EXHIBIT 10.1
EXECUTION COPY
$130,000,000
CREDIT AGREEMENT
dated as of January 20, 2004,
among
A. T. MASSEY COAL COMPANY, INC., ALEX ENERGY, INC., ARACOMA COAL COMPANY,
INC., BANDMILL COAL CORPORATION, BOONE EAST DEVELOPMENT CO., CENTRAL PENN ENERGY
COMPANY, INC., CENTRAL WEST VIRGINIA ENERGY COMPANY, DELBARTON MINING COMPANY,
DEMETER LAND COMPANY, ELK RUN COAL COMPANY, INC., GREEN VALLEY COAL COMPANY,
HIGHLAND MINING COMPANY, INDEPENDENCE COAL COMPANY, INC., KNOX CREEK COAL
CORPORATION, MARFORK COAL COMPANY, INC., MARTIN COUNTY COAL CORPORATION, MASSEY
COAL SALES COMPANY, INC., NICHOLAS ENERGY COMPANY, PERFORMANCE COAL COMPANY,
ROAD FORK DEVELOPMENT COMPANY, INC., RUM CREEK COAL SALES, INC. AND SIDNEY COAL
COMPANY, INC.,
as Borrowers,
THE GUARANTORS PARTY HERETO,
as Guarantors,
THE LENDERS PARTY HERETO
WELLS FARGO FOOTHILL, LLC and
FLEET CAPITAL CORPORATION,
as Co-Syndication Agents,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent,
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Collateral Agent,
UBS SECURITIES LLC,
as Arranger,
UBS AG, STAMFORD BRANCH,
as Administrative Agent,
and
UBS LOAN FINANCE LLC,
as Swingline Lender
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS............................................................................................2
SECTION 1.01 Defined Terms......................................................................2
SECTION 1.02 Classification of Loans and Borrowings............................................40
SECTION 1.03 Terms Generally...................................................................40
SECTION 1.04 Accounting Terms; GAAP............................................................40
ARTICLE II. THE CREDITS..........................................................................................41
SECTION 2.01 Commitments.......................................................................41
SECTION 2.02 Loans.............................................................................41
SECTION 2.03 Borrowing Procedure...............................................................43
SECTION 2.04 Evidence of Debt; Repayment of Loans..............................................44
SECTION 2.05 Fees..............................................................................45
SECTION 2.06 Interest on Loans and Default Interest............................................46
SECTION 2.07 Termination and Reduction of Commitments..........................................47
SECTION 2.08 Interest Elections................................................................48
SECTION 2.09 [Intentionally Omitted]...........................................................49
SECTION 2.10 Optional and Mandatory Prepayments of Loans.......................................49
SECTION 2.11 Alternate Rate of Interest........................................................52
SECTION 2.12 Increased Costs...................................................................53
SECTION 2.13 Breakage Payments.................................................................54
SECTION 2.14 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.......................55
SECTION 2.15 Taxes.............................................................................56
SECTION 2.16 Mitigation Obligations; Replacement of Lenders....................................59
SECTION 2.17 Swingline Loans...................................................................59
SECTION 2.18 Letters of Credit.................................................................61
SECTION 2.19 Determination of Borrowing Base...................................................66
SECTION 2.20 Administrative Borrower...........................................................70
ARTICLE III. REPRESENTATIONS AND WARRANTIES......................................................................71
SECTION 3.01 Organization; Powers..............................................................71
SECTION 3.02 Authorization; Enforceability.....................................................71
SECTION 3.03 Governmental Approvals; No Conflicts..............................................71
SECTION 3.04 Financial Statements..............................................................72
SECTION 3.05 Properties........................................................................72
SECTION 3.06 Equity Interests and Subsidiaries.................................................73
SECTION 3.07 Litigation; Compliance with Laws..................................................74
SECTION 3.08 Agreements........................................................................74
SECTION 3.09 Federal Reserve Regulations.......................................................75
i
SECTION 3.10 Investment Company Act; Public Utility Holding Company Act........................75
SECTION 3.11 Use of Proceeds...................................................................75
SECTION 3.12 Taxes.............................................................................75
SECTION 3.13 No Material Misstatements.........................................................76
SECTION 3.14 Labor Matters.....................................................................76
SECTION 3.15 Solvency..........................................................................76
SECTION 3.16 Employee Benefit Plans............................................................77
SECTION 3.17 Environmental Matters.............................................................77
SECTION 3.18 Insurance.........................................................................78
SECTION 3.19 Security Documents................................................................79
SECTION 3.20 Coal Act; Black Lung Act..........................................................79
SECTION 3.21 Coal Supply Agreements, Mining Leases and Prep Plant Leases.......................80
SECTION 3.22 Location of Material Inventory....................................................80
SECTION 3.23 Accuracy of Borrowing Base........................................................80
SECTION 3.24 Post-Audit Asset Dispositions.....................................................80
SECTION 3.25 Holdings; Unrestricted Subsidiaries...............................................80
SECTION 3.26 [Intentionally Omitted]...........................................................81
SECTION 3.27 Surety Bonds......................................................................81
SECTION 3.28 Specified Tax Sharing Agreement...................................................81
ARTICLE IV. CONDITIONS TO CREDIT EXTENSIONS......................................................................81
SECTION 4.01 Conditions to Initial Credit Extension............................................81
SECTION 4.02 Conditions to All Credit Extensions...............................................86
ARTICLE V. AFFIRMATIVE COVENANTS.................................................................................87
SECTION 5.01 Financial Statements, Reports, etc................................................87
SECTION 5.02 Litigation and Other Notices......................................................90
SECTION 5.03 Existence; Businesses and Properties..............................................90
SECTION 5.04 Insurance.........................................................................91
SECTION 5.05 Taxes.............................................................................92
SECTION 5.06 Employee Benefits.................................................................92
SECTION 5.07 Maintaining Records; Access to Properties and Inspections.........................93
SECTION 5.08 Use of Proceeds...................................................................93
SECTION 5.09 Compliance with Environmental Laws; Environmental Reports.........................93
SECTION 5.10 Mining............................................................................94
SECTION 5.11 Additional Collateral; Additional Guarantors......................................94
SECTION 5.12 Security Interests; Further Assurances............................................95
SECTION 5.13 Information Regarding Collateral..................................................96
SECTION 5.14 Post-Closing Collateral Matters...................................................97
SECTION 5.15 Borrowing Base-Related Reports....................................................97
SECTION 5.16 Securitization Company............................................................98
SECTION 5.17 Adequate Reserves.................................................................99
ii
SECTION 5.18 Limitations on Designation of Unrestricted Subsidiaries...........................99
ARTICLE VI. NEGATIVE COVENANTS..................................................................................100
SECTION 6.01 Indebtedness.....................................................................100
SECTION 6.02 Liens............................................................................102
SECTION 6.03 Sale and Leaseback Transactions..................................................106
SECTION 6.04 Investment, Loan and Advances....................................................106
SECTION 6.05 Mergers, Consolidations, Sales of Assets and Acquisitions........................108
SECTION 6.06 Prepayments and Redemptions of Senior Notes; Dividends...........................110
SECTION 6.07 Transactions with Affiliates.....................................................111
SECTION 6.08 Financial Covenants..............................................................112
SECTION 6.09 Limitation on Modifications of Indebtedness; Modifications of Certificate
of Incorporation, or Other Constitutive Documents, By-laws and Certain
Other Agreements, etc............................................................112
SECTION 6.10 Limitation on Certain Restrictions on Subsidiaries...............................113
SECTION 6.11 Limitation on Issuance of Capital Stock..........................................113
SECTION 6.12 Limitation on Creation of Subsidiaries...........................................114
SECTION 6.13 Business.........................................................................114
SECTION 6.14 [Intentionally Omitted]..........................................................114
SECTION 6.15 Fiscal Year......................................................................114
SECTION 6.16 Negative Pledges.................................................................114
SECTION 6.17 Lease Obligations................................................................115
SECTION 6.18 Breach of Coal Supply Agreements, Mining Leases and Prep Plant Leases............115
SECTION 6.19 Intercompany Loans...............................................................115
SECTION 6.20 Specified Tax Sharing Agreement..................................................116
ARTICLE VII. GUARANTEE..........................................................................................116
SECTION 7.01 The Guarantee....................................................................116
SECTION 7.02 Obligations Unconditional........................................................116
SECTION 7.03 Reinstatement....................................................................118
SECTION 7.04 Subrogation; Subordination.......................................................118
SECTION 7.05 Remedies.........................................................................119
SECTION 7.06 Instrument for the Payment of Money..............................................119
SECTION 7.07 Continuing Guarantee.............................................................119
ARTICLE VIII. EVENTS OF DEFAULT.................................................................................119
ARTICLE IX. COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS..............................................122
SECTION 9.01 Accounts and Account Collections.................................................122
SECTION 9.02 Inventory and Accounts...........................................................125
SECTION 9.03 Application of Proceeds..........................................................126
iii
ARTICLE X. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT....................................................127
SECTION 10.01 Appointment......................................................................127
SECTION 10.02 Administrative Agent and Collateral Agent in Their Individual Capacity...........128
SECTION 10.03 Exculpatory Provisions...........................................................128
SECTION 10.04 Reliance by Agents...............................................................129
SECTION 10.05 Delegation of Duties.............................................................129
SECTION 10.06 Successor Administrative Agent and Collateral Agent..............................130
SECTION 10.07 Non-Reliance on Agents and Other Lenders.........................................130
SECTION 10.08 No Other Administrative Agent or Collateral Agent................................130
SECTION 10.09 Indemnification..................................................................131
SECTION 10.10 Overadvances.....................................................................131
SECTION 10.11 Special Agent Advances...........................................................132
SECTION 10.12 Lender Specified Collateral......................................................133
ARTICLE XI. MISCELLANEOUS.......................................................................................133
SECTION 11.01 Notices..........................................................................133
SECTION 11.02 Waivers; Amendment...............................................................135
SECTION 11.03 Expenses; Indemnity..............................................................137
SECTION 11.04 Successors and Assigns...........................................................139
SECTION 11.05 Survival of Agreement............................................................141
SECTION 11.06 Counterparts; Integration; Effectiveness.........................................142
SECTION 11.07 Severability.....................................................................142
SECTION 11.08 Right of Setoff..................................................................142
SECTION 11.09 Governing Law; Jurisdiction; Consent to Service of Process.......................143
SECTION 11.10 Waiver of Jury Trial.............................................................143
SECTION 11.11 Headings.........................................................................144
SECTION 11.12 Confidentiality..................................................................144
SECTION 11.13 Interest Rate Limitation.........................................................145
SECTION 11.14 Lender Addendum..................................................................145
SECTION 11.15 General Limitation on Obligations and Guarantee Obligations......................145
iv
ANNEXES
Annex I Applicable Margin
Annex II Lenders and Commitments
SCHEDULES
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Refinancing Indebtedness To Be Repaid
Schedule 3.03 Governmental Approvals; Compliance with Laws
Schedule 3.05(b) Real Property
Schedule 3.06(a) Subsidiaries
Schedule 3.06(c) Corporate Organizational Chart
Schedule 3.08(c) Material Agreements
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.21 Coal Supply Agreements, Mining Leases and Prep Plant Leases
Schedule 3.22 Location of Material Inventory
Schedule 4.01(n) Landlord Access Agreements
Schedule 5.14 Post-Closing Matters
Schedule 6.01(b) Existing Indebtedness
Schedule 6.02(c) Existing Liens
Schedule 6.04(b) Existing Investments
EXHIBITS
Exhibit A-1 Form of Administrative Questionnaire
Exhibit A-2 Form of Compliance Certificate
Exhibit A-3 Form of LC Request
Exhibit A-4 Form of Lender Addendum
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Interest Election Request
Exhibit E Form of Joinder Agreement
Exhibit F Form of Landlord Lien Waiver and Access Agreement
Exhibit H-2 Form of Revolving Note
Exhibit H-3 Form of Swingline Note
Exhibit I-1 Form of Perfection Certificate
Exhibit I-2 Form of Perfection Certificate Supplement
Exhibit J Form of Security Agreement
v
Exhibit K-1 Form of Opinion of Company Counsel
Exhibit K-2 Form of Opinion of Kymberly T. Wellons (KY)
Exhibit K-3 Form of Opinion of M. Shane Harvey (WV, PA)
Exhibit K-4 Form of Opinion of Thomas J. Dostart
Exhibit J Form of Opinion of Stikeman Elliott LLP
Exhibit M Form of Solvency Certificate
Exhibit N Form of Borrowing Base Certificate
vi
CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") dated as of January 20, 2004
is among A. T. Massey Coal Company, Inc., a Virginia corporation, Alex Energy,
Inc., a West Virginia corporation, Aracoma Coal Company, Inc., a West Virginia
corporation, Bandmill Coal Corporation, a West Virginia corporation, Boone East
Development Co., a West Virginia corporation, Central Penn Energy Company, Inc.,
a Pennsylvania corporation, Central West Virginia Energy Company, a West
Virginia corporation, Delbarton Mining Company, a West Virginia corporation,
Demeter Land Company, a West Virginia corporation, Elk Run Coal Company, Inc., a
West Virginia corporation, Green Valley Coal Company, a West Virginia
corporation, Highland Mining Company, a West Virginia corporation, Independence
Coal Company, Inc., a West Virginia corporation, Knox Creek Coal Corporation, a
Virginia corporation, Marfork Coal Company, Inc., a West Virginia corporation,
Martin County Coal Corporation, a Kentucky corporation, Massey Coal Sales
Company, Inc., a Virginia corporation, Nicholas Energy Company, a West Virginia
corporation, Performance Coal Company, a West Virginia corporation, Road Fork
Development Company, Inc., a Kentucky corporation, Rum Creek Coal Sales, Inc., a
West Virginia corporation, Sidney Coal Company, Inc., a Kentucky corporation
(each of the foregoing collectively referred to herein as the "Borrowers" and
individually as a "Borrower"), Massey Energy Company, a Delaware corporation
("Holdings"), the Guarantors (such term and each other capitalized term used but
not defined herein having the meaning given to it in Article I), the Lenders,
UBS Securities, LLC, as lead arranger (in such capacity, "Arranger"), WELLS
FARGO FOOTHILL, LLC and FLEET CAPITAL CORPORATION, as co-syndication agents (in
such capacity, "Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL CORPORATION,
as documentation agent (in such capacity, "Documentation Agent"), UBS LOAN
FINANCE LLC, as a Lender and as swingline lender (in such capacity, "Swingline
Lender"), UBS AG, STAMFORD BRANCH, as administrative agent (in such capacity,
"Administrative Agent") for the Lenders and The CIT Group/Business Credit, Inc.,
as collateral agent (in such capacity, "Collateral Agent") for the Secured
Parties and Issuing Banks.
WITNESSETH:
WHEREAS, the Borrowers have requested the Lenders to extend credit in
the form of Revolving Loans at any time and from time to time prior to the Final
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $130 million.
WHEREAS, the Borrowers have requested the Swingline Lender to make
Swingline Loans, at any time and from time to time prior to the Final Maturity
Date, in an aggregate principal amount at any time outstanding not in excess of
$25 million.
WHEREAS, the Borrowers have requested the Issuing Bank to issue letters
of credit, in an aggregate face amount at any time outstanding not in excess of
$100 million to support payment obligations incurred in the ordinary course of
business and other business expenses by Administrative Borrower and its
Subsidiaries.
WHEREAS, the proceeds of the Loans are to be used in accordance with
Section 3.11.
NOW, THEREFORE, the Lenders are willing to extend such credit to the
Borrowers and the Issuing Bank is willing to issue letters of credit for the
account of the Borrowers on the terms and subject to the conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms shall
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, is used when
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Revolving Loan.
"ABR Revolving Borrowing" shall mean a Borrowing comprised of ABR
Revolving Loans.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Accounting Changes" shall have meaning assigned to such term in
Section 1.04.
"Account Debtor" shall mean any Person who may become obligated to
another Person under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the
UCC as in effect on the date hereof in the State of New York, in which such
Person now or hereafter has rights.
"Acquisition Consideration" shall mean the purchase consideration for
any Permitted Acquisition and all other payments paid to or for the benefit of
the seller by Holdings or any of its Subsidiaries in exchange for, or as part
of, or in connection with, any Permitted Acquisition, whether paid in cash or by
exchange of Equity Interests or of assets or otherwise and whether payable at or
prior to the consummation of such Permitted Acquisition or deferred for payment
at any future time, whether or not any such future payment is subject to the
occurrence of any contingency, and includes any and all payments representing
the purchase price and any assumptions of Indebtedness, and Indebtedness secured
by assets acquired in a Permitted Acquisition, whether or not assumed, and any
Indebtedness of the acquired entity that will remain outstanding after the
2
acquisition, "earn-outs" and other agreements to make any payment the amount of
which is, or the terms of payment of which are, in any respect subject to or
contingent upon the revenues, income, cash flow or profits (or the like) of any
Person or business.
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, (a) an interest rate per annum (rounded
upward, if necessary, to the next 1/100 of 1%) determined by the Administrative
Agent to be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for
such Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for
such Eurodollar Borrowing for such Interest Period.
"Administrative Agent" shall have the meaning assigned to such term in
the preamble hereto and includes each other Person appointed as the successor
pursuant to Article X.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Borrower" shall mean A. T. Massey Coal Company, Inc.,
on behalf of itself and the other Borrowers.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form as may be supplied
from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified; provided, however, that, for purposes of Section 6.07, the term
"Affiliate" shall also include any Person that directly or indirectly owns more
than 10% of any class of Equity Interests of the Person specified or that is an
executive officer or director of the Person specified.
"Agents" shall mean the Arranger, Documentation Agent, Co-Syndication
Agents, Administrative Agent and the Collateral Agent.
"Agreement" shall have the meaning assigned to such term in the
preamble hereto.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upward, if necessary, to the next 1/100 of 1%) equal to the greater of
(a) the Base Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 0.50%. If the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) of the
preceding sentence until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the Base
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Base Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Margin" shall mean, for any day, with respect to any
Revolving Loan, the applicable percentage set forth in Annex I under the
appropriate caption.
3
"Arranger" shall have the meaning assigned to such term in the preamble
hereto.
"Asset Sale" shall mean (a) any conveyance, sale, lease, sublease,
assignment, transfer or other disposition (including by way of merger or
consolidation and including any sale and leaseback transaction) of any Property
(including stock of any Subsidiary of Holdings by the holder thereof) by
Holdings, the Borrowers or any of their Subsidiaries to any Person other than
any Loan Party (excluding (i) any sale of Inventory in the ordinary course of
business, (ii) any sale or discount, in each case without recourse, of accounts
receivable arising in the ordinary course of business, but only in connection
with the compromise or collection thereof, (iii) disposals of obsolete,
uneconomical, negligible, worn out or surplus Property in the ordinary course of
business, (iv) sales of Cash Equivalents and marketable securities, or (v) any
Leases of any coal, oil, gas or other mineral reserves or related rights
(including surface rights)) and (b) any issuance or sale by any Subsidiary of
Holdings (other than a Borrower) of its Equity Interests to any Person (other
than to any Loan Party).
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B, or such other form as shall be approved by the
Administrative Agent.
"Attributable Indebtedness" shall mean, when used with respect to any
sale and leaseback transaction, as at the time of determination, the present
value (discounted at a rate equivalent to the then-current weighted average cost
of funds for borrowed money of the Consolidated Companies as at the time of
determination, compounded on a semi-annual basis) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in any such sale and leaseback transaction.
"Average Excess Availability" shall mean, as of the date of
determination, an amount equal to (a) the sum of Excess Availability as of each
Business Day during the 30 day period ending on the day before such date of
determination divided by (b) the total number of Business Days in such 30 day
period.
"Base Rate" shall mean, for any day, a rate per annum that is equal to
the corporate base rate of interest established by the Administrative Agent from
time to time; each change in the Base Rate shall be effective on the date such
change is publicly announced as being effective. The corporate base rate is not
necessarily the lowest rate charged by the Administrative Agent to its
customers.
"Black Lung Act" shall mean, collectively, the Black Lung Benefits
Revenue Act of 1977, as amended, and the Black Lung Benefits Reform Act of 1977,
as amended.
"Blocked Accounts" shall have the meaning assigned to such term in
Section 9.01(d).
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Board of Directors" shall mean, with respect to any Person, the board
of directors or comparable governing body of such Person.
4
"Borrowers" shall have the meaning assigned to such term in the
preamble hereto.
"Borrowing" shall mean (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Base" shall mean at any time, subject to adjustment as
provided in Section 2.19, an amount equal to the lesser of (a) the sum of,
without duplication:
(i) the aggregate of all Incorporated Borrowing Bases; provided,
however, the amount included in the Borrowing Base with respect
to Eligible Pit Inventory shall not exceed, in the aggregate,
$23.0 million, plus
(ii) the Specified Borrowing Base Account Amount, minus
(iii) the Hedging Reserve, minus
(iv) the Royalty Reserve, minus
(v) effective immediately upon notification thereof to Administrative
Borrower by the Collateral Agent, any Reserves established from
time to time by the Collateral Agent in the exercise of its
reasonable credit judgment; and
(b) the maximum amount of Indebtedness that is permitted in Section
4.06(1) of the 6.625% Senior Note Indenture as Permitted Indebtedness
thereunder.
The Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate theretofore delivered to the Collateral Agent
and the Administrative Agent with such adjustments as the Collateral Agent deems
appropriate in its reasonable credit judgment to assure that the Borrowing Base
is calculated in accordance with the terms of this Agreement.
"Borrowing Base Certificate" shall mean an Officers' Certificate from
the Administrative Borrower, substantially in the form of, and containing the
information prescribed by, Exhibit N, delivered to the Administrative Agent and
Collateral Agent setting forth the Administrative Borrower's calculation of each
Incorporated Borrowing Base separately along with an aggregate calculation of
the Borrowing Base with respect to all the Borrowers.
"Borrowing Base Limitation Amount" shall mean, with respect to any
Borrower at any date of determination, an amount equal to the sum of (i) the
Intercompany Indebtedness owing by such Borrower at such time (after subtracting
any Intercompany Indebtedness owing to such Borrower at such time) (to the
extent a positive number) and (ii) an amount equal to (1) 80% of the Estimated
Solvency Amount of such Borrower (to the extent a positive number) at such time
as determined by the Administrative Agent and the Collateral Agent from the most
recently received consolidating financial statements delivered pursuant to
Section 5.01 of this Agreement minus (2) any adjustments from such Estimated
Solvency Amount which the Administrative Agent and the Collateral Agent in their
reasonable credit judgment believe to be appropriate to reflect non-balance
sheet liabilities that would be treated as liabilities in a determination of
"solvency" for purposes of Section 548 of the Bankruptcy Code. Notwithstanding
5
anything herein to the contrary, the Administrative Borrower shall not be
required to calculate the Borrowing Base Limitation Amount more frequently than
once a month in connection with the delivery of a Borrowing Base Certificate
delivered pursuant to Section 5.15(a).
"Borrowing Request" shall mean a request by Administrative Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C, or such other form as shall be approved by the Administrative Agent.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in New York City are authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in Dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, with respect to any Person, for any
period, the aggregate amount of all expenditures by such Person and its
Subsidiaries during that period for fixed or capital assets that, in accordance
with GAAP, are or should be classified as capital expenditures in the
consolidated balance sheet of such Person and its Consolidated Subsidiaries.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) Property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Equivalents" shall mean, as to any Person: (a) securities issued,
or directly, unconditionally and fully guaranteed or insured, by the United
States or any agency or instrumentality thereof (provided, that the full faith
and credit of the United States is pledged in support thereof) having maturities
of not more than 360 days from the date of acquisition by such Person; (b)
securities issued, or directly, unconditionally and fully guaranteed or insured,
by any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from either Standard & Poor's Ratings Group
or Moody's Investors Services, Inc.; (c) time deposits and certificates of
deposit or bankers' acceptance of any Lender or any commercial bank having, or
which is the principal banking subsidiary of a bank holding company organized
under the laws of the United States, any state thereof or the District of
Columbia having, capital and surplus aggregating in excess of $500.0 million and
a rating of "A" (or such other similar equivalent rating) or higher by at least
one nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act) with maturities of not more than 180 days from the
date of acquisition by such Person; (c) repurchase obligations with a term of
not more than 10 days for underlying securities of the types described in clause
(a) above entered into with any bank meeting the qualifications specified in
clause (c) above, which repurchase obligations are secured by a valid perfected
security interest in the underlying securities; (d) commercial paper issued by
6
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's Rating Service or at least P-1 or the
equivalent thereof by Moody's Investors Service, Inc., and in each case maturing
not more than 180 days after the date of acquisition by such Person; (e)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (a) through (d) above;
and (f) demand deposit accounts maintained in the ordinary course of business.
"Cash Management System" shall have the meaning assigned to such term
in Section 9.01(e).
"Casualty Event" shall mean, with respect to any Property (including
Real Property) of any Person, any loss of title with respect to such Property or
any loss of or damage to or destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, such Property for which such
Person or any of its Subsidiaries receives insurance proceeds or proceeds of a
condemnation award or other compensation. "Casualty Event" shall include but not
be limited to any taking of all or any part of any Real Property of any Person
or any part thereof, in or by condemnation or other eminent domain proceedings
pursuant to any law, or by reason of the temporary requisition of the use or
occupancy of all or any part of any Real Property of any Person or any part
thereof by any Governmental Authority, civil or military.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.
A "Change in Control" means the occurrence of any of the following
events:
(a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this
clause that person or group shall be deemed to have "beneficial ownership" of
all securities that any such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of Voting Stock representing more than 50% of the voting
power of the total outstanding Voting Stock of Holdings;
(b) during any period of twenty-four consecutive calendar months,
individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election to such Board of
Directors or whose nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of Holdings;
(c) (i) all or substantially all of the assets of Holdings and its
Subsidiaries are sold or otherwise transferred to any Person other than a
Wholly-Owned Subsidiary or (ii) Holdings consolidates or merges with or into
another Person or any Person consolidates or merges with or into Holdings, in
either case under this clause (c), in one transaction or a series of related
transactions in which immediately after the consummation thereof Persons owning
Voting Stock representing in the aggregate a majority of the total voting power
of the Voting Stock of Holdings immediately prior to such consummation do not
own Voting Stock representing a majority of the total voting power of the Voting
Stock of Holdings or the surviving or transferee Person;
(d) Holdings shall adopt a plan of liquidation or dissolution or any
such plan shall be approved by the stockholders of Holdings; and
7
(e) Holdings shall cease to own 100% of the capital stock of
Administrative Borrower or Administrative Borrower shall cease to own, directly
or indirectly, 100% of the capital stock of each other Borrower.
"Change in Law" shall mean (a) the adoption of any law, treaty, order,
rule or regulation after the date of this Agreement, (b) any change in any law,
treaty, order, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or Issuing Bank (or for purposes of Section 2.12(b), by
any lending office of such Lender or by such Lender's or Issuing Bank's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Charges" shall have the meaning assigned to such term in Section
11.13.
"Chattel Paper" shall mean all "chattel paper," as such term is defined
in the UCC as in effect on the date hereof in the State of New York, in which
any Person now or hereafter has rights.
"Citibank Facility" shall mean the loan facility provided pursuant to
the Credit Agreement dated July 2, 2003 among Administrative Borrower, as
borrower, Citicorp North America, Inc., as administrative agent and certain
others party thereto.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Swingline Loans and, when used in reference to any Commitment, refers to
whether such Commitment is a Revolving Commitment, Swingline Commitment or LC
Commitment.
"Closing Date" shall mean the date of the initial Credit Extension
hereunder.
"Coal" means all of the coal owned or leased by any Company and (i)
located on, under, or within, or (ii) produced and severed from, the Real
Property owned or leased or operated by any Company.
"Coal Act" means the Coal Industry Retiree Health Benefits Act of 1992,
as amended.
"Coal Handling Facility" means any coal handling facility, including,
all necessary electrical, water and plumbing lines and systems necessary to
operate such coal handling facility, all coal storage and transportation
facilities, administrative facilities and vehicle parking facilities related
thereto and all leases in respect of the foregoing.
"Coal Supply Agreements" means those contracts now in effect or
hereafter entered into by any Company for the sale, purchase, exchange,
processing or handling of Coal with an initial term of more than one year.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean, collectively, all of the Security Agreement
Collateral and all other Property of whatever kind and nature pledged as
collateral under any Security Document.
8
"Collateral Agent" shall have the meaning assigned to such term in the
preamble hereto and includes each other Person appointed as the successor
pursuant to Article X.
"Collateral Agent Fee" shall have the meaning ascribed to such term in
Section 2.05(b)(ii).
"Collateral Agent Fee Letter" shall mean the confidential Fee Letter
dated December 31, 2003 among the Borrowers and the Collateral Agent.
"Collection Account" shall have the meaning assigned to such term in
Section 9.01(e)(i).
"Commercial Letter of Credit" shall mean any letter of credit or
similar instrument issued for the account of the Administrative Borrower for the
benefit of a Borrower or any of its Subsidiaries, for the purpose of providing
the primary payment mechanism in connection with the purchase of materials,
goods or services by such Borrower or any of its Subsidiaries in the ordinary
course of their businesses.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Commitment, LC Commitment or Swingline Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Commitments" shall mean the aggregate sum of each Lender's Commitment.
"Companies" shall mean Holdings and its Subsidiaries; and "Company"
shall mean any one of them.
"Compliance Certificate" shall mean a certificate of a Financial
Officer substantially in the form of Exhibit A-2.
"Concentration Account" shall have the meaning assigned to such term in
Section 9.01(e)(i).
"Concentration Account Bank" shall have the meaning assigned to such
term in Section 9.01(e)(i).
"Confidential Information Memorandum" shall mean that certain
confidential information memorandum dated as of December 18, 2003.
"Consolidated Companies" shall mean Holdings and its Consolidated
Subsidiaries.
"Consolidated Current Liabilities" shall mean, with respect to any
Person as at any date of determination, the total liabilities of such Person and
its Consolidated Subsidiaries which may properly be classified as current
liabilities (other than the current portion of any Loans) on a consolidated
balance sheet of such Person and its Consolidated Subsidiaries in accordance
with GAAP.
9
"Consolidated EBITDA" means, with respect to any Person for any period,
(a) Consolidated Net Income of such Person for such period plus (b) the sum of,
in each case to the extent included in the calculation of such Consolidated Net
Income but without duplication, (i) any provision for income taxes, (ii)
Consolidated Interest Expense, (iii) loss from extraordinary items, (iv) any
aggregate loss from the sale, exchange or other disposition of capital assets by
such Person (excluding, in the case of Holdings and its Subsidiaries, any such
loss attributable to the sale of Appalachian Synfuels, LLC), (v) depreciation,
depletion and amortization expenses and (vi) all other non-cash charges and
non-cash losses for such period, including the amount of any compensation
deduction as the result of any grant of Equity Interests to employees, officers,
directors or consultants minus (c) the sum of, in each case to the extent
included in the calculation of such Consolidated Net Income but without
duplication, (i) any credit for income tax, (ii) gains from extraordinary items
for such period (iii) any aggregate gain from sale, exchange or other
disposition of capital assets by such Person (excluding, in the case of Holdings
and its Subsidiaries, any such gain attributable to the sale of Appalachian
Synfuels, LLC) and (iv) any other non-cash gains or other items which have been
added in determining Consolidated Net Income, including any reversal of a charge
referred to in clause (b)(vi) above by reason of a decrease in the value of any
Equity Interests.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any Test
Period, the ratio of (a) Consolidated EBITDA for such Test Period to (b)
Consolidated Fixed Charges for such Test Period.
"Consolidated Fixed Charges" shall mean, for any period, the sum,
without duplication, of (a) Consolidated Interest Expense for such period; (b)
the lesser of (i) Maintenance Capital Expenditures and (ii) the amount of all
Capital Expenditures made by Holdings and its Subsidiaries during such period;
(c) all cash payments in respect of income taxes made during such period (net of
any cash refund in respect of income taxes actually received during such
period); (d) the scheduled principal amount of all amortization payments on all
Indebtedness of Holdings and its Subsidiaries for such period (as determined on
the first day of the respective period) (excluding the principal component of
such payments with respect to either (A) Purchase Money Obligations arising from
any conversion of operating leases existing on December 1, 2003 to Purchase
Money Obligations or (B) Capital Lease Obligations); (e) an amount determined by
multiplying (A) a fraction, the numerator of which is an amount equal to all
Capital Expenditures made by Holdings and its Subsidiaries during such period
minus Maintenance Capital Expenditures as of the date of determination and the
denominator of which is all Capital Expenditures made Holdings and its
Subsidiaries during such period times (B) the principal component of all
amortization payments with respect to Capital Lease Obligations (other than the
principal component of such payments with respect to Capital Lease Obligations
arising from any conversion of operating leases existing on December 1, 2003 to
Capital Lease Obligations) of Holdings and its Subsidiaries during such period;
and (f) all cash dividend payments on any Equity Interest of Holdings.
"Consolidated Interest Expense" shall mean, for any period, without
duplication, the total consolidated interest expense of Holdings and its
Consolidated Subsidiaries for such period (calculated without regard to any
limitations on the payment thereof and including amortization of debt discount
and deferred financing costs (other than write-offs resulting from the
acceleration of deferred financing costs solely in connection with the Citibank
Facility), capitalized interest, interest paid in kind, commitment fees, letter
of credit fees and net amounts payable under Interest Rate Protection
Agreements) determined in accordance with GAAP plus, without duplication, (a)
10
the portion of Capital Lease Obligations of Holdings and its Consolidated
Subsidiaries representing the interest factor for such period, (b) imputed
interest on Attributable Indebtedness, (c) cash contributions to any employee
stock ownership plan or similar trust to the extent such contributions are used
by such plan or trust to pay interest or fees to any Person (other than Holdings
or a Wholly Owned Subsidiary) in connection with Indebtedness incurred by such
plan or trust, (d) all interest paid or payable with respect to discontinued
operations, (e) the product of (i) all dividend payments on any series of any
Preferred Stock of any Subsidiary of Holdings (other than any Preferred Stock
held by Holdings or a Wholly Owned Subsidiary), multiplied by (ii) a fraction,
the numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of Holdings and its
Subsidiaries, expressed as a decimal and (f) all interest (but only to the
extent such interest is in default or is currently payable by a Loan Party) on
any Indebtedness of the type described in clause (f) or (k) of the definition of
"Indebtedness" with respect to Holdings or any of its Subsidiaries.
"Consolidated Net Income" shall mean, for any period, the consolidated
net income of Holdings and its Consolidated Subsidiaries determined in
accordance with GAAP, but excluding in any event (a) after-tax extraordinary
gains or extraordinary losses; (b) after-tax gains or losses realized from (i)
the acquisition of any securities, or the extinguishment or conversion of any
Indebtedness or Equity Interest, of Holdings or any of its Subsidiaries or (ii)
any sales of assets (other than Inventory in the ordinary course of business
(excluding, in the case of Holdings and its Subsidiaries, any gains or losses
attributable to the sale of Appalachian Synfuels, LLC); (c) net earnings or loss
of any other Person (other than a Subsidiary of Holdings) in which Holdings or
any Consolidated Subsidiary has an ownership interest, except (in the case of
any such net earnings) to the extent such net earnings shall have actually been
received by Holdings or such Consolidated Subsidiary (subject to the limitation
in clause (d) below) in the form of cash dividends or distributions; (d) the net
income of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Consolidated Subsidiary of
its net income is not at the time of determination permitted without approval
under applicable law or regulation or under such Consolidated Subsidiary's
organizational documents or any agreement or instrument applicable to such
Consolidated Subsidiary or its stockholders; (e) gains or losses from the
cumulative effect of any change in accounting principles; (f) earnings resulting
from any reappraisal, revaluation or write-up of assets; and (g) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of
Holdings or any Consolidated Subsidiary or is merged into or consolidated with
Holdings or any Consolidated Subsidiary or that Person's assets are acquired by
Holdings or such Consolidated Subsidiary.
"Consolidated Net Tangible Assets" shall mean, as of any date of
determination, the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a consolidated balance
sheet of Holdings and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, without duplication the amounts of:
11
(a) minority interests in Consolidated Subsidiaries held by Persons
other than Holdings or a Consolidated Subsidiary;
(b) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors of Holdings;
(c) any revaluation or other write-up in book value of assets
subsequent to the Closing Date as a result of a change in the method of
valuation in accordance with GAAP consistently applied;
(d) unamortized debt discount and expenses and other unamortized
deferred financing charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, licenses, organization expenses and other intangible items;
(e) treasury stock;
(f) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of Equity
Interests to the extent such obligation is not reflected in Consolidated Current
Liabilities; and
(g) Investments in and assets of Unrestricted Subsidiaries.
"Consolidated Net Worth" shall mean, as of any date, consolidated
shareholders' equity or net worth of Holdings and its Consolidated Subsidiaries,
as determined in accordance with GAAP.
"Consolidated Subsidiary" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with GAAP.
"Contested Collateral Lien Conditions" shall mean, with respect to any
Permitted Lien of the type described in paragraphs (a), (b) and (f) of Section
6.02, the following conditions:
(a) the applicable Loan Party shall be contesting such Lien in
good faith;
(b) to the extent such Lien is in an amount in excess of
$100,000, in the aggregate with all other such Liens, the Collateral
Agent shall have established a Reserve (to the extent of such Lien on
Collateral) with respect thereto or obtained a bond in an amount
sufficient to pay and discharge such Lien and the Collateral Agent's
reasonable estimate of all interest and penalties related thereto; and
(c) such Lien shall in all respects be subject and subordinate
in priority to the Lien and security interest created and evidenced by
the Security Documents, except if and to the extent that the law or
regulation creating, permitting or authorizing such Lien provides that
such Lien is or must be superior to the Lien and security interest
created and evidenced by the Security Documents.
12
"Contingent Obligation" shall mean, as to any Person, any obligation,
agreement, understanding or arrangement of such Person guaranteeing or intended
to guarantee any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any Property constituting direct or indirect security therefor; (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor; (c) to purchase Property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation; (d) with respect
to bankers' acceptances and letters of credit, until a reimbursement obligation
arises; (e) with respect to leases (including Capital Lease Obligations and
operating leases), to become a co-lessee with the primary obligor; or (f)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term "Contingent
Obligation" shall not include endorsements of instruments for deposit or
collection in the ordinary course of business or any product warranties for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable, whether severally or jointly,
pursuant to the terms of the instrument evidencing such Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Contribution, Incentive and Offset Agreement" shall mean that certain
Contribution, Incentive and Offset Agreement dated as of the date hereof by and
among the Loan Parties, Collateral Agent and Administrative Agent.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Control Agreement" shall have the meaning assigned to such term in the
Security Agreement.
"Convertible Note Documents" means the Convertible Note Indenture, the
Convertible Notes and all other documents executed and delivered with respect to
the Convertible Notes or the Convertible Note Indenture.
"Convertible Note Indenture" means the Indenture, dated as of May 29,
2003, among Holdings, as issuer, Administrative Borrower, as guarantor and
Wilmington Trust Company, as Trustee, as may be supplemented from time to time
in accordance with the terms hereof.
13
"Convertible Notes" means Holdings' 4.75% Convertible Senior Notes due
May 15, 2023 issued under the Convertible Note Indenture in an aggregate
original principal amount of $132 million.
"Cost" shall mean, as determined by Collateral Agent in good faith,
with respect to Inventory, the lower of (a) cost computed on a first-in
first-out basis using an average cost method in accordance with GAAP or (b)
market value; provided, that for purposes of the calculation of the Borrowing
Base, (i) the Cost of the Inventory shall not include: (A) the portion of the
cost of Inventory equal to the profit earned by any Affiliate on the sale
thereof to any Borrower or (B) write-ups or write-downs in cost with respect to
currency exchange rates, and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same manner
and consistent with the most recent Inventory Appraisal which has been received
and approved by Collateral Agent in its reasonable discretion.
"Co-Syndication Agents" shall have the meaning assigned to such term in
the preamble hereto.
"Credit Extension" shall mean, as the context may require, (i) the
making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or
the amendment, extension or renewal of any existing Letter of Credit, by an
Issuing Bank; provided, that "Credit Extensions" shall not include conversions
and continuations of outstanding Loans.
"Debt Issuance" shall mean the incurrence by Holdings, any Borrower or
any of their Subsidiaries of any Indebtedness after the Closing Date (other than
as permitted by Section 6.01).
"Default" shall mean any event, occurrence or condition which is, or
upon notice, lapse of time or both would constitute, an Event of Default.
"Default Allocation Percentage" as to any Secured Party shall mean the
quotient (determined as a percentage) determined as of the date of an Event of
Default, whose numerator equals the principal, interest, fees and other
Obligations owing to such Secured Party (including all advances made by such
Lender following such Event of Default but excluding any Hedging Obligations)
and whose denominator equals the principal, interest, fees and other Obligations
owing to all Secured Parties (including all advances made by the Lenders
following such Event of Default but excluding any Hedging Obligations) as of
such date.
"Disqualified Capital Stock" shall mean any Equity Interest which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (a) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Final Maturity Date, (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a)
above, in each case at any time prior to the first anniversary of the Final
Maturity Date, or (c) contains any repurchase obligation which may come into
effect prior to payment in full of all Obligations.
