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EXHIBIT 1
$125,000,000
ANKER COAL GROUP, INC.
9 3/4% Series A Senior Notes due 2007
PURCHASE AGREEMENT
September 22, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
227 Park Avenue
New York, New York 10172
Ladies & Gentlemen:
Anker Coal Group, Inc., a Delaware corporation (the "Company"), and each
of the entities listed on Schedule II hereto (each a "Guarantor" and
collectively, the "Guarantors") agrees with you as follows:
1. Issuance of Securities. Subject to the terms and conditions set forth
herein, the Company proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and Chase Securities Inc. (each, an "Initial
Purchaser" and collectively, the "Initial Purchasers") an aggregate of
$125,000,000 principal amount of 9 3/4% Series A Senior Notes due 2007 (the
"Series A Notes"). The Series A Notes are to be issued pursuant to an indenture
(the "Note Indenture") to be dated as of September 25, 1997 among the Company,
the Guarantors and Marine Midland Bank, as trustee (the "Trustee"). The Series A
Notes and the Series B Notes (as defined below) (the Series A Notes and the
Series B Notes being collectively referred to as the "Securities") will be
guaranteed (the "Guarantees") on a senior unsecured basis by each of the
Guarantors. As used herein, the term "Securities" shall include the Guarantees
thereof whenever the context permits.
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Note Indenture.
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The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). The Company and the Guarantors have prepared a
preliminary offering memorandum, dated September 5, 1997 (the "Preliminary
Offering Memorandum"), and a final offering memorandum, dated September 22, 1997
(the "Offering Memorandum"), relating to the Company and the Guarantors and the
Series A Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE THIRD SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR ANY INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTIONS" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
You have advised the Company that you will make offers (the "Exempt
Resales") of the Series A Notes purchased hereunder on the terms set forth in
the Offering Memorandum, as amended or supplemented, solely to persons whom you
reasonably believe to be "qualified institutional
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buyers," as defined in Rule 144A under the Act ("QIBs"), and to non-U.S. persons
outside the United States in reliance upon Regulation S under the Act (each, a
"Regulation S Purchaser"). The QIBs and the Regulation S Purchasers are referred
to herein as the "Eligible Initial Purchasers". You will offer the Series A
Notes to such QIBs and Regulation S Purchasers initially at a price equal to
100% of the principal amount thereof. Such price may be changed at any time
without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement"), to be dated the Closing Date (as
defined in Section 3 below), in substantially the form of Exhibit A hereto, for
so long as such Series A Notes constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Company and the Guarantors will agree to file with the
Securities and Exchange Commission (the "Commission"), under the circumstances
set forth therein, (i) a registration statement under the Act (the "Exchange
Offer Registration Statement") relating to the 9 3/4% Series B Senior Notes due
2007 (the "Series B Notes") to be offered in exchange for the Series A Notes
(the "Exchange Offer"), and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") relating to the resale by certain holders of the Series
A Notes, and to use their reasonable best efforts to cause such Registration
Statement to be declared effective. This Purchase Agreement (the "Agreement"),
the Securities, the Guarantees, the Note Indenture and the Registration Rights
Agreement are hereinafter sometimes referred to collectively as the "Operative
Documents".
2. Agreements to Sell and Purchase. On the basis of the representations,
warranties and agreements contained in this Agreement, and subject to its terms
and conditions, the Company agrees to issue and sell to you, and each of the
Initial Purchasers, severally but not jointly, agrees to purchase from the
Company, Series A Notes in the respective principal amount set forth opposite
its name on Schedule I hereto. The purchase price for the Series A Notes shall
be 97% of their principal amount. The Company shall not be obligated to deliver
any of the Series A Notes except upon payment for all of the Series A Notes to
be purchased as provided below.
3. Delivery and Payment. Delivery to the Initial Purchasers of and payment
for the Series A Notes shall be made at 9:00 a.m., New York City time, on
September 25, 1997 (the "Closing Date") at the offices of Andrews & Kurth
L.L.P., 425 Lexington Avenue, New York, New York 10017, or such other time or
place as you and the Company shall designate.
One or more of the Series A Notes in definitive form, registered in the
name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), having
an aggregate principal amount corresponding to the aggregate principal amount of
the Series A Notes sold pursuant to Exempt Resales to QIBs (collectively, the
"Global Note") and one or more Series A Notes in definitive form registered in
the names of the nominees of the Euroclear System and Cedel, S.A., having an
aggregate principal amount corresponding to the aggregate principal amount of
the Series A Notes sold pursuant to Exempt Resales to Regulation S Purchasers
(collectively, the "Regulation S Note"), shall be delivered by or on behalf of
the Company to you (or as you direct), against payment by you
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of the purchase price therefor by wire transfer of same day funds to the Company
or as the Company may direct. The Global Note and Regulation S Note shall be
made available to you for inspection not later than 9:30 a.m. on the business
day immediately preceding the Closing Date.
4. Agreements of the Company and the Guarantors. The Company and each of
the Guarantors, jointly and severally, agrees with each of you as follows:
(a) To advise you promptly and, if requested by the Initial
Purchasers, confirm such advice in writing, (i) of the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of any of the Series A Notes for offering or sale
in any jurisdiction, or the initiation of any proceeding for such purpose by any
state securities commission or other regulatory authority, and (ii) of the
happening of any event that makes any statement of a material fact made in the
Offering Memorandum untrue or that requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from time to
time) in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading. The Company and the Guarantors shall
use their reasonable best efforts to prevent the issuance of any stop order or
order suspending the qualification or exemption of any of the Series A Notes
under any state securities or Blue Sky laws, and if at any time any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any of the Series A Notes under any
state securities or Blue Sky laws, the Company and the Guarantors shall use
their reasonable best efforts to obtain the withdrawal or lifting of such order
at the earliest possible time.
(b) To furnish you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as you may reasonably request. The Company and the
Guarantors consent to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto, by you in
connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum
or the Offering Memorandum prior to the Closing Date unless you shall previously
have been advised thereof, been furnished a copy thereof and shall not have
objected thereto after being given a reasonable period to review.
(d) If, after the date hereof and prior to consummation of any
Exempt Resales, any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of your counsel, the Offering
Memorandum as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to amend or supplement the Offering Memorandum to
comply with applicable law, forthwith to prepare an appropriate amendment or
supplement to the Offering Memorandum to correct such untrue statement or
omission or so that the Offering Memorandum, as so amended or supplemented, will
comply with applicable law.
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(e) To cooperate with you and your counsel in connection with the
qualification of the Series A Notes under the securities or Blue Sky laws of
such jurisdictions as you may reasonably request and to continue such
qualification in effect so long as required for the Exempt Resales; provided,
however, that neither the Company nor any of the Guarantors shall be required in
connection therewith to register or qualify as a foreign corporation where it is
not now so qualified or to take any action that would subject it to the service
of process in suits or taxation in any jurisdiction where it is not now so
subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, to pay all costs, expenses,
fees and taxes incident to and in connection with: (i) the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum and the
Offering Memorandum (including, without limitation, financial statements and
exhibits) and all amendments and supplements thereto, (ii) the preparation
(including, without limitation, word processing and duplication costs) and
delivery of this Agreement and the other Operative Documents and all preliminary
and final Blue Sky memoranda, (iii) the issuance and delivery by the Company and
the Guarantors of the Securities, (iv) the qualification of the Securities for
offer and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the reasonable fees and disbursements of your
counsel relating to such registration or qualification), (v) furnishing such
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
all amendments and supplements thereto, as may be reasonably requested for use
in connection with Exempt Resales, (vi) the preparation of certificates for the
Securities (including, without limitation, printing and engraving thereof),
(vii) the fees, disbursements and expenses of the Company's and the Guarantors'
counsel and accountants, (viii) all expenses and listing fees in connection with
the application for quotation of the Series A Notes in the National Association
of Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL
("PORTAL"), (ix) all fees and expenses (including fees and expenses of counsel)
of the Company and the Guarantors in connection with approval of the Securities
by DTC for "book-entry" transfer, (x) the rating of the Securities by investment
rating agencies, (xi) the fees and expenses of the Trustee and the Trustee's
counsel in connection with the Note Indenture and the Securities and (xii) the
performance by the Company and the Guarantors of their other obligations under
this Agreement and the other Operative Documents. Except as otherwise provided
in this Agreement, the Initial Purchasers shall pay their own costs and
expenses, including the costs and expenses of their counsel and the expenses of
advertising any offering of the Series A Notes made by the Initial Purchasers.
