of
a successor agent. Upon its appointment pursuant to either clause (a) or (b)
above, such successor agent shall succeed to the rights, powers and duties of
the Administrative Note Agent, and the term " Administrative Note Agent" shall
mean such successor agent, effective upon its appointment, and the former
Administrative Note Agent's rights, powers and duties as Administrative Note
Agent shall be terminated without any other or further act or deed on the part
of such former Administrative Note Agent or any of the parties to this
Agreement. After the resignation of any Administrative Note Agent hereunder, the
provisions of this Schedule C shall inure to the benefit of such former
Administrative Note Agent and such former Administrative Note 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 an Administrative Note Agent under
this Agreement.
15. Administrative Note Agent's Fee.
-------------------------------
The Company shall pay to the Administrative Note Agent a
nonrefundable fee (the "Agent's Fee") under the terms of a letter (the "Agent's
Letter") between the Company and Administrative Note Agent, as amended from time
to time.
16. Calculations.
------------
In the absence of gross negligence or willful misconduct, the
Administrative Note Agent shall not be liable for any error in computing the
amount payable to any holder of the Series A Notes whether in respect of the
Series A Notes, fees or any other amounts due to the holders of the Series A
Notes under this Agreement. In the event an error in computing any amount
payable to any holder of Series A Notes is made, the Administrative Note Agent,
the Company and each affected holder of a Series A Note 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.
17. Beneficiaries.
-------------
Except as expressly provided herein, the provisions of this
Schedule C are solely for the benefit of the Administrative Note Agent and the
holders of Series A Notes, and the Obligors 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 Note Agent shall act solely as agent of
the holders of Series A Notes and does 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 Obligors.
EXHIBIT 99.4
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Agreement"), dated as of April 27, 2001, is
made and entered into by and among each of the undersigned and each of the other
Persons which become Pledgors hereunder from time to time (each a "Pledgor" and
collectively the "Pledgors"), and FIRSTAR BANK, N.A, as Collateral Agent for the
Banks in connection with the Credit Agreement described below (the "Secured
Party").
WHEREAS, pursuant to that certain Credit Agreement (as from time to
time restated, amended, modified or supplemented, the "Credit Agreement") dated
as of April 27, 2001, by and among Westmoreland Mining LLC, a Delaware limited
liability company (the "Borrower"), each of the Guarantors now or hereafter
party thereto, the Banks now or hereafter party thereto, and PNC Bank, National
Association, as Agent ("PNC"), PNC and the Banks have agreed to provide certain
loans and other financial accommodations to the Borrower; and
WHEREAS, pursuant to and in consideration of the Credit Agreement, all
of the issued and outstanding equity interests of each of the corporations,
limited liability companies, partnerships or other entities as set forth on
Schedule A hereto (each a "Pledged Company" and collectively the "Pledged
Companies") is to be pledged to the Secured Party in accordance herewith; and
WHEREAS, each Pledgor acknowledges its receipt, whether direct or
indirect, of the benefit of certain revolving credit facilities which are being
made available, either directly or indirectly, to each Pledgor concurrently with
the closing of the Credit Agreement; and
WHEREAS, Each Pledgor owns the outstanding equity interest in the
Pledged Companies as set forth on Schedule A hereto.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. Defined Terms.
(a) Except as otherwise expressly provided herein, capitalized terms used
in this Agreement shall have the respective meanings assigned to them in the
Credit Agreement. Where applicable and except as otherwise expressly provided
herein, terms used herein (whether or not capitalized) shall have the respective
meanings assigned to them in the Uniform Commercial Code as enacted in New York
as amended from time to time (the "Code").
(b) "Organizational Documents" shall mean, with respect to any Pledged
Company, as applicable, its articles of incorporation, charter, bylaws,
certificate of limited liability, limited liability company operating agreement,
partnership agreement, shareholder agreement, and member agreement, and any
similar organizational document.
(c) "Pledged Collateral" shall mean and include all right, title and
interest in the following: (i) the capital stock, shares, securities, member
interests, partnership interests and all other ownership interests
(collectively, the "Investments") listed on Schedule A attached hereto and made
a part hereof, and all rights and privileges pertaining thereto, including,
without limitation, all present and future securities, shares, capital stock,
member interests, partnership interests and other ownership interests receivable
in respect of or in exchange for any such Investments, all rights under any
Organizational Documents and other similar agreements relating to all
Investments, all rights to subscribe for securities, shares, capital stock,
member interests, partnership interests or other ownership interests incident to
or arising from ownership of Investments, all cash, interest, stock and other
dividends or distributions paid or payable on such Investments, and all books
and records (whether paper, electronic or any other medium) pertaining to the
foregoing, including, without limitation, all stock record and transfer books,
(ii) any and all other securities, shares, capital stock, member interests,
partnership interests and other ownership interests hereafter pledged by any
Pledgor to the Secured Party to secure the Secured Obligations (as hereinafter
defined), and all rights and privileges pertaining thereto, including, without
limitation, all present and future securities, shares, capital stock, member
interests, partnership interests and other ownership interests receivable in
respect of or in exchange for such securities, shares, capital stock, member
interests, partnership interests or other ownership interests, all rights under
any Organizational Documents and other similar agreements relating to such
securities, shares, capital stock, member interests, partnership interests and
other ownership interests, all rights to subscribe for securities, shares,
capital stock, member interests, partnership interests or other ownership
interests incident to or arising from ownership of such Investments, all cash,
interest, stock, member interests, partnership interests and other dividends or
distributions paid or payable on such securities, shares, capital stock, member
interests, partnership interests and other ownership interests, and all books
and records (whether paper, electronic or other medium) pertaining to the
foregoing, (iii) all of each Pledgor's books, records, ledgers, ledger cards,
files correspondence, computer programs software, disks, tapes and related data
that at any time evidence or relate to any of the foregoing or are otherwise
necessary or helpful in the collection thereof or realization thereon, and (iv)
whatever is received when any of the foregoing is sold, exchanged, replaced or
otherwise disposed of, including all proceeds, as such term is defined in the
Code, thereof.
2. Grant of Security Interests.
(a) In order to secure the prompt payment and performance of all
Obligations of the Borrower and each Guarantor in full as and when due in
accordance with the Credit Agreement and the other Loan Documents (collectively,
the "Secured Obligations"), each Pledgor hereby sells, assigns, conveys,
mortgages, pledges, hypothecates, transfers, confirms and grants unto the
Secured Party for the equal and ratable benefit and security of PNC, each of the
Banks and the Secured Party, a lien on and a first priority security interest in
and any Affiliate of any of the Banks, all of such Pledgor's now existing and
hereafter acquired or arising right, title and interest in, to and under the
Pledged Collateral whether now existing or hereafter coming into existence,
whether now held or owned or hereafter acquired, as now in existence or in
effect or as hereafter modified, amended or supplemented, and wherever the same
may be located.
(b) Upon the execution and delivery of this Agreement, each Pledgor shall
deliver to and deposit with the Secured Party in pledge, all stock certificates,
instruments or other documents evidencing the Pledged Collateral owned by such
Pledgor, together with undated stock powers, instruments or other documents
signed in blank by such Pledgor.
(c) Any right, title and interest hereby assigned to the Secured Party
hereunder includes, without limitation, the right to further assign such right,
title and interest.
(d) Notwithstanding any provision of this Agreement to the contrary, each
Pledgor, shall remain liable under the applicable Organizational Documents to
observe and perform all the respective conditions and obligations to be observed
and performed thereunder, all in accordance with and pursuant to the terms and
provisions of the applicable Organizational Documents. The granting of any of
the rights to the Secured Party hereunder shall not release such Pledgor from
any of its duties or obligations under the applicable Organizational Documents
or constitute an assumption by the Secured Party or such Bank of such duties and
obligations. Neither the Secured Party nor any Bank shall have any obligation or
liability under the applicable Organizational Documents by reason of or arising
out of this Agreement or the assignment of the rights hereunder to the Secured
Party or the receipt by the Secured Party of any payment under or relating to
the applicable Organizational Documents pursuant hereto, nor shall the Secured
Party or any Bank be required or obligated in any manner to perform or fulfill
any of the obligations of such Pledgor under or pursuant to the applicable
Organizational Documents, or to make any payment thereunder, or to make any
inquiry as to the nature or the sufficiency of any payment received by the
Secured Party or the sufficiency of any performance by any party under the
applicable Organizational Documents, or to present or file any claim, or to take
any action to collect or enforce any performance or the payment of any amounts
which may have been assigned to the Secured Party or to which it may be entitled
at any time or times pursuant hereto.
3. Further Assurances.
Prior to or concurrently with the execution of this Agreement,
and thereafter at any time and from time to time upon reasonable request of the
Secured Party, each Pledgor shall execute and deliver to the Secured Party all
financing statements, continuation financing statements, assignments,
certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of attorney and all other
documents (collectively, the "Security Documents") which the Secured Party may
reasonably request, in form reasonably satisfactory to the Secured Party, and
take such other action which the Secured Party may reasonably request, to
perfect and continue perfected and to create and maintain a Prior Security
Interest in favor of the Secured Party in the Pledged Collateral and to fully
consummate the transactions contemplated under this Agreement. Each Pledgor
hereby irrevocably makes, constitutes and appoints the Secured Party (and any of
the Secured Party's officers or employees or agents designated by the Secured
Party) as such Pledgor's true and lawful attorney with power to sign the name of
such Pledgor on all or any of the Security Documents which the Secured Party
determines must be executed, filed, recorded or sent in order to perfect or
continue perfected the Secured Party's security interest in the Pledged
Collateral in any jurisdiction. Such power, being coupled with an interest, is
irrevocable until all of the Secured Obligations have been indefeasibly paid in
full and the Commitments have terminated.
4. Pledged Companies Acknowledgment and Assignment of Pledged Collateral.
Each Pledgor shall cause the Pledged Companies to execute and
to deliver to the Secured Party concurrently herewith an Acknowledgment
Regarding Pledge Agreement (the "Acknowledgment") in the form attached hereto as
Exhibit "A". Concurrently herewith each Pledgor of any membership interests in
any Pledged Company shall execute and deliver to Secured Party a fully executed
Assignment of Membership Interest in the form attached hereto as Exhibit "B" and
each Pledgor of any capital stock in any Pledged Company shall execute and
deliver to Secured Party a fully executed Stock Power in the form attached
hereto as Exhibit "C" with respect to the Pledged Collateral. Each Pledgor
hereby authorizes the Secured Party, after the occurrence of an Event of
Default, and upon the completion of a sale conducted pursuant to Article 9 of
the Code in effect in the State of New York at that time, to complete the
Assignment of Membership Interest or Stock Power, as applicable, and if the
assignee is not the Secured Party to fill in the name of the purchaser of the
Pledged Collateral at such sale conducted pursuant to Article 9 of the Code as
the assignee, and the date on which such sale was conducted, and, thereafter, to
deliver a true copy of the fully executed original to the Pledged Company, and,
if any, other members or shareholders of the Pledged Company. Each Pledgor
agrees that the Pledged Company and its constituent members or shareholders
shall be entitled to rely conclusively on such Assignment of Membership Interest
or Stock Power and shall have no liability to such Pledgor for any loss of
damage which such Pledgor may incur by reason of said reliance, this provision
being expressly for the benefit of such members or shareholders.
5. Representations and Warranties.
The Pledgors hereby jointly and severally represent and
warrant to the Secured Party as follows:
(a) Each Pledgor has and will continue to have (or, in the case of
after-acquired Pledged Collateral, at the time such Pledgor acquires rights in
such Pledged Collateral, will have and will continue to have), title to its
Pledged Collateral, free and clear of all Liens except Permitted Liens (other
than Permitted Liens of the types described in clauses (iv), (vii) and (viii) of
the definition of that term).
(b) The capital stock, shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral have
been duly authorized and validly issued to a Pledgor (as set forth on Schedule A
hereto), are fully paid and nonassessable and constitute one hundred percent
(100 %) of the issued and outstanding capital stock, member interests (exclusive
of any non-economic interest held by any Independent Manager), partnership
interests of each of the Pledged Companies.
(c) The security interests in the Pledged Collateral granted hereunder are
valid, perfected and of first priority, subject to the Lien of no other Person
except for the prior lien of the Term Lenders to secure obligations under the
Credit Agreement and Permitted Liens.
(d) There are no restrictions upon the transfer of the Pledged Collateral
and each Pledgor has the power and authority and right to transfer the Pledged
Collateral owned by such Pledgor free of any encumbrances and without obtaining
the consent of any other Person.
(e) Each Pledgor has all necessary corporate or limited liability company
power to execute, deliver and perform this Agreement.
(f) There are no actions, suits, or proceedings pending or, to any
Pledgor's best knowledge after due inquiry, threatened against or affecting such
Pledgor with respect to the Pledged Collateral, at law or in equity or before or
by any Official Body, which could adversely affect such Pledgor's performance
hereunder and no Pledgor is in default with respect to any judgment, writ,
injunction, decree, rule or regulation which could adversely affect such
Pledgor's performance hereunder.
(g) This Agreement has been duly executed and delivered by each Pledgor and
constitutes the valid and legally binding obligation of each Pledgor,
enforceable in accordance with its terms, except to the extent that
enforceability of this Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforceability of
creditor's rights generally or limiting the right of specific performance or
other equitable remedies.
(h) Neither the execution and delivery by such Pledgor of this Agreement,
nor the compliance with the terms and provisions hereof, nor the enforcement of
any rights hereunder (including, but not limited to, a foreclosure sale of the
Pledged Collateral), will violate: (i) any provision of any Law or conflict with
or result in a breach of any of the terms, conditions or provisions of any
judgment, order, injunction, decree or ruling of any Official Body to which such
Pledgor is subject or any provision of any agreement, understanding or
arrangement to which Pledgor is a party or by which such Pledgor is bound; or
(ii) any Coal Lease or any of the Coal Supply Contracts set forth on Schedule 1
or any permit, but the Pledgor makes no representation as to the ability of any
Person who acquires the Pledged Stock to conduct mining operations until such
Person has complied with applicable law relating to the continuation of mining
permits in the event of a change of control of a permitee.
(i) Each Pledgor's chief executive office address is as set forth on the
signature page hereto.
(j) Other then the Limited Liability Company Agreement of the Company, no
shareholder or other similar agreements are applicable to any of the Pledged
Collateral, the applicable Organizational Documents of each Company contain no
restrictions on the rights of shareholders, members or partners other than those
that normally would apply to a company organized under the laws of the
jurisdiction of organization of each of the companies; and, all rights of such
Pledgor in connection with its ownership of each of the Pledged Companies which
is a corporation are evidenced and governed solely by the stock certificates,
instruments or other documents evidencing ownership and the applicable
Organizational Documents of each of the Companies which is a corporation.
(k) No dividends or other distributions have been made by any of the
Pledged Companies to any Pledgor which is prohibited by the Credit Agreement.
(l) There is no action nor legal, administrative or other proceeding
pending or, to the best of any Pledgor's knowledge, threatened which adversely
affects any Pledgor's title to the Pledged Collateral or any Pledgor's grant of
a security interest hereunder, nor does any Pledgor know of any basis for the
assertion of any such claim.
(m) Any and all information heretofore furnished to the Secured Party by
such Pledgor in connection with the financial condition, assets, liabilities,
business or prospects of any Pledged Company or the value or condition of the
Pledged Collateral was true and correct in all material respects as of the date
furnished, and all such information hereafter furnished to the Secured Party by
such Pledgor will be true and correct in all material respects as of the date
furnished.
(n) True and complete copies of the Organizational Documents of the
Pledgors are attached to the Acknowledgment and have been delivered to the
Secured Party.
6. General Covenants.
The Pledgors hereby jointly and severally covenant and agree
as follows:
(a) Each Pledgor shall do all reasonable acts that may be necessary and
appropriate to maintain, preserve and protect the Pledged Collateral; each
Pledgor shall be responsible for the risk of loss of, damage to, or destruction
of the Pledged Collateral owned by such Pledgor, unless such loss is the result
of the gross negligence or willful misconduct of the Secured Party. Each Pledgor
shall notify the Secured Party in writing ten (10) days prior to any change in
such Pledgor's chief executive office address.
(b) Each Pledgor shall appear in and defend any action or proceeding of
which such Pledgor is aware which could reasonably be expected to adversely
affect, to any material extent, such Pledgor's title to, or the Secured Party's
interest in, the Pledged Collateral or the proceeds thereof; provided, however,
that with the consent of the Secured Party such Pledgor may settle such actions
or proceedings with respect to the Pledged Collateral, which consent shall not
be unreasonably withheld or delayed.
(c) Each Pledgor shall, and shall cause each of the Companies to, keep
separate, accurate and complete records of the Pledged Collateral, disclosing
the Secured Party's security interest hereunder.
(d) Such Pledgor shall comply with all Laws applicable to the Pledged
Collateral unless any noncompliance would not individually or in the aggregate
materially impair the use or value of the Pledged Collateral or the Secured
Party's rights hereunder.
(e) Such Pledgor shall pay any and all taxes, duties, fees or imposts of
any nature imposed by any Official Body on any of the Pledged Collateral, except
to the extent that such liabilities, including taxes, assessments or charges,
are being contested in good faith and by and lawful appropriate proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made, but only to the
extent that failure to discharge any such liabilities would not result in any
additional liability which would adversely affect to a material extent the
financial condition of any Pledgor or Subsidiary of any Pledgor or which would
affect a material portion of the Pledged Collateral, provided that the Pledgors
and their Subsidiaries will pay all such liabilities forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor.
(f) Such Pledgor shall permit the Secured Party, its officers, employees
and agents at reasonable times to inspect all books and records related to the
Pledged Collateral, except as may be permitted under the Credit Agreement.
(g) To the extent, following the date hereof, any Pledgor acquires capital
stock, shares securities, member interests, partnership interests and other
ownership interests of any of the Companies or any of the rights, property or
securities, shares, capital stock, member interests, partnership interests or
other ownership interests described in the definition of Pledged Collateral with
respect to any of the Companies, such stock, rights, property or securities,
shares, capital stock, member interests, partnership interests or ownership
interests shall be subject to the terms hereof and, upon such acquisition, shall
be deemed to be hereby pledged to the Secured Party; and, such Pledgor thereupon
shall deliver all such securities, shares, capital stock, member interests,
partnership interests and other ownership interests together with an updated
Schedule A hereto, to the Secured Party.
(h) No Pledgor shall, without the prior written consent of the Secured
Party, (i) sell, assign, transfer, exchange, lease, lend or dispose of
(directly, indirectly, or voluntarily), or grant any option with respect to, any
of the Pledged Collateral or (ii) create or permit to exist any Lien in or with
respect to the Pledged Collateral, except for the Lien in favor of the Secured
Party and the junior lien in favor of the Bank Lenders. The inclusion of
"proceeds" as a component of the Pledged Collateral shall not be deemed a
consent by the Secured Party to any sale, assignment, transfer, exchange, lease,
loan, granting of an option with respect to or disposition of all or any part of
the Pledged Collateral.
(i) No Pledgor shall: (i) amend in any respect its certificate of
incorporation (including any provisions or resolutions relating to capital
stock), certificate of limited partnership, certificate of formation, limited
liability company agreement or other organizational document without providing
at least twenty (20) calendar days' prior written notice to the Banks, in the
event such change would be material and adverse to the Banks as determined by
the Banks in their sole discretion, obtaining the prior written consent of the
Agent; (ii) consent or vote to approve the sale or mortgaging of any asset of
any Pledged Company except in the ordinary course of business, or (iii) with
respect to a Pledgor of membership interests in any Pledged Company, take any
action in furtherance of any modification of the Organizational Documents of
such Pledged Company, or any other action, that would have the effect of
constituting member interests in the Company "securities" within the meaning, or
otherwise subjecting such member interests to the coverage, of Article 8 of the
Uniform Commercial Code of any jurisdiction.
(j) Each Pledgor shall, at its own expense, perform and observe all of the
terms and provisions of the applicable Organizational Documents to be performed
or observed by such Pledgor, maintain the applicable Organizational Documents in
full force and effect, and enforce such Pledgor's rights under the applicable
Organizational Documents in accordance with its terms. Such Pledgor shall
promptly deliver to Secured Party any notice of default which such Pledgor
receives with respect to the applicable Organizational Documents.
(k) Except as otherwise permitted in the Credit Agreement, no Pledgor shall
permit any of its Subsidiaries which is a Pledged Company to directly or
indirectly (i) sell, assign, pledge or otherwise transfer or dispose of any Debt
of, or claim against, or any shares of stock or similar interests or other
securities (or warrants, rights or options to acquire stock or similar interests
or other securities) of any other Subsidiary of such Pledgor, or (ii) issue or
sell any shares of its stock or similar interests or other securities (or
warrants, rights or options to acquire stock or similar interests or other
securities ) of such Subsidiary.
7. Other Rights With Respect to Pledged Collateral.
(a) So long as no Event of Default under the Credit Agreement shall have
occurred and be continuing, each Pledgor shall be entitled to exercise any and
all voting and other consensual and other rights pertaining to the Pledged
Collateral or any part thereof and each Pledgor shall have the right to deal
with the Pledged Collateral and to receive distribution in the ordinary course
of business, for any purpose and in a manner not inconsistent with the terms of
this Agreement (including, without limitation, Section 6(i) hereof), the Credit
Agreement or any of the other Loan Documents; provided, however, that such
Pledgor shall not exercise or shall refrain from exercising any such right if it
would result in a Potential Default or an Event of Default.
(b) Upon the occurrence and during the continuance of an Event of Default,
the Secured Party at the expense of such Pledgor, may: (i) take control of and
manage all or any of the Pledged Collateral; (ii) apply to the payment of any of
the Secured Obligations, whether any be due and payable or not, any moneys,
including cash dividends and income from any Pledged Collateral, now or
hereafter in the hands of the Secured Party or any Affiliate of the Secured
Party, on deposit or otherwise, belonging to Pledgors, as the Secured Party in
its sole discretion shall determine; and (iii) do anything which any Pledgor is
required but fails to do hereunder.
(c) If any Pledgor fails to perform any agreement contained herein, the
Secured Party may itself perform or cause the performance of such agreement, and
the expenses of the Secured Party incurred in connection therewith shall be
payable by such Pledgor. However, nothing in this Agreement shall obligate the
Secured Party to act.
(d) Each Pledgor hereby appoints Secured Party to be such Pledgor's
attorney-in-fact with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time (but only upon an
Event of Default) in Secured Party's discretion to take any action and to
execute any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to such Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same.
(e) The Banks' and the Collateral Agent's recourse against the Parent shall
be solely limited to the Parent's interest in the Pledged Collateral and the
enforcement of their rights under this Pledge Agreement.
8. Additional Remedies Upon Event of Default.
Upon the occurrence of any Event of Default and while such
Event of Default shall be continuing, the Secured Party shall have, in addition
to all rights and remedies of a secured party under the Code or other applicable
Law, and in addition to its rights under Section 6 above and under the other
Loan Documents, the following rights and remedies:
(a) The Secured Party may, after ten (10) business days' advance written
notice to a Pledgor, sell, assign, give an option or options to purchase or
otherwise dispose of such Pledgor's Pledged Collateral or any part thereof at
public or private sale, at any of the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the Secured
Party may deem commercially reasonable. Each Pledgor agrees that ten (10)
business days' advance notice of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Pledgor
recognizes that the Secured Party may be compelled to resort to one or more
private sales of the Pledged Collateral to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities,
shares, capital stock, member interests, partnership interests or ownership
interests for their own account for investment and not with a view to the
distribution or resale thereof.
(b) The proceeds of any collection, sale or other disposition of the
Pledged Collateral, or any part thereof, shall, after the Secured Party has made
all deductions of reasonable expenses, including but not limited to reasonable
attorneys' fees and other expenses incurred in connection with repossession,
collection, sale or disposition of such Pledged Collateral or in connection with
the enforcement of the Secured Party's rights with respect to the Pledged
Collateral, including in any insolvency, bankruptcy or reorganization
proceedings, be applied against the Secured Obligations, whether or not all the
same be then due and payable, as follows:
(i) first, to the Secured Obligations and to reimburse the Secured
Party for reasonable out-of-pocket costs, expenses and disbursements,
including without limitation reasonable attorneys' fees and legal expenses,
incurred by the Secured Party in connection with realizing on the Pledged
Collateral or collection of any obligation of any Pledgor under any of the
Loan Documents, including advances made subsequent to an Event of Default
by the Secured Party for the reasonable maintenance, preservation,
protection or enforcement of, or realization upon, the Pledged Collateral,
including without limitation advances for taxes, insurance, and the like,
and reasonable expenses incurred to sell or otherwise realize on, or
prepare for sale of or other realization on, any of the Pledged Collateral,
in such order as the Secured Party may determine in its discretion; and
(ii) the balance, if any, as required by Law.
(c) (i) The Secured Party shall have the right to have the Pledged
Collateral transferred into the name of Secured Party pursuant to Section 8
hereof.
(ii) All rights of any Pledgor to exercise the voting and other
consensual rights which such Pledgor would otherwise be entitled to
exercise pursuant to Section 7(a) above and to receive distributions shall
cease, and all such rights shall thereupon become vested in Secured Party,
who shall thereafter upon notice to such Pledgor have the sole right to
exercise such voting and other consensual rights and to receive 100 percent
of all distributions, which shall be promptly applied by Secured Party
against the Secured Obligations in the order and manner specified in
Section 8(b) hereof.
(iii) All distributions which are received by any Pledgor contrary to
the provisions of Section 8(b) shall be received in trust for the benefit
of Secured Party, shall be segregated from other funds of such Pledgor, and
forthwith shall be paid over to Secured Party as Pledged Collateral in the
same form as received (with any necessary endorsements), unless such
Pledgor shall have previously cured the Event of Default giving rise to the
Event of Default hereunder.