14
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or other holder of any applicable Equity Interest in such Person or authorized
or made any other distribution, payment or delivery of Property (other than
common stock or other applicable Equity Interest of such Person) or cash to its
stockholders or other holder of any applicable Equity Interest in such Person as
such, or redeemed, retired, purchased or otherwise acquired, directly or
indirectly, for a consideration any shares of any class of its capital stock
outstanding (or any options or warrants issued by such Person with respect to
its capital stock or other applicable Equity Interest), or set aside any funds
for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock or other applicable Equity Interest of such
Person outstanding (or any options or warrants issued by such Person with
respect to its capital stock or other applicable Equity Interest). Without
limiting the foregoing, "Dividends" with respect to any Person shall also
include all payments made or required to be made by such Person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Documentation Agent" shall have the meaning assigned to such term in
the preamble hereto.
"Documents" shall mean all "documents," as such term is defined in the
UCC as in effect on the date hereof in the State of New York, in which any
Person now or hereafter has rights.
"Dollars" or "$" shall mean lawful money of the United States.
"Eastman Facility Assets" means the coal handling facility constructed
by Tennessee Energy Corp. at Eastman Chemical Company's Kingsport, Tennessee
plant, and all locomotive(s), all equipment, parts and supplies incorporated
into such facility by Tennessee Energy Corp. and all integrally related tangible
and intangible assets, including leases, coal handling agreements, service
agreements and transportation agreements.
"Eligible Accounts" shall have the meaning assigned to such term in
Section 2.19(a).
"Eligible Consigned Inventory" shall mean Eligible Inventory of the
Borrowers on consignment (A) on any location at which the aggregate Cost of such
Eligible Inventory is no less than $100,000, (B) with a consignee that (i) has
not suspended business, (ii) has not made a general assignment for the benefit
of creditors, (iii) has not failed to pay its debts generally as they come due,
(iv) has not filed, or against which has not been filed, a petition under any
bankruptcy law or any other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the relief of debtors
or (v) is otherwise, in the reasonable credit judgment of the Collateral Agent,
able to meet its obligations under the applicable Coal Supply Agreement for the
remainder of the term of such Coal Supply Agreement, (C) which meets the minimum
15
specifications that require the consignee to accept such Eligible Inventory
under the applicable Coal Supply Agreement or, if such specifications are not
met, the consignee has confirmed its agreement to purchase such Eligible
Inventory in a manner reasonably acceptable to the Collateral Agent and (D) with
respect to which Collateral Agent shall have received, in each case in form and
substance satisfactory to Collateral Agent:
(a) a valid consignment agreement or an arrangement which is reasonably
satisfactory to Collateral Agent is in place with respect to such Eligible
Inventory;
(b) Lien searches against the consignee in the jurisdiction in which
the consignee is organized and such other searches that the Collateral Agent
reasonably deems necessary or appropriate;
(c) UCC-1 financing statements between the consignee and the applicable
Borrower, as consignor, in form and substance satisfactory to Collateral Agent,
which are duly assigned to Collateral Agent, or with respect to Inventory in
Canada, such arrangements as are satisfactory to Collateral Agent to perfect the
Lien;
(d) a written notice to any secured lender to the consignee of the
first priority security interest in such Eligible Inventory of Collateral Agent;
and
(e) an agreement in writing, in form and substance reasonably
satisfactory to Collateral Agent, from the consignee, pursuant to which such
consignee, inter alia, acknowledges the first priority security interest of
Collateral Agent in such Collateral, and agrees to waive or subordinate any and
all claims such consignee may, at any time, have against such Collateral,
whether for processing, storage, breach of warranty (with respect to prior
purchases) or otherwise.
"Eligible Inventory" shall mean, subject to adjustment as set forth in
Section 2.19(b), items of Inventory of the Borrowers.
"Eligible Pit Inventory" shall mean Coal that has not been removed from
the Real Property of a Land Company or a Mining Company; provided that (i) the
Collateral Agent shall have a priority Lien on the Real Property pursuant to a
Mortgage (subject only to Permitted Liens described in Sections 6.02 (a), (b),
(d), (m) and, provided that any dedication of reserves provision in any Coal
Supply Agreement applicable to such Coal expressly permits Liens for secured
financings on commercially reasonable terms, also (g) and (u)), (ii) such Real
Property shall then be currently subject to mining operations by a Mining
Company, (iii) the Collateral Agent shall have received evidence reasonably
satisfactory to it concerning title related issues with respect to such Real
Property, and (iv) the Collateral Agent shall have received an appraisal in
form, scope and substance, and by an appraiser, acceptable to the Collateral
Agent with respect to such Coal.
"Environment" shall mean ambient air, surface water and groundwater
(including, without limitation, potable water, navigable water and wetlands),
the land surface or subsurface strata, natural resources, the workplace or as
otherwise defined in any Environmental Law.
"Environmental Claim" shall mean any claim, notice, demand, order,
action, suit, proceeding or other communication in each case alleging liability
for investigation, remediation, removal, cleanup, response, corrective action,
damages to natural resources, personal injury, Property damage, fines, penalties
or other costs resulting from, related to or arising out of (i) the presence,
Release or threatened Release of Hazardous Material at any location or (ii) any
16
violation of Environmental Law, and shall include, without limitation, any claim
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from, related to or arising out of the presence,
Release or threatened Release of Hazardous Material or alleged injury or threat
of injury to human health, safety, or the Environment.
"Environmental Law" shall mean any and all applicable treaties, laws,
statutes, ordinances, regulations, rules, decrees, orders, judgments, consent
orders, consent decrees or other binding requirements, and the common law,
relating to protection of public health or the Environment, the Release or
threatened Release of Hazardous Material, natural resources or natural resource
damages, or occupational safety or health.
"Environmental Permit" shall mean any permit, license, approval,
consent or other authorization required by or from a Governmental Authority
under Environmental Law.
"Equity Interest" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of equity of such
Person, including, if such Person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership, whether outstanding on the date
hereof or issued after the Closing Date, but excluding debt securities
convertible or exchangeable into such equity.
"Equity Issuance" shall mean, without duplication, any issuance or sale
by Holdings or any Borrower (other than to Holdings) after the Closing Date of
(a) any Equity Interests (including any Equity Interests issued upon exercise of
any warrant or option) or any warrants or options to purchase Equity Interests
or (b) any other security or instrument representing an Equity Interest (or the
right to obtain any Equity Interest) in the issuing or selling Person; provided,
however, that an Equity Issuance shall not include any such sale or issuance by
Holdings of (i) shares of its capital stock to the holders of Convertible Notes
upon any exercise of conversion rights under the Convertible Note Documents,
(ii) shares of its capital stock to the holders of the 6.625% Senior Notes in
connection with the optional redemption of no more than 35% of the principal
amount of the 6.625% Senior Notes pursuant to Section 3.07 of the 6.625% Senior
Note Indenture, and (iii) not more than an aggregate amount of 5.0% of the
shares of its capital stock (including capital stock issued upon exercise of any
warrant or option or warrants or options to purchase its capital stock but
excluding Disqualified Capital Stock), in each case, to directors, officers or
employees of any Company.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with any Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
17
"ERISA Event" shall mean (a) any "reportable event," as such term is
defined in Section 4043(c) of ERISA or the regulations issued thereunder, with
respect to a Plan (other than an event for which the 30-day notice period is
waived by regulation); (b) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, the failure to make by its due
date a required installment under Section 412(m) of the Code with respect to any
Plan or the failure to make any required contribution to a Multiemployer Plan;
(c) the incurrence by any Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(d) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a
plan administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan, or the occurrence of
any event or condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (e) the incurrence by any Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal from any Plan or
Multiemployer Plan; (f) the receipt by any Company or its ERISA Affiliates of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (g) the making of any
amendment to any Plan which could result in the imposition of a lien or the
posting of a bond or other security; and (h) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could result in liability to any Company.
"Estimated Solvency Amount" shall mean, with respect to any Borrower
(other than the Administrative Borrower), at any date of determination, the
amount shown for such Borrower (including, in the case of any Borrower for which
a separate divisional or d/b/a balance sheet is maintained, the corresponding
amounts reflected on such divisional or d/b/a balance sheet) as the "Total
Shareholder Equity", minus the amounts shown as "Investments-Other", "Prepaid
Expenses & Other Current Assets" and "Deferred Charges & Other Non-Current
Assets", as well as the portion of the amount shown as "Intercompany
Investments" which is attributable to any divisional or d/b/a balance sheets
associated with such Borrower, in each case, on the consolidating balance sheet
delivered pursuant to Section 5.01(c) and calculated in accordance with the same
procedures as such amounts were calculated in the October 31, 2003 consolidating
balance sheets of the Borrowers presented to the Administrative Agent and
Collateral Agent prior to the Closing Date, plus such adjustments as the
Administrative Agent and Collateral Agent deem appropriate in their collective
reasonable credit judgment to reflect any differences which may have been
identified between the carrying value on the most recently delivered balance
sheet of the investments in Subsidiaries of such Borrower and the fair saleable
value of the investments in such Subsidiaries (it being recognized that the
amount shown as "Intercompany Investments" for any Subsidiaries of such Borrower
and the Estimated Solvency Amount of such Subsidiaries will be considered by the
Administrative Agent and the Collateral Agent if they elect to make any such
adjustment). The Estimated Solvency Amount is intended to provide an
approximation, solely for purposes of administering the Borrowing Base formulas,
of the level of credit which the Lenders are prepared to provide hereunder with
respect to the assets of any Borrower in light of the limitations on recovery
from the assets of the Borrower under Section 11.15 and applicable law in
connection with any action or proceeding of the type referred to in Section
11.15 and the Borrowers acknowledge that the actual amount of recovery from such
18
assets should be a greater amount when and if there ever is reason to actually
determine the "solvency" of the respective Borrower as it would be determined
for purposes of Section 548 of the Bankruptcy Code and the limitation contained
in Section 11.15. Borrowers acknowledge that, among various reasons for a
variance between the "Estimated Solvency Amount" and the actual amount of a
Borrower's "solvency" for Bankruptcy Code purposes are the facts that (i) "Other
Accrued Liabilities" amounts and the "Other Non-Current Liabilities" amounts
shown on the most recently delivered balance sheet shall reflect estimations of
the respective Borrower's liabilities for many contingent liabilities, (although
there may be other contingent liabilities of such Borrower which have not been
included in such calculation) and (ii) no attempt has been made by the
applicable Borrower to reflect in the calculation such non-balance-sheet assets
as any contribution, indemnity and set-off rights against other Loan Parties or
mark-ups of fixed assets to reflect current saleable values above the lower of
cost or market values shown on the respective balance sheet.
"Eurodollar Revolving Borrowing" shall mean a Borrowing comprised of
Eurodollar Revolving Loans.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBOR Rate in
accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VIII.
"Excess Availability" shall mean (a) the lesser of (i) the Revolving
Commitments of all of the Lenders and (ii) the Borrowing Base on the date of
determination less (b) all outstanding Loans and LC Exposure as of the date of
determination less (c) in Collateral Agent's discretion, the aggregate amount of
all the outstanding and unpaid trade payables and other obligations of the Loan
Parties which are not paid within 60 days past the due date according to their
original terms of sale, in each case as of such date of determination less (d)
in Collateral Agent's discretion, the amount of checks issued by the Loan
Parties to pay trade payables and other obligations which are not paid within 60
days past the due date according to their original terms of sale, in each case
as of such date of determination, but which either have not yet been sent or are
subject to other arrangements which are expected to delay the prompt
presentation of such checks for payment. Each component of the determination of
Excess Availability pursuant to this definition shall be based on the most
recent information available to the Collateral Agent at the time of
determination.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of any Borrower hereunder, (a) income or
franchise taxes (including branch profits taxes) imposed on (or measured by) its
gross or net income (excluding U.S. withholding taxes) by the United States (or
any political subdivision thereof, including, without limitation, any state of
the United States and any political subdivision of such state), or by the
jurisdiction under the laws of which such recipient is organized (or any
political subdivision thereof) or in which its principal office is located (or
any political subdivision thereof) or, in the case of any Lender, in which its
applicable lending office is located, (b) in the case of a Lender or the Issuing
19
Bank (other than an assignee pursuant to a request by a Borrower under Section
2.16), any and all Taxes (including withholding taxes) that are imposed on
amounts payable to such Lender or the Issuing Bank at the time such Lender or
Issuing Bank becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Lender's or Issuing Bank's failure to comply
with Section 2.15(e) (it being understood and agreed, for the avoidance of
doubt, that any withholding tax imposed on a Lender or Issuing Bank as a result
of a Change in Law or regulation or interpretation thereof occurring after the
time such Lender or Issuing Bank became a party to this Agreement shall not be
an Excluded Tax), and (c) any and all Taxes imposed on it as a result of a trade
or business in, a permanent establishment in, or a present or former connection
between such Lender, the Issuing Bank or the Administrative Agent (as the case
may be) and the jurisdiction of the Governmental Authority imposing such tax or
any taxing authority thereof or therein.
"Existing Letters of Credit" shall mean the letters of credit listed on
Schedule 1.01(a) hereto.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day for such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the collective reference to (a) the Commitment
Letter, dated December 19, 2003, among Administrative Borrower, UBS Loan Finance
LLC and UBS Securities LLC and (b) the confidential Fee Letter, dated December
19, 2003, among Administrative Borrower, UBS Loan Finance LLC and UBS Securities
LLC.
"Fees" shall mean the Commitment Fees, the Administrative Agent Fees,
the Collateral Agent Fees, the LC Participation Fees and the Fronting Fees.
"Final Maturity Date" shall mean January 16, 2009.
"Financial Officer" of any Person shall mean the Chief Financial
Officer, principal accounting officer, Treasurer or Controller of such Person.
"FIRREA" shall mean the Federal Institutions Reform, Recovery and
Enforcement Act of 1989.
"Foreign Issuing Bank" shall mean any Issuing Bank that is not, for
United States federal income tax purposes, (i) a citizen or resident of the
Untied States; (ii) a corporation or entity treated as a corporation created or
organized in or under the laws of the United States, or any political
subdivision thereof; (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of its source or (iv) a trust if a court
20
within the United States is able to exercise primary supervision over the
administration of such trust and one or more United States Persons have the
authority to control all such decisions of such trust.
"Foreign Lender" shall mean any Lender that is not, for United States
federal income tax purposes, (i) a citizen or resident of the United States,
(ii) a corporation or entity treated as a corporation created or organized in or
under the laws of the United States, or any political subdivision thereof, (iii)
an estate the income of which is subject to U.S. federal income taxation
regardless of its source or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of such trust and
one or more United States Persons have the authority to control all substantial
decisions of such trust.
"Foreign Subsidiary" shall mean a Subsidiary that is organized under
the laws of a jurisdiction other than the United States or any state thereof or
the District of Columbia.
"Fronting Fees" shall have the meaning assigned to such term in Section
2.05(c).
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a consistent basis.
"Governmental Authority" shall mean any federal, state, local or
foreign court, central bank or governmental agency, authority, instrumentality
or regulatory body.
"Governmental Real Property Disclosure Requirements" shall mean any
Requirement of Law of any Governmental Authority requiring notification of the
buyer, lessee, mortgagee, assignee or other transferee of any Real Property,
facility, establishment or business, or notification, registration or filing to
or with any Governmental Authority, in connection with the sale, lease,
mortgage, assignment or other transfer (including, without limitation, any
transfer of control) of any Real Property, facility, establishment or business,
of the actual or threatened presence or Release in or into the Environment, or
the use, disposal or handling of Hazardous Material on, at, or under the Real
Property, facility, establishment or business to be sold, leased, mortgaged,
assigned or transferred.
"Guaranteed Obligations" shall have the meaning assigned to such term
in Section 7.01.
"Guarantees" shall mean the guarantees issued pursuant to Article VII
by the Guarantors.
"Guarantors" shall mean Holdings and the other Companies executing this
Agreement as Guarantors in the space provided for that purpose.
"Hazardous Materials" shall mean the following: hazardous substances;
hazardous wastes; polychlorinated biphenyls ("PCBs") or any substance or
compound containing PCBs; asbestos or any asbestos-containing materials in any
form or condition; radon or any other radioactive materials including any
source, special nuclear or by-product material; petroleum, crude oil or any
fraction thereof; and any other pollutant or contaminant or hazardous, toxic or
dangerous chemicals, wastes, materials, compounds, constituents or substances,
as all such terms are used in their broadest sense and defined by or under any
Environmental Laws.
"Hedging Agreement" shall mean any Interest Rate Protection Agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement
21
designed to alter the risks of any Person arising from fluctuations in interest
rates, currency values or commodity pricing.
"Hedging Obligations" shall mean the amount of obligations referenced
in clause (c) and (d) of the definition of "Obligations."
"Hedging Reserve" shall mean, as of any date of determination, (i) a
reserve determined by the Collateral Agent in its reasonable credit judgment
(with due regard to recent market volatility) and giving effect to the aggregate
amount owing to the Loan Parties by a counterparty to a Hedging Agreement, less
the amount the Loan Parties owe such counterparty thereunder, less the aggregate
amount of Property pledged to collateralize or otherwise secure such obligation
(other than the Collateral granted under the Loan Documents), in each case
valued by the Collateral Agent based on the information provided to the
Collateral Agent pursuant to Section 5.15(f) on a mark-to-market basis as of the
last Business Day of the month (or if not available, the nearest prior Business
Day for which such evaluation is available) minus (ii) with respect to any
Hedging Reserve established with respect to the Specified Interest Rate
Protection Agreement, an amount equal to the lesser of (A) such Hedging Reserve
and (B) the "Threshold" as defined in and pursuant to the Specified Interest
Rate Protection Agreement; provided, that Collateral Agent, in its reasonable
credit judgment, may adjust such reserve from time to time to reflect changes in
market volatility and other relevant factors that may be reported to the
Collateral Agent by the counterparty to such Hedging Agreement. Notwithstanding
anything in this definition to the contrary, in the event that a counterparty to
any Hedging Agreement elects to report to the Collateral Agent the amount of the
Obligations with respect to such Hedging Agreement within the last 30 days of
such date of determination, the Collateral Agent shall at all times, unless
otherwise consented to by such counterparty, maintain a Hedging Reserve with
respect to such Obligations of at least the amount so reported less, with
respect to the Hedging Reserve established with respect to the Specified
Interest Rate Protection Agreement, an amount equal to the lesser of (A) such
Hedging Reserve and (B) the "Threshold" as defined in and pursuant to the
Specified Interest Rate Protection Agreement, less the amount the Loan Parties
owe such counterparty thereunder, less the aggregate amount of Property pledged
to collateralize or otherwise secure any such obligations (other than the
Collateral granted under the Loan Documents); provided, however, to the extent
that the Collateral Agent increases the Hedging Reserve based on such reports,
the Collateral Agent shall notify the Administrative Borrower and such increase
in the Hedging Reserve will not take effect for five (5) Business Days from the
date of receipt by the Administrative Borrower of such notice with respect to
any determination of Excess Availability or Average Excess Availability.
"Holdings" shall have the meaning assigned to such term in the preamble
hereto.
"Incorporated Borrowing Base" shall mean at any time, for each
Borrower, subject to adjustment as provided in Section 2.19, an amount equal to
the lesser of (a) the sum of, without duplication:
(i) the book value of Eligible Accounts of such Borrower multiplied
by the advance rate of 85%, plus
22
(ii) the lesser of (A) the advance rate of 65% of the Cost of Eligible
Inventory of such Borrower, or (B) the advance rate of 85% of the
Net Recovery Cost Percentage multiplied by the Cost of Eligible
Inventory of such Borrower, or
(b) the Borrowing Base Limitation Amount for such Borrower.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or advances; (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments; (c)
all obligations of such Person upon which interest charges are customarily paid
or accrued; (d) all obligations of such Person under conditional sale or other
title retention agreements relating to Property purchased by such Person; (e)
all obligations of such Person issued or assumed as the deferred purchase price
of Property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business on normal trade terms
and not overdue by more than 90 days unless contested in good faith and by
appropriate proceedings if adequate reserves have been established on the books
of such Person in accordance with GAAP); (f) all Indebtedness of others secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on Property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed; (g) all Capital Lease Obligations, Purchase Money Obligations and
synthetic lease obligations of such Person; (h) all obligations of such Person
in respect of Interest Rate Protection Agreements and other Hedging Agreements
to the extent required to be reflected on a balance sheet of such Person; (i)
all Attributable Indebtedness of such Person; (j) all obligations for the
reimbursement of any obligor in respect of letters of credit, letters of
guaranty, bankers' acceptances and similar credit transactions; and (k) all
Contingent Obligations of such Person in respect of Indebtedness or obligations
of others of the kinds referred to in clauses (a) through (j) above. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor under applicable law as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent that terms of such Indebtedness provide that such Person is not
liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnitee" shall have the meaning assigned to such term in Section
11.03(b).
"Information" shall have the meaning assigned to such term in Section
11.12.
"Instruments" shall mean all "instruments," as such term is defined in
the UCC as in effect on the date hereof in the State of New York, in which any
Person now or hereafter has rights.
"Intellectual Property" shall have the meaning assigned to such term in
Section 3.05(c).
"Intercompany Indebtedness" shall mean any Indebtedness or other
liability owed by a Loan Party to another Loan Party, including any amounts
owing under tax sharing agreements and any amounts treated on the books and
records of the Loan Parties as "Intercompany-Accounts Receivable",
"Intercompany-Accounts Payable", "Intercompany Loan Payable", and "Intercompany
Loan Receivable."
23
"Interest Election Request" shall mean a request by the Administrative
Borrower to convert or continue a Revolving Borrowing in accordance with Section
2.08(b), substantially in the form of Exhibit D.
"Interest Payment Date" shall mean (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each March, June, September and
December to occur during the period that such Loan is outstanding and the Final
Maturity Date of such Loan, (b) with respect to any Eurodollar Revolving Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of
more than three months' duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months' duration after the
first day of such Interest Period, and (c) with respect to any Swingline Loan,
the day that such Loan is required to be repaid.
"Interest Period" shall mean, with respect to any Eurodollar Revolving
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Administrative Borrower may elect; provided, that
(a) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(b) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing; provided, however, that an Interest Period shall
be limited to two weeks to the extent required under Section 2.03(e).
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect Holdings, any Borrower or
any of their Subsidiaries against fluctuations in interest rates and not entered
into for speculation.
"Interest Reserve" shall mean, at any date of determination, an amount
equal to the total amount of interest on Indebtedness for borrowed money (other
than the Loans) accrued but not paid from the beginning of the then current
calendar year through and including the end of the then current calendar month.
"Inventory" shall mean all "inventory," as such term is defined in the
UCC as in effect on the date hereof in the State of New York, wherever located,
and all Coal located on, under or within Real Property before extraction and
classified in the Inventory Appraisal prepared prior to the Closing Date as pit
24
coal, pit-shippable coal or ratio coal whether or not legally owned by any
Person, in each case, in which any Person now or hereafter has rights.
"Inventory Appraisal" shall mean (a) on the Closing Date, the audit
prepared by Weir International Mining Consultants dated December 18, 2003 and
(b) thereafter, the most recent inventory appraisal conducted by an independent
appraisal firm satisfactory to the Collateral Agent and delivered pursuant to
Section 5.15(e) hereof.
"Investments" shall have the meaning assigned to such term in Section
6.04.
"Issuing Bank" shall mean, as the context may require, (a) UBS AG,
Stamford Branch, with respect to Letters of Credit issued by it; (b) any other
Lender or Affiliate of such Lender that may become an Issuing Bank pursuant to
Sections 2.18(i) or (k), with respect to Letters of Credit issued by such Lender
or Affiliate; (c) PNC Bank, National Association with respect to the Existing
Letters of Credit and any other Letter of Credit issued by it or (d)
collectively, all of the foregoing.
"Joinder Agreement" shall mean that certain joinder agreement
substantially in the form of Exhibit E.
"Joint Venture Subsidiary" means CoalSolv, LLC, a Virginia limited
liability company.
"Land Companies" shall mean Boone East Development Co., a West Virginia
corporation, Demeter Land Company, a West Virginia corporation and any
additional Company joined as a Land Company pursuant to Section 5.11(b).
"Landlord Lien Waiver and Access Agreement" shall mean the Landlord
Lien Waiver and Access Agreement, substantially in the form of Exhibit F.
"LC Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.18.
"LC Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"LC Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all LC Disbursements that have not yet been
reimbursed at such time. The LC Exposure of any Revolving Lender at any time
shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.
"LC Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"LC Request" shall mean a request by Administrative Borrower in
accordance with the terms of Section 2.18(b) and substantially in the form of
Exhibit A-3, or such other form as shall be approved by the Administrative
Agent.
"Leases" shall mean any and all leases, subleases, tenancies,
concession agreements, rental agreements, occupancy agreements, franchise
agreements, access agreements and any other agreements (including all
25
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real
Property.
"Lender Addendum" shall mean with respect to any Lender on the Closing
Date, a lender addendum in the form of Exhibit A-4 to be executed and delivered
by such Lender on the Closing Date as provided in Section 11.14.
"Lender Affiliate" shall mean with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such advisor.
"Lenders" shall mean (a) the financial institutions that have become a
party hereto pursuant to a Lender Addendum (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance. Unless the context clearly indicates
otherwise, the term "Lenders" shall include the Swingline Lender.
"Lender Specified Collateral" has the meaning assigned to such term in
the Lender Specified Collateral Side Letter.
"Lender Specified Collateral Side Letter" means that certain letter
dated as of the date hereof from the Administrative Agent and the Collateral
Agent to, and acknowledged by, the Lenders. The Lender Specified Collateral Side
Letter is solely for the benefit of the Lenders, may be amended, supplemented or
otherwise modified without the consent of the Loan Parties and does not create
any rights in favor of any other Person, including, without limitation, the Loan
Parties.
"Letter of Credit" shall mean any (i) Standby Letter of Credit, (ii)
Commercial Letter of Credit, in each case, issued or to be issued by an Issuing
Bank for the account of any Borrower pursuant to Section 2.18 and (iii) Existing
Letter of Credit.
"Letter of Credit Expiration Date" shall mean the date which is five
Business Days prior to the Final Maturity Date.
"LIBOR Rate" shall mean, with respect to any Eurodollar Revolving
Borrowing for any Interest Period therefor, the rate per annum determined by the
Administrative Agent to be the arithmetic mean (rounded to the nearest 1/100 of
1%) of the offered rates for deposits in Dollars with a term comparable to such
Interest Period that appears on the Telerate British Bankers Assoc. Interest
Settlement Rates Page (as defined below) at approximately 11:00 a.m., London,
England time, on the second full Business Day preceding the first day of such
Interest Period; provided, however, that (i) if no comparable term for an
Interest Period is available, the LIBOR Rate shall be determined using the
weighted average of the offered rates for the two terms most nearly
corresponding to such Interest Period and (ii) if there shall at any time no
longer exist a Telerate British Bankers Assoc. Interest Settlement Rates Page,
26
"LIBOR Rate" shall mean, with respect to each day during each Interest Period
pertaining to Eurodollar Revolving Borrowings comprising part of the same
Borrowing, the rate per annum equal to the rate at which the Administrative
Agent is offered deposits in Dollars at approximately 11:00 a.m., London,
England time, two Business Days prior to the first day of such Interest Period
in the London interbank market for delivery on the first day of such Interest
Period for the number of days comprised therein and in an amount comparable to
its portion of the amount of such Eurodollar Revolving Borrowing to be
outstanding during such Interest Period. "Telerate British Bankers Assoc.
Interest Settlement Rates Page" shall mean the display designated as Page 3750
on the Telerate System Incorporated Service (or such other page as may replace
such page on such service for the purpose of displaying the rates at which
Dollar deposits are offered by leading banks in the London interbank deposit
market).
"Lien" shall mean, with respect to any Property, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind, any other type of preferential
arrangement in respect of such Property or any filing of any financing statement
under the UCC or any other similar notice of Lien under any similar notice or
recording statute of any Governmental Authority, including any easement,
right-of-way or other encumbrance on title to Real Property, in each of the
foregoing cases whether voluntary or imposed by law, and any agreement to give
any of the foregoing; (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such Property; and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Line Reserve" shall have the meaning assigned to such term in Section
2.10(g).
"Loan Documents" shall mean this Agreement, any Borrowing Base
Certificate, the Letters of Credit, the Notes (if any), the Security Documents,
the Contribution, Incentive and Offset Agreement, the Fee Letter, the Collateral
Agent Fee Letter, the Specified Interest Rate Protection Agreement and each
Hedging Agreement entered into with any Secured Party.
"Loan Parties" shall mean the Borrowers, Holdings and the other
Guarantors.
"Loans" shall mean advances made to or at the instructions of
Administrative Borrower pursuant to Article II hereof and may constitute a
Revolving Loan or a Swingline Loan.
"Maintenance Capital Expenditures" shall mean, at any date of
determination, an amount equal to the product of (i) $2.00 and (ii) the total
tons of Coal produced by Holdings or any of its Consolidated Subsidiaries during
the applicable Test Period.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a material adverse effect on
the business, Property, results of operations, prospects or condition, financial
or otherwise, or material agreements of Holdings and its Consolidated
Subsidiaries, taken as a whole; (b) material impairment of the ability of the
Loan Parties to fully and timely perform any of their obligations under any Loan
Document; (c) material impairment of the rights of or benefits or remedies
available to the Lenders or the Collateral Agent under any Loan Document; or (d)
27
a material adverse effect on the Collateral or the Liens in favor of the
Collateral Agent (for its benefit and for the benefit of the other Secured
Parties) on the Collateral or the priority of such Liens.
"Material Agreements" shall mean the Coal Supply Agreements, the Mining
Leases, the Prep Plant Leases and any other agreement the termination of which,
in each case, would cause a Material Adverse Effect.
"Maximum Rate" shall have the meaning assigned to such term in Section
11.13.
"Mine" means any excavation or opening into the earth now and hereafter
made from which Coal is or can be extracted on or from any of the properties
owned or leased by any Company, together with all appurtenances, fixtures,
structures, improvements and all tangible property of whatsoever kind or nature
in connection therewith.
"Mining Companies" shall mean Elk Run Coal Company, Inc., Performance
Coal Company, Sidney Coal Company, Inc., Martin County Coal Corporation, Road
Fork Development Company, Inc., Independence Coal Company, Inc., Alex Energy,
Inc., Aracoma Coal Company, Inc., Bandmill Coal Corporation, Highland Mining
Company, Marfork Coal Company, Inc., Green Valley Coal Company, Knox Creek Coal
Corporation, Nicholas Energy Company, Rum Creek Coal Sales, Inc. and Delbarton
Mining Company and any additional Company joined as a Mining Company pursuant to
Section 5.11(b).
"Mining Laws" means any and all applicable current and future federal,
state, local and foreign statutes, laws, regulations, guidance, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions or common law causes of
action relating to mining operations and activities. Mining Laws shall include,
but not be limited to, the Federal Coal Leasing Amendments Act, the Surface
Mining Control and Reclamation Act, all other land reclamation and use statutes
and regulations, the Federal Coal Mine Health and Safety Act, the Black Lung Act
and the Coal Act, each as amended, and their state and local counterparts or
equivalents.
"Mining Lease" shall mean a Lease which provides a Company the right to
mine coal reserves. Mining Leases which provide a Company the right to construct
and operate a preparation plant and related facilities on the surface shall also
be deemed a Prep Plant Lease.
"Mining Permits" means any and all permits, licenses, registrations,
notifications, exemptions and any other authorization required under any
applicable Mining Law or otherwise necessary to recover Coal from any Mine being
operated by any Company.
"Mortgage" shall mean any mortgage, deed of trust or similar document,
between a Land Company and/or a Mining Company and the Collateral Agent for the
benefit of Secured Parties, in form and substance satisfactory to the Collateral
Agent.
"Multiemployer Plan" shall mean a multiemployer plan within the meaning
of Section 4001(a)(3) or Section 3(37) of ERISA to which any Company or any
ERISA Affiliate has an obligation to contribute.
"Net Cash Proceeds" shall mean:
(a) with respect to any Asset Sale, the cash proceeds received
by any Loan Party (including cash proceeds subsequently received (as
and when received by any Loan Party) in respect of noncash
consideration initially received) net of (i) selling expenses
28
(including reasonable brokers' fees or commissions, legal, accounting
and other professional and transactional fees, transfer and similar
taxes and Administrative Borrower's good faith estimate of income taxes
paid or payable in connection with such sale after taking into account
any available tax credits or deductions and any tax sharing
arrangements); (ii) amounts provided as a reserve, in accordance with
GAAP or amounts placed in escrow, against any liabilities under any
indemnification obligations associated with such Asset Sale (provided,
that, to the extent and at the time any such amounts are released from
such reserve or escrow, such amounts shall constitute Net Cash
Proceeds); (iii) Administrative Borrower's good faith estimate of
payments required to be made with respect to unassumed liabilities
relating to the assets sold within 30 days of such Asset Sale
(provided, that, to the extent such cash proceeds are not used to make
payments in respect of such unassumed liabilities within 30 days of
such Asset Sale, such cash proceeds shall constitute Net Cash
Proceeds); and (iv) the principal amount, premium or penalty, if any,
interest and other amounts on any Indebtedness for borrowed money which
is secured by a senior Lien on the asset sold in such Asset Sale and
which is repaid with such proceeds (other than any such Indebtedness
assumed by the purchaser of such asset and the Obligations);
(b) with respect to any Debt Issuance or Equity Issuance, the
cash proceeds thereof, net of customary fees, commissions, costs and
other expenses incurred in connection therewith; and
(c) with respect to any Casualty Event, the cash insurance
proceeds, condemnation awards and other compensation received in
respect thereof, net of all reasonable costs and expenses incurred in
connection with the collection of such proceeds, awards or other
compensation in respect of such Casualty Event.
"Net Recovery Cost Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the net recovery
on the aggregate amount of the Inventory at such time on an "orderly liquidation
value" basis as set forth in the most recent Inventory Appraisal received by
Collateral Agent in accordance with Section 5.15(e), such "orderly liquidation
value" having taken into consideration operating expenses and liquidation
expenses reasonably anticipated in the disposition of such assets, and (b) the
denominator of which is the original Cost of the aggregate amount of the
Inventory subject to the most recent Inventory Appraisal.
"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary:
(i) as to which neither Holdings nor any Subsidiary that is
not an Unrestricted Subsidiary (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (c) constitutes the lender;
(ii) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or
29
both any holder of any other Indebtedness of Holdings or any Subsidiary
to declare a default on the other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing
that they shall not have any recourse to the Equity Interests or assets
of Holdings or any Subsidiary.
"Notes" shall mean any notes evidencing (i) the Revolving Loans issued
pursuant to this Agreement, if any, substantially in the form of Exhibit H-2 or
(ii) the Swingline Loans issued pursuant to this Agreement, if any,
substantially in the form of Exhibit H-3, including any notes issued to the
Lenders on the Closing Date and any notes issued in exchange therefor.
"Obligations" shall mean (a) obligations of any Borrower and any and
all of the other Loan Parties from time to time arising under or in respect of
the due and punctual payment of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by any Borrower and any and all
of the other Loan Parties under this Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of any Borrower and any and all of the
other Loan Parties under this Agreement and the other Loan Documents, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of each Borrower and each Loan Party under or pursuant to this
Agreement and the other Loan Documents, (c) the due and punctual payment and
performance of all obligations of any Borrower and any and all of the other Loan
Parties under each Hedging Agreement (other than the Specified Interest Rate
Protection Agreement) entered into with any Secured Party, (d) the due and
punctual payment and performance of all obligations under the Specified Interest
Rate Protection Agreement, and (e) the due and punctual payment and performance
of all obligations owed by any Borrower and any and all of the other Loan
Parties in respect of overdrafts and related liabilities owed to any Lender, the
Administrative Agent or the Collateral Agent arising from treasury, depositary
and cash management services or in connection with any automated clearinghouse
transfer of funds.
"Officers' Certificate" shall mean a certificate executed by the
Chairman of the Board (if an officer), the Chief Executive Officer, the
President and one of the Financial Officers, each in his or her official (and
not individual) capacity.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or Property taxes, charges or similar
levies of the United States or any political subdivision thereof (including,
without limitation, any state in the United States and any political subdivision
30
thereof) (including interest, fines, penalties and additions to tax) arising
from the execution, delivery or enforcement of, or otherwise with respect to,
any Loan Document.
"Overadvance" shall have the meaning assigned to such term in Section
10.10.
"Participant" shall have the meaning assigned to such term in Section
11.04(d).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Perfection Certificate" shall mean a certificate in the form of
Exhibit I-1 or any other form approved by the Collateral Agent, as the same
shall be supplemented from time to time by a Perfection Certificate Supplement
or otherwise.
"Perfection Certificate Supplement" shall mean a certificate supplement
in the form of Exhibit I-2 or any other form approved by the Collateral Agent.
"Permitted Acquisition" shall mean, with respect to any Borrower or any
Guarantor (other than Holdings), any transaction or series of related
transactions for the direct or indirect (a) acquisition of all or substantially
all of the Property of any other Person, or of any business or division of any
other Person; (b) acquisition of in excess of 50% of the Equity Interests of any
other Person, or otherwise causing any other Person to become a Subsidiary of
such Person; or (c) merger or consolidation or any other combination with any
other Person, if each of the following conditions are met as reasonably
determined by the Administrative Agent and the Collateral Agent:
(i) no Default then exists or would result therefrom;
(ii) after giving effect to such acquisition and, as
applicable, on a Pro Forma Basis, (A) the Borrowers shall be in
compliance with all covenants set forth in Section 6.08 as of the most
recent Test Period (assuming, for purposes of Section 6.08, that such
acquisition, and all other Permitted Acquisitions consummated since the
first day of the relevant Test Period for each of the financial
covenants set forth in Section 6.08 ending on or prior to the date of
such acquisition, had occurred on the first day of such relevant Test
Period and that such covenant applies regardless of the amount of
Average Excess Availability), (B) the Loan Parties can reasonably be
expected to remain in compliance with such covenants through the Final
Maturity Date (regardless of the amount of Excess Availability) and to
have sufficient cash liquidity to conduct their business and pay their
respective debts and other liabilities as they come due, and (C)
Average Excess Availability shall be no less than $30 million
immediately before giving effect to such acquisition and Excess
Availability shall be no less than $30 million immediately after giving
effect to such acquisition;
(iii) no Company shall, in connection with any such
acquisition, assume or remain liable with respect to any Indebtedness
or other liability (including any material tax or ERISA liability) of
the related seller, except (A) unsecured Indebtedness to the extent
permitted under Section 6.01, (B) secured Indebtedness not in excess of
$25 million at any time outstanding, secured only by a Lien on Property
that is not Collateral and otherwise permitted by Section 6.02 and no
other Loan Party shall be liable for such Indebtedness, (C) obligations
31
of the seller incurred in the ordinary course of business and necessary
or desirable to the continued operation of the underlying properties,
(D) ordinary course reclamation, black lung, workers compensation and
other employee benefits and (E) in the case of clauses (A) and (B), the
covenants, events of default, subordination and other provisions of
such assumed or acquired Indebtedness (including any guarantees
thereof) shall be otherwise reasonably satisfactory to the
Administrative Agent, and, in each case, any other such liabilities or
obligations not permitted to be assumed or otherwise supported by any
Company hereunder shall be paid in full or released as to the assets
being so acquired on or before the consummation of such acquisition;
(iv) the acquired Person shall be engaged in a Permitted
Business and the Property acquired in connection with any such
acquisition shall be made subject to the Lien of the Security Documents
(to the extent such Property would have been subject to the Lien of the
Security Documents if such Property were owned by the Companies on the
Closing Date) on terms reasonably satisfactory to the Agents, and shall
be free and clear of any Liens, other than Permitted Liens, and the
Agents shall have received all opinions, certificates, lien search
results and other documents reasonably requested by the Agents;
(v) the board of directors or other similar governing body of
the acquired Person shall not have indicated publicly its opposition to
the consummation of such acquisition;
(vi) with respect to any acquisition involving Acquisition
Consideration of more than $20 million, the Borrowers shall have
provided the Administrative Agent and the Lenders with financial
information, financial analysis, documentation or other information and
data relating to such acquisition or the Person or business to be
acquired as may be reasonably requested by the Administrative Agent or
the Required Lenders; and
(vii) The Borrowers shall have delivered to the Agents and the
Lenders an Officers' Certificate certifying that (A) such acquisition
complies with this definition (which shall have attached thereto
reasonably detailed backup data and calculations showing such
compliance), and (B) such acquisition could not reasonably be expected
to result in a Material Adverse Effect.
"Permitted Business" means coal production, coal mining, coal
brokering, coal transportation, mine development, power marketing, electricity
generation, power/energy sales and trading, energy transactions/asset
restructuring, risk management products associated with energy, fuel/power
integration and other energy-related businesses, ash disposal, environmental
remediation and development of related real estate assets, coal, natural gas,
petroleum or other fossil fuel exploration, production, marketing,
transportation and distribution and other related businesses and activities of
Holdings and its Subsidiaries, as of the date hereof and any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.
32
"Permitted Liens" shall have the meaning assigned to such term in
Section 6.02.