(g) To use the proceeds from the sale of the Series A Notes in the
manner described in the Offering Memorandum under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Securities.
(i) To do and perform all things required to be done and performed
under this Agreement by them prior to or after the Closing Date and to use their
best efforts to satisfy all conditions precedent on their part to the delivery
of the Series A Notes.
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(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes in a manner that would
require the registration under the Act of the sale to you or Eligible Initial
Purchasers of the Series A Notes.
(k) For so long as it is required to do so under the Indenture, and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), to
make available to any Holder of Series A Notes in connection with any sale
thereof and any prospective purchaser of such Series A Notes from such Holder,
upon their request, the information required by Rule 144A(d)(4) under the Act.
(l) So long as permitted under applicable law, to cause the Exchange
Offer to be made in the appropriate form to permit registration of the Series B
Notes to be offered in exchange for the Series A Notes and to comply with all
applicable federal and state securities laws in connection with the Exchange
Offer.
(m) To comply with the Registration Rights Agreement, and all
agreements set forth in the representation letter of the Company to DTC relating
to the approval of the Securities by DTC for "book-entry" transfer.
(n) To use their best efforts to effect the inclusion of the Series
A Notes in PORTAL.
(o) During a period of three years following the date of this
Agreement, to deliver to each of you promptly upon their becoming available,
copies of all current, regular and periodic reports filed by the Company and the
Guarantors with the Commission or any securities exchange or with any
governmental authority succeeding to any of the Commission's functions.
5. Representations and Warranties.
(a) The Company and each of the Guarantors, jointly and severally,
represent and warrant to each of you that:
(i) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and at the
Closing Date, the Offering Memorandum and any amendment or supplement
thereto will not, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in
this paragraph (i) shall not apply to statements in or omissions from the
Preliminary Offering Memorandum and the Offering Memorandum (or any
supplement or amendment thereto) made in reliance upon in conformity with
information relating to you furnished to the Company and the Guarantors in
writing by you expressly for use therein. No stop order preventing the use
of
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the Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued. Each of the
Preliminary Offering Memorandum and the Offering Memorandum, as of its
date, and each amendment or supplement thereto, as of its date, contains
all the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Act.
(ii) When the Series A Notes are issued and delivered pursuant
to this Agreement, none of the Series A Notes will be of the same class
(within the meaning of Rule 144A under the Act) as securities of the
Company or the Guarantors that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted
in a United States automated interdealer quotation system.
(iii) The Company and each the Guarantors has been duly
incorporated or formed, is validly existing and in good standing under the
laws of its respective jurisdiction of incorporation, has all requisite
corporate power and authority to carry on its business as it is currently
being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties, and is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to so qualify or have such power or authority would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect
on the financial condition, results of operations, business, properties or
prospects of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect").
(iv) The entities listed on Schedule II hereto are all the
subsidiaries, direct or indirect, of the Company which are Guarantors. The
Company owns, directly or indirectly through other subsidiaries, 100% of
the outstanding capital stock or other securities evidencing equity
ownership of such subsidiaries, free and clear of any security interest,
claim, lien, limitation on voting rights or encumbrance (except pursuant
to the Credit Agreement referred to in Section 7(n) hereof); and all of
such securities have been duly authorized, validly issued, are fully paid
and nonassessable and were not issued in violation of any preemptive or
similar rights. There are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of such subsidiaries.
(v) The Company and each of the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Note Indenture, the Registration
Rights Agreement and the other Operative Documents to which it is a party
and to consummate the transactions contemplated hereby and thereby,
including, without limitation, with respect to the Company, the corporate
power and authority to issue, sell and deliver the Securities as provided
herein and therein.
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(vi) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and, assuming due
authorization, execution and delivery by the Initial Purchasers is a valid
and binding agreement of each such person, enforceable against each such
person in accordance with its terms, except to the extent that (A) the
enforcement thereof may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally and an implied covenant of good
faith and fair dealing, and general equitable principles (whether
considered in a proceeding in equity or at law) and (B) any rights to
indemnity or contribution hereunder may be limited by federal or state
securities laws or public policy considerations.
(vii) The Note Indenture has been duly authorized by the
Company and each of the Guarantors and, assuming the due authorization,
execution and delivery of the Note Indenture by the Trustee, the Note
Indenture when duly executed and delivered by each such person, will be
the valid and binding obligation of each such person, enforceable against
each such person in accordance with its terms, except to the extent that
(A) the enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and an implied
covenant of good faith and fair dealing, and general equitable principles
(whether considered in a proceeding in equity or at law) and (B) any
rights to indemnity or contribution thereunder may be limited by federal
and state securities laws or public policy considerations. The Note
Indenture, when executed and delivered, will conform in all material
respects to the description thereof in the Offering Memorandum.
(viii) The Series A Notes have been duly authorized for
issuance and sale to you by the Company pursuant to this Agreement and,
assuming due authorization, execution and delivery of the Note Indenture
by the Trustee and due authentication of the Series A Notes by the
Trustee, the Series A Notes, when issued and authenticated in accordance
with the terms of the Note Indenture and delivered against payment
therefor in accordance with the terms hereof, will be the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Note
Indenture, except to the extent that the enforcement thereof may be
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally and an implied covenant of good faith and fair dealing,
and general equitable principles (whether considered in a proceeding in
equity or at law). The Series A Notes, when issued, authenticated and
delivered, will conform in all material respects to the description
thereof in the Offering Memorandum.
(ix) The Series B Notes have been duly authorized for issuance
by the Company, assuming due authorization, execution and delivery of the
Note Indenture by the Trustee and due authentication of the Series B Notes
by the Trustee, the Series B Notes, and when issued and authenticated in
accordance with the terms of the Note Indenture, the Registration Rights
Agreement and the Exchange Offer, will be the legally valid and binding
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obligations of the Company, enforceable against the Company in accordance
with their terms and entitled to the benefits of the Note Indenture,
except to the extent that the enforcement thereof may be subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally
and an implied covenant of good faith and fair dealing, and general
equitable principles (whether considered in a proceeding in equity or at
law).
(x) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, assuming due authorization,
execution and delivery of the Registration Rights Agreement by the Initial
Purchasers, the Registration Rights Agreement, when duly executed and
delivered by the Company and the Guarantors will be the legally valid and
binding obligation of each such person, enforceable against each such
person in accordance with its terms , except to the extent that (A) the
enforcement thereof may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally and an implied covenant of good
faith and fair dealing, and general equitable principles (whether
considered in a proceeding in equity or at law) and (B) any rights to
indemnity or contribution thereunder may be limited by federal or state
securities laws or public policy considerations. The Registration Rights
Agreement, when executed and delivered, will conform in all material
respects to the description thereof in the Offering Memorandum.