(iv) The Secured Party shall have the right to take control of and
manage all or any of the Pledged Collateral.
9. Secured Party's Duties.
(a) The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of
any Pledged Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as
to any Pledged Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Collateral.
(b) It is anticipated that additional persons will from time to time
become Subsidiaries of the Borrower or a Guarantor, each of whom will be
required to join this Pledge Agreement. It is acknowledged and agreed that
new Subsidiaries of the Borrower or of a Guarantor will become Pledgors
hereunder and will be bound hereby simply by executing and delivering to
Agent a Guarantor Joinder in the form of Exhibit 1.1(G)(1) to the Credit
Agreement. In addition, a new Schedule A hereto shall be provided to Agent
showing the pledge of the ownership interest in such new Subsidiary and any
ownership interests that such new Subsidiary owns in any other Person.
10. No Waiver; Cumulative Remedies.
No failure to exercise, and no delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any further exercise thereof or the
exercise of any other right, power or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided under the other Loan
Documents or by Law. Each Pledgor waives any right to require the Secured Party
to proceed against any other Person or to exhaust any of the Pledged Collateral
or other security for the Secured Obligations or to pursue any remedy in the
Secured Party's power.
11. Assignment.
Subject to the provisions of the Credit Agreement, all rights
of the Secured Party under this Agreement shall inure to the benefit of its
successors and assigns. All obligations of each Pledgor shall bind its
successors and assigns; provided, however, each Pledgor may not assign or
transfer any of its rights and obligations hereunder or any interest herein.
12. Severability.
Any provision of this Agreement which shall be held invalid or
unenforceable shall be ineffective without invalidating the remaining provisions
hereof.
13. Governing Law.
This Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York, except to the extent the
validity or perfection of the security interests or the remedies hereunder in
respect of any Pledged Collateral are governed by the law of a jurisdiction
other than the State of New York.
14. Notices.
All notices, requests, demands, directions and other
communications (collectively, "notices") given to or made upon any party hereto
under the provisions of this Agreement shall be as set forth in Section 11.6 of
the Credit Agreement.
15. Specific Performance.
Each Pledgor acknowledges and agrees that, in addition to the
other rights of the Secured Party hereunder and under the other Loan Documents,
because the Secured Party's remedies at law for failure of such Pledgor to
comply with the provisions hereof relating to the Secured Party's rights (i) to
inspect the books and records related to the Pledged Collateral, (ii) to receive
the various notifications such Pledgor is required to deliver hereunder, (iii)
to obtain copies of agreements and documents as provided herein with respect to
the Pledged Collateral, (iv) to enforce the provisions hereof pursuant to which
such Pledgor has appointed the Secured Party its attorney-in-fact, and (v) to
enforce the Secured Party's remedies hereunder, would be inadequate and that any
such failure would not be adequately compensable in damages, such Pledgor agrees
that each such provision hereof may be specifically enforced.
16. Voting Rights in Respect of the Pledged Collateral.
Subject to Section 8 above, long as no Event of Default shall
occur and be continuing under the Credit Agreement, each Pledgor may exercise
any and all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the other Loan Documents; provided, however, that such
Pledgor will not exercise or will refrain from exercising any such voting and
other consensual right pertaining to the Pledged Collateral, as the case may be,
if such action would have a material adverse effect on the value of any Pledged
Collateral. Without limiting the generality of the foregoing and in addition
thereto, the Pledgors shall not vote to enable, or take any other action to
permit, any of the Pledged Companies to issue any stock, member interests,
partnership interests or other equity securities, member interests, partnership
interests or other ownership interests of any nature or to issue any other
securities, shares, capital stock, member interests, partnership interests or
other ownership interests convertible into or granting the right to purchase or
exchange for any stock, member interests, partnership interests or other equity
securities, member interests, partnership interests or other ownership interests
of any nature of any such Pledged Company or to enter into any agreement or
undertaking restricting the right or ability of the Pledgor or the Secured Party
to sell, assign or transfer any of the Pledged Collateral.
17. Consent to Jurisdiction.
EACH OF THE PLEDGORS AGREES THAT ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST THE PLEDGORS, OR ANY OF THEM,
FOR BREACH HEREOF, OR AGAINST ANY OF THEIR PROPERTIES, MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK BY ANY BANK OR THE COLLATERAL AGENT OR ON BEHALF
OF ANY BANK OR THE COLLATERAL AGENT, AS SUCH BANK OR THE COLLATERAL AGENT MAY
ELECT, AND EACH OF THE PLEDGORS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL
ACTION OR PROCEEDING. THE PLEDGORS HEREBY AGREE THAT SERVICE OF PROCESS IN ANY
SUCH PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO
THEM AT THEIR ADDRESS SPECIFIED IN SECTION 11.6 OF THE CREDIT AGREEMENT OR AT
SUCH OTHER ADDRESS OF WHICH EACH BANK SHALL HAVE BEEN NOTIFIED PURSUANT THERETO.
IN ADDITION, EACH OF THE PLEDGORS HEREBY IRREVOCABLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
18. Waiver of Jury Trial.
EACH PLEDGOR AND EACH OF THE COMPANIES HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION..
19. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements relating to a grant of a security interest in the Pledged Collateral
by any Pledgor. This Agreement may not be amended or supplemented except by a
writing signed by the Secured Party and the Pledgors.
20. Counterparts.
This Agreement may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
21. Descriptive Headings.
The descriptive headings which are used in this Agreement are
for the convenience of the parties only and shall not affect the meaning of any
provision of this Agreement.
[SIGNATURE PAGE 1 OF 3 TO
PLEDGE AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have caused this Agreement to be duly executed as of the date first above
written.
FIRSTAR BANK, N.A., as Collateral Agent
By: /s/ James Moll
-------------------------------------------
Name: James Moll
-----------------------------------------
Title: Vice President
----------------------------------------
WESTMORELAND COAL COMPANY
By: /s/ W. Michael Lepchitz
-------------------------------------------
Name: W. Michael Lepchitz
-----------------------------------------
Title: Vice President
----------------------------------------
Address:
2 North Cascade Avenue
14th Floor
Colorado Springs, CO 80903
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger
-------------------------------------------
Name: Robert J. Jaeger
-----------------------------------------
Title: President
----------------------------------------
Address:
490 North 31st Street
Suite 308
Billings, MT 59101
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Description of Pledged Collateral
A. Corporations
Pledgor Pledged Shares Type and Amount of Ownership
- ------- -------------- ----------------------------
Westmoreland Mining LLC 118,111.429 shares of Western Energy 100% owned by Westmoreland Mining LLC
Company
10,000 shares of Northwestern 100% owned by Westmoreland Mining LLC
Resources Company
1,000 shares of Dakota Westmoreland 100% owned by Westmoreland Mining LLC
Company
1,000 shares of WCCO-KRC Acquisition 100% owned by Westmoreland Mining LLC
Corp.
B. Limited Liability Companies
Pledgor Pledged Shares Type and Amount of Ownership
- ------- -------------- ----------------------------
Westmoreland Coal Company 100% of the membership interests in 100% owned by Westmoreland Coal
Westmoreland Mining LLC Company
C. Partnerships
Pledgor Pledged Shares Type and Amount of Ownership
- ------- -------------- ----------------------------
N/A
SCHEDULE 1
TO
PLEDGE AGREEMENT
COAL SUPPLY CONTRACTS
Holly Sugar Corporation Coal Agreement dated September 1, 2000
Coyote Plant Coal Agreement, dated January 1, 1978
Heskett Station Coal Sales Contract, dated September 20, 2000
Lewis & Clark Station Coal Sales Contract, dated January 1, 1998
Amended and Restated Coal Supply Agreement (Colstrip 3 & 4) dated August
24, 1998 among Montana Power Company, PPL Montana LLC, Puget Sound Energy,
Inc., Portland General Electric Company, PacificCorp and Western Energy
Company.
Coal Supply Agreement (Colstrip 1 & 2), dated July 30, 1971, as amended,
between PPL Montana LLC, Puget Sound Energy Inc., and Western Energy
Company.
Lignite Supply Agreement dated August 29, 1979, as amended, between
Northwestern Resources Co. and Reliant Energy, Incorporated.
Settlement Agreement and Amendment of Existing Contracts dated August 2,
1999 between Northwestern Resources Co. and Reliant Energy, Incorporated
Exhibit "A"
Acknowledgement Regarding Pledge Agreement
The undersigned [limited liability company/corporation] (the "Company")
hereby acknowledges receipt of a copy of the Pledge Agreement (the "Pledge")
dated as of _____________ by _____________________ ("Pledgor") in favor of
_________________________________ ("Secured Party") for the benefit of the
Banks. Capitalized terms used herein but not otherwise defined herein shall have
the meanings ascribed to them in the Pledge.
NOW, THEREFORE, intending that Secured Party may rely hereon, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby represents, warrants and covenants to
Secured Party as follows, notwithstanding any conflicting provision of any
applicable Organizational Document (herein defined):
1. (a) The Company attached to an Officer's Certificate delivered by it
under Section 7.1 of the Credit Agreement a true and complete copy of the
[articles of incorporation, charter, bylaws, certificate of limited liability,
limited liability company operating agreement, partnership agreement,
shareholder agreement, or member agreement] of the Company as currently in
effect, including any and all amendments thereto (the "Organizational
Documents"); (b) Pledgor is currently the owner of 100% of the entire
[membership equity interest/stock] under the Organizational Documents, except
for non-economic interest of the Independent Managers; (c) the undersigned does
not have any offset or counterclaim against Pledgor with respect to the
Organizational Documents; (d) Pledgor is not in default under the Organizational
Documents, and no event has occurred that, with notice or lapse of time, or
both, would constitute an event of default by Pledgor under the Organizational
Documents; (e) no dividends, distributions or any other fees or payments payable
by the Company to Pledgor have been paid by the Company to Pledgor in violation
of the Credit Agreement; and (f) the Company is a [limited liability
company/corporation] duly formed, validly existing and in good standing under
the laws of the State of ________.
2. There are no owners of [membership equity interests/stock] in the
Company other than Pledgor, except for the non-economic interests of the
Independent Managers.]
3. The undersigned will be bound by the terms of the Pledge and will
comply with such terms insofar as such terms are applicable to the undersigned,
including without limiting the generality of the foregoing, those terms in
Section 17 and 18 of the Pledge Agreement.
4. The undersigned will notify the Secured Party promptly in writing
of the occurrence of any of the events described in Section 6(g) of the
Pledge Agreement.
5. The terms of Section 3 of the Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may facilitate, in the
reasonable judgement of the Secured Party, the carrying out of Section 3 of the
Pledge Agreement.
6. To the extent that any of undersigned has or hereafter may acquire
any immunity from the jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution, or otherwise) with respect to itself or its
property, each of undersigned hereby irrevocably waives such immunity in respect
of its obligations under the Pledge and any other document or agreement executed
in connection therewith, and each of undersigned agrees that it will not raise
or claim any such immunity at or in respect of any such action or proceeding.
7. The Company acknowledges and agrees that any notices sent to the
Pledgor regarding any of the Pledged Collateral shall also be sent to the
Secured Party in the manner and at the address of Secured Party as indicated in
Section 14 of the Pledge Agreement.
8. The Company shall promptly and completely co-operate with the
Collateral Agent and the Banks in their exercise of their rights under Section
7(b) of the Pledge. From and after such time as it receives written notice of an
Event of Default containing instructions to do so from Secured Party, the
Company shall pay all distributions directly to Secured Party or its designee,
and not to Pledgor. Such notice and instructions need be signed only by Secured
Party, and the Company shall comply with same regardless of whether it receives
at any time any contrary instructions or demands from Pledgor or any other
person; provided, however, that the Company may comply with any conflicting
court order received from a court of competent jurisdiction. The Company shall
comply with the provisions of Section 8.2.14 of the Credit Agreement.
9. The undersigned shall not issue or sell any shares of its stock or
similar interests or other securities (or warrants, rights or options to acquire
stock or similar interests or other securities) to a party other than a Pledgor.
10. Notwithstanding the granting of a security interest to Secured
Party in the Pledged Collateral, Secured Party shall have no obligation or
liability whatsoever to the Company, any [member/shareholder] thereof or any
creditor or other person having any relationship with the Company, nor shall
Secured Party be obligated to perform any of the obligations or duties of
Pledgor under the Organizational Documents or to take any action to collect or
to enforce any claim for payment of Pledgor arising under the Organizational
Documents, unless Secured Party has exercised its right to foreclose on the
Pledged Collateral, have the Collateral transferred to Secured Party, or to any
other Person, under the Pledge, and in such event Secured Party shall have no
obligation to perform any duties or obligations under the Organizational
Documents arising prior to the date of such transfer.
11. Subject to the limitations set forth in the Credit Agreement, the
undersigned acknowledges that the security interest of Secured Party in the
Pledged Collateral, the Pledged Collateral and all of Secured Party's rights and
remedies under the Pledge may be freely transferred or assigned by Secured Party
to any third party. In the event of any such transfer or assignment of such
rights and interests of the Secured Party, following receipt by the undersigned
of notice of such transfer or assignment from Secured Party, all of the
provisions of this Acknowledgment shall inure to the benefit of the transferees,
successors and/or assigns of Secured Party provided that Secured Party has
provided to the undersigned a copy of such assignment or transfer. The
provisions of this Acknowledgment shall likewise be binding upon the successors
and assigns of the undersigned.
12. The undersigned shall, from time to time, promptly execute and
deliver such further instruments, documents and papers and perform such further
acts as may be reasonably necessary to carry out and effect the intent, purposes
and terms of this Acknowledgment.
13. When necessary herein, all terms used in the singular shall apply
to the plural, and vice versa, and all terms used in the masculine shall apply
to the neuter and feminine genders, and vice versa.
14. This Acknowledgement shall be governed by the laws of the State
of New York.
15. THE COMPANY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS ACKNOWLEDGEMENT OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE
ENFORCE ANY JUDGMENT OBTAINED AGAINST THE COMPANY FOR BREACH HEREOF, OR AGAINST
ANY OF ITS PROPERTIES, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY ANY
BANK OR THE COLLATERAL AGENT OR ON BEHALF OF ANY BANK OR THE COLLATERAL AGENT,
AS SUCH BANK OR THE COLLATERAL AGENT MAY ELECT, AND THE COMPANY HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION OR PROCEEDING. THE COMPANY
HEREBY AGREES THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS SPECIFIED IN
SECTION 11.6 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH EACH BANK
SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. IN ADDITION, THE UNDERSIGNED HEREBY
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS ACKNOWLEDGEMENT BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
16. EXCEPT AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE ACKNOWLEDGEMENT
REGARDING PLEDGE AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING
THERETO.
IN WITNESS WHEREOF, this Acknowledgment Regarding Pledge Agreement is given as
of __________, 2001.
COMPANY:
a
------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Exhibit "B"
ASSIGNMENT OF MEMBERSHIP INTEREST
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, _______________________________, a _____________
("Assignor"), hereby sells, assigns, transfers and conveys to
_______________________________________ ______________________________________
("Assignee"), all of its right, title and interest in and to its membership
interest in __________________________, a _______ limited liability company (the
"Company"), including Assignor's right to receive from the Company all amounts
payable to Assignor from and after the date hereof. In consideration of the
foregoing transfer, Assignee agrees that, subject to the immediately preceding
sentence, it shall be bound by all of the terms and provisions of the limited
liability company agreement governing the Company and shall perform and observe
all of the covenants, duties and obligations contained therein from and after
the date of Assignee's admission as a member in the Company.
IN WITNESS WHEREOF, this Assignment of Membership Interest is executed as of
____________________, 20__.
ASSIGNOR:
a
------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ASSIGNEE:
a
------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Exhibit "C"
STOCK POWER
FOR VALUE RECEIVED, [Pledgor], a _________________
________________, hereby sells, assigns and transfers unto _____________________
(__________) shares of the common stock of [the Pledged Company], a
______________ corporation, standing in its name on the books of said
corporation represented by Certificate No(s). ____________________ herewith.
[PLEDGOR]
Date: _______________ By __________________________________(Seal)
Title:
IN PRESENCE OF:
- --------------------------------
EXHIBIT 99.5
- ------------
PLEDGE AGREEMENT (NOTEHOLDERS)
THIS PLEDGE AGREEMENT (NOTEHOLDERS) (the "Agreement"), dated as of
April 27, 2001, is made and entered into by and among each of the undersigned
and each of the other Persons which become Pledgors hereunder from time to time
(each a "Pledgor" and collectively the "Pledgors") and FIRSTAR BANK, N.A., as
Collateral Agent for the Purchasers in connection with the Term Loan Agreement
described below (the "Secured Party").
WHEREAS, pursuant to that certain Term Loan Agreement (as from time to
time restated, amended, modified or supplemented, the "Term Loan Agreement")
dated as of April 27, 2001, by and among Westmoreland Mining LLC, a Delaware
limited liability company (the "Company"), each of the Guarantors now or
hereafter party thereto, the Purchasers named in the Initial Purchaser Schedule
A attached thereto (all of whom, together with the holders from time to time of
Notes issued thereunder, are collectively referred to herein as the
"Purchasers") and the other parties from time to time signatory thereto, the
Purchasers have agreed to purchase certain Notes from the Company; and
WHEREAS, pursuant to and in consideration of the Term Loan Agreement,
all of the issued and outstanding equity interests of each of the corporations,
limited liability companies, partnerships or other entities as set forth on
Schedule A hereto (each a "Pledged Company" and collectively the "Pledged
Companies") is to be pledged to the Secured Party in accordance herewith;
WHEREAS, each Pledgor acknowledges its receipt, whether direct or
indirect, of the benefit of certain revolving credit facilities which are being
made available, either directly or indirectly, to each Pledgor concurrently with
the closing of the Term Loan Agreement; and
WHEREAS, Each Pledgor owns the outstanding equity interest in the
Pledged Companies as set forth on Schedule A hereto.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. Defined Terms.
(a) Except as otherwise expressly provided herein, capitalized terms used
in this Agreement shall have the respective meanings assigned to them in the
Term Loan Agreement. Where applicable and except as otherwise expressly provided
herein, terms used herein (whether or not capitalized) shall have the respective
meanings assigned to them in the Uniform Commercial Code as enacted in New York
as amended from time to time (the "Code").
(b) "Organizational Documents" shall mean, with respect to any Pledged
Company, as applicable, its articles of incorporation, charter, bylaws,
certificate of limited liability, limited liability company operating agreement,
partnership agreement, shareholder agreement, and member agreement, and any
similar organizational document.
(c) "Pledged Collateral" shall mean and include all right, title and
interest in the following: (i) the capital stock, shares, securities, member
interests, partnership interests and all other ownership interests
(collectively, the "Investments") listed on Schedule A attached hereto and made
a part hereof, and all rights and privileges pertaining thereto, including,
without limitation, all present and future securities, shares, capital stock,
member interests, partnership interests and other ownership interests receivable
in respect of or in exchange for any such Investments, all rights under any
Organizational Documents and other similar agreements relating to all
Investments, all rights to subscribe for securities, shares, capital stock,
member interests, partnership interests or other ownership interests incident to
or arising from ownership of Investments, all cash, interest, stock and other
dividends or distributions paid or payable on such Investments, and all books
and records (whether paper, electronic or any other medium) pertaining to the
foregoing, including, without limitation, all stock record and transfer books,
(ii) any and all other securities, shares, capital stock, member interests,
partnership interests and other ownership interests hereafter pledged by any
Pledgor to the Secured Party to secure the Secured Obligations (as hereinafter
defined), and all rights and privileges pertaining thereto, including, without
limitation, all present and future securities, shares, capital stock, member
interests, partnership interests and other ownership interests receivable in
respect of or in exchange for such securities, shares, capital stock, member
interests, partnership interests or other ownership interests, all rights under
any Organizational Documents and other similar agreements relating to such
securities, shares, capital stock, member interests, partnership interests and
other ownership interests, all rights to subscribe for securities, shares,
capital stock, member interests, partnership interests or other ownership
interests incident to or arising from ownership of such Investments, all cash,
interest, stock, member interests, partnership interests and other dividends or
distributions paid or payable on such securities, shares, capital stock, member
interests, partnership interests and other ownership interests, and all books
and records (whether paper, electronic or other medium) pertaining to the
foregoing, (iii) all of each Pledgor's books, records, ledgers, ledger cards,
files correspondence, computer programs software, disks, tapes and related data
that at any time evidence or relate to any of the foregoing or are otherwise
necessary or helpful in the collection thereof or realization thereon, and (iv)
whatever is received when any of the foregoing is sold, exchanged, replaced or
otherwise disposed of, including all proceeds, as such term is defined in the
Code, thereof.
2. Grant of Security Interests.
(a) In order to secure the prompt payment and performance of all
Obligations of the Company and each Guarantor in full as and when due in
accordance with the Term Loan Agreement and the other Financing Documents
(collectively, the "Secured Obligations"), each Pledgor hereby sells, assigns,
conveys, mortgages, pledges, hypothecates, transfers, confirms and grants unto
the Secured Party for the equal and ratable benefit and security of the
Purchasers and the Secured Party, a lien on and a first priority security
interest in all of such Pledgor's now existing and hereafter acquired or arising
right, title and interest in, to and under the Pledged Collateral whether now
existing or hereafter coming into existence, whether now held or owned or
hereafter acquired, as now in existence or in effect or as hereafter modified,
amended or supplemented, and wherever the same may be located.
(b) Upon the execution and delivery of this Agreement, each Pledgor shall
deliver to and deposit with the Secured Party in pledge, all stock certificates,
instruments or other documents evidencing the Pledged Collateral owned by such
Pledgor, together with undated stock powers, instruments or other documents
signed in blank by such Pledgor.
(c) Any right, title and interest hereby assigned to the Secured Party
hereunder includes, without limitation, the right to further assign such right,
title and interest.
(d) Notwithstanding any provision of this Agreement to the contrary, each
Pledgor, shall remain liable under the applicable Organizational Documents to
observe and perform all the respective conditions and obligations to be observed
and performed thereunder, all in accordance with and pursuant to the terms and
provisions of the applicable Organizational Documents. The granting of any of
the rights to the Secured Party hereunder shall not release such Pledgor from
any of its duties or obligations under the applicable Organizational Documents
or constitute an assumption by the Secured Party or such Purchaser of such
duties and obligations. Neither the Secured Party nor any Purchaser shall have
any obligation or liability under the applicable Organizational Documents by
reason of or arising out of this Agreement or the assignment of the rights
hereunder to the Secured Party or the receipt by the Secured Party of any
payment under or relating to the applicable Organizational Documents pursuant
hereto, nor shall the Secured Party or any Purchaser be required or obligated in
any manner to perform or fulfill any of the obligations of such Pledgor under or
pursuant to the applicable Organizational Documents, or to make any payment
thereunder, or to make any inquiry as to the nature or the sufficiency of any
payment received by the Secured Party or the sufficiency of any performance by
any party under the applicable Organizational Documents, or to present or file
any claim, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to the Secured Party or to
which it may be entitled at any time or times pursuant hereto.
3. Further Assurances.
Prior to or concurrently with the execution of this Agreement,
and thereafter at any time and from time to time upon reasonable request of the
Secured Party, each Pledgor shall execute and deliver to the Secured Party all
financing statements, continuation financing statements, assignments,
certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of attorney and all other
documents (collectively, the "Security Documents") which the Secured Party may
reasonably request, in form reasonably satisfactory to the Secured Party, and
take such other action which the Secured Party may reasonably request, to
perfect and continue perfected and to create and maintain a Prior Security
Interest in favor of the Secured Party in the Pledged Collateral and to fully
consummate the transactions contemplated under this Agreement. Each Pledgor
hereby irrevocably makes, constitutes and appoints the Secured Party (and any of
the Secured Party's officers or employees or agents designated by the Secured
Party) as such Pledgor's true and lawful attorney with power to sign the name of
such Pledgor on all or any of the Security Documents which the Secured Party
determines must be executed, filed, recorded or sent in order to perfect or
continue perfected the Secured Party's security interest in the Pledged
Collateral in any jurisdiction. Such power, being coupled with an interest, is
irrevocable until all of the Secured Obligations have been indefeasibly paid in
full.
4. Pledged Companies Acknowledgment and Assignment of Pledged Collateral.
Each Pledgor shall cause the Pledged Companies to execute and
to deliver to the Secured Party concurrently herewith an Acknowledgment
Regarding Pledge Agreement (the "Acknowledgment") in the form attached hereto as
Exhibit "A". Concurrently herewith each Pledgor of any membership interests in
any Pledged Company shall execute and deliver to Secured Party a fully executed
Assignment of Membership Interest in the form attached hereto as Exhibit "B" and
each Pledgor of any capital stock in any Pledged Company shall execute and
deliver to Secured Party a fully executed Stock Power in the form attached
hereto as Exhibit "C" with respect to the Pledged Collateral. Each Pledgor
hereby authorizes the Secured Party, after the occurrence of an Event of
Default, and upon the completion of a sale conducted pursuant to Article 9 of
the Code in effect in the State of New York at that time, to complete the
Assignment of Membership Interest or Stock Power, as applicable, and if the
assignee is not the Secured Party to fill in the name of the purchaser of the
Pledged Collateral at such sale conducted pursuant to Article 9 of the Code as
the assignee, and the date on which such sale was conducted, and, thereafter, to
deliver a true copy of the fully executed original to the Pledged Company, and,
if any, other members or shareholders of the Pledged Company. Each Pledgor
agrees that the Pledged Company and its constituent members or shareholders
shall be entitled to rely conclusively on such Assignment of Membership Interest
or Stock Power and shall have no liability to such Pledgor for any loss of
damage which such Pledgor may incur by reason of said reliance, this provision
being expressly for the benefit of such members or shareholders.