"Person" shall mean any natural Person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any "employee pension benefit plan" as such term is
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to
the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA which is maintained or contributed to by any Company or its ERISA
Affiliate or with respect to which any Company could incur liability (including,
without limitation, under Section 4069 of ERISA).
"Preferred Stock" shall mean, with respect to any Person, any and all
preferred or preference Equity Interests (however designated) of such Person
whether now outstanding or issued after the Closing Date.
"Prep Plant Lease" shall mean each Lease entered into by a Borrower or
any of its Subsidiaries in respect of a preparation plant and/or related
property or Real Property on which a preparation plant is situated. Prep Plant
Leases which also provide a Company with the right to mine coal reserves shall
also be considered a Mining Lease.
"Prior Lien" shall have the meaning assigned to such term in the
applicable Security Document.
"Private Letter Ruling" shall have the meaning assigned to such term in
Section 3.28.
"Pro Forma Basis" shall mean on a basis in accordance with GAAP and
Regulation S-X under the Securities Act and otherwise reasonably satisfactory to
the Administrative Agent.
"Pro Rata Percentage" of any Revolving Lender at any time shall mean
the percentage of the total Revolving Commitment represented by such Lender's
Revolving Commitment.
"Property" shall mean any right, title or interest in or to Property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests of any Person and whether now in existence or owned or hereafter
entered into or acquired, including, without limitation, all Real Property.
"Purchase Money Obligation" shall mean, for any Person, the obligations
of such Person in respect of Indebtedness incurred for the purpose of financing
all or any part of the purchase price of any Property (including Equity
Interests of any Person) or the cost of installation, construction or
improvement of any Property or assets and any refinancing thereof; provided,
however, that such Indebtedness is incurred within 90 days after such
acquisition of such Property by such Person.
"Qualified Capital Stock" of any Person shall mean any Equity Interest
of such Person that is not Disqualified Capital Stock.
33
"Real Property" shall mean, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real Property owned, leased or operated by any Person, whether by lease,
license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other Property and rights incidental to the ownership, lease or operation
thereof.
"Refinancing" shall mean the repayment in full of all outstandings and
the termination of any commitment to make extensions of credit under the
receivables financing transaction of certain Subsidiaries of Holdings identified
on Schedule 1.01(b).
"Register" shall have the meaning assigned to such term in Section
11.04(c).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Reinvestment Reserve" shall have the meaning assigned to such term in
Section 2.10(g).
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material into,
the Environment.
"Required Lenders" shall mean, at any time, Lenders having more than
fifty percent (50%) of the Revolving Commitments, and if the Revolving
Commitments have been terminated, more than fifty percent (50%) of the Revolving
Exposure.
"Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including any and all laws,
ordinances, rules, regulations or similar statutes or case law.
"Reserves" shall mean reserves established against the Borrowing Base
that the Collateral Agent may, in its reasonable credit judgment, establish from
time to time.
"Response" shall mean (a) "response" as such term is defined in CERCLA,
42 U.S.C. ss. 9601 (25), and (b) all other actions required by any Governmental
Authority or voluntarily undertaken to: (i) clean up, remove, treat, abate or in
any other way address any Hazardous Material in the environment; (ii) prevent
34
the Release or threat of Release, or minimize the further Release, of any
Hazardous Material; or (iii) perform studies and investigations in connection
with, or as a precondition to, clause (i) or (ii) above.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation or other entity and any other
officer or similar official thereof with responsibility for the administration
of the obligations of such corporation in respect of this Agreement.
"Revolving Availability Period" shall mean the period from and
including the Closing Date to but excluding the earlier of the Final Maturity
Date and the date of termination of the Revolving Commitments.
"Revolving Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans hereunder up to the
amount set forth on Schedule I to the Lender Addendum executed and delivered by
such Lender, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.07 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
11.04. The aggregate amount of the Lenders' Revolving Commitments on the Closing
Date is $130.0 million.
"Revolving Exposure" shall mean, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Lender, plus the aggregate amount at such time of such Lender's LC
Exposure, plus the aggregate amount at such of such Lender's Swingline Exposure.
"Revolving Lender" shall mean a Lender with a Revolving Commitment.
"Revolving Loans" shall mean a Loan made by the Lenders to
Administrative Borrower pursuant to Section 2.01(b).
"Royalty Reserve" shall mean, at any date of determination, an amount
equal to the accrued and unpaid monthly production royalty expense due under
royalty agreements with any Person, or, if there is no separate royalty
agreement, under any lease or other applicable agreements with such Person.
"Sales Companies" shall mean Massey Coal Sales Co., Inc., Central Penn
Energy Company, Inc. and Central West Virginia Energy Company and any additional
Company joined as a Sales Company pursuant to Section 5.11(b).
"Sarbanes-Oxley Act" shall mean the United States Sarbanes-Oxley Act of
2002.
"Secured Parties" shall mean, collectively, the Administrative Agent,
the Collateral Agent, each other Agent, each Issuing Bank, the Lenders, the
Specified Swap Counterparty and each counterparty to a Loan Party under a
Hedging Agreement if at the date of entering into such Hedging Agreement such
Person was a Lender or an Affiliate of a Lender and, if an Affiliate, such
35
Affiliate executes and delivers to the Administrative Agent a letter agreement
in form and substance acceptable to the Administrative Agent pursuant to which
such Person (i) appoints the Collateral Agent as its agent under the applicable
Loan Documents and (ii) agrees to be bound by the provisions of Section 9.03.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall mean a Security Agreement substantially in
the form of Exhibit J among the Loan Parties and Collateral Agent for the
benefit of the Secured Parties.
"Security Agreement Collateral" shall mean all Property pledged or
granted as collateral pursuant to the Security Agreement delivered on the
Closing Date or thereafter pursuant to Section 5.11.
"Security Documents" shall mean the Security Agreement, the Mortgages,
the Perfection Certificate and each other security document or pledge agreement
delivered in accordance with applicable local or foreign law to grant a valid,
perfected security interest in any Property, and all UCC or other financing
statements or instruments of perfection required by this Agreement or the
Security Agreement or the Mortgages or applicable law to be filed with respect
to the security interests in Property created pursuant to the Security Agreement
and the Mortgages and any other document or instrument utilized to pledge as
collateral for the Obligations any Property of whatever kind or nature.
"Senior Notes" shall mean the 6.625% Senior Notes, the 6.95% Senior
Notes and the Convertible Notes.
"Senior Note Documents" shall mean the 6.625% Senior Note Documents,
the 6.95% Senior Note Documents and the Convertible Note Documents.
"6.625% Senior Note Documents" shall mean the 6.625% Senior Notes, the
6.6125% Senior Note Indenture and the guarantees issued thereunder and all other
documents executed and delivered with respect to the Senior Notes or such
Indenture.
"6.625% Senior Note Indenture" shall mean the Indenture dated as of
November 10, 2003 among Holdings, certain Subsidiaries of Holdings party thereto
as guarantors and Wilmington Trust Company, as Trustee with respect to the
6.625% Senior Notes.
"6.625% Senior Notes" shall mean Holdings' 6.625% Senior Notes due 2010
issued pursuant to the Senior Note Indenture and any registered notes issued by
Holdings in exchange for, and as contemplated by the Senior Notes, with
substantially identical terms as the 6.625% Senior Notes.
"6.95% Senior Note Documents" shall mean the 6.95% Senior Notes, the
Senior Note Indenture dated as of February 18, 1997, between Holdings (formerly
Fluor Corporation) and Deutsche Bank Trust Company Americas as trustee, as
supplemented in accordance with its terms and all other documents executed and
delivered with respect to the 6.95% Senior Notes or such Indenture.
36
"6.95% Senior Notes" shall mean the 6.95% Senior Notes due March 1,
2007 issued by Holdings pursuant to the 6.95% Indenture and any registered notes
issued by Holdings in exchange for, and as contemplated by, the 6.95% Senior
Notes, with substantially identical terms as the Senior Notes.
"Special Agent Advance" shall have the meaning assigned to such term in
Section 10.11.
"Specified Borrowing Base Account" shall mean Account #WA793083000 at
the Administrative Agent subject to a Control Agreement in the form of Exhibit 4
attached to the Security Agreement.
"Specified Borrowing Base Account Amount" shall mean as of any date of
determination the total amount of cash and Cash Equivalents deposited into the
Specified Borrowing Base Account.
"Specified Interest Rate Protection Agreement" shall mean the ISDA
Master Agreement dated as of November 10, 2003 by and between the Specified Swap
Counterparty and Holdings and any and all schedules, annexes and addendums
attached thereto.
"Specified Swap Counterparty" shall mean UBS AG, as the counterparty,
together with any assignee or participant thereof, under the Specified Interest
Rate Protection Agreement.
"Specified Swap Obligations" shall mean the obligations determined
under clause (d) of the definition of "Obligations."
"Specified Tax Sharing Agreement" shall mean that certain Tax Sharing
Agreement dated as of November 30, 2000 by and among Holdings, f/k/a Fluor
Corporation, a Delaware corporation incorporated in 1978, Fluor Corporation, a
Delaware corporation incorporated in 2000, and the Administrative Borrower.
"Standby Letter of Credit" shall mean any standby letter of credit or
similar instrument issued for the purpose of supporting (a) workers'
compensation liabilities of any Company (other than Holdings), (b) the
obligations of third-party insurers of any Company arising by virtue of the laws
of any jurisdiction requiring third-party insurers to obtain such letters of
credit, or (c) performance, payment, deposit or surety obligations of any such
Company if required by law or governmental rule or regulation or in accordance
with custom and practice in the industry.
"Statutory Reserves" shall mean, for any Interest Period for any
Eurodollar Borrowing, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the United
States Federal Reserve System in New York City with deposits exceeding one
billion Dollars against "Eurodollar liabilities" (as such term is used in
Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar
liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exceptions or offsets which may be available from time to
time to any Lender under Regulation D.
37
"Subsidiary" shall mean, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more Subsidiaries of the parent or by the parent and one or
more Subsidiaries of the parent. Unless otherwise set forth herein, reference in
this Agreement to "Subsidiary" shall mean Holdings' direct and indirect
Subsidiaries.
"Supermajority Lenders" shall mean at any time, Lenders having at least
80% of the Revolving Commitments or, if the Revolving Commitments have been
terminated, at least 80% of the Revolving Exposure.
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.17, as the same may be reduced from
time to time pursuant to Section 2.07 or Section 2.17.
"Swingline Exposure" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Revolving Lender at any time shall equal its Pro Rata Percentage of the
aggregate Swingline Exposure at such time.
"Swingline Lender" shall have the meaning assigned to such term in the
preamble hereto.
"Swingline Loan" shall mean any Loan made by the Swingline Lender
pursuant to Section 2.17.
"Tax Return" shall mean all returns, statements, filings, attachments
and other documents or certifications required to be filed in respect of Taxes.
"Tax Sharing Agreements" shall mean all tax sharing, tax allocation and
other similar agreements entered into by Holdings or any subsidiary of Holdings.
"Taxes" shall mean (i) any and all present or future taxes, duties,
levies, fees, imposts, assessments, deductions, withholdings or other charges,
whether computed on a separate, consolidated, unitary, combined or other basis
and any and all liabilities (including interest, fines, penalties or additions
to tax) with respect to the foregoing, and (ii) any transferee, successor, joint
and several, contractual or other liability (including, without limitation,
liability pursuant to Treasury Regulation ss.1.1502-6 (or any similar provision
of state, local or non-U.S. law)) in respect of any item described in clause
(i).
"Test Period" shall mean, at any time, the four consecutive fiscal
quarters of Holdings then last ended (in each case taken as one accounting
period) for which financial statements have been or are required to be delivered
to the Administrative Agent pursuant to Section 5.01(a) or (b); provided,
38
however, that for purposes of calculating the covenants set forth in Section
6.08 for any period ending on or prior to December 31, 2004, the Test Period
shall be the period from January 1, 2004 to the date of the fiscal quarter then
last ended (in each case taken as one accounting period) for which financial
statements have been or are required to be delivered to the Administrative Agent
pursuant to Section 5.01(a) or (b).
"Transaction Documents" shall mean the Loan Documents.
"Transactions" shall mean, collectively, the transactions to occur on
or prior to the Closing Date pursuant to the Transaction Documents, including
(a) the execution and delivery of the Loan Documents and the initial borrowings
hereunder; (b) the Refinancing; and (c) the payment of all fees and expenses to
be paid on or prior to the Closing Date and owing in connection with the
foregoing.
"Treasury Regulation" means the regulations promulgated under the Code.
"Type" when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBOR Rate or the
Alternate Base Rate.
"UBS" shall have the meaning assigned to such term in the preamble
hereto.
"UCC" shall mean the Uniform Commercial Code of the State of New York
or any other state the laws of which are required to be applied in connection
with the perfection of security interests in any Collateral.
"Unrestricted Subsidiary" shall means (i) as of the Closing Date, the
Joint Venture Subsidiary, (ii) any other Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of Holdings in accordance with Section 5.18 and (iii) any other
Subsidiary of an Unrestricted Subsidiary.
"Voting Stock" shall mean any class or classes of capital stock of
Holdings pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the Board of
Directors of Holdings.
"Westvaco Facility Assets" shall mean the coal handling facility
constructed at Westvaco Corporation's Covington, Virginia plant, including all
assets necessary to operate such coal handling facility, and all integrally
related tangible and intangible assets, including leases, coal handling
agreements, service agreements and transportation agreements.
"Wholly Owned Subsidiary" shall mean, as to any Person, (a) any
corporation 100% of whose capital stock (other than directors' qualifying
shares) is at the time owned by such Person and/or one or more Wholly Owned
Subsidiaries of such Person and (b) any partnership, association, joint venture,
limited liability company or other entity in which such Person and/or one or
more Wholly Owned Subsidiaries of such Person have a 100% Equity Interest at
such time. Unless otherwise set forth herein, reference in this Agreement to
"Wholly Owned Subsidiary" shall mean Holding's direct and indirect Wholly Owned
Subsidiaries.
39
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
Loan Document, agreement, instrument of other document herein shall be construed
as referring to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person's
successors and assigns, (c) the words "herein", "hereof" and "hereunder", and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (f)
the words "asset" and "Property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all financial statements to be delivered pursuant to this Agreement
shall be prepared in accordance with GAAP as in effect from time to time and all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect on the date hereof unless agreed to by the Administrative
Borrower and the Required Lenders. In the event that any "Accounting Change" (as
defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrowers and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrowers' financial condition shall be the same after such Accounting Changes
as if such Accounting Changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrowers and the
Required Lenders, all financial covenants, standards and terms in this Agreement
shall continue to be calculated or construed as if such Accounting Changes had
not occurred. "Accounting Changes" refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
40
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the Public Company Accounting
Oversight Board and the Securities and Exchange Commission (or successors
thereto or agencies with similar functions).
ARTICLE II.
THE CREDITS
SECTION 2.01 Commitments. Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, each Lender agrees,
severally and not jointly to make Revolving Loans to the Borrowers, at any time
and from time to time after the Closing Date until the earlier of one Business
Day prior to the Final Maturity Date and the termination of the Commitment of
such Lender in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not (subject to the provisions of
Sections 10.10 and 10.11) result in such Lender's Revolving Exposure exceeding
the lesser of (A) such Lender's Revolving Commitment less such Lender's Pro Rata
Percentage of any Line Reserve, and (B) such Lender's Pro Rata Percentage
multiplied by the Borrowing Base then in effect.
Within the limits set forth in clause (b) above and subject to the
terms, conditions and limitations set forth herein, the Borrowers may borrow,
pay or prepay and reborrow Revolving Loans.
SECTION 2.02 Loans. (a) Each Loan (other than Swingline Loans) shall be made as
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their applicable Commitments; provided, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Except for Loans deemed made pursuant to Section
2.02(f), Loans (other than Swingline Loans) comprising any Borrowing shall be in
an aggregate principal amount that is (i) in the case of ABR Loans, integral
multiples of $1.0 million and not less than $5.0 million or (B) in the case of
Eurodollar Loans, an integral multiple of $1.0 million and not less than $5.0
million or (ii) equal to the remaining available balance of the applicable
Revolving Commitments.
(b) Subject to Sections 2.11 and 2.12, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as Administrative Borrower
may request pursuant to Section 2.03. Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided, that any exercise of such option shall not
affect the obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement. Borrowings of more than one Type may be outstanding at
the same time; provided further that the Borrowers shall not be entitled to
request any Borrowing that, if made, would result in more than five Eurodollar
Borrowings outstanding hereunder at any one time. For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan (other than Swingline Loans) to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds to such account in New York City as the Administrative Agent may designate
41
not later than 1:30 p.m., New York City time, and the Administrative Agent shall
promptly credit the amounts so received to an account as directed by
Administrative Borrower in the applicable Borrowing Request maintained with the
Administrative Agent or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrowers severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrowers, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Final Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrowers the
payment required to be made by Section 2.18(e) within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent and the
Collateral Agent of the LC Disbursement and the Administrative Agent will
promptly notify each Revolving Lender of such LC Disbursement and its Pro Rata
Percentage thereof. Each Revolving Lender shall pay by wire transfer of
immediately available funds to the Administrative Agent on such date (or, if
such Revolving Lender shall have received such notice later than 12:00 (noon),
New York City time, on any Business Day, not later than 11:00 a.m., New York
City time, on the immediately following Business Day), an amount equal to such
Lender's Pro Rata Percentage of such LC Disbursement (it being understood that
such amount shall be deemed to constitute an ABR Revolving Loan of such Lender,
and such payment shall be deemed to have reduced the LC Exposure), and the
Administrative Agent will promptly pay to the Issuing Bank amounts so received
by it from the Revolving Lenders. The Administrative Agent will promptly pay to
the Issuing Bank any amounts received by it from the Borrowers pursuant to
Section 2.18(e) prior to the time that any Revolving Lender makes any payment
pursuant to this paragraph (f); any such amounts received by the Administrative
Agent thereafter will be promptly remitted by the Administrative Agent to the
Revolving Lenders that shall have made such payments and to the Issuing Bank, as
42
their interests may appear. If any Revolving Lender shall not have made its Pro
Rata Percentage of such LC Disbursement available to the Administrative Agent as
provided above, such Lender and the Borrowers severally agree to pay interest on
such amount, for each day from and including the date such amount is required to
be paid in accordance with this paragraph (f) to but excluding the date such
amount is paid, to the Administrative Agent for the account of the Issuing Bank
at (i) in the case of the Borrowers, a rate per annum equal to the interest rate
applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case
of such Lender, for the first such day, the Federal Funds Effective Rate, and
for each day thereafter, the Alternate Base Rate.
SECTION 2.03 Borrowing Procedure. To request a Revolving Borrowing,
Administrative Borrower shall notify the Administrative Agent of such request by
telephone (promptly confirmed by telecopy) (i) in the case of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business Days
before the date of the proposed Borrowing or (ii) in the case of an ABR
Borrowing, (other than Swingline Loans), not later than 11:00 a.m., New York
City time, on the same Business Day of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
Administrative Borrower. Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:
(a) [Intentionally Omitted];
(b) the aggregate amount of such Borrowing;
(c) the date of such Borrowing, which shall be a Business Day;
(d) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(e) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the definition
of the term "Interest Period"; provided, that until the earlier of (i) the date
on which the Co-Syndication Agents shall have notified the Borrowers that the
primary syndication of the Commitments has been completed and (ii) the date
which is 180 days after the Closing Date, the Interest Period shall be two
weeks;
(f) the location and number of Administrative Borrower's account to
which funds are to be disbursed, which shall comply with the requirements of
Section 2.02; and
(g) that the conditions set forth in Section 4.02 (b)-(e) are satisfied
as of the date of the notice.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Revolving Borrowing, then the
Borrowers shall be deemed to have selected an Interest Period of one month's
duration (subject to the proviso in clause (e) above). Promptly following
receipt of a Borrowing Request in accordance with this Section 2.03, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
43
SECTION 2.04 Evidence of Debt; Repayment of Loans.
(a) The Borrowers, jointly and severally, hereby unconditionally agree
to pay (i) to the Administrative Agent for the account of each Revolving Lender,
the then unpaid principal amount of each Revolving Loan of such Lender on the
Final Maturity Date and (ii) to the Swingline Lender the then unpaid principal
amount of each Swingline Loan on the earlier of the Final Maturity Date and the
first date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least two Business Days after such Swingline Loan is
made; provided, that on each date that a Revolving Borrowing is made, the
Borrowers shall repay all Swingline Loans that were outstanding on the date such
Borrowing was requested.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type and Class thereof
and the Interest Period applicable thereto; (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder; and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
The Administrative Agent shall from time to time, advise the Collateral Agent of
the status of such accounts to permit the Collateral Agent to determine the
Borrowing Base.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrowers to repay the Loans in
accordance with their terms.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrowers shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in the form of Exhibit H-2 or H-3, as the case may be. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 11.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
(f) All funds held by any Borrower or any other Loan Party (other than
proceeds of a Casualty Event, Asset Sales that do not require a permanent
repayment and any other cash required to be pledged under Loan Documents) shall
be deposited in one or more bank or investment accounts to be swept on a daily
basis to Concentration Accounts in accordance with control agreements in form
and substance reasonably satisfactory to Collateral Agent, and, following the
occurrence and during the continuance of an Event of Default or at any time
44
Excess Availability is less than the amount specified in Section 9.01(e) shall
be applied on a daily basis to the repayment of the Swingline Loans and,
thereafter, to any Revolving Loans which become due, without a reduction in the
Commitments.
SECTION 2.05 Fees.
(a) Commitment Fee. The Borrowers, jointly and severally, agree to pay
to the Administrative Agent for the account of each Lender a commitment fee (a
"Commitment Fee"), equal to 0.5% per annum on the average daily unused amount of
each Revolving Commitment of such Lender during the period from and including
the Closing Date to but excluding the date on which such Commitment terminates.
Accrued Commitment Fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All Commitment Fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). For purposes of computing Commitment Fees with
respect to Revolving Commitments, a Revolving Commitment of a Lender shall be
deemed to be used to the extent of the outstanding Revolving Loans and LC
Exposure of such Lender (and the Swingline Exposure of such Lender shall be
disregarded for such purpose).
(b) Administrative Agent Fees; Collateral Agent Fees. The Borrowers,
jointly and severally, agree to pay to the (i) the Administrative Agent, for its
own account, the administrative fees set forth in the Fee Letter or such other
fees payable in the amounts and at the times separately agreed upon among the
Borrowers and the Administrative Agent (the "Administrative Agent Fees") and
(ii) the Collateral Agent, for its own account, the collateral monitoring fee
set forth in the Collateral Agent Fee Letter or such other fees payable in the
amounts and at the times separately agreed upon between the Borrowers and the
Collateral Agent (the "Collateral Agent Fees").
(c) LC and Fronting Fees. The Borrowers, jointly and severally, agree
to pay (i) to the Administrative Agent for the account of each Revolving Lender
a participation fee ("LC Participation Fee") with respect to its participations
in Letters of Credit, which shall accrue at a rate equal to the Applicable
Margin from time to time used to determine the interest rate on Eurodollar
Revolving Loans pursuant to Section 2.06 on the average daily amount of such
Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Closing Date to but
excluding the later of the date on which such Lender's Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and
(ii) to the Issuing Bank a fronting fee ("Fronting Fee"), which shall accrue at
the rate of 0.25% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Closing Date to but excluding the later
of the date of termination of the Revolving Commitments and the date on which
there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. LC Participation Fees and Fronting
Fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Closing Date;
provided, that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
45
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All LC Participation Fees and Fronting Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
During a Default, the LC Participation Fee shall be increased to a per annum
rate equal to 2% plus the otherwise applicable rate with respect thereto.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Fronting Fees shall be paid directly to the
Issuing Bank and the Collateral Agent Fees shall be paid directly to the
Collateral Agent. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06 Interest on Loans and Default Interest.
(a) Subject to the provisions of Section 2.06(c), the Loans comprising
each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate
per annum equal to the Alternate Base Rate plus the Applicable Margin in effect
from time to time.
(b) Subject to the provisions of Section 2.06), the Loans comprising
each Eurodollar Borrowing shall bear interest at a rate per annum equal to the
Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin in effect from time to time.
(c) Notwithstanding the foregoing, during a Default, all Obligations
shall bear interest, after as well as before judgment, at a per annum rate equal
to (i) in the case of principal of any Loan, 2% plus the higher of (A) the
Alternative Base Rate plus the Applicable Margin and (B) the Adjusted LIBOR Rate
plus the Applicable Margin, (ii) LC Participation Fee shall increase as provided
in Section 2.05(c), and (iii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section
2.06.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided, that (i) interest accrued
pursuant to paragraph (c) of this Section 2.06 shall be payable on demand
(provided, that, absent demand, such interest shall be payable on each Interest
Payment Date and upon termination of the Revolving Commitments), (ii) in the
event of any repayment or prepayment of any Loan (other than a prepayment of an
ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
46
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent
in accordance with the provisions of this Agreement and such determination shall
be conclusive absent manifest error.
SECTION 2.07 Termination and Reduction of Commitments.
(a) The Revolving Commitments, the Swingline Commitment, and the LC
Commitment shall automatically terminate on the Final Maturity Date.
(b) The Administrative Borrower may at any time terminate, or from time
to time permanently reduce, the Commitments of any Class; provided, that (i)
each reduction of the Commitments of any Class shall be in an amount that is an
integral multiple of $1.0 million and not less than $5.0 million and (ii) the
Commitments shall not be terminated or reduced if, after giving effect to any
concurrent prepayment of the Swingline Exposures would exceed the Swingline
Commitment Loans in accordance with Section 2.10, the sum of the Revolving
Exposures would exceed the aggregate amount of Revolving Commitments or the LC
Exposures would exceed the LC Commitment, the Swingline Exposures would exceed
the Swingline Commitment or the LC Exposures would exceed the LC Commitment.
(c) Administrative Borrower shall notify the Administrative Agent of
any election to terminate or reduce the Commitments under paragraph (b) of this
Section 2.07 at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by
Administrative Borrower pursuant to this Section 2.07 shall be irrevocable. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.
SECTION 2.08 Interest Elections.
(a) Each Revolving Borrowing initially shall be of the Type specified
in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Administrative Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section
2.08. The Administrative Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. Notwithstanding anything to the contrary, Administrative
Borrower shall not be entitled to request any conversion or continuation that,
if made, would result in more than five Eurodollar Borrowings outstanding
hereunder at any one time. This Section 2.08 shall not apply to Swingline Loans,
which may not be converted or continued.
47
(b) To make an election pursuant to this Section 2.08, Administrative
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Administrative Borrower was requesting a Revolving Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request substantially in the form of Exhibit D.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period"; provided, that until the earlier of (i) the date on which the
Co-Syndication Agents shall have notified Administrative Borrower that the
primary syndication of the Commitments has been completed and (ii) the date
which is 180 days after the Closing Date, the Interest Period shall be two
weeks.
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Administrative Borrower shall be deemed
to have selected an Interest Period of one month's duration (subject to the
proviso in clause (iv) above).
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If an Interest Election Request with respect to a Eurodollar
Borrowing is not timely delivered prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies Administrative Borrower, then, after the
occurrence and during the continuance of such Event of Default (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.09 [Intentionally Omitted].
48
SECTION 2.10 Optional and Mandatory Prepayments of Loans.
(a) Optional Prepayments. The Borrowers shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, subject
to the requirements of this Section 2.10; provided, that each partial prepayment
shall be in an amount that is an integral multiple of $1.0 million and not less
than $5.0 million.
(b) Revolving Loan Prepayments.
(i) In the event of the termination of all the Revolving
Commitments, the Borrowers shall, on the date of such termination, repay or
prepay all outstanding Revolving Borrowings and all outstanding Swingline Loans
and replace all outstanding Letters of Credit or cash collateralize outstanding
Letters of Credit in accordance with the procedures set forth in Section
2.18(j).
(ii) In the event of any partial reduction of the Revolving
Commitments, then (x) at or prior to the effective date of such reduction, the
Administrative Agent shall notify Administrative Borrower and the Revolving
Lenders of the sum of the Revolving Exposures after giving effect thereto and
(y) if the sum of the Revolving Exposures would exceed the aggregate amount of
Revolving Commitments after giving effect to such reduction, then the Borrowers
shall, on the date of such reduction, first, repay or prepay all Swingline
Loans, second, repay or prepay Revolving Borrowings and third, replace or cash
collateralize outstanding Letters of Credit in accordance with the procedures
set forth in Section 2.18(j), in an amount sufficient to eliminate such excess.
(iii) In the event that the sum of all Lenders' Revolving
Exposures exceeds the Borrowing Base then in effect, the Borrowers shall,
without notice or demand, immediately apply an amount equal to such excess to
prepay the Loans and any interest accrued thereon, in accordance with this
Section 2.10(b)(iii). The Borrowers shall, first, repay or prepay all Swingline
Loans, second repay or prepay Revolving Borrowings, and third, replace or cash
collateralize outstanding Letters of Credit in accordance with the procedures
set forth in Section 2.18(j), in an amount sufficient to eliminate such excess.
(iv) In the event that the sum of all Lenders' Revolving
Exposures exceeds the Revolving Commitments then in effect, the Borrowers shall,
without notice or demand, immediately first, repay or prepay Revolving
Borrowings, second, repay or prepay all Swingline Loans, and third, replace or
cash collateralize outstanding Letters of Credit in accordance with the
procedures set forth in Section 2.18(j), in an amount sufficient to eliminate
such excess.
(v) In the event that the aggregate LC Exposure exceeds the LC
Commitment then in effect, the Borrowers shall, without notice or demand,
immediately replace or cash collateralize outstanding Letters of Credit in
accordance with the procedures set forth in Section 2.18(j)., in an amount
sufficient to eliminate such excess.
(vi) In the event that the aggregate Swingline Exposure
exceeds the Swingline Commitment then in effect, the Borrowers shall, without
notice or demand, immediately repay or prepay the Swingline Loan in an amount
sufficient to eliminate such excess.
49
(c) Asset Sales. Not later than three Business Day following the
receipt of any Net Cash Proceeds of any Asset Sale by a Loan Party, the
Borrowers shall, and shall cause the applicable Loan Party (with appropriate
adjustments to any intercompany loan account balances), to apply 100% of the Net
Cash Proceeds received with respect thereto to make prepayments in accordance
with Sections 2.10 (i); provided, that:
(i) no such prepayment shall be required with respect to (A)
any Asset Sale permitted by Section 6.05(a)(ii) and (iii),(c), (d) or (f) or, to
the extent involving Loan Parties, (h), (B) the disposition of assets subject to
a condemnation or eminent domain proceeding or insurance settlement to the
extent it does not constitute a Casualty Event, or (C) Asset Sales for fair
market value resulting in no more than $250,000 in Net Cash Proceeds per Asset
Sale (or series of related Asset Sales) and less than $2.0 million in Net Cash
Proceeds in any fiscal year; and
(ii) subject to Section 2.10(g) and so long as no Default
shall then exist or would arise therefrom such proceeds of any other Asset Sale
shall not be required to be so applied on such date to the extent that the
Administrative Borrower shall have delivered an Officers' Certificate to the
Administrative Agent and the Collateral Agent on or prior to such date stating
that such Net Cash Proceeds shall be used to purchase replacement assets or
acquire 100% of the Equity Interests of any Person that owns such assets no
later than 270 days following the date of such Asset Sale (which Officers'
Certificate shall set forth the estimates of the proceeds to be so expended);
provided, that (A) if all or any portion of such Net Cash Proceeds shall not be
utilized to purchase replacement assets or acquire such Equity Interests within
such 270-day period, such unused portion shall be applied as a mandatory
prepayment as provided in Section 2.10(i) and (B) if the Property subject to
such Asset Sale constituted Collateral, then all Property purchased with the Net
Cash Proceeds thereof pursuant to this subsection shall be made subject to the
Lien of the applicable Security Documents in favor of the Collateral Agent, for
its benefit and for the benefit of the other Secured Parties in accordance with
Sections 5.11 and 5.12.
(d) Debt Issuance. Upon any Debt Issuance after the Closing Date, the
Borrowers shall, and shall cause the other Loan Parties to, make prepayments in
accordance with Sections 2.10(i) in an aggregate principal amount equal to 100%
of the Net Cash Proceeds of such Debt Issuance.
(e) Equity Issuance. Upon any Equity Issuance after the Closing Date,
the Borrowers shall make prepayments in accordance with Sections 2.10(i) in an
aggregate principal amount equal to 50% of the Net Cash Proceeds of such Equity
Issuance.
(f) Casualty Events. Not later than three Business Days following the
receipt of any Net Cash Proceeds from a Casualty Event, the Borrowers shall, and
shall cause the other Loan Parties (with appropriate adjustments to any
intercompany loan account balances), to apply an amount equal to 100% of such
Net Cash Proceeds to make prepayments in accordance with Sections 2.10 (i);
provided, that subject to Section 2.10(g) and so long as no Default shall then
exist or arise therefrom, such proceeds shall not be required to be so applied
on such date to the extent that in the event such Net Cash Proceeds shall not
exceed $5.0 million in the aggregate at anytime, the Administrative Borrower
50
shall have delivered an Officers' Certificate to the Administrative Agent and
the Collateral Agent on or prior to such date stating that such proceeds shall
be used to repair, replace or restore any Property the subject of a Casualty
Event no later than 180 days following the date of receipt of such proceeds
(which Officers' Certificate shall set forth the estimates of the proceeds to be
so expended); provided, that if the Property subject to such Casualty Event
constituted Collateral under the Security Documents, then all Property purchased
with the Net Cash Proceeds thereof pursuant to this subsection shall be made
subject to the Lien of the applicable Security Documents in favor of the
Collateral Agent, for its benefit and for the benefit of the other Secured
Parties in accordance with Sections 5.11 and 5.12;
(g) In the event that the Administrative Borrower has delivered an
Officers' Certificate in accordance with Section 2.10(c)(ii) or in accordance
with Section 2.10(f), (i) the applicable Net Cash Proceeds shall be applied
against the outstanding Revolving Loans, without a permanent reduction in the
Commitments, (ii) both a Reserve (the "Reinvestment Reserve") and a reserve
against the Commitments ("Line Reserve") shall be established (in the amount of
the Net Cash Proceeds less, in the case of a Casualty Event, the Net Cash
Proceeds attributable to lost or destroyed Inventory) which shall each be
released simultaneously with and to the extent of any Loans advanced to any
Borrower for the purpose of purchasing assets in accordance with Section
2.10(c)(ii) or 2.10(f), as applicable or repairing or restoring the Property
subject to the Casualty Event; provided the Administrative Borrower submits
(with the applicable Borrowing Request) an Officer's Certificate setting forth
the use of proceeds of the requested Loan and confirming that such use is in
compliance with Section 2.10(c)(ii) or 2.10(f), as applicable, and (iii) in the
event that any part or all of the Reinvestment Reserve remains in place at the
end of the time period set forth in Section 2.10(c)(ii) or 2.10(f), as
applicable, the Commitments shall be permanently reduced by an amount equal to
such remaining Reinvestment Reserve and, simultaneously with the such reduction,
the remaining Reinvestment Reserve shall be released.
(h) [Intentionally Omitted].
(i) Application of Prepayments.
(i) Prior to any optional or mandatory prepayment of
Borrowings hereunder, Borrower shall select the Borrowing or Borrowings to be
prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (i) of this Section 2.10(i). Subject to Section 9.03 and
so long as no Default shall then exist and be continuing, all mandatory
prepayments shall be applied as follows: first, to Fees and reimbursable
expenses of the Administrative Agent and the Collateral Agent then due and
payable pursuant to the Loan Documents; second, to interest then due and payable
on all Loans; third, to the principal balance of the Swingline Loan until the
same has been repaid in full; fourth, to the outstanding principal balance of
Revolving Loans until the same has been paid in full, including accompanying
accrued interest and charges under Sections 2.12, 2.13 and 2.15 (Administrative
Borrower may elect which of any Eurodollar Borrowings is to be prepaid); fifth,
to cash collateralize all LC Exposures plus any accrued and unpaid Fees with
respect thereto (to be held and applied in accordance with Section 2.18(j)
hereof); sixth, to all other Obligations pro rata in accordance with the amounts
that such Lender certifies is outstanding; and, seventh, returned to the
Borrowers or to such party as otherwise required by law. Such mandatory
prepayments shall not cause a corresponding reduction in the Revolving
Commitments or Swingline Commitment of the Lenders.
51
(ii) Amounts to be applied pursuant to this Section 2.10 to
the prepayment of Revolving Loans shall be applied, as applicable, first to
reduce outstanding ABR Revolving Loans. Any amounts remaining after each such
application shall be applied to prepay Eurodollar Revolving Loans, as
applicable, together with any amounts owing to the Lenders under Section 2.13.
(j) Notice of Prepayment. Administrative Borrower shall notify the
Administrative Agent (and, in the case of prepayment of a Swingline Loan, the
Swingline Lender) by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than
11:00 a.m., New York City time, on the same Business Day of the prepayment or
(iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m.,
New York City time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment.
Promptly following receipt of any such notice (other than a notice relating
solely to Swingline Loans), the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.06.
SECTION 2.11 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to Administrative
Borrower and the Lenders by telephone or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies Administrative Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall
be ineffective and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.
52
SECTION 2.12 Increased Costs.
(a) Except as provided for in Section 2.15 with respect to Indemnified
Taxes, if any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrowers will pay to Administrative Agent for the account of such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrowers will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section 2.12 shall be delivered to Administrative Borrower and shall be
conclusive absent manifest error. The Borrowers shall pay Administrative Agent
for the account of such Lender or the Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section 2.12 shall not constitute a waiver
of such Lender's or the Issuing Bank's right to demand such compensation;
provided, that the Borrowers shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section 2.12 for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or the Issuing
53
Bank, as the case may be, notifies Administrative Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's or the
Issuing Bank's intention to claim compensation therefor; provided, further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall not begin earlier
than the date of effectiveness of the Change in Law.
SECTION 2.13 Breakage Payments. In the event of (a) the payment or prepayment,
whether optional or mandatory, of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any Eurodollar Loan on the date specified
in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar
Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by Administrative Borrower pursuant to Section 2.16, then,
in any such event, the Borrowers shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBOR Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for Dollar deposits of a
comparable amount and period from other banks in the Eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 2.13 shall be delivered to
Administrative Borrower and Administrative Agent and shall be conclusive absent
manifest error. The Borrowers shall pay Administrative Agent for the account of
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.14 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrowers shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.12,
2.13 or 2.15, or otherwise) on or before the time expressly required hereunder
or under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 2:00 p.m., New York City time), on the date when
due, in immediately available funds, without setoff or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 677 Washington
Boulevard, Stamford, Connecticut, except payments to be made directly to the
Issuing Bank or Swingline Lender as expressly provided herein and except that
payments pursuant to Sections 2.12, 2.13, 2.15 and 11.03 shall be made to the
Administrative Agent for the benefit of to the Persons entitled thereto and
54
payments pursuant to other Loan Documents shall be made to the Administrative
Agent for the benefit of the Persons specified therein. The Administrative Agent
shall distribute any such payments received by it for the account of any other
Person to the appropriate recipient promptly following receipt thereof. If any
payment under any Loan Document shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments under each Loan Document
shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, or participations in LC Disbursements or
Swingline Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans, and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans, and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans, and
participations in LC Disbursements and Swingline Loans; provided, that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by any Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
any Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). Each Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against any Borrower rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of any
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
Administrative Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
55
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.02(c), 2.02(f), 2.14(d), 2.17(d), 2.18(d) or 11.03(d),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.15 Taxes.
(a) Any and all payments by or on account of any obligation of any
Borrower hereunder or under any other Loan Document shall be made free and clear
of and without deduction or withholding for any and all Indemnified Taxes;
provided, that if any Borrower shall be required by law to deduct any
Indemnified Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions or withholdings applicable to additional sums payable under this
Section 2.15) the Administrative Agent, Lender or Issuing Bank (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) such Borrower shall make such
deductions or withholdings and (iii) such Borrower shall pay the full amount
deducted or withheld to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify and pay the Administrative Agent,
each Lender and the Issuing Bank, within 30 Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or the Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of any
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.15) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto (except, with respect to each Lender, the
Issuing Bank and the Administrative Agent to the extent arising from the gross
negligence or willful misconduct of such Lender, the Issuing Bank or the
Administrative Agent, including the failure of such Lender, the Issuing Bank or
the Administrative Agent to make any filing or payment within such person's
control, but only if such failure is the result of gross negligence or willful
misconduct), whether or not such Indemnified Taxes or Other Taxes were correctly
or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to a
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) Within 30 days after any payment of Indemnified Taxes or Other
Taxes by the Borrowers to a Governmental Authority, the Borrowers shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
56
by such Governmental Authority evidencing such payment or, if such receipt is
not available, other evidence of such payment reasonably satisfactory to the
Administrative Agent.