(xi) Neither the Company nor any of the Guarantors is (A) in
violation of its respective charter or bylaws or (B) in default in the
performance of (and there exists no condition that, with notice, the
passage of time (other than the expiration on October 15, 1997 of the
waiver period set forth in the waiver letter, dated August 19, 1997, with
the lenders under the Company's existing credit facility, relating to a
default thereunder which will be extinguished and be of no further force
or effect whatsoever upon the repayment of all amounts outstanding
thereunder out of the proceeds of the offering of the Series A Notes) or
otherwise, would constitute a default under) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties is subject, or (C) in violation of any law, statute, rule,
regulation, judgment or court decree applicable to the Company, any of its
subsidiaries or their assets or properties, except, in the case of (B) or
(C), for such violations or defaults that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(xii) The execution, delivery and performance by the Company
and each of the Guarantors of this Agreement and the other Operative
Documents to which it is a party, the issuance and sale of the Securities,
will not violate or constitute a breach of any of the terms or provisions
of, or a default under (or an event that with notice or the lapse of time,
or both, would constitute a default, or require consent under, or result
in the imposition of a lien or encumbrance on any properties of the
Company or any of its subsidiaries, or an acceleration of indebtedness
pursuant to, (A) the charter or bylaws of the Company or any
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of its subsidiaries, (B) any bond, debenture, note, indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which any of them or their property
is or may be bound, (C) any statute, rule or regulation applicable to the
Company, any of its subsidiaries or any of their assets or properties, or
(D) any judgment, order or decree of any court or governmental agency or
authority having jurisdiction over the Company, any of its subsidiaries or
their assets or properties. No consent, approval, authorization or order
of, or filing, registration, qualification, license or permit of or with,
any court or governmental agency, body or administrative agency is
required for the execution, delivery and performance of this Agreement and
the other Operative Documents by the Company and the Guarantors and the
consummation of the transactions contemplated hereby and thereby, except
such as have been obtained and made (or, in the case of the Registration
Rights Agreement, will be obtained and made) under the Act, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") and state
securities or Blue Sky laws and regulations or such as may be required by
the NASD.
(xiii) There is (A) no action, suit or proceeding before or by
any court, arbitrator or governmental agency, body or official, domestic
or foreign, now pending or, to the Company's knowledge, threatened or
contemplated to which the Company or any of its subsidiaries is or may be
a party or to which the business or property of the Company or any of its
subsidiaries is or may be subject, (B) except as disclosed in the Offering
Memorandum (with respect to clause (I) below), no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency and (C) no injunction, restraining order or order of
any nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or any of its subsidiaries is or may be
subject issued that, in the case of clauses (A), (B) and (C) above, (I)
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect or (II) would reasonably be expected to interfere
with or adversely affect the issuance of the Securities or question the
validity of this Agreement, the Note Indenture, the Registration Rights
Agreement or any other Operative Document.
(xiv) There is (A) no unfair labor practice complaint pending
against the Company or any of its subsidiaries nor, to the best knowledge
of the Company and its subsidiaries, threatened against any of them,
before the National Labor Relations Board, any state or local labor
relations board or any foreign labor relations board which would,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (B) no strike, labor dispute, slowdown or
stoppage pending against the Company or any of its subsidiaries nor, to
the best knowledge of the Company and its subsidiaries, threatened against
the Company or any of its subsidiaries which would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect and
(C) to the best knowledge of the Company and its subsidiaries, no union
representation question existing with respect to the employees of the
Company and its subsidiaries and, to the best knowledge of the Company and
its subsidiaries, no union organizing activities are taking place. Neither
the Company nor any of its subsidiaries has violated any federal, state or
local law relating to
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discrimination in hiring, promotion or pay of employees, nor any
applicable wage or hour laws, nor any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and
regulations thereunder, which violation would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(xv) In the ordinary course of its business, each of the
Company and its subsidiaries conducts periodic reviews of the effect of
Environmental Laws (as defined herein) and the disposal of hazardous or
toxic substances, wastes, pollutants and contaminants on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, all capital and operating
expenditures required for clean-up, closure of properties and compliance
with Environmental Laws, all permits, licenses and approvals, all related
constraints on operating activities and all potential liabilities to third
parties). On the basis of such reviews, the Company has reasonably
concluded that such associated costs and liabilities, individually or in
the aggregate, would not have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries (A) has violated any environmental,
safety or similar law or regulation applicable to it or its business or
property relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants, including, without limitation, the Clean Air Act, as
amended, the Clean Water Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Federal Water
Pollution Control Act, as amended, the Resource Conservation and Recovery
Act, as amended, the Federal Water Pollution Control Act, as amended, the
Resource Conservation and Recovery Act, as amended, the Toxic Substances
Control Act, as amended, the Surface Mining Control and Reclamation Act,
as amended (the "Surface Mining Act"), the Occupational Safety and Health
Act, as amended, and comparable state and local laws and other safety,
health and environmental conservation or protection laws ("Environmental
Laws"), the effect of which would be to cause, individually or in the
aggregate, a Material Adverse Effect, or (B) lacks any notices, permits,
licenses of other approvals required of them under applicable
Environmental Laws or is violating any terms and conditions of any such
notice, permit, license or approval, the effect of which would be to
cause, individually or in the aggregate, a Material Adverse Effect.
Without limitation of the foregoing, there is as of the date hereof no
litigation or action pending or, to the best knowledge of the Company,
threatened against the Company or any of the Guarantors relating to any
violation of any Environmental Laws with respect to the assets or business
of the Company or any of the Guarantors which is required to be disclosed
in the Offering Memorandum, or which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(xvi) Each of the Company and its subsidiaries is in
compliance with all of the current permits ("Surface Mining Permits") held
by it issued pursuant to the Surface Mining Act, or pursuant to an
equivalent state regulatory program granted primacy under the provisions
of 30 U.S.C. Section 1253 (collectively, "Surface Mining Laws"), including
the mining plans as respects reclamation, coal processing and related
activities as submitted to
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the Office of Surface Mining or any state equivalent agency having
jurisdiction over a state program granted primacy under the provisions of
30 U.S.C. Section 1253 ("Surface Mining Enforcement Agency") to obtain the
Surface Mining Permits, the failure to be in compliance with which would,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries
has been subjected to or is as of the date hereof subject to any bond
forfeiture, permit suspension or revocation proceedings instituted by any
Surface Mining Enforcement Agency and neither the Company nor any of its
subsidiaries is presently "permit-blocked" in any state or under the
federal Applicant Violator System which would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(xvii) Each of the Company and its subsidiaries has (A) good
and marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, and good title to all leasehold estates
described in the Offering Memorandum as being leased by it, except (i)
such as are described in the Offering Memorandum, (ii) for liens for taxes
not yet due and payable, (iii) for liens and encumbrances pursuant to the
Credit Facility (as defined in the Offering Memorandum) and as
contemplated by the Amended and Restated Credit Facility (as defined in
the Offering Memorandum) or (iv) as would not, individually or in the
aggregate, have a Material Adverse Effect (it being understood that liens,
charges, encumbrances and restrictions that do not materially interfere
with the use made or proposed to be made of such property would not have a
Material Adverse Effect), (B) all licenses, certificates, permits,
authorizations, approvals, franchises and other rights from, and has made
all declarations and filings with, all federal, state and local
authorities, all self-regulatory authorities and all courts and other
tribunals (each an "Authorization") necessary to engage in the business
currently conducted by it in the manner described in the Offering
Memorandum, except where failure to hold such Authorizations would have
not have a Material Adverse Effect and (C) no reason to believe that any
governmental body or agency is considering limiting, suspending or
revoking any such Authorization. The Company and its subsidiaries are in
compliance in all material respects with the terms and conditions of all
such Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto, except where the
failure to comply would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. All leases to which
the Company or any of its subsidiaries is a party are valid and binding
and no default by the Company or any of its subsidiaries has occurred and
is continuing thereunder, except where such default or defaults, would
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect. Except to the extent described in the Offering
Memorandum, the leases, options to lease or other arrangements held by the
Company and the Guarantors reflect in all material respects the rights of
the Company and the Guarantors to explore the unexplored and undeveloped
acreage described in the Offering Memorandum. The Company and the
Guarantors have exercised reasonable diligence with respect to acquiring
or otherwise procuring such leases, options to lease and other
arrangements,
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although the investigation of record title made by the Company and the
Guarantors generally involved no more than a preliminary review of local
records, as is customary in the industry.