5. Representations and Warranties.
The Pledgors hereby jointly and severally represent and
warrant to the Secured Party as follows:
(a) Each Pledgor has and will continue to have (or, in the case of
after-acquired Pledged Collateral, at the time such Pledgor acquires rights in
such Pledged Collateral, will have and will continue to have) title to its
Pledged Collateral, free and clear of all Liens except Permitted Liens (other
than Permitted Liens of the types described in clauses (iv), (vii) and (viii) of
the definition of that term).
(b) The capital stock, shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral have
been duly authorized and validly issued to a Pledgor (as set forth on Schedule A
hereto), are fully paid and nonassessable and constitute one hundred percent
(100 %) of the issued and outstanding capital stock, member interests (exclusive
of any non-economic interest held by any Independent Manager), partnership
interests of each of the Pledged Companies.
(c) The security interests in the Pledged Collateral granted hereunder are
valid, perfected and of first priority, subject to the Lien of no other Person
except for the junior lien securing the obligations under the Bank Financing
Documents and Permitted Liens.
(d) There are no restrictions upon the transfer of the Pledged Collateral
and each Pledgor has the power and authority and right to transfer the Pledged
Collateral owned by such Pledgor free of any encumbrances and without obtaining
the consent of any other Person.
(e) Each Pledgor has all necessary corporate or limited liability company
power to execute, deliver and perform this Agreement.
(f) There are no actions, suits, or proceedings pending or, to any
Pledgor's best knowledge after due inquiry, threatened against or affecting such
Pledgor with respect to the Pledged Collateral, at law or in equity or before or
by any Official Body, which could reasonably be expected to have an adverse
effect on the Pledged Collateral and no Pledgor is in default with respect to
any judgment, writ, injunction, decree, rule or regulation which could adversely
affect such Pledgor's performance hereunder.
(g) This Agreement has been duly executed and delivered and constitutes the
valid and legally binding obligation of each Pledgor, enforceable in accordance
with its terms, except to the extent that enforceability of this Agreement may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforceability of creditor's rights generally or by
general equitable principles limiting the availability of the right of specific
performance or other equitable remedies.
(h) Neither the execution and delivery by such Pledgor of this Agreement,
nor the compliance with the terms and provisions hereof, nor the enforcement of
any rights hereunder (including, but not limited to, a foreclosure sale of the
Pledged Collateral), will violate: (i) any provision of any Law or conflict with
or result in a breach of any of the terms, conditions or provisions of any
judgment, order, injunction, decree or ruling of any Official Body to which such
Pledgor is subject or any provision of any agreement, understanding or
arrangement to which Pledgor is a party or by which such Pledgor is bound; or
(ii) any Coal Lease or any of the Coal Supply Contracts set forth on Schedule 1
or any permit, but the Pledgor makes no representation as to the ability of any
Person who acquires the Pledged Stock to conduct mining operations until such
Person has complied with applicable law relating to the continuation of mining
permits in the event of a change of control of a permitee.
(i) Each Pledgor's chief executive office address is as set forth on the
signature page hereto.
(j) Other then the Limited Liability Company Agreement of the Company, no
shareholder or other similar agreements are applicable to any of the Pledged
Collateral; the applicable Organizational Documents of each Pledged Company
contain no restrictions on the rights of shareholders, members or partners other
than those that normally would apply to a company organized under the laws of
the jurisdiction of organization of each of the companies; and, all rights of
such Pledgor in connection with its ownership of each of the Pledged Companies
which is a corporation are evidenced and governed solely by the stock
certificates, instruments or other documents evidencing ownership and the
applicable Organizational Documents of each of the Companies which is a
corporation.
(k) No dividends or other distributions have been made by any of the
Pledged Companies to any Pledgor which is prohibited by the Term Loan Agreement.
(l) There is no action nor legal, administrative or other proceeding
pending or, to the best of any Pledgor's knowledge, threatened which adversely
affects any Pledgor's title to the Pledged Collateral or any Pledgor's grant of
a security interest hereunder, nor does any Pledgor know of any basis for the
assertion of any such claim.
(m) Any and all information heretofore furnished to the Secured Party by
such Pledgor in connection with the financial condition, assets, liabilities,
business or prospects of any Pledged Company or the value or condition of the
Pledged Collateral was true and correct in all material respects as of the date
furnished, and all such information hereafter furnished to the Secured Party by
such Pledgor will be true and correct in all material respects as of the date
furnished.
(n) True and complete copies of the Organizational Documents of the
Pledgors are attached to the Acknowledgment and have been delivered to the
Secured Party.
6. General Covenants.
The Pledgors hereby jointly and severally covenant and agree
as follows:
(a) Each Pledgor shall do all reasonable acts that may be necessary and
appropriate to maintain, preserve and protect the Pledged Collateral; each
Pledgor shall be responsible for the risk of loss of, damage to, or destruction
of the Pledged Collateral owned by such Pledgor, unless such loss is the result
of the gross negligence or willful misconduct of the Secured Party. Each Pledgor
shall notify the Secured Party in writing ten (10) days prior to any change in
such Pledgor's chief executive office address.
(b) Each Pledgor shall appear in and defend any action or proceeding of
which such Pledgor is aware which could reasonably be expected to adversely
affect, to any material extent, such Pledgor's title to, or the Secured Party's
interest in, the Pledged Collateral or the proceeds thereof; provided, however,
that with the consent of the Secured Party such Pledgor may settle such actions
or proceedings with respect to the Pledged Collateral, which consent shall not
be unreasonably withheld or delayed.
(c) Each Pledgor shall, and shall cause each of the Pledged Companies to,
keep separate, accurate and complete records of the Pledged Collateral,
disclosing the Secured Party's security interest hereunder.
(d) Each Pledgor shall comply with all Laws applicable to the Pledged
Collateral unless any noncompliance would not individually or in the aggregate
materially impair the use or value of the Pledged Collateral or the Secured
Party's rights hereunder.
(e) Such Pledgor shall pay any and all taxes, duties, fees or imposts of
any nature imposed by any Official Body on any of the Pledged Collateral, except
to the extent that such liabilities, including taxes, assessments or charges,
are being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made, but only to the
extent that failure to discharge any such liabilities would not result in any
additional liability which would adversely affect to a material extent the
financial condition of any Pledgor or Subsidiary of any Pledgor or which would
affect a material portion of the Pledged Collateral, provided that the Pledgors
and their Subsidiaries will pay all such liabilities forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor.
(f) Such Pledgor shall permit the Secured Party, its officers, employees
and agents at reasonable times to inspect all books and records related to the
Pledged Collateral, except as may be limited under the Term Loan Agreement.
(g) To the extent, following the date hereof, any Pledgor acquires capital
stock, shares securities, member interests, partnership interests and other
ownership interests of any of the Pledged Companies or any of the rights,
property or securities, shares, capital stock, member interests, partnership
interests or other ownership interests described in the definition of Pledged
Collateral with respect to any of the Pledged Companies, such stock, rights,
property or securities, shares, capital stock, member interests, partnership
interests or ownership interests shall be subject to the terms hereof and, upon
such acquisition, shall be deemed to be hereby pledged to the Secured Party;
and, such Pledgor thereupon shall deliver all such securities, shares, capital
stock, member interests, partnership interests and other ownership interests
together with an updated Schedule A hereto, to the Secured Party.
(h) No Pledgor shall, without the prior written consent of the Secured
Party, (i) sell, assign, transfer, exchange, lease, lend or dispose of
(directly, indirectly, or voluntarily), or grant any option with respect to, any
of the Pledged Collateral or (ii) create or permit to exist any Lien in or with
respect to the Pledged Collateral, except for the Lien in favor of the Secured
Party and the junior lien in favor of the Bank Lenders. The inclusion of
"proceeds" as a component of the Pledged Collateral shall not be deemed a
consent by the Secured Party to any sale, assignment, transfer, exchange, lease,
loan, granting of an option with respect to or disposition of all or any part of
the Pledged Collateral.
(i) No Pledgor shall: (i) amend in any respect its certificate of
incorporation (including any provisions or resolutions relating to capital
stock), certificate of limited partnership, certificate of formation, limited
liability company agreement or other organizational document without providing
at least twenty (20) calendar days' prior written notice to the holders of the
Notes and, in the event such change would be material and adverse to the holders
of the Notes as determined by the Required Combined Holders in their sole
discretion, obtaining the prior written consent of the holders of the Notes;
(ii) consent or vote to approve the sale or mortgaging of any asset of any
Pledged Company except in the ordinary course of business, or (iii) with respect
to a Pledgor of membership interests in any Pledged Company, take any action in
furtherance of any modification of the Organizational Documents of such Pledged
Company, or any other action, that would have the effect of constituting member
interests in the Company "securities" within the meaning, or otherwise
subjecting such member interests to the coverage, of Article 8 of the Uniform
Commercial Code of any jurisdiction.
(j) Each Pledgor shall, at its own expense, perform and observe all of the
terms and provisions of the applicable Organizational Documents to be performed
or observed by such Pledgor, maintain the applicable Organizational Documents in
full force and effect, and enforce such Pledgor's rights under the applicable
Organizational Documents in accordance with its terms. Such Pledgor shall
promptly deliver to Secured Party any notice of default which such Pledgor
receives with respect to the applicable Organizational Documents.
(k) Except as otherwise permitted in the Term Loan Agreement, no Pledgor
shall permit any of its Subsidiaries which is a Pledged Company to directly or
indirectly (i) sell, assign, pledge or otherwise transfer or dispose of any Debt
of, or claim against, or any shares of stock or similar interests or other
securities (or warrants, rights or options to acquire stock or similar interests
or other securities) of any other Subsidiary of such Pledgor, or (ii) issue or
sell any shares of its stock or similar interests or other securities (or
warrants, rights or options to acquire stock or similar interests or other
securities ) of such Subsidiary.
7. Other Rights With Respect to Pledged Collateral.
(a) So long as no Event of Default under the Term Loan Agreement shall have
occurred and be continuing, each Pledgor shall be entitled to exercise any and
all voting and other consensual and other rights pertaining to the Pledged
Collateral or any part thereof and each Pledgor shall have the right to deal
with the Pledged Collateral and to receive distribution in the ordinary course
of business, for any purpose and in a manner not inconsistent with the terms of
this Agreement (including, without limitation, Section 6(i) hereof), the Term
Loan Agreement or any of the other Financing Documents; provided, however, that
such Pledgor shall not exercise or shall refrain from exercising any such right
if it would result in a Potential Default or an Event of Default.
(b) Upon the occurrence and during the continuance of an Event of Default,
the Secured Party, at the expense of such Pledgor, may: (i) take control of and
manage all or any of the Pledged Collateral; (ii) apply to the payment of any of
the Secured Obligations, whether any be due and payable or not, any moneys,
including cash dividends and income from any Pledged Collateral, now or
hereafter in the hands of the Secured Party or any Affiliate of the Secured
Party, on deposit or otherwise, belonging to Pledgors, as the Secured Party in
its sole discretion shall determine; and (iii) do anything which any Pledgor is
required but fails to do hereunder.
(c) If any Pledgor fails to perform any agreement contained herein, the
Secured Party may itself perform or cause the performance of such agreement, and
the expenses of the Secured Party incurred in connection therewith shall be
payable by such Pledgor. However, nothing in this Agreement shall obligate the
Secured Party to act.
(d) Each Pledgor hereby appoints Secured Party to be such Pledgor's
attorney-in-fact with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time (but only upon an
Event of Default) in Secured Party's discretion to take any action and to
execute any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to such Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same.
(e) The Purchasers' and the Collateral Agent's recourse against the Parent
shall be solely limited to the Parent's interest in the Pledged Collateral and
the enforcement of their rights under this Pledge Agreement.
8. Additional Remedies Upon Event of Default.
Upon the occurrence of any Event of Default and while such
Event of Default shall be continuing, the Secured Party shall have, in addition
to all rights and remedies of a secured party under the Code or other applicable
Law, and in addition to its rights under Section 7 above and under the other
Financing Documents, the following rights and remedies:
(a) The Secured Party may, after ten (10) business days' advance written
notice to a Pledgor, sell, assign, give an option or options to purchase or
otherwise dispose of such Pledgor's Pledged Collateral or any part thereof at
public or private sale, at any of the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the Secured
Party may deem commercially reasonable. Each Pledgor agrees that ten (10)
business days' advance notice of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Pledgor
recognizes that the Secured Party may be compelled to resort to one or more
private sales of the Pledged Collateral to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities,
shares, capital stock, member interests, partnership interests or ownership
interests for their own account for investment and not with a view to the
distribution or resale thereof.
(b) The proceeds of any collection, sale or other disposition of the
Pledged Collateral, or any part thereof, shall, after the Secured Party has made
all deductions of reasonable expenses, including but not limited to reasonable
attorneys' fees and other expenses incurred in connection with repossession,
collection, sale or disposition of such Pledged Collateral or in connection with
the enforcement of the Secured Party's rights with respect to the Pledged
Collateral, including in any insolvency, bankruptcy or reorganization
proceedings, be applied against the Secured Obligations, whether or not all the
same be then due and payable, as follows:
(i) first, to the Secured Obligations and to reimburse the Secured
Party for reasonable out-of-pocket costs, expenses and disbursements,
including without limitation reasonable attorneys' fees and legal expenses,
incurred by the Secured Party in connection with realizing on the Pledged
Collateral or collection of any obligation of any Pledgor under any of the
Financing Documents, including advances made subsequent to an Event of
Default by the Secured Party for the reasonable maintenance, preservation,
protection or enforcement of, or realization upon, the Pledged Collateral,
including without limitation advances for taxes, insurance, and the like,
and reasonable expenses incurred to sell or otherwise realize on, or
prepare for sale of or other realization on, any of the Pledged Collateral,
in such order as the Secured Party may determine in its discretion; and
(ii) the balance, if any, as required by Law.
(c) (i) The Secured Party shall have the right to have the Pledged
Collateral transferred into the name of Secured Party pursuant to Section 8
hereof.
(ii) All rights of any Pledgor to exercise the voting and other
consensual rights which such Pledgor would otherwise be entitled to
exercise pursuant to Section 7(a) above and to receive distributions shall
cease, and all such rights shall thereupon become vested in Secured Party,
who shall thereafter upon notice to such Pledgor have the sole right to
exercise such voting and other consensual rights and to receive 100 percent
of all distributions, which shall be promptly applied by Secured Party
against the Secured Obligations in the order and manner specified in
Section 8(b) hereof.
(iii) All distributions which are received by any Pledgor contrary to
the provisions of Section 8(b) shall be received in trust for the benefit
of Secured Party, shall be segregated from other funds of such Pledgor, and
forthwith shall be paid over to Secured Party as Pledged Collateral in the
same form as received (with any necessary endorsements), unless such
Pledgor shall have previously cured the Event of Default giving rise to the
Event of Default hereunder.
(iv) The Secured Party shall have the right to take control of and
manage all or any of the Pledged Collateral.
9.Secured Party's Duties.
(a) The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any Pledged
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Secured Party shall have no duty as to any Pledged Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Pledged Collateral.
(b) It is anticipated that additional persons will from time to time become
Subsidiaries of the Company or a Guarantor, each of whom will be required to
join this Pledge Agreement. It is acknowledged and agreed that new Subsidiaries
of the Company or of a Guarantor will become Pledgors hereunder and will be
bound hereby simply by executing and delivering to Agent a Guarantor Joinder in
the form of Exhibit (G)(1) to the Term Loan Agreement. In addition, a new
Schedule A hereto shall be provided to Agent showing the pledge of the ownership
interest in such new Subsidiary and any ownership interests that such new
Subsidiary owns in any other Person.
10. No Waiver; Cumulative Remedies.
No failure to exercise, and no delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any further exercise thereof or the
exercise of any other right, power or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided under the other
Financing Documents or by Law. Each Pledgor waives any right to require the
Secured Party to proceed against any other Person or to exhaust any of the
Pledged Collateral or other security for the Secured Obligations or to pursue
any remedy in the Secured Party's power.
11. Assignment.
Subject to the provisions of the Term Loan Agreement, all
rights of the Secured Party under this Agreement shall inure to the benefit of
its successors and assigns. All obligations of each Pledgor shall bind its
successors and assigns; provided, however, each Pledgor may not assign or
transfer any of its rights and obligations hereunder or any interest herein.
12. Severability.
Any provision of this Agreement which shall be held invalid or
unenforceable shall be ineffective without invalidating the remaining provisions
hereof.
13. Governing Law.
This Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York, except to the extent the
validity or perfection of the security interests or the remedies hereunder in
respect of any Pledged Collateral are governed by the law of a jurisdiction
other than the State of New York.
14. Notices.
All notices, requests, demands, directions and other
communications (collectively, "notices") given to or made upon any party hereto
under the provisions of this Agreement shall be as set forth in Section 18 of
the Term Loan Agreement.
15. Specific Performance.
Each Pledgor acknowledges and agrees that, in addition to the
other rights of the Secured Party hereunder and under the other Financing
Documents, because the Secured Party's remedies at law for failure of such
Pledgor to comply with the provisions hereof relating to the Secured Party's
rights (i) to inspect the books and records related to the Pledged Collateral,
(ii) to receive the various notifications such Pledgor is required to deliver
hereunder, (iii) to obtain copies of agreements and documents as provided herein
with respect to the Pledged Collateral, (iv) to enforce the provisions hereof
pursuant to which such Pledgor has appointed the Secured Party its
attorney-in-fact, and (v) to enforce the Secured Party's remedies hereunder,
would be inadequate and that any such failure would not be adequately
compensable in damages, such Pledgor agrees that each such provision hereof may
be specifically enforced.
16. Voting Rights in Respect of the Pledged Collateral.
Subject to Section 8 above, so long as no Event of Default
shall occur and be continuing under the Term Loan Agreement, each Pledgor may
exercise any and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not inconsistent with the
terms of this Agreement or the other Financing Documents; provided, however,
that such Pledgor will not exercise or will refrain from exercising any such
voting and other consensual right pertaining to the Pledged Collateral, as the
case may be, if such action would have a material adverse effect on the value of
any Pledged Collateral. Without limiting the generality of the foregoing and in
addition thereto, the Pledgors shall not vote to enable, or take any other
action to permit, any of the Pledged Companies to issue any stock, member
interests, partnership interests or other equity securities, member interests,
partnership interests or other ownership interests of any nature or to issue any
other securities, shares, capital stock, member interests, partnership interests
or other ownership interests convertible into or granting the right to purchase
or exchange for any stock, member interests, partnership interests or other
equity securities, member interests, partnership interests or other ownership
interests of any nature of any such Pledged Company or to enter into any
agreement or undertaking restricting the right or ability of the Pledgor or the
Secured Party to sell, assign or transfer any of the Pledged Collateral.
17. Consent to Jurisdiction.
EACH OF THE PLEDGORS AGREES THAT ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST THE PLEDGORS, OR ANY OF THEM,
FOR BREACH HEREOF, OR AGAINST ANY OF THEIR PROPERTIES, MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK BY ANY PURCHASER OR NOTEHOLDER OR THE COLLATERAL
AGENT OR ON BEHALF OF ANY PURCHASER OR NOTEHOLDER OR THE COLLATERAL AGENT, AS
SUCH NOTEHOLDER, PURCHASER OR THE COLLATERAL AGENT MAY ELECT, AND EACH OF THE
PLEDGORS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION OR PROCEEDING.
THE PLEDGORS HEREBY AGREE THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THEM AT THEIR ADDRESS
SPECIFIED IN SECTION 18 OF THE TERM LOAN AGREEMENT OR AT SUCH OTHER ADDRESS OF
WHICH EACH PURCHASER AND EACH HOLDER OF A NOTE SHALL HAVE BEEN NOTIFIED PURSUANT
THERETO. IN ADDITION, EACH OF THE PLEDGORS HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
18. Waiver of Jury Trial.
EACH PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
19. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements relating to a grant of a security interest in the Pledged Collateral
by any Pledgor. This Agreement may not be amended or supplemented except by a
writing signed by the Secured Party and the Pledgors.
20. Counterparts.
This Agreement may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
21. Descriptive Headings.
The descriptive headings which are used in this Agreement are
for the convenience of the parties only and shall not affect the meaning of any
provision of this Agreement.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 2 TO
PLEDGE AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have caused this Agreement to be duly executed as of the date first above
written.
FIRSTAR BANK, N.A., as Collateral Agent
By: /s/ James Moll
-------------------------------------------
Name: James Moll
-----------------------------------------
Title: Vice President
----------------------------------------
WESTMORELAND COAL COMPANY
By: /s/ W. Michael Lepchitz
-------------------------------------------
Name: W. Michael Lepchitz
-----------------------------------------
Title: Vice President
----------------------------------------
Address:
2 North Cascade Avenue
14th Floor
Colorado Springs, CO 80903
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger
-------------------------------------------
Name: Robert J. Jaeger
-----------------------------------------
Title: President
----------------------------------------
Address:
490 North 31st Street
Suite 308
Billings, MT 59101
SCHEDULE A
TO
PLEDGE AGREEMENT
Description of Pledged Collateral
A. Corporations
Pledgor Pledged Shares Type and Amount of Ownership
- ------- -------------- ----------------------------
Westmoreland Mining LLC Western Energy Company 118, 111.429 shares (100%)
Northwestern Resources Co. 10,000 shares (100%)
Dakota Westmoreland Corporation 1,000 shares (100%)
WCCO-KRC Acquisition Corp. 1,000 shares (100%)
B. Limited Liability Companies
Pledgor Pledged Shares Type and Amount of Ownership
- ------- -------------- ----------------------------
Westmoreland Coal Company Westmoreland Mining LLC 100% economic member units
C. Partnerships
Pledgor Pledged Shares Type and Amount of Ownership
- ------- -------------- ----------------------------
N/A
SCHEDULE 1
TO
PLEDGE AGREEMENT
COAL SUPPLY CONTRACTS
Coyote Plant Coal Agreement, dated January 1, 1978
Heskett Station Coal Sales Contract, dated September 20, 2000
Lewis & Clark Station Coal Sales Contract, dated January 1, 1998
Amended and Restated Coal Supply Agreement (Colstrip 3 & 4) dated August
24, 1998 among Montana Power Company, PPL Montana LLC, Puget Sound Energy,
Inc., Portland General Electric Company, PacificCorp and Western Energy
Company.
Coal Supply Agreement (Colstrip 1 & 2), dated July 30, 1971, as amended,
between PPL Montana LLC, Puget Sound Energy Inc., and Western Energy
Company.
Lignite Supply Agreement dated August 29, 1979, as amended, between
Northwestern Resources Co. and Reliant Energy, Incorporated.
Settlement Agreement and Amendment of Existing Contracts dated August 2,
1999 between Northwestern Resources Co. and Reliant Energy, Incorporated
Exhibit "A"
ACKNOWLEDGMENT REGARDING PLEDGE AGREEMENT
The undersigned [limited liability company/corporation] (the
"Company") hereby acknowledges receipt of a copy of the Pledge Agreement (the
"Pledge") dated as of ____________ by ____________________ ("Pledgor") in favor
of _______________________ ("Secured Party") and the Purchasers. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
ascribed to them in the Pledge.
NOW, THEREFORE, intending that Secured Party may rely hereon, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby represents, warrants and covenants to
Secured Party as follows, notwithstanding any conflicting provision of any
applicable Organizational Document (herein defined):
1. (a) The Company attached to an Officer's Certificate delivered by it
under Section 4.1 of the Term Loan Agreement a true and complete copy of the
[articles of incorporation, charter, bylaws, certificate of limited liability,
limited liability company operating agreement, partnership agreement,
shareholder agreement, or member agreement] of the Company as currently in
effect, including any and all amendments thereto (the "Organizational
Documents"); (b) Pledgor is currently the owner of 100% of the entire
[membership equity interest/stock] under the Organizational Documents, except
for non-economic interest of the Independent Managers; (c) the undersigned does
not have any offset or counterclaim against Pledgor with respect to the
Organizational Documents; (d)Pledgor is not in default under the Organizational
Documents, and no event has occurred that, with notice or lapse of time, or
both, would constitute an event of default by Pledgor under the Organizational
Documents; (e) no dividends, distributions or any other fees or payments payable
by the Company to Pledgor have been paid by the Company to Pledgor in violation
of the Term Loan Agreement; and (f) the Company is a [limited liability
company/corporation] duly formed, validly existing and in good standing under
the laws of the State of ________.
2. There are no owners of [membership equity interests/stock] in the
Company other than Pledgor, except for the non-economic interests of the
Independent Managers.
3. The undersigned will be bound by the terms of the Pledge and will comply
with such terms insofar as such terms are applicable to the undersigned,
including without limiting the generality of the foregoing, those terms in
Section 7 and 18 of the Pledge.
4. The undersigned will notify the Secured Party promptly in writing of the
occurrence of any of the events described in Section 6(g) of the Pledge.
5. The terms of Section 3 of the Pledge shall apply to it, mutatis
mutandis, with respect to all actions that may facilitate, in the reasonable
judgement of the Secured Party, the carrying out of Section 3 of the Pledge.
6. To the extent that any of undersigned has or hereafter may acquire any
immunity from the jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution, or otherwise) with respect to itself or its property, each
of undersigned hereby irrevocably waives such immunity in respect of its
obligations under the Pledge and any other document or agreement executed in
connection therewith, and each of undersigned agrees that it will not raise or
claim any such immunity at or in respect of any such action or proceeding.
7. The Company acknowledges and agrees that any notices sent to the Pledgor
regarding any of the Pledged Collateral shall also be sent to the Secured Party
in the manner and at the address of Secured Party as indicated in Section 14 of
the Pledge.
8. The Company shall promptly and completely co-operate with the Collateral
Agent and the Purchasers in their exercise of their rights under Section 7(b) of
the Pledge. From and after such time as it receives written notice of an Event
of Default containing instructions to do so from Secured Party, the Company
shall pay all distributions directly to Secured Party or its designee, and not
to Pledgor. Such notice and instructions need be signed only by Secured Party,
and the Company shall comply with same regardless of whether it receives at any
time any contrary instructions or demands from Pledgor or any other person;
provided, however, that the Company may comply with any conflicting court order
received from a court of competent jurisdiction.