(e) Any Lender or any Issuing Bank that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
any Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to Administrative
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrowers as will
permit such payments to be made without withholding or at a reduced rate. Each
Lender and the Issuing Bank either (1) (i) prior to becoming a party to this
Agreement furnish two copies of either (a) U.S. Internal Revenue Service Form
W-8ECI (or successor form), (b) U.S. Internal Revenue Service Form W-8BEN (or
successor form) or (c) with respect to any Loan Document in which a
participation has been sold, an Internal Revenue Service Form W-8IMY along with
accompanying Form W-8BEN and (ii) (for the benefit of the Borrowers and the
Administrative Agent), to the extent it may lawfully do so at such times, upon
reasonable request by the Borrowers or the Administrative Agent, to provide a
new Form W-8ECI, Form W-8BEN or Form W-8IMY (or successor form) upon the
expiration or obsolescence of any previously delivered form to reconfirm any
complete exemption from, or any entitlement to a reduction in, U.S. federal
withholding tax with respect to any payment hereunder (2) in the case of any
such Foreign Lender or Foreign Issuing Bank that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (i) prior to becoming a party to
this Agreement furnish two original copies of either (a) a "Non-Bank
Certificate" in a form acceptable to the Administrative Agent and the Borrowers
and two accurate and complete original signed copies of Internal Revenue Service
Form W-8BEN (or successor form) or (b) an Internal Revenue Form W-8ECI (or
successor form), certifying (in each case) to such Foreign Lender's or Foreign
Issuing Bank's legal entitlement to an exemption or reduction from U.S. federal
withholding tax with respect to all interest payments hereunder and (ii) (for
the benefit of the Borrowers and the Administrative Agent) to the extent it may
lawfully do so at such times, upon reasonable request by the Borrowers or the
Administrative Agent, to provide a new Form W-8BEN or W-8ECI (or successor form)
upon the expiration or obsolescence of any previously delivered form to
reconfirm any complete exemption from, or any entitlement to a reduction in,
U.S. federal withholding tax with respect to any interest payment hereunder, (3)
furnish two original copies of any other applicable form, certificate or
document prescribed by the Internal Revenue Service certifying as to such
Foreign Lender's or such Foreign Issuing Bank's entitlement to exemption from
United States withholding tax or reduced rate with respect to all payments to be
made to such Foreign Lender or Foreign Issuing Bank under the Loan Documents, or
(4) in the case of any other Lender or Issuing Bank, provide two original copies
of Internal Revenue Service Form W-9 (or any successor form) and (ii) (for the
benefit of the Borrowers and the Administrative Agent) to the extent it may
lawfully do so at such time, upon a reasonable request by Administrative
Borrower or the Administrative Agent, provide a new Form W-9 )or successor form)
upon the expiration or obsolescence of any previously delivered form to
reconfirm any exemption from U.S. backup withholding tax. If any Lender or
Issuing Bank fails to provide the forms required by this Section 2. 15(e), the
Administrative Borrower and the Administrative Agent shall, notwithstanding
57
anything in this Section 2.15 to the contrary, withhold amounts required to be
withheld by the applicable Requirements of Law from any payments to such Lender
or Issuing Bank at the applicable statutory rate and the Administrative Borrower
shall have no indemnification obligations pursuant to this Agreement or any
other Loan Document to be required to pay additional amounts pursuant to Section
2.15 with respect to amounts so withheld or related amounts.
(f) If the Administrative Agent or a Lender (or an assignee) determines
in its reasonable discretion that it has received a refund or realizes the
benefit of a credit or reduction resulting from a refund of, credit against, or
reduction in any tax excluded from Indemnified Taxes in respect of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by the
Borrowers or with respect to which the Borrowers have paid additional amounts
pursuant to this Section 2.15, it shall pay over such refund, credit, or
reduction to the Borrowers (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrowers under this Section 2.15 with
respect to the Indemnified Taxes or the Other Taxes giving rise to such refund,
credit, or reduction), net of all reasonable out-of-pocket expenses of the
Administrative Agent or such Lender (or assignee) and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund, credit, or reduction); provided, however, that the Borrowers, upon
the request of the Administrative Agent or such Lender (or assignee), agrees to
repay the amount paid over to the Borrowers to the Administrative Agent or such
Lender (or assignee) in the event the Administrative Agent or such Lender (or
assignee) is required to repay such refund to such Governmental Authority.
Nothing contained in this Section 2.15(f) shall require the Administrative Agent
or any Lender (or assignee) to make available its tax returns or any other
information which it deems confidential to the Borrowers or any other Person.
Notwithstanding anything to the contrary, in no event will any Lender be
required to pay any amount to the Borrowers the payment of which would place
such Lender in a less favorable net after-tax position than such Lender would
have been in had the additional amounts giving rise to such refund of any
Indemnified Taxes or Other Taxes never been paid in the first place.
SECTION 2.16 Mitigation Obligations; Replacement of Lenders.
(a) Mitigation of Obligations. If any Lender requests compensation
under Section 2.12, or if the Borrowers are required to pay any additional
amount to any Lender, the Issuing Bank or any Governmental Authority for the
account of any Lender or the Issuing Bank pursuant to Section 2.15, then such
Lender or the Issuing Bank shall use reasonable efforts to designate a different
lending office for funding or booking its Loans or Letters of Credit hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.12 or 2.15, as the case may be, in the future and (ii) would not
subject such Lender or the Issuing Bank to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender or the Issuing Bank.
(b) Replacement of Lenders. If any Lender requests compensation under
Section 2.12, or if the Borrowers are required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 2.15, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrowers may, at their sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
58
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 11.04), all of its interests, rights and obligations under
this Agreement to an assignee selected by the Borrowers that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided, that (i) the Borrowers shall have received the prior
written consent of the Administrative Agent and the Collateral Agent (and, if a
Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.12 or payments required to be made pursuant to Section 2.15, such assignment
will result in a material reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrowers to require such assignment and delegation cease to
apply.
SECTION 2.17 Swingline Loans.
(a) Swingline Commitment. Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers
from time to time during the Revolving Availability Period, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swingline Loans exceeding $25 million
or (ii) the sum of the total Revolving Exposures exceeding the lesser of (A) the
total Revolving Commitments minus any Line Reserve, (B) the Borrowing Base then
in effect and (C) the maximum amount of Indebtedness that is permitted in
Section 4.06 of the 6.625% Senior Note Indenture as Permitted Indebtedness
thereunder; provided, that the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrowers
may borrow, repay and reborrow Swingline Loans.
(b) Swingline Loans. To request a Swingline Loan, Administrative
Borrower shall notify the Administrative Agent of such request by telephone
(confirmed by telecopy), not later than 2:00 p.m., New York City time, on the
day of a proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan. The Administrative Agent will promptly advise the
Swingline Lender of any such notice received from Administrative Borrower. The
Swingline Lender shall make each Swingline Loan available to the applicable
Borrower by means of a credit to the general deposit account of such Borrower
with the Swingline Lender (or, in the case of a Swingline Loan made to finance
the reimbursement of an LC Disbursement as provided in Section 2.18(e), by
remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the
requested date of such Swingline Loan. The Administrative Borrower shall not
request a Swingline Loan if at the time of and immediately after giving effect
to such request a Default has occurred and is continuing. Swingline Loans shall
be made in minimum amounts of $500,000 and integral multiples of $100,000 above
such amount.
(c) Prepayment. The Borrowers shall have the right at any time and from
time to time to repay any Swingline Loan, in whole or in part, upon giving
written or telecopy notice (or telephone notice promptly confirmed by written,
or telecopy notice) to the Swingline Lender and to the Administrative Agent
59
before 12:00 (noon), New York City time on the date of repayment at the
Swingline Lender's address for notices specified in the Swingline Lender's
Administrative Questionnaire. All principal payments of Swingline Loans shall be
accompanied by accrued interest on the principal amount being repaid to the date
of payment.
(d) Participations. The Swingline Lender may by written notice given to
the Administrative Agent not later than 12:00 noon, New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding; provided,
however, that the Swingline Lender shall give such notice no less frequently
than once in each five Business Day period while any Swingline Loans are
outstanding. Such notice shall specify the aggregate amount of Swingline Loans
in which Revolving Lenders will participate. Promptly upon receipt of such
notice, the Administrative Agent will give notice thereof to each Revolving
Lender, specifying in such notice such Lender's Pro Rata Percentage of such
Swingline Loan or Loans. Each Revolving Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swingline Lender, such Lender's Pro
Rata Percentage of such Swingline Loan or Loans. Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever (provided, that such payment shall not cause such
Lender's Revolving Exposure to exceed such Lender's Revolving Commitment). Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.02(f) with respect to Loans made by such Lender (and Section 2.02
shall apply, mutatis mutandis, to the payment obligations of the Revolving
Lenders), and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify Administrative Borrower of any participations
in any Swingline Loan acquired pursuant to this paragraph, and thereafter
payments in respect of such Swingline Loan shall be made to the Administrative
Agent and not to the Swingline Lender. Any amounts received by the Swingline
Lender from any Borrower (or other party on behalf of such Borrower) in respect
of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a
sale of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Revolving Lenders that shall have
made their payments pursuant to this paragraph and to the Swingline Lender, as
their interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrowers of any default in the
payment thereof.
SECTION 2.18 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein,
Administrative Borrower may request the issuance of Letters of Credit for
Administrative Borrower's account or the account of any other Loan Party in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank,
(the Existing Letters of Credit shall be deemed to be acceptable forms), at any
time and from time to time during the Revolving Availability Period (provided,
that Administrative Borrower shall be a co-applicant with respect to each Letter
of Credit issued for the account of or in favor of any other Loan Party or an
60
obligor under and pursuant to any application for an Existing Letter of Credit).
The Administrative Borrower shall be deemed to have requested that the Existing
Letters of Credit listed in Part A of Schedule 1.01(a) be issued for the account
of the applicable Loan Party hereunder on the date hereof. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrowers to, or entered into by the Borrowers with, the
Issuing Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Request for Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit or the amendment,
renewal or extension of an outstanding Letter of Credit, the Borrowers shall,
except in the case of the Existing Letters of Credit listed on Part A of
Schedule 1.01(a), hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) an LC Request to the Issuing Bank and the Administrative Agent not later
than 11:00 a.m. on the third Business Day preceding the requested date of
issuance, amendment, renewal or extension (or such later date and time as is
acceptable to the Issuing Bank). A request for an initial issuance of a Letter
of Credit shall specify in form and detail satisfactory to the Issuing Bank: (i)
the proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (ii) the amount thereof; (iii) the expiry date thereof; (iv) the
name and address of the beneficiary thereof; (v) the documents to be presented
by such beneficiary in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by such beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Issuing Bank may require.
Subject to Section 2.17(b), any Letter of Credit with any expiry date one year
from the date of issuance may provide for renewals of additional one year
periods. A request for an amendment, renewal or extension of any outstanding
Letter of Credit shall specify in form and detail satisfactory to the Issuing
Bank (i) the Letter of Credit to be amended, renewed or extended; (ii) the
proposed date of amendment, renewal or extension thereof (which shall be a
Business Day); (iii) the nature of the proposed amendment, renewal or extension;
and (iv) such other matters as the Issuing Bank may require. If requested by the
Issuing Bank, the applicable Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrowers shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $100 million and (ii) the total Revolving Exposures
shall not exceed the lesser of (A) the total Revolving Commitments minus any
Line Reserve and (B) the Borrowing Base then in effect. Unless the Issuing Bank
shall agree otherwise, no Letter of Credit shall be in an initial amount less
than $100,000, in the case of a Commercial Letter of Credit, or $500,000, in the
case of a Standby Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) in the case of a Standby Letter of
Credit, (x) the date which is one year after the date of the issuance of such
Standby Letter of Credit (or, in the case of any renewal or extension thereof,
61
one year after such renewal or extension) and (y) the Letter of Credit
Expiration Date and (ii) in the case of a Commercial Letter of Credit, (x) the
date that is 180 days after the date of issuance of such Commercial Letter of
Credit (or, in the case of any renewal or extension thereof, 180 days after such
renewal or extension) and (y) the Letter of Credit Expiration Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Pro Rata Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Pro Rata Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrowers on the date due as provided in paragraph (e)
of this Section 2.18, or of any reimbursement payment required to be refunded to
the Borrowers for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrowers shall reimburse such LC
Disbursement by paying to the Issuing Bank an amount equal to such LC
Disbursement not later than 2:00 p.m., New York City time, on the date that such
LC Disbursement is made, if Administrative Borrower shall have received notice
of such LC Disbursement prior to 11:00 a.m., New York City time, on such date,
or, if such notice has not been received by Administrative Borrower prior to
such time, on such date, then not later than 2:00 p.m., New York City time on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 11:00 a.m., New York City time, on the day of
receipt, or (ii) the Business Day immediately following the day that
Administrative Borrower receives such notice, if such notice is not received
prior to such time on the day of receipt; provided, that Administrative Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 or 2.17 that such payment be financed with an ABR
Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent
so financed, the Borrowers' obligation to make such payment shall be discharged
and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If
Borrowers fail to make such payment when due, the Issuing Bank shall notify the
Administrative Agent and the Administrative Agent shall notify each Revolving
Lender of the applicable LC Disbursement, the payment then due from the
Borrowers in respect thereof and such Lender's Pro Rata Percentage thereof.
Promptly following receipt of such notice, each Revolving Lender shall pay to
the Administrative Agent its Pro Rata Percentage of the unreimbursed LC
Disbursement in the same manner as provided in Section 2.02(f) with respect to
Loans made by such Lender, and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Revolving Lenders.
Promptly following receipt by the Administrative Agent of any payment from the
62
Borrowers pursuant to this paragraph, the Administrative Agent shall, to the
extent that Revolving Lenders have made payments pursuant to this paragraph to
reimburse the Issuing Bank, distribute such payment to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrowers of their obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The obligation of the Borrowers to reimburse
LC Disbursements as provided in paragraph (e) of this Section 2.18 shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.18, constitute a legal or equitable discharge
of, or provide a right of setoff against, the obligations of the Borrowers
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Affiliates, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided, that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrowers to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by each Borrower to the extent permitted by
applicable law) suffered by any Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and Administrative Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided, that any failure to give or
63
delay in giving such notice shall not relieve any Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement (other than with respect to the timing of such reimbursement
obligation set forth in Section 2.18(e)).
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrowers reimburse such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided, that, if the Borrowers fails to reimburse such LC Disbursement when
due pursuant to paragraph (e) of this Section 2.18, then Section 2.06(c) shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the date of payment
by any Revolving Lender pursuant to paragraph (e) of this Section 2.18 to
reimburse the Issuing Bank shall be for the account of such Lender to the extent
of such payment.
(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may
resign as Issuing Bank hereunder at any time upon at least 30 days' prior notice
to the Lenders, the Administrative Agent and the Borrowers. The Issuing Bank may
be replaced at any time by written agreement among the Borrowers, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.
One or more Lenders may be appointed as additional Issuing Banks in accordance
with subsection (k) below. The Administrative Agent shall notify the Lenders of
any such replacement of the Issuing Bank or any such additional Issuing Bank. At
the time any such resignation or replacement shall become effective, the
Borrowers shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.05(c). From and after the effective date of
any such resignation or replacement or addition, as applicable, (i) the
successor or additional Issuing Bank shall have all the rights and obligations
of the Issuing Bank under this Agreement with respect to Letters of Credit to be
issued thereafter and (ii) references herein to the term "Issuing Bank" shall be
deemed to refer to such successor or such addition or to any previous Issuing
Bank, or to such successor or such additional Issuing Bank and all previous
Issuing Banks, as the context shall require. After the resignation or
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such resignation or replacement, but shall not be required to issue
additional Letters of Credit. If at any time there is more than one Issuing Bank
hereunder, Administrative Borrower may, in its discretion, select which Issuing
Bank is to issue any particular Letter of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that Administrative Borrower receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrowers shall deposit in the
Specified Borrowing Base Account, in the name of the Collateral Agent and for
the benefit of the Secured Parties, an amount in cash equal to the LC Exposure
as of such date plus any accrued and unpaid interest thereon; provided, that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrowers described in clause (g) or (h) of Article VIII. Each
64
such deposit shall be held by the Collateral Agent in the Specified Borrowing
Base Account pursuant to Section 9.01, as collateral for the payment and
performance of the obligations of the Borrowers under this Agreement. The
Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Collateral Agent and at the risk and expense
of the Borrowers, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Collateral Agent to reimburse the Issuing Bank
for LC Disbursements for which it has not been reimbursed and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement obligations
of the Borrowers for the LC Exposure at such time or, if the maturity of the
Loans has been accelerated (but subject to the consent of Revolving Lenders with
LC Exposure representing greater than 50% of the total LC Exposure), be applied
to satisfy other Obligations of the Borrowers under this Agreement. If the
Borrowers are required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount plus any accrued
interest or realized profits of such amounts (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three Business Days after
all Events of Default have been cured or waived. If the Borrowers are required
to provide an amount of such collateral hereunder pursuant to Section 2.10(b),
such amount plus any accrued interest or realized profits on account of such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrowers as and to the extent that, after giving effect to such return, the
Borrowers would remain in compliance with Section 2.10(b) and no Default or
Event of Default shall have occurred and be continuing.
(k) Additional Issuing Banks. The Borrowers may, at any time and from
time to time with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and such Lender, designate one or more additional
Lenders or Affiliates thereof to act as an issuing bank under the terms of this
Agreement. Any Lender or Affiliate designated as an issuing bank pursuant to
this paragraph (k) shall be deemed to be the Issuing Bank with respect to
Letters of Credit issued or to be issued by such Lender or Affiliate, and all
references herein and in the other Loan Documents to the term "Issuing Bank"
shall, with respect to such Letters of Credit, be deemed to refer to such Lender
or Affiliate in its capacity as Issuing Bank, as the context shall require. Any
such Affiliate shall execute and deliver a joinder agreement provided by the
Administrative Agent.
(l) The Issuing Bank shall be under no obligation to issue any Letter
of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from issuing such Letter of Credit, or any law applicable to the
Issuing Bank or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over the Issuing Bank
shall prohibit, or request that the Issuing Bank refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Bank with respect to such Letter of Credit any
65
restriction, reserve or capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the Issuing Bank any unreimbursed loss, cost or expense which was
not applicable on the Closing Date and which the Issuing Bank in good faith
deems material to it; or
(ii) the issuance of such Letter of Credit would violate one
or more policies of the Issuing Bank.
(m) The Issuing Bank shall be under no obligation to amend any Letter
of Credit if (A) the Issuing Bank would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.
SECTION 2.19 Determination of Borrowing Base.
(a) Eligible Accounts. On any date of determination of the Borrowing
Base, all of the Accounts owned by the Sales Companies and reflected in the most
recent Borrowing Base Certificate delivered by the Administrative Borrower to
the Collateral Agent and the Administrative Agent shall be "Eligible Accounts"
for the purposes of this Agreement, except any Account to which any of the
exclusionary criteria set forth below applies. In addition, the Collateral Agent
reserves the right, at any time and from time to time after the Closing Date, to
adjust any of the criteria set forth below, to establish new criteria and to
adjust the applicable advance rate with respect to Eligible Accounts, in its
reasonable credit judgment, subject to the approval of the Supermajority
Revolving Lenders in the case of adjustments, new criteria or changes in the
applicable Advance Rates which have the effect of making more credit available.
Eligible Accounts shall not include any of the following Accounts:
(i) any Account in which the Collateral Agent, on behalf of
the Secured Parties, does not have a first priority and exclusive perfected
Lien;
(ii) any Account that is not owned by a Sales Company;
(iii) any Account due from an Account Debtor that is not
domiciled in the United States or Canada and (if not a natural Person) organized
under the laws of the United States or Canada or any political subdivision
thereof;
(iv) any Account that is payable in any currency other than
Dollars;
(v) any Account that does not arise from the sale of goods or
the performance of services by such Sales Company in the ordinary course of its
business;
(vi) any Account that does not comply in any material respect
with all applicable legal requirements, including, without limitation, all laws,
rules, regulations and orders of any Governmental Authority;
(vii) any Account (a) upon which a Sales Company's right to
receive payment is not absolute or is contingent upon the fulfillment of any
condition whatsoever unless such condition is satisfied or (b) as to which a
Sales Company is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial or administrative process or (c)
that represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to a Sales Company's
completion of further performance under such contract or is subject to the
equitable lien of a surety bond issuer;
66
(viii) to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account, it being understood that the remaining
balance of the Account shall be eligible;
(ix) any Account that is not a true and correct statement of
bona fide indebtedness incurred in the amount of the Account for goods sold to
or services rendered and accepted by the applicable Account Debtor;
(x) any Account with respect to which an invoice or other
electronic transmission constituting a request for payment, reasonably
acceptable to the Collateral Agent in form and substance, has not been sent on a
timely basis to the applicable Account Debtor according to the normal invoicing
and timing procedures of the Sales Company;
(xi) any Account that arises from a sale to any director,
officer, other employee or Affiliate of any Sales Company, or to any entity that
has any common officer or director with any Sales Company;
(xii) to the extent any Sales Company or any Subsidiary is
liable for goods sold or services rendered by the applicable Account Debtor to
any Sales Company or any Subsidiary but only to the extent of the potential
offset;
(xiii) any Account that arises with respect to goods that are
delivered on a bill-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the Account
Debtor is or may be conditional;
(xiv) any Account that is in default; provided, that, without
limiting the generality of the foregoing, an Account shall be deemed in default
upon the occurrence of any of the following:
(a) any Account not paid within 90 days following its
original invoice date or that is more than 60 days past due
according to its original terms of sale; or
(b) the Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit
of creditors or fails to pay its debts generally as they come
due; or
(c) a petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or
any other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors;
(xv) any Account that is the obligation of an Account Debtor
(other than an individual) if 50% or more of the Dollar amount of all Accounts
owing by that Account Debtor are ineligible under the other criteria set forth
in this Section 2.19(a);
(xvi) any Account as to which any of the representations or
warranties in the Loan Documents are untrue;
67
(xvii) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(xviii) to the extent such Account exceeds any credit limit
established by the Collateral Agent, in its reasonable credit judgment,
following prior notice of such limit by the Collateral Agent to the
Administrative Borrower;
(xix) that portion of any Account (a) in respect of which
there has been, or should have been, established by any Sales Company a contra
account, whether in respect of contractual allowances with respect to such
Account, audit adjustment, anticipated discounts or otherwise, or (b) which is
due from an Account Debtor to whom any Sales Company owes a trade payable, but
only to the extent of such trade payable or (c) which any Sales Company knows is
subject to the exercise by an Account Debtor of any right of recession, set-off,
recoupment, counterclaim or defense; or
(xx) any Account on which the Account Debtor is a Governmental
Authority, unless any Sales Company has assigned its rights to payment of such
Account to the Collateral Agent pursuant to the Assignment of Claims Act of
1940, as amended, in the case of a federal Governmental Authority, and pursuant
to applicable law, if any, in the case of any other Governmental Authority, and
such assignment has been accepted and acknowledged by the appropriate government
officers.
(b) Eligible Inventory. For purposes of this Agreement, Eligible
Inventory shall exclude any Inventory to which any of the exclusionary criteria
set forth below applies. The Collateral Agent shall have the right to establish,
modify or eliminate Reserves against Eligible Inventory from time to time in its
reasonable credit judgment. In addition, the Collateral Agent reserves the
right, at any time and from time to time after the Closing Date, to adjust any
of the criteria set forth below, to establish new criteria and to adjust the
applicable Advance Rate with respect to Eligible Inventory, in its reasonable
credit judgment, subject to the approval of the Supermajority Revolving Lenders
in the case of adjustments, new criteria, changes in the applicable Advance Rate
or the elimination of Reserves which have the effect of making more credit
available. Eligible Inventory shall not include any Inventory of any Borrower
that:
(i) the Collateral Agent, on behalf of Secured Parties, does
not have a first priority and exclusive or, with respect to Inventory at a
leased or subleased location otherwise meeting the eligibility requirements
hereunder, superior perfected Lien on such Inventory;
(ii) is not located on premises in the United States or
Canada;
(iii) (a) is stored at a location leased or subleased by a
Loan Party unless the Collateral Agent has given its prior consent thereto and
unless either (x) a reasonably satisfactory Landlord Lien Waiver and Access
Agreement has been delivered to the Collateral Agent, or (y) Reserves reasonably
satisfactory to the Collateral Agent have been established with respect thereto
or (b) is stored with a bailee or warehouseman unless either (x) a reasonably
satisfactory, acknowledged bailee or warehouseman waiver letter has been
received by the Collateral Agent or (y) Reserves reasonably satisfactory to the
Collateral Agent have been established with respect thereto, or (c) is located
at an owned location subject to a mortgage in favor of a lender other than the
Collateral Agent unless either (x) a reasonably satisfactory mortgagee waiver or
subordination has been delivered to the Collateral Agent or (y) Reserves
reasonably satisfactory to the Collateral Agent have been established with
68
respect thereto; provided, however, that in no event shall Eligible Inventory
include any Inventory stored at a location owned, leased or subleased by a Loan
Party where the aggregate value of such Inventory is equal to or less than
$250,000 unless the Collateral Agent has given its prior consent thereto;
(iv) is placed on consignment (other than Eligible Consignment
Inventory);
(v) is covered by a negotiable document of title, unless such
document has been delivered to the Collateral Agent with all necessary
endorsements, free and clear of all Liens except those in favor of the
Collateral Agent and the Lenders and landlords, carriers, bailees and
warehousemen if clause (ii) above has been complied with;
(vi) is to be returned to suppliers;
(vii) is obsolete, unsalable, shopworn, seconds, damaged or
unfit for sale;
(viii) consists of display items, samples or packing or
shipping materials, manufacturing or mining supplies, work-in-process Inventory
or replacement parts or is coal or other mineral rights before extraction unless
the same is either As-Extracted Collateral (as defined in the Security
Agreement) or Eligible Pit Inventory;
(ix) is not of a type held for sale in the ordinary course of
any Borrower's business;
(x) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(xi) consists of Hazardous Material or goods that can be
transported or sold only with licenses that are not readily available;
(xii) is not covered by casualty insurance maintained as
required by Section 5.04 (unless such Inventory is Coal);
(xiii) is Inventory purchased from another Person (other than
a Borrower) which is not in the possession of a Borrower or has not been
received by a Borrower or a customer of a Borrower (otherwise referred to as
"brokered coal in-transit"); or
(xiv) is subject to any licensing arrangement the effect of
which would be to limit the ability of Collateral Agent, or any Person selling
the Inventory on behalf of Collateral Agent, to sell such Inventory in
enforcement of the Collateral Agent's Liens, without further consent or payment
to the licensor or other Person.
SECTION 2.20 Administrative Borrower.
Each Borrower hereby designates A. T. Massey Coal Company, Inc. as its
representative and agent on its behalf for the purpose of issuing Borrowing
Requests and Interest Election Requests, giving instructions with respect to the
69
disbursements of the proceeds of the Loans, requesting Letters of Credit, giving
and receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or the Borrowers under the Loan
Documents. Administrative Borrower hereby accepts such appointment.
Administrative Agent, Collateral Agent and each Lender may regard any notice or
other communication pursuant to any Loan Document from Administrative Borrower
as a notice or communication from all the Borrowers. Each warranty, covenant,
agreement and undertaking made on a Borrower's behalf by Administrative Borrower
shall be deemed for all purposes to have been made by such Borrower and shall be
binding upon and enforceable against such Borrower to the same extent as if the
same had been made directly by such Borrower. Administrative Borrower shall
maintain a written record of the allocation of all proceeds of Loans between the
Borrowers and shall disclose such record to the Administrative Agent upon its
request.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Administrative Agent,
the Collateral Agent, the Issuing Bank and each of the Lenders (with references
to the Companies being references thereto after giving effect to the
Transactions unless otherwise expressly stated) that:
SECTION 3.01 Organization; Powers. Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to carry on its business as now conducted and
to own and lease its Property and (c) is qualified and in good standing (to the
extent such concept is applicable in the applicable jurisdiction) to do business
in every jurisdiction where such qualification is required, except in such
jurisdictions where the failure to so qualify or be in good standing,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.02 Authorization; Enforceability. The Transactions to be entered into
by each Loan Party are within such Loan Party's powers and have been duly
authorized by all necessary action. This Agreement has been duly executed and
delivered by each Loan Party and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. Except as set forth on
Schedule 3.03, the Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except (i) such as have been obtained or made and are in full force and effect,
(ii) filings necessary to perfect Liens created under the Loan Documents and to
release Liens securing the obligations repaid in the Refinancing, and (iii)
consents, approvals, registrations, filings or actions the failure of which to
obtain or perform could not reasonably be expected to result in a Material
Adverse Effect, (b) will not violate the charter, by-laws or other
organizational documents of any Company or any order of any Governmental
70
Authority, (c) will not violate, result in a default or require any consent or
approval under any applicable law or regulation, indenture, agreement or other
instrument binding upon any Company or its assets, or give rise to a right
thereunder to require any payment to be made by any Company, except for
violations, defaults or the creation of such rights that could not reasonably be
expected to result in a Material Adverse Effect, and (d) will not result in the
creation or imposition of any Lien on any Property of any Company, except Liens
created under the Loan Documents and Permitted Liens.
SECTION 3.04 Financial Statements.
(a) The Administrative Borrower has heretofore furnished to the Lenders
the consolidated balance sheets and related statements of income, stockholders'
equity and cash flows of Holdings and its Consolidated Subsidiaries (i) as of
and for the fiscal years ended December 31, 2002 and October 31, 2001, audited
by and accompanied by the opinion of Ernest& Young LLP, independent public
accountants, and (ii) as of and for the nine-month period ended September 30,
2003 and for the comparable period of the preceding fiscal year, in each case,
certified by the Chief Financial Officer of Holdings. Such financial statements
have been prepared in accordance with GAAP consistently applied and present
fairly and accurately the financial condition and results of operations and cash
flows of Holdings and its Consolidated Subsidiaries as of such dates and for
such periods. Except as set forth in such financial statements or schedules
hereto, as of the Closing Date, there are no liabilities of any Company of any
kind, whether accrued, contingent, absolute, determined, determinable or
otherwise, which if unpaid could reasonably be expected to result in a Material
Adverse Effect, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability,
other than liabilities under the Loan Documents and the Senior Note Documents.
(b) The Administrative Borrower has heretofore delivered to the Lenders
Holdings' unaudited consolidated balance sheets and statements of income and
cash flows as of and for the nine-month period ended September 30, 2003 and for
the comparable period of the preceding fiscal year.
(c) Since December 31, 2002, there has been no event, change or
occurrence that, individually or in the aggregate, has had or could reasonably
be expected to result in a Material Adverse Effect.
(d) To the extent required by GAAP, Holdings and its Consolidated
Subsidiaries maintain adequate reserves for (i) future costs associated with any
lung disease claim alleging pneumoconiosis or silicosis or arising out of
exposure to coal dust or the coal mining environment, (ii) future costs
associated with retiree and health care benefits, (iii) future costs associated
with reclamation of disturbed acreage, removal of facilities and other closing
costs in connection with its mining operations and (iv) future costs associated
with other potential environmental liabilities.
71
SECTION 3.05 Properties.
(a) Each Company has good title to, or valid leasehold interests in,
all its Property material to its business, except for minor irregularities or
deficiencies in title that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on its ability to
conduct its business as currently conducted or to utilize such Property for its
intended purpose. Title to all such Property held by such Company is free and
clear of all Liens except for Permitted Liens. The Property of the Companies,
taken as a whole, (i) is in good operating order, condition and repair (ordinary
wear and tear excepted) (except to the extent that the failure to be in such
condition could not reasonably be expected to result in a Material Adverse
Effect) and (ii) constitutes all the Property which is required for the business
and operations of the Companies as presently conducted.
(b) Schedule 3.05(b) lists substantially and in all material respects
each interest in Real Property owned by any Company as of the date hereof and
describes the type of interest therein held by such Company. Schedule 3.05(b)
lists substantially and in all material respects each Real Property leased,
subleased or otherwise occupied or utilized by any Company, as lessee,
sublessee, franchisee or licensee, as of the date hereof and describes the type
of interest therein held by such Company, whether such lease or sublease is a
Mining Lease or Prep Plant Lease. Schedule 3.05(b) lists all locations at which
any Company has any Collateral on consignment and the name and contact
information of each consignee.
(c) Each Company owns, or is licensed to use, all patents, patent
applications, trademarks, trade names, servicemarks, copyrights, technology,
trade secrets, proprietary information, domain names, know-how and processes
necessary for the conduct of its business as currently conducted (the
"Intellectual Property"), except for those the failure to own or license which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does any
Company know of any valid basis for any such claim. The use of such Intellectual
Property by each Company does not infringe the rights of any Person, except for
such claims and infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(d) No Company has received any notice of, nor has any knowledge of,
the occurrence or pendency or contemplation of any Casualty Event affecting all
or any portion of the Collateral.
SECTION 3.06 Equity Interests and Subsidiaries.
(a) Schedule 3.06(a) sets forth a list of (i) all the Subsidiaries and
their jurisdiction of organization as of the Closing Date and (ii) the number of
shares of each class of its Equity Interests authorized, and the number
outstanding (and the record holder of such Equity Interests), on the Closing
Date and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights at the Closing Date. All
Equity Interests of each Company (other than Holdings) are duly and validly
issued and are fully paid and non-assessable and are owned by Holdings or a
Borrower, directly or indirectly through Wholly Owned Subsidiaries and all
Equity Interests of the Borrowers (other than Administrative Borrower) are owned
directly by the Administrative Borrower and all Equity Interests of
Administrative Borrower are owned directly by Holdings. Each Loan Party is the
record and beneficial owner of, and has good and marketable title to, the Equity
Interests pledged by it under the Security Agreement, free of any and all Liens,
72
rights or claims of other Persons, except the security interest created by the
Security Agreement, and there are no outstanding warrants, options or other
rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or Property that is convertible into, or that
requires the issuance or sale of, any such Equity Interests.
(b) No consent of any Person including any other general or limited
partner, any other member of a limited liability company, any other shareholder
(other than any shareholder consent obtained prior to the Closing Date) or any
other trust beneficiary is necessary or desirable in connection with the
creation, perfection or first priority status of the security interest of the
Collateral Agent in any Equity Interests pledged to the Collateral Agent for the
benefit of the Secured Parties under the Security Agreement or the exercise by
the Collateral Agent of the voting or other rights provided for in the Security
Agreement or the exercise of remedies in respect thereof.
(c) An accurate organization chart, showing the ownership structure of
Holdings and each Subsidiary on the Closing Date, and after giving effect to the
Transaction, is set forth on Schedule 3.06(c).
SECTION 3.07 Litigation; Compliance with Laws.
(a) There are no actions, suits or proceedings at law or in equity by
or before any Governmental Authority now pending or, to the knowledge of any
Company, threatened against or affecting any Company or any business, Property
or rights of any Company as to which there is a reasonable probability of an
adverse determination other than those that, in the aggregate, if adversely
determined, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Except for matters covered by Section 3.17, no Company or any of
its Property is in violation of, nor will the continued operation of their
Property as currently conducted violate, any Requirements of Law (including any
zoning or building ordinance, code or approval or any building permits or any
Mining Laws) or any restrictions of record or agreements affecting the Real
Property or is in default with respect to any judgment, writ, injunction, decree
or order of any Governmental Authority, where such violation or default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.08 Agreements.
(a) No Company is a party to any agreement or instrument or subject to
any corporate or other constitutional restriction that has resulted or could
reasonably be expected to result in a Material Adverse Effect.
(b) No Company is in default in any manner under any provision of any
indenture or other agreement or instrument evidencing Indebtedness, or any other
agreement or instrument to which it is a party or by which it or any of its
Property are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
73
(c) Schedule 3.08(c) accurately and completely lists all Material
Agreements (other than leases of Real Property set forth on Schedule 3.05(b) and
the Coal Supply Agreements, Mining Leases and Prep Plant Leases set forth on
Schedule 3.21) to which any Company is a party which are in effect on the date
hereof in connection with the operation of the business conducted thereby and
the Borrowers have, upon request, delivered or have otherwise made available to
the Administrative Agent and the Collateral Agent complete and correct copies of
all such Material Agreements, including any amendments, supplements or
modifications with respect thereto.
SECTION 3.09 Federal Reserve Regulations.
(a) No Company is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the regulations of the Board, including Regulation T, U
or X. The pledge of the Security Agreement Collateral pursuant to the Security
Agreement does not violate such regulations.
SECTION 3.10 Investment Company Act; Public Utility Holding Company Act. No
Company is (a) an "investment company" or a company "controlled" by an
"investment company," as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, or (b) a "holding company," an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
SECTION 3.11 Use of Proceeds. The Borrowers will use the proceeds of the
Revolving Loans to effect the Refinancing and on and after the Closing Date will
use the proceeds of the Revolving Loans and the issuances of Letters of Credit
for general corporate purposes of the Loan Parties and other purposes consistent
with the liabilities associated with their businesses.
SECTION 3.12 Taxes. Each Company has (a) timely filed or caused to be timely
filed all federal Tax Returns and all material, state, local and foreign Tax
Returns or materials required to have been filed by it and all such Tax Returns
are true and correct in all material respects and has (b) duly and timely paid
or caused to be duly and timely paid all Taxes (whether or not shown on any Tax
Return) due and payable by it and all assessments received by it, except Taxes
(i) that are being contested in good faith by appropriate proceedings and for
which such Company shall have set aside on its books adequate reserves in
accordance with GAAP or (ii) which could not, individually or in the aggregate,
have a Material Adverse Effect; provided, that any such contest of Taxes with
respect to Collateral shall also satisfy the Contested Collateral Lien
Conditions. Each Company has made adequate provision in accordance with GAAP for
all Taxes not yet due and payable. Each Company is unaware of any proposed or
pending tax assessments, deficiencies or audits that could be reasonably
expected to, individually or in the aggregate, result in a Material Adverse
Effect.
SECTION 3.13 No Material Misstatements. None of any information (whether written
or oral), report, financial statement, exhibit or schedule furnished by or on
behalf of any Company to the Administrative Agent or any Lender in connection
with the negotiation of any Loan Document or included therein or delivered
pursuant thereto (including the Confidential Information Memorandum) contained,
74
contains or will contain any material misstatement of fact or omission, omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading as of the date such information is dated or certified; provided,
that to the extent any such information, report, financial statement, exhibit or
schedule was based upon or constitutes a forecast or projection, each Loan Party
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such information, report, financial
statement, exhibit or schedule.
SECTION 3.14 Labor Matters. As of the date hereof and the Closing Date, there
are no strikes, lockouts or slowdowns against any Company pending or, to the
knowledge of any Company, threatened. The hours worked by and payments made to
employees of any Company have not been in violation of the Fair Labor Standards
Act or any other applicable federal, state, local or foreign law dealing with
such matters in any manner which could reasonably be expected to result in a
Material Adverse Effect. All payments due from any Company, or for which any
claim may be made against any Company, on account of wages and employee health
and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of such Company except where the failure to do so could
not reasonably be expected to result in a Material Adverse Effect. The
consummation of the Transactions will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which any Company is bound.
SECTION 3.15 Solvency. Immediately after the consummation of the Transactions to
occur on the Closing Date and immediately following the making of each Loan and
the issuance of each Letter of Credit and after giving effect to the application
of the proceeds of each Loan taking into account, and giving full effect to,
rights of contribution against or reimbursement from other Loan Parties under
the Contribution, Incentive and Offset Agreement or applicable law, (a) the fair
value of the assets of the Consolidated Companies and each Borrower individually
will exceed its debts and liabilities, subordinated, contingent or otherwise;
(b) the present fair saleable value of the Property of the Consolidated
Companies and each Borrower individually will be greater than the amount that
will be required to pay the probable liability of its debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) the Consolidated Companies and each
Borrower individually will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Consolidated Companies and each Borrower
individually will not have unreasonably small capital with which to conduct its
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date. In determining the
foregoing, the amount of contingent liabilities (such as litigation, guaranties
and pension plan liabilities) at any time shall be computed as the amount that,
in light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured
liability.
SECTION 3.16 Employee Benefit Plans. Each Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder except for
75
any noncompliance that, in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events, could reasonably be expected to result in a Lien on the Collateral or
result in a Lien on the assets of a Company that, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Except as set
forth in Schedule 3.16, using actuarial assumptions and computation methods
consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of each Company or its ERISA Affiliates to all Multiemployer Plans
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Multiemployer Plan, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.17 Environmental Matters.
(a) Except as set forth in Schedule 3.17 or except as, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect:
(1) The Companies and their businesses, operations and Real
Property are and in the last six years have been in compliance with, and the
Companies have no liability under, Environmental Law;
(2) The Companies have obtained all Environmental Permits
required for the conduct of their businesses and operations, and the ownership,
operation and use of their assets, under Environmental Law, all such
Environmental Permits are valid and in good standing and, under the currently
effective business plan of the Companies, no expenditures or operational
adjustments will be required in order to renew or modify such Environmental
Permits during the next five years;
(3) There has been no Release, threatened Release of Hazardous
Material or any conditions existing on, at, under or from any Real Property or
facility presently or, to the knowledge of the Companies, formerly owned, leased
or operated by the Companies or their predecessors in interest that could result
in liability of the Companies under Environmental Law;
(4) There is no Environmental Claim pending or, to the
knowledge of the Companies, threatened against the Companies, or relating to the
Real Property currently or, to the knowledge of the Companies, formerly owned,
leased or operated by the Companies or relating to the operations of the
Companies, and there are no actions, activities, circumstances, conditions,
events or incidents that could form the basis of such an Environmental Claim;
and
(5) To the knowledge of the Companies, no Person with an
indemnity or contribution obligation to the Companies relating to compliance
with or liability under Environmental Law is in default with respect to such
obligation.