(xviii) Each of the Company and its subsidiaries owns or
possesses all patents, patent right, licenses, inventions, copyright,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, the "Intellectual
Property") presently employed by it in connection with the businesses now
operated by them, except where the failure to own or possess or have the
ability to acquire any of the Intellectual Property would not reasonably
be expected to have a Material Adverse Effect, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing, which if such assertion were sustained, would reasonably be
expected to have a Material Adverse Effect.
(xix) All tax returns required to be filed by the Company or
any of its subsidiaries, in all jurisdictions, have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided, those
currently payable without penalty or interest or those the failure to pay
would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries knows of any material proposed additional tax assessments
against it or any of its subsidiaries.
(xx) Neither the Company nor any of the Guarantors (A) is, or
after giving effect to the offering and sale of the Series A Notes and the
application of the proceeds thereof as described in the Offering
Memorandum will be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
or (B) is a "holding company" or a "subsidiary company" or an "affiliate"
or a holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(xxi) Other than pursuant to the Registration Rights Agreement
and the Stockholders Agreement (as defined in the Offering Memorandum),
there are no holders of securities of the Company or any of the Guarantors
who, by reason of the execution by the Company and each of the Guarantors
of this Agreement or any other Operative Document to which it is a party
or the consummation of the transactions contemplated hereby and thereby,
have the right to request or demand that the Company or any Guarantor
register under the Act securities held by them.
(xxii) The authorized, issued and outstanding capital stock of
the Company has been duly and validly authorized and issued, is fully paid
and nonassessable and was not issued in violation of or subject to any
preemptive or similar rights. The Company had at
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June 30, 1997, an authorized and outstanding capitalization as set forth
in the Offering Memorandum.
(xxiii) Each certificate signed by any officer of the Company
or any of the Guarantors and delivered to the Initial Purchasers or
counsel for the Initial Purchasers shall be deemed to be a representation
and warranty by the Company or Guarantors to each Initial Purchaser as to
the matter covered thereby.
(xxiv) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that: (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; and (C) access to assets is permitted only in
accordance with management's general or specific authorization.
(xxv) In accordance with customary industry practices, the
Company and each of its subsidiaries maintains insurance covering their
properties, operations, personnel and businesses. Such insurance insures
against such losses and risks as are adequate in accordance with customary
industry practice to protect the Company and its subsidiaries and their
businesses. Neither the Company nor any of its subsidiaries has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in force on the
Closing Date.
(xxvi) Neither the Company nor any of it subsidiaries has (A)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or any of its
subsidiaries to facilitate the sale or resale of the Securities or (B)
except as permitted by Regulation M under the Exchange Act or pursuant to
this Agreement, since the date of the Preliminary Offering Memorandum (i)
sold, bid for, purchased or paid any person any compensation for
soliciting purchases of, the Securities or (ii) paid or agreed to pay to
any person any compensation for soliciting another to purchaser any other
securities of the Company or any of its subsidiaries.
(xxvii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchasers or
the Exempt Resales as contemplated hereby and in the Offering Memorandum
assuming (A) that the purchasers who buy the Series A Senior Notes in the
Exempt Resales are either QIBs or Regulation S Purchasers and (B) the
accuracy of the Initial Purchasers' representations contained herein and
their compliance with the agreements set forth herein. No form of general
solicitation or general advertising was used by the Company or the
Guarantors or any of their
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representatives in connection with the offer and sale of any of the Series
A Notes or in connection with Exempt Resales, including, but not limited
to, articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as
the Series A Notes have been issued and sold by the Company or the
Guarantors within the six-month period immediately prior to the date
hereof.
(xxviii) The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Series A Notes to be
purchased by the Eligible Initial Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986. The representation made
by the Company and the Guarantors in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Initial
Purchasers as set forth in the Offering Memorandum under the Section
entitled "Notice to Investors."
(xxix) Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing
Date, except as set forth in the Offering Memorandum, neither the Company
nor any of its subsidiaries has incurred any liabilities or obligations,
direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, nor entered into any material transaction
not in the ordinary course of business, individually or in the aggregate,
nor has there occurred any material adverse change, or any development
which may reasonably be expected to involve a material adverse change, in
the properties, business, results of operations, financial condition or
prospects of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Change") and there have not been dividends or
distributions of any kind declared, paid or made by the Company or any of
its subsidiaries (other than on a pro rata basis to the Company) on any
class of its capital stock.
(xxx) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Series A Notes, the application of
the proceeds from the issuance and sale of the Series A Notes and the
consummation of the transactions contemplated thereby as set forth in the
Offering Memorandum, will violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(xxxi) The accountants, Coopers & Lybrand L.L.P. and Ernst &
Young LLP, who have certified or shall certify the financial statements
and supporting schedules included or to be included as part of the
Offering Memorandum are independent accountants within the meaning of the
Act and the rules and regulations promulgated thereunder. The consolidated
historical statements fairly present in all material respects the
consolidated financial condition and results of operations of the Company
and its subsidiaries at the
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respective dates and for the respective periods indicated, subject in the
case of unaudited combined financial statements to normal year-end
adjustments, in accordance with generally accepted accounting principles
consistently applied throughout such periods, except as stated therein.
The pro forma financial statements contained in the Offering Memorandum
have been prepared on a basis consistent with such historical statements,
except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis and present fairly the historical
and proposed transactions contemplated by the Agreement and the other
Operative Documents. Other financial and statistical information and data
(including, without limitation, with respect to production) included in
the Offering Memorandum, historical and pro forma, are fairly presented in
all material respects and prepared on a basis consistent with such
financial statements and the books and records of the Company and its
subsidiaries.
(xxxii) Other than as contemplated by this Agreement, there
are no contracts, agreement or understandings between the Company or any
of its subsidiaries and any person that would give rise to a valid claim
against the Company, its subsidiaries or any Initial Purchaser for a
brokerage commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Series A Notes.
(xxxiii) The information which was supplied by the Company to
John T. Boyd Company ("Boyd"), independent coal engineers, for purposes of
evaluating the coal reserves of the Company and its subsidiaries as of
June 1, 1997, including, without limitation, production, costs of
operation and development, current prices for production, agreements
relating to current and future operations and sales of production, was
true and correct in all material respects on the dates such estimates were
made and such information was supplied and was prepared in accordance with
customary industry practices, as indicated in the letter of Boyd included
in the Offering Memorandum at Annex A-2 (the "Boyd Letter"); Boyd was, as
of the date of the Boyd Letter, and is, as of the date hereof, independent
with respect to the Company and the Guarantors; other than normal
production of the reserves, the Company is not aware of any facts or value
of future net cash flows therefrom, as described in the Offering
Memorandum and as reflected in the Boyd Letter and the reserve report
referenced therein; estimates of such reserves as described in the
Definitive Memorandum and reflected in the Boyd Letter and the reserve
report referenced therein comply in all material respects to the
applicable requirements of Regulation S-X and Industry Guide 7 under the
Act.
(xxxiv) The Series A Notes offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions and such securities have been and will be represented upon
issuance by a global security that may not be exchanged for definitive
securities until the expiration of the Restricted Period (as defined in
Regulation S) and only upon certification of beneficial ownership of the
Securities by a non-U.S. person or a U.S. person who purchased such
securities in a transaction that was exempt from the
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registration requirements of the Act, which U.S. person will acquire an
interest in a Transfer Restricted Security (as defined in the Registration
Rights Agreement).