9. The Company shall comply with the provisions of Section 10.14 of the
Term Loan Agreement.
10. The undersigned shall not issue or sell any shares of its stock or
similar interests or other securities (or warrants, rights or options to acquire
stock or similar interests or other securities) to a party other than a Pledgor.
11. Notwithstanding the granting of a security interest to Secured Party in
the Pledged Collateral, Secured Party shall have no obligation or liability
whatsoever to the Company, any [member/shareholder] thereof or any creditor or
other person having any relationship with the Company, nor shall Secured Party
be obligated to perform any of the obligations or duties of Pledgor under the
Organizational Documents or to take any action to collect or to enforce any
claim for payment of Pledgor arising under the Organizational Documents, unless
Secured Party has exercised its right to foreclose on the Pledged Collateral,
have the Collateral transferred to Secured Party, or to any other Person, under
the Pledge, and in such event Secured Party shall have no obligation to perform
any duties or obligations under the Organizational Documents arising prior to
the date of such transfer.
12. Subject to the limitations set forth in the Term Loan Agreement, the
undersigned acknowledges that the security interest of Secured Party in the
Pledged Collateral, the Pledged Collateral and all of Secured Party's rights and
remedies under the Pledge may be freely transferred or assigned by Secured Party
to any third party. In the event of any such transfer or assignment of such
rights and interests of the Secured Party, following receipt by the undersigned
of notice of such transfer or assignment from Secured Party, all of the
provisions of this Acknowledgment shall inure to the benefit of the transferees,
successors and/or assigns of Secured Party provided that Secured Party has
provided to the undersigned a copy of such assignment or transfer. The
provisions of this Acknowledgment shall likewise be binding upon the successors
and assigns of the undersigned.
13. The undersigned shall, from time to time, promptly execute and deliver
such further instruments, documents and papers and perform such further acts as
may be reasonably necessary to carry out and effect the intent, purposes and
terms of this Acknowledgment.
14. When necessary herein, all terms used in the singular shall apply to
the plural, and vice versa, and all terms used in the masculine shall apply to
the neuter and feminine genders, and vice versa.
15. This Acknowledgement shall be governed by the laws of the State of New
York.
16. THE COMPANY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY
JUDGMENT OBTAINED AGAINST THE COMPANY FOR BREACH HEREOF, OR AGAINST ANY OF ITS
PROPERTIES, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY ANY PURCHASER OR
NOTEHOLDER OR THE COLLATERAL AGENT OR ON BEHALF OF ANY PURCHASER OR NOTEHOLDER
OR THE COLLATERAL AGENT, AS SUCH NOTEHOLDER, PURCHASER OR THE COLLATERAL AGENT
MAY ELECT, AND THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION
OR PROCEEDING. THE COMPANY HEREBY AGREES THAT SERVICE OF PROCESS IN ANY SUCH
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SPECIFIED IN SECTION 18 OF THE TERM LOAN AGREEMENT OR AT SUCH OTHER
ADDRESS OF WHICH EACH PURCHASER AND EACH HOLDER OF A NOTE SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO. IN ADDITION, THE COMPANY HEREBY IRREVOCABLY WAIVES TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS ACKNOWLEDGEMENT REGARDING PLEDGE AGREEMENT BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
17. EXCEPT AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE ACKNOWLEDGEMENT REGARDING
PLEDGE AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING THERETO.
IN WITNESS WHEREOF, this Acknowledgment Regarding Pledge Agreement is given as
of __________, 2001.
COMPANY:
a
-----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Exhibit "B"
ASSIGNMENT OF MEMBERSHIP INTEREST
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, _______________________________, a _____________
("Assignor"), hereby sells, assigns, transfers and conveys to
_______________________________________ ______________________________________
("Assignee"), all of its right, title and interest in and to its membership
interest in __________________________, a _______ limited liability company (the
"Company"), including Assignor's right to receive from the Company all amounts
payable to Assignor from and after the date hereof. In consideration of the
foregoing transfer, Assignee agrees that, subject to the immediately preceding
sentence, it shall be bound by all of the terms and provisions of the limited
liability company agreement governing the Company and shall perform and observe
all of the covenants, duties and obligations contained therein from and after
the date of Assignee's admission as a member in the Company.
IN WITNESS WHEREOF, this Assignment of Membership Interest is executed as of
____________________, 20__.
ASSIGNOR:
a
-----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ASSIGNEE:
a
-----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Exhibit "C"
STOCK POWER
FOR VALUE RECEIVED, [Pledgor], a _________________ ________________, hereby
sells, assigns and transfers unto _____________________ (__________) shares of
the common stock of [the Pledged Company], a ______________ corporation,
standing in its name on the books of said corporation represented by Certificate
No(s). ____________________ herewith.
[PLEDGOR]
Date: _______________ By __________________________________(Seal)
Title:
IN PRESENCE OF:
- ---------------
EXHIBIT 99.6
- ------------
CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP
This Continuing Agreement of Guaranty and Suretyship (the "Guaranty"),
dated as of this 27th day of April, 2001, is jointly and severally given by each
of the undersigned and each of the other Persons which become Guarantors
hereunder from time to time (each a "Guarantor" and collectively the
"Guarantors") in favor of PNC Bank, National Association, as agent for the Banks
(the "Agent") in connection with that Credit Agreement, dated as of the date
hereof, by and among Westmoreland Mining LLC, a Delaware limited liability
company (the "Borrower"), the Guarantors now or hereafter party thereto, the
Agent, and the Banks now or hereafter party thereto (the "Banks") (as amended,
restated, modified, or supplemented from time to time hereafter, the "Credit
Agreement"). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them by the Credit Agreement.
1. Guarantied Obligations. To induce the Agent and the Banks to make loans
and grant other financial accommodations to the Borrower under the Credit
Agreement, each Guarantor hereby jointly and severally, unconditionally and
irrevocably guaranties to the Agent and each Bank and each Affiliate of each
Bank and the Collateral Agent on behalf of the Banks, and becomes surety, as
though it was a primary obligor for, the full and punctual payment and
performance when due (whether on demand, at stated maturity, by acceleration, or
otherwise and including any amounts which would become due but for the operation
of an automatic stay under the federal bankruptcy code of the United States or
any similar laws of any country or jurisdiction) of all Obligations, including,
without limiting the generality of the foregoing, all obligations, liabilities,
and indebtedness from time to time of the Borrower or any other Guarantor to the
Agent or any of the Banks or any Affiliate of any Bank under or in connection
with the Credit Agreement or any other Loan Document, whether for principal,
interest, fees, indemnities, expenses, or otherwise, and all refinancings or
refundings thereof, whether such obligations, liabilities, or indebtedness are
direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising (and including obligations, liabilities, and
indebtedness arising or accruing after the commencement of any bankruptcy,
insolvency, reorganization, or similar proceeding with respect to the Borrower
or any Guarantor or which would have arisen or accrued but for the commencement
of such proceeding, even if the claim for such obligation, liability, or
indebtedness is not enforceable or allowable in such proceeding, and including
all Obligations, liabilities, and indebtedness arising from any extensions of
credit under or in connection with the Loan Documents from time to time,
regardless whether any such extensions of credit are in excess of the amount
committed under or contemplated by the Loan Documents or are made in
circumstances in which any condition to extension of credit is not satisfied)
(all of the foregoing obligations, liabilities and indebtedness are referred to
herein collectively as the "Guarantied Obligations" and each as a "Guarantied
Obligation"). Without limitation of the foregoing, any of the Guarantied
Obligations shall be and remain Guarantied Obligations entitled to the benefit
of this Guaranty if the Agent, the Collateral Agent or any of the Banks (or any
one or more assignees or transferees thereof) from time to time assign or
otherwise transfer all or any portion of their respective rights and obligations
under the Notes the Credit Agreement or the other Loan Documents, or any other
Guarantied Obligations, to any other Person in accordance therewith. In
furtherance of the foregoing, each Guarantor jointly and severally agrees as
follows.
2. Guaranty. Each Guarantor hereby jointly and severally promises to pay
and perform all such Guarantied Obligations immediately upon demand of the
Agent, the Collateral Agent and the Banks or any one or more of them. All
payments made hereunder shall be made by each Guarantor in immediately available
funds in United States Dollars and shall be made without setoff, counterclaim,
withholding, or other deduction of any nature.
3. Obligations Absolute. The obligations of the Guarantors hereunder shall
not be discharged or impaired or otherwise diminished by any failure, default,
omission, or delay, willful or otherwise, by any Bank, the Agent, the Collateral
Agent or Borrower or any other obligor on any of the Guarantied Obligations, or
by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of any Guarantor
or would otherwise operate as a discharge of any Guarantor as a matter of law or
equity. Each of the Guarantors agree that the Guarantied Obligations will be
paid and performed strictly in accordance with the terms of the Loan Documents.
Without limiting the generality of the foregoing, each Guarantor hereby consents
to, at any time and from time to time, and the joint and several obligations of
each Guarantor hereunder shall not be diminished, terminated, or otherwise
similarly affected by any of the following:
(a) Any lack of genuineness, legality, validity, enforceability or
allowability (in a bankruptcy, insolvency, reorganization or similar
proceeding, or otherwise), or any avoidance or subordination, in whole or
in part, of any Loan Document or any of the Guarantied Obligations and
regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of the Guarantied Obligations, any of the
terms of the Loan Documents, or any rights of the Agent, the Collateral
Agent or the Banks or any other Person with respect thereto;
(b) Any increase, decrease, or change in the amount, nature, type or
purpose of any of the Guarantied Obligations (whether or not contemplated
by the Loan Documents as presently constituted); any change in the time,
manner, method, or place of payment or performance of, or in any other term
of, any of the Guarantied Obligations; any execution or delivery of any
additional Loan Documents; or any amendment, modification or supplement to,
or refinancing or refunding of, any Loan Document or any of the Guarantied
Obligations;
(c) Any failure to assert any breach of or default under any Loan
Document or any of the Guarantied Obligations; any extensions of credit in
excess of the amount committed under or contemplated by the Loan Documents,
or in circumstances in which any condition to such extensions of credit has
not been satisfied; any other exercise or non-exercise, or any other
failure, omission, breach, default, delay, or wrongful action in connection
with any exercise or non-exercise, of any right or remedy against the
Borrower or any other Person under or in connection with any Loan Document
or any of the Guarantied Obligations; any refusal of payment or performance
of any of the Guarantied Obligations, whether or not with any reservation
of rights against any Guarantor; or any application of collections
(including but not limited to collections resulting from realization upon
any direct or indirect security for the Guarantied Obligations) to other
obligations, if any, not entitled to the benefits of this Guaranty, in
preference to Guarantied Obligations entitled to the benefits of this
Guaranty, or if any collections are applied to Guarantied Obligations, any
application to particular Guarantied Obligations;
(d) Any taking, exchange, amendment, modification, supplement,
termination, subordination, release, loss, or impairment of, or any failure
to protect, perfect, or preserve the value of, or any enforcement of,
realization upon, or exercise of rights, or remedies under or in connection
with, or any failure, omission, breach, default, delay, or wrongful action
by the Agent, the Collateral Agent or the Banks, or any of them, or any
other Person in connection with the enforcement of, realization upon, or
exercise of rights or remedies under or in connection with, or, any other
action or inaction by any of the Agent, the Collateral Agent or the Banks,
or any of them, or any other Person in respect of, any direct or indirect
security for any of the Guarantied Obligations. As used in this Guaranty,
"direct or indirect security" for the Guarantied Obligations, and similar
phrases, includes any collateral security, guaranty, suretyship, letter of
credit, capital maintenance agreement, put option, subordination agreement,
or other right or arrangement of any nature providing direct or indirect
assurance of payment or performance of any of the Guarantied Obligations,
made by or on behalf of any Person;
(e) Any merger, consolidation, liquidation, dissolution, winding-up,
charter revocation of charter or other organizational document, or
forfeiture, or other change in, restructuring or termination of the
corporate, limited liability or other structure or existence of, the
Borrower, any Guarantor or any other Person; any bankruptcy, insolvency,
reorganization or similar proceeding with respect to the Borrower, any
Guarantor or any other Person; or any action taken or election made by the
Agent, the Collateral Agent or the Banks, or any of them (including but not
limited to any election under Section 1111(b)(2) of the United States
Bankruptcy Code), the Borrower, any Guarantor or any other Person in
connection with any such proceeding;
(f) Any defense, setoff, or counterclaim which may at any time be
available to or be asserted by the Borrower, any Guarantor or any other
Person with respect to any Loan Document or any of the Guarantied
Obligations; or any discharge by operation of law or release of the
Borrower, any Guarantor or any other Person from the performance or
observance of any Loan Document or any of the Guarantied Obligations; and
(g) Any other event or circumstance, whether similar or dissimilar to
the foregoing, and whether known or unknown, which might otherwise
constitute a defense available to, or limit the liability of, any
Guarantor, a guarantor or a surety, excepting only full, strict, and
indefeasible payment and performance of the Guarantied Obligations in full.
Each Guarantor acknowledges, consents, and agrees that new Guarantors
may join in this Guaranty pursuant to Section 11.18 of the Credit Agreement and
each Guarantor affirms that its obligations shall continue hereunder
undiminished.
4. Waivers, etc. Each of the Guarantors hereby waives any defense to or
limitation on its obligations under this Guaranty arising out of or based on any
event or circumstance referred to in Section 3 hereof. Without limitation and to
the fullest extent permitted by applicable law, each Guarantor waives each of
the following:
(a) All notices, disclosures and demand of any nature which otherwise
might be required from time to time to preserve intact any rights against
any Guarantor, including the following: any notice of any event or
circumstance described in Section 3 hereof; any notice required by any law,
regulation or order now or hereafter in effect in any jurisdiction; any
notice of nonpayment, nonperformance, dishonor, or protest under any Loan
Document or any of the Guarantied Obligations; any notice of the incurrence
of any Guarantied Obligation; any notice of any default or any failure on
the part of the Borrower, any Guarantor or any other Person to comply with
any Loan Document or any of the Guarantied Obligations or any direct or
indirect security for any of the Guarantied Obligations; and any notice of
any information pertaining to the business, operations, condition
(financial or otherwise) or prospects of the Borrower, any Guarantor or any
other Person;
(b) Any right to any marshalling of assets, to the filing of any claim
against the Borrower, any Guarantor or any other Person in the event of any
bankruptcy, insolvency, reorganization or similar proceeding, or to the
exercise against the Borrower, any Guarantor or any other Person of any
other right or remedy under or in connection with any Loan Document or any
of the Guarantied Obligations or any direct or indirect security for any of
the Guarantied Obligations; any requirement of promptness or diligence on
the part of the Agent, the Collateral Agent or the Banks, or any of them,
or any other Person; any requirement to exhaust any remedies under or in
connection with, or to mitigate the damages resulting from default under,
any Loan Document or any of the Guarantied Obligations or any direct or
indirect security for any of the Guarantied Obligations; any benefit of any
statute of limitations; and any requirement of acceptance of this Guaranty
or any other Loan Document, and any requirement that any Guarantor receive
notice of any such acceptance;
(c) Any defense or other right arising by reason of any law now or
hereafter in effect in any jurisdiction pertaining to election of remedies
(including but not limited to anti-deficiency laws, "one action" laws or
the like), or by reason of any election of remedies or other action or
inaction by the Agent, the Collateral Agent or the Banks, or any of them
(including but not limited to commencement or completion of any judicial
proceeding or nonjudicial sale or other action in respect of collateral
security for any of the Guarantied Obligations), which results in denial or
impairment of the right of the Agent, the Collateral Agent or the Banks, or
any of them, to seek a deficiency against the Borrower, any Guarantor or
any other Person or which otherwise discharges or impairs any of the
Guarantied Obligations; and
(d) Any and all defenses it may now or hereafter have based on
principles of suretyship, impairment of collateral, or the like.
5. Reinstatement. This Guaranty is a continuing obligation of the
Guarantors and shall remain in full force and effect notwithstanding that no
Guarantied Obligations may be outstanding from time to time and notwithstanding
any other event or circumstance. Upon termination of all Commitments and the
expiration of all Letters of Credit and indefeasible payment in full of all
Guarantied Obligations, this Guaranty shall terminate; provided, however, that
this Guaranty shall continue to be effective or be reinstated, as the case may
be, any time any payment of any of the Guarantied Obligations is rescinded,
recouped, avoided, or must otherwise be returned or released by the Collateral
Agent, any Bank or Agent upon or during the insolvency, bankruptcy, or
reorganization of, or any similar proceeding affecting, Borrower or for any
other reason whatsoever, all as though such payment had not been made and was
due and owing.
6. Subrogation. No Guarantor shall exercise any rights against Borrower or
any other Guarantor arising in connection with the Guarantied Obligations
(including rights of subrogation, contribution, and the like) until the
Guarantied Obligations have been indefeasibly paid in full and all Commitments
have been terminated and all Letters of Credit have expired. If any amount shall
be paid to any Guarantor by or on behalf of Borrower or any other Guarantor by
virtue of any right of subrogation, contribution, or the like, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and shall be
held in trust for the benefit of, the Agent, the Collateral Agent and the Banks
and shall forthwith be paid to the Agent to be credited and applied against the
Guarantied Obligations, whether matured or unmatured, in accordance with the
terms of the Credit Agreement.
7. No Stay. Without limitation of any other provision of this Guaranty, if
any declaration of default or acceleration or other exercise or condition to
exercise of rights or remedies under or with respect to any Guarantied
Obligation shall at any time be stayed, enjoined, or prevented for any reason
(including but not limited to stay or injunction resulting from the pendency
against the Borrower, any Guarantor or any other Person of a bankruptcy,
insolvency, reorganization or similar proceeding), the Guarantors agree that,
for the purposes of this Guaranty and their obligations hereunder, the
Guarantied Obligations shall be deemed to have been declared in default or
accelerated, and such other exercise or conditions to exercise shall be deemed
to have been taken or met, and, to the full extent permitted by law, such stay,
injunction or other impediment shall not be applicable to any Guarantor's
obligations hereunder.
8. Taxes.
(a) No Deductions. All payments made by any Guarantor hereunder or
under any of the other Loan Documents 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 any Bank and all
income and franchise taxes of the United States applicable to any Bank (all
such non-excluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If
any Guarantor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any of the other Loan
Documents, (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 (a) such Bank receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) such Guarantor shall make such deductions and (iii) such
Guarantor shall timely pay the full amount deducted to the relevant tax
authority or other authority in accordance with applicable law.
(b) Stamp Taxes. In addition, each Guarantor 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 of, or otherwise with respect
to, any of the Loan Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification for Taxes Paid by any Bank. Each Guarantor shall
indemnify each Bank 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 any 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 a Bank makes written demand therefor.
(d) Certificate. Within 30 days after the date of any payment of any
Taxes by any Guarantor, such Guarantor shall furnish to each Bank, the
original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment by such Guarantor, such
Guarantor shall, if so requested by a Bank, provide a certificate of an
officer of such Guarantor to that effect.
(e) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due under any of the Loan Documents in any
currency (the "Original Currency") into another currency (the "Other
Currency"), each Guarantor hereby agrees, to the fullest extent permitted
by law, that the rate of exchange used shall be that at which in accordance
with normal banking procedures each Bank could purchase the Original
Currency with the Other Currency after any premium and costs of exchange on
the Business Day preceding that on which final judgment is given.
(f) The obligation of each Guarantor in respect of any sum due from
such Guarantor to any Bank under any of the Loan Documents shall,
notwithstanding any judgment in an Other Currency, whether pursuant to a
judgment or otherwise, be discharged only to the extent that, on the
business day (being a day on which it is open for business at its principal
office in the United States) following receipt by any Bank of any sum
adjudged to be so due in such Other Currency, such Bank may in accordance
with normal banking procedures purchase the Original Currency with such
Other Currency. If the amount of the Original Currency so purchased is less
than the sum originally due to such Bank in the Original Currency, each
Guarantor agrees, as a separate obligation and notwithstanding any such
judgment or payment, to indemnify such Bank against such loss.
9. Notices. Each Guarantor agrees that all notices, statements, requests,
demands and other communications under this Guaranty shall be given to such
Guarantor at the address set forth on a Schedule to, or in a Guarantor Joinder
given under, the Credit Agreement and in the manner provided in Section 11.6 of
the Credit Agreement. The Agent, the Collateral Agent and the Banks may rely on
any notice (whether or not made in a manner contemplated by this Guaranty)
purportedly made by or on behalf of a Guarantor, and the Agent, the Collateral
Agent and the Banks shall have no duty to verify the identity or authority of
the Person giving such notice.
10. Counterparts; Telecopy Signatures. This Guaranty may be executed in any
number of counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. Each Guarantor acknowledges and agrees that a telecopy transmission
to Agent or any Bank of signature pages hereof purporting to be signed on behalf
of any Guarantor shall constitute effective and binding execution and delivery
hereof by such Guarantor.
11. Setoff, Default Payments by Borrower.
(a) In the event that at any time any obligation of the Guarantors now
or hereafter existing under this Guaranty shall have become due and
payable, the Agent and the Banks, or any of them, shall have the right from
time to time, without notice to any Guarantor, to set off against and apply
to such due and payable amount any obligation of any nature of any Bank or
the Agent, or any subsidiary or affiliate of any Bank or Agent, to any
Guarantor, including but not limited to all deposits (whether time or
demand, general or special, provisionally credited or finally credited,
however evidenced) now or hereafter maintained by any Guarantor with the
Agent or any Bank or any subsidiary or affiliate thereof. Such right shall
be absolute and unconditional in all circumstances and, without limitation,
shall exist whether or not the Agent, the Collateral Agent or the Banks, or
any of them, shall have given any notice or made any demand under this
Guaranty or under such obligation to the Guarantor, whether such obligation
to the Guarantor is absolute or contingent, matured or unmatured (it being
agreed that the Agent and the Banks, or any of them, may deem such
obligation to be then due and payable at the time of such setoff), and
regardless of the existence or adequacy of any collateral, guaranty, or
other direct or indirect security or right or remedy available to the
Agent, the Collateral Agent or any of the Banks. The rights of the Agent
and the Banks under this Section are in addition to such other rights and
remedies (including, without limitation, other rights of setoff and
banker's lien) which the Agent and the Banks, or any of them, may have, and
nothing in this Guaranty or in any other Loan Document shall be deemed a
waiver of or restriction on the right of setoff or banker's lien of the
Agent and the Banks, or any of them. Each of the Guarantors hereby agree
that, to the fullest extent permitted by law, any affiliate or subsidiary
of the Agent or any of the Banks and any holder of a participation in any
obligation of any Guarantor under this Guaranty, shall have the same rights
of setoff as the Agent and the Banks as provided in this Section
(regardless whether such affiliate or participant otherwise would be deemed
a creditor of the Guarantor).
(b) Upon the occurrence and during the continuation of any default
under any Guarantied Obligation, if any amount shall be paid to any
Guarantor by or for the account of Borrower, such amount shall be held in
trust for the benefit of each Bank and Agent and shall forthwith be paid to
the Agent to be credited and applied to the Guarantied Obligations when due
and payable.
12. Construction. The section and other headings contained in this Guaranty
are for reference purposes only and shall not affect interpretation of this
Guaranty in any respect. This Guaranty has been fully negotiated between the
applicable parties, each party having the benefit of legal counsel, and
accordingly neither any doctrine of construction of guaranties or suretyships in
favor of the guarantor or surety, nor any doctrine of construction of
ambiguities in agreement or instruments against the party controlling the
drafting thereof, shall apply to this Guaranty.
13. Successors and Assigns. This Guaranty shall be binding upon each
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by the Agent and the Banks, or any of them, and their successors and
assigns. Without limitation of the foregoing, the Agent, the Collateral Agent
and the Banks, or any of them (and any successive assignee or transferee), from
time to time may assign or otherwise transfer all or any portion of its rights
or obligations under the Loan Documents (including all or any portion of any
commitment to extend credit), or any other Guarantied Obligations, to any other
person, in accordance with the Credit Agreement and such Guarantied Obligations
(including any Guarantied Obligations resulting from extension of credit by such
other Person under or in connection with the Loan Documents) shall be and remain
Guarantied Obligations entitled to the benefit of this Guaranty, and to the
extent of its interest in such Guarantied Obligations such other Person shall be
vested with all the benefits in respect thereof granted to the Agent and the
Banks in this Guaranty or otherwise.
14. Intentionally Omitted.
15. Severability; Modification to Conform to Law.
(a) It is the intention of the parties that this Guaranty be
enforceable to the fullest extent permissible under applicable law, but
that the unenforceability (or modification to conform to such law) of any
provision or provisions hereof shall not render unenforceable, or impair,
the remainder hereof. If any provision in this Guaranty shall be held
invalid or unenforceable in whole or in part in any jurisdiction, this
Guaranty shall, as to such jurisdiction, be deemed amended to modify or
delete, as necessary, the offending provision or provisions and to alter
the bounds thereof in order to render it or them valid and enforceable to
the maximum extent permitted by applicable law, without in any manner
affecting the validity or enforceability of such provision or provisions in
any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
(b) Without limitation of the preceding subsection (a), to the extent
that applicable law (including applicable laws pertaining to fraudulent
conveyance or fraudulent or preferential transfer) otherwise would render
the full amount of the Guarantor's obligations hereunder invalid, voidable,
or unenforceable on account of the amount of a Guarantor's aggregate
liability under this Guaranty, then, notwithstanding any other provision of
this Guaranty to the contrary, the aggregate amount of such liability
shall, without any further action by the Agent or any of the Banks or such
Guarantor or any other Person, be automatically limited and reduced to the
highest amount which is valid and enforceable as determined in such action
or proceeding, which (without limiting the generality of the foregoing) may
be an amount which is equal to the greater of:
(A) the fair consideration actually received by such Guarantor
under the terms and as a result of the Loan Documents and the value of
the benefits described in Section 18 (b) hereof, including (and to the
extent not inconsistent with applicable federal and state laws
affecting the enforceability of guaranties) distributions,
commitments, and advances made to or for the benefit of such Guarantor
with the proceeds of any credit extended under the Loan Documents, or
(B) the excess of (1) the amount of the fair value of the assets
of such Guarantor as of the date of this Guaranty as determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors as in effect on the date
hereof, over (2) the amount of all liabilities of such Guarantor as of
the date of this Guaranty, also as determined on the basis of
applicable federal and state laws governing the insolvency of debtors
as in effect on the date hereof.