(b) Except as set forth in Schedule 3.17:
(1) Except for matters that, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, no Company is
76
obligated to perform any action or otherwise incur any expense under
Environmental Law pursuant to any order, decree, judgment or agreement by which
it is bound or has assumed by contract or agreement, and no Company is
conducting or financing any Response pursuant to any Environmental Law with
respect to any Real Property or any other location;
(2) No Real Property or facility owned, operated or leased by
the Companies and, to the knowledge of the Companies, no Real Property or
facility formerly owned, operated or leased by the Companies or any of their
predecessors in interest is (i) listed or proposed for listing on the National
Priorities List promulgated pursuant to CERCLA or (ii) listed on the
Comprehensive Environmental Response, Compensation and Liability Information
System promulgated pursuant to CERCLA or (iii) included on any similar list
maintained by any Governmental Authority including, without limitation, any such
list relating to petroleum releases;
(3) No Lien has been recorded or, to the knowledge of any
Company, threatened under any Environmental Law with respect to any Real
Property or assets of the Companies;
(4) Except for matters that, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not require any notification,
registration, filing, reporting, disclosure, investigation, remediation or
cleanup pursuant to any Environmental Real Property Disclosure Requirements or
any other Environmental Law; and
(5) The Companies have made available to Lenders all material
reports and assessments in the possession, custody or control of, or otherwise
prepared for any of the Companies concerning compliance with or liability under
Environmental Law including, without limitation, those concerning the existence
of Hazardous Material at real Property or facilities currently or formerly
owned, operated, leased or used by the Companies.
SECTION 3.18 Insurance. Schedule 3.18 sets forth a true, complete and correct
description of all insurance maintained by each Company as of the Closing Date.
As of each such date, such insurance is in full force and effect and all
premiums have been duly paid. Each Company has insurance in such amounts and
covering such risks and liabilities as are in accordance with normal industry
practice.
SECTION 3.19 Security Documents.
(a) The Security Agreement is effective to create in favor of the
Collateral Agent for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in and Lien on the Security Agreement Collateral
and, when (i) financing statements and other filings in appropriate form are
filed in the offices specified on Schedule 7 to the Perfection Certificate and
(ii) upon the taking of possession or control by the Collateral Agent of the
Security Agreement Collateral with respect to which a security interest may be
perfected only by possession or control (which possession or control shall be
given to the Collateral Agent to the extent possession or control by the
Collateral Agent is required by the Security Agreement), the Lien created by the
Security Agreement shall constitute a fully perfected Lien on, and security
77
interest in, all right, title and interest of the grantors thereunder in the
Security Agreement Collateral (other than the Intellectual Property (as defined
in the Security Agreement), in each case subject to no Liens other than
Permitted Liens.
(b) When the Security Agreement or a short form thereof is filed in the
United States Patent and Trademark Office and the United States Copyright
Office, the Lien created by such Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in the Intellectual Property (as defined in such
Security Agreement), in each case subject to no Liens other than Permitted
Liens.
(c) [Intentionally Omitted].
(d) Each Security Document delivered pursuant to Sections 5.11 and 5.12
will, upon execution and delivery thereof, be effective to create in favor of
the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in and Lien on all of the Loan Parties' right,
title and interest in and to the Collateral thereunder, and when all appropriate
filings or recordings are made in the appropriate offices as may be required
under applicable law, such Security Document will constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral, in each case subject to no Liens other than the
applicable Permitted Liens.
SECTION 3.20 Coal Act; Black Lung Act. Each Loan Party and each of its "related
persons" (as defined in the Coal Act) are in compliance in all material respects
with the Coal Act and no Loan Party or any of its related persons has any
liability under the Coal Act except with respect to premiums or other payments
required thereunder which have been paid when due and except to the extent that
the liability thereunder would not reasonably be expected to have a Material
Adverse Effect. Each Loan Party is in compliance in all material respects with
the Black Lung Act, and no Loan Party has any liability under the Black Lung Act
except with respect to premiums or other payments required thereunder which have
been paid when due and except to the extent that the liability thereunder would
not reasonably be expected to have a Material Adverse Effect.
SECTION 3.21 Coal Supply Agreements, Mining Leases and Prep Plant Leases.
Schedule 3.21 sets forth a complete and accurate list of each Coal Supply
Agreement, substantially all of the Mining Leases (but, in any event sets forth
each Mining Lease that is a Material Agreement) and each Prep Plant Lease to
which any Loan Party is a party as of the Closing Date, including the
counterparty to each agreement. As of the Closing Date, each such Coal Supply
Agreement, Mining Lease and Prep Plant Lease is in full force and effect, except
to the extent that the failure to be in full force and effect would not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.22 Location of Material Inventory. Schedule 3.22 sets forth all
locations in the United States where the aggregate value of Inventory owned by
78
the Loan Parties exceeds $250,000 except for any Coal that has not been
extracted from a Mine.
SECTION 3.23 Accuracy of Borrowing Base. At the time any Borrowing Base
Certificate is delivered pursuant to this Agreement, each Account and each item
of Inventory included in the calculation of the Borrowing Base satisfies all of
the criteria stated herein (or of which a Responsible Officer of the
Administrative Borrower has hereafter been notified by Collateral Agent in
writing (including electronic form) under Section 2.19) to be an Eligible
Account and an item of Eligible Inventory, respectively.
SECTION 3.24 Post-Audit Asset Dispositions. As of the Closing Date, each
Borrower and the other Loan Parties have not disposed of assets (other than
Inventory sold in the ordinary course of their business) which are set forth in
the Inventory Appraisal and which have an aggregate fair market value of more
than $250,000.
SECTION 3.25 Holdings; Unrestricted Subsidiaries.
(a) Holdings does not (i) engage in any active trade or business, or
(ii) own any material assets (other than Equity Interests which are pledged to
the Collateral Agent on the Closing Date).
(b) No Unrestricted Subsidiary (other than the Joint Venture
Subsidiary) (i) has assets with an aggregate book value in excess of $25,000,
(ii) has any liabilities (other than for the Obligations and the Indebtedness
under the Senior Note Documents) in an aggregate amount that exceeds $25,000 or
(iii) engages in any trade or business.
(c) Except for the Mining Companies, no other Company is engaged in the
business of producing coal from reserves owned or leased by the Consolidated
Companies. No Mining Company is engaged in the coal sales business except with
and through the Sales Companies.
SECTION 3.26 [Intentionally Omitted]
SECTION 3.27 Surety Bonds. All surety, reclamation and similar bonds required to
be maintained by any Loan Party under any Requirement of Law, including any
Mining Law, or any obligation under any agreement, undertaking, contract, lease,
indenture, mortgage, deed of trust or other instrument which such Person or its
Property is bound are in full force and effect and were not and will not be
terminated, suspended, revoked or otherwise adversely affected by virtue of the
execution and delivery of the Loan Documents and the funding of the Transactions
thereunder; provided that (i) self-bonding permitted under Requirements of Law
prior to the Closing Date may be required to be replaced following the Closing
Date with surety bonds, (ii) the cost of such bonds may be increased and (iii)
certain of such bonds may be terminated, suspended or revoked, provided that,
taken together, the events specified in clauses (i), (ii) and (iii) above would
not reasonably be expected to have a Material Adverse Effect. All required
guarantees of, and letters of credit with respect to, such surety, reclamation
and similar bonds are in full force and effect except where such failure to be
in full force and effect would not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.28 Specified Tax Sharing Agreement. To the best knowledge of any
Responsible Officer of Holdings or any Borrower, no Loan Party has taken, nor as
of the Closing Date has any plan or intention to take, any action which is
79
inconsistent with any material factual statements or representations in the
private letter ruling issued by the Internal Revenue Service on November 15,
2000 (the "Private Letter Ruling") with respect to the Transactions (as defined
in the Specified Tax Sharing Agreement).
ARTICLE IV.
CONDITIONS TO CREDIT EXTENSIONS
SECTION 4.01 Conditions to Initial Credit Extension. The obligation of each
Lender and, if applicable, each Issuing Bank to fund the initial Credit
Extension (including, without limitation, issuance of any applicable Letters of
Credit) requested to be made by it shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 4.01.
(a) Loan Documents. All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan Documents shall
be satisfactory to the Lenders, to the Issuing Bank and to the Administrative
Agent and there shall have been delivered to counsel for the Administrative
Agent an executed counterpart of each of the Loan Documents, including this
Agreement, the Security Agreement, the Perfection Certificate and each other
applicable Loan Document.
(b) Corporate Documents. The Administrative Agent shall have received:
(i) a certificate of the Secretary or Assistant Secretary of
each Loan Party dated the Closing Date and certifying (A) that attached thereto
is a true and complete copy of the certificate or articles of incorporation or
other constitutive documents, including all amendments thereto certified as of a
recent date by the Secretary of State of the state of its organization, (B) that
attached thereto is a true and complete copy of the by-laws of such Loan Party
as in effect on the Closing Date and at all times since a date prior to the date
of the resolutions described in clause (C) below, (C) that attached thereto is a
true and complete copy of resolutions duly adopted by the Board of Directors of
such Loan Party and, if applicable, any shareholder of such Loan Party,
authorizing the execution, delivery and performance of the Loan Documents to
which such Person is a party and, in the case of the Borrowers, the borrowings
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (D) as to the incumbency and specimen
signature of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan Party (together with a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificate in this clause
(i);
(ii) satisfactory evidence as to the good standing of each
Loan Party as of a date acceptable to the Administrative Agent, from such
Secretary of State; and
(iii) such other documents as the Lenders, the Issuing Bank or
the Administrative Agent may reasonably request.
(c) Officers' Certificate. The Administrative Agent shall have received
a certificate, dated the Closing Date and signed by the Chief Financial Officer
80
of Holdings, confirming compliance with the conditions precedent set forth in
Section 4.01 and paragraphs (b), (c), (d) and (e) of Section 4.02.
(d) Financings and Other Transactions, Etc. The Refinancing shall have
been consummated in full to the satisfaction of the Lenders with all liens
granted pursuant to the securitization transaction documents being
unconditionally released or unconditionally committed to be released; the
Administrative Agent shall have received a "pay-off" letter or transfer
agreement transferring all receivables and other related rights from the
purchasers to Massey Receivables Corporation and a subsequent transfer of such
receivables and related rights to the originators of such receivables and
related rights with respect to all obligations being refinanced in the
Refinancing; the Administrative Agent shall have received from any Person
holding any Lien securing any such debt, such UCC termination statements,
mortgage releases, releases of assignments of leases and rents, releases of any
blocked accounts and other instruments, in each case in proper form for
recording, as the Administrative Agent shall have reasonably requested to
release and terminate of record the Liens securing such debt. The Administrative
Agent shall have received a copy of the November 10, 2003 payoff letter relating
to the CitiBank Facility under which Citicorp North America, Inc.,
unconditionally commits to release all Liens created under the CitiBank
Facility, including filing of UCC termination statements and the delivery to the
Collateral Agent (at the direction of the Administrative Agent) of all stock
certificates, instruments, promissory notes and other collateral held in its
possession (and all such release documents shall be, in each case, in form and
substance reasonably satisfactory to the Administrative Agent) and the
Administrative Borrower shall have delivered to the Administrative Agent
evidence reasonably satisfactory to the Administrative Agent of the receipt by
Citicorp North America, Inc. of the payment required to give rise to the
aforementioned commitment to release all Liens.
(e) Financial Statements; Balance Sheet; Projections. The Lenders shall
have received and shall be satisfied with the form and substance of the
financial statements described in Section 3.04 and the financial performance of
Holdings and its Subsidiaries for the three-year period following the Closing
Date (including a detailed quarterly forecast for no less than the period ended
December 31, 2004).
(f) Indebtedness and Minority Interests. After giving effect to the
Transactions and the other transactions contemplated hereby, no Company shall
have outstanding any Indebtedness for borrowed money, preferred stock or
minority interests other than (i) the Loans and extensions of credit hereunder,
(ii) the Senior Notes, (iii) $16.2 million of Capital Lease Obligations and the
other Indebtedness listed on Schedule 6.01, and (iv) Indebtedness owed to any
Borrower or any Guarantor.
(g) Opinions of Counsel. The Administrative Agent shall have received,
on behalf of itself, the other Agents, the Arranger, the Lenders and the Issuing
Bank, a favorable written opinion of (i) Hunton & Williams, special counsel for
the Loan Parties, substantially to the effect set forth in Exhibit K-1, (ii)
Kymberly T. Wellons, Senior Corporate Counsel of Holdings as Kentucky counsel
for the Loan Parties, substantially to the effect set forth in Exhibit K-2,
(iii) M. Shane Harvey, Senior Corporate Counsel and Assistant Secretary of
Holdings, as West Virginia Counsel to the Loan Parties, substantially to the
effect set forth in Exhibit K-3, (iv) Thomas J. Dostart, Vice President, General
Counsel and Secretary of Holdings, substantially to the effect set forth in
Exhibit K-4 and (v) Stikeman Elliot LLP, special Canadian counsel to the
81
Administrative Agent and the Collateral Agent, substantially to the effect as
set forth on Exhibit K-5 in each case (A) dated the Closing Date, (B) addressed
to the Agents, the Arranger, the Issuing Bank and the Lenders and (C) covering
such other matters relating to the Loan Documents and the Transactions as the
Administrative Agent shall reasonably request.
(h) Other Reports. (i) The Lenders shall have received all reports and
opinions of appraisers, consultants or other advisors retained by it to review
the business, operation or condition of Holdings and the other Companies giving
effect to the Transactions, and shall be satisfied with such reports and
opinions, including, without limitation, the Inventory Appraisal.
(ii) The Administrative Agent shall have received a solvency
certificate in the form of Exhibit M, dated the Closing Date and signed by the
Chief Financial Officer of Holdings.
(i) Requirements of Law. The Lenders shall be satisfied that the
Transactions shall be in full compliance with all material Requirements of Law,
including without limitation Regulations T, U and X of the Board. The Lenders
shall have received satisfactory evidence of the Loan Parties' compliance in all
material respects with all applicable Requirements of Law, including all
applicable environmental laws and regulations.
(j) Consents. The Lenders shall be satisfied that all requisite
Governmental Authorities and third parties shall have approved or consented to
the Transactions, and there shall be no governmental or judicial action, actual
or threatened, that has or would have, singly or in the aggregate, a reasonable
likelihood of restraining, preventing or imposing burdensome conditions on the
Transactions or the other transactions contemplated hereby.
(k) Litigation. There shall be no litigation, public or private, or
administrative proceedings, governmental investigation or other legal or
regulatory developments, pending or threatened against any Company as to which
there is reasonable probability of an adverse determination, other than those,
that, in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, or could materially and adversely affect the ability of
Holdings, Borrower and the Subsidiaries to fully and timely perform their
respective obligations under the Loan Documents, or the ability of the parties
to consummate the financings contemplated hereby or the other Transactions.
(l) Sources and Uses. The sources and uses of the Loans shall be as set
forth in Section 3.11.
(m) Fees. The Arranger, Collateral Agent and Administrative Agent shall
have received all Fees and other amounts due and payable on or prior to the
Closing Date, including, to the extent invoiced, reimbursement or payment of all
reasonable out-of-pocket expenses (including the legal fees and expenses of
Latham & Watkins, LLP, special counsel to the Administrative Agent and Hahn &
Hessen, LLP, special counsel to the Collateral Agent, and the fees and expenses
of any local counsel, appraisers, consultants and other advisors) required to be
reimbursed or paid by the Borrowers hereunder or under any other Loan Document.
(n) Personal Property Requirements. The Collateral Agent shall have
received:
82
(i) all certificates, agreements or instruments representing
or evidencing the Pledged Equity Interests and the Pledged Notes (each as
defined in the Security Agreement) accompanied by instruments of transfer and
stock powers endorsed in blank shall have been delivered to the Collateral
Agent;
(ii) all other certificates, agreements, including control
agreements, or instruments necessary to perfect the Collateral Agent's security
interest in all Chattel Paper, all Instruments, all deposit accounts and all
Investment Property of each Loan Party (as each such term is defined in the
Security Agreement and to the extent required by Section 3.3 of the Security
Agreement);
(iii) UCC financing statements in appropriate form for filing
under the UCC, filings with the United States Patent, Trademark and Copyright
offices and such other documents under applicable Requirements of Law in each
jurisdiction as may be necessary or appropriate or, in the opinion of the
Collateral Agent, desirable to perfect the Liens created, or purported to be
created, by the Security Documents and, with respect to all UCC Financing
Statements required to be filed pursuant to the Loan Documents. The Borrowers
hereby acknowledge and agree that, at the Borrowers' sole cost and expense, the
Administrative Agent, in its sole discretion, shall select a service provider
for the tracking of all such financing statements and for providing notification
to the Administrative Agent and the Collateral Agent of, among other things, the
upcoming lapse or expiration thereof.
(iv) certified copies of UCC, tax and judgment lien searches,
bankruptcy and pending lawsuit searches or equivalent reports or searches, each
of a recent date listing all effective financing statements, lien notices or
comparable documents that name any Loan Party as debtor and that are filed in
those state and county jurisdictions in which any Property of any Loan Party is
located and the state and county jurisdictions in which any Loan Party is
organized or maintains its principal place of business and such other searches
that the Collateral Agent deems necessary or appropriate, none of which encumber
the Collateral covered or intended to be covered by the Security Documents
(other than those relating to Liens acceptable to the Collateral Agent) and
those relating to the Liens to be released or terminated on the Closing Date)
and a UCC insurance policy in favor of the Collateral Agent insuring the proper
creation, perfection and priority of the Lien of the Security Documents as it
relates to "as extracted" Coal Inventory comprising part of the part of the
Collateral in form and substance satisfactory to the Collateral Agent;
(v) with respect to each Real Property location set forth on
Schedule 4.01(n), a Landlord Lien Waiver and Access Agreement or applicable
consignment letter agreement or other applicable bailee or warehouseman
agreements in form and substance satisfactory to the Administrative Agent and
the Collateral Agent, except for those Real Property locations for which, after
and despite use of commercially reasonable efforts by the Borrowers, a Landlord
Lien Waiver and Access Agreement or applicable consignment letter agreement was
not obtained; it being agreed and understood that for any such location, an
appropriate Reserve as set forth in the definition of "Eligible Inventory" may
be established by the Collateral Agent; and
83
(vi) evidence acceptable to the Collateral Agent of payment by
the Loan Parties of all applicable recording taxes, fees, charges, costs and
expenses required for the recording of the Security Documents.
(o) Insurance. The Administrative Agent shall have received a copy of,
or a certificate as to coverage under, the insurance policies required by
Section 5.04 and the applicable provisions of the Security Documents, each of
which shall be endorsed or otherwise amended to include a "standard" or "New
York" lender's loss payable endorsement and to name the Collateral Agent as
additional insured, in form and substance satisfactory to the Administrative
Agent.
(p) Initial Borrowing Base Certificate. The Collateral Agent and the
Administrative Agent shall have received a Borrowing Base Certificate, dated as
of the Closing Date.
(q) Take-Over Audit. Within five (5) days prior to the Closing Date,
the Collateral Agent's staff shall have conducted a supplemental "take-over
audit" which supports and confirms (i) the calculation of the initial Borrowing
Base and Excess Availability, (ii) no material change in the procedures since
the delivery of the Inventory Appraisal, (iii) no material change in sales,
Inventory turn or the level of Inventory since the delivery of the Inventory
Appraisal and (iv) the accuracy in all material respects of all representations
and warranties set forth herein.
(r) Cash Management. The Collateral Agent and the Administrative Agent
shall have reviewed and approved the Companies' cash management system and shall
have received executed control agreements in form and substance satisfactory to
Collateral Agent with respect to funds or investments maintained in all
applicable accounts (except with respect to payroll deposit accounts, trust
deposit accounts, withholding tax, employee benefit and other fiduciary deposit
accounts and local cash deposit accounts the thirty day average daily balance of
which accounts does not exceed $1.0 million in the aggregate as of any date of
determination).
(s) Minimum Excess Availability. Following the initial Credit Extension
on the Closing Date, Excess Availability shall be no less than $50 million.
SECTION 4.02 Conditions to All Credit Extensions. The obligation of each Lender
and each Issuing Bank to make any Credit Extension (including the initial Credit
Extension) shall be subject to, and to the satisfaction of, each of the
conditions precedent set forth below.
(a) Notice. The Administrative Agent shall have received a Borrowing
Request as required by Section 2.03 (or such notice shall have been deemed given
in accordance with Section 2.03) if Loans are being requested or, in the case of
the issuance, amendment, extension or renewal of a Letter of Credit, the Issuing
Bank and the Administrative Agent shall have received a notice requesting the
issuance, amendment, extension or renewal of such Letter of Credit as required
by Section 2.18(b) or, in the case of the Borrowing of a Swingline Loan, the
Swingline Lender and the Administrative Agent shall have received a notice
requesting such Swingline Loan as required by Section 2.17(b).
(b) No Default. Each Borrower and each other Loan Party shall be in
compliance in all material respects with all the terms and provisions set forth
herein, including, without limitation, all provisions related to the Borrowing
Base, and in each other Loan Document on its part to be observed or performed,
84
and, at the time of and immediately after such Credit Extension, no Default
shall have occurred and be continuing on such date or after giving effect to the
Credit Extension requested to be made on such date.
(c) Representations and Warranties. Each of the representations and
warranties made by any Loan Party set forth in Article III hereof or in any
other Loan Document shall be true and correct in all material respects (except
that any representation and warranty that is qualified as to "materiality" or
"Material Adverse Effect" shall be true and correct in all respects) on and as
of the date of such Credit Extension with the same effect as though made on and
as of such date, except to the extent such representations and warranties
expressly relate to an earlier date.
(d) No Material Adverse Effect. There has been no event, condition
and/or contingency that has had or is reasonable likely to have a Material
Adverse Effect.
(e) No Legal Bar. No order, judgment or decree of any Governmental
Authority shall purport to restrain any Lender from making any Loans to be made
by it or the Issuing Bank from issuing any Letters of Credit. No injunction or
other restraining order shall have been issued, shall be pending or noticed with
respect to any action, suit or proceeding seeking to enjoin or otherwise prevent
the consummation of, or to recover any damages or obtain relief as a result of,
the transactions contemplated by this Agreement or the making of Loans or
issuances of Letters of Credit hereunder.
Each of the delivery of a Borrowing Request or notice requesting the issuance,
amendment, extension or renewal of a Letter of Credit and the acceptance by the
Borrowers of the proceeds of such Credit Extension (including, without
limitation, the Existing Letters of Credit) shall constitute a representation
and warranty by each Borrower and each other Loan Party that on the date of such
Credit Extension (both immediately before and after giving effect to such Credit
Extension and the application of the proceeds thereof) the conditions contained
in this Section 4.02 have been satisfied. Each Borrower shall provide such
information (including calculations in reasonable detail of the covenants in
Section 6.08) as the Administrative Agent may reasonably request to confirm that
the conditions in this Section 4.02 have been satisfied.
ARTICLE V.
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees with each Lender that so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full and all Letters of Credit have been canceled or have expired or been
fully cash collateralized and all amounts drawn thereunder have been reimbursed
in full, unless the Required Lenders shall otherwise consent in writing, each
Loan Party will, and will cause each of its Subsidiaries to:
SECTION 5.01 Financial Statements, Reports, etc. In the case of Holdings and the
Borrowers, furnish to the Administrative Agent, the Collateral Agent and each
Lender:
85
(a) Annual Reports. Within 90 days after the end of each fiscal year
(but no later than ten days after the date on which Holdings is required to file
a Form 10-K under the Exchange Act), (i) the consolidated balance sheet of
Holdings as of the end of such fiscal year and related consolidated statements
of income, cash flows and stockholders' equity for such fiscal year, and notes
thereto, all prepared in accordance with Regulation S-X under the Securities Act
and accompanied by an opinion of Ernst & Young LLP or other independent public
accountants of recognized national standing satisfactory to the Administrative
Agent or one of the "Big 3" accounting firms (which opinion shall not be
qualified as to scope or contain any going concern or other qualification),
stating that such financial statements fairly present, in all material respects,
the consolidated financial condition, results of operations, cash flows and
changes in stockholders' equity of the Consolidated Companies as of the end of
and for such fiscal year in accordance with GAAP consistently applied, (ii) a
management report in a form reasonably satisfactory to the Administrative Agent
setting forth, on a consolidated basis, the financial condition, results of
operations and cash flows of the Consolidated Companies as of the end of and for
such fiscal year, as compared to the Consolidated Companies' financial
condition, results of operations and cash flows as of the end of and for the
previous fiscal year and its budgeted results of operations and cash flows
compared to projections as provided pursuant to Section 5.01(h), and (iii) a
management's discussion and analysis of the financial condition and results of
operations for such fiscal year, as compared to the previous fiscal year;
(b) Quarterly Reports. Within 50 days after the end of each of the
first three fiscal quarters of each fiscal year (but no later than ten days
after the date on which Holdings is required to file a Form 10-Q under the
Exchange Act), (i) the consolidated balance sheet of Holdings as of the end of
such fiscal quarter and related consolidated statements of income and cash flows
for such fiscal quarter and for the then elapsed portion of the fiscal year, in
comparative form with the consolidated statements of income and cash flows for
the comparable periods in the previous fiscal year, and notes thereto, all
prepared in accordance with Regulation S-X under the Securities Act and
accompanied by a certificate of a Financial Officer stating that such financial
statements fairly present, in all material respects, the consolidated financial
condition, results of operations and cash flows of the Consolidated Companies as
of the date and for the periods specified in accordance with GAAP consistently
applied, and on a basis consistent with audited financial statements referred to
in paragraph (a) if this Section 5.01(b), subject to normal year-end audit
adjustments, (ii) a management report in a form reasonably satisfactory to the
Administrative Agent setting forth, on a consolidated basis, the financial
condition, results of operations and cash flows of the Consolidated Companies as
of the end of and for such fiscal quarter and for the then elapsed portion of
the fiscal year, as compared to the Consolidated Companies' financial condition,
results of operations and cash flows for the comparable periods in the previous
fiscal year compared to projections as provided pursuant to Section 5.01(h), and
(iii) a management's discussion and analysis of the financial condition and
results of operations for such fiscal quarter and the then elapsed portion of
the fiscal year, as compared to the comparable periods in the previous fiscal
year;
(c) Monthly Reports. Within 30 days after the end of the each month, a
consolidating balance sheet for each of the Borrowers as of the end of the prior
month and, upon the request of the Administrative Agent or the Collateral Agent,
the related consolidating statements of income of the Borrowers for such month
and for the then elapsed portion of the calendar year, each balance sheet being
in substantially the form attached hereto as Exhibit O (or in the form of the
86
EXCEL spreadsheet previously approved by the Collateral Agent) and accompanied
by a certificate of a Financial Officer of Holdings stating that such financial
statements fairly present, in all material respects, the consolidating results
of operations of the Borrowers as of the date and for the periods specified in
such financial statements;
(d) Financial Officer's Certificate. (i) Concurrently with any delivery
of financial statements under paragraphs (a) or (b) above, a certificate of a
Financial Officer of Holdings certifying that no Default has occurred or, if
such a Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto; (ii)
concurrently with any delivery of financial statements under sub-paragraph (a)
or (b) above, a Compliance Certificate; and (iii) in the case of paragraph (a)
above, a report of the accounting firm opining on or certifying such financial
statements stating that in the course of its regular audit of the financial
statements of Holdings and its Subsidiaries, which audit was conducted in
accordance with GAAP, such accounting firm obtained no knowledge that any
Default has occurred or, if in the opinion of such accounting firm such a
Default has occurred, specifying the nature and extent thereof;
(e) Financial Officer's Certificate Regarding Collateral. Concurrently
with any delivery of financial statements under paragraph (a) above, a
certificate of a Financial Officer setting forth the information required
pursuant to the Perfection Certificate or confirming that there has been no
change in such information since the date of the Perfection Certificate or
Supplement;
(f) Public Reports. Promptly after the same become publicly available,
electronic copies of all periodic and other reports, proxy statements and other
materials filed by any Company with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed to holders
of its Indebtedness pursuant to the terms of the documentation governing such
Indebtedness (or any trustee, agent or other representative therefor), as the
case may be;
(g) Management Letters. Promptly after the receipt thereof by any
Company, a copy of any "management letter" received by any such Person from its
certified public accountants and the management's responses thereto;
(h) Budgets. No later than 30 days prior to the first day of each
fiscal year of Holdings, a budget in form reasonably satisfactory to the
Administrative Agent and the Collateral Agent (including consolidated budgeted
statements of income and sources and uses of cash and balance sheets) prepared
by Holdings, for (i) each fiscal quarter of such fiscal year prepared in detail
and (ii) each of the four years immediately following such fiscal year prepared
in summary form, in each case, of the Consolidated Companies, with appropriate
presentation and discussion of the principal assumptions upon which such budgets
are based, accompanied by the statement of a Financial Officer of Holdings to
the effect that the budget of Holdings and each Borrower, respectively, is a
reasonable estimate for the period covered thereby;
(i) Annual Meetings with Lenders. Within 120 days after the close of
each fiscal year of Holdings, Holdings and the Administrative Borrower shall, at
the request of the Administrative Agent or Required Lenders, hold a meeting (at
87
a mutually agreeable location and time) with all Lenders who choose to attend
such meeting at which meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of the Companies and the
budgets presented for the current fiscal year of the Companies;
(j) Borrowing Base Forecast. Concurrently with the delivery of the
budgets under paragraph (h), a forecast with respect to the projected Borrowing
Base and Excess Availability for the next succeeding four fiscal quarters in
form and detail reasonably satisfactory to the Collateral Agent; and
(k) Other Information. Promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of any Company, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.02 Litigation and Other Notices. Furnish to the Administrative Agent,
the Collateral Agent and each Lender written notice of the following promptly
after a Responsible Officer of any Loan Party or any lawyer of any Loan Party's
in-house legal staff has knowledge thereof:
(a) any Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of intention
of any Person to file or commence, any action, suit or proceeding, whether at
law or in equity by or before any Governmental Authority, (i) against any
Company or any Affiliate thereof that could reasonably be expected to result in
a Material Adverse Effect or (ii) with respect to any Loan Document;
(c) any development that has resulted in, or could reasonably be
expected to result in a Material Adverse Effect;
(d) the occurrence of a Casualty Event with respect to Collateral or
with respect to any other Property if such occurrence could reasonably be
expected to result in a Material Adverse Effect;
(e) (i) the incurrence of any material Lien (other than Permitted
Liens) on, or claim asserted against any of the Collateral or (ii) the
occurrence of any other event which could reasonably be expected materially and
adversely affect the value of the Collateral;
(f) any threatened indictment by any Governmental Authority of any Loan
Party, as to which any Loan Party receives or notice, under any criminal statute
against any Loan Party pursuant to which statute the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $1 million or (ii) any other Property of any Loan Party which
is necessary or material to the conduct of its business if the forfeiture
thereof could reasonably be expected to occur and have a Material Adverse
Effect; and
(g) any receipt by any Loan Party of a notice of termination of any
Material Agreement or the occurrence of any event or condition which would, with
the passage of time or the giving of notice or both, permit the termination of
any Material Agreements.
88
SECTION 5.03 Existence; Businesses and Properties.
(a) Do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its legal existence, except as otherwise expressly
permitted under Section 6.05 or, in the case of any Unrestricted Subsidiary or
any other Subsidiary, where the failure to perform such obligations,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect; except than any Subsidiary of Holdings (other than a
Borrower) which is inactive or dormant (meaning that on the date of
determination and on a consolidated basis with its Subsidiaries, it has assets
with an aggregate fair market value of less than $100,000) may be dissolved,
provided that if such other Subsidiary is a Loan Party, all assets distributed
upon dissolution, shall be distributed to another Loan Party.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
with all applicable Requirements of Law (including any and all zoning, building,
Environmental Law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Real Property) and decrees
and orders of any Governmental Authority, whether now in effect or hereafter
enacted, except where the failure to comply, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect; pay and
perform its obligations under all Leases, Mining Leases, Prep Plant Lease, and
Coal Supply Agreements, maintain Coal Reserves, or the right to acquire Coal
from third parties sufficient to fill the requirements under all Coal Supply
Agreements; and at all times maintain and preserve all Property material to the
conduct of such business and keep such Property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times in each case in accordance with generally
accepted mining practices and except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; provided, that nothing
in this Section 5.03(b) shall prevent (i) sales of assets, consolidations or
mergers by or involving any Company in accordance with Section 6.05; (ii) the
failure of any Company to qualify or the withdrawal by any Company of its
qualification as a foreign corporation in any jurisdiction where such
withdrawal, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect; or (iii) the abandonment by any Company
of any rights, franchises, licenses, trademarks, tradenames, copyrights or
patents that such Person reasonably determines are not useful to its business.
SECTION 5.04 Insurance. Keep its insurable Property adequately insured at all
times by financially sound and reputable insurers (provided, that the Borrowers
shall not be deemed to breach this provision if, after its insurer becomes
unsound or irreputable, the Borrowers promptly and diligently obtains adequate
insurance from an alternative carrier); and maintain such other insurance, in
each case, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, and maintain
89
such other insurance as may be required by law or as Collateral Agent or
Administrative Agent may reasonably request (provided that any such request is
accompanied by a insurance broker's statement that such insurance is available
at commercially reasonable rates); and, with respect to the Collateral,
otherwise maintain all insurance coverage required under each applicable
Security Document, such policies to be in such form and amounts and having such
coverage as may be reasonably satisfactory to the Administrative Agent and the
Collateral Agent, it being agreed that the levels of insurance in place on the
Closing Date, absent a material change in the Property of the Loan Parties,
shall be satisfactory to the Administrative Agent and the Collateral Agent so
long as appropriate steps are taken to assure that such insurance coverage is
also obtained for any future Subsidiaries other than Unrestricted Subsidiaries.
(a) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Collateral Agent of written notice
thereof, and (ii) name the Collateral Agent as mortgagee (in the case of
Property insurance) or additional insured (in the case of liability insurance)
or loss payee (in the case of casualty insurance), as applicable.
(b) Notify the Administrative Agent and the Collateral Agent immediately
whenever any separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 5.04 is taken out
by any Company; and promptly deliver to the Administrative Agent and the
Collateral Agent a duplicate original copy of such policy or policies.
SECTION 5.05 Taxes.
(a) Pay and discharge promptly when due all Taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its Property, before the same shall become delinquent or in
default, except amounts that in the aggregate do not exceed $500,000 at any
time, as well as all lawful claims for labor, materials and supplies or
otherwise that, if unpaid, might give rise to a Lien other than a Permitted Lien
upon such properties or any part thereof; provided, that such payment and
discharge shall not be required with respect to any such Tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the applicable Company
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, Tax, assessment or charge and enforcement of a Lien other
than a Permitted Lien and, in the case of Collateral, the applicable Company
shall have otherwise complied with the Contested Collateral Lien Conditions.
(b) Timely and correctly file all material Tax Returns required to be
filed by it.
SECTION 5.06 Employee Benefits.
(a) With respect to each Plan, comply in all material respects with the
applicable provisions of ERISA and the Code except to the extent the failure to
comply could not reasonably be expected to result in a Material Adverse Effect;
and
(b) With respect to each Plan, furnish to the Administrative Agent (x)
promptly after, and in any event within 20 days after any Responsible Officer of
the Companies or their ERISA Affiliates or any ERISA Affiliate knows or has
reason to know that, any ERISA Event has occurred that, alone or together with
any other ERISA Event could reasonably be expected to result in liability of the
Companies or their ERISA Affiliates in an aggregate amount exceeding $1 million
or the imposition of a Lien, a statement of a Financial Officer of Holdings
90
setting forth details as to such ERISA Event and the action, if any, that the
Companies propose to take with respect thereto, and (y) upon request by the
Administrative Agent, copies of: (i) each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) filed by any Company or any ERISA Affiliate
with the Internal Revenue Service with respect to each Plan; (ii) the most
recent actuarial valuation report for each Plan; (iii) all notices received by
any Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any
governmental agency concerning an ERISA Event; and (iv) such other documents or
governmental reports or filings relating to any Plan (or employee benefit plan
sponsored or contributed to by any Company) as the Administrative Agent shall
reasonably request.
SECTION 5.07 Maintaining Records; Access to Properties and Inspections. Keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law are made of all dealings and
transactions in relation to its business and activities. Keep proper records of
intercompany accounts with full, true and correct entries reflecting all
payments received and paid (including, without limitation, funds received by any
Borrower or Holdings from swept deposit accounts of the other Companies and any
funds received from any Borrower). Each Company will permit any representatives
designated by the Administrative Agent and the Collateral Agent or any Lender to
visit and inspect the financial records and the Property of such Company at
reasonable times and as often as reasonably requested and to make extracts from
and copies of such financial records, and permit any representatives designated
by the Administrative Agent, the Collateral Agent or any Lender to discuss the
affairs, finances and condition of any Company with the officers thereof and
independent accountants therefor; provided, however, that no more than three
such audits and inspections shall occur in any fiscal year unless an Event of
Default has occurred and is continuing.
SECTION 5.08 Use of Proceeds. Use the proceeds of the Loans and request the
issuance of Letters of Credit only for the purposes set forth in Section 3.11.
SECTION 5.09 Compliance with Environmental Laws; Environmental Reports.
(a) Comply, and cause all lessees and other Persons occupying Real
Property owned, operated or leased by any Company to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to its
operations and Real Property; obtain and renew all material Environmental
Permits applicable to its operations and Real Property; and conduct any Response
in accordance with Environmental Laws; provided, that no Company shall be
required to undertake any Response to the extent that its obligation to do so is
being contested in good faith and by proper proceedings and appropriate reserves
are being maintained with respect to such circumstances in accordance with GAAP.
(b) If a Default caused by reason of a breach of Section 3.17 or
5.09(a) shall have occurred and be continuing for more than 20 days without the
Companies commencing activities reasonably likely to cure such Default, at the
written request of the Required Lenders through the Administrative Agent,
provide to the Lenders within 45 days after such request, at the expense of the
91
Borrowers, an environmental assessment report regarding the matters which are
the subject of such Default, including where appropriate, any soil and/or
groundwater sampling, prepared by an environmental consulting firm and in the
form and substance reasonably acceptable to the Administrative Agent and
indicating the presence or absence of Hazardous Materials and the estimated cost
of any compliance or Response to address them.
SECTION 5.10 Mining.
(a) Take all commercially reasonably efforts to ensure that all of its
tenants, subtenants, contractors, subcontractors and invitees comply in all
material respects with all applicable Mining Laws, and obtain, comply in all
respects with and maintain any and all Mining Permits, applicable to any of them
in each case to the extent noncompliance could reasonably be expected to have a
Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, all remedial, removal or other actions in each case required under
applicable Mining Laws and promptly comply in all respects with all lawful
orders and directives of all Government Authorities regarding applicable Mining
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency would not be reasonably expected to
have a Material Adverse Effect.
SECTION 5.11 Additional Collateral; Additional Guarantors.
(a) Subject to this Section 5.11, with respect to any Property now
owned or acquired after the Closing Date by the Borrowers or any other Loan
Party that is intended to be or become Collateral subject to the Lien created by
any of the Security Documents but is not so subject (but, in any event,
excluding any Property described in paragraph (b) of this subsection) promptly
(and in any event within 30 days after the acquisition thereof provided
Collateral Agent has provided all joinder agreements to the applicable Security
Documents necessary for the Loan Parties to comply herewith): (i) execute and
deliver to the Administrative Agent and the Collateral Agent such amendments or
supplements to the relevant Security Documents or such other documents as the
Administrative Agent or the Collateral Agent shall deem necessary or advisable
to grant to the Collateral Agent, for its benefit and for the benefit of the
other Secured Parties, a Lien on such Property subject to no Liens other than
Permitted Liens, and (ii) take all actions necessary to cause such Lien to be
duly perfected to the extent required by such Security Document in accordance
with all applicable Requirements of Law, including, without limitation, the
filing of financing statements in such jurisdictions as may be reasonably
requested by the Administrative Agent or the Collateral Agent. Each Borrower
shall otherwise take such actions and execute and/or deliver to the Collateral
Agent such documents as the Administrative Agent or the Collateral Agent shall
require to confirm the validity, perfection and priority of the Lien of the
Security Documents against such after-acquired properties or assets.