(xxxv) None of the Company or any of its affiliates or any
person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect
to the Series A Notes, and the Company and its affiliates and all persons
acting on their behalf have complied with and will comply with the
offering restrictions requirements of Regulation S in connection with the
offering of the Series A Notes outside the United States.
The Company and the Guarantors acknowledge that the Initial Purchasers
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 7 hereof, counsel to the Company and the Guarantors and
counsel to the Initial Purchasers will rely upon the accuracy and truth of the
foregoing representations and hereby consent to such reliance.
(b) Each Initial Purchaser represents and warrants to the Company,
the Guarantors and the other Initial Purchaser and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(ii) Such Initial Purchaser (A) is not acquiring the Series A
Notes with a view to any distribution thereof that would violate the Act
or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and to non-U.S.
persons outside the United States in offshore transactions in reliance
upon Regulation S under the Act.
(iii) No form of general solicitation or general advertising
has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of any of the Series
A Notes, including, but not limited to, articles, notices or other
communication published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(iv) Such Initial Purchaser agrees that, in connection with
the Exempt Resales, (A) it will offer to sell the Series A Notes only to,
and will solicit offers to buy the Series A Notes only from (1) QIBs who
in purchasing such Series A Notes will be deemed to have represented and
agreed that they are purchasing the Series A Notes for their own accounts
or accounts with respect to which they exercise sole investment discretion
and that they or such accounts are QIBs and (2) Regulation S Purchasers
and (B) it will take reasonable steps to inform persons acquiring Series A
Notes from such Initial Purchaser or
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its affiliates that such Series A Notes will not have been registered
under the Act and may be resold, pledged or otherwise transferred only
(I)(w) to a person who the seller reasonably believes is a QIB in a
transaction meeting the requirements of Rule 144A, (x) in a transaction
meeting the requirements of Rule 144, (y) to a foreign person in a
transaction meeting the requirements of Rule 904 under the Act or (z) in
accordance with another exemption from the registration requirements of
the Act (and based upon an opinion of counsel if the Company so requests),
(II) to the Company, (III) pursuant to an effective registration statement
under the Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (C) that the holder will, and each subsequent holder is
required to, notify any purchaser from it of the security evidenced
thereby of the resale restrictions set forth in (B) above.
(v) Such Initial Purchaser agrees that it has offered the
Series A Notes and will offer and sell the Series A Notes (i) as part of
their distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering of the Series A Notes and the
Closing Date, only in accordance with Rule 144A, Regulation S or another
exemption from the registration requirements of the Securities Act.
Accordingly, neither such Initial Purchaser, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Rule 901(b) of Regulation S
with respect to the Series A Notes, and such Initial Purchaser, its
affiliates and all persons acting on its or their behalf have complied and
will comply with the offering restrictions requirements of Regulation S.
(vi) Such Initial Purchaser agrees that the Series A Notes
offered and sold in reliance on Regulation S have been and will be offered
and sold only in offshore transactions and that such securities have been
and will be represented upon issuance by a global security that may not be
exchanged for definitive securities until the expiration of the Restricted
Period (as defined in Regulation S) and only upon certification of
beneficial ownership of the securities by a non-U.S. person or a U.S.
person who purchased such securities in a transaction that was exempt from
the registration requirements of the Securities Act, which U.S. person
will acquire an interest in a Transfer Restricted Security (as defined in
the Registration Rights Agreement).
(vii) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Series A Notes from it during the Restricted
Period (as defined in Regulation S) a confirmation or notice to
substantially the following effect:
"The Series A Notes covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered and sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of their
distribution
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at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S (or Rule 144A or in
transactions that are exempt from the registration requirements of
the Securities Act) under the Securities Act. Terms used above have
the meanings assigned to them in Regulation S."
Such Initial Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Series A Notes, except with its affiliates or with the prior
written consent of the Company.
(viii) Such Initial Purchaser further represents and agrees
that (i) it has not offered or sold and will not offer or sell any Series
A Notes to persons in the United Kingdom prior to the expiry of the period
of six months from the issue date of the Series A Notes, except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Series A Notes in, from or otherwise involving the United Kingdom and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issuance of the Series A Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.
(ix) Such Initial Purchaser agrees that it will not offer,
sell or deliver any of the Series A Notes in any jurisdiction outside the
United States except under circumstances that will result in compliance
with the applicable laws thereof, and that it will take at its own expense
whatever action is required to permit its purchase and resale of the
Series A Notes in such jurisdictions. Such Initial Purchaser understands
that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for
such purpose.
(x) Such Initial Purchaser agrees not to cause any
advertisement of the Series A Notes to be published in any newspaper or
periodical or posted in any public place and not to issue any circular
relating to the Series A Notes, except such advertisements as include the
statements required by Regulation S.
(xi) Such Initial Purchaser has not taken and will not take,
directly or indirectly, any action prohibited by Regulation M of the
Exchange Act in connection with the offering of the Series A Notes, to the
extent applicable.
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Terms used in this Section 7 that have the meanings assigned to them in
Regulation S are used herein as so defined.
Such Initial Purchaser also understands that the Company, the Guarantors
and, for purposes of the opinions to be delivered to you pursuant to Section 7
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchaser will rely upon the accuracy and truth of the foregoing representations
and hereby consents to such reliance.
6. Indemnification.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each of the Initial Purchasers and (ii) each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) either of the Initial Purchasers (any of the
persons referred to in this clause (ii) being hereinafter referred to as a
"controlling person"), and (iii) the respective officers, directors, partners,
employees, representatives and agents and affiliates of either of the Initial
Purchasers or any controlling person (any person referred to in clause (i), (ii)
or (iii) may hereinafter be referred to as an "Indemnified Person") to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including, without limitation, and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Person) directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or the Offering Memorandum (or
any amendment or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in light of the circumstances under which they were
made) not misleading, except (i) insofar as such losses, claims, damages,
liabilities or expenses are based upon an untrue statement or omission or
alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to such Initial Purchaser furnished in
writing to the Company and the Guarantors by such Initial Purchaser expressly
for use therein or (ii) the indemnity agreement contained in this Section 6(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that (A) a copy of the Offering Memorandum was not sent or given
to such person at or prior to the written confirmation of the sale of such
Securities to such person, (B) the untrue statement in or omission from the
Preliminary Offering Memorandum was corrected in the Offering Memorandum (as
amended or supplemented) and such statement or omission formed the basis for the
claim giving rise to such loss, and (C) sufficient quantities of the Offering
Memorandum were delivered to the Initial Purchasers on a timely basis. The
Company and each Guarantor also agree, jointly and severally, to reimburse each
Indemnified Person for the reasonable fees and expenses (including, without
limitation, the reasonable fees and expenses of counsel) promptly after receipt
of a bill therefor in connection with enforcing such
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Indemnified Person's rights under this Agreement (including, without limitation,
its rights under this Section 6). The Company and the Guarantors shall notify
you promptly of the institution, threat or assertion of any claim, proceeding
(including any governmental investigation) or litigation in connection with the
matters addressed by this Agreement which involves the Company or the Guarantors
or an Indemnified Person.