(c) Notwithstanding anything to the contrary in this Section or
elsewhere in this Guaranty, this Guaranty shall be presumptively valid and
enforceable to its full extent in accordance with its terms, as if this
Section (and references elsewhere in this Guaranty to enforceability to the
fullest extent permitted by law) were not a part of this Guaranty, and in
any related litigation the burden of proof shall be on the party asserting
the invalidity or unenforceability of any provision hereof or asserting any
limitation on any Guarantor's obligations hereunder as to each element of
such assertion.
16. Additional Guarantors. At any time after the initial execution and
delivery of this Guaranty to the Agent, the Collateral Agent and the Banks,
additional Persons may become parties to this Guaranty and thereby acquire the
duties and rights of being Guarantors hereunder by executing and delivering to
the Agent, the Collateral Agent and the Banks a Guarantor Joinder pursuant to
the Credit Agreement. No notice of the addition of any Guarantor shall be
required to be given to any pre-existing Guarantor and each Guarantor hereby
consents thereto.
17. Joint and Several Obligations. Each of the obligations of each and
every Guarantor under this Guaranty are joint and several. The Agent and the
Banks, or any of them, may, in their sole discretion, elect to enforce or cause
the Collateral Agent to enforce this Guaranty against any Guarantor without any
duty or responsibility to pursue any other Guarantor and such an election by the
Agent and the Banks, or any of them, shall not be a defense to any action the
Agent and the Banks, or any of them, may elect to take against any Guarantor.
Each of the Banks and Agent hereby reserves all rights against each Guarantor.
18. Receipt of Credit Agreement, Other Loan Documents, Benefits.
(a) Each Guarantor hereby acknowledges that it has received a copy of
the Credit Agreement and the other Loan Documents and each Guarantor
certifies that the representations and warranties made therein with respect
to such Guarantor are true and correct. Further, each Guarantor
acknowledges and agrees to perform, comply with, and be bound by all of the
provisions of the Credit Agreement and the other Loan Documents.
(b) Each Guarantor hereby acknowledges, represents, and warrants that
it receives synergistic benefits by virtue of its affiliation with Borrower
and the other Guarantors and that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit
Agreement and that such benefits, together with the rights of contribution
and subrogation that may arise in connection herewith are a reasonably
equivalent exchange of value in return for providing this Guaranty.
19. Miscellaneous. (a) Generality of Certain Terms. As used in this
Guaranty, the terms "hereof," "herein," and terms of similar import refer to
this Guaranty as a whole and not to any particular term or provision; the term
"including," as used herein, is not a term of limitation and means "including
without limitation." (b) Amendments, Waivers. No amendment to or waiver of any
provision of this Guaranty, and no consent to any departure by any Guarantor
herefrom, shall in any event be effective unless in a writing manually signed by
or on behalf of the Agent and the Banks. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No delay or failure of the Agent, the Collateral Agent or the Banks, or
any of them, in exercising any right or remedy under this Guaranty shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
or remedy preclude any other or further exercise thereof or the exercise of any
other right or remedy. The rights and remedies of the Agent, the Collateral
Agent and the Banks under this Guaranty are cumulative and not exclusive of any
other rights or remedies available hereunder, under any other agreement or
instrument, by law, or otherwise. (c) Telecommunications. Each Bank, the
Collateral Agent and Agent shall be entitled to rely on the authority of any
individual making any telecopy or telephonic notice, request, or signature
without the necessity of receipt of any verification thereof. (d) Expenses. Each
Guarantor unconditionally agrees to pay all reasonable costs and expenses,
including reasonable attorney's fees incurred by the Agent, the Collateral Agent
or any of the Banks in enforcing this Guaranty against any Guarantor and each
Guarantor shall pay and indemnify each Bank the Collateral Agent and Agent for,
and hold it harmless from and against, any and all obligations, liabilities,
losses, damages, costs, expenses (including disbursements and reasonable legal
fees of counsel to any Bank , the Collateral Agent or Agent), penalties,
judgments, suits, actions, claims, and disbursements imposed on, asserted
against, or incurred by any Bank, the Collateral Agent or Agent (A) relating to
the preparation, negotiation, execution, administration, or enforcement of or
collection under this Guaranty or any document, instrument, or agreement
relating to any of the Obligations, including in any bankruptcy, insolvency, or
similar proceeding in any jurisdiction or political subdivision thereof; (B)
relating to any amendment, modification, waiver, or consent hereunder or
relating to any telecopy or telephonic transmission purporting to be by any
Guarantor or the Borrower; (C) in any way relating to or arising out of this
Guaranty, or any document, instrument, or agreement relating to any of the
Guarantied Obligations, or any action taken or omitted to be taken by the
Collateral Agent, any Bank or Agent hereunder, and including those arising
directly or indirectly from the violation or asserted violation by any Guarantor
or the Borrower, the Collateral Agent or Agent or any Bank of any law, rule,
regulation, judgment, order, or the like of any jurisdiction or political
subdivision thereof (including those relating to environmental protection,
health, labor, importing, exporting, or safety) and regardless whether asserted
by any governmental entity or any other Person except for any which arises out
of the gross negligence or willful misconduct of the Collateral Agent, the Agent
or any Bank. (e) Prior Understandings. This Guaranty, the Credit Agreement and
the other Loan Documents constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede any and all other prior
and contemporaneous understandings and agreements. (f) Survival. All
representations and warranties of the Guarantors made in connection with this
Guaranty shall survive, and shall not be waived by, the execution and delivery
of this Guaranty, any investigation by or knowledge of the Agent, the Collateral
Agent and the Banks, or any of them, any extension of credit, or any other event
or circumstance whatsoever.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 OF CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP]
IN WITNESS WHEREOF, each Guarantor intending to be legally bound, has
executed this Guaranty as of the date first above written with the intention
that this Guaranty shall constitute a sealed instrument.
WESTERN ENERGY COMPANY
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
NORTHWESTERN RESOURCES CO.
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
DAKOTA WESTMORELAND CORPORATION
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
WCCO-KRC ACQUISITION CORP.
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
EXHIBIT 99.7
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CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP
This Continuing Agreement of Guaranty and Suretyship (the "Guaranty"),
dated as of this 27th day of April, 2001, is jointly and severally given by each
of the undersigned and each of the other Persons which become Guarantors
hereunder from time to time (each a "Guarantor" and collectively the
"Guarantors") in favor of the Purchasers in connection with that Term Loan
Agreement, dated as of the date hereof, by and among Westmoreland Mining LLC, a
Delaware limited liability company (the "Company"), the Obligors now or
hereafter party thereto, the Purchasers named in the Schedule A attached thereto
(together with the holders from time to time of the Notes referred to therein,
herein collectively referred to as the "Purchasers") (as amended, restated,
modified, or supplemented from time to time hereafter, the "Term Loan
Agreement"). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them by the Term Loan Agreement.
1. Guarantied Obligations. To induce the Purchasers to purchase the Note(s)
from the Company under the Term Loan Agreement, each Guarantor hereby jointly
and severally, unconditionally and irrevocably guaranties to the Purchasers and
the Collateral Agent on behalf of the Purchasers, and becomes surety, as though
it was a primary obligor for, the full and punctual payment and performance when
due (whether on demand, at stated maturity, by acceleration, or otherwise and
including any amounts which would become due but for the operation of an
automatic stay under the federal bankruptcy code of the United States or any
similar laws of any country or jurisdiction) of all Obligations, including,
without limiting the generality of the foregoing, all obligations, liabilities,
and indebtedness from time to time of the Company or any other Guarantor to the
Purchasers under or in connection with the Notes, the Term Loan Agreement or any
other Financing Document, whether for principal, interest, Make-Whole Amount,
fees, indemnities, expenses, or otherwise, and all refinancings or refundings
thereof, whether such obligations, liabilities, or indebtedness are direct or
indirect, secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether for payment or performance, now existing or hereafter
arising (and including obligations, liabilities, and indebtedness arising or
accruing after the commencement of any bankruptcy, insolvency, reorganization,
or similar proceeding with respect to the Company or any Guarantor or which
would have arisen or accrued but for the commencement of such proceeding, even
if the claim for such obligation, liability, or indebtedness is not enforceable
or allowable in such proceeding, and including all Obligations, liabilities, and
indebtedness arising from any extensions of credit under or in connection with
the Financing Documents from time to time, regardless whether any such
extensions of credit are in excess of the amount committed under or contemplated
by the Financing Documents or are made in circumstances in which any condition
to extension of credit is not satisfied) (all of the foregoing obligations,
liabilities and indebtedness are referred to herein collectively as the
"Guarantied Obligations" and each as a "Guarantied Obligation"). Without
limitation of the foregoing, any of the Guarantied Obligations shall be and
remain Guarantied Obligations entitled to the benefit of this Guaranty if the
Collateral Agent, the Purchasers (or any one or more assignees or transferees
thereof) from time to time assign or otherwise transfer all or any portion of
their respective rights and obligations under the Notes, the Term Loan Agreement
or the other Financing Documents, or any other Guarantied Obligations, to any
other Person in accordance therewith. In furtherance of the foregoing, each
Guarantor jointly and severally agrees as follows.
2. Guaranty. Each Guarantor hereby jointly and severally promises to pay
and perform all such Guarantied Obligations immediately upon demand of the
Collateral Agent, the Purchasers or any one or more of them. All payments made
hereunder shall be made by each Guarantor in immediately available funds in
United States Dollars and shall be made without setoff, counterclaim,
withholding, or other deduction of any nature.
3. Obligations Absolute. The obligations of the Guarantors hereunder shall
not be discharged or impaired or otherwise diminished by any failure, default,
omission, or delay, willful or otherwise, by the Collateral Agent, any Purchaser
or Company or any other Obligor on any of the Guarantied Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of any Guarantor or would
otherwise operate as a discharge of any Guarantor as a matter of law or equity.
Each of the Guarantors agree that the Guarantied Obligations will be paid and
performed strictly in accordance with the terms of the Financing Documents.
Without limiting the generality of the foregoing, each Guarantor hereby consents
to, at any time and from time to time, and the joint and several obligations of
each Guarantor hereunder shall not be diminished, terminated, or otherwise
similarly affected by any of the following:
(a) Any lack of genuineness, legality, validity, enforceability or
allowability (in a bankruptcy, insolvency, reorganization or similar
proceeding, or otherwise), or any avoidance or subordination, in whole or
in part, of any Financing Document or any of the Guarantied Obligations and
regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of the Guarantied Obligations, any of the
terms of the Financing Documents, or any rights of the Collateral Agent,
the Purchasers or any other Person with respect thereto;
(b) Any increase, decrease, or change in the amount, nature, type or
purpose of any of the Guarantied Obligations (whether or not contemplated
by the Financing Documents as presently constituted); any change in the
time, manner, method, or place of payment or performance of, or in any
other term of, any of the Guarantied Obligations; any execution or delivery
of any additional Financing Documents; or any amendment, modification or
supplement to, or refinancing or refunding of, any Financing Document or
any of the Guarantied Obligations;
(c) Any failure to assert any breach of or default under any Financing
Document or any of the Guarantied Obligations; any extensions of credit in
excess of the amount committed under or contemplated by the Financing
Documents, or in circumstances in which any condition to such extensions of
credit has not been satisfied; any other exercise or non-exercise, or any
other failure, omission, breach, default, delay, or wrongful action in
connection with any exercise or non-exercise, of any right or remedy
against the Company or any other Person under or in connection with any
Financing Document or any of the Guarantied Obligations; any refusal of
payment or performance of any of the Guarantied Obligations, whether or not
with any reservation of rights against any Guarantor; or any application of
collections (including but not limited to collections resulting from
realization upon any direct or indirect security for the Guarantied
Obligations) to other obligations, if any, not entitled to the benefits of
this Guaranty, in preference to Guarantied Obligations entitled to the
benefits of this Guaranty, or if any collections are applied to Guarantied
Obligations, any application to particular Guarantied Obligations;
(d) Any taking, exchange, amendment, modification, supplement,
termination, subordination, release, loss, or impairment of, or any failure
to protect, perfect, or preserve the value of, or any enforcement of,
realization upon, or exercise of rights, or remedies under or in connection
with, or any failure, omission, breach, default, delay, or wrongful action
by the Collateral Agent, the Purchasers or any other Person in connection
with the enforcement of, realization upon, or exercise of rights or
remedies under or in connection with, or any other action or inaction by
the Collateral Agent, any of the Purchasers or any other Person in respect
of, any direct or indirect security for any of the Guarantied Obligations.
As used in this Guaranty, "direct or indirect security" for the Guarantied
Obligations, and similar phrases, includes any collateral security,
guaranty, suretyship, letter of credit, capital maintenance agreement, put
option, subordination agreement, or other right or arrangement of any
nature providing direct or indirect assurance of payment or performance of
any of the Guarantied Obligations, made by or on behalf of any Person;
(e) Any merger, consolidation, liquidation, dissolution, winding-up,
revocation of charter or other organizational document, or forfeiture, or
other change in, restructuring or termination of the corporate, limited
liability company or other structure or existence of, the Company, any
Guarantor or any other Person; any bankruptcy, insolvency, reorganization
or similar proceeding with respect to the Company, any Guarantor or any
other Person; or any action taken or election made by the Collateral Agent
or the Purchasers (including but not limited to any election under Section
1111(b)(2) of the United States Bankruptcy Code), the Company, any
Guarantor or any other Person in connection with any such proceeding;
(f) Any defense, setoff, or counterclaim which may at any time be
available to or be asserted by the Company, any Guarantor or any other
Person with respect to any Financing Document or any of the Guarantied
Obligations; or any discharge by operation of law or release of the
Company, any Guarantor or any other Person from the performance or
observance of any Financing Document or any of the Guarantied Obligations;
and
(g) Any other event or circumstance, whether similar or dissimilar to
the foregoing, and whether known or unknown, which might otherwise
constitute a defense available to, or limit the liability of, any
Guarantor, a guarantor or a surety, excepting only full, strict, and
indefeasible payment and performance of the Guarantied Obligations in full.
Each Guarantor acknowledges, consents, and agrees that new Guarantors
may join in this Guaranty pursuant to Section 9.2 of the Term Loan Agreement and
each Guarantor affirms that its obligations shall continue hereunder
undiminished.
4. Waivers, etc. Each of the Guarantors hereby waives any defense to or
limitation on its obligations under this Guaranty arising out of or based on any
event or circumstance referred to in Section 3 hereof. Without limitation and to
the fullest extent permitted by applicable law, each Guarantor waives each of
the following:
(a) All notices, disclosures and demand of any nature which otherwise might
be required from time to time to preserve intact any rights against any
Guarantor, including the following: any notice of any event or circumstance
described in Section 3 hereof; any notice required by any law, regulation or
order now or hereafter in effect in any jurisdiction; any notice of nonpayment,
nonperformance, dishonor, or protest under any Financing Document or any of the
Guarantied Obligations; any notice of the incurrence of any Guarantied
Obligation; any notice of any default or any failure on the part of the Company,
any Guarantor or any other Person to comply with any Financing Document or any
of the Guarantied Obligations or any direct or indirect security for any of the
Guarantied Obligations; and any notice of any information pertaining to the
business, operations, condition (financial or otherwise) or prospects of the
Company, any Guarantor or any other Person;
(b) Any right to any marshalling of assets, to the filing of any claim
against the Company, any Guarantor or any other Person in the event of any
bankruptcy, insolvency, reorganization or similar proceeding, or to the exercise
against the Company, any Guarantor or any other Person of any other right or
remedy under or in connection with any Financing Document or any of the
Guarantied Obligations or any direct or indirect security for any of the
Guarantied Obligations; any requirement of promptness or diligence on the part
of the Collateral Agent, the Purchasers or any other Person; any requirement to
exhaust any remedies under or in connection with, or to mitigate the damages
resulting from default under, any Financing Document or any of the Guarantied
Obligations or any direct or indirect security for any of the Guarantied
Obligations; any benefit of any statute of limitations; and any requirement of
acceptance of this Guaranty or any other Financing Document, and any requirement
that any Guarantor receive notice of any such acceptance;
(c) Any defense or other right arising by reason of any law now or
hereafter in effect in any jurisdiction pertaining to election of remedies
(including but not limited to anti-deficiency laws, "one action" laws or the
like), or by reason of any election of remedies or other action or inaction by
the Collateral Agent or the Purchasers (including but not limited to
commencement or completion of any judicial proceeding or nonjudicial sale or
other action in respect of collateral security for any of the Guarantied
Obligations), which results in denial or impairment of the right of the
Collateral Agent or the Purchasers to seek a deficiency against the Company, any
Guarantor or any other Person or which otherwise discharges or impairs any of
the Guarantied Obligations; and
(d) Any and all defenses it may now or hereafter have based on principles
of suretyship, impairment of collateral, or the like.
5. Reinstatement. This Guaranty is a continuing obligation of the
Guarantors and shall remain in full force and effect. Upon indefeasible payment
in full of all Guarantied Obligations, this Guaranty shall terminate; provided,
however, that this Guaranty shall continue to be effective or be reinstated, as
the case may be, any time any payment of any of the Guarantied Obligations is
rescinded, recouped, avoided, or must otherwise be returned or released by the
Collateral Agent or any Purchaser upon or during the insolvency, bankruptcy, or
reorganization of, or any similar proceeding affecting, Company or any Guarantor
or for any other reason whatsoever, all as though such payment had not been made
and was due and owing.
6. Subrogation. No Guarantor shall exercise any rights against Company or
any other Guarantor arising in connection with the Guarantied Obligations
(including rights of subrogation, contribution, and the like) until the
Guarantied Obligations have been indefeasibly paid in full. If any amount shall
be paid to any Guarantor by or on behalf of Company or any other Guarantor by
virtue of any right of subrogation, contribution, or the like, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and shall be
held in trust for the benefit of, the Collateral Agent on behalf of the
Purchasers and shall forthwith be paid to the Collateral Agent on behalf of the
Purchasers to be credited and applied against the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms of the Term Loan
Agreement.
7. No Stay. Without limitation of any other provision of this Guaranty, if
any declaration of default or acceleration or other exercise or condition to
exercise of rights or remedies under or with respect to any Guarantied
Obligation shall at any time be stayed, enjoined, or prevented for any reason
(including but not limited to stay or injunction resulting from the pendency
against the Company, any other Guarantor or any other Person of a bankruptcy,
insolvency, reorganization or similar proceeding), the Guarantors agree that,
for the purposes of this Guaranty and their obligations hereunder, the
Guarantied Obligations shall be deemed to have been declared in default or
accelerated, and such other exercise or conditions to exercise shall be deemed
to have been taken or met, and, to the full extent permitted by law, such stay,
injunction or other impediment shall not be applicable to any Guarantor's
obligations hereunder.
8. Taxes.
(a) No Deductions. All payments made by any Guarantor hereunder or
under any of the other Financing Documents 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 any Purchaser and all
income and franchise taxes of the United States applicable to any Purchaser
(all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If
any Guarantor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any of the other Financing
Documents, (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 (a) such Purchaser
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Guarantor shall make such deductions and
(iii) such Guarantor shall timely pay the full amount deducted to the
relevant tax authority or other authority in accordance with applicable
law.
(b) Stamp Taxes. In addition, each Guarantor 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 of, or otherwise with respect
to, any of the Financing Documents (hereinafter referred to as "Other
Taxes").
(c) Indemnification for Taxes Paid by any Purchaser. Each Guarantor
shall indemnify each Purchaser 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 any
Purchaser 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 a Purchaser makes written demand
therefor.
(d) Certificate. Within 30 days after the date of any payment of any
Taxes by any Guarantor, such Guarantor shall furnish to each Purchaser, the
original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment by such Guarantor, such
Guarantor shall, if so requested by a Purchaser, provide a certificate of
an officer of such Guarantor to that effect.
(e) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due under any of the Financing Documents in any
currency (the "Original Currency") into another currency (the "Other
Currency"), each Guarantor hereby agrees, to the fullest extent permitted
by law, that the rate of exchange used shall be that at which in accordance
with normal banking procedures each Purchaser could purchase the Original
Currency with the Other Currency after any premium and costs of exchange on
the Business Day preceding that on which final judgment is given.
(f) The obligation of each Guarantor in respect of any sum due from
such Guarantor to any Purchaser under any of the Financing Documents shall,
notwithstanding any judgment in an Other Currency, whether pursuant to a
judgment or otherwise, be discharged only to the extent that, on the
business day (being a day on which it is open for business at its principal
office in the United States) following receipt by any Purchaser of any sum
adjudged to be so due in such Other Currency, such Purchaser may in
accordance with normal banking procedures purchase the Original Currency
with such Other Currency. If the amount of the Original Currency so
purchased is less than the sum originally due to such Purchaser in the
Original Currency, each Guarantor agrees, as a separate obligation and
notwithstanding any such judgment or payment, to indemnify such Purchaser
against such loss.
9. Notices. Each Guarantor agrees that all notices, statements, requests,
demands and other communications under this Guaranty shall be given to such
Guarantor as provided in Section 18 of, or in a Guarantor Joinder given under,
the Term Loan Agreement and in the manner provided in Section 18 of the Term
Loan Agreement. The Collateral Agent and the Purchasers may rely on any notice
(whether or not made in a manner contemplated by this Guaranty) purportedly made
by or on behalf of a Guarantor, and the Collateral Agent and the Purchasers
shall have no duty to verify the identity or authority of the Person giving such
notice.
10. Counterparts; Telecopy Signatures. This Guaranty may be executed in any
number of counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. Each Guarantor acknowledges and agrees that a telecopy transmission
to the Collateral Agent of signature pages hereof purporting to be signed on
behalf of any Guarantor shall constitute effective and binding execution and
delivery hereof by such Guarantor.
11. Setoff, Default Payments by Company.
(a) In the event that at any time any obligation of the Guarantors now
or hereafter existing under this Guaranty shall have become due and
payable, the Purchasers, shall have the right from time to time, without
notice to any Guarantor, to set off against and apply to such due and
payable amount any obligation of any nature of any Purchaser, or any
subsidiary or affiliate of any Purchaser, to any Guarantor, including but
not limited to all deposits (whether time or demand, general or special,
provisionally credited or finally credited, however evidenced) now or
hereafter maintained by any Guarantor with such Purchaser or any subsidiary
or affiliate thereof. Such right shall be absolute and unconditional in all
circumstances and, without limitation, shall exist whether or not the
Collateral Agent or the Purchasers shall have given any notice or made any
demand under this Guaranty or under such obligation to the Guarantor,
whether such obligation to the Guarantor is absolute or contingent, matured
or unmatured (it being agreed that the Purchasers may deem such obligation
to be then due and payable at the time of such setoff), and regardless of
the existence or adequacy of any collateral, guaranty, or other direct or
indirect security or right or remedy available to the Collateral Agent or
the Purchasers. The rights of the Purchasers under this Section are in
addition to such other rights and remedies (including, without limitation,
other rights of setoff and banker's lien) which the Purchasers may have,
and nothing in this Guaranty or in any other Financing Document shall be
deemed a waiver of or restriction on the right of setoff or banker's lien
of the Purchasers. Each of the Guarantors hereby agree that, to the fullest
extent permitted by law, any affiliate or subsidiary of the Purchasers and
any holder of a participation in any obligation of any Guarantor under this
Guaranty, shall have the same rights of setoff as the Purchasers as
provided in this Section (regardless whether such affiliate or participant
otherwise would be deemed a creditor of the Guarantor).
(b) Upon the occurrence and during the continuation of any default
under any Guarantied Obligation, if any amount shall be paid to any
Guarantor by or for the account of Company, such amount shall be held in
trust for the benefit of each Purchaser and shall forthwith be paid to the
Collateral Agent on behalf of the Purchasers to be credited and applied to
the Guarantied Obligations when due and payable.
12. Construction. The section and other headings contained in this Guaranty
are for reference purposes only and shall not affect interpretation of this
Guaranty in any respect. This Guaranty has been fully negotiated between the
applicable parties, each party having the benefit of legal counsel, and
accordingly neither any doctrine of construction of guaranties or suretyships in
favor of the guarantor or surety, nor any doctrine of construction of
ambiguities in agreement or instruments against the party controlling the
drafting thereof, shall apply to this Guaranty.
13. Successors and Assigns. This Guaranty shall be binding upon each
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by the Purchasers and their successors and assigns. Without
limitation of the foregoing, the Collateral Agent and any of the Purchasers (and
any successive assignee or transferee), from time to time may assign or
otherwise transfer all or any portion of its rights or obligations under the
Financing Documents, or any other Guarantied Obligations, to any other person,
in accordance with the Term Loan Agreement and such Guarantied Obligations
(including any Guarantied Obligations resulting from extension of credit by such
other Person under or in connection with the Financing Documents) shall be and
remain Guarantied Obligations entitled to the benefit of this Guaranty, and to
the extent of its interest in such Guarantied Obligations such other Person
shall be vested with all the benefits in respect thereof granted to the
Purchasers in this Guaranty or otherwise.