(b) With respect to any Person that is or becomes a Wholly Owned
Subsidiary (other than any Foreign Subsidiary that is not a direct Subsidiary of
a Loan Party) promptly (and in any event within 30 days after such Person
becomes a Subsidiary) (i) deliver to the Collateral Agent the certificates, if
any, representing the Equity Interests of such Subsidiary (provided, that with
92
respect to any first-tier Foreign Subsidiary of Holdings or any of its
Subsidiaries organized in a State of the United States, in no event shall more
than 66% of the Equity Interests of any Foreign Subsidiary be subject to any
Lien or pledged under any Security Document if such pledge would have a material
adverse tax impact on Holdings or any of its Subsidiaries (determined at the
reasonable discretion of the Administrative Agent)), together with undated stock
powers or other appropriate instruments of transfer executed and delivered in
blank by a duly authorized officer of such Subsidiary's parent, as the case may
be, and (ii) cause such new Subsidiary (other than any Foreign Subsidiary if
such pledge would have a material adverse tax impact on Holdings or any of its
Subsidiaries (determined at the reasonable discretion of the Administrative
Agent) (A) to execute a Joinder Agreement or such comparable documentation and a
joinder agreement to the Security Agreement in the form annexed thereto which is
in form and substance reasonably satisfactory to the Administrative Agent, and
(B) to take all actions necessary or advisable in the opinion of the
Administrative Agent or the Collateral Agent to cause the Lien created by the
Security Agreement to be duly perfected to the extent required by such agreement
in accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements in such jurisdictions as may be
reasonably requested by the Administrative Agent or the Collateral Agent. If any
such new Subsidiary is engaged in the business of coal production or coal sales
(other than the sale of coal for export or home use), such Joinder Agreement
shall provide, among other things, for the joinder of such new Subsidiary as an
additional Borrower and, as appropriate, as an additional Mining Company, Land
Company or Sales Company and shall otherwise be in form and substance
satisfactory to the Administrative Agent.
(c) If at any time any one or more Wholly-Owned Subsidiaries in the
aggregate (other than any Foreign Subsidiary of Holdings or any of its
Subsidiaries that is not a "first-tier" Foreign Subsidiary) not otherwise
subject to Section 5.11(b) have assets having either a book value or fair market
value in excess of $10.0 million, then the Borrowers shall, and shall cause one
or more of such Subsidiaries to, comply with Section 5.11(b) within the time
frames set forth in such subsection so that no one or more such Subsidiaries in
the aggregate hold assets having either a book value or fair market value in
excess of $10.0 million .
SECTION 5.12 Security Interests; Further Assurances. Promptly, upon the
reasonable request of the Administrative Agent, the Collateral Agent or any
Lender, at the Borrowers' expense, execute, acknowledge and deliver, or cause
the execution, acknowledgment and delivery of, and thereafter register, file or
record, or cause to be registered, filed or recorded, in an appropriate
governmental office, any document or instrument supplemental to or confirmatory
of the Security Documents or otherwise deemed by the Administrative Agent or the
Collateral Agent reasonably necessary or desirable for the continued validity,
perfection and priority of the Liens on the Collateral covered thereby superior
to and prior to the rights of all third Persons other than the holders of Prior
Liens and subject to no other Liens except as permitted by the applicable
Security Document, or use commercially reasonably efforts to obtain any consents
and agreements with consignees or bailee or warehouseman agreements, including,
without limitation, landlord or similar lien waivers and consents, as may be
necessary or appropriate in connection therewith. Deliver or cause to be
delivered to the Administrative Agent and the Collateral Agent from time to time
such other documentation, consents, authorizations, approvals and orders in form
and substance reasonably satisfactory to the Administrative Agent and the
Collateral Agent as the Administrative Agent and the Collateral Agent shall
reasonably deem necessary to perfect or maintain the Liens on the Collateral
pursuant to the Security Documents. Upon the exercise by the Administrative
93
Agent, the Collateral Agent or the Lenders of any power, right, privilege or
remedy pursuant to any Loan Document which requires any consent, approval,
registration, qualification or authorization of any Governmental Authority,
execute and deliver all applications, certifications, instruments and other
documents and papers that the Administrative Agent, the Collateral Agent or the
Lenders may be so required to obtain.
SECTION 5.13 Information Regarding Collateral.
(a) Furnish to the Administrative Agent and the Collateral Agent 30
days prior written notice (in the form of an officer's certificate), clearly
describing any of the following changes (i) in any Loan Party's corporate name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (ii) in the location of any Loan Party's chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral (including any locations at which Collateral on
consignment is located) owned by it is located (including the establishment of
any such new office or facility or new consignment location), (iii) in any Loan
Party's identity or corporate structure, (iv) in any Loan Party's Federal
Taxpayer Identification Number or its Organizational Identification Number from
its jurisdiction of organization or (v) in any Loan Party's jurisdiction of
organization. The Borrowers agree not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the UCC or
otherwise that are required in order for the Collateral Agent to continue at all
times following such change to have a valid, legal and perfected security
interest in all the Collateral. The Borrowers agree to provide to the Collateral
Agent such other information in connection with such changes as the Collateral
Agent may reasonably request. The Borrowers also agree promptly to notify the
Administrative Agent and the Collateral Agent if any material portion of the
Collateral is subject to a Casualty Event.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.01, deliver to the Administrative Agent and the Collateral Agent a certificate
of a Financial Officer and the chief legal officer of Holding (i) setting forth
any changes to the information required pursuant to the Perfection Certificate
or confirming that there has been no change in such information since the date
of the Perfection Certificate delivered on the Closing Date or the date of the
most recent certificate delivered pursuant to this Section 5.13(b) and (ii)
certifying that neither Holdings nor any of its Subsidiaries have taken any
actions (and are not aware of any actions so taken) to terminate any UCC
Financing Statements (including fixture filings and filings with respect to
"As-Extracted Collateral" (as defined in the Security Agreement), as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) above
to the extent necessary to protect and perfect the security interests and Liens
under the Security Documents for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).
SECTION 5.14 Post-Closing Collateral Matters. Execute and deliver the documents
and complete the tasks set forth on Schedule 5.14, in each case within the time
limits specified on such schedule.
94
SECTION 5.15 Borrowing Base-Related Reports. The Administrative Borrower shall
deliver or cause to be delivered (at the expense of the Borrowers) to the
Collateral Agent and the Administrative Agent and, if requested, the Lenders,
the following:
(a) in no event less frequently than 20 days after the end of each
month for the month most recently ended, a Borrowing Base Certificate from the
Administrative Borrower accompanied by such supporting detail and documentation
as shall be requested by the Collateral Agent in its reasonable credit judgment,
including, without limitation the amount applicable to payables and held checks
referenced in clause (c) and (d) of the definition of "Excess Availability" and
the information necessary to calculate the Borrowing Base Limitation Amount;
(b) upon request by the Collateral Agent, and in no event less
frequently than 30 days after the end of (i) each month, a monthly trial balance
showing Accounts outstanding aged from statement date as follows: 1 to 30 days,
31 to 60 days, 61 to 90 days and 91 days or more, accompanied by a comparison to
the prior month's trial balance and such supporting detail and documentation as
shall be requested by the Collateral Agent in its reasonable credit judgment and
(ii) each month, a summary of Inventory by location and type accompanied by such
supporting detail and documentation as shall be requested by the Collateral
Agent in its reasonable credit judgment (in each case, together with a copy of
all or any part of such delivery requested by any Lender in writing after the
Closing Date);
(c) on the date any Borrowing Base Certificate is delivered pursuant to
Section 5.15(a) or at such more frequent intervals as the Collateral Agent may
request from time to time in its reasonable credit judgment (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Closing Date), a report with respect to the Borrowers, including all
additions and reductions (cash and non-cash) with respect to Intercompany
Indebtedness of the Borrowers, accompanied by such supporting detail and
documentation as shall be requested by the Collateral Agent in its reasonable
credit judgment;
(d) at the time of delivery of each of the financial statements
delivered pursuant to Sections 5.01(a) and (b);
(i) a reconciliation of the Accounts trial balance and
quarter-end Inventory reports of the Borrowers to the general ledger of
such Loan Party, in each case, accompanied by such supporting detail
and documentation as shall be requested by the Collateral Agent in its
reasonable credit judgment; and
(ii) a list of any application for the registration of any
patent, trademark or copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any similar
office or agency which any Loan Party has filed in the prior fiscal
quarter.
(e) at the time of delivery of the financial statements referred to in
Section 5.01(a), an Inventory Appraisal to be conducted by an appraiser
satisfactory to the Collateral Agent, and in form, scope and substance,
substantially the same as the Inventory Appraisal delivered on or about the
Closing Date and, otherwise reasonably satisfactory to the Collateral Agent and
Administrative Agent;
95
(f) not later than thirty (30) days after the end of each calendar
month (or more frequently as reasonably requested by the Collateral Agent in its
reasonable credit judgment), a schedule of all Hedging Agreements, including
notional amounts and a statement setting forth in reasonable detail the amount
the applicable Loan Party owes counterparties to Hedging Agreements based on a
mark-to-market analysis as of the last Business Day of the previous calendar
month (or if not available, the nearest prior Business Day for which such
evaluation is available); and
(g) such other reports, statements and reconciliations with respect to
the Borrowing Base or Collateral of any or all Loan Parties as the Collateral
Agent shall from time to time request in its reasonable credit judgment.
The delivery of each certificate and report or any other information delivered
pursuant to this Section 5.15 shall constitute a representation and warranty by
the Borrowers that the statements and information contained therein are true and
correct in all material respects on and as of such date.
SECTION 5.16 Securitization Company. Holdings and the Borrowers shall cause
Massey Receivables Corporation to merge with and into a Loan Party, with such
Loan Party as the surviving entity or dissolve on or before February 28, 2004
and, shall deliver to the Administrative Agent evidence thereof and evidence
that any outstanding accounts receivables shall have been transferred back to
the originators of such accounts receivable no later than three Business Days
after the Closing Date (it being agreed and understood that such accounts
receivable shall not be deemed Eligible Accounts until such transfer is
accomplished and evidence thereof has been received by the Administrative
Agent).
SECTION 5.17 Adequate Reserves. To the extent required by GAAP, maintain
adequate reserves for (i) future costs associated with any lung disease claim
alleging pneumoconiosis or silicosis or arising out of exposure or alleged
exposure to coal dust or the coal mining environment, (ii) future costs
associated with retiree and health care benefits, (iii) future costs associated
with reclamation of disturbed acreage, removal of facilities and other closing
costs in connection with its mining operations and (iv) future costs associated
with other potential environmental liabilities.
SECTION 5.18 Limitations on Designation of Unrestricted Subsidiaries. Holdings
may designate any Subsidiary of Holdings as an "Unrestricted Subsidiary" under
this Agreement and otherwise in accordance with the 6.625% Senior Note Documents
(a "Designation") only if:
(i) no Default shall have occurred and be continuing after giving
effect to such Designation; and
(ii) Holdings would be permitted to make an Investment in an amount
(the "Designation Amount") equal to the fair market value of
Holdings' proportionate interest in such Subsidiary on such date.
No Subsidiary shall be Designated as an "Unrestricted Subsidiary"
unless such Subsidiary:
96
(A) has no Indebtedness other than Non-Recourse Debt;
(B) is not party to any agreement, contract, arrangement or
understanding with Holdings or any Subsidiary that is not an
Unrestricted Subsidiary unless the terms of the agreement,
contract, arrangement or understanding are no less favorable to
the Holdings or the Subsidiary that is not an Unrestricted
Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates;
(C) is a Person with respect to which neither Holdings nor any
Subsidiary that is not an Unrestricted Subsidiary has any direct
or indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or preserve the Person's financial
condition or to cause the Person to achieve any specified levels
of operating results; and
(E) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Holdings or any Subsidiary
that is not an Unrestricted Subsidiary, except for any guarantee
given solely to support the pledge by Holdings or any Restricted
Subsidiary of the Equity Interests of such Unrestricted
Subsidiary, which guarantee is not recourse to Holdings or any
Subsidiary that is not an Unrestricted Subsidiary, and except to
the extent the amount thereof Payment is permitted pursuant to
Section 6.02.
If, at any time, any Unrestricted Subsidiary fails to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of
the Subsidiary and any Liens on assets of such Subsidiary shall be deemed to be
incurred by a Subsidiary that is not an Unrestricted Subsidiary as of the date
and, if the Indebtedness is not permitted to be incurred under the covenant
described under Section 6.01 or the Lien is not permitted under the covenant
described under Section 6.02 Holdings shall be in default of the applicable
covenant.
Holdings may redesignate an Unrestricted Subsidiary as a Restricted
Subsidiary (a "Redesignation") only if:
(x) no Default shall have occurred and be continuing at the time of
and after giving effect to such Redesignation; and
(y) all Liens, Indebtedness and Investments of such Unrestricted
Subsidiary outstanding immediately following such Redesignation
would, if incurred or made at such time, have been permitted to
be incurred or made for all purposes of this Agreement.
All Designations and Redesignations must be evidenced by resolutions of
the Board of Directors of Holdings delivered to the Administrative Agent
certifying compliance with the foregoing provisions.
97
ARTICLE VI.
NEGATIVE COVENANTS
Each Loan Party covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in full
and all Letters of Credit have been canceled or have expired or been fully cash
collateralized and all amounts drawn thereunder have been reimbursed in full,
unless the Required Lenders shall otherwise consent in writing, no Loan Party
will, nor will they cause or permit any Subsidiaries to:
SECTION 6.01 Indebtedness. Incur, create, assume or permit to exist, directly or
indirectly, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other Loan
Documents;
(b) (i) Indebtedness actually outstanding on the Closing Date and
listed on Schedule 6.01(b), including, without limitation, the Senior Notes, or
(ii) refinancings or renewals thereof; provided that (A) any such refinancing
Indebtedness is in an aggregate principal amount not greater than the aggregate
principal amount of the Indebtedness being renewed or refinanced, plus the
amount of any premiums required to be paid thereon and fees and expenses
associated therewith, (B) such refinancing Indebtedness has a later or equal
final maturity and longer or equal remaining weighted average life than the
Indebtedness being renewed or refinanced and (C) except for any refinancing of
the 6.95% Senior Notes, the covenants, events of default, subordination and
other provisions thereof (including any guarantees thereof) shall be, in the
aggregate, no less favorable to the Lenders than those contained in the
Indebtedness being renewed or refinanced;
(c) Indebtedness of any Company under non-speculative Interest Rate
Protection Agreements which may be entered into from time to time by any Company
and which such Company in good faith believes will assist in managing the
exposure to fluctuations in interest rates;
(d) Indebtedness under Hedging Agreements (other than Interest Rate
Protection Agreements) entered into from time to time by any Company in
accordance with Section 6.04(c);
(e) to the extent recorded in the Companies' intercompany account
ledgers, Intercompany Indebtedness of the Companies outstanding and, in the case
of the Loan Parties, to the extent permitted by Section 6.04(d);
(f) Indebtedness of the Borrowers and their Subsidiaries organized in a
State within the United States in respect of Purchase Money Obligations and
Capital Lease Obligations and refinancings or renewals thereof (other than
refinancings funded with intercompany advances), in an aggregate amount
(exclusive of Capital Lease Obligations and Purchase Money Obligations arising
from any conversion of operating leases existing on December 1, 2003 to
Capitalized Lease Obligations or Purchase Money Obligations) not to exceed 10%
of Consolidated Net Tangible Assets; provided that such Indebtedness is incurred
98
for the purpose of acquiring fixed and/or capital assets, including plant,
property and equipment, and all development costs, prepaid royalties, coal sales
contracts and deferred long-wall mining costs relating to such plant, property
and equipment;
(g) Indebtedness for industrial revenue bonds or other similar
governmental or municipal bonds for the deferred purchase price of newly
acquired Property and to finance equipment of any Borrower and its Subsidiaries
(pursuant to purchase money mortgages or otherwise and whether owed to the
seller or a third party) used in the ordinary course of business (provided that
such financing is entered into within 180 days of the acquisition of such
Property) of the Borrowers and its Subsidiaries which shall not exceed $50
million in the aggregate at any one time outstanding, and any refinancings of
Indebtedness permitted under this Section 6.01(g));
(h) Indebtedness in respect of workers' compensation claims,
reclamation, sales contracts, unemployment insurance or self-insurance
obligations, black lung or other types of social security benefits, performance
bonds, surety appeal or similar bonds and completion guarantees provided by a
Company in the ordinary course of its business;
(i) Contingent Obligations of any Loan Party in respect of Indebtedness
otherwise permitted under this Section 6.01;
(j) Indebtedness in respect of taxes, assessments or governmental
charges to the extent that payment thereof shall not at the time be required to
be made in accordance with Section 5.05;
(k) Indebtedness in respect of netting services and overdraft
protections in connection with deposit accounts, in each case in the ordinary
course of business,
(l) Indebtedness assumed or acquired pursuant to a Permitted
Acquisition;
(m) Indebtedness pursuant to letters of credit not issued under this
Agreement and used to support any obligations in respect of unemployment
insurance, black lung or other types of social security benefits, other
insurance or self insurance arrangements, reclamation, the performance of bids,
tenders, statutory obligations, sales, leases, contracts (other than for the
repayment of borrowed money) and surety, appeal, customs, performance or return
of money bonds and workers' compensation or other types of social security
benefits or to secure the performance of statutory obligations, surety, appeal
and other similar obligations up to an aggregate principal amount not to exceed
$175 million at any time;
(n) a sale and leaseback transaction permitted pursuant to Section 6.03
to the extent that such transaction would constitute Indebtedness; provided that
the Net Cash Proceeds of such Indebtedness are applied to the Obligations to the
extent required by Section 2.10(c);
(o) other unsecured Indebtedness (not of the type covered in clauses
(a) - (n) above) of any Company in the aggregate amount not to exceed $25
million; and
(p) other unsecured Indebtedness (not of the type covered in clauses
(a) - (o) above) of any Company, provided that, in each case, such other
unsecured Indebtedness has a later final maturity and longer weighted average
99
life than the Indebtedness incurred pursuant to this Agreement and the other
Loan Documents and the covenants, events of default, subordination and other
provisions thereof (including any guarantees thereof) shall be otherwise
reasonably satisfactory to the Administrative Agent.
SECTION 6.02 Liens. Create, incur, assume or permit to exist, directly or
indirectly, any Lien on any Property now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except (the
"Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or delinquent and Liens for taxes, assessments or
governmental charges or levies, which (i) are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings (or orders entered in connection with
such proceedings) have the effect of preventing the forfeiture or sale of the
Property or assets subject to any such Lien to the extent such forfeiture or
sale could reasonably be expected to have a Material Adverse Effect, or (ii) in
the case of any such charge or claim which has or may become a Lien against any
of the Collateral, such Lien and the contest thereof shall satisfy the Contested
Collateral Lien Conditions;
(b) Liens in respect of Property of any Company imposed by law, which
were incurred in the ordinary course of business and do not secure Indebtedness
for borrowed money, such as carriers', warehousemen's, materialmen's,
landlords', lessors', workmen's, suppliers', repairmen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business, and (i)
which do not in the aggregate materially detract from the value of the Property
of the Companies, taken as a whole, and do not materially impair the use thereof
in the operation of the business of the Companies, taken as a whole, (ii) which
do not pertain to Indebtedness that is due and payable or which pertain to Liens
that are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, which
proceedings (or orders entered in connection with such proceedings) have the
effect of preventing the forfeiture or sale of the Property or assets subject to
any such Lien, and (iii) in the case of any such Lien which has or may become a
Lien against any of the Collateral, such Lien and the contest thereof shall
satisfy the Contested Collateral Lien Conditions;
(c) Liens in existence on the Closing Date and set forth on Schedule
6.02(c); provided that (i) the aggregate principal amount of the Indebtedness,
if any, secured by such Liens does not increase; and (ii) such Liens do not
encumber any Property other than the Property subject thereto on the Closing
Date;
(d) any matters that are or would be shown on an accurate survey, any
encumbrances arising by reason of zoning restrictions, any and all matters and
exceptions to title that would be reflected on a title insurance commitment or
in a lawyer's title opinion (excluding any Liens securing indebtedness or other
monetary obligation, such as a judgment lien or mortgage lien) including,
without limitation, easements, rights-of-way, restrictions (including zoning
100
restrictions), covenants, encroachments, protrusions and other similar charges
or encumbrances, and minor title deficiencies on or with respect to any Real
Property, in each case whether now or hereafter in existence, not (i) securing
Indebtedness, (ii) individually or in the aggregate materially impairing the
value or marketability of such Real Property and (iii) individually or in the
aggregate materially interfering with the conduct of the business of the
Companies at such Real Property;
(e) Liens arising out of judgments or awards not resulting in a
Default;
(f) Liens incurred on deposits made in the ordinary course of business
in connection with unemployment insurance or to secure the performance of bids,
tenders, sales, leases, contracts (other than for the repayment of borrowed
money) and customs, performance or return-of-money bonds and similar
obligations;
(g) Liens arising under any contract mining agreements, dedication of
reserves agreements (but only to the extent that the party for whom the reserves
are dedicated would not have a higher priority claim in a bankruptcy proceeding
of a Company than the Collateral Agent on behalf of the Secured Parties as to
the reserve which is the subject of any such agreement), leases or subleases
(other than leases with respect to Capital Lease Obligations) with respect to
the assets or properties of any Company, in each case entered into in the
ordinary course of such Company's business so long as such Liens do not,
individually or in the aggregate, (i) interfere in any material respect with the
ordinary conduct of the businesses of the Loan Parties, taken as a whole, or any
Borrower, and (ii) attach to any Collateral.
(h) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods entered into by any Company (x) in
the ordinary course of business in accordance with the past practices of such
Company with respect to Liens arising out of such arrangements for the sale of
goods that constitute Collateral and (y) in the ordinary course of business of
such Company with respect to Liens arising out of such arrangements for the sale
of goods that constitute all other Property;
(i) Liens arising pursuant to Purchase Money Obligations or Capital
Lease Obligations incurred pursuant to Section 6.01(f); provided that (i) the
Indebtedness secured by any such Lien (including refinancings thereof) does not
exceed 100% of the cost of the Property being acquired or leased at the time of
the incurrence of such Indebtedness and (ii) any such Liens attach only to the
Property being financed pursuant to such Purchase Money Obligations or Capital
Lease Obligations and do not encumber any other Property of any Company;
(j) bankers' Liens, rights of setoff and other similar Liens existing
solely with respect to cash and Cash Equivalents on deposit in one or more
accounts maintained by any Company, in each case granted in the ordinary course
of business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank with respect to cash management
and operating account arrangements, including those involving pooled accounts
and netting arrangements; provided that in no case shall any such Liens secure
(either directly or indirectly) the repayment of any Indebtedness;
(k) Liens on Property of a Person existing at the time such Person is
acquired or merged with or into or consolidated with any Company in a Permitted
Acquisition (and not created in anticipation or contemplation thereof) so long
as such merger or acquisition is permitted pursuant to Section 6.05; provided
101
that such Liens do not extend to Property not subject to such Liens at the time
of acquisition (other than improvements thereon) and are no more favorable to
the lienholders than the existing Lien and any such Indebtedness is permitted
under Section 6.01;
(l) [Intentionally Omitted]
(m) Liens granted pursuant to the Security Documents;
(n) licenses or sublicenses of Intellectual Property granted by any
Company in the ordinary course of business and not interfering in any material
respect with the ordinary conduct of the business of such Company;
(o) Liens attaching solely to cash earnest money deposits in connection
with any letter of intent or purchase agreement in connection with a Permitted
Acquisition; provided that such cash earnest money deposits shall total no more
than ten per cent (10%) of the total anticipated Acquisition Consideration;
(p) Liens in favor of customs and revenues authorities which secure
payment of customs duties in connection with the importation of goods to the
extent required by law;
(q) Liens deemed to exist in connection with set-off rights in the
ordinary course of any Company's business;
(r) replacement, extension or renewal of any Lien permitted herein in
the same property previously subject thereto provided the underlying
Indebtedness is permitted to be replaced, extended and renewed under Section
6.01(b);
(s) the filing of financing statements solely in connection with
operating leases permitted hereunder or consignments of goods;
(t) Liens (other than any Lien imposed by ERISA) on cash or Cash
Equivalents (i) securing letters of credit supporting obligations of the
Companies in respect of unemployment insurance, black lung or other types of
social security benefits, other insurance or self insurance arrangements,
reclamation, the performance of bids, tenders, statutory obligations, sales,
leases, contracts (other than for the repayment of borrowed money) and surety,
appeal, customs, performance or return of money bonds and workers' compensation
or other types of social security benefits or to secure the performance of
statutory obligations, surety, appeal and other similar obligations and (ii)
incurred in the ordinary course of business on deposits (A) imposed by law in
connection with workers' compensation, unemployment insurance and other types of
social security, (B) to secure the performance of tenders, statutory obligations
(other than excise taxes), surety, stay, customs and appeal bonds, statutory
bonds, bids, leases, sales contracts (other than for the repayment of borrowed
money), performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money) or (C) arising by
virtue of such deposits made to secure liability for premiums to insurance
carriers; provided that with respect to Liens described clauses (ii)(A), (B) and
(C) hereof against any Collateral, such Lien and the contest thereof shall
satisfy the Contested Collateral Lien Conditions, up to in the case of clause
(i) and (ii) an aggregate principal amount not to exceed $225 million at any
time,
102
(u) Liens in the nature of royalties, dedications of reserves under
Coal Supply Agreements (but only to the extent that the party for whom the
reserves are dedicated would not have a higher priority claim in a bankruptcy
proceeding of a Company than the Collateral Agent on behalf of the Secured
Parties as to the reserve which is the subject of any such agreement) or similar
rights or interests granted, taken subject to or otherwise imposed on properties
consistent with normal practices in the mining industry;
(v) other Liens (not of a type set forth in clauses (a) through (u)
above) incurred in the ordinary course of business of any Company with respect
to obligations (including, without limitation, the Specified Swap Obligations
and any Capitalized Lease Obligations resulting from the conversion of operating
leases existing on December 1, 2003, but excluding any other Indebtedness) that
do not in the aggregate exceed $50 million at any time outstanding; provided
that such Liens permitted under this clause (v) do not attach to any Collateral;
(w) Liens on the Eastman Facility Assets and the Westvaco Facility
Assets, but not including any Lien on Collateral, and any Liens on Property
which is the subject of an interim arrangement of the type described in clause
(iii) of Section 6.03;
(x) Liens of sellers of goods with respect to reclamation rights as set
forth in Article 2 of the UCC;
(y) Liens of a collection bank as described and set forth in Section
4-210 of the UCC.
provided, however, that no Liens (other than Liens under the Security Documents
permitted under Section 6.02(a)(ii)) shall be permitted to exist, directly or
indirectly, on any Pledged Equity Interests or Pledged Notes (each as defined in
the Security Agreement).
SECTION 6.03 Sale and Leaseback Transactions. Enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
Property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such Property or other Property
which it intends to use for substantially the same purpose or purposes as the
Property being sold or transferred unless (i) the sale of such Property is
permitted by Section 6.05, (ii) any Liens arising in connection with its use of
such Property are permitted by Section 6.02 (iii) any acquisition of Property
made with the intention of leasing such Property from a third party, provided
such sale and leaseback occurs no later than 90 days following the date on which
such Property is first placed in service by the Company, and (iv) the lease and
any Indebtedness associated with such lease is otherwise permitted hereunder.
SECTION 6.04 Investment, Loan and Advances. Directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract (all of the
foregoing, collectively, "Investments"), except that the following shall be
permitted:
(a) Investments outstanding on the Closing Date and identified on
Schedule 6.04(b) and extensions, renewals or reinvestments of all or any portion
of the net proceeds received by the Companies in connection with such
103
investments, provided that any such reinvestment is an Investment otherwise
permitted hereunder and provided, further, that if the proceeds are received
from an Asset Sale, the right to reinvest such proceeds shall be limited to the
extent set forth in Section 2.10;
(b) the Companies may (i) acquire and hold accounts, payment
intangibles and chattel paper (each as defined in the UCC) owing to any of them
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary terms, (ii) acquire and hold cash and
Cash Equivalents held in an account with respect to which the Collateral Agent,
for the benefit of the Secured Parties, has a first priority perfected Lien,
(iii) endorse negotiable instruments for collection in the ordinary course of
business, (iv) make lease, utility and other similar deposits in the ordinary
course of business; or (v) make prepayments and deposits to suppliers in the
ordinary course of business;
(c) The Borrowers may enter into Interest Rate Protection Agreements to
the extent permitted by Section 6.01(c) and may enter into and perform its
obligations under Hedging Agreements entered into in the ordinary course of
business and so long as any such Hedging Agreement is not speculative in nature
and is (i) (A) related to income derived from foreign operations of any Company
or otherwise related to purchases permitted hereunder from foreign suppliers or
(ii) (B) entered into to protect such Companies against fluctuations in the
prices of raw materials used in their businesses and (ii) permitted by Section
6.01(d);
(d) any Loan Party may make intercompany loans and advances to any
other Loan Party (other than Holdings) that is a Wholly-Owned Subsidiary;
provided that such loan shall simultaneously be recorded on such Loan Party's
ledgers as an intercompany loan, provided further that (i) no Loan Party may
make loans to any Foreign Subsidiary pursuant to this paragraph (d) unless
permitted under Section 6.01(g) and (ii) any loans made pursuant to this
paragraph (d) shall be subordinated to the obligations of the Loan Parties and
may only be repaid in accordance with Section 6.07(b);
(e) each Borrower and its Subsidiaries may make loans and advances
(including payroll, travel and entertainment related advances) in the ordinary
course of business to their respective employees (other than any loans or
advances to any director or executive officer (or equivalent thereof) that would
be in violation of Section 402 of the Sarbanes-Oxley Act) so long as the
aggregate principal amount thereof at any time outstanding (determined without
regard to any write-downs or write-offs of such loans and advances) shall not
exceed $5 million;
(f) each Borrower and its Subsidiaries may sell or transfer amounts and
acquire assets to the extent permitted by Section 6.05;
(g) each Borrower may establish (i) Wholly Owned Subsidiaries to the
extent permitted by Section 6.12 and (ii) non-Wholly Owned Subsidiaries and/or
joint ventures to the extent that Investments in such non-Wholly Owned
Subsidiaries and/or joint ventures shall not exceed $25 million at any time
outstanding, after taking into account amounts returned in cash (including upon
disposition);
(h) Investments (other than as described in Section 6.04(e)) (i) by any
Borrower in any Guarantor that is a Subsidiary, (ii) by any Company in any
104
Borrower or any Guarantor that is a Subsidiary, (iii) by Holdings in any
Borrower, (iv) by a Guarantor in another Guarantor, and (v) by any Loan Party in
a Company that is not a Loan Party; provided, however, that the aggregate amount
of all Investments permitted pursuant to this clause (v) shall not exceed $25
million at any time;
(i) Investments in securities of trade creditors or customers in the
ordinary course of business and consistent with such Company's past practices
that are received in settlement of bona fide disputes or pursuant to any plan of
reorganization or liquidation or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers;
(j) Investments made by any Borrower or any Subsidiary as a result of
consideration received in connection with an Asset Sale made in compliance with
Section 6.05 and not required to be applied to the Obligations or the Senior
Notes;
(k) earnest money required in connection with and to the extent
permitted by Permitted Acquisitions;
(l) Loan Parties may hold Investments to the extent such Investments
reflect an increase in the value of Investments otherwise permitted under this
Section 6.04 hereof;
(m) Investments in deposit accounts opened in the ordinary course of
business provided such deposit accounts are subject to deposit account control
agreements if required hereunder;
(n) Any Loan Party may capitalize or forgive any Indebtedness owed to
it by other Loan Parties (except that no Borrower shall forgive intercompany
loans made to any other Loan Party);
(o) Investments in the nature of royalties, dedications of reserves
under Coal Supply Agreements or similar rights or interests granted, taken
subject to or otherwise imposed on properties consistent with normal practices
in the mining industry;
(p) each Borrower and its Subsidiaries may make or acquire Investments
in connection with Permitted Acquisitions;
(q) Investments not otherwise permitted hereby; provided that the
aggregate amount of all such Investments shall not exceed $25 million at any
time and to the extent that any Investment is made in the form of a contribution
of Property of a Loan Party, such Investment shall be calculated based on the
Fair Market Value of such Property; and
(r) Investments made by any Loan Party to the extent permitted and as
described in Section 6.06(e).
SECTION 6.05 Mergers, Consolidations, Sales of Assets and Acquisitions. Wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its Property or
assets, or purchase or otherwise acquire (in one or a series of related
transactions) any part of the Property or assets of any Person (or agree to do
any of the foregoing at any future time), except that:
105
(a) (i) purchases or other acquisitions of inventory, materials,
minerals, coal reserves, surface or other real estate, fixed assets, equipment
and intangible assets in the ordinary course of business shall be permitted,
(ii) the sale of the Eastman Facility Assets and the Westvaco Facility Assets
shall be permitted provided that such sales shall be for fair market value,
(iii) Asset Sales of used, worn out, obsolete or surplus Property (other than
mineral rights and reserves which may be surplus or non-strategic) by any
Company in the ordinary course of business, interim arrangements of the type
described in clause (iii) of Section 6.03, and the abandonment or other Asset
Sale of Intellectual Property that is, in the reasonable judgment of the
Administrative Borrower, no longer economically practicable to maintain or
useful in the conduct of the business of the Companies taken as a whole shall be
permitted and (iv) subject to Section 2.10(c), other Asset Sales (excluding
sales of accounts receivable of the Borrowers) not otherwise referred to herein
shall be permitted; provided that (A) no Default exists at the time of and after
giving effect to such Asset Sale, (B) such Asset Sale is for fair market value,
(C) with respect to Asset Sales of Property constituting Collateral, 75% of the
proceeds of such Asset Sale consist of cash or Cash Equivalents and (D)
aggregate consideration received in respect of all Asset Sales pursuant to this
clause (a)(iv) shall not exceed $30 million in any four consecutive fiscal
quarters of Holdings;
(b) Investments in connection with any such transaction may be made to
the extent permitted by Section 6.04;
(c) each Borrower and its Subsidiaries may sell Cash Equivalents and
use cash for purposes that are otherwise permitted by the terms of this
Agreement in the ordinary course of business;
(d) each Borrower and its Subsidiaries may grant licenses or easements
with respect to and lease or subleases (as lessee or lessor) real or personal
Property or coal, oil or gas reserves and may guaranty such lease, in each case,
in the ordinary course of business and in accordance with the applicable
Security Documents;
(e) each Borrower and its Subsidiaries may consummate Permitted
Acquisitions;
(f) any Loan Party may transfer Property or lease to or acquire or
lease Property from any Loan Party or any Company may be merged into any Loan
Party or any Wholly-Owned Subsidiary (as long as such Loan Party or such
Wholly-Owned Subsidiary is the surviving corporation of such merger and, in the
case of such Wholly-Owned Subsidiary, remains a Wholly Owned Subsidiary of
Holdings); provided that the Lien on and security interest in such Property
granted or to be granted in favor of the Collateral Agent under the Security
Documents shall be maintained or created in accordance with the provisions of
Section 5.11 or 5.12, as applicable;
(g) any Subsidiary (other than a Borrower) may dissolve, liquidate or
wind up its affairs at any time; provided that such dissolution, liquidation or
winding up, as applicable, could not reasonably be expected to have a Material
Adverse Effect;
106
(h) Asset Sales by any Company to any other Company shall be permitted;
provided that such Asset Sale involving a Subsidiary that it is not a Loan Party
shall be otherwise in compliance with this Section 6.05;
(i) discounts or forgiveness of account receivables in the ordinary
course of business or in connection with collection or compromise thereof shall
be permitted provided the account debtor is not an Affiliate;
(j) Permitted Liens (to the extent constituting a conveyance of
Property) shall be permitted;
(k) Loan Parties may merge with or into any other Loan Party so long as
any Borrower is the surviving entity in a merger with such Borrower; and
(l) sale of non strategic coal reserves up to $5 million during any
fiscal year and exchanges of coal, oil and gas reserves in the ordinary course;
provided that no Default exists at the time of and after giving effect to such
sale and 75% of the proceeds of such sale consist of cash and Cash Equivalents.
To the extent the Required Lenders waive the provisions of this Section 6.05
with respect to the sale of any Collateral, or any Collateral is sold, subject
to Section 11.02(b)(vii), as permitted by this Section 6.05, such Collateral
(unless sold to a Company) shall be sold free and clear of the Liens created by
the Security Documents, and the Administrative Agent and the Collateral Agent
shall take all actions deemed appropriate in order to effect the foregoing.
SECTION 6.06 Prepayments and Redemptions of Senior Notes; Dividends. Redeem or
otherwise prepay, directly or indirectly, any amounts under any of the Senior
Notes or authorize, declare or pay, directly or indirectly, any Dividends with
respect to any Company, except that:
(a) any Subsidiary of a Borrower (i) may pay cash Dividends to such
Borrower or any Wholly Owned Subsidiary of such Borrower and (ii) if such
Subsidiary is not a Wholly Owned Subsidiary of such Borrower, may pay cash
Dividends to its shareholders generally so long as such Borrower or its
Subsidiary which owns the equity interest or interests in the Subsidiary paying
such Dividends receives at least its proportionate share thereof (based upon its
relative holdings of equity interests in the Subsidiary paying such Dividends
and taking into account the relative preferences, if any, of the various classes
of equity interests in such Subsidiary);
(b) so long as no Default exists or would result therefrom, any Company
(other than Holdings) may pay Dividends, directly or indirectly, to Holdings for
the purpose of enabling Holdings to, and Holdings may promptly use such proceeds
to, repurchase outstanding shares of its common stock (or options to purchase
such common stock) following the death, disability, retirement or termination of
employment of employees, officers or directors of any Company; provided that (i)
all amounts used to effect such repurchases are obtained by Holdings from a
substantially concurrent issuance of its common stock (or options to purchase
such common stock) to other employees, members of management, executive officers
or directors of any Company or (ii) to the extent the proceeds used to effect
107
any repurchase pursuant to this clause (ii) are not obtained as described in
preceding clause (i), the aggregate amount of Dividends paid by Holdings
pursuant to this paragraph (b) (exclusive of amounts paid as described pursuant
to preceding clause (i)) shall not exceed $2.5 million in any fiscal year of
Holdings;
(c) so long as no Default exists or would result therefrom, any Company
(other than Holdings) may pay cash Dividends, directly or indirectly, to
Holdings for the purpose of paying, so long as all proceeds thereof are promptly
used by Holdings to pay, (i) its franchise taxes and operating expenses incurred
in the ordinary course of business and (ii) other corporate overhead costs and
expenses (including legal and accounting expenses and similar expenses and
customary fees to non-officer directors of Holdings) and (iii) upon 10 days
prior written notice by the Administrative Borrower to the Administrative Agent
of the payment of any Dividends under this clause (iii) by the applicable
Company, other liabilities, judgments and settlements required to be paid by
Holdings in an amount not to exceed $10 million in the aggregate in any fiscal
year of Holdings;
(d) any Company (other than Holdings) may pay cash Dividends, directly
or indirectly, to Holdings for the purpose of paying, so long as all the
proceeds thereof are promptly paid to, Holdings for the purpose of paying, so
long as all proceeds thereof are promptly used by Holdings to pay, its income
tax when and as due;
(e) so long as no Default exists or would result therefrom and Excess
Availability shall be no less than $30 million after giving effect thereto, any
Company (other than Holdings) may pay cash Dividends, directly or indirectly, to
Holdings for the purpose of purchasing or redeeming, so long as all the proceeds
thereof are promptly used by Holdings to purchase or redeem, any of the Senior
Notes;
(f) so long as no Default exists or would result therefrom and no
Borrower makes any cash Dividends for the purposes specified in this Section
6.06(f) prior to the date which is ten days prior to the date on which the
subsequent payment by Holdings is to be made or is required to be made, any
Company (other than Holdings) may, directly or indirectly, pay cash Dividends to
Holdings for the purpose of (i) paying cash Dividends on Holdings' common stock,
so long as all proceeds thereof are promptly used by Holdings to pay such cash
Dividends on Holdings' common stock, in an amount per year not to exceed $25
million or (ii) paying interest due, so long as all proceeds thereof are
promptly used by Holdings to pay such interest, pursuant to any of the Senior
Notes or (iii) paying any termination charges with respect to the Specified
Interest Rate Protection Agreement; and
(g) so long as no Default exists or would result therefrom, and Average
Excess Availability minus the Interest Reserve is no less than $30 million prior
to and Excess Availability minus the Interest Reserve is no less than $30
million immediately after giving effect thereto, any Company (other than
Holdings) may pay cash Dividends to Holdings, directly or indirectly, for the
purpose of, and Holdings shall promptly use such proceeds to, repurchase
outstanding shares of its common stock (or options to purchase such common
stock), provided that such Dividends may not be paid on any date prior to the
receipt by the Collateral Agent and the Administrative Agent of the financial
statements required to be delivered pursuant to Section 5.01(a) with respect to
Holdings' 2003 fiscal year.
108
SECTION 6.07 Transactions with Affiliates. Enter into, directly or indirectly,
any transaction or series of related transactions, whether or not in the
ordinary course of business, with any Affiliate of any Company (other than
between or among any Borrower and its Wholly-Owned Subsidiaries), other than in
the ordinary course of business and on terms and conditions substantially as
favorable to such Company as would reasonably be obtained by such Company at
that time in a comparable arm's-length transaction with a Person other than an
Affiliate, except that:
(a) Dividends may be paid to the extent provided in Section 6.06;
(b) loans may be made and other transactions may be entered into
between and among any Company and its Affiliates to the extent permitted by
Sections 6.01 and 6.04;
(c) customary fees may be paid to non-officer directors of Holdings and
customary indemnities may be provided to all directors of Holdings;
(d) each Borrower may pay management fees to Holdings from time to time
in an amount not in excess of Holdings' compensation expenses for its employees;
and
(e) any Borrower or any Subsidiary may make payments to Holdings
pursuant to the Specified Tax Sharing Agreement, the Tax Allocation Agreement
among Holdings and its Subsidiaries, dated as of December 31, 2003, or any other
Tax Sharing Agreement agreed to by the Administrative Agent;
SECTION 6.08 Financial Covenants.