(b) In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the Indemnified
Persons with respect to which indemnity may be sought against the Company or the
Guarantors, such Indemnified Person shall promptly notify the Company and the
Guarantors in writing (provided, that the failure to give such notice shall not
relieve the Company or the Guarantors of their obligations pursuant to this
Agreement, to the extent it is not materially prejudiced as a result thereof)
and the Company and the Guarantors shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person and
payment of all fees and expenses (regardless of whether it is ultimately
determined that an Indemnified Person is not entitled to indemnification
hereunder). Such Indemnified Person shall have the right to employ its own
counsel in any such action and the fees and expenses of such counsel shall be
paid by such Indemnified Person unless (i) the employment of such counsel shall
have been specifically authorized in writing by the Company, (ii) the Company or
the Guarantors shall have failed to assume the defense and employ counsel or
(iii) the named parties to any such action (including any impleaded parties)
include both such Indemnified Person and the Company or the Guarantors and such
Indemnified Person shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Company or the Guarantors (in which case the Company and
the Guarantors shall not have the right to assume the defense of such action on
behalf of such Indemnified Person, it being understood, however, that the
Company and the Guarantors shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Indemnified Persons, which firm shall be
designated in writing by DLJ and that all such fees and expenses shall be
reimbursed promptly after receipt of a bill therefor). The Company and the
Guarantors shall not be liable for any settlement of any such action or
proceeding settled without the Company's prior written consent, but if settled
with the Company's written consent, which consent will not be unreasonably
withheld, the Company and the Guarantors agree to indemnify and hold harmless
any Indemnified Person from and against any loss, claim, damage, liability or
expense by reason of any such settlement. Notwithstanding the immediately
preceding sentence, if at any time an Indemnified Person shall have requested an
indemnifying party to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than twenty (20) business days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. The Company and the Guarantors shall not,
without the prior written consent of an Indemnified Person, settle or compromise
or consent to the entry of judgment in or otherwise
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seek to terminate any pending or threatened action, claim, litigation or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not any Indemnified Person is a party thereto), unless
such settlement, compromise, consent or termination includes an unconditional
release of such Indemnified Person from all liability arising out of such
action, claim, litigation or proceeding.
(c) Each of the Initial Purchasers agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors, officers and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company
or the Guarantors, and the respective officers, directors, partners, employees,
representatives and agents and affiliates of the Company, the Guarantors and
each such controlling person, to the same extent as the foregoing indemnity from
the Company and the Guarantors to each of the Indemnified Persons, but only with
respect to claims and actions based on information relating to such Initial
Purchaser furnished in writing by such Initial Purchaser to the Company and the
Guarantors expressly for use in the Offering Memorandum. In case any action or
proceeding shall be brought against the Company, the Guarantors, or any such
other indemnified person referred to in this Section 6(c) based on the Offering
Memorandum or any amendment thereof or supplement thereto and in respect of
which indemnity may be sought against an Initial Purchaser, such Initial
Purchaser shall have the same rights and duties as are given to the Company and
the Guarantors by Section 6(b) hereof (except that if the Company and the
Guarantors shall have assumed the defense thereof, such Initial Purchaser shall
not be required to do so, and in such case such Initial Purchaser may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at such Initial Purchaser's expense), and the
Company, the Guarantors and each other indemnified person referred to in this
Section 6(c) shall have the same rights and duties as are given to such Initial
Purchaser by Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other hand from the offering of the Series A
Notes or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party and the indemnified party, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and either of the Initial Purchasers, on the other
hand, shall be deemed to be in the same proportion as the total proceeds from
the offering of the Series A Notes (net of commissions but before deducting
expenses) received by the Company and the total commissions received by such
Initial Purchaser bear to the total price of the Series A Notes paid in the
Exempt Resales, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, shall be determined
by reference to, among other
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things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to information
supplied by the Company or any Guarantor, on the one hand, and the Initial
Purchasers, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The indemnity set forth herein shall be in addition to any liability
or obligation the indemnifying party may otherwise have to any indemnified
party.
The Company, the Guarantors and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6, neither of
the Initial Purchasers (nor the related Indemnified Persons) shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
total discounts and commissions received by such Initial Purchaser with respect
to the Series A Notes, exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 6(d) are several in proportion to the respective principal amount
of Series A Notes purchased by each of the Initial Purchasers hereunder and not
joint.
7. Conditions of Initial Purchasers' Obligations. The several obligations
of the Initial Purchasers under this Agreement are subject to the satisfaction
of each of the following conditions:
(a) All of the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if made on and
as of the date hereof and the Closing Date, respectively. The Company and the
Guarantors shall have performed or complied with all of the agreements herein
contained and required to be performed or complied with by them at or prior to
the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers as promptly as practicable, on the date of
this Agreement or at such later date and time as to which you may agree, and no
stop order suspending the qualification or exemption from qualification of any
of the Series A Notes in any jurisdiction referred to in Section 4(e) shall have
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
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(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance of any of the Series A
Notes; no action, suit or proceeding shall be pending against or affecting or,
to the knowledge of either of the Company or any Guarantor, threatened against,
the Company or any Guarantor or any of their respective subsidiaries before any
court or arbitrator or any governmental body, agency or official that, if
adversely determined, would prohibit, interfere with or adversely affect the
issuance of the Series A Notes or would have a Material Adverse Effect, or in
any manner question the validity of this Agreement, the Note Indenture, the
Securities or the Registration Rights Agreement; and no stop order preventing
the use of the Offering Memorandum, or any amendment or supplement thereto, or
any order asserting that any of the transactions contemplated by this Agreement
are subject to the registration requirements of the Act shall have been issued.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material change, or any
development that is reasonably likely to result in a material change, in the
capital stock or the long-term debt, or material increase in the short-term
debt, of the Company or any of its subsidiaries from that set forth in the
Offering Memorandum, (ii) no dividend or distribution of any kind shall have
been declared, paid or made by the Company or any if its subsidiaries on any
class of its capital stock (other than on a pro rata basis to the Company), and
(iii) neither the Company nor any of its subsidiaries shall have incurred any
liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to the Company and its subsidiaries, taken as
a whole, and that are required to be disclosed on a balance sheet in accordance
with generally accepted accounting principles and are not disclosed on the
latest balance sheet included in the Offering Memorandum. Since the date hereof
and since the dates as of which information is given in the Offering Memorandum,
there shall not have been any Material Adverse Change.
(e) You shall have received certificates, dated the Closing Date,
signed by (i) the President or any Vice President and (ii) a principal financial
or accounting officer of the Company and each of the Guarantors confirming, as
of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d)
of this Section 7.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Simpson
Thacher & Bartlett, counsel for the Company and the Guarantors to the effect
that:
(i) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the State
of Delaware, and has full corporate power and authority to conduct its
business as described in the Offering Memorandum.
(ii) Each of the Guarantors listed on Schedule II hereto which
is identified thereon as incorporated in the State of Delaware (the
"Delaware Guarantors") has
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been duly incorporated and is validly existing and in good standing as a
corporation under the laws of the State of Delaware and each such
Guarantor has full corporate power and authority to conduct its business
as described in the Offering Memorandum.
(iii) The Company and each of the Delaware Guarantors has duly
authorized, executed and delivered this Agreement; and each of the
Guarantors listed on Schedule II hereto which is identified thereon as
incorporated in a state other than the State of Delaware (the
"Non-Delaware Guarantors") has duly executed and delivered this Agreement.
(iv) The Company and each of the Delaware Guarantors has duly
authorized, executed and delivered the Note Indenture and each of the
Non-Delaware Guarantors has duly executed and delivered the Note
Indenture. Assuming that the Note Indenture is the valid and legal binding
obligation of the Trustee and that the Non-Delaware Guarantors have duly
authorized the Note Indenture, the Note Indenture constitutes a valid and
legally binding obligation of the Company and the Guarantors enforceable
against each such person in accordance with its terms.
(v) The Series A Notes have been duly authorized, executed and
issued by the Company and, assuming due authentication thereof by the
Trustee and upon payment and delivery in accordance with this Agreement,
will constitute the valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Note Indenture.
(vi) The Guarantees to be endorsed on the Senior A Notes have
been duly authorized by each Delaware Guarantor and, assuming the due
authorization of the Guarantees by the Non-Delaware Guarantors and the due
authentication of the Series A Notes by the Trustee and upon payment and
delivery in accordance with this Agreement of the Series A Notes, will
constitute a valid and legally binding obligation of each Guarantor,
enforceable against such Guarantor in accordance with its terms.