14. Intentionally Omitted.
15. Severability; Modification to Conform to Law.
(a) It is the intention of the parties that this Guaranty be
enforceable to the fullest extent permissible under applicable law, but
that the unenforceability (or modification to conform to such law) of any
provision or provisions hereof shall not render unenforceable, or impair,
the remainder hereof. If any provision in this Guaranty shall be held
invalid or unenforceable in whole or in part in any jurisdiction, this
Guaranty shall, as to such jurisdiction, be deemed amended to modify or
delete, as necessary, the offending provision or provisions and to alter
the bounds thereof in order to render it or them valid and enforceable to
the maximum extent permitted by applicable law, without in any manner
affecting the validity or enforceability of such provision or provisions in
any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
(b) Without limitation of the preceding subsection (a), to the extent
that applicable law (including applicable laws pertaining to fraudulent
conveyance or fraudulent or preferential transfer) otherwise would render
the full amount of the Guarantor's obligations hereunder invalid, voidable,
or unenforceable on account of the amount of a Guarantor's aggregate
liability under this Guaranty, then, notwithstanding any other provision of
this Guaranty to the contrary, the aggregate amount of such liability
shall, without any further action by the Purchasers or such Guarantor or
any other Person, be automatically limited and reduced to the highest
amount which is valid and enforceable as determined in such action or
proceeding, which (without limiting the generality of the foregoing) may be
an amount which is equal to the greater of:
(A) the fair consideration actually received by such Guarantor
under the terms and as a result of the Financing Documents and the
value of the benefits described in Section 18 (b) hereof, including
(and to the extent not inconsistent with applicable federal and state
laws affecting the enforceability of guaranties) distributions,
commitments, and advances made to or for the benefit of such Guarantor
with the proceeds of any credit extended under the Financing
Documents, or
(B) the excess of (1) the amount of the fair value of the assets
of such Guarantor as of the date of this Guaranty as determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors as in effect on the date
hereof, over (2) the amount of all liabilities of such Guarantor as of
the date of this Guaranty, also as determined on the basis of
applicable federal and state laws governing the insolvency of debtors
as in effect on the date hereof.
(c) Notwithstanding anything to the contrary in this Section or
elsewhere in this Guaranty, this Guaranty shall be presumptively valid and
enforceable to its full extent in accordance with its terms, as if this
Section (and references elsewhere in this Guaranty to enforceability to the
fullest extent permitted by law) were not a part of this Guaranty, and in
any related litigation the burden of proof shall be on the party asserting
the invalidity or unenforceability of any provision hereof or asserting any
limitation on any Guarantor's obligations hereunder as to each element of
such assertion.
16. Additional Guarantors. At any time after the initial execution and
delivery of this Guaranty to the Collateral Agent and the Purchasers, additional
Persons may become parties to this Guaranty and thereby acquire the duties and
rights of being Guarantors hereunder by executing and delivering to the
Collateral Agent and the Purchasers a Guarantor Joinder pursuant to the Term
Loan Agreement. No notice of the addition of any Guarantor shall be required to
be given to any pre-existing Guarantor and each Guarantor hereby consents
thereto.
17. Joint and Several Obligations. Each of the obligations of each and
every Guarantor under this Guaranty are joint and several. The Purchasers may,
in their sole discretion, elect to enforce or cause the Collateral Agent to
enforce this Guaranty against any Guarantor without any duty or responsibility
to pursue any other Guarantor and such an election by the Purchasers shall not
be a defense to any action the Purchasers may elect to take against any
Guarantor. Each of the Purchasers hereby reserves all rights against each
Guarantor.
18. Receipt of Term Loan Agreement, Other Financing Documents, Benefits.
(a) Each Guarantor hereby acknowledges that it has received a copy of
the Term Loan Agreement and the other Financing Documents and each
Guarantor certifies that the representations and warranties made therein
with respect to such Guarantor are true and correct. Further, each
Guarantor acknowledges and agrees to perform, comply with, and be bound by
all of the provisions of the Term Loan Agreement and the other Financing
Documents.
(b) Each Guarantor hereby acknowledges, represents, and warrants that
it receives synergistic benefits by virtue of its affiliation with Company
and the other Guarantors and that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Term Loan
Agreement and that such benefits, together with the rights of contribution
and subrogation that may arise in connection herewith are a reasonably
equivalent exchange of value in return for providing this Guaranty.
19. Miscellaneous. (a) Generality of Certain Terms. As used in this
Guaranty, the terms "hereof," "herein," and terms of similar import refer to
this Guaranty as a whole and not to any particular term or provision; the term
"including," as used herein, is not a term of limitation and means "including
without limitation." (b) Amendments, Waivers. No amendment to or waiver of any
provision of this Guaranty, and no consent to any departure by any Guarantor
herefrom, shall in any event be effective unless in a writing manually signed by
or on behalf of the Purchasers. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
delay or failure of the Collateral Agent or the Purchasers in exercising any
right or remedy under this Guaranty shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies of Collateral Agent and the Purchasers under this Guaranty
are cumulative and not exclusive of any other rights or remedies available
hereunder, under any other agreement or instrument, by law, or otherwise. (c)
Telecommunications. The Collateral Agent and each Purchaser shall be entitled to
rely on the authority of any individual making any telecopy or telephonic
notice, request, or signature without the necessity of receipt of any
verification thereof. (d) Expenses. Each Guarantor unconditionally agrees to pay
all reasonable costs and expenses, including reasonable attorney's fees incurred
by Collateral Agent or the Purchasers in enforcing this Guaranty against any
Guarantor and each Guarantor shall pay and indemnify the Collateral Agent and
each Purchaser for, and hold it harmless from and against, any and all
obligations, liabilities, losses, damages, reasonable costs, expenses (including
disbursements and reasonable legal fees of counsel to Collateral Agent or any
Purchaser), penalties, judgments, suits, actions, claims, and disbursements
imposed on, asserted against, or incurred by Collateral Agent or any Purchaser
(A) relating to the preparation, negotiation, execution, administration, or
enforcement of or collection under this Guaranty or any document, instrument, or
agreement relating to any of the Obligations, including in any bankruptcy,
insolvency, or similar proceeding in any jurisdiction or political subdivision
thereof; (B) relating to any amendment, modification, waiver, or consent
hereunder or relating to any telecopy or telephonic transmission purporting to
be by any Guarantor or the Company; (C) in any way relating to or arising out of
this Guaranty, or any document, instrument, or agreement relating to any of the
Guarantied Obligations, or any action taken or omitted to be taken by the
Collateral Agent or any Purchaser hereunder, and including those arising
directly or indirectly from the violation or asserted violation by any Guarantor
or the Company or the Collateral Agent or any Purchaser of any law, rule,
regulation, judgment, order, or the like of any jurisdiction or political
subdivision thereof (including those relating to environmental protection,
health, labor, importing, exporting, or safety) and regardless whether asserted
by any governmental entity or any other Person except for any which arises out
of the gross negligence or willful misconduct of the Collateral Agent or any
Purchaser. (e) Prior Understandings. This Guaranty, the Term Loan Agreement and
the other Financing Documents constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede any and all other
prior and contemporaneous understandings and agreements. (f) Survival. All
representations and warranties of the Guarantors made in connection with this
Guaranty shall survive, and shall not be waived by, the execution and delivery
of this Guaranty, any investigation by or knowledge of the Collateral Agent or
the Purchasers, any extension of credit, or any other event or circumstance
whatsoever.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 OF CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP]
IN WITNESS WHEREOF, each Guarantor intending to be legally bound, has
executed this Guaranty as of the date first above written with the intention
that this Guaranty shall constitute a sealed instrument.
WESTERN ENERGY COMPANY
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
NORTHWESTERN RESOURCES CO.
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
DAKOTA WESTMORELAND CORPORATION
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
WCCO-KRC ACQUISITION CORP.
By: /s/ Robert J. Jaeger (SEAL)
--------------------------------------------
Name: Robert J. Jaeger
Title: Vice President
EXHIBIT 99.8
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated as of April 27, 2001,
is entered into by and among each of the undersigned and each of the other
Persons which become Guarantors under the Credit Agreement (defined below) from
time to time, (each a "Debtor" and collectively the "Debtors"), and FIRSTAR
BANK, N.A., as Collateral Agent (the "Agent") for the Banks (as defined below);
WITNESSETH THAT:
WHEREAS, the Debtors are (or will be with respect to after-acquired
property) the legal and beneficial owners and the holders of the Collateral (as
defined in Section 1 hereof); and
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter
from time to time be restated, amended, modified or supplemented, the "Credit
Agreement") of even date herewith by and among PNC Bank, National Association,
as agent thereunder ("PNC"), the Banks now or hereafter party thereto (the
"Banks"), the Guarantors now or hereafter party thereto and Westmoreland Mining
LLC, a Delaware limited liability company (the "Borrower"), PNC and the Banks
have agreed to make certain loans to the Borrower; and
WHEREAS, the obligation of the Banks to make loans under the Credit
Agreement is subject to the condition, among others, that the Debtors secure
their obligations and the obligations of the Borrower to the Banks under the
Credit Agreement and the other Loan Documents in the manner set forth herein;
and
WHEREAS, each Debtor acknowledges its receipt of benefit, whether
direct or indirect, from the Credit Agreement which is being made available,
either directly or indirectly, to each Debtor and for the sale and purchase of
certain notes under the Term Loan Agreement, concurrently with the closing of
the Credit Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
1. Terms which are defined in the Credit Agreement and not otherwise
defined herein are used herein as defined therein. The following words and terms
shall have the following meanings, respectively, unless the context hereof
otherwise clearly requires:
(a) "Code" means the Uniform Commercial Code of each relevant state as
in effect on the date hereof and as the same may subsequently be amended
from time to time, the substantive provisions of which are applicable to
any of the property of any Debtor in which the Agent for the benefit of PNC
and the Banks is granted a security interest pursuant to this Agreement.
(b) "Collateral" means all of each Debtor's right, title and interest
in, to and under the following described property of such Debtor (each
capitalized term used in this Section 1(b) shall have in this Agreement the
meaning given to it by Article 9 of the Code as in effect in New York):
(i) all now existing and hereafter acquired and arising Accounts,
General Intangibles, Chattel Paper, Documents, Instruments, Investment
Property, Letters of Credit, advices of credit, Equipment, and
Inventory, all Products of and Accessions to the foregoing and all
Proceeds of all of the foregoing (including without limitation all
insurance policies and proceeds thereof); and
(ii) to the extent, if any, not included in clause (i) above,
each and every other item of personal property and fixtures, both
those that are now owned and those that hereafter arise or are
acquired, regardless of whether Article 9 of the Code is applicable to
any extent to the creation, perfection or enforcement of Liens thereon
or therein.
Without limiting the foregoing, Collateral includes all business records and
information, including computer tapes and other storage media containing the
same and computer programs and software (including without limitation, source
code, object code and related manuals and documentation and all licenses to use
such software) for accessing and manipulating such information. Notwithstanding
the foregoing provisions of Section 1(b), (i) this Agreement shall not be deemed
to be an assignment of any agreements, contracts or licenses to the extent the
terms of such agreements, contracts or licenses would be violated by such
assignment and (ii) the term "Collateral" shall not include, any agreements,
contracts or licenses which are now or hereafter held by the Debtor to the
extent that (a) such agreements, contracts or licenses are not capable of being
encumbered as a matter of law or (b) an encumbrance thereon or security interest
therein without the consent of the other applicable party thereto results in a
violation, breach, default or termination of such agreement, contract or
license, and such consent has not been obtained; provided, however, that the
term "Collateral" shall include such otherwise excluded agreements, contracts or
licenses once consent has been obtained and any and all proceeds thereof that
might have theretofore been excluded from such grant of a security interest. It
is understood that each Debtor shall use commercially reasonable efforts to
exclude from all hereafter acquired material agreements, contracts and licenses
restrictions on the encumbrancing of the same or granting of security interests
therein.
(c) "Debt" means, collectively, all now existing and hereafter arising
Indebtedness and Obligations of the Borrower and any other Debtor to PNC,
the Banks or any Affiliate of any Bank under the Credit Agreement and other
Loan Documents, including without limitation, all Indebtedness and
Obligations, whether of principal, interest, fees, expenses or otherwise,
of the Borrower and any other Debtor to PNC, the Banks or any Affiliate of
any Bank now existing or hereafter incurred under the Credit Agreement or
the Notes), or any of the other Loan Documents referred to therein as any
of the same or any one or more of them may from time to time be amended,
restated, modified or supplemented, together with any and all extensions,
renewals, refinancings or refundings thereof in whole or in part.
2. As security for the due and punctual payment and performance of the Debt
in full, each Debtor hereby agrees that the Agent, PNC and the Banks and any
Affiliate of any Bank shall have, and each Debtor hereby grants to and creates
in favor of the Agent for the benefit of PNC, the Banks and any Affiliate of any
Bank, a first priority security interest under the Code in and to the Collateral
subject only to Permitted Liens of the type described in clauses (i) through
(iii), (v) through (vii) and (ix) of the definition of that term set forth in
the Credit Agreement. Without limiting the generality of Section 4 below, each
Debtor further agrees that with respect to each item of Collateral as to which
(i) the creation of a valid and enforceable security interest is not governed
exclusively by the Code or (ii) the perfection of a valid and enforceable
security interest therein under the Code cannot be accomplished either by the
Agent taking possession thereof or by the filing in appropriate locations of
appropriate Code financing statements executed by such Debtor, such Debtor will
at its expense execute and deliver to the Agent such documents, agreements,
notices, assignments and instruments and take such further actions as may be
requested by the Agent from time to time for the purpose of creating a valid and
perfected first priority Lien on such item, subject only to Permitted Liens,
enforceable against such Debtor and all third parties to secure the Debt.
3. Except as otherwise provided or permitted in the Credit Agreement and
without limiting any provisions thereof, each Debtor represents and warrants to
the Agent and the Banks that (a) each Debtor has good and marketable title to
its Collateral, (b) except for the security interest granted to and created in
favor of the Agent for the benefit of PNC and the Banks hereunder and Permitted
Liens, all the Collateral is free and clear of any Lien (c) each Debtor will
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, (d) each Account and General
Intangible is genuine and enforceable in accordance with its terms and such
Debtor will defend the same against all claims, demands, setoffs and
counterclaims at any time asserted, (e) at the time any Account becomes subject
to this Agreement, such Account will be a good and valid Account representing a
bona fide sale of goods or services by such Debtor and such goods will have been
shipped to the respective account debtors or the services will have been
performed for the respective account debtors, and no such Account will be
subject to any claim for credit, allowance or adjustment by an account debtor or
any setoff, defense or counterclaim, and (f) no consent are necessary for the
granting of the security interest in the Collateral by such Debtor to the
Collateral Agent.
4. Each Debtor will faithfully preserve and protect the Agent's security
interest in the Collateral as a prior perfected security interest under the
Code, superior and prior to the rights of all third Persons, except for
Permitted Liens of the type described in clauses (i) through (iii), (v) through
(vii) and ix) of the definition of that term in the Credit Agreement, and will
do all such other acts and things and will, upon reasonable request therefor by
the Agent, execute, deliver, file and record all such other documents and
instruments, including, without limitation, financing statements and extensions
thereof, security agreements, assignments and documents and powers of attorney
with respect to the Collateral, and pay all filing fees and taxes related
thereto, as the Agent in its reasonable discretion may deem necessary or
advisable from time to time in order to attach, continue, preserve, perfect and
protect said security interest; and each Debtor hereby irrevocably appoints the
Agent, its officers, employees and agents, or any of them, as attorneys-in-fact
for such Debtor to execute, deliver, file and record such items for such Debtor
and in such Debtor's name, place and stead. This power of attorney, being
coupled with an interest, shall be irrevocable for the life of this Agreement.
5. Each Debtor covenants and agrees that:
(a) it will defend the Agent's, PNC's and the Banks' right, title and
security interest in and to the Collateral and the proceeds thereof against
the claims and demands of all Persons whomsoever, other than any Person
claiming a right in the Collateral pursuant to an agreement between such
Person and the Agent;
(b) it will not suffer or permit to exist on any Collateral any Lien
except for Permitted Liens;
(c) it will not take or omit to take any action, the taking or the
omission of which might reasonably be expected to result in a material
alteration or impairment of the Collateral or of the Agent's rights under
this Agreement;
(d) it will not sell, assign or otherwise dispose of any portion of
the Collateral except as permitted in Section 8.2.7 of the Credit
Agreement;
(e) it will (i) obtain and maintain sole and exclusive possession of
the Collateral, (ii) keep the Collateral and all records pertaining thereto
at the locations specified on the Security Interest Data Summary attached
as Schedule A hereto, unless it shall have given the Agent prior notice and
taken any action reasonably requested by the Agent to maintain its security
interest therein, (iii) notify the Agent if an Account becomes evidenced or
secured by an Instrument or Chattel Paper and deliver to the Agent upon the
Agent's request therefor all Collateral consisting of Chattel Paper
immediately upon such Debtor's receipt of a request therefor, and (iv) keep
materially accurate and complete books and records concerning the
Collateral and such other books and records required in accordance with the
Credit Agreement;
(f) it will promptly furnish to the Agent such information and
documents relating to the Collateral as the Agent may reasonably request,
including, without limitation, all invoices, Documents, contracts, Chattel
Paper, Instruments and other writings pertaining to such Debtor's contracts
or the performance thereof, all of the foregoing to be certified upon
request of the Agent by an authorized officer of such Debtor; and
(g) it shall immediately notify the Agent if any account arises out of
contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and take any
steps required by the Agent so that all monies due under such contract
shall be assigned to the Agent and notice of the assignment given to and
acknowledged by the appropriate government agency or authority under the
Federal Assignment of Claims Act.
6. Each Debtor assumes full responsibility for taking any and all necessary
steps to preserve the Agent's, PNC's and the Banks' rights with respect to the
Collateral against all Persons other than anyone asserting rights in respect of
a Permitted Lien.
7. (a) At any time and from time to time whether or not an Event of
Default then exists and without prior notice to or consent of any Debtor,
the Agent may at its option take such actions as the Agent deems
appropriate (i) to attach, perfect, continue, preserve and protect the
Agent's, PNC's and the Banks' prior security interest in the Collateral,
and/or (ii) subject to the provisions of Section 8.1.6 of the Credit
Agreement, to inspect, audit and verify the Collateral, including reviewing
all of such Debtor's books and records and copying and making excerpts
therefrom, provided that prior to an Event of Default or a Potential
Default, the same is done with advance notice during normal business hours
to the extent access to such Debtor's premises is required, and (iii) to
add all liabilities, obligations, reasonable costs and expenses reasonably
incurred in connection with the foregoing clauses (i) and (ii) to the Debt,
to be paid by the Debtors to the Agent for the benefit of PNC and the Banks
upon demand; and
(b) At any time and from time to time after an Event of Default exists
and is continuing and without prior notice to or consent of any Debtor, the
Agent may at its option take such action as the Agent deems appropriate (i)
to maintain, repair, protect and insure the Collateral, and/or (ii) to
perform, keep, observe and render true and correct any and all covenants,
agreements, representations and warranties of any Debtor hereunder, and
(iii) to add all liabilities, obligations, costs and expenses reasonably
incurred in connection with the foregoing clauses (i) and (ii) to the Debt,
to be paid by any Debtor to the Agent for the benefit of PNC and the Banks
upon demand.
8. After there exists any Event of Default under the Credit Agreement:
(a) The Agent shall have and may exercise all the rights and remedies
available to a secured party under the Code in effect at the time, and such
other rights and remedies as may be provided by Law and as set forth below,
including without limitation to take over and collect any or all of any
Debtor's Collateral, and to this end each Debtor hereby appoints the Agent,
its officers, employees and agents, as its irrevocable, true and lawful
attorneys-in-fact with all necessary power and authority to (i) take
possession immediately, with or without notice, demand, or legal process,
of any of or all of the Collateral wherever found, and for such purposes,
enter upon any premises upon which the Collateral may be found and remove
the Collateral therefrom, (ii) require any Debtor to assemble the
Collateral and deliver it to the Agent or to any place designated by the
Agent at such Debtor's expense, (iii) receive, open and dispose of all mail
addressed to any Debtor and notify postal authorities to change the address
for delivery thereof to such address as the Agent may designate, (iv)
demand payment of all of the Collateral except Equipment and Inventory, (v)
enforce payment of all of the Collateral except Equipment and Inventory by
legal proceedings or otherwise, (vi) exercise all of any Debtor's rights
and remedies with respect to the collection of all of the Collateral except
Equipment and Inventory, (vii) settle, adjust, compromise, extend or renew
all of the Collateral except Equipment and Inventory, (viii) settle, adjust
or compromise any legal proceedings brought to collect all of the
Collateral except Equipment and Inventory, (ix) to the extent permitted by
applicable Law, sell or assign all of the Collateral except Equipment and
Inventory upon such terms, for such amounts and at such time or times as
the Agent deems advisable, (x) discharge and release all of the Collateral
except Equipment and Inventory, (xi) take control, in any manner, of any
item of payment or proceeds from any account debtor, (xii) prepare, file
and sign any Debtor's name on any Proof of Claim in Bankruptcy or similar
document against any account debtor, (xiii) prepare, file and sign any
Debtor's name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with all of the Collateral except Equipment
and Inventory, (xiv) do all acts and things necessary, in the Agent's sole
discretion, to fulfill any Debtor's obligations under the Loan Documents,
(xv) endorse the name of any Debtor upon any check, Chattel Paper,
Document, Instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to all of the Collateral except Equipment;
(xvi) use any Debtor's stationery and sign such Debtor's name to
verifications of all of the Collateral except Equipment and Inventory and
notices thereof to account debtors; (xvii) access and use the information
recorded on or contained in any data processing equipment or computer
hardware or software relating to the Collateral or proceeds thereof to
which any Debtor has access, (xviii) demand, sue for, collect, compromise
and give acquittances for any and all Collateral, (xix) prosecute, defend
or compromise any action, claim or proceeding with respect to any of the
Collateral, and (xx) take such other action as the Agent may deem
appropriate, including extending or modifying the terms of payment of any
Debtor's debtors. This power of attorney, being coupled with an interest,
shall be irrevocable for the life of this Agreement. To the extent
permitted by Law, each Debtor hereby waives all claims of damages due to or
arising from or connected with any of the rights or remedies exercised by
the Agent pursuant to this Agreement, except claims for physical damage to
the Collateral arising from gross negligence or willful misconduct by the
Agent.
(b) The Agent shall have the right to lease, sell or otherwise dispose
of all or any of the Collateral at public or private sale or sales for
cash, credit or any combination thereof, with such notice as may be
required by Law (it being agreed by each Debtor that, in the absence of any
contrary requirement of Law, ten (10) business days' prior notice of a
public or private sale of Collateral shall be deemed reasonable notice), in
lots or in bulk, for cash or on credit, all as the Agent, in its sole
discretion, may deem advisable. Such sales may be adjourned from time to
time with or without notice. The Agent shall have the right to conduct such
sales on any Debtor's premises or elsewhere and shall have the right to use
any Debtor's premises without charge for such sales for such time or times
as the Agent may see fit. The Agent may purchase all or any part of the
Collateral at public or, if permitted by Law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Debt.
9. The security interest in each Debtor's Collateral granted to and created
in favor of the Agent by this Agreement shall be for the benefit of the Agent,
PNC and the Banks. Each of the rights, privileges, and remedies provided to the
Agent hereunder or otherwise by Law with respect to any Debtor's Collateral
shall be exercised by the Agent only for its own benefit and the benefit of PNC
and the Banks, and any of such Debtor's Collateral or proceeds thereof held or
realized upon at any time by the Agent shall be applied as set forth in Section
9.2.5 of the Credit Agreement. Each Debtor shall remain liable to PNC and the
Banks for and shall pay to the Agent for the benefit of PNC and the Banks any
deficiency which may remain after such sale or collection.
10. If the Agent repossesses or seeks to repossess any of the Collateral
pursuant to the terms hereof because of the occurrence of an Event of Default,
then to the extent it is commercially reasonable for the Agent to store any
Collateral on any of any Debtor's premises, each Debtor hereby agrees to lease
to the Agent on a month-to-month tenancy for a period not to exceed one hundred
twenty (120) days at the Agent's election, at a rental of One Dollar ($1.00) per
month, the premises on which the Collateral is located, provided it is located
on premises owned or leased by such Debtor.
11. Upon indefeasible payment in full of the Debt and termination of the
Credit Agreement, this Agreement shall terminate and be of no further force and
effect, and the Agent shall thereupon promptly return to a Debtor such of the
Collateral and such other documents delivered by such Debtor hereunder as may
then be in the Agent's possession. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
12. No failure or delay on the part of the Agent in exercising any right,
remedy, power or privilege hereunder shall operate as a waiver thereof or of any
other right, remedy, power or privilege of the Agent hereunder; nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. No waiver of a single Event of Default shall
be deemed a waiver of a subsequent Event of Default. All waivers under this
Agreement must be in writing. The rights and remedies of the Agent under this
Agreement are cumulative and in addition to any rights or remedies which it may
otherwise have, and the Agent may enforce any one or more remedies hereunder
successively or concurrently at its option.
13. All notices, statements, requests and demands given to or made upon
either party hereto in accordance with the provisions of this Agreement shall be
given or made as provided in Section 11.6 of the Credit Agreement.
14. Each Debtor agrees that as of the date hereof, all information
contained on the Security Interest Data Schedule attached hereto as Schedule A
is accurate and complete and contains no omission or misrepresentation. Each
Debtor shall promptly notify the Agent of any changes in the information set
forth thereon.