(a) Minimum Fixed Charge Coverage Ratio. At any time Average Excess
Availability is less than $30 million, permit the Consolidated Fixed Charge
Coverage Ratio, as of any Test Period to be less than 1.00 to 1.00.
(b) Consolidated Net Worth. At any time Average Excess Availability is
less than $30 million, permit Consolidated Net Worth for any Test Period to be
less than $550 million.
SECTION 6.09 Limitation on Modifications of Indebtedness; Modifications of
Certificate of Incorporation, or Other Constitutive Documents, By-laws and
Certain Other Agreements, etc. Except to the extent not prohibited by clause
(iii) below, amend or modify, or permit the amendment or modification of, any
provision of existing Indebtedness or of any agreement (including any purchase
agreement, indenture, loan agreement or security agreement) relating thereto
other than any amendments or modifications to Indebtedness which do not in any
way materially adversely affect the interests of the Lenders and are otherwise
permitted under Section 6.01(b); (ii) except as otherwise expressly permitted by
this Agreement, make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of, or
any prepayment or redemption as a result of any asset sale, change of control or
similar event of, any indebtedness outstanding under any of the Senior Notes;
(iii) amend or modify, or permit the amendment or modification of, any provision
of any of the Senior Notes or any agreement (including any of the Senior Note
Documents) relating thereto if the effect of such amendment is to (A) increase
the interest rate on such Indebtedness, (B) change the dates upon which payments
or principal or interest are due on such Indebtedness other than to extend such
dates, (C) change any default or event of default other than to delete or make
less restrictive any default provision therein or add any covenants with respect
to such Indebtedness, (D) change the redemptions or prepayment provisions of
such Indebtedness other than to extend the dates therefore or to reduce the
premiums payable therewith, or (E) change or amend any other term of such other
amendment or modification would in any way materially adversely affect the
interests of the Lenders; or (iv) amend, modify or change its articles of
incorporation or other constitutive documents (including by the filing or
modification of any certificate of designation) or by-laws, or any agreement
entered into by it, with respect to its Equity Interests (including any
shareholders' agreement), or enter into any new agreement with respect to its
109
capital stock, other than any amendments, modifications, agreements or changes
pursuant to this clause (iv) or any such new agreements pursuant to this clause
(iv) which do not in any way materially adversely affect in any material respect
the interests of the Lenders; and provided that Subsidiaries of any Borrower may
issue Equity Interests as permitted under Section 6.11 and may amend articles of
incorporation or other constitutive documents to authorize such Equity
Interests.
SECTION 6.10 Limitation on Certain Restrictions on Subsidiaries. Directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends
or make any other distributions on its capital stock or any other interest or
participation in its profits owned by any Borrower or any other Subsidiary of
any Borrower, or pay any Indebtedness owed to any Borrower or any other
Subsidiary of any Borrower, (b) make loans or advances to any Borrower or any of
such Borrower's other Subsidiaries or (c) transfer any of its properties to any
Borrower or any of such Borrower's other Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law;
(ii) this Agreement and the other Loan Documents; (iii) the Senior Note
Documents in effect on the date hereof; (iv) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of a
Borrower or any Subsidiary of a Borrower; (v) customary provisions restricting
assignment of any agreement entered into by a Borrower or any Subsidiary of a
Borrower in the ordinary course of business; (vi) any holder of a Lien permitted
by Section 6.02 may restrict the transfer of the asset or assets subject
thereto; (vii) restrictions which are not more restrictive than those contained
in this Agreement contained in any documents governing any Indebtedness incurred
after the Closing Date in accordance with the provisions of this Agreement;
(viii) customary restrictions and conditions contained in any agreement relating
to the sale of any Property permitted under Section 6.05 pending the
consummation of such sale; (ix) any agreement in effect at the time such
Subsidiary is a Subsidiary of a Borrower, so long as such agreement was not
entered into in contemplation of such Person becoming a Subsidiary of a
Borrower; or (x) in the case of any joint venture which is not a Loan Party in
respect of any matters referred to in clauses (b) and (c) above, restrictions in
such Person's organizational or governing documents or pursuant to any joint
venture agreement or stockholders agreements solely to the extent of the Equity
Interests of or assets held in the subject joint venture or other entity.
SECTION 6.11 Limitation on Issuance of Capital Stock. No Borrower will, and will
not permit any Subsidiary, to issue any Equity Interest of any Subsidiary
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, Equity Interest of any Subsidiary,
110
except (i) for stock splits, stock dividends and additional Equity Interest
issuances which do not decrease the percentage ownership of any Borrower or any
Subsidiaries in any class of the Equity Interest of such Subsidiary; (ii)
Subsidiaries of any Borrower formed after the Closing Date pursuant to Section
6.12 may issue Equity Interests to such Borrower or the Subsidiary of such
Borrower which is to own such stock; and (iii) each Borrower may issue common
stock that is Qualified Capital Stock to Holdings. All Equity Interests issued
in accordance with this Section 6.11 shall, to the extent required by Section
5.12 or the Security Agreement, be delivered to the Collateral Agent for pledge
pursuant to the Security Agreement.
SECTION 6.12 Limitation on Creation of Subsidiaries. Establish, create or
acquire any additional Subsidiaries without the prior written consent of the
Required Lenders; provided that each Borrower may (a) establish or create one or
more Wholly Owned Subsidiaries of such Borrower or one of its Wholly Owned
Subsidiaries without such consent so long as (i) 100% of the Equity Interest of
any new Subsidiary is upon the creation or establishment of any such new
Subsidiary (or, in the case of Foreign Subsidiaries if such pledge would have a
material adverse tax impact on such Borrower (determined at the reasonable
discretion of the Administrative Agent), 66%) pledged and delivered to the
Collateral Agent for the benefit of the Secured Parties under the Security
Agreement, (other than fund non-Wholly Owned Subsidiaries acquired in connection
with a Permitted Acquisition or pursuant to Investments pursuant to Section
6.04(h)); (ii) upon the creation or establishment of any such new Wholly Owned
Subsidiary, such Subsidiary becomes a party to the applicable Security Documents
and shall become a Guarantor hereunder and execute a Joinder Agreement and the
other Loan Documents all in accordance with Section 5.11(b) above and (iii) such
new Subsidiary is a Domestic Subsidiary and (b) establish or create one or more
non-Wholly Owned Subsidiaries in connection with Permitted Acquisitions and
Permitted Investments.
SECTION 6.13 Business.
(a) With respect to Holdings, engage in any business activities or have any
assets or liabilities, other than (i) its ownership of the Equity Interests of
Administrative Borrower, (ii) obligations under the Loan Documents or the Senior
Note Documents and other Indebtedness permitted under this Agreement, (iii)
paying taxes, (iv) preparing reports to Governmental Authorities and to its
shareholders, and (v) holding directors and shareholders meetings, preparing
corporate records and other corporate activities required to maintain its
separate corporate structure.
(b) With respect to the Borrowers and their Subsidiaries, engage (directly or
indirectly) in any business other than those businesses in which the Borrowers
and their Subsidiaries are engaged on the Closing Date, whether in connection
with a Permitted Acquisition or otherwise; provided that this Section shall not
preclude a Permitted Acquisition of an entity engaged in a Permitted Business or
the formation of a Subsidiary of Holdings to be engaged in a Permitted Business.
SECTION 6.14 [Intentionally Omitted].
111
SECTION 6.15 Fiscal Year. Change its fiscal year end to a date other than
December 31.
SECTION 6.16 Negative Pledges.
(a) Directly or indirectly enter into or assume any agreement (other
than this Agreement, any of the Senior Note Documents or any documents
evidencing any refinancing or renewal of Indebtedness evidenced by such Senior
Note Documents permitted hereunder or any new unsecured debt securities issued
and/or guaranteed solely by Holdings and/or by the Administrative Borrower
otherwise permitted by Section 6.01 and provided that the terms of any such
refinancing of such Senior Note Documents or new issuance of such unsecured debt
securities relating to the prohibitions of any creation or assumption of any
Lien upon Holdings' or Administrative Borrower's properties or assets shall be
no more restrictive on Holdings or the Administrative Borrower or more
disadvantageous to the Administrative Agent, the Collateral Agent and the
Lenders than the Indebtedness being refinanced) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, except for Property subject to purchase money security
interests, operating leases and capital leases.
(b) Except in connection with any Permitted Liens, directly or
indirectly create, incur, assume or suffer to exist any mortgage, deed of trust,
pledge, lien, security interest, hypothecation, assignment, deposit arrangement
or other preferential arrangement, charge or encumbrance (including without
limitation, any conditional sale, or other title retention agreement, or finance
lease) of any nature, upon or with respect to any Real Property, Equipment and
mineral rights of any of the Companies, now owned or hereafter acquired, or sign
or file under the Uniform Commercial Code of any jurisdiction a financing
statement which names any Borrower or any of its Subsidiaries as a debtor, or
sign any security agreement authorizing any secured party thereunder to file
such financing statement with respect to such Real Property, Equipment and
mineral rights.
SECTION 6.17 Lease Obligations. Create, incur, assume or suffer to exist any
obligations as lessee for the rental or hire of real or personal Property of any
kind under operating leases or under Capital Lease Obligations or Purchase Money
Obligations arising from any conversion of operating leases existing on December
1, 2003 to Capital Lease Obligations or Purchase Money Obligations if the
aggregate amount of all rents paid or accrued under such leases would exceed $85
million in any fiscal year of Holdings.
SECTION 6.18 Breach of Coal Supply Agreements, Mining Leases and Prep Plant
Leases. Neither Holdings nor any Borrower shall, nor shall they permit any of
their respective Subsidiaries to, permit any breach or default attributable to
them to exist beyond any applicable grace period under any Coal Supply
Agreement, Mining Lease or Prep Plant Lease or take or fail to take any action
thereunder, if to do so would reasonably be expected to have a Material Adverse
Effect.
SECTION 6.19 Intercompany Loans. No Loan Party shall evidence any intercompany
loan or advance to any other Loan Party by a promissory note unless such note is
in a form acceptable to the Collateral Agent and pledged to the Collateral Agent
in accordance with the Security Agreement.
112
SECTION 6.20 Specified Tax Sharing Agreement. No Loan Party shall take any
action which would result in a tax treatment of the Transactions (as defined in
the Specified Tax Sharing Agreement) that is inconsistent in any material
respect with the tax treatment of such Transactions as contemplated by the
Private Letter Ruling unless such action is required by law (including any rule,
regulation and administrative or judicial order promulgated thereunder) or the
Person taking the action has obtained the prior written consent of the other
parties to the Specified Tax Sharing Agreement.
ARTICLE VII.
GUARANTEE
SECTION 7.01 The Guarantee. The Guarantors and each of the Borrowers hereby
jointly and severally guarantee as a primary obligor and not as a surety to each
Secured Party and their respective successors and assigns the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
principal of and interest (including any interest, fees, costs or charges that
would accrue but for the provisions of Title 11 of the United States Code after
any bankruptcy or insolvency petition under Title 11 of the United States Code)
on the Loans made by the Lenders to, and the Notes held by each Lender of, the
Borrowers, and all other Obligations from time to time owing to the Secured
Parties by any Loan Party under any Loan Document or Interest Rate Protection
Agreement relating to the Loans, in each case strictly in accordance with the
terms thereof (such obligations being herein collectively called the "Guaranteed
Obligations"). The Guarantors and each Borrower hereby jointly and severally
agree that if any Borrower or other Guarantor(s) shall fail to pay in full when
due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Guarantors and Borrowers will promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.
SECTION 7.02 Obligations Unconditional. The obligations of the Guarantors under
Section 7.01 shall constitute a guaranty of payment and are absolute,
irrevocable and unconditional, joint and several, irrespective of the value,
genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of the Borrowers under this Agreement, the Notes, if any, or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
Guarantor (except for payment in full). Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantors and the Borrowers
hereunder which shall remain absolute, irrevocable and unconditional under any
and all circumstances as described above:
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document or any other
agreement, document or instrument to which a Borrower is or may become a party;
113
(b) the absence of any action to enforce this Agreement or any other
Loan Document or the waiver or consent by Administrative Agent and Lenders with
respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Administrative Agent and Lenders in respect thereof (including
the release of any such security);
(d) the insolvency of any Borrower or any other Guarantor;
(e) at any time or from time to time, without notice to the Guarantors
or the Borrowers, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(f) any of the acts mentioned in any of the provisions of this
Agreement or the Notes, if any, or any other agreement or instrument referred to
herein or therein shall be done or omitted;
(g) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be amended in any
respect, or any right under the Loan Documents or any other agreement or
instrument referred to herein or therein shall be amended or waived in any
respect or any other guarantee of any of the Guaranteed Obligations or any
security therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
(h) any lien or security interest granted to, or in favor of, Issuing
Bank or any Lender or Agent as security for any of the Guaranteed Obligations
shall fail to be perfected;
(i) the release of any Borrower or any other Guarantor; or
(j) any other action or circumstances that might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor (other than
indefeasible payment in full in cash of all Obligations and the termination of
all Commitments).
The Guarantors and the Borrowers hereby expressly waive diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that any Loan Party thereof exhaust any right, power or remedy or
proceed against any Borrower under this Agreement or the Notes, if any, or any
other agreement or instrument referred to herein or therein, or against any
other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations. The Guarantors and the Borrowers waive any and all
notice of the creation, renewal, extension, waiver, termination or accrual of
any of the Guaranteed Obligations and notice of or proof of reliance by any
Secured Party upon this Guarantee or acceptance of this Guarantee, and the
Guaranteed Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Guarantee, and all
dealings between the Borrowers and the Secured Parties shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. This Guarantee shall be construed as a continuing, absolute,
irrevocable and unconditional guarantee of payment without regard to any right
of offset with respect to the Guaranteed Obligations at any time or from time to
time held by Secured Parties, and the obligations and liabilities of the
Guarantors and the Borrowers hereunder shall not be conditioned or contingent
upon the pursuit by the Secured Parties or any other Person at any time of any
right or remedy against any Borrower or against any other Person which may be or
become liable in respect of all or any part of the Guaranteed Obligations or
against any collateral security or guarantee therefor or right of offset with
114
respect thereto. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantors
and the Borrowers and the successors and assigns thereof, and shall inure to the
benefit of the Lenders, and their respective successors and assigns,
notwithstanding that from time to time during the term of this Agreement there
may be no Guaranteed Obligations outstanding.
SECTION 7.03 Reinstatement. The obligations of the Guarantors and the Borrowers
under this Article VII shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of the Borrowers or other Loan
Party in respect of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise. The Guarantors
and the Borrowers jointly and severally agree that they will indemnify each
Secured Party on demand for all reasonable costs and expenses (including
reasonable fees of counsel) incurred by such Secured Party in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law, other than any costs or expenses resulting from the
bad faith or willful misconduct of such Secured Party.
SECTION 7.04 Subrogation; Subordination. Each Guarantor and Borrower hereby
agrees that until the indefeasible payment and satisfaction in full in cash of
all Guaranteed Obligations and the expiration and termination of the Commitments
of the Lenders under this Agreement it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee in Section 7.01,
whether by subrogation or otherwise, against any Borrower or any other Guarantor
of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations. The payment of any amounts due with respect to any Indebtedness of
any Borrower or any other Guarantor (or any such Borrower) now or hereafter
owing to any Guarantor or any Borrower by reason of any payment by such
Guarantor under the Guarantee in this Article VII is hereby subordinated to the
prior indefeasible payment in full in cash of the Guaranteed Obligations. In
addition, any Indebtedness of the Guarantors now or hereafter held by any
Guarantor is hereby subordinated in right of payment in full in cash to the
Guaranteed Obligations. Each Guarantor and each Borrower agrees that it will not
demand, sue for or otherwise attempt to collect any such Indebtedness of any
Borrower to such Guarantor or such other Borrower until the Obligations shall
have been indefeasibly paid in full in cash. If, notwithstanding the foregoing
sentence, any Guarantor shall prior to the indefeasible payment in full in cash
of the Guaranteed Obligations collect, enforce or receive any amounts in respect
of such Indebtedness, such amounts shall be collected, enforced and received by
such Guarantor or such Borrower as trustee for the Secured Parties and be paid
over to Administrative Agent on account of the Guaranteed Obligations without
affecting in any manner the liability of such Guarantor or such Borrower under
the other provisions of the guaranty contained herein.
SECTION 7.05 Remedies. The Guarantors and the Borrowers jointly and severally
agree that, as between the Guarantors, the Borrowers and the Lenders, the
obligations of the Borrowers under this Agreement and the Notes, if any, may be
115
declared to be forthwith due and payable as provided in Article VIII (and shall
be deemed to have become automatically due and payable in the circumstances
provided in said Article VIII) for purposes of Section 7.01, notwithstanding any
stay, injunction or other prohibition preventing such declaration (or such
obligations from becoming automatically due and payable) as against any Borrower
and that, in the event of such declaration (or such obligations being deemed to
have become automatically due and payable), such obligations (whether or not due
and payable by any Borrower) shall forthwith become due and payable by the
Guarantors for purposes of Section 7.01.
SECTION 7.06 Instrument for the Payment of Money. Each Guarantor and Borrower
hereby acknowledges that the guarantee in this Article VII constitutes an
instrument for the payment of money, and consents and agrees that any Lender or
Agent, at its sole option, in the event of a dispute by such Guarantor (or such
Borrower) in the payment of any moneys due hereunder, shall have the right to
bring a motion-action under New York CPLR Section 3213.
SECTION 7.07 Continuing Guarantee. The guarantee in this Article VII is a
continuing guarantee of payment, and shall apply to all Guaranteed Obligations
whenever arising.
ARTICLE VIII.
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on any Loan or
any Fee or any other amount (other than an amount referred to in (a) above) due
under any Loan Document, when and as the same shall become due and payable, and
such default shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made in or in
connection with any Loan Document or the Borrowings or issuances of Letters of
Credit hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made, deemed made
or furnished; it being recognized by Lenders, however, that projections as to
future events are not to be viewed as facts and that the actual results during
the period or periods covered by said projections may differ from the projected
results;
(d) default shall be made in the due observance or performance by any
Company of any covenant, condition or agreement contained in Section 5.02, 5.03,
5.04 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by any
Company of any covenant, condition or agreement contained in any Loan Document
116
(other than those specified in (a), (b) or (d) above) and such default shall
continue unremedied or shall not be waived for a period of 30 days after written
notice thereof from the Administrative Agent or any Lender to any Borrower;
(f) any Company shall (i) fail to pay any principal or interest,
regardless of amount, due in respect of any Indebtedness (other than the
Obligations), when and as the same shall become due and payable, or (ii) fail to
observe or perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such Indebtedness if the
effect of any failure referred to in clauses (i) and (ii) is to cause, or to
permit the holder or holders of such Indebtedness or a trustee on its or their
behalf (with or without the giving of notice, the lapse of time or both) to
cause, such Indebtedness to become due prior to its stated maturity; provided,
that it shall not constitute an Event of Default pursuant to this paragraph (f)
unless the aggregate amount of all such Indebtedness referred to in clauses (i)
and (ii) exceeds $25 million at any one time;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Company, or of a substantial part of the Property or assets of
any Company, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law; (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any
Company or for a substantial part of the Property or assets of any Company; or
(iii) the winding-up or liquidation of any Company; and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(h) any Company shall (i) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other federal, state or foreign
bankruptcy, insolvency, receivership or similar law; (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (g) above; (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Company or for a substantial part of the
Property or assets of any Company; (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding; (v) make a
general assignment for the benefit of creditors; (vi) become unable (after
taking into account all rights of contribution), admit in writing its inability
or fail generally to pay its debts as they become due; (vii) take any action for
the purpose of effecting any of the foregoing; or (viii) wind up or liquidate;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $25 million, to the extent not bonded or paid or covered by
an insurance policy issued by an insurance company reasonably acceptable to the
Administrative Agent that has admitted in writing its liability to pay the full
amount of such judgment, shall be rendered against any Company or any
combination thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to levy upon assets or
properties of any Company to enforce any such judgment;
117
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events, could
reasonably be expected to result in liability of any Company and its ERISA
Affiliates in an aggregate amount exceeding $25 million or the imposition of a
Lien on any assets of a Company;
(k) any security interest and Lien purported to be created by any
Security Document shall cease to be in full force and effect, or shall cease to
give the Collateral Agent, for the benefit of the Secured Parties, the Liens,
rights, powers and privileges purported to be created and granted under such
Security Documents (including a perfected first priority security interest in
and Lien on, all of the Collateral thereunder (except as otherwise expressly
provided in such Security Document)) in favor of the Collateral Agent, or shall
be asserted by any Borrower or any other Loan Party not to be, a valid,
perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in or Lien on the
Collateral covered thereby;
(l) the Guarantees shall cease to be in full force and effect, unless
in connection with the sale, merger or dissolution of a Guarantor to the extent
permitted under Section 6.05 hereof;
(m) any Loan Document or any material provisions thereof shall at any
time and for any reason be declared by a court of competent jurisdiction to be
null and void, or a proceeding shall be commenced by any Loan Party or any other
Person, or by any Governmental Authority, seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or any Loan Party shall repudiate or deny that it has any
liability or obligation for the payment of principal or interest or other
obligations purported to be created under any Loan Document;
(n) there shall have occurred a Change in Control;
(o) there shall have occurred the termination of any one or more
Material Agreements;
(p) any Loan Party shall be prohibited or otherwise restrained from
conducting the business theretofore conducted by it in any manner that has or
could reasonably be expected to result in a Material Adverse Effect by virtue of
any determination, ruling, decision, decree or order of any court or
Governmental Authority of competent jurisdiction; or
(q) the indictment by any Governmental Authority of any Loan Party as
to which any Loan Party or the Administrative Agent receives notice as to which
there is a reasonable probability of an adverse determination, in the good faith
determination of the Administrative Agent, under any criminal statute, or
commencement of criminal proceedings against any Loan Party pursuant to which
statute or proceedings the penalties or remedies sought or available include
forfeiture of (i) any of the Collateral having a value in excess of $1 million
or (ii) any other Property of any Loan Party which is necessary or material to
the conduct of its business if the forfeiture of such other Property could
reasonably be expected to occur and have a Material Adverse Effect;
then, and in every such event (other than an event with respect to Holdings,
Borrower described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to Administrative Borrower,
118
take either or both of the following actions, at the same or different times:
(i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrowers accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by each Borrower
and the Guarantors, anything contained herein or in any other Loan Document to
the contrary notwithstanding; and in any event with respect to Holdings, or any
Borrower described in paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by each Borrower and the Guarantors, anything contained herein
or in any other Loan Document to the contrary notwithstanding.
ARTICLE IX.
COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS
SECTION 9.01 Accounts and Account Collections.
(a) Each Borrower shall notify Collateral Agent promptly of: (i) any
material delay in the performance by any Borrower of any of their material
obligations to any Account Debtor or the assertion of any material claims,
offsets, defenses or counterclaims by any Account Debtor, or any material
disputes with Account Debtors, or any settlement, adjustment or compromise
thereof, (ii) all material adverse information known to any Loan Party relating
to the financial condition of any Account Debtor and (iii) any event or
circumstance which, to any Loan Party's knowledge, would result in any Account
no longer constituting an Eligible Account. Each Borrower hereby agrees not to
grant to any Account Debtor any credit, discount, allowance or extension, or to
enter into any agreement for any of the foregoing, without Collateral Agent's
consent, except in the ordinary course of business in accordance with practices
and policies previously disclosed in writing to Collateral Agent. So long as no
Event of Default exists or has occurred and is continuing, each Borrower may
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
Account Debtor. At any time that an Event of Default exists or has occurred and
is continuing, Collateral Agent shall, at its option, have the exclusive right
to settle, adjust or compromise any claim, offset, counterclaim or dispute with
Account Debtors of any Loan Party or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Collateral Agent or schedule thereof delivered to Collateral Agent
shall be true and complete in all material respects, (ii) no payments shall be
made thereon except payments immediately delivered to Collateral Agent pursuant
to the terms of this Agreement or any applicable Security Document (to the
extent so required), (iii) there shall be no setoffs, deductions, contras,
119
defenses, counterclaims or disputes existing or asserted with respect thereto
except as reported to Collateral Agent and promptly reflected in the reporting
of the Borrowing Base, in accordance with the terms of this Agreement, and (iv)
none of the transactions giving rise thereto will violate any applicable laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.
(c) Collateral Agent shall have the right at any time or times, in
Collateral Agent's name or in the name of a nominee of Collateral Agent, to
verify the validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, e-mail, facsimile transmission or otherwise. To
facilitate the exercise of the right described in the immediately preceding
sentence, each Borrower hereby agrees to provide Collateral Agent upon request
the name and address of each Account Debtor of any Borrower.
(d) Each Sales Company and the Administrative Borrower shall each
establish and maintain, at its sole expense blocked accounts or lockboxes and
related deposit accounts, which, on the Closing Date, shall consist of account
201366827 maintained by SunTrust Bank, accounts 206261-0705252 and 2018412470603
and related lockboxes maintained by Wachovia Bank, National Association and
accounts 1001342736 and 1010938611 and related lockboxes maintained by PNC Bank,
National Association (in each case, "Blocked Accounts"), as Administrative Agent
may specify, with such banks as are acceptable to Administrative Agent into
which the Administrative Borrower and the Sales Companies shall promptly deposit
and direct their respective Account Debtors to directly remit all payments on
Accounts and all payments constituting proceeds of Inventory or other Collateral
in the identical form in which such payments are made, whether by cash, check or
other manner and shall be identified and segregated from all other funds of the
Loan Parties. The Administrative Borrower and the Sales Companies shall deliver,
or cause to be delivered, to Administrative Agent a Deposit Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account for the benefit of the Administrative Borrower or any Sales Company is
maintained, and by each bank where any other deposit account is from time to
time maintained. The Administrative Borrower and each Sales Company shall
execute and deliver such agreements and documents as Administrative Agent may
require in connection with such Blocked Accounts and such Deposit Account
Control Agreements. Except as permitted by Section 9.01(e)(iii), neither the
Administrative Borrower nor any Sales Company shall establish any deposit
accounts after the Closing Date, unless the Administrative Borrower or such
Sales Company (as applicable) has complied in full with the provisions of this
Section 9.01 with respect to such deposit accounts. The Administrative Borrower
and each Sales Company agrees that all payments made to such Blocked Accounts or
other funds received and collected by Administrative Agent or any Lender,
whether in respect of the Accounts, as proceeds of Inventory or other Collateral
or otherwise shall be treated as payments to Administrative Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of
Administrative Agent and Lenders to the extent of the then outstanding
Obligations.
(e) The Administrative Borrower and each Sales Company shall maintain a
cash management system which is acceptable to the Administrative Agent (the
"Cash Management System"). The Cash Management System shall contain, among other
things, the following:
(i) With respect to the Blocked Accounts of the Administrative
Borrower and each Sales Company, the applicable bank maintaining such Blocked
Accounts shall agree, pursuant to the applicable Deposit Account Control
120
Agreement, from and after the receipt of a notice (an "Activation Notice") from
the Administrative Agent (which Activation Notice may be given by Administrative
Agent at any time Excess Availability is less than $15.0 million or a Default or
Event of Default shall exist), to forward daily all amounts in each Blocked
Account to one Blocked Account designated as the concentration account in the
name of Administrative Borrower (the "Concentration Account") at the bank that
shall be designated as the Concentration Account bank for the Borrowers (the
"Concentration Account Bank"), which, on the Closing Date, shall be account
201366827 maintained by SunTrust Bank, Richmond, Virginia. The Concentration
Account Bank shall agree, pursuant to the applicable Deposit Account Control
Agreement, to forward daily all amounts in the Concentration Account to the
account designated as the collection account (the "Collection Account") which
shall be under the exclusive dominion and control of the Administrative Agent;
which, on the Closing Date, shall be account WA793083002 maintained at the
Administrative Agent,
(ii) [Intentionally Omitted];
(iii) Any provision of this Section 9.01 to the contrary
notwithstanding, (A) Loan Parties may maintain payroll accounts and trust
accounts that are not a part of the Cash Management Systems provided that no
Loan Party shall accumulate or maintain cash in such accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements and (B) Loan
Parties may maintain payroll deposit accounts, trust deposit accounts,
withholding tax, employee benefit and other fiduciary deposit accounts and local
cash deposit accounts the thirty day average daily balance of which accounts
does not exceed $1.0 million in the aggregate as of any date of determination.
(f) The Administrative Agent shall apply all funds received in the
Collection Account on a daily basis to the repayment of (i) first, Fees and
reimbursable expenses of Agents then due and payable; (ii) second, to interest
then due and payable on all Loans, (iii) third, Overadvances, (iv) fourth, the
Swingline Loans, (v) fifth, ABR Revolving Loans, (vi) sixth, Eurodollar
Revolving Loans, together with all accrued and unpaid interest thereon
(excluding Eurodollar Revolving Loans (A) with respect to which the application
of such payment would result in the payment of the principal prior to the last
day of the relevant Interest Period and (B) which Administrative Borrower elects
to continue pursuant to Section 2.08(b)), and (vii) last, other amounts which
are due, in each case without a reduction in the Commitments; all further funds
received in the Collection Account shall, unless an Event of Default has
occurred and is continuing, be transferred or applied by the Administrative
Agent in accordance with the directions of the Administrative Borrower or the
respective Sales Company. If an Event of Default has occurred and is continuing,
the Administrative Agent shall not transfer or apply any such funds from the
Collection Account in accordance with such directions from the Administrative
Borrower or such respective Sales Company unless the Administrative Agent shall
have determined to release such funds to the Administrative Borrower and the
Sales Companies. Absent any such determination by the Administrative Agent, all
such funds in the Collection Account shall be transferred to the Specified
Borrowing Base Account to be applied to the Eurodollar Revolving Loans on the
last day of the relevant Interest Period of such Eurodollar Revolving Loan or to
the Obligations as they come due (whether at stated maturity, by acceleration or
otherwise). If consented to by the Administrative Agent, the Collateral Agent
and the Required Lenders, such funds in the Specified Borrowing Base Account may
be released to the Borrowers.
121
(g) Each Borrower and its directors, employees, agents and other
Affiliates shall, acting as trustee for Administrative Agent, receive, as the
property of Administrative Agent, any monies, checks, notes, drafts or any other
payment relating to and/or proceeds of Accounts, Inventory or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to the
Administrative Agent. In no event shall the same be commingled with any
Borrower's own funds. Each Borrower agrees to reimburse Administrative Agent on
demand for any amounts owed or paid to any bank at which a Blocked Account is
established or any other bank or Person involved in the transfer of funds to or
from the Blocked Accounts arising out of the Administrative Agent's payments to
or indemnification of such bank or Person.
(h) At any time after the delivery of an Activation Notice as described
in Section 9.01(e)(i) and once the Administrative Agent shall have received
evidence satisfactory to it that Average Excess Availability for either (i) each
of the three (3) 30-day periods ending on or about the date of determination is
greater than $30.0 million or (ii) each of the six (6) 30-day periods ending on
or about the date of determination is greater than $15.0 million, and provided
no Default or Event of Default shall then exist, the Administrative Agent shall
send a notice to each applicable bank that received an Activation Notice to the
effect that the required daily sweeps shall be stopped and the Administrative
Borrower or the applicable Sales Company may have access to the applicable
accounts in accordance with the applicable Deposit Account Control Agreement
until another Activation Notice is received by such banks.
SECTION 9.02 Inventory and Accounts. (a) The Borrowers shall at all times
maintain records of Inventory and Accounts reasonably satisfactory to Collateral
Agent, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, the cost therefor and daily withdrawals
therefrom and additions thereto; (b) the Collateral Agent's officers, employees
or agents shall have the right, at any time or times, in the name of the
Collateral Agent any designee of the Collateral Agent or any Borrower, to verify
the validity, amount or any other matter relating to Accounts or Inventory by
mail, telephone, electronic communication, personal inspection or otherwise and
to conduct field audits of the financial affairs and Collateral of the Loan
Parties, and the Borrowers shall cooperate fully with the Collateral Agent in an
effort to facilitate and promptly conclude any such verification process; (c)
the Loan Parties shall cooperate fully with the Collateral Agent and its agents
with respect to granting access to any premises of such Loan Party where
Collateral is located for the purpose of inspecting, removing or otherwise
enforcing any rights or remedies pursuant to the Loan Documents and during all
Collateral field audits which shall be at the expense of the Borrowers and shall
122
be conducted three times a year and Inventory Appraisals which shall be at the
expense of the Borrowers and shall be conducted semi-annually, or, in each case,
following the occurrence and during the continuation of an Event of Default,
more frequently at Collateral Agent's reasonable request; (d) no Borrower shall
sell Inventory to any customer on approval, or any other basis which entitles
the customer to return (except for the right of customers for Inventory which is
defective or non-conforming) or may obligate any Loan Party to repurchase such
Inventory; and (e) each Borrower shall keep the Inventory in good and marketable
condition.
SECTION 9.03 Application of Proceeds. The proceeds received by the
Administrative Agent or the Collateral Agent in respect of any sale of,
collection from or other realization upon all or any part of the Collateral
pursuant to the exercise by the Administrative Agent or the Collateral Agent, as
applicable, of its remedies shall be applied, together with any other sums then
held by the Administrative Agent pursuant to this Agreement, promptly by the
Administrative Agent or the Collateral Agent as follows:
(a) First, to the payment of all reasonable costs and expenses, fees,
commissions and taxes of such sale, collection or other realization including,
without limitation, compensation to the Administrative Agent or the Collateral
Agent and their agents and counsel, and all expenses, liabilities and advances
made or incurred by the Administrative Agent or the Collateral Agent in
connection therewith, together with interest on each such amount at the highest
rate then in effect under this Agreement from and after the date such amount is
due, owing or unpaid until paid in full;
(b) Second, to the payment of all other reasonable costs and expenses
of such sale, collection or other realization including, without limitation,
costs and expenses and all costs, liabilities and advances made or incurred by
the other Secured Parties in connection therewith, together with interest on
each such amount at the highest rate then in effect under this Agreement from
and after the date such amount is due, owing or unpaid until paid in full;
(c) Third, without duplication of amounts applied pursuant to
paragraphs (a) and (b) above, to the indefeasible payment in full in cash, of
each Secured Party's Default Allocation Percentage of interest, principal and
other amounts constituting Obligations (excluding any Hedging Obligation),
equally and ratably in accordance with each Secured Party's Default Allocation
Percentage of such amounts;
(d) Fourth, to the indefeasible payment in full in cash, of interest,
principal and other amounts constituting Hedging Obligations equally and ratably
in accordance with the amounts owed to each of the applicable counterparties;
and
(e) Fifth, the balance, if any, to the Person lawfully entitled thereto
(including the applicable Loan Party or its successors or assigns).
In the event that any such proceeds are insufficient to pay in full the
items described in clauses (a) through (d) of this Section 9.03, the Loan
Parties shall remain liable for any deficiency.
123
ARTICLE X.
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
SECTION 10.01 Appointment.
(a) Each Lender hereby irrevocably designates and appoints UBS as the
Administrative Agent under this Agreement and the other Loan Documents, and each
Lender irrevocably authorizes UBS, in its capacity as the Administrative Agent,
in such capacity, to take such actions on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers as are
expressly delegated to the Administrative Agent by the terms of this Agreement
and the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
(b) Each Secured Party hereby irrevocably designates and appoints The
CIT Group/Business Credit, Inc. as the Collateral Agent under this Agreement and
the other Loan Documents, and each Lender irrevocably authorizes The CIT
Group/Business Credit, Inc., in its capacity as the Collateral Agent, in such
capacity, to take such actions on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers as are
expressly delegated to the Collateral Agent by the terms of this Agreement and
the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto. Except as otherwise provided herein, Collateral
Agent shall hold all Collateral and all payments of principal, interest, fees,
charges and expenses received pursuant to this Agreement or any of the Loan
Documents for the benefit of Secured Parties and shall enforce the rights in the
Collateral on behalf of the Secured Parties.
(c) Each Secured Party authorizes and directs the Collateral Agent to
enter into the Security Documents and other Loan Documents for the benefit of
Secured Parties. The Collateral Agent is hereby authorized on behalf of all
Secured Parties, without the necessity of any notice to or further consent from
any Secured Party to take any action with respect to any Collateral or the
Security Documents or the other Loan Documents which may be necessary to perfect
and maintain perfected the security interest in and liens upon the Collateral
granted pursuant to the Security Documents and the other Loan Documents. Each
Secured Party agrees that it shall have recourse under or by virtue of the
Security Documents to the Collateral only through the Collateral Agent, that it
shall have no independent recourse to the Liens created by the Security
Documents and that it shall refrain from exercising any rights or remedies under
the Security Documents which have or may have arisen or which may arise as a
result of an Event of Default or an acceleration of the maturities of the
Obligations, except that, any Secured Party (i) may give directions to the
Collateral Agent as one of the Required Lenders, and (ii) may, to the extent
permitted by law or under any Loan Document, set off any amount of any balances
held by it for the account of any Company or any other property held or owing by
it to or for the credit or for the account of any Company provided, however,
that to the extent the amount so set off is to be applied to any of the
Obligations held by such Secured Party, such amount shall be delivered by such
Secured Party to the Collateral Agent for application pursuant to this
Agreement.
(d) The Administrative Agent and the Collateral Agent may perform any
of their duties hereunder by or through its agents or employees and each may,
from time to time, agree to reallocate or temporarily assign its rights and
responsibilities hereunder to the other. With respect to Section 9.01 (d) - (h),
to the extent necessary to maintain "control" for perfection purposes with
respect to the Blocked Accounts, Concentration Account and Collection Account,
the Collateral Agent agrees that the Administrative Agent is acting as the
Collateral Agent's agent, on behalf of the Secured Parties.
124
SECTION 10.02 Administrative Agent and Collateral Agent in Their Individual
Capacity. Each of the Persons serving as the Administrative Agent and Collateral
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and Collateral Agent, as applicable, and such Person and
its Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with Holdings, any Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder or
Collateral Agent, as applicable.
SECTION 10.03 Exculpatory Provisions. Neither the Administrative Agent nor the
Collateral Agent shall have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing,
(a) the Administrative Agent and the Collateral Agent, shall not be subject to
any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent the Collateral Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the Administrative Agent or the
Collateral Agent, as applicable, is required to exercise in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 11.02), and (c) except
as expressly set forth in the Loan Documents, the Administrative Agent and the
Collateral Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to Holdings, any Borrower
or any of their Subsidiaries that is communicated to or obtained by the
financial institution serving as Administrative Agent or Collateral Agent, as
applicable, or any of its respective Affiliates in any capacity. The
Administrative Agent and Collateral Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 11.02) or in the absence of its
own gross negligence or willful misconduct. Each Lender party hereto hereby
waives any claims that any of them may have against the Administrative Agent and
the Collateral Agent with respect to the exercise of any discretion or
reasonable credit judgment required to be used by the Administrative Agent or
the Collateral Agent hereunder in, among other things, the determination of the
Borrowing Base, the Borrowing Base Limitation Amount, Eligible Accounts,
Eligible Inventory, Eligible Consigned Inventory, Eligible Pit Inventory and
advance rates with respect to such Collateral, except to the extent that such
exercise of discretion or reasonable credit judgment was the result of the
Administrative Agent's or the Collateral Agent's, as applicable, gross
negligence or willful misconduct. The Administrative Agent and Collateral Agent
shall not be deemed to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent and Collateral Agent by a
Borrower or a Lender, and the Administrative Agent and Collateral Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent or Collateral Agent, as applicable.
125
SECTION 10.04 Reliance by Agents. Each of the Agents shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
of the Agents also may rely upon any statement made to it orally or by telephone
and believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each of the Agents may consult with legal counsel
(who may be counsel for the Borrowers), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
SECTION 10.05 Delegation of Duties. The Administrative Agent and Collateral
Agent may perform any and all its duties and exercise its rights and powers by
or through any one or more sub-agents appointed by the Administrative Agent or
Collateral Agent, as applicable. The Administrative Agent and Collateral Agent
and any such respective sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Affiliates. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Affiliates of each Administrative Agent and Collateral
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities of Administrative Agent and Collateral Agent.
SECTION 10.06 Successor Administrative Agent and Collateral Agent. The
Administrative Agent and/or Collateral Agent may resign as such at any time upon
at least 30 days' prior notice to the Lenders, the Issuing Bank and the
Borrowers. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrowers, to appoint a successor from among the
Lenders. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent and/or Collateral Agent, as applicable, gives notice of its
resignation, then the retiring Administrative Agent and/or Collateral Agent, as
applicable may, on behalf of the Lenders and the Issuing Bank, appoint a
successor Administrative Agent and/or Collateral Agent, as applicable, which
successor shall be a financial institution organized under the laws of the
United States (or any state thereof) or a United States branch or agency of a
financial institution, and having combined capital and surplus of at least
$250.0 million; provided, however, that if such retiring Administrative Agent
and/or Collateral Agent, as applicable is unable to find a commercial banking
institution which is willing to accept such appointment and which meets the
qualifications set forth above, the retiring Administrative Agent's and/or
Collateral Agent's resignation shall nevertheless thereupon become effective,
and the Lenders shall assume and perform all of the duties of the Administrative
Agent and/or Collateral Agent, as applicable hereunder until such time, if any,
as the Required Lenders appoint a successor Administrative Agent and/or
Collateral Agent, as applicable.
Upon the acceptance of its appointment as Administrative Agent and/or
Collateral Agent, as applicable, hereunder by a successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent and/or Collateral Agent, as applicable, and
the retiring Administrative Agent and/or Collateral Agent, as applicable, shall
be discharged from its duties and obligations hereunder. The fees payable by the
Borrowers to a successor Administrative Agent and/or Collateral Agent, as
applicable, shall be the same as those payable to its predecessor unless
126
otherwise agreed between the Borrowers and such successor. After the
Administrative Agent's and/or Collateral Agent's resignation hereunder, the
provisions of this Article X and Section 11.03 shall continue in effect for the
benefit of such retiring Administrative Agent and/or Collateral Agent, as
applicable, its respective sub-agents and their respective Affiliates in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Administrative Agent and/or Collateral Agent, as applicable.
SECTION 10.07 Non-Reliance on Agents and Other Lenders. Each Lender acknowledges
that it has, independently and without reliance upon the Agents or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agents or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or related agreement or any document furnished hereunder or thereunder.
SECTION 10.08 No Other Administrative Agent or Collateral Agent. The Lenders
identified in this Agreement, the Co-Syndication Agents and the Documentation
Agent shall not have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders. Without
limiting the foregoing, neither any of the Syndication Agents nor the
Documentation Agent shall have or be deemed to have a fiduciary relationship
with any Lender. Each Lender hereby makes the same acknowledgments with respect
to the Co-Syndication Agents and the Documentation Agent as it makes with
respect to the Administrative Agent or Collateral Agent or any other Lender in
this Article X. Notwithstanding the foregoing, the parties hereto acknowledge
that the Documentation Agent and the Co-Syndication Agents hold such titles in
name only, and that such titles confer no additional rights or obligations
relative to those conferred on any Lender hereunder.
SECTION 10.09 Indemnification. The Lenders severally agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrowers or
the Guarantors and without limiting the obligation of the Borrowers or the
Guarantors to do so), ratably according to their respective outstanding Loans
and Commitments in effect on the date on which indemnification is sought under
this Section 10.09 (or, if indemnification is sought after the date upon which
all Commitments shall have terminated and the Loans shall have been paid in
full, ratably in accordance with such outstanding Loans and Commitments as in
effect immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided, that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this Section 10.09 shall survive the
payment of the Loans and all other amounts payable hereunder.
127
SECTION 10.10 Overadvances. Administrative Agent shall not make (and shall
prohibit the Issuing Bank and Swingline Lender, as applicable, from making) any
Revolving Loans or Swingline Loans or provide any Letters of Credit to any
Borrower on behalf of Lenders intentionally and with actual knowledge that such
Revolving Loans, Swingline Loans, or Letters of Credit would cause the aggregate
amount of the Revolving Exposure to exceed the Borrowing Base, without the prior
consent of all Lenders, except, that, Administrative Agent (after consultation
with the Collateral Agent) may make (or cause to be made) such additional
Revolving Loans or Swingline Loans or provide such additional Letters of Credit
on behalf of Lenders (each an "Overadvance" and collectively, the
"Overadvances"), intentionally and with actual knowledge that such Loans or
Letters of Credit will cause the total outstanding Revolving Exposure to exceed
the Borrowing Base, as Administrative Agent (after consultation with the
Collateral Agent) may deem necessary or advisable in its discretion, provided,
that: (a) the total principal amount of the Overadvances to any Borrower which
Administrative Agent may make or provide (or cause to be made or provided) after
obtaining such actual knowledge that the Revolving Exposure equals or exceeds
the Borrowing Base shall not exceed the amount equal to $10 million outstanding
at any time less the then outstanding amount of any Special Agent Advances and
shall not cause the Revolving Exposure to exceed the Revolving Commitments of
all of the Lenders or the Revolving Exposure of a Lender to exceed such Lender's
Revolving Commitment, (b) without the consent of all Lenders, (i) no Overadvance
shall be outstanding for more than sixty (60) days (ii) no Overadvance shall be
made at any time an Event of Default shall exist and (iii) after all
Overadvances have been repaid, Administrative Agent shall not make any
additional Overadvance unless sixty (60) days or more have elapsed since the
last date on which any Overadvance was outstanding and (c) Administrative Agent
shall be entitled to recover such funds, on demand from the Borrowers together
with interest thereon for each day from the date such payment was due until the
date such amount is paid to Administrative Agent at the interest rate provided
for in Section 2.06(c) and (d) Collateral Agent must consent to such
Overadvance. Each Lender shall be obligated to pay Administrative Agent the
amount of its Pro Rata Percentage of any such Overadvance provided, that
Administrative Agent is acting in accordance with the terms of this Section
10.10. All Overadvances shall be secured by Collateral.
SECTION 10.11 Special Agent Advances. Administrative Agent (after consultation
with the Collateral Agent) may, at its option, from time to time, at any time on
or after an Event of Default and for so long as the same is continuing or upon
any other failure of a condition precedent to the making of Loans hereunder,
make such disbursements and advances ("Special Agent Advances") which
Administrative Agent, in its sole discretion after such consultation with the
Collateral Agent, deems necessary or desirable either (i) to preserve or protect
the Collateral or any portion thereof or (ii) to pay any other amount chargeable
to the Borrowers pursuant to the terms of this Agreement or any of the other
Loan Documents consisting of costs, fees and expenses and payments to any
Issuing Bank (provided, that in no event shall (i) Special Agent Advances for
such purpose exceed the amount equal to $10 million in the aggregate outstanding
at any time less the then outstanding Overadvances under Section 10.10 hereof
and (ii) Special Agent Advances plus the Revolving Exposure exceed the Lenders'
Commitment at the time of such Event of Default or cause any Lender's Revolving
128
Exposure to exceed such Lender's Revolving Loan Commitment at the time of such
Event of Default). Special Agent Advances shall be repayable on demand and be
secured by the Collateral. Special Agent Advances shall not constitute Loans but
shall otherwise constitute Obligations hereunder. Administrative Agent shall
notify each Lender and each Borrower in writing of each such Special Agent
Advance, which notice shall include a description of the purpose of such Special
Agent Advance. Each Lender agrees that it shall make available to Administrative
Agent, upon Administrative Agent's demand, in immediately available funds, the
amount equal to such Lender's Pro Rata Percentage of each such Special Agent
Advance. If such funds are not made available to Administrative Agent by such
Lender, Administrative Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Administrative Agent at
the Federal Funds Rate for each day during such period (as published by the
Federal Reserve Bank of New York or at Administrative Agent's option based on
the arithmetic mean determined by Administrative Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of the three leading brokers of Federal funds
transactions in New York City selected by Administrative Agent) and if such
amounts are not paid within three (3) days of Administrative Agent's demand, at
the highest interest rate provided for in Section 2.06(a).
SECTION 10.12 Lender Specified Collateral. Notwithstanding anything herein or
any other Loan Document to the contrary, the Collateral Agent shall only
exercise remedies in respect of Lender Specified Collateral pursuant to the
Lender Specified Collateral Side Letter.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01 Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to any Loan Party, to Administrative Borrower at:
129
A.T. Massey Coal Company, Inc.
4 North Fourth Street
Richmond, Virginia 23219
Attention: Chief Financial Officer
Telecopy No.: (804) 788-1801
With a copy to:
A.T. Massey Coal Company, Inc.
315 70th Street S.E.
Charleston, WV 25304
Attention: Thomas J. Dostart
Vice President, General
Counsel & Secretary
Telecopy No.: (304) 926-8980
and
Hunton & Williams LLP
Riverfront Plaza-East Tower
951 E. Byrd Street
Richmond, VA 23219
Attention: J. Waverley Pulley, III
Telecopy No.: (804) 788-8218
(b) if to the Administrative Agent, to it at:
UBS AG, Stamford Branch
677 Washington Boulevard
Stamford, Connecticut 06901
Attention: Joselyn Fernandes
Telecopy No.: (203) 719-4176
with a copy to:
Latham & Watkins, LLP
233 S. Wacker Drive, Suite 5800
Chicago, IL 60606
Attention: Donald L. Schwartz
Telecopy No.: (312) 993-9767
(c) if to the Collateral Agent, to it at:
130
The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
12th Floor
New York, New York 10036
Attention: Massey Client Credit Manager
Telecopy No.: (212) 382-6875
with a copy to the Administrative Agent as set forth in
Section 11.01(b) above and, except with respect to
communications under Sections 5.01 and 5.15, to:
Latham & Watkins, LLP Hahn & Hessen, LLP
233 S. Wacker Drive, Suite 5800 488 Madison Avenue
Chicago, IL 60606 and New York, New York 10022
Attention: Donald L. Schwartz Attention: Steven J. Seif
Telecopy No: (312) 993-9767 Telecopy No: (212) 498-7400
(d) if to a Lender, to it at its address (or telecopy number) set forth
on the applicable Lender Addendum or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or by certified or registered mail, in each case delivered, sent or
mailed (properly addressed) to such party as provided in this Section 11.01 or
in accordance with the latest unrevoked direction from such party given in
accordance with this Section 11.01 and failure to deliver courtesy copies of
notices and other communications shall in no event affect the validity or
effectiveness of such notices and other communications.
SECTION 11.02 Waivers; Amendment.
(a) No failure or delay by the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender in exercising any right or power hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Collateral Agent, the Issuing Bank
and the Lenders hereunder and under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of any Loan Document or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 11.02, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making of a
Loan or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, the Collateral Agent,
any Lender or the Issuing Bank may have had notice or knowledge of such Default
at the time.
131
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent or Collateral Agent, as applicable, and the
Loan Party or Loan Parties that are parties thereto, in each case with the
written consent of the Required Lenders; provided, that no such agreement shall
(i) increase the Dollar amount of the Commitment of any Lender without the
written consent of such Lender or increase the Commitments of all Lenders
without the consent of each Lender, (ii) reduce or forgive the principal amount
of any Loan or LC Disbursement or reduce the rate of interest thereon (other
than to waive default interest under Section 2.06(c) to the extent a waiver of
the underlying default giving rise to such default interest does not require a
vote of all Lenders), or reduce or forgive any Fees payable hereunder, without
the written consent of each Lender affected thereby, (iii) postpone the maturity
of any Loan, or the required date of reimbursement of any LC Disbursement, or
any date for the payment of any interest or fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment or postpone the scheduled date of expiration of
any Letter of Credit beyond the Final Maturity Date, without the written consent
of each Lender affected thereby, (iv) change Section 2.14(b) or (c) in a manner
that would alter the pro rata sharing of payments or set-offs required thereby,
without the written consent of each Lender, (v) change the percentage set forth
in the definitions of "Supermajority Lenders" and "Required Lenders" or any
other provision of any Loan Document (including this Section 11.02) specifying
the number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Lender
of such Class, as the case may be), (vi) release Holdings or any other Guarantor
from its Guarantee (except as expressly provided in Article VII), or limit its
liability in respect of such Guarantee, without the written consent of each
Lender, (vii) release all or substantially all of the Collateral from the Liens
of the Security Documents or alter the relative priorities of the Obligations
entitled to the Liens of the Security Documents (except in connection with
securing additional Obligations equally and ratably with the other Obligations),
in each case without the written consent of each Lender, (viii) change any
provisions of any Loan Document in a manner that by its terms adversely affects
the rights in respect of payments due to Lenders holding Loans of any Class
differently than those holding Loans of any other Class, without the written
consent of Lenders holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class, (ix) (1) decrease the amount of
Excess Availability referred to in the definition of the term "Permitted
Acquisition" and Sections 6.06(e), 6.06(g), 6.08, 9.01(e) and 9.01(h), (2) amend
or modify the definitions of "Borrowing Base," "Incorporated Borrowing Base,"
"Borrowing Base Limitation Amount," "Estimated Solvency Amount," or any other
defined term used within such definitions the amendment or modification of which
results in more credit being made available or (3) amend or modify Section 10.10
(including any amendment or modification to clauses (b)(i), (ii) and (iii) of
such Section), in each case without the written consent of Supermajority
Lenders; provided, further, that (1) no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender without the prior
written consent of the Administrative Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender, as the case may be, and (2) any waiver, amendment
or modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Revolving Lenders may be effected by an agreement or
132
agreements in writing entered into by the Borrowers and requisite percentage in
interest of the affected Class of Lenders that would be required to consent
thereto under this Section 11.02(b) if such Class of Lenders were the only Class
of Lenders hereunder at the time. Notwithstanding the foregoing, any provision
of this Agreement may be amended by an agreement in writing entered into by the
Borrowers, the Required Lenders and the Administrative Agent (and, if their
rights or obligations are affected thereby, the Issuing Bank, the Collateral
Agent and the Swingline Lender) if (x) by the terms of such agreement the
Commitment of each Lender not consenting to the amendment provided for therein
shall terminate upon the effectiveness of such amendment and (y) at the time
such amendment becomes effective, each Lender not consenting thereto receives
payment in full of the principal of and interest accrued on each Loan made by it
and all other amounts owing to it or accrued for its account under this
Agreement.
(c) If, in connection with any proposed change, waiver, discharge or
termination of the provisions of this Agreement that requires unanimous approval
of all Lenders as contemplated by Section 11.02(b) (other than clause (iii) of
such Section), the consent of the Supermajority Lenders is obtained but the
consent of one or more of such other Lenders whose consent is required is not
obtained, then the Borrowers shall have the right to replace all, but not less
than all, of such non-consenting Lender or Lenders (so long as all
non-consenting Lenders are so replaced) with one or more Persons pursuant to
Section 2.16 so long as at the time of such replacement each such new Lender
consents to the proposed change, waiver, discharge or termination; provided,
however, that the Borrowers shall not have the right to replace a Lender solely
as a result of the exercise of such Lender's rights (and the withholding of any
required consent by such Lender) pursuant to paragraph (iii) of Section
11.02(b); provided further that each replaced Lender receives payment in full of
the principal of and interest accrued on each Loan made by it and all other
amounts owing to it or accrued for its account under this Agreement.
SECTION 11.03 Expenses; Indemnity.
(a) Each Borrower and Holdings each agree, jointly and severally, to
pay all reasonable out-of-pocket expenses (including but not limited to expenses
incurred in connection with due diligence and travel, courier, reproduction,
printing and delivery expenses) incurred by the Administrative Agent, the
Collateral Agent, the Swingline Lender and the Issuing Bank in connection with
the syndication of the credit facilities provided for herein and the
preparation, execution and delivery, and administration of this Agreement and
the other Loan Documents, including any Inventory Appraisal, or in connection
with any amendments, modifications, enforcement costs, work-out costs,
documentary taxes or waivers of the provisions hereof or thereof (whether or not
the transactions hereby or thereby contemplated shall be consummated) or
incurred by the Agents or any Lender in connection with the work-out enforcement
or protection of its rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or Letters of Credit issued
hereunder, including the fees, charges and disbursements of Latham & Watkins,
LLP, counsel for the Administrative Agent and, in connection with the
133
preparation, execution and delivery of this Agreement and the other Loan
Documents, including the initial Inventory Appraisal, Hahn & Hessen, LLP,
counsel to the Collateral Agent, and, in connection with any such enforcement or
protection, or work-out, the fees, charges and disbursements of any other
counsel, including Hahn & Hessen, LLP, counsel for the Collateral Agent, for the
Agents or any Lender.
(b) The Loan Parties agree, jointly and severally, to indemnify the
Agents, each Lender, the Issuing Bank and the Swingline Lender, each Affiliate
of any of the foregoing Persons and each of their respective directors,
officers, trustees, employees and agents (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, all reasonable
out-of-pocket costs and any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges, expenses and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the Transactions, (ii) any actual
or proposed use of the proceeds of the Loans or issuance of Letters of Credit,
(iii) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto, or (iii) any actual
or alleged presence or Release or threatened Release of Hazardous Materials, on,
under or from any Property owned, leased or operated by any Company, or any
Environmental Claim related in any way to any Company; provided, that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 11.03 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Agents, the Issuing Bank or any Lender. All amounts
due under this Section 11.03 shall be payable on written demand therefor
accompanied by reasonable documentation with respect to any reimbursement,
indemnification or other amount requested.
(d) To the extent that the Borrowers fail to pay any amount required to
be paid by it to the Agents, the Issuing Bank or the Swingline Lender under
paragraph (a) or (b) of this Section 11.03, each Lender severally agrees to pay
to the Agents, the Issuing Bank or the Swingline Lender, as the case may be,
such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided, that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against any of the Agents, the Issuing Bank or the Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposure.
SECTION 11.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that the Borrowers may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the
Borrowers without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
134
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the
Affiliates of each of the Administrative Agent, the Issuing Bank and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more banks, insurance companies,
investment companies or funds or other institutions (other than any Borrower,
Holdings or any Affiliate or Subsidiary thereof) all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided, that (i) except in
the case of an assignment to a Lender, an Affiliate of a Lender or a Lender
Affiliate, the Administrative Borrower (except prior to the completion of the
primary syndication (as determined by Arranger) of the Commitments and the Loans
by the Arranger) and the Administrative Agent (and, in the case of an assignment
of all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Bank (but only
with respect to any such assignment occurring after the completion of the
primary syndication (as determined by Arranger) of the Commitments and the Loans
by the Arranger) and the Swingline Lender) must give their prior written consent
to such assignment (which consent shall not be unreasonably withheld or
delayed), (ii) except in the case of an assignment to a Lender, an Affiliate of
a Lender or a Lender Affiliate, any assignment made in connection with the
primary syndication of the Commitment and Loans by the Arranger or an assignment
of the entire remaining amount of the assigning Lender's Commitments or Loans,
the amount of the Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than in the case of Revolving Commitments and Revolving Loans, $5.0
million unless the Administrative Borrower and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, except that this clause (iii) shall not be construed to
prohibit the assignment of a proportionate part of all the assigning Lender's
rights and obligations in respect of one Class of Commitments or Loans, (iv) the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and provided, further that
any consent of the Administrative Borrower otherwise required under this
paragraph shall not be required if a Default or an Event of Default has occurred
and is continuing. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section 11.04(b), from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement
(provided, that any liability of any Borrower to such assignee under Section
2.12, 2.13 or 2.15 shall be limited to the amount, if any, that would have been
payable thereunder by the Borrowers in the absence of such assignment, except to
the extent any such amounts are attributable to a Change in Law occurring after
the date of such assignment), and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
135
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.12, 2.13, 2.15 and 11.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section 11.04.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of New York or
Stamford, Connecticut a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans and LC Disbursements
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error, and each Borrower, the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrowers, the Issuing Bank,
the Collateral Agent, the Swingline Lender and any Lender (with respect to its
own interest only), at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section 11.04 and any written consent to such assignment required by
paragraph (b) of this Section 11.04, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrowers, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers, the
Administrative Agent, the Collateral Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided, that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
11.02(b) that affects such Participant. Subject to paragraph (f) of this Section
11.04, each Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.12, 2.13 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
136
this Section 11.04. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 11.08 as though it were a Lender;
provided, that such Participant agrees to be subject to Section 2.14(c) as
though it were a Lender. Each Lender shall, acting for this purpose as an agent
of the Borrower, maintain at one of its offices a register for the recordation
of the names and addresses of its Participants, and the amount and terms of its
participations, provided, that no Lender shall be required to disclose or share
the information contained in such register with the Borrower or any other party,
except as required by applicable law.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.12, 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the prior
written consent of the Borrowers (which consent shall not be unreasonably
withheld or delayed). A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.15 unless
Administrative Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Sections 2.15(e) and (f) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 11.04 shall not apply to any such pledge
or assignment of a security interest; provided, that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto. In the case of any Lender that is a fund that invests in bank
loans, such Lender may, without the consent of the Borrowers or the
Administrative Agent, collaterally assign or pledge all or any portion of its
rights under this Agreement, including the Loans and Notes or any other
instrument evidencing its rights as a Lender under this Agreement, to any holder
of, trustee for, or any other representative of holders of, obligations owed or
securities issued, by such fund, as security for such obligations or securities;
provided, that the documentation governing or evidencing such collateral
assignment or pledge shall provide that any foreclosure or similar action by
such trustee or representative shall be subject to the provisions of this
Section 11.04 concerning assignments and shall not be effective to transfer any
rights under this Agreement or in any Loan, Note or other instrument evidencing
its rights as a Lender under this Agreement unless the requirements of Section
11.04 concerning assignments are fully satisfied.
SECTION 11.05 Survival of Agreement. All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agents, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.12, 2.13, 2.15 and 11.03 and Article X shall survive and remain in
137
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 11.06 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and the Fee Letter constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 11.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 11.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final, but excluding payroll and trust accounts) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of any Loan Party against any of and all the obligations of any
Loan Party now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section 11.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 11.09 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York, without regard to conflicts of law
principles that would require the application of the laws of another
jurisdiction.
(b) Each Loan Party hereby irrevocably and unconditionally submits, for
itself and its Property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
138
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Loan Party or its properties in the courts
of any jurisdiction.
(c) Each Loan Party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section 11.09. Each
of the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 11.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 11.10 Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in any legal proceeding directly or indirectly arising out of or relating
to this Agreement, any other Loan Document or the transactions contemplated
hereby (whether based on contract, tort or any other theory). Each party hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 11.10.
SECTION 11.11 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 11.12 Confidentiality. Each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates or its Lender Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential pursuant to the terms hereof), (b) to the extent
requested by any regulatory authority, (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any
other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 11.12, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
139
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to any Borrower and its
obligations, (g) with the consent of the Borrowers or (h) to the extent such
Information (i) is publicly available at the time of disclosure or becomes
publicly available other than as a result of a breach of this Section 11.12 or
(ii) becomes available to the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
Holdings or any Subsidiary. For the purposes of this Section 11.12,
"Information" means all information received from Holdings or any Subsidiary
relating to Holdings or any Subsidiary or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by Holdings or any
Subsidiary; provided, that, in the case of information received from Holdings or
any Subsidiary after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 11.12 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything to the contrary set forth herein or in any other
written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, the parties acknowledge and agree that (i)
any obligations of confidentiality contained herein and therein do not apply and
have not applied from the commencement of discussions between the parties to the
tax treatment and tax structure of the Transactions (and any related
transactions or arrangements), and (ii) each party (and each of its employees,
representatives, or other agents) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transactions
and all materials of any kind (including opinions or other tax analyses) that
are provided to such party relating to such tax treatment and tax structure, all
within the meaning of Treasury Regulation Section 1.6011-4; provided, however,
that each party recognizes that the privilege each has to maintain, in its sole
discretion, the confidentiality of a communication relating to the Transactions,
including a confidential communication with its attorney or a confidential
communication with a federally authorized tax practitioner under Section 7525 of
the Code, is not intended to be affected by the foregoing.
SECTION 11.13 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively, the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 11.13 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
140
SECTION 11.14 Lender Addendum. Each Lender to become a party to this Agreement
on the date hereof shall do so by delivering to the Administrative Agent a
Lender Addendum duly executed by such Lender, each Borrower and the
Administrative Agent.
SECTION 11.15 General Limitation on Obligations and Guarantee Obligations. In
any action or proceeding involving any state corporate law, or any state,
federal or foreign bankruptcy, insolvency, reorganization or other similar law,
in each case, affecting the rights of creditors generally, if the obligations of
any Guarantor or Borrower under Section 7.01 or of any Borrower under any other
provision hereof would otherwise be held or determined to be void, voidable,
invalid or unenforceable, or subordinated to the claims of any other creditors,
on account of the amount of its liability under Section 7.01 or any other term
of this Agreement, then, notwithstanding any other provision to the contrary,
the amount of such liability shall, without any further action by such Guarantor
or Borrower, or of any Loan Party or any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable under applicable
law (whether federal or state and including without limitation, the federal
Bankruptcy Code). In determining the amount of or existence of any such
limitation, full effect shall be given to the application of the provisions of
the Contribution, Incentive and Offset Agreement and any determination made at
any time with respect to the Estimated Solvency Amount shall not be binding on
the Collateral Agent or the Lenders in connection with any action or proceeding
of the type referred to in this Section 11.15. To the extent that the laws of
the state of Kentucky are found to be applicable to the Obligations of any Loan
Party, for purposes of KRS Sec. 371.065, (i) the maximum aggregate liability of
such Loan Party as a guarantor of the Obligations of any other Loan Party or
Loan Parties is $150 million, plus interest accruing on such Obligations, and
fees, charges and costs of collecting the Obligations, including reasonable
attorneys' fees, and (ii) the termination date of the guarantee of such Loan
Party, unless sooner terminated by the Administrative Agent in writing, is
twenty years after the date hereof; provided, however, that the termination of
such guarantee on the termination date shall not affect the liability of any
Loan Party with respect to Obligations created or incurred prior to such date or
extensions or renewals of, interest accruing on, or fees, costs or expenses,
including reasonable attorneys' fees, incurred with respect to, such Obligations
on or after such date.
[Signature Pages Follow]
141
[Signature Page to Credit Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWERS
A. T. MASSEY COAL COMPANY, INC.
By: /s/ Baxter F. Phillips, Jr.
--------------------------------------------------
Name: Baxter F. Phillips, Jr.
Title: Senior Vice President and CFO
ALEX ENERGY, INC.
By: /s/ David C. Hughart
--------------------------------------------------
Name: David C. Hughart
Title: President
ARACOMA COAL COMPANY, INC.
By: /s/ Dwayne Francisco
--------------------------------------------------
Name: Dwayne Francisco
Title: President
BANDMILL COAL CORPORATION
By: /s/ Eric D. Salyer
--------------------------------------------------
Name: Eric D. Salyer
Title: President
BOONE EAST DEVELOPMENT CO.
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
CENTRAL PENN ENERGY COMPANY, INC.
By: /s/ James L. Gardner
--------------------------------------------------
Name: James L. Gardner
Title: President
CENTRAL WEST VIRGINIA ENERGY COMPANY
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
DELBARTON MINING COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
DEMETER LAND COMPANY
By: /s/ F. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
ELK RUN COAL COMPANY, INC.
By: /s/ Larry Ward
--------------------------------------------------
Name: Larry Ward
Title: President
GREEN VALLEY COAL COMPANY
By: /s/ David C. Hughart
--------------------------------------------------
Name: David C. Hughart
Title: President
HIGHLAND MINING COMPANY
By: /s/ Dwayne Francisco
--------------------------------------------------
Name: Dwayne Francisco
Title: President
INDEPENDENCE COAL COMPANY, INC.
By: /s/ Jeffrey W. Walkup
--------------------------------------------------
Name: Jeffrey W. Walkup
Title: President
KNOX CREEK COAL CORPORATION
By: /s/ David P. Kramer
--------------------------------------------------
Name: David P. Kramer
Title: President
MARFORK COAL COMPANY, INC.
By: /s/ Johnny R. Jones
--------------------------------------------------
Name: Johnny R. Jones
Title: President
MARTIN COUNTY COAL CORPORATION
By: /s/ Hiram Mahon
--------------------------------------------------
Name: Hiram Mahon
Title: President
MASSEY COAL SALES COMPANY, INC.
By: /s/ James L. Gardner
--------------------------------------------------
Name: James L. Gardner
Title: President
NICHOLAS ENERGY COMPANY
By: /s/ Mike Snelling
--------------------------------------------------
Name: Mike Snelling
Title: President
PERFORMANCE COAL COMPANY
By: /s/ Bill M. Potter
--------------------------------------------------
Name: Bill M. Potter
Title: President
ROAD FORK DEVELOPMENT COMPANY, INC.
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
RUM CREEK COAL SALES, INC.
By: /s/ Richard Zigmond
--------------------------------------------------
Name: Richard Zigmond
Title: President
SIDNEY COAL COMPANY, INC.
By: /s/ Sidney R. Young, III
--------------------------------------------------
Name: Sidney R. Young, III
Title: President
GUARANTORS
MASSEY ENERGY COMPANY
By: /s/ Baxter F. Phillips, Jr.
--------------------------------------------------
Name: Baxter F. Phillips, Jr.
Title: Senior Vice President and CFO
APPALACHIAN CAPITAL MANAGEMENT CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
BANDYTOWN COAL COMPANY
By: /s/ Kenny Williams
--------------------------------------------------
Name: Kenny Williams
Title: President
BARNABUS LAND COMPANY
By: /s/ Harold Osborne
--------------------------------------------------
Name: Harold Osborne
Title: President
BELFRY COAL CORPORATION
By: /s/ Sidney R. Young, III
--------------------------------------------------
Name: Sidney R. Young, III
Title: President
BEN CREEK COAL COMPANY
By: /s/ Bruce A. Johnson
--------------------------------------------------
Name: Bruce A. Johnson
Title: President
BIG BEAR MINING COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
BIG SANDY VENTURE CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
BLACK KING MINE DEVELOPMENT CO.
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
BLUE RIDGE VENTURE CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
BOONE ENERGY COMPANY
By: /s/ Johnny R. Jones
--------------------------------------------------
Name: Johnny R. Jones
Title: President
BOONE WEST DEVELOPMENT CO.
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
CABINAWA MINING COMPANY
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
CAPSTAN MINING COMPANY
By: /s/ James L. Gardner
--------------------------------------------------
Name: James L. Gardner
Title: President
CERES LAND COMPANY
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
CLEAR FORK COAL COMPANY
By: /s/ Larry Ward
--------------------------------------------------
Name: Larry Ward
Title: President
CONTINUITY VENTURE CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
CRYSTAL FUELS COMPANY
By: /s/ George E. Dotson
--------------------------------------------------
Name: George E. Dotson
Title: President
DEHUE COAL COMPANY
By: /s/ Harold Osborne
--------------------------------------------------
Name: Harold Osborne
Title: President
DOUGLAS POCAHONTAS COAL CORPORATION
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
DRIH CORPORATION
By: /s/ John M. Poma
--------------------------------------------------
Name: John M. Poma
Title: Vice President
DUCHESS COAL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
DUNCAN FORK COAL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
EAGLE ENERGY, INC.
By: /s/ Kenny Williams
--------------------------------------------------
Name: Kenny Williams
Title: President
FEATS VENTURE CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
FOOTHILLS COAL COMPANY
By: /s/ J. Christopher Adkins
--------------------------------------------------
Name: J. Christopher Adkins
Title: President
GOALS COAL COMPANY
By: /s/ Michael A. Milam
--------------------------------------------------
Name: Michael A. Milam
Title: President
GREYEAGLE COAL COMPANY
By: /s/ Michael D. Bauersachs
--------------------------------------------------
Name: Michael D. Bauersachs
Title: President
HADEN FARMS, INC.
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
HANNA LAND COMPANY, LLC
By: A.T. MASSEY COAL COMPANY, INC.
By: /s/ Baxter F. Phillips, Jr.
-------------------------------------------
Name: Baxter F. Phillips, Jr. for
A.T. Massey Coal Company, Inc.
Title: Senior Vice President and CFO
and
By: ALEX ENERGY, INC.
By: /s/ David C. Hughart
-----------------------------------------
Name: David C. Hughart
Title:
HAZY RIDGE COAL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
HOPKINS CREEK COAL COMPANY
By: /s/ Baxter F. Phillips, Jr.
--------------------------------------------------
Name: Baxter F. Phillips, Jr.
Title: President
JACKS BRANCH COAL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
JOBONER COAL COMPANY
By: /s/ Baxter F. Phillips, Jr.
--------------------------------------------------
Name: Baxter F. Phillips, Jr.
Title: President
KANAWHA ENERGY COMPANY
By: /s/ Randy Cunningham
--------------------------------------------------
Name: Randy Cunningham
Title: President
LAUREN LAND COMPANY
By: /s/ Harold Osborne
--------------------------------------------------
Name: Harold Osborne
Title: President
LAXARE, INC.
By: /s/ R. Freal Mize
--------------------------------------------------
Name: R. Freal Mize
Title: President
LICK BRANCH COAL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
LOGAN COUNTY MINE SERVICES, INC.
By: /s/ Dwayne Francisco
--------------------------------------------------
Name: Dwayne Francisco
Title: President
LONG FORK COAL COMPANY
By: /s/ Cathy Frazier
--------------------------------------------------
Name: Cathy Frazier
Title: President
LYNN BRANCH COAL COMPANY, INC.
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
M&B COAL COMPANY
By: TOWN CREEK COAL COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
and
By: WYOMAC COAL COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
MAJESTIC MINING, INC.
By: /s/ David C. Hughart
--------------------------------------------------
Name: David C. Hughart
Title: President
MASSEY COAL SERVICES, INC.
By: /s/ Mark A. Clemens
--------------------------------------------------
Name: Mark A. Clemens
Title: President
MASSEY GAS & OIL COMPANY
By: /s/ Timothy E. Comer
--------------------------------------------------
Name: Timothy E. Comer
Title: President
MASSEY NEW ERA CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
MASSEY TECHNOLOGY INVESTMENTS, INC.
By: /s/ Jeffrey M. Jarosinski
--------------------------------------------------
Name: Jeffrey M. Jarosinski
Title: Treasurer
MENEFEE LAND COMPANY, INC.
By: /s/ James L. Gardner
--------------------------------------------------
Name: James L. Gardner
Title: President
MINE MAINTENANCE, INC.
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
NEW MARKET LAND COMPANY
By: /s/ Harold Osborne
--------------------------------------------------
Name: Harold Osborne
Title: Vice President
NEW MASSEY CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
NEW RIDGE MINING COMPANY
By: /s/ Sidney R. Young, III
--------------------------------------------------
Name: Sidney R. Young, III
Title: President
NEW RIVER ENERGY CORPORATION
By: /s/ Timothy E. Comer
--------------------------------------------------
Name: Timothy E. Comer
Title: President
NICCO CORPORATION
By: /s/ David C. Hughart
--------------------------------------------------
Name: David C. Hughart
Title: President
OMAR MINING COMPANY
By: /s/ Mitchell M. Kalos
--------------------------------------------------
Name: Mitchell M. Kalos
Title: President
PEERLESS EAGLE COAL CO.
By: /s/ David C. Hughart
--------------------------------------------------
Name: David C. Hughart
Title: President
PETER CAVE MINING COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
PILGRIM MINING COMPANY, INC.
By: /s/ Hiram Mahon
--------------------------------------------------
Name: Hiram Mahon
Title: President
POWER MOUNTAIN COAL COMPANY
By: /s/ James S. Smith
--------------------------------------------------
Name: James S. Smith
Title: President
PROGRESSIVE VENTURE CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
RAVEN RESOURCES, INC.
By: /s/ R. Freal Mize
-----------------------------------------
Name: R. Freal Mize
Title: President
RAWL SALES & PROCESSING CO.
By: /s/ Macs E. Hall
-----------------------------------------
Name: Macs E. Hall
Title: President
RAWL SALES VENTURE CAPITAL CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
ROBINSON-PHILLIPS COAL COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
ROCKRIDGE COAL COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
RUM CREEK SYNFUEL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
RUSSELL FORK COAL COMPANY
By: /s/ Baxter F. Phillips, Jr.
--------------------------------------------------
Name: Baxter F. Phillips, Jr.
Title: President
SC COAL CORPORATION
By: /s/ Stephen Hatfield
--------------------------------------------------
Name: Stephen Hatfield
Title: President
SCARLET DEVELOPMENT COMPANY
By: /s/ James L. Gardner
--------------------------------------------------
Name: James L. Gardner
Title: President
SHANNON-POCAHONTAS COAL CORPORATION
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
SHANNON-POCAHONTAS MINING COMPANY
By: SHANNON-POCAHONTAS MINING CORPORATION
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
and
By: OMAR MINING COMPANY
By: /s/ Mitchell M. Kalos
--------------------------------------------
Name: Mitchell M. Kalos
Title: President
SHENANDOAH CAPITAL MANAGEMENT CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
SPARTAN MINING COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
SPM CAPITAL MANAGEMENT CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
ST. ALBANS CAPITAL MANAGEMENT CORP.
By: /s/ Eric B. Tolbert
--------------------------------------------------
Name: Eric B. Tolbert
Title: Vice President
STIRRAT COAL COMPANY
By: /s/ Kevin T. Varney
--------------------------------------------------
Name: Kevin T. Varney
Title: President
STONE MINING COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
SUN COAL COMPANY, INC.
By: /s/ James L. Gardner
--------------------------------------------------
Name: James L. Gardner
Title: President
SUPPORT MINING COMPANY
By: /s/ Andrew F. Ashurst
--------------------------------------------------
Name: Andrew F. Ashurst
Title: President
SYCAMORE FUELS, INC.
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
T.C.H. COAL CO.
By: /s/ Baxter F. Phillips, Jr.
--------------------------------------------------
Name: Baxter F. Phillips, Jr.
Title: President
TENNESSEE CONSOLIDATED COAL COMPANY
By: /s/ Michael D. Bauersachs
--------------------------------------------------
Name: Michael D. Bauersachs
Title: President
TENNESSEE ENERGY CORP.
By: /s/ Michael D. Bauersachs
--------------------------------------------------
Name: Michael D. Bauersachs
Title: President
THUNDER MINING COMPANY
By: /s/ Michael D. Bauersachs
--------------------------------------------------
Name: Michael D. Bauersachs
Title: President
TOWN CREEK COAL COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
TRACE CREEK COAL COMPANY
By: /s/ Danny Cox
--------------------------------------------------
Name: Danny Cox
Title: President
TUCSON LIMITED LIABILITY COMPANY
By: A.T. MASSEY COAL COMPANY, INC.
By: /s/ Baxter F. Phillips, Jr.
-------------------------------------------
Name: Baxter F. Phillips, Jr. for
A.T. Massey Coal Company, Inc.
Title: Senior Vice President and CFO
VANTAGE MINING COMPANY
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
WHITE BUCK COAL COMPANY
By: /s/ Larry M. Roop
--------------------------------------------------
Name: Larry M. Roop
Title: President
WILLIAMS MOUNTAIN COAL COMPANY
By: /s/ Michael A. Milam
--------------------------------------------------
Name: Michael A. Milam
Title: President
WYOMAC COAL COMPANY, INC.
By: /s/ Macs E. Hall
--------------------------------------------------
Name: Macs E. Hall
Title: President
UBS AG, STAMFORD BRANCH, as a Lender,
Issuing Bank and Administrative Agent
By: /s/ Wilfred V. Saint
--------------------------------------------------
Name: Wilfred V. Saint
Title: Associate Director
Banking Products Services, US
By: /s/ Thomas R. Salzano
--------------------------------------------------
Name: Thomas R. Salzano
Title: Director
Banking Products Services, US
UBS LOANS FINANCE, LLC,
as Swingline Lender
By: /s/ Wilfred V. Saint
--------------------------------------------------
Name: Wilfred V. Saint
Title: Associate Director
Banking Products Services, US
By: /s/ Thomas R. Salzano
--------------------------------------------------
Name: Thomas R. Salzano
Title: Director
Banking Products Services, US
GENERAL ELECTRIC CAPITAL CORPORATION, as
Documentation Agent
By: /s/ James R. Persico
--------------------------------------------------
Name: James R. Persico
Title: Duly Authorized Signatory
FLEET CAPITAL CORPORATION, as a
Co-Syndication Agent
By: /s/ Michael Kerneklian
--------------------------------------------------
Name: Michael Kerneklian
Title: Vice President
WELLS FARGO FOOTHILL, LLC, as a
Co-Syndication Agent
By: /s/ Sanat S. Amladi
--------------------------------------------------
Name: Sanat S. Amladi
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC., as a
Lender and as Collateral Agent
By: /s/ Christine M. Ferrise
--------------------------------------------------
Name: Christine M. Ferrise
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Norm Harkleroad
--------------------------------------------------
Name: Norm Harkleroad
Title: Assistant Vice President
ANNEX I
Applicable Margin
Excess Availability Revolving Loans
- ------------------- ---------------
Eurodollar ABR
---------- ---
Level I < $50,000,000 2.50% 1.50%
Level II > $50,000,000 2.25% 1.25%
Each change in the Applicable Margin resulting from a change in the
Excess Availability shall be effective with respect to all Loans and Letters of
Credit outstanding on and after the date of delivery to the Administrative Agent
of the financial statements and certificates required by Section 5.01(a) or (b)
and Section 5.01(d), respectively, and the most recent Borrowing Base
Certificate indicating such change until the date immediately preceding the next
date of delivery of such financial statements and certificates indicating
another such change. Notwithstanding the foregoing, the Excess Availability
shall be deemed to be in Level I for purposes of determining the Applicable
Margin (i) from the Closing Date to the date of delivery to the Administrative
Agent of the financial statements and certificates required by Section 5.01(a)
or (b) and Section 5.01(d) for the fiscal period ended at least three months
after the Closing Date and the most recent Borrowing Base Certificate, (ii) at
any time during which the Borrowers have failed to deliver the financial
statements and certificates required by Section 5.01(a) or (b) and Section
5.01(d), respectively, and the Borrowing Base Certificate and (iii) at any time
during the existence of an Event of Default.