(vii) The Registration Rights Agreement has been duly
authorized by the Company and each of the Delaware Guarantors. Assuming
the due authorization of the Registration Rights Agreement by the
Non-Delaware Guarantors, when the Registration Rights Agreement is duly
executed and delivered by each such person, it will constitute a valid and
legally binding obligation of each such person, enforceable against the
Company and the Guarantors in accordance with its terms.
(viii) No registration under the Act of any of the Series A
Notes, and no qualification of the Indenture under the Trust Indenture Act
is required for the sale of the Series A Notes by the Company to the
Initial Purchasers or the sale of the Notes by the Initial Purchasers or
the initial purchasers therefrom solely in the manner contemplated by this
Agreement, the Note Indenture and the Offering Memorandum.
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(ix) The issue and sale of the Series A Notes by the Company
and the compliance by the Company and the Delaware Guarantors with all of
the provisions of this Agreement, the Note Indenture, the Registration
Rights Agreement, the Guarantees and the Series A Notes, will not breach
or result in a default under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument identified on an annexed
Schedule furnished to such counsel by the Company and which the Company
has represented lists all material agreements and instruments to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound or to which any of the property or assets
of the Company or any of its Subsidiaries is subject, nor will such action
violate the Certificate of Incorporation or By-laws of the Company or any
Federal or New York statute or the Delaware General Corporation Law or any
order known to such counsel issued pursuant to any Federal or New York
statute or the Delaware General Corporation Law by any court or
governmental agency or body that has jurisdiction over the Company or any
of the Delaware Guarantors or any of their respective properties.
(x) The statements made in the Offering Memorandum under the
caption "Description of Senior Notes," "Description of Capital Stock" and
"Description of Certain Indebtedness," insofar as they purport to
constitute summaries of certain terms of documents referred to therein,
constitute accurate summaries of the terms of such documents in all
material respects.
(xi) The Company and each of the Delaware Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement, the Note Indenture, the Registration
Rights Agreement, the Series A Notes and the Guarantees to which it is a
party, including, without limitation, with respect to the Company, the
corporate power and authority to issue, sell and deliver the Series A
Notes as provided herein.
(xii) The Note Indenture complies as to form in all material
respects with the requirements of the Trust Indenture Act applicable to an
indenture which is qualified thereunder.
(xiii) Neither the Company nor any Guarantor is or, after
giving effect to the offering and sale of the Series A Notes and the
application of the proceeds thereof as described in the Offering
Memorandum will be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Such counsel shall also state that (A) their opinions in paragraphs (iv),
(v), (vi) and (vii) are subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and (B) their opinion in
paragraph (vii) is further subject to the qualification that the enforceability
of the Company's obligations under the Registration Rights Agreement may be
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limited by considerations of public policy. Such counsel shall not express any
opinion as to the validity, legally binding effect or enforceability of (A) any
provision of the Registration Rights Agreement or any related provisions of the
Note Indenture that requires or relates to payment of any interest at a rate or
in an amount which a court would determine in the circumstances under applicable
law to be commercially unreasonable or a penalty or a forfeiture and (B) of the
waiver of rights and defenses provision contained in Section 4.6 of the Note
Indenture or the specific performance provisions contained in the Registration
Rights Agreement.
In addition, such counsel shall state that such counsel has not
independently verified the accuracy, completeness or fairness of the statements
made or included in the Offering Memorandum and takes no responsibility
therefor, except as and to the extent set forth in paragraph (x) above. In the
course of the preparation by the Company of the Offering Memorandum, such
counsel participated in conferences with certain officers and employees of the
Company, with representatives of Coopers & Lybrand L.L.P. and Ernst & Young LLP
and with counsel to the Company. Based upon such counsel's examination of the
Offering Memorandum, such counsel's investigations made in connection with the
preparation of the Offering Memorandum and such counsel's participation in the
conferences referred to above, such counsel has no reason to believe that the
Offering Memorandum contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that such counsel need not express any belief with respect to (i) the
statements made in the Offering Memorandum under the captions entitled "Risk
Factors--Government Regulation of the Mining Industry," "Risk Factors--Impact of
Clean Air Act Amendments on Coal Consumption" and "Business--Regulation and
Laws" and (ii) the financial statements or other financial or statistical data
contained in the Offering Memorandum, including, without limitation, the Boyd
Report (as defined in the Offering Memorandum).
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the federal laws of the United States of America,
the laws of the State of New York, and the General Corporation Law of Delaware
and may rely as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and public officials which
are furnished to the Initial Purchasers.
The opinions of such counsel described in this paragraph shall be rendered
to you at the request of the Company and the Guarantors and shall so state
therein.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Spilman,
Thomas & Battle, counsel to the Company and the Guarantors, to the effect that:
(i) Each of the Non-Delaware Guarantors is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has the corporate power to
conduct its business as described in the Offering Memorandum.
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(ii) All of the outstanding capital stock or other securities
evidencing equity ownership of the Non-Delaware Guarantors are owned of
record by Anker Group, Inc. To the extent of such counsel's knowledge, the
ownership of such capital stock or other securities evidencing such equity
ownership is free and clear of any security interest, adverse claim of
ownership, lien or limitation on dispositive or voting rights, except (A)
as otherwise disclosed in an annexed schedule and (B) for such liens and
encumbrances as are contemplated by the Credit Agreement. All of such
securities have been duly authorized, validly issued, are fully paid and
nonassessable and, to the extent of such counsel's knowledge, were not
issued in violation of any preemptive or similar rights. To the extent of
such counsel's knowledge, there are no outstanding subscriptions, rights,
warrants, calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of any Non-Delaware Guarantor.
(iii) All necessary corporate action has been taken to duly
authorize each of the Non-Delaware Guarantors to enter into and perform
its obligations under the Purchase Agreement, the Note Indenture, the
Registration Rights Agreement and the other Operative Documents to which
it is a party.
(iv) The execution, delivery and performance of the Operative
Documents to which each Non-Delaware Guarantor is a party (A) does not
violate its respective charter or bylaws, (B) to the extent of such
counsel's knowledge, does not constitute a default in the performance of
any bond, debenture, note, other evidence of indebtedness, indenture,
mortgage, deed of trust or other material agreement to which it is a party
or by which it is bound or to which any of its properties is subject, or
(C) does not violate any applicable law, statute, rule, regulation, or, to
the extent of such counsel's knowledge, any judgment or court decree,
applicable to any of the Non-Delaware Guarantors; except for, in the case
of (B) and (C), any violation or default that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(v) To the extent of such counsel's knowledge, except as
disclosed on an annexed schedule, there are no actions, suits or
proceedings, including arbitration proceedings pending against or
affecting any of the Non-Delaware Guarantors before any West Virginia
court or Federal District Court sitting in West Virginia or any West
Virginia governmental department or agency, or threatened against any of
them, which, if adversely determined against them, would have a Material
Adverse Effect.
(vi) The statements in the Offering Memorandum under the
captions "Risk Factors--Government Regulation of the Mining Industry,"
"Risk Factors--Impact of Clean Air Act Amendments on Coal Consumption" and
"Business--Regulation and Laws," insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, fairly and accurately summarize in all material respects the
information set forth therein with respect to such legal matters,
documents or proceedings.
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In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the federal laws of the United States of America,
the laws of the States of West Virginia and Virginia, and may rely as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and any of the Non-Delaware Guarantors and public
officials which are furnished to the Initial Purchasers.
The opinions of such counsel described in this paragraph shall be rendered
to you at the request of the Company and the Guarantors and shall so state
therein.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of a counsel to
the Company and the Guarantors (satisfactory to you and your counsel)
substantially to the effect set forth in Section 7(g)(ii), as applicable, with
respect to the Delaware Guarantors.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the General Corporation Law of Delaware and may
rely as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and any of the Delaware
Guarantors and public officials which are furnished to the Initial Purchasers.