15. Each Debtor acknowledges that the provisions hereof giving the Agent
rights of access to books, records and information concerning the Collateral and
such Debtor's operations and providing the Agent access to such Debtor's
premises are intended to afford the Agent with immediate access to current
information concerning such Debtor and its activities, including without
limitation, the value, nature and location of the Collateral so that the Agent
can, among other things, make an appropriate determination after the occurrence
of an Event of Default, whether and when to exercise its other remedies
hereunder and at Law, including without limitation, instituting a replevin
action should any Debtor refuse to turn over any Collateral to the Agent. Each
Debtor further acknowledges that should such Debtor at any time fail to promptly
provide such information and access to the Agent, each Debtor acknowledges that
the Agent would have no adequate remedy at Law to promptly obtain the same. Each
Debtor agrees that the provisions hereof may be specifically enforced by the
Agent and waives any claim or defense in any such action or proceeding that the
Agent has an adequate remedy at Law.
16. This Agreement shall be binding upon and inure to the benefit of the
Agent, PNC, the Banks and their respective successors and assigns, and each
Debtor and each of its respective successors and assigns, except that no debtor
may assign or transfer such Debtor's obligations hereunder or any interest
herein.
17. This Agreement shall be deemed to be a contract under the laws of the
State of New York and for all purposes shall be governed by and construed and
enforced in accordance with the laws of said State.
18. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall not invalidate the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 2 TO SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement as of the day and
year first above set forth.
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: President
WESTERN ENERGY COMPANY
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
NORTHWESTERN RESOURCES CO.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
DAKOTA WESTMORELAND CORPORATION
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
WCCO-KRC ACQUISITION CORP.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
[SIGNATURE PAGE 2 OF 2 TO SECURITY AGREEMENT]
FIRSTAR BANK, N.A., as Collateral Agent
By: /s/ James Moll
----------------------------------
Name: James Moll
Title: Vice President
SCHEDULE A
TO
SECURITY AGREEMENT
SECURITY INTEREST DATA SUMMARY
1. The chief executive office of each respective Debtor is located at:
- ----------------------------------- --------------------------------------------
DEBTOR EXECUTIVE OFFICE
- ----------------------------------- --------------------------------------------
Westmoreland Mining LLC 490 North 31st Street
Suite 308
Billings, Montana 59101
- ----------------------------------- --------------------------------------------
Western Energy Company Castle Rock Road
P.O. Box 99
Colstrip, Montana 59323-0099
- ----------------------------------- --------------------------------------------
Northwestern Resources Co. P.O. Box 915
Jewett, Texas 75846-0915
- ----------------------------------- --------------------------------------------
Dakota Westmoreland Corp. Beulah Mine
P.O. Box 39
Beulah, North Dakota 58523-0039
- ----------------------------------- --------------------------------------------
WCCO-KRC Acquisition Corp. Castle Rock Road
P.O. Box 99
Colstrip, Montana 59323-0099
- ----------------------------------- --------------------------------------------
2. Each Debtor's true and full name is listed above: Each Debtor uses no
trade names or fictitious names.
3. All of each Debtor's personal property which has not been delivered to
the Agent pursuant to the terms of this Agreement or the Term Loan Agreement is
now, and will be at all future times, located at such Debtor's chief executive
office as described in Paragraph 1 above, except as specified below:
Westmoreland Mining LLC - None
Western Energy Company - None
Northwestern Resources Co. - None
Dakota Westmoreland Corp. - None
WCCO-KRC Acquisition Corp. - None
EXHIBIT 99.9
- ------------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated as of April 27, 2001,
is entered into by and among each of the undersigned and each of the other
Persons which become Guarantors under the Term Loan Agreement (defined below)
from time to time, (each a "Debtor" and collectively the "Debtors"), and FIRSTAR
BANK, N.A., as Collateral Agent (the "Agent") for the Purchasers (as defined
below);
WITNESSETH THAT:
WHEREAS, the Debtors are (or will be with respect to after-acquired
property) the legal and beneficial owners and the holders of the Collateral (as
defined in Section 1 hereof); and
WHEREAS, pursuant to that certain Term Loan Agreement (as it may
hereafter from time to time be restated, amended, modified or supplemented, the
"Term Loan Agreement") of even date herewith by and among the Purchasers named
in Schedule A attached thereto (together with the holders from time to time of
the Notes referred to therein, herein collectively referred to as the
"Purchasers"), the Guarantors now or hereafter party thereto and Westmoreland
Mining LLC, a Delaware limited liability company (the "Company"), the Purchasers
have agreed to purchase certain Notes of the Company; and
WHEREAS, the obligation of the Purchasers to acquire the Notes under
the Term Loan Agreement is subject to the condition, among others, that the
Debtors secure their obligations and the obligations of the Company to the
Purchasers under the Term Loan Agreement and the other Financing Documents in
the manner set forth herein; and
WHEREAS, each Debtor acknowledges its receipt of benefit, whether
direct or indirect, from the sale and purchase of the Notes under the Term Loan
Agreement and from certain revolving credit facilities which are being made
available, either directly or indirectly, to each Debtor concurrently with the
closing of the Term Loan Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
1. Terms which are defined in the Term Loan Agreement and not otherwise
defined herein are used herein as defined therein. The following words and terms
shall have the following meanings, respectively, unless the context hereof
otherwise clearly requires:
(a) "Code" means the Uniform Commercial Code of each relevant state as
in effect on the date hereof and as the same may subsequently be amended
from time to time, the substantive provisions of which are applicable to
any of the property of any Debtor in which the Agent for the benefit of the
Purchasers is granted a security interest pursuant to this Agreement.
(b) "Collateral" means all of each Debtor's right, title and interest
in, to and under the following described property of such Debtor (each
capitalized term used in this Section 1(b) shall have in this Agreement the
meaning given to it by Article 9 of the Code as in effect in New York):
(i) all now existing and hereafter acquired and arising Accounts,
General Intangibles, Chattel Paper, Documents, Instruments, Investment
Property, Letters of Credit, advices of credit, Equipment, and
Inventory, all Products of and Accessions to the foregoing and all
Proceeds of all of the foregoing (including without limitation all
insurance policies and proceeds thereof); and
(ii) to the extent, if any, not included in clause (i) above,
each and every other item of personal property and fixtures, both
those that are now owned and those that hereafter arise or are
acquired, regardless of whether Article 9 of the Code is applicable to
any extent to the creation, perfection or enforcement of Liens thereon
or therein.
Without limiting the foregoing, Collateral includes all business records and
information, including computer tapes and other storage media containing the
same and computer programs and software (including without limitation, source
code, object code and related manuals and documentation and all licenses to use
such software) for accessing and manipulating such information. Notwithstanding
the foregoing provisions of Section 1(b), (i) this Agreement shall not be deemed
to be an assignment of any agreements, contracts or licenses to the extent the
terms of such agreements, contracts or licenses would be violated by such
assignment and (ii) the term "Collateral" shall not include, any agreements,
contracts or licenses which are now or hereafter held by the Debtor to the
extent that (a) such agreements, contracts or licenses are not capable of being
encumbered as a matter of law or (b) an encumbrance thereon or security interest
therein without the consent of the other applicable party thereto results in a
violation, breach, default or termination of such agreement, contract or
license, and such consent has not been obtained; provided, however, that the
term "Collateral" shall include such otherwise excluded agreements, contracts or
licenses once consent has been obtained and any and all proceeds thereof that
might have theretofore been excluded from such grant of a security interest. It
is understood that each Debtor shall use commercially reasonable efforts to
exclude from all hereafter acquired material agreements, contracts and licenses
restrictions on the encumbrancing of the same or granting of security interests
therein.
(c) "Debt" means, collectively, all now existing and hereafter arising
Indebtedness and Obligations arising under or out of the Term Loan
Agreement and other Financing Documents, including without limitation, all
Indebtedness and Obligations, whether of principal, interest, Make-Whole
Amounts, fees, expenses or otherwise, of the Company and any other Debtor
to the Purchasers now existing or hereafter incurred under the Term Loan
Agreement or the Notes), or any of the other Financing Documents referred
to therein as any of the same or any one or more of them may from time to
time be amended, restated, modified or supplemented, together with any and
all extensions, renewals, refinancings or refundings thereof in whole or in
part.
2. As security for the due and punctual payment and performance of the Debt
in full, each Debtor hereby agrees that the Agent, for the benefit of the
Purchasers, shall have, and each Debtor hereby grants to and creates in favor of
the Agent for the benefit of the Purchasers, a first priority security interest
under the Code in and to the Collateral subject only to Permitted Liens of the
type described in clauses (i) through (iii), (v) through (vii) and (ix) of the
definition of that term set forth in Schedule B to the Term Loan Agreement.
Without limiting the generality of Section 4 below, each Debtor further agrees
that with respect to each item of Collateral as to which (i) the creation of a
valid and enforceable security interest is not governed exclusively by the Code
or (ii) the perfection of a valid and enforceable security interest therein
under the Code cannot be accomplished either by the Agent taking possession
thereof or by the filing in appropriate locations of appropriate Code financing
statements executed by such Debtor, such Debtor will at its expense execute and
deliver to the Agent such documents, agreements, notices, assignments and
instruments and take such further actions as may be requested by the Agent from
time to time for the purpose of creating a valid and perfected first priority
Lien on such item, subject only to Permitted Liens, enforceable against such
Debtor and all third parties to secure the Debt.
3. Except as otherwise provided or permitted in the Term Loan Agreement and
without limiting any provisions thereof, each Debtor represents and warrants to
the Agent and the Purchasers that (a) each Debtor has good and marketable title
to its Collateral, (b) except for the security interest granted to and created
in favor of the Agent for the benefit of the Purchasers hereunder and Permitted
Liens, all the Collateral is free and clear of any Lien, (c) each Debtor will
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, (d) each Account and General
Intangible is genuine and enforceable in accordance with its terms and such
Debtor will defend the same against all claims, demands, setoffs and
counterclaims at any time asserted, (e) at the time any Account becomes subject
to this Agreement, such Account will be a good and valid Account representing a
bona fide sale of goods or services by such Debtor and such goods will have been
shipped to the respective account debtors or the services will have been
performed for the respective account debtors, and (f) no consents are necessary
for the granting of the security interest in the Collateral by such Debtor to
the Collateral Agent.
4. Each Debtor will faithfully preserve and protect the Agent's security
interest in the Collateral as a prior perfected security interest under the
Code, superior and prior to the rights of all third Persons, except for
Permitted Liens of the type described in clauses (i) through (iii), (v) through
(vii) and (ix) of the definition of that term set forth in Schedule B to the
Term Loan Agreement, and will do all such other acts and things and will, upon
reasonable request therefor by the Agent, execute, deliver, file and record all
such other documents and instruments, including, without limitation, financing
statements and extensions thereof, security agreements, assignments and
documents and powers of attorney with respect to the Collateral, and pay all
filing fees and taxes related thereto, as the Agent in its reasonable discretion
may deem necessary or advisable from time to time in order to attach, continue,
preserve, perfect and protect said security interest; and each Debtor hereby
irrevocably appoints the Agent, its officers, employees and agents, or any of
them, as attorneys-in-fact for such Debtor to execute, deliver, file and record
such items for such Debtor and in such Debtor's name, place and stead. This
power of attorney, being coupled with an interest, shall be irrevocable for the
life of this Agreement.
5. Each Debtor covenants and agrees that:
(a) it will defend the Agent's and the Purchaser's right, title and
security interest in and to the Collateral and the proceeds thereof against
the claims and demands of all Persons whomsoever, other than any Person
claiming a right in the Collateral pursuant to an agreement between such
Person and the Agent;
(b) it will not suffer or permit to exist on any Collateral any Lien
except for Permitted Liens;
(c) it will not take or omit to take any action, the taking or the
omission of which might reasonably be expected to result in a material
alteration or impairment of the Collateral or of the Agent's rights under
this Agreement;
(d) it will not sell, assign or otherwise dispose of any portion of
the Collateral except as permitted in Section 10.7 of the Term Loan
Agreement;
(e) it will (i) obtain and maintain sole and exclusive possession of
the Collateral, (ii) keep the Collateral and all records pertaining thereto
at the locations specified on the Security Interest Data Summary attached
as Schedule A hereto, unless it shall have given the Agent prior notice and
taken any action reasonably requested by the Agent to maintain its security
interest therein, (iii) notify the Agent if an Account becomes evidenced or
secured by an Instrument or Chattel Paper and deliver to the Agent upon the
Agent's request therefor all Collateral consisting of Chattel Paper
immediately upon such Debtor's receipt of a request therefor, and (iv) keep
materially accurate and complete books and records concerning the
Collateral and such other books and records required in accordance with the
Term Loan Agreement;
(f) it will promptly furnish to the Agent such information and
documents relating to the Collateral as the Agent may reasonably request,
including, without limitation, all invoices, Documents, contracts, Chattel
Paper, Instruments and other writings pertaining to such Debtor's contracts
or the performance thereof, all of the foregoing to be certified upon
request of the Agent by an authorized officer of such Debtor; and
(g) it shall immediately notify the Agent if any account arises out of
contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and take any
steps required by the Agent so that all monies due under such contract
shall be assigned to the Agent and notice of the assignment given to and
acknowledged by the appropriate government agency or authority under the
Federal Assignment of Claims Act.
6. Each Debtor assumes full responsibility for taking any and all necessary
steps to preserve the Agent's and the Purchaser's rights with respect to the
Collateral against all Persons other than anyone asserting rights in respect of
a Permitted Lien.
7. (a) At any time and from time to time whether or not an Event of
Default then exists and without prior notice to or consent of any Debtor,
the Agent may at its option take such actions as the Agent deems
appropriate (i) to attach, perfect, continue, preserve and protect the
Agent's and the Purchaser's prior security interest in the Collateral,
and/or (ii) subject to the provisions of Section 7.2 of the Term Loan
Agreement, to inspect, audit and verify the Collateral, including reviewing
all of such Debtor's books and records and copying and making excerpts
therefrom, provided that prior to an Event of Default or a Potential
Default, the same is done with advance notice during normal business hours
to the extent access to such Debtor's premises is required, and (iii) to
add all liabilities, obligations, reasonable costs and expenses reasonably
incurred in connection with the foregoing clauses (i) and (ii) to the Debt,
to be paid by the Debtors to the Agent for the benefit of the Purchasers
upon demand; and
(b) At any time and from time to time after an Event of Default exists
and is continuing and without prior notice to or consent of any Debtor, the
Agent may at its option take such action as the Agent deems appropriate (i)
to maintain, repair, protect and insure the Collateral, and/or (ii) to
perform, keep, observe and render true and correct any and all covenants,
agreements, representations and warranties of any Debtor hereunder, and
(iii) to add all liabilities, obligations, costs and expenses reasonably
incurred in connection with the foregoing clauses (i) and (ii) to the Debt,
to be paid by any Debtor to the Agent for the benefit of the Purchasers
upon demand.
8. After there exists any Event of Default under the Term Loan Agreement:
(a) The Agent shall have and may exercise all the rights and remedies
available to a secured party under the Code in effect at the time, and such
other rights and remedies as may be provided by Law and as set forth below,
including without limitation to take over and collect any or all of any
Debtor's Collateral, and to this end each Debtor hereby appoints the Agent,
its officers, employees and agents, as its irrevocable, true and lawful
attorneys-in-fact with all necessary power and authority to (i) take
possession immediately, with or without notice, demand, or legal process,
of any of or all of the Collateral wherever found, and for such purposes,
enter upon any premises upon which the Collateral may be found and remove
the Collateral therefrom, (ii) require any Debtor to assemble the
Collateral and deliver it to the Agent or to any place designated by the
Agent at such Debtor's expense, (iii) receive, open and dispose of all mail
addressed to any Debtor and notify postal authorities to change the address
for delivery thereof to such address as the Agent may designate, (iv)
demand payment of all of the Collateral except Equipment and Inventory, (v)
enforce payment of all of the Collateral except Equipment and Inventory by
legal proceedings or otherwise, (vi) exercise all of any Debtor's rights
and remedies with respect to the collection of all of the Collateral except
Equipment and Inventory, (vii) settle, adjust, compromise, extend or renew
all of the Collateral except Equipment and Inventory, (viii) settle, adjust
or compromise any legal proceedings brought to collect all of the
Collateral except Equipment and Inventory, (ix) to the extent permitted by
applicable Law, sell or assign all of the Collateral except Equipment and
Inventory upon such terms, for such amounts and at such time or times as
the Agent deems advisable, (x) discharge and release all of the Collateral
except Equipment and Inventory, (xi) take control, in any manner, of any
item of payment or proceeds from any account debtor, (xii) prepare, file
and sign any Debtor's name on any Proof of Claim in Bankruptcy or similar
document against any account debtor, (xiii) prepare, file and sign any
Debtor's name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with all of the Collateral except Equipment
and Inventory, (xiv) do all acts and things necessary, in the Agent's sole
discretion, to fulfill any Debtor's obligations under the Financing
Documents, (xv) endorse the name of any Debtor upon any check, Chattel
Paper, Document, Instrument, invoice, freight bill, bill of lading or
similar document or agreement relating to all of the Collateral except
Equipment; (xvi) use any Debtor's stationery and sign such Debtor's name to
verifications of all of the Collateral except Equipment and Inventory and
notices thereof to account debtors; (xvii) access and use the information
recorded on or contained in any data processing equipment or computer
hardware or software relating to the Collateral or proceeds thereof to
which any Debtor has access, (xviii) demand, sue for, collect, compromise
and give acquittances for any and all Collateral, (xix) prosecute, defend
or compromise any action, claim or proceeding with respect to any of the
Collateral, and (xx) take such other action as the Agent may deem
appropriate, including extending or modifying the terms of payment of any
Debtor's debtors. This power of attorney, being coupled with an interest,
shall be irrevocable for the life of this Agreement. To the extent
permitted by Law, each Debtor hereby waives all claims of damages due to or
arising from or connected with any of the rights or remedies exercised by
the Agent pursuant to this Agreement, except claims for physical damage to
the Collateral arising from gross negligence or willful misconduct by the
Agent.
(b) The Agent shall have the right to lease, sell or otherwise dispose
of all or any of the Collateral at public or private sale or sales for
cash, credit or any combination thereof, with such notice as may be
required by Law (it being agreed by each Debtor that, in the absence of any
contrary requirement of Law, ten (10) business days' prior notice of a
public or private sale of Collateral shall be deemed reasonable notice), in
lots or in bulk, for cash or on credit, all as the Agent, in its sole
discretion, may deem advisable. Such sales may be adjourned from time to
time with or without notice. The Agent shall have the right to conduct such
sales on any Debtor's premises or elsewhere and shall have the right to use
any Debtor's premises without charge for such sales for such time or times
as the Agent may see fit. The Agent may purchase all or any part of the
Collateral at public or, if permitted by Law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Debt.
9. The security interest in each Debtor's Collateral granted to and created
in favor of the Agent by this Agreement shall be for the benefit of the Agent
and the Purchasers. Each of the rights, privileges, and remedies provided to the
Agent hereunder or otherwise by Law with respect to any Debtor's Collateral
shall be exercised by the Agent only for its own benefit and the benefit of the
Purchasers, and any of such Debtor's Collateral or proceeds thereof held or
realized upon at any time by the Agent shall be applied as set forth in Section
5 of the Collateral Agency Agreement. Each Debtor shall remain liable to the
Purchasers for and shall pay to the Agent for the benefit of the Purchasers any
deficiency which may remain after such sale or collection.
10. If the Agent repossesses or seeks to repossess any of the Collateral
pursuant to the terms hereof because of the occurrence of an Event of Default,
then to the extent it is commercially reasonable for the Agent to store any
Collateral on any of any Debtor's premises, each Debtor hereby agrees to lease
to the Agent on a month-to-month tenancy for a period not to exceed one hundred
twenty (120) days at the Agent's election, at a rental of One Dollar ($1.00) per
month, the premises on which the Collateral is located, provided it is located
on premises owned or leased by such Debtor.
11. Upon indefeasible payment in full of the Debt and termination of the
Term Loan Agreement, this Agreement shall terminate and be of no further force
and effect, and the Agent shall thereupon promptly return to a Debtor such of
the Collateral and such other documents delivered by such Debtor hereunder as
may then be in the Agent's possession. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
12. No failure or delay on the part of the Agent in exercising any right,
remedy, power or privilege hereunder shall operate as a waiver thereof or of any
other right, remedy, power or privilege of the Agent hereunder; nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. No waiver of a single Event of Default shall
be deemed a waiver of a subsequent Event of Default. All waivers under this
Agreement must be in writing. The rights and remedies of the Agent under this
Agreement are cumulative and in addition to any rights or remedies which it may
otherwise have, and the Agent may enforce any one or more remedies hereunder
successively or concurrently at its option.
13. All notices, statements, requests and demands given to or made upon
either party hereto in accordance with the provisions of this Agreement shall be
given or made as provided in Section 18 of the Term Loan Agreement.
14. Each Debtor agrees that as of the date hereof, all information
contained on the Security Interest Data Schedule attached hereto as Schedule A
is accurate and complete and contains no omission or misrepresentation. Each
Debtor shall promptly notify the Agent of any changes in the information set
forth thereon.
15. Each Debtor acknowledges that the provisions hereof giving the Agent
rights of access to books, records and information concerning the Collateral and
such Debtor's operations and providing the Agent access to such Debtor's
premises are intended to afford the Agent with immediate access to current
information concerning such Debtor and its activities, including without
limitation, the value, nature and location of the Collateral so that the Agent
can, among other things, make an appropriate determination after the occurrence
of an Event of Default, whether and when to exercise its other remedies
hereunder and at Law, including without limitation, instituting a replevin
action should any Debtor refuse to turn over any Collateral to the Agent. Each
Debtor further acknowledges that should such Debtor at any time fail to promptly
provide such information and access to the Agent, each Debtor acknowledges that
the Agent would have no adequate remedy at Law to promptly obtain the same. Each
Debtor agrees that the provisions hereof may be specifically enforced by the
Agent and waives any claim or defense in any such action or proceeding that the
Agent has an adequate remedy at Law.
16. This Agreement shall be binding upon and inure to the benefit of the
Agent and the Purchasers and their respective successors and assigns, and each
Debtor and each of its respective successors and assigns, except that no debtor
may assign or transfer such Debtor's obligations hereunder or any interest
herein.
17. This Agreement shall be deemed to be a contract under the laws of the
State of New York and for all purposes shall be governed by and construed and
enforced in accordance with the laws of said State.
18. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall not invalidate the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 2 TO SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement as of the day and
year first above set forth.
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: President
WESTERN ENERGY COMPANY
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
NORTHWESTERN RESOURCES CO.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
DAKOTA WESTMORELAND CORPORATION
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
WCCO-KRC ACQUISITION CORP.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
[SIGNATURE PAGE 2 OF 2 TO SECURITY AGREEMENT]
FIRSTAR BANK, N.A., as Collateral Agent
By: /s/ James Moll
----------------------------------
Name: James Moll
Title: Vice President
SCHEDULE A
TO
SECURITY AGREEMENT
SECURITY INTEREST DATA SUMMARY
1. The chief executive office of each respective Debtor is located at:
- --------------------------------------- ----------------------------------------
DEBTOR EXECUTIVE OFFICE
- --------------------------------------- ----------------------------------------
Westmoreland Mining LLC 490 North 31st Street
Suite 308
Billings, Montana 59101
- --------------------------------------- ----------------------------------------
Western Energy Company Castle Rock Road
P.O. Box 99
Colstrip, Montana 59323-0099
- --------------------------------------- ----------------------------------------
Northwestern Resources Co. P.O. Box 915
Jewett, Texas 75846-0915
- --------------------------------------- ----------------------------------------
Dakota Westmoreland Corp. Beulah Mine
P.O. Box 39
Beulah, North Dakota 58523-0039
- --------------------------------------- ----------------------------------------
WCCO-KRC Acquisition Corp. Castle Rock Road
P.O. Box 99
Colstrip, Montana 59323-0099
- --------------------------------------- ----------------------------------------
2. Each Debtor's true and full name is listed above: Each Debtor uses no
trade names or fictitious names.
3. All of each Debtor's personal property which has not been delivered to
the Agent pursuant to the terms of this Agreement or the Term Loan Agreement is
now, and will be at all future times, located at such Debtor's chief executive
office as described in Paragraph 1 above, except as specified below:
Westmoreland Mining LLC - None
Western Energy Company - None
Northwestern Resources Co. - None
Dakota Westmoreland Corp. - None
WCCO-KRC Acquisition Corp. - None
EXHIBIT 99.10
- -------------
COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS
THIS COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS (the "Assignment") is
made and entered into the 27th day of April, 2001, by and among WESTMORELAND
MINING LLC, a Delaware limited liability company, each of the entities listed on
the signature page hereto and each of the Persons that are now or hereafter
become Guarantors under the Credit Agreement described below (each an "Assignor"
and collectively the "Assignors"), in favor of FIRSTAR BANK, N.A., as Collateral
Agent ("Assignee").
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter
from time to time be restated, amended, modified or supplemented, the "Credit
Agreement") of even date herewith among Westmoreland Mining LLC, a Delaware
limited liability company (the "Borrower"), the Guarantors party thereto, the
Banks party thereto and PNC Bank, National Association, in its capacity as Agent
("PNC"), PNC and the Banks have agreed to provide certain loans to the Borrower;
and
WHEREAS, it is a condition to the Credit Agreement that in order to
provide additional security for the repayment of such loans, the parties hereto
desire that Assignee for the benefit of PNC and the Banks be granted an
assignment and security interest in all rights of the Assignors under those
certain contracts listed on Schedule I hereto (each an "Assigned Contract" and
collectively the "Assigned Contracts").
NOW, THEREFORE, in consideration of the promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Assignors, and intending to
be legally bound, each Assignor assigns to Assignee for the benefit of PNC and
the Banks all of its right, title and interest in and to each Assigned Contract
to the extent assignable and to the fullest extent permitted by Law.
1. Except as otherwise expressly provided herein, capitalized terms used in
this Assignment shall have the respective meanings given to them in the Credit
Agreement.
2. Each Assignor hereby grants a security interest to Assignee in the
Assigned Contracts and, each Assignor has granted, bargained, sold, assigned,
transferred and set over and by these presents does hereby grant, bargain, sell,
assign, transfer and set over unto Assignee, its respective successors and
assigns as collateral for the Obligations, all of the rights, interests and
privileges which such Assignor has or may have in or under any Assigned
Contract, including without limiting the generality of the foregoing, the
present and continuing right with full power and authority, in its own name, or
in the name of such Assignor, or otherwise, but subject to the provisions and
limitations of Section 3 hereof, (i) to receive all benefits from such Assigned
Contracts which such Assignor is or may become entitled to under such Assigned
Contracts, (ii) to make claim for, enforce, perform, collect and receive any and
all rights under any Assigned Contract, (iii) to do any and all things which
such Assignor is or may become entitled to do under any Assigned Contract, (iv)
to cure any defaults by any Assignor under any Assigned Contract, and (v) to
grant and make all waivers and agreements, give all notices, consents and
releases and other instruments and to do any and all other things whatsoever
which such Assignor is or may become entitled to do under any Assigned Contract.
Notwithstanding the foregoing provisions of this Agreement shall not be deemed
to be an assignment of any agreements, contracts or licenses to the extent the
terms of such agreements, contracts or licenses would be violated by such
assignment and (ii) the term "Assigned Contract" shall not include, any
agreements, contracts or licenses which are now or hereafter held by an Assignor
to the extent that (a) such agreements, contracts or licenses are not capable of
being encumbered as a matter of law or (b) an encumbrance thereon or security
interest therein without the consent of the other applicable party thereto
results in a violation, breach, default or termination of such agreement,
contract or license, and such consent has not been obtained; provided, however,
that the term "Assigned Contract" shall include such otherwise excluded
agreements, contracts or licenses once consent has been obtained and any and all
proceeds thereof that might have theretofore been excluded from such grant of a
security interest. It is understood that each Assignor shall use commercially
reasonable efforts to exclude from all hereafter acquired material agreements,
contracts and licenses restrictions on the encumbrancing of the same or granting
of security interests therein.
3. The acceptance of this Assignment and the payment or performance under
the Assigned Contracts shall not constitute a waiver of any rights of Assignee
under the terms of the Notes, the Credit Agreement or any other of the Loan
Documents, it being understood that, subject to the terms hereof, until the
occurrence of an Event of Default, and the exercise of Assignee's rights under
Section 4 hereof, each Assignor shall have all rights to its respective Assigned
Contracts and to retain, use and enjoy the same.
4. Each Assignor, upon the occurrence of an Event of Default, hereby
authorizes Assignee, at Assignee's option, to do all acts required or permitted
under any Assigned Contract as Assignee in its sole discretion may deem proper.
Each Assignor does hereby irrevocably constitute and appoint Assignee, while
this Assignment remains in force and effect and, in each instance, to the full
extent permitted by applicable Law, its true and lawful attorney-in-fact,
coupled with an interest and with full power of substitution and revocation, for
such Assignor and in its name, place and stead, to demand and enforce compliance
with all the terms and conditions of each Assigned Contract and all benefits
accrued thereunder, whether at law, in equity or otherwise; provided, however,
that Assignee shall not exercise any such power unless and until an Event of
Default shall have occurred. The Assignee hereby accepts this power of attorney
and all powers granted hereunder for the benefit of the Assignee, PNC and the
Banks.
5. Assignee shall not be obligated to perform or discharge any obligation
or duty to be performed or discharged by Assignor under any Assigned Contract,
and each Assignor hereby agrees to indemnify Assignee for, and to save Assignee
harmless from, any and all liability arising under the Assigned Contracts, other
than arising or resulting from Assignee's (or its agents, employees or
contractors) gross negligence or willful misconduct.
6. Each Assignor agrees that this Assignment and the designation and
directions herein set forth are irrevocable.
7. Neither this Assignment nor any action or inaction on the part of
Assignee shall constitute an assumption on the part of Assignee of any
obligations or duties under any Assigned Contract.
8. Each Assignor covenants and warrants that:
(a) it has the power and authority to assign for collateral purposes
and grant a security interest in each of its respective Assigned Contracts,
there have been no prior assignments or security interests granted in any
Assigned Contract, and there are no other types of encumbrances burdening
Assignors' rights, title and interests in and to the Assigned Contracts,
except for Permitted Liens;
(b) each Assigned Contract is and shall be a valid contract, is in
full force and effect, and there are and shall be, to the extent
ascertainable by Assignor, no defaults on the part of any of the parties
thereto;
(c) true, correct and complete copies of all of the Assigned Contracts
have been delivered or made available to Assignor;
(d) no consents are necessary for Assignor to grant security interests
in the Assigned Contracts to Assignee;
(e) except as set forth in Schedule I attached hereto, none of the
Assigned Contracts are scheduled to terminate prior to the scheduled
maturity dates under the Notes;
(f) it will not assign, pledge or otherwise encumber any Assigned
Contract without the prior written consent of Assignee, except for
Permitted Liens;
(g) it will not cancel, terminate or accept any surrender of any
Assigned Contract, (except in accordance with its respective terms) or
(except as may otherwise be permitted by the Credit Agreement) amend or
modify the same directly or indirectly in any respect whatsoever (except
for Permitted Modifications), without having obtained the prior written
consent of Assignee thereto;
(h) it will not waive or give any consent with respect to any material
default or material variation in the performance under any Assigned
Contract, it will at all times take proper steps to enforce all of the
material provisions and conditions thereof, and it will forthwith notify
Assignee of any material default under any Assigned Contract;
(i) it will perform and observe, or cause to be performed and
observed, all of the material terms, covenants and conditions on its part
to be performed and observed with respect to each Assigned Contract;
(j) it will not accept or allow to be made any payment to Assignor
under any Assigned Contract more than thirty (30) days in advance of when
such payment was regularly scheduled to have been made without the prior
written consent of Assignee; and
(k) it will execute from time to time any and all additional
assignments or instruments of further assurance to Assignee, as Assignee
may at any time reasonably request (including, but not limited to, Uniform
Commercial Code financing statements and extensions thereof).
9. At such time as the Loans and Reimbursement Obligations are indefeasibly
paid in full and the Commitments have terminated and there are no Letters of
Credit outstanding, this Assignment and all of Assignee's right, title and
interest hereunder with respect to the Assigned Contracts shall terminate and
all right, title and interest in the Assigned Contracts shall fully vest in
Assignor, free of any lien, claim or encumbrance created by or in favor of the
Assignee or any Bank.
10. This Assignment shall inure to the benefit of Assignee, its respective
successors and assigns, and shall be binding upon each Assignor, its successors,
successors in title and assigns.
11. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York.
12. This Agreement may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement. Each Assignor acknowledges and agrees
that a telecopy transmission to PNC or any Bank of signature pages hereof
purporting to be signed on behalf of any Assignor shall constitute effective and
binding execution and delivery hereof by such Assignor.
13. After there exists any Event of Default under the Term Loan Agreement:
(a) The Assignee shall have and may exercise all the rights and
remedies available to a secured party under the Uniform Commercial Code in
effect at the time, and such other rights and remedies as may be provided
by Law and as set forth below, including without limitation to receive all
benefits from such Assigned Contracts which such Assignor is or may become
entitled to under such Assigned Contracts, (ii) to make claim for, enforce,
perform, collect and receive any and all rights under any Assigned
Contract, (iii) to do any and all things which such Assignor is or may
become entitled to do under any Assigned Contract, (iv) to cure any
defaults by any Assignor under any Assigned Contract, and (v) to grant and
make all waivers and agreements, give all notices, consents and releases
and other instruments and to do any and all other things whatsoever which
such Assignor is or may become entitled to do under any Assigned Contract,
and to this end each Assignor hereby appoints the Assignee, its officers,
employees and agents, as its irrevocable, true and lawful attorneys-in-fact
with all necessary power and authority to (i) take possession immediately,
with or without notice, demand, or legal process, of any of or all of the
Assigned Contracts wherever found, and for such purposes, enter upon any
premises upon which the Assigned Contracts may be found and remove the
Assigned Contracts therefrom, (ii) require any Assignor to assemble the
Assigned Contracts and deliver them to the Assignee or to any place
designated by the Assignee at such Assignor's expense, (iii) receive, open
and dispose of all mail addressed to any Assignor and notify postal
authorities to change the address for delivery thereof to such address as
the Assignee may designate, (iv) demand payment of all of the Assigned
Contracts, (v) enforce payment and performance under the Assigned Contracts
by legal proceedings or otherwise, (vi) exercise all of any Assignor's
rights and remedies with respect to the collection of all amounts owed
under the Assigned Contracts, (vii) settle, adjust or compromise any legal
proceedings brought to collect all amounts owed under the Assigned
Contracts, (viii) to the extent permitted by applicable Law, sell or assign
all rights under the Assigned Contracts upon such terms, for such amounts
and at such time or times as the Assignee deems advisable, (ix) discharge
and release all of the parties' obligations under the Assigned Contracts,
(x) take control, in any manner, of any item of payment or proceeds from
any account debtor, (xi) prepare, file and sign any Assignor's name on any
Proof of Claim in Bankruptcy or similar document against any account
debtor, (xii) prepare, file and sign any Assignor's name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection
with all of the Assigned Contracts, (xiii) do all acts and things
necessary, in the Assignee's sole discretion, to fulfill any Assignor's
obligations under the Loan Documents, (xiv) endorse the name of any
Assignor upon any check, chattel paper, document, instrument, invoice,
freight bill, bill of lading or similar document or agreement relating to
all of the Assigned Contracts; (xv) use any Assignor's stationery and sign
such Assignor's name to verifications of all of the Assigned Contracts and
notices thereof to account debtors; (xvi) access and use the information
recorded on or contained in any data processing equipment or computer
hardware or software relating to the Assigned Contracts or proceeds thereof
to which any Assignor has access, (xvii) demand, sue for, collect,
compromise and give acquittances for any and all Assigned Contracts,
(xviii) prosecute, defend or compromise any action, claim or proceeding
with respect to any of the Assigned Contracts, and (xix) take such other
action as the Assignee may deem appropriate, including extending or
modifying the terms of payment of any Assignor's debtors. This power of
attorney, being coupled with an interest, shall be irrevocable for the life
of this Assignment. To the extent permitted by Law, each Assignor hereby
waives all claims of damages due to or arising from or connected with any
of the rights or remedies exercised by the Assignee pursuant to this
Assignment, except claims arising from gross negligence or willful
misconduct by the Assignee.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 2 TO
COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS]
IN WITNESS WHEREOF, the parties have executed this instrument under
seal as of the day and year first above written.
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: President
WESTERN ENERGY COMPANY
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
NORTHWESTERN RESOURCES CO.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
DAKOTA WESTMORELAND CORPORATION
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
WCCO-KRC ACQUISITION CORP.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
[SIGNATURE PAGE 2 OF 2 TO SECURITY AGREEMENT]
FIRSTAR BANK, N.A., as Collateral Agent
By: /s/ James Moll
----------------------------------
Name: James Moll
Title: Vice President
SCHEDULE I
to
Collateral Assignment of Contract Rights
o Holly Sugar Corporation Coal Agreement dated September 1, 2000
o Coyote Plant Coal Agreement, dated January 1, 1978
o Heskett Station Coal Sales Contract, dated September 20, 2000
o Lewis & Clark Station Coal Sales Contract, dated January 1, 1998
o Amended and Restated Coal Supply Agreement (Colstrip 3 & 4) dated
August 24, 1998 among Montana Power Company, PPL Montana LLC, Puget
Sound Energy, Inc., Portland General Electric Company, PacificCorp and
Western Energy Company.
o Coal Supply Agreement (Colstrip 1 & 2), dated July 30, 1971, as
amended, between PPL Montana LLC, Puget Sound Energy Inc., and Western
Energy Company.
o Lignite Supply Agreement dated August 29, 1979, as amended, between
Northwestern Resources Co. and Reliant Energy, Incorporated.
EXHIBIT 99.11
- -------------
COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS
THIS COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS (the "Assignment") is
made and entered into the 27th day of April, 2001, by and among WESTMORELAND
MINING LLC, a Delaware limited liability company, each of the entities listed on
the signature page hereto and each of the Persons that are now or hereafter
become Guarantors under the Term Loan Agreement described below (each an
"Assignor" and collectively the "Assignors"), in favor of FIRSTAR BANK, N.A., as
Collateral Agent, for the Purchasers ("Assignee").
WITNESSETH:
WHEREAS, pursuant to that certain Term Loan Agreement (as it may
hereafter from time to time be restated, amended, modified or supplemented, the
"Term Loan Agreement") of even date herewith among Westmoreland Mining LLC, a
Delaware limited liability company (the "Company"), the Guarantors party
thereto, and the Purchasers named in Schedule A attached thereto (together with
the holders from time to time of the Notes referred to therein, herein
collectively referred to as the "Purchasers"), the Purchasers have agreed to
purchase certain notes from the Company; and
WHEREAS, it is a condition to the purchase of such Notes that, in order
to provide additional security for the repayment of the Notes and all other
obligations of the Obligors under the Term Loan Documents, the parties hereto
grant to Assignee for the benefit of the Purchasers an assignment and security
interest in all rights of the Assignors under those certain contracts listed on
Schedule I hereto (each an "Assigned Contract" and collectively the "Assigned
Contracts").
NOW, THEREFORE, in consideration of the promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Assignors, and intending to
be legally bound, each Assignor assigns to Assignee for the benefit of the
Purchasers all of its right, title and interest in and to each Assigned Contract
to the extent assignable and to the fullest extent permitted by Law.
1. Except as otherwise expressly provided herein, capitalized terms used in
this Assignment shall have the respective meanings given to them in the Term
Loan Agreement.
2. Each Assignor hereby grants a security interest to Assignee in the
Assigned Contracts and, each Assignor has granted, bargained, sold, assigned,
transferred and set over and by these presents does hereby grant, bargain, sell,
assign, transfer and set over unto Assignee, its respective successors and
assigns as collateral for the Obligations, all of the rights, interests and
privileges which such Assignor has or may have in or under any Assigned
Contract, including without limiting the generality of the foregoing, the
present and continuing right, with full power and authority, in its own name, or
in the name of such Assignor, or otherwise, but subject to the provisions and
limitations of Section 3 hereof, (i) to receive all benefits from such Assigned
Contracts which such Assignor is or may become entitled to under such Assigned
Contracts, (ii) to make claim for, enforce, perform, collect and receive any and
all rights under any Assigned Contract, (iii) to do any and all things which
such Assignor is or may become entitled to do under any Assigned Contract, (iv)
to cure any defaults by any Assignor under any Assigned Contract, and (v) to
grant and make all waivers and agreements, give all notices, consents and
releases and other instruments and to do any and all other things whatsoever
which such Assignor is or may become entitled to do under any Assigned Contract.
Notwithstanding the foregoing provisions of this Agreement shall not be deemed
to be an assignment of any agreements, contracts or licenses to the extent the
terms of such agreements, contracts or licenses would be violated by such
assignment and (ii) the term "Assigned Contract" shall not include, any
agreements, contracts or licenses which are now or hereafter held by an Assignor
to the extent that (a) such agreements, contracts or licenses are not capable of
being encumbered as a matter of law or (b) an encumbrance thereon or security
interest therein without the consent of the other applicable party thereto
results in a violation, breach, default or termination of such agreement,
contract or license, and such consent has not been obtained; provided, however,
that the term "Assigned Contract" shall include such otherwise excluded
agreements, contracts or licenses once consent has been obtained and any and all
proceeds thereof that might have theretofore been excluded from such grant of a
security interest. It is understood that each Assignor shall use commercially
reasonable efforts to exclude from all hereafter acquired material agreements,
contracts and licenses restrictions on the encumbrancing of the same or granting
of security interests therein.
3. The acceptance of this Assignment and the payment or performance under
the Assigned Contracts shall not constitute a waiver of any rights of Assignee
under the terms of the Notes, the Term Loan Agreement or any other of the
Financing Documents, it being understood that, subject to the terms hereof,
until the occurrence of an Event of Default, and the exercise of Assignee's
rights under Section 4 hereof, each Assignor shall have all rights to its
respective Assigned Contracts and to retain, use and enjoy the same.
4. Each Assignor, upon the occurrence of an Event of Default, hereby
authorizes Assignee, at Assignee's option, to do all acts required or permitted
under any Assigned Contract as Assignee in its sole discretion may deem proper.
Each Assignor does hereby irrevocably constitute and appoint Assignee, while
this Assignment remains in force and effect and, in each instance, to the full
extent permitted by applicable Law, its true and lawful attorney-in-fact,
coupled with an interest and with full power of substitution and revocation, for
such Assignor and in its name, place and stead, to demand and enforce compliance
with all the terms and conditions of each Assigned Contract and all benefits
accrued thereunder, whether at law, in equity or otherwise; provided, however,
that Assignee shall not exercise any such power unless and until an Event of
Default shall have occurred. The Assignee hereby accepts this power of attorney
and all powers granted hereunder for the benefit of the Assignee and the
Purchasers.
5. Assignee shall not be obligated to perform or discharge any obligation
or duty to be performed or discharged by Assignor under any Assigned Contract,
and each Assignor hereby agrees to indemnify Assignee for, and to save Assignee
harmless from, any and all liability arising under the Assigned Contracts, other
than arising or resulting from Assignee's (or its agents, employees or
contractors) gross negligence or willful misconduct.
6. Each Assignor agrees that this Assignment and the designation and
directions herein set forth are irrevocable.
7. Neither this Assignment nor any action or inaction on the part of
Assignee shall constitute an assumption on the part of Assignee of any
obligations or duties under any Assigned Contract.
8. Each Assignor covenants and warrants that:
(a) it has the power and authority to assign for collateral purposes
and grant a security interest in each of its respective Assigned Contracts,
there have been no prior assignments or security interests granted in any
Assigned Contract, and there are no other types of encumbrances burdening
Assignors' rights, title and interests in and to the Assigned Contracts,
except for Permitted Liens;
(b) each Assigned Contract is and shall be a valid contract, is in
full force and effect, and there are and shall be, to the extent
ascertainable by Assignor, no defaults on the part of any of the parties
thereto;
(c) true, correct and complete copies of all of the Assigned Contracts
have been delivered or made available to Assignor;
(d) no consents are necessary for Assignor to grant security interests
in the Assigned Contracts to Assignee;
(e) except as set forth in Schedule I attached hereto, none of the
Assigned Contracts are scheduled to terminate prior to the scheduled
maturity dates under the Notes;
(f) it will not assign, pledge or otherwise encumber any Assigned
Contract without the prior written consent of Assignee, except for
Permitted Liens;
(g) it will not cancel, terminate or accept any surrender of any
Assigned Contract (except in accordance with its respective terms), or
(except as may otherwise be permitted by the Term Loan Agreement) amend or
modify the same directly or indirectly in any respect whatsoever (except
for Permitted Modifications), without having obtained the prior written
consent of Assignee thereto;
(h) it will not waive or give any consent with respect to any material
default or material variation in the performance under any Assigned
Contract, it will at all times take proper steps to enforce all of the
material provisions and conditions thereof, and it will forthwith notify
Assignee of any material default under any Assigned Contract;
(i) it will perform and observe, or cause to be performed and
observed, all of the material terms, covenants and conditions on its part
to be performed and observed with respect to each Assigned Contract;
(j) it will not accept or allow to be made any payment to Assignor
under any Assigned Contract more than thirty (30) days in advance of when
such payment was regularly scheduled to have been made without the prior
written consent of Assignee; and
(k) it will execute from time to time any and all additional
assignments or instruments of further assurance to Assignee, as Assignee
may at any time reasonably request (including, but not limited to, Uniform
Commercial Code financing statements and extensions thereof).
9. At such time as the Notes are indefeasibly paid in full this Assignment
and all of Assignee's right, title and interest hereunder with respect to the
Assigned Contracts shall terminate, and all right, title and interest in the
Assigned Contracts shall fully vest in Assignor, free of any lien, claim or
encumbrance created by or in favor of the Assignee or any Purchaser.
10. This Assignment shall inure to the benefit of Assignee, its respective
successors and assigns, and shall be binding upon each Assignor, its successors,
successors in title and assigns.
11. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York.
12. This Agreement may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement. Each Assignor acknowledges and agrees
that a telecopy transmission to Assignee of signature pages hereof purporting to
be signed on behalf of any Assignor shall constitute effective and binding
execution and delivery hereof by such Assignor.
13. After there exists any Event of Default under the Term Loan Agreement:
(a) The Assignee shall have and may exercise all the rights and
remedies available to a secured party under the Uniform Commercial Code in
effect at the time, and such other rights and remedies as may be provided
by Law and as set forth below, including without limitation to receive all
benefits from such Assigned Contracts which such Assignor is or may become
entitled to under such Assigned Contracts, (ii) to make claim for, enforce,
perform, collect and receive any and all rights under any Assigned
Contract, (iii) to do any and all things which such Assignor is or may
become entitled to do under any Assigned Contract, (iv) to cure any
defaults by any Assignor under any Assigned Contract, and (v) to grant and
make all waivers and agreements, give all notices, consents and releases
and other instruments and to do any and all other things whatsoever which
such Assignor is or may become entitled to do under any Assigned Contract,
and to this end each Assignor hereby appoints the Assignee, its officers,
employees and agents, as its irrevocable, true and lawful attorneys-in-fact
with all necessary power and authority to (i) take possession immediately,
with or without notice, demand, or legal process, of any of or all of the
Assigned Contracts wherever found, and for such purposes, enter upon any
premises upon which the Assigned Contracts may be found and remove the
Assigned Contracts therefrom, (ii) require any Assignor to assemble the
Assigned Contracts and deliver them to the Assignee or to any place
designated by the Assignee at such Assignor's expense, (iii) receive, open
and dispose of all mail addressed to any Assignor and notify postal
authorities to change the address for delivery thereof to such address as
the Assignee may designate, (iv) demand payment of all of the Assigned
Contracts, (v) enforce payment and performance under the Assigned Contracts
by legal proceedings or otherwise, (vi) exercise all of any Assignor's
rights and remedies with respect to the collection of all amounts owed
under the Assigned Contracts, (vii) settle, adjust or compromise any legal
proceedings brought to collect all amounts owed under the Assigned
Contracts, (viii) to the extent permitted by applicable Law, sell or assign
all rights under the Assigned Contracts upon such terms, for such amounts
and at such time or times as the Assignee deems advisable, (ix) discharge
and release all of the parties' obligations under the Assigned Contracts,
(x) take control, in any manner, of any item of payment or proceeds from
any account debtor, (xi) prepare, file and sign any Assignor's name on any
Proof of Claim in Bankruptcy or similar document against any account
debtor, (xii) prepare, file and sign any Assignor's name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection
with all of the Assigned Contracts, (xiii) do all acts and things
necessary, in the Assignee's sole discretion, to fulfill any Assignor's
obligations under the Financing Documents, (xiv) endorse the name of any
Assignor upon any check, chattel paper, document, instrument, invoice,
freight bill, bill of lading or similar document or agreement relating to
all of the Assigned Contracts; (xv) use any Assignor's stationery and sign
such Assignor's name to verifications of all of the Assigned Contracts and
notices thereof to account debtors; (xvi) access and use the information
recorded on or contained in any data processing equipment or computer
hardware or software relating to the Assigned Contracts or proceeds thereof
to which any Assignor has access, (xvii) demand, sue for, collect,
compromise and give acquittances for any and all Assigned Contracts,
(xviii) prosecute, defend or compromise any action, claim or proceeding
with respect to any of the Assigned Contracts, and (xix) take such other
action as the Assignee may deem appropriate, including extending or
modifying the terms of payment of any Assignor's debtors. This power of
attorney, being coupled with an interest, shall be irrevocable for the life
of this Assignment. To the extent permitted by Law, each Assignor hereby
waives all claims of damages due to or arising from or connected with any
of the rights or remedies exercised by the Assignee pursuant to this
Assignment, except claims arising from gross negligence or willful
misconduct by the Assignee.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 2 TO
COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS]
IN WITNESS WHEREOF, the parties have executed this instrument under
seal as of the day and year first above written.
WESTMORELAND MINING LLC
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: President
WESTERN ENERGY COMPANY
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
NORTHWESTERN RESOURCES CO.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
DAKOTA WESTMORELAND CORPORATION
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
WCCO-KRC ACQUISITION CORP.
By: /s/ Robert J. Jaeger (SEAL)
----------------------------------
Name: Robert J. Jaeger
Title: Vice President
[SIGNATURE PAGE 2 OF 2 TO SECURITY AGREEMENT]
FIRSTAR BANK, N.A., as Collateral Agent
By: /s/ James Moll
----------------------------------
Name: James Moll
Title: Vice President
SCHEDULE I
to
Collateral Assignment of Contract Rights
o Holly Sugar Corporation Coal Agreement dated September 1, 2000
o Coyote Plant Coal Agreement, dated January 1, 1978
o Heskett Station Coal Sales Contract, dated September 20, 2000
o Lewis & Clark Station Coal Sales Contract, dated January 1, 1998
o Amended and Restated Coal Supply Agreement (Colstrip 3 & 4) dated
August 24, 1998 among Montana Power Company, PPL Montana LLC, Puget
Sound Energy, Inc., Portland General Electric Company, PacificCorp and
Western Energy Company.
o Coal Supply Agreement (Colstrip 1 & 2), dated July 30, 1971, as
amended, between PPL Montana LLC, Puget Sound Energy Inc., and Western
Energy Company.
o Lignite Supply Agreement dated August 29, 1979, as amended, between
Northwestern Resources Co. and Reliant Energy, Incorporated.