The opinions of such counsel described in this paragraph shall be rendered
to you at the request of the Company and the Guarantors and shall so state
therein.
(i) You shall have received an opinion, dated the Closing Date, of
Andrews & Kurth L.L.P., your counsel, in form and substance reasonably
satisfactory to you, covering such matters as are customarily covered in such
opinions.
(j) At the time this Agreement is executed and delivered by the
Company and the Guarantors and on the Closing Date, you shall have received
letters, substantially in the forms previously approved by you, from each of
Coopers & Lybrand L.L.P. and Ernst & Young LLP, independent public accountants,
with respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(k) The Initial Purchasers and Andrews & Kurth L.L.P. shall have
been furnished with such documents and opinions, in addition to those set forth
above, as they may reasonably require for the purpose of enabling them to review
or pass upon the matters referred to in this Section 7 and in order to evidence
the accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
(l) Prior to the Closing Date, the Company and the Guarantors shall
have furnished to you such further information, certificates and documents as
you may reasonably request.
(m) The Company, the Guarantors and the Trustee shall have entered
into the Note Indenture and you shall have received counterparts, conformed as
executed, thereof.
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(n) The Company and the Guarantors shall have entered into the
Amended and Restated Credit Facility (the "Credit Agreement") and you shall have
received counterparts, conformed as executed, thereof.
(o) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and you shall have received counterparts,
conformed as executed, thereof.
All opinions, certificates, letters and other documents required by this
Section 7 to be delivered by the Company and the Guarantors will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you. The Company and the Guarantors will furnish the
Initial Purchasers with such conformed copies of such opinions, certificates,
letters and other documents as they shall reasonably request.
8. Defaults. If, on the Closing Date, either of the Initial Purchasers
shall fail or refuse to purchase Series A Notes that it has agreed to purchase
hereunder on such date, and the aggregate principal amount of such Series A
Notes that such defaulting Initial Purchaser agreed but failed or refused to
purchase does not exceed 10% of the total principal amount of such Series A
Notes that both of the Initial Purchasers are obligated to purchase on such
Closing Date, the non-defaulting Initial Purchaser shall be obligated to
purchase the amount of such Series A Notes that such defaulting Initial
Purchaser agreed but failed or refused to purchase. If, on the Closing Date,
either of the Initial Purchasers shall fail or refuse to purchase Securities in
an aggregate principal amount that exceeds 10% of such total principal amount
and arrangements satisfactory to the other Initial Purchaser and the Company for
the purchase of such Series A Notes are not made within 48 hours after such
default, this Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchaser or the Company and the Guarantors, except as
otherwise provided in Section 9. In any such case that does not result in
termination of this Agreement, the Initial Purchasers or the Company may
postpone the Closing Date for not longer than seven (7) days in order that the
required changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Initial Purchaser from liability in respect of any default
by any such Initial Purchaser under this Agreement.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) subsequent to the date information is provided in the Offering
Memorandum, any Material Adverse Change which, in your judgment, materially
impairs the investment quality of any of the Series A Notes, (ii) any outbreak
or escalation of hostilities or other national or international calamity or
crisis or material adverse change in the financial markets of the United States
or elsewhere, or any other substantial national or international calamity or
emergency if the effect of such outbreak, escalation, calamity, crisis, material
adverse change or emergency would, in your judgment, make it impracticable or
inadvisable to market any of the Series A Notes or to enforce contracts for the
sale of any of the Series A Notes,
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(iii) any suspension or limitation of trading generally in securities on the New
York Stock Exchange or in the over-the-counter markets or any setting of minimum
prices for trading on such exchange or market, (iv) any declaration of a general
banking moratorium by either federal or New York authorities, (v) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs that in your judgment has a material adverse effect
on the financial markets in the United States, and would, in your judgment, make
it impracticable or inadvisable to market any of the Series A Notes or to
enforce contracts for the sale of any of the Series A Notes, (vi) the enactment,
publication, decree, or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which, in
your judgment, would have a Material Adverse Effect, or (vii) any securities of
the Company or any of its subsidiaries shall have been downgraded or placed on
any "watch list" for possible downgrading by any nationally recognized
statistical rating organization.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Company and the Guarantors, their
respective officers and directors and of the Initial Purchasers set forth in or
made pursuant to this Agreement shall remain operative and in full force and
effect, and will survive delivery of and payment for the Series A Notes,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of either of the Initial Purchasers or by or on behalf of
the Company and the Guarantors, the officers or directors of the Company or the
Guarantors or controlling person of the Company or the Guarantors, (ii)
acceptance of the Series A Notes and payment for them hereunder and (iii)
termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchasers pursuant
to clauses (i) or (vii) of the second paragraph of this Section 9 or because of
the failure or refusal on the part of the Company or any Guarantor to comply
with the terms or to fulfill any of the conditions of this Agreement, the
Company and the Guarantors agree to reimburse you for all out-of-pocket expenses
(including the reasonable fees and disbursements of counsel) incurred by you.
Notwithstanding any termination of this Agreement, the Company and the
Guarantors shall be liable for all expenses which it has agreed to pay pursuant
to Section 4(f) hereof.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Guarantors, the
Initial Purchasers, any indemnified party referred to in Section 6 hereof and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The terms "successors and assigns" shall not include a
purchaser of any of the Series A Notes from any of the Initial Purchasers merely
because of such purchase.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company or any Guarantor,
2708 Cranberry Square, Morgantown, West Virginia 26505, Attention: P. Bruce
Sparks, with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, Attention: John Tehan, Esq., and (b) if to the Initial
Purchasers, c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10127, Attention: Michael Johnson, with a copy to
Andrews & Kurth L.L.P., 425
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Lexington Avenue, New York, New York 10017, Attention: Allan Reiss, Esq., or in
any case to such other address as the person to be notified may have requested
in writing.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the Agreement among
the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
ANKER COAL GROUP, INC.
By: /s/ BRUCE SPARKS
----------------------------------
Name: Bruce Sparks
Title: Executive Vice President
ANKER GROUP, INC.
By: /s/ BRUCE SPARKS
----------------------------------
Name: Bruce Sparks
Title: Executive Vice President
EACH OTHER ENTITY LISTED ON
SCHEDULE II HERETO
By: /s/ MICHAEL M. MATESIC
----------------------------------
Name: Michael M. Matesic
Title: Treasurer
Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ WILLIAM J. R. WILSON
- ----------------------------------
Name: William J. R. Wilson
Title: Vice President
CHASE SECURITIES INC.
By: /s/ DANIEL P. TREDWELL
- ----------------------------------
Name: Daniel P. Tredwell
Title: Managing Director
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SCHEDULE I
Principal Amount
Donaldson, Lufkin & Jenrette
Securities Corporation......................................... $ 68,750,000
Chase Securities Inc............................................. 56,250,000
------------
Total.................................................... $125,000,000
============
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SCHEDULE II
Company State of Incorporation
Anker Group, Inc. Delaware
Anker Energy Corporation Delaware
Bronco Mining Company, Inc. West Virginia
Anker Power Services, Inc. West Virginia
Anker West Virginia Mining Company, Inc. West Virginia
Juliana Mining Company, Inc. West Virginia
King Knob Coal Co., Inc. West Virginia
Vantrans, Inc. Delaware
Melrose Coal Company, Inc. West Virginia
Marine Coal Sales Company Delaware
Hawthorne Coal Company, Inc. West Virginia
Upshur Property, Inc. Delaware
Heather Glen Resources, Inc. West Virginia
New Allegheny Land Holding Company, Inc. West Virginia
Patriot Mining Company, Inc. West Virginia
Vindex Energy Corporation West Virginia
Anker Virginia Mining Company, Inc. Virginia